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Template-Type: ReDIF-Paper 1.0
Title: Valuing the Benefits of Superfund Site Remediation: Three Approaches to Measuring Localized Externalities
Classification-JEL: Q5; Q51; Q53
Author-Name: Shanti Gamper-Rabindran
Author-Name: Ralph Mastromonaco
Author-Name: Christopher Timmins
Note: EEE
Number: 16655
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16655
File-URL: http://www.nber.org/papers/w16655.pdf
File-Format: application/pdf
Abstract: We apply three complementary approaches designed to identify the localized effects of Superfund site remediation under the CERCLA, examining data at the level of (i) the census tract (paying attention to within tract heterogeneity), (ii) the census block, and (iii) individual house transaction. Our analysis of the within-tract housing value distribution detects statistically and economically significant appreciation in the lower tails resulting from hazardous waste cleanup; deletion of a site raises tract-level housing values by 18.2% at the 10th percentile, 15.4% at the median, and 11.4% at the 60th percentile. These tract results are confirmed by (i) house transaction data that show cheaper houses within each tract are more likely to be exposed to waste sites within one kilometer, explaining their greater appreciation from site cleanup, and (ii) high-resolution census block data that show greater appreciation among blocks lying closer to the cleaned sites. House-level repeat-sales data confirm results from our national level census analysis by showing that deletion raises housing values relative to proposal in specific markets, such as northern New Jersey, but they also uncover a great heterogeneity in the effects of remediation across markets, with no statistical effects from deletion relative to proposal detected in Los Angeles metro, southwestern Connecticut or Boston metro.
Handle: RePEc:nbr:nberwo:16655
Template-Type: ReDIF-Paper 1.0
Title: A Structural Approach to Market Definition With an Application to the Hospital Industry
Classification-JEL: I11; K21; L1; L4
Author-Name: Martin Gaynor
Author-Person: pga1
Author-Name: Samuel A. Kleiner
Author-Person: pkl120
Author-Name: William B. Vogt
Author-Person: pvo14
Note: EH
Number: 16656
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16656
File-URL: http://www.nber.org/papers/w16656.pdf
File-Format: application/pdf
Publication-Status: published as Martin S. Gaynor & Samuel A. Kleiner & William B. Vogt, 2013. "A Structural Approach to Market Definition With an Application to the Hospital Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 61(2), pages 243-289, 06.
Abstract: Market definition is essential to merger analysis. Because no standard approach to market definition exists, opposing parties in antitrust cases often disagree about the extent of the market. These differences have been particularly relevant in the hospital industry, where the courts have denied seven of eight merger challenges since 1994, due largely to disagreements over geographic market definition. We compare geographic markets produced using common ad hoc methodologies to a method that directly applies the "SSNIP test" to hospitals in California using a structural model. Our results suggest that previously employed methods overstate hospital demand elasticities by a factor of 2.4 to 3.4 and define larger markets than would be implied by the merger guidelines's hypothetical monopolist test. The use of these methods in differentiated product industries may lead to mistaken geographic market delineation, and was likely a contributing factor to the permissive legal environment for hospital mergers.
Handle: RePEc:nbr:nberwo:16656
Template-Type: ReDIF-Paper 1.0
Title: The Propagation of Regional Recessions
Classification-JEL: E32
Author-Name: James D. Hamilton
Author-Person: pha60
Author-Name: Michael T. Owyang
Author-Person: pow3
Note: EFG
Number: 16657
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16657
File-URL: http://www.nber.org/papers/w16657.pdf
File-Format: application/pdf
Publication-Status: published as James D. Hamilton & Michael T. Owyang, 2012. "The Propagation of Regional Recessions," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 935-947, November.
Abstract: This paper develops a framework for inferring common Markov-switching components in a panel data set with large cross-section and time-series dimensions. We apply the framework to studying similarities and differences across U.S. states in the timing of business cycles. We hypothesize that there exists a small number of cluster designations, with individual states in a given cluster sharing certain business cycle characteristics. We find that although oil-producing and agricultural states can sometimes experience a separate recession from the rest of the United States, for the most part, differences across states appear to be a matter of timing, with some states entering recession or recovering before others.
Handle: RePEc:nbr:nberwo:16657
Template-Type: ReDIF-Paper 1.0
Title: Does Management Matter? Evidence from India
Classification-JEL: L2; M2; O14; O32; O33
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Benn Eifert
Author-Name: Aprajit Mahajan
Author-Name: David McKenzie
Author-Person: pmc29
Author-Name: John Roberts
Author-Person: pro554
Note: EFG IO LS PR
Number: 16658
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16658
File-URL: http://www.nber.org/papers/w16658.pdf
File-Format: application/pdf
Publication-Status: published as Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2013. "Does Management Matter? Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 128(1), pages 1-51.
Abstract: A long-standing question in social science is to what extent differences in management cause differences in firm performance. To investigate this we ran a management field experiment on large Indian textile firms. We provided free consulting on modern management practices to a randomly chosen set of treatment plants and compared their performance to the control plants. We find that adopting these management practices had three main effects. First, it raised average productivity by 11% through improved quality and efficiency and reduced inventory. Second, it increased decentralization of decision making, as better information flow enabled owners to delegate more decisions to middle managers. Third, it increased the use of computers, necessitated by the data collection and analysis involved in modern management. Since these practices were profitable this raises the question of why firms had not adopted these before. Our results suggest that informational barriers were a primary factor in explaining this lack of adoption. Modern management is a technology that diffuses slowly between firms, with many Indian firms initially unaware of its existence or impact. Since competition was limited by constraints on firm entry and growth, badly managed firms were not rapidly driven from the market.
Handle: RePEc:nbr:nberwo:16658
Template-Type: ReDIF-Paper 1.0
Title: Effects of Welfare Reform on Vocational Education and Training
Classification-JEL: I3; I38; J24
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Nancy E. Reichman
Author-Name: Hope Corman
Author-Name: Dhiman Das
Author-Person: pda535
Note: ED EH PE
Number: 16659
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16659
File-URL: http://www.nber.org/papers/w16659.pdf
File-Format: application/pdf
Publication-Status: published as Dhaval M. Dave, Nancy E. Reichman, Hope Corman, and Dhiman Das, 2011. "Effects of Welfare Reform on Vocational Education and Training," Economics of Education Review, vol. 30(6), pages 1399-1415.
Abstract: Exploiting variation in welfare reform across states and over time and using relevant comparison groups, this study estimates the effects of welfare reform on an important source of human capital acquisition among women at risk for relying on welfare: vocational education and training. The results indicate that welfare reform reduced enrollment in full-time vocational education and had no significant effects on part-time vocational education or participation in other types of work-related courses, though there is considerable heterogeneity across states with respect to the strictness of educational policy and the strength of work incentives under welfare reform. In addition, we find heterogeneous effects by prior educational attainment. We find no evidence that the previously-observed negative effects of welfare reform on formal education (including college enrollment), which we replicated in this study, have been offset by increases in vocational education and training.
Handle: RePEc:nbr:nberwo:16659
Template-Type: ReDIF-Paper 1.0
Title: International Trade, Offshoring and Heterogeneous Firms
Classification-JEL: F1; F12; F2
Author-Name: Richard Baldwin
Author-Person: pba124
Author-Name: Toshihiro Okubo
Author-Person: pok11
Note: ITI
Number: 16660
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16660
File-URL: http://www.nber.org/papers/w16660.pdf
File-Format: application/pdf
Publication-Status: published as Richard E. Baldwin & Toshihiro Okubo, 2014. "International Trade, Offshoring and Heterogeneous Firms," Review of International Economics, Wiley Blackwell, vol. 22(1), pages 59-72, 02.
Abstract: Recent trade models determine the equilibrium distribution of firm-level efficiency endogenously and show that freer trade shifts the distribution towards higher average productivity due to entry and exit of firms. These models ignore the possibility that freer trade also alters the firm-size distribution via international firm migration (offshoring); firms must, by assumption, produce in their 'birth nation.' We show that when firms are allowed to switch locations, new productivity effects arise. Freer trade induces the most efficient small-nation firms to move to the large nation. The big country gets an 'extra helping' of the most efficient firms while the small nation's firm-size distribution is truncated on both ends. This reinforces the big-nation productivity gain while reducing or even reversing the small-nation productivity gain. The small nation is nevertheless better off allowing firm migration.
Handle: RePEc:nbr:nberwo:16660
Template-Type: ReDIF-Paper 1.0
Title: Fifteen Years On: Household Incomes in South Africa
Classification-JEL: O12
Author-Name: Murray Leibbrandt
Author-Person: ple227
Author-Name: James Levinsohn
Author-Person: ple386
Note: ITI
Number: 16661
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16661
File-URL: http://www.nber.org/papers/w16661.pdf
File-Format: application/pdf
Publication-Status: published as Fifteen Years On: Household Incomes in South Africa, Murray Leibbrandt, James Levinsohn. in African Successes, Volume I: Government and Institutions, Edwards, Johnson, and Weil. 2016
Abstract: This paper uses national household survey data to examine changes in real per capita incomes in South Africa between 1993 and 2008; the start and the end of the first fifteen years of post-apartheid South Africa. These data show an increase in average per capita real incomes across the distribution. Over this period growth has been shared, albeit unequally, across almost the entire spectrum of incomes. However, kernel density estimations make clear that these real income changes are not dramatic and inequality has increased. We conduct a series of semi-parametric decompositions in order to understand the role of endowments and changes in the returns to these endowments in driving these observed changes in the income distribution. This analysis highlights the positive role played by changes in endowments such as access to education and social services over the period. If these endowment changes were all that changed in South Africa over the post-apartheid period, we would have seen a pervasive rightward shift of the distribution of per capita real incomes. In the rest of the paper we explore why this did not happen.
Handle: RePEc:nbr:nberwo:16661
Template-Type: ReDIF-Paper 1.0
Title: Trade and Labor Market Outcomes
Classification-JEL: F12; F16; J64
Author-Name: Elhanan Helpman
Author-Person: phe205
Author-Name: Oleg Itskhoki
Author-Person: pit14
Author-Name: Stephen Redding
Author-Person: pre64
Note: ITI
Number: 16662
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16662
File-URL: http://www.nber.org/papers/w16662.pdf
File-Format: application/pdf
Publication-Status: published as E.Helpman, O.Itskhoki, S. Redding, Trade and labor market outcomes, in Daron Acemoglu, Manuel Arellano and Eddie Dekel (eds.), Advances in Economics and Econometrics: Theory and Application. Tenth World Congress , Volume II: Applied Economics (Cambridge: Cambridge University Press), 2013.
Abstract: This paper reviews a new framework for analyzing the interrelationship between inequality, unemployment, labor market frictions, and foreign trade. This framework emphasizes firm heterogeneity and search and matching frictions in labor markets. It implies that the opening of trade may raise inequality and unemployment, but always raises welfare. Unilateral reductions in labor market frictions increase a country's welfare, can raise or reduce its unemployment rate, yet always hurt the country's trade partner. Unemployment benefits can alleviate the distortions in a country's labor market in some cases but not in others, but they can never implement the constrained Pareto optimal allocation. We characterize the set of optimal policies, which require interventions in product and labor markets.
Handle: RePEc:nbr:nberwo:16662
Template-Type: ReDIF-Paper 1.0
Title: Jockeying for Position: Strategic High School Choice Under Texas' Top Ten Percent Plan
Classification-JEL: D10; H31; H73; I28; J60; J78
Author-Name: Julie Berry Cullen
Author-Person: pcu44
Author-Name: Mark C. Long
Author-Person: plo487
Author-Name: Randall Reback
Author-Person: pre97
Note: CH ED LS PE
Number: 16663
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16663
File-URL: http://www.nber.org/papers/w16663.pdf
File-Format: application/pdf
Publication-Status: published as Cullen, Julie Berry & Long, Mark C. & Reback, Randall, 2013. "Jockeying for position: Strategic high school choice under Texas' top ten percent plan," Journal of Public Economics, Elsevier, vol. 97(C), pages 32-48.
Abstract: Beginning in 1998, all students in the state of Texas who graduated in the top ten percent of their high school classes were guaranteed admission to any in-state public higher education institution, including the flagships. While the goal of this policy is to improve college access for disadvantaged and minority students, the use of a school-specific standard to determine eligibility could have unintended consequences. Students may increase their chances of being in the top ten percent by choosing a high school with lower-achieving peers. Our analysis of students' school transitions between 8th and 10th grade three years before and after the policy change reveals that this incentive influences enrollment choices in the anticipated direction. Among the subset of students with both motive and opportunity for strategic high school choice, as many as 25 percent enroll in a different high school to improve the chances of being in the top ten percent. Strategic students tend to choose the neighborhood high school in lieu of more competitive magnet schools and, regardless of own race, typically displace minority students from the top ten percent pool. The net effect of strategic behavior is to slightly decrease minority students' representation in the pool.
Handle: RePEc:nbr:nberwo:16663
Template-Type: ReDIF-Paper 1.0
Title: Long-run Impacts of School Desegregation & School Quality on Adult Attainments
Classification-JEL: I00; I21; I28; J15
Author-Name: Rucker C. Johnson
Note: CH LS
Number: 16664
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16664
File-URL: http://www.nber.org/papers/w16664.pdf
File-Format: application/pdf
Abstract: This paper investigates the long-run impacts of court-ordered school desegregation on an array of adult socioeconomic and health outcomes. The study analyzes the life trajectories of children born between 1945 and 1968, and followed through 2013, using the Panel Study of Income Dynamics (PSID). The PSID data are linked with multiple data sources that describe the neighborhood attributes, school quality resources, and coincident policies that prevailed at the time these children were growing up. I exploit quasi-random variation in the timing of initial court orders, which generated differences in the timing and scope of the implementation of desegregation plans during the 1960s, 70s, and 80s. Event study analyses as well as 2SLS and sibling-difference estimates indicate that school desegregation and the accompanied increases in school quality resulted in significant improvements in adult attainments for blacks. I find that, for blacks, school desegregation significantly increased both educational and occupational attainments, college quality and adult earnings, reduced the probability of incarceration, and improved adult health status; desegregation had no effects on whites across each of these outcomes. The results suggest that the mechanisms through which school desegregation led to beneficial adult attainment outcomes for blacks include improvement in access to school resources reflected in reductions in class size and increases in per-pupil spending.
Handle: RePEc:nbr:nberwo:16664
Template-Type: ReDIF-Paper 1.0
Title: Race and Home Ownership from the Civil War to the Present
Classification-JEL: N11; N12; R21
Author-Name: William J. Collins
Author-Person: pco315
Author-Name: Robert A. Margo
Author-Person: pma319
Note: DAE
Number: 16665
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16665
File-URL: http://www.nber.org/papers/w16665.pdf
File-Format: application/pdf
Publication-Status: published as Collins, William J., and Robert A. Margo. 2011. "Race and Home Ownership from the End of the Civil War to the Present." American Economic Review, 101(3): 355-59.
Abstract: We present estimates of home ownership for African-American and white households from 1870 to 2007. The estimates pertain to a sample of households headed by adult men participating in the labor force but the substantive findings are unchanged if the analysis is extended to all households. Over the entire period African-American households in the sample increased their home ownership rate by 46 percentage points, whereas the rate for white households increased by 20 percentage points. Thus, in the long run, the racial gap declined by 26 percentage points. Remarkably, 25 of the 26 point long-run narrowing occurred between 1870 and 1910. Since 1910, both white and black households have increased their rates of homeownership but the long-run growth in levels has been similar for both groups, and therefore the racial gap measured in percentage points was approximately constant over the past century.
Handle: RePEc:nbr:nberwo:16665
Template-Type: ReDIF-Paper 1.0
Title: Trade and the Global Recession
Classification-JEL: E3; F1; F4
Author-Name: Jonathan Eaton
Author-Person: pea5
Author-Name: Samuel Kortum
Author-Person: pko74
Author-Name: Brent Neiman
Author-Person: pne85
Author-Name: John Romalis
Note: EFG IFM ITI PR
Number: 16666
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16666
File-URL: http://www.nber.org/papers/w16666.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Eaton & Samuel Kortum & Brent Neiman & John Romalis, 2016. "Trade and the Global Recession," American Economic Review, American Economic Association, vol. 106(11), pages 3401-3438, November.
Abstract: We develop a dynamic multi-country general equilibrium model to investigate forces acting on the global economy during the Great Recession and ensuing recovery. Our multi-sector framework accounts completely for countries' trade, investment, production, and GDPs in terms of different sets of shocks. Applying the model to 21 countries, we investigate the 29 percent drop in world trade in manufactures during 2008-2009. A shift in final spending away from tradable sectors, largely caused by declines in durables investment efficiency, account for most of the collapse in trade relative to GDP. Shocks to trade frictions, productivity, and demand play minor roles.
Handle: RePEc:nbr:nberwo:16666
Template-Type: ReDIF-Paper 1.0
Title: Kosher Pork
Classification-JEL: D72; E62; H40
Author-Name: Allan Drazen
Author-Person: pdr25
Author-Name: Ethan Ilzetzki
Author-Person: pil21
Note: IFM POL
Number: 16667
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16667
File-URL: http://www.nber.org/papers/w16667.pdf
File-Format: application/pdf
Publication-Status: published as Allan Drazen & Ethan Ilzetzki, 2023. "Kosher Pork," Journal of Public Economics, vol 227.
Abstract: Both conventional wisdom and leading academic research view pork barrel spending as antithetical to responsible policymaking in times of crisis. In this paper we present an alternative view. When agents are heterogeneous in their ideology and in their information about the economic situation, allocation of pork may enable passage of legislation appropriate to a "crisis" that might otherwise not pass. Pork "greases the legislative wheels" not by bribing legislators to accept legislation they view as harmful, but by conveying information about the necessity of policy change, where it may be impossible to convey such information in the absence of pork. Pork may be used for this function in situations where all legislators would agree to forgo pork under full information. Moreover, pork will be observed when the public good is most valuable precisely because it is valuable and the informed agenda setter wants to convey this information.
Handle: RePEc:nbr:nberwo:16667
Template-Type: ReDIF-Paper 1.0
Title: International Happiness
Classification-JEL: I1; I3
Author-Name: David G. Blanchflower
Author-Person: pbl22
Author-Name: Andrew J. Oswald
Note: EH LS
Number: 16668
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16668
File-URL: http://www.nber.org/papers/w16668.pdf
File-Format: application/pdf
Publication-Status: published as With Andrew Oswald, 'International happ iness: a new view on the measure of performance', Academy of Management Perspectives, February, pp. 1-17.
Abstract: This paper describes the findings from a new, and intrinsically interdisciplinary, literature on happiness and human well-being. The paper focuses on international evidence. We report the patterns in modern data; we discuss what has been persuasively established and what has not; we suggest paths for future research. Looking ahead, our instinct is that this social-science research avenue will gradually merge with a related literature -- from the medical, epidemiological, and biological sciences -- on biomarkers and health. Nevertheless, we expect that intellectual convergence to happen slowly.
Handle: RePEc:nbr:nberwo:16668
Template-Type: ReDIF-Paper 1.0
Title: Health Insurance Mandates, Mammography, and Breast Cancer Diagnoses
Classification-JEL: I1; I18
Author-Name: Marianne P. Bitler
Author-Person: pbi12
Author-Name: Christopher S. Carpenter
Author-Person: pca802
Note: EH
Number: 16669
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16669
File-URL: http://www.nber.org/papers/w16669.pdf
File-Format: application/pdf
Publication-Status: published as Marianne P. Bitler & Christopher S. Carpenter, 2016. "Health Insurance Mandates, Mammography, and Breast Cancer Diagnoses," American Economic Journal: Economic Policy, American Economic Association, vol. 8(3), pages 39-68, August.
Abstract: We examine the effects of state health insurance mandates requiring coverage of screening mammograms. We find robust evidence that mammography mandates significantly increased mammography screenings by 4.5-25 percent. Effects are larger for women with less than a high school degree in states that ban deductibles, a policy similar to a provision of federal health reform that eliminates cost-sharing for preventive care. We also find that mandates increased detection of early stage in-situ pre-cancers. Finally, we find a substantial proportion of the increased screenings were attributable to mandates that are not consistent with current recommendations of the American Cancer Society.
Handle: RePEc:nbr:nberwo:16669
Template-Type: ReDIF-Paper 1.0
Title: Tax Competition and Migration: The Race-to-the-Bottom Hypothesis Revisited
Classification-JEL: F2; H2
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Efraim Sadka
Author-Person: psa492
Note: IFM
Number: 16670
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16670
File-URL: http://www.nber.org/papers/w16670.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: Oates reminds us that tax competition among localities in the presence of capital mobility, may lead to inefficiently low tax rates (and benefits). In contrast, the Tiebout paradigm suggests that tax competition yields an efficient outcome, so that there are no gains from tax coordination. This paper demonstrates that when a group of host countries faces an upward supply of migrants, labor and capital income tax rate under competition are higher than under tax coordination, due to a fiscal externality.
Handle: RePEc:nbr:nberwo:16670
Template-Type: ReDIF-Paper 1.0
Title: The War at Home: Effects of Vietnam-Era Military Service on Post-War Household Stability
Classification-JEL: H56; J12
Author-Name: Dalton Conley
Author-Name: Jennifer Heerwig
Note: CH LS PE
Number: 16671
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16671
File-URL: http://www.nber.org/papers/w16671.pdf
File-Format: application/pdf
Publication-Status: published as Conley, D. and J. Heerwig. 2011. “The War at Ho me: Effects of Vietnam-Era Military Service on Postwar Household Stability.” : 350–American Economic Review (Papers and Proceedings) . 101: 350-54.
Abstract: Prior researchers have deployed the Vietnam-era draft lottery as an instrument to estimate causal effects of military service on health and income. This research has shown that effects of veteran status on mortality and earnings that appeared shortly after the war seem to have dissipated by 2000. While these are important outcomes to economists, by focusing on them, researchers may be neglecting an area of life that could be more sensitive to the psychological effects of military service: household and family life. In the present study we use the same IV approach to model the causal impact of Vietnam- era military service on four novel outcomes: residential stability, marital stability, housing tenure and extended family living arrangements. In analysis of the 2000 U.S. Census and the 2005 American Community Survey, we find that veteran status has no effect on housing tenure or residential stability. However, in the ACS sample, being a veteran appears to lower the likelihood of marital disruption, and results for extended family living arrangements appear to change signs across the two samples. Meanwhile, results tend to be strongest for whites.
Handle: RePEc:nbr:nberwo:16671
Template-Type: ReDIF-Paper 1.0
Title: Gravity Chains: Estimating Bilateral Trade Flows When Parts And Components Trade Is Important
Classification-JEL: F1; F15
Author-Name: Richard Baldwin
Author-Person: pba124
Author-Name: Daria Taglioni
Author-Person: pta176
Note: ITI
Number: 16672
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16672
File-URL: http://www.nber.org/papers/w16672.pdf
File-Format: application/pdf
Publication-Status: published as Daria Taglioni & Richard Baldwin, 2014. "Gravity chains: Estimating bilateral trade flows when parts and components trade is important," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(2), pages 61-82, November.
Abstract: Trade is measured on a gross sales basis while GDP is measured on a net sales basis, i.e. value added. The rapid internationalisation of production in the last two decades has meant that gross trade flows are increasingly unrepresentative of the value added flows. This fact has important implications for the estimation of the gravity equation. We present empirical evidence that the standard gravity equation performs poorly by some measures when it is applied to bilateral flows where parts and components trade is important. We also provide a simple theoretical foundation for a modified gravity equation that is suited to explaining trade where international supply chains are important.
Handle: RePEc:nbr:nberwo:16672
Template-Type: ReDIF-Paper 1.0
Title: Is Being in School Better? The Impact of School on Children's BMI When Starting Age is Endogenous
Classification-JEL: I12; I21
Author-Name: Patricia M. Anderson
Author-Name: Kristin F. Butcher
Author-Person: pbu245
Author-Name: Elizabeth U. Cascio
Author-Person: pca757
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Note: CH EH
Number: 16673
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16673
File-URL: http://www.nber.org/papers/w16673.pdf
File-Format: application/pdf
Publication-Status: published as Anderson, Patricia M. & Butcher, Kristin F. & Cascio, Elizabeth U. & Schanzenbach, Diaane Whitmore, 2011. "Is Being in School Better? The Impact of School on Children's BMI When Starting Age is Endogeneous" Journal of Health Economics, Elsevier, vol. 30(5), 977-986, September.
Abstract: In this paper, we investigate the impact of attending school on body weight and obesity. We use school starting age cutoff dates to compare weight outcomes for similar age children with different years of school exposure. As is the case with academic outcomes, school exposure is related to unobserved determinants of weight outcomes because some families choose to have their child start school late (or early). If one does not account for this endogeneity, it appears that an additional year of school exposure results in a greater BMI and a higher probability of being overweight or obese. When actual exposure is instrumented with expected exposure based on school starting dates and birthday, the significant positive effects disappear, and most point estimates become negative and insignificant. However, for children not eating the school lunch, there is a significant negative effect on the probability of being overweight.
Handle: RePEc:nbr:nberwo:16673
Template-Type: ReDIF-Paper 1.0
Title: The Role of Currency Realignments in Eliminating the US and China Current Account Imbalances
Classification-JEL: F3; F32; F4
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: IFM
Number: 16674
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16674
File-URL: http://www.nber.org/papers/w16674.pdf
File-Format: application/pdf
Publication-Status: published as Martin Feldstein, 2011. "The role of currency realignments in eliminating the US and China current account imbalances," Journal of Policy Modeling, vol 33(5), pages 731-736.
Abstract: The high level of current account imbalances continues to be a major focus of international concern. In this paper I suggest why public and private actions in the United States and China are now likely to cause the current account imbalances in those countries to shrink and perhaps even to disappear in the next few years. If that happens, it will eliminate the largest current account imbalances in the global economy. The United States now has a current account deficit of about $500 billion or 3.5 percent of US GDP. China has a current account surplus of about $300 billion or 6 percent of its GDP. Although natural market forces should resolve such imbalances without the need for specific government policies, the government actions in both countries have actually contributed to their persistence and prevented market forces from correcting the problem. That may be about to change.
Handle: RePEc:nbr:nberwo:16674
Template-Type: ReDIF-Paper 1.0
Title: The Drawdown of Personal Retirement Assets
Classification-JEL: D14; E21; H30; 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: 16675
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16675
File-URL: http://www.nber.org/papers/w16675.pdf
File-Format: application/pdf
Abstract: How households draw down their balances in personal retirement accounts (PRAs) such as 401(k) plans and IRAs can have an important effect on retirement income security and on federal income tax revenues. This paper examines the withdrawal behavior of retirement-age households in the SIPP and finds a modest rate of withdrawals prior to the age of 70½, the age at which required minimum distributions (RMDs) must begin. In a typical year, only seven percent of PRA-owning households between the ages of 60 and 69 take an annual distribution of more than ten percent of their PRA balance, and only eighteen percent make any withdrawals at all. For these households, annual withdrawals represent about two percent of account balances. The rate of distributions rises sharply after age 70½, with annual withdrawals of about five percent per year. During the period we study, the average rate of return on account balances exceeded this withdrawal rate, so average PRA balances continued to grow through at least age 85. Our findings suggest that households tend to preserve PRA assets, perhaps to self-insure against large and uncertain late-life expenses, and that RMD rules have important effects on withdrawal patterns.
Handle: RePEc:nbr:nberwo:16675
Template-Type: ReDIF-Paper 1.0
Title: Globalization, Governance, and the Returns to Cross-Border Acquisitions
Classification-JEL: G31; G32; G34
Author-Name: Jesse Ellis
Author-Name: Sara B. Moeller
Author-Name: Frederik P. Schlingemann
Author-Person: psc684
Author-Name: René M. Stulz
Note: CF
Number: 16676
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16676
File-URL: http://www.nber.org/papers/w16676.pdf
File-Format: application/pdf
Abstract: Using a sample of control cross-border acquisitions from 61 countries from 1990 to 2007, we find that acquirers from countries with better governance gain more from such acquisitions and their gains are higher when targets are from countries with worse governance. Other acquirer country characteristics are not consistently related to acquisition gains. For instance, the anti-self-dealing index of the acquirer has opposite associations with acquirer returns depending on whether the acquisition of a public firm is paid for with cash or equity. Strikingly, global effects in acquisition returns are at least as important as acquirer country effects. First, the acquirer's industry and the year of the acquisition explain more of the stock-price reaction than the country of the acquirer. Second, for acquisitions of private firms or subsidiaries, acquirers gain more when acquisition returns are high for acquirers from other countries. We find strong evidence that better alignment of interests between insiders and minority shareholders is associated with greater acquirer returns and weaker evidence that this effect mitigates the adverse impact of poor country governance.
Handle: RePEc:nbr:nberwo:16676
Template-Type: ReDIF-Paper 1.0
Title: U.S. International Equity Investment and Past and Prospective Returns
Classification-JEL: F21; G11; G15
Author-Name: Stephanie E. Curcuru
Author-Name: Charles P. Thomas
Author-Person: pth302
Author-Name: Francis E. Warnock
Author-Name: Jon Wongswan
Note: IFM
Number: 16677
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16677
File-URL: http://www.nber.org/papers/w16677.pdf
File-Format: application/pdf
Publication-Status: published as Curcuru, Stephanie E., Charles P. Thomas, Francis E. Warnock, and Jon Wongswan. 2011. "US International Equity Investment and Past and Prospective Returns." American Economic Review, 101(7): 3440–55.
Abstract: Counter to extant stylized facts, using newly available data on country allocations in U.S. investors' foreign equity portfolios we find that (i) U.S. investors do not exhibit returns-chasing behavior, but, consistent with partial portfolio rebalancing, tend to sell past winners; and (ii) U.S. investors increase portfolio weights on a country's equity market just prior to its strong performance, behavior inconsistent with an informational disadvantage. Over the past two decades, U.S. investors' foreign equity portfolios outperformed a value-weighted foreign benchmark by 160 basis points per year.
Handle: RePEc:nbr:nberwo:16677
Template-Type: ReDIF-Paper 1.0
Title: Economics, History, and Causation
Classification-JEL: C01; C21; C31; G0; M2; N0
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Bernard Yeung
Note: CF
Number: 16678
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16678
File-URL: http://www.nber.org/papers/w16678.pdf
File-Format: application/pdf
Publication-Status: published as Morck, Randall & Bernard Yeung. 2011. Economics, History, and Causation. Business History Review 85 : pp 39-63
Abstract: Economics and history both strive to understand causation: economics using instrumental variables econometrics and history by weighing the plausibility of alternative narratives. Instrumental variables can lose value with repeated use because of an econometric tragedy of the commons bias: each successful use of an instrument potentially creates an additional latent variable bias problem for all other uses of that instrument - past and future. Economists should therefore consider historians' approach to inferring causality from detailed context, the plausibility of alternative narratives, external consistency, and recognition that free will makes human decisions intrinsically exogenous.
Handle: RePEc:nbr:nberwo:16678
Template-Type: ReDIF-Paper 1.0
Title: A New Control Function Approach for Non-Parametric Regressions with Endogenous Variables
Classification-JEL: C14
Author-Name: Kyoo il Kim
Author-Person: pki456
Author-Name: Amil Petrin
Note: TWP
Number: 16679
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16679
File-URL: http://www.nber.org/papers/w16679.pdf
File-Format: application/pdf
Abstract: When the endogenous variable enters the structural equation non-parametrically the linear Instrumental Variable (IV) estimator is no longer consistent. Non-parametric IV (NPIV) can be used but it requires one to impose restrictions during estimation to make the problem well-posed. The non-parametric control function estimator of Newey, Powell, and Vella (1999) (NPV-CF) is an alternative approach that uses the residuals from the conditional mean decomposition of the endogenous variable as controls in the structural equation. While computationally simple identification relies upon independence between the instruments and the expected value of the structural error conditional on the controls, which is hard to motivate in many economic settings including estimation of returns to education, production functions, and demand or supply elasticities. We develop an estimator for non-linear and non-parametric regressions that maintains the simplicity of the NPV-CF estimator but allows the conditional expectation of the structural error to depend on both the control variables and the instruments. Our approach combines the conditional moment restrictions (CMRs) from NPIV with the controls from NPV-CF setting. We show that the CMRs place shape restrictions on the conditional expectation of the error given instruments and controls that are sufficient for identification. When sieves are used to approximate both the structural function and the control function our estimator reduces to a series of Least Squares regressions. Our monte carlos are based on the economic settings suggested above and illustrate that our new estimator performs well when the NPV-CF estimator is biased. Our empirical example replicates NPV-CF and we reject the maintained assumption of the independence of the instruments and the expected value of the structural error conditional on the controls in their setting.
Handle: RePEc:nbr:nberwo:16679
Template-Type: ReDIF-Paper 1.0
Title: Best Prices
Classification-JEL: E3; E31; L11; L16
Author-Name: Judith A. Chevalier
Author-Person: pch151
Author-Name: Anil K. Kashyap
Author-Person: pka35
Note: EFG IO ME
Number: 16680
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16680
File-URL: http://www.nber.org/papers/w16680.pdf
File-Format: application/pdf
Abstract: We explore the role of strategic price-discrimination by retailers for price determination and inflation dynamics. We model two types of customers, "loyals" who buy only one brand and do not strategically time purchases, and "shoppers" who seek out low-priced products both across brands and across time. Shoppers always pay the lowest price available, the "best price". Retailers in this setting optimally choose long periods of constant regular prices punctuated by frequent temporary sales. Supermarket scanner data confirm the model's predictions: the average price paid is closely approximated by a weighted average of the fixed weight average list price and the "best price". In contrast to standard menu cost models, our model implies that sales are an essential part of the price plan and the number and frequency of sales may be an important mechanism for adjustment to shocks. We conclude that our "best price" construct provides a tractable input for constructing price series.
Handle: RePEc:nbr:nberwo:16680
Template-Type: ReDIF-Paper 1.0
Title: Stochastic Growth in the United States and Euro Area
Classification-JEL: E32; F41; F43; O41; O47
Author-Name: Peter N. Ireland
Author-Person: pir1
Note: ME
Number: 16681
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16681
File-URL: http://www.nber.org/papers/w16681.pdf
File-Format: application/pdf
Publication-Status: published as Peter N. Ireland, 2013. "Stochastic Growth In The United States And Euro Area," Journal of the European Economic Association, European Economic Association, vol. 11(1), pages 1-24, 02.
Abstract: This paper estimates, using data from the United States and Euro Area, a two-country stochastic growth model in which both neutral and investment-specific technology shocks are nonstationary but cointegrated across economies. The results point to large and persistent swings in productivity, both favorable and adverse, originating in the US but not transmitted to the EA. More specifically, the results suggest that while the EA missed out on the period of rapid investment-specific technological change enjoyed in the US during the 1990s, it also escaped the stagnation in neutral technological progress that plagued the US in the 1970s.
Handle: RePEc:nbr:nberwo:16681
Template-Type: ReDIF-Paper 1.0
Title: A Dynamic Theory of Resource Wars
Classification-JEL: F00; O1
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Aleh Tsyvinski
Author-Name: Pierre Yared
Author-Person: pya107
Note: EFG POL
Number: 16682
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16682
File-URL: http://www.nber.org/papers/w16682.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Mikhail Golosov & Aleh Tsyvinski & Pierre Yared, 2012. "A Dynamic Theory of Resource Wars," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 283-331.
Abstract: We develop a dynamic theory of resource wars and study the conditions under which such wars can be prevented. The interaction between the scarcity of resources and the incentives for war in the presence of limited commitment is at the center of our theory. We show that a key parameter determining the incentives for war is the elasticity of demand. Our first result identifies a novel externality that can precipitate war: price-taking firms fail to internalize the impact of their extraction on military action. In the case of inelastic resource demand, war incentives increase over time and war may become inevitable. Our second result shows that in some situations, regulation of prices and quantities by the resource-rich country can prevent war, and when this is the case, there will also be intertemporal distortions. In particular, resource extraction will tend to be slower than that prescribed by the Hotelling rule, which is the rate of extraction in the competitive environment. Our third result is that, due to limited commitment, such regulation can also precipitate war in some circumstances in which war is avoided in the competitive environment.
Handle: RePEc:nbr:nberwo:16682
Template-Type: ReDIF-Paper 1.0
Title: The Diffusion of Scientific Knowledge Across Time and Space: Evidence from Professional Transitions for the Superstars of Medicine
Classification-JEL: O33
Author-Name: Pierre Azoulay
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Bhaven N. Sampat
Author-Person: psa1696
Note: PR
Number: 16683
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16683
File-URL: http://www.nber.org/papers/w16683.pdf
File-Format: application/pdf
Publication-Status: published as The Diffusion of Scientific Knowledge across Time and Space: Evidence from Professional Transitions for the Superstars of Medicine, Pierre Azoulay, Joshua S. Graff Zivin, Bhaven N. Sampat. in The Rate and Direction of Inventive Activity Revisited, Lerner and Stern. 2012
Abstract: Are scientific knowledge flows embodied in individuals, or "in the air"? To answer this question, we measure the effect of labor mobility in a sample of 9,483 elite academic life scientists on the citation trajectories associated with individual articles (resp. patents) published (resp. granted) before the scientist moved to a new institution. We find that article-to-article citations from the scientific community at the superstar's origin location are barely affected by their departure. In contrast, article-to-patent citations, and especially patent-to-patent citations, decline at the origin location following a star's departure, suggesting that spillovers from academia to industry are not completely disembodied. We also find that article-to-article citations at the superstar's destination location markedly increase after they move. Our results suggest that, to be realized, knowledge flows to industry may require more face-to-face interaction than those to academics. Moreover, to the extent that academic scientists do not internalize the effect of their location decisions on the circulation of ideas, our results raise the intriguing possibility that barriers to labor mobility in academic science limit the recombination of individual bits of knowledge, resulting in a suboptimal rate of scientific exploration.
Handle: RePEc:nbr:nberwo:16683
Template-Type: ReDIF-Paper 1.0
Title: Consumer Spending and the Economic Stimulus Payments of 2008
Classification-JEL: D12; D14; D91; E21; E62; E65; H24; H31
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Author-Name: Nicholas S. Souleles
Author-Person: pso104
Author-Name: David S. Johnson
Author-Name: Robert McClelland
Author-Person: pmc304
Note: EFG ME PE
Number: 16684
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16684
File-URL: http://www.nber.org/papers/w16684.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan A. Parker & Nicholas S. Souleles & David S. Johnson & Robert McClelland, 2013. "Consumer Spending and the Economic Stimulus Payments of 2008," American Economic Review, American Economic Association, vol. 103(6), pages 2530-53, October.
Abstract: We measure the response of household spending to the economic stimulus payments (ESPs) disbursed in mid-2008, using special questions added to the Consumer Expenditure Survey and variation arising from the randomized timing of when the payments were disbursed. We find that, on average, households spent about 12-30% (depending on the specification) of their stimulus payments on nondurable expenditures during the three-month period in which the payments were received. Further, there was also a substantial and significant increase in spending on durable goods, in particular vehicles, bringing the average total spending response to about 50-90% of the payments. Relative to research on the 2001 tax rebates, these spending responses are estimated with greater precision using the randomized timing variation. The estimated responses are substantial and significant for older, lower-income, and home-owning households. We find little evidence that the propensity to spend varies with the method of disbursement (paper check versus electronic transfer).
Handle: RePEc:nbr:nberwo:16684
Template-Type: ReDIF-Paper 1.0
Title: Foreclosures, House Prices, and the Real Economy
Classification-JEL: E21; E32; R31
Author-Name: Atif Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: EFG
Number: 16685
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16685
File-URL: http://www.nber.org/papers/w16685.pdf
File-Format: application/pdf
Publication-Status: published as Atif Mian & Amir Sufi & Francesco Trebbi, 2015. "Foreclosures, House Prices, and the Real Economy," Journal of Finance, American Finance Association, vol. 70(6), pages 2587-2634, December.
Abstract: States without a judicial requirement for foreclosures are twice as likely to foreclose on delinquent homeowners. Comparing zip codes close to state borders with differing foreclosure laws, we show that foreclosure propensity and housing inventory jump discretely as one enters non-judicial states. There is no jump in other homeowner attributes such as credit scores, income, or education levels. The increase in foreclosure rates in non-judicial states persists for at least five years. Using the judicial / non-judicial law as an instrument for foreclosures, we show that foreclosures lead to a large decline in house prices, residential investment, and consumer demand.
Handle: RePEc:nbr:nberwo:16685
Template-Type: ReDIF-Paper 1.0
Title: Rebalancing and the Chinese VAT: Some Numerical Simulation Results
Classification-JEL: F1; F10; F13; F17; F4; F47
Author-Name: Chunding Li
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 16686
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16686
File-URL: http://www.nber.org/papers/w16686.pdf
File-Format: application/pdf
Publication-Status: published as LI, Chunding & WHALLEY, John, 2012. "Rebalancing and the Chinese VAT: Some numerical simulation results," China Economic Review, Elsevier, vol. 23(2), pages 316-324.
Abstract: This paper presents numerical simulation results that suggest that China can both reduce its trade imbalance and receive welfare benefits by switching the value added tax (VAT) regime from the current destination principle to an origin principle. With the tax on exports exceeding that no longer collected on imports, revenues rise and exports fall. VAT regime switching is thus a possibility for China to receive a double benefit, rebalancing trade with a welfare gain. This has implications for present G20 discussions on finding ways to adjust global trade imbalances. Under a destination principle, imports are taxed but input taxes are rebated on exports (as currently). Under an origin basis imports are not taxed, but no export rebates are given. Previous VAT literature stresses the neutrality of tax basis switches, which simply reflect moving between consumption and production taxes, but neutrality only holds when trade is balanced. In the unbalanced trade case for countries with a trade surplus, such as China, an origin basis offers a lower tax rate on an equal yield basis and reduced exports. We use a two country endogenous trade imbalance general equilibrium global trade model with endogenous factor supply, a fixed exchange rate and a non-accommodative monetary policy structure which supports the Chinese trade imbalance. We calibrate model parameters to 2008 data and simulate counterfactual equilibria for VAT tax basis switches in which the trade imbalance changes. Our results suggest that given China's trade surplus VAT regime switching to an origin can decrease China's trade surplus by over 50%, and additionally increase Chinese and world welfare. The rest of the world's production and welfare improves simultaneously.
Handle: RePEc:nbr:nberwo:16686
Template-Type: ReDIF-Paper 1.0
Title: Letting Down the Team? Evidence of Social Effects of Team Incentives
Classification-JEL: B49; C93; J01; J33
Author-Name: Philip Babcock
Author-Name: Kelly Bedard
Author-Person: pbe420
Author-Name: Gary Charness
Author-Person: pch205
Author-Name: John Hartman
Author-Name: Heather Royer
Author-Person: pro423
Note: EH
Number: 16687
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16687
File-URL: http://www.nber.org/papers/w16687.pdf
File-Format: application/pdf
Abstract: This paper estimates social effects of incentivizing people in teams. In two field experiments featuring exogenous team formation and opportunities for repeated social interactions, we find large team effects that operate through social channels. The team compensation system induced agents to choose effort as if they valued a marginal dollar of compensation for their teammate from two-thirds as much (in one study) to twice as much as they valued a dollar of their own compensation (in the other study). We conclude that social effects of monetary team incentives exist and can induce effort at lower cost than through direct individual payment.
Handle: RePEc:nbr:nberwo:16687
Template-Type: ReDIF-Paper 1.0
Title: Did Doubling Reserve Requirements Cause the Recession of 1937-1938? A Microeconomic Approach
Classification-JEL: E51; E58; G21; G28; N12; N22
Author-Name: Charles W. Calomiris
Author-Person: pca421
Author-Name: Joseph Mason
Author-Name: David Wheelock
Note: DAE EFG ME
Number: 16688
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16688
File-URL: http://www.nber.org/papers/w16688.pdf
File-Format: application/pdf
Abstract: In 1936-37, the Federal Reserve doubled the reserve requirements imposed on member banks. Ever since, the question of whether the doubling of reserve requirements increased reserve demand and produced a contraction of money and credit, and thereby helped to cause the recession of 1937-1938, has been a matter of controversy. Using microeconomic data to gauge the fundamental reserve demands of Fed member banks, we find that despite being doubled, reserve requirements were not binding on bank reserve demand in 1936 and 1937, and therefore could not have produced a significant contraction in the money multiplier. To the extent that increases in reserve demand occurred from 1935 to 1937, they reflected fundamental changes in the determinants of reserve demand and not changes in reserve requirements.
Handle: RePEc:nbr:nberwo:16688
Template-Type: ReDIF-Paper 1.0
Title: Partnership fragility and credit costs
Classification-JEL: K20; N21; N41
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Note: DAE
Number: 16689
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16689
File-URL: http://www.nber.org/papers/w16689.pdf
File-Format: application/pdf
Abstract: Economic teams, including the business partnership, are created to exploit gains from cooperation, but teams also fall prey to shirking and other opportunistic behaviors, which lead to their dissolution. If team production is partly financed with debt, the untimely dissolution of partnerships exposes creditors to default risks that they will price into debt contracts. This paper explores these two features of the nineteenth-century business partnership and finds: (1) partnerships were short-lived teams (two years or less, on average) and larger partnerships were shorter-lived yet; and (2) compared to proprietorship, partnerships paid higher interest rates on short-term debt, after controlling for loan size, maturity, and other observable features. Although there were potential gains from team production, potential opportunism raised the costs of partnerships.
Handle: RePEc:nbr:nberwo:16689
Template-Type: ReDIF-Paper 1.0
Title: Does Decreased Access to Emergency Departments Affect Patient Outcomes? Analysis of AMI Population 1996-2005
Classification-JEL: I1; I11
Author-Name: Yu-Chu Shen
Author-Name: Renee Y. Hsia
Note: EH
Number: 16690
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16690
File-URL: http://www.nber.org/papers/w16690.pdf
File-Format: application/pdf
Publication-Status: published as Shen, Y. and Hsia, RY. 2012. Does Decreased Access to Emergency Departments Affect Patient Outcomes? Analysis of AMI Population 1996-2005. Health Services Research, 47(1, Part 1): 188-210.
Abstract: We analyze whether decreased emergency department access (measured by increased driving time to the nearest ED) results in adverse patient outcomes or changes in the patient health profile for patients suffering from acute myocardial infarction. Data sources include 100% Medicare Provider Analysis and Review, AHA hospital annual surveys, Medicare hospital cost reports, and longitude and latitude information for 1995-2005. We define four ED access change categories and estimate a zip codes fixed-effects regression models on the following AMI outcomes: time-specific mortality rates, age, and probability of PTCA on the day of admission. We find a small increase in 30-day to 1-year mortality rates among patients in communities that experience <10-minute increase in driving time. Among patients in communities with >30-minute increases in driving time, we find a substantial increase in long-term mortality rates, a shift to younger ages (suggesting that the older ones die en route) and a higher probability of immediate PTCA. Most of the adverse effects disappear after the initial three-year transition window.
Handle: RePEc:nbr:nberwo:16690
Template-Type: ReDIF-Paper 1.0
Title: Matching Firms, Managers and Incentives
Classification-JEL: J24; L2
Author-Name: Oriana Bandiera
Author-Person: pba451
Author-Name: Andrea Prat
Author-Person: ppr174
Author-Name: Luigi Guiso
Author-Person: pgu58
Author-Name: Raffaella Sadun
Author-Person: psa385
Note: PR
Number: 16691
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16691
File-URL: http://www.nber.org/papers/w16691.pdf
File-Format: application/pdf
Publication-Status: published as Bandiera, Oriana, Luigi Guiso, Andrea Prat, and Raffaella Sadun. "Matching Firms, Managers, and Incentives." Journal of Labor Economics (forthcoming).
Abstract: We exploit a unique combination of administrative sources and survey data to study the match between firms and managers. The data includes manager characteristics, such as risk aversion and talent; firm characteristics, such as ownership; detailed measures of managerial practices relative to incentives, dismissals and promotions; and measurable outcomes, for the firm and for the manager. A parsimonious model of matching and incentive provision generates an array of implications that can be tested with our data. Our contribution is twofold. We disentangle the role of risk-aversion and talent in determining how firms select and motivate managers. In particular, risk-averse managers are matched with firms that offer low-powered contracts. We also show that empirical findings linking governance, incentives, and performance that are typically observed in isolation, can instead be interpreted within a simple unified matching framework.
Handle: RePEc:nbr:nberwo:16691
Template-Type: ReDIF-Paper 1.0
Title: Investigating the Dynamic Effects of Counterfeits with a Random Changepoint Simultaneous Equation Model
Classification-JEL: O34
Author-Name: Yi Qian
Author-Name: Hui Xie
Note: PR
Number: 16692
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16692
File-URL: http://www.nber.org/papers/w16692.pdf
File-Format: application/pdf
Abstract: Using a unique panel dataset and a new model, this article investigates the dynamic effects of counterfeit sales on authentic-product price dynamics. We propose a Bayesian random-changepoint simultaneous equation model that simultaneously takes into account three important features in empirical studies: (1) Endogeneity of a market entry, (2) Nonstationarity of the entry effects and (3) Heterogeneity of the firms' response behaviors. Besides accounting for the endogeneity of counterfeiting, the proposed methodology improves the estimation of dynamic effects under heterogeneous response times by firms. We identify both a temporary negative short-term effect and a stable positive long-term effect of counterfeit sales on the authentic prices. Such effect estimates are biased in the OLS model and attenuated in a standard IV model. The findings help to unify two strands of I.O. theories on the pricing effects of competition. Finally, our analysis identifies considerable heterogeneity in authentic firms' response behaviors (both response time and magnitude), and the hierarchical structure of our model enables a study of the drivers of the heterogeneity. This study casts managerial insights on effective brand protection and management strategies that can be tailored to each type of firms. The method illustrated provides a new approach to use field data to study the determinants of a firm's response time, an important dimension of management strategy. In particular, firms with more human capital or less diversification from infringed markets were faster in responding and differentiating from counterfeits. The proposed framework can be widely applied to study dynamic and heterogeneous causal effects of marketing variables.
Handle: RePEc:nbr:nberwo:16692
Template-Type: ReDIF-Paper 1.0
Title: The Buck Stops Where? The Distribution of Agricultural Subsidies
Classification-JEL: Q18
Author-Name: Barry K. Goodwin
Author-Name: Ashok K. Mishra
Author-Name: François Ortalo-Magné
Author-Person: por21
Note: PE POL
Number: 16693
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16693
File-URL: http://www.nber.org/papers/w16693.pdf
File-Format: application/pdf
Publication-Status: published as The Buck Stops Where? The Distribution of Agricultural Subsidies, Barry K. Goodwin, Ashok K. Mishra, François Ortalo-Magné. in The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, Graff Zivin and Perloff. 2012
Abstract: The U.S. has a long history of providing generous support for the agricultural sector. A recent omnibus package of farm legislation, the 2008 Farm Bill (P.L. 110-246) will provide in excess of $284 billion in financial support to U.S. agriculture over the 2008-2012 period. Commodity program payments account for $43.3 billion of this total. Our paper is concerned with the distribution of these benefits. Farm subsidies make agricultural production more profitable by increasing and stabilizing farm prices and incomes. If these benefits are expected to persist, farm land values should capture the subsidy benefits. We use a large sample of individual farm land values to investigate the extent of this capitalization of benefits. Our results confirm that subsidies have a very significant impact on farm land values and thus suggest that landowners are the real benefactors of farm programs. As land is exchanged, new owners will pay prices that reflect these benefits, leaving the benefits of farm programs in the hands of former owners that may be exiting production. Approximately 45% of U.S. farmland is operated by someone other than the owner. We report evidence that owners benefit not only from capital gains but also from lease rates which incorporate a significant portion of agricultural payments even if the farm legislation mandates that benefits must be allocated to producers. Finally, we examine rental agreements for farmers that rent land on both a cash and share basis. We find evidence that farm programs that are meant to stabilize farm prices provide a valuable insurance benefit.
Handle: RePEc:nbr:nberwo:16693
Template-Type: ReDIF-Paper 1.0
Title: Provincial and Local Governments in China: Fiscal Institutions and Government Behavior
Classification-JEL: H7; O17; O38; O53; P16; P2; P43
Author-Name: Roger H. Gordon
Author-Person: pgo95
Author-Name: Wei Li
Author-Person: pli922
Note: PE
Number: 16694
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16694
File-URL: http://www.nber.org/papers/w16694.pdf
File-Format: application/pdf
Publication-Status: published as Provincial and Local Governments in China: Fiscal Institutions and Government Behavior, Roger H. Gordon, Wei Li. in Capitalizing China, Fan and Morck. 2013
Abstract: What are the incentives faced by local officials in China? Without democratic institutions, there is no mechanism for local residents to exercise "voice". Given the hukou registration system, local residents have little opportunity to threaten "exit" if they are unhappy with local taxes and spending. This paper explores an alternative source of incentives, starting from the premise that local officials aim to maximize the jurisdiction's fiscal residual (profits), equal to local tax revenue minus expenditures on public services. In a Tiebout setting with mobile households, this objective should lead to efficient provision. What happens, though, if firms and economic activity but not people are mobile? The paper examines the incentives faced by local Chinese officials in this context, and argues that the forecasted behavior helps to explain both the successes and the problems arising from local government activity in China.
Handle: RePEc:nbr:nberwo:16694
Template-Type: ReDIF-Paper 1.0
Title: Water Quality Violations and Avoidance Behavior: Evidence from Bottled Water Consumption
Classification-JEL: H41; I18; Q53; Q58
Author-Name: Joshua Graff Zivin
Author-Person: pgr314
Author-Name: Matthew Neidell
Author-Person: pne362
Author-Name: Wolfram Schlenker
Author-Person: psc210
Note: EEE EH
Number: 16695
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16695
File-URL: http://www.nber.org/papers/w16695.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Graff Zivin & Matthew Neidell & Wolfram Schlenker, 2011. "Water Quality Violations and Avoidance Behavior: Evidence from Bottled Water Consumption," American Economic Review, American Economic Association, vol. 101(3), pages 448-53, May.
Abstract: In this paper, we examine the impact of poor water quality on avoidance behavior by estimating the change in bottled water purchases in response to drinking water violations. Using data from a national grocery chain matched with water quality violations, we find an increase in bottled water sales of 22 percent from violations due to microorganisms and 17 percent from violations due to elements and chemicals. Back-of-the envelope calculations yield costs of avoidance behavior at roughly $60 million for all nationwide violations in 2005, which likely reflects a significant understatement of the total willingness to pay to eliminate violations.
Handle: RePEc:nbr:nberwo:16695
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneity and Risk Sharing in Village Economies
Classification-JEL: D12; D14; D53; D81; D91; G11; O16
Author-Name: Pierre-André Chiappori
Author-Person: pch377
Author-Name: Krislert Samphantharak
Author-Person: psa1581
Author-Name: Sam Schulhofer-Wohl
Author-Name: Robert M. Townsend
Author-Person: pto99
Note: AP EFG
Number: 16696
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16696
File-URL: http://www.nber.org/papers/w16696.pdf
File-Format: application/pdf
Publication-Status: published as PierreâAndré Chiappori & Krislert Samphantharak & Sam SchulhoferâWohl & Robert M. Townsend, 2014. "Heterogeneity and risk sharing in village economies," Quantitative Economics, Econometric Society, vol. 5, pages 1-27, 03.
Abstract: We measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model and complement the results with a measure based on optimal portfolio choice. Among households with relatives living in the same village, full insurance cannot be rejected, suggesting that relatives provide something close to a complete-markets consumption allocation. There is substantial heterogeneity in risk preferences estimated from the full-insurance model, positively correlated in most villages with portfolio-choice estimates. The heterogeneity matters for policy: Although the average household would benefit from eliminating village-level risk, less-risk-averse households who are paid to absorb that risk would be worse off.
Handle: RePEc:nbr:nberwo:16696
Template-Type: ReDIF-Paper 1.0
Title: Meeting the Mandate for Biofuels: Implications for Land Use, Food and Fuel Prices
Classification-JEL: C6; Q4; Q5
Author-Name: Xiaoguang Chen
Author-Name: Haixiao Huang
Author-Name: Madhu Khanna
Author-Person: pkh290
Author-Name: Hayri Önal
Author-Person: pon104
Note: EEE
Number: 16697
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16697
File-URL: http://www.nber.org/papers/w16697.pdf
File-Format: application/pdf
Publication-Status: published as Meeting the Mandate for Biofuels: Implications for Land Use, Food, and Fuel Prices, Xiaoguang Chen, Haixiao Huang, Madhu Khanna, Hayri Önal. in The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, Graff Zivin and Perloff. 2012
Abstract: Biofuel production is being promoted through various policies such as mandates and tax credits. This paper uses a dynamic, spatial, multi-market equilibrium model, Biofuel and Environmental Policy Analysis Model (BEPAM), to estimate the effects of these policies on cropland allocation, food and fuel prices, and the mix of biofuels from corn and cellulosic feedstocks over the 2007-2022 period. We find that the biofuel mandate will increase corn price by 24%, reduce the price of gasoline by 8% in 2022, and increase social welfare by $122 B (0.7%) relative to Business As Usual scenario. The provision of volumetric tax credits that accompany the mandate significantly changes the mix of biofuels produced in favor of cellulosic biofuels and reduces the share of corn ethanol in the cumulative volume of biofuels produced from 50% to 10%. The tax credits reduce the adverse impact of the mandate alone on crop prices and decrease the price of biofuels. However, they impose a welfare cost of $79 B compared to the mandate alone. These results are found to be sensitive to the rate of growth of crop productivity, the costs of production of bioenergy crops, and the availability of marginal land for producing bioenergy crops.
Handle: RePEc:nbr:nberwo:16697
Template-Type: ReDIF-Paper 1.0
Title: Decreasing Delinquency, Criminal Behavior, and Recidivism by Intervening on Psychological Factors Other than Cognitive Ability: A Review of the Intervention Literature
Classification-JEL: K4
Author-Name: Patrick L. Hill
Author-Name: Brent W. Roberts
Author-Name: Jeffrey T. Grogger
Author-Person: pgr125
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: Karen Sixkiller
Note: LE
Number: 16698
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16698
File-URL: http://www.nber.org/papers/w16698.pdf
File-Format: application/pdf
Publication-Status: published as Decreasing Delinquency, Criminal Behavior, and Recidivism by Intervening on Psychological Factors Other Than Cognitive Ability: A Review of the Intervention Literature, Patrick L. Hill, Brent W. Roberts, Jeffrey T. Grogger, Jonathan Guryan, Karen Sixkiller. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: Research on the causes of delinquency has a long research history, often with an undue focus on how cognitive ability serves as the main predictor of delinquent activity. The current review examines interventions that focus on psychological factors other than cognitive ability, and discusses how several of these programs have demonstrated efficacy in reducing delinquent behavior. Our review uncovers certain themes shared by a number of effective interventions. First, these interventions tend to emphasize rigorous and consistent implementation. Second, effective interventions often incorporate the family environment. Third, several effective interventions have focused on promoting adaptive social skills. In conclusion, our review discusses the possibility that these interventions have proven efficacious in part because they promote adaptive personality trait development.
Handle: RePEc:nbr:nberwo:16698
Template-Type: ReDIF-Paper 1.0
Title: How Agricultural Biotechnology Boosts Food Supply and Accomodates Biofuels
Classification-JEL: Q1
Author-Name: Steven Sexton
Author-Person: pse643
Author-Name: David Zilberman
Author-Person: pzi8
Note: EEE
Number: 16699
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16699
File-URL: http://www.nber.org/papers/w16699.pdf
File-Format: application/pdf
Publication-Status: published as Land for Food and Fuel Production: The Role of Agricultural Biotechnology, Steven Sexton, David Zilberman. in The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, Graff Zivin and Perloff. 2012
Abstract: Increased global demand for biofuels is placing increased pressure on agricultural systems at a time when traditional sources of yield improvements have been mostly exhausted, generating concerns about the future of food prices. This paper estimates the impact of global adoption of genetically engineered (GE) seeds on food supply by exploiting the spatial and temporal variation in the adoption of GE crops to identify the average yield effect due to GE technologies among adopters. The yield gains range from 65% for GE cotton to 12.4% for soybeans and appear to be higher in the developing world than in developed countries. The authors simulate food prices during the 2008 food crisis without GE-seed-induced yield gains. Genetically engineered crops appear to play an important role in arbitrating tensions between energy production, environmental protection, and global food supplies.
Handle: RePEc:nbr:nberwo:16699
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Plant-level Resource Reallocations and Technical Progress on U.S. Macroeconomic Growth
Classification-JEL: E32; L6; O47
Author-Name: Amil Petrin
Author-Name: T. Kirk White
Author-Person: pwh3
Author-Name: Jerome P. Reiter
Note: IO PR
Number: 16700
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16700
File-URL: http://www.nber.org/papers/w16700.pdf
File-Format: application/pdf
Publication-Status: published as Amil Petrin & Jerome Reiter & Kirk White, 2011. "The Impact of Plant-level Resource Reallocations and Technical Progress on U.S. Macroeconomic Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(1), pages 3-26, January.
Abstract: We build up from the plant level an "aggregate(d)" Solow residual by estimating every U.S. manufacturing plant's contribution to the change in aggregate final demand between 1976 and 1996. Our framework uses the Petrin and Levinsohn (2010) definition of aggregate productivity growth, which aggregates plant-level changes to changes in aggregate final demand in the presence of imperfect competition and other distortions/frictions. We decompose these contributions into plant-level resource reallocations and plant-level technical efficiency changes while allowing in the estimation for 459 different production technologies, one for each 4-digit SIC code. On average we find positive aggregate productivity growth of 2.2% in this sector during this period of declining share in U.S. GDP. We find that aggregate reallocation made a larger contribution to growth than aggregate technical efficiency. Our estimates of the contribution of reallocation range from 1.7% to 2.1% per year, while our estimates of the average contribution of aggregate technical efficiency growth range from 0.2% to 0.6% per year. In terms of cyclicality, the aggregate technical efficiency component has a standard deviation that is roughly 50% to 100% larger than that of aggregate total reallocation, pointing to an important role for technical efficiency in macroeconomic fluctuations. Aggregate reallocation is negative in only 3 of the 20 years of our sample, suggesting that the movement of inputs to more highly valued activities on average plays a stabilizing role in manufacturing growth. Our results have implications for both the theoretical literature on growth and alternative indexes of aggregate productivity growth based only on technical efficiency.
Handle: RePEc:nbr:nberwo:16700
Template-Type: ReDIF-Paper 1.0
Title: Negative Equity Does Not Reduce Homeowners' Mobility
Classification-JEL: R21; R23
Author-Name: Sam Schulhofer-Wohl
Note: EFG PE
Number: 16701
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16701
File-URL: http://www.nber.org/papers/w16701.pdf
File-Format: application/pdf
Publication-Status: published as Sam Schulhofer-Wohl, 2012. "Negative equity does not reduce homeownersâ mobility," Quarterly Review, Federal Reserve Bank of Minneapolis.
Abstract: Some commentators have argued that the housing crisis may harm labor markets because homeowners who owe more than their homes are worth are less likely to move to places that have productive job opportunities. I show that, in the available data, negative equity does not make homeowners less mobile. In fact, homeowners who have negative equity are slightly more likely to move than homeowners who have positive equity. Ferreira, Gyourko and Tracy's (2010) contrasting result that negative equity reduces mobility arises because they systematically drop some negative-equity homeowners' moves from the data.
Handle: RePEc:nbr:nberwo:16701
Template-Type: ReDIF-Paper 1.0
Title: White Suburbanization and African-American Home Ownership, 1940-1980
Classification-JEL: J71; N92; R21
Author-Name: Leah Platt Boustan
Author-Person: pbo332
Author-Name: Robert A. Margo
Author-Person: pma319
Note: DAE
Number: 16702
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16702
File-URL: http://www.nber.org/papers/w16702.pdf
File-Format: application/pdf
Publication-Status: published as "A Silver Lining to White Flight? White Suburbanization and African-American Homeownership, 1940-1980," with Robert A. Margo. Journal of Urban Economics, 2013.
Abstract: Between 1940 and 1980, the homeownership rate among metropolitan African-American households increased by 27 percentage points. Nearly three-quarters of this increase occurred in central cities. We show that rising black homeownership in central cities was facilitated by the movement of white households to the suburban ring, which reduced the price of urban housing units conducive to owner-occupancy. Our OLS and IV estimates imply that 26 percent of the national increase in black homeownership over the period is explained by white suburbanization.
Handle: RePEc:nbr:nberwo:16702
Template-Type: ReDIF-Paper 1.0
Title: Six Distributional Effects of Environmental Policy
Classification-JEL: H23; Q58
Author-Name: Don Fullerton
Author-Person: pfu10
Note: EEE PE
Number: 16703
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16703
File-URL: http://www.nber.org/papers/w16703.pdf
File-Format: application/pdf
Publication-Status: published as Don Fullerton. "Six Distributional Effects of Environmental Policy" Risk Analysis (2011). Volume 31, Issue 6
Abstract: While prior literature has identified various effects of environmental policy, this note uses the example of a proposed carbon permit system to illustrate and discuss six different types of distributional effects: (1) higher prices of carbon-intensive products, (2) changes in relative returns to factors like labor, capital, and resources, (3) allocation of scarcity rents from a restricted number of permits, (4) distribution of the benefits from improvements in environmental quality, (5) temporary effects during the transition, and (6) capitalization of all those effects into prices of land, corporate stock, or house values. The note also discusses whether all six effects could be regressive, that is, whether carbon policy could place disproportionate burden on the poor.
Handle: RePEc:nbr:nberwo:16703
Template-Type: ReDIF-Paper 1.0
Title: Determinants of Foreign Direct Investment
Classification-JEL: C52; F21; F23
Author-Name: Bruce A. Blonigen
Author-Person: pbl165
Author-Name: Jeremy Piger
Author-Person: ppi14
Note: ITI
Number: 16704
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16704
File-URL: http://www.nber.org/papers/w16704.pdf
File-Format: application/pdf
Publication-Status: published as Modeling Processor Market Power and the Incidence of Agricultural Policy: A Nonparametric Approach, Rachael E. Goodhue, Carlo Russo. in The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, Graff Zivin and Perloff. 2012
Publication-Status: published as Bruce A. Blonigen & Jeremy Piger, 2014. "Determinants of foreign direct investment," Canadian Journal of Economics/Revue canadienne d'économique, vol 47(3), pages 775-812.
Abstract: Empirical studies of bilateral foreign direct investment (FDI) activity show substantial differences in specifications with little agreement on the set of covariates that are (or should be) included. We use Bayesian statistical techniques that allow one to select from a large set of candidates those variables most likely to be determinants of FDI activity. The variables with consistently high inclusion probabilities are traditional gravity variables, cultural distance factors, parent-country per capita GDP, relative labor endowments, and regional trade agreements. Variables with little support for inclusion are multilateral trade openness, host country business costs, host-country infrastructure (including credit markets), and host-country institutions. Of particular note, our results suggest that many covariates found significant by previous studies are not robust.
Handle: RePEc:nbr:nberwo:16704
Template-Type: ReDIF-Paper 1.0
Title: Implications of Population Aging for Economic Growth
Classification-JEL: J14; J15; J21; J26; O1; O4
Author-Name: David E. Bloom
Author-Person: pbl79
Author-Name: David Canning
Author-Person: pca340
Author-Name: Günther Fink
Author-Person: pfi86
Note: AG EFG LS
Number: 16705
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16705
File-URL: http://www.nber.org/papers/w16705.pdf
File-Format: application/pdf
Publication-Status: published as David E. Bloom & David Canning & Günther Fink, 2010. "Implications of population ageing for economic growth," Oxford Review of Economic Policy, Oxford University Press, vol. 26(4), pages 583-612, Winter.
Abstract: The share of the population aged 60 and over is projected to increase in nearly every country in the world during 2005-2050. Population ageing will tend to lower both labor-force participation and savings rates, thereby raising concerns about a future slowing of economic growth. Our calculations suggest that OECD countries are likely to see modest - but not catastrophic - declines in the rate of economic growth. However, behavioral responses (including greater female labor force participation) and policy reforms (including an increase in the legal age of retirement) can mitigate the economic consequences of an older population. In most non-OECD countries, declining fertility rates will cause labor-force-to-population ratios to rise as the shrinking share of young people will more than offset the skewing of adults toward the older ages. These factors suggest that population ageing will not significantly impede the pace of economic growth in developing countries.
Handle: RePEc:nbr:nberwo:16705
Template-Type: ReDIF-Paper 1.0
Title: Modeling Processor Market Power and the Incidence of Agricultural Policy: A Non-parametric Approach
Classification-JEL: C14; Q18
Author-Name: Rachael E. Goodhue
Author-Person: pgo272
Author-Name: Carlo Russo
Note: EEE IO
Number: 16706
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16706
File-URL: http://www.nber.org/papers/w16706.pdf
File-Format: application/pdf
Abstract: This paper examines interactions between market power and agricultural policy in the U.S. wheat flour milling industry using a non-parametric approach. The analysis focuses on marketing loan and pre-1986 deficiency payment programs; farmers' payments from these programs are dependent on whether or not the market price exceeds a "policy" price. It assesses if the payments trigger a change in the underlying economic behavior of the milling industry, and any resulting change in the flour-wheat price margin. The analysis compares the outcomes of using constrained and unconstrained sliced inverse regressions in order to identify the significant factors affecting millers' pricing behavior. In both cases, the link functions are then estimated using a non-parametric regression of prices on these factors. Constraining the factors in the sliced inverse regression in order to generate coefficients that are easily interpreted using economic theory does not affect the results. Based on the SIR factors, millers were able to extract an additional $0.24/cwt. of flour by increasing their marketing margins in years farmers received program payments. Based on the CIR factors, the increase in the marketing margin was $0.23/cwt. In both cases the increase was approximately 10 percent of the estimated marketing margin in years farmers received program payments.
Handle: RePEc:nbr:nberwo:16706
Template-Type: ReDIF-Paper 1.0
Title: Why Are Target Interest Rate Changes So Persistent?
Classification-JEL: E4; E5; E6
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG IFM ME
Number: 16707
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16707
File-URL: http://www.nber.org/papers/w16707.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Coibion & Yuriy Gorodnichenko, 2012. "Why Are Target Interest Rate Changes So Persistent?," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(4), pages 126-62, October.
Abstract: While the degree of policy inertia in central banks' reaction functions is a central ingredient in theoretical and empirical monetary economics, the source of the observed policy inertia in the U.S. is controversial, with tests of competing hypotheses such as interest-smoothing and persistent-shocks theories being inconclusive. This paper employs real time data; nested specifications with flexible time series structures; narratives; interest rate forecasts of the Fed, financial markets, and professional forecasters; and instrumental variables to discriminate competing explanations of policy inertia. The presented evidence strongly favors the interest-smoothing explanation and thus can help resolve a key puzzle in monetary economics.
Handle: RePEc:nbr:nberwo:16707
Template-Type: ReDIF-Paper 1.0
Title: One-node Quadrature Beats Monte Carlo: A Generalized Stochastic Simulation Algorithm
Classification-JEL: C63
Author-Name: Kenneth Judd
Author-Person: pju19
Author-Name: Lilia Maliar
Author-Name: Serguei Maliar
Note: EFG TWP
Number: 16708
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16708
File-URL: http://www.nber.org/papers/w16708.pdf
File-Format: application/pdf
Publication-Status: published as Kenneth L. Judd, Lilia Maliar and Serguei Maliar, (2011). “Numerically Stable and Accurate Stochastic Simulation Methods for Solving Dynamic Models" and "Supplement", Quantitative Economics 2, 173-210.
Abstract: In conventional stochastic simulation algorithms, Monte Carlo integration and curve fitting are merged together and implemented by means of regression. We perform a decomposition of the solution error and show that regression does a good job in curve fitting but a poor job in integration, which leads to low accuracy of solutions. We propose a generalized notion of stochastic simulation approach in which integration and curve fitting are separated. We specifically allow for the use of deterministic (quadrature and monomial) integration methods which are more accurate than the conventional Monte Carlo method. We achieve accuracy of solutions that is orders of magnitude higher than that of the conventional stochastic simulation algorithms.
Handle: RePEc:nbr:nberwo:16708
Template-Type: ReDIF-Paper 1.0
Title: Supply and Effects of Specialty Crop Insurance
Classification-JEL: D2; Q12
Author-Name: Ethan Ligon
Author-Person: pli4
Note: PR
Number: 16709
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16709
File-URL: http://www.nber.org/papers/w16709.pdf
File-Format: application/pdf
Publication-Status: published as Supply and Effects of Specialty Crop Insurance, Ethan Ligon. in The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, Graff Zivin and Perloff. 2012
Abstract: The federal government has developed a large number of programs to insure various "specialty crops" over the last two decades; a given program is peculiar to a particular county and crop. This development has been particularly notable in California, because of its size and the diversity of crops produced there. If the extension of federal crop insurance programs to cover fruit and vegetable production has affected either producer or consumer welfare, then we would expect to see this reflected in output and prices. Exploiting variation in the timing of program introduction in different locations for different crops to estimate the effect of crop insurance on the output and prices of the insured crops. We find that the supply of and demand for insurance for tree crops is much larger than for non-tree crops. Crop insurance has a small but significant negative effect on prices of insured crops. This last finding is consistent with the view that demand for such highly disaggregated commodities is likely to be highly elastic. A consequence is that crop insurance for these specialty crops has little benefit for consumers, even when it generates a large supply response.
Handle: RePEc:nbr:nberwo:16709
Template-Type: ReDIF-Paper 1.0
Title: The Design of Performance Pay in Education
Classification-JEL: I20; I28
Author-Name: Derek Neal
Note: ED LS
Number: 16710
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16710
File-URL: http://www.nber.org/papers/w16710.pdf
File-Format: application/pdf
Publication-Status: published as "The Design of Performance Pay in Education," Handbook of Economics of Education. Volume 4. 2011
Abstract: This chapter analyzes the design of incentive schemes in education while reviewing empirical studies that evaluate performance pay programs for educators. Several themes emerge. First, it is difficult to use one assessment system to create both educator performance metrics and measures of student achievement. To mitigate incentives for coaching, incentive systems should employ assessments that vary in both format and item content. Separate no-stakes assessments provide more reliable information about student achievement because they create no incentives for educators to take hidden actions that contaminate student test scores. Second, relative performance schemes are rare in education even though they are more difficult to manipulate than systems built around psychometric or subjective performance standards. Third, assessment-based incentive schemes are mechanisms that complement rather than substitute for systems that promote parental choice, e.g. vouchers and charter schools.
Handle: RePEc:nbr:nberwo:16710
Template-Type: ReDIF-Paper 1.0
Title: The Equal Environments Assumption in the Post-Genomic Age: Using Misclassified Twins to Estimate Bias in Heritability Models
Classification-JEL: I1; I21
Author-Name: Dalton Conley
Author-Name: Emily Rauscher
Note: CH ED EH
Number: 16711
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16711
File-URL: http://www.nber.org/papers/w16711.pdf
File-Format: application/pdf
Publication-Status: published as Conley, D., Rauscher, E., Dawes, C., Magnusson, P. K., & Siegal, M. L. 2013. “Heritability and the Equal Environments Assumption: Evidence from Multiple Samples of Misclassified Twins.” Behavior Genetics . 43:415-426.
Abstract: While it has long been known that genetic-environmental covariance is likely to be non-trivial and confound estimates of narrow-sense (additive) heritability for social and behavioral outcomes, there has not been an effective way to address this concern. Indeed, in a classic paper, Goldberger (1979) shows that by varying assumptions of the GE-covariance, a researcher can drive the estimated heritability of an outcome, such as IQ, down to zero or up close to one. Survey questions that attempt to measure directly the extent to which more genetically similar kin (such as monozygotic twins) also share more similar environmental conditions than, say, dizygotic twins, represent poor attempts to gauge a very complex underlying phenomenon of GE-covariance. Methods that rely on concordance between interviewer classification and self-report offer similar concerns about validity. In the present study, we take advantage of a natural experiment to address this issue from another angle: Misclassification of twin zygosity in a nationally-representative study (Add Health). Since such twins were reared under one "environmental regime of similarity" while genetically belonging to another group, this reverses the typical GE-covariance and allows us bounded estimates of heritability for a range of outcomes of interest to medical and behavioral scientists.
Handle: RePEc:nbr:nberwo:16711
Template-Type: ReDIF-Paper 1.0
Title: What Does Futures Market Interest Tell Us about the Macroeconomy and Asset Prices?
Classification-JEL: E31; E37; F31; G12; G13
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: Motohiro Yogo
Author-Person: pyo20
Note: AP IFM
Number: 16712
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16712
File-URL: http://www.nber.org/papers/w16712.pdf
File-Format: application/pdf
Publication-Status: published as Hong, Harrison & Yogo, Motohiro, 2012. "What does futures market interest tell us about the macroeconomy and asset prices?," Journal of Financial Economics, Elsevier, vol. 105(3), pages 473-490.
Abstract: Economists have traditionally viewed futures prices as fully informative about future economic activity and asset prices. We argue that open interest could be more informative than futures prices in the presence of hedging demand and limited risk absorption capacity in futures markets. We find that movements in open interest are highly pro-cyclical, correlated with both macroeconomic activity and movements in asset prices. Movements in commodity market interest predict commodity returns, bond returns, and movements in the short rate even after controlling for other known predictors. To a lesser degree, movements in open interest predict returns in currency, bond, and stock markets.
Handle: RePEc:nbr:nberwo:16712
Template-Type: ReDIF-Paper 1.0
Title: Assessing China's Top-Down Securities Markets
Classification-JEL: K2; K22; O53; O57
Author-Name: William T. Allen
Author-Name: Han Shen
Note: LE
Number: 16713
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16713
File-URL: http://www.nber.org/papers/w16713.pdf
File-Format: application/pdf
Publication-Status: published as Assessing China's Top-Down Securities Markets, William T. Allen, Han Shen. in Capitalizing China, Fan and Morck. 2013
Abstract: China's securities markets are unlike those of Amsterdam, London or New York. Those markets evolved over centuries from myriad interactions among those seeking finance on the one hand and savers seeking rewarding investments on the other. Such spontaneous securities markets did emerge throughout China in the 1980s following the start of economic liberalization, but these spontaneous markets were closed by the government in favor of new and tightly controlled exchanges established in the early 1990s in Shanghai and Shenzhen. These new markets, have been designed to and largely limited to, serving state purposes, that is to assist in the financing of the state sector of the economy. Rather than evolving in a bottom-up pattern, they are controlled, top-down securities markets. This essay reviews as of June 2010, the development of these markets, the economic functions they perform, the regulatory structure that controls and shapes them, and the governance mechanisms - legal and otherwise - that controls the management of the PRC listed companies. These markets represent a signal accomplishment of the Chinese leadership in producing in less than twenty years' modern, albeit not yet fully developed, securities markets. Whether they can be further developed to serve more basic economic role than they have been permitted to play is a question with which the essay concludes.
Handle: RePEc:nbr:nberwo:16713
Template-Type: ReDIF-Paper 1.0
Title: Forecasts in a Slightly Misspecified Finite Order VAR
Classification-JEL: C11; C22; C32
Author-Name: Ulrich K. Müller
Author-Name: James H. Stock
Author-Person: pst148
Note: TWP
Number: 16714
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16714
File-URL: http://www.nber.org/papers/w16714.pdf
File-Format: application/pdf
Abstract: We propose a Bayesian procedure for exploiting small, possibly long-lag linear predictability in the innovations of a finite order autoregression. We model the innovations as having a log-spectral density that is a continuous mean-zero Gaussian process of order 1/√T. This local embedding makes the problem asymptotically a normal-normal Bayes problem, resulting in closed-form solutions for the best forecast. When applied to data on 132 U.S. monthly macroeconomic time series, the method is found to improve upon autoregressive forecasts by an amount consistent with the theoretical and Monte Carlo calculations.
Handle: RePEc:nbr:nberwo:16714
Template-Type: ReDIF-Paper 1.0
Title: Is the Endowment Effect a Reference Effect?
Classification-JEL: C9; D11; Q26
Author-Name: Ori Heffetz
Author-Person: phe566
Author-Name: John A. List
Author-Person: pli176
Note: EEE PE
Number: 16715
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16715
File-URL: http://www.nber.org/papers/w16715.pdf
File-Format: application/pdf
Publication-Status: published as IS THE ENDOWMENT EFFECT AN EXPECTATIONS EFFECT? Ori Heffetz1 andJohn A. List2 Article first published online: 20 MAY 2014 DOI: 10.1111/jeea.12084 © 2014 by the European Economic Association Issue Journal of the European Economic Association Journal of the European Economic Association Volume 12, Issue 5, pages 1396–1422, October 2014
Abstract: This paper is aimed to assess, with two lab experiments, to what extent Kőszegi and Rabin's (2006) model of expectations-based reference-dependent preferences can explain Knetsch's (1989) endowment effect. Departing from past work, we design an experiment that treats the two goods (a mug and a pen) symmetrically in all but in the probabilities with which they are expected to be owned. Thus, our "endowmentless" endowment effect experiment shuts down all alternative mechanisms while leaving expectations the only difference between treatments. We find no evidence that expectations alone can reproduce any of the original effect.
Handle: RePEc:nbr:nberwo:16715
Template-Type: ReDIF-Paper 1.0
Title: Risk Response in Agriculture
Classification-JEL: C3; D2; D8
Author-Name: Jeffrey LaFrance
Author-Name: Rulon Pope
Author-Name: Jesse Tack
Author-Person: pta323
Note: AP PR TWP
Number: 16716
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16716
File-URL: http://www.nber.org/papers/w16716.pdf
File-Format: application/pdf
Publication-Status: published as Risk Response in Agriculture, Jeffrey LaFrance, Rulon Pope, Jesse Tack. in The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, Graff Zivin and Perloff. 2012
Abstract: Crop production is subject to supply shocks, and both expected and realized outputs as well as output prices are unknown when inputs are chosen. The process by which producers form expectations is difficult to model, especially when working with aggregate data. We present a necessary and sufficient condition on cost and technology to allow variable input demand equations to be specified as functions of input prices, quasi-fixed inputs, and total variable cost. These all are observable when inputs are committed to production, so that ex ante demands can be estimated with observable data. A flexible, exactly aggregable, and economically regular model of variable input demands is derived and applied to aggregate U.S. agricultural data for the period 1960-1999. We use the empirical results of this model to aid in the specification of a dynamic life-cycle model for agricultural producers facing output and output price risk, with investment in an off-farm, conditionally risk free asset, risky financial assets, savings, consumption, and agricultural production opportunities. This framework admits a coherent, structural, econometric model of input use, output production, savings, investment, and consumption for agricul-ture. We apply this model to U.S. data for the period 1960-1999. Ongoing work focuses on updating the data set to the 21st century and applying both components of the model at the state-level.
Handle: RePEc:nbr:nberwo:16716
Template-Type: ReDIF-Paper 1.0
Title: Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity
Classification-JEL: F14; L25; L60; O33
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Mirko Draca
Author-Person: pdr157
Author-Name: John Van Reenen
Author-Person: pva45
Note: EFG IO ITI LS PR
Number: 16717
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16717
File-URL: http://www.nber.org/papers/w16717.pdf
File-Format: application/pdf
Publication-Status: published as Nicholas Bloom & Mirko Draca & John Van Reenen, 2016. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," The Review of Economic Studies, vol 83(1), pages 87-117.
Abstract: We examine the impact of Chinese import competition on patenting, IT, R&D and TFP using a panel of up to half a million firms over 1996-2007 across twelve European countries. We correct for endogeneity using the removal of product-specific quotas following China's entry into the World Trade Organization. Chinese import competition had two effects: first, it led to increases in R&D, patenting, IT and TFP within firms; and second it reallocated employment between firms towards more innovative and technologically advanced firms. These within and between effects were about equal in magnitude, and appear to account for around 15% of European technology upgrading between 2000-2007. Rising Chinese import competition also led to falls in employment, profits, prices and the skill share. By contrast, import competition from developed countries had no effect on innovation. We develop a simple "trapped factor" model of innovation that is consistent with these empirical findings.
Handle: RePEc:nbr:nberwo:16717
Template-Type: ReDIF-Paper 1.0
Title: Fertility and the Plough
Classification-JEL: J13; O13
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Paola Giuliano
Author-Person: pgi66
Author-Name: Nathan Nunn
Author-Person: pnu17
Note: POL
Number: 16718
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16718
File-URL: http://www.nber.org/papers/w16718.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Paola Giuliano & Nathan Nunn, 2011. "Fertility and the Plough," American Economic Review, American Economic Association, vol. 101(3), pages 499-503, May.
Abstract: The current study finds that societies which historically engaged in plough agriculture today have lower fertility. We argue, and provide ethnographic evidence, that the finding is explained by the fact that with plough agriculture, children, like women, are relatively less useful in the field. The plough requires strength and eliminates the need for weeding, a task particularly suitable for women and children. This in turn generates a preference for fewer children, lowering fertility.
Handle: RePEc:nbr:nberwo:16718
Template-Type: ReDIF-Paper 1.0
Title: Social Security and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms - Introduction and Summary
Classification-JEL: H31; H55; I19; J14; J26
Author-Name: Kevin S. Milligan
Author-Person: pmi14
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG
Number: 16719
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16719
File-URL: http://www.nber.org/papers/w16719.pdf
File-Format: application/pdf
Publication-Status: published as Introduction and Summary to "Social Security and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms", Kevin Milligan, David A. Wise. in Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms, Wise. 2012
Abstract: This is the introduction and summary to the fifth phase of an ongoing project on Social Security Programs and Retirement Around the World. The first phase described the retirement incentives inherent in plan provisions and documented the strong relationship across countries between social security incentives to retire and the proportion of older persons out of the labor force. The second phase documented the large effects that changing plan provisions would have on the labor force participation of older workers. The third phase demonstrated the consequent fiscal implications that extending labor force participation would have on net program costs--reducing government social security benefit payments and increasing government tax revenues. The fourth phase presented analyses of the relationship between the labor force participation of older persons and the labor force participation of younger persons in twelve countries. We found no evidence that increasing the employment of older persons will reduce the employment opportunities of youth and no evidence that increasing the employment of older persons will increase the unemployment of youth. This phase is intended to set the stage for and inform future more formal analysis of disability insurance programs, with this key question: Given health status, to what extent are the differences in LFP across countries determined by the provisions of disability insurance programs? Here we first consider changes in mortality over time and in particular the relationship between mortality and labor force participation, thinking of mortality as one indicator of health that is comparable across countries and over time in the same country. We then consider how mortality is related to other indicators of health status, in particular self-assessed health and then how trends in DI participation are related to changes in health. Finally we consider the effect on disability insurance participation of "natural experiments" in which the disability insurance reforms were not prompted by changes in health status or by changes in the employment circumstances of older workers. We find that these "exogenous" reforms can have a very large effect on the labor force participation of older workers.
Handle: RePEc:nbr:nberwo:16719
Template-Type: ReDIF-Paper 1.0
Title: Individual Rationality and Participation in Large Scale, Multi-Hospital Kidney Exchange
Classification-JEL: C78; D02; I11
Author-Name: Itai Ashlagi
Author-Name: Alvin E. Roth
Author-Person: pro40
Note: EH
Number: 16720
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16720
File-URL: http://www.nber.org/papers/w16720.pdf
File-Format: application/pdf
Abstract: As multi-hospital kidney exchange clearinghouses have grown, the set of players has grown from patients and surgeons to include hospitals. Hospitals have the option of enrolling only their hard-to-match patient-donor pairs, while conducting easily arranged exchanges internally. This behavior has already started to be observed. We show that the cost of making it individually rational for hospitals to participate fully is low in almost every large exchange pool (although the worst-case cost is very high), while the cost of failing to guarantee individually rational allocations could be large, in terms of lost transplants. We also identify an incentive compatible mechanism.
Handle: RePEc:nbr:nberwo:16720
Template-Type: ReDIF-Paper 1.0
Title: Mobile Money: The Economics of M-PESA
Classification-JEL: O16; O33; O55
Author-Name: William Jack
Author-Person: pja302
Author-Name: Tavneet Suri
Note: PR
Number: 16721
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16721
File-URL: http://www.nber.org/papers/w16721.pdf
File-Format: application/pdf
Abstract: Mobile money is a tool that allows individuals to make financial transactions using cell phone technology. In this paper, we report initial results of two rounds of a large survey of households in Kenya, the country that has seen perhaps the most rapid and widespread growth of a mobile money product - known locally as M‐PESA - in the developing world. We first summarize the mechanics of M-PESA, and review its potential economic impacts. We then document the sequencing of adoption across households according to income and wealth, location, gender, and other socio‐economic characteristics, as well as the purposes for which the technology is used, including saving, sending and receiving remittances, and direct purchases of goods and services. In addition, we report findings from a survey of M‐PESA agents, who provide cash‐in and cash‐out services, and highlight the inventory management problems they face.
Handle: RePEc:nbr:nberwo:16721
Template-Type: ReDIF-Paper 1.0
Title: Non-Production Benefits of Education: Crime, Health, and Good Citizenship
Classification-JEL: H52; I18; I21; I28; J24; K42
Author-Name: Lance Lochner
Author-Person: plo31
Note: CH ED EH LS PE POL
Number: 16722
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16722
File-URL: http://www.nber.org/papers/w16722.pdf
File-Format: application/pdf
Publication-Status: published as Lochner, Lance, “Nonproduction Benefits of Education: Crime, Health, and Good Citizenship,” in E. Hanushek, S. Machin, and L. Woessmann (eds.), Handbook of the Economics of Education , Vol. 4, Ch. 2, Amsterdam: Elsevier Science, 2011 .
Abstract: A growing body of work suggests that education offers a wide-range of benefits that extend beyond increases in labor market productivity. Improvements in education can lower crime, improve health, and increase voting and democratic participation. This chapter reviews recent developments on these 'non-production' benefits of education with an emphasis on contributions made by economists.
Handle: RePEc:nbr:nberwo:16722
Template-Type: ReDIF-Paper 1.0
Title: Selection in Insurance Markets: Theory and Empirics in Pictures
Classification-JEL: D60; D82
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Note: AG EH IO PE
Number: 16723
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16723
File-URL: http://www.nber.org/papers/w16723.pdf
File-Format: application/pdf
Publication-Status: published as “Selection in Insurance Markets: Theory and Empirics in Pictures,” with Amy Finkelstein, Journal of Economics Perspectives 25(1), 1 15 - 138 , Winter 2011 .
Abstract: We present a graphical framework for analyzing both theoretical and empirical work on selection in insurance markets. We begin by using this framework to review the "textbook" adverse selection environment and its implications for insurance allocation, social welfare, and public policy. We then discuss several important extensions to this classical treatment that are necessitated by important real world features of insurance markets and which can be easily incorporated in the basic framework. Finally, we use the same graphical approach to discuss the intuition behind recently developed empirical methods for testing for the existence of selection and examining its welfare consequences. We conclude by discussing some important issues that are not well-handled by this framework and which, perhaps not unrelatedly, have been little addressed by the existing empirical work.
Handle: RePEc:nbr:nberwo:16723
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Mergers
Classification-JEL: G31; G32; G33; G34
Author-Name: Heitor Almeida
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: Dirk Hackbarth
Author-Person: pha342
Note: CF
Number: 16724
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16724
File-URL: http://www.nber.org/papers/w16724.pdf
File-Format: application/pdf
Publication-Status: published as Almeida, Heitor & Campello, Murillo & Hackbarth, Dirk, 2011. "Liquidity mergers," Journal of Financial Economics, Elsevier, vol. 102(3), pages 526-558.
Abstract: We study the interplay between corporate liquidity and asset reallocation opportunities. Our model shows that financially distressed firms are acquired by liquid firms in their industries even when there are no operational synergies associated with the merger. We call these transactions "liquidity mergers," since their main purpose is to reallocate liquidity to firms that might be otherwise inefficiently terminated. We show that liquidity mergers are more likely to occur when industry-level asset specificity is high (i.e., industry-specific rents are high) and firm-level asset specificity is low (industry counterparts can efficiently operate distressed firms' assets). We also provide a detailed analysis of firms' liquidity policies as a function of real asset reallocation, examining the trade-offs between cash and lines of credit. The model makes a number of predictions that have not been examined in the literature. Using a large sample of mergers, we verify the model's prediction that liquidity-driven acquisitions are more likely to occur in industries in which assets are industry-specific, but transferable across industry rival firms. We also verify the prediction that firms are more likely to use credit lines (relative to cash) when they operate in industries in which liquidity mergers are more frequent.
Handle: RePEc:nbr:nberwo:16724
Template-Type: ReDIF-Paper 1.0
Title: Credit Spreads as Predictors of Real-Time Economic Activity: A Bayesian Model-Averaging Approach
Classification-JEL: C11; C53
Author-Name: Jon Faust
Author-Person: pfa9
Author-Name: Simon Gilchrist
Author-Person: pgi28
Author-Name: Jonathan H. Wright
Author-Person: pwr25
Author-Name: Egon Zakrajsek
Author-Person: pza207
Note: ME
Number: 16725
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16725
File-URL: http://www.nber.org/papers/w16725.pdf
File-Format: application/pdf
Publication-Status: published as Jon Faust & Simon Gilchrist & Jonathan H. Wright & Egon Zakrajšsek, 2013. "Credit Spreads as Predictors of Real-Time Economic Activity: A Bayesian Model-Averaging Approach," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1501-1519, December.
Abstract: Employing a large number of real and financial indicators, we use Bayesian Model Averaging (BMA) to forecast real-time measures of economic activity. Importantly, the predictor set includes option-adjusted credit spread indexes based on bond portfolios sorted by maturity and credit risk as measured by the issuer's "distance-to-default." The portfolios are constructed directly from the secondary market prices of outstanding senior unsecured bonds issued by a large number of U.S. corporations. Our results indicate that relative to an autoregressive benchmark, BMA yields consistent improvements in the prediction of the growth rates of real GDP, business fixed investment, industrial production, and employment, as well as of the changes in the unemployment rate, at horizons from the current quarter (i.e., "nowcasting") out to four quarters hence. The gains in forecast accuracy are statistically significant and economically important and owe exclusively to the inclusion of our portfolio credit spreads in the set of predictors--BMA consistently assigns a high posterior weight to models that include these financial indicators.
Handle: RePEc:nbr:nberwo:16725
Template-Type: ReDIF-Paper 1.0
Title: Differences of Opinion and International Equity Markets
Classification-JEL: F3; G11; G12; G15
Author-Name: Bernard Dumas
Author-Person: pdu519
Author-Name: Karen K. Lewis
Author-Person: ple1119
Author-Name: Emilio Osambela
Note: AP IFM
Number: 16726
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16726
File-URL: http://www.nber.org/papers/w16726.pdf
File-Format: application/pdf
Publication-Status: published as "Differences of Opinion and International Equity Markets," BERNARD DUMAS, K. K. LEWIS, and E. OSAMBELA, Review of Financial Studies, 30 (2017), 750-800.
Abstract: We develop an international financial market model in which domestic and foreign residents differ in their beliefs about the information content in public signals. We determine how informational advantages by domestic investors in the interpretation of home public signals impact equity markets. We evaluate the ability of our model to generate four international finance anomalies: (i) the co-movement of returns and capital flows; (ii) home-equity preference; (iii) the dependence of firm returns on home and foreign factors; and (iv) abnormal returns around foreign firm cross- listing in the home market. Their relationships with empirical differences-of-opinion proxies are consistent with the model.
Handle: RePEc:nbr:nberwo:16726
Template-Type: ReDIF-Paper 1.0
Title: Informational Rents, Macroeconomic Rents, and Efficient Bailouts
Classification-JEL: E3; G01; G2; G3
Author-Name: Thomas Philippon
Author-Person: pph81
Author-Name: Philipp Schnabl
Author-Person: psc789
Note: CF EFG ME PE
Number: 16727
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16727
File-URL: http://www.nber.org/papers/w16727.pdf
File-Format: application/pdf
Publication-Status: published as “Effi cient Recapitalization,” with Philipp Schnabl, Journal of Finance, February 2013, lead articl e
Abstract: We analyze government interventions to alleviate debt overhang among banks. Interventions generate two types of rents. Informational rents arise from opportunistic participation based on private information while macroeconomic rents arise from free riding. Minimizing informational rents is a security design problem and we show that warrants and preferred stocks are the optimal instruments. Minimizing macroeconomic rents requires the government to condition implementation on sufficient participation. Informational rents always impose a cost, but if macroeconomic rents are large, efficient recapitalizations can be profitable.
Handle: RePEc:nbr:nberwo:16727
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Economics Perspectives on Public Sector Pension Plans
Classification-JEL: G23; G28; H76
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: AG
Number: 16728
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16728
File-URL: http://www.nber.org/papers/w16728.pdf
File-Format: application/pdf
Publication-Status: published as Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C., 2011. "Behavioral economics perspectives on public sector pension plans," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(02), pages 315-336, April.
Publication-Status: published as Behavioral Economics Perspectives on Public Sector Pension Plans, John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian. in The Economics of State and Local Pensions, Brown and Clark. 2011
Abstract: We describe the pension plan features of the states and the largest cities and counties in the U.S. Unlike in the private sector, defined benefit (DB) pensions are still the norm in the public sector. However, a few jurisdictions have shifted towards defined contribution (DC) plans as their primary savings plan, and fiscal pressures are likely to generate more movement in this direction. Holding fixed a public employee's work and salary history, we show that DB retirement income replacement ratios vary greatly across jurisdictions. This creates large variation in workers' need to save for retirement in other accounts. There is also substantial heterogeneity across jurisdictions in the savings generated in primary DC plans because of differences in the level of mandatory employer and employee contributions. One notable difference between public and private sector DC plans is that public sector primary DC plans are characterized by required employee or employer contributions (or both), whereas private sector plans largely feature voluntary employee contributions that are supplemented by an employer match. We conclude by applying lessons from savings behavior in private sector savings plans to the design of public sector plans.
Handle: RePEc:nbr:nberwo:16728
Template-Type: ReDIF-Paper 1.0
Title: Does Indivisible Labor Explain the Difference Between Micro and Macro Elasticities? A Meta-Analysis of Extensive Margin Elasticities
Classification-JEL: E24; E32; J22
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: Adam Guren
Author-Name: Dayanand S. Manoli
Author-Person: pma1770
Author-Name: Andrea Weber
Author-Person: pwe32
Note: EFG LS PE
Number: 16729
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16729
File-URL: http://www.nber.org/papers/w16729.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & Adam Guren & Day Manoli & Andrea Weber, 2013. "Does Indivisible Labor Explain the Difference between Micro and Macro Elasticities? A Meta-Analysis of Extensive Margin Elasticities," NBER Macroeconomics Annual, University of Chicago Press, vol. 27(1), pages 1 - 56.
Publication-Status: published as Does Indivisible Labor Explain the Difference between Micro and Macro Elasticities? A Meta-Analysis of Extensive Margin Elasticities, Raj Chetty, Adam Guren, Day Manoli, Andrea Weber. in NBER Macroeconomics Annual 2012, Volume 27, Acemoglu, Parker, and Woodford. 2013
Abstract: Macroeconomic calibrations imply much larger labor supply elasticities than microeconometric studies. One prominent explanation for this divergence is that indivisible labor generates extensive margin responses that are not captured in micro studies of hours choices. We evaluate whether existing calibrations of macro models are consistent with micro evidence on extensive margin responses using two approaches. First, we use a standard calibrated macro model to simulate the impacts of tax policy changes on labor supply. Second, we present a meta-analysis of quasi-experimental estimates of extensive margin elasticities. We find that micro estimates are consistent with macro evidence on the steady-state (Hicksian) elasticities relevant for cross-country comparisons. However, micro estimates of extensive-margin elasticities are an order of magnitude smaller than the values needed to explain business cycle fluctuations in aggregate hours. Hence, indivisible labor supply does not explain the large gap between micro and macro estimates of intertemporal substitution (Frisch) elasticities. Our synthesis of the micro evidence points to Hicksian elasticities of 0.3 on the intensive and 0.25 on the extensive margin and Frisch elasticities of 0.5 on the intensive and 0.25 on the extensive margin.
Handle: RePEc:nbr:nberwo:16729
Template-Type: ReDIF-Paper 1.0
Title: Why Is an Elite Undergraduate Education Valuable? Evidence from Israel
Classification-JEL: I21; J24; J3
Author-Name: Kevin Lang
Author-Person: pla83
Author-Name: Erez Siniver
Note: LS
Number: 16730
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16730
File-URL: http://www.nber.org/papers/w16730.pdf
File-Format: application/pdf
Publication-Status: published as Lang, Kevin & Siniver, Erez, 2011. "Why is an elite undergraduate education valuable? Evidence from Israel," Labour Economics, Elsevier, vol. 18(6), pages 767-777.
Abstract: In this paper we compare the labor market performance of Israeli students who graduated from one of the leading universities, Hebrew University (HU), with those who graduated from a professional undergraduate college, College of Management Academic Studies (COMAS). Our results support a model in which employers have good information about the quality of HU graduates and pay them according to their ability, but in which the market has relatively little information about COMAS graduates. Hence, high-skill COMAS graduates are initially treated as if they were the average COMAS graduate, who is weaker than a HU graduate, consequently earning less than UH graduates. However, over time the market differentiates among them so that after several years of experience, COMAS and HU graduates with similar entry scores have similar earnings. Our results are therefore consistent with the view that employers use education information to screen workers but that the market acquires information fairly rapidly.
Handle: RePEc:nbr:nberwo:16730
Template-Type: ReDIF-Paper 1.0
Title: If Drug Treatment Works So Well, Why Are So Many Drug Users in Prison?
Classification-JEL: G18
Author-Name: Harold Pollack
Author-Name: Peter Reuter
Author-Name: Eric L. Sevigny
Note: LE
Number: 16731
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16731
File-URL: http://www.nber.org/papers/w16731.pdf
File-Format: application/pdf
Publication-Status: published as If Drug Treatment Works So Well, Why Are So Many Drug Users in Prison?, Harold Pollack, Peter Reuter, Eric Sevigny. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: This paper examines the effectiveness of drug courts to reduce the size of the incarcerated drug-offending population using data from the Survey of Inmates in State Correctional Facilities and the Survey of Inmates in Local Jails. We find that very few of those entering state prison in 2004 or jail in 2002 would have been eligible for drug diversion through state drug courts. The policy implication is that drug courts and other diversion programs require substantial redesign if they are to contribute to a reduction in the incarcerated population.
Handle: RePEc:nbr:nberwo:16731
Template-Type: ReDIF-Paper 1.0
Title: Electricity Consumption and Durable Housing: Understanding Cohort Effects
Classification-JEL: Q41; Q58
Author-Name: Dora L. Costa
Author-Person: pco358
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE
Number: 16732
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16732
File-URL: http://www.nber.org/papers/w16732.pdf
File-Format: application/pdf
Publication-Status: published as Dora L. Costa & Matthew E. Kahn, 2011. "Electricity Consumption and Durable Housing: Understanding Cohort Effects," American Economic Review, American Economic Association, vol. 101(3), pages 88-92, May.
Abstract: We find that households living in California homes built in the 1960s and 1970s had high electricity consumption in 2000 relative to houses of more recent vintages because the price of electricity at the time of home construction was low. Homes built in the early 1990s had lower electricity consumption than homes of earlier vintages because the price of electricity was higher. The elasticity of the price of electricity at the time of construction was -0.22. As homes built between 1960 and 1989 become a smaller share of the housing stock, average household electricity purchases will fall.
Handle: RePEc:nbr:nberwo:16732
Template-Type: ReDIF-Paper 1.0
Title: Learning Versus Stealing: How Important are Market-Share Reallocations to India's Productivity Growth?
Classification-JEL: F13; F14; F23
Author-Name: Ann E. Harrison
Author-Person: pha441
Author-Name: Leslie A. Martin
Author-Person: pma2185
Author-Name: Shanthi Nataraj
Author-Person: pna467
Note: EEE ITI
Number: 16733
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16733
File-URL: http://www.nber.org/papers/w16733.pdf
File-Format: application/pdf
Publication-Status: published as Ann E. Harrison & Leslie A. Martin & Shanthi Nataraj, 2013. "Learning versus Stealing: How Important Are Market-Share Reallocations to India's Productivity Growth?," World Bank Economic Review, World Bank Group, vol. 27(2), pages 202-228.
Abstract: The new trade theory emphasizes the role of market-share reallocations across firms ("stealing") in driving productivity growth, while the older literature focused on average productivity improvements ("learning"). We use comprehensive, firm-level data from India's organized manufacturing sector to show that market-share reallocations did play an important role in aggregate productivity gains immediately following the start of India's trade reforms in 1991. However, aggregate productivity gains during the overall 20-year period from 1985 to 2004 were driven largely by improvements in average productivity. By exploiting the variation in reforms across industries, we document that the average productivity increases can be attributed to India's trade liberalization and FDI reforms. Finally, we construct a panel dataset that allows us to track firms during this time period; our results suggest that while within-firm productivity improvements were important, much of the increase in average productivity also occured because of firm entry and exit.
Handle: RePEc:nbr:nberwo:16733
Template-Type: ReDIF-Paper 1.0
Title: Understanding Booms and Busts in Housing Markets
Classification-JEL: E32; R31
Author-Name: Craig Burnside
Author-Person: pbu20
Author-Name: Martin Eichenbaum
Author-Person: pei4
Author-Name: Sergio Rebelo
Note: AP EFG
Number: 16734
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16734
File-URL: http://www.nber.org/papers/w16734.pdf
File-Format: application/pdf
Publication-Status: published as Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 2016. "Understanding Booms and Busts in Housing Markets," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 000 - 000.
Abstract: Some booms in housing prices are followed by busts. Others are not. It is generally difficult to find observable fundamentals that are useful for predicting whether a boom will turn into a bust or not. We develop a model consistent with these observations. Agents have heterogeneous expectations about long-run fundamentals but change their views because of “social dynamics.” Agents with tighter priors are more likely to convert others to their beliefs. Boom-bust episodes typically occur when skeptical agents happen to be correct. The booms that are not followed by busts typically occur when optimistic agents happen to be correct.
Handle: RePEc:nbr:nberwo:16734
Template-Type: ReDIF-Paper 1.0
Title: Transaction Cost Regulation
Classification-JEL: D02; D73; L14; L51
Author-Name: Pablo T. Spiller
Author-Person: psp34
Note: LE POL
Number: 16735
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16735
File-URL: http://www.nber.org/papers/w16735.pdf
File-Format: application/pdf
Publication-Status: published as Spiller, Pablo T., 2013. "Transaction cost regulation," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 232-242.
Abstract: This paper discusses the fundamental underpinnings and some implications of transaction cost regulation (TCR), a framework to analyze the interaction between governments and investors fundamentally, but not exclusively, in utility industries. TCR sees regulation as the governance structure of these interactions, and thus, as in standard transaction cost economics, it places emphasis in understanding the nature of the hazards inherent to these interactions. The emphasis on transactional hazards requires a microanalytical perspective, where performance assessment is undertaken within the realm of possible institutional alternative. In that sense, politics becomes fundamental to understanding regulation as the governance of public / private interactions. The paper discusses two fundamental hazards and their organizational implications: governmental and third party opportunism. Both interact to make regulatory processes and outcomes more rigid, formalistic, and prone to conflict than envisioned by relational contracting.
Handle: RePEc:nbr:nberwo:16735
Template-Type: ReDIF-Paper 1.0
Title: Economic Impacts of Immigration: A Survey
Classification-JEL: H53; J23; J31; J61; J68
Author-Name: Sari Pekkala Kerr
Author-Name: William R. Kerr
Author-Person: pke127
Note: LS PR
Number: 16736
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16736
File-URL: http://www.nber.org/papers/w16736.pdf
File-Format: application/pdf
Publication-Status: published as Sari Pekkala Kerr & William R. Kerr, 2011. "Economic Impacts of Immigration: A Survey," Finnish Economic Papers, Finnish Economic Association, vol. 24(1), pages 1-32, Spring.
Abstract: This paper surveys recent empirical studies on the economic impacts of immigration. The survey first examines the magnitude of immigration as an economic phenomenon in various host countries. The second part deals with the assimilation of immigrant workers into host-country labor markets and concomitant effects for natives. The paper then turns to immigration's impact for the public finances of host countries. The final section considers emerging topics in the study of immigration. The survey particularly emphasizes the recent experiences of Northern Europe and Scandinavia and relevant lessons from traditional destination countries like the US.
Handle: RePEc:nbr:nberwo:16736
Template-Type: ReDIF-Paper 1.0
Title: Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement
Classification-JEL: F36; G12; G14; G15; G38; K22; M41; M48
Author-Name: Hans B. Christensen
Author-Name: Luzi Hail
Author-Name: Christian Leuz
Author-Person: ple259
Note: AP CF LE POL
Number: 16737
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16737
File-URL: http://www.nber.org/papers/w16737.pdf
File-Format: application/pdf
Publication-Status: published as Hans B. Christensen & Luzi Hail & Christian Leuz, 2016. "Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement," Review of Financial Studies, vol 29(11), pages 2885-2924.
Abstract: We examine the capital-market effects of changes in securities regulation in the European Union (EU) aimed at reducing market abuse and increasing transparency. To estimate causal effects for the population of EU firms, we exploit that for plausibly exogenous reasons, like national legislative procedures, EU countries adopted these directives at different times. We find significant increases in market liquidity, but the effects are stronger in countries with stricter implementation and traditionally more stringent securities regulation. The findings suggest that countries with initially weaker regulation do not catch up with stronger countries, and that countries diverge more upon harmonizing regulation.
Handle: RePEc:nbr:nberwo:16737
Template-Type: ReDIF-Paper 1.0
Title: A Simple Test of Private Information in the Insurance Markets with Heterogeneous Insurance Demand
Classification-JEL: D82; G22; I11
Author-Name: Li Gan
Author-Person: pga94
Author-Name: Feng Huang
Author-Name: Adalbert Mayer
Author-Person: pma605
Note: AG EH
Number: 16738
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16738
File-URL: http://www.nber.org/papers/w16738.pdf
File-Format: application/pdf
Publication-Status: published as Li Gan & Feng Huang & Adalbert Mayer, 2015. "A simple test for private information in insurance markets with heterogeneous insurance demand," Economics Letters, vol 136, pages 197-200.
Abstract: A positive correlation between insurance coverage and ex post risk can be an indicator for private information in insurance markets. However, this test fails if agents have heterogeneous risk attitudes. We propose a new test that conditions on unobserved types of individuals who differ in their risks preferences. This makes it possible to detect asymmetric information without direct evidence of private information - even if agents have heterogeneous risk attitudes. We apply our technique to the market for long-term care insurance. Finkelstein and McGarry (2006) provide direct evidence for the existence of private information in this market. At the same time they fail to find a positive correlation between insurance coverage and ex post risk. Our method indicates the existence of private information, without using direct evidence of private information. Our methodology is applicable to other insurance markets and markets where proxies for private information are not available.
Handle: RePEc:nbr:nberwo:16738
Template-Type: ReDIF-Paper 1.0
Title: Making friends with your neighbors? Agglomeration and tacit collusion in the lodging industry
Classification-JEL: C3; L13; L4
Author-Name: Li Gan
Author-Person: pga94
Author-Name: Manuel A. Hernandez
Author-Person: phe286
Note: IO LE
Number: 16739
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16739
File-URL: http://www.nber.org/papers/w16739.pdf
File-Format: application/pdf
Publication-Status: published as Li Gan & Manuel A. Hernandez, 2013. "Making Friends with Your Neighbors? Agglomeration and Tacit Collusion in The Lodging Industry," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 1002-1017, July.
Abstract: Agglomeration is a location pattern frequently observed in service industries such as hotels. This paper empirically examines if agglomeration facilitates tacit collusion in the lodging industry using a quarterly dataset of hotels that operated in rural areas across Texas between 2003 and 2005. We jointly model a price and occupancy rate equation under a switching regression model to endogenously identify a collusive and non-collusive regime. The estimation results indicate that clustered hotels have a higher probability of being in the potential collusive regime than isolated properties in the same town. The identification of a collusive regime is also consistent with other factors considered to affect the sustainability of collusion like cluster size, seasonality and firm size, and the results are robust to alternative cluster definitions.
Handle: RePEc:nbr:nberwo:16739
Template-Type: ReDIF-Paper 1.0
Title: How Financial Literacy and Impatience Shape Retirement Wealth and Investment Behaviors
Classification-JEL: E21; G11; G23; H31; J26
Author-Name: Justine S. Hastings
Author-Person: pha804
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG LS
Number: 16740
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16740
File-URL: http://www.nber.org/papers/w16740.pdf
File-Format: application/pdf
Publication-Status: published as JUSTINE HASTINGS & OLIVIA S. MITCHELL, 2020. "How financial literacy and impatience shape retirement wealth and investment behaviors," Journal of Pension Economics and Finance, vol 19(1), pages 1-20.
Abstract: Two competing explanations for why consumers have trouble with financial decisions are gaining momentum. One is that people are financially illiterate since they lack understanding of simple economic concepts and cannot carry out computations such as computing compound interest, which could cause them to make suboptimal financial decisions. A second is that impatience or present-bias might explain suboptimal financial decisions. That is, some people persistently choose immediate gratification instead of taking advantage of larger long-term payoffs. We use experimental evidence from Chile to explore how these factors appear related to poor financial decisions. Our results show that our measure of impatience is a strong predictor of wealth and investment in health. Financial literacy is also correlated with wealth though it appears to be a weaker predictor of sensitivity to framing in investment decisions. Policymakers interested in enhancing retirement wellbeing would do well to consider the importance of these factors.
Handle: RePEc:nbr:nberwo:16740
Template-Type: ReDIF-Paper 1.0
Title: The Long Slump
Classification-JEL: E1; E2; E3; E4; E5
Author-Name: Robert E. Hall
Note: EFG
Number: 16741
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16741
File-URL: http://www.nber.org/papers/w16741.pdf
File-Format: application/pdf
Publication-Status: published as Robert E. Hall, 2011. "The Long Slump," American Economic Review, American Economic Association, vol. 101(2), pages 431-69, April.
Abstract: In a market-clearing economy, declines in demand from one sector do not cause large declines in aggregatge output because other sectors expand. The key price mediating the response is the interest rate. A decline in the rate stimulates all categories of spending. But in a low-inflation economy, the room for a decline in the rate is small, because of the notorious lower limit of zero on the nominal interest rate. In the Great Depression, substantial deflation caused the real interest rate to reach high levels. In the Great Slump that began at the end of 2007, low inflation resulted in an only slightly negative real rate when full employment called for a much lower real rate because of declines in demand. Fortunately the inflation rate hardly responded to conditions in product and labor markets, else deflation might have occurred, with an even higher real interest rate. I concentrate on three closely related sources of declines in demand: the buildup of excess stocks of housing and consumer durables, the corresponding expansion of consumer debt that financed the buildup, and financial frictions that resulted from the decline in real-estate prices.
Handle: RePEc:nbr:nberwo:16741
Template-Type: ReDIF-Paper 1.0
Title: Misallocation, Economic Growth, and Input-Output Economics
Classification-JEL: E2; O1
Author-Name: Charles I. Jones
Author-Person: pjo24
Note: EFG PR
Number: 16742
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16742
File-URL: http://www.nber.org/papers/w16742.pdf
File-Format: application/pdf
Publication-Status: published as "Misallocation, Input-Output Economics, and Economic Growth" in D. Acemoglu, M. Arellano, and E. Dekel, Advances in Economics and Econometrics, Tenth World Congress, Volume II, Cambridge University Press, 2013.
Abstract: One of the most important developments in the growth literature of the last decade is the enhanced appreciation of the role that the misallocation of resources plays in helping us understand income differences across countries. Misallocation at the micro level typically reduces total factor productivity at the macro level. Quantifying these effects is leading growth researchers in new directions, two examples being the extensive use of firm-level data and the exploration of input-output tables, and promises to yield new insights on why some countries are so much richer than others.
Handle: RePEc:nbr:nberwo:16742
Template-Type: ReDIF-Paper 1.0
Title: Sale Rates and Price Movements in Art Auctions
Classification-JEL: D44; L1; L82
Author-Name: Orley C. Ashenfelter
Author-Person: pas9
Author-Name: Kathryn Graddy
Author-Person: pgr151
Note: IO
Number: 16743
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16743
File-URL: http://www.nber.org/papers/w16743.pdf
File-Format: application/pdf
Publication-Status: published as Orley Ashenfelter & Kathryn Graddy, 2011. "Sale Rates and Price Movements in Art Auctions," American Economic Review, American Economic Association, vol. 101(3), pages 212-16, May.
Abstract: The failure of many paintings to sell in art auctions indicates the presence of reserve prices set by sellers. This paper examines the relationship between sale rates and price surprises over time in art auctions. Using data on contemporary and impressionist art, we show that while sale rates appear to have little relationship to current prices, there exists a strong positive relationship of sale rates to unexpected aggregate price changes, which is reminiscent of a Phillips curve. As a result, sale rates provide a useful quantity indicator of the strength of the art market. The data also indicate that sale rates revert to "normal" very quickly following a price surprise. We estimate an empirical model to measure normal sale rates. We also find evidence that the reserve price is set on average at about 70% of the auctioneer's low estimate, as published in the auction catalog.
Handle: RePEc:nbr:nberwo:16743
Template-Type: ReDIF-Paper 1.0
Title: On the Persistent Financial Losses of U.S. Airlines: A Preliminary Exploration
Classification-JEL: L1; L93
Author-Name: Severin Borenstein
Author-Person: pbo78
Note: IO EFG
Number: 16744
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16744
File-URL: http://www.nber.org/papers/w16744.pdf
File-Format: application/pdf
Publication-Status: published as “Why Can’t U.S. Airlines Make Money?” American Economic Review Papers and Proceedings , 101 (May 2011). (A longer version is available as NBER Working Pa per #16744)
Abstract: U.S. airlines have lost nearly $60 billion (2009 dollars) in domestic markets since deregulation, most of it in the last decade. More than 30 years after domestic airline markets were deregulated, the dismal financial record is a puzzle that challenges the economics of deregulation. I examine some of the most common explanations among industry participants, analysts, and researchers -- including high taxes and fuel costs, weak demand, and competition from lower-cost airlines. Descriptive statistics suggest that high taxes have been at most a minor factor and fuel costs shocks played a role only in the last few years. Major drivers seem to be the severe demand downturn after 9/11 -- demand remained much weaker in 2009 than it was in 2000 -- and the large cost differential between legacy airlines and the low-cost carriers, which has persisted even as their price differentials have greatly declined.
Handle: RePEc:nbr:nberwo:16744
Template-Type: ReDIF-Paper 1.0
Title: Under Pressure: Job Security, Resource Allocation, and Productivity in Schools Under NCLB
Classification-JEL: H4; H7; I28
Author-Name: Randall Reback
Author-Person: pre97
Author-Name: Jonah Rockoff
Author-Name: Heather L. Schwartz
Note: ED
Number: 16745
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16745
File-URL: http://www.nber.org/papers/w16745.pdf
File-Format: application/pdf
Abstract: The most sweeping federal education law in decades, the No Child Left Behind (NCLB) Act, requires states to administer standardized exams and to punish schools that do not make Adequate Yearly Progress (AYP) for the fraction of students passing these exams. While the literature on school accountability is well-established, there exists no nationwide study of the strong short-term incentives created by NCLB for schools on the margin of failing AYP. We assemble the first comprehensive, national, school-level dataset concerning detailed performance measures used to calculate AYP, and demonstrate that idiosyncrasies in state policies create numerous cases where schools near the margin for satisfying their own state's AYP requirements would have almost certainly failed or almost certainly made AYP if they were located in other states. Using this variation as a means of identification, we examine the impact of NCLB on the behavior of school personnel and students' academic achievement in nationally representative samples. We find that accountability pressure from NCLB lowers teachers' perceptions of job security and causes untenured teachers in high-stakes grades to work longer hours than their peers. We also find that NCLB pressure has either neutral or positive effects on students' enjoyment of learning and their achievement gains on low-stakes exams in reading, math, and science.
Handle: RePEc:nbr:nberwo:16745
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Returns to Urban Boarding Schools: Evidence from SEED
Classification-JEL: I20; J01; J15
Author-Name: Vilsa E. Curto
Author-Name: Roland G. Fryer, Jr.
Author-Person: pfr43
Note: ED LS
Number: 16746
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16746
File-URL: http://www.nber.org/papers/w16746.pdf
File-Format: application/pdf
Publication-Status: published as The Potential of Urban Boarding Schools for the Poor: Evidence from SEED Vilsa E. Curto and Roland G. Fryer Jr. Journal of Labor Economics Vol. 32, No. 1 (January 2014), pp. 65-93
Abstract: The SEED schools, which combine a "No Excuses'' charter model with a five-day-a-week boarding program, are America's only urban public boarding schools for the poor. We provide the first causal estimate of the impact of attending SEED schools on academic achievement, with the goal of understanding whether changing a student's environment through boarding is a cost-effective strategy to increase achievement among the poor. Using admission lotteries, we show that attending a SEED school increases achievement by 0.198 standard deviations in reading and 0.230 standard deviations in math, per year of attendance. Despite these relatively large impacts, the return on investment in SEED is less than five percent due to the substantial costs of boarding. Similar "No Excuses'' charter schools -- without a boarding option -- have a return on investment of over eighteen percent.
Handle: RePEc:nbr:nberwo:16746
Template-Type: ReDIF-Paper 1.0
Title: A Model of Momentum
Classification-JEL: G12; G14; G31
Author-Name: Laura Xiaolei Liu
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP CF EFG
Number: 16747
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16747
File-URL: http://www.nber.org/papers/w16747.pdf
File-Format: application/pdf
Abstract: Optimal investment of firms implies that expected stock returns are tied with the expected marginal benefit of investment divided by the marginal cost of investment. Winners have higher expected growth and expected marginal productivity (two major components of the marginal benefit of investment), and earn higher expected stock returns than losers. The investment model succeeds in capturing average momentum profits, reversal of momentum in long horizons, as well as the interaction of momentum with market capitalization, firm age, trading volume, and stock return volatility. However, the model fails to reproduce procyclical momentum profits.
Handle: RePEc:nbr:nberwo:16747
Template-Type: ReDIF-Paper 1.0
Title: Marital Sorting and Parental Wealth
Classification-JEL: J12
Author-Name: Kerwin Kofi Charles
Author-Name: Erik Hurst
Author-Person: phu87
Author-Name: Alexandra Killewald
Note: AG EFG LS PE
Number: 16748
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16748
File-URL: http://www.nber.org/papers/w16748.pdf
File-Format: application/pdf
Publication-Status: published as Demography February 2013, Volume 50, Issue 1, pp 51-70 Marital Sorting and Parental Wealth Kerwin Kofi Charles, Erik Hurst, Alexandra Killewald
Abstract: Using data from the Panel Study of Income Dynamics (PSID), this paper studies the degree to which spouses sort in the marriage market on the basis of parental wealth. We estimate a variety of models, including transition matrices, OLS and TSLS models to deal with measurement error in wealth reports. Our various results show that men and women in the U.S. marry spouses whose parents have wealth similar to that of their own parents; and are very unlikely to marry persons from very different parental wealth backgrounds. This effect is present in the population as a whole, within racial groups, and especially in the tails of the distribution. Our preferred estimates indicate that the correlation in log wealth between own and spouse's parents wealth is around 0.4. We show that education accounts for only one-quarter of this sorting, and also show that selection into and out marriage by parental wealth does not appreciably bias our results.
Handle: RePEc:nbr:nberwo:16748
Template-Type: ReDIF-Paper 1.0
Title: Insurance and Taxation over the Life Cycle
Classification-JEL: H21
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Iván Werning
Author-Person: pwe141
Note: EFG PE
Number: 16749
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16749
File-URL: http://www.nber.org/papers/w16749.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Farhi, 2013. "Insurance and Taxation over the Life Cycle," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 596-635.
Abstract: We consider a dynamic Mirrlees economy in a life cycle context and study the op- timal insurance arrangement. Individual productivity evolves as a Markov process and is private information. We use a first order approach in discrete and continuous time and obtain novel theoretical and numerical results. Our main contribution is a formula describing the dynamics for the labor-income tax rate. When productivity is an AR(1) our formula resembles an AR(1) with a trend where: (i) the auto-regressive coefficient equals that of productivity; (ii) the trend term equals the covariance pro- ductivity with consumption growth divided by the Frisch elasticity of labor; and (iii) the innovations in the tax rate are the negative of consumption growth. The last prop- erty implies a form of short-run regressivity. Our simulations illustrate these results and deliver some novel insights. The average labor tax rises from 0% to 46% over 40 years, while the average tax on savings falls from 17% to 0% at retirement. We com- pare the second best solution to simple history independent tax systems, calibrated to mimic these average tax rates. We find that age dependent taxes capture a sizable fraction of the welfare gains. In this way, our theoretical results provide insights into simple tax systems.
Handle: RePEc:nbr:nberwo:16749
Template-Type: ReDIF-Paper 1.0
Title: Bubbly Liquidity
Classification-JEL: E2; E44
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Jean Tirole
Author-Person: pti33
Note: EFG ME
Number: 16750
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16750
File-URL: http://www.nber.org/papers/w16750.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Farhi & Jean Tirole, 2012. "Bubbly Liquidity," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 678-706.
Abstract: This paper analyzes the possibility and the consequences of rational bubbles in a dy- namic economy where financially constrained firms demand and supply liquidity. Bub- bles are more likely to emerge, the scarcer the supply of outside liquidity and the more limited the pledgeability of corporate income; they crowd investment in (out) when liquidity is abundant (scarce). We analyze extensions with firm heterogeneity and sto- chastic bubbles.
Handle: RePEc:nbr:nberwo:16750
Template-Type: ReDIF-Paper 1.0
Title: Consumption and Income Poverty over the Business Cycle
Classification-JEL: D6; E3; I3
Author-Name: Bruce D. Meyer
Author-Person: pme273
Author-Name: James X. Sullivan
Note: CH ED LS PE
Number: 16751
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16751
File-URL: http://www.nber.org/papers/w16751.pdf
File-Format: application/pdf
Publication-Status: published as “Consumption and Income Poverty Over the Business Cycle,” (with James X. Sullivan), Research in Labor Economics 32, 2011, 51-81. Outstanding Author Contribution Award Winner at the Literati Network Awards for Excellence 2012.
Abstract: We examine the relationship between the business cycle and poverty for the period from 1960 to 2008 using income data from the Current Population Survey and consumption data from the Consumer Expenditure Survey. This new evidence on the relationship between macroeconomic conditions and poverty is of particular interest given recent changes in anti-poverty policies that have placed greater emphasis on participation in the labor market and in-kind transfers. We look beyond official poverty, examining alternative income poverty and consumption poverty, which have conceptual and empirical advantages as measures of the well-being of the poor. We find that both income and consumption poverty are sensitive to macroeconomic conditions. A one percentage point increase in unemployment is associated with an increase in the after-tax income poverty rate of 0.9 to 1.1 percentage points in the long-run, and an increase in the consumption poverty rate of 0.3 to 1.2 percentage points in the long-run. The evidence on whether income is more responsive to the business cycle than consumption is mixed. Income poverty does appear to be more responsive using national level variation, but consumption poverty is often more responsive to unemployment when using regional variation. Low percentiles of both income and consumption are sensitive to macroeconomic conditions, and in most cases low percentiles of income appear to be more responsive than low percentiles of consumption.
Handle: RePEc:nbr:nberwo:16751
Template-Type: ReDIF-Paper 1.0
Title: Deposit Insurance Without Commitment: Wall St. Versus Main St
Classification-JEL: D84; E44; G21; G38
Author-Name: Russell Cooper
Author-Name: Hubert Kempf
Author-Person: pke25
Note: EFG
Number: 16752
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16752
File-URL: http://www.nber.org/papers/w16752.pdf
File-Format: application/pdf
Abstract: This paper studies the provision of deposit insurance without commitment in an economy with heterogenous households. When households are identical, deposit insurance will be provided ex post to reap insurance gains. But the ex post provision of deposit insurance redistributes consumption when households differ in their claims on the banking system as well as in their tax obligations to finance the deposit insurance. Deposit insurance will not be provided ex post if it requires a (socially) undesirable redistribution of consumption which outweighs insurance gains.
Handle: RePEc:nbr:nberwo:16752
Template-Type: ReDIF-Paper 1.0
Title: The Network Structure of International Trade
Classification-JEL: D85; F1
Author-Name: Thomas Chaney
Author-Person: pch504
Note: ITI
Number: 16753
Creation-Date: 2011-01
Order-URL: http://www.nber.org/papers/w16753
File-URL: http://www.nber.org/papers/w16753.pdf
File-Format: application/pdf
Publication-Status: published as Chaney, Thomas. 2014. "The Network Structure of International Trade." American Economic Review, 104(11): 3600-3634.
Abstract: I build a simple dynamic model of the formation of an international social network of importers and exporters. Firms can only export into markets in which they have a contact. They acquire new contacts both at random, and via their network of existing contacts. This model explains (i) the cross-sectional distribution of the number of foreign markets accessed by individual exporters, (ii) the cross-sectional geographic distribution of foreign contacts, and (iii) the dynamics of firm level exports. I show that the firm level dynamics of trade can explain the observed cross section of firm level exports. All theoretical predictions are supported by the data.
Handle: RePEc:nbr:nberwo:16753
Template-Type: ReDIF-Paper 1.0
Title: Currency and Financial Crises of the 1990s and 2000s
Classification-JEL: E02; F3; N1
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Steven Rosefielde
Note: IFM
Number: 16754
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16754
File-URL: http://www.nber.org/papers/w16754.pdf
File-Format: application/pdf
Publication-Status: published as Assaf Razin & Steven Rosefielde, 2011. "Currency and Financial Crises of the 1990s and 2000s," CESifo Economic Studies, Oxford University Press, vol. 57(3), pages 499-530, September.
Abstract: We survey three distinct types of financial crises which took place in the 1990s and the 2000s: 1) the credit implosion leading to severe banking crisis in Japan; 2) The foreign reserves' meltdown triggered by foreign hot money flight from frothy economies with fixed exchange rate regimes of developing Asian economies, and 3) The 2008 worldwide debacle rooted in financial institutional opacity and reckless aggregate demand management, epi-centered in the US, that spread almost instantaneously across the globe, mostly through international financial networks.
Handle: RePEc:nbr:nberwo:16754
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy Strategy: Lessons from the Crisis
Classification-JEL: E44; E52; E58; G01
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Note: EFG ME
Number: 16755
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16755
File-URL: http://www.nber.org/papers/w16755.pdf
File-Format: application/pdf
Publication-Status: published as in "Approaches to monetary policy revisited - lessons from the crisis," 6th ECB Central Banking Conference, 18-19 November 2010
Abstract: This paper examines what we have learned and how we should change our thinking about monetary policy strategy in the aftermath of the 2007-2009 financial crisis. It starts with a discussion of where the science of monetary policy was before the crisis and how central banks viewed monetary policy strategy. It will then examine how the crisis has changed the thinking of both macro/monetary economists and central bankers. Finally, it looks how much of the science of monetary policy needs to be altered and draws implications for monetary policy strategy.
Handle: RePEc:nbr:nberwo:16755
Template-Type: ReDIF-Paper 1.0
Title: Reducing Greenhouse Gas Emissions by Forest Protection: The Transaction Costs of REDD
Classification-JEL: H11; H23; K32; K33; K41; K42; O13; O38; O43; Q15; Q2; Q23; Q24; Q34; Q38; Q49; Q54; Q58; R1; R13
Author-Name: Lee J. Alston
Author-Person: pal162
Author-Name: Krister Andersson
Note: EEE LE PE POL
Number: 16756
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16756
File-URL: http://www.nber.org/papers/w16756.pdf
File-Format: application/pdf
Publication-Status: published as Alston, Lee J., and Krister Ander sson, “Reducing Greenhouse Gas Emissions by Forest Protection: The Transaction Costs of Implementing REDD,” Climate Law 3 (2011): 1‐9. Earlier version published as NBER Working Paper No. 16
Abstract: Understanding and minimizing the transaction costs of policy implementation are critical for reducing tropical forest losses. As the international community prepares to launch REDD+, a global initiative to reduce greenhouse gas emissions from tropical deforestation, policymakers need to pay attention to the transactions costs associated with negotiating, monitoring and enforcing contracts between governments and donors. The existing institutional design for REDD+ relies heavily on central government interventions in program countries. Analyzing new data on forest conservation outcomes, we identify several problems with this centralized approach to forest protection. We describe options for a more diversified policy approach that could reduce the full set of transaction costs and thereby improve the efficiency of the market-based approach for conservation.
Handle: RePEc:nbr:nberwo:16756
Template-Type: ReDIF-Paper 1.0
Title: The Service Sector as India's Road to Economic Growth
Classification-JEL: O1
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Poonam Gupta
Author-Person: pgu151
Note: IFM
Number: 16757
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16757
File-URL: http://www.nber.org/papers/w16757.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen & Poonam Gupta, 2011. "The Service Sector as India’s Road to Economic Growth?," India Policy Forum, National Council of Applied Economic Research, vol. 7(1), pages 1-42.
Abstract: While India is distinctive among developing countries for its fast-growing service sector, sceptics have raised doubts about the quality and sustainability of this service-sector growth and its implications for economic development. We show, consistent with the views of the sceptics, that while growth of the sector has been unusually rapid, it started 15 years ago from unusually low levels. That the share of services has now simply converged to the international norm raises questions about whether it will continue growing rapidly. In particular, whether service-sector output and employment continue to grow in excess of international norms will depend on the continued expansion of modern services (business services, communication and banking) but, also, on the application of modern information technology to more traditional services (retail and wholesale trade, transport and storage, public administration and defense ). The second aspect obviously has more positive implications for output than for employment. We also show that the modern services that are growing most rapidly are now large enough where their future performance could have a significant macroeconomic impact. The expansion of modern service-sector employment is not simply disguised manufacturing activity. Finally, we show that the mix of skilled and unskilled labor in manufacturing and services is increasingly similar. It is no longer obvious therefore that manufacturing is the main destination for the vast majority of Indian labor moving into the modern sector and that modern services are a viable destination only for the highly-skilled few. We conclude that sustaining economic growth and raising living standards will require shifting labor into both manufacturing and services.
Handle: RePEc:nbr:nberwo:16757
Template-Type: ReDIF-Paper 1.0
Title: Unconventional Fiscal Policy at the Zero Bound
Classification-JEL: E12; E52; E58; E6; E62
Author-Name: Isabel Correia
Author-Person: pco92
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Juan Pablo Nicolini
Author-Name: Pedro Teles
Author-Person: pte24
Note: EFG ME
Number: 16758
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16758
File-URL: http://www.nber.org/papers/w16758.pdf
File-Format: application/pdf
Publication-Status: published as Isabel Correia & Emmanuel Farhi & Juan Pablo Nicolini & Pedro Teles, 2013. "Unconventional Fiscal Policy at the Zero Bound," American Economic Review, American Economic Association, vol. 103(4), pages 1172-1211, June.
Abstract: When the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that in the standard New Keynesian model, tax policy can deliver such stimulus at no cost and in a time-consistent manner. There is no need to use inefficient policies such as wasteful public spending or future commitments to inflate. We conclude that in the New Keynesian model, the zero bound on nominal interest rates is not a relevant constraint on both fiscal and monetary policy.
Handle: RePEc:nbr:nberwo:16758
Template-Type: ReDIF-Paper 1.0
Title: Did the Stimulus Stimulate? Real Time Estimates of the Effects of the American Recovery and Reinvestment Act
Classification-JEL: E6; E62; E65
Author-Name: James Feyrer
Author-Person: pfe139
Author-Name: Bruce Sacerdote
Note: EFG ME
Number: 16759
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16759
File-URL: http://www.nber.org/papers/w16759.pdf
File-Format: application/pdf
Abstract: We use state and county level variation to examine the impact of the American Recovery and Reinvestment Act on employment. A cross state analysis suggests that one additional job was created by each $170,000 in stimulus spending. Time series analysis at the state level suggests a smaller response with a per job cost of about $400,000. These results imply Keynesian multipliers between 0.5 and 1.0, somewhat lower than those assumed by the administration. However, the overall results mask considerable variation for different types of spending. Grants to states for education do not appear to have created any additional jobs. Support programs for low income households and infrastructure spending are found to be highly expansionary. Estimates excluding education spending suggest fiscal policy multipliers of about 2.0 with per job cost of under $100,000.
Handle: RePEc:nbr:nberwo:16759
Template-Type: ReDIF-Paper 1.0
Title: The Distribution of the Size of Price Changes
Classification-JEL: E00; E3
Author-Name: Alberto Cavallo
Author-Person: pca605
Author-Name: Roberto Rigobon
Author-Person: pri12
Note: IFM
Number: 16760
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16760
File-URL: http://www.nber.org/papers/w16760.pdf
File-Format: application/pdf
Abstract: Different theories of price stickiness have distinct implications on the number of modes in the distribution of price changes. We formally test for the number of modes in the price change distribution of 36 supermarkets, spanning 22 countries and 5 continents. We present results for three modality tests: the two best-known tests in the statistical literature, Hartigan's Dip and Silverman's Bandwidth, and a test designed in this paper, called the Proportional Mass test (PM). Three main results are uncovered. First, when the traditional tests are used, unimodality is rejected in about 90 percent of the retailers. When we used the PM test, which reduces the impact of smaller modes in the distribution and can be applied to test for modality around zero percent, we still reject unimodality in two thirds of the supermarkets. Second, category-level heterogeneity can account for about half of the PM test's rejections of unimodality. Finally, a simulation of the model in Alvarez, Lippi, and Paciello (2010) shows that the data is consistent a combination of both time and state-dependent pricing behaviors.
Handle: RePEc:nbr:nberwo:16760
Template-Type: ReDIF-Paper 1.0
Title: Financial Integration, Entrepreneurial Risk and Global Imbalances
Classification-JEL: E13; F15; F41
Author-Name: George-Marios Angeletos
Author-Person: pan143
Author-Name: Vasia Panousi
Author-Person: ppa449
Note: IFM
Number: 16761
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16761
File-URL: http://www.nber.org/papers/w16761.pdf
File-Format: application/pdf
Publication-Status: published as “ Financial Integration, Entrepreneurial Risk and Global Dynamics ” Journal of Economic Theory , vol. 146, no. 3 (May 2011) , with V. Panousi.
Abstract: How does financial integration impact capital accumulation, current-account dynamics, and cross-country inequality? We investigate this question within a two-country, general-equilibrium, incomplete-markets model that focuses on the importance of idiosyncratic entrepreneurial risk-- a risk that introduces, not only a precautionary motive for saving, but also a wedge between the interest rate and the marginal product of capital. Our contribution is to show that this friction provides a simple explanation for the emergence of global imbalances, a resolution to the empirical puzzle that capital often fails to flow from the rich or slow-growing countries to the poor or fast-growing ones, and a set of policy lessons regarding the intertemporal costs and benefits of capital-account liberalization.
Handle: RePEc:nbr:nberwo:16761
Template-Type: ReDIF-Paper 1.0
Title: The Value of Terroir: Hedonic Estimation of Vineyard Sale Prices
Classification-JEL: C2; Q11
Author-Name: Robin Cross
Author-Name: Andrew J. Plantinga
Author-Name: Robert N. Stavins
Author-Person: pst167
Note: EEE
Number: 16762
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16762
File-URL: http://www.nber.org/papers/w16762.pdf
File-Format: application/pdf
Publication-Status: published as AThe Value of Terroir: Hedonic Estimation of Vineyard Sale Prices.@ Journal of Wine Economics, Volume 6, Number 1, 2011, pp. 1-14. With R. Cross and A.J. Plantinga. [A-67]
Abstract: We examine the value of terroir, which refers to the special characteristics of a place that impart unique qualities to the wine produced. We do this by conducting a hedonic analysis of vineyard sales in the Willamette Valley of Oregon to ascertain whether site attributes, such as slope, aspect, elevation, and soil types, or designated appellations are more important determinants of price. We find that prices are strongly determined by sub-AVA appellation designations, but not by specific site attributes. These results indicate that the concept of terroir matters economically, although the reality of terroir - as proxied for by locational attributes - is not significant.
Handle: RePEc:nbr:nberwo:16762
Template-Type: ReDIF-Paper 1.0
Title: The Promise and Performance of the Federal Reserve as Lender of Last Resort 1914-1933
Classification-JEL: E58; G28; N21; N22
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: David C. Wheelock
Note: DAE ME
Number: 16763
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16763
File-URL: http://www.nber.org/papers/w16763.pdf
File-Format: application/pdf
Publication-Status: published as “ The Promise and Performance of the Federal Reserve as Lender of Last Resort 1914 - 1933 ” with Michael D. Bordo, in The Origins, History, and Future of the Federal Reserve: A Return to Jekyll Island , edited by Michael D. Bordo and William Roberds , Cambridge University Press , 2013, pp 59 - 98 .
Abstract: This paper examines the origins and early performance of the Federal Reserve as lender of last resort. The Fed was established to overcome the problems of the National Banking era, in particular an "inelastic" currency and the absence of an effective lender of last resort. As conceived by Paul Warburg and Nelson Aldrich at Jekyll Island in 1910, the Fed's discount window and bankers acceptance-purchase facilities were expected to solve the problems that had caused banking panics in the National Banking era. Banking panics returned with a vengeance in the 1930s, however, and we examine why the Fed failed to live up to the promise of its founders. Although many factors contributed to the Fed's shortcomings, we argue that the failure of the Federal Reserve Act to faithfully recreate the conditions that had enabled European central banks to perform effectively as lenders of last resort, or to reform the inherently unstable U.S. banking system, were crucial. The Fed's shotcomings led to numerous reforms in the mid-1930s, including expansion of the Fed's lending authority and changes in the System's structure, as well as changes that made the U.S. banking system less prone to banking panics. Finally, we consider lessons about the design of lender of last resort policies that might be drawn from the Fed's early history.
Handle: RePEc:nbr:nberwo:16763
Template-Type: ReDIF-Paper 1.0
Title: Investors' and Central Bank's Uncertainty Embedded in Index Options
Classification-JEL: G12; G13; G18
Author-Name: Alexander David
Author-Name: Pietro Veronesi
Note: AP EFG ME
Number: 16764
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16764
File-URL: http://www.nber.org/papers/w16764.pdf
File-Format: application/pdf
Publication-Status: published as Alexander David & Pietro Veronesi, 2014. "Investors' and Central Bank's Uncertainty Embedded in Index Options," Review of Financial Studies, vol 27(6), pages 1661-1716.
Abstract: Shocks to equity options' ATM implied volatility (ATMIV) are followed by persistently lower short-term rates. Shocks to the ratio of OTM puts' over OTM calls' implied volatilities (P/C) are followed by persistently higher rates. The stock's and Treasury-bond's ATMIV indices, which measure market and policy uncertainty, are counter-cyclical while the P/C index, which measures downside risk, is pro-cyclical. An equilibrium model where investors and the central bank learn about composite regimes on economic and policy variables explains these options' dynamics, linking them to a learning-based, forward-looking Taylor rule. The model produces several predictions on the relation between options, monetary policy variables, and beliefs that find support in the data.
Handle: RePEc:nbr:nberwo:16764
Template-Type: ReDIF-Paper 1.0
Title: Is It Whom You Know or What You Know? An Empirical Assessment of the Lobbying Process
Classification-JEL: D72; H7; P48
Author-Name: Marianne Bertrand
Author-Person: pbe697
Author-Name: Matilde Bombardini
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: POL
Number: 16765
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16765
File-URL: http://www.nber.org/papers/w16765.pdf
File-Format: application/pdf
Publication-Status: published as “Is It Whom You Know Or What You Know? An Empirical Assessment of the Lobbying Process” (joint with Matilde Bombardini and Francesco Trebbi), forthcoming, American Economic Review.
Abstract: What do lobbyists do? Some believe that lobbyists' main role is to provide issue-specific information and expertise to congressmen to help guide the law-making process. Others believe that lobbyists mainly provide the firms and other special interests they represent with access to politicians in their "circle of influence" and that this access is the be-all and end-all of how lobbyists affect the lawmaking process. This paper combines a descriptive analysis with more targeted testing to get inside the black box of the lobbying process and inform our understanding of the relative importance of these two views of lobbying. We exploit multiple sources of data covering the period 1999 to 2008, including: federal lobbying registration from the Senate Office of Public Records, Federal Election Commission reports, committee and subcommittee assignments for the 106th to 110th Congresses, and background information on individual lobbyists. A pure issue expertise view of lobbying does not fit the data well. Instead, maintaining connections to politicians appears central to what lobbyists do. In particular, we find that whom lobbyists are connected to (through political campaign donations) directly affects what they work on. More importantly, lobbyists appear to systematically switch issues as the politicians they were previously connected to switch committee assignments, hence following people they know rather than sticking to issues. We also find evidence that lobbyists that have issue expertise earn a premium, but we uncover that such a premium for lobbyists that have connections to many politicians and Members of Congress is considerably larger.
Handle: RePEc:nbr:nberwo:16765
Template-Type: ReDIF-Paper 1.0
Title: Securitization without Adverse Selection: The Case of CLOs
Classification-JEL: G0; G00; G2; G20
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Jennifer Dlugosz
Author-Name: Victoria Ivashina
Note: CF
Number: 16766
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16766
File-URL: http://www.nber.org/papers/w16766.pdf
File-Format: application/pdf
Publication-Status: published as Benmelech, Efraim & Dlugosz, Jennifer & Ivashina, Victoria, 2012. "Securitization without adverse selection: The case of CLOs," Journal of Financial Economics, Elsevier, vol. 106(1), pages 91-113.
Abstract: For nearly a decade prior to the collapse of structured finance markets in late 2007, securitization by collateralized loan obligations (CLOs) was a key source of capital for the high-yield corporate loan market. In this paper, we investigate whether securitization was associated with risky lending in the corporate loan market by examining the performance of individual loans held by CLOs. We employ two different datasets that identify loan holdings for a large set of CLOs and find that adverse selection problems in corporate loan securitizations are less severe than commonly believed. Controlling for borrowers' credit quality, securitized loans perform no worse, and under some criteria even better, than unsecuritized loans of comparable credit quality. However, within a CLO portfolio, loans originated by the bank that acts as the CLO underwriter underperform the rest of the loan portfolio. Overall, we argue that the securitization of corporate loans is fundamentally different from securitization of other assets classes because securitized loans are fractions of syndicated loans. Therefore, mechanisms used to align incentives in a lending syndicate also reduce adverse selection in the choice of CLO collateral.
Handle: RePEc:nbr:nberwo:16766
Template-Type: ReDIF-Paper 1.0
Title: FDI Spillovers and Industrial Policy: The Role of Tariffs and Tax Holidays
Classification-JEL: F2; F23
Author-Name: Luosha Du
Author-Name: Ann Harrison
Author-Person: pha441
Author-Name: Gary Jefferson
Author-Person: pje51
Note: EEE ITI
Number: 16767
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16767
File-URL: http://www.nber.org/papers/w16767.pdf
File-Format: application/pdf
Publication-Status: published as Du, Luosha & Harrison, Ann & Jefferson, Gary, 2014. "FDI Spillovers and Industrial Policy: The Role of Tariffs and Tax Holidays," World Development, Elsevier, vol. 64(C), pages 366-383.
Abstract: This paper examines how industrial policy - specifically tariff liberalization and tax subsidies - affects the magnitude and direction of FDI spillovers. We examine these spillover effects across the diverse ownership structure of China's manufacturing sector. Using this approach, we control for policies that are likely to be correlated with both firm-level productivity and industry FDI, thereby limiting the problem of omitted variables and bias associated with estimating the impacts of FDI spillovers. During 1998-2007, the span of our Chinese firm-level data set, both tariffs and FDI tax holidays changed dramatically. Our results highlight the efficacy of vertical FDI spillovers. We find that tariff reforms, particularly tariff reductions associated with China's WTO ascension, increased the productivity impacts of FDI's backward spillovers. Tax policy - both corporate income and VAT subsidies - has seemingly drawn FDI into strategic industries that spawn significant vertical spillovers. We conclude that liberalization measures during the critical 1998-2007 period on balance served to enhance productivity growth in Chinese industry.
Handle: RePEc:nbr:nberwo:16767
Template-Type: ReDIF-Paper 1.0
Title: Does the Indexing of Government Transfers Make Carbon Pricing Progressive?
Classification-JEL: H23; H55; Q43; Q58
Author-Name: Don Fullerton
Author-Person: pfu10
Author-Name: Garth Heutel
Author-Person: phe315
Author-Name: Gilbert E. Metcalf
Note: EEE PE
Number: 16768
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16768
File-URL: http://www.nber.org/papers/w16768.pdf
File-Format: application/pdf
Publication-Status: published as Don Fullerton & Garth Heutel & Gilbert E. Metcalf, 2012. "Does the Indexing of Government Transfers Make Carbon Pricing Progressive?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 347-353.
Abstract: We analyze both the uses side and the sources side incidence of domestic climate policy using an analytical general equilibrium model, taking into account the degree of government program indexing. When transfer programs such as Social Security are explicitly indexed to inflation, higher energy prices automatically lead to cost-of-living adjustments for recipients. We show results with no indexing, 100 percent indexing, and partial indexing based on our analysis of actual transfer programs. When households are classified by annual income, the indexing of U.S. transfers is not enough to offset the regressive uses side, but when they are classified by annual expenditures as a proxy for permanent income, transfer indexing does offset regressivity across the lowest income groups.
Handle: RePEc:nbr:nberwo:16768
Template-Type: ReDIF-Paper 1.0
Title: Saints Marching In, 1590-2009
Classification-JEL: N10; Z1; Z12
Author-Name: Robert J. Barro
Author-Person: pba251
Author-Name: Rachel M. McCleary
Note: EFG LS PE
Number: 16769
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16769
File-URL: http://www.nber.org/papers/w16769.pdf
File-Format: application/pdf
Abstract: The Catholic Church has been making saints for centuries, typically in a two-stage process featuring beatification and canonization. We analyze determinants of rates of beatification and canonization (for non-martyrs) over time and across six world regions. The research uses a recently assembled data set on numbers and characteristics of beatifieds and saints chosen since 1590. We classify these blessed persons regionally in accordance with residence at death. These data are combined with time-series estimates of regional populations of Catholics, broadly-defined Protestants, Orthodox, and Evangelicals (mostly a sub-set of Protestants). Regression estimates indicate that the canonization rate depends strongly on the number of candidates, gauged by a region's stock of beatifieds who have not yet been canonized. The beatification rate depends positively on the region's stock of persons previously canonized. The last two popes, John Paul II and Benedict XVI (the only non-Italians in our sample), are outliers, choosing blessed persons at a much higher rate than that of their predecessors. Since around 1900, the naming of blessed persons seems to reflect a response by the Catholic Church to competition from Protestantism or Evangelicalism. We find no evidence, at least since 1590, of competition between the Catholic and Orthodox Churches.
Handle: RePEc:nbr:nberwo:16769
Template-Type: ReDIF-Paper 1.0
Title: The Cross-Section of Hurdle Rates for Capital Budgeting: An Empirical Analysis of Survey Data
Classification-JEL: G12; G3; G31
Author-Name: Ravi Jagannathan
Author-Person: pja91
Author-Name: Iwan Meier
Author-Name: Vefa Tarhan
Note: AP CF
Number: 16770
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16770
File-URL: http://www.nber.org/papers/w16770.pdf
File-Format: application/pdf
Abstract: Whereas Poterba and Summers (1995) find that firms use hurdle rates that are unrelated to their CAPM betas, Graham and Harvey (2001) find that 74% of their survey firms use the CAPM for capital budgeting. We provide an explanation for these two apparently contradictory conclusions. We find that firms behave as though they add a hurdle premium to their CAPM based cost of capital. Following McDonald and Siegel (1986), we argue that the hurdle premium depends on the value of the option to defer investments. While CAPM explains only 10% of the cross-sectional variation in hurdle rates across firms, variables that proxy for the benefits from the option to wait for potentially better investment opportunities explain 35%. Estimates of our hurdle premium model parameters imply an equity premium of 3.8% per year, a figure that is essentially the same as that reported in the survey by Graham and Harvey (2005). Consistent with our model, growth firms use a higher hurdle rate when compared to value firms, even though they have a lower cost of capital.
Handle: RePEc:nbr:nberwo:16770
Template-Type: ReDIF-Paper 1.0
Title: Why Are Saving Rates so High in China?
Classification-JEL: D91; E21; O53
Author-Name: Dennis Tao Yang
Author-Person: pya100
Author-Name: Junsen Zhang
Author-Person: pzh194
Author-Name: Shaojie Zhou
Author-Person: pzh376
Note: EFG
Number: 16771
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16771
File-URL: http://www.nber.org/papers/w16771.pdf
File-Format: application/pdf
Publication-Status: published as Why Are Saving Rates So High in China?, Dennis Tao Yang, Junsen Zhang, Shaojie Zhou. in Capitalizing China, Fan and Morck. 2013
Abstract: In this paper, we define "The Chinese Saving Puzzle" as the persistently high national saving rate at 34-53 percent of gross domestic product (GDP) in the past three decades and a surge in the saving rate by 11 percentage points from 2000-2008. Using data from the Flow of Funds Accounts (FFA) and Urban Household Surveys (UHS) supplemented by the findings from existing studies, we analyze the sources and causes of China's high and rising saving rates in the government, corporate, and household sectors. Although the causes of China's high saving are complex, we suggest that the evolving economic, demographic, and policy trends in the internal and external environments of the Chinese economy will likely lead to a decline in national saving in the foreseeable future.
Handle: RePEc:nbr:nberwo:16771
Template-Type: ReDIF-Paper 1.0
Title: Health Care Spending Growth and the Future of U.S. Tax Rates
Classification-JEL: H2; H21; H22; I0
Author-Name: Katherine Baicker
Author-Name: Jonathan S. Skinner
Author-Person: psk23
Note: EH PE
Number: 16772
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16772
File-URL: http://www.nber.org/papers/w16772.pdf
File-Format: application/pdf
Publication-Status: published as Katherine Baicker & Jonathan Skinner, 2011. "Health Care Spending Growth and the Future of U.S. Tax Rates," Tax Policy and the Economy, University of Chicago Press, vol. 25(1), pages 39 - 68.
Publication-Status: published as Health Care Spending Growth and the Future of US Tax Rates, Katherine Baicker, Jonathan Skinner. in Tax Policy and the Economy, Volume 25, Brown. 2011
Abstract: The fraction of GDP devoted to health care in the United States is the highest in the world and rising rapidly. Recent economic studies have highlighted the growing value of health improvements, but less attention has been paid to the efficiency costs of tax-financed spending to pay for such improvements. This paper uses a life cycle model of labor supply, saving, and longevity improvement to measure the balanced-budget impact of continued growth in the Medicare and Medicaid programs. The model predicts that top marginal tax rates could rise to 70 percent by 2060, depending on the progressivity of future tax changes. The deadweight loss of the tax system is greater when the financing is more progressive. If the share of taxes paid by high-income taxpayers remains the same, the efficiency cost of raising the revenue needed to finance the additional health spending is $1.48 per dollar of revenue collected, and GDP declines (relative to trend) by 11 percent. A proportional payroll tax has a lower efficiency cost (41 cents per dollar of revenue averaged over all tax hikes, a 5 percent drop in GDP) but more than doubles the share of the tax burden borne by lower income taxpayers. Empirical support for the model comes from analysis of OECD country data showing that countries facing higher tax burdens in 1979 experienced slower health care spending growth in subsequent decades. The rising burden imposed by the public financing of health care expenditures may therefore serve as a brake on health care spending growth.
Handle: RePEc:nbr:nberwo:16772
Template-Type: ReDIF-Paper 1.0
Title: The Fragility of Estimated Effects of Unilateral Divorce Laws on Divorce Rates
Classification-JEL: C23; J12; K36
Author-Name: Jin Young Lee
Author-Name: Gary Solon
Author-Person: pso215
Note: LE LS
Number: 16773
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16773
File-URL: http://www.nber.org/papers/w16773.pdf
File-Format: application/pdf
Publication-Status: published as Jin Young Lee & Gary Solon, 2011. "The Fragility of Estimated Effects of Unilateral Divorce Laws on Divorce Rates," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 11(1), pages 49.
Abstract: Following an influential article by Friedberg (1998), Wolfers (2006) explored the sensitivity of Friedberg's results to allowing for dynamics in the response of divorce rates to the adoption of unilateral divorce laws. We in turn explore the sensitivity of Wolfers's results to variations in estimation method and functional form, and we find that the results are extremely fragile. We conclude first that the impact of unilateral divorce laws remains unclear. Second, extending Wolfers's methodological insight about sensitivity of differences-in-differences estimation to allowance for dynamic response, we suggest that identification in differences-in-differences research becomes weaker in the presence of dynamics, especially in the presence of unit-specific time trends.
Handle: RePEc:nbr:nberwo:16773
Template-Type: ReDIF-Paper 1.0
Title: Transition to FDI Openness: Reconciling Theory and Evidence
Classification-JEL: E01; E2; F21; F23; F36; F41
Author-Name: Ellen R. McGrattan
Author-Person: pmc46
Note: AP EFG
Number: 16774
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16774
File-URL: http://www.nber.org/papers/w16774.pdf
File-Format: application/pdf
Publication-Status: published as Ellen McGrattan, 2012. "Transition to FDI Openness: Reconciling Theory and Evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(4), pages 437-458, October.
Abstract: Empirical studies quantifying the economic effects of increased foreign direct investment (FDI) have not provided conclusive evidence that they are positive, as theory predicts. This paper shows that the lack of empirical evidence is consistent with theory if countries are in transition to FDI openness. Anticipated welfare gains lead to temporary declines in domestic investment and employment. Also, growth measures miss some intangible FDI, which is expensed from company profits. The reconciliation of theory and evidence is accomplished with a multicountry dynamic general equilibrium model parameterized with data from a sample of 104 countries during 1980-2005. Although no systematic benefits of FDI openness are found, the model demonstrates that the eventual gains in growth and welfare can be huge, especially for small countries.
Handle: RePEc:nbr:nberwo:16774
Template-Type: ReDIF-Paper 1.0
Title: Targeted Transfers and the Fiscal Response to the Great Recession
Classification-JEL: E62; H31; H5
Author-Name: Hyunseung Oh
Author-Person: poh33
Author-Name: Ricardo Reis
Author-Person: pre73
Note: EFG ME PE
Number: 16775
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16775
File-URL: http://www.nber.org/papers/w16775.pdf
File-Format: application/pdf
Publication-Status: published as Oh, Hyunseung & Reis, Ricardo, 2012. "Targeted transfers and the fiscal response to the great recession," Journal of Monetary Economics, Elsevier, vol. 59(S), pages S50-S64.
Abstract: Between 2007 and 2009, government expenditures increased rapidly across the OECD countries. While economic research on the impact of government purchases has flourished, in the data, about three quarters of the increase in expenditures in the United States (and more in other countries) was in government transfers. We document this fact, and show that the increase in U.S. spending on retirement, disability, and medical care has been as high as the increase in government purchases. We argue that future research should focus on the positive impact of transfers. Towards this, we present a model in which there is no representative agent and Ricardian equivalence does not hold because of uncertainty, imperfect credit markets, and nominal rigidities. Targeted lump-sum transfers are expansionary both because of a neoclassical wealth effect and because of a Keynesian aggregate demand effect.
Handle: RePEc:nbr:nberwo:16775
Template-Type: ReDIF-Paper 1.0
Title: Rethinking America's Illegal Drug Policy
Classification-JEL: K0
Author-Name: John J. Donohue III
Author-Person: pdo40
Author-Name: Benjamin Ewing
Author-Name: David Peloquin
Note: LE
Number: 16776
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16776
File-URL: http://www.nber.org/papers/w16776.pdf
File-Format: application/pdf
Publication-Status: published as Rethinking America's Illegal Drug Policy, John J. Donohue III, Benjamin Ewing, David Pelopquin. in Controlling Crime: Strategies and Tradeoffs, Cook, Ludwig, and McCrary. 2011
Abstract: This paper provides a critical review of the empirical and theoretical literatures on illegal drug policy, including cross-country comparisons, in order to evaluate three drug policy regimes: criminalization, legalization and "depenalization." Drawing on the experiences of various states, as well as countries such as Portugal and the Netherlands, the paper attempts to identify cost-minimizing policies for marijuana and cocaine by assessing the differing ways in which the various drug regimes would likely change the magnitude and composition of the social costs of each drug. The paper updates and evaluates Jeffrey Miron's 1999 national time series analysis of drug prohibition spending and the homicide rate, which underscores the lack of a solid empirical base for assessing the theoretically anticipated crime drop that would come from drug legalization. Nonetheless, the authors conclude that given the number of arrests for marijuana possession, and the costs of incarceration and crime systemic to cocaine criminalization, the current regime is unlikely to be cost-minimizing for either marijuana or cocaine.
Handle: RePEc:nbr:nberwo:16776
Template-Type: ReDIF-Paper 1.0
Title: Margin-Based Asset Pricing and Deviations from the Law of One Price
Classification-JEL: E02; E44; G01; G12; G13
Author-Name: Nicolae Gârleanu
Author-Name: Lasse Heje Pedersen
Author-Person: ppe174
Note: AP EFG ME
Number: 16777
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16777
File-URL: http://www.nber.org/papers/w16777.pdf
File-Format: application/pdf
Publication-Status: published as Nicolae G�rleanu & Lasse Heje Pedersen, 2011. "Margin-based Asset Pricing and Deviations from the Law of One Price," Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 1980-2022.
Abstract: In a model with heterogeneous-risk-aversion agents facing margin constraints, we show how securities' required returns are characterized both by their betas and their margin requirements. Negative shocks to fundamentals make margin constraints bind, lowering risk-free rates and raising Sharpe ratios of risky securities, especially for high-margin securities. Such a funding-liquidity crisis gives rise to "bases," that is, price gaps between securities with identical cash-flows but different margins. In the time series, bases depend on the shadow cost of capital, which can be captured through the interest-rate spread between collateralized and uncollateralized loans, and, in the cross section, they depend on relative margins. We test the model empirically using the CDS-bond bases and other deviations from the Law of One Price, and use it to evaluate central banks' lending facilities.
Handle: RePEc:nbr:nberwo:16777
Template-Type: ReDIF-Paper 1.0
Title: A Global View of Productivity Growth in China
Classification-JEL: F1; F4; O4
Author-Name: Chang-Tai Hsieh
Author-Name: Ralph Ossa
Author-Person: pos139
Note: IFM ITI PR
Number: 16778
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16778
File-URL: http://www.nber.org/papers/w16778.pdf
File-Format: application/pdf
Publication-Status: published as Chang-Tai Hsieh & Ralph Ossa, 2016. "A Global View of Productivity Growth in China," Journal of International Economics, .
Abstract: How does a country's productivity growth a¤ect worldwide real incomes through international trade? In this paper, we take this classic question to the data by measuring the spillover e¤ects of China's productivity growth. Our framework features traditional terms-of-trade e¤ects and new trade home market e¤ects as suggested by the theoretical literature and works from a reference point which perfectly matches industry-level trade. Focusing on the years 1995 to 2007, we find that the spillover e¤ects of China's productivity growth are small causing the real incomes of China's trading partners to increase by only 0.1 percent on average.
Handle: RePEc:nbr:nberwo:16778
Template-Type: ReDIF-Paper 1.0
Title: Net Fiscal Stimulus During the Great Recession
Classification-JEL: E62; F36; H77
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Gurnain Kaur Pasricha
Author-Person: ppa330
Note: IFM PE
Number: 16779
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16779
File-URL: http://www.nber.org/papers/w16779.pdf
File-Format: application/pdf
Publication-Status: published as “Net fiscal stimulus during the great recession,” (with G. K. Pasricha), Review of Development Economics, 2013, pp: 397–413.
Abstract: This paper studies the patterns of fiscal stimuli in the OECD countries propagated by the global crisis. Overall, we find that the USA net fiscal stimulus was modest relative to peers, despite it being the epicenter of the crisis, and having access to relatively cheap funding of its twin deficits. The USA is ranked at the bottom third in terms of the rate of expansion of the consolidated government consumption and investment of the 28 countries in sample. Contrary to historical experience, emerging markets had strongly countercyclical policy during the period immediately preceding the Great Recession and the Great Recession. Many developed OECD countries had procyclical fiscal policy stance in the same periods. Federal unions, emerging markets and countries with very high GDP growth during the pre-recession period saw larger net fiscal stimulus on average than their counterparts. We also find that greater net fiscal stimulus was associated with lower flow costs of general government debt in the same or subsequent period.
Handle: RePEc:nbr:nberwo:16779
Template-Type: ReDIF-Paper 1.0
Title: The Consequences of Financial Innovation: A Counterfactual Research Agenda
Classification-JEL: G20; O31
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Peter Tufano
Note: CF PR
Number: 16780
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16780
File-URL: http://www.nber.org/papers/w16780.pdf
File-Format: application/pdf
Publication-Status: published as The Consequences of Financial Innovation: A Counterfactual Research Agenda, Josh Lerner, Peter Tufano. in The Rate and Direction of Inventive Activity Revisited, Lerner and Stern. 2012
Publication-Status: published as Josh Lerner & Peter Tufano, 2011. "The Consequences of Financial Innovation: A Counterfactual Research Agenda," Annual Review of Financial Economics, vol 3(1), pages 41-85.
Abstract: Financial innovation has been both praised as the engine of growth of society and castigated for being the source of the weakness of the economy. In this paper, we review the literature on financial innovation and highlight the similarities and differences between financial innovation and other forms of innovation. We also propose a research agenda to systematically address the social welfare implications of financial innovation. To complement existing empirical and theoretical methods, we propose that scholars examine case studies of systemic (widely adopted) innovations, explicitly considering counterfactual histories had the innovations never been invented or adopted.
Handle: RePEc:nbr:nberwo:16780
Template-Type: ReDIF-Paper 1.0
Title: Estimation and Evaluation of DSGE Models: Progress and Challenges
Classification-JEL: C32; C50; E30; E50
Author-Name: Frank Schorfheide
Author-Person: psc19
Note: EFG ME
Number: 16781
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16781
File-URL: http://www.nber.org/papers/w16781.pdf
File-Format: application/pdf
Publication-Status: published as “Estimation and Evaluation of DSGE Models: Progress and Challenges.” Forthcoming in: D. Acemoglu, M. Arellano, and E. Deckel (eds .): “Advances in Economics and Econometrics: Theory and Applications, Tenth World Congress,” Vol 3 , 2 013, Cambridge University Press , 184 - 230.
Abstract: Estimated dynamic stochastic equilibrium (DSGE) models are now widely used for empirical research in macroeconomics as well as for quantitative policy analysis and forecasting at central banks around the world. This paper reviews recent advances in the estimation and evaluation of DSGE models, discusses current challenges, and provides avenues for future research.
Handle: RePEc:nbr:nberwo:16781
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Fatigue, Fiscal Space and Debt Sustainability in Advanced Economies
Classification-JEL: E62; H62; H63
Author-Name: Atish R. Ghosh
Author-Person: pgh16
Author-Name: Jun I. Kim
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Jonathan D. Ostry
Author-Person: pos23
Author-Name: Mahvash S. Qureshi
Author-Person: pqu82
Note: IFM
Number: 16782
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16782
File-URL: http://www.nber.org/papers/w16782.pdf
File-Format: application/pdf
Publication-Status: published as Atish R. Ghosh & Jun I. Kim & Enrique G. Mendoza & Jonathan D. Ostry & Mahvash S. Qureshi, 2013. "Fiscal Fatigue, Fiscal Space and Debt Sustainability in Advanced Economies," Economic Journal, Royal Economic Society, vol. 0, pages F4-F30, 02.
Abstract: How high can public debt rise without compromising fiscal solvency? We answer this question using a stochastic ability-to-pay model of sovereign default in which risk-neutral investors lend to a government that displays "fiscal fatigue," because its ability to increase primary balances cannot keep pace with rising debt. As a result, the government faces an endogenous debt limit beyond which debt cannot be rolled-over. Using data for 23 advanced economies over 1970-2007, we find evidence of a fiscal reaction function with these features, and use it to compute "fiscal space," defined as the difference between projected debt ratios and debt limits.
Handle: RePEc:nbr:nberwo:16782
Template-Type: ReDIF-Paper 1.0
Title: School Admissions Reform in Chicago and England: Comparing Mechanisms by Their Vulnerability to Manipulation
Classification-JEL: C78; I20
Author-Name: Parag A. Pathak
Author-Name: Tayfun Sönmez
Note: ED LS PE
Number: 16783
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16783
File-URL: http://www.nber.org/papers/w16783.pdf
File-Format: application/pdf
Publication-Status: published as Parag A. Pathak & Tayfun S�nmez, 2013. "School Admissions Reform in Chicago and England: Comparing Mechanisms by Their Vulnerability to Manipulation," American Economic Review, American Economic Association, vol. 103(1), pages 80-106, February.
Abstract: In Fall 2009, officials from Chicago Public Schools changed their assignment mechanism for coveted spots at selective college preparatory high schools midstream. After asking about 14,000 applicants to submit their preferences for schools under one mechanism, the district asked them re-submit their preferences under a new mechanism. Officials were concerned that "high-scoring kids were being rejected simply because of the order in which they listed their college prep preferences" under the abandoned mechanism. What is somewhat puzzling is that the new mechanism is also manipulable. This paper introduces a method to compare mechanisms based on their vulnerability to manipulation. Under our notion, the old mechanism is more manipulable than the new Chicago mechanism. Indeed, the old Chicago mechanism is at least as manipulable as any other plausible mechanism. A number of similar transitions between mechanisms took place in England after the widely popular Boston mechanism was ruled illegal in 2007. Our approach provides support for these and other recent policy changes involving matching mechanisms.
Handle: RePEc:nbr:nberwo:16783
Template-Type: ReDIF-Paper 1.0
Title: Speculators and Middlemen: The Strategy and Performance of Investors in the Housing Market
Classification-JEL: E3; G01; G1; G12; G14; G28; H7; R0; R21; R31; R51
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Christopher Geissler
Author-Name: Kyle Mangum
Author-Person: pma1996
Author-Name: James W. Roberts
Note: EFG PE
Number: 16784
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16784
File-URL: http://www.nber.org/papers/w16784.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bayer & Christopher Geissler & Kyle Mangum & James W Roberts & Andrew Karolyi, 2020. "Speculators and Middlemen: The Strategy and Performance of Investors in the Housing Market," The Review of Financial Studies, vol 33(11), pages 5212-5247.
Abstract: Housing market transactions are a matter of public record and thus provide a rare opportunity to analyze the behavior, performance, and strategies of individual investors. Using data for all housing transactions in the Los Angeles area from 1988-2009, this paper provides empirical evidence on investor behavior that is consistent with several rationales for speculative investment in the finance literature, including the roles of middlemen and naïve speculators. Speculative activity by novice investors increased sharply in the recent housing boom. These investors earned little more than the market rate of appreciation and demonstrated no ability to foresee market price movements.
Handle: RePEc:nbr:nberwo:16784
Template-Type: ReDIF-Paper 1.0
Title: Counterfeiters: Foes or Friends? How Do Counterfeits Affect Different Product Quality Tiers?
Classification-JEL: L25; L26; L6
Author-Name: Yi Qian
Note: IO PR
Number: 16785
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16785
File-URL: http://www.nber.org/papers/w16785.pdf
File-Format: application/pdf
Abstract: A key concern about counterfeits and weak intellectual property protection is that they may hamper innovation by displacing legitimate sales. This paper combines a natural policy experiment with randomized lab experiments to estimate the heterogeneous impacts of counterfeiting on the sales and consumer purchase intent related to branded products of various quality levels. I collect new product-line-level panel data (1993-2004) on Chinese shoe companies. I identify heterogeneous effects of counterfeit entry on sales of authentic products of three quality tiers, finding that counterfeits have both advertising effects for a brand and substitution effects for authentic products, additionally the effects linger for some years. The advertising effect dominates the substitution effect for high-end authentic-product sales, and the substitution effect outweighs the advertising effect for low-end product sales. The positive effect of counterfeits is most pronounced for high-fashion products (such as women's high-leg boots and dress shoes), for shoes tailored to young customers, and for high-end products of brands not yet well-known at the time of counterfeiter entry.
Handle: RePEc:nbr:nberwo:16785
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Tax Shocks on Output: Not So Large, But Not Small Either
Classification-JEL: E62; H20; H60
Author-Name: Roberto Perotti
Author-Person: ppe66
Note: EFG PE
Number: 16786
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16786
File-URL: http://www.nber.org/papers/w16786.pdf
File-Format: application/pdf
Publication-Status: published as The Effects of Tax Shocks on Output: Not So Large, but Not Small Either, Roberto Perotti. in Fiscal Policy (Trans-Atlantic Public Economics Seminar, TAPES), Gordon and Perotti. 2012
Publication-Status: published as Roberto Perotti, 2012. "The Effects of Tax Shocks on Output: Not So Large, But Not Small Either," American Economic Journal: Economic Policy, vol 4(2), pages 214-237.
Abstract: In a seminal contribution, Romer and Romer (2010) (RR henceforth) estimate GDP tax multipliers of up to -3 after 3 years. These results have been criticized as implausibly large. For instance, Favero and Giavazzi (2010) (FG henceforth) argue RR's specification cannot be interpreted as a proper (truncated) moving average representation of the output process. They show that when the system is estimated in its VAR form, or its correct truncated MA representation, a unit realization of the RR shock has much smaller effects on GDP than in RR, typically about - .5 percentage points of GDP. I argue that on theoretical grounds the discretionary component of taxation should be allowed to have different effects than the automatic response of tax revenues to macroeconomic variables; existing approaches, including FG's, that do not allow for this difference, exhibit impulse responses that are biased towards 0. I show that the correct impulse responses to a RR tax shock are about half-way between the large effects estimated by RR and the much smaller effects estimated by FG: typically, a one percentage point of GDP increase in taxes leads to a decline in GDP by about 1.5 percentage points after 3 years. I also create two new datasets of tax shocks, one based on receipts and the other on liabilities; in these datasets, I distinguish between different types of taxes (personal, corporate, indirect, and social security) and their subcomponents.
Handle: RePEc:nbr:nberwo:16786
Template-Type: ReDIF-Paper 1.0
Title: Safety-Net Benefits Conferred on Difficult-to-Fail-and-Unwind Banks in the US and EU Before and During the Great Recession
Classification-JEL: G01; G2; G21; G28; G38; K2
Author-Name: Santiago Carbo-Valverde
Author-Person: pca189
Author-Name: Edward J. Kane
Author-Person: pka853
Author-Name: Francisco Rodriguez-Fernandez
Author-Person: pro161
Note: CF IFM ME PE POL
Number: 16787
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16787
File-URL: http://www.nber.org/papers/w16787.pdf
File-Format: application/pdf
Publication-Status: published as Santiago Carbo-Valverde & Edward J. Kane & Francisco Rodriquez-Fernandez, 2011. "Safety-net benefits conferred on difficulty-to-fail-and-unwind banks in the U.S. and EU before and during the Great Recession," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 327-332.
Publication-Status: published as Carbó-Valverde, Santiago & Kane, Edward J. & Rodriguez-Fernandez, Francisco, 2013. "Safety-net benefits conferred on difficult-to-fail-and-unwind banks in the US and EU before and during the great recession," Journal of Banking & Finance, Elsevier, vol. 37(6), pages 1845-1859.
Abstract: This paper models and estimates ex ante safety-net benefits at a sample of large banks in US and Europe during 2003-2008. Our results suggest that difficult-to-fail and unwind (DFU) banks enjoyed substantially higher ex ante benefits than other institutions. Safety-net benefits prove significantly larger for DFU firms in Europe and bailout decisions less driven by asset size than in the US. We also find that a proxy for regulatory capture helps to explain bailout decisions in Europe. A policy implication of our findings is that authorities could better contain safety-net benefits if they refocused their information systems on measuring volatility as well as capital.
Handle: RePEc:nbr:nberwo:16787
Template-Type: ReDIF-Paper 1.0
Title: A Darwinian Perspective on "Exchange Rate Undervaluation"
Classification-JEL: F31; F41
Author-Name: Qingyuan Du
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: AP IFM
Number: 16788
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16788
File-URL: http://www.nber.org/papers/w16788.pdf
File-Format: application/pdf
Publication-Status: published as Du, Qingyuan & Wei, Shang-Jin, 2016. "A Darwinian perspective on “exchange rate undervaluation”," European Economic Review, Elsevier, vol. 83(C), pages 111-138.
Abstract: Though the real exchange rate is a key price for most economies, our understanding of its determinants is still incomplete. This paper studies the implications of status competition in the marriage market for the real exchange rate. In theory, a rise in the sex ratio (increasing relative surplus of men) can generate a decline in the real exchange rate (RER) through both a savings channel and an effective labor supply channel. The effects can be quantitatively large if the biological desire for a marriage partner is strong. Empirically, we show that within China, those regions with a faster increase in the sex ratio also exhibit a faster decline in the RER (the relative price of nontradables). Furthermore, across countries, those with a high sex ratio tend to have a low real exchange rate, beyond what can be explained by the Balassa-Samuelson effect, financial underdevelopment, dependence ratio, and exchange rate regime classifications. As an application, the estimation suggests that these structural factors can account for the Chinese exchange rate almost completely.
Handle: RePEc:nbr:nberwo:16788
Template-Type: ReDIF-Paper 1.0
Title: International Risk Sharing in the Short Run and in the Long Run
Classification-JEL: E2; E21; E32; F11; F15; F2; F4; F41
Author-Name: Marianne Baxter
Author-Person: pba102
Note: IFM
Number: 16789
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16789
File-URL: http://www.nber.org/papers/w16789.pdf
File-Format: application/pdf
Publication-Status: published as Marianne Baxter, 2012. "International risk-sharing in the short run and in the long run," Canadian Journal of Economics/Revue canadienne d'économique, vol 45(2), pages 376-393.
Abstract: International risk-sharing has far-reaching implications both for economic policy and for basic research in economics. When countries do not share risk, individuals in those countries experience fluctuations in their consumption levels that are undesirable and possibly unnecessary. This paper extends and refines the study of international risk-sharing in two dimensions. First, this paper investigates risk-sharing at short vs. long horizons. Countries might, for example, pool risks associated with high-frequency shocks (e.g., seasonal fluctuations in crop yields) but might not share risks associated with low frequency shocks (e.g., different long-run national growth rates). Second, this paper studies bilateral risk-sharing, which is different from the approach taken in most previous studies. We find that there is evidence of substantial international risk-sharing at medium and low frequencies. There is evidence of high and increasing risk-sharing within Europe that is not apparent for other regions of the world.
Handle: RePEc:nbr:nberwo:16789
Template-Type: ReDIF-Paper 1.0
Title: Historical Oil Shocks
Classification-JEL: E32; Q41; Q43
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EEE EFG
Number: 16790
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16790
File-URL: http://www.nber.org/papers/w16790.pdf
File-Format: application/pdf
Publication-Status: published as “Historical Oil Shocks,” in Routledge Handbook of Major Events in Economic History, pp. 239-265, edited by Randall E. Parker and Robert Whaples, New York: Routledge Taylor and Francis Group, 2013 .
Abstract: This paper surveys the history of the oil industry with a particular focus on the events associated with significant changes in the price of oil. Although oil was used much differently and was substantially less important economically in the nineteenth century than it is today, there are interesting parallels between events in that era and more recent developments. Key post-World-War-II oil shocks reviewed include the Suez Crisis of 1956-57, the OPEC oil embargo of 1973-1974, the Iranian revolution of 1978-1979, the Iran-Iraq War initiated in 1980, the first Persian Gulf War in 1990-91, and the oil price spike of 2007-2008. Other more minor disturbances are also discussed, as are the economic downturns that followed each of the major postwar oil shocks.
Handle: RePEc:nbr:nberwo:16790
Template-Type: ReDIF-Paper 1.0
Title: Who Is (More) Rational?
Classification-JEL: C93; D01; D03; D12; D81
Author-Name: Syngjoo Choi
Author-Person: pch373
Author-Name: Shachar Kariv
Author-Name: Wieland Müller
Author-Person: pml15
Author-Name: Dan Silverman
Author-Person: psi181
Note: PE
Number: 16791
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16791
File-URL: http://www.nber.org/papers/w16791.pdf
File-Format: application/pdf
Publication-Status: published as Syngjoo Choi & Shachar Kariv & Wieland M?ller & Dan Silverman, 2014. "Who Is (More) Rational?," American Economic Review, American Economic Association, vol. 104(6), pages 1518-50, June.
Abstract: Revealed preference theory offers a criterion for decision-making quality: if decisions are high quality then there exists a utility function that the choices maximize. We conduct a large-scale field experiment that enables us to test subjects' choices for consistency with utility maximization and to combine the experimental data with a wide range of individual socioeconomic information for the subjects. There is considerable heterogeneity in subjects' consistency scores: high-income and high-education subjects display greater levels of consistency than low-income and low-education subjects, men are more consistent than women, and young subjects are more consistent than older subjects. We also find that consistency with utility maximization is strongly related to wealth: a standard deviation increase in the consistency score is associated with 15-19 percent more wealth. This result conditions on socioeconomic variables including current income, education, and family structure, and is little changed when we add controls for past income, risk tolerance and the results of a standard personality test used by psychologists.
Handle: RePEc:nbr:nberwo:16791
Template-Type: ReDIF-Paper 1.0
Title: The Economics of State and Local Public Pensions
Classification-JEL: G18; G23; H55; H7
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: Robert Clark
Author-Name: Joshua Rauh
Note: AG PE
Number: 16792
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16792
File-URL: http://www.nber.org/papers/w16792.pdf
File-Format: application/pdf
Publication-Status: published as “The Economics of State and Local Pensions.” Journal of Pension Economics and Finance. Vol . 10(2): pages 161 - 172. April 2011. With Robert Clark and Joshua Rauh.
Abstract: This paper provides an overview of an economics-based perspective on the financial aspects of state and local public pensions in the U.S. Drawing on the research commissioned for an NBER research program on this topic, we discuss the large degree to which public pension liabilities exceed the assets set aside to fund them. We summarize issues related to the optimality of pre-funding, portfolio allocation, the discounting of liabilities, as well as how plans operate in practice. We also lay out an agenda for future research related to financial aspects of public pensions, retiree health plans for public employees, as well as issues related to plan design and labor market outcomes.
Handle: RePEc:nbr:nberwo:16792
Template-Type: ReDIF-Paper 1.0
Title: Higher Order Properties of the Wild Bootstrap Under Misspecification
Classification-JEL: C12
Author-Name: Patrick M. Kline
Author-Name: Andres Santos
Note: TWP
Number: 16793
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16793
File-URL: http://www.nber.org/papers/w16793.pdf
File-Format: application/pdf
Publication-Status: published as Kline, Patrick & Santos, Andres, 2012. "Higher order properties of the wild bootstrap under misspecification," Journal of Econometrics, Elsevier, vol. 171(1), pages 54-70.
Abstract: We examine the higher order properties of the wild bootstrap (Wu, 1986) in a linear regression model with stochastic regressors. We find that the ability of the wild bootstrap to provide a higher order refinement is contingent upon whether the errors are mean independent of the regressors or merely uncorrelated. In the latter case, the wild bootstrap may fail to match some of the terms in an Edgeworth expansion of the full sample test statistic, potentially leading to only a partial refinement (Liu and Singh, 1987). To assess the practical implications of this result, we conduct a Monte Carlo study contrasting the performance of the wild bootstrap with the traditional nonparametric bootstrap.
Handle: RePEc:nbr:nberwo:16793
Template-Type: ReDIF-Paper 1.0
Title: Occupational Status and Health Transitions
Classification-JEL: I1; I12
Author-Name: G. Brant Morefield
Author-Person: pmo602
Author-Name: David C. Ribar
Author-Person: pri33
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: EH LS PE
Number: 16794
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16794
File-URL: http://www.nber.org/papers/w16794.pdf
File-Format: application/pdf
Publication-Status: published as Brant Morefield & David C. Ribar & Christopher J. Ruhm, 2012. "Occupational Status and Health Transitions," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 11(3), pages 8.
Abstract: We use longitudinal data from the 1984 through 2007 waves of the Panel Study of Income Dynamics to examine how occupational status is related to the health transitions of 30 to 59 year-old U.S. males. A recent history of blue-collar employment predicts a substantial increase in the probability of transitioning from very good into bad self-assessed health, relative to white-collar employment, but with no evidence of occupational differences in movements from bad to very good health. These findings are robust to a series of sensitivity analyses. The results suggest that blue-collar workers "wear out" faster with age because they are more likely, than their white-collar counterparts, to experience negative health shocks. This partly reflects differences in the physical demands of blue-collar and white-collar jobs.
Handle: RePEc:nbr:nberwo:16794
Template-Type: ReDIF-Paper 1.0
Title: Why Do Some People Want to Legalize Cannabis Use?
Classification-JEL: C31; I10; I18
Author-Name: Jenny Williams
Author-Name: Jan C. van Ours
Author-Person: pva54
Author-Name: Michael Grossman
Author-Person: pgr107
Note: EH
Number: 16795
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16795
File-URL: http://www.nber.org/papers/w16795.pdf
File-Format: application/pdf
Publication-Status: published as as “Attitudes to Legalizing Cannabis Use” Health Economics 25, No. 9 (2016), pp. 12012-1216
Abstract: Preferences and attitudes to illicit drug policy held by individuals are likely to be an important influence in the development of illicit drug policy. Among the key factors impacting on an individual's preferences over substance use policy are their beliefs about the costs and benefits of drug use, their own drug use history, and the extent of drug use amongst their peers. We use data from the Australian National Drug Strategy's Household Surveys to study these preferences. We find that current use and past use of cannabis are major determinants of being in favor of legalization. These results control for reverse causality from favorable attitudes to use. We also find that cannabis users are more in favor of legalization the longer they have used cannabis and, among past users, the more recent their own drug using experience. This may reflect that experience with cannabis provides information about the costs and benefits of using this substance. Finally, we uncover some evidence that peers' use of cannabis impacts on preferences towards legalization.
Handle: RePEc:nbr:nberwo:16795
Template-Type: ReDIF-Paper 1.0
Title: The Elasticity of Trade: Estimates and Evidence
Classification-JEL: F10; F11; F14; F17
Author-Name: Ina Simonovska
Author-Person: psi395
Author-Name: Michael E. Waugh
Author-Person: pwa234
Note: ITI
Number: 16796
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16796
File-URL: http://www.nber.org/papers/w16796.pdf
File-Format: application/pdf
Publication-Status: published as Simonovska, Ina & Waugh, Michael E., 2014. "The elasticity of trade: Estimates and evidence," Journal of International Economics, Elsevier, vol. 92(1), pages 34-50.
Abstract: Quantitative results from a large class of structural gravity models of international trade depend critically on the elasticity of trade with respect to trade frictions. We develop a new simulated method of moments estimator to estimate this elasticity from disaggregate price and trade-flow data and we use it within Eaton and Kortum's (2002) Ricardian model. We apply our estimator to disaggregate price and trade-flow data for 123 countries in the year 2004. Our method yields a trade elasticity of roughly four, nearly fifty percent lower than Eaton and Kortum's (2002) approach. This difference doubles the welfare gains from international trade.
Handle: RePEc:nbr:nberwo:16796
Template-Type: ReDIF-Paper 1.0
Title: Beaches, Sunshine, and Public-Sector Pay: Theory and Evidence on Amenities and Rent Extraction by Government Workers
Classification-JEL: J45; J48; J61; R10
Author-Name: Jan K. Brueckner
Author-Person: pbr241
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 16797
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16797
File-URL: http://www.nber.org/papers/w16797.pdf
File-Format: application/pdf
Publication-Status: published as Brueckner, Jan, and David Neumark, “Beaches, Sunshine, and Public-Sector Pay: Theory and Evidence on Amenities and Rent Extraction by Government Workers,” forthcoming in American Economic Journal: Economic Policy.
Abstract: The absence of a competitive market may enable public-sector workers to extract rents from taxpayers in the form of high pay, especially when public-sector workers are unionized. On the other hand, this rent extraction may be suppressed by the ability of taxpayers to vote with their feet, leaving jurisdictions where public-sector workers extract high rents. However, although migration of taxpayers may limit rent-seeking, public-sector workers may be able to extract higher rents in regions where high amenities mute the migration response. We develop a theoretical model that predicts such a link between public-sector wage differentials and local amenities, and we test the model's predictions by analyzing variation in these wage differentials and amenities across states. We find that public-sector wage differentials are, in fact, larger in the presence of high amenities, with the effect stronger for unionized public-sector workers who are likely better able to exercise political power in extracting rents. The implication is that the mobility of taxpayers is insufficient to prevent rent-seeking behavior of public-sector workers from leading to higher public-sector pay.
Handle: RePEc:nbr:nberwo:16797
Template-Type: ReDIF-Paper 1.0
Title: Inequality at Birth: Some Causes and Consequences
Classification-JEL: I12; Q51; Q53
Author-Name: Janet Currie
Author-Person: pcu13
Note: CH EEE EH LS PE
Number: 16798
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16798
File-URL: http://www.nber.org/papers/w16798.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie, 2011. "Inequality at Birth: Some Causes and Consequences," American Economic Review, American Economic Association, vol. 101(3), pages 1-22, May.
Abstract: Recent research shows that health at birth is affected by many factors, including maternal education, behaviors, and participation in social programs. In turn, endowments at birth are predictive of adult outcomes, and of the outcomes of future generations. Exposure to environmental pollution is one potential determinant of health at birth that has received increasing attention. A large literature outside of economics advocates for "Environmental Justice," and argues that poor and minority families are disproportionately exposed to environmental hazards. I provide new evidence on this question, showing that children born to less educated and minority mothers are more likely to be exposed to pollution in utero and that white, college educated mothers are particularly responsive to changes in environmental amenities. I estimate that differences in exposure to toxic releases may explain 6% of the gap in incidence of low birth weight between infants of white college educated mothers and infants of black high school dropout mothers.
Handle: RePEc:nbr:nberwo:16798
Template-Type: ReDIF-Paper 1.0
Title: Temporarily Unstable Government Debt and Inflation
Classification-JEL: E31; E52; E62; E63
Author-Name: Troy Davig
Author-Person: pda131
Author-Name: Eric M. Leeper
Author-Person: ple3
Note: EFG
Number: 16799
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16799
File-URL: http://www.nber.org/papers/w16799.pdf
File-Format: application/pdf
Publication-Status: published as Troy Davig & Eric M Leeper, 2011. "Temporarily Unstable Government Debt and Inflation," IMF Economic Review, Palgrave Macmillan, vol. 59(2), pages 233-270, June.
Abstract: Many advanced economies are heading into an era of fiscal stress: populations are aging and governments have made substantially more promises of old-age benefits than they have made provisions to finance. This paper models the era of fiscal stress as stemming from relentlessly growing promised government transfers that initially are fully honored, being financed by new sales of government debt that bring forth higher future income taxes. As debt levels and tax rates rise, the population's tolerance for taxation declines and the probability of reaching the fiscal limit increases. At the limit a fixed tax rate is adopted, adjustments in taxes no longer stabilize debt, and some new stabilizing combination of policies must arise. We examine how, in the period before the fiscal limit, rapidly rising debt interacts with expectations of how and when policies will adjust. Temporarily explosive debt has no effect on inflation if households expect all adjustments to occur through entitlements reform, but if households believe it is possible that in the future monetary policy will shift from targeting inflation to stabilizing debt, then debt feeds directly into the path of inflation and monetary policy can no longer control inflation. News that reduces expected primary surpluses can bring future inflation into the present, well before the news shows up in fiscal measures.
Handle: RePEc:nbr:nberwo:16799
Template-Type: ReDIF-Paper 1.0
Title: Sex Ratios, Entrepreneurship, and Economic Growth in the People's Republic of China
Classification-JEL: E2; F3; F43; J1; J2; O1; O4
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Author-Name: Xiaobo Zhang
Author-Person: pzh45
Note: EFG IFM LS
Number: 16800
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16800
File-URL: http://www.nber.org/papers/w16800.pdf
File-Format: application/pdf
Abstract: China experiences an increasingly severe relative surplus of men in the pre-marital age cohort. The existing literature on its consequences focuses mostly on negative aspects such as crime. In this paper, we provide evidence that the imbalance may also stimulate economic growth by inducing more entrepreneurship and hard work. First, new domestic private firms - an important engine of growth - are more likely to emerge from regions with a higher sex ratio imbalance. Second, the likelihood for parents with a son to be entrepreneurs rises with the local sex ratio. Third, households with a son in regions with a more skewed sex ratio demonstrate a greater willingness to accept relatively dangerous or unpleasant jobs and supply more work days. In contrast, the labor supply pattern by households with a daughter is unrelated to the sex ratio. Finally, regional GDP tends to grow faster in provinces with a higher sex ratio. Since the sex ratio imbalance will become worse in the near future, this growth effect is likely to persist.
Handle: RePEc:nbr:nberwo:16800
Template-Type: ReDIF-Paper 1.0
Title: Hedge Fund Leverage
Classification-JEL: G01; G1; G12; G18; G21; G23; G28; G32
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Sergiy Gorovyy
Author-Name: Gregory B. van Inwegen
Note: AP
Number: 16801
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16801
File-URL: http://www.nber.org/papers/w16801.pdf
File-Format: application/pdf
Publication-Status: published as Ang, Andrew & Gorovyy, Sergiy & van Inwegen, Gregory B., 2011. "Hedge fund leverage," Journal of Financial Economics, Elsevier, vol. 102(1), pages 102-126, October.
Abstract: We investigate the leverage of hedge funds in the time series and cross section. Hedge fund leverage is counter-cyclical to the leverage of listed financial intermediaries and decreases prior to the start of the financial crisis in mid-2007. Hedge fund leverage is lowest in early 2009 when the market leverage of investment banks is highest. Changes in hedge fund leverage tend to be more predictable by economy-wide factors than by fund-specific characteristics. In particular, decreases in funding costs and increases in market values both forecast increases in hedge fund leverage. Decreases in fund return volatilities predict future increases in leverage.
Handle: RePEc:nbr:nberwo:16801
Template-Type: ReDIF-Paper 1.0
Title: New Evidence on Teacher Labor Supply
Classification-JEL: I21; I28; J01; J08; J2; J45
Author-Name: Mimi Engel
Author-Name: Brian A. Jacob
Note: CH ED LS PE
Number: 16802
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16802
File-URL: http://www.nber.org/papers/w16802.pdf
File-Format: application/pdf
Publication-Status: published as Mimi Engel, Brian A. Jacob, and F. Chris Curran American Educational Research Journal, February 2014; vol. 51, 1: pp. 36-72., first published on September 10, 2013
Abstract: Recent evidence on the large variance in teacher effectiveness has spurred renewed interest in teacher labor market policies. A substantial body of prior research documents that more highly qualified teachers tend to work in more advantaged schools, although this literature cannot determine the relative importance of supply versus demand factors in generating this equilibrium outcome. To isolate the importance of teacher labor supply, we attended three large teacher job fairs in Chicago during the summer of 2006 and collected detailed information on the specific schools at which teachers interviewed. We document a substantial variation in the number of applicants per school, with some schools having fewer than five applicants and others schools having over 300 applicants, even after controlling for the number and type of positions advertised at the school. We show that the demographic characteristics of schools strongly predict the number of applicants to the school in the expected direction. Interestingly, the geographic location of the school is an extremely strong predictor of applications, even after controlling for a host of observable school and neighborhood characteristics.
Handle: RePEc:nbr:nberwo:16802
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Early Occupational Choice On Health Behaviors
Classification-JEL: I0
Author-Name: Inas Rashad Kelly
Author-Person: pke191
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Jody L. Sindelar
Author-Name: William T. Gallo
Note: EH
Number: 16803
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16803
File-URL: http://www.nber.org/papers/w16803.pdf
File-Format: application/pdf
Publication-Status: published as Dave, D. M., Kelly, I., Sindelar, J., Gallo, W. (2012). The Impact of Early Occupational Choice on Health Behaviors. Review of Economics of the Household.
Abstract: Occupational choice is a significant input into individuals' health investments, operating in a manner that can be either health-promoting or health-depreciating. Recent studies have highlighted the potential importance of initial occupational choice on subsequent outcomes pertaining to morbidity. This study is the first to assess the existence and strength of a causal relationship between initial occupational choice at labor entry and subsequent health behaviors and habits. We utilize the Panel Study of Income Dynamics to analyze the effect of first occupation, as identified by industry category and blue collar work, on subsequent health outcomes relating to body mass index, obesity, alcohol consumption, and physical activity in 1999-2005. Our findings suggest that initial occupations described as craft, operative, and service are related to higher body mass index and obesity later in life, while labor occupations are related to higher probabilities of smoking later in life. Blue collar work early in life is associated with increased probabilities of obesity and smoking, and decreased physical activity later in life, although effects may be masked by unobserved heterogeneity. Few effects are found for the effect of initial occupation on alcohol consumption. The weight of the evidence bearing from various methodologies, which account for non-random unobserved selection, indicates that at least part of this effect is consistent with a causal interpretation. These estimates also underscore the potential durable impact of early labor market experiences on later health.
Handle: RePEc:nbr:nberwo:16803
Template-Type: ReDIF-Paper 1.0
Title: Cream Skimming in Financial Markets
Classification-JEL: G1; G14; G18; G2; G24; G28
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Tano Santos
Author-Name: Jose A. Scheinkman
Author-Person: psc26
Note: CF
Number: 16804
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16804
File-URL: http://www.nber.org/papers/w16804.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bolton & Tano Santos & Jose A. Scheinkman, 2016. "Cream-Skimming in Financial Markets," Journal of Finance, American Finance Association, vol. 71(2), pages 709-736, 04.
Abstract: We propose an equilibrium occupational choice model, where agents can choose to work in the real sector (become entrepreneurs) or to become informed dealers in financial markets. Agents incur costs to become informed dealers and develop skills for valuing assets up for trade. The financial sector comprises a transparent competitive exchange, where uninformed agents trade and an opaque over-the-counter (OTC) market, where informed dealers offer attractive terms for the most valuable assets entrepreneurs put up for sale. Thanks to their information advantage and valuation skills, dealers are able to provide incentives to entrepreneurs to originate good assets. However, the opaqueness of the OTC market allows dealers to extract informational rents from entrepreneurs. Trade in the OTC market imposes a negative externality on the organized exchange, where only the less valuable assets end up for trade. We show that in equilibrium the dealers' informational rents in the OTC market are too large and attract too much talent to the financial industry.
Handle: RePEc:nbr:nberwo:16804
Template-Type: ReDIF-Paper 1.0
Title: Capital Controls: Myth and Reality - A Portfolio Balance Approach
Classification-JEL: E44; E5; F3; F30; F32; F34; F41
Author-Name: Nicolas E. Magud
Author-Person: pma2505
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM ME
Number: 16805
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16805
File-URL: http://www.nber.org/papers/w16805.pdf
File-Format: application/pdf
Publication-Status: published as Nicolas E. Magud & Carmen M. Reinhart & Kenneth S. Rogoff, 2018. "Capital Controls: Myth and Reality--A Portfolio Balance Approach," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 1-47, May.
Abstract: The literature on capital controls has (at least) four very serious apples-to-oranges problems: (i) There is no unified theoretical framework to analyze the macroeconomic consequences of controls; (ii) there is significant heterogeneity across countries and time in the control measures implemented; (iii) there are multiple definitions of what constitutes a "success" and (iv) the empirical studies lack a common methodology-furthermore these are significantly "overweighted" by a couple of country cases (Chile and Malaysia). In this paper, we attempt to address some of these shortcomings by: being very explicit about what measures are construed as capital controls. Also, given that success is measured so differently across studies, we sought to "standardize" the results of over 30 empirical studies we summarize in this paper. The standardization was done by constructing two indices of capital controls: Capital Controls Effectiveness Index (CCE Index), and Weighted Capital Control Effectiveness Index (WCCE Index). The difference between them lies in that the WCCE controls for the differentiated degree of methodological rigor applied to draw conclusions in each of the considered papers. Inasmuch as possible, we bring to bear the experiences of less well known episodes than those of Chile and Malaysia. Then, using a portfolio balance approach we model the effects of imposing capital controls on short-term flows. We find that there should exist country-specific characteristics for capital controls to be effective. From this simple perspective, this rationalizes why some capital controls were effective and some were not. We also show that the equivalence in effects of price- vs. quantity-capital control are conditional on the level of short-term capital flows.
Handle: RePEc:nbr:nberwo:16805
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Comparative Advantage: Measurement and Welfare Implications
Classification-JEL: F11; F43; O33; O47
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Author-Name: Jing Zhang
Author-Person: pzh153
Note: IFM ITI PR
Number: 16806
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16806
File-URL: http://www.nber.org/papers/w16806.pdf
File-Format: application/pdf
Publication-Status: published as Levchenko, Andrei A. & Zhang, Jing, 2016. "The evolution of comparative advantage: Measurement and welfare implications," Journal of Monetary Economics, Elsevier, vol. 78(C), pages 96-111.
Abstract: We estimate productivities at the sector level for 72 countries and 5 decades, and examine how they evolve over time in both developed and developing countries. In both country groups, comparative advantage has become weaker: productivity grew systematically faster in sectors that were initially at greater comparative disadvantage. These changes have had a significant impact on trade volumes and patterns, and a non-negligible welfare impact. In the counterfactual scenario in which each country's comparative advantage remained the same as in the 1960s, and technology in all sectors grew at the same country-specific average rate, trade volumes would be higher, cross-country export patterns more dissimilar, and intra-industry trade lower than in the data. In this counterfactual scenario, welfare is also 1.6% higher for the median country compared to the baseline. The welfare impact varies greatly across countries, ranging from -1.1% to +4.3% among OECD countries, and from -4.6% to +41.9% among non-OECD countries.
Handle: RePEc:nbr:nberwo:16806
Template-Type: ReDIF-Paper 1.0
Title: Has Consumption Inequality Mirrored Income Inequality?
Classification-JEL: E2; E21; J31
Author-Name: Mark A. Aguiar
Author-Person: pag57
Author-Name: Mark Bils
Author-Person: pbi148
Note: EFG
Number: 16807
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16807
File-URL: http://www.nber.org/papers/w16807.pdf
File-Format: application/pdf
Publication-Status: published as Mark Aguiar & Mark Bils, 2015. "Has Consumption Inequality Mirrored Income Inequality?," American Economic Review, vol 105(9), pages 2725-2756.
Abstract: We revisit to what extent the increase in income inequality over the last 30 years has been mirrored by consumption inequality. We do so by constructing two alternative measures of consumption expenditure, using data from the Consumer Expenditure Survey (CE). We first use reports of active savings and after tax income to construct the measure of consumption implied by the budget constraint. We find that the consumption inequality implied by savings behavior largely tracks income inequality between 1980 and 2007. Second, we use a demand system to correct for systematic measurement error in the CE's expenditure data. Specifically, we consider trends in the relative expenditure of high income and low income households for different goods with different income (total expenditure) elasticities. Our estimation exploits the difference in the growth rate of luxury consumption inequality versus necessity consumption inequality. This "double-differencing,'' which we implement in a a regression framework, corrects for mis-measurement that can systematically vary over time by good and income group. This second exercise indicates that consumption inequality has closely tracked income inequality over the period 1980-2007. Both of our measures show a significantly greater increase in consumption inequality than what is obtained from the CE's total household expenditure data directly.
Handle: RePEc:nbr:nberwo:16807
Template-Type: ReDIF-Paper 1.0
Title: Market Timing, Investment, and Risk Management
Classification-JEL: E22; G01; G12; G3
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Hui Chen
Author-Person: pch718
Author-Name: Neng Wang
Author-Person: pwa390
Note: AP CF
Number: 16808
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16808
File-URL: http://www.nber.org/papers/w16808.pdf
File-Format: application/pdf
Publication-Status: published as Bolton, Patrick & Chen, Hui & Wang, Neng, 2013. "Market timing, investment, and risk management," Journal of Financial Economics, Elsevier, vol. 109(1), pages 40-62.
Abstract: Firms face uncertain financing conditions and are exposed to the risk of a sudden rise in financing costs during financial crises. We develop a tractable model of dynamic corporate financial management (cash accumulation, investment, equity issuance, risk management, and payout policies) for a financially constrained firm facing time-varying external financing costs. Firms value financial slack and build cash reserves to mitigate financial constraints. However, uncertainty about future financing opportunities also induce firms to rationally time the equity market, even if they have no immediate needs for cash. The stochastic financing conditions have rich implications for investment and risk management: (1) investment can be decreasing in financial slack; (2) firms may invest less as expected future financing costs fall; (3) investment-cash sensitivity, marginal value of cash, and firm's risk premium can all be non-monotonic in cash holdings; (4) speculation (as opposed to hedging) can be value-maximizing for financially constrained firms.
Handle: RePEc:nbr:nberwo:16808
Template-Type: ReDIF-Paper 1.0
Title: Industrial Catching Up in the Poor Periphery 1870-1975
Classification-JEL: F1; N7; O1
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 16809
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16809
File-URL: http://www.nber.org/papers/w16809.pdf
File-Format: application/pdf
Abstract: This paper documents industrial output and labor productivity growth around the poor periphery 1870-1975 (Latin America, the European periphery, the Middle East, South Asia, Southeast Asia and East Asia). Intensive and extensive industrial growth accelerated there over this critical century. The precocious poor periphery leaders underwent a surge and more poor countries joined their club. Furthermore, by the interwar the majority were catching up on Germany, the US and the UK, a process that accelerated even more up to 1950-1975. What explains the spread of the industrial revolution world-wide and this catching up? Productivity growth certainly made their industries more competitive in home and foreign markets, but other forces mattered as well. A falling terms of trade raised the relative price of manufactures in domestic markets, as did real exchange rate depreciation. In addition, increasingly cheap fuel and non-fuel intermediates from globally integrating markets seems to have taken resource advantages away from the European and North American leaders, and integrating world financial markets also reduced the cheap capital advantage of the leaders. However, ever-cheaper labor was not a serious cause of industrial catch up, offering little support for the Krugman-Venables (1995) model. Furthermore, tariffs did not foster industrial catch up either, but rather poor industry performance fostered high tariffs. Markets and policies mattered, not just institutions.
Handle: RePEc:nbr:nberwo:16809
Template-Type: ReDIF-Paper 1.0
Title: Advances in Consumption-Based Asset Pricing: Empirical Tests
Classification-JEL: E21; G1; G12
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Note: AP EFG
Number: 16810
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16810
File-URL: http://www.nber.org/papers/w16810.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of the Economics of Finance Volume 2, Part B, 2013, Pages 799–906 Cover image Chapter 12 – Advances in Consumption-Based Asset Pricing: Empirical Tests * Sydney C. Ludvigson
Abstract: The last 15 years has brought forth an explosion of research on consumption-based asset pricing as a leading contender for explaining aggregate stock market behavior. This research has propelled further interest in consumption-based asset pricing, as well as some debate. This chapter surveys the growing body of empirical work that evaluates today's leading consumption-based asset pricing theories using formal estimation, hypothesis testing, and model comparison. In addition to summarizing the findings and debate, the analysis seeks to provide an accessible description of a few key econometric methodologies for evaluating consumption-based models, with an emphasis on method-of-moments estimators. Finally, the chapter offers a prescription for future econometric work by calling for greater emphasis on methodologies that facilitate the comparison of multiple competing models, all of which are potentially misspecified, while calling for reduced emphasis on individual hypothesis tests of whether a single model is specified without error.
Handle: RePEc:nbr:nberwo:16810
Template-Type: ReDIF-Paper 1.0
Title: The Impact of National Health Insurance on Birth Outcomes: A Natural Experiment in Taiwan
Classification-JEL: I10; I11; I12; I18
Author-Name: Shin-Yi Chou
Author-Name: Michael Grossman
Author-Person: pgr107
Author-Name: Jin-Tan Liu
Author-Person: pli620
Note: EH
Number: 16811
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16811
File-URL: http://www.nber.org/papers/w16811.pdf
File-Format: application/pdf
Publication-Status: published as Chou, Shin-Yi & Grossman, Michael & Liu, Jin-Tan, 2014. "The impact of National Health Insurance on birth outcomes: A natural experiment in Taiwan," Journal of Development Economics, Elsevier, vol. 111(C), pages 75-91.
Abstract: We estimate the impacts of the introduction of National Health Insurance (NHI) in Taiwan in March 1995 on the health of infants. Prior to NHI, government workers (the control group) possessed health insurance policies with comprehensive coverage for births and infant medical care services. Private sector industrial workers and farmers (the treatment groups) lacked this coverage. All households received coverage for the services just mentioned as of March 1995. Since stringent requirements for reporting births introduced in 1994 produced artificial upward trends in early infant deaths, we focus on postneonatal mortality (deaths from the 28th through the 364th day of life per thousand survivors of the first 27 days of life). We find that the introduction of NHI led to reductions in this rate for infants born in farm households but not for infants born in private sector households. For the former group, the rate fell by 0.5 deaths per thousand survivors or by 13 percent relative to the mean in the pre-NHI period of 4 deaths per thousand survivors. An especially large decline of 6 deaths per thousand survivors occurred for pre-term infants-- a 36 percent drop relative to the pre-NHI mean of 17 deaths per thousand survivors.
Handle: RePEc:nbr:nberwo:16811
Template-Type: ReDIF-Paper 1.0
Title: Does Tax Policy Affect Executive Compensation? Evidence from Postwar Tax Reforms
Classification-JEL: G30; H24; H32; J31; J33; N32
Author-Name: Carola Frydman
Author-Person: pfr240
Author-Name: Raven S. Molloy
Note: CF DAE LS PE
Number: 16812
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16812
File-URL: http://www.nber.org/papers/w16812.pdf
File-Format: application/pdf
Publication-Status: published as Frydman, Carola & Molloy, Raven S., 2011. "Does tax policy affect executive compensation? Evidence from postwar tax reforms," Journal of Public Economics, Elsevier, vol. 95(11), pages 1425-1437.
Abstract: The trends in executive pay and labor income tax rates since the 1940s suggest a high elasticity of taxable income with respect to tax policy. By contrast, the level and structure of executive compensation have been largely unresponsive to tax incentives since the 1980s. However, the relative tax advantage of different forms of pay was small during this period. Using a sample of top executives in large firms from 1946 to 2005, we also find a small short run response of salaries, qualified stock options, and bonuses paid after retirement to changes in tax rates on labor income--even though tax rates were significantly higher and more heterogeneous across individuals in the first several decades following WWII. We explore several potential explanations for the conflicting impressions given by the long-run and short-run correlations between taxes and pay, including changes in social norms and concerns about pay equality.
Handle: RePEc:nbr:nberwo:16812
Template-Type: ReDIF-Paper 1.0
Title: The Returns to the Brain Drain and Brain Circulation in Sub-Saharan Africa: Some Computations Using Data from Ghana
Classification-JEL: F35; F43; O1; O55
Author-Name: Yaw Nyarko
Author-Person: pny18
Note: LS
Number: 16813
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16813
File-URL: http://www.nber.org/papers/w16813.pdf
File-Format: application/pdf
Publication-Status: published as The Returns to the Brain Drain and Brain Circulation in Sub-Saharan Africa: Some Computations Using Data from Ghana, Yaw Nyarko. in African Successes, Volume II: Human Capital, Edwards, Johnson, and Weil. 2016
Abstract: We look at the decision of the government or "central planner" in the allocation of scarce governmental resources for tertiary education, as well as that for the individual. We provide estimates of the net present values, or cost and benefits. These include costs of tertiary education; the benefits of improved skills of those who remain in the country; and also takes into account the flows of the skilled out of the country (the brain drain) as well as the remittances they bring into the country. Our results are positive for the net benefits relative to costs. Our results suggest that (i) there may be room for creative thinking about the possibility that the brain drain could provide mechanisms for dramatic increases in education levels within African nations; and (ii) by at least one metric, spending by African nations on higher education in this period yielded positive returns on the investment. Our results on the individual decision problem resolve a paradox in the returns to education literature which finds low returns to tertiary education.
Handle: RePEc:nbr:nberwo:16813
Template-Type: ReDIF-Paper 1.0
Title: Stock Option Exercise and Gift Exchange Relationships: Evidence for a Large US Company
Classification-JEL: J33
Author-Name: Peter Cappelli
Author-Name: Martin J. Conyon
Author-Person: pco299
Note: LS
Number: 16814
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16814
File-URL: http://www.nber.org/papers/w16814.pdf
File-Format: application/pdf
Abstract: We investigate gift exchange relationships in real jobs, making use of a field quasi-experiment associated with the exercise of stock options for roughly 4500 managers in a large public company. In this company, option grants are set equally for all employees within occupational categories, and financial markets set the price at which the options are ultimately exercised. We assert that the considerable variation that we observe across employees and over time in profits from those sales is beyond the control of the individual employee and can be thought of as effectively randomized. We also assert that employees perceive the profit they receive from exercising these options at least in part as the equivalent of a gift: Higher profits in turn cause them to reciprocate with better job performance in the subsequent period. We find significant and economically meaningful positive relationships between the variation in profit per share of the options sold and standard measures of subsequent job performance for individual employees. These effects exist in real jobs and persist over long periods, extending previous studies. Non-parametric and parametric fixed effects models, other controls for sample heterogeneity, and alternative specifications address possible concerns about the randomization assumption and associated statistical issues.
Handle: RePEc:nbr:nberwo:16814
Template-Type: ReDIF-Paper 1.0
Title: Pride Goes Before a Fall: Federal Reserve Policy and Asset Markets
Classification-JEL: E40; E43; E52
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Vincent Reinhart
Note: IFM ME
Number: 16815
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16815
File-URL: http://www.nber.org/papers/w16815.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart and Vincent R. Reinhart, 2011. "Limits of Monetary Policy in Theory and Practice," Cato Journal, Cato Journal, Cato Institute, vol. 31(3), pages 427-439, Fall.
Abstract: Considerable debate rages about whether Federal Reserve policy was too lax in the early part of the 2000s, thereby fueling the home-price bubble that was the proximate cause of the global financial crisis. We present evidence that the view that modest alterations to monetary policy have vast consequences is inconsistent with theory and not supported by evidence. We take a close look at the responses of asset markets to changes in the short-term policy interest rate since the founding of the Fed in 1914. Changes in the federal funds rate have no systematic effect on either long-term interest rates or housing prices over nearly a century. Indeed, since the mid-1990s the policy rate had a negative relationship with long-term interest rates. This is consistent with a global view of capital markets where massive cross-border flows shape the availability of domestic credit and asset prices. The evidence casts doubts on arguments that a moderately different monetary policy path might have mattered.
Handle: RePEc:nbr:nberwo:16815
Template-Type: ReDIF-Paper 1.0
Title: Learning, Large Deviations and Rare Events
Classification-JEL: D83; D84
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Chetan Dave
Author-Person: pda176
Note: EFG
Number: 16816
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16816
File-URL: http://www.nber.org/papers/w16816.pdf
File-Format: application/pdf
Publication-Status: published as Jess Benhabib & Chetan Dave, 2014. "Learning, Large Deviations and Rare Events," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(3), July.
Abstract: We examine the role of generalized constant gain stochastic gradient (SGCG) learning in generating large deviations of an endogenous variable from its rational expectations value. We show analytically that these large deviations can occur with a frequency associated with a fat tailed distribution even though the model is driven by thin tailed exogenous stochastic processes. We characterize these large deviations that are driven by sequences of consistently low or consistently high shocks. We then apply our model to the canonical asset-pricing model. We demonstrate that the tails of the stationary distribution of the price-dividend ratio will follow a power law.
Handle: RePEc:nbr:nberwo:16816
Template-Type: ReDIF-Paper 1.0
Title: Single-Sex Schools, Student Achievement, and Course Selection: Evidence from Rule-Based Student Assignments in Trinidad and Tobago
Classification-JEL: I20; J0
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Note: CH ED LS PE
Number: 16817
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16817
File-URL: http://www.nber.org/papers/w16817.pdf
File-Format: application/pdf
Publication-Status: published as Jackson, C. Kirabo., "Single-sex schools, student achievement, and course selection: Evidence from rule-based student assignments in Trinidad and Tobago," Journal of Public Economics, Volume 96, Issues 1–2, February 2012, Pages 173-187.
Abstract: Existing studies on single-sex schooling suffer from biases because students who attend single-sex schools differ in unmeasured ways from those who do not. In Trinidad and Tobago students are assigned to secondary schools based on an algorithm allowing one to address self-selection bias and estimate the causal effect of attending a single-sex school versus a similar coeducational school. While students (particularly females) with strong expressed preferences for single-sex schools benefit, most students perform no better at single-sex schools. Girls at single-sex schools take fewer sciences courses and more traditionally female subjects.
Handle: RePEc:nbr:nberwo:16817
Template-Type: ReDIF-Paper 1.0
Title: Freedom to Trade and the Competitive Process
Classification-JEL: D2; D4; K2; L2; L4; L5; M2
Author-Name: Aaron Edlin
Author-Person: ped12
Author-Name: Joseph Farrell
Author-Person: pfa35
Note: IO LE
Number: 16818
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16818
File-URL: http://www.nber.org/papers/w16818.pdf
File-Format: application/pdf
Abstract: Although antitrust courts sometimes stress the competitive process, they have not deeply explored what that process is. Inspired by the theory of the core, we explore the idea that the competitive process is the process of sellers and buyers forming improving coalitions. Much of antitrust can be seen as prohibiting firms' attempts to restrain improving trade between their rivals and customers. In this way, antitrust protects firms' and customers' freedom to trade to their mutual betterment.
Handle: RePEc:nbr:nberwo:16818
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Limits in Advanced Economies
Classification-JEL: E30; E62; E63; H60
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Todd B. Walker
Author-Person: pwa179
Note: EFG
Number: 16819
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16819
File-URL: http://www.nber.org/papers/w16819.pdf
File-Format: application/pdf
Publication-Status: published as Eric M. Leeper & Todd B. Walker, 2011. "Fiscal Limits in Advanced Economies*," Economic Papers: A journal of applied economics and policy, vol 30(1), pages 33-47.
Abstract: Aging populations in advanced economies are placing ever-increasing demands on government spending in the form of old-age benefits. Economies that have promised substantially more benefits than they have made provision to finance are heading into a prolonged era of fiscal stress. Unresolved fiscal stress raises the possibility that the economies will hit their fiscal limits where taxes and spending no longer adjust to stabilize debt. In such economies, monetary policy may lose its ability to control inflation and influence the economy in the usual ways. The paper discusses models of fiscal limits and their implications and lays out a research agenda to integrate political economy and empirical considerations with general equilibrium models of monetary and fiscal interactions.
Handle: RePEc:nbr:nberwo:16819
Template-Type: ReDIF-Paper 1.0
Title: The Geography of Crowdfunding
Classification-JEL: G21; G24; L17; R12; Z11
Author-Name: Ajay K. Agrawal
Author-Person: pag38
Author-Name: Christian Catalini
Author-Name: Avi Goldfarb
Author-Person: pgo53
Note: PR
Number: 16820
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16820
File-URL: http://www.nber.org/papers/w16820.pdf
File-Format: application/pdf
Abstract: Perhaps the most striking feature of "crowdfunding" is the broad geographic dispersion of investors in small, early-stage projects. This contrasts with existing theories that predict entrepreneurs and investors will be co-located due to distance-sensitive costs. We examine a crowdfunding setting that connects artist-entrepreneurs with investors over the internet for financing musical projects. The average distance between artists and investors is about 3,000 miles, suggesting a reduced role for spatial proximity. Still, distance does play a role. Within a single round of financing, local investors invest relatively early, and they appear less responsive to decisions by other investors. We show this geography effect is driven by investors who likely have a personal connection with the artist-entrepreneur ("family and friends"). Although the online platform seems to eliminate most distance-related economic frictions such as monitoring progress, providing input, and gathering information, it does not eliminate social-related frictions.
Handle: RePEc:nbr:nberwo:16820
Template-Type: ReDIF-Paper 1.0
Title: The Unofficial Economy in Africa
Classification-JEL: O1; O12; O17; O43
Author-Name: Rafael La Porta
Author-Person: pla273
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: POL
Number: 16821
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16821
File-URL: http://www.nber.org/papers/w16821.pdf
File-Format: application/pdf
Publication-Status: published as The Unofficial Economy in Africa, Rafael La Porta, Andrei Shleifer. in African Successes, Volume I: Government and Institutions, Edwards, Johnson, and Weil. 2016
Abstract: We examine the productivity of informal firms (those that are not registered with the government) in 24 African countries using field work and World Bank firm level data. We find that productivity jumps sharply if we compare small formal firms to informal firms, and rises rapidly with the size of formal firms. Critically, informal firms appear to be qualitatively different than formal firms: they are smaller in size, produce to order, are run by managers with low human capital, do not have access to external finance, do not advertise their products, and sell to largely informal clients for cash. Informal firms thus occupy a very different market niche than formal firms do, and rarely become formal because there is very little demand for their products from the formal sector.
Handle: RePEc:nbr:nberwo:16821
Template-Type: ReDIF-Paper 1.0
Title: Personality Psychology and Economics
Classification-JEL: I2; J24
Author-Name: Mathilde Almlund
Author-Name: Angela Lee Duckworth
Author-Name: James J. Heckman
Author-Name: Tim D. Kautz
Note: CH ED
Number: 16822
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16822
File-URL: http://www.nber.org/papers/w16822.pdf
File-Format: application/pdf
Publication-Status: published as “Personality Psychology and Economics,” (with A. Duckworth, M. Almlund and T. Kautz). In E. Hanushek, S. Machin, and L. Woessman, eds., Handbook of the Economics of Educa- tion , Amsterdam: Elsevier. pp. 1-181. (2011)
Abstract: This paper explores the power of personality traits both as predictors and as causes of academic and economic success, health, and criminal activity. Measured personality is interpreted as a construct derived from an economic model of preferences, constraints, and information. Evidence is reviewed about the "situational specificity" of personality traits and preferences. An extreme version of the situationist view claims that there are no stable personality traits or preference parameters that persons carry across different situations. Those who hold this view claim that personality psychology has little relevance for economics. The biological and evolutionary origins of personality traits are explored. Personality measurement systems and relationships among the measures used by psychologists are examined. The predictive power of personality measures is compared with the predictive power of measures of cognition captured by IQ and achievement tests. For many outcomes, personality measures are just as predictive as cognitive measures, even after controlling for family background and cognition. Moreover, standard measures of cognition are heavily influenced by personality traits and incentives. Measured personality traits are positively correlated over the life cycle. However, they are not fixed and can be altered by experience and investment. Intervention studies, along with studies in biology and neuroscience, establish a causal basis for the observed effect of personality traits on economic and social outcomes. Personality traits are more malleable over the life cycle compared to cognition, which becomes highly rank stable around age 10. Interventions that change personality are promising avenues for addressing poverty and disadvantage.
Handle: RePEc:nbr:nberwo:16822
Template-Type: ReDIF-Paper 1.0
Title: The Diversity of Concentrated Prescribing Behavior: An Application to Antipsychotics
Classification-JEL: D83; I10; L25; O33
Author-Name: Anna A. Levine Taub
Author-Name: Anton Kolotilin
Author-Person: pko599
Author-Name: Robert S. Gibbons
Author-Person: pgi283
Author-Name: Ernst R. Berndt
Note: EH PR
Number: 16823
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16823
File-URL: http://www.nber.org/papers/w16823.pdf
File-Format: application/pdf
Abstract: Physicians prescribing drugs for patients with schizophrenia and related conditions are remarkably concentrated in their choice among antipsychotic drugs. In 2007 the single antipsychotic drug prescribed by a physician accounted for 66% of all antipsychotic prescriptions written by that physician. Which particular branded antipsychotic was the prescriber's "favorite" varied widely across physicians, i.e. physician prescribing concentration patterns are diverse. Building on Frank and Zeckhauser's [2007] characterization of physician treatments varying from "custom made" to "ready-to-wear", we construct a model of physician learning that generates a number of hypotheses. Using 2007 annual antipsychotic prescribing behavior on 17,652 physicians from IMS Health, we evaluate these predictions empirically. While physician prescribing behavior is generally quite concentrated, prescribers having greater volumes, those with training in psychiatry, male prescribers, and those not approaching retirement age tend to have less concentrated prescribing patterns.
Handle: RePEc:nbr:nberwo:16823
Template-Type: ReDIF-Paper 1.0
Title: Commodity Price Volatility in the Biofuel Era: An Examination of the Linkage Between Energy and Agricultural Markets
Classification-JEL: C68; Q1; Q4
Author-Name: Thomas W. Hertel
Author-Person: phe190
Author-Name: Jayson Beckman
Author-Person: pbe549
Note: EEE
Number: 16824
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16824
File-URL: http://www.nber.org/papers/w16824.pdf
File-Format: application/pdf
Publication-Status: published as Commodity Price Volatility in the Biofuel Era: An Examination of the Linkage between Energy and Agricultural Markets, Thomas W. Hertel, Jayson Beckman. in The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, Graff Zivin and Perloff. 2012
Abstract: Agricultural and energy commodity prices have traditionally exhibited relatively low correlation. However, recent increases in biofuel production have altered the agriculture-energy relationship in a fundamental way. This increase has drawn on corn previously sold to other uses, as well as acreage devoted to other crops. The US RFS envisions a further boost of ethanol production to 15 billion gallons per year, which might be expected to further strengthen the linkages. We estimate that, in the presence of a binding RFS, the inherent volatility in the US coarse grains market will rise by about one-quarter. And the volatility of the US coarse grains price to supply side shocks in that market will rise by nearly one-half. Under a high oil price scenario, rather than the RFS binding, the binding constraint is likely to be the blend wall. With a binding blend wall, we see similar, although somewhat smaller, increases in market volatility. If both the RFS and the blend wall are on the verge of being binding, then our results suggest that US coarse grains price volatility in response to corn supply shocks would be 57% higher than in the non-binding case, and world price volatility would be boosted by 25%.
Handle: RePEc:nbr:nberwo:16824
Template-Type: ReDIF-Paper 1.0
Title: "To Establish a More Effective Supervision of Banking": How the Birth of the Fed Altered Bank Supervision
Classification-JEL: E58; G21; G28; N11; N12; N2
Author-Name: Eugene N. White
Author-Person: pwh5
Note: DAE ME
Number: 16825
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16825
File-URL: http://www.nber.org/papers/w16825.pdf
File-Format: application/pdf
Abstract: Although bank supervision under the National Banking System exercised a light hand and panics were frequent, depositor losses were minimal. Double liability induced shareholders to carefully monitor bank managers and voluntarily liquidate banks early if they appeared to be in trouble. Inducing more disclosure, marking assets to market, and ensuring prompt closure of insolvent national banks, the Comptroller of the Currency reinforced market discipline. The arrival of the Federal Reserve weakened this regime. Monetary policy decisions conflicted with the goal of financial stability and created moral hazard. The appearance of the Fed as an additional supervisor led to more "competition in laxity" among regulators and "regulatory arbitrage" by banks. When the Great Depression hit, policy-induced deflation and asset price volatility were misdiagnosed as failures of competition and market valuation. In response, the New Deal shifted to a regime of discretion-based supervision with forbearance.
Handle: RePEc:nbr:nberwo:16825
Template-Type: ReDIF-Paper 1.0
Title: Life Shocks and Homelessness
Classification-JEL: I1; R21; R31
Author-Name: Marah A. Curtis
Author-Name: Hope Corman
Author-Name: Kelly Noonan
Author-Name: Nancy Reichman
Note: EH
Number: 16826
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16826
File-URL: http://www.nber.org/papers/w16826.pdf
File-Format: application/pdf
Publication-Status: published as Curtis, M., Corman, H., Noonan, K., Reichman, N. (2013). Life Shocks and Homelessness. Demography 50(6): 2227–2253.
Abstract: We exploit an exogenous health shock--the birth of a child with a severe health condition--to investigate the causal effect of a life shock on homelessness. Using survey data from the Fragile Families and Child Wellbeing study that have been augmented with information from hospital medical records, we find that the health shock increases the likelihood of homelessness three years later, particularly in cities with high housing costs. Homelessness is defined using both a traditional measure and a more contemporary measure that includes residential instability and doubling up without paying rent. The findings are consistent with the economic theory of homelessness, which posits that homelessness results from a conjunction of adverse circumstances in which housing markets and individual characteristics collide. They also add to a growing body of evidence that housing markets are an important contributor to homelessness and suggest that homelessness is a problem not easily addressed by existing public support programs.
Handle: RePEc:nbr:nberwo:16826
Template-Type: ReDIF-Paper 1.0
Title: A Decade of Debt
Classification-JEL: F3; H6; N10
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM ME
Number: 16827
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16827
File-URL: http://www.nber.org/papers/w16827.pdf
File-Format: application/pdf
Publication-Status: published as A Decade of Debt (with Carmen M Reinhart), Washington DC: Peterson Institute for International Economics, September 2011.
Abstract: This paper presents evidence that public debts in the advanced economies have surged in recent years to levels not recorded since the end of World War II, surpassing the heights reached during the First World War and the Great Depression. At the same time, private debt levels, particularly those of financial institutions and households, are in uncharted territory and are (in varying degrees) a contingent liability of the public sector in many countries. Historically, high leverage episodes have been associated with slower economic growth and a higher incidence of default or, more generally, restructuring of public and private debts. A more subtle form of debt restructuring in the guise of "financial repression" (which had its heyday during the tightly regulated Bretton Woods system) also importantly facilitated sharper and more rapid debt reduction than would have otherwise been the case from the late 1940s to the 1970s. It is conjectured here that the pressing needs of governments to reduce debt rollover risks and curb rising interest expenditures in light of the substantial debt overhang (combined with the widespread "official aversion" to explicit restructuring) are leading to a revival of financial repression--including more directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, and tighter regulation on cross-border capital movements.
Handle: RePEc:nbr:nberwo:16827
Template-Type: ReDIF-Paper 1.0
Title: Demographic Patterns and Household Saving in China
Classification-JEL: E2; J1
Author-Name: Chadwick C. Curtis
Author-Person: pcu166
Author-Name: Steven Lugauer
Author-Person: plu182
Author-Name: Nelson C. Mark
Author-Person: pma186
Note: IFM
Number: 16828
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16828
File-URL: http://www.nber.org/papers/w16828.pdf
File-Format: application/pdf
Publication-Status: published as Chadwick C. Curtis & Steven Lugauer & Nelson C. Mark, 2015. "Demographic Patterns and Household Saving in China," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(2), pages 58-94, April.
Abstract: This paper studies the effect that changing demographic patterns have had on the household saving rate in China. We undertake a quantitative investigation using an overlapping generations (OLG) model where agents live for 85 years. Consumers begin to exercise decision making when they are 18. From age 18 to 60, they work and raise children. Dependent children's utility enter into parent's utility where parents choose the consumption level of the young until they leave the household. Working agents give a portion of their labor income to their retired parents and save for their own retirement while the aged live on their accumulated assets and support from their children. Remaining assets are bequeathed to the living upon death. We parameterize the model and take future demographic changes, labor income and interest rates as exogenously given from the data. We then run the model from 1963 to 2009 and find that the model accounts for nearly all the observed increase in the household saving rate.
Handle: RePEc:nbr:nberwo:16828
Template-Type: ReDIF-Paper 1.0
Title: New measures of the costs of unemployment: Evidence from the subjective well-being of 3.3 million Americans
Classification-JEL: E24; H23; J64; J68
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Haifang Huang
Author-Person: phu198
Note: EFG LS PE
Number: 16829
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16829
File-URL: http://www.nber.org/papers/w16829.pdf
File-Format: application/pdf
Publication-Status: Forthcoming, Economic Inquiry.
Abstract: Using two large US surveys, we estimate the effects of unemployment on the subjective well-being of the unemployed and the rest of the population. For the unemployed, the non-pecuniary costs of unemployment are several times as large as those due to lower incomes, while the indirect effect at the population level is fifteen times as large. For those who are still employed, a one percentage point increase in local unemployment has an impact on well-being roughly equivalent to a four percent decline in household income. We also find evidence indicating that job security is an important channel for the indirect effects of unemployment.
Handle: RePEc:nbr:nberwo:16829
Template-Type: ReDIF-Paper 1.0
Title: School Inputs, Household Substitution, and Test Scores
Classification-JEL: H52; I21; O15
Author-Name: Jishnu Das
Author-Person: pda284
Author-Name: Stefan Dercon
Author-Person: pde40
Author-Name: James Habyarimana
Author-Name: Pramila Krishnan
Author-Name: Karthik Muralidharan
Author-Person: pmu102
Author-Name: Venkatesh Sundararaman
Note: CH ED PE
Number: 16830
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16830
File-URL: http://www.nber.org/papers/w16830.pdf
File-Format: application/pdf
Publication-Status: published as Jishnu Das & Stefan Dercon & James Habyarimana & Pramila Krishnan & Karthik Muralidharan & Venkatesh Sundararaman, 2013. "School Inputs, Household Substitution, and Test Scores," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 29-57, April.
Abstract: Empirical studies of the relationship between school inputs and test scores typically do not account for the fact that households will respond to changes in school inputs. We present a dynamic household optimization model relating test scores to school and household inputs, and test its predictions in two very different low-income country settings - Zambia and India. We measure household spending changes and student test score gains in response to unanticipated as well as anticipated changes in school funding. Consistent with the optimization model, we find in both settings that households offset anticipated grants more than unanticipated grants. We also find that unanticipated school grants lead to significant improvements in student test scores but anticipated grants have no impact on test scores. Our results suggest that naïve estimates of public education spending on learning outcomes that do not account for optimal household responses are likely to be considerably biased if used to estimate parameters of an education production function.
Handle: RePEc:nbr:nberwo:16830
Template-Type: ReDIF-Paper 1.0
Title: Free vs. Controlled Migration: Bilateral Country Study
Classification-JEL: F0; F2; F22; H10
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Jackline Wahba
Author-Person: pwa885
Note: IFM
Number: 16831
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16831
File-URL: http://www.nber.org/papers/w16831.pdf
File-Format: application/pdf
Publication-Status: published as Assaf Razin & Jackline Wahba, 2015. "Welfare Magnet Hypothesis, Fiscal Burden, and Immigration Skill Selectivity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(2), pages 369-402, April.
Abstract: This paper tests the differential effects of the generosity of the welfare state under free migration and under policy-controlled migration, distinguishing between source developing and developed countries. We utilize free-movement within the EU to examine the free migration regime and compare that to immigration into the EU from two other groups, developed and developing source countries, to capture immigration-restricted regimes. We standardize cross-country education quality differences by using the Hanushek-Woessmann (2009) cognitive skills measure. We find strong support for the "Magnet Hypothesis" under the free-migration regime, and the "Fiscal Burden Hypothesis" under the immigration- restricted regime even after controlling for differences in returns to skills in source and host countries. We also find a significant differences across host-country policy regimes in the effects of returns to skills on the skill mix of immigrants.
Handle: RePEc:nbr:nberwo:16831
Template-Type: ReDIF-Paper 1.0
Title: Reestablishing the Income-Democracy Nexus
Classification-JEL: O10; P16
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Alejandro Corvalan
Author-Name: Mark M. Spiegel
Author-Person: psp18
Note: EFG POL
Number: 16832
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16832
File-URL: http://www.nber.org/papers/w16832.pdf
File-Format: application/pdf
Abstract: A number of recent empirical studies have cast doubt on the "modernization theory" of democratization, which posits that increases in income are conducive to increases in democracy levels. This doubt stems mainly from the fact that while a strong positive correlation exists between income and democracy levels, the relationship disappears when one controls for country fixed effects. This raises the possibility that the correlation in the data reflects a third causal characteristic, such as institutional quality. In this paper, we reexamine the robustness of the income-democracy relationship. We extend the research on this topic in two dimensions: first, we make use of newer income data, which allows for the construction of larger samples with more within-country observations. Second, we concentrate on panel estimation methods that explicitly allow for the fact that the primary measures of democracy are censored with substantial mass at the boundaries, or binary censored variables. Our results show that when one uses both the new income data available and a properly non linear estimator, a statistically significant positive income-democracy relationship is robust to the inclusion of country fixed effects.
Handle: RePEc:nbr:nberwo:16832
Template-Type: ReDIF-Paper 1.0
Title: Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004
Classification-JEL: J31
Author-Name: Robert A. Moffitt
Author-Person: pmo48
Author-Name: Peter Gottschalk
Note: PE
Number: 16833
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16833
File-URL: http://www.nber.org/papers/w16833.pdf
File-Format: application/pdf
Publication-Status: published as T re nds in th e T ra nsi tor y Var ia nce of Ma le Ear nin gs in t he U.S ., 19 70- 2004 . J our nal of Hum an Re sou rc es, Wi nte r, 2 012.
Abstract: We estimate the trend in the transitory variance of male earnings in the U.S. using the Michigan Panel Study of Income Dynamics from 1970 to 2004. Using both an error components model as well as simpler but only approximate methods, we find that the transitory variance started to increase in the early 1970s, continued to increase through the mid-1980s, and then remained at this new higher level through the 1990s and beyond. Thus the increase mostly occurred about thirty years ago. Its increase accounts for between 31 and 49 percent of the total rise in cross-sectional variance, depending on the time period.
Handle: RePEc:nbr:nberwo:16833
Template-Type: ReDIF-Paper 1.0
Title: Deductions from the Export Basket: Capabilities, Wealth and Trade
Classification-JEL: F12; O10
Author-Name: John Sutton
Author-Name: Daniel Trefler
Author-Person: ptr44
Note: ITI
Number: 16834
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16834
File-URL: http://www.nber.org/papers/w16834.pdf
File-Format: application/pdf
Abstract: This paper re-explores the relation between a country's level of wealth and the mix of products it exports. We argue that both are simultaneously determined by countries' capabilities i.e. by countries' productivity and quality levels for each good. Our theoretical setup has two features. (1) Some goods have fewer high-quality producers/countries than others i.e. there is Ricardian comparative advantage. (2) Imperfect competition allows high- and low-quality producers to coexist, which we refer to as 'product ranges'. These two features generate a very particular non-monotonic, general equilibrium relationship between a country's export mix and its wage (GDP per capita). We show that this non-monotonicity permeates the 1980-2005 international data on trade and GDP per capita. Our setup also explains two other facets of the data: (1) Product ranges are huge and (2) for the poorest third of countries, changes in export mix substantially over-predict growth in GDP per capita. This suggests that the main challenge for low-income countries is to raise quality and productivity in their existing product lines.
Handle: RePEc:nbr:nberwo:16834
Template-Type: ReDIF-Paper 1.0
Title: Does Less Income Mean Less Representation?
Classification-JEL: D72
Author-Name: Eric J. Brunner
Author-Name: Stephen L. Ross
Author-Person: pro69
Author-Name: Ebonya L. Washington
Note: POL
Number: 16835
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16835
File-URL: http://www.nber.org/papers/w16835.pdf
File-Format: application/pdf
Publication-Status: published as Eric Brunner & Stephen L. Ross & Ebonya Washington, 2013. "Does Less Income Mean Less Representation?," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 53-76, May.
Abstract: We assemble a novel dataset of matched legislative and constituent votes and demonstrate that less income does not mean less representation. We show 1) The opinions of high and low income voters are highly correlated; the legislator's vote often reflects the desire of both. 2) What differences in representation by income exist, vary by legislator party. Republicans more often vote the will of their higher income over their lower income constituents; Democratic legislators do the reverse. 3) Differences in representation by income are largely explained by the correlation between constituent income and party affiliation.
Handle: RePEc:nbr:nberwo:16835
Template-Type: ReDIF-Paper 1.0
Title: Procyclicality and Monetary Aggregates
Classification-JEL: E32; E44; E52
Author-Name: Hyun Song Shin
Author-Person: psh692
Author-Name: Kwanho Shin
Author-Person: psh131
Note: EFG
Number: 16836
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16836
File-URL: http://www.nber.org/papers/w16836.pdf
File-Format: application/pdf
Abstract: Financial intermediaries borrow in order to lend. When credit is increasing rapidly, the traditional deposit funding (core liabilities) is supplemented with other funding (non-core liabilities). We explore the hypothesis that monetary aggregates reflect the size of non-core and core liabilities and hence convey information on the stage of the financial cycle. In emerging economies with open capital markets, non-core liabilities of the banking system take the form of short-term foreign exchange liabilities, increasing the vulnerability to the outbreak of "twin crises" where a liquidity crisis is compounded by a currency crisis.
Handle: RePEc:nbr:nberwo:16836
Template-Type: ReDIF-Paper 1.0
Title: Why World Exports are so Susceptible to the Economic Crisis --The Prevailing "Export Overshooting" Phenomenon
Classification-JEL: F1; F14
Author-Name: Bih Jane Liu
Note: ITI
Number: 16837
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16837
File-URL: http://www.nber.org/papers/w16837.pdf
File-Format: application/pdf
Abstract: This paper provides some evidence of the "export overshooting" phenomenon, i.e., the unusually large deviation of exports from their long-run level. We study the export trends of a sample of 37 countries including both OECD and non-OECD countries over the period of 1994-2009. We find that exports overshot their equilibrium value during economic crises and that the tendency to overshoot was a worldwide phenomenon. The bullwhip effect was the driving force behind such a phenomenon. Moreover, the extent of export overshooting was increasing in more recent crisis, which can be attributed to an increase in cross-border vertical specialization over time.
Handle: RePEc:nbr:nberwo:16837
Template-Type: ReDIF-Paper 1.0
Title: The Geography of Fear
Classification-JEL: D80; N30; Z10; Z12
Author-Name: Daniel Treisman
Author-Person: ptr286
Note: POL
Number: 16838
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16838
File-URL: http://www.nber.org/papers/w16838.pdf
File-Format: application/pdf
Abstract: Whether the danger invoked is nuclear war or genetically modified foods, far more people in some countries than in others say they are afraid. Using data from six surveys, I show that the levels of reported fear of different dangers correlate strongly across both individuals and countries. I construct indexes of fearfulness for 15-25 countries and map the prevalence of fear in Western Europe. About two thirds of the crossnational variation within Europe can be explained by differences in pessimism--the degree to which respondents exaggerate the likelihood of disasters. Among the countries for which I have data, the most robust correlates of fearfulness relate to countries' religious traditions. Fear tends to be higher in countries where more people believe in Hell and where fewer believe in Heaven.
Handle: RePEc:nbr:nberwo:16838
Template-Type: ReDIF-Paper 1.0
Title: Cross-Country Comparisons of Corporate Income Taxes
Classification-JEL: H25; K34; M41
Author-Name: Kevin S. Markle
Author-Name: Douglas A. Shackelford
Author-Person: psh631
Note: PE
Number: 16839
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16839
File-URL: http://www.nber.org/papers/w16839.pdf
File-Format: application/pdf
Publication-Status: published as Markle, Kevin S. and Douglas A. Shackelford, “Cross-Country Comparisons of Corporate Income Taxes,” National Tax Journal 65:3, September 2012, 493-527.
Abstract: To our knowledge, this paper provides the most comprehensive analysis of firm-level corporate income taxes to date. We use publicly available financial statement information for 11,602 public corporations from 82 countries from 1988 to 2009 to estimate country-level effective tax rates (ETRs). We find that the location of a multinational and its subsidiaries substantially affects its worldwide ETR. Japanese firms always faced the highest ETRs. U.S. multinationals are among the highest taxed. Multinationals based in tax havens face the lowest taxes. We find that ETRs have been falling over the last two decades; however, the ordinal rank from high-tax countries to low-tax countries has changed little. We also find little difference between the ETRs of multinationals and domestic-only firms. Besides enhancing our knowledge about international taxes, these findings should provide some empirical underpinning for ongoing policy debates about the taxation of multinationals.
Handle: RePEc:nbr:nberwo:16839
Template-Type: ReDIF-Paper 1.0
Title: Inheritances and the Distribution of Wealth or Whatever Happened to the Great Inheritance Boom? Results from the SCF and PSID
Classification-JEL: D31; J1
Author-Name: Edward N. Wolff
Author-Name: Maury Gittleman
Author-Person: pgi10
Note: PR
Number: 16840
Creation-Date: 2011-02
Order-URL: http://www.nber.org/papers/w16840
File-URL: http://www.nber.org/papers/w16840.pdf
File-Format: application/pdf
Abstract: Using data from both the Survey of Consumer Finances (SCF) and the Panel Study of Income Dynamics (PSID), we found that on average over the period from 1984 to 2007, about one fifth of American households at a given point of time received a wealth transfer and these accounted for about a quarter of their net worth. Over the lifetime, about 30 percent of households could expect to receive a wealth transfer and these would account for close to 40 percent of their net worth near time of death. However, there is little evidence of an inheritance "boom." In fact, from 1989 to 2007, the share of households in the SCF reporting a wealth transfer fell by 2.5 percentage points. The average value of inheritances received among all households did increase but at a slow pace, by 10 percent, but wealth transfers as a proportion of current net worth fell sharply over this period, from 29 to 19 percent. We also found, somewhat surprisingly, that inheritances and other wealth transfers tend to be equalizing in terms of the distribution of household wealth. Indeed, the addition of wealth transfers to other sources of household wealth has had a sizeable effect on reducing the inequality of wealth.
Handle: RePEc:nbr:nberwo:16840
Template-Type: ReDIF-Paper 1.0
Title: The American Family in Black and White: A Post-Racial Strategy for Improving Skills to Promote Equality
Classification-JEL: J15; J24
Author-Name: James J. Heckman
Note: CH ED
Number: 16841
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16841
File-URL: http://www.nber.org/papers/w16841.pdf
File-Format: application/pdf
Publication-Status: published as “The American Family in Black & White: A Post-Racial Strategy for Improving Skills to Promote Equality,” Daedalus , 140 (2):70–89. (2011).
Abstract: In contemporary America, racial gaps in achievement are primarily due to gaps in skills. Skill gaps emerge early before children enter school. Families are major producers of those skills. Inequality in performance in school is strongly linked to inequality in family environments. Schools do little to reduce or enlarge the gaps in skills that are present when children enter school. Parenting matters, and the true measure of child advantage and disadvantage is the quality of parenting received. A growing fraction of American children across all race and ethnic groups is being raised in dysfunctional families. Investment in the early lives of children in disadvantaged families will help close achievement gaps. America currently relies too much on schools and adolescent remediation strategies to solve problems that start in the preschool years. Prevention is likely to be more cost-effective than remediation. Voluntary, culturally sensitive support for parenting is a politically and economically palatable strategy that addresses problems common to all racial and ethnic groups.
Handle: RePEc:nbr:nberwo:16841
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Hedge Funds: Alpha, Fees, Leverage, and Valuation
Classification-JEL: G11; G2; G32
Author-Name: Yingcong Lan
Author-Name: Neng Wang
Author-Person: pwa390
Author-Name: Jinqiang Yang
Note: AP CF
Number: 16842
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16842
File-URL: http://www.nber.org/papers/w16842.pdf
File-Format: application/pdf
Publication-Status: published as “The economics of hedge funds,” with Yingcong Lan and Ji nqiang Yang, Journal of Financial Economics, 110(2), 300 -‐ 323, (2013)
Abstract: Hedge fund managers are compensated via management fees on the assets under management (AUM) and incentive fees indexed to the high-water mark (HWM). We study the effects of managerial skills (alpha) and compensation on dynamic leverage choices and the valuation of fees and investors' payoffs. Increasing the investment allocation to the alpha-generating strategy typically lowers the fund's risk-adjusted excess return due to frictions such as price pressure. When the manager is only paid via management fees, the manager optimally chooses time-invariant leverage to balance the size of allocation to the alpha-generating strategy against the negative impact of increasing size on the fund's alpha. When the manager is paid via both management and incentive fees, we show that (i) the high-powered incentive fees encourage excessive risk taking, while management fees have the opposite effect; (ii) conflicts of interest between the manager and investors have significant effects on dynamically changing leverage choices and the valuation of fees and investors' payoffs; (iii) the manager optimally increases leverage following strong fund performances; (iv) investors' options to liquidate the fund following sufficiently poor fund performances substantially curtail managerial risk-taking, provide strong incentives to de-leverage, and sometimes even give rise to strong precautionary motives to hoard cash (in long positions); and (v) managerial ownership concentration has incentive alignment effects.
Handle: RePEc:nbr:nberwo:16842
Template-Type: ReDIF-Paper 1.0
Title: A Unified Model of Entrepreneurship Dynamics
Classification-JEL: E2; G11; G31
Author-Name: Chong Wang
Author-Name: Neng Wang
Author-Person: pwa390
Author-Name: Jinqiang Yang
Note: AP CF EFG
Number: 16843
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16843
File-URL: http://www.nber.org/papers/w16843.pdf
File-Format: application/pdf
Publication-Status: published as as "A unified model of entrepreneurship dynamics" in Journal of Financial Economics Volume 106, Issue 1, October 2012, Pages 1–23
Abstract: We develop an incomplete-markets q-theoretic model to study entrepreneurship dynamics. Precautionary motive, borrowing constraints, and capital illiquidity lead to underinvestment, conservative debt use, under-consumption, and less risky portfolio allocation. The endogenous liquid wealth-illiquid capital ratio w measures time-varying financial constraint. The option to accumulate wealth before entry is critical for entrepreneurship. Flexible exit option is important for risk management purposes. Investment increases and the private marginal value of liquidity decreases as w decreases and exit becomes more likely, contrary to predictions of standard financial constraint models. We show that the idiosyncratic risk premium is quantitatively significant, especially for low w.
Handle: RePEc:nbr:nberwo:16843
Template-Type: ReDIF-Paper 1.0
Title: Superfund Cleanups and Infant Health
Classification-JEL: H4; I1; Q5
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: Enrico Moretti
Author-Person: pmo392
Note: CH EEE EH PE
Number: 16844
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16844
File-URL: http://www.nber.org/papers/w16844.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie & Michael Greenstone & Enrico Moretti, 2011. "Superfund Cleanups and Infant Health," American Economic Review, American Economic Association, vol. 101(3), pages 435-41, May.
Abstract: We are the first to examine the effect of Superfund cleanups on infant health rather than focusing on proximity to a site. We study singleton births to mothers residing within 5km of a Superfund site between 1989-2003 in five large states. Our "difference in differences" approach compares birth outcomes before and after a site clean-up for mothers who live within 2,000 meters of the site and those who live between 2,000- 5,000 meters of a site. We find that proximity to a Superfund site before cleanup is associated with a 20 to 25% increase in the risk of congenital anomalies.
Handle: RePEc:nbr:nberwo:16844
Template-Type: ReDIF-Paper 1.0
Title: Asset Prices, Credit Growth, Monetary and Other Policies: An Australian Case Study
Classification-JEL: E52; E58
Author-Name: Paul Bloxham
Author-Person: pbl117
Author-Name: Christopher Kent
Author-Name: Michael Robson
Note: ME
Number: 16845
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16845
File-URL: http://www.nber.org/papers/w16845.pdf
File-Format: application/pdf
Abstract: The long-running debate about the role of monetary policy in responding to rising asset prices has received renewed attention in the wake of the global financial crisis. This paper contributes to this debate by describing the Australian experience of a cycle in house prices and credit from 2002 to 2004, and discussing the role played by various policies during this episode. In particular, it focuses on the efforts by the Reserve Bank of Australia to draw attention to the risks associated with large, ongoing increases in housing prices and household borrowing.
Handle: RePEc:nbr:nberwo:16845
Template-Type: ReDIF-Paper 1.0
Title: Industrial Actions in Schools: Strikes and Student Achievement
Classification-JEL: I21; J24; J51
Author-Name: Michael Baker
Author-Person: pba400
Note: ED LS
Number: 16846
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16846
File-URL: http://www.nber.org/papers/w16846.pdf
File-Format: application/pdf
Publication-Status: published as Michael Baker, 2013. "Industrial actions in schools: strikes and student achievement," Canadian Journal of Economics/Revue canadienne d'économique, vol 46(3), pages 1014-1036.
Abstract: While many jurisdictions ban teacher strikes on the assumption that they harm students, there is surprisingly little research on this question. The majority of existing studies make cross section comparisons of students who do or do not experience a strike, and report that strikes do not affect student performance. I present new estimates from a sample of strikes in the Canadian province of Ontario over the period 1998-2005. The empirical strategy controls for fixed student characteristics at the school cohort level. The results indicate that teacher strikes in grades 2 or 3 have on average a small, negative and statistically insignificant effect on grade 3 through grade 6 test score growth, although there is some heterogeneity across school boards. The effect of strikes in grades 5 and 6 on grade 3 through grade 6 score growth is negative, much larger and statistically significant. The largest impact is on math scores: 29 percent of the standard deviation of test scores across school/grade cohorts.
Handle: RePEc:nbr:nberwo:16846
Template-Type: ReDIF-Paper 1.0
Title: Pegs and Pain
Classification-JEL: E3; F33; F41
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martin Uríbe
Note: EFG IFM ME
Number: 16847
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16847
File-URL: http://www.nber.org/papers/w16847.pdf
File-Format: application/pdf
Abstract: We identify a disconnect between historical and model-based assessments of the costs of currency pegs due to nominal rigidities. While the former attribute major contractions and massive unemployment to currency pegs, the latter find miniscule welfare losses. The goal of this paper is to reconcile these two assessments. We refocus attention to downward wage inflexibility as the central source of nominal rigidity. More importantly, our model departs from existing sticky wage models in the Calvo-Rotemberg tradition in that employment is not always demand determined. This departure creates an endogenous connection between macroeconomic volatility and the average level of unemployment and in this way opens the door to large welfare gains from stabilization policy. In a calibrated version of the model, an external crisis, defined as a two-standard-deviation decline in tradable output and a two-standard-deviation increase in the country interest rate premium, causes the unemployment rate to rise by more than 20 percentage points under a peg. Currency pegs are shown to be highly costly also during regular business-cycle fluctuations. The median welfare cost of a currency peg is 4 and 10 percent of consumption per period.
Handle: RePEc:nbr:nberwo:16847
Template-Type: ReDIF-Paper 1.0
Title: Wealth Effects Revisited 1978-2009
Classification-JEL: E02; G1; R31
Author-Name: Karl E. Case
Author-Person: pca484
Author-Name: John M. Quigley
Author-Person: pqu1
Author-Name: Robert J. Shiller
Author-Person: psh69
Note: EFG
Number: 16848
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16848
File-URL: http://www.nber.org/papers/w16848.pdf
File-Format: application/pdf
Abstract: We re-examine the link between changes in housing wealth, financial wealth, and consumer spending. We extend a panel of U.S. states observed quarterly during the seventeen-year period, 1982 through 1999, to the thirty-one year period, 1978 through 2009. Using techniques reported previously, we impute the aggregate value of owner-occupied housing, the value of financial assets, and measures of aggregate consumption for each of the geographic units over time. We estimate regression models in levels, first differences and in error-correction form, relating per capita consumption to per capita income and wealth. We find a statistically significant and rather large effect of housing wealth upon household consumption. This effect is consistently larger than the effect of stock market wealth upon consumption. This reinforces the conclusions reported in our previous analysis. In contrast to our previous analysis, however, we do find - based on data which include the recent volatility in asset markets - that the effects of declines in housing wealth in reducing consumption are at least as large as the effects of increases in housing wealth in increasing the course of household consumption.
Handle: RePEc:nbr:nberwo:16848
Template-Type: ReDIF-Paper 1.0
Title: Did Securitization Affect the Cost of Corporate Debt?
Classification-JEL: G21; G32
Author-Name: Taylor D. Nadauld
Author-Name: Michael S. Weisbach
Note: CF
Number: 16849
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16849
File-URL: http://www.nber.org/papers/w16849.pdf
File-Format: application/pdf
Publication-Status: published as Nadauld, Taylor D. & Weisbach, Michael S., 2012. "Did securitization affect the cost of corporate debt?," Journal of Financial Economics, Elsevier, vol. 105(2), pages 332-352.
Abstract: This paper investigates whether the securitization of corporate bank loans had an impact on the price of corporate debt. Our results suggest that loan facilities that are subsequently securitized are associated with a 15 basis point lower spread than that of loans that are not subsequently securitized. To identify the particular role of securitization in loan pricing, we employ a difference in differences approach and consider loan characteristics that are associated with the likelihood of securitization. We document that Term Loan B facilities, facilities originated by banks that originate CLOs, and loans of B-Rated firms are securitized more frequently than other loans. Spreads on facilities estimated to be more likely to be subsequently securitized have lower spreads than otherwise similar facilities. The results are consistent with the view that securitization caused a reduction in the cost of capital.
Handle: RePEc:nbr:nberwo:16849
Template-Type: ReDIF-Paper 1.0
Title: Teacher Incentives and Student Achievement: Evidence from New York City Public Schools
Classification-JEL: I0; J0
Author-Name: Roland G. Fryer
Author-Person: pfr43
Note: ED LS
Number: 16850
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16850
File-URL: http://www.nber.org/papers/w16850.pdf
File-Format: application/pdf
Publication-Status: published as Teacher Incentives and Student Achievement: Evidence from New York City Public Schools Roland G. Fryer Journal of Labor Economics Vol. 31, No. 2 (April 2013), pp. 373-407 Published by: The University of Chicago Press on behalf of the Society of Labor Economists and the NORC at the University of Chicago
Abstract: Financial incentives for teachers to increase student performance is an increasingly popular education policy around the world. This paper describes a school-based randomized trial in over two-hundred New York City public schools designed to better understand the impact of teacher incentives on student achievement. I find no evidence that teacher incentives increase student performance, attendance, or graduation, nor do I find any evidence that the incentives change student or teacher behavior. If anything, teacher incentives may decrease student achievement, especially in larger schools. The paper concludes with a speculative discussion of theories that may explain these stark results.
Handle: RePEc:nbr:nberwo:16850
Template-Type: ReDIF-Paper 1.0
Title: Set-Asides and Subsidies in Auctions
Classification-JEL: D44; H57; L53
Author-Name: Susan Athey
Author-Person: pat6
Author-Name: Dominic Coey
Author-Person: pco755
Author-Name: Jonathan Levin
Author-Person: ple318
Note: IO PE
Number: 16851
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16851
File-URL: http://www.nber.org/papers/w16851.pdf
File-Format: application/pdf
Publication-Status: published as Susan Athey & Dominic Coey & Jonathan Levin, 2013. "Set-Asides and Subsidies in Auctions," American Economic Journal: Microeconomics, American Economic Association, vol. 5(1), pages 1-27, February.
Abstract: Set-asides and subsidies are used extensively in government procurement and natural resource sales. We analyze these policies in an empirical model of U.S. Forest Service timber auctions. The model fits the data well both within the sample of unrestricted sales where we estimate the model, and when we predict (out of sample) bidder entry and prices for small business set-asides. Our estimates suggest that restricting entry to small businesses substantially reduces efficiency and revenue, although it does increase small business participation. An alternative policy of subsidizing small bidders would increase revenue and small bidder profit, while eliminating almost all of the efficiency loss of set-asides, and only slightly decreasing the profit of larger firms. We explain these findings by connecting to the theory of optimal auction design.
Handle: RePEc:nbr:nberwo:16851
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Internet Markets
Classification-JEL: C78; D4; D44; L10; L14; O33
Author-Name: Jonathan D. Levin
Author-Person: ple318
Note: IO
Number: 16852
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16852
File-URL: http://www.nber.org/papers/w16852.pdf
File-Format: application/pdf
Publication-Status: published as The Economics of Internet Markets,îin D. Acemoglu, M. Arellano and E. Dekel, ed. Advances in Economics and Econometrics , Cambridge University Press, 2013.
Abstract: The internet has facilitated the creation of new markets characterized by large scale, increased customization, rapid innovation and the collection and use of detailed consumer and market data. I describe these changes and some of the economic theory that has been useful for thinking about online advertising markets, retail and business-to-business e-commerce, internet job matching and financial exchanges, and other internet platforms. I also discuss the empirical evidence on competition and consumer behavior in internet markets and some directions for future research.
Handle: RePEc:nbr:nberwo:16852
Template-Type: ReDIF-Paper 1.0
Title: Does Input Quality Drive Measured Differences in Firm Productivity?
Classification-JEL: J21; J23; L11; L23
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Author-Name: Valérie Smeets
Author-Person: psm26
Note: IO LS PR
Number: 16853
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16853
File-URL: http://www.nber.org/papers/w16853.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy T. Fox & Valérie Smeets, 2011. "Does Input Quality Drive Measured Differences In Firm Productivity?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(4), pages 961-989, November.
Abstract: Firms in the same industry can differ in measured productivity by multiples of 3. Griliches (1957) suggests one explanation: the quality of inputs differs across firms. We add labor market history variables such as experience and firm and industry tenure, as well as general human capital measures such as schooling and sex. We also use the wage bill and worker fixed effects. We show adding human capital variables and the wage bill decreases the ratio of the 90th to 10th productivity quantiles from 3.27 to 2.68 across eight Danish manufacturing and service industries. The productivity dispersion decrease is roughly of the same order of magnitude as some competitive effects found in the literature, but input quality measures do not explain most productivity dispersion, despite economically large production function coefficients. We find that the wage bill explains as much dispersion as human capital measures.
Handle: RePEc:nbr:nberwo:16853
Template-Type: ReDIF-Paper 1.0
Title: Does Price Reveal Poor-Quality Drugs? Evidence from 17 Countries
Classification-JEL: D18; D4; D8; I11; I18; L15
Author-Name: Roger Bate
Author-Name: Ginger Zhe Jin
Author-Name: Aparna Mathur
Author-Person: pma1162
Note: IO
Number: 16854
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16854
File-URL: http://www.nber.org/papers/w16854.pdf
File-Format: application/pdf
Publication-Status: Published in the Journal of Health Economics 30 (2011) 1150-1163
Abstract: Focusing on 8 drug types on the WHO-approved medicine list, we constructed an original dataset of 899 drug samples from 17 low- and median-income countries and tested them for visual appearance, disintegration, and analyzed their ingredients by chromatography and spectrometry. Fifteen percent of the samples fail at least one test and can be considered substandard. After controlling for local factors, we find that failing drugs are priced 13.6-18.7% lower than non-failing drugs but the signaling effect of price is far from complete, especially for non-innovator brands. The look of the pharmacy, as assessed by our covert shoppers, is weakly correlated with the results of quality tests. These findings suggest that consumers are likely to suspect low quality from market price, non-innovator brand and the look of the pharmacy, but none of these signals can perfectly identify substandard and counterfeit drugs. Indeed, many cheaper non-innovator products pass all quality tests, and are genuine generic drugs.
Handle: RePEc:nbr:nberwo:16854
Template-Type: ReDIF-Paper 1.0
Title: Learning by Doing with Asymmetric Information: Evidence from Prosper.com
Classification-JEL: D14; D53; D83; L15; L81
Author-Name: Seth M. Freedman
Author-Person: pfr305
Author-Name: Ginger Zhe Jin
Note: IO
Number: 16855
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16855
File-URL: http://www.nber.org/papers/w16855.pdf
File-Format: application/pdf
Abstract: Using peer-to-peer (P2P) lending as an example, we show that learning by doing plays an important role in alleviating the information asymmetry between market players. Although the P2P platform (Prosper.com) discloses part of borrowers' credit histories, lenders face serious information problems because the market is new and subject to adverse selection relative to offline markets. We find that early lenders did not fully understand the market risk but lender learning is effective in reducing the risk over time. As a result, the market excludes more and more sub-prime borrowers and evolves towards the population served by traditional credit markets.
Handle: RePEc:nbr:nberwo:16855
Template-Type: ReDIF-Paper 1.0
Title: Mother's Schooling and Fertility under Low Female Labor Force Participation: Evidence from a Natural Experiment
Classification-JEL: I1; J2
Author-Name: Victor Lavy
Author-Person: pla111
Author-Name: Alexander Zablotsky
Note: CH ED LS
Number: 16856
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16856
File-URL: http://www.nber.org/papers/w16856.pdf
File-Format: application/pdf
Abstract: This paper studies the effect of mothers' education on fertility in a population with very low female labor force participation. The results we present are particularly relevant to many countries in the Muslim world where 70-80 percent of women are still out of the labor force. For identification we exploit the abrupt end of the military rule which greatly restricted the mobility of Arabs in Israel until the mid-1960's. This change improved access to schooling in communities that lacked schools and, as a consequence, significantly increased the education of affected cohorts, mainly of girls. The very large increase in schooling attainment triggered a sharp decline in completed fertility. We show that no other changes explain these findings and that the results are robust to checks against various threats to identification. We rule out convergence in fertility and schooling, changes in labor-force participation, age upon marriage, marriage and divorce rates, and spousal labor-force participation and earnings as mechanisms in this fertility decline. Spousal education increased however sharply through assortative matching and played a role in the fertility decline. We also show that the increase in mother's education was significantly and positively correlated with several potential mechanisms such as a reduction in the desired number of children, better knowledge and higher probability of using contraceptives, recognition that family size can compromise children quality, larger role for women in family decision making, less religiosity, and positive attitude towards modern health care and modernism in general.
Handle: RePEc:nbr:nberwo:16856
Template-Type: ReDIF-Paper 1.0
Title: Health Shocks, Insurance Status and Net Worth: Intra- and Inter-Generational Effects
Classification-JEL: I1; J14
Author-Name: Dalton Conley
Author-Name: Jason Alan Thompson
Note: AG EH
Number: 16857
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16857
File-URL: http://www.nber.org/papers/w16857.pdf
File-Format: application/pdf
Abstract: An extensive literature has documented a robust correlation between socioeconomic status--measured in a variety of ways--and health outcomes; however, much uncertainty remains regarding what causal processes underlie this association. The present paper builds on a growing literature that seeks to better document how and why wealth and SES are related. Specifically, we ask the extent to which health shocks affect net worth--a less-studied dimension of socioeconomic status. Given a lack of instruments that meet the exclusion restriction, we use data from the Panel Study of Income Dynamics to pursue a first-differences identification strategy. We estimate a parameter for acute illnesses (which should have a causal effect on wave-to-wave wealth changes) and compare this coefficient to a counterfactual parameter for the presence of chronic illnesses (which we argue should be less causally related to wealth differences year-to-year). Additionally, we interact these health indicators with insurance status as a further test that the health-wealth relationship is likely causal net of covariates. Results show that the onset of an acute illness has a negative effect on family wealth levels and that the onset of chronic illnesses only makes an impact when it occurs for those uninsured. In intergenerational models, parental health insurance status also seems to matter. When parents suffer from chronic illness and have no health insurance, adult children's net worth declines. Adult children in white families also face a greater likelihood of falling into debt (excluding wealth from home equity) when parental medical expenses increase. Together, these findings suggest that health dynamics play an important role in intergenerational stratification processes--at least under the current health regime of the United States.
Handle: RePEc:nbr:nberwo:16857
Template-Type: ReDIF-Paper 1.0
Title: Exposure to Food Advertising On Television: Associations With Children's Fast Food and Soft Drink Consumption and Obesity
Classification-JEL: I1
Author-Name: Tatiana Andreyeva
Author-Person: pan63
Author-Name: Inas Rashad Kelly
Author-Person: pke191
Author-Name: Jennifer L. Harris
Note: EH
Number: 16858
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16858
File-URL: http://www.nber.org/papers/w16858.pdf
File-Format: application/pdf
Publication-Status: published as Andreyeva, Tatiana; Kelly, Inas Rashad; Harris, Jennifer. Exposure to Food Advertising on Television: Associations with Children's Fast Food and Soft Drink Consumption and Obesity. Economics and Human Biology, 9(3): 221-233, July 2011.
Abstract: There is insufficient research on the direct effects of food advertising on children's diet and diet-related health, particularly in non-experimental settings. We employ a nationally-representative sample from the Early Childhood Longitudinal Survey-Kindergarten Cohort (ECLS-K) and the Nielsen Company data on spot television advertising of cereals, fast food restaurants and soft drinks to children across the top 55 designated-market areas to estimate the relation between exposure to food advertising on television and children's food consumption and body weight. Our results suggest that soft drink and fast food television advertising is associated with increased consumption of soft drinks and fast food among elementary school children (Grade 5). Exposure to 100 incremental TV ads for sugar-sweetened carbonated soft drinks during 2002-2004 was associated with a 9.4% rise in children's consumption of soft drinks in 2004. The same increase in exposure to fast food advertising was associated with a 1.1% rise in children's consumption of fast food. There was no detectable link between advertising exposure and average body weight, but fast food advertising was significantly associated with body mass index for overweight and obese children (>=85th BMI percentile), revealing detectable effects for a vulnerable group of children. Exposure to advertising for calorie-dense nutrient-poor foods may increase overall consumption of unhealthy food categories.
Handle: RePEc:nbr:nberwo:16858
Template-Type: ReDIF-Paper 1.0
Title: The Long-term Impact of Medicare Payment Reductions on Patient Outcomes
Classification-JEL: I1
Author-Name: Vivian Y. Wu
Author-Name: Yu-Chu Shen
Note: EH
Number: 16859
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16859
File-URL: http://www.nber.org/papers/w16859.pdf
File-Format: application/pdf
Publication-Status: published as Vivian Y. Wu & Yu-Chu Shen, 2014. "Long-Term Impact of Medicare Payment Reductions on Patient Outcomes," Health Services Research, vol 49(5), pages 1596-1615.
Abstract: This study examines the long term impact of Medicare payment reductions on patient outcomes using a natural experiment - the Balance Budget Act (BBA) of 1997. We use predicted Medicare revenue changes due to BBA, with simulated BBA payment cuts as an instrument, to categorize hospitals by degrees of payment cuts (small, moderate, or large), and follow Medicare patient outcomes in these hospitals over a 11 year panel: 1995-1997 pre-BBA, 1998-2000 initial years of BBA, and 2001-2005 post-BBA years. We find that Medicare AMI mortality trends stay similar across hospitals when comparing between pre-BBA and initial-BBA periods. However, the trends began to diverge in 2001-2005: hospitals facing large payment cuts saw increased mortality rates relative to that of hospitals facing small cuts in the post-BBA period (2001-2005) after controlling for their pre-BBA trends. We find support that part of the higher AMI mortalities among large-cut hospitals are explained by reductions in staffing level and operating cost following the payment cuts.
Handle: RePEc:nbr:nberwo:16859
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Allowing Pollution Offsets With Imperfect Enforcement
Classification-JEL: K32; K42; Q54; Q58
Author-Name: Hilary Sigman
Author-Person: psi55
Author-Name: Howard F. Chang
Note: EEE LE
Number: 16860
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16860
File-URL: http://www.nber.org/papers/w16860.pdf
File-Format: application/pdf
Publication-Status: published as Hilary Sigman & Howard F. Chang, 2011. "The Effect of Allowing Pollution Offsets with Imperfect Enforcement," American Economic Review, American Economic Association, vol. 101(3), pages 268-72, May.
Abstract: Public policies for pollution control, including climate change policies, sometimes allow polluters in one sector subject to an emissions cap to offset excessive emissions in that sector with pollution abatement in another sector. The government may often find it more costly to verify offset claims than to verify compliance with emissions caps. Concerns about such difficulties in enforcement may lead regulators to restrict the use of offsets. In this paper, we demonstrate that allowing offsets may increase pollution abatement and reduce illegal pollution, even if the government has a fixed enforcement budget. We explore the circumstances that may make allowing pollution offsets an attractive option when enforcement is costly.
Handle: RePEc:nbr:nberwo:16860
Template-Type: ReDIF-Paper 1.0
Title: Investment Dispersion and the Business Cycle
Classification-JEL: E2; E22; E3; E32
Author-Name: Rüdiger Bachmann
Author-Person: pba751
Author-Name: Christian Bayer
Author-Person: pba175
Note: EFG
Number: 16861
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16861
File-URL: http://www.nber.org/papers/w16861.pdf
File-Format: application/pdf
Publication-Status: published as R?diger Bachmann & Christian Bayer, 2014. "Investment Dispersion and the Business Cycle," American Economic Review, American Economic Association, vol. 104(4), pages 1392-1416, April.
Abstract: We document a new business cycle fact: the cross-sectional standard deviation of firm-level investment (investment dispersion) is robustly and significantly procyclical. This makes investment dispersion different from the dispersion of productivity and output growth, which is countercyclical. Investment dispersion is more procyclical in the goods-producing sectors, for smaller firms and for structures. We show that a heterogeneous-firm real business cycle model with countercyclical idiosyncratic firm risk and non-convex adjustment costs calibrated to match moments of the long-run investment rate distribution, produces a time series correlation coefficient between investment dispersion and aggregate output of 0.58, close to the 0.45 in the data. We argue, more generally, that cross-sectional business cycle dynamics impose tight empirical restrictions on the physical environments and the structural parameters of heterogeneous-firm models.
Handle: RePEc:nbr:nberwo:16861
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty Business Cycles - Really?
Classification-JEL: E2; E22; E3; E32
Author-Name: Rüdiger Bachmann
Author-Person: pba751
Author-Name: Christian Bayer
Author-Person: pba175
Note: EFG
Number: 16862
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16862
File-URL: http://www.nber.org/papers/w16862.pdf
File-Format: application/pdf
Publication-Status: published as “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”.
Abstract: Are fluctuations in firms' profitability risk a major cause of regular business cycles? We study this question within the framework of a heterogeneous-firm dynamic stochastic general equilibrium model with fixed capital adjustment costs. In such a model, surprise increases of risk lead to a wait-and-see policy for investment at the firm level and a decrease in aggregate economic activity. We calibrate the model using German firm-level data with a broader sectoral, size and ownership coverage than comparable U.S. data sets. The use of these data enables us to provide robust lower and upper bound estimates for the size of firm-level risk fluctuations. We find that time-varying firm-level risk on its own is unlikely to be a major quantitative source of regular business cycle fluctuations. When we augment a model with only aggregate productivity shocks by time-varying risk, the risk shocks dampen the high contemporaneous correlations of the productivity-shock-only model, but do not alter the other unconditional business cycle properties.
Handle: RePEc:nbr:nberwo:16862
Template-Type: ReDIF-Paper 1.0
Title: Fuel Tax Incidence and Supply Conditions
Classification-JEL: H22; H71; L98; Q4
Author-Name: Justin Marion
Author-Person: pma1125
Author-Name: Erich Muehlegger
Author-Person: pmu479
Note: EEE PE
Number: 16863
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16863
File-URL: http://www.nber.org/papers/w16863.pdf
File-Format: application/pdf
Publication-Status: published as Marion, Justin & Muehlegger, Erich, 2011. "Fuel tax incidence and supply conditions," Journal of Public Economics, Elsevier, vol. 95(9), pages 1202-1212.
Publication-Status: published as Marion, Justin & Muehlegger, Erich, 2011. "Fuel tax incidence and supply conditions," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1202-1212, October.
Abstract: The incidence of taxes on consumers and producers plays a central role in evaluating energy tax policy, yet the literature testing the main predictions of the tax incidence model is sparse. In this paper, we examine the pass-through rate of state gasoline and diesel taxes to retail prices, and importantly we estimate the dependence of pass-through on factors constraining the gasoline and diesel supply chains. We consider several factors that alter the elasticity of supply, including within state heterogeneity in gasoline content requirements, refinery capacity utilization, inventory constraints, and variation in the demand for untaxed uses of diesel. In general, we find that in periods of time when the supply chain is constrained, and the constraint is plausibly unrelated to shifts in demand, the pass-through rate of fuel taxes declines. We describe several potential implications for tax policy, including tax breaks during peak driving season and during times of supply disruptions such as after major hurricanes.
Handle: RePEc:nbr:nberwo:16863
Template-Type: ReDIF-Paper 1.0
Title: Spillovers, Linkages, and Productivity Growth in the US Economy, 1958 to 2007
Classification-JEL: O30; O33
Author-Name: Edward N. Wolff
Note: PR
Number: 16864
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16864
File-URL: http://www.nber.org/papers/w16864.pdf
File-Format: application/pdf
Publication-Status: published as Productivity Growth: Industries, Spillovers and Economic Performance [withThijs ten Raa], Edward Elgar Publishers, Cheltenham, UK, 2012.
Abstract: I speculate that technological spillover effects may have become more important over time as IT penetrated the U.S. economy. The rationale is that IT may speed up the process of knowledge transfer and make these knowledge spillovers more effective. Using US input-output tables for years 1958, 1967, 1977, 1987, 1997, and 2007, I compare my new results with Wolff and Nadiri (1993) covering years 1947-1977 and Wolff (1997) covering 1958- 1987. I estimate that the direct rate of return to R&D is now 22% and the indirect rate of return to R&D is 37%. The former is higher than in the previous studies. The indirect rate of return to R&D is now significant at the one percent level, in comparison to a 10 percent significance level in Wolff (1997). The newly estimated social rate of return to R&D is 59%, compared to 53% in Wolff (1997). In contrast to the earlier studies, the coefficients of R&D embodied in new investment are now statistically significant at the five percent level. Separate regressions on the 1958-1987 and 1987-2007 periods and the addition of successive periods to the sample also suggest a strengthening of R&D spillovers between the 1958-1987 and 1987-2007 periods. A decomposition of TFP growth also indicates a higher contribution from R&D spillovers in the later period. These results suggest a strengthening of the R&D spillover effect over time.
Handle: RePEc:nbr:nberwo:16864
Template-Type: ReDIF-Paper 1.0
Title: From Natural Variation to Optimal Policy? The Lucas Critique Meets Peer Effects
Classification-JEL: I2; J01
Author-Name: Scott E. Carrell
Author-Person: pca439
Author-Name: Bruce I. Sacerdote
Author-Name: James E. West
Author-Person: pwe191
Note: CH ED LS PE
Number: 16865
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16865
File-URL: http://www.nber.org/papers/w16865.pdf
File-Format: application/pdf
Publication-Status: published as “ From Natural Variation to Optimal Policy? The Importance of Endogenous Peer Group Formation ,” Econometrica , 81(3): 855 - 882 , 2013 . (with B. Sacerdote and J. West)
Abstract: We take cohorts of entering freshmen at the United States Air Force Academy and assign half to peer groups with the goal of maximizing the academic performance of the lowest ability students. Our assignment algorithm uses peer effects estimates from the observational data. We find a negative and significant treatment effect for the students we intended to help. We show that within our "optimal" peer groups, students self-selected into bifurcated sub-groups with social dynamics entirely different from those in the observational data. Our results suggest that using reduced-form estimates to make out-of-sample policy predictions can lead to unanticipated outcomes.
Handle: RePEc:nbr:nberwo:16865
Template-Type: ReDIF-Paper 1.0
Title: Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits
Classification-JEL: J08; J2; J78
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 16866
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16866
File-URL: http://www.nber.org/papers/w16866.pdf
File-Format: application/pdf
Publication-Status: published as Kenneth A. Couch & Douglas J. Besharov & David Neumark, 2013. "Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(1), pages 142-171, 01.
Abstract: The continuing adverse labor market effects of the Great Recession have intensified interest in policy efforts to spur job creation. In periods when labor demand and supply are in balance, either hiring credits or worker subsidies can be used to boost employment - hiring credits by reducing labor costs for employers, and worker subsidies by raising the economic returns to work. Historically, both types of policies have been used in pursuit of distributional goals as well, with hiring credits targeting employment of disadvantaged workers, and worker subsidies targeting low-income families. Hiring credits targeting the disadvantaged have generally been regarded as ineffective at both creating jobs and increasing incomes of low-income families, whereas worker subsidies have been viewed as more successful at both. However, in the context of the Great Recession - and severe recessions more generally - hiring credits may be particularly effective at spurring job creation, but only if they are designed quite differently from past hiring credits targeting the disadvantaged. Moreover, establishing a national hiring credit that kicks in during and after recessions may be an effective countercyclical measure - a useful addition to the "automatic stabilizers" already in place, and one that specifically targets job creation.
Handle: RePEc:nbr:nberwo:16866
Template-Type: ReDIF-Paper 1.0
Title: Global Liquidity Trap
Classification-JEL: E5; E52
Author-Name: Ippei Fujiwara
Author-Person: pfu32
Author-Name: Tomoyuki Nakajima
Author-Person: pna137
Author-Name: Nao Sudo
Author-Person: psu191
Author-Name: Yuki Teranishi
Author-Person: pte107
Note: EFG
Number: 16867
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16867
File-URL: http://www.nber.org/papers/w16867.pdf
File-Format: application/pdf
Publication-Status: published as Fujiwara, Ippei & Nakajima, Tomoyuki & Sudo, Nao & Teranishi, Yuki, 2013. "Global liquidity trap," Journal of Monetary Economics, Elsevier, vol. 60(8), pages 936-949.
Abstract: In this paper we consider a two-country New Open Economy Macroeconomics model, and analyze the optimal monetary policy when countries cooperate in the face of a "global liquidity trap" - i.e., a situation where the two countries are simultaneously caught in liquidity traps. Compared to the closed economy case, a notable feature of the optimal policy in the face of a global liquidity trap is its international dependence. Whether or not a country's nominal interest rate is hitting the zero bound affects the target inflation rate of the other country. The direction of the effect depends on whether goods produced in the two countries are Edgeworth complements or substitutes. We also compare several classes of simple interest-rate rules. Our finding is that targeting the price level yields higher welfare than targeting the inflation rate, and that it is desirable to let the policy rate of each country respond not only to its own price level and output gap, but also to those in the other country.
Handle: RePEc:nbr:nberwo:16867
Template-Type: ReDIF-Paper 1.0
Title: Does Aggregated Returns Disclosure Increase Portfolio Risk-Taking?
Classification-JEL: D14; G11
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: AG AP
Number: 16868
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16868
File-URL: http://www.nber.org/papers/w16868.pdf
File-Format: application/pdf
Publication-Status: published as John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2017. "Does Aggregated Returns Disclosure Increase Portfolio Risk Taking?," Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 1971-2005.
Abstract: Many previous experiments have found that participants invest more in risky assets if they (i) see their returns less frequently, (ii) see portfolio-level returns (rather than individual asset-by-asset returns), or (iii) see long-horizon (rather than one-year) historical asset class return distributions. In contrast, we find that such information aggregation treatments do not increase equity allocations in an experiment where—unlike previous experiments—participants invest in real mutual funds over the course of one year. In a follow-up experiment, we start with the classic Gneezy and Potters (1997) experimental design and modify it step-by-step to move closer to the design of our first experiment. Using this identification strategy, we show that previously documented aggregation effects are not robust to (i) changes in the distribution of the risky asset’s returns and (ii) the introduction of a multi-day delay between the initial portfolio choice and the realization of returns.
Handle: RePEc:nbr:nberwo:16868
Template-Type: ReDIF-Paper 1.0
Title: Math or Science? Using Longitudinal Expectations Data to Examine the Process of Choosing a College Major
Classification-JEL: I21; J24
Author-Name: Todd R. Stinebrickner
Author-Person: pst255
Author-Name: Ralph Stinebrickner
Author-Person: pst471
Note: ED
Number: 16869
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16869
File-URL: http://www.nber.org/papers/w16869.pdf
File-Format: application/pdf
Abstract: Due primarily to the difficulty of obtaining ideal data, much remains unknown about how college majors are determined. We take advantage of longitudinal expectations data from the Berea Panel Study to provide new evidence about this issue, paying particular attention to the choice of whether to major in math and science. The data collection and analysis are based directly on a simple conceptual model which takes into account that, from a theoretical perspective, a student's final major is best viewed as the end result of a learning process. We find that students enter college as open to a major in math or science as to any other major group, but that a large number of students move away from math and science after realizing that their grade performance will be substantially lower than expected. Further, changes in beliefs about grade performance arise because students realize that their ability in math/science is lower than expected rather than because students realize that they are not willing to put substantial effort into math or science majors. The findings suggest the potential importance of policies at younger ages which lead students to enter college better prepared to study math or science.
Handle: RePEc:nbr:nberwo:16869
Template-Type: ReDIF-Paper 1.0
Title: Finance and Governance in Developing Economies
Classification-JEL: G3; O1; O25; P11
Author-Name: Randall Morck
Author-Person: pmo146
Note: CF
Number: 16870
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16870
File-URL: http://www.nber.org/papers/w16870.pdf
File-Format: application/pdf
Publication-Status: published as Randall Morck, 2011. "Finance and Governance in Developing Economies," Annual Review of Financial Economics, Annual Reviews, vol. 3(1), pages 375-406, December.
Abstract: Classic Big Push industrialization envisions state planners coordinating economic activity to internalize a range of externalities that otherwise lock in a low-income equilibrium, but runs afoul of well-known government failure problems. Successful Big Push coordination may occur instead when a large business group, acting in its controlling shareholder's self-interest, coordinates the establishment and expansion of businesses in diverse sectors. Where business groups play this role, many basic axioms of Anglo-American corporate governance, including the advocacy of shareholder value maximization and contestable corporate control, must be qualified.
Handle: RePEc:nbr:nberwo:16870
Template-Type: ReDIF-Paper 1.0
Title: Monetary and Fiscal Stimuli, Ownership Structure, and China's Housing Market
Classification-JEL: E02; E52; G01; G21; G3; G38; P27; P34
Author-Name: Yongheng Deng
Author-Person: pde836
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Jing Wu
Author-Person: pwu144
Author-Name: Bernard Yeung
Note: CF
Number: 16871
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16871
File-URL: http://www.nber.org/papers/w16871.pdf
File-Format: application/pdf
Abstract: In the recent financial crisis, macroeconomic stimuli produced mixed results across developed economies. In contrast, China's stimulus boosted real GDP growth from an annualized 6.2% in the first quarter of 2009 trough to 11.9% in the first quarter of 2010. Amidst this phenomenal response, land auction and house prices in major cities soared. We argue that the speed and efficacy of China's stimulus derives from state control over its banking system and corporate sector. Beijing ordered state-owned banks to lend, and they lent. Beijing ordered centrally-controlled state-owned enterprises (SOEs) to invest, and they invested. However, our data show that much of this investment was highly leveraged purchases of real estate. Residential land auction prices in eight major cities rose about 100% in 2009, controlling for quality variation. Moreover, higher price rises occur these SOEs are more active buyers. We argue that these centrally-controlled SOEs overbid substantially, fueling a real estate bubble; and that China's seemingly highly effective macroeconomic stimulus package may well have induced costly resource misallocation.
Handle: RePEc:nbr:nberwo:16871
Template-Type: ReDIF-Paper 1.0
Title: Business Failures by Industry in the United States, 1895 to 1939: A Statistical History.
Classification-JEL: N1; N11; N6; N61; N8; N81
Author-Name: Gary Richardson
Author-Person: pri185
Author-Name: Michael Gou
Note: DAE
Number: 16872
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16872
File-URL: http://www.nber.org/papers/w16872.pdf
File-Format: application/pdf
Abstract: Dun's Review began publishing monthly data on bankruptcies by branch of business during the 1890s. This essay reconstructs that series, links it to its successors, and discusses how it can be used for economic analysis.
Handle: RePEc:nbr:nberwo:16872
Template-Type: ReDIF-Paper 1.0
Title: Adequate (or Adipose?) Yearly Progress: Assessing the Effect of "No Child Left Behind" on Children's Obesity
Classification-JEL: I18; I21
Author-Name: Patricia M. Anderson
Author-Name: Kristin F. Butcher
Author-Person: pbu245
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Note: CH ED EH
Number: 16873
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16873
File-URL: http://www.nber.org/papers/w16873.pdf
File-Format: application/pdf
Publication-Status: published as Patricia M. Anderson & Kristin F. Butcher & Diane Whitmore Schanzenbach, 2017. "Adequate (or Adipose?) Yearly Progress: Assessing the Effect of “No Child Left Behind” on Children's Obesity," Education Finance and Policy, MIT Press, vol. 12(1), pages 54-76, Winter.
Abstract: This paper investigates how accountability pressures under No Child Left Behind (NCLB) may affect children's rate of overweight. Schools facing increased pressures to produce academic outcomes may reallocate their efforts in ways that have unintended consequences for children's health. For example, schools may cut back on recess and physical education in favor of increasing time on tested subjects. To examine the impact of school accountability programs, we create a unique panel data set of schools in Arkansas that allows us to test the impact of NCLB rules on students' weight outcomes. Our main approach is to consider schools to be facing increased pressures if they are on the margin of passing - that is, if any subgroup at the school has a passing rate that is close to the AYP passing threshold, where we define close as being 5 percentage points above or below the threshold. We find evidence of small effects of accountability pressures on the percent of students at a school that are overweight. A follow-up survey of school principals points to reductions in physical activity and worsening of the food environment as potential mechanisms.
Handle: RePEc:nbr:nberwo:16873
Template-Type: ReDIF-Paper 1.0
Title: Adoptive Expectations: Rising Sons in Japanese Family Firms
Classification-JEL: G3; J12; N25
Author-Name: Vikas Mehrotra
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Jungwook Shim
Author-Name: Yupana Wiwattanakantang
Note: CF
Number: 16874
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16874
File-URL: http://www.nber.org/papers/w16874.pdf
File-Format: application/pdf
Publication-Status: published as Mehrotra, Vikas & Morck, Randall & Shim, Jungwook & Wiwattanakantang, Yupana, 2013. "Adoptive expectations: Rising sons in Japanese family firms," Journal of Financial Economics, Elsevier, vol. 108(3), pages 840-854.
Abstract: The practice of adopting adults, even if one has biological children, makes Japanese family firms unusually competitive. Our nearly population-wide panel of postwar listed nonfinancial firms shows inherited family firms more important in postwar Japan than generally realized, and also performing well - an unusual finding for a developed economy. Adopted heirs' firms outperform blood heirs' firms, and match or nearly match founder-run listed firms. Both adopted and blood heirs' firms outperform non-family firms. Using family structure variables as instruments, we find adopted heirs "causing" elevated performance. These findings are consistent with adult adoptees displacing blood heirs in the left tail of the talent distribution, with the "adopted son" job motivating star managers, and with the threat of displacement inducing blood heirs to invest in human capital, mitigating the so-called "Carnegie conjecture" that inherited wealth deadens talent.
Handle: RePEc:nbr:nberwo:16874
Template-Type: ReDIF-Paper 1.0
Title: Limits to Arbitrage and Hedging: Evidence from Commodity Markets
Classification-JEL: G12; G13; G24; G33
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Lars A. Lochstoer
Author-Name: Tarun Ramadorai
Author-Person: pra44
Note: AP CF
Number: 16875
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16875
File-URL: http://www.nber.org/papers/w16875.pdf
File-Format: application/pdf
Publication-Status: published as “Limits to Arbitrage and Hedging: Evidence from Commodity Markets” with Lars Lochstoer and Tarun Ramadorai, forthcoming, Journal of Financial Economics.
Abstract: Motivated by the literature on limits-to-arbitrage, we build an equilibrium model of commodity markets in which speculators are capital constrained, and commodity producers have hedging demands for commodity futures. Increases (decreases) in producers' hedging demand (speculators' risk-capacity) increase hedging costs via price-pressure on futures, reduce producers' inventory holdings, and thus spot prices. Consistent with our model, producers' default risk forecasts futures returns, spot prices, and inventories in oil and gas market data from 1980-2006, and the component of the commodity futures risk premium associated with producer hedging demand rises when speculative activity reduces. We conclude that limits to financial arbitrage generate limits to hedging by producers, and affect both asset and goods prices.
Handle: RePEc:nbr:nberwo:16875
Template-Type: ReDIF-Paper 1.0
Title: Intergeneration Transfer of Human Capital: Results from a Natural Experiment in Taiwan
Classification-JEL: I20; J24
Author-Name: Wehn-Jyuan Tsai
Author-Name: Jin-Tan Liu
Author-Person: pli620
Author-Name: Shin-Yi Chou
Author-Name: Michael Grossman
Author-Person: pgr107
Note: CH ED LS
Number: 16876
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16876
File-URL: http://www.nber.org/papers/w16876.pdf
File-Format: application/pdf
Abstract: We exploit a natural experiment to estimate the causal impact of parental education on educational outcomes of their children when they are high school seniors. In 1968, the Taiwanese government extended compulsory education from 6 to 9 years and opened over 150 new junior high schools at a differential rate among regions. We form treatment and control groups of women or men who were age 12 or under on the one hand and between the ages of 13 and 25 on the other hand in 1968. Within each region, we exploit variations across cohorts in new junior high school openings to construct an instrument for schooling. We employ this instrument to estimate the causal effects of mother's and father's schooling on their child's college entrance examination test scores in the years 2000-2003, on the probability that the child attended college and on the rank of the college attended. The schooling of each parent does cause their child to experience better educational outcomes. A one-year increase in the schooling of either parent raises the probability that the child attends one of the top six colleges in Taiwan by approximately 10 percent.
Handle: RePEc:nbr:nberwo:16876
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Evaluation on Performance: Evidence from Longitudinal Student Achievement Data of Mid-career Teachers
Classification-JEL: I21; J24; M59
Author-Name: Eric S. Taylor
Author-Name: John H. Tyler
Author-Person: pty2
Note: ED
Number: 16877
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16877
File-URL: http://www.nber.org/papers/w16877.pdf
File-Format: application/pdf
Publication-Status: published as Taylor, Eric S., and John H. Tyler. 2012. "The Effect of Evaluation on Teacher Performance." American Economic Review, 102(7): 3628-51.
Abstract: The effect of evaluation on employee performance is traditionally studied in the context of the principal-agent problem. Evaluation can, however, also be characterized as an investment in the evaluated employee's human capital. We study a sample of mid-career public school teachers where we can consider these two types of evaluation effect separately. Employee evaluation is a particularly salient topic in public schools where teacher effectiveness varies substantially and where teacher evaluation itself is increasingly a focus of public policy proposals. We find evidence that a quality classroom-observation-based evaluation and performance measures can improve mid-career teacher performance both during the period of evaluation, consistent with the traditional predictions; and in subsequent years, consistent with human capital investment. However the estimated improvements during evaluation are less precise. Additionally, the effects sizes represent a substantial gain in welfare given the program's costs.
Handle: RePEc:nbr:nberwo:16877
Template-Type: ReDIF-Paper 1.0
Title: The Possibilities For Global Poverty Reduction Using Revenues From Global Carbon Pricing
Classification-JEL: O19; Q56
Author-Name: James B. Davies
Author-Person: pda143
Author-Name: Xiaojun Shi
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE
Number: 16878
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16878
File-URL: http://www.nber.org/papers/w16878.pdf
File-Format: application/pdf
Publication-Status: published as The Journal of Economic Inequality September 2014, Volume 12, Issue 3, pp 363-391 Date: 24 Sep 2013 The possibilities for global inequality and poverty reduction using revenues from global carbon pricing James B. Davies, Xiaojun Shi, John Whalley
Abstract: Global carbon pricing can yield revenues which are large enough to create significant global pro-poor redistributive opportunities. We analyze alternative multidecade growth trajectories for major global economies with carbon tax rates designed to stabilize emissions in the presence of both continued country growth and autonomous energy use efficiency improvement. In our central case analysis, revenues from globally internalizing carbon pricing rise to 7% and then fall to 5% of gross world product. High growth in India and China is the major equalizing force globally over time, but the incremental redistributive effects that can be achieved using global carbon pricing revenues are large both in absolute and relative terms. Revenues from carbon pricing depend on growth and energy efficiency improvement parameters as well as on the price elasticity of demand for fossil fuels.
Handle: RePEc:nbr:nberwo:16878
Template-Type: ReDIF-Paper 1.0
Title: A Primer on the Economics of Prescription Pharmaceutical Pricing in Health Insurance Markets
Classification-JEL: D4; I11; L12; L13; L65
Author-Name: Ernst R. Berndt
Author-Name: Thomas G. McGuire
Author-Name: Joseph P. Newhouse
Note: EH IO
Number: 16879
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16879
File-URL: http://www.nber.org/papers/w16879.pdf
File-Format: application/pdf
Publication-Status: published as Ernst R. Berndt & Thomas McGuire & Joseph P. Newhouse, 2011. "A Primer on the Economics of Prescription Pharmaceutical Pricing in Health Insurance Markets," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 14(2), pages 10.
Abstract: The pricing of medical products and services in the U.S. is notoriously complex. In health care, supply prices (those received by the manufacturer) are distinct from demand prices (those paid by the patient) due to health insurance. The insurer, in designing the benefit, decides what prices patients pay out-of-pocket for drugs and other products. In this primer we characterize cost and supply conditions in markets for generic and branded drugs, and apply basic tools of microeconomics to describe how an insurer, acting on behalf of its enrollees, would set demand prices for drugs. Importantly, we show how the market structure on the supply side, characterized alternatively by monopoly (unique brands), Bertrand differentiated product markets (therapeutic competition), and competition (generics), influences the insurer's choices about demand prices. This perspective sheds light on the choice of coinsurance versus copayments, the structure of tiered formularies, and developments in the retail market.
Handle: RePEc:nbr:nberwo:16879
Template-Type: ReDIF-Paper 1.0
Title: A Roy Model of Social Interactions
Classification-JEL: I0; J01; J15
Author-Name: Steve Cicala
Author-Person: pci93
Author-Name: Roland G. Fryer, Jr.
Author-Person: pfr43
Author-Name: Jörg L. Spenkuch
Author-Person: psp102
Note: CH ED LS
Number: 16880
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16880
File-URL: http://www.nber.org/papers/w16880.pdf
File-Format: application/pdf
Abstract: We develop a Roy model of social interactions in which individuals sort into peer groups based on comparative advantage. Two key results emerge: First, when comparative advantage is the guiding principle of peer group organization, the effect of moving a student into an environment with higher-achieving peers depends on where in the ability distribution she falls and the effective wages that clear the social market. In this sense our model may rationalize the widely varying estimates of peer effects found in the literature without casting group behavior as an externality in agents' objective functions. Second, since a student's comparative advantage is typically unobserved, the theory implies that important determinants of individual choice operate through the error term and may, even under random assignment, be correlated with the regressor of interest. As a result, linear in means estimates of peer effects are not identified. We show that the model's testable prediction in the presence of this confounding issue-an individual's ordinal rank predicts her behavior, ceteris paribus-is borne out in two data sets.
Handle: RePEc:nbr:nberwo:16880
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Student Coaching in College: An Evaluation of a Randomized Experiment in Student Mentoring
Classification-JEL: I21
Author-Name: Eric Bettinger
Author-Person: pbe413
Author-Name: Rachel Baker
Note: ED
Number: 16881
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16881
File-URL: http://www.nber.org/papers/w16881.pdf
File-Format: application/pdf
Publication-Status: published as The Effects of Student Coaching An Evaluation of a Randomized Experiment in Student Advising. Eric P. Bettinger, Rachel Baker. Educational Evaluation and Policy Analysis, 36(1), pp. 3-19. 2014.
Abstract: College completion and college success often lag behind college attendance. One theory as to why students do not succeed in college is that they lack key information about how to be successful or fail to act on the information that they have. We present evidence from a randomized experiment which tests the effectiveness of individualized student coaching. Over the course of two separate school years, InsideTrack, a student coaching service, provided coaching to students from public, private, and proprietary universities. Most of the participating students were non-traditional college students enrolled in degree programs. The participating universities and InsideTrack randomly assigned students to be coached. The coach contacted students regularly to develop a clear vision of their goals, to guide them in connecting their daily activities to their long term goals, and to support them in building skills, including time management, self advocacy, and study skills. Students who were randomly assigned to a coach were more likely to persist during the treatment period, and were more likely to be attending the university one year after the coaching had ended. Coaching also proved a more cost-effective method of achieving retention and completion gains when compared to previously studied interventions such as increased financial aid.
Handle: RePEc:nbr:nberwo:16881
Template-Type: ReDIF-Paper 1.0
Title: Bye, Bye, Miss American Pie? The Supply of New Recorded Music Since Napster
Classification-JEL: K11; L82
Author-Name: Joel Waldfogel
Author-Person: pwa46
Note: IO LE
Number: 16882
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16882
File-URL: http://www.nber.org/papers/w16882.pdf
File-Format: application/pdf
Abstract: In the decade since Napster, file-sharing has undermined the protection that copyright affords recorded music, reducing recorded music sales. What matters for consumers, however, is not sellers' revenue but the surplus they derive from new music. The legal monopoly created by copyright is justified by its encouragement of the creation of new works, but there is little evidence on this relationship. The file-sharing era can be viewed as a large-scale experiment allowing us to check whether events since Napster have stemmed the flow of new works. We assemble a novel dataset on the number of high quality works released annually, since 1960, derived from retrospective critical assessments of music such best-of-the-decade lists. This allows a comparison of the quantity of new albums since Napster to 1) its pre-Napster level, 2) pre-Napster trends, and 3) a possible control, the volume of new songs since the iTunes Music Store's revitalization of the single. We find no evidence that changes since Napster have affected the quantity of new recorded music or artists coming to market. We reconcile stable quantities in the face of decreased demand with reduced costs of bringing works to market and a growing role of independent labels.
Handle: RePEc:nbr:nberwo:16882
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy as Financial-Stability Regulation
Classification-JEL: E58; G01
Author-Name: Jeremy C. Stein
Author-Person: pst43
Note: CF ME
Number: 16883
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16883
File-URL: http://www.nber.org/papers/w16883.pdf
File-Format: application/pdf
Publication-Status: published as “Monetary Policy as Financial-Stability Regulation,” Quarterly Journal of Economics, 127, February 2012, pp. 57-95.
Abstract: This paper develops a model that speaks to the goals and methods of financial-stability policies. There are three main points. First, from a normative perspective, the model defines the fundamental market failure to be addressed, namely that unregulated private money creation can lead to an externality in which intermediaries issue too much short-term debt and leave the system excessively vulnerable to costly financial crises. Second, it shows how in a simple economy where commercial banks are the only lenders, conventional monetary-policy tools such as open-market operations can be used to regulate this externality, while in more advanced economies it may be helpful to supplement monetary policy with other measures. Third, from a positive perspective, the model provides an account of how monetary policy can influence bank lending and real activity, even in a world where prices adjust frictionlessly and there are other transactions media besides bank-created money that are outside the control of the central bank.
Handle: RePEc:nbr:nberwo:16883
Template-Type: ReDIF-Paper 1.0
Title: Simple Variance Swaps
Classification-JEL: G01; G12; G13
Author-Name: Ian Martin
Author-Person: pma1585
Note: AP
Number: 16884
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16884
File-URL: http://www.nber.org/papers/w16884.pdf
File-Format: application/pdf
Abstract: The large asset price jumps that took place during 2008 and 2009 disrupted volatility derivatives markets and caused the single-name variance swap market to dry up completely. This paper defines and analyzes a simple variance swap, a relative of the variance swap that in several respects has more desirable properties. First, simple variance swaps are robust: they can be easily priced and hedged even if prices can jump. Second, simple variance swaps supply a more accurate measure of market-implied variance than do variance swaps or the VIX index. Third, simple variance swaps provide a better way to measure and to trade correlation. The paper also explains how to interpret VIX in the presence of jumps.
Handle: RePEc:nbr:nberwo:16884
Template-Type: ReDIF-Paper 1.0
Title: What Makes an Effective Teacher? Quasi-Experimental Evidence
Classification-JEL: I21; J24
Author-Name: Victor Lavy
Author-Person: pla111
Note: CH ED LS
Number: 16885
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16885
File-URL: http://www.nber.org/papers/w16885.pdf
File-Format: application/pdf
Publication-Status: published as Victor Lavy, 2016. "What Makes an Effective Teacher? Quasi-Experimental Evidence," CESifo Economic Studies, vol 62(1), pages 88-125.
Abstract: This paper measures empirically the relationship between classroom teaching practices and student achievements. Based on primary- and middle-school data from Israel, I find very strong evidence that two important elements of teaching practices cause student achievements to improve. In particular, classroom teaching that emphasizes the instilment of knowledge and comprehension, often termed "traditional"-style teaching, has a very strong and positive effect on test scores, particularly among girls and pupils of low socioeconomic background. Second, the use of classroom techniques that endow pupils with analytical and critical skills ("modern" teaching) has a very large positive payoff, evidenced in improvement of test scores across subgroups differentiated by gender and socioeconomic background. However, a second element of modern teaching, instilment of the capacity for individual study, has no effect while transparency, fairness, and proper feedback in teachers' conduct with their students improve marginally academic performance, especially among boys. Apart from identifying "what works" in the classroom, these findings yield two insights for the debate about the merit of "traditional" versus "modern" approaches to teaching, which are often discussed as rival classroom pedagogical approaches. First, both may coexist in the classroom production function of knowledge. Second, it is best to target the two teaching practices differentially to students of different genders and abilities. The effect of the effective teaching practices estimated is very large, especially in comparison with that of other potential interventions such as reducing class size or increasing school hours of instruction.
Handle: RePEc:nbr:nberwo:16885
Template-Type: ReDIF-Paper 1.0
Title: Going to a Better School: Effects and Behavioral Responses
Classification-JEL: I20
Author-Name: Cristian Pop-Eleches
Author-Person: ppo349
Author-Name: Miguel Urquiola
Author-Person: pur10
Note: CH ED
Number: 16886
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16886
File-URL: http://www.nber.org/papers/w16886.pdf
File-Format: application/pdf
Publication-Status: published as “Going to a Better School: Effects and Behavioral Respons es,” joint with Miguel Urquiola , American Economic Review , 103(4), 1289 - 1324, 201 3
Abstract: This paper: i) estimates the effect that going to a better school has on students' academic achievement, and ii) explores whether this intervention induces behavioral responses on the part of children, their parents, and the school system. For the first task, we exploit almost 2,000 regression discontinuity quasi-experiments observed in the context of Romania's high school educational system. For the second, we use data from a specialized survey of children, parents, teachers and principals that we implemented in 59 Romanian towns. The first finding is that students do benefit from access to higher achieving schools and tracks within schools. A second set of results suggests that the stratification of schools by quality in general, and the opportunity to attend a better school in particular, result in significant behavioral responses on the part of teachers, parents, and students. Although we do not expect the magnitude or even the direction of these responses to hold everywhere, their existence has a number of implications for evaluation, particularly since some of them change over time, and some would seem to be relevant only once interventions reach a certain scale.
Handle: RePEc:nbr:nberwo:16886
Template-Type: ReDIF-Paper 1.0
Title: When a Nudge Isn't Enough: Defaults and Saving Among Low-Income Tax Filers
Classification-JEL: C93; D03; D1
Author-Name: Erin Todd Bronchetti
Author-Person: pbr585
Author-Name: Thomas S. Dee
Author-Name: David B. Huffman
Author-Person: phu45
Author-Name: Ellen Magenheim
Author-Person: pma2614
Note: PE
Number: 16887
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16887
File-URL: http://www.nber.org/papers/w16887.pdf
File-Format: application/pdf
Publication-Status: published as “When a Nudge isn’t Enough: Defaults and Saving among Low - Income Tax Filers,” with Erin Bronchetti, David Huffman, and Ellen Magenheim, National Tax Journal 66(3), September 2013, 609 - 634.
Publication-Status: published as Wiley Online Library
Abstract: Recent evidence suggests that the default options implicit in economic choices (e.g., 401(k) savings by white-collar workers) have extraordinarily large effects on decision-making. This study presents a field experiment that evaluates the effect of defaults on savings among a highly policy-relevant population: low-income tax filers. In the control condition, tax filers could choose (i.e., opt in) to receive some of their federal tax refund in the form of U.S. Savings Bonds. In the treatment condition, a fraction of the tax refund was automatically directed to U.S. Savings Bonds unless tax filers actively chose another allocation. We find that the opt-out default had no impact on savings behavior. Furthermore, our treatment estimate is sufficiently precise to reject effects as small as one-fifth of the participation effects found in the 401(k) literature. Ancillary evidence suggests that this "nudge" was ineffective in part because the low-income tax filers in our study had targeted plans to spend their refunds. These results suggest that choice architecture based on defaults may be less effective in certain policy-relevant settings, particularly where intentions are strong.
Handle: RePEc:nbr:nberwo:16887
Template-Type: ReDIF-Paper 1.0
Title: Testing for the Role of Prejudice in Emergency Departments Using Bounceback Rates
Classification-JEL: I11; J7
Author-Name: Shamena Anwar
Author-Name: Hanming Fang
Author-Person: pfa17
Note: EH LE LS PE
Number: 16888
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16888
File-URL: http://www.nber.org/papers/w16888.pdf
File-Format: application/pdf
Publication-Status: published as Anwar Shamena & Fang Hanming, 2012. "Testing for the Role of Prejudice in Emergency Departments Using Bounceback Rates," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(3), pages 1-49, December.
Abstract: We propose and empirically implement a test for the presence of racial prejudice among emergency department (ED) physicians based on the bounceback rates of the patients who were discharged after receiving diagnostic tests during their initial ED visits. A bounceback is defined as a return to the ED within 72 hours of being initially discharged. Based on a plausible model of physician behavior, we show that differential bounceback rates across patients of different racial groups who are discharged after receiving diagnostic tests from their ED visits are informative of the racial prejudice of the physicians. Applying the test to administrative data of ED visits from California and New Jersey, we do not find evidence of prejudice against black and Hispanic patients. Our finding suggests that, at least in the emergency department setting, taste based discrimination does not play an important role in the racial disparities in health care.
Handle: RePEc:nbr:nberwo:16888
Template-Type: ReDIF-Paper 1.0
Title: What Explains the Lagged Investment Effect?
Classification-JEL: E2
Author-Name: Janice C. Eberly
Author-Person: peb3
Author-Name: Sergio Rebelo
Author-Name: Nicolas Vincent
Author-Person: pvi316
Note: EFG
Number: 16889
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16889
File-URL: http://www.nber.org/papers/w16889.pdf
File-Format: application/pdf
Publication-Status: published as Eberly, Janice & Rebelo, Sergio & Vincent, Nicolas, 2012. "What explains the lagged-investment effect?," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 370-380.
Abstract: The best predictor of current investment at the firm level is lagged investment. This lagged-investment effect is empirically more important than the cash-flow and Q effects combined. We show that the specification of investment adjustment costs proposed by Christiano, Eichenbaum and Evans (2005) predicts the presence of a lagged-investment effect and that a generalized version of their model is consistent with the behavior of firm-level data from Compustat.
Handle: RePEc:nbr:nberwo:16889
Template-Type: ReDIF-Paper 1.0
Title: Were the Nigerian Banking Reforms of 2005 A Success ... And for the Poor?
Classification-JEL: G2; O21
Author-Name: Lisa D. Cook
Author-Person: pco838
Note: ME
Number: 16890
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16890
File-URL: http://www.nber.org/papers/w16890.pdf
File-Format: application/pdf
Publication-Status: published as Were the Nigerian Banking Reforms of 2005 a Success … and for the Poor?, Lisa D. Cook. in African Successes, Volume III: Modernization and Development, Edwards, Johnson, and Weil. 2016
Abstract: The Nigerian banking system was in crisis for much of the 1990's and early 2000's. The reforms of 2005 were ambitious in simultaneously attempting to address safety, soundness, and accessibility. This paper uses published and new survey data through 2008 to investigate whether bank consolidation and other measures achieved their stated goals and whether they also enhanced development, efficiency, and profitability. Following the reforms, banks are better capitalized, more efficient, and less involved in the public sector but not more profitable and accessible to the poor. While there is greater supervision and less fragility, recorded distress was artificially low. The improved macroeconomic environment also explains some of the variation in observed outcomes and likely enhanced the efficacy of reforms.
Handle: RePEc:nbr:nberwo:16890
Template-Type: ReDIF-Paper 1.0
Title: Trust in Public Institutions over the Business Cycle
Classification-JEL: D72; E32; E65; K0; O4; P52; Z13
Author-Name: Betsey Stevenson
Author-Person: pst145
Author-Name: Justin Wolfers
Author-Person: pwo9
Note: EFG LS PE POL
Number: 16891
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16891
File-URL: http://www.nber.org/papers/w16891.pdf
File-Format: application/pdf
Publication-Status: published as Betsey Stevenson & Justin Wolfers, 2011. "Trust in Public Institutions over the Business Cycle," American Economic Review, American Economic Association, vol. 101(3), pages 281-87, May.
Abstract: We document that trust in public institutions--and particularly trust in banks, business and government--has declined over recent years. U.S. time series evidence suggests that this partly reflects the pro-cyclical nature of trust in institutions. Cross-country comparisons reveal a clear legacy of the Great Recession, and those countries whose unemployment grew the most suffered the biggest loss in confidence in institutions, particularly in trust in government and the financial sector. Finally, analysis of several repeated cross-sections of confidence within U.S. states yields similar qualitative patterns, but much smaller magnitudes in response to state-specific shocks.
Handle: RePEc:nbr:nberwo:16891
Template-Type: ReDIF-Paper 1.0
Title: Return Predictability in the Treasury Market: Real Rates, Inflation, and Liquidity
Classification-JEL: G12
Author-Name: Carolin E. Pflueger
Author-Person: ppf25
Author-Name: Luis M. Viceira
Author-Person: pvi31
Note: AP ME
Number: 16892
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16892
File-URL: http://www.nber.org/papers/w16892.pdf
File-Format: application/pdf
Abstract: Estimating the liquidity differential between inflation-indexed and nominal bond yields, we separately test for time-varying real rate risk premia, inflation risk premia, and liquidity premia in U.S. and U.K. bond markets. We find strong, model independent evidence that real rate risk premia and inflation risk premia contribute to nominal bond excess return predictability to quantitatively similar degrees. The estimated liquidity premium between U.S. inflation-indexed and nominal yields is systematic, ranges from 30 bps in 2005 to over 150 bps during 2008-2009, and contributes to return predictability in inflation-indexed bonds. We find no evidence that bond supply shocks generate return predictability.
Handle: RePEc:nbr:nberwo:16892
Template-Type: ReDIF-Paper 1.0
Title: The Liquidation of Government Debt
Classification-JEL: E31; E4; E6; F3; F4; H6; N10
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: M. Belen Sbrancia
Note: IFM ME
Number: 16893
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16893
File-URL: http://www.nber.org/papers/w16893.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & M. Belen Sbrancia1, 2015. "The liquidation of government debt," Economic Policy, CEPR;CES;MSH, vol. 30(82), pages 291-333.
Abstract: Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. A subtle type of debt restructuring takes the form of "financial repression." Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks. In the heavily regulated financial markets of the Bretton Woods system, several restrictions facilitated a sharp and rapid reduction in public debt/GDP ratios from the late 1940s to the 1970s. Low nominal interest rates help reduce debt servicing costs while a high incidence of negative real interest rates liquidates or erodes the real value of government debt. Thus, financial repression is most successful in liquidating debts when accompanied by a steady dose of inflation. Inflation need not take market participants entirely by surprise and, in effect, it need not be very high (by historic standards). For the advanced economies in our sample, real interest rates were negative roughly ½ of the time during 1945-1980. For the United States and the United Kingdom our estimates of the annual liquidation of debt via negative real interest rates amounted on average from 3 to 4 percent of GDP a year. For Australia and Italy, which recorded higher inflation rates, the liquidation effect was larger (around 5 percent per annum). We describe some of the regulatory measures and policy actions that characterized the heyday of the financial repression era.
Handle: RePEc:nbr:nberwo:16893
Template-Type: ReDIF-Paper 1.0
Title: Identification and Estimation in Discrete Choice Demand Models when Endogenous Variables Interact with the Error
Classification-JEL: C25; L0
Author-Name: Amit Gandhi
Author-Name: Kyoo il Kim
Author-Person: pki456
Author-Name: Amil Petrin
Note: IO TWP
Number: 16894
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16894
File-URL: http://www.nber.org/papers/w16894.pdf
File-Format: application/pdf
Abstract: We develop an estimator for the parameters of a utility function that has interactions between the unobserved demand error and observed factors including price. We show that the Berry (1994)/Berry, Levinsohn, and Pakes (1995) inversion and contraction can still be used to recover the mean utility term that now contains both the demand error and the interactions with the error. However, the instrumental variable (IV) solution is no longer consistent because the price interaction term is correlated with the instrumented price. We show that the standard conditional moment restrictions (CMRs) do not generally suffice for identification. We supplement the standard CMRs with new moments that we call "generalized" control function moments and we show together they are sufficient for identification of all of the demand parameters. A major advantage of our setup is that it requires little more than the existence of the same instruments used in this standard IV setting. We run several monte carlos that show our approach works when the standard IV approaches fail because of non-separability. We also test and reject additive separability in the original Berry, Levinsohn, and Pakes (1995) automobile data, and we show that demand becomes significantly more elastic when the correction is applied
Handle: RePEc:nbr:nberwo:16894
Template-Type: ReDIF-Paper 1.0
Title: Human Capital Accounts: Choice of Rates and Construction of Volume Indices
Classification-JEL: J24; O15; O47; O53
Author-Name: Barbara M. Fraumeni
Note: LS PR
Number: 16895
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16895
File-URL: http://www.nber.org/papers/w16895.pdf
File-Format: application/pdf
Publication-Status: published as “Human Capital Accounts: Choice of Rate s and Construction of Volume Indices,” National Bureau of Economic Resear ch Working Paper Number 16895, March 2011, published by the Italian Statistical Agency in Italian, Capitale Umano Definizione e Misurazioni , edited by (A cura di) Leonello Tronti, Associazione Italiana degli Economisti del Lavoro, F ondazione Giovanni Agnelli , Societa Italiana di Statistica (SIS ), CEDAM, Milan, 2012, pp. 129-147, 2012.
Abstract: Both human capital and nonhuman capital play an important role in economic growth. Estimates of nonhuman (physical) capital exist for many more countries than for human capital. Recently there has been a significant increase in the number of countries for which estimates of human capital exist, primarily because of the OECD human capital project, which has constructed nominal Jorgenson-Fraumeni human capital stocks for eleven countries. As the OECD project continues, it is important to reflect on the rates used in this project and in other efforts. Although two real rates need to be chosen: a discount rate and a rate of growth of labor income, what really matters is the size of the adjustment factor which incorporates both rates. In order to best understand the role of human capital in economic growth, volume (quantity) indices need to be constructed. This paper outlines how total and partial indices can be constructed, which along which companion contributions, will allow for more informative and detailed cross-country and individual country analyses.
Handle: RePEc:nbr:nberwo:16895
Template-Type: ReDIF-Paper 1.0
Title: Dividends and Bank Capital in the Financial Crisis of 2007-2009
Classification-JEL: G01; G21; G24; G28; G32; G35; G38
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Irvind Gujral
Author-Name: Nirupama Kulkarni
Author-Name: Hyun Song Shin
Author-Person: psh692
Note: CF
Number: 16896
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16896
File-URL: http://www.nber.org/papers/w16896.pdf
File-Format: application/pdf
Abstract: The headline numbers appear to show that even as banks and financial intermediaries suffered large credit losses in the financial crisis of 2007-09, they raised substantial amounts of new capital, both from private investors and through government-funded capital injections. However, on closer inspection the composition of bank capital shifted radically from one based on common equity to that based on debt-like hybrid claims such as preferred equity and subordinated debt. The erosion of common equity was exacerbated by large scale payments of dividends, in spite of widely anticipated credit losses. Dividend payments represent a transfer from creditors (and potentially taxpayers) to equity holders in violation of the priority of debt over equity. The dwindling pool of common equity in the banking system may have been one reason for the continued reluctance by banks to lend over this period. We draw conclusions on how capital regulation may be reformed in light of our findings.
Handle: RePEc:nbr:nberwo:16896
Template-Type: ReDIF-Paper 1.0
Title: Workday, Holiday and Calendar Adjustment with 21st Century Data: Monthly Aggregates from Daily Diesel Fuel Purchases
Classification-JEL: C81
Author-Name: Edward E. Leamer
Author-Person: ple440
Note: TWP
Number: 16897
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16897
File-URL: http://www.nber.org/papers/w16897.pdf
File-Format: application/pdf
Abstract: This paper uses a Ceridian transaction-by-transaction data set on purchases of diesel fuel by over-the-road truckers to form a monthly diesel volume purchase index from 1999 to 2011, purged of weekday, holiday and calendar effects. These high-frequency data support a new and improved set of options to correct for (1) the variability in the weekday composition of months and (2) the drift of holiday effects between months. With only monthly data, Census seasonal adjustment methods are forced to make inferences about the effects of both weekday composition and holiday drift. With daily data, these can be directly observed, and removed from the data, if the patterns repeat. But the drift of holiday effects between December and January resists statistical treatment, leaving the December/January comparison the most noisy in a seasonally adjusted monthly series. This problem, and other issues of holiday drift, can be treated with an overhaul of the calendar to put all holidays but Easter firmly in one month or another. The bottom line here is that e-recording of transactions offers a new set of opportunities for studying the health of Main Street.
Handle: RePEc:nbr:nberwo:16897
Template-Type: ReDIF-Paper 1.0
Title: The Short of It: Investor Sentiment and Anomalies
Classification-JEL: G0; G12; G14
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Author-Name: Jianfeng Yu
Author-Name: Yu Yuan
Author-Person: pyu149
Note: AP
Number: 16898
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16898
File-URL: http://www.nber.org/papers/w16898.pdf
File-Format: application/pdf
Publication-Status: published as Stambaugh, Robert F. & Yu, Jianfeng & Yuan, Yu, 2012. "The short of it: Investor sentiment and anomalies," Journal of Financial Economics, Elsevier, vol. 104(2), pages 288-302.
Abstract: This study explores the role of investor sentiment in a broad set of anomalies in cross-sectional stock returns. We consider a setting where the presence of market-wide sentiment is combined with the argument that overpricing should be more prevalent than underpricing, due to short-sale impediments. Long-short strategies that exploit the anomalies exhibit profits consistent with this setting. First, each anomaly is stronger--its long-short strategy is more profitable--following high levels of sentiment. Second, the short leg of each strategy is more profitable following high sentiment. Finally, sentiment exhibits no relation to returns on the long legs of the strategies.
Handle: RePEc:nbr:nberwo:16898
Template-Type: ReDIF-Paper 1.0
Title: Sovereign Default Risk and Bank Fragility in Financially Integrated Economies
Classification-JEL: E44; E62; F15; F34; G01
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Olivier Jeanne
Author-Person: pje59
Note: CF IFM PE
Number: 16899
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16899
File-URL: http://www.nber.org/papers/w16899.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bolton & Olivier Jeanne, 2011. "Sovereign Default Risk and Bank Fragility in Financially Integrated Economies," IMF Economic Review, Palgrave Macmillan, vol. 59(2), pages 162-194, June.
Abstract: We analyze contagious sovereign debt crises in financially integrated economies. Under financial integration banks optimally diversify their holdings of sovereign debt in an effort to minimize the costs with respect to an individual country's sovereign debt default. While diversification generates risk diversification benefits ex ante, it also generates contagion ex post. We show that financial integration without fiscal integration results in an inefficient equilibrium supply of government debt. The safest governments inefficiently restrict the amount of high quality debt that could be used as collateral in the financial system and the riskiest governments issue too much debt, as they do not take account of the costs of contagion. Those inefficiencies can be removed by various forms of fiscal integration, but fiscal integration typically reduce the welfare of the country that provides the "safe-haven" asset below the autarky level.
Handle: RePEc:nbr:nberwo:16899
Template-Type: ReDIF-Paper 1.0
Title: Economics of Individualization in Comparative Effectiveness Research and a Basis for a Patient-Centered Health Care
Classification-JEL: C11; D61; I18
Author-Name: Anirban Basu
Author-Person: pba977
Note: EH
Number: 16900
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16900
File-URL: http://www.nber.org/papers/w16900.pdf
File-Format: application/pdf
Publication-Status: published as Basu, Anirban, 2011. "Economics of individualization in comparative effectiveness research and a basis for a patient-centered health care," Journal of Health Economics, Elsevier, vol. 30(3), pages 549-559, May.
Abstract: The United States aspires to use information from comparative effectiveness research (CER) to reduce waste and contain costs without instituting a formal rationing mechanism or compromising patient or physician autonomy with regard to treatment choices. With such ambitious goals, traditional combinations of research designs and analytical methods used in CER may lead to disappointing results. In this paper, I study how alternate regimes of comparative effectiveness information help shape the marginal benefits (demand) curve in the population and how such perceived demand curves impact decision-making at the individual patient level and welfare at the societal level. I highlight the need to individualize comparative effectiveness research in order to generate the true (normative) demand curve for treatments. I discuss methodological principles that guide research designs for such studies. Using an example of the comparative effect of substance abuse treatments on crime, I use novel econometric methods to salvage individualized information from an existing dataset.
Handle: RePEc:nbr:nberwo:16900
Template-Type: ReDIF-Paper 1.0
Title: HIV Status and Labor Market Participation in South Africa
Classification-JEL: O12
Author-Name: James A. Levinsohn
Author-Person: ple386
Author-Name: Zoë McLaren
Author-Person: pmc179
Author-Name: Olive Shisana
Author-Name: Khangelani Zuma
Note: EH LS
Number: 16901
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16901
File-URL: http://www.nber.org/papers/w16901.pdf
File-Format: application/pdf
Publication-Status: published as James Levinsohn & Zoë M. McLaren & Olive Shisana & Khangelani Zuma, 2013. "HIV Status and Labor Market Participation in South Africa," Review of Economics and Statistics, vol 95(1), pages 98-108.
Abstract: Because individuals with HIV are more likely to fall into poverty, and the poor may be at higher risk of contracting HIV, simple estimates of the effect of HIV status on economic outcomes will tend to be biased. In this paper, we use two econometric methods based on the propensity score to estimate the causal effect of HIV status on employment outcomes in South Africa. We rely on rich data on sexual behavior and knowledge of HIV from a large national household-based survey, which included HIV testing, to control for systematic differences between HIV-positive and HIV-negative individuals. This paper provides the first nationally representative estimates of the impact of HIV status on labor market outcomes for southern Africa. We find that being HIV-positive is associated with a 6 to 7 percentage point increase in the likelihood of being unemployed. South Africans with less than a high school education are 10 to 11 percentage points more likely to be unemployed if they are HIV-positive. Despite high unemployment rates, being HIV-positive confers a disadvantage and reinforces existing inequalities in South Africa.
Handle: RePEc:nbr:nberwo:16901
Template-Type: ReDIF-Paper 1.0
Title: Comparing Economic and Social Interventions to Reduce Intimate Partner Violence: Evidence from Central and Southern Africa
Classification-JEL: D12; G21; I12; J12
Author-Name: Radha Iyengar
Author-Name: Giulia Ferrari
Author-Person: pfe569
Note: LS
Number: 16902
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16902
File-URL: http://www.nber.org/papers/w16902.pdf
File-Format: application/pdf
Publication-Status: published as Comparing Economic and Social Interventions to Reduce Intimate Partner Violence: Evidence from Central and Southern Africa, Radha Iyengar, Giulia Ferrari. in African Successes, Volume II: Human Capital, Edwards, Johnson, and Weil. 2016
Abstract: The empowerment of women within households remains a major issue around the world including in Africa. We have conducted a study in Burundi coupling discussion sessions with microfinancing to determine if they enhance the role of women in decisions regarding household purchases and the reduction of domestic violence. We compare our findings to that from a published study in South Africa that combined discussion sessions on life skills and health on reduction in domestic violence and decisions on economic issues. Both studies used randomized controlled experiments. Both studies show a trend towards increases in household authority, with the Burundi study showing statistical significance. In South Africa there was a large, albeit short lived decrease in domestic violence. In Burundi there was small reduction but trends suggest a longer duration. The effects on overall empowerment are small. These studies suggest that a more sustained use of discussion sessions may result in longer and more sustained economic and social empowerment. Future research could focus on the longer term effects of the use of discussion sessions and investigate how the observed impacts can be sustained in magnitude and duration.
Handle: RePEc:nbr:nberwo:16902
Template-Type: ReDIF-Paper 1.0
Title: Inflation-Indexed Bonds and the Expectations Hypothesis
Classification-JEL: G12
Author-Name: Carolin E. Pflueger
Author-Person: ppf25
Author-Name: Luis M. Viceira
Author-Person: pvi31
Note: AP ME
Number: 16903
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16903
File-URL: http://www.nber.org/papers/w16903.pdf
File-Format: application/pdf
Publication-Status: published as Carolin E. Pflueger & Luis M. Viceira, 2011. "Inflation-Indexed Bonds and the Expectations Hypothesis," Annual Review of Financial Economics, Annual Reviews, vol. 3(1), pages 139-158, December.
Abstract: This paper empirically analyzes the Expectations Hypothesis (EH) in inflation-indexed (or real) bonds and in nominal bonds in the US and in the UK. We strongly reject the EH in inflation-indexed bonds, and also confirm and update the existing evidence rejecting the EH in nominal bonds. This rejection implies that the risk premium on both real and nominal bonds varies predictably over time. We also find strong evidence that the spread between the nominal and the real bond risk premium, or the break-even inflation risk premium, also varies over time. We argue that the time variation in real bond risk premia mostly likely reflects both a changing real interest rate risk premium and a changing liquidity risk premium, and that the variability in the nominal bond risk premia reflects a changing inflation risk premium. We estimate significant time series variability in the magnitude and sign of bond risk premia.
Handle: RePEc:nbr:nberwo:16903
Template-Type: ReDIF-Paper 1.0
Title: Factor Prices and International Trade: A Unifying Perspective
Classification-JEL: F1
Author-Name: Ariel Burstein
Author-Name: Jonathan Vogel
Author-Person: pvo58
Note: EFG IFM ITI
Number: 16904
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16904
File-URL: http://www.nber.org/papers/w16904.pdf
File-Format: application/pdf
Abstract: How do trade liberalizations affect relative factor prices and to what extent do they cause factors to reallocate across sectors? We first present a general framework that nests a wide range of models that have been used to study the link between globalization and factor prices. Under some restrictions, changes in the "factor content of trade" are sufficient statistics for the impact of trade on relative factor prices. We then study the determination of the factor content of trade in a specific version of our general framework featuring imperfect competition, increasing returns to scale, and heterogeneous producers. We show how heterogeneous firms' decisions shape the factor content of trade, and, therefore, the impact of trade liberalization on relative factor prices and between-sector factor allocation.
Handle: RePEc:nbr:nberwo:16904
Template-Type: ReDIF-Paper 1.0
Title: Firm Exports and Multinational Activity Under Credit Constraints
Classification-JEL: F10; F14; F23; F36; G32
Author-Name: Kalina Manova
Author-Person: pma2520
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Author-Name: Zhiwei Zhang
Note: IFM ITI
Number: 16905
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16905
File-URL: http://www.nber.org/papers/w16905.pdf
File-Format: application/pdf
Publication-Status: published as “Firm Exports and Multinational Activity under Credit Constraints” Review of Economics and Statistics (forthcoming). (with Shang-Jin Wei and Zhiwei Zhang)
Abstract: This paper provides firm-level evidence that credit constraints restrict international trade flows and affect the sectoral pattern of multinational activity. Using detailed customs data from China, we show that foreign affiliates and joint ventures have better export performance than private domestic firms in financially more vulnerable sectors. These results are stronger for destinations with higher trade costs and not driven by variation in firm size or by other sector determinants of FDI. Our findings are consistent with multinational subsidiaries being less liquidity constrained because they can tap additional funding from their parent company and/or access foreign capital markets. More broadly, they suggest that FDI can alleviate the impact of domestic financial market imperfections on aggregate growth, trade and private sector development.
Handle: RePEc:nbr:nberwo:16905
Template-Type: ReDIF-Paper 1.0
Title: Generalized Transform Analysis of Affine Processes and Applications in Finance
Classification-JEL: C5; G10; G12; G13
Author-Name: Hui Chen
Author-Person: pch718
Author-Name: Scott Joslin
Note: AP
Number: 16906
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16906
File-URL: http://www.nber.org/papers/w16906.pdf
File-Format: application/pdf
Publication-Status: published as Hui Chen & Scott Joslin, 2012. "Generalized Transform Analysis of Affine Processes and Applications in Finance," Review of Financial Studies, Society for Financial Studies, vol. 25(7), pages 2225-2256.
Abstract: Nonlinearity is an important consideration in many problems of finance and economics, such as pricing securities, computing equilibrium, and conducting structural estimations. We extend the transform analysis in Duffie, Pan, and Singleton (2000) by providing analytical treatment of a general class of nonlinear transforms for processes with tractable conditional characteristic functions. We illustrate the applications of the generalized transform method in pricing contingent claims and solving general equilibrium models with preference shocks, heterogeneous agents, or multiple goods. We also apply the method to a model of time-varying labor income risk and study the implications of stochastic covariance between labor income and dividends for the dynamics of the risk premiums on financial wealth and human capital.
Handle: RePEc:nbr:nberwo:16906
Template-Type: ReDIF-Paper 1.0
Title: The Promise of Beijing: Evaluating the Impact of the 2008 Olympic Games on Air Quality
Classification-JEL: D0; Q53; Q58
Author-Name: Yuyu Chen
Author-Person: pch138
Author-Name: Ginger Zhe Jin
Author-Name: Naresh Kumar
Author-Name: Guang Shi
Note: IO
Number: 16907
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16907
File-URL: http://www.nber.org/papers/w16907.pdf
File-Format: application/pdf
Publication-Status: published as Chen, Yuyu & Jin, Ginger Zhe & Kumar, Naresh & Shi, Guang, 2013. "The promise of Beijing: Evaluating the impact of the 2008 Olympic Games on air quality," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 424-443.
Abstract: To prepare for the 2008 Olympic Games, China adopted a number of radical measures to improve air quality. Using officially reported air pollution index (API) from 2000 to 2009, we show that these measures improved the API of Beijing during and after the Games, but 60% of the effect faded away by the end of October 2009. Since the credibility of API data has been questioned, an objective and indirect measure of air quality at a high spatial resolution - aerosol optimal depth (AOD), derived using the data from the NASA satellites - was analyzed and compared with the API trend. The analysis confirms that the improvement was real but temporary and most improvement was attributable to plant closure and traffic control. Our results suggest that it is possible to achieve real environmental improvement in an authoritarian regime but the magnitude of the effect and how long it lasts depend on the political motivation behind the policy interventions.
Handle: RePEc:nbr:nberwo:16907
Template-Type: ReDIF-Paper 1.0
Title: Does Market Experience Eliminate Market Anomalies? The Case of Exogenous Market Experience
Classification-JEL: C93; D01; Q5
Author-Name: John A. List
Author-Person: pli176
Note: EEE PE
Number: 16908
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16908
File-URL: http://www.nber.org/papers/w16908.pdf
File-Format: application/pdf
Publication-Status: published as John A. List, 2011. "Does Market Experience Eliminate Market Anomalies? The Case of Exogenous Market Experience," American Economic Review, American Economic Association, vol. 101(3), pages 313-17, May.
Abstract: A vibrant literature has emerged that suggests willingness to pay and willingness to accept measures of value are quite different for inexperienced consumers but that value differences erode with market experience. One potential shortcoming of this literature is that market experience is endogenous. This study presents a framed field experiment that exogenously induces market experience. Empirical findings support the premise that market experience, alone, can eliminate an important market anomaly.
Handle: RePEc:nbr:nberwo:16908
Template-Type: ReDIF-Paper 1.0
Title: Physician Response to Pay-for-Performance: Evidence from a Natural Experiment
Classification-JEL: I18; J33
Author-Name: Jinhu Li
Author-Person: pli659
Author-Name: Jeremiah Hurley
Author-Person: phu118
Author-Name: Philip DeCicca
Author-Person: pde303
Author-Name: Gioia Buckley
Author-Person: pbu283
Note: EH
Number: 16909
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16909
File-URL: http://www.nber.org/papers/w16909.pdf
File-Format: application/pdf
Publication-Status: published as Li, Jinhu, Hurley, Jeremiah, DeCicca, Philip and Gioia Buckley (2013). Physician response to pay-for-performance: Evidence from a natural experiment, forthcoming in Health Economics.
Abstract: Explicit financial incentives, especially pay-for-performance (P4P) incentives, have been extensively employed in recent years by health plans and governments in an attempt to improve the quality of health care services. This study exploits a natural experiment in the province of Ontario, Canada to identify empirically the impact of pay-for-performance (P4P) incentives on the provision of targeted primary care services, and whether physicians' responses differ by age, practice size and baseline compliance level. We use an administrative data source which covers the full population of the province of Ontario and nearly all the services provided by practicing primary care physicians in Ontario. With an individual-level data set of physicians, we employ a difference-in-differences approach that controls for both "selection on observables" and "selection on unobservables" that may cause estimation bias in the identification. We also implemented a set of robustness checks to control for confounding from the other contemporary interventions of the primary care reform in Ontario. The results indicate that, while all responses are of modest size, physicians responded to some of the financial incentives but not the others. The differential responses appear related to the cost of responding and the strength of the evidence linking a service with quality. Overall, the results provide a cautionary message regarding the effectiveness of pay-for-performance schemes for increasing quality of care.
Handle: RePEc:nbr:nberwo:16909
Template-Type: ReDIF-Paper 1.0
Title: The Great Inflation: Did the Shadow Know Better?
Classification-JEL: E31; E32; E37; E41; E52; E58
Author-Name: William Poole
Author-Person: ppo114
Author-Name: Robert H. Rasche
Author-Person: pra180
Author-Name: David C. Wheelock
Note: ME
Number: 16910
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16910
File-URL: http://www.nber.org/papers/w16910.pdf
File-Format: application/pdf
Publication-Status: published as The Great Inflation: Did The Shadow Know Better?, William Poole, Robert H. Rasche, David C. Wheelock. in The Great Inflation: The Rebirth of Modern Central Banking, Bordo and Orphanides. 2013
Abstract: The Shadow Open Market Committee was formed in 1973 in response to rising inflation and the apparent unwillingness of U.S. policymakers to implement policies necessary to maintain price stability. This paper describes how the Committee's policy views differed from those of most Federal Reserve officials and many academic economists at the time. The Shadow argued that price stability should be the primary goal of monetary policy and favored gradual adjustment of monetary growth to a rate consistent with price stability. This paper evaluates the Shadow's policy rule in the context of the New Keynesian macroeconomic model of Clarida, Gali, and Gertler (1999). Simulations of the model suggest that the gradual stabilization of monetary growth favored by the Shadow would have lowered inflation with less impact on output growth and less variability in inflation or output than a one-time reduction in monetary growth. We conclude that the Shadow articulated a policy that would have outperformed the policies actually implemented by the Federal Reserve during the Great Inflation era.
Handle: RePEc:nbr:nberwo:16910
Template-Type: ReDIF-Paper 1.0
Title: A Sparsity-Based Model of Bounded Rationality
Classification-JEL: D03; D42; D8; D83; E31; G1
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: AP EFG LE ME
Number: 16911
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16911
File-URL: http://www.nber.org/papers/w16911.pdf
File-Format: application/pdf
Publication-Status: published as Xavier Gabaix, 2014. "A Sparsity-Based Model of Bounded Rationality," The Quarterly Journal of Economics, Oxford University Press, vol. 129(4), pages 1661-1710.
Abstract: This paper defines and analyzes a "sparse max" operator, which is a less than fully attentive and rational version of the traditional max operator. The agent builds (as economists do) a simplified model of the world which is sparse, considering only the variables of first-order importance. His stylized model and his resulting choices both derive from constrained optimization. Still, the sparse max remains tractable to compute. Moreover, the induced outcomes reflect basic psychological forces governing limited attention. The sparse max yields a behavioral version of two basic chapters of the microeconomics textbook: consumer demand and competitive equilibrium. We obtain a behavioral version of Marshallian and Hicksian demand, the Slutsky matrix, the Edgeworth box, Roy's identity etc. The Slutsky matrix is no longer symmetric: non-salient prices are associated with anomalously small demand elasticities. Because the consumer exhibits nominal illusion, in the Edgeworth box, the offer curve is a two-dimensional surface rather than a one-dimensional curve. As a result, different aggregate price levels correspond to materially distinct competitive equilibria, in a similar spirit to a Phillips curve. This framework provides a way to assess which parts of basic microeconomics are robust, and which are not, to the assumption of perfect maximization.
Handle: RePEc:nbr:nberwo:16911
Template-Type: ReDIF-Paper 1.0
Title: The Selection of Migrants and Returnees: Evidence from Romania and Implications
Classification-JEL: F22; J61; O15
Author-Name: J. William Ambrosini
Author-Name: Karin Mayr
Author-Name: Giovanni Peri
Author-Person: ppe210
Author-Name: Dragos Radu
Note: ITI LS
Number: 16912
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16912
File-URL: http://www.nber.org/papers/w16912.pdf
File-Format: application/pdf
Abstract: This paper uses census and survey data to identify the wage earning ability and the selectivity of recent Romanian migrants and returnees. We construct measures of selection across skill groups and estimate the average and the skills-specific premium for migration and return for three typical destinations of Romanian migrants after 1990. We find evidence for a sorting of migrants consistent with skill compensation in destination countries. The premium to return migration increases with migrants' skills and drives the positive selection of returnees. Based on the rationality of these migration decisions, a model of education, migration and return predicts positive long-run effects of increased migration for average skills and wages in Romania.
Handle: RePEc:nbr:nberwo:16912
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Social Cost of Carbon for Use in U.S. Federal Rulemakings: A Summary and Interpretation
Classification-JEL: Q51; Q54; Q58
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: Elizabeth Kopits
Author-Person: pko426
Author-Name: Ann Wolverton
Note: EEE PE
Number: 16913
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16913
File-URL: http://www.nber.org/papers/w16913.pdf
File-Format: application/pdf
Publication-Status: published as “Developing a Social Cost of Carbon for US Regulator y Analysis: A Methodology and Interpretation,” (with Elizabeth Kopits and Ann Wolverton), Review of Environmental Economics and Policy , 2013, 7 (1): 23–46; also MIT Dept. of Economics WP No. 11-04; CEEPR WP No. 2011-006.
Abstract: The United States Government recently concluded a year-long process to develop a range of values representing the monetized damages associated with an incremental increase in carbon dioxide (CO2) emissions, commonly referred to as the social cost of carbon (SCC). These values are currently used in benefit-cost analyses to assess potential federal regulations. For 2010, the central value of the SCC is $21 per ton of CO2 emissions and sensitivity analyses are to be conducted at $5, $35, and $65 (2007$). This paper summarizes the methodology and process used to develop the SCC values, complemented with our own commentary about how the SCC can be used to inform regulatory decisions and areas where further research would be particularly useful.
Handle: RePEc:nbr:nberwo:16913
Template-Type: ReDIF-Paper 1.0
Title: School Tracking and Access to Higher Education Among Disadvantaged Groups
Classification-JEL: I21
Author-Name: Ofer Malamud
Author-Person: pma2350
Author-Name: Cristian Pop-Eleches
Author-Person: ppo349
Note: ED
Number: 16914
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16914
File-URL: http://www.nber.org/papers/w16914.pdf
File-Format: application/pdf
Publication-Status: published as Malamud, Ofer & Pop-Eleches, Cristian, 2011. "School tracking and access to higher education among disadvantaged groups," Journal of Public Economics, Elsevier, vol. 95(11), pages 1538-1549.
Abstract: When students are tracked into vocational and academic secondary schools, access to higher education is usually restricted to those who completed an academic track. Postponing such tracking may increase university attendance among disadvantaged students if additional time in school enables them to catch up with their more privileged counterparts. However, if ability and expectations are fairly well set by an early age, postponing tracking during adolescence may not have much effect. This paper exploits an educational reform in Romania to examine the impact of postponing tracking on the proportion of disadvantaged students graduating from university using a regression discontinuity (RD) design. We show that, although students from poor, rural areas and with less educated parents were significantly more likely to finish an academic track and become eligible to apply for university after the reform, this did not translate into an increase in university completion. Our findings indicate that simply postponing tracking, without increasing the slots available in university, is not sufficient to improve access to higher education for disadvantaged groups.
Handle: RePEc:nbr:nberwo:16914
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Alcohol Policies in Reducing Entry Rates and Time Spent in Foster Care
Classification-JEL: I0; J1; K0
Author-Name: Sara Markowitz
Author-Person: pma138
Author-Name: Alison Evans Cuellar
Author-Name: Ryan M. Conrad
Author-Name: Michael Grossman
Author-Person: pgr107
Note: CH EH
Number: 16915
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16915
File-URL: http://www.nber.org/papers/w16915.pdf
File-Format: application/pdf
Publication-Status: published as Review of Economics of the Household December 2014, Volume 12, Issue 4, pp 589-612 First online: 23 May 2013 Alcohol control and foster care Sara Markowitz , Alison Cuellar, Ryan M. Conrad, Michael Grossman
Abstract: The purpose of this paper is to empirically estimate the propensity for alcohol-related policies to influence rates of entry into foster care and the length of time spent in foster care. Alcohol consumption is believed to be major contributing factor to child maltreatment, associated with an increased likelihood of abuse and longer durations once in foster care. We analyze a panel of state-level foster care entry rates over time, followed by a duration analysis of individual-level cases. The alcohol regulations of interest include beer, wine, and liquor taxes and prices, and a measure of alcohol availability. Overall, these alcohol control policies appear to have limited power to alter foster care entry rates and duration once in care. We find that higher alcohol taxes and prices are not effective in reducing foster care entry rates, however, once in foster care, the duration of stay may be influenced with higher taxes, particularly when the entry was a result of an alcohol abusing parent.
Handle: RePEc:nbr:nberwo:16915
Template-Type: ReDIF-Paper 1.0
Title: The U.S. Left Behind: The Rise of IPO Activity Around the World
Classification-JEL: F3; G3
Author-Name: Craig Doidge
Author-Name: G. Andrew Karolyi
Author-Person: pka329
Author-Name: René M. Stulz
Note: CF IFM
Number: 16916
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16916
File-URL: http://www.nber.org/papers/w16916.pdf
File-Format: application/pdf
Publication-Status: published as “The U.S. left behind? Financial globalization and the rise of IPOs outside the U.S.,” with Craig Doidge and G. Andrew Karolyi, Journal of Financial Economics, 2013, v110(3), 546-573.
Abstract: During the past two decades, there has been a dramatic change in IPO activity around the world. Though vibrant IPO activity, attributed to better institutions and governance, used to be a strength of the U.S., it no longer is. IPO activity in the U.S. has fallen compared to the rest of the world and U.S. firms go public less than expected based on the economic importance of the U.S. In the early 1990s, the declining U.S. IPO share was due to the extraordinary growth of IPOs in foreign countries; in the 2000s, however, it is due to higher IPO activity abroad combined with lower IPO activity in the U.S. Global IPOs, which are IPOs in which some of the proceeds are raised outside the firm's home country, play a critical role in the increase in IPO activity outside the U.S. The quality of a country's institutions is positively related to its domestic IPO activity and negatively related to its global IPO activity. However, home country institutions are more important in explaining IPO activity in the 1990s than in the 2000s. The evidence is consistent with the view that access to global markets helps firms overcome the obstacles of poor institutions. Finally, we show that the dynamics of global IPO activity and country-level IPO activity are strongly affected by global factors.
Handle: RePEc:nbr:nberwo:16916
Template-Type: ReDIF-Paper 1.0
Title: Identification Problems in Personality Psychology
Classification-JEL: D01; D03; D89
Author-Name: Lex Borghans
Author-Person: pbo190
Author-Name: Bart H.H. Golsteyn
Author-Person: pgo157
Author-Name: James J. Heckman
Author-Name: John Eric Humphries
Author-Person: phu293
Note: CH
Number: 16917
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16917
File-URL: http://www.nber.org/papers/w16917.pdf
File-Format: application/pdf
Publication-Status: published as “Identification Problems in Personality Psychology,” (with L. Borghans, B. Golsteyn, and J.E. Humphries), Personality and Individual Differences , 51 (3):315–320. (2011).
Abstract: This paper discusses and illustrates identification problems in personality psychology. The measures used by psychologists to infer traits are based on behaviors, broadly defined. These behaviors are produced from multiple traits interacting with incentives in situations. In general, measures are determined by these multiple traits and do not identify any particular trait unless incentives and other traits are controlled for. Using two data sets, we show, as an example, that substantial portions of the variance in achievement test scores and grades, which are often used as measures of cognition, are explained by personality variables.
Handle: RePEc:nbr:nberwo:16917
Template-Type: ReDIF-Paper 1.0
Title: With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship
Classification-JEL: G24; I23; J24
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Note: CF LS PR
Number: 16918
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16918
File-URL: http://www.nber.org/papers/w16918.pdf
File-Format: application/pdf
Publication-Status: published as Josh Lerner & Ulrike Malmendier, 2013. "With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship," Review of Financial Studies, Society for Financial Studies, vol. 26(10), pages 2411-2452.
Abstract: To what extent do peers affect our occupational choices? This question has been of particular interest in the context of entrepreneurship and policies to create a favorable environment for entry. Such influences, however, are hard to identify empirically. We exploit the assignment of students into business school sections that have varying numbers of classmates with prior entrepreneurial experience. We find that the presence of entrepreneurial peers strongly predicts subsequent entrepreneurship rates of students without an entrepreneurial background, but in a more complex way than the literature has previously suggested: A higher share of entrepreneurial peers leads to lower rather than higher subsequent rates of entrepreneurship. However, the decrease in entrepreneurship is entirely driven by a significant reduction in unsuccessful entrepreneurial ventures. The effect on the rate of successful post-MBA entrepreneurs, instead, is insignificantly positive. In addition, sections with few prior entrepreneurs have a considerably higher variance in their rates of unsuccessful entrepreneurs. The results are consistent with intra-section learning, where the close ties between section-mates lead to insights about the merits of business plans.
Handle: RePEc:nbr:nberwo:16918
Template-Type: ReDIF-Paper 1.0
Title: When Fast Growing Economies Slow Down: International Evidence and Implications for China
Classification-JEL: F00; O10; O4
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Donghyun Park
Author-Person: ppa611
Author-Name: Kwanho Shin
Author-Person: psh131
Note: IFM
Number: 16919
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16919
File-URL: http://www.nber.org/papers/w16919.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen & Donghyun Park & Kwanho Shin, 2012. "When Fast-Growing Economies Slow Down: International Evidence and Implications for China," Asian Economic Papers, MIT Press, vol. 11(1), pages 42-87, February.
Abstract: Using international data starting in 1957, we construct a sample of cases where fast-growing economies slow down. The evidence suggests that rapidly growing economies slow down significantly, in the sense that the growth rate downshifts by at least 2 percentage points, when their per capita incomes reach around $17,000 US in year-2005 constant international prices, a level that China should achieve by or soon after 2015. Among our more provocative findings is that growth slowdowns are more likely in countries that maintain undervalued real exchange rates.
Handle: RePEc:nbr:nberwo:16919
Template-Type: ReDIF-Paper 1.0
Title: Innovation and Diffusion of Clean/Green Technology: Can Patent Commons Help?
Classification-JEL: H23; H42; K11; O33; O34
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Christian Helmers
Author-Person: phe349
Note: EEE PR
Number: 16920
Creation-Date: 2011-03
Order-URL: http://www.nber.org/papers/w16920
File-URL: http://www.nber.org/papers/w16920.pdf
File-Format: application/pdf
Publication-Status: published as Hall, Bronwyn H. & Helmers, Christian, 2013. "Innovation and diffusion of clean/green technology: Can patent commons help?," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 33-51.
Abstract: This paper explores the characteristics of 238 patents on 94 "inventions" contributed by major multinational innovators to the "Eco-Patent Commons", which provides royalty-free access to third parties to patented climate change related innovations. By comparing the pledged patents to other patents in the same technologies or held by the same multinationals, we investigate the motives of the contributing firms as well as the potential for such commons to encourage innovation and diffusion of climate change related technologies. This study, therefore, indirectly provides evidence on the role of patents in the development and diffusion of green technologies. More generally, the paper sheds light on the performance of hybrid forms of knowledge management that combine open innovation and patenting.
Handle: RePEc:nbr:nberwo:16920
Template-Type: ReDIF-Paper 1.0
Title: Capping Individual Tax Expenditure Benefits
Classification-JEL: H2
Author-Name: Martin Feldstein
Author-Person: pfe112
Author-Name: Daniel Feenberg
Author-Person: pfe56
Author-Name: Maya MacGuineas
Note: PE
Number: 16921
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16921
File-URL: http://www.nber.org/papers/w16921.pdf
File-Format: application/pdf
Publication-Status: published as “Capping Individual Tax Expenditure Benefits”, (with Dan Feenberg and Maya MacGuinneas) in Tax Notes, May 2, 2011, p 505-509. NBER Working Paper 16921, April 2011.
Abstract: This paper analyzes a new way of reducing the major individual tax expenditures: capping the total amount that tax expenditures as a whole can reduce each individual's tax burden. More specifically, we examine the effect of limiting the total value of the tax reduction resulting from tax expenditures to two percent of the individual's adjusted gross income. Each individual can benefit from the full range of tax expenditures but can receive tax reduction only up to 2 percent of his AGI. Simulations using the NBER TAXSIM model project that a 2 percent cap would raise $278 billion in 2011. The paper analyzes the revenue increases by AGI class. The 2 percent cap would also cause substantial simplification by inducing more than 35 million taxpayers to shift from itemizing their deductions to using the standard deduction. For any taxpayer for whom the 2 percent cap is binding, a cap would reduce the volume of wasteful spending and the associated deadweight loss. Even for those taxpayers for whom the cap is not binding but who are induced by the cap to shift from itemizing to using the standard deduction, the deadweight loss associated with deductible expenditures would be completely eliminated
Handle: RePEc:nbr:nberwo:16921
Template-Type: ReDIF-Paper 1.0
Title: The First Deal: The Division of Founder Equity in New Ventures
Classification-JEL: G30; L26; M13
Author-Name: Thomas F. Hellmann
Author-Person: phe157
Author-Name: Noam Wasserman
Note: CF
Number: 16922
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16922
File-URL: http://www.nber.org/papers/w16922.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Hellmann & Noam Wasserman, 2017. "The First Deal: The Division of Founder Equity in New Ventures," Management Science, vol 63(8), pages 2647-2666.
Abstract: This paper examines the division of founder shares in entrepreneurial ventures, focusing on the decision of whether or not to divide the shares equally among all founders. To motivate the empirical analysis we develop a simple theory of costly bargaining, where founders trade off the simplicity of accepting an equal split, with the costs of negotiating a differentiated allocation of founder equity. We test the predictions of the theory on a proprietary dataset comprised of 1,476 founders in 511 entrepreneurial ventures. The empirical analysis consists of three main steps. First we consider determinants of equal splitting. We identify three founder characteristics -idea generation, prior entrepreneurial experience and founder capital contributions - regarding which greater team heterogeneity reduces the likelihood of equal splitting. Second, we show that these same founder characteristics also significantly affect the share premium in teams that split the equity unequally. Third, we show that equal splitting is associated with lower pre-money valuations in first financing rounds. Further econometric tests suggest that, as predicted by the theory, this effect is driven by unobservable heterogeneity, and it is more pronounced in teams that make quick decisions about founder share allocations. In addition we perform some counterfactual calculations that estimate the amount of money 'left on the table' by stronger founders who agree to an equal split. We estimate that the value at stake is approximately 10% of the firm equity, 25% of the average founder stake, or $450K in net present value.
Handle: RePEc:nbr:nberwo:16922
Template-Type: ReDIF-Paper 1.0
Title: The Importance of Trust for Investment: Evidence from Venture Capital
Classification-JEL: G24; L14; M13; O16; Z1
Author-Name: Laura Bottazzi
Author-Person: pbo90
Author-Name: Marco Da Rin
Author-Person: pda43
Author-Name: Thomas F. Hellmann
Author-Person: phe157
Note: CF
Number: 16923
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16923
File-URL: http://www.nber.org/papers/w16923.pdf
File-Format: application/pdf
Publication-Status: published as Laura Bottazzi & Marco Da Rin & Thomas Hellmann, 2016. "The Importance of Trust for Investment: Evidence from Venture Capital," Review of Financial Studies, vol 29(9), pages 2283-2318.
Abstract: We examine the effect of trust on financial investment and contracting decisions in a micro-economic environment where trust is exogenous. Using hand-collected data on European venture capital, we show that the Eurobarometer measure of trust among nations significantly affects investment decisions. This holds even after controlling for investor and company fixed effects, geographic distance, information and transaction costs. The national identity of venture capital firms' individual partners further contributes to the effect of trust. Education and work experience reduce the effect of trust but do not eliminate it. We also examine the relationship between trust and sophisticated contracts involving contingent control rights and find that, even after controlling for endogeneity, they are complements, not substitutes.
Handle: RePEc:nbr:nberwo:16923
Template-Type: ReDIF-Paper 1.0
Title: Intergenerational Redistribution in the Great Recession
Classification-JEL: D31; D58; D91; E21
Author-Name: Andrew Glover
Author-Person: pgl52
Author-Name: Jonathan Heathcote
Author-Person: phe1
Author-Name: Dirk Krueger
Author-Person: pkr7
Author-Name: José-Víctor Ríos-Rull
Author-Person: pri8
Note: EFG
Number: 16924
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16924
File-URL: http://www.nber.org/papers/w16924.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Glover & Jonathan Heathcote & Dirk Krueger & José-Víctor Ríos-Rull, 2020. "Intergenerational Redistribution in the Great Recession," Journal of Political Economy, vol 128(10), pages 3730-3778.
Abstract: In this paper we construct a stochastic overlapping-generations general equilibrium model in which households are subject to aggregate shocks that affect both wages and asset prices. We use a calibrated version of the model to quantify how the welfare costs of severe recessions are distributed across different household age groups. The model predicts that younger cohorts fare better than older cohorts when the equilibrium decline in asset prices is large relative to the decline in wages, as observed in the data. Asset price declines hurt the old, who rely on asset sales to finance consumption, but benefit the young, who purchase assets at depressed prices. In our preferred calibration, asset prices decline more than twice as much as wages, consistent with the experience of the US economy in the Great Recession. A model recession is approximately welfare-neutral for households in the 20-29 age group, but translates into a large welfare loss of around 10% of lifetime consumption for households aged 70 and over.
Handle: RePEc:nbr:nberwo:16924
Template-Type: ReDIF-Paper 1.0
Title: Trade, Exchange Rate Regimes and Output Co-Movement: Evidence from the Great Depression
Classification-JEL: E32; E42; F42; N1; N12; N14
Author-Name: Gabriel P. Mathy
Author-Person: pma1446
Author-Name: Christopher M. Meissner
Author-Person: pme45
Note: DAE IFM ME
Number: 16925
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16925
File-URL: http://www.nber.org/papers/w16925.pdf
File-Format: application/pdf
Publication-Status: published as Business Cycle Co-Movement: Evidence from the Great Depression (2011) Journal of Monetary Economics. 58 (4) pp. 362-372. (with Gabe Mathy)
Abstract: A large body of cross-country empirical evidence identifies monetary policy and trade integration as key determinants of business cycle co-movement. Partially consistent with this, many argue that the re-emergence of the gold standard allowed for the global transmission of a deflationary shock in 1929 that culminated in the Great Depression. It is puzzling then to see decreased co-movement between 1920 and 1927 when international integration increased and nations returned to the gold standard. Fixed exchange rates and global trade were also on the rise after 1932, but co-movement declined again. Our empirical results shows that exchange rate regimes and trade were associated with higher co-movement at the bilateral level while common shocks and exchange control policies also mattered. Much of the fall after 1932 was driven by the rise of smaller blocs of monetary and trade cooperation and an inter-bloc fall in co-movement.
Handle: RePEc:nbr:nberwo:16925
Template-Type: ReDIF-Paper 1.0
Title: Rural Hospital Ownership: Medical Service Provision, Market Mix, and Spillover Effects
Classification-JEL: H1; I1; L1; L13; L22; L3
Author-Name: Jill R. Horwitz
Author-Name: Austin Nichols
Note: EH
Number: 16926
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16926
File-URL: http://www.nber.org/papers/w16926.pdf
File-Format: application/pdf
Publication-Status: published as Jill R. Horwitz & Austin Nichols, 2011. "Rural Hospital Ownership: Medical Service Provision, Market Mix, and Spillover Effects," Health Services Research, vol 46(5), pages 1452-1472.
Abstract: Roughly one half of hospitals in the U.S. are in rural areas, yet researchers have largely studied the effects of hospital ownership in the urban context. We examine differences in the provision of profitable and unprofitable medical services in rural areas across nonprofit, for-profit, and government hospitals. We also consider the effect of hospital ownership mix within rural hospital markets. We find that rural nonprofit hospitals are more likely than for-profit hospitals to offer unprofitable services, many of which are underprovided services. Nonprofits respond less than for-profits to changes in service profitability. Nonprofits with more for-profit competitors offer more profitable services and fewer unprofitable services than those with fewer for-profit competitors.
Handle: RePEc:nbr:nberwo:16926
Template-Type: ReDIF-Paper 1.0
Title: The Psychological Costs of War: Military Combat and Mental Health
Classification-JEL: H56; I1
Author-Name: Resul Cesur
Author-Name: Joseph J. Sabia
Author-Name: Erdal Tekin
Author-Person: pte12
Note: EH
Number: 16927
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16927
File-URL: http://www.nber.org/papers/w16927.pdf
File-Format: application/pdf
Publication-Status: published as Cesur, Resul & Sabia, Joseph J. & Tekin, Erdal, 2013. "The psychological costs of war: Military combat and mental health," Journal of Health Economics, Elsevier, vol. 32(1), pages 51-65.
Abstract: While descriptive evidence suggests that deployment in the Global War on Terrorism is associated with adverse mental health, the causal effect of combat is not well established. Using data drawn from the National Longitudinal Study of Adolescent Health, we exploit exogenous variation in deployment assignment and find that soldiers deployed to combat zones where they engage in frequent enemy firefight or witness allied or civilian deaths are at substantially increased risk for suicidal ideation, psychological counseling, and post-traumatic stress disorder (PTSD). Our estimates imply lower-bound health care costs of $1.5 to $2.7 billion for combat-induced PTSD.
Handle: RePEc:nbr:nberwo:16927
Template-Type: ReDIF-Paper 1.0
Title: Efficient Estimation of Data Combination Models by the Method of Auxiliary-to-Study Tilting (AST)
Classification-JEL: C01; C14; J31; J7
Author-Name: Bryan S. Graham
Author-Person: pgr95
Author-Name: Cristine Campos de Xavier Pinto
Author-Person: ppi260
Author-Name: Daniel Egel
Note: LS TWP
Number: 16928
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16928
File-URL: http://www.nber.org/papers/w16928.pdf
File-Format: application/pdf
Publication-Status: published as Bryan S. Graham & Cristine Campos de Xavier Pinto & Daniel Egel, 2016. "Efficient Estimation of Data Combination Models by the Method of Auxiliary-to-Study Tilting (AST)," Journal of Business & Economic Statistics, vol 34(2), pages 288-301.
Abstract: We propose a locally efficient estimator for a class of semiparametric data combination problems. A leading estimand in this class is the Average Treatment Effect on the Treated (ATT). Data combination problems are related to, but distinct from, the class of missing data problems analyzed by Robins, Rotnitzky and Zhao (1994) (of which the Average Treatment Effect (ATE) estimand is a special case). Our estimator also possesses a double robustness property. Our procedure may be used to efficiently estimate, among other objects, the ATT, the two-sample instrumental variables model (TSIV), counterfactual distributions, poverty maps, and semiparametric difference-in-differences. In an empirical application we use our procedure to characterize residual Black-White wage inequality after flexibly controlling for 'pre-market' differences in measured cognitive achievement as in Neal and Johnson (1996).
Handle: RePEc:nbr:nberwo:16928
Template-Type: ReDIF-Paper 1.0
Title: Noncontractible Investments and Reference Points
Classification-JEL: D23; D86; K12
Author-Name: Oliver D. Hart
Author-Person: pha222
Note: CF LE
Number: 16929
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16929
File-URL: http://www.nber.org/papers/w16929.pdf
File-Format: application/pdf
Publication-Status: published as Oliver Hart, 2013. "Noncontractible Investments and Reference Points," Games, MDPI, Open Access Journal, vol. 4(3), pages 437-456, August.
Abstract: We analyze noncontractible investments in a model with shading. A seller can make an investment that affects a buyer's value. The parties have outside options that depend on asset ownership. When shading is not possible and there is no contract renegotiation, an optimum can be achieved by giving the seller the right to make a take‐it‐or‐leave‐it offer. However, with shading, such a contract creates deadweight losses. We show that an optimal contract will limit the seller's offers, and possibly create ex post inefficiency. Asset ownership can improve matters even if revelation mechanisms are allowed.
Handle: RePEc:nbr:nberwo:16929
Template-Type: ReDIF-Paper 1.0
Title: Information Shocks and Social Networks
Classification-JEL: I3; J18
Author-Name: David N. Figlio
Author-Person: pfi57
Author-Name: Sarah Hamersma
Author-Person: pha892
Author-Name: Jeffrey Roth
Note: CH
Number: 16930
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16930
File-URL: http://www.nber.org/papers/w16930.pdf
File-Format: application/pdf
Abstract: The relationships between social networks and economic behavior have been well-documented. However, it is often difficult to distinguish between the role of information sharing and other features of a neighborhood, such as factors that are common to people of the same ethnicities or socio-economic opportunities, or uniquely local methods of program implementation. We seek to gain new insight into the potential role of information flows in networks by investigating what happens when information is disrupted. We exploit rich microdata from Florida vital records and program participation files to explore the effects of neighborhood social networks on the degree to which immigrant WIC participation during pregnancy declined in the "information shock" period surrounding welfare reform. We compare changes in WIC participation amongst Hispanic immigrants living in neighborhoods with a larger concentration of immigrants from their country of origin to those with a smaller concentration of immigrants from their country of origin, holding constant the size of the immigrant population and the share of immigrants in the neighborhood who are Hispanic. We find strong evidence to support the notion that social networks mediated the information shock faced by immigrant women in the wake of welfare reform.
Handle: RePEc:nbr:nberwo:16930
Template-Type: ReDIF-Paper 1.0
Title: Testable Implications of Affine Term Structure Models
Classification-JEL: E43; G12
Author-Name: James D. Hamilton
Author-Person: pha60
Author-Name: Jing Cynthia Wu
Author-Person: pwu111
Note: AP ME
Number: 16931
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16931
File-URL: http://www.nber.org/papers/w16931.pdf
File-Format: application/pdf
Publication-Status: published as Hamilton, James D. & Wu, Jing Cynthia, 2014. "Testable implications of affine term structure models," Journal of Econometrics, Elsevier, vol. 178(P2), pages 231-242.
Abstract: Affine term structure models have been used to address a wide range of questions in macroeconomics and finance. This paper investigates a number of their testable implications which have not previously been explored. We show that the assumption that certain specified yields are priced without error is testable, and find that the implied measurement or specification error exhibits serial correlation in all of the possible formulations investigated here. We further find that the predictions of these models for the average levels of different interest rates are inconsistent with the observed data, and propose a more general specification that is not rejected by the data.
Handle: RePEc:nbr:nberwo:16931
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Zoning and Sales Taxes: Do Higher Sales Taxes Lead to More Retailing and Less Manufacturing?
Classification-JEL: H71; J2; R52
Author-Name: Daria Burnes
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Michelle J. White
Author-Person: pwh52
Note: LS PE
Number: 16932
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16932
File-URL: http://www.nber.org/papers/w16932.pdf
File-Format: application/pdf
Publication-Status: published as Burnes, Daria, David Neumark, and Michelle White, “Fiscal Zoning and Sales Taxes: Do Higher Sales Taxes Lead to More Retailing and Less Manufacturing,” forthcoming in National Tax Journal.
Abstract: We test the hypothesis that local government officials in jurisdictions that have higher local sales taxes are more likely to use fiscal zoning to attract retailing. We find that total retail employment is not significantly affected by local sales tax rates, but employment in big box and anchor stores is significantly increased in jurisdictions where sales tax rates increase. We also find that manufacturing employment is significantly lowered in these jurisdictions. These results suggest that local officials in jurisdictions with higher sales tax rates concentrate on attracting large stores and shopping centers and that their efforts crowd out manufacturing. A rise of one percentage point in a county-level local sales tax rate is predicted to result in 258 additional retail jobs and the loss of 838 manufacturing jobs.
Handle: RePEc:nbr:nberwo:16932
Template-Type: ReDIF-Paper 1.0
Title: Happiness on Tap: Piped Water Adoption in Urban Morocco
Classification-JEL: D12; I38; O12
Author-Name: Florencia Devoto
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: William Pariente
Author-Person: ppa604
Author-Name: Vincent Pons
Author-Person: ppo637
Note: CH
Number: 16933
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16933
File-URL: http://www.nber.org/papers/w16933.pdf
File-Format: application/pdf
Publication-Status: published as Florencia Devoto & Esther Duflo & Pascaline Dupas & William Parient� & Vincent Pons, 2012. "Happiness on Tap: Piped Water Adoption in Urban Morocco," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 68-99, November.
Abstract: We study the demand for household water connections in urban Morocco, and the effect of such connections on household welfare. In the northern city of Tangiers, among homeowners without a private connection to the city's water grid, a random subset was offered a simplified procedure to purchase a household connection on credit (at a zero percent interest rate). Take-up was high, at 69%. Because all households in our sample had access to the water grid through free public taps (often located fairly close to their homes), household connections did not lead to any improvement in the quality of the water households consumed; and despite significant increase in the quantity of water consumed, we find no change in the incidence of waterborne illnesses. Nevertheless, we find that households are willing to pay a substantial amount of money to have a private tap at home. Being connected generates important time gains, which are used for leisure and social activities, rather than productive activities. Because water is often a source of tension between households, household connections improve social integration and reduce conflict. Overall, within 6 months, self-reported well-being improved substantially among households in the treatment group, despite the financial cost of the connection. Our results suggest that facilitating access to credit for households to finance lump sum quality-of-life investments can significantly increase welfare, even if those investments do not result in income or health gains.
Handle: RePEc:nbr:nberwo:16933
Template-Type: ReDIF-Paper 1.0
Title: Cities, Skills, and Regional Change
Classification-JEL: D00; R00
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Giacomo A.M. Ponzetto
Author-Person: ppo323
Author-Name: Kristina Tobio
Note: EFG
Number: 16934
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16934
File-URL: http://www.nber.org/papers/w16934.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser & Giacomo A. M. Ponzetto & Kristina Tobio, 2014. "Cities, Skills and Regional Change," Regional Studies, Taylor & Francis Journals, vol. 48(1), pages 7-43, January.
Abstract: One approach to urban areas emphasizes the existence of certain immutable relationships, such as Zipf's or Gibrat's Law. An alternative view is that urban change reflects individual responses to changing tastes or technologies. This paper examines almost 200 years of regional change in the U.S. and finds that few, if any, growth relationships remain constant, including Gibrat's Law. Education does a reasonable job of explaining urban resilience in recent decades, but does not seem to predict county growth a century ago. After reviewing this evidence, we present and estimate a simple model of regional change, where education increases the level of entrepreneurship. Human capital spillovers occur at the city level because skilled workers produce more product varieties and thereby increase labor demand. We find that skills are associated with growth in productivity or entrepreneurship, not with growth in quality of life, at least outside of the West. We also find that skills seem to have depressed housing supply growth in the West, but not in other regions, which supports the view that educated residents in that region have fought for tougher land-use controls. We also present evidence that skills have had a disproportionately large impact on unemployment during the current recession.
Handle: RePEc:nbr:nberwo:16934
Template-Type: ReDIF-Paper 1.0
Title: Inference with Imperfect Randomization: The Case of the Perry Preschool Program
Classification-JEL: C31; I21; J13
Author-Name: James J. Heckman
Author-Name: Rodrigo Pinto
Author-Person: ppi451
Author-Name: Azeem M. Shaikh
Author-Person: psh256
Author-Name: Adam Yavitz
Note: CH TWP
Number: 16935
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16935
File-URL: http://www.nber.org/papers/w16935.pdf
File-Format: application/pdf
Abstract: This paper considers the problem of making inferences about the effects of a program on multiple outcomes when the assignment of treatment status is imperfectly randomized. By imperfect randomization we mean that treatment status is reassigned after an initial randomization on the basis of characteristics that may be observed or unobserved by the analyst. We develop a partial identification approach to this problem that makes use of information limiting the extent to which randomization is imperfect to show that it is still possible to make nontrivial inferences about the effects of the program in such settings. We consider a family of null hypotheses in which each null hypothesis specifies that the program has no effect on one of several outcomes of interest. Under weak assumptions, we construct a procedure for testing this family of null hypotheses in a way that controls the familywise error rate -- the probability of even one false rejection -- in finite samples. We develop our methodology in the context of a reanalysis of the HighScope Perry Preschool program. We find statistically significant effects of the program on a number of different outcomes of interest, including outcomes related to criminal activity for males and females, even after accounting for the imperfectness of the randomization and the multiplicity of null hypotheses.
Handle: RePEc:nbr:nberwo:16935
Template-Type: ReDIF-Paper 1.0
Title: An Elementary Theory of Global Supply Chains
Classification-JEL: F1
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Jonathan Vogel
Author-Person: pvo58
Author-Name: Su Wang
Note: ITI
Number: 16936
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16936
File-URL: http://www.nber.org/papers/w16936.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot & Jonathan Vogel & Su Wang, 2013. "An Elementary Theory of Global Supply Chains," Review of Economic Studies, Oxford University Press, vol. 80(1), pages 109-144.
Abstract: This paper develops an elementary theory of global supply chains. We consider a world economy with an arbitrary number of countries, one factor of production, a continuum of intermediate goods, and one final good. Production of the final good is sequential and subject to mistakes. In the unique free trade equilibrium, countries with lower probabilities of making mistakes at all stages specialize in later stages of production. Because of the sequential nature of production, absolute productivity differences are a source of comparative advantage among nations. Using this simple theoretical framework, we offer a first look at how vertical specialization shapes the interdependence of nations.
Handle: RePEc:nbr:nberwo:16936
Template-Type: ReDIF-Paper 1.0
Title: Broadening Focus: Spillovers, Complementarities and Specialization in the Hospital Industry
Classification-JEL: I1; L15; M11
Author-Name: Jonathan R. Clark
Author-Name: Robert Huckman
Author-Person: phu90
Note: EH PR
Number: 16937
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16937
File-URL: http://www.nber.org/papers/w16937.pdf
File-Format: application/pdf
Publication-Status: published as Clark, Jonathan R., and Robert S. Huckman. "Broadening Focus: Spillovers, Complementarities and Specialization in the Hospital Industry." Management Science 58, no. 4 (April 2012): 708–722.
Abstract: The long-standing argument that focused operations outperform others stands in contrast to claims about the benefits of broader operational scope. The performance benefits of focus are typically attributed to reduced complexity, lower uncertainty, and the development of specialized expertise, while the benefits of greater breadth are linked to the economies of scope achieved by sharing common resources, such as advertising or production capacity, across activities. Within the literature on corporate strategy, this tension between focus and breadth is reconciled by the concept of related diversification (i.e., a firm with multiple operating units, each specializing in distinct but related activities). We consider whether there are similar benefits to related diversification within an operating unit and examine the mechanism that generates these benefits. Using the empirical context of cardiovascular care within hospitals, we first examine the relationship between a hospital's level of specialization in cardiovascular care and the quality of its clinical performance on cardiovascular patients. We find that, on average, focus has a positive effect on quality performance. We then distinguish between positive spillovers and complementarities to examine: (1) the extent to which a hospital's specialization in areas related to cardiovascular care directly impacts performance on cardiovascular patients (positive spillovers) and (2) whether the marginal benefit of a hospital's focus in cardiovascular care depends on the degree to which the hospital "co-specializes" in related areas (complementarities). In our setting, we find evidence of such complementarities in specialization.
Handle: RePEc:nbr:nberwo:16937
Template-Type: ReDIF-Paper 1.0
Title: An Overview of The Changing Body: Health, Nutrition, and Human Development in the Western World Since 1700
Classification-JEL: I1; N31; N33
Author-Name: Robert W. Fogel
Author-Name: Nathaniel Grotte
Note: DAE EH
Number: 16938
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16938
File-URL: http://www.nber.org/papers/w16938.pdf
File-Format: application/pdf
Abstract: This summary of The Changing Body: Health, Nutrition, and Human Development in the Western World since 1700 (Cambridge) was prepared for presentation at the University of Alabama at Birmingham School of Public Health in March 2011. The book is built on the authors' work with 300 years of height and nutrition data and discusses their findings in the context of technophysio evolution, a uniquely modern form of rapid physiological development, the result of humanity's ability to control its environment and create technological innovations to adapt to it.
Handle: RePEc:nbr:nberwo:16938
Template-Type: ReDIF-Paper 1.0
Title: Education as Liberation?
Classification-JEL: I20; O15; P16
Author-Name: Willa Friedman
Author-Person: pfr283
Author-Name: Michael Kremer
Author-Person: pkr20
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Rebecca Thornton
Author-Person: pth143
Note: ED POL
Number: 16939
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16939
File-URL: http://www.nber.org/papers/w16939.pdf
File-Format: application/pdf
Publication-Status: published as Willa Friedman & Michael Kremer & Edward Miguel & Rebecca Thornton, 2016. "Education as Liberation?," Economica, London School of Economics and Political Science, vol. 83(329), pages 1-30, 01.
Abstract: Scholars have long speculated about education's political impacts, variously arguing that it promotes modern or pro-democratic attitudes; that it instills acceptance of existing authority; and that it empowers the disadvantaged to challenge authority. To avoid endogeneity bias, if schooling requires some willingness to accept authority, we assess the political and social impacts of a randomized girls' merit scholarship incentive program in Kenya that raised test scores and secondary schooling. We find little evidence for modernization theory. Consistent with the empowerment view, young women in program schools were less likely to accept domestic violence. Moreover, the program increased objective political knowledge, and reduced acceptance of political authority. However, this rejection of the status quo did not translate into greater perceived political efficacy, community participation, or voting intentions. Instead, the perceived legitimacy of political violence increased. Reverse causality may help account for the view that education instills greater acceptance of authority.
Handle: RePEc:nbr:nberwo:16939
Template-Type: ReDIF-Paper 1.0
Title: Exports and Credit Constraints Under Incomplete Information: Theory and Evidence from China
Classification-JEL: D8; F1; G2
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: Zhiyuan Li
Author-Person: pli677
Author-Name: Miaojie Yu
Author-Person: pyu46
Note: ITI
Number: 16940
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16940
File-URL: http://www.nber.org/papers/w16940.pdf
File-Format: application/pdf
Publication-Status: published as “Exports and Credit Constraints under Incomplete Information: Theory and Evidence from China,” Review of Economics and Statistics, forthcoming 2014, with Zhiyuan Li and Miaojie Yu.
Abstract: This paper examines why credit constraints for domestic and exporting firms arise in a setting where banks do not observe firms' productivities. To maintain incentive-compatibility, banks lend below the amount needed for first-best production. The longer time needed for export shipments induces a tighter credit constraint on exporters than on purely domestic firms, even in the exporters' home market. Greater risk faced by exporters also affects the credit extended by banks. Extra fixed costs reduce exports on the extensive margin, but can be offset by collateral held by exporting firms. The empirical application to Chinese firms strongly supports these theoretical results, and we find a sizable impact of the financial crisis in reducing exports.
Handle: RePEc:nbr:nberwo:16940
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Conditions and Capital Raising
Classification-JEL: E00; G21; G32
Author-Name: Isil Erel
Author-Name: Brandon Julio
Author-Name: Woojin Kim
Author-Person: pki279
Author-Name: Michael S. Weisbach
Note: AP CF IFM ME
Number: 16941
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16941
File-URL: http://www.nber.org/papers/w16941.pdf
File-Format: application/pdf
Publication-Status: published as Isil Erel & Brandon Julio & Woojin Kim & Michael S. Weisbach, 2012. "Macroeconomic Conditions and Capital Raising," Review of Financial Studies, Society for Financial Studies, vol. 25(2), pages 341-376.
Abstract: Do macroeconomic conditions affect firms' abilities to raise capital? If so, how do they affect the manner in which the capital is raised? We address these questions using a large sample of publicly-traded debt issues, seasoned equity offers, bank loans and private placements of equity and debt. Our results suggest that a borrower's credit quality significantly affects its ability to raise capital during macroeconomic downturns. For noninvestment-grade borrowers, capital raising tends to be procyclical while for investment-grade borrowers, it is countercyclical. Moreover, proceeds raised by investment grade firms are more likely to be held in cash in recessions than in expansions. Poor market conditions also affect the structure of securities offered, shifting them towards shorter maturities and more security. Overall, our results suggest that macroeconomic conditions influence the securities that firms issue to raise capital, the way in which these securities are structured and indeed firms' ability to raise capital at all. This influence likely occurs primarily through the effect of macroeconomic conditions on the supply of capital.
Handle: RePEc:nbr:nberwo:16941
Template-Type: ReDIF-Paper 1.0
Title: Carry Trade and Momentum in Currency Markets
Classification-JEL: F31
Author-Name: Craig Burnside
Author-Person: pbu20
Author-Name: Martin S. Eichenbaum
Author-Person: pei4
Author-Name: Sergio Rebelo
Note: AP EFG
Number: 16942
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16942
File-URL: http://www.nber.org/papers/w16942.pdf
File-Format: application/pdf
Publication-Status: published as Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 2011. "Carry Trade and Momentum in Currency Markets," Annual Review of Financial Economics, Annual Reviews, vol. 3(1), pages 511-535, December.
Abstract: We examine the empirical properties of the payoffs to two popular currency speculation strategies: the carry trade and momentum. We review three possible explanations for the apparent profitability of these strategies. The first is that speculators are being compensated for bearing risk. The second is that these strategies are vulnerable to rare disasters or peso problems. The third is that there is price pressure in currency markets.
Handle: RePEc:nbr:nberwo:16942
Template-Type: ReDIF-Paper 1.0
Title: The Circulation of Ideas in Firms and Markets
Classification-JEL: D83; L22; L26; M13; O31
Author-Name: Thomas F. Hellmann
Author-Person: phe157
Author-Name: Enrico C. Perotti
Author-Person: ppe58
Note: PR
Number: 16943
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16943
File-URL: http://www.nber.org/papers/w16943.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Hellmann & Enrico Perotti, 2011. "The Circulation of Ideas in Firms and Markets," Management Science, INFORMS, vol. 57(10), pages 1813-1826, October.
Abstract: Novel early stage ideas face uncertainty on the expertise needed to elaborate them, which creates a need to circulate them widely to find a match. Yet as information is not excludable, shared ideas may be stolen, reducing incentives to innovate. Still, in idea-rich environments inventors may share them without contractual protection. Idea density is enhanced by firms ensuring rewards to inventors, while their legal boundaries limit idea leakage. As firms limit idea circulation, the innovative environment involves a symbiotic interaction: firms incubate ideas and allow employees leave if they cannot find an internal fit; markets allow for wide ideas circulation of ideas until matched and completed; under certain circumstances ideas may be even developed in both firms and markets.
Handle: RePEc:nbr:nberwo:16943
Template-Type: ReDIF-Paper 1.0
Title: Fighting Procrastination in the Workplace: An Experiment
Classification-JEL: D03; G21; J22; J33; L2
Author-Name: Ximena Cadena
Author-Name: Antoinette Schoar
Author-Person: psc180
Author-Name: Alexandra Cristea
Author-Name: Héber M. Delgado-Medrano
Note: IO
Number: 16944
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16944
File-URL: http://www.nber.org/papers/w16944.pdf
File-Format: application/pdf
Abstract: In this paper we test whether procrastination and planning problems affect the performance, compensation and work satisfaction among employees. We conducted a randomized controlled experiment with a bank in Colombia to change the frequency and intensity with which employees received reminders about goal achievements. We also provided small in-kind prizes every week to remind employees of their goal achievement. Loan officers in the treatment group showed strong improvements in their goal achievements, better work load distribution, and higher monthly compensation (not including the value of the small prizes). The intervention also improved worker satisfaction and reduced stress levels, without affecting the quality of the loan officers' portfolios. We show that including branch managers (the supervisors of the loan officers) in the intervention was central in achieving these results, since they played a key role in reinforcing the reminders and helping employees with planning problems.
Handle: RePEc:nbr:nberwo:16944
Template-Type: ReDIF-Paper 1.0
Title: A Solution to Fiscal Procyclicality: The Structural Budget Institutions Pioneered by Chile
Classification-JEL: E62; F41; H50; O54; Q33
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: EFG IFM PE
Number: 16945
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16945
File-URL: http://www.nber.org/papers/w16945.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey Frankel, 2011. "A Solution to Fiscal Procyclicality: the Structural Budget Institutions Pioneered by Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 14(2), pages 39-78, August.
Abstract: Historically, many countries have suffered a pattern of procyclical fiscal policy: spending too much in booms and then forced to cut back in recessions. This problem has especially plagued Latin American commodity exporters. Since 2000, fiscal policy in Chile has been governed by a structural budget rule that has succeeded in implementing countercyclical fiscal policy. Official estimates of trend output and the 10-year price of copper - which are key to the decomposition of the budget into structural versus cyclical components - are made by expert panels and thus insulated from the political process. Chile's fiscal institutions hold useful lessons everywhere, but especially in other commodity exporting countries. This paper finds statistical support for a series of hypotheses regarding forecasts by official agencies that have responsibility for formulating the budget. 1) Official forecasts of budgets and GDP in a 33-country sample are overly optimistic on average. 2) The bias is stronger at longer horizons 3) The bias is greater among European governments that are politically subject to the budget rules in the Stability and Growth Pact (SGP). 4) The bias is greater in booms. 5) In most countries, the real growth rate is the key macroeconomic input for budget forecasting. In Chile it is the price of copper. 6) Real copper prices mean-revert in the long run, but this is not readily perceived. 7) Chile has avoided the problem of overly optimistic official forecasts. The conclusion: official forecasts tend to be overly optimistic, if not insulated from politics, and the problem can be worse when the government is formally subject to budget rules. The key innovation that has allowed Chile to achieve countercyclical fiscal policy in general, and to run surpluses in booms in particular, is not just a structural budget rule in itself, but a regime that entrusts to independent expert panels responsibility for estimating long-run trends in copper prices and GDP.
Handle: RePEc:nbr:nberwo:16945
Template-Type: ReDIF-Paper 1.0
Title: U.S. Intervention During the Bretton Woods Era: 1962-1973
Classification-JEL: E0; N1
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: 16946
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16946
File-URL: http://www.nber.org/papers/w16946.pdf
File-Format: application/pdf
Abstract: By the early 1960s, outstanding U.S. dollar liabilities began to exceed the U.S. gold stock, suggesting that the United States could not completely maintain its pledge to convert dollars into gold at the official price. This raised uncertainty about the Bretton Woods parity grid, and speculation seemed to grow. In response, the Federal Reserve instituted a series of swap lines to provide central banks with cover for unwanted, but temporary accumulations of dollars and to provide foreign central banks with dollar funds to finance their own interventions. The Treasury also began intervening in the market. The operations often forestalled gold losses, but in so doing, delayed the need to solve Bretton Woods' fundamental underlying problems. In addition, the institutional arrangements forged between the Federal Reserve and the U.S. Treasury raised important questions bearing on Federal Reserve independence.
Handle: RePEc:nbr:nberwo:16946
Template-Type: ReDIF-Paper 1.0
Title: Lifting the Domestic Veil: The Challenges of Exporting Differentiated Goods Across the Development Divide
Classification-JEL: F10; F14; M13; M16; O14; O33
Author-Name: Alejandro Artopoulos
Author-Name: Daniel Friel
Author-Name: Juan Carlos Hallak
Author-Person: pha474
Note: ITI
Number: 16947
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16947
File-URL: http://www.nber.org/papers/w16947.pdf
File-Format: application/pdf
Abstract: Several developing countries feature weak performances as exporters of differentiated goods to developed countries. This paper builds a conceptual framework to explain the obstacles that prevent producers of differentiated products from establishing a consistent presence in the developed world and the process through which those obstacles may be overcome. We build our framework based on case studies of export emergence in four Argentine industries: motorboats, television programs, wines, and wooden furniture. We find that exporting consistently to developed countries requires drastic changes in how business is conceived and conducted relative to the practices that prevail among domestically-oriented firms. Attempts by these firms to export often do not succeed because they approach foreign markets the same way that they approach the domestic one. Their failure to change the business approach stems from their inability to access critical (tacit) knowledge about differences in consumption patterns and business practices in developed countries. In three of the sectors we study, an export pioneer is the first to implement the necessary changes to established practices. His actions set a benchmark, unleashing a diffusion process that fosters export emergence in the sector. The most salient feature of export pioneers is their knowledge advantage about foreign markets stemming from their embeddedness in the business community of their industry in a developed country.
Handle: RePEc:nbr:nberwo:16947
Template-Type: ReDIF-Paper 1.0
Title: Do Local Elections in Non-Democracies Increase Accountability? Evidence from Rural China
Classification-JEL: H4; P16
Author-Name: Monica Martinez-Bravo
Author-Person: pma1375
Author-Name: Gerard Padró i Miquel
Author-Name: Nancy Qian
Author-Person: pqi25
Author-Name: Yang Yao
Note: PE POL
Number: 16948
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16948
File-URL: http://www.nber.org/papers/w16948.pdf
File-Format: application/pdf
Abstract: We use unique survey data to study whether the introduction of local elections in China made local leaders more accountable towards local constituents. We develop a simple model to predict the effects on different policies of increasing local leader accountability, taking into account that there is an autocratic upper government. We exploit variation in the timing of the top-down introduction of elections across villages to estimate the causal effects of elections and find that elections affected policy outcomes in a way that is consistent with the predicted effects of increased local leader accountability.
Handle: RePEc:nbr:nberwo:16948
Template-Type: ReDIF-Paper 1.0
Title: How Prediction Markets Can Save Event Studies
Classification-JEL: A2; C5; D72; G14; H50
Author-Name: Erik Snowberg
Author-Person: psn15
Author-Name: Justin Wolfers
Author-Person: pwo9
Author-Name: Eric Zitzewitz
Author-Person: pzi23
Note: AP LE LS POL
Number: 16949
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16949
File-URL: http://www.nber.org/papers/w16949.pdf
File-Format: application/pdf
Publication-Status: published as How Prediction Markets can Save Event Studies (with Justin Wolfers and Eric Zitzewitz) Prediction Markets, Leighton Vaughn Williams, Editor. Routledge, 2011.
Abstract: This review paper articulates the relationship between prediction market data and event studies, with a special focus on applications in political economy. Event studies have been used to address a variety of political economy questions from the economic effects of party control of government to the importance of complex rules in congressional committees. However, the results of event studies are notoriously sensitive to both choices made by researchers and external events. Specifically, event studies will generally produce different results depending on three interrelated things: which event window is chosen, the prior probability assigned to an event at the beginning of the event window, and the presence or absence of other events during the event window. In this paper we show how each of these may bias the results of event studies, and how prediction markets can mitigate these biases.
Handle: RePEc:nbr:nberwo:16949
Template-Type: ReDIF-Paper 1.0
Title: Why Surplus Consumption in the Habit Model May be Less Persistent than You Think
Classification-JEL: D91; E21; G12
Author-Name: Anthony W. Lynch
Author-Name: Oliver Randall
Note: AP
Number: 16950
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16950
File-URL: http://www.nber.org/papers/w16950.pdf
File-Format: application/pdf
Abstract: In U.S. data, value stocks have higher expected excess returns and higher CAPM alphas than growth stocks. We find the external-habit model of Campbell and Cochrane (1999) can generate a value premium in both CAPM alpha and expected excess return so long as the persistence of the log surplus-consumption ratio is not too high. In contrast, Lettau and Wachter (2007) find that when the log surplus-consumption ratio is assumed to be highly persistent as in Campbell and Cochrane, the external-habit model generates a growth premium in expected excess return. However, the micro evidence favors a less persistent log surplus-consumption ratio. We choose a value for this persistence which is sufficiently low that the most recent 2 years of log consumption contribute over 98% of all past consumption to log habit, which is a much more reasonable number than the 25% contribution generated by the Lettau-Wachter value. In our model, expected consumption is slowly mean-reverting, as in the long-run risk model of Bansal and Yaron (2004), which is why our model is able to generate a price-dividend ratio for aggregate equity that exhibits the high autocorrelation found in the data, despite the very low persistence of the price-of-risk state variable. Our results suggest that an external habit model in the spirit of Campbell and Cochrane can deliver an empirically sensible value premium once the persistence of the surplus consumption ratio is calibrated to the micro evidence rather than set to a value close to one. When we allow the conditional volatility of consumption growth to also be slowly mean reverting as in the long-run risk model of Bansal and Yaron, our model is also able to generate empirically sensible predictability of long-horizon returns using the price-dividend ratio, without eroding the value premium. Our results also suggest that models with fast-moving habit can deliver several empirical properties of aggregate dividend strips that have been recently documented.
Handle: RePEc:nbr:nberwo:16950
Template-Type: ReDIF-Paper 1.0
Title: Foresight and Information Flows
Classification-JEL: C5; E62; H30
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Todd B. Walker
Author-Person: pwa179
Author-Name: Shu-Chun Susan Yang
Author-Person: pya89
Note: EFG
Number: 16951
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16951
File-URL: http://www.nber.org/papers/w16951.pdf
File-Format: application/pdf
Abstract: News--or foresight--about future economic fundamentals can create rational expectations equilibria with non-fundamental representations that pose substantial challenges to econometric efforts to recover the structural shocks to which economic agents react. Using tax policies as a leading example of foresight, simple theory makes transparent the economic behavior and information structures that generate non-fundamental equilibria. Econometric analyses that fail to model foresight will obtain biased estimates of output multipliers for taxes; biases are quantitatively important when two canonical theoretical models are taken as data generating processes. Both the nature of equilibria and the inferences about the effects of anticipated tax changes hinge critically on hypothesized tax information flows. Differential U.S. federal tax treatment of municipal and treasury bonds embeds news about future taxes in bond yield spreads. Including that measure of tax news in identified VARs produces substantially different inferences about the macroeconomic impacts of anticipated taxes.
Handle: RePEc:nbr:nberwo:16951
Template-Type: ReDIF-Paper 1.0
Title: Coups, Corporations, and Classified Information
Classification-JEL: F50; G14; N10
Author-Name: Arindrajit Dube
Author-Person: pdu263
Author-Name: Ethan Kaplan
Author-Person: pka532
Author-Name: Suresh Naidu
Note: AP DAE POL
Number: 16952
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16952
File-URL: http://www.nber.org/papers/w16952.pdf
File-Format: application/pdf
Publication-Status: published as Arindrajit Dube & Ethan Kaplan & Suresh Naidu, 2011. "Coups, Corporations, and Classified Information," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1375-1409.
Abstract: We estimate the impact of coups and top-secret coup authorizations on asset prices of partially nationalized multinational companies that stood to benefit from US-backed coups. Stock returns of highly exposed firms reacted to coup authorizations classified as top-secret. The average cumulative abnormal return to a coup authorization was 9% over 4 days for a fully nationalized company, rising to more than 13% over sixteen days. Pre-coup authorizations accounted for a larger share of stock price increases than the actual coup events themselves.There is no effect in the case of the widely publicized, poorly executed Cuban operations, consistent with abnormal returns to coup authorizations reflecting credible private information. We also introduce two new intuitive and easy to implement nonparametric tests that do not rely on asymptotic justifications.
Handle: RePEc:nbr:nberwo:16952
Template-Type: ReDIF-Paper 1.0
Title: Technology Growth and Expenditure Growth in Health Care
Classification-JEL: D24; I1; I12
Author-Name: Amitabh Chandra
Author-Person: pch893
Author-Name: Jonathan S. Skinner
Author-Person: psk23
Note: AG EH PR
Number: 16953
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16953
File-URL: http://www.nber.org/papers/w16953.pdf
File-Format: application/pdf
Publication-Status: published as Amitabh Chandra & Jonathan Skinner, 2012. "Technology Growth and Expenditure Growth in Health Care," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 645-80, September.
Abstract: In the United States, health care technology has contributed to rising survival rates, yet health care spending relative to GDP has also grown more rapidly than in any other country. We develop a model of patient demand and supplier behavior to explain these parallel trends in technology growth and cost growth. We show that health care productivity depends on the heterogeneity of treatment effects across patients, the shape of the health production function, and the cost structure of procedures such as MRIs with high fixed costs and low marginal costs. The model implies a typology of medical technology productivity: (I) highly cost-effective "home run" innovations with little chance of overuse, such as anti-retroviral therapy for HIV, (II) treatments highly effective for some but not for all (e.g. stents), and (III) "gray area" treatments with uncertain clinical value such as ICU days among chronically ill patients. Not surprisingly, countries adopting Category I and effective Category II treatments gain the greatest health improvements, while countries adopting ineffective Category II and Category III treatments experience the most rapid cost growth. Ultimately, economic and political resistance in the U.S. to ever-rising tax rates will likely slow cost growth, with uncertain effects on technology growth.
Handle: RePEc:nbr:nberwo:16953
Template-Type: ReDIF-Paper 1.0
Title: Tipping Climate Negotiations
Classification-JEL: C72; F53; Q56
Author-Name: Geoffrey Heal
Author-Person: phe40
Author-Name: Howard Kunreuther
Note: EEE
Number: 16954
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16954
File-URL: http://www.nber.org/papers/w16954.pdf
File-Format: application/pdf
Publication-Status: published as “Tipping Climate Negotiations” (with Geoffrey Heal). In: Climate Change and Common Sense: Essays in Honour of Tom Schelling. R. Hahn and A. Ulph (eds.) Oxford University Press (2012).
Abstract: Thinking about tipping provides a novel perspective on finding a way forward in climate negotiations and suggests an alternative to the current framework of negotiating a global agreement on reductions in greenhouse gas emissions. Recent work on non-cooperative games shows games with increasing differences have multiple equilibria and have a "tipping set," a subset of agents who by changing from the inefficient to the efficient equilibrium can induce all others to do the same. We argue that international climate negotiations may form such a game and so have a tipping set. This set is a small group of countries who by adopting climate control measures can make in the interests of all others to do likewise.
Handle: RePEc:nbr:nberwo:16954
Template-Type: ReDIF-Paper 1.0
Title: Learning During a Crisis: the SARS Epidemic in Taiwan
Classification-JEL: D83; I1
Author-Name: Daniel Bennett
Author-Name: Chun-Fang Chiang
Author-Person: pch1706
Author-Name: Anup Malani
Author-Person: pma903
Note: EH PE
Number: 16955
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16955
File-URL: http://www.nber.org/papers/w16955.pdf
File-Format: application/pdf
Publication-Status: published as Bennett, Daniel & Chiang, Chun-Fang & Malani, Anup, 2015. "Learning during a crisis: The SARS epidemic in Taiwan," Journal of Development Economics, Elsevier, vol. 112(C), pages 1-18.
Abstract: When SARS struck Taiwan in the spring of 2003, many people feared that the disease would spread through the healthcare system. As a result, outpatient medical visits fell by over 30 percent in the course of a few weeks. This paper examines how both public information (SARS incidence reports) and private information (the behavior and opinions of peers) contributed to this public reaction. We identify social learning through a difference-in-difference strategy that compares long time community residents to recent arrivals, who are less socially connected. We find that people learned from both public and private sources during SARS. In a dynamic simulation based on the regressions, social learning substantially magnifes the response to SARS.
Handle: RePEc:nbr:nberwo:16955
Template-Type: ReDIF-Paper 1.0
Title: The Effectiveness of Alternative Monetary Policy Tools in a Zero Lower Bound Environment
Classification-JEL: E43; E52; G12; H63
Author-Name: James D. Hamilton
Author-Person: pha60
Author-Name: Jing Cynthia Wu
Author-Person: pwu111
Note: AP ME PE
Number: 16956
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16956
File-URL: http://www.nber.org/papers/w16956.pdf
File-Format: application/pdf
Publication-Status: published as James D. Hamilton & Jing Cynthia Wu, 2012. "The Effectiveness of Alternative Monetary Policy Tools in a Zero Lower Bound Environment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 3-46, 02.
Abstract: This paper reviews alternative options for monetary policy when the short-term interest rate is at the zero lower bound and develops new empirical estimates of the effects of the maturity structure of publicly held debt on the term structure of interest rates. We use a model of risk-averse arbitrageurs to develop measures of how the maturity structure of debt held by the public might affect the pricing of level, slope and curvature term-structure risk. We find these Treasury factors historically were quite helpful for predicting both yields and excess returns over 1990-2007. The historical correlations are consistent with the claim that if in December of 2006, the Fed were to have sold off all its Treasury holdings of less than one-year maturity (about $400 billion) and use the proceeds to retire Treasury debt from the long end, this might have resulted in a 14-basis-point drop in the 10-year rate and an 11-basis-point increase in the 6-month rate. We also develop a description of how the dynamic behavior of the term structure of interest rates changed after hitting the zero lower bound in 2009. Our estimates imply that at the zero lower bound, such a maturity swap would have the same effects as buying $400 billion in long-term maturities outright with newly created reserves, and could reduce the 10-year rate by 13 basis points without raising short-term yields.
Handle: RePEc:nbr:nberwo:16956
Template-Type: ReDIF-Paper 1.0
Title: Consumption Smoothing and Portfolio Rebalancing: The Effects of Adjustment Costs
Classification-JEL: E21; G11
Author-Name: Yosef Bonaparte
Author-Name: Russell Cooper
Author-Name: Guozhong Zhu
Author-Person: pzh352
Note: EFG
Number: 16957
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16957
File-URL: http://www.nber.org/papers/w16957.pdf
File-Format: application/pdf
Publication-Status: published as Bonaparte, Yosef & Cooper, Russell & Zhu, Guozhong, 2012. "Consumption smoothing and portfolio rebalancing: The effects of adjustment costs," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 751-768.
Abstract: This paper studies the dynamics of portfolio rebalancing and consumption smoothing in the presence of non-convex portfolio adjustment costs. The goal is to understand a household's response to income and return shocks. The model includes the choice of two assets: one riskless without adjustment costs and a second risky asset with adjustment costs. With these multiple assets, a household can buffer some income fluctuations through the asset without adjustment costs and engage in costly portfolio rebalancing less frequently. We estimate both preference parameters and portfolio adjustment costs. The estimates are used for evaluating consumption smoothing and portfolio adjustment in the face of income and return shocks.
Handle: RePEc:nbr:nberwo:16957
Template-Type: ReDIF-Paper 1.0
Title: Trade Adjustment and Productivity in Large Crises
Classification-JEL: E32; F4; O47
Author-Name: Gita Gopinath
Author-Name: Brent Neiman
Author-Person: pne85
Note: EFG IFM ITI PR
Number: 16958
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16958
File-URL: http://www.nber.org/papers/w16958.pdf
File-Format: application/pdf
Publication-Status: published as “ Trade Adjustment and Productiv ity in Large Crises ” (with Brent Neiman) American Economic Review , March 2014, Volume 104 (3)
Abstract: We empirically characterize the mechanics of trade adjustment during the Argen- tine crisis using detailed transaction-level customs data covering the universe of import transactions during 1996-2008. Though imports collapsed by nearly 70 percent from 2000-2002, the entry and exit of firms or products at the country level (the \extensive margin") played a small role in this adjustment. By contrast, the within-firm churning of inputs (the \sub-extensive margin") played a sizeable role, and we highlight significant heterogeneity in how firms adjusted their import mix. Motivated by these facts, we build a model of trade in intermediate inputs with heterogeneous firms, fixed import costs, and roundabout production to evaluate the channels through which a collapse in imports affects productivity. Import demand is non-homothetic and therefore the implications for productivity depend on the details of individual firm adjustments and cannot be summarized by the change in the aggregate import share. We simulate the model to discuss quantitatively these mechanisms in the context of an imported input cost shock that produces a significant productivity decline
Handle: RePEc:nbr:nberwo:16958
Template-Type: ReDIF-Paper 1.0
Title: Market Size, Competition, and the Product Mix of Exporters
Classification-JEL: F12
Author-Name: Thierry Mayer
Author-Person: pma443
Author-Name: Marc J. Melitz
Author-Person: pme260
Author-Name: Gianmarco I.P. Ottaviano
Author-Person: pot15
Note: ITI
Number: 16959
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16959
File-URL: http://www.nber.org/papers/w16959.pdf
File-Format: application/pdf
Publication-Status: published as Thierry Mayer & Marc J. Melitz & Gianmarco I. P. Ottaviano, 2014. "Market Size, Competition, and the Product Mix of Exporters," American Economic Review, American Economic Association, vol. 104(2), pages 495-536, February.
Abstract: We build a theoretical model of multi-product firms that highlights how competition across market destinations affects both a firm's exported product range and product mix. We show how tougher competition in an export market induces a firm to skew its export sales towards its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Theoretically, this within firm change in product mix driven by the trading environment has important repercussions on firm productivity. A calibrated fit to our theoretical model reveals that these productivity effects are potentially quite large.
Handle: RePEc:nbr:nberwo:16959
Template-Type: ReDIF-Paper 1.0
Title: Trade Liberalization and Firm Dynamics
Classification-JEL: F1; F4
Author-Name: Ariel Burstein
Author-Name: Marc J. Melitz
Author-Person: pme260
Note: IFM ITI
Number: 16960
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16960
File-URL: http://www.nber.org/papers/w16960.pdf
File-Format: application/pdf
Abstract: In this paper, we analyze the transition dynamics associated with an economy's response to trade liberalization. We start by reviewing the recent literature that incorporates firm dynamics into models of international trade. We then build upon that literature to characterize the role of firm dynamics, export-market selection, firm-level innovation, sunk export costs, and firms' expectations regarding the time path of liberalization in generating those transition dynamics following trade liberalization. These modeling ingredients generate substantial aggregate transition dynamics as they shift and shape the endogenous distribution of firms over time. Our results show how the responses of trade volumes, innovation, and aggregate output can vary greatly over time depending on those modeling ingredients. This has important consequences for many issues in international economics that rely on predictions for the effects of globalization over time on those key aggregate outcomes.
Handle: RePEc:nbr:nberwo:16960
Template-Type: ReDIF-Paper 1.0
Title: Sentencing Guidelines and Judicial Discretion: Quasi-experimental Evidence from Human Calculation Errors
Classification-JEL: K14; K42
Author-Name: Shawn D. Bushway
Author-Name: Emily G. Owens
Author-Person: pow8
Author-Name: Anne Morrison Piehl
Author-Person: ppi106
Note: LE
Number: 16961
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16961
File-URL: http://www.nber.org/papers/w16961.pdf
File-Format: application/pdf
Publication-Status: published as “ Sentencing Guidelines and Judicial Discretion: Quasi - experimental Evidence from Human Calculation Errors ” (with Shawn D. Bushway and Emily G. Owens ), Journal of Empirical Legal Studies 9(2) , June 2012 , 291 - 319 .
Abstract: There is a debate about whether advisory non-binding sentencing guidelines affect the sentences outcomes of individuals convicted in jurisdictions with this sentencing framework. Identifying the impact of sentencing guidelines is a difficult empirical problem because court actors may have preferences for sentencing severity that are correlated with the preferences that are outlined in the guidelines. But, in Maryland, ten percent of the recommended sentences computed in the guideline worksheets contain calculation errors. We use this unique source of quasi-experimental variation to quantify the extent to which sentencing guidelines influence policy outcomes. Among drug offenses, we find that the direct impact of the guidelines is roughly ½ the size of the overall correlation between recommendations and outcomes. For violent offenses, we find the same ½ discount for sentence recommendations that are higher than they should have been, but more responsiveness to recommendations that are too low. We find no evidence that the guidelines themselves directly affect discretion for property offenders, perhaps because judges generally have substantial experience with property cases and therefore do not rely on the errant information. Sentences are more sensitive to both accurate and inaccurate recommendations for crimes that occur less frequently and have more complicated sentencing. This suggests that when the court has more experience, the recommendations have less influence. More tentative findings suggest that, further down the decision chain, parole boards counteract the remaining influence of the guidelines.
Handle: RePEc:nbr:nberwo:16961
Template-Type: ReDIF-Paper 1.0
Title: Market-specific and Currency-specific Risk During the Global Financial Crisis: Evidence from the Interbank Markets in Tokyo and London
Classification-JEL: E44; F32; F36
Author-Name: Shin-ichi Fukuda
Author-Person: pfu76
Note: IFM
Number: 16962
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16962
File-URL: http://www.nber.org/papers/w16962.pdf
File-Format: application/pdf
Publication-Status: published as Fukuda, Shin-ichi, 2012. "Market-specific and currency-specific risk during the global financial crisis: Evidence from the interbank markets in Tokyo and London," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3185-3196.
Abstract: This paper explores how international money markets reflected credit and liquidity risks during the global financial crisis. After matching the currency denomination, we investigate how the Tokyo Interbank Offered Rate (TIBOR) was synchronized with the London Interbank Offered Rate (LIBOR) denominated in the US dollar and the Japanese yen. Regardless of the currency denomination, TIBOR was highly synchronized with LIBOR in tranquil periods. However, the interbank rates showed substantial deviations in turbulent periods. We find remarkable asymmetric responses in reflecting market-specific and currency-specific risks during the crisis. The regression results suggest that counter-party credit risk increased the difference across the markets, while liquidity risk caused the difference across the currency denominations. They also support the view that a shortage of US dollar as liquidity distorted the international money markets during the crisis. We find that coordinated central bank liquidity provisions were useful in reducing liquidity risk in the US dollar transactions. But their effectiveness was asymmetric across the markets.
Handle: RePEc:nbr:nberwo:16962
Template-Type: ReDIF-Paper 1.0
Title: Contracting for Impure Public Goods: Carbon Offsets and Additionality
Classification-JEL: D8; L15; Q2
Author-Name: Charles Mason
Author-Person: pma1190
Author-Name: Andrew Plantinga
Note: EEE
Number: 16963
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16963
File-URL: http://www.nber.org/papers/w16963.pdf
File-Format: application/pdf
Publication-Status: published as Mason, C.F., and A.J. Plantinga. 201 3 . The Additionality Problem with Offsets: Optimal Contracts for Carbon Sequestration in Forests. Journal of Envi ronmental Economics and Management 66:1 - 14.
Abstract: Governments contracting with private agents for the provision of an impure public good must contend with agents who would potentially supply the good absent any payments. This additionality problem is centrally important to the use of carbon offsets to mitigate climate change. We analyze optimal contracts for forest carbon, an important offset category. A novel national-scale simulation of the contracts is conducted that uses econometric results derived from micro data. For a 50 million acre increase in forest area, annual government expenditures with optimal contracts are found to be about $4 billion lower compared to costs with a uniform subsidy.
Handle: RePEc:nbr:nberwo:16963
Template-Type: ReDIF-Paper 1.0
Title: Exporting Christianity: Governance and Doctrine in the Globalization of US Denominations
Classification-JEL: F23; H4
Author-Name: Gordon H. Hanson
Author-Person: pha80
Author-Name: Chong Xiang
Author-Person: pxi42
Note: ITI
Number: 16964
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16964
File-URL: http://www.nber.org/papers/w16964.pdf
File-Format: application/pdf
Publication-Status: published as Hanson, Gordon H. & Xiang, Chong, 2013. "Exporting Christianity: Governance and doctrine in the globalization of US denominations," Journal of International Economics, Elsevier, vol. 91(2), pages 301-320.
Abstract: In this paper we build a model of market competition among religious denominations, using a framework that involves incomplete contracts and the production of club goods. We treat denominations akin to multinational enterprises, which decide which countries to enter based on local market conditions and their own "productivity." The model yields predictions for how a denomination's religious doctrine and governance structure affect its ability to attract adherents. We test these predictions using data on the foreign operations of US Protestant denominations in 2005 from the World Christian Database. Consistent with the model, we find that (1) denominations with stricter religious doctrine attract more adherents in countries in which the risk of natural disaster or disease outbreak is greater and in which government provision of health services is weaker, and (2) denominations with a decentralized governance structure attract more adherents in countries in which the productivity of pastor effort is higher. These findings shed light on factors determining the composition of religion within countries, helping account for the rise of new Protestant denominations in recent decades.
Handle: RePEc:nbr:nberwo:16964
Template-Type: ReDIF-Paper 1.0
Title: Household Leverage and the Recession
Classification-JEL: E2; E4; E5; G0; G01
Author-Name: Callum Jones
Author-Person: pjo233
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Author-Name: Thomas Philippon
Author-Person: pph81
Note: AP EFG ME
Number: 16965
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16965
File-URL: http://www.nber.org/papers/w16965.pdf
File-Format: application/pdf
Abstract: We evaluate and partially challenge the ‘household leverage’ view of the Great Recession. In the data, employment and consumption declined more in states where household debt declined more. We study a model where liquidity constraints amplify the response of consumption and employment to changes in debt. We estimate the model with Bayesian methods combining state and aggregate data. Changes in household credit limits explain 40% of the differential rise and fall of employment across states, but a small fraction of the aggregate employment decline in 2008-2010. Nevertheless, since household deleveraging was gradual, credit shocks greatly slowed the recovery.
Handle: RePEc:nbr:nberwo:16965
Template-Type: ReDIF-Paper 1.0
Title: Hither Thou Shalt Come, But No Further: Reply to "The Colonial Origins of Comparative Development: An Empirical Investigation: Comment"
Classification-JEL: E02; N20; O11
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Simon Johnson
Author-Person: pjo44
Author-Name: James A. Robinson
Author-Person: pro179
Note: DAE EFG LS POL
Number: 16966
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16966
File-URL: http://www.nber.org/papers/w16966.pdf
File-Format: application/pdf
Publication-Status: published as - ( With Simon Johnson and James Robinson) Colonial Origins of Comparative Development: Reply, October 2012, American Economic Review , 102(6), pp. 3077 - 3110.
Abstract: David Albouy expresses three main concerns about the results in Acemoglu, Johnson and Robinson (2001) on the relationship between potential settler mortality and institutions. First, there is a general concern that there are high mortality outliers, potentially affecting this relationship, with which we agree. However, limiting the effect of outliers has no impact on our substantive results and if anything significantly strengthens them, in fact making them robust to even extreme versions of his other critiques. His second argument that all the data from Latin America and much of the data from Africa, making up almost 60% of our sample, should be dropped is arbitrary - there is a great deal of well-documented comparable information on the mortality of Europeans in those places during the relevant period. His third argument that a "campaign" dummy should be included in the first stage is at odds with the historical record and is implemented inconsistently; even modest corrections undermine his claims.
Handle: RePEc:nbr:nberwo:16966
Template-Type: ReDIF-Paper 1.0
Title: Global retail lending in the aftermath of the US financial crisis: Distinguishing between supply and demand effects
Classification-JEL: F34; G01; G21
Author-Name: Manju Puri
Author-Person: ppu153
Author-Name: Jörg Rocholl
Author-Name: Sascha Steffen
Author-Person: pst441
Note: CF EFG IFM ME
Number: 16967
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16967
File-URL: http://www.nber.org/papers/w16967.pdf
File-Format: application/pdf
Publication-Status: published as Puri, Manju & Rocholl, Jörg & Steffen, Sascha, 2011. "Global retail lending in the aftermath of the US financial crisis: Distinguishing between supply and demand effects," Journal of Financial Economics, Elsevier, vol. 100(3), pages 556-578, June.
Abstract: This paper examines the broader effects of the US financial crisis on global lending to retail customers. In particular we examine retail bank lending in Germany using a unique data set of German savings banks during the period 2006 through 2008 for which we have the universe of loan applications and loans granted. Our experimental setting allows us to distinguish between savings banks affected by the US financial crisis through their holdings in Landesbanken with substantial subprime exposure and unaffected savings banks. The data enable us to distinguish between demand and supply side effects of bank lending and find that the US financial crisis induced a contraction in the supply of retail lending in Germany. While demand for loans goes down, it is not substantially different for the affected and nonaffected banks. More important, we find evidence of a significant supply side effect in that the affected banks reject substantially more loan applications than nonaffected banks. This result is particularly strong for smaller and more liquidity-constrained banks as well as for mortgage as compared with consumer loans. We also find that bank-depositor relationships help mitigate these supply side effects.
Handle: RePEc:nbr:nberwo:16967
Template-Type: ReDIF-Paper 1.0
Title: What Do Business Climate Indexes Teach Us About State Policy and Economic Growth?
Classification-JEL: H2; H5; J21; O4
Author-Name: Jed Kolko
Author-Person: pko228
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Marisol Cuellar Mejia
Note: EFG LS PE
Number: 16968
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16968
File-URL: http://www.nber.org/papers/w16968.pdf
File-Format: application/pdf
Publication-Status: published as Jed Kolko & David Neumark & Marisol Cuellar Mejia, 2013. "What Do Business Climate Indexes Teach Us About State Policy And Economic Growth?," Journal of Regional Science, Wiley Blackwell, vol. 53(2), pages 220-255, 05.
Abstract: State business climate indexes capture state policies that might affect economic growth. State rankings in these indexes vary wildly, raising questions about what the indexes measure and which policies are important for growth. Indexes focused on productivity do not predict economic growth, while indexes emphasizing taxes and costs predict growth of employment, wages, and output. Analysis of sub-indexes of the tax-and-cost-related indexes point to two policy factors associated with faster growth: less spending on welfare and transfer payments; and more uniform and simpler corporate tax structures. But factors beyond the control of policy have a stronger relationship with economic growth.
Handle: RePEc:nbr:nberwo:16968
Template-Type: ReDIF-Paper 1.0
Title: Selection on Moral Hazard in Health Insurance
Classification-JEL: D12; D82; G22
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Stephen P. Ryan
Author-Person: pry32
Author-Name: Paul Schrimpf
Author-Name: Mark R. Cullen
Note: AG EH IO LS PE
Number: 16969
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16969
File-URL: http://www.nber.org/papers/w16969.pdf
File-Format: application/pdf
Publication-Status: published as Liran Einav & Amy Finkelstein & Stephen P. Ryan & Paul Schrimpf & Mark R. Cullen, 2013. "Selection on Moral Hazard in Health Insurance," American Economic Review, American Economic Association, vol. 103(1), pages 178-219, February.
Abstract: In this paper we explore the possibility that individuals may select insurance coverage in part based on their anticipated behavioral response to the insurance contract. Such "selection on moral hazard" can have important implications for attempts to combat either selection or moral hazard. We explore these issues using individual-level panel data from a single firm, which contain information about health insurance options, choices, and subsequent claims. To identify the behavioral response to health insurance coverage and the heterogeneity in it, we take advantage of a change in the health insurance options offered to some, but not all of the firm's employees. We begin with descriptive evidence that is suggestive of both heterogeneous moral hazard as well as selection on it, with individuals who select more coverage also appearing to exhibit greater behavioral response to that coverage. To formalize this analysis and explore its implications, we develop and estimate a model of plan choice and medical utilization. The results from the modeling exercise echo the descriptive evidence, and allow for further explorations of the interaction between selection and moral hazard. For example, one implication of our estimates is that abstracting from selection on moral hazard could lead one to substantially over-estimate the spending reduction associated with introducing a high deductible health insurance option.
Handle: RePEc:nbr:nberwo:16969
Template-Type: ReDIF-Paper 1.0
Title: On the Relationship Between Mobility, Population Growth, and Capital Spending in the United States
Classification-JEL: E62; H41; H71
Author-Name: Marco Bassetto
Author-Name: Leslie McGranahan
Author-Person: pmc268
Note: EFG
Number: 16970
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16970
File-URL: http://www.nber.org/papers/w16970.pdf
File-Format: application/pdf
Abstract: In this paper, we investigate the relationship between public capital spending and population dynamics at the state level. Empirically, we document two robust facts. First, states with faster population growth do not spend more (per capita) to accommodate the needs of their growing population. Second, states whose population is more likely to leave do tend to spend more per capita than states with low gross emigration rates. To interpret these facts, we introduce an explicit, quantitative political-economy model of government spending determination, where mobility and population growth generate departures from Ricardian equivalence by shifting some of the costs and benefits of public projects to future residents. The magnitude of the empirical response of capital spending to mobility is at the upper end of what can be explained by the theory with a plausible calibration. In the model, more mobile voters favor more spending because the maturity of states' debt is very long term and costs are shifted into the future more than benefits.
Handle: RePEc:nbr:nberwo:16970
Template-Type: ReDIF-Paper 1.0
Title: Valuing Mortality Risk Reductions: Progress and Challenges
Classification-JEL: Q50; Q51; Q58
Author-Name: Maureen L. Cropper
Author-Person: pcr77
Author-Name: James K. Hammitt
Author-Person: pha652
Author-Name: Lisa A. Robinson
Author-Person: pro800
Note: EEE
Number: 16971
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16971
File-URL: http://www.nber.org/papers/w16971.pdf
File-Format: application/pdf
Publication-Status: published as Maureen Cropper & James K. Hammitt & Lisa A. Robinson, 2011. "Valuing Mortality Risk Reductions: Progress and Challenges," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 313-336, October.
Abstract: The value of mortality risk reduction is an important component of the benefits of environmental policies. In recent years, the number, scope, and quality of valuation studies have increased dramatically. Revealed-preference studies of wage compensation for occupational risks, on which analysts have primarily relied, have benefited from improved data and statistical methods. Stated-preference research has improved methodologically and expanded dramatically. Studies are now available for several health conditions associated with environmental causes and researchers have explored many issues concerning the validity of the estimates. With the growing numbers of both types of studies, several meta-analyses have become available that provide insight into the results of both methods. Challenges remain, including better understanding of the persistently smaller estimates from stated-preference than from wage-differential studies and of how valuation depends on the individual's age, health status, and characteristics of the illnesses most frequently associated with environmental causes.
Handle: RePEc:nbr:nberwo:16971
Template-Type: ReDIF-Paper 1.0
Title: Discount Rates
Classification-JEL: G0
Author-Name: John H. Cochrane
Author-Person: pco57
Note: AP EFG
Number: 16972
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16972
File-URL: http://www.nber.org/papers/w16972.pdf
File-Format: application/pdf
Publication-Status: published as Discount Rates: American Finance Association Presidential Address . Journal of Finance, 66, 1047 - 1108 , A ugust 2011.
Abstract: Discount rate variation is the central organizing question of current asset pricing research. I survey facts, theories and applications. We thought returns were uncorrelated over time, so variation in price-dividend ratios was due to variation in expected cashflows. Now it seems all price-dividend variation corresponds to discount-rate variation. We thought that the cross-section of expected returns came from the CAPM. Now we have a zoo of new factors. I categorize discount-rate theories based on central ingredients and data sources. Discount-rate variation continues to change finance applications, including portfolio theory, accounting, cost of capital, capital structure, compensation, and macroeconomics.
Handle: RePEc:nbr:nberwo:16972
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Education on Religion: Evidence from Compulsory Schooling Laws
Classification-JEL: I20; I28; Z12
Author-Name: Daniel M. Hungerman
Author-Person: phu114
Note: CH ED PE
Number: 16973
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16973
File-URL: http://www.nber.org/papers/w16973.pdf
File-Format: application/pdf
Publication-Status: published as “The Effect of Education on Religion: Evidence from Compulsory Schooling Laws,” forthcoming at the Journal of Economic Behavior & Organization
Abstract: For over a century, social scientists have debated how educational attainment impacts religious belief. In this paper, I use Canadian compulsory schooling laws to identify the relationship between completed schooling and later religiosity. I find that higher levels of education lead to lower levels of religious participation later in life. An additional year of education leads to a 4-percentage-point decline in the likelihood that an individual identifies with any religious tradition; the estimates suggest that increases in schooling can explain most of the large rise in non-affiliation in Canada in recent decades.
Handle: RePEc:nbr:nberwo:16973
Template-Type: ReDIF-Paper 1.0
Title: What Do Consumers Believe About Future Gasoline Prices?
Classification-JEL: D84; L62; Q40; Q41
Author-Name: Soren T. Anderson
Author-Person: pan315
Author-Name: Ryan Kellogg
Author-Name: James M. Sallee
Author-Person: psa1187
Note: EEE IO PE
Number: 16974
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16974
File-URL: http://www.nber.org/papers/w16974.pdf
File-Format: application/pdf
Publication-Status: published as Anderson, Soren T. & Kellogg, Ryan & Sallee, James M., 2013. "What do consumers believe about future gasoline prices?," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 383-403.
Abstract: A full understanding of how gasoline prices affect consumer behavior frequently requires information on how consumers forecast future gasoline prices. We provide the first evidence on the nature of these forecasts by analyzing two decades of data on gasoline price expectations from the Michigan Survey of Consumers. We find that average consumer beliefs are typically indistinguishable from a no-change forecast, justifying an assumption commonly made in the literature on consumer valuation of energy efficiency. We also provide evidence on circumstances in which consumer forecasts are likely to deviate from no-change and on significant cross-consumer forecast heterogeneity.
Handle: RePEc:nbr:nberwo:16974
Template-Type: ReDIF-Paper 1.0
Title: Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data
Classification-JEL: F10; F30; F40; G15; G21; G32
Author-Name: Daniel Paravisini
Author-Name: Veronica Rappoport
Author-Person: pra565
Author-Name: Philipp Schnabl
Author-Person: psc789
Author-Name: Daniel Wolfenzon
Note: CF IFM ITI
Number: 16975
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16975
File-URL: http://www.nber.org/papers/w16975.pdf
File-Format: application/pdf
Publication-Status: published as Daniel Paravisini & Veronica Rappoport & Philipp Schnabl & Daniel Wolfenzon, 2015. "Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data," Review of Economic Studies, Oxford University Press, vol. 82(1), pages 333-359.
Abstract: We estimate the elasticity of exports to credit using matched customs and firm-level bank credit data from Peru. To account for non-credit determinants of exports, we compare changes in exports of the same product and to the same destination by firms borrowing from banks differentially affected by capital-flow reversals during the 2008 financial crisis. We find that credit shocks affect the intensive margin of exports, but have no significant impact on entry or exit of firms to new product and destination markets. Our results suggest that credit shortages reduce exports through raising the variable cost of production, rather than the cost of financing sunk entry investments.
Handle: RePEc:nbr:nberwo:16975
Template-Type: ReDIF-Paper 1.0
Title: Stock Volatility During the Recent Financial Crisis
Classification-JEL: G11; G12
Author-Name: G. William Schwert
Author-Person: psc116
Note: AP
Number: 16976
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16976
File-URL: http://www.nber.org/papers/w16976.pdf
File-Format: application/pdf
Publication-Status: published as "Stock Volatility during the Recent Financial Crisis" NBER Working Paper No. W16976, European Financial Management, 17 (2011) 789-805
Abstract: This paper uses monthly returns from 1802-2010, daily returns from 1885-2010, and intraday returns from 1982-2010 in the United States to show how stock volatility has changed over time. It also uses various measures of volatility implied by option prices to infer what the market was expecting to happen in the months following the financial crisis in late 2008. This episode was associated with historically high levels of stock market volatility, particularly among financial sector stocks, but the market did not expect volatility to remain high for long and it did not. This is in sharp contrast to the prolonged periods of high volatility during the Great Depression. Similar analysis of stock volatility in the United Kingdom and Japan reinforces the notion that the volatility seen in the 2008 crisis was relatively short-lived. While there is a link between stock volatility and real economic activity, such as unemployment rates, it can be misleading.
Handle: RePEc:nbr:nberwo:16976
Template-Type: ReDIF-Paper 1.0
Title: How does Risk Selection Respond to Risk Adjustment? Evidence from the Medicare Advantage Program
Classification-JEL: H51; I11; I18
Author-Name: Jason Brown
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Ilyana Kuziemko
Author-Name: William Woolston
Note: AG EH PE
Number: 16977
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16977
File-URL: http://www.nber.org/papers/w16977.pdf
File-Format: application/pdf
Publication-Status: published as Brown, Jason, Mark Duggan, Ilyana Kuziemko, and William Woolston. 2014. "How Does Risk Selection Respond to Risk Adjustment? New Evidence from the Medicare Advantage Program." American Economic Review, 104(10): 3335-64.
Abstract: Governments often contract with private firms to provide public services such as health care and education. To decrease firms' incentives to selectively enroll low-cost individuals, governments frequently "risk-adjust" payments to firms based on enrollees' characteristics. We model how risk adjustment affects selection and differential payments---the government's payments to a firm for covering an individual minus the counterfactual cost had the government directly covered her. We show that firms reduce selection along dimensions included in the risk-adjustment formula, while increasing selection along excluded dimensions. These responses can actually increase differential payments relative to pre-risk-adjustment levels and thus risk adjustment can raise the total cost to the government of providing the public service. We confirm both selection predictions using individual-level data from Medicare, which in 2004 began risk-adjusting payments to private Medicare Advantage plans. We find that differential payments actually rise after risk adjustment and estimate that they totaled $30 billion in 2006, or nearly eight percent of total Medicare spending.
Handle: RePEc:nbr:nberwo:16977
Template-Type: ReDIF-Paper 1.0
Title: The Demand for Health Insurance Among Uninsured Americans: Results of a Survey Experiment and Implications for Policy
Classification-JEL: H51; I11; I18
Author-Name: Alan B. Krueger
Author-Person: pkr63
Author-Name: Ilyana Kuziemko
Note: EH PE
Number: 16978
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16978
File-URL: http://www.nber.org/papers/w16978.pdf
File-Format: application/pdf
Publication-Status: published as Krueger, Alan B. & Kuziemko, Ilyana, 2013. "The demand for health insurance among uninsured Americans: Results of a survey experiment and implications for policy," Journal of Health Economics, Elsevier, vol. 32(5), pages 780-793.
Abstract: Most existing work on the price elasticity of demand for health insurance focuses on employees' decisions to enroll in employer-provided plans. Yet any attempt to achieve universal coverage must focus on the uninsured, the vast majority of whom are not offered employer-sponsored insurance. In the summer of 2008, we conducted a survey experiment to assess the willingness to pay for a health plan among a large sample of uninsured Americans. The experiment yields price elasticities substantially greater than those found in most previous studies. We use these results to estimate coverage expansion under the Affordable Care Act, with and without an individual mandate. We estimate that 39 million uninsured individuals would gain coverage and find limited evidence of adverse selection.
Handle: RePEc:nbr:nberwo:16978
Template-Type: ReDIF-Paper 1.0
Title: Bank Finance Versus Bond Finance
Classification-JEL: C68; E20; E44
Author-Name: Fiorella De Fiore
Author-Person: pde37
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG CF ME
Number: 16979
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16979
File-URL: http://www.nber.org/papers/w16979.pdf
File-Format: application/pdf
Publication-Status: published as Fiorella De Fiore & Harald Uhlig, 2011. "Bank Finance versus Bond Finance," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(7), pages 1399-1421, October.
Abstract: We present a dynamic general equilibrium model with agency costs where: i) firms are heterogeneous in the risk of default; ii) they can choose to raise finance through bank loans or corporate bonds; and iii) banks are more efficient than the market in resolving informational problems. The model is used to analyze some major long-run differences in corporate finance between the US and the euro area. We suggest an explanation of those differences based on information availability. Our model replicates the data when the euro area is characterized by limited availability of public information about corporate credit risk relative to the US, and when european firms value more than US firms the flexibility and information acquisition role provided by banks.
Handle: RePEc:nbr:nberwo:16979
Template-Type: ReDIF-Paper 1.0
Title: Funding Scientific Knowledge: Selection, Disclosure and the Public-Private Portfolio
Classification-JEL: O34; O38
Author-Name: Joshua Gans
Author-Person: pga42
Author-Name: Fiona E. Murray
Note: PR
Number: 16980
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16980
File-URL: http://www.nber.org/papers/w16980.pdf
File-Format: application/pdf
Publication-Status: published as Funding Scientific Knowledge: Selection, Disclosure and the Public-Private Portfolio, Joshua S. Gans, Fiona Murray. in The Rate and Direction of Inventive Activity Revisited, Lerner and Stern. 2012
Abstract: This paper examines argues that while two distinct perspectives characterize the foundations of the public funding of research - filling a selection gap and solving a disclosure problem - in fact both the selection choices of public funders and their criteria for disclosure and commercialization shape the level and type of funding for research and the disclosures that arise as a consequence. In making our argument, we begin by reviewing project selection criteria and policies towards disclosure and commercialization (including patent rights) made by major funding organizations, noting the great variation between these institutions. We then provide a model of how selection criteria and funding conditions imposed by funders interact with the preferences of scientists to shape those projects that accept public funds and the overall level of openness in research. Our analysis reveals complex and unexpected relationships between public funding, private funding, and public disclosure of research. We show, for example, that funding choices made by public agencies can lead to unintended, paradoxical effects, providing short-term openness while stifling longer-term innovation. Implications for empirical evaluation and an agenda for future research are discussed.
Handle: RePEc:nbr:nberwo:16980
Template-Type: ReDIF-Paper 1.0
Title: A Test of Racial Bias in Capital Sentencing
Classification-JEL: K42
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Eliana La Ferrara
Author-Person: pla68
Note: LE
Number: 16981
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16981
File-URL: http://www.nber.org/papers/w16981.pdf
File-Format: application/pdf
Publication-Status: published as Alesina, Alberto, and Eliana La Ferrara. 2014. "A Test of Racial Bias in Capital Sentencing." American Economic Review, 104(11): 3397-3433.
Abstract: We propose a test of bias based upon patterns of judicial errors. We model the trial court as minimizing a weighted sum of type I and II errors. We define racial bias a situation where the weight depends on defendant/victim race. If the court is unbiased, the error rate should be independent of the combination defendant/victim race. We test this prediction using an original dataset on all capital appeals in 1973-1995. We find that in the first and last stage of appeal the probability of error is 3 and 9 percentage points higher for minority defendants who killed white (vs. minority) victims.
Handle: RePEc:nbr:nberwo:16981
Template-Type: ReDIF-Paper 1.0
Title: Systemic Sovereign Credit Risk: Lessons from the U.S. and Europe
Classification-JEL: E44; F21; F34; F36; G12; G13; G15; G18
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Francis A. Longstaff
Author-Person: plo283
Note: AP
Number: 16982
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16982
File-URL: http://www.nber.org/papers/w16982.pdf
File-Format: application/pdf
Publication-Status: published as Ang, Andrew & Longstaff, Francis A., 2013. "Systemic sovereign credit risk: Lessons from the U.S. and Europe," Journal of Monetary Economics, Elsevier, vol. 60(5), pages 493-510.
Abstract: We study the nature of systemic sovereign credit risk using CDS spreads for the U.S. Treasury, individual U.S. states, and major European countries. Using a multifactor affine framework that allows for both systemic and sovereign-specific credit shocks, we find that there is considerable heterogeneity across U.S. and European issuers in their sensitivity to systemic risk. U.S. and Euro systemic shocks are highly correlated, but there is much less systemic risk among U.S. sovereigns than among European sovereigns. We also find that U.S. and European systemic sovereign risk is strongly related to financial market variables. These results provide strong support for the view that systemic sovereign risk has its roots in financial markets rather than in macroeconomic fundamentals.
Handle: RePEc:nbr:nberwo:16982
Template-Type: ReDIF-Paper 1.0
Title: Did Plant Patents Create the American Rose?
Classification-JEL: K0; N12; O3; O31; O34; Q0
Author-Name: Petra Moser
Author-Person: pmo257
Author-Name: Paul W. Rhode
Author-Person: prh14
Note: DAE PR
Number: 16983
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16983
File-URL: http://www.nber.org/papers/w16983.pdf
File-Format: application/pdf
Publication-Status: published as Did Plant Patents Create the American Rose?, Petra Moser, Paul W. Rhode. in The Rate and Direction of Inventive Activity Revisited, Lerner and Stern. 2012
Abstract: The Plant Patent Act of 1930 was the first step towards creating property rights for biological innovation: it introduced patent rights for asexually-propagated plants. This paper uses data on plant patents and registrations of new varieties to examine whether the Act encouraged innovation. Nearly half of all plant patents between 1931 and 1970 were for roses. Large commercial nurseries, which began to build mass hybridization programs in the 1940s, accounted for most of these patents, suggesting that the new intellectual property rights may have helped to encourage the development of a commercial rose breeding industry. Data on registrations of newly-created roses, however, yield no evidence of an increase in innovation: less than 20 percent of new roses were patented, European breeders continued to create most new roses, and there was no increase in the number of new varieties per year after 1931.
Handle: RePEc:nbr:nberwo:16983
Template-Type: ReDIF-Paper 1.0
Title: Diversity and Technological Progress
Classification-JEL: C65; O30; O31; O33
Author-Name: Daron Acemoglu
Author-Person: pac16
Note: EFG
Number: 16984
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16984
File-URL: http://www.nber.org/papers/w16984.pdf
File-Format: application/pdf
Publication-Status: published as Diversity and Technological Progress, Daron Acemoglu. in The Rate and Direction of Inventive Activity Revisited, Lerner and Stern. 2012
Abstract: This paper proposes a tractable model to study the equilibrium diversity of technological progress and shows that equilibrium technological progress may exhibit too little diversity (too much conformity), in particular, foregoing socially beneficial investments in "alternative" technologies that will be used at some point in the future. The presence of future innovations that will replace current innovations imply that social benefits from innovation are not fully internalized. As a consequence, the market favors technologies that generate current gains relative to those that will bear fruit in the future; current innovations in research lines that will be profitable in the future are discouraged because current innovations are typically followed by further innovations before they can be profitably marketed. A social planner would choose a more diverse research portfolio and would induce a higher growth rate than the equilibrium allocation. The diversity of researchers is a partial (imperfect) remedy against the misallocation induced by the market. Researchers with different interests, competences or ideas may choose non-profit maximizing and thus more diverse research portfolios, indirectly contributing to economic growth.
Handle: RePEc:nbr:nberwo:16984
Template-Type: ReDIF-Paper 1.0
Title: Drowning or Weathering the Storm? Changes in Family Finances from 2007 to 2009
Classification-JEL: D1; D31; G11
Author-Name: Jesse Bricker
Author-Name: Brian K. Bucks
Author-Name: Arthur Kennickell
Author-Name: Traci L. Mach
Author-Name: Kevin Moore
Note: PE
Number: 16985
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16985
File-URL: http://www.nber.org/papers/w16985.pdf
File-Format: application/pdf
Publication-Status: published as Drowning or Weathering the Storm? Changes in Family Finances from 2007 to 2009, Jesse Bricker, Brian Bucks, Arthur Kennickell, Traci Mach, Kevin Moore. in Measuring Wealth and Financial Intermediation and Their Links to the Real Economy, Hulten and Reinsdorf. 2015
Abstract: In 2009, the Federal Reserve Board implemented a survey of families that participated in the 2007 Survey of Consumer Finances (SCF) to gain detailed information on the effects of the recent recession on all types of households. Using data from the 2007-09 SCF panel, we highlight the variation in households' financial experiences by examining the distribution of changes in families' balance sheets. Further, we use information on changes in families' saving, investing, and spending behavior to consider the potential longer-term consequences of the current recession on households' finances and decisions. Most families experienced a decline in wealth between 2007 and 2009, but many families saw only small changes on net, and others saw substantial increases in their wealth. This pattern of gains and losses typically holds within demographic groups. Changes in families' wealth over the period appear to reflect changes in asset values (particularly the value of homes, stocks, and businesses) rather than changes in the level of ownership of assets and debts or in the amount of debt held. On the whole, families appear more cautious in 2009 than in 2007, as most families reported greater desired buffer savings, and many expressed concern over future income and employment.
Handle: RePEc:nbr:nberwo:16985
Template-Type: ReDIF-Paper 1.0
Title: Employment in Black Urban Labor Markets: Problems and Solutions
Classification-JEL: J15; J18; J7
Author-Name: Judith K. Hellerstein
Author-Person: phe270
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 16986
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16986
File-URL: http://www.nber.org/papers/w16986.pdf
File-Format: application/pdf
Publication-Status: published as Hellerstein, Judith K., and Da vid Neumark, 2012, “Employment Problems in Black Urban Labor Markets: Problems and Solutions,” in The Oxford Handbook of the Economics of Poverty, Philip N. Jefferson, Ed. (Oxford: Oxford University Press), pp. 164-202.
Abstract: Blacks in the United States are poorer than whites and have much lower employment rates. "Place-based" policies seek to improve the labor markets in which blacks - especially low-income urban blacks - tend to reside. We first review the literature on spatial mismatch, which provides much of the basis for place-based policies. New evidence demonstrates an important racial dimension to spatial mismatch, and this "racial mismatch" suggests that simply creating more jobs where blacks live, or moving blacks to where jobs are located, is unlikely to make a major dent in black employment problems. We also discuss new evidence of labor market networks that are to some extent stratified by race, which may help explain racial mismatch. We then turn to evidence on place-based policies. Many of these, such as enterprise zones and Moving to Opportunity (MTO), are largely ineffective in increasing employment, likely because spatial mismatch is not the core problem facing urban blacks, and because, in the case of MTO, the role of labor market networks was weakened. Finally, we discuss policies focused on place that also target incentives and other expenditures on the residents of the targeted locations, which may do more to take advantage of labor market networks.
Handle: RePEc:nbr:nberwo:16986
Template-Type: ReDIF-Paper 1.0
Title: The Cost of Fuel Economy in the Indian Passenger Vehicle Market
Classification-JEL: L62; Q4
Author-Name: Randy Chugh
Author-Name: Maureen L. Cropper
Author-Person: pcr77
Author-Name: Urvashi Narain
Note: EEE
Number: 16987
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16987
File-URL: http://www.nber.org/papers/w16987.pdf
File-Format: application/pdf
Publication-Status: published as Chugh, Randy & Cropper, Maureen & Narain, Urvashi, 2011. "The cost of fuel economy in the Indian passenger vehicle market," Energy Policy, Elsevier, vol. 39(11), pages 7174-7183.
Abstract: To investigate how fuel economy is valued in the Indian car market, we compute the cost to Indian consumers of purchasing a more fuel-efficient vehicle and compare it to the benefit of lower fuel costs over the life of the vehicle. We use hedonic price functions for four market segments (petrol hatchbacks, diesel hatchbacks, petrol sedans, and diesel sedans) to compute 95 percent confidence intervals for the marginal cost to the consumer of an increase in fuel economy. We find that the associated present value of fuel savings falls within the 95 percent confidence interval for some specifications, in all market segments, for the years 2002 through 2006. Thus, we fail to consistently reject the hypothesis that consumers appropriately value fuel economy. When we reject the null hypothesis, the marginal cost of additional fuel economy exceeds the present value of fuel savings, suggesting that consumers may, in fact, be overvaluing fuel economy.
Handle: RePEc:nbr:nberwo:16987
Template-Type: ReDIF-Paper 1.0
Title: Intertemporal Price Discrimination in Storable Goods Markets
Classification-JEL: D43; E3; E30; L1; L13
Author-Name: Igal Hendel
Author-Name: Aviv Nevo
Author-Person: pne133
Note: EFG IO ME PR
Number: 16988
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16988
File-URL: http://www.nber.org/papers/w16988.pdf
File-Format: application/pdf
Publication-Status: published as “Intertemporal Price Discrimination in Storable Goods Markets”, American Economic Review 103(7), December 2013, 2722-51 (joint with Igal Hendel).
Abstract: We study intertemporal price discrimination when consumers can store for future consumption needs. To make the problem tractable we offer a simple model of demand dynamics, which we estimate using market level data. Optimal pricing involves temporary price reductions that enable sellers to discriminate between price sensitive consumers, who anticipate future needs, and less price-sensitive consumers. We empirically quantify the impact of intertemporal price discrimination on profits and welfare. We find that sales: (1) capture 25-30% of the profit gap between non-discriminatory and third degree price discrimination profits, and (2) increase total welfare.
Handle: RePEc:nbr:nberwo:16988
Template-Type: ReDIF-Paper 1.0
Title: Cross-border media and nationalism: Evidence from Serbian radio in Croatia
Classification-JEL: H41; H56; H77
Author-Name: Stefano DellaVigna
Author-Person: pde710
Author-Name: Ruben Enikolopov
Author-Name: Vera Mironova
Author-Name: Maria Petrova
Author-Name: Ekaterina Zhuravskaya
Author-Person: pzh71
Note: LS PE POL
Number: 16989
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w16989
File-URL: http://www.nber.org/papers/w16989.pdf
File-Format: application/pdf
Publication-Status: published as Stefano Della Vigna & Ruben Enikolopov & Vera Mironova & Maria Petrova & Ekaterina Zhuravskaya, 2014. "Cross-Border Media and Nationalism: Evidence from Serbian Radio in Croatia," American Economic Journal: Applied Economics, American Economic Association, vol. 6(3), pages 103-32, July.
Abstract: How do nationalistic media affect animosity between ethnic groups? We consider one of Europe's deadliest conflicts since WWII: the Serbo-Croatian conflict. We show that, after a decade of peace, cross-border nationalistic Serbian radio triggers ethnic hatred towards Serbs in Croatia. Mostly attracted by non-political content, many Croats listen to Serbian public radio (intended for Serbs in Serbia) whenever signal is available. As a result, the vote for extreme nationalist parties is higher, and ethnically offensive graffiti are more common, in Croatian villages with Serbian radio reception. A laboratory experiment confirms that Serbian radio exposure causes anti-Serbian sentiment among Croats.
Handle: RePEc:nbr:nberwo:16989
Template-Type: ReDIF-Paper 1.0
Title: The Pragmatist's Guide to Comparative Effectiveness Research
Classification-JEL: H51; I1
Author-Name: Amitabh Chandra
Author-Person: pch893
Author-Name: Anupam B. Jena
Author-Person: pje47
Author-Name: Jonathan S. Skinner
Author-Person: psk23
Note: EH PR
Number: 16990
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16990
File-URL: http://www.nber.org/papers/w16990.pdf
File-Format: application/pdf
Publication-Status: published as Amitabh Chandra & Anupam B. Jena & Jonathan S. Skinner, 2011. "The Pragmatist's Guide to Comparative Effectiveness Research," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 27-46, Spring.
Abstract: All developed countries have been struggling with a trend toward health care absorbing an ever-larger fraction of government and private budgets. Adopting any treatment that improves health outcomes, no matter what the cost, can worsen allocative inefficiency by paying dearly for small health gains. One potential solution is to rely more heavily on studies of the costs and effectiveness of new technologies in an effort to ensure that new spending is justified by a commensurate gain in consumer benefits. But not everyone is a fan of such studies and we discuss the merits of comparative effectiveness studies and its cousin, cost-effectiveness analysis. We argue that effectiveness research can generate some moderating effects on cost growth in healthcare if such research can be used to nudge patients away from less-effective therapies, whether through improved decision making or by encouraging beefed-up copayments for cost-ineffective procedures. More promising still for reducing growth is the use of a cost-effectiveness framework to better understand where the real savings lie--and the real savings may well lie in figuring out the complex interaction and fragmentation of healthcare systems.
Handle: RePEc:nbr:nberwo:16990
Template-Type: ReDIF-Paper 1.0
Title: Pensions in the 2000s: the Lost Decade?
Classification-JEL: D31; H55; J32
Author-Name: Edward N. Wolff
Note: AG PR
Number: 16991
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16991
File-URL: http://www.nber.org/papers/w16991.pdf
File-Format: application/pdf
Publication-Status: published as Edward N. Wolff, 2015. "U.S. Pensions in the 2000s: The Lost Decade?," Review of Income and Wealth, vol 61(4), pages 599-629.
Abstract: One of the most dramatic changes in the retirement income system over the last three decades has been a decline in traditional defined benefit (DB) pension plans and a corresponding rise in defined contribution (DC) pensions. Have workers benefited from this change? Using data from the Survey of Consumer Finances, I find that after robust gains in the 1980s and 1990s, pension wealth experienced a marked slowdown in growth from 2001 to 2007. Projections to 2009 indicate no increase in pension wealth from 2001 to 2009. Retirement wealth is also found to offset the inequality in standard household net worth. However, I find that pensions had a weaker offsetting effect on wealth inequality in 2007 than in 1989. As a result, whereas standard net worth inequality showed little change from 1989 to 2007, the inequality of private augmented wealth (the sum of pension wealth and net worth) did increase over this period. These results hold up even when Social Security wealth and employer contributions to DC plans are included in the measure of wealth and when adjustments are made for future tax liabilities on retirement wealth.
Handle: RePEc:nbr:nberwo:16991
Template-Type: ReDIF-Paper 1.0
Title: China's Rising Demand for "Green Cities": Evidence from Cross-City Real Estate Price Hedonics
Classification-JEL: Q53; R31
Author-Name: Siqi Zheng
Author-Person: pzh497
Author-Name: Jing Cao
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE
Number: 16992
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16992
File-URL: http://www.nber.org/papers/w16992.pdf
File-Format: application/pdf
Publication-Status: published as Real Estate Valuation and Cross-Boundary Air Pollution Externalities: Evidence from Chinese Cities (joint with Cao, Zheng and Sun), Journal of Real Estate Finance and Economics, April 2013
Abstract: With the decline of the traditional hukou system, migrants in China have a broad set of cities to choose from. Within an open system of cities, compensating differentials theory predicts that local real estate prices will reflect the marginal valuation of non-market local public goods. More polluted cities will feature lower real estate prices. But, local pollution may be caused by booming local industries. To address such endogeneity concerns, we estimate hedonic regressions using an instrumental variable strategy based on "imports" of pollution from nearby sources. By documenting the importance of spatial emissions patterns, our study highlights how real estate prices in one city are affected by Pigouvian externalities originating in another location. On average, a 10% decrease in imported neighbor pollution is associated with a 1.8% increase in local home prices.
Handle: RePEc:nbr:nberwo:16992
Template-Type: ReDIF-Paper 1.0
Title: The Rate and Direction of Invention in the British Industrial Revolution: Incentives and Institutions
Classification-JEL: N13; N73; O31; O34; O43
Author-Name: Ralf Meisenzahl
Author-Name: Joel Mokyr
Note: PR
Number: 16993
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16993
File-URL: http://www.nber.org/papers/w16993.pdf
File-Format: application/pdf
Publication-Status: published as The Rate and Direction of Invention in the British Industrial Revolution: Incentives and Institutions, Ralf R. Meisenzahl, Joel Mokyr. in The Rate and Direction of Inventive Activity Revisited, Lerner and Stern. 2012
Abstract: During the Industrial Revolution technological progress and innovation became the main drivers of economic growth. But why was Britain the technological leader? We argue that one hitherto little recognized British advantage was the supply of highly skilled, mechanically able craftsmen who were able to adapt, implement, improve, and tweak new technologies and who provided the micro inventions necessary to make macro inventions highly productive and remunerative. Using a sample of 759 of these mechanics and engineers, we study the incentives and institutions that facilitated the high rate of inventive activity during the Industrial Revolution. First, apprenticeship was the dominant form of skill formation. Formal education played only a minor role. Second, many skilled workmen relied on secrecy and first-mover advantages to reap the benefits of their innovations. Over 40 percent of the sample here never took out a patent. Third, skilled workmen in Britain often published their work and engaged in debates over contemporary technological and social questions. In short, they were affected by the Enlightenment culture. Finally, patterns differ for the textile sector; therefore, any inferences from textiles about the whole economy are likely to be misleading.
Handle: RePEc:nbr:nberwo:16993
Template-Type: ReDIF-Paper 1.0
Title: Illiquid Banks, Financial Stability, and Interest Rate Policy
Classification-JEL: E4; E5; G2
Author-Name: Douglas W. Diamond
Author-Person: pdi80
Author-Name: Raghuram Rajan
Author-Person: pra149
Note: IFM ME
Number: 16994
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16994
File-URL: http://www.nber.org/papers/w16994.pdf
File-Format: application/pdf
Publication-Status: published as Douglas W. Diamond & Raghuram G. Rajan, 2012. "Illiquid Banks, Financial Stability, and Interest Rate Policy," Journal of Political Economy, University of Chicago Press, vol. 120(3), pages 552 - 591.
Abstract: Banks finance illiquid assets with demandable deposits, which discipline bankers but expose them to damaging runs. Authorities may not want to stand by and watch banks collapse. However, unconstrained direct bailouts undermine the disciplinary role of deposits. Moreover, competition forces banks to promise depositors more, increasing intervention and making the system worse off. By contrast, constrained central bank intervention to lower rates maintains private discipline, while offsetting contractual rigidity. It may still lead banks to make excessive liquidity promises. Anticipating this, central banks should raise rates in normal times to offset distortions from reducing rates in adverse times.
Handle: RePEc:nbr:nberwo:16994
Template-Type: ReDIF-Paper 1.0
Title: Cash Holdings and Credit Risk
Classification-JEL: G32; G33
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Sergei A. Davydenko
Author-Name: Ilya A. Strebulaev
Author-Person: pst526
Note: AP CF
Number: 16995
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16995
File-URL: http://www.nber.org/papers/w16995.pdf
File-Format: application/pdf
Publication-Status: published as “Cash Holdings and Credit Risk” with Sergei Davydenko and Ilya Strebulaev , 2012, Review of Financial Studies , 25(12), 3572 - 3609
Abstract: Intuition suggests that firms with higher cash holdings are safer and should have lower credit spreads. Yet empirically, the correlation between cash and spreads is robustly positive and higher for lower credit ratings. This puzzling finding can be explained by the precautionary motive for saving cash. In our model endogenously determined optimal cash reserves are positively related to credit risk, resulting in a positive correlation between cash and spreads. In contrast, spreads are negatively related to the "exogenous'' component of cash holdings that is independent of credit risk factors. Similarly, although firms with higher cash reserves are less likely to default over short horizons, endogenously determined liquidity may be related positively to the longer-term probability of default. Our empirical analysis confirms these predictions, suggesting that precautionary savings are central to understanding the effects of cash on credit risk.
Handle: RePEc:nbr:nberwo:16995
Template-Type: ReDIF-Paper 1.0
Title: Shocks and Crashes
Classification-JEL: E10; E21; E27; E44; G12; G17
Author-Name: Martin Lettau
Author-Person: ple572
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Note: AP EFG ME
Number: 16996
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16996
File-URL: http://www.nber.org/papers/w16996.pdf
File-Format: application/pdf
Publication-Status: published as Shocks and Crashes, Martin Lettau, Sydney C. Ludvigson. in NBER Macroeconomics Annual 2013, Volume 28, Parker and Woodford. 2014
Abstract: Three shocks, distinguished by whether their effects are permanent or transitory, are identified to characterize the post-war dynamics of aggregate consumer spending, labor earnings, and household wealth. The first shock accounts for virtually all of the variation in consumption; we argue that it can be plausibly interpreted as a permanent total factor productivity shock. The second shock, which underlies the vast bulk of quarterly fluctuations in labor income growth, permanently reallocates rewards between shareholders and workers but leaves consumption unaffected. Over the last 25 years, the cumulative effect of this shock has persistently boosted stock market wealth and persistently lowered labor earnings. We call this a factors share shock. The third shock is a persistent but transitory innovation that accounts for the vast majority of quarterly fluctuations in asset values but has a negligible impact on consumption and labor earnings at all horizons. We call this an exogenous risk aversion shock. We show that the 2000-02 asset market crash and recession surrounding it was characterized by a negative transitory wealth (positive risk aversion) shock, predominantly affecting stock market wealth. By contrast, the 2007-09 crash and recession was characterized by a string of large negative productivity shocks, as well as positive risk aversion shocks.
Handle: RePEc:nbr:nberwo:16996
Template-Type: ReDIF-Paper 1.0
Title: Quantile Regression with Censoring and Endogeneity
Classification-JEL: C14
Author-Name: Victor Chernozhukov
Author-Person: pch864
Author-Name: Iván Fernández-Val
Author-Person: pfe104
Author-Name: Amanda E. Kowalski
Note: PE TWP
Number: 16997
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16997
File-URL: http://www.nber.org/papers/w16997.pdf
File-Format: application/pdf
Publication-Status: published as Chernozhukov, Victor & Fernández-Val, Iván & Kowalski, Amanda E., 2015. "Quantile regression with censoring and endogeneity," Journal of Econometrics, Elsevier, vol. 186(1), pages 201-221.
Abstract: In this paper, we develop a new censored quantile instrumental variable (CQIV) estimator and describe its properties and computation. The CQIV estimator combines Powell (1986) censored quantile regression (CQR) to deal semiparametrically with censoring, with a control variable approach to incorporate endogenous regressors. The CQIV estimator is obtained in two stages that are nonadditive in the unobservables. The first stage estimates a nonadditive model with infinite dimensional parameters for the control variable, such as a quantile or distribution regression model. The second stage estimates a nonadditive censored quantile regression model for the response variable of interest, including the estimated control variable to deal with endogeneity. For computation, we extend the algorithm for CQR developed by Chernozhukov and Hong (2002) to incorporate the estimation of the control variable. We give generic regularity conditions for asymptotic normality of the CQIV estimator and for the validity of resampling methods to approximate its asymptotic distribution. We verify these conditions for quantile and distribution regression estimation of the control variable. We illustrate the computation and applicability of the CQIV estimator with numerical examples and an empirical application on estimation of Engel curves for alcohol.
Handle: RePEc:nbr:nberwo:16997
Template-Type: ReDIF-Paper 1.0
Title: Systemic Risks and the Macroeconomy
Classification-JEL: E17; E44; G21
Author-Name: Gianni De Nicolò
Author-Name: Marcella Lucchetta
Author-Person: plu229
Note: IFM
Number: 16998
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16998
File-URL: http://www.nber.org/papers/w16998.pdf
File-Format: application/pdf
Publication-Status: published as Systemic Risks and the Macroeconomy, Gianni De Nicolò, Marcella Lucchetta. in Quantifying Systemic Risk, Haubrich and Lo. 2013
Abstract: This paper presents a modeling framework that delivers joint forecasts of indicators of systemic real risk and systemic financial risk, as well as stress-tests of these indicators as impulse responses to structural shocks identified by standard macroeconomic and banking theory. This framework is implemented using large sets of quarterly time series of indicators of financial and real activity for the G-7 economies for the 1980Q1-2009Q3 period. We obtain two main results. First, there is evidence of out-of sample forecasting power for tail risk realizations of real activity for several countries, suggesting the usefulness of the model as a risk monitoring tool. Second, in all countries aggregate demand shocks are the main drivers of the real cycle, and bank credit demand shocks are the main drivers of the bank lending cycle. These results challenge the common wisdom that constraints in the aggregate supply of credit have been a key driver of the sharp downturn in real activity experienced by the G-7 economies in 2008Q4-2009Q1.
Handle: RePEc:nbr:nberwo:16998
Template-Type: ReDIF-Paper 1.0
Title: Household Debt and Saving During the 2007 Recession
Classification-JEL: D12; D14; D91; G01
Author-Name: Rajashri Chakrabarti
Author-Person: pch303
Author-Name: Donghoon Lee
Author-Person: ple372
Author-Name: Wilbert van der Klaauw
Author-Person: pva186
Author-Name: Basit Zafar
Author-Person: pza107
Note: DAE
Number: 16999
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w16999
File-URL: http://www.nber.org/papers/w16999.pdf
File-Format: application/pdf
Publication-Status: published as Household Debt and Saving during the 2007 Recession, Rajashri Chakrabarti, Donghoon Lee, Wilbert van der Klaauw, Basit Zafar. in Measuring Wealth and Financial Intermediation and Their Links to the Real Economy, Hulten and Reinsdorf. 2015
Abstract: Using administrative credit report records and data collected through several special household surveys we analyze changes in household debt and savings during the 2007 recession. We find that while different segments of the population were affected in distinct ways, depending on whether they owned a home, whether they owned stocks and whether they had secure jobs, the crisis' impact appears to have been widespread, affecting large shares of households across all age, income and education groups. In response to their deteriorated financial situation, households reduced their average spending and increased saving. The latter increase - at least in 2009 - did not materialize itself through an increase in contributions to retirement and savings accounts. If anything, such contributions actually declined on average during that year. Instead, the higher saving rate appears to reflect a considerable decline in household debt, with households paying down mortgage debt in particular. At the end of 2009 individuals expected to continue to increase saving and pay down debt, which is consistent with what we have observed so far in 2010. In contrast, consumers were pessimistic about the availability of credit, with credit expected to become harder to obtain during 2010.
Handle: RePEc:nbr:nberwo:16999
Template-Type: ReDIF-Paper 1.0
Title: Counterparty Risk Externality: Centralized Versus Over-the-counter Markets
Classification-JEL: D52; D53; D62; G14; G2; G33
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Alberto Bisin
Author-Person: pbi10
Note: AP
Number: 17000
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w17000
File-URL: http://www.nber.org/papers/w17000.pdf
File-Format: application/pdf
Publication-Status: published as “Counterparty Risk Externality: Centralized versus Over - the - counter Markets” with Alberto Bisin, Journal of Economic Theory , 2014, 149 , 153 - 182
Abstract: We model the opacity of over-the-counter (OTC) markets in a setup where agents share risks, but have incentives to default and their financial positions are not mutually observable. We show that this setup results in excess "leverage" in that parties take on short OTC positions that lead to levels of default risk that are higher than Pareto-efficient ones. In particular, OTC markets feature a "counterparty risk externality" that we show can lead to ex-ante productive inefficiency. This externality is absent when trading is organized via a centralized clearing mechanism that provides transparency of trade positions, or a centralized counterparty (such as an exchange) that observes all trades and sets prices competitively. While collateral requirements and subordination of OTC positions in bankruptcy can ameliorate the counterparty risk externality, they are in general inadequate in addressing it fully.
Handle: RePEc:nbr:nberwo:17000
Template-Type: ReDIF-Paper 1.0
Title: Negative Leakage
Classification-JEL: H2; H23; Q48; Q54
Author-Name: Don Fullerton
Author-Person: pfu10
Author-Name: Daniel Karney
Author-Name: Kathy Baylis
Author-Person: pba747
Note: EEE PE
Number: 17001
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w17001
File-URL: http://www.nber.org/papers/w17001.pdf
File-Format: application/pdf
Publication-Status: published as Negative Leakage (with Kathy Baylis and Daniel Karney), Journal of the Association of Environmental and Resource Economists (2014)
Abstract: We build a simple analytical general equilibrium model and linearize it, to find a closed-from expression for the effect of a small change in carbon tax on leakage - the increase in emissions elsewhere. The model has two goods produced in two sectors or regions. Many identical consumers buy both goods using income from a fixed stock of capital that is mobile between sectors. An increase in one sector's carbon tax raises the price of its output, so consumption shifts to the other good, causing positive carbon leakage. However, the taxed sector substitutes away from carbon into capital. It thus absorbs capital, which shrinks the other sector, causing negative leakage. This latter effect could swamp the former, reducing carbon emissions in both sectors.
Handle: RePEc:nbr:nberwo:17001
Template-Type: ReDIF-Paper 1.0
Title: Does Government Investment in Local Public Goods Spur Gentrification? Evidence from Beijing
Classification-JEL: H41; Q51; R41
Author-Name: Siqi Zheng
Author-Person: pzh497
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE PE
Number: 17002
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w17002
File-URL: http://www.nber.org/papers/w17002.pdf
File-Format: application/pdf
Publication-Status: published as Siqi Zheng & Matthew E. Kahn, 2013. "Does Government Investment in Local Public Goods Spur Gentrification? Evidence from Beijing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 41(1), pages 1-28, 03.
Abstract: In Beijing, the metropolitan government has made enormous place based investments to increase green space and to improve public transit. We examine the gentrification consequences of such public investments. Using unique geocoded real estate and restaurant data, we document that the construction of the Olympic Village and two recent major subway systems have led to increased new housing supply in the vicinity of these areas, higher local prices and an increased quantity of nearby private chain restaurants.
Handle: RePEc:nbr:nberwo:17002
Template-Type: ReDIF-Paper 1.0
Title: Terms of Trade and Global Efficiency Effects of Free Trade Agreements, 1990-2002
Classification-JEL: F13
Author-Name: James E. Anderson
Author-Person: pan2
Author-Name: Yoto V. Yotov
Author-Person: pyo93
Note: ITI
Number: 17003
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w17003
File-URL: http://www.nber.org/papers/w17003.pdf
File-Format: application/pdf
Publication-Status: published as Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
Abstract: This paper infers the terms of trade effects of Free Trade Agreements (FTA's) with the structural gravity model. Using panel data methods to resolve two way causality between trade and FTA's, we estimate direct FTA effects on bilateral trade volume in 2 digit manufacturing goods from 1990-2002. We deduce the terms of trade changes implied by these volume effects for 40 countries plus a rest-of-the-world aggregate. Some gain over 10%, some lose less than 0.2%. Overall, using a novel measure of the change in iceberg melting, global efficiency rises 0.62%.
Handle: RePEc:nbr:nberwo:17003
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Pollution on Worker Productivity
Classification-JEL: I1; J3; Q5
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Matthew J. Neidell
Author-Person: pne362
Note: EEE EH LS PR
Number: 17004
Creation-Date: 2011-04
Order-URL: http://www.nber.org/papers/w17004
File-URL: http://www.nber.org/papers/w17004.pdf
File-Format: application/pdf
Publication-Status: published as Graff Zivin, Joshua and Matthew Neidell. “The impact of pollution on worker productivity,” American Economic Review, 102(7): 2012.
Abstract: Environmental protection is typically cast as a tax on the labor market and the economy in general. Since a large body of evidence links pollution with poor health, and health is an important part of human capital, efforts to reduce pollution could plausibly be viewed as an investment in human capital and thus a tool for promoting economic growth. While a handful of studies have documented the impacts of pollution on labor supply, this paper is the first to rigorously assess the less visible but likely more pervasive impacts on worker productivity. In particular, we exploit a novel panel dataset of daily farm worker output as recorded under piece rate contracts merged with data on environmental conditions to relate the plausibly exogenous daily variations in ozone with worker productivity. We find robust evidence that ozone levels well below federal air quality standards have a significant impact on productivity: a 10 ppb decrease in ozone concentrations increases worker productivity by 4.2 percent.
Handle: RePEc:nbr:nberwo:17004
Template-Type: ReDIF-Paper 1.0
Title: Should Central Banks Raise their Inflation Targets? Some Relevant Issues
Classification-JEL: E31; E52; E58
Author-Name: Bennett T. McCallum
Note: EFG ME
Number: 17005
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17005
File-URL: http://www.nber.org/papers/w17005.pdf
File-Format: application/pdf
Publication-Status: published as Bennett T. McCallum, 2011. "Should central banks raise their inflation targets? Some relevant issues," Economic Quarterly, Federal Reserve Bank of Richmond, issue 2Q, pages 111-131.
Abstract: Should central banks, because of the zero-lower-bound problem, raise their inflation-rate targets? Several arguments are relevant. (1) In the absence of the ZLB, the optimal steady-state inflation rate, according to standard New Keynesian reasoning, lies between the Friedman-rule value of deflation at the steady-state real interest rate and the Calvo-model value of zero, with calibration indicating a larger weight on the latter. (2) An attractive modification of the Calvo pricing equation would, however, imply that the weight on the second of these values should be zero. (3) There may be some scope for activist monetary policy to be effective even when the one-period interest rate is at the ZLB; but there is professional disagreement on this matter. (4) Present institutional arrangements are not immutable. In particular, elimination of traditional currency is feasible (even arguably attractive) and would remove the ZLB constraint on policy. (5) Increasing target inflation for the purpose of avoiding occasional ZLB difficulties would tend to undermine the rationale for central bank independence and would constitute an additional movement away from policy recognition of the economic necessity for intertemporal discipline.
Handle: RePEc:nbr:nberwo:17005
Template-Type: ReDIF-Paper 1.0
Title: Durable Financial Regulation: Monitoring Financial Instruments as a Counterpart to Regulating Financial Institutions
Classification-JEL: G28
Author-Name: Leonard Nakamura
Author-Person: pna565
Note: PE
Number: 17006
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17006
File-URL: http://www.nber.org/papers/w17006.pdf
File-Format: application/pdf
Publication-Status: published as Durable Financial Regulation: Monitoring Financial Instruments as a Counterpart to Regulating Financial Institutions, Leonard Nakamura. in Measuring Wealth and Financial Intermediation and Their Links to the Real Economy, Hulten and Reinsdorf. 2015
Abstract: This paper sets forth a discussion framework for the information requirements of systemic financial regulation. It specifically describes a potentially large macro-micro database for the U.S. based on an extended version of the Flow of Funds. I argue that such a database would have been of material value to U.S. regulators in ameliorating the recent financial crisis and could be of aid in understanding the potential vulnerabilities of an innovative financial system in the future. I also suggest that making these data available to the academic research community, under strict confidentiality restrictions, would enhance the detection and measurement of systemic risk.
Handle: RePEc:nbr:nberwo:17006
Template-Type: ReDIF-Paper 1.0
Title: Continuous Workout Mortgages
Classification-JEL: C63; D11; D14; D92; G13; G21; R31
Author-Name: Robert J. Shiller
Author-Person: psh69
Author-Name: Rafal M. Wojakowski
Author-Name: M. Shahid Ebrahim
Author-Name: Mark B. Shackleton
Note: AP
Number: 17007
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17007
File-URL: http://www.nber.org/papers/w17007.pdf
File-Format: application/pdf
Abstract: Continuous Workout Mortgage (CWM) balance and payments are indexed using market-observable house price index in an economic environment with prepayments. Our main results include: (a) explicit modelling of repayment and interest-only CWMs; (b) closed form formulas for mortgage payment and mortgage balance of a repayment CWM; (c) a closed form formula for the actuarially fair mortgage rate of an interest-only CWM. For repayment CWMs we extend our analysis to include two negotiable parameters: adjustable "workout proportion" and adjustable "workout threshold." These results are of importance as they not only help in the understanding of the mechanics of CWMs and estimating key contract parameters, but they also provide guidance on how to enhance the resilience of the financial architecture and mitigate systemic risk.
Handle: RePEc:nbr:nberwo:17007
Template-Type: ReDIF-Paper 1.0
Title: Sustainability and its Measurement
Classification-JEL: H0; Q20; Q30; Q50
Author-Name: Geoffrey Heal
Author-Person: phe40
Note: EEE PE
Number: 17008
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17008
File-URL: http://www.nber.org/papers/w17008.pdf
File-Format: application/pdf
Abstract: I present a non-technical high-level review the concept of sustainability and the various approaches to quantifying it.
Handle: RePEc:nbr:nberwo:17008
Template-Type: ReDIF-Paper 1.0
Title: Estimates of Crowd-Out from a Public Health Insurance Expansion Using Administrative Data
Classification-JEL: I18
Author-Name: Laura Dague
Author-Person: pda897
Author-Name: Thomas DeLeire
Author-Person: pde167
Author-Name: Donna Friedsam
Author-Name: Daphne Kuo
Author-Name: Lindsey Leininger
Author-Name: Sarah Meier
Author-Name: Kristen Voskuil
Note: EH
Number: 17009
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17009
File-URL: http://www.nber.org/papers/w17009.pdf
File-Format: application/pdf
Abstract: We use a combination of administrative and survey data to estimate the fraction of individuals newly enrolled in public health coverage (Wisconsin's combined Medicaid and CHIP program) that had access to private, employer-sponsored health insurance at the time of their enrollment and the fraction that dropped this coverage. We estimate that after expansion of eligibility for public coverage, approximately 20% of new enrollees had access to private health insurance at the time of enrollment and that only 8% dropped this coverage (with the remaining 12% having both private and public coverage). We also identify an "upper bound" estimate, which suggests that the percentage of new enrollees with private insurance coverage at the time of enrollment is, at most, 27%. These estimates of crowd-out are relatively low compared with estimates from the literature based on Medicaid and CHIP expansions, although based both on different data and on a different method.
Handle: RePEc:nbr:nberwo:17009
Template-Type: ReDIF-Paper 1.0
Title: Legal Investor Protection and Takeovers
Classification-JEL: G34
Author-Name: Mike Burkart
Author-Person: pbu112
Author-Name: Denis Gromb
Author-Person: pgr309
Author-Name: Holger M. Mueller
Author-Name: Fausto Panunzi
Author-Person: ppa224
Note: CF
Number: 17010
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17010
File-URL: http://www.nber.org/papers/w17010.pdf
File-Format: application/pdf
Publication-Status: published as Legal Investor Protection and Takeovers With M. Burkart, D. Gromb, and F. P anunzi, Journal of Finance 69, 1129-1165, 2014
Abstract: We study the role of legal investor protection for the efficiency of the market for corporate control. Stronger legal investor protection limits the ease with which an acquirer, once in control, can extract private benefits at the expense of non-controlling investors. This, in turn, increases the acquirer's capacity to raise outside funds to finance the takeover. Absent effective competition for the target, the increased outside funding capacity does not make efficient takeovers more likely, however, because the bid price, and thus the acquirer's need for funds, increase in lockstep with his pledgeable income. In contrast, under effective competition, the increased outside funding capacity makes it less likely that the takeover outcome is determined by the bidders' financing constraints-and thus by their internal funds-and more likely that it is determined by their ability to create value. Accordingly, stronger legal investor protection can improve the efficiency of the takeover outcome. Taking into account the interaction between legal investor protection and financing constraints also provides new insights into the optimal allocation of voting rights, sales of controlling blocks, and the role of legal investor protection in cross-border M&A.
Handle: RePEc:nbr:nberwo:17010
Template-Type: ReDIF-Paper 1.0
Title: Can Medical Progress be Sustained? Implications of the Link Between Development and Output Markets
Classification-JEL: I1; I11
Author-Name: Anup Malani
Author-Person: pma903
Author-Name: Tomas J. Philipson
Author-Person: pph37
Note: EH
Number: 17011
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17011
File-URL: http://www.nber.org/papers/w17011.pdf
File-Format: application/pdf
Abstract: There is considerable debate about the impact of health care reform on the growth in medical spending. Medical innovation is thought to be a central contributor to that growth. We argue that there is a unique linkage between reforms that affect output markets for medical care and medical R&D costs. This linkage is due to the fact that potential consumers of medical care are also potential participants in clinical trials that are required to develop new medical products. Therefore, reforms that increase the quality or reduce the price of already developed treatments reduce the incentive of patients to participate in trials of experimental treatments. This delays development and reduce the returns to in innovation. We provide evidence of this "subject market effect" by considering the impact of changes in the quality of conventional care on development. We document a dramatic drop in trial recruitment following introduction of break-through HIV/AIDS therapies in 1996. We conclude by discussing additional positive and normative implications of the subject market effect that link input and output markets for medical products.
Handle: RePEc:nbr:nberwo:17011
Template-Type: ReDIF-Paper 1.0
Title: Reshaping Institutions: Evidence on Aid Impacts Using a Pre-Analysis Plan
Classification-JEL: F35; H41; O4
Author-Name: Katherine Casey
Author-Name: Rachel Glennerster
Author-Person: pgl73
Author-Name: Edward Miguel
Author-Person: pmi499
Note: LE PE POL
Number: 17012
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17012
File-URL: http://www.nber.org/papers/w17012.pdf
File-Format: application/pdf
Publication-Status: published as Katherine Casey & Rachel Glennerster & Edward Miguel, 2012. "Reshaping Institutions: Evidence on Aid Impacts Using a Preanalysis Plan," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1755-1812.
Abstract: Although institutions are believed to be key determinants of economic performance, there is limited evidence on how they can be successfully reformed. Evaluating the effects of specific reforms is complicated by the lack of exogenous variation in the presence of institutions; the difficulty of empirically measuring institutional performance; and the temptation to "cherry pick" a few novel treatment effect estimates from amongst the large number of indicators required to capture the complex and multi-faceted subject. We evaluate one attempt to make local institutions more egalitarian by imposing minority participation requirements in Sierra Leone and test for longer term learning-by-doing effects. In so doing, we address these three pervasive challenges by: exploiting the random assignment of a participatory local governance intervention, developing innovative real-world outcomes measures, and using a pre-analysis plan to bind our hands against data mining. The specific program under study is a "community driven development" (CDD) project, which has become a popular strategy amongst donors to improve local institutions in developing countries. We find positive short-run effects on local public goods provision and economic outcomes, but no sustained impacts on collective action, decision-making processes, or the involvement of marginalized groups (like women) in local affairs, indicating that the intervention was ineffective at durably reshaping local institutions. We further show that in the absence of a pre-analysis plan, we could have instead generated two highly divergent, equally erroneous interpretations of the impacts--one positive, one negative--of external aid on institutions.
Handle: RePEc:nbr:nberwo:17012
Template-Type: ReDIF-Paper 1.0
Title: The Organization of R&D in American Corporations: The Determinants and Consequences of Decentralization
Classification-JEL: D23; D83; L22; O32
Author-Name: Ashish Arora
Author-Person: par15
Author-Name: Sharon Belenzon
Author-Person: pbe264
Author-Name: Luis A. Rios
Note: PR
Number: 17013
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17013
File-URL: http://www.nber.org/papers/w17013.pdf
File-Format: application/pdf
Abstract: We study the relationship between decentralization of R&D, innovation and firm performance using a novel dataset on the organizational structure of 1,290 American publicly-listed corporations, 2,615 of their affiliate firms, as well as characteristics of 594,903 patents that they hold. We explore the tension between centralization and decentralization of R&D, which trades off between responsiveness to immediate and local business needs and the type of research that can benefit the firm as a whole. To do this, we develop two novel measures of decentralization. First, using intra-firm patent assignments, we distinguish between patents that are assigned to the inventing unit rather than to corporate headquarters. Second, we exploit the variation between firms which posses a central corporate R&D labs and those that do not. We find that centralized R&D tends be more scientific, broader in scope, and have more technical impact, while being more likely in firms that operate within a narrower range of businesses, in complex technologies, or that are less reliant upon acquisitions. Additionally, we find that firms with a more decentralized structure, on average, invest less in R&D, generate fewer patents per R&D, and exhibit greater sales growth and higher market value. We discuss several theories that can explain these relationships, as well as potential avenues for future research.
Handle: RePEc:nbr:nberwo:17013
Template-Type: ReDIF-Paper 1.0
Title: Managing Self-Confidence: Theory and Experimental Evidence
Classification-JEL: C91; C93; D83
Author-Name: Markus M. Mobius
Author-Person: pmo367
Author-Name: Muriel Niederle
Author-Person: pni95
Author-Name: Paul Niehaus
Author-Person: pni384
Author-Name: Tanya S. Rosenblat
Author-Person: pro585
Note: LS
Number: 17014
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17014
File-URL: http://www.nber.org/papers/w17014.pdf
File-Format: application/pdf
Publication-Status: published as Markus M. Möbius & Muriel Niederle & Paul Niehaus & Tanya S. Rosenblat, 2022. "Managing Self-Confidence: Theory and Experimental Evidence," Management Science, vol 68(11), pages 7793-7817.
Abstract: Evidence from social psychology suggests that agents process information about their own ability in a biased manner. This evidence has motivated exciting research in behavioral economics, but has also garnered critics who point out that it is potentially consistent with standard Bayesian updating. We implement a direct experimental test. We study a large sample of 656 undergraduate students, tracking the evolution of their beliefs about their own relative performance on an IQ test as they receive noisy feedback from a known data-generating process. Our design lets us repeatedly measure the complete relevant belief distribution incentive-compatibly. We find that subjects (1) place approximately full weight on their priors, but (2) are asymmetric, over-weighting positive feedback relative to negative, and (3) conservative, updating too little in response to both positive and negative signals. These biases are substantially less pronounced in a placebo experiment where ego is not at stake. We also find that (4) a substantial portion of subjects are averse to receiving information about their ability, and that (5) less confident subjects are causally more likely to be averse. We unify these phenomena by showing that they all arise naturally in a simple model of optimally biased Bayesian information processing.
Handle: RePEc:nbr:nberwo:17014
Template-Type: ReDIF-Paper 1.0
Title: A Matter of Trust: Understanding Worldwide Public Pension Conversions
Classification-JEL: H0; H55
Author-Name: Kent Smetters
Author-Person: psm21
Author-Name: Walter E. Theseira
Note: AG PE POL
Number: 17015
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17015
File-URL: http://www.nber.org/papers/w17015.pdf
File-Format: application/pdf
Abstract: This paper seeks to explain the key two stylized facts of fundamental reforms to social security systems worldwide: Why have so many countries reformed when traditional systems seem, at first glance, to have a higher probability of delivering a secure retirement income? Why have these reforms been larger in developing countries facing less severe demographic problems? We show that an OLG voter model can answer both questions. Larger reforms are motivated by a fundamental breakdown in intergenerational trust while smaller reforms are caused by a lack of trust in the ability of the government to save. Empirical analysis seems to support the model.
Handle: RePEc:nbr:nberwo:17015
Template-Type: ReDIF-Paper 1.0
Title: Socioeconomic Status in Childhood and Health After Age 70: A New Longitudinal Analysis for the U.S., 1895-2005
Classification-JEL: I1; J1; N31; N32
Author-Name: Joseph P. Ferrie
Author-Name: Karen Rolf
Note: CH DAE LS
Number: 17016
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17016
File-URL: http://www.nber.org/papers/w17016.pdf
File-Format: application/pdf
Publication-Status: published as Joseph Ferrie & Karen Rolf, 2011. "Socioeconomic status in childhood and health after age 70: A new longitudinal analysis for the U.S., 1895–2005," Explorations in Economic History, vol 48(4), pages 445-460.
Abstract: The link between circumstances faced by individuals early in life (including those encountered in utero) and later life outcomes has been of increasing interest since the work of Barker in the 1970s on birth weight and adult disease. We provide such a life course perspective for the U.S. by following 45,000 U.S.-born males from the household where they resided before age 5 until their death and analyzing the link between the characteristics of their childhood environment - particularly, its socioeconomic status - and their longevity and specific cause of death. Individuals living before age 5 in lower SES households (measured by father's occupation and family home ownership) die younger and are more likely to die from heart disease than those living in higher SES households. The pathways potentially generating these effects are discussed.
Handle: RePEc:nbr:nberwo:17016
Template-Type: ReDIF-Paper 1.0
Title: Public Goods Agreements with Other-Regarding Preferences
Classification-JEL: D03; H4; H41; Q5
Author-Name: Charles D. Kolstad
Author-Person: pko133
Note: EEE PE
Number: 17017
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17017
File-URL: http://www.nber.org/papers/w17017.pdf
File-Format: application/pdf
Abstract: Why cooperation occurs when noncooperation appears to be individually rational has been an issue in economics for at least a half century. In the 1960's and 1970's the context was cooperation in the prisoner's dilemma game; in the 1980's concern shifted to voluntary provision of public goods; in the 1990's, the literature on coalition formation for public goods provision emerged, in the context of coalitions to provide transboundary pollution abatement. The problem is that theory suggests fairly low (even zero) levels of contributions to the public good and high levels of free riding. Experiments and empirical evidence suggests higher levels of cooperation. This is a major reason for the emergence in the 1990's and more recently of the literature on other-regarding preferences (also known as social preferences). Such preferences tend to involve higher levels of cooperation (though not always). This paper contributes to the literature on coalitions, public good provision and other-regarding preferences. For standard preferences, the marginal per capita return (MPCR) to investing in the public good must be greater than one for contributing to be individually rational. We find that Charness-Rabin preferences tend to reduce this threshold for individual contributions. We also find that Charness-Rabin preferences reduce the equilibrium size of a coalition of agents formed to provide the public good. In contrast to much of the literature, we treat the wealth of agents as heterogeneous. In such cases, we find that transfers among agents of the coalition may be necessary to sustain cooperation (regardless of the nature of preferences). An example drawn from experiments is provided as an illustration of the effectiveness of social preferences.
Handle: RePEc:nbr:nberwo:17017
Template-Type: ReDIF-Paper 1.0
Title: Framing Effects and Expected Social Security Claiming Behavior
Classification-JEL: D03; D12; D14; H55
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: Arie Kapteyn
Author-Person: pka406
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG PE
Number: 17018
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17018
File-URL: http://www.nber.org/papers/w17018.pdf
File-Format: application/pdf
Publication-Status: published as Brown, J. R., Kapteyn, A. and Mitchell, O. S. (2013), FRAMING AND CLAIMING: HOW INFORMATION-FRAMING AFFECTS EXPECTED SOCIAL SECURITY CLAIMING BEHAVIOR. Journal of Risk and Insurance. doi: 10.1111/j.1539-6975.2013.12004.x
Abstract: Eligible participants in the U.S. Social Security system may claim benefits anytime from age 62-70, with benefit levels actuarially adjusted based on the claiming age. This paper shows that individual intentions with regard to Social Security claiming ages are sensitive to how the early versus late claiming decision is framed. Using an experimental design, we find that the use of a "break-even analysis" has the very strong effect of encouraging individuals to claim early. We also show that individuals are more likely to report they will delay claiming when later claiming is framed as a gain, and when the information provides an anchoring point at older, rather than younger, ages. Moreover, females, individuals with credit card debt, and workers with lower expected benefits are more strongly influenced by framing. We conclude that some individuals may not make fully rational optimizing choices when it comes to choosing a claiming date.
Handle: RePEc:nbr:nberwo:17018
Template-Type: ReDIF-Paper 1.0
Title: The Value of Secure Property Rights: Evidence from Global Fisheries
Classification-JEL: G12; P14; Q2; Q22
Author-Name: Corbett A. Grainger
Author-Name: Christopher Costello
Author-Person: pco426
Note: EEE
Number: 17019
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17019
File-URL: http://www.nber.org/papers/w17019.pdf
File-Format: application/pdf
Abstract: Property rights are commonly touted as a solution to common pool resource problems. But in practice the security of these property rights varies substantially owing to differences in design. In fisheries, the design of individual transferable quotas (ITQs) varies widely; the consequences of these design differences on economic outcomes has not been studied. To test whether the security of these property rights affects asset values, we compile a unique dataset to examine the relationship between the exclusivity of property rights and the dividend price ratios for ITQs. We find evidence that stronger property rights lead to higher asset values and lower dividend price ratios in ITQ fisheries. This pecuniary effect of property rights security informs the current policy debate on the design of property rights institutions for managing natural resources.
Handle: RePEc:nbr:nberwo:17019
Template-Type: ReDIF-Paper 1.0
Title: Remembering to Pay? Reminders vs. Financial Incentives for Loan Payments
Classification-JEL: D03; G21; O16
Author-Name: Ximena Cadena
Author-Name: Antoinette Schoar
Author-Person: psc180
Note: IO
Number: 17020
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17020
File-URL: http://www.nber.org/papers/w17020.pdf
File-Format: application/pdf
Abstract: We report the results from a field experiment with a micro lender in Uganda to test the effectiveness of privately implemented incentives for loan repayment. Using a randomized control trial we measure the impact of three different treatments: Borrowers are either given a lump sum cash reward upon completion of the loan (equivalent to a 25% interest rate reduction on the current loan), a 25% reduction of the interest rate in the next loan the borrower takes from the bank, or a monthly text message reminder before the loan payment is due (SMS). We find that on average the size of the treatment effect is similar across all the treatment groups: borrowers in the treatment groups have a 7-9% increase in the probability of paying on time and the average days late drop by 2 days a month. The results suggest that simple text messages which help borrowers to better manage their repayment dates have similar effects as large changes in the cost of capital of 25% of interest. The impact of the cash back incentives are stronger for customers with smaller loans and less banking experience, the reduced future interest rate seemed to be most effective for customers with larger loans, while the SMS text messages were particularly effective for younger customers.
Handle: RePEc:nbr:nberwo:17020
Template-Type: ReDIF-Paper 1.0
Title: Credit Spreads and Business Cycle Fluctuations
Classification-JEL: E22; E44; G12
Author-Name: Simon Gilchrist
Author-Person: pgi28
Author-Name: Egon Zakrajšek
Author-Person: pza207
Note: AP EFG ME
Number: 17021
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17021
File-URL: http://www.nber.org/papers/w17021.pdf
File-Format: application/pdf
Publication-Status: published as Simon Gilchrist & Egon Zakrajsek, 2012. "Credit Spreads and Business Cycle Fluctuations," American Economic Review, American Economic Association, vol. 102(4), pages 1692-1720, June.
Abstract: This paper examines the evidence on the relationship between credit spreads and economic activity. Using an extensive data set of prices of outstanding corporate bonds trading in the secondary market, we construct a credit spread index that is--compared with the standard default-risk indicators--a considerably more powerful predictor of economic activity. Using an empirical framework, we decompose our index into a predictable component that captures the available firm-specific information on expected defaults and a residual component--the excess bond premium. Our results indicate that the predictive content of credit spreads is due primarily to movements in the excess bond premium. Innovations in the excess bond premium that are orthogonal to the current state of the economy are shown to lead to significant declines in economic activity and equity prices. We also show that during the 2007-09 financial crisis, a deterioration in the creditworthiness of broker-dealers--key financial intermediaries in the corporate cash market--led to an increase in the excess bond premium. These find- ings support the notion that a rise in the excess bond premium represents a reduction in the effective risk-bearing capacity of the financial sector and, as a result, a contraction in the supply of credit with significant adverse consequences for the macroeconomy.
Handle: RePEc:nbr:nberwo:17021
Template-Type: ReDIF-Paper 1.0
Title: The Quantification of Systemic Risk and Stability: New Methods and Measures
Classification-JEL: C99; Z19
Author-Name: Romney B. Duffey
Note: PR
Number: 17022
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17022
File-URL: http://www.nber.org/papers/w17022.pdf
File-Format: application/pdf
Publication-Status: published as The Quantification of Systemic Risk and Stability: New Methods and Measures, Romney B. Duffey. in Quantifying Systemic Risk, Haubrich and Lo. 2013
Abstract: We address the question of the prediction of large failures, busts, or system collapse, and the necessary concepts related to risk quantification, minimization and management. Answering this question requires a new approach since predictions using standard financial techniques and statistical distributions fail to predict or anticipate crises. The key points are that financial markets, systems, trading and manoeuvres are not just about money, debt, stocks, instruments and assets but reflect the actions and motivations of humans, which includes the presence or absence of learning effects. Therefore we have the possibility of failures or rare or low frequency events due to human involvement. The rare or unknown event is directly due to human influence, and reflects both learning and risk taking, with the presence of the finite and persistent human error contribution while taking or exposed to risk. This presence of humans in the marketplace explains the failure of present purely statistical methods to correctly estimate, predict or determine the onset of financial crises, busts and collapses. In this essay, we unify the concepts for predicting financial systemic risk with the general theory for outcomes, trends and measures already derived for other technical and social systems with human involvement. We replace words and qualitative reasoning with measures and quantitative predictions. The paper is therefore written with an introductory section devoted to the measures relevant to risk prediction in other modern technological systems; and is then extended and applied specifically to risk prediction for financial and business systems. The resulting measures also provide useful guidance for risk governance.
Handle: RePEc:nbr:nberwo:17022
Template-Type: ReDIF-Paper 1.0
Title: The Role of Skill Versus Luck in Poker: Evidence from the World Series of Poker
Classification-JEL: K23; K42
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: Thomas J. Miles
Note: LE
Number: 17023
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17023
File-URL: http://www.nber.org/papers/w17023.pdf
File-Format: application/pdf
Publication-Status: published as “The Role of Skill Versus Luck in Poker Evidence from the World Series of Poker,” Journal of Sports Economics : 2012 (with Thomas J. Miles). DOI: 10.1177/15270 02512449471
Abstract: In determining the legality of online poker - a multibillion dollar industry - courts have relied heavily on the issue of whether or not poker is a game of skill. Using newly available data, we analyze that question by examining the performance in the 2010 World Series of Poker of a group of poker players identified as being highly skilled prior to the start of the events. Those players identified a priori as being highly skilled achieved an average return on investment of over 30 percent, compared to a -15 percent for all other players. This large gap in returns is strong evidence in support of the idea that poker is a game of skill.
Handle: RePEc:nbr:nberwo:17023
Template-Type: ReDIF-Paper 1.0
Title: Historical Evidence on the Finance-Trade-Growth Nexus
Classification-JEL: E44; F14; F15; N1; N2
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: DAE IFM ME
Number: 17024
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17024
File-URL: http://www.nber.org/papers/w17024.pdf
File-Format: application/pdf
Publication-Status: published as Bordo, Michael D. & Rousseau, Peter L., 2012. "Historical evidence on the finance-trade-growth nexus," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 1236-1243.
Abstract: We study linkages between financial development, international trade, and long-run growth using data since 1880 for seventeen now-developed "Atlantic" economies and a set of cross-country and dynamic panel data models. We find that finance and trade reinforced each other before 1930, but that these effects did not persist after the Second World War. Financial development has positive effects on growth throughout the sample period, while trade affects growth strongly and independently after 1945. We attribute the rising importance of trade in explaining growth to major post-World War II changes in tariffs and quantity restrictions associated with the GATT, the establishment of the European Common Market, and the gradual elimination of capital controls after 1973. The findings are robust to the use of 'deep' fundamentals such as legal origin and indicators of the political environment as instruments for financial development and trade. Financial development, however, is more closely linked to these fundamentals than trade.
Handle: RePEc:nbr:nberwo:17024
Template-Type: ReDIF-Paper 1.0
Title: Optimal Portfolio Choice with Wage-Indexed Social Security
Classification-JEL: G11; H0
Author-Name: Jialun Li
Author-Name: Kent Smetters
Author-Person: psm21
Note: AG AP PE
Number: 17025
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17025
File-URL: http://www.nber.org/papers/w17025.pdf
File-Format: application/pdf
Abstract: This paper re-examines the classic question of how a household should optimally allocate its portfolio between risky stocks and risk-free bonds over its lifecycle. We show that allowing for the wage indexation of social security benefits fundamentally alters the optimal decisions. Moreover, the optimal allocation is close to observed empirical behavior. Households, therefore, do not appear to be making large "mistakes," as sometimes believed. In fact, traditional financial planning advice, as embedded in "target date" funds - whose enormous recent growth has been encouraged by new government policy - often leads to even relatively larger "mistakes" and welfare losses.
Handle: RePEc:nbr:nberwo:17025
Template-Type: ReDIF-Paper 1.0
Title: Credit Risk and Disaster Risk
Classification-JEL: E22; E32; E44; G12
Author-Name: Francois Gourio
Author-Person: pgo158
Note: AP CF EFG ME
Number: 17026
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17026
File-URL: http://www.nber.org/papers/w17026.pdf
File-Format: application/pdf
Publication-Status: published as François Gourio, 2013. "Credit Risk and Disaster Risk," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 1-34, July.
Abstract: Corporate credit spreads are large, volatile, countercyclical, and significantly larger than expected losses, but existing macroeconomic models with financial frictions fail to reproduce these patterns, because they imply small and constant aggregate risk premia. Building on the idea that corporate debt, while safe in normal times, is exposed to the risk of economic depression, this paper embeds a trade-off theory of capital structure into a real business cycle model with a small, time-varying risk of large economic disaster. This simple feature generates large, volatile and countercyclical credit spreads as well as novel business cycle implications. In particular, financial frictions substantially amplify the effect of shocks to the disaster probability.
Handle: RePEc:nbr:nberwo:17026
Template-Type: ReDIF-Paper 1.0
Title: The Social Cost of Near-Rational Investment
Classification-JEL: D83; E2; E3; G1
Author-Name: Tarek A. Hassan
Author-Person: pha489
Author-Name: Thomas M. Mertens
Note: AP EFG
Number: 17027
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17027
File-URL: http://www.nber.org/papers/w17027.pdf
File-Format: application/pdf
Publication-Status: published as Tarek A. Hassan & Thomas M. Mertens, 2017. "The Social Cost of Near-Rational Investment," American Economic Review, American Economic Association, vol. 107(4), pages 1059-1103, April.
Abstract: We show that the stock market may fail to aggregate information even if it appears to be efficient, and that the resulting decrease in the information content of prices may drastically reduce welfare. We solve a macroeconomic model in which information about fundamentals is dispersed and households make small, correlated errors when forming expectations about future productivity. As information aggregates in the market, these errors amplify and crowd out the information content of stock prices. When prices reflect less information, the conditional variance of stock returns rises, causing an increase in uncertainty and costly distortions in consumption, capital accumulation, and labor supply.
Handle: RePEc:nbr:nberwo:17027
Template-Type: ReDIF-Paper 1.0
Title: Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees
Classification-JEL: D14; D18; G13; G21
Author-Name: Victor Stango
Author-Person: pst264
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: LE
Number: 17028
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17028
File-URL: http://www.nber.org/papers/w17028.pdf
File-Format: application/pdf
Publication-Status: published as Victor Stango & Jonathan Zinman, 2014. "Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees," Review of Financial Studies, vol 27(4), pages 990-1030.
Abstract: We explore dynamics of limited attention in the $35 billion market for checking overdrafts, using survey content as shocks to the salience of overdraft fees. Conditional on selection into surveys, individuals who face overdraft-related questions are less likely to incur a fee in the survey month. Taking multiple overdraft surveys builds a "stock" of attention that reduces overdrafts for up to two years. The effects are significant among consumers with lower education and financial literacy. Individuals avoid overdrafts by making fewer low-balance debit transactions and cancelling automatic recurring withdrawals. The results raise new questions about consumer financial protection policy.
Handle: RePEc:nbr:nberwo:17028
Template-Type: ReDIF-Paper 1.0
Title: An Exploration of Optimal Stabilization Policy
Classification-JEL: E52; E62; E63
Author-Name: N. Gregory Mankiw
Author-Name: Matthew C. Weinzierl
Author-Person: pwe206
Note: ME
Number: 17029
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17029
File-URL: http://www.nber.org/papers/w17029.pdf
File-Format: application/pdf
Publication-Status: published as N. Gregory Mankiw & Matthew weinzierl, 2011. "An Exploration of Optimal Stabilization Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 209-272.
Abstract: This paper examines the optimal response of monetary and fiscal policy to a decline in aggregate demand. The theoretical framework is a two-period general equilibrium model in which prices are sticky in the short run and flexible in the long run. Policy is evaluated by how well it raises the welfare of the representative household. While the model has Keynesian features, its policy prescriptions differ significantly from textbook Keynesian analysis. Moreover, the model suggests that the commonly used "bang for the buck" calculations are potentially misleading guides for the welfare effects of alternative fiscal policies.
Handle: RePEc:nbr:nberwo:17029
Template-Type: ReDIF-Paper 1.0
Title: Heuristic Thinking and Limited Attention in the Car Market
Classification-JEL: D03; D12; L62
Author-Name: Nicola Lacetera
Author-Person: pla61
Author-Name: Devin G. Pope
Author-Name: Justin R. Sydnor
Note: IO PR
Number: 17030
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17030
File-URL: http://www.nber.org/papers/w17030.pdf
File-Format: application/pdf
Publication-Status: published as Nicola Lacetera & Devin G. Pope & Justin R. Sydnor, 2012. "Heuristic Thinking and Limited Attention in the Car Market," American Economic Review, American Economic Association, vol. 102(5), pages 2206-36, August.
Abstract: Can heuristic information processing affect important product markets? We explore whether the tendency to focus on the left-most digit of a number affects how used car buyers incorporate odometer values in their purchase decisions. Analyzing over 22 million wholesale used-car transactions, we find substantial evidence of this left-digit bias; there are large and discontinuous drops in sale prices at 10,000-mile thresholds in odometer mileage, along with smaller drops at 1,000-mile thresholds. We obtain estimates for the inattention parameter in a simple model of this left-digit bias. We also investigate whether this heuristic behavior is primarily attributable to the final used-car customers or the used-car salesmen who buy cars in the wholesale market. The evidence is most consistent with partial inattention by final customers. We discuss the significance of these results for the literature on inattention and point to other market settings where this type of heuristic thinking may be important. Our results suggest that information-processing heuristics may be important even in markets with large stakes and where information is easy to observe.
Handle: RePEc:nbr:nberwo:17030
Template-Type: ReDIF-Paper 1.0
Title: Individual Preferences, Organization, and Competition in a Model of R&D Incentive Provision
Classification-JEL: L1; L22; M12; O31; O32
Author-Name: Nicola Lacetera
Author-Person: pla61
Author-Name: Lorenzo Zirulia
Author-Person: pzi28
Note: PR
Number: 17031
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17031
File-URL: http://www.nber.org/papers/w17031.pdf
File-Format: application/pdf
Publication-Status: published as Lacetera, Nicola & Zirulia, Lorenzo, 2012. "Individual preferences, organization, and competition in a model of R&D incentive provision," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 550-570.
Abstract: Understanding the organization of R&D activities requires the simultaneous consideration of scientific workers' talent and tastes, companies' organizational choices, and the characteristics of the relevant industry. We develop a model of the provision of incentives to corporate scientists, in an environment where (1) scientists engage in multiple activities when performing research; (2) knowledge is not perfectly appropriable; (3) scientists are responsive to both monetary and non-monetary incentives; and (4) firms compete on the product market. We show that both the degree of knowledge spillovers and of market competition affect the incentives given to scientists, and these effects interact. First, high knowledge spillovers lead firms to soften incentives when product market competition is high, and to strengthen incentives when competition is low. Second, the relationship between the intensity of competition and the power of incentives is U-shaped, with the exact shape depending on the degree of knowledge spillovers. We also show that the performance-contingent pay for both applied and basic research increases with the non-pecuniary benefits that scientists obtain from research. We relate our findings to the existing empirical research, and also discuss their implications for management and public policy.
Handle: RePEc:nbr:nberwo:17031
Template-Type: ReDIF-Paper 1.0
Title: The Hired Gun Mechanism
Classification-JEL: C72; C91; C92; D7; H41
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Laura K. Gee
Author-Person: pge262
Note: PE
Number: 17032
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17032
File-URL: http://www.nber.org/papers/w17032.pdf
File-Format: application/pdf
Abstract: We present and experimentally test a mechanism that provides a simple, natural, low cost, and realistic solution to the problem of compliance with socially determined efficient actions, such as contributing to a public good. We note that small self-governing organizations often place enforcement in the hands of an appointed leader-the department chair, the building superintendent, the team captain. This hired gun, we show, need only punish the least compliant group member, and then only punish this person enough so that the person would have rather been the second least compliant. We show experimentally this mechanism, despite having very small penalties out of equilibrium, reaches the full compliance equilibrium almost instantly.
Handle: RePEc:nbr:nberwo:17032
Template-Type: ReDIF-Paper 1.0
Title: Gun For Hire: Does Delegated Enforcement Crowd out Peer Punishment in Giving to Public Goods?
Classification-JEL: C72; C91; C92; D7; H41
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Laura K. Gee
Author-Person: pge262
Note: PE
Number: 17033
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17033
File-URL: http://www.nber.org/papers/w17033.pdf
File-Format: application/pdf
Publication-Status: published as “Gun For Hire: Delegated Enforcement and Peer Punishment in Public Goods Provision.” with Laura K. Gee, Journal of Public Economics, 2012, v. 96, 1036- 1046.
Abstract: This paper compares two methods to encourage socially optimal provision of a public good. We compare the efficacy of vigilante justice, as represented by peer-to-peer punishment, to delegated policing, as represented by the "hired gun" mechanism, to deter free riding and improve group welfare. The "hired gun" mechanism (Andreoni and Gee, 2011) is an example of a low cost device that promotes complete compliances and minimal enforcement as the unique Nash equilibrium. We find that subjects are willing to pay to hire a delegated policing mechanism over 70% of the time, and that this mechanism increases welfare between 15% to 40%. Moreover, the lion's share of the welfare gain comes because the hired gun crowds out vigilante peer-to-peer punishments.
Handle: RePEc:nbr:nberwo:17033
Template-Type: ReDIF-Paper 1.0
Title: Are the Effects of Monetary Policy Shocks Big or Small?
Classification-JEL: E3; E4; E5
Author-Name: Olivier Coibion
Author-Person: pco205
Note: EFG ME
Number: 17034
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17034
File-URL: http://www.nber.org/papers/w17034.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Coibion, 2012. "Are the Effects of Monetary Policy Shocks Big or Small?," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(2), pages 1-32, April.
Abstract: This paper studies the small estimated effects of monetary policy shocks from standard VAR's versus the large effects from the Romer and Romer (2004) approach. The differences are driven by three factors: the different contractionary impetus, the period of reserves targeting and lag length selection. Accounting for these factors, the real effects of policy shocks are consistent across approaches and most likely medium. Alternative monetary policy shock measures from estimated Taylor rules also yield medium-sized real effects and indicate that the historical contribution of monetary policy shocks to real fluctuations has been significant, particularly during the 1970s and early 1980s.
Handle: RePEc:nbr:nberwo:17034
Template-Type: ReDIF-Paper 1.0
Title: Optimal Taxation with Rent-Seeking
Classification-JEL: D3; D5; D8; E2; E6; H2
Author-Name: Casey Rothschild
Author-Person: pro404
Author-Name: Florian Scheuer
Author-Person: psc147
Note: PE
Number: 17035
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17035
File-URL: http://www.nber.org/papers/w17035.pdf
File-Format: application/pdf
Publication-Status: published as Casey Rothschild & Florian Scheuer, 2016. "Optimal Taxation with Rent-Seeking," The Review of Economic Studies, vol 83(3), pages 1225-1262.
Abstract: Recent policy proposals have suggested taxing top incomes at very high rates on the grounds that some or all of the highest wage earners are engaged in socially unproductive or counterproductive activities, such as externality imposing speculation in the financial sector. To address this, we provide a model in which agents can choose between working in a traditional sector, where private and social products coincide, and a crowdable rent-seeking sector, where some or all of earned income reflects the capture of pre-existing output rather than increased production. We characterize Pareto optimal linear and non-linear income tax systems under the assumption that the social planner cannot or does not observe whether any given individual is a traditional worker or a rent-seeker. We find that optimal marginal taxes on the highest wage earners can remain remarkably modest even if all high earners are socially unproductive rent-seekers and the government has a strong intrinsic desire for progressive redistribution. Intuitively, taxing their effort at a lower rate stimulates their rent-seeking efforts, thereby keeping private returns for other potential rent-seekers low and discouraging further entry.
Handle: RePEc:nbr:nberwo:17035
Template-Type: ReDIF-Paper 1.0
Title: Does Accuracy Improve the Information Value of Trials?
Classification-JEL: K10; K40
Author-Name: Scott A. Baker
Author-Name: Anup Malani
Author-Person: pma903
Note: LE
Number: 17036
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17036
File-URL: http://www.nber.org/papers/w17036.pdf
File-Format: application/pdf
Abstract: We develop a model where products liability trials provide information to consumers who are not parties to the litigation. Consumers use this information to take precautions against dangerous products. A critical assumption is that consumers cannot differentiate between firms that have never been sued and firms that have been sued but settled out of court. In this framework, we show that perfectly accurate courts do not maximize information to consumers and thus welfare, contrary to Kaplow and Shavell (1994). More accurate courts provide more information only if producers go to trial. Greater accuracy, however, encourages producers of dangerous products to settle and hide their type. When courts are perfectly accurate, all low quality producers settle. And given the lack of any information from trials about bad types, consumers (rationally) fail to take precautions. If consumer precautions are relatively more efficient than producer precautions, our conclusion stands even when firms can invest in improving the safety of their products.
Handle: RePEc:nbr:nberwo:17036
Template-Type: ReDIF-Paper 1.0
Title: Dynamics and Stagnation in the Malthusian Epoch
Classification-JEL: J1; N0; O1
Author-Name: Quamrul Ashraf
Author-Name: Oded Galor
Author-Person: pga46
Note: EFG
Number: 17037
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17037
File-URL: http://www.nber.org/papers/w17037.pdf
File-Format: application/pdf
Publication-Status: published as Quamrul Ashraf & Oded Galor, 2011. "Dynamics and Stagnation in the Malthusian Epoch," American Economic Review, American Economic Association, vol. 101(5), pages 2003-41, August.
Abstract: This paper examines the central hypothesis of the influential Malthusian theory, according to which improvements in the technological environment during the pre-industrial era had generated only temporary gains in income per capita, eventually leading to a larger, but not significantly richer, population. Exploiting exogenous sources of cross-country variations in land productivity and the level of technological advancement the analysis demonstrates that, in accordance with the theory, technological superiority and higher land productivity had significant positive effects on population density but insignificant effects on the standard of living, during the time period 1-1500 CE.
Handle: RePEc:nbr:nberwo:17037
Template-Type: ReDIF-Paper 1.0
Title: This Time Is the Same: Using Bank Performance in 1998 to Explain Bank Performance During the Recent Financial Crisis
Classification-JEL: G01; G21
Author-Name: Rüdiger Fahlenbrach
Author-Person: pfa388
Author-Name: Robert Prilmeier
Author-Name: René M. Stulz
Note: CF ME
Number: 17038
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17038
File-URL: http://www.nber.org/papers/w17038.pdf
File-Format: application/pdf
Publication-Status: published as Rüdiger Fahlenbrach & Robert Prilmeier & René M. Stulz, 2012. "This Time Is the Same: Using Bank Performance in 1998 to Explain Bank Performance during the Recent Financial Crisis," Journal of Finance, American Finance Association, vol. 67(6), pages 2139-2185, December.
Abstract: We investigate whether a bank's performance during the 1998 crisis, which was viewed at the time as the most dramatic crisis since the Great Depression, predicts its performance during the recent financial crisis. One hypothesis is that a bank that has an especially poor experience in a crisis learns and adapts, so that it performs better in the next crisis. Another hypothesis is that a bank's poor experience in a crisis is tied to aspects of its business model that are persistent, so that its past performance during one crisis forecasts poor performance during another crisis. We show that banks that performed worse during the 1998 crisis did so as well during the recent financial crisis. This effect is economically important. In particular, it is economically as important as the leverage of banks before the start of the crisis. The result cannot be attributed to banks having the same chief executive in both crises. Banks that relied more on short-term funding, had more leverage, and grew more are more likely to be banks that performed poorly in both crises.
Handle: RePEc:nbr:nberwo:17038
Template-Type: ReDIF-Paper 1.0
Title: Estimating and Testing Models with Many Treatment Levels and Limited Instruments
Classification-JEL: C01; J0
Author-Name: Lance Lochner
Author-Person: plo31
Author-Name: Enrico Moretti
Author-Person: pmo392
Note: CH ED LS
Number: 17039
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17039
File-URL: http://www.nber.org/papers/w17039.pdf
File-Format: application/pdf
Publication-Status: published as Lance Lochner & Enrico Moretti, 2015. "Estimating and Testing Models with Many Treatment Levels and Limited Instruments," The Review of Economics and Statistics, MIT Press, vol. 2(97), pages 387-397, May.
Abstract: Many empirical microeconomic studies estimate econometric models that assume a single finite-valued discrete endogenous regressor (for example: different levels of schooling), exogenous regressors that are additively separable and enter the equation linearly; and coefficients (including per-unit treatment effects) that are homogeneous in the population. Empirical researchers interested in the causal effect of the endogenous regressor often use instrumental variables. When few valid instruments are available, researchers typically estimate restricted specifications that impose uniform per-unit treatment effects, even when these effects are likely to vary depending on the treatment level. In these cases, ordinary least squares (OLS) and instrumental variables (IV) estimators identify different weighted averages of all per-unit effects, so the traditional Hausman test (based on the restricted specification) is uninformative about endogeneity. Addressing this concern, we develop a new exogeneity test that compares the IV estimate from the restricted model with an appropriately weighted average of all per-unit effects estimated from the more general model using OLS. Notably, our test works even when the true model cannot be estimated using IV methods as long as a single valid instrument is available (e.g. a single binary instrument). We re-visit three recent empirical examples that examine the role of educational attainment on various outcomes to demonstrate the practical value of our test.
Handle: RePEc:nbr:nberwo:17039
Template-Type: ReDIF-Paper 1.0
Title: Job Loss in the Great Recession: Historical Perspective from the Displaced Workers Survey, 1984-2010
Classification-JEL: J63; J64
Author-Name: Henry S. Farber
Note: LS
Number: 17040
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17040
File-URL: http://www.nber.org/papers/w17040.pdf
File-Format: application/pdf
Abstract: The Great Recession from December 2007 to June 2009 is associated with a dramatic weakening of the labor market from which the labor market is now only slowly recovering. The unemployment rate remains stubbornly high and durations of unemployment are unprecedentedly long. I use data from the Displaced Workers Survey (DWS) from 1984-2010 to investigate the incidence and consequences of job loss from 1981-2009. In particular, the January 2010 DWS, which captures job loss during the 2007-2009 period, provides a window through which to examine the experience of job losers in the Great Recession and to compare their experience to that of earlier job losers. These data show a record high rate of job loss, with almost one in six workers reporting having lost a job in the 2007-2009 period. The consequences of job loss are also very serious during this period with very low rates of reemployment, difficulty finding full-time employment, and substantial earnings losses.
Handle: RePEc:nbr:nberwo:17040
Template-Type: ReDIF-Paper 1.0
Title: What Do Small Businesses Do?
Classification-JEL: L21; L25; L26
Author-Name: Erik Hurst
Author-Person: phu87
Author-Name: Benjamin Wild Pugsley
Author-Person: ppu56
Note: CF EFG IO LS PE PR
Number: 17041
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17041
File-URL: http://www.nber.org/papers/w17041.pdf
File-Format: application/pdf
Publication-Status: published as Erik Hurst & Benjamin Wild Pugsley, 2011. "What do Small Businesses Do?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 73-142.
Abstract: In this paper, we show that most small business owners are very different from the entrepreneurs that economic models and policy makers often have in mind. Using new data that samples early stage entrepreneurs just prior to business start up, we show that few small businesses intend to bring a new idea to market. Instead, most intend to provide an existing service to an existing market. Further, we find that most small businesses have little desire to grow big or to innovate in any observable way. We show that such behavior is consistent with the industry characteristics of the majority of small businesses, which are concentrated among skilled craftsmen, lawyers, real estate agents, doctors, small shopkeepers, and restaurateurs. Lastly, we show non pecuniary benefits (being one's own boss, having flexibility of hours, etc.) play a first-order role in the business formation decision. We then discuss how our findings suggest that the importance of entrepreneurial talent, entrepreneurial luck, and financial frictions in explaining the firm size distribution may be overstated. We conclude by discussing the potential policy implications of our findings.
Handle: RePEc:nbr:nberwo:17041
Template-Type: ReDIF-Paper 1.0
Title: An Assessment of the Effectiveness of Anti-Poverty Programs in the United States
Classification-JEL: H53; I3
Author-Name: Yonatan Ben-Shalom
Author-Person: pbe736
Author-Name: Robert A. Moffitt
Author-Person: pmo48
Author-Name: John Karl Scholz
Note: LS PE
Number: 17042
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17042
File-URL: http://www.nber.org/papers/w17042.pdf
File-Format: application/pdf
Publication-Status: published as An Ass ess m ent of th e Ef fe ct ivenes s of Ant i- Povert y Programs in t he Un it ed S ta te s. In Oxfor d Han dboo k of t he Econ om ic s of Povert y, ed. P. J ef fe rs on, Ox for d Uni versi ty Pre ss, 201 2 ( wit h Y. Be n- Shal om and J .K . Scho lz).
Abstract: We assess the effectiveness of means-tested and social insurance programs in the United States. We show that per capita expenditures on these programs as a whole have grown over time but expenditures on some programs have declined. The benefit system in the U.S. has a major impact on poverty rates, reducing the percent poor in 2004 from 29 percent to 13.5 percent, estimates which are robust to different measures of the poverty line. We find that, while there are significant behavioral side effects of many programs, their aggregate impact is very small and does not affect the magnitude of the aggregate poverty impact of the system. The system reduces poverty the most for the disabled and the elderly and least for several groups among the non-elderly and non-disabled. Over time, we find that expenditures have shifted toward the disabled and the elderly, and away from those with the lowest incomes and toward those with higher incomes, with the consequence that post-transfer rates of deep poverty for some groups have increased. We conclude that the U.S. benefit system is paternalistic and tilted toward the support of the employed and toward groups with special needs and perceived deservingness.
Handle: RePEc:nbr:nberwo:17042
Template-Type: ReDIF-Paper 1.0
Title: Incentives and the Effects of Publication Lags on Life Cycle Research Productivity in Economics
Classification-JEL: A11; J0; J11; J24
Author-Name: John P. Conley
Author-Person: pco46
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Robert A. Driskill
Author-Name: Ali Sina Onder
Author-Person: pon35
Note: LS PR
Number: 17043
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17043
File-URL: http://www.nber.org/papers/w17043.pdf
File-Format: application/pdf
Publication-Status: published as Crucini, Mario J., John Conley, Robert Driskill and Ali Sina Onder. “The Effects of Publication Lags on Life Cycle Research Productivity in Economics,” Economic Inquiry, 2012.
Abstract: We investigate how increases in publication delays have affected the life-cycle of publications of recent Ph.D. graduates in economics. We construct a panel dataset of 14,271 individuals who were awarded Ph.D.s between 1986 and 2000 in US and Canadian economics departments. For this population of scholars, we amass complete records of publications in peer reviewed journals listed in the JEL (a total of 368,672 observations). We find evidence of significantly diminished productivity in recent relative to earlier cohorts when productivity of an individual is measured by the number of AER equivalent publications. Diminished productivity is less evident when number of AER equivalent pages is used instead. Our findings are consistent with earlier empirical findings of increasing editorial delays, decreasing acceptance rates at journals, and a trend toward longer manuscripts. This decline in productivity is evident in both graduates of top thirty and non-top thirty ranked economics departments and may have important implications for what should constitute a tenurable record. We also find that the research rankings of the faculty do not line up with the research quality of their students in many cases.
Handle: RePEc:nbr:nberwo:17043
Template-Type: ReDIF-Paper 1.0
Title: Inflation Dynamics and the Great Recession
Classification-JEL: E31
Author-Name: Laurence M. Ball
Author-Person: pba605
Author-Name: Sandeep Mazumder
Author-Person: pma1103
Note: EFG ME
Number: 17044
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17044
File-URL: http://www.nber.org/papers/w17044.pdf
File-Format: application/pdf
Publication-Status: published as Laurence Ball & Sandeep Mazumder, 2011. "Inflation Dynamics and the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 337-405.
Abstract: This paper examines inflation dynamics in the United States since 1960, with a particular focus on the Great Recession. A puzzle emerges when Phillips curves estimated over 1960-2007 are used to predict inflation over 2008-2010: inflation should have fallen by more than it did. We resolve this puzzle with two modifications of the Phillips curve, both suggested by theories of costly price adjustment: we measure core inflation with the median CPI inflation rate, and we allow the slope of the Phillips curve to change with the level and variance of inflation. We then examine the hypothesis of anchored inflation expectations. We find that expectations have been fully "shock-anchored" since the 1980s, while "level anchoring" has been gradual and partial, but significant. It is not clear whether expectations are sufficiently anchored to prevent deflation over the next few years. Finally, we show that the Great Recession provides fresh evidence against the New Keynesian Phillips curve with rational expectations.
Handle: RePEc:nbr:nberwo:17044
Template-Type: ReDIF-Paper 1.0
Title: Land-price dynamics and macroeconomic fluctuations
Classification-JEL: E21; E27; E32; E44
Author-Name: Zheng Liu
Author-Person: pli18
Author-Name: Pengfei Wang
Author-Person: pwa169
Author-Name: Tao Zha
Author-Person: pzh80
Note: EFG ME
Number: 17045
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17045
File-URL: http://www.nber.org/papers/w17045.pdf
File-Format: application/pdf
Publication-Status: published as Zheng Liu & Pengfei Wang & Tao Zha, 2013. "LandâPrice Dynamics and Macroeconomic Fluctuations," Econometrica, Econometric Society, vol. 81(3), pages 1147-1184, 05.
Abstract: We argue that positive co-movements between land prices and business investment are a driving force behind the broad impact of land-price dynamics on the macroeconomy. We develop an economic mechanism that captures the co-movements by incorporating two key features into a DSGE model: We introduce land as a collateral asset in firms' credit constraints and we identify a shock that drives most of the observed fluctuations in land prices. Our estimates imply that these two features combine to generate an empirically important mechanism that amplifies and propagates macroeconomic fluctuations through the joint dynamics of land prices and business investment.
Handle: RePEc:nbr:nberwo:17045
Template-Type: ReDIF-Paper 1.0
Title: Pharmaceutical Use Following Generic Entry: Paying Less and Buying Less
Classification-JEL: I18; L11; M3; O31; O38
Author-Name: Peter J. Huckfeldt
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Note: EH IO PR
Number: 17046
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17046
File-URL: http://www.nber.org/papers/w17046.pdf
File-Format: application/pdf
Abstract: We study the effects of generic entry on prices and utilization using both event study models that exploit the differential timing of generic entry across drug molecules and cast studies. Our analysis examines drugs treating hypertension, high blood pressure, type 2 diabetes, and depression using price and utilization data from the Medical Expenditure Panel Survey. We find that utilization of drug molecules starts decreasing in the two years prior to generic entry and continues to decrease in the years following generic entry, despite decreases in prices offered by generic versions of a drug. This decrease coincides with the market entry and increased utilization of branded reformulations of a drug going off patent. We show case study evidence that utilization patterns coincide with changes in marketing by branded drug manufacturers. While the reformulations---often extended-release versions of the patent-expiring drug---offer potential health benefits, the FDA does not require evidence that the reformulations are improvements over the previous drug in order to grant a patent. Indeed, in a number of experiments comparing the efficacies of the patent-expiring and reformulated drugs do not find statistical differences in health outcomes calling into question the patent-extension policy.
Handle: RePEc:nbr:nberwo:17046
Template-Type: ReDIF-Paper 1.0
Title: The Role of Theory in Field Experiments
Classification-JEL: C9; C93
Author-Name: David Card
Author-Person: pca271
Author-Name: Stefano DellaVigna
Author-Person: pde710
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Note: CH ED EEE EH IO LE LS PE POL
Number: 17047
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17047
File-URL: http://www.nber.org/papers/w17047.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Stefano DellaVigna & Ulrike Malmendier, 2011. "The Role of Theory in Field Experiments," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 39-62, Summer.
Abstract: We propose a new classification of experiments that captures the extent to which the experimental design and analysis are linked to economic theory. We then use this system to classify all published field experiments in the five top economics journals from 1975 to 2010. We find that the vast majority of field experiments (68%) are Descriptive studies that lack any explicit model; 18% are Single Model studies that test a single model-based hypothesis; 6% are Competing Models studies that test competing model-based hypotheses; and 8% are Parameter Estimation studies that estimate structural parameters in a completely specified model. Using the same system to classify laboratory experiments published over the same period, we find that economic theory has played a more central role in the laboratory than in the field. Finally, we discuss in detail three sets of field experiments, on gift exchange, on charitable giving, and on negative income tax, that illustrate both the benefits and the potential costs of a tighter link between experimental design and theoretical underpinnings.
Handle: RePEc:nbr:nberwo:17047
Template-Type: ReDIF-Paper 1.0
Title: Health, Disability and Pathways to Retirement in Spain
Classification-JEL: H55; I18; J11
Author-Name: Pilar García-Gómez
Author-Person: pga593
Author-Name: Sergi Jiménez-Martín
Author-Person: pji20
Author-Name: Judit Vall Castelló
Author-Person: pva533
Note: AG
Number: 17048
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17048
File-URL: http://www.nber.org/papers/w17048.pdf
File-Format: application/pdf
Publication-Status: published as Health, disability and pathways into retirement in Spain (with Sergi Jiménez Martin and Judit Vall Castelló). In Social Security Programs around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reform. DA Wise, ed. University of Chicago Press. 2012
Abstract: In this paper we analyze the trends in labor force participation and transitions to benefit programs of older workers in relation to health trends as well as recent Social Security reforms. Our preliminary conclusions are pessimistic regarding the effect of health improvements on the labor market attachment of older workers since we show that despite the large improvements in the mortality rates among older individuals in Spain, the employment rates of individuals older than fifty-five remain lower than the ones observed in the late 1970s. Some caution should remain in our conclusions as the evidence on health trends is inconclusive. Regarding the effect of Social Security reforms, we find that both the 1997 and the 2002 reform decreased the stock into old-age benefits at the cost of an increased share of the participation into disability. Finally, we find that there was a significant increase in the outflow from employment into disability after the 2002 reform.
Handle: RePEc:nbr:nberwo:17048
Template-Type: ReDIF-Paper 1.0
Title: Disability, Health and Retirement in the United Kingdom
Classification-JEL: H55; I1; I38
Author-Name: James Banks
Author-Person: pba509
Author-Name: Richard Blundell
Author-Person: pbl81
Author-Name: Antoine Bozio
Author-Person: pbo439
Author-Name: Carl Emmerson
Note: AG EH PE
Number: 17049
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17049
File-URL: http://www.nber.org/papers/w17049.pdf
File-Format: application/pdf
Publication-Status: published as Disability, Health and Retirement in the United Kingdom, James Banks, Richard Blundell, Antoine Bozio, Carl Emmerson. in Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms, Wise. 2012
Abstract: Over the last thirty years pathways to retirement have changed substantially in the UK. They have been dominated by spells of unemployment in the late 1970s, with then an increased importance of disability spells from the mid-1980s onwards. At the end of the period the direct route from work to retirement was increasingly more common. General economic conditions seem to have been important driving forces during the entire period. In contrast changes in health do not seem to provide convincing explanations for these trends: mortality has been falling over the period without any apparent link to the share of the population reporting ill health or disability or to the number claiming benefits. We also find evidence that recent reforms have had some impact. The halting of the previous growth in the rate of in-flow onto disability benefits in the mid-1990s coincided with the implementation of a major reform. Evidence from the pilots of the Pathways-to-Work programme in 2003-2005 suggests that those moving onto disability benefits moved off these benefits faster than they would otherwise have done as a direct result of the programme.
Handle: RePEc:nbr:nberwo:17049
Template-Type: ReDIF-Paper 1.0
Title: Show Me the Right Stuff: Signals for High Tech Startups
Classification-JEL: G24
Author-Name: Annamaria Conti
Author-Name: Marie C. Thursby
Author-Person: pth283
Author-Name: Frank Rothaermel
Author-Person: pro220
Note: PR
Number: 17050
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17050
File-URL: http://www.nber.org/papers/w17050.pdf
File-Format: application/pdf
Publication-Status: published as “Show Me the Right Stuff: High Tech Startu p Signals,” (Annamaria Conti, Marie Thursby, and Frank Rothaermel), Journal of Economics and Management Strategy 22, Summer 2013, 341-364.
Abstract: We present a theoretical model of startup signaling with multiple signals and potential differences in external investor preferences. For a novel sample of technology incubator startups, we empirically examine the use of patents and founder, friends, and family (FFF) money as such signals, finding that they are jointly endogenous to venture capital and business angel investment in the startups. For this sample, venture capitalists appear to value patents more highly than FFF money, while the reverse is true for business angels. Moreover, the impact of patents on venture capitalists is larger than the impact of FFF money on business angels.
Handle: RePEc:nbr:nberwo:17050
Template-Type: ReDIF-Paper 1.0
Title: Coercive Contract Enforcement: Law and the Labor Market in 19th Century Industrial Britain
Classification-JEL: J41; K31; N13; N43
Author-Name: Suresh Naidu
Author-Name: Noam Yuchtman
Author-Person: pyu185
Note: DAE LE LS POL
Number: 17051
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17051
File-URL: http://www.nber.org/papers/w17051.pdf
File-Format: application/pdf
Publication-Status: published as “Coercive Contract Enforcement : Law and the Labor Market in 19th Century Industrial Britain ” (with Noam Yuchtman) - American Economic Review Vol. 103(1) (February 201 3):107 - 144
Abstract: British Master and Servant law made employee contract breach a criminal offense until 1875. We develop a contracting model generating equilibrium contract breach and prosecutions, then exploit exogenous changes in output prices to examine the effects of labor demand shocks on prosecutions. Positive shocks in the textile, iron, and coal industries increased prosecutions. Following the abolition of criminal sanctions, wages differentially rose in counties that had experienced more prosecutions, and wages responded more to labor demand shocks. Coercive contract enforcement was applied in industrial Britain; restricted mobility allowed workers to commit to risk-sharing contracts with lower, but less volatile, wages.
Handle: RePEc:nbr:nberwo:17051
Template-Type: ReDIF-Paper 1.0
Title: Disability Pension Program and Labor Force Participation in Japan: A Historical Perspective
Classification-JEL: H55; J26
Author-Name: Takashi Oshio
Author-Name: Satoshi Shimizutani
Author-Person: psh330
Note: AG PE
Number: 17052
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17052
File-URL: http://www.nber.org/papers/w17052.pdf
File-Format: application/pdf
Publication-Status: published as Takashi Oshio and Satoshi Shimizutani, "Disability pension program and labor force participation in Japan: A Historical Perspective," in David A. Wise ed., Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms, 2012, pp.391-417
Abstract: This paper utilizes historical information to explore the relationship between labor force participation of middle aged and old people and the disability program in Japan. In particular, we explore the time series dimension to identify what has determined the trend in disability program participation over time and relate it with the labor supply. We find that mortality and health measures have been largely unrelated to the disability program participation rates. While major revisions to the disability program have slightly expanded the eligibility for DI programs, the program participation is still very low; thus, the effect on labor force participation is very limited in Japan, which is in contrast with some European countries that have high take up rates, inducing early retirement.
Handle: RePEc:nbr:nberwo:17052
Template-Type: ReDIF-Paper 1.0
Title: Disability Insurance and Labor Market Exit Routes of Older Workers in The Netherlands
Classification-JEL: J26
Author-Name: Klaas de Vos
Author-Person: pde404
Author-Name: Arie Kapteyn
Author-Person: pka406
Author-Name: Adriaan Kalwij
Author-Person: pka116
Note: AG LS
Number: 17053
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17053
File-URL: http://www.nber.org/papers/w17053.pdf
File-Format: application/pdf
Publication-Status: published as Disability Insurance and Labor Market Exit Routes of Older Workers in the Netherlands, Klaas de Vos, Arie Kapteyn, Adriaan Kalwij. in Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms, Wise. 2012
Abstract: This paper presents information on labor market participation of the elderly, mortality and health, pathways to retirement and rates of participation in various earnings replacing programs in the Netherlands. It presents an overview of reforms to Disability Insurance (DI) and other income maintenance and early retirement programs over the past few decades, and examines to what extent these reforms have affected labor market exit routes of older workers. The overall picture that emerges is that DI receipt appears unrelated to the general health of the population and that over the last two decades relatively fewer older workers exit the labor market through DI. This reduction may, arguably, in part be attributed to stricter DI eligibility rules.
Handle: RePEc:nbr:nberwo:17053
Template-Type: ReDIF-Paper 1.0
Title: Disability Insurance, Population Health and Employment in Sweden
Classification-JEL: H51; H55; I18; J26
Author-Name: Lisa Jönsson
Author-Person: pjn3
Author-Name: Mårten Palme
Author-Person: ppa618
Author-Name: Ingemar Svensson
Note: AG
Number: 17054
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17054
File-URL: http://www.nber.org/papers/w17054.pdf
File-Format: application/pdf
Publication-Status: published as J onsson, L., M. Palme and I. Svensson (2012), \Disability Insurance, Population Health, and Employment in Sweden", in David A. Wise (ed.), Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms , Chicago: University of Chicago Press.
Abstract: This paper describes the development of population health and disability insurance utilization for older workers in Sweden and analyzes the relation between the two. We use three different measures of population health: (1) the mortality rate (measured between 1950 and 2009); (2) the prevalence of different types of health deficiencies obtained from Statistics Sweden's Survey on Living Conditions (ULF, 1975-2005); (3) the utilization of health care from the inpatient register (1968-2008). We also study the development of the relative health between disability insurance recipients and non-recipients. Finally, we study the effect of the introduction of less strict eligibility criteria for older workers in 1970 and 1972 as well as the subsequent abolishment of these rules in 1991 and 1997, respectively.
Handle: RePEc:nbr:nberwo:17054
Template-Type: ReDIF-Paper 1.0
Title: Disability and Social Security Reforms: The French Case
Classification-JEL: H55; H63; J14; J26
Author-Name: Luc Behaghel
Author-Person: pbe252
Author-Name: Didier Blanchet
Author-Person: pbl98
Author-Name: Thierry Debrand
Author-Person: pde432
Author-Name: Muriel Roger
Author-Person: pro183
Note: AG LS PE
Number: 17055
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17055
File-URL: http://www.nber.org/papers/w17055.pdf
File-Format: application/pdf
Publication-Status: published as Disability and Social Security Reforms: The French Case, Luc Behaghel, Didier Blanchet, Thierry Debrand, Muriel Roger. in Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms, Wise. 2012
Abstract: The French pattern of early transitions out of employment is basically explained by the low age at "normal" retirement and by the importance of transitions through unemployment insurance and early-retirement schemes before access to normal retirement. These routes have exempted French workers from massively relying on disability motives for early exits, contrarily to the situation that prevails in some other countries where normal ages are high, unemployment benefits low and early-retirement schemes almost non-existent. Yet the role of disability remains interesting to examine in the French case, at least for prospective reasons in a context of decreasing generosity of other programs. The study of the past reforms of the pension system underlines that disability routes have often acted as a substitute to other retirement routes. Changes in the claiming of invalidity benefits seem to match changes in pension schemes or controls more than changes in such health indicators as the mortality rates. However, our results suggest that increases in average health levels over the past two decades have come along with increased disparities. In that context, less generous pensions may induce an increase in the claiming of invalidity benefits partly because of substitution effects, but also because the share of people with poor health increases.
Handle: RePEc:nbr:nberwo:17055
Template-Type: ReDIF-Paper 1.0
Title: Money and Happiness: Evidence from the Industry Wage Structure
Classification-JEL: D1; J31
Author-Name: Jörn-Steffen Pischke
Author-Person: ppi29
Note: LS
Number: 17056
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17056
File-URL: http://www.nber.org/papers/w17056.pdf
File-Format: application/pdf
Abstract: There is a well-established positive correlation between life-satisfaction measures and income in individual level cross-sectional data. This paper attempts to provide some evidence on whether this correlation reflects causality running from money to happiness. I use industry wage differentials as instruments for income. This is based on the idea that at least part of these differentials are due to rents, and part of the pattern of industry affiliations of individuals is random. To probe the validity of these assumptions, I compare estimates for life satisfaction with those for job satisfaction, present fixed effects estimates, and present estimates for married women using their husbands' industry as the instrument. All these specifications paint a fairly uniform picture across three different data sets. IV estimates are similar to the OLS estimates suggesting that most of the association of income and well-being is causal.
Handle: RePEc:nbr:nberwo:17056
Template-Type: ReDIF-Paper 1.0
Title: The Demographic Transition: Causes and Consequences
Classification-JEL: J1; O10
Author-Name: Oded Galor
Author-Person: pga46
Note: EFG
Number: 17057
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17057
File-URL: http://www.nber.org/papers/w17057.pdf
File-Format: application/pdf
Publication-Status: published as Oded Galor, 2012. "The demographic transition: causes and consequences," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 6(1), pages 1-28, January.
Abstract: This paper develops the theoretical foundations and the testable implications of the various mechanisms that have been proposed as possible triggers for the demographic transition. Moreover, it examines the empirical validity of each of the theories and their significance for the understanding of the transition from stagnation to growth. The analysis suggests that the rise in the demand for human capital in the process of development was the main trigger for the decline in fertility and the transition to modern growth
Handle: RePEc:nbr:nberwo:17057
Template-Type: ReDIF-Paper 1.0
Title: Inequality, Human Capital Formation and the Process of Development
Classification-JEL: O11; O15
Author-Name: Oded Galor
Author-Person: pga46
Note: EFG
Number: 17058
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17058
File-URL: http://www.nber.org/papers/w17058.pdf
File-Format: application/pdf
Publication-Status: published as “Inequality, Human Capital Formation and the Process of Development,” Handbook of the Economics of Education , North Holand, 2011
Abstract: Conventional wisdom about the relationship between income distribution and economic development has been subjected to dramatic transformations in the past century. While classical economists advanced the hypothesis that inequality is beneficial for growth, the neoclassical paradigm dismissed the classical hypothesis and suggested that income distribution has limited role in the growth process. A metamorphosis in these perspectives has taken place in the past two decades. Theory and subsequent empirical evidence have demonstrated that income distribution has a significant impact on human capital formation and the development process. In early stages of industrialization, as physical capital accumulation was a prime engine of growth, inequality enhanced the process of development by channeling resources towards individuals whose marginal propensity to save is higher. In later stages of development, however, as human capital has become a main engine of growth, equality, in the presence of credit constraints, has stimulated human capital formation and growth. Moreover, unequal distribution of land has been a hurdle for economic development. While industrialists have had an incentive to support education policies that foster human capital formation, landowners, whose interests lay in the reduction of the mobility of their labor force, have favored policies that deprived the masses of education.
Handle: RePEc:nbr:nberwo:17058
Template-Type: ReDIF-Paper 1.0
Title: Theft and Deterrence
Classification-JEL: J0; K14; K4
Author-Name: William T. Harbaugh
Author-Name: Naci H. Mocan
Author-Person: pmo270
Author-Name: Michael S. Visser
Note: CH EH LE
Number: 17059
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17059
File-URL: http://www.nber.org/papers/w17059.pdf
File-Format: application/pdf
Publication-Status: published as “ Theft and Deterrence ,” with Bill Harbaugh and Mike Visser. (NBER Working Paper No: 17059). Journal of Labor Research . December 2013. Vol. 34 (4), pp. 389 - 407.
Abstract: We report results from economic experiments of decisions that are best described as petty larceny, with high school and college students who can anonymously steal real money from each other. Our design allows exogenous variation in the rewards of crime, and the penalty and probability of detection. We find that the probability of stealing is increasing in the amount of money that can be stolen, and that it is decreasing in the probability of getting caught and in the penalty for getting caught. Furthermore, the impact of the certainty of getting caught is larger when the penalty is bigger, and the impact of the penalty is bigger when the probability of getting caught is larger.
Handle: RePEc:nbr:nberwo:17059
Template-Type: ReDIF-Paper 1.0
Title: Decentralization, Communication, and the Origins of Fluctuations
Classification-JEL: D52; D83; E32
Author-Name: George-Marios Angeletos
Author-Person: pan143
Author-Name: Jennifer La'O
Author-Person: pla396
Note: EFG ME
Number: 17060
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17060
File-URL: http://www.nber.org/papers/w17060.pdf
File-Format: application/pdf
Abstract: We consider a class of convex, competitive, neoclassical economies in which agents are rational; the equilibrium is unique; there is no room for randomization devices; and there are no shocks to preferences, technologies, endowments, or other fundamentals. In short, we rule out every known source of macroeconomic volatility. And yet, we show that these economies can be ridden with large and persistent fluctuations in equilibrium allocations and prices. These fluctuations emerge because decentralized trading impedes communication and, in so doing, opens the door to self-fulfilling beliefs despite the uniqueness of the equilibrium. In line with Keynesian thinking, these fluctuations may be attributed to "coordination failures" and "animal spirits". They may also take the form of "fads", or waves of optimism and pessimism that spread in the population like contagious diseases. Yet, these ostensibly pathological phenomena emerge at the heart of the neoclassical paradigm and require neither a deviation from rationality, nor multiple equilibria, nor even a divergence between private and social motives.
Handle: RePEc:nbr:nberwo:17060
Template-Type: ReDIF-Paper 1.0
Title: Are the Seeds of Bad Governance Sown in Good Times?
Classification-JEL: G34
Author-Name: Antoinette Schoar
Author-Person: psc180
Author-Name: Ebonya L. Washington
Note: CF
Number: 17061
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17061
File-URL: http://www.nber.org/papers/w17061.pdf
File-Format: application/pdf
Abstract: This paper examines the extent to which the corporate governance structure of a firm arises endogenously in response to its performance. We demonstrate that following periods of abnormally good performance, managers are more likely to call special meetings and to propose and pass governance measures that are contrary to shareholder interests (based on IRRC classification). These results are driven primarily by firms that are characterized as having poor governance according to either the GIM Index or the proportion of activist shareholders. Following these special meetings, we find that the next quarter performance of the firm is negative. Our results are consistent with an interpretation of shareholder inattention to governance following good firm performance or a desire to reward management for good past performance. Overall, our evidence seems more consistent with the former interpretation.
Handle: RePEc:nbr:nberwo:17061
Template-Type: ReDIF-Paper 1.0
Title: Mechanism Experiments and Policy Evaluations
Classification-JEL: C93
Author-Name: Jens Ludwig
Author-Name: Jeffrey R. Kling
Author-Person: pkl126
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Note: POL
Number: 17062
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17062
File-URL: http://www.nber.org/papers/w17062.pdf
File-Format: application/pdf
Publication-Status: published as Jens Ludwig & Jeffrey R. Kling & Sendhil Mullainathan, 2011. "Mechanism Experiments and Policy Evaluations," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 17-38, Summer.
Abstract: Randomized controlled trials are increasingly used to evaluate policies. How can we make these experiments as useful as possible for policy purposes? We argue greater use should be made of experiments that identify behavioral mechanisms that are central to clearly specified policy questions, what we call "mechanism experiments." These types of experiments can be of great policy value even if the intervention that is tested (or its setting) does not correspond exactly to any realistic policy option.
Handle: RePEc:nbr:nberwo:17062
Template-Type: ReDIF-Paper 1.0
Title: Confidence and the Transmission of Government Spending Shocks
Classification-JEL: E00; E3; E62
Author-Name: Rüdiger Bachmann
Author-Person: pba751
Author-Name: Eric R. Sims
Author-Person: psi336
Note: EFG ME
Number: 17063
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17063
File-URL: http://www.nber.org/papers/w17063.pdf
File-Format: application/pdf
Publication-Status: published as Bachmann, Rüdiger & Sims, Eric R., 2012. "Confidence and the transmission of government spending shocks," Journal of Monetary Economics, Elsevier, vol. 59(3), pages 235-249.
Abstract: There seems to be a widespread belief among economists, policy-makers, and members of the media that the "confidence'" of households and businesses is a critical component in the transmission of fiscal policy shocks into economic activity. We take this proposition to the data using standard structural VARs with government spending and aggregate output augmented to include empirical measures of consumer or business confidence. We also estimate non-linear VAR specifications to allow for differential impacts of government spending in "normal'' times versus recessions. In normal times confidence does not react significantly to unexpected increases in government spending and spending multipliers are in the neighborhood of one; during recessions confidence rises and spending multipliers are significantly larger. We then quantify the importance of the systematic response of confidence to spending shocks for the spending multiplier and find that, in normal times, confidence is irrelevant for the transmission of government spending shocks to output, but during periods of economic slack it is important. We argue and present evidence that it is not confidence per se - in the sense of pure sentiment - that matters for the transmission of spending shocks during downturns, but rather that the composition of spending during a downtown is different. In particular, spending shocks during downturns predict future productivity improvements through a persistent increase in government investment relative to consumption, which is in turn reflected in higher measured confidence.
Handle: RePEc:nbr:nberwo:17063
Template-Type: ReDIF-Paper 1.0
Title: Recursive Contracts, Lotteries and Weakly Concave Pareto Sets
Classification-JEL: C61; D82
Author-Name: Harold L. Cole
Author-Person: pco70
Author-Name: Felix Kubler
Author-Person: pku6
Note: AP CF EFG
Number: 17064
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17064
File-URL: http://www.nber.org/papers/w17064.pdf
File-Format: application/pdf
Publication-Status: published as Harold Cole & Felix Kubler, 2012. "Recursive Contracts, Lotteries and Weakly Concave Pareto Sets," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(4), pages 479-500, October.
Abstract: Marcet and Marimon (1994, revised 1998, revised 2011) developed a recursive saddle point method which can be used to solve dynamic contracting problems that include participation, enforcement and incentive constraints. Their method uses a recursive multiplier to capture implicit prior promises to the agent(s) that were made in order to satisfy earlier instances of these constraints. As a result, their method relies on the invertibility of the derivative of the Pareto frontier and cannot be applied to problems for which this frontier is not strictly concave. In this paper we show how one can extend their method to a weakly concave Pareto frontier by expanding the state space to include the realizations of an end of period lottery over the extreme points of a flat region of the Pareto frontier. With this expansion the basic insight of Marcet and Marimon goes through - one can make the problem recursive in the Lagrangian multiplier which yields significant computational advantages over the conventional approach of using utility as the state variable. The case of a weakly concave Pareto frontier arises naturally in applications where the principal's choice set is not convex but where randomization is possible.
Handle: RePEc:nbr:nberwo:17064
Template-Type: ReDIF-Paper 1.0
Title: Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide
Classification-JEL: D10; G21; G33; K0
Author-Name: Christopher J. Mayer
Author-Person: pma212
Author-Name: Edward Morrison
Author-Name: Tomasz Piskorski
Author-Person: ppi49
Author-Name: Arpit Gupta
Author-Person: pgu719
Note: CF PE
Number: 17065
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17065
File-URL: http://www.nber.org/papers/w17065.pdf
File-Format: application/pdf
Publication-Status: published as Mayer, Christopher, Edward Morrison, Tomasz Piskorski, and Arpit Gupta. 2014. “Mortgage Modification and Strategic Default: Evidence from a Legal Settlement with Countrywide,” January. (Forthcoming, The American Economic Review)
Abstract: We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers with subprime mortgages throughout the country. Using a difference-in-difference framework, we find that Countrywide's relative delinquency rate increased thirteen percent per month immediately after the program's announcement. The borrowers whose estimated default rates increased the most in response to the program were those who appear to have been the least likely to default otherwise, including those with substantial liquidity available through credit cards and relatively low combined loan-to-value ratios. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs.
Handle: RePEc:nbr:nberwo:17065
Template-Type: ReDIF-Paper 1.0
Title: History, Expectations, and Leadership in the Evolution of Social Norms
Classification-JEL: C72; C73; D7; P16; Z1
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Matthew O. Jackson
Author-Person: pja7
Note: POL
Number: 17066
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17066
File-URL: http://www.nber.org/papers/w17066.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Matthew O. Jackson, 2015. "History, Expectations, and Leadership in the Evolution of Social Norms," Review of Economic Studies, Oxford University Press, vol. 82(2), pages 423-456.
Abstract: We study the evolution of the social norm of "cooperation" in a dynamic environment. Each agent lives for two periods and interacts with agents from the previous and next generations via a coordination game. Social norms emerge as patterns of behavior that are stable in part due to agents' interpretations of private information about the past, which are influenced by occasional past behaviors that are commonly observed. We first characterize the (extreme) cases under which history completely drives equilibrium play, leading to a social norm of high or low cooperation. In intermediate cases, the impact of history is potentially countered by occasional "prominent" agents, whose actions are visible by all future agents, and who can leverage their greater visibility to influence expectations of future agents and overturn social norms of low cooperation. We also show that in equilibria not completely driven by history, there is a pattern of "reversion" whereby play starting with high (low) cooperation reverts toward lower (higher) cooperation.
Handle: RePEc:nbr:nberwo:17066
Template-Type: ReDIF-Paper 1.0
Title: Goods Prices and Availability in Cities
Classification-JEL: L81; R12; R13
Author-Name: Jessie Handbury
Author-Person: pha907
Author-Name: David E. Weinstein
Author-Person: pwe34
Note: ITI
Number: 17067
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17067
File-URL: http://www.nber.org/papers/w17067.pdf
File-Format: application/pdf
Publication-Status: published as Jessie Handbury & David E. Weinstein, 2015. "Goods Prices and Availability in Cities," Review of Economic Studies, Oxford University Press, vol. 82(1), pages 258-296.
Abstract: This paper uses detailed barcode data on purchase transactions by households in 49 U.S. cities to overcome a large number of problems that have plagued spatial price index measurement. We identify two important sources of bias. Heterogeneity bias arises from comparing different goods in different locations, and variety bias arises from not correcting for the fact that some goods are unavailable in some locations. Eliminating heterogeneity bias causes 97 percent of the variance in the price level of food products across cities to disappear relative to a conventional index. Eliminating both biases reverses the common finding that prices tend to be higher in larger cities. Instead, we find that price level for food products falls with city size.
Handle: RePEc:nbr:nberwo:17067
Template-Type: ReDIF-Paper 1.0
Title: Isolating the Effect of Major Depression on Obesity: Role of Selection Bias
Classification-JEL: I1; I12; I18
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Jennifer Tennant
Author-Name: Gregory J. Colman
Author-Person: pco455
Note: EH
Number: 17068
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17068
File-URL: http://www.nber.org/papers/w17068.pdf
File-Format: application/pdf
Publication-Status: published as Dave, D. M., Tennant, J., Colman, G. (2011). Isolating the Effect of Major Depression on Obesity: Role of Selection Bias. Journal of Mental Health Policy and Economics, 14 (4)
Abstract: There is suggestive evidence that rates of major depression have risen markedly in the U.S. concurrent with the rise in obesity. The economic burden of depression, about $100 billion annually, is under-estimated if depression has a positive causal impact on obesity. If depression plays a causal role in increasing the prevalence of obesity, then policy interventions aimed at promoting mental health may also have the indirect benefits of promoting a healthy bodyweight. However, virtually the entire existing literature on the connection between the two conditions has examined merely whether they are significantly correlated, sometimes holding constant a limited set of demographic factors. This study utilizes multiple large-scale nationally-representative datasets to assess whether, and the extent to which, the positive association reflects a causal link from major depression to higher BMI and obesity. While contemporaneous effects are considered, the study primarily focuses on the effects of past and lifetime depression to bypass reverse causality and further assess the role of non-random selection on unobservable factors. There are expectedly no significant or substantial effects of current depression on BMI or overweight/obesity, given that BMI is a stock measure that changes relatively slowly over time. Results are also not supportive of a causal interpretation among males. However, among females, estimates indicate that past or lifetime diagnosis of major depression raises the probability of being overweight or obese by about seven percentage points. Results also suggest that this effect appears to plausibly operate through shifts in food consumption and physical activity. We estimate that this higher risk of overweight and obesity among females could potentially add about 10% (or $9.7 billion) to the estimated economic burden of depression.
Handle: RePEc:nbr:nberwo:17068
Template-Type: ReDIF-Paper 1.0
Title: Income-Based Disparities in Health Care Utilization under Universal Coverage in Brazil
Classification-JEL: I0; O12
Author-Name: Guido Cataife
Author-Name: Charles J. Courtemanche
Author-Person: pco421
Note: EH
Number: 17069
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17069
File-URL: http://www.nber.org/papers/w17069.pdf
File-Format: application/pdf
Abstract: Since Brazil's adoption of universal health care in 1988, the country's health care system has consisted of a mix of private providers and free public providers. We test whether income-based disparities in medical visits and medications remain in Brazil despite universal coverage using a nationally representative sample of over 48,000 households. Additional income is associated with less public sector utilization and more private sector utilization, both using simple correlations and regressions controlling for household characteristics and local area fixed effects. Importantly, the increase in private care use is greater than the drop in public care use. Also, income and unmet medical needs are negatively associated. These results suggest that access limitations remain for low-income households despite the availability of free public care.
Handle: RePEc:nbr:nberwo:17069
Template-Type: ReDIF-Paper 1.0
Title: The Doctor Might See You Now: The Supply Side Effects of Public Health Insurance Expansions
Classification-JEL: H0; H4; I1; I18
Author-Name: Craig L. Garthwaite
Note: CH EH PE
Number: 17070
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17070
File-URL: http://www.nber.org/papers/w17070.pdf
File-Format: application/pdf
Publication-Status: published as Garthwaite, Craig. 2012. The Doctor Might See You Now: The Supply Side of Public Health Insurance Expansions. American Economic Journal: Economic Policy. 4(3): 190-217.
Abstract: In the United States, public health insurance programs cover over 90 million individuals. Changes in the scope of these programs, such as the Medicaid expansions under the recently passed Patient Protection and Affordable Care Act, may have large effects on physician behavior. This study finds that following the implementation of the State Children's Health Insurance Program, physicians decreased the number of hours spent with patients, but increased their participation in the expanded program. Suggestive evidence is found that this decrease in hours was a result of shorter office visits. These findings are consistent with the predictions from a mixed-economy model of physician behavior with public and private payers and also provide evidence of crowd out resulting from the creation of SCHIP.
Handle: RePEc:nbr:nberwo:17070
Template-Type: ReDIF-Paper 1.0
Title: Is there a trade-off between inflation and output stabilization?
Classification-JEL: E30; E52
Author-Name: Alejandro Justiniano
Author-Person: pju154
Author-Name: Giorgio E. Primiceri
Author-Person: ppr18
Author-Name: Andrea Tambalotti
Author-Person: pta51
Note: EFG ME
Number: 17071
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17071
File-URL: http://www.nber.org/papers/w17071.pdf
File-Format: application/pdf
Publication-Status: published as Alejandro Justiniano & Giorgio E. Primiceri & Andrea Tambalotti, 2013. "Is There a Trade-Off between Inflation and Output Stabilization?," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(2), pages 1-31, April.
Abstract: Not in an estimated DSGE model of the US economy, once we account for the fact that most of the high-frequency volatility in wages appears to be due to noise, rather than to variation in workers' preferences or market power.
Handle: RePEc:nbr:nberwo:17071
Template-Type: ReDIF-Paper 1.0
Title: Financially Fragile Households: Evidence and Implications
Classification-JEL: D14; D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Daniel J. Schneider
Author-Name: Peter Tufano
Note: AG
Number: 17072
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17072
File-URL: http://www.nber.org/papers/w17072.pdf
File-Format: application/pdf
Publication-Status: published as “Financially Fragile Households: Evidence an d Implications” joint with Daniel Schneider, and Peter Tu fano , Brookings Papers on Economic Activity , Spring 2011 , pp. 83 - 134.
Abstract: This paper examines households' financial fragility by looking at their capacity to come up with $2,000 in 30 days. Using data from the 2009 TNS Global Economic Crisis survey, we document widespread financial weakness in the United States: Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans. If we consider the respondents who report being certain or probably not able to cope with an ordinary financial shock of this size, we find that nearly half of Americans are financially fragile. While financial fragility is more severe among those with low educational attainment and no financial education, families with children, those who suffered large wealth losses, and those who are unemployed, a sizable fraction of seemingly "middle class" Americans also judge themselves to be financially fragile. We examine the coping methods people use to deal with shocks. While savings is used most often, relying on family and friends, using formal and alternative credit, increasing work hours, and selling items are also used frequently to deal with emergencies, especially for some subgroups. Household finance researchers must look beyond precautionary savings to understand how families cope with risk. We also find evidence of a "pecking order" of coping methods in which savings appears to be first in the ordering. Finally, the paper compares the levels of financial fragility and methods of coping among eight industrialized countries. While there are differences in coping ability across countries, there is general evidence of a consistent ordering of coping methods
Handle: RePEc:nbr:nberwo:17072
Template-Type: ReDIF-Paper 1.0
Title: Financial Protectionism: the First Tests
Classification-JEL: F36; G21
Author-Name: Andrew K. Rose
Author-Person: pro71
Author-Name: Tomasz Wieladek
Author-Person: pwi271
Note: IFM
Number: 17073
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17073
File-URL: http://www.nber.org/papers/w17073.pdf
File-Format: application/pdf
Publication-Status: published as Financial Protectionism? First Evidence Authors ANDREW K. ROSE, Tomasz Wieladek Volume 69, Issue 5 October 2014 Pages 2127–2149
Abstract: We provide the first empirical tests for financial protectionism, defined as a nationalistic change in banks' lending behaviour, as the result of public intervention, which leads domestic banks either to lend less or at higher interest rates to foreigners. We use a bank-level panel data set spanning all British and foreign banks providing loans within the United Kingdom between 1997Q3 and 2010Q1. During this time, a number of banks were nationalised, privatised, given unusual access to loan or credit guarantees, or received capital injections. We use standard empirical panel-data techniques to study the "loan mix," domestic (British) loans of a bank expressed as a fraction of its total loan activity. We also study effective short-term interest rates, though our data set here is much smaller. We examine the loan mix for both British and foreign banks, both before and after unusual public interventions such as nationalisations and public capital injections. We find strong evidence of financial protectionism. After nationalisations, foreign banks reduced the fraction of loans going to the UK by about eleven percentage points and increased their effective interest rates by about 70 basis points. By way of contrast, nationalised British banks did not significantly change either their loan mix or effective interest rates. Succinctly, foreign nationalised banks seem to have engaged in financial protectionism, while British nationalised banks have not.
Handle: RePEc:nbr:nberwo:17073
Template-Type: ReDIF-Paper 1.0
Title: Exchange Rates in Emerging Countries: Eleven Empirical Regularities from Latin America and East Asia
Classification-JEL: F0; F31; F32; F41
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM ITI
Number: 17074
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17074
File-URL: http://www.nber.org/papers/w17074.pdf
File-Format: application/pdf
Publication-Status: published as “Exchange-Rate Policies in Emerging Countries: Elev en Empirical Regularities from Latin America and East Asia,” Open Economies Review , vol. 22, no. 4, September 2011, pp. 533-63.
Abstract: In this paper I discuss some of the most important lessons on exchange rate policies in emerging markets during the last 35 years. The analysis is undertaken from the perspective of both the Latin American and East Asian nations. Some of the topics addressed include: the relationship between exchange rate regimes and growth, the costs of currency crises, the merits of "dollarization," the relation between exchange rates and macroeconomic stability, monetary independence under alternative exchange rate arrangements, and the effects of the recent global "currency wars" on exchange rates in commodity exporters.
Handle: RePEc:nbr:nberwo:17074
Template-Type: ReDIF-Paper 1.0
Title: Evolution and the Growth Process: Natural Selection of Entrepreneurial Traits
Classification-JEL: J11; J13; O11; O14; O33; O40
Author-Name: Oded Galor
Author-Person: pga46
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Note: EFG
Number: 17075
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17075
File-URL: http://www.nber.org/papers/w17075.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Economic Theory, March 2012, 147(2): 759-780
Abstract: This research suggests that a Darwinian evolution of entrepreneurial spirit played a significant role in the process of economic development and the dynamics of inequality within and across societies. The study argues that entrepreneurial spirit evolved non-monotonically in the course of human history. In early stages of development, risk-tolerant, growth promoting traits generated an evolutionary advantage and their increased representation accelerated the pace of technological progress and the process of economic development. In mature stages of development, however, risk-averse traits gained an evolutionary advantage, diminishing the growth potential of advanced economies and contributing to convergence in economic growth across countries.
Handle: RePEc:nbr:nberwo:17075
Template-Type: ReDIF-Paper 1.0
Title: A Fistful of Dollars: Lobbying and the Financial Crisis
Classification-JEL: G21; P16
Author-Name: Deniz Igan
Author-Person: pig12
Author-Name: Prachi Mishra
Author-Name: Thierry Tressel
Author-Person: ptr11
Note: ME POL
Number: 17076
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17076
File-URL: http://www.nber.org/papers/w17076.pdf
File-Format: application/pdf
Publication-Status: published as Deniz Igan & Prachi Mishra & Thierry Tressel, 2012. "A Fistful of Dollars: Lobbying and the Financial Crisis," NBER Macroeconomics Annual, University of Chicago Press, vol. 26(1), pages 195 - 230.
Publication-Status: published as A Fistful of Dollars: Lobbying and the Financial Crisis, Deniz Igan, Prachi Mishra, Thierry Tressel. in NBER Macroeconomics Annual 2011, Volume 26, Acemoglu and Woodford. 2012
Abstract: Has lobbying by financial institutions contributed to the financial crisis? This paper uses detailed information on financial institutions' lobbying and mortgage lending activities to answer this question. We find that lobbying was associated with more risk-taking during 2000-07 and with worse outcomes in 2008. In particular, lenders lobbying more intensively on issues related to mortgage lending and securitization (i) originated mortgages with higher loan-to-income ratios, (ii) securitized a faster growing proportion of their loans, and (iii) had faster growing originations of mortgages. Moreover, delinquency rates in 2008 were higher in areas where lobbying lenders' mortgage lending grew faster. These lenders also experienced negative abnormal stock returns during the rescue of Bear Stearns and the collapse of Lehman Brothers, but positive abnormal returns when the bailout was announced. Finally, we find a higher bailout probability for lobbying lenders. These findings suggest that lending by politically active lenders played a role in accumulation of risks and thus contributed to the financial crisis.
Handle: RePEc:nbr:nberwo:17076
Template-Type: ReDIF-Paper 1.0
Title: The Outlook for Financial Literacy
Classification-JEL: D91; E21
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG
Number: 17077
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17077
File-URL: http://www.nber.org/papers/w17077.pdf
File-Format: application/pdf
Publication-Status: published as “The Outlook for Financial Literacy,” joint w ith Olivia Mitchell , in A. Lusardi and O . Mitchell (eds), “Financial Literacy. Implica tions for Retirement Security and the Financial Marketplace,” Oxford University Press , 2011, pp. 1 - 13 .
Abstract: As the world becomes more financially integrated and complex, average individuals and their families are increasingly faced with making highly sophisticated and all-too-often irreversible financial decisions. Nowhere is this more evident than with regard to retirement decision-making. Indeed, the global financial crisis suggests that poor financial decision-making can have substantial costs not only for individuals but also society at large. This paper focuses on key lessons for financial decision-making in the wake of that crisis, exploring how financial literacy can enhance peoples' skills and abilities to make more informed economic choices.
Handle: RePEc:nbr:nberwo:17077
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy and Planning: Implications for Retirement Wellbeing
Classification-JEL: D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG
Number: 17078
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17078
File-URL: http://www.nber.org/papers/w17078.pdf
File-Format: application/pdf
Publication-Status: published as “Financial Literacy and Planning: Implications for Retirement Well - being,” joint with Olivia Mitchell , in A. Lusardi and O Mitc hell (eds), “Financia l Literacy. Implications for Retirement Security and the Fina ncial Marketplace,” Oxford University Press , 2011, p p. 17 - 39 .
Abstract: Relatively little is known about why people fail to plan for retirement and whether planning and information costs might affect retirement saving patterns. This paper reports on a purpose-built survey module on planning and financial literacy for the Health and Retirement Study which measures how people make financial plans, collect the information needed to make these plans, and implement the plans. We show that financial illiteracy is widespread among older Americans, particularly women, minorities, and the least educated. We also find that the financially savvy are more likely to plan and to succeed in their planning, and they rely on formal methods such as retirement calculators, retirement seminars, and financial experts, instead of family/relatives or co-workers. These results have implications for targeted financial education efforts.
Handle: RePEc:nbr:nberwo:17078
Template-Type: ReDIF-Paper 1.0
Title: Disability, Pension Reform and Early Retirement in Germany
Classification-JEL: H55; J14
Author-Name: Axel H. Boersch-Supan
Author-Name: Hendrik Juerges
Author-Person: pju13
Note: AG LS
Number: 17079
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17079
File-URL: http://www.nber.org/papers/w17079.pdf
File-Format: application/pdf
Abstract: The aim of this paper is to describe for (West) Germany the historical relationship between health and disability on the one hand and old-age labor force participation or early retirement on the other hand. We explore how both are linked with various pension reforms. To put the historical developments into context, the paper first describes the most salient features and reforms of the pension system since the 1960s. Then we show how mortality, health and labor force participation of the elderly have changed since the 1970. While mortality (as our main measure of health) has continuously decreased and population health improved, labor force participation has also decreased, which is counterintuitive. We then look at a number of specific pension reforms in the 1970s and 1980s and show that increasing or decreasing the generosity of the pension system has had the expected large effects on old-age labor force participation. Finally, we explore the possible link between early childhood environment and early retirement by analyzing the retirement behavior of cohorts born during World War I, a period of harsh living conditions among the civilian population in Germany. Our data show higher early retirement rates among those cohorts, presumably because those cohorts still suffer from worse health on average many decades after their birth.
Handle: RePEc:nbr:nberwo:17079
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy Mistakes and the Evolution of Inflation Expectations
Classification-JEL: E52
Author-Name: Athanasios Orphanides
Author-Name: John Williams
Author-Person: pwi23
Note: POL
Number: 17080
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17080
File-URL: http://www.nber.org/papers/w17080.pdf
File-Format: application/pdf
Publication-Status: published as Monetary Policy Mistakes and the Evolution of Inflation Expectations, Athanasios Orphanides, John C. Williams. in The Great Inflation: The Rebirth of Modern Central Banking, Bordo and Orphanides. 2013
Abstract: What monetary policy framework, if adopted by the Federal Reserve, would have avoided the Great Inflation of the 1960s and 1970s? We use counterfactual simulations of an estimated model of the U.S. economy to evaluate alternative monetary policy strategies. We show that policies constructed using modern optimal control techniques aimed at stabilizing inflation, economic activity, and interest rates would have succeeded in achieving a high degree of economic stability as well as price stability only if the Federal Reserve had possessed excellent information regarding the structure of the economy or if it had acted as if it placed relatively low weight on stabilizing the real economy. Neither condition held true. We document that policymakers at the time both had an overly optimistic view of the natural rate of unemployment and put a high priority on achieving full employment. We show that in the presence of realistic informational imperfections and with an emphasis on stabilizing economic activity, an optimal control approach would have failed to keep inflation expectations well anchored, resulting in high and highly volatile inflation during the 1970s. Finally, we show that a strategy of following a robust first-difference policy rule would have been highly effective at stabilizing inflation and unemployment in the presence of informational imperfections. This robust monetary policy rule yields simulated outcomes that are close to those seen during the period of the Great Moderation starting in the mid-1980s.
Handle: RePEc:nbr:nberwo:17080
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Risky Health Behaviors
Classification-JEL: D01; D03; D1; D6; D83; D87; H2; I1; I18; I20; J1; Q18
Author-Name: John Cawley
Author-Person: pca6
Author-Name: Christopher Ruhm
Author-Person: pru7
Note: CH ED EH LE LS PE
Number: 17081
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17081
File-URL: http://www.nber.org/papers/w17081.pdf
File-Format: application/pdf
Publication-Status: published as John Cawley, Christopher J. Ruhm. “Chapter Three - The Economics of Risky Health Behaviors” Handbook of Health Economics, Volume 2, 2011, Pages 95-199
Abstract: Risky health behaviors such as smoking, drinking alcohol, drug use, unprotected sex, and poor diets and sedentary lifestyles (leading to obesity) are a major source of preventable deaths. This chapter overviews the theoretical frameworks for, and empirical evidence on, the economics of risky health behaviors. It describes traditional economic approaches emphasizing utility maximization that, under certain assumptions, result in Pareto-optimal outcomes and a limited role for policy interventions. It also details nontraditional models (e.g. involving hyperbolic time discounting or bounded rationality) that even without market imperfections can result in suboptimal outcomes for which government intervention has greater potential to increase social welfare. The chapter summarizes the literature on the consequences of risky health behaviors for economic outcomes such as medical care costs, educational attainment, employment, wages, and crime. It also reviews the research on policies and strategies with the potential to modify risky health behaviors, such as taxes or subsidies, cash incentives, restrictions on purchase and use, providing information and restricting advertising. The chapter concludes with suggestions for future research.
Handle: RePEc:nbr:nberwo:17081
Template-Type: ReDIF-Paper 1.0
Title: Funding in Public Sector Pension Plans - International Evidence
Classification-JEL: H55; H6; H7; H75; H83
Author-Name: Eduard Ponds
Author-Name: Clara Severinson
Author-Name: Juan Yermo
Note: PE
Number: 17082
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17082
File-URL: http://www.nber.org/papers/w17082.pdf
File-Format: application/pdf
Abstract: Most countries have separate pension plan for public sector employees. The future fiscal burden of these plans can be substantial as the government usually is the largest employer, pension promises in the public sector tend to be relatively generous, and future payments have to be paid out directly from government revenues (pay-as-you-go) or by funded plans (pension funds) which tend to be underfunded. The valuation and disclosure of these promises in some countries lacks transparency, which may be hiding potentially huge fiscal liabilities that are being passed on to future generations of workers. In order to arrive at a fair comparison between countries regarding the fiscal burden of their DB public sector pension plans, this paper gathers more evidence on public sector pension plans regarding the type of pension promise and quantifies the future tax burden related to these pension promises. The reported liabilities are recalculated using both a fair value approach (local market discount rates) and a common, fixed discount rate across all countries which reflects projected growth in national income. We also estimate for a number of plans from a sample of OECD countries the size of the net unfunded liabilities in fair value terms as of the end of 2008. This fiscal burden can also be interpreted as the implicit pension debt in fair value terms.
Handle: RePEc:nbr:nberwo:17082
Template-Type: ReDIF-Paper 1.0
Title: Optimal Policy Instruments for Externality-Producing Durable Goods Under Time Inconsistency
Classification-JEL: D03; Q48; Q58
Author-Name: Garth Heutel
Author-Person: phe315
Note: EEE PE
Number: 17083
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17083
File-URL: http://www.nber.org/papers/w17083.pdf
File-Format: application/pdf
Publication-Status: published as " How Should Environmental Policy Respond to Business Cycles? Optimal Policy under Persistent Productivity Shock s . " Review of Economic Dynamics , Vol. 15, No. 2 (April 2012), 244 - 264.
Abstract: When consumers exhibit present bias and are time-inconsistent, the standard solution to market failures caused by externalities--Pigouvian pricing--is suboptimal. I investigate policies aimed at externalities for time-inconsistent consumers. Welfare-maximizing policy in this case includes an instrument to correct the externality and an instrument to correct the present bias. Either instrument can be an incentive-based policy or a command-and-control policy. Calibrated to the US automobile market, simulation results from a model with time-inconsistent consumers suggest that the second-best gasoline tax is 18%-30% higher than marginal external damages. These simulations also suggest that social welfare is maximized with a gasoline tax set about equal to marginal external damages and a fuel economy tax that increases the price of an average non-hybrid car by about $750-$2200 relative to the price of an average hybrid car.
Handle: RePEc:nbr:nberwo:17083
Template-Type: ReDIF-Paper 1.0
Title: Unemployment in an Estimated New Keynesian Model
Classification-JEL: D58; E24; E31; E32
Author-Name: Jordi Galí
Author-Person: pga43
Author-Name: Frank Smets
Author-Person: psm33
Author-Name: Rafael Wouters
Author-Person: pwo72
Note: EFG ME
Number: 17084
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17084
File-URL: http://www.nber.org/papers/w17084.pdf
File-Format: application/pdf
Publication-Status: published as Jordi Gal� & Frank Smets & Rafael Wouters, 2012. "Unemployment in an Estimated New Keynesian Model," NBER Macroeconomics Annual, University of Chicago Press, vol. 26(1), pages 329 - 360.
Publication-Status: published as Unemployment in an Estimated New Keynesian Model, Jordi Galí, Frank Smets, Rafael Wouters. in NBER Macroeconomics Annual 2011, Volume 26, Acemoglu and Woodford. 2012
Abstract: We reformulate the Smets-Wouters (2007) framework by embedding the theory of unemployment proposed in Galí (2011a,b). We estimate the resulting model using postwar U.S. data, while treating the unemployment rate as an additional observable variable. Our approach overcomes the lack of identification of wage markup and labor supply shocks highlighted by Chari, Kehoe and McGrattan (2008) in their criticism of New Keynesian models, and allows us to estimate a "correct" measure of the output gap. In addition, the estimated model can be used to analyze the sources of unemployment fluctuations.
Handle: RePEc:nbr:nberwo:17084
Template-Type: ReDIF-Paper 1.0
Title: The Long-Run Impacts of Early Childhood Education: Evidence From a Failed Policy Experiment
Classification-JEL: I21; I28; J24
Author-Name: Philip DeCicca
Author-Person: pde303
Author-Name: Justin D. Smith
Author-Person: psm128
Note: ED
Number: 17085
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17085
File-URL: http://www.nber.org/papers/w17085.pdf
File-Format: application/pdf
Publication-Status: published as DeCicca, Philip & Smith, Justin, 2013. "The long-run impacts of early childhood education: Evidence from a failed policy experiment," Economics of Education Review, Elsevier, vol. 36(C), pages 41-59.
Abstract: We investigate short and long-term effects of early childhood education using variation created by a unique policy experiment in British Columbia, Canada. Our findings imply starting Kindergarten one year late substantially reduces the probability of repeating the third grade, and meaningfully increases in tenth grade math and reading scores. Effects are highest for low income students and males. Estimates suggest that entering kindergarten early may have a detrimental effect on future outcomes.
Handle: RePEc:nbr:nberwo:17085
Template-Type: ReDIF-Paper 1.0
Title: Intermittency and the Value of Renewable Energy
Classification-JEL: Q2; Q4
Author-Name: Gautam Gowrisankaran
Author-Name: Stanley S. Reynolds
Author-Name: Mario Samano
Author-Person: psa1941
Note: EEE IO PR
Number: 17086
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17086
File-URL: http://www.nber.org/papers/w17086.pdf
File-Format: application/pdf
Publication-Status: published as Gautam Gowrisankaran & Stanley S. Reynolds & Mario Samano, 2016. "Intermittency and the Value of Renewable Energy," Journal of Political Economy, vol 124(4), pages 1187-1234.
Abstract: A key problem with solar energy is intermittency: solar generators only produce when the sun is shining. This adds to social costs and also requires electricity system operators to reoptimize key decisions with large-scale renewables. We develop a method to quantify the economic value of large-scale renewable energy. We estimate the model for southeastern Arizona. Not accounting for offset CO2, we find social costs of $138.4/MWh for 20% solar generation, of which unforecastable intermittency accounts for $6.1 and intermittency overall for $46. With solar installation costs of $1.52/W and CO2 social costs of $39/ton, 20% solar would be welfare neutral.
Handle: RePEc:nbr:nberwo:17086
Template-Type: ReDIF-Paper 1.0
Title: Distributional Impacts of Carbon Pricing: A General Equilibrium Approach with Micro-Data for Households
Classification-JEL: H22; Q54; Q58
Author-Name: Sebastian Rausch
Author-Person: pra626
Author-Name: Gilbert E. Metcalf
Author-Name: John M. Reilly
Author-Person: pre355
Note: EEE PE
Number: 17087
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17087
File-URL: http://www.nber.org/papers/w17087.pdf
File-Format: application/pdf
Publication-Status: published as Rausch, Sebastian & Metcalf, Gilbert E. & Reilly, John M., 2011. "Distributional impacts of carbon pricing: A general equilibrium approach with micro-data for households," Energy Economics, Elsevier, vol. 33(S1), pages S20-S33.
Abstract: Many policies to limit greenhouse gas emissions have at their core efforts to put a price on carbon emissions. Carbon pricing impacts households both by raising the cost of carbon intensive products and by changing factor prices. A complete analysis requires taking both effects into account. The impact of carbon pricing is determined by heterogeneity in household spending patterns across income groups as well as heterogeneity in factor income patterns across income groups. It is also affected by precise formulation of the policy (how is the revenue from carbon pricing distributed) as well as the treatment of other government policies (e.g. the treatment of transfer payments). What is often neglected in analyses of policy is the heterogeneity of impacts across households even within income or regional groups. In this paper, we incorporate 15,588 households from the U.S. Consumer and Expenditure Survey data as individual agents in a comparative-static general equilibrium framework. These households are represented within the MIT USREP model, a detailed general equilibrium model of the U.S. economy. In particular, we categorize households by full household income (factor income as well as transfer income) and apply various measures of lifetime income to distinguish households that are temporarily low-income (e.g., retired households drawing down their financial assets) from permanently low-income households. We also provide detailed within-group distributional measures of burden impacts from various policy scenarios.
Handle: RePEc:nbr:nberwo:17087
Template-Type: ReDIF-Paper 1.0
Title: Peer Effects and Multiple Equilibria in the Risky Behavior of Friends
Classification-JEL: J13
Author-Name: David Card
Author-Person: pca271
Author-Name: Laura Giuliano
Author-Person: pgi111
Note: CH LS
Number: 17088
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17088
File-URL: http://www.nber.org/papers/w17088.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Laura Giuliano, 2013. "Peer Effects and Multiple Equilibria in the Risky Behavior of Friends," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1130-1149, October.
Abstract: We study social interactions in the risky behavior of best-friend pairs in the National Longitudinal Study of Adolescent Health (Add Health). Focusing on friends who had not yet initiated a particular behavior (sex, smoking, marijuana use, truancy) by the first wave of the survey, we estimate bivariate discrete choice models for their subsequent decisions that include peer effects and unobserved heterogeneity. Social interactions can lead to multiple equilibria in friends' choices: we consider simple equilibrium selection models as well as partial likelihood models that remain agnostic about the choice of equilibrium. Our identification strategy assumes that there is at least one individual characteristic (e.g., physical development) that does not directly affect a friend's propensity to engage in a risky activity. Our estimates suggest that patterns of initiation of risky behavior by adolescent friends exhibit significant interaction effects. The likelihood that one friend initiates intercourse within a year of the baseline interview increases by 4 percentage points (on a base of 14%) if the other also initiates intercourse, holding constant family and individual factors. Similar effects are also present for smoking, marijuana use, and truancy. We find larger peer effects for females and for pairs that are more likely to remain best friends after a year. We also find important asymmetries in the strength of the peer effects in non-reciprocated friendships.
Handle: RePEc:nbr:nberwo:17088
Template-Type: ReDIF-Paper 1.0
Title: Is Gifted Education a Bright Idea? Assessing the Impact of Gifted and Talented Programs on Achievement
Classification-JEL: H75; I2
Author-Name: Sa A. Bui
Author-Name: Steven G. Craig
Author-Person: pcr122
Author-Name: Scott A. Imberman
Author-Person: pim24
Note: CH ED LS PE
Number: 17089
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17089
File-URL: http://www.nber.org/papers/w17089.pdf
File-Format: application/pdf
Abstract: In this paper we determine how the receipt of gifted and talented (GT) services affects student outcomes. We identify the causal relationship by exploiting a discontinuity in eligibility requirements and find that for students on the margin there is no discernable impact on achievement even though peers improve substantially. We then use randomized lotteries to examine the impact of attending a GT magnet program relative to GT programs in other schools and find that, despite being exposed to higher quality teachers and peers that are one standard deviation higher achieving, only science achievement improves. We argue that these results are consistent with an invidious comparison model of peer effects offsetting other benefits. Evidence of large reductions in course grades and rank relative to peers in both regression discontinuity and lottery models are consistent with this explanation.
Handle: RePEc:nbr:nberwo:17089
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Regimes
Classification-JEL: C42; C53; E31; E32; E52; E58
Author-Name: Lieven Baele
Author-Person: pba100
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Seonghoon Cho
Author-Person: pch580
Author-Name: Koen Inghelbrecht
Author-Name: Antonio Moreno
Author-Person: pmo498
Note: AP ME IFM
Number: 17090
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17090
File-URL: http://www.nber.org/papers/w17090.pdf
File-Format: application/pdf
Publication-Status: published as Baele, Lieven & Bekaert, Geert & Cho, Seonghoon & Inghelbrecht, Koen & Moreno, Antonio, 2015. "Macroeconomic regimes," Journal of Monetary Economics, Elsevier, vol. 70(C), pages 51-71.
Abstract: We estimate a New-Keynesian macro model accommodating regime-switching behavior in monetary policy and in macro shocks. Key to our estimation strategy is the use of survey-based expectations for inflation and output. We identify accommodating monetary policy before 1980, with activist monetary policy prevailing most but not 100% of the time thereafter. Systematic monetary policy switched to the activist regime in the 2000-2005 period through an aggressive lowering of interest rates. Discretionary policy spells became less frequent since 1985, but the Volcker period is identified as a discretionary period. Output shocks shift to the low volatility regime around 1985 whereas inflation shocks do so only around 1990, suggesting active monetary policy may have played role in anchoring inflation expectations. Shocks and policy regimes jointly drive the volatility of the macro variables. We provide new estimates of the onset and demise of the Great Moderation and the relative role played by macro-shocks and monetary policy.
Handle: RePEc:nbr:nberwo:17090
Template-Type: ReDIF-Paper 1.0
Title: Poultry in Motion: A Study of International Trade Finance Practices
Classification-JEL: F1; G0; K12
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: C. Fritz Foley
Note: CF ITI
Number: 17091
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17091
File-URL: http://www.nber.org/papers/w17091.pdf
File-Format: application/pdf
Publication-Status: published as Pol Antràs & C. Fritz Foley, 2015. "Poultry in Motion: A Study of International Trade Finance Practices," Journal of Political Economy, University of Chicago Press, vol. 123(4), pages 853 - 901.
Abstract: This paper analyzes the financing terms that support international trade and sheds light on how and why these arrangements affect trade. Using detailed transaction level data from a U.S. based exporter of frozen and refrigerated food products, primarily poultry, it begins by describing broad patterns about the use of alternative financing terms. These patterns help discipline a model in which the trade finance mode is shaped by the risk that an importer defaults on an exporter and by the possibility that an exporter does not deliver goods as specified in the contract. The empirical results indicate that transactions are more likely to occur on cash in advance or letter of credit terms when the importer is located in a country with weak contractual enforcement and in a country that is further from the exporter. Letters of credit, however, are rarely used by the exporter. As an importer develops a relationship with the exporter, transactions are less likely to occur on terms that require prepayment. During the recent crisis, the exporter was more likely to demand cash in advance terms when transacting with new customers, and customers that traded on cash in advance terms prior to the crisis disproportionately reduced their purchases. These results can be rationalized by the model whenever (i) misbehavior on the part of the exporter is of little concern to importers, and (ii) local banks in importing countries are typically more effective than the exporter in pursuing financial claims against importers.
Handle: RePEc:nbr:nberwo:17091
Template-Type: ReDIF-Paper 1.0
Title: Incorporating Climate Uncertainty into Estimates of Climate Change Impacts, with Applications to U.S. and African Agriculture
Classification-JEL: O13; Q11; 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
Number: 17092
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17092
File-URL: http://www.nber.org/papers/w17092.pdf
File-Format: application/pdf
Publication-Status: published as “Incorporating climate uncertainty into estimates of climate change impacts” (co-authors Marshall Burke, John Dykema, David Lobell, Shanker Satyanath), Review of Economics and Statistics. May 2015, Vol. 97, No. 2
Abstract: A growing body of economics research projects the effects of global climate change on economic outcomes. Climate scientists often criticize these articles because nearly all ignore the well-established uncertainty in future temperature and rainfall changes, and therefore appear likely to have downward biased standard errors and potentially misleading point estimates. This paper incorporates climate uncertainty into estimates of climate change impacts on U.S. agriculture. Accounting for climate uncertainty leads to a much wider range of projected impacts on agricultural profits, with the 95% confidence interval featuring drops of between 17% to 88%. An application to African agriculture yields similar results.
Handle: RePEc:nbr:nberwo:17092
Template-Type: ReDIF-Paper 1.0
Title: How Responsive is Investment in Schooling to Changes in Redistribution Policies and in Returns
Classification-JEL: I21; J24
Author-Name: Ran Abramitzky
Author-Person: pab108
Author-Name: Victor Lavy
Author-Person: pla111
Note: CH DAE ED LS PE
Number: 17093
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17093
File-URL: http://www.nber.org/papers/w17093.pdf
File-Format: application/pdf
Publication-Status: published as “How Responsive is Investment in Schooling to Changes in Redistribution Policies and in Returns?” with Victor Lavy, forthcoming Econometrica [current draft: March 2014]
Abstract: This paper uses an unusual pay reform to test the responsiveness of investment in schooling to changes in redistribution schemes that increase the rate of return to education. We exploit an episode where different Israeli kibbutzim shifted from equal sharing to productivity-based wages in different years and find that students in kibbutzim that reformed earlier invested more in education. This effect is stronger for males and is mainly driven by students whose parents have lower levels of education. Our findings support the prediction that education is highly responsive to changes in the redistribution policy, especially for students from weaker backgrounds.
Handle: RePEc:nbr:nberwo:17093
Template-Type: ReDIF-Paper 1.0
Title: Life and Growth
Classification-JEL: E0; I10; O3; O4
Author-Name: Charles I. Jones
Author-Person: pjo24
Note: EFG EH PR
Number: 17094
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17094
File-URL: http://www.nber.org/papers/w17094.pdf
File-Format: application/pdf
Publication-Status: published as Charles I. Jones, 2016. "Life and Growth," Journal of Political Economy, vol 124(2), pages 539-578.
Abstract: Some technologies save lives -- new vaccines, new surgical techniques, safer highways. Others threaten lives -- pollution, nuclear accidents, global warming, the rapid global transmission of disease, and bioengineered viruses. How is growth theory altered when technologies involve life and death instead of just higher consumption? This paper shows that taking life into account has first-order consequences. Under standard preferences, the value of life may rise faster than consumption, leading society to value safety over consumption growth. As a result, the optimal rate of consumption growth may be substantially lower than what is feasible, in some cases falling all the way to zero.
Handle: RePEc:nbr:nberwo:17094
Template-Type: ReDIF-Paper 1.0
Title: Empirical Implementation of Nonparametric First-Price Auction Models
Classification-JEL: C12; C14; D44
Author-Name: Daniel J. Henderson
Author-Person: phe142
Author-Name: John A. List
Author-Person: pli176
Author-Name: Daniel L. Millimet
Author-Person: pmi3
Author-Name: Christopher F. Parmeter
Author-Person: ppa1068
Author-Name: Michael K. Price
Author-Person: ppr89
Note: EEE IO
Number: 17095
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17095
File-URL: http://www.nber.org/papers/w17095.pdf
File-Format: application/pdf
Publication-Status: published as Henderson, Daniel J. & List, John A. & Millimet, Daniel L. & Parmeter, Christopher F. & Price, Michael K., 2012. "Empirical implementation of nonparametric first-price auction models," Journal of Econometrics, Elsevier, vol. 168(1), pages 17-28.
Abstract: Nonparametric estimators provide a flexible means of uncovering salient features of auction data. Although these estimators are popular in the literature, many key features necessary for proper implementation have yet to be uncovered. Here we provide several suggestions for nonparamteric estimation of first-price auction models. Specifically, we show how to impose monotonicity of the equilibrium bidding strategy; a key property of structural auction models not guaranteed in standard nonparametric estimation. We further develop methods for automatic bandwidth selection. Finally, we discuss how to impose monotonicity in auctions with differering number of bidders, reserve prices, and auction-specific characteristics. Finite sample performance is examined using simulated data as well as experimental auction data.
Handle: RePEc:nbr:nberwo:17095
Template-Type: ReDIF-Paper 1.0
Title: Childhood Health and Differences in Late-Life Health Outcomes Between England and the United States
Classification-JEL: I10
Author-Name: James Banks
Author-Person: pba509
Author-Name: Zoe Oldfield
Author-Person: pol30
Author-Name: James P. Smith
Author-Person: psm28
Note: AG EH
Number: 17096
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17096
File-URL: http://www.nber.org/papers/w17096.pdf
File-Format: application/pdf
Publication-Status: published as Childhood Health and Differences in Late-Life Health Outcomes between England and the United States, James Banks, Zoë Oldfield, James P. Smith. in Investigations in the Economics of Aging, Wise. 2012
Abstract: In this paper we examine the link between retrospectively reported measures of childhood health and the prevalence of various major and minor diseases at older ages. Our analysis is based on comparable retrospective questionnaires placed in the Health and Retirement Study and the English Longitudinal Study of Ageing - nationally representative surveys of the age 50 plus population in America and England respectively. We show that the origins of poorer adult health among older Americans compared to the English trace right back into the childhood years - the American middle and old-age population report higher rates of specific childhood health conditions than their English counterparts. The transmission into poor health in mid life and older ages of these higher rates of childhood illnesses also appears to be higher in America compared to England. Both factors contribute to higher rates of adult illness in the United States compared to England although even in combination they do not explain the full extent of the country difference in late-life health outcomes.
Handle: RePEc:nbr:nberwo:17096
Template-Type: ReDIF-Paper 1.0
Title: Racial Differences in Inequality Aversion: Evidence from Real World Respondents in the Ultimatum Game
Classification-JEL: J15
Author-Name: John D. Griffin
Author-Name: David Nickerson
Author-Name: Abigail K. Wozniak
Author-Person: pwo113
Note: LS
Number: 17097
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17097
File-URL: http://www.nber.org/papers/w17097.pdf
File-Format: application/pdf
Publication-Status: published as Griffin, John & Nickerson, David & Wozniak, Abigail, 2012. "Racial differences in inequality aversion: Evidence from real world respondents in the ultimatum game," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 600-617.
Abstract: The distinct historical and cultural experiences of American blacks and whites may influence whether members of those groups perceive a particular exchange as fair. We investigate racial differences in fairness standards using preferences for equal treatment in the ultimatum game, where responders choose to allow a proposed division of a monetary amount or to block it. Although previous research has studied group differences in the ultimatum game, no study has been able to examine these across races in America. We use a sample of over 1600 blacks and whites drawn from the universe of registered voters in three states and merged with information on neighborhood income and racial composition. We experimentally vary proposed divisions as well as the implied race of the ultimatum game proposer. We find no overall racial differences in acceptance rates or aversion to unequal divisions. However, we uncover racial differences in the response to pecuniary returns conditional on inequality of the division. This is driven by the lowest income group in our sample, which represents the 10th percentile of the black income distribution. The racial differences are robust across gender and age groups. We also find that blacks are more sensitive to unfair proposals from other blacks.
Handle: RePEc:nbr:nberwo:17097
Template-Type: ReDIF-Paper 1.0
Title: On the Origins of Gender Roles: Women and the Plough
Classification-JEL: D03; J16; N30
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Paola Giuliano
Author-Person: pgi66
Author-Name: Nathan Nunn
Author-Person: pnu17
Note: CH DAE EFG LS POL
Number: 17098
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17098
File-URL: http://www.nber.org/papers/w17098.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Paola Giuliano & Nathan Nunn, 2013. "On the Origins of Gender Roles: Women and the Plough," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 469-530.
Abstract: This paper seeks to better understand the historical origins of current differences in norms and beliefs about the appropriate role of women in society. We test the hypothesis that traditional agricultural practices influenced the historical gender division of labor and the evolution and persistence of gender norms. We find that, consistent with existing hypotheses, the descendants of societies that traditionally practiced plough agriculture, today have lower rates of female participation in the workplace, in politics, and in entrepreneurial activities, as well as a greater prevalence of attitudes favoring gender inequality. We identify the causal impact of traditional plough use by exploiting variation in the historical geo-climatic suitability of the environment for growing crops that differentially benefited from the adoption of the plough. Our IV estimates, based on this variation, support the findings from OLS. To isolate the importance of cultural transmission as a mechanism, we examine female labor force participation of second-generation immigrants living within the US.
Handle: RePEc:nbr:nberwo:17098
Template-Type: ReDIF-Paper 1.0
Title: Do Majority Black Districts Limit Blacks' Representation? The Case of the 1990 Redistricting
Classification-JEL: D72; J15; K0
Author-Name: Ebonya L. Washington
Note: LE POL
Number: 17099
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17099
File-URL: http://www.nber.org/papers/w17099.pdf
File-Format: application/pdf
Publication-Status: published as “Do Majority Black Districts Lim it Blacks’ Representation? The Case of the 1990 Redistricting” Journal of Law and Economics , 2012, 55 (2) 251-274.
Abstract: Conventional wisdom and empirical academic research conclude that majority Black districts decrease Black representation by increasing conservatism in Congress. However, this research generally suffers from three limitations: 1) too low a level of aggregation 2) lack of a counterfactual and 3) failure to account for the endogeneity of the creation of majority minority districts. I compare congressional delegations of states that during the 1990 redistricting were under greater pressure to create majority minority districts with those under lesser pressure in a difference-in-difference framework. I find no evidence that the creation of majority minority districts leads to more conservative House delegations. In fact point estimates indicate that states that increased their share of majority Black districts saw their delegations grow increasingly liberal. I find similar results for majority Latino districts in the southwest. Thus I find no evidence for the common view that majority minority districts decrease minority representation in Congress.
Handle: RePEc:nbr:nberwo:17099
Template-Type: ReDIF-Paper 1.0
Title: International Business Travel: An Engine of Innovation?
Classification-JEL: F20; J61; O33
Author-Name: Nune Hovhannisyan
Author-Name: Wolfgang Keller
Author-Person: pke8
Note: EFG ITI LS PR
Number: 17100
Creation-Date: 2011-05
Order-URL: http://www.nber.org/papers/w17100
File-URL: http://www.nber.org/papers/w17100.pdf
File-Format: application/pdf
Publication-Status: published as Nune Hovhannisyan & Wolfgang Keller, 2015. "International business travel: an engine of innovation?," Journal of Economic Growth, vol 20(1), pages 75-104.
Abstract: While it is well known that managers prefer in-person meetings for negotiating deals and selling their products, face-to-face communication may be particularly important for the transfer of technology because technology is best explained and demonstrated in person. This paper studies the role of short-term cross-border labor movements for innovation by estimating the recent impact of U.S. business travel to foreign countries on their patenting rates. Business travel is shown to have a signi...cant e¤ect up and beyond technology transfer through the channels of international trade and foreign direct investment. On average, a 10% increase in business travel leads to an increase in patenting by about 0.2%, and inward business travel is about one fourth as potent for innovation as domestic R&D spending. We show that the technological knowledge of each business traveler matters by estimating a higher impact for travelers that originate in U.S. states with substantial innovation, such as California. This study provides initial evidence that international air travel may be an important channel through which cross-country income di¤erences can be reduced.
Handle: RePEc:nbr:nberwo:17100
Template-Type: ReDIF-Paper 1.0
Title: Estimating Ricardian Models With Panel Data
Classification-JEL: Q1; Q12; Q51; Q54
Author-Name: Emanuele Massetti
Author-Name: Robert Mendelsohn
Author-Person: pme221
Note: EEE
Number: 17101
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17101
File-URL: http://www.nber.org/papers/w17101.pdf
File-Format: application/pdf
Publication-Status: published as Emanuele Massetti & Robert Mendelsohn, 2011. "Estimating Ricardian Models With Panel Data," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 2(04), pages 301-319.
Abstract: Many nonmarket valuation models, such as the Ricardian model, have been estimated using cross sectional methods with a single year of data. Although multiple years of data should increase the robustness of such methods, repeated cross sections suggest the results are not stable. We argue that repeated cross sections do not properly specify the model. Panel methods that correctly specify the Ricardian model are stable over time. The results suggest that many cross sectional methods including hedonic studies and travel cost studies could be enhanced using panel data.
Handle: RePEc:nbr:nberwo:17101
Template-Type: ReDIF-Paper 1.0
Title: Banks, Market Organization, and Macroeconomic Performance: An Agent-Based Computational Analysis
Classification-JEL: C63; E0; E44; G20; G28
Author-Name: Quamrul Ashraf
Author-Name: Boris Gershman
Author-Name: Peter Howitt
Author-Person: pho22
Note: EFG
Number: 17102
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17102
File-URL: http://www.nber.org/papers/w17102.pdf
File-Format: application/pdf
Publication-Status: published as Ashraf, Quamrul & Gershman, Boris & Howitt, Peter, 2017. "Banks, market organization, and macroeconomic performance: An agent-based computational analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 143-180.
Abstract: This paper is an exploratory analysis of the role that banks play in supporting the mechanism of exchange. It considers a model economy in which exchange activities are facilitated and coordinated by a self-organizing network of entrepreneurial trading firms. Collectively, these firms play the part of the Walrasian auctioneer, matching buyers with sellers and helping the economy to approximate equilibrium prices that no individual is able to calculate. Banks affect macroeconomic performance in this economy because their lending activities facilitate entry of trading firms and also influence their exit decisions. Both entry and exit have conflicting effects on performance, and we resort to computational analysis to understand how they are resolved. Our analysis sheds new light on the conflict between micro-prudential bank regulation and macroeconomic stability. Specifically, it draws an important distinction between "normal" performance of the economy and "worst-case" scenarios, and shows that micro prudence conflicts with macro stability only in bad times. The analysis also shows that banks provide a "financial stabilizer" that in some respects can more than counteract the more familiar financial accelerator.
Handle: RePEc:nbr:nberwo:17102
Template-Type: ReDIF-Paper 1.0
Title: Americans' Financial Capability
Classification-JEL: D14
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: AG
Number: 17103
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17103
File-URL: http://www.nber.org/papers/w17103.pdf
File-Format: application/pdf
Abstract: This paper examines Americans' financial capability, using data from a new survey. Financial capability is measured in terms of how well people make ends meet, plan ahead, choose and manage financial products, and possess the skills and knowledge to make financial decisions. The findings reported in this work paint a troubling picture of the state of financial capability in the United States. The majority of Americans do not plan for predictable events such as retirement or children's college education. Most importantly, people do not make provisions for unexpected events and emergencies, leaving themselves and the economy exposed to shocks. To understand financial capability, it is important to look not only at assets but also at debt and debt management, as an increasingly large portion of the population carry debt. In managing debt, Americans engage in behaviors that can generate large expenses, such as sizable interest payments and fees. Moreover, more than one in five Americans has used alternative (and often costly) borrowing methods (payday loans, advances on tax refunds, pawn shops, etc.) in the past five years. The most worrisome finding is that many people do not seem well informed and knowledgeable about their terms of borrowing; a sizeable group does not know the terms of their mortgages or the interest rates they pay on their loans. Finally, the majority of Americans lack basic numeracy and knowledge of fundamental economic principles such as the workings of inflation, risk diversification, and the relationship between asset prices and interest rates.
Handle: RePEc:nbr:nberwo:17103
Template-Type: ReDIF-Paper 1.0
Title: Children Left Behind: The Effects of Statewide Job Loss on Student Achievement
Classification-JEL: I2; J6
Author-Name: Elizabeth Oltmans Ananat
Author-Name: Anna Gassman-Pines
Author-Name: Dania V. Francis
Author-Name: Christina M. Gibson-Davis
Note: CH
Number: 17104
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17104
File-URL: http://www.nber.org/papers/w17104.pdf
File-Format: application/pdf
Abstract: We examine effects of state-level job losses on student achievement. Losses to 1% of the working-age population decrease eighth-grade math scores by .076 standard deviations, with consistently negative but less precise effects on eighth-grade reading and on fourth-grade math and reading. Effects are 34 times larger than found when comparing students with displaced parents to otherwise similar students, suggesting that downturns affect all students, not just those whose parents lose employment. Evidence is inconsistent with a "downward spiral of behavior" or reduced school funding as causal mechanisms; rather, reduced income and increased distress likely inhibit performance. States experiencing displacement of 1% of workers likely see an 8% increase in schools missing No Child Left Behind requirements.
Handle: RePEc:nbr:nberwo:17104
Template-Type: ReDIF-Paper 1.0
Title: Maternity Leave and Children's Cognitive and Behavioral Development
Classification-JEL: I18; J13; J32
Author-Name: Michael Baker
Author-Person: pba400
Author-Name: Kevin S. Milligan
Author-Person: pmi14
Note: CH
Number: 17105
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17105
File-URL: http://www.nber.org/papers/w17105.pdf
File-Format: application/pdf
Publication-Status: published as Michael Baker & Kevin Milligan, 2015. "Maternity leave and children’s cognitive and behavioral development," Journal of Population Economics, Springer, vol. 28(2), pages 373-391, April.
Abstract: We investigate the impact of maternity leave on the cognitive and behavioral development of children at ages 4 and 5, following up previous research on these children at younger ages. The impact is identified by legislated increases in the duration of maternity leave in Canada, which significantly increased the amount of first-year maternal care. Our results indicate no positive effect on indices of children's cognitive and behavioral development. We uncover a small negative impact on cognitive scores, which may indicate the timing of the mother/child separation due to the mother's return to work plays a role.
Handle: RePEc:nbr:nberwo:17105
Template-Type: ReDIF-Paper 1.0
Title: Institutional Comparative Statics
Classification-JEL: D7; N50
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Ragnar Torvik
Author-Person: pto24
Note: POL
Number: 17106
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17106
File-URL: http://www.nber.org/papers/w17106.pdf
File-Format: application/pdf
Publication-Status: published as “Instituti onal Comparative Statics” (2013) ( joint with Ragnar Torvik, University of Trondheim) Daron Acemoglu, Manuel Arellano and Eddie Dekel eds. Advances in Economics and Econometrics : Tenth World Congress, Volume II, Applied Economics , New York: Cambridge University Press, pp. 97 - 134.
Abstract: Why was the Black Death followed by the decline of serfdom in Western Europe but its' intensification in Eastern Europe? What explains why involvement in Atlantic trade in the Early Modern period was positively correlated with economic growth in Britain but negatively correlated in Spain? Why did frontier expansion in the 19th Century Americas go along with economic growth in the United States and economic decline in Latin America? Why do natural resource booms seem to stimulate growth in some countries, but lead to a 'curse' in others, and why does foreign aid sometimes seem to encourage, other times impede economic growth? In this paper we argue that the response of economies to shocks or innovations in economic opportunities depends on the nature of institutions. When institutions are strong, new opportunities or windfalls can have positive effects. But when institutions are weak they can have negative effects. We present a simple model to illustrate how comparative statics are conditional on the nature of institutions and show how this perspective helps to unify a large number of historical episodes and empirical studies.
Handle: RePEc:nbr:nberwo:17106
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy around the World: An Overview
Classification-JEL: D14; D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG
Number: 17107
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17107
File-URL: http://www.nber.org/papers/w17107.pdf
File-Format: application/pdf
Publication-Status: published as Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy around the world: an overview," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 497-508, October.
Abstract: In an increasingly risky and globalized marketplace, people must be able to make well-informed financial decisions. Yet new international research demonstrates that financial illiteracy is widespread when financial markets are well developed as in Germany, the Netherlands, Sweden, Japan, Italy, New Zealand, and the United States, or when they are changing rapidly as in Russia. Further, across these countries, we show that the older population believes itself well informed, even though it is actually less well informed than average. Other common patterns are also evident: women are less financially literate than men and are aware of this shortfall. More educated people are more informed, yet education is far from a perfect proxy for literacy. There are also ethnic/racial and regional differences: city-dwellers in Russia are better informed than their rural counterparts, while in the U.S., African Americans and Hispanics are relatively less financially literate than others. Moreover, the more financially knowledgeable are also those most likely to plan for retirement. In fact, answering one additional financial question correctly is associated with a 3-4 percentage point higher chance of planning for retirement in countries as diverse as Germany, the U.S., Japan, and Sweden; in the Netherlands, it boosts planning by 10 percentage points. Finally, using instrumental variables, we show that these estimates probably underestimate the effects of financial literacy on retirement planning. In sum, around the world, financial literacy is critical to retirement security.
Handle: RePEc:nbr:nberwo:17107
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy and Retirement Planning in the United States
Classification-JEL: D14; D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG
Number: 17108
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17108
File-URL: http://www.nber.org/papers/w17108.pdf
File-Format: application/pdf
Publication-Status: published as Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy and retirement planning in the United States," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 509-525, October.
Abstract: We examine financial literacy in the United States using the new National Financial Capability Study, wherein we demonstrate that financial literacy is particularly low among the young, women, and the less-educated. Moreover, Hispanics and African-Americans score the least well on financial literacy concepts. Interestingly, all groups rate themselves as rather well-informed about financial matters, notwithstanding their actual performance on the key literacy questions. Finally, we show that people who score higher on the financial literacy questions are also much more likely to plan for retirement, which is likely to leave them better positioned for old-age. Our results will inform those seeking to target financial literacy programs to those in most need.
Handle: RePEc:nbr:nberwo:17108
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy, Retirement Preparation and Pension Expectations in the Netherlands
Classification-JEL: D14; D91
Author-Name: Rob J. Alessie
Author-Person: pal293
Author-Name: Maarten van Rooij
Author-Person: pva83
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: AG
Number: 17109
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17109
File-URL: http://www.nber.org/papers/w17109.pdf
File-Format: application/pdf
Publication-Status: published as “ Financial Literay, Retirement Preparation and Pension Expectations in the Netherlands, ” joint with Rob A lessie and Maarten van Rooij , Journal of Pension Economics and Finance , October 2011, vol. 10(4), pp. 527 - 545.
Abstract: We present new evidence on financial literacy and retirement preparation in the Netherlands based on two surveys conducted before and after the onset of the financial crisis. We document that while financial knowledge did not increase from 2005 to 2010, significantly more individuals planned for their retirement in 2010. At the same time, employees' expectations about the level of their pension income are high compared to what retirement plans may realistically provide. However, financially knowledgeable employees report lower expected replacement rates and acknowledge higher levels of uncertainty. Moreover using instrumental variables estimates for financial knowledge, we find a positive effect of financial literacy on retirement preparation. Employing the panel feature of our dataset, we show that financial knowledge has a causal impact on retirement planning. Our findings suggest that the formation of pension expectations might be an important mechanism contributing to the impact of financial literacy on planning.
Handle: RePEc:nbr:nberwo:17109
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy and Retirement Planning in Germany
Classification-JEL: D14; D91
Author-Name: Tabea Bucher-Koenen
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: AG
Number: 17110
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17110
File-URL: http://www.nber.org/papers/w17110.pdf
File-Format: application/pdf
Publication-Status: published as “ Financial Literacy and Retireme n t Planning in Germany, ” joint with Ta bea Bucher - Koenen , Journal of Pension Economics and Finance , October 2011, vol. 10(4), pp. 5 65 - 584 .
Abstract: We examine financial literacy in Germany using data from the SAVE survey. We find that knowledge of basic financial concepts is lacking among women, the less educated, and those living in East Germany. In particular, those with low education and low income in East Germany have little financial literacy compared to their West German counterparts. Interestingly, there is no gender disparity in financial knowledge in the East. In order to investigate the nexus of causality between financial literacy and retirement planning, we develop an IV strategy by making use of regional variation in the financial knowledge of peers. We find a positive impact of financial knowledge on retirement planning.
Handle: RePEc:nbr:nberwo:17110
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Stimulus and Distortionary Taxation
Classification-JEL: E62; E63; E65; H20; H62
Author-Name: Thorsten Drautzburg
Author-Person: pdr146
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG
Number: 17111
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17111
File-URL: http://www.nber.org/papers/w17111.pdf
File-Format: application/pdf
Publication-Status: published as Thorsten Drautzburg & Harald Uhlig, 2015. "Fiscal Stimulus and Distortionary Taxation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 894-920, October.
Abstract: We quantify the fiscal multipliers in response to the American Recovery and Reinvestment Act (ARRA) of 2009. We extend the benchmark Smets-Wouters (2007) New Keynesian model, allowing for credit-constrained households, the zero lower bound, government capital and distortionary taxation. The posterior yields modestly positive short-run multipliers around 0.52 and modestly negative long-run multipliers around -0.42. The multiplier is sensitive to the fraction of transfers given to credit-constrained households, the duration of the zero lower bound and the capital. The stimulus results in negative welfare effects for unconstrained agents. The constrained agents gain, if they discount the future substantially.
Handle: RePEc:nbr:nberwo:17111
Template-Type: ReDIF-Paper 1.0
Title: High-School Exit Examinations and the Schooling Decisions of Teenagers: A Multi-Dimensional Regression-Discontinuity Analysis
Classification-JEL: C10; C14; I20; I21; I28; J24
Author-Name: John P. Papay
Author-Name: John B. Willett
Author-Name: Richard J. Murnane
Author-Person: pmu87
Note: ED
Number: 17112
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17112
File-URL: http://www.nber.org/papers/w17112.pdf
File-Format: application/pdf
Abstract: We ask whether failing one or more of the state-mandated high-school exit examinations affects whether students graduate from high school. Using a new multi-dimensional regression-discontinuity approach, we examine simultaneously scores on mathematics and English language arts tests. Barely passing both examinations, as opposed to failing them, increases the probability that students graduate by 7.6 percentage points. The effects are greater for students scoring near each cutoff than for students further away from them. We explain how the multi-dimensional regression-discontinuity approach provides insights over conventional methods for making causal inferences when multiple variables assign individuals to a range of treatments.
Handle: RePEc:nbr:nberwo:17112
Template-Type: ReDIF-Paper 1.0
Title: Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany
Classification-JEL: N33; N34; N53; N54; Z1; Z10
Author-Name: Nico Voigtlaender
Author-Name: Hans-Joachim Voth
Author-Person: pvo5
Note: POL
Number: 17113
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17113
File-URL: http://www.nber.org/papers/w17113.pdf
File-Format: application/pdf
Publication-Status: published as Nico Voigtländer & Hans-Joachim Voth, 2012. "Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1339-1392.
Abstract: How persistent are cultural traits? This paper uses data on anti-Semitism in Germany and finds continuity at the local level over more than half a millennium. When the Black Death hit Europe in 1348-50, killing between one third and one half of the population, its cause was unknown. Many contemporaries blamed the Jews. Cities all over Germany witnessed mass killings of their Jewish population. At the same time, numerous Jewish communities were spared. We use plague pogroms as an indicator for medieval anti-Semitism. Pogroms during the Black Death are a strong and robust predictor of violence against Jews in the 1920s, and of votes for the Nazi Party. In addition, cities that saw medieval anti-Semitic violence also had higher deportation rates for Jews after 1933, were more likely to see synagogues damaged or destroyed in the 'Night of Broken Glass' in 1938, and their inhabitants wrote more anti-Jewish letters to the editor of the Nazi newspaper Der Stürmer.
Handle: RePEc:nbr:nberwo:17113
Template-Type: ReDIF-Paper 1.0
Title: Disability in Belgium: There is More than Meets the Eye
Classification-JEL: H55; J14; J21; J26
Author-Name: Alain Jousten
Author-Person: pjo61
Author-Name: Mathieu Lefebvre
Author-Person: ple277
Author-Name: Sergio Perelman
Author-Person: ppe146
Note: AG PE
Number: 17114
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17114
File-URL: http://www.nber.org/papers/w17114.pdf
File-Format: application/pdf
Publication-Status: published as Disability in Belgium: There Is More Than Meets the Eye, Alain Jousten, Mathieu Lefebvre, Sergio Perelman. in Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms, Wise. 2012
Abstract: The paper provides a perspective on the development of the Belgian disability insurance system. Using both survey and administrative data, it sketches a picture of the (changing) factors leading towards disability, as well as the outcomes in terms of program participation. The paper shows the key role of integrating other forms of early retirement programs into the analysis. The main findings are an unspectacular trend in the number of DI beneficiaries over time combined with a strong expansion of (early-) retirement schemes.
Handle: RePEc:nbr:nberwo:17114
Template-Type: ReDIF-Paper 1.0
Title: A Model of Shadow Banking
Classification-JEL: E44; G01; 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: 17115
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17115
File-URL: http://www.nber.org/papers/w17115.pdf
File-Format: application/pdf
Publication-Status: published as Nicola Gennaioli & Andrei Shleifer & Robert W. Vishny, 2013. "A Model of Shadow Banking," Journal of Finance, American Finance Association, vol. 68(4), pages 1331-1363, 08.
Abstract: We present a model of shadow banking in which financial intermediaries originate and trade loans, assemble these loans into diversified portfolios, and then finance these portfolios externally with riskless debt. In this model: i) outside investor wealth drives the demand for riskless debt and indirectly for securitization, ii) intermediary assets and leverage move together as in Adrian and Shin (2010), and iii) intermediaries increase their exposure to systematic risk as they reduce their idiosyncratic risk through diversification, as in Acharya, Schnabl, and Suarez (2010). Under rational expectations, the shadow banking system is stable and improves welfare. When investors and intermediaries neglect tail risks, however, the expansion of risky lending and the concentration of risks in the intermediaries create financial fragility and fluctuations in liquidity over time.
Handle: RePEc:nbr:nberwo:17115
Template-Type: ReDIF-Paper 1.0
Title: The Real Exchange Rate, Real Interest Rates, and the Risk Premium
Classification-JEL: F30; F31; G12
Author-Name: Charles Engel
Author-Person: pen14
Note: AP IFM
Number: 17116
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17116
File-URL: http://www.nber.org/papers/w17116.pdf
File-Format: application/pdf
Abstract: The well-known uncovered interest parity puzzle arises from the empirical regularity that, among developed country pairs, the high interest rate country tends to have high expected returns on its short term assets. At the same time, another strand of the literature has documented that high real interest rate countries tend to have currencies that are strong in real terms - indeed, stronger than can be accounted for by the path of expected real interest differentials under uncovered interest parity. These two strands - one concerning short-run expected changes and the other concerning the level of the real exchange rate - have apparently contradictory implications for the relationship of the foreign exchange risk premium and interest-rate differentials. This paper documents the puzzle, and shows that existing models appear unable to account for both empirical findings. The features of a model that might reconcile the findings are discussed.
Handle: RePEc:nbr:nberwo:17116
Template-Type: ReDIF-Paper 1.0
Title: Trade and the Greenhouse Gas Emissions from International Freight Transport
Classification-JEL: F17; F18; Q56
Author-Name: Anca D. Cristea
Author-Person: pcr140
Author-Name: David Hummels
Author-Person: phu100
Author-Name: Laura Puzzello
Author-Person: ppu73
Author-Name: Misak G. Avetisyan
Author-Person: pav59
Note: ITI
Number: 17117
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17117
File-URL: http://www.nber.org/papers/w17117.pdf
File-Format: application/pdf
Publication-Status: published as Cristea, Anca & Hummels, David & Puzzello, Laura & Avetisyan, Misak, 2013. "Trade and the greenhouse gas emissions from international freight transport," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 153-173.
Abstract: We collect extensive data on worldwide trade by transportation mode and use this to provide detailed comparisons of the greenhouse gas emissions associated with output versus international transportation of traded goods. International transport is responsible for 33 percent of world-wide trade-related emissions, and over 75 percent of emissions for major manufacturing categories like machinery, electronics and transport equipment. US exports intensively make use of air cargo; as a result two-thirds of its export-related emissions are due to international transport, and US exports by themselves generate a third of transport emissions worldwide. Inclusion of transport dramatically changes the ranking of countries by emission intensity. US production emissions per dollar of exports are 16 percent below the world average, but once we include transport US emissions per dollar exported are 59 percent above the world average. We use our data to systematically investigate whether trade inclusive of transport can lower emissions. In one-quarter of cases, the difference in output emissions is more than enough to compensate for the emissions cost of transport. Finally, we examine how likely patterns of trade growth will affect modal use and emissions. Full liberalization of tariffs and GDP growth concentrated in China and India lead to transport emissions growing much faster than the value of trade, due to trade shifting toward distant trading partners. Emissions growth from growing GDP dwarfs any growth from tariff liberalization.
Handle: RePEc:nbr:nberwo:17117
Template-Type: ReDIF-Paper 1.0
Title: The Availability and Utilization of 401(k) Loans
Classification-JEL: D14; D91
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: AG
Number: 17118
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17118
File-URL: http://www.nber.org/papers/w17118.pdf
File-Format: application/pdf
Publication-Status: published as The Availability and Utilization of 401(k) Loans, John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian. in Investigations in the Economics of Aging, Wise. 2012
Abstract: We document the loan provisions in 401(k) savings plans and how participants use 401(k) loans. Although only about 22% of savings plan participants who are allowed to borrow from their 401(k) have such a loan at any given point in time, almost half had used a 401(k) loan over a longer, seven-year horizon. The probability of having a loan follows a hump-shaped pattern with respect to age, job tenure, account balance, and salary, but conditional on having a loan, loan size as a fraction of 401(k) balances declines with respect to these variables. Participants are less likely to use loans in plans that charge a higher interest rate, and loans are smaller when plans allow fewer simultaneously outstanding loans, impose a shorter maximum possible loan duration, or charge a lower interest rate.
Handle: RePEc:nbr:nberwo:17118
Template-Type: ReDIF-Paper 1.0
Title: Improving College Performance and Retention the Easy Way: Unpacking the ACT Exam
Classification-JEL: I23
Author-Name: Eric P. Bettinger
Author-Person: pbe413
Author-Name: Brent J. Evans
Author-Name: Devin G. Pope
Note: ED LS
Number: 17119
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17119
File-URL: http://www.nber.org/papers/w17119.pdf
File-Format: application/pdf
Publication-Status: published as Eric P. Bettinger & Brent J. Evans & Devin G. Pope, 2013. "Improving College Performance and Retention the Easy Way: Unpacking the ACT Exam," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 26-52, May.
Abstract: Colleges rely on the ACT exam in their admission decisions to increase their ability to differentiate between students likely to succeed and those that have a high risk of under-performing and dropping out. We show that two of the four sub tests of the ACT, English and Mathematics, are highly predictive of positive college outcomes while the other two subtests, Science and Reading, provide little or no additional predictive power. This result is robust across various samples, specifications, and outcome measures. We demonstrate that focusing solely on the English and Mathematics test scores greatly enhances the predictive validity of the ACT exam.
Handle: RePEc:nbr:nberwo:17119
Template-Type: ReDIF-Paper 1.0
Title: How Performance Information Affects Human-Capital Investment Decisions: The Impact of Test-Score Labels on Educational Outcomes
Classification-JEL: I20; I21; J24
Author-Name: John P. Papay
Author-Name: Richard J. Murnane
Author-Person: pmu87
Author-Name: John B. Willett
Note: ED
Number: 17120
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17120
File-URL: http://www.nber.org/papers/w17120.pdf
File-Format: application/pdf
Abstract: Students receive abundant information about their educational performance, but how this information affects future educational-investment decisions is not well understood. Increasingly common sources of information are state-mandated standardized tests. On these tests, students receive a score and a label that summarizes their performance. Using a regression-discontinuity design, we find persistent effects of earning a more positive label on the college-going decisions of urban, low-income students. Consistent with a Bayesian-updating model, these effects are concentrated among students with weaker priors, specifically those who report before taking the test that they do not plan to attend a four-year college.
Handle: RePEc:nbr:nberwo:17120
Template-Type: ReDIF-Paper 1.0
Title: Global Crises and Equity Market Contagion
Classification-JEL: G01; G15
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Michael Ehrmann
Author-Person: peh4
Author-Name: Marcel Fratzscher
Author-Person: pfr34
Author-Name: Arnaud J. Mehl
Author-Person: pme225
Note: AP IFM
Number: 17121
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17121
File-URL: http://www.nber.org/papers/w17121.pdf
File-Format: application/pdf
Publication-Status: published as Geert Bekaert & Michael Ehrmann & Marcel Fratzscher & Arnaud Mehl, 2014. "The Global Crisis and Equity Market Contagion," Journal of Finance, American Finance Association, vol. 69(6), pages 2597-2649, December.
Abstract: Using the 2007-09 financial crisis as a laboratory, we analyze the transmission of crises to country-industry equity portfolios in 55 countries. We use a factor model to predict crisis returns, defining unexplained increases in factor loadings and residual correlations as indicative of contagion. We find statistically significant evidence of contagion from US markets and from the global financial sector, but the effects are economically small. By contrast, there has been substantial contagion from domestic equity markets to individual domestic equity portfolios, with its severity inversely related to the quality of countries' economic fundamentals and policies. This confirms the old "wake-up call" hypothesis, with markets and investors focusing substantially more on country-specific characteristics during the crisis.
Handle: RePEc:nbr:nberwo:17121
Template-Type: ReDIF-Paper 1.0
Title: Local Overweighting and Underperformance: Evidence from Limited Partner Private Equity Investments
Classification-JEL: G11; G23; G24; M13
Author-Name: Yael V. Hochberg
Author-Name: Joshua D. Rauh
Note: AP CF
Number: 17122
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17122
File-URL: http://www.nber.org/papers/w17122.pdf
File-Format: application/pdf
Publication-Status: published as Local Overweighting and Underperformance: Evidence from Limited Partner Private Equity Investments, 2013 (with Joshua Rauh), Review of Financial Studies, Vol. 26 No. 2
Abstract: Institutional investors of all types exhibit substantial home-state bias when investing in private equity (PE) funds. This effect is particularly pronounced for public pension funds, where the local overweighting amounts to 9.7% of the private equity portfolio on average, based on 5-year rolling average benchmarks. Public pension funds' own-state investments perform significantly worse than their out-of-state investments, an average of 3-4 percentage points of net IRR per year, and those that that overweight their portfolios towards home-state investments also perform worse overall. These underperformance patterns are not evident for other types of institutional investors, such as endowments, foundations and corporate pension funds, and we do not observe similar overweighting or underperformance of investments in neighboring states. Overweighting in home state investments by public pension funds is greater in states with higher levels of corruption, although there is no positive correlation of underperformance with corruption for these investors. The overweighting and underperformance of local investments cost public pension funds between $0.9 and $1.2 billion per year, depending on the benchmark.
Handle: RePEc:nbr:nberwo:17122
Template-Type: ReDIF-Paper 1.0
Title: Irving Fisher and Price-Level Targeting in Austria: Was Silver the Answer?
Classification-JEL: E31; E4; E58; N1; N33
Author-Name: Richard C.K. Burdekin
Author-Person: pbu17
Author-Name: Kris James Mitchener
Author-Name: Marc D. Weidenmier
Author-Person: pwe14
Note: DAE ME
Number: 17123
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17123
File-URL: http://www.nber.org/papers/w17123.pdf
File-Format: application/pdf
Publication-Status: published as Richard C.K. Burdekin & Kris James Mitchener & Marc D. Weidenmier, 2012. "Irving Fisher and Price‐Level Targeting in Austria: Was Silver the Answer?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(4), pages 733-750, 06.
Abstract: The question of price level versus inflation targeting remains controversial. Disagreement concerns, not so much the desirability of price stability, but rather the means of achieving it. Irving Fisher argued for a commodity dollar standard where the purchasing power of money was fixed by indexing it to a basket of commodities. We show that movements in the price of silver closely track the movements in overall prices during the classical gold standard era. The one-to-one relationship between paper and silver bonds suggests that a simple "silver rule" could have sufficed to fix the purchasing power of money.
Handle: RePEc:nbr:nberwo:17123
Template-Type: ReDIF-Paper 1.0
Title: Privacy and Innovation
Classification-JEL: O31; O38
Author-Name: Avi Goldfarb
Author-Person: pgo53
Author-Name: Catherine Tucker
Author-Person: ptu36
Note: PR
Number: 17124
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17124
File-URL: http://www.nber.org/papers/w17124.pdf
File-Format: application/pdf
Publication-Status: published as Avi Goldfarb & Catherine Tucker, 2012. "Privacy and Innovation," Innovation Policy and the Economy, University of Chicago Press, vol. 12(1), pages 65 - 90.
Publication-Status: published as Privacy and Innovation, Avi Goldfarb, Catherine Tucker. in Innovation Policy and the Economy, Volume 12, Lerner and Stern. 2012
Abstract: Information and communication technology now enables firms to collect detailed and potentially intrusive data about their customers both easily and cheaply. This means that privacy concerns are no longer limited to government surveillance and public figures' private lives. The empirical literature on privacy regulation shows that privacy regulation may affect the extent and direction of data-based innovation. We also show that the impact of privacy regulation can be extremely heterogeneous. Therefore, we argue that digitization means that privacy policy is now a part of innovation policy.
Handle: RePEc:nbr:nberwo:17124
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Prospective Payment on Admission and Treatment Policy: Evidence from Inpatient Rehabilitation Facilities
Classification-JEL: H42; H51; I11; I18
Author-Name: Neeraj Sood
Author-Person: pso62
Author-Name: Peter J. Huckfeldt
Author-Name: David C. Grabowski
Author-Name: Joseph P. Newhouse
Author-Name: José J. Escarce
Note: EH
Number: 17125
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17125
File-URL: http://www.nber.org/papers/w17125.pdf
File-Format: application/pdf
Publication-Status: published as Sood, Neeraj & Huckfeldt, Peter J. & Grabowski, David C. & Newhouse, Joseph P. & Escarce, José J., 2013. "The effect of prospective payment on admission and treatment policy: Evidence from inpatient rehabilitation facilities," Journal of Health Economics, Elsevier, vol. 32(5), pages 965-979.
Abstract: We examine provider responses to the Medicare inpatient rehabilitation facility (IRF) prospective payment system (PPS), which simultaneously reduced marginal reimbursement and increased average reimbursement. IRFs could respond to the PPS by changing the total number of patients admitted, admitting different types of patients, or changing the intensity of care for admitted patients. We use Medicare claims data to separately estimate each type of provider response to the PPS. We also examine changes in patient outcomes and spillover effects on other post acute care providers. We find that costs of care initially fell following the PPS implementation, which we attribute to changes in treatment decisions rather than the types of patients admitted to IRFs. However, the probability of admission to IRFs increased after the PPS due to the expanded admission policies of providers. We find modest spillover effects on skilled nursing home costs and no substantive impact on patient health outcomes.
Handle: RePEc:nbr:nberwo:17125
Template-Type: ReDIF-Paper 1.0
Title: Price Setting in a Leading Swiss Online Supermarket
Classification-JEL: E3
Author-Name: Martin Berka
Author-Person: pbe194
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Thomas Rudolph
Note: IFM
Number: 17126
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17126
File-URL: http://www.nber.org/papers/w17126.pdf
File-Format: application/pdf
Abstract: We study a newly released data set of scanner prices for food products in a large Swiss online supermarket. We find that average prices change about every two months, but when we exclude temporary sales, prices are extremely sticky, changing on average once every three years. Non-sale price behavior is broadly consistent with menu cost models of sticky prices. When we focus specifically on the behavior of sale prices, however, we find that the characteristics of price adjustment seems to be substantially at odds with standard theory.
Handle: RePEc:nbr:nberwo:17126
Template-Type: ReDIF-Paper 1.0
Title: Staggered Boards and the Wealth of Shareholders: Evidence from Two Natural Experiments
Classification-JEL: 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: CF LE
Number: 17127
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17127
File-URL: http://www.nber.org/papers/w17127.pdf
File-Format: application/pdf
Abstract: While staggered boards have been documented to be negatively correlated with firm valuation, such association might be due to staggered boards either bringing about lower firm value or merely reflecting the tendency of low-value firms to have staggered boards. In this paper, we use two natural experiments to shed light on the causality question. In particular, we focus on two recent court rulings, separated by several weeks, that affected in opposite directions the antitakeover force of staggered boards: (i) a ruling by the Delaware Chancery Court approving the legality of shareholder-adopted bylaws that weaken the antitakeover force of a staggered board by moving the company's annual meeting up from later parts of the calendar year to January, and (ii) the subsequent decision by the Delaware Supreme Court to overturn the Chancery Court ruling and invalidate such bylaws. We find evidence consistent with the hypothesis that the Chancery Court ruling increased the value of affected companies - namely, companies with a staggered board and an annual meeting in later parts of the calendar year - and that the Supreme Court ruling produced a reduction in the affected companies' value. The identified effects were most pronounced for firms for which control contests are especially relevant due to relative underperformance, small firm size, high asset pledgibility, or high takeover intensity in their industry. Our findings have implications for the long-standing debate on staggered boards. The findings are consistent with the market's viewing staggered boards as bringing about a reduction in firm value. Our findings are thus consistent with leading institutional investors' policies in favor of board de-staggering, and with the view that the ongoing process of board de-staggering in public firms can be expected to enhance shareholder value.
Handle: RePEc:nbr:nberwo:17127
Template-Type: ReDIF-Paper 1.0
Title: The Financial Crisis and the Well-Being of Americans
Classification-JEL: E01; E32; H0; I31
Author-Name: Angus S. Deaton
Author-Person: pde30
Note: AG EFG PE
Number: 17128
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17128
File-URL: http://www.nber.org/papers/w17128.pdf
File-Format: application/pdf
Publication-Status: published as Angus Deaton, 2012. "The financial crisis and the well-being of Americans," Oxford Economic Papers, Oxford University Press, vol. 64(1), pages 1-26, January.
Abstract: The Great Recession was associated with large changes in income, wealth, and unemployment, changes that affected many lives. Since January 2008, the Gallup Organization has been collecting daily data on 1,000 Americans each day, with a range of self-reported well-being (SWB) questions. I use these data to examine how the recession affected the emotional and evaluative lives of the population, as well as of subgroups within it. In the fall of 2008, around the time of the collapse of Lehman Brothers, and lasting into the spring of 2009, at the bottom of the stock market, Americans reported sharp declines in their life evaluation, sharp increases in worry and stress, and declines in positive affect. By the end of 2010, in spite of continuing high unemployment, these measures had largely recovered, though worry remained higher and life evaluation lower than in January 2008. The SWB measures do a much better job of monitoring short-run levels of anxiety as the crisis unfolded than they do of reflecting the evolution of the economy over a year or two. Even large macroeconomic shocks to income and unemployment can be expected to produce only small and hard to detect effects on SWB measures. SWB, particularly evaluation of life as a whole, is sensitive to question order effects. Asking political questions before the life evaluation question reduces reported life evaluation by an amount that dwarfs the effects of even the worst of the crisis; these order effects persist deep into the interview, and condition the reporting of hedonic experience and of satisfaction with standard of living. Methods for controlling these effects need to be developed and tested if national measures are to be comparable over space and time.
Handle: RePEc:nbr:nberwo:17128
Template-Type: ReDIF-Paper 1.0
Title: Mobile Banking: The Impact of M-Pesa in Kenya
Classification-JEL: E40; O16; O33
Author-Name: Isaac Mbiti
Author-Person: pmb15
Author-Name: David N. Weil
Author-Person: pwe24
Note: ME
Number: 17129
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17129
File-URL: http://www.nber.org/papers/w17129.pdf
File-Format: application/pdf
Publication-Status: published as Mobile Banking: The Impact of M-Pesa in Kenya, Isaac Mbiti, David N. Weil. in African Successes, Volume III: Modernization and Development, Edwards, Johnson, and Weil. 2016
Abstract: M-Pesa is a mobile phone based money transfer system in Kenya which grew at a blistering pace following its inception in 2007. We examine how M-Pesa is used as well as its economic impacts. Analyzing data from two waves of individual data on financial access in Kenya, we find that increased use of M-Pesa lowers the propensity of people to use informal savings mechanisms such as ROSCAS, but raises the probability of their being banked. Using aggregate data, we calculate the velocity of M-Pesa at roughly four person-to-person transfers per month. In addition, we find that M-Pesa causes decreases in the prices of competing money transfer services such as Western Union. While we find little evidence that people use their M-Pesa accounts as a place to store wealth, our results suggest that M-Pesa improves individual outcomes by promoting banking and increasing transfers.
Handle: RePEc:nbr:nberwo:17129
Template-Type: ReDIF-Paper 1.0
Title: An Estimation of Economic Models with Recursive Preferences
Classification-JEL: E21; G12
Author-Name: Xiaohong Chen
Author-Person: pch1746
Author-Name: Jack Favilukis
Author-Person: pfa609
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Note: AP EFG
Number: 17130
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17130
File-URL: http://www.nber.org/papers/w17130.pdf
File-Format: application/pdf
Publication-Status: published as “An Estimation of Recursive Preferences,” (with Jack Favilukis and Xiaohong Chen), in Quantitative Economics (forthcoming).
Abstract: This paper presents estimates of key preference parameters of the Epstein and Zin (1989, 1991) and Weil (1989) (EZW) recursive utility model, evaluates the model's ability to fit asset return data relative to other asset pricing models, and investigates the implications of such estimates for the unobservable aggregate wealth return. Our empirical results indicate that the estimated relative risk aversion parameter ranges from 17-60, with higher values for aggregate consumption than for stockholder consumption, while the estimated elasticity of intertemporal substitution is above one. In addition, the estimated model-implied aggregate wealth return is found to be weakly correlated with the CRSP value-weighted stock market return, suggesting that the return to human wealth is negatively correlated with the aggregate stock market return.
Handle: RePEc:nbr:nberwo:17130
Template-Type: ReDIF-Paper 1.0
Title: Sharing the Burden: Monetary and Fiscal Responses to a World Liquidity Trap
Classification-JEL: E5; F41; F42
Author-Name: David Cook
Author-Person: pco19
Author-Name: Michael B. Devereux
Author-Person: pde32
Note: IFM
Number: 17131
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17131
File-URL: http://www.nber.org/papers/w17131.pdf
File-Format: application/pdf
Publication-Status: published as David Cook & Michael B. Devereux, 2013. "Sharing the Burden: Monetary and Fiscal Responses to a World Liquidity Trap," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 190-228, July.
Abstract: With integrated trade and financial markets, a collapse in aggregate demand in a large country can cause 'natural real interest rates' to fall below zero in all countries, giving rise to a global 'liquidity trap'. This paper explores the policy choices that maximize the joint welfare of all countries following such a shock, when governments cooperate on both fiscal and monetary policy. Adjusting to a large negative demand shock requires raising world aggregate demand, as well as redirecting demand towards the source (home) country. The key feature of demand shocks in a liquidity trap is that relative prices respond perversely. A negative shock causes an appreciation of the home terms of trade, exacerbating the slump in the home country. At the zero bound, the home country cannot counter this shock. Because of this, it may be optimal for the foreign policy-maker to raise interest rates. Strikingly, the foreign country may choose to have a positive policy interest rate, even though its 'natural real interest rate' is below zero. A combination of relatively tight monetary policy in the foreign country combined with substantial fiscal expansion in the home country achieves the level and composition of world expenditure that maximizes the joint welfare of the home and foreign country. Thus, in response to conditions generating a global liquidity trap, there is a critical mutual interaction between monetary and fiscal policy.
Handle: RePEc:nbr:nberwo:17131
Template-Type: ReDIF-Paper 1.0
Title: Income, Democracy, and the Cunning of Reason
Classification-JEL: D78; I39; N10; O10
Author-Name: Daniel Treisman
Author-Person: ptr286
Note: POL
Number: 17132
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17132
File-URL: http://www.nber.org/papers/w17132.pdf
File-Format: application/pdf
Abstract: A long-standing debate pits those who think economic development leads to democratization against those who argue that both result from distant historical causes. Using the most comprehensive estimates of national income available, I show that development is associated with more democratic government--but in the medium run (10 to 20 years). The reason is that, for the most part, higher income only prompts a breakthrough to more democratic politics after the incumbent leader falls from power. And in the short run, faster economic growth increases the leader's odds of survival. This logic--for which I provide evidence at the levels of individual countries and the world--helps explain why democracy advances in waves followed by periods of stasis and why dictators, concerned only to entrench themselves in power, end up preparing their countries to leap to a higher level of democracy when they are eventually overthrown.
Handle: RePEc:nbr:nberwo:17132
Template-Type: ReDIF-Paper 1.0
Title: Risk, Monetary Policy and the Exchange Rate
Classification-JEL: E0; E43; E52; F3; F31; F41
Author-Name: Gianluca Benigno
Author-Person: pbe206
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Salvatore Nisticò
Author-Person: pni67
Note: AP EFG IFM ME
Number: 17133
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17133
File-URL: http://www.nber.org/papers/w17133.pdf
File-Format: application/pdf
Publication-Status: published as Gianluca Benigno & Pierpaolo Benigno & Salvatore Nistic�, 2012. "Risk, Monetary Policy, and the Exchange Rate," NBER Macroeconomics Annual, University of Chicago Press, vol. 26(1), pages 247 - 309.
Publication-Status: published as Risk, Monetary Policy and the Exchange Rate, Gianluca Benigno, Pierpaolo Benigno, Salvatore Nisticò. in NBER Macroeconomics Annual 2011, Volume 26, Acemoglu and Woodford. 2012
Abstract: In this research, we provide new empirical evidence on the importance of time-varying uncertainty for the exchange rate and the excess return in currency markets. Following an increase in monetary policy uncertainty, the dollar exchange rate appreciates in the medium run, while an increase in the volatility of productivity leads to a dollar depreciation. We propose a general-equilibrium theory of exchange rate determination based on the interaction between monetary policy and time-varying uncertainty aimed at understanding these regularities. In the model, the behaviour of the exchange rate following nominal and real volatility shocks is consistent with the empirical evidence. Furthermore we show that risk factors and interest-rate smoothing are important in accounting for the negative coefficient in the UIP regression.
Handle: RePEc:nbr:nberwo:17133
Template-Type: ReDIF-Paper 1.0
Title: Lifecycle Impacts of the Financial and Economic Crisis on Household Optimal Consumption, Portfolio Choice, and Labor Supply
Classification-JEL: D1; G11; G23; G35; J14; J26; J32
Author-Name: Jingjing Chai
Author-Name: Raimond Maurer
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Ralph Rogalla
Note: AG LS
Number: 17134
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17134
File-URL: http://www.nber.org/papers/w17134.pdf
File-Format: application/pdf
Publication-Status: published as Chai, Jingjing, Raimond Maurer, Olivia S. Mitchell, & Ralph Rogalla. (2012). “Lifecycle Impacts of the Financial and Economic Crisis on Household Optimal Consumption, Portfolio Choice, and Labor Supply.” In Reshaping Retirement Security: Lessons from the Global Financial Crisis. Eds. R. Maurer, O.S. Mitchell, and M. Warshawsky. Oxford: Oxford University Press. 120-151.
Abstract: The direct financial impact of the financial crisis has been to deal a heavy blow to investment-based pensions; many workers lost a substantial portion of their retirement saving. The financial sector implosion produced an economic crisis for the rest of the economy via high unemployment and reduced labor earnings, which reduced household contributions to Social Security and some private pensions. Our research asks which types of individuals were most affected by these dual financial and economic shocks, and it also explores how people may react by changing their consumption, saving and investment, work and retirement, and annuitization decisions. We do so with a realistically calibrated lifecycle framework allowing for time-varying investment opportunities and countercyclical risky labor income dynamics. We show that households near retirement will reduce both short- and long-term consumption, boost work effort, and defer retirement. Younger cohorts will initially reduce their work hours, consumption, saving, and equity exposure; later in life, they will work more, retire later, consume less, invest more in stocks, save more, and reduce their demand for private annuities.
Handle: RePEc:nbr:nberwo:17134
Template-Type: ReDIF-Paper 1.0
Title: Time for Children: Trends in the Employment Patterns of Parents, 1967-2009
Classification-JEL: J13; J22; J38
Author-Name: Liana E. Fox
Author-Name: Wen-Jui Han
Author-Name: Christopher Ruhm
Author-Person: pru7
Author-Name: Jane Waldfogel
Note: CH LS PE
Number: 17135
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17135
File-URL: http://www.nber.org/papers/w17135.pdf
File-Format: application/pdf
Publication-Status: published as Liana Fox & Wen-Jui Han & Christopher Ruhm & Jane Waldfogel, 2013. "Time for Children: Trends in the Employment Patterns of Parents, 1967â2009," Demography, Springer, vol. 50(1), pages 25-49, February.
Abstract: Utilizing data from the 1967-2009 years of the March Current Population Surveys, we examine two important resources for children's well-being: time and money. We document trends in parental employment, from the perspective of children, and show what underlies these trends. We find that increases in family work hours mainly reflect movements into jobs by parents who, in prior decades, would have remained at home. This increase in market work has raised incomes for children in the typical two-parent family but not for those in lone-parent households. Time use data from 1975 and 2003-2008 reveal that working parents spend less time engaged in primary childcare than their counterparts without jobs but more than employed peers in previous cohorts. Analysis of 2004 work schedule data suggests that non-daytime work provides an alternative method of coordinating employment schedules for some dual-earner families.
Handle: RePEc:nbr:nberwo:17135
Template-Type: ReDIF-Paper 1.0
Title: A Pyrrhic Victory? - Bank Bailouts and Sovereign Credit Risk
Classification-JEL: D62; E58; G21; G28; G38
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Itamar Drechsler
Author-Name: Philipp Schnabl
Author-Person: psc789
Note: AP CF IFM
Number: 17136
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17136
File-URL: http://www.nber.org/papers/w17136.pdf
File-Format: application/pdf
Publication-Status: published as VIRAL ACHARYA & ITAMAR DRECHSLER & PHILIPP SCHNABL, 2014. "A Pyrrhic Victory? Bank Bailouts and Sovereign Credit Risk," The Journal of Finance, vol 69(6), pages 2689-2739.
Abstract: We show that financial sector bailouts and sovereign credit risk are intimately linked. A bailout benefits the economy by ameliorating the under-investment problem of the financial sector. However, increasing taxation of the non-financial sector to fund the bailout may be inefficient since it weakens its incentive to invest, decreasing growth. Instead, the sovereign may choose to fund the bailout by diluting existing government bondholders, resulting in a deterioration of the sovereign's creditworthiness. This deterioration feeds back onto the financial sector, reducing the value of its guarantees and existing bond holdings and increasing its sensitivity to future sovereign shocks. We provide empirical evidence for this two-way feedback between financial and sovereign credit risk using data on the credit default swaps (CDS) of the Eurozone countries for 2007-10. We show that the announcement of financial sector bailouts was associated with an immediate, unprecedented widening of sovereign CDS spreads and narrowing of bank CDS spreads; however, post-bailouts there emerged a significant co-movement between bank CDS and sovereign CDS, even after controlling for banks' equity performance, the latter being consistent with an effect of the quality of sovereign guarantees on bank credit risk.
Handle: RePEc:nbr:nberwo:17136
Template-Type: ReDIF-Paper 1.0
Title: Animal Spirits, Financial Crises and Persistent Unemployment
Classification-JEL: E0; E12; E24
Author-Name: Roger Farmer
Author-Person: pfa3
Note: EFG
Number: 17137
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17137
File-URL: http://www.nber.org/papers/w17137.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
Publication-Status: published as Roger E.A. Farmer, 2013. "Animal Spirits, Financial Crises and Persistent Unemployment," The Economic Journal, vol 123(568), pages 317-340.
Abstract: This paper develops a rational expectations model with multiple equilibrium unemployment rates where the price of capital may be unbounded above. I argue that this property is an important feature of any rational-agent explanation of a financial crisis, since for the expansion phase of the crisis to be rational, investors must credibly believe that asset prices could keep increasing forever with positive probability. I explain the sudden crash in asset prices that precipitates a financial crisis as a large negative self-fulfilling shock to the expectation of the future price of capital. This shock causes a permanent reduction in wealth and consumption and a permanent increase in the unemployment rate. My work suggests that economic policies designed to reduce the volatility of asset market movements will significantly increase economic welfare.
Handle: RePEc:nbr:nberwo:17137
Template-Type: ReDIF-Paper 1.0
Title: Disability Programs, Health and Retirement in Denmark since 1960
Classification-JEL: H51; H55; I18; J26
Author-Name: Paul Bingley
Author-Name: Nabanita Datta Gupta
Author-Person: pda42
Author-Name: Peder J. Pedersen
Author-Person: ppe521
Note: AG EH
Number: 17138
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17138
File-URL: http://www.nber.org/papers/w17138.pdf
File-Format: application/pdf
Abstract: This paper investigates the interaction between measures of health, disability pension take up and labor market performance in Denmark by charting their development over time and by examining how they are affected by key policy reforms in the area of early retirement. The main emphasis is on the long-run development of the Social Disability Pension (SDP) program, and whether it concurs with trends in population health based on mortality indicators (both overall and cause-specific) and with self-reported health. A strong relationship is found between labor force activity measures and non-health related programs for early retirement for those 60 and older. However, no clear relationship is evident between SDP take up and the health indicators. One reason for the lack of a correlation is most probably that SDP is "on its own track" due to program innovations and reforms creating competing risks or program substitution especially for the 50+ population.
Handle: RePEc:nbr:nberwo:17138
Template-Type: ReDIF-Paper 1.0
Title: Immigration, Jobs and Employment Protection: Evidence from Europe
Classification-JEL: J24; J61; J62
Author-Name: Francesco D'Amuri
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: LS
Number: 17139
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17139
File-URL: http://www.nber.org/papers/w17139.pdf
File-Format: application/pdf
Publication-Status: published as “Immigration, Jobs and Labor Market Institutions: Evidence from Europe” (with F. D’Amuri) Journal of European Economic Association, Volume 12, Issue 2, pages 432–464, April 2014
Abstract: In this paper we analyze the effect of immigrants on native jobs in fourteen Western European countries. We test whether the inflow of immigrants in the period 1996-2007 decreased employment rates and/or if it altered the occupational distribution of natives with similar education and age. We find no evidence of the first but significant evidence of the second: immigrants took "simple" (manual-routine) type of occupations and natives moved, in response, toward more "complex" (abstract-communication) jobs. The results are robust to the use of an IV strategy based on past settlement of different nationalities of immigrants across European countries. We also document the labor market flows through which such a positive reallocation took place: immigration stimulated job creation, and the complexity of jobs offered to new native hires was higher relative to the complexity of destructed native jobs. Finally, we find evidence that the occupation reallocation of natives was significantly larger in countries with more flexible labor laws. This tendency was particularly strong for less educated workers.
Handle: RePEc:nbr:nberwo:17139
Template-Type: ReDIF-Paper 1.0
Title: Inference for VARs Identified with Sign Restrictions
Classification-JEL: C1; C32
Author-Name: Hyungsik Roger Moon
Author-Name: Frank Schorfheide
Author-Person: psc19
Author-Name: Eleonora Granziera
Author-Person: pgr548
Author-Name: Mihye Lee
Note: EFG ME
Number: 17140
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17140
File-URL: http://www.nber.org/papers/w17140.pdf
File-Format: application/pdf
Publication-Status: published as Eleonora Granziera & Hyungsik Roger Moon & Frank Schorfheide, 2018. "Inference for VARs identified with sign restrictions," Quantitative Economics, Econometric Society, vol. 9(3), pages 1087-1121, November.
Abstract: There is a fast growing literature that partially identifies structural vector autoregressions (SVARs) by imposing sign restrictions on the responses of a subset of the endogenous variables to a particular structural shock (sign-restricted SVARs). To date, the methods that have been used are only justified from a Bayesian perspective. This paper develops methods of constructing error bands for impulse response functions of sign-restricted SVARs that are valid from a frequentist perspective. We also provide a comparison of frequentist and Bayesian error bands in the context of an empirical application - the former can be twice as wide as the latter.
Handle: RePEc:nbr:nberwo:17140
Template-Type: ReDIF-Paper 1.0
Title: Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance
Classification-JEL: F1; F2; F36
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Maggie Chen
Author-Person: pch376
Note: IFM ITI
Number: 17141
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17141
File-URL: http://www.nber.org/papers/w17141.pdf
File-Format: application/pdf
Publication-Status: published as Laura Alfaro & Maggie Xiaoyang Chen, 2012. "Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 30-55, August.
Abstract: We examine the differential response of establishments to the recent global financial crisis with particular emphasis on the role of foreign ownership. Using a worldwide establishment panel dataset, we investigate how multinational subsidiaries around the world responded to the crisis relative to local establishments. We find that, first, multinational subsidiaries fared on average better than local counterfactuals with similar economic characteristics. Second, among multinational subsidiaries, establishments sharing stronger vertical production and financial linkages with parents exhibited greater resilience. Finally, in contrast to the crisis period, the effect of foreign ownership and linkages on establishment performance was insignificant in non-crisis years.
Handle: RePEc:nbr:nberwo:17141
Template-Type: ReDIF-Paper 1.0
Title: Government Policy, Credit Markets and Economic Activity
Classification-JEL: E42; E58; E63
Author-Name: Lawrence Christiano
Author-Person: pch45
Author-Name: Daisuke Ikeda
Note: EFG
Number: 17142
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17142
File-URL: http://www.nber.org/papers/w17142.pdf
File-Format: application/pdf
Abstract: The US government has recently conducted large scale purchases of assets and implemented policies that reduced the cost of funds to financial institutions. Arguably these policies have helped to correct credit market dysfunctions, allowing interest rate spreads to shrink and output to begin a recovery. We study four models of financial frictions which explore different channels by which these effects might have occured. Recent events have sparked a renewed interest in leverage restrictions and the consequences of bailouts of the creditors of banks with under-performing assets. We use two of our models to consider the welfare and other effects of these policies.
Handle: RePEc:nbr:nberwo:17142
Template-Type: ReDIF-Paper 1.0
Title: Globalization, Structural Change and Productivity Growth
Classification-JEL: O1
Author-Name: Margaret S. McMillan
Author-Person: pmc26
Author-Name: Dani Rodrik
Author-Person: pro60
Note: ITI
Number: 17143
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17143
File-URL: http://www.nber.org/papers/w17143.pdf
File-Format: application/pdf
Publication-Status: published as “Globalization, Structural Change and Productivity Growth,” 2011. In Making Globalization Socially Sustainable, edited by Mark Bachetta and Marion Jansen, International Labor Organization, Geneva Switzerland. (with Dani Rodrik)
Abstract: Large gaps in labor productivity between the traditional and modern parts of the economy are a fundamental reality of developing societies. In this paper, we document these gaps, and emphasize that labor flows from low-productivity activities to high-productivity activities are a key driver of development. Our results show that since 1990 structural change has been growth reducing in both Africa and Latin America, with the most striking changes taking place in Latin America. The bulk of the difference between these countries' productivity performance and that of Asia is accounted for by differences in the pattern of structural change - with labor moving from low- to high-productivity sectors in Asia, but in the opposite direction in Latin America and Africa. In our empirical work, we identify three factors that help determine whether (and the extent to which) structural change contributes to overall productivity growth. In countries with a relatively large share of natural resources in exports, structural change has typically been growth reducing. Even though these "enclave" sectors usually operate at very high productivity, they cannot absorb the surplus labor from agriculture. By contrast, competitive or undervalued exchange rates and labor market flexibility have contributed to growth enhancing structural change.
Handle: RePEc:nbr:nberwo:17143
Template-Type: ReDIF-Paper 1.0
Title: Financing Labor
Classification-JEL: D53; E24; E44; G31; G32
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Nittai K. Bergman
Author-Name: Amit Seru
Author-Person: pse308
Note: CF EFG LS ME
Number: 17144
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17144
File-URL: http://www.nber.org/papers/w17144.pdf
File-Format: application/pdf
Publication-Status: published as Efraim Benmelech & Nittai Bergman & Amit Seru, 2021. "Financing Labor," Review of Finance, vol 25(5), pages 1365-1393.
Abstract: Financial market imperfections can have significant impact on employment decisions of firms. We illustrate the economic importance of this channel by demonstrating that the responsiveness of employment decisions to firms' financial health is quantitatively similar to the much-studied responsiveness of investment decisions to cash-flows. We use a collage of three 'quasi-experiments' used previously in the investment-cash flow and finance-growth literatures to trace the effects of finance on employment. Our results suggest that financial constraints and the availability of credit play an important role in firm-level employment decisions, as well as aggregate unemployment outcomes
Handle: RePEc:nbr:nberwo:17144
Template-Type: ReDIF-Paper 1.0
Title: Property Taxation, Zoning, and Efficiency: A Dynamic Analysis
Classification-JEL: H21; H72
Author-Name: Stephen Coate
Author-Person: pco66
Note: PE POL
Number: 17145
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17145
File-URL: http://www.nber.org/papers/w17145.pdf
File-Format: application/pdf
Abstract: This paper revisits the classic argument that a system of local governments financing public service provision via property taxes will produce an efficient allocation of both housing and services if communities can implement zoning ordinances. The novel feature of the analysis is a dynamic model in which housing stocks and public policies are endogenously determined. In each period, citizens choose both the level of services for their communities and the zoning ordinances that govern future new construction. The main result of the paper is that there does not exist an equilibrium which has a steady state that is both efficient and satisfies a local stability property. The paper also develops examples in which equilibrium allocations converge to a steady state in which there is over-zoning and households are forced to over-consume housing. The findings of the paper challenge the well-known Benefit View of the property tax.
Handle: RePEc:nbr:nberwo:17145
Template-Type: ReDIF-Paper 1.0
Title: Trade Credit Contracts
Classification-JEL: G32
Author-Name: Leora F. Klapper
Author-Person: pkl66
Author-Name: Luc Laeven
Author-Person: pla174
Author-Name: Raghuram Rajan
Author-Person: pra149
Note: CF
Number: 17146
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17146
File-URL: http://www.nber.org/papers/w17146.pdf
File-Format: application/pdf
Publication-Status: published as Leora Klapper & Luc Laeven & Raghuram Rajan, 2012. "Trade Credit Contracts," Review of Financial Studies, Society for Financial Studies, vol. 25(3), pages 838-867.
Abstract: We employ a novel dataset on almost 30,000 trade credit contracts to describe the broad characteristics of the parties that contract together and the key contractual terms of these contracts. Whereas prior work has typically used information on only one side of the buyer-seller transaction, this paper utilizes information on both, allowing for the first analysis of buyer-seller pairs. An equally important distinction is that we have multiple contracts for the same buyer or supplier firms, rather than a firm-average response, allowing for the correction of time-invariant firm characteristics that might determine the choice of credit terms. We find that the largest and most creditworthy buyers receive contracts with the longest maturities from smaller suppliers, and that discounts for early payment tend to be offered to riskier buyers. (JEL G32)
Handle: RePEc:nbr:nberwo:17146
Template-Type: ReDIF-Paper 1.0
Title: Democratic Dividends: Stockholding, Wealth and Politics in New York, 1791-1826
Classification-JEL: K22; N21; N41
Author-Name: Eric Hilt
Author-Person: phi104
Author-Name: Jacqueline Valentine
Note: DAE LE
Number: 17147
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17147
File-URL: http://www.nber.org/papers/w17147.pdf
File-Format: application/pdf
Publication-Status: published as Hilt, Eric & Valentine, Jacqueline, 2012. "Democratic Dividends: Stockholding, Wealth, and Politics in New York, 1791–1826," The Journal of Economic History, Cambridge University Press, vol. 72(02), pages 332-363, June.
Abstract: This paper analyzes the early history of corporate shareholding, and its relationship with political change. In the late eighteenth century, corporations were extremely rare and were dominated by elites, but in the early nineteenth century, after American politics became significantly more democratic, corporations proliferated rapidly. Using newly collected data, this paper compares the wealth and status of New York City households who owned corporate stock to the general population there both in 1791, when there were only two corporations in the state, and in 1826, when there were hundreds. The results indicate that although corporate stock was held principally by the city's elite merchants in both periods, share ownership became more widespread over time among less affluent households. In particular, the corporations created in the 1820s were owned and managed by investors who were less wealthy than the stockholders of corporations created in earlier, less democratic periods in the state's history.
Handle: RePEc:nbr:nberwo:17147
Template-Type: ReDIF-Paper 1.0
Title: Dimensions of Health in the Elderly Population
Classification-JEL: I1; I12
Author-Name: David M. Cutler
Author-Person: pcu64
Author-Name: Mary Beth Landrum
Note: AG EH
Number: 17148
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17148
File-URL: http://www.nber.org/papers/w17148.pdf
File-Format: application/pdf
Publication-Status: published as Dimensons of Health in the Elderly Population, David M. Cutler, Mary Beth Landrum. in Investigations in the Economics of Aging, Wise. 2012
Abstract: In this paper, we characterize the multi-faceted health of the elderly and understand how health along multiple dimensions has changed over time. Our data are from the Medicare Current Beneficiary Survey, 1991-2007. We show that 19 measures of health can be combined into three broad categories: a first dimension representing severe physical and social incapacity such as difficulty dressing or bathing; a second dimension representing less severe difficulty such as walking long distances or lifting heavy objects; and a third dimension representing vision and hearing impairment. These dimensions have changed at different rates over time. The first and third have declined rapidly over time, while the second has not. The improvement in health is not due to differential mortality of the sick or a new generation of more healthy people entering old age. Rather, the aging process itself is associated with less rapid deterioration in health. We speculate about the factors that may lead to this.
Handle: RePEc:nbr:nberwo:17148
Template-Type: ReDIF-Paper 1.0
Title: Too-Systemic-To-Fail: What Option Markets Imply About Sector-wide Government Guarantees
Classification-JEL: G01; G12; G2; G38
Author-Name: Bryan T. Kelly
Author-Name: Hanno Lustig
Author-Person: plu17
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: AP EFG
Number: 17149
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17149
File-URL: http://www.nber.org/papers/w17149.pdf
File-Format: application/pdf
Publication-Status: published as Bryan Kelly & Hanno Lustig & Stijn Van Nieuwerburgh, 2016. "Too-Systemic-to-Fail: What Option Markets Imply about Sector-Wide Government Guarantees," American Economic Review, American Economic Association, vol. 106(6), pages 1278-1319, June.
Abstract: Investors in option markets price in a substantial collective government bailout guarantee in the financial sector, which puts a floor on the equity value of the financial sector as a whole, but not on the value of the individual firms. The guarantee makes put options on the financial sector index cheap relative to put options on its member banks. The basket-index put spread rises fourfold from 0.8 cents per dollar insured before the financial crisis to 3.8 cents during the crisis for deep out-of-the-money options. The spread peaks at 12.5 cents per dollar, or 70% of the value of the index put. The rise in the put spread cannot be attributed to an increase in idiosyncratic risk because the correlation of stock returns increased during the crisis. The government's collective guarantee partially absorbs financial sector-wide tail risk, which lowers index put prices but not individual put prices, and hence can explain the basket-index spread. A structural model with financial disasters quantitatively matches these facts and attributes as much as half of the value of the financial sector to the bailout guarantee during the crisis. The model solves the problem of how to measure systemic risk in a world where the government distorts market prices.
Handle: RePEc:nbr:nberwo:17149
Template-Type: ReDIF-Paper 1.0
Title: Performance Evaluation of Zero Net-Investment Strategies
Classification-JEL: C14; C59; G14; G17
Author-Name: Òscar Jordà
Author-Person: pjo46
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: AP IFM TWP
Number: 17150
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17150
File-URL: http://www.nber.org/papers/w17150.pdf
File-Format: application/pdf
Abstract: This paper introduces new nonparametric statistical methods to evaluate zero-cost investment strategies. We focus on directional trading strategies, risk-adjusted returns, and the investor's decisions under uncertainty as the core of our analysis. By relying on classification tools with a long tradition in the sciences and biostatistics, we can provide a tighter connection between model-based risk characteristics and the no-arbitrage conditions for market efficiency. Moreover, we extend the methods to multicategorical settings, such as when the investor can sometimes take a neutral position. A variety of inferential procedures are provided, many of which are illustrated with applications to excess equity returns and to currency carry trades.
Handle: RePEc:nbr:nberwo:17150
Template-Type: ReDIF-Paper 1.0
Title: A General Equilibrium Model of Sovereign Default and Business Cycles
Classification-JEL: E32; E44; F32; F34
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Vivian Z. Yue
Author-Person: pyu120
Note: IFM
Number: 17151
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17151
File-URL: http://www.nber.org/papers/w17151.pdf
File-Format: application/pdf
Publication-Status: published as Enrique G. Mendoza & Vivian Z. Yue, 2012. "A General Equilibrium Model of Sovereign Default and Business Cycles," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 889-946.
Abstract: Emerging markets business cycle models treat default risk as part of an exogenous interest rate on working capital, while sovereign default models treat income fluctuations as an exogenous endowment process with ad-hoc default costs. We propose instead a general equilibrium model of both sovereign default and business cycles. In the model, some imported inputs require working capital financing; default triggers an efficiency loss as these inputs are replaced by imperfect substitutes; and default on public and private obligations occurs simultaneously. The model explains several features of cyclical dynamics around defaults, countercyclical spreads, high debt ratios, and key business cycle moments.
Handle: RePEc:nbr:nberwo:17151
Template-Type: ReDIF-Paper 1.0
Title: A Functional Filtering and Neighborhood Truncation Approach to Integrated Quarticity Estimation
Classification-JEL: G12; G13; G17
Author-Name: Torben G. Andersen
Author-Name: Dobrislav Dobrev
Author-Name: Ernst Schaumburg
Author-Person: psc490
Note: AP
Number: 17152
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17152
File-URL: http://www.nber.org/papers/w17152.pdf
File-Format: application/pdf
Publication-Status: published as Andersen, Torben, Dobrislav Dobrev and Ernst Schaumburg. 2014. A Robust Neighborhood Truncation Approach to Estimation of Integrated Quarticity. Econometric Theory. 30: 3-59.
Abstract: We provide a first in-depth look at robust estimation of integrated quarticity (IQ) based on high frequency data. IQ is the key ingredient enabling inference about volatility and the presence of jumps in financial time series and is thus of considerable interest in applications. We document the significant empirical challenges for IQ estimation posed by commonly encountered data imperfections and set forth three complementary approaches for improving IQ based inference. First, we show that many common deviations from the jump diffusive null can be dealt with by a novel filtering scheme that generalizes truncation of individual returns to truncation of arbitrary functionals on return blocks. Second, we propose a new family of efficient robust neighborhood truncation (RNT) estimators for integrated power variation based on order statistics of a set of unbiased local power variation estimators on a block of returns. Third, we find that ratio-based inference, originally proposed by Barndorff-Nielsen and Shephard, has desirable robustness properties and is well suited for our empirical applications. We confirm that the proposed filtering scheme and the RNT estimators perform well in our extensive simulation designs and in an application to the individual Dow Jones 30 stocks.
Handle: RePEc:nbr:nberwo:17152
Template-Type: ReDIF-Paper 1.0
Title: Self Reported Disability and Reference Groups
Classification-JEL: J14; J21; J68
Author-Name: Arthur van Soest
Author-Person: pva270
Author-Name: Tatiana Andreyeva
Author-Person: pan63
Author-Name: Arie Kapteyn
Author-Person: pka406
Author-Name: James P. Smith
Author-Person: psm28
Note: AG EH
Number: 17153
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17153
File-URL: http://www.nber.org/papers/w17153.pdf
File-Format: application/pdf
Publication-Status: published as Self-Reported Disability and Reference Groups, Arthur van Soest, Tatiana Andreyeva, Arie Kapteyn, James P. Smith. in Investigations in the Economics of Aging, Wise. 2012
Abstract: Social networks and social interactions affect individual and social norms. We develop a direct test of this using Dutch survey data on how respondents evaluate work disability of hypothetical people with some work related health problem (vignettes). We analyze how the thresholds respondents use to decide what constitutes a (mild or more serious) work disability depend on the number of people receiving disability insurance benefits (DI) in their reference group. We find that reference group effects are significant and contribute substantially to an explanation of why self-reported work disability in the Netherlands is much higher than in, for example, the US.
Handle: RePEc:nbr:nberwo:17153
Template-Type: ReDIF-Paper 1.0
Title: What does Monetary Policy do to Long-Term Interest Rates at the Zero Lower Bound?
Classification-JEL: C22; E43; E58
Author-Name: Jonathan H. Wright
Author-Person: pwr25
Note: ME
Number: 17154
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17154
File-URL: http://www.nber.org/papers/w17154.pdf
File-Format: application/pdf
Publication-Status: published as \What does Monetary Policy do to Long-term Interest Rates at the Zero Lower Bound?", Economic Journal , vol. 122 (2012), pp.F447-F466.
Abstract: The federal funds rate has been stuck at the zero bound for over two years and the Fed has turned to unconventional monetary policies, such as large scale asset purchases to provide stimulus to the economy. This paper uses a structural VAR with daily data to identify the effects of monetary policy shocks on various longer-term interest rates during this period. The VAR is identified using the assumption that monetary policy shocks are heteroskedastic: monetary policy shocks have especially high variance on days of FOMC meetings and certain speeches, while there is nothing unusual about these days from the perspective of any other shocks to the economy. A complementary high-frequency event-study approach is also used. I find that stimulative monetary policy shocks lower Treasury and corporate bond yields, but the effects die off fairly fast, with an estimated half-life of about two months.
Handle: RePEc:nbr:nberwo:17154
Template-Type: ReDIF-Paper 1.0
Title: Federal Aid and Equality of Educational Opportunity: Evidence from the Introduction of Title I in the South
Classification-JEL: H7; I2; J15
Author-Name: Elizabeth U. Cascio
Author-Person: pca757
Author-Name: Nora E. Gordon
Author-Person: pgo146
Author-Name: Sarah J. Reber
Note: CH DAE ED PE
Number: 17155
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17155
File-URL: http://www.nber.org/papers/w17155.pdf
File-Format: application/pdf
Publication-Status: published as “Local Responses to Federal Grants : Evidence from the Introduction of Ti tle I in the South” (with Nora Gordon and Sarah Reber), American Economic Jour nal: Economic Policy , 5(3), 126-159, August 2013.
Abstract: Title I of the 1965 Elementary and Secondary Education Act substantially increased federal aid for education, with the goal of expanding educational opportunity. Combining the timing of the program's introduction with variation in its intensity, we find that Title I increased school spending by 46 cents on the dollar in the average school district in the South and increased spending nearly dollar-for-dollar in Southern districts with little scope for local offset. Based on this differential fiscal response, we find that increases in school budgets from Title I decreased high school dropout rates for whites, but not blacks.
Handle: RePEc:nbr:nberwo:17155
Template-Type: ReDIF-Paper 1.0
Title: Studying Discrimination: Fundamental Challenges and Recent Progress
Classification-JEL: J01; J7; J71
Author-Name: Kerwin Kofi Charles
Author-Name: Jonathan Guryan
Author-Person: pgu126
Note: LS
Number: 17156
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17156
File-URL: http://www.nber.org/papers/w17156.pdf
File-Format: application/pdf
Publication-Status: published as Kerwin Kofi Charles & Jonathan Guryan, 2011. "Studying Discrimination: Fundamental Challenges and Recent Progress," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 479-511, 09.
Abstract: We discuss research on discrimination against blacks and other racial minorities in labor market outcomes, highlighting fundamental challenges faced by empirical work in this area. Specifically, for work devoted to measuring whether and how much discrimination exists, we discuss how the absence of relevant data, the potential noncomparability of blacks and whites, and various conceptual concerns peculiar to race may frustrate or render impossible the application of empirical methods used in other areas of study. For work seeking to arbitrate empirically between the two main alternative theoretical explanations for such discrimination as it exists, we distinguish between indirect analyses, which do not directly study the variation in prejudice or the variation in information, the mechanisms at the heart of the two types of models we review, and direct analyses, which are more recent and much less common. We highlight problems with both approaches. Throughout, we discuss recent work, which, the various challenges notwithstanding, permits tentative conclusions about discrimination. We conclude by pointing to areas that might be fruitful avenues for future investigation.
Handle: RePEc:nbr:nberwo:17156
Template-Type: ReDIF-Paper 1.0
Title: Income Inequality and Early Non-Marital Childbearing: An Economic Exploration of the "Culture of Despair"
Classification-JEL: I3; J1
Author-Name: Melissa Schettini Kearney
Author-Name: Phillip B. Levine
Author-Person: ple553
Note: CH LS
Number: 17157
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17157
File-URL: http://www.nber.org/papers/w17157.pdf
File-Format: application/pdf
Publication-Status: published as Kearney, Melissa S. and Phillip Levine. “Income Inequality and Early, Non-Marital Childbearing,” Journal of Human Resources 49, Winter 2014: 1-31
Abstract: Using individual-level data from the United States and a number of other developed countries, we empirically investigate the role of income inequality in determining rates of early, non-marital childbearing among low socioeconomic status (SES) women. We present robust evidence that low SES women are more likely to give birth at a young age and outside of marriage when they live in more unequal places, all else held constant. Our results suggest that inequality itself, as opposed to other correlated geographic factors, drives this relationship. We calculate that differences in the level of inequality are able to explain a sizeable share of the geographic variation in teen fertility rates both across U.S. states and across developed countries. We propose a model of economic "despair" that facilitates the interpretation of our results. It reinterprets the sociological and ethnographic literature that emphasizes the role of economic marginalization and hopelessness into a parsimonious framework that captures the concept of "despair" with an individual's perception of economic success. Our empirical results are consistent with the idea that income inequality heightens a sense of economic despair among those at the bottom of the distribution.
Handle: RePEc:nbr:nberwo:17157
Template-Type: ReDIF-Paper 1.0
Title: Human Capital and Regional Development
Classification-JEL: L26; O11; O43; O47; R11
Author-Name: Nicola Gennaioli
Author-Person: pge95
Author-Name: Rafael La Porta
Author-Person: pla273
Author-Name: Florencio Lopez-de-Silanes
Author-Person: plo137
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: EFG POL
Number: 17158
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17158
File-URL: http://www.nber.org/papers/w17158.pdf
File-Format: application/pdf
Publication-Status: published as Nicola Gennaioli & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2013. "Human Capital and Regional Development," The Quarterly Journal of Economics, Oxford University Press, vol. 128(1), pages 105-164.
Abstract: We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world's surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.
Handle: RePEc:nbr:nberwo:17158
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Return to College Selectivity over the Career Using Administrative Earnings Data
Classification-JEL: I21; J31
Author-Name: Stacy Dale
Author-Name: Alan B. Krueger
Author-Person: pkr63
Note: ED LS
Number: 17159
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17159
File-URL: http://www.nber.org/papers/w17159.pdf
File-Format: application/pdf
Publication-Status: published as “Estimating the Return to College Selectivity of the Career Using Administrative Earning Data,” (with Stacy Dale), forthcoming in Journal of Human Resources Spring 2014, vol. 49, no. 2, pp. 323-358
Abstract: We estimate the monetary return to attending a highly selective college using the College and Beyond (C&B) Survey linked to Detailed Earnings Records from the Social Security Administration (SSA). This paper extends earlier work by Dale and Krueger (2002) that examined the relationship between the college that students attended in 1976 and the earnings they self-reported reported in 1995 on the C&B follow-up survey. In this analysis, we use administrative earnings data to estimate the return to various measures of college selectivity for a more recent cohort of students: those who entered college in 1989. We also estimate the return to college selectivity for the 1976 cohort of students, but over a longer time horizon (from 1983 through 2007) using administrative data. We find that the return to college selectivity is sizeable for both cohorts in regression models that control for variables commonly observed by researchers, such as student high school GPA and SAT scores. However, when we adjust for unobserved student ability by controlling for the average SAT score of the colleges that students applied to, our estimates of the return to college selectivity fall substantially and are generally indistinguishable from zero. There were notable exceptions for certain subgroups. For black and Hispanic students and for students who come from less-educated families (in terms of their parents' education), the estimates of the return to college selectivity remain large, even in models that adjust for unobserved student characteristics.
Handle: RePEc:nbr:nberwo:17159
Template-Type: ReDIF-Paper 1.0
Title: Smoking Policies and Birth Outcomes: Estimates From a New Era
Classification-JEL: I1; K0
Author-Name: Sara Markowitz
Author-Person: pma138
Author-Name: E. Kathleen Adams
Author-Name: Patricia M. Dietz
Author-Name: Viji Kannan
Author-Name: Van Tong
Note: CH EH
Number: 17160
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17160
File-URL: http://www.nber.org/papers/w17160.pdf
File-Format: application/pdf
Abstract: Smoking during pregnancy has been shown to have significant adverse health effects for new born babies. Smoking is the leading preventable cause of low birth weight of infants who in turn, need more resources at delivery and are more likely to have related health problems in infancy and beyond. Despite these outcomes, many women still smoke during pregnancy. The main question for policy makers is whether tobacco control policies can influence maternal smoking and reduce adverse birth outcomes. We examine this question using data from the Pregnancy Risk Assessment Monitoring System data from 2000 to 2005. This is a time period during which states significantly changed their tobacco control policies by raising excise taxes and imposing strong restrictions on indoor smoking. We estimate reduced form models of birth weight and gestational weeks, focusing on the effects of taxes and workplace restrictions on smoking as the policies of interest. We also estimate demand equations for the probability of smoking during the third trimester. Results show that the smoking policies are effective, but limited to babies born to mothers of certain age groups. For babies born to teenage mothers, higher cigarette taxes are associated with small increases in birth weight and gestational weeks. For babies born to mothers ages 25-34, restrictions on smoking in the workplace are associated with small increases in gestational weeks.
Handle: RePEc:nbr:nberwo:17160
Template-Type: ReDIF-Paper 1.0
Title: Cognitive Disparities, Lead Plumbing, and Water Chemistry: Intelligence Test Scores and Exposure to Water-Borne Lead Among World War Two U.S. Army Enlistees
Classification-JEL: I10; N3
Author-Name: Joseph P. Ferrie
Author-Name: Karen Rolf
Author-Name: Werner Troesken
Author-Person: ptr352
Note: DAE EH
Number: 17161
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17161
File-URL: http://www.nber.org/papers/w17161.pdf
File-Format: application/pdf
Publication-Status: published as Joseph P. Ferrie & Karen Rolf & Werner Troesken, 2012. "Cognitive disparities, lead plumbing, and water chemistry: Prior exposure to water-borne lead and intelligence test scores among World War Two U.S. Army enlistees," Economics & Human Biology, vol 10(1), pages 98-111.
Abstract: Assessing the impact of lead exposure is difficult if individuals select on the basis of their characteristics into environments with different exposure levels. We address this issue with data from when the dangers of lead exposure were still largely unknown, using new evidence on intelligence test scores for male World War Two U.S. Army enlistees linked to the households where they resided in 1930. Higher exposure to water-borne lead (proxied by urban residence and low water pH levels) was associated with lower test scores: going from pH 6 to pH 5.5, scores fell 5 points (1/4 standard deviation). A longer time exposed led to a more severe effect. The ubiquity of lead in urban water systems at this time and uncertainty regarding its impact mean these effects are unlikely to have resulted from selection into locations with different levels of exposure.
Handle: RePEc:nbr:nberwo:17161
Template-Type: ReDIF-Paper 1.0
Title: Side Effects of Competition: the Role of Advertising and Promotion in Pharmaceutical Markets
Classification-JEL: I0; K0; K2
Author-Name: Guy David
Author-Name: Sara Markowitz
Author-Person: pma138
Note: EH LE
Number: 17162
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17162
File-URL: http://www.nber.org/papers/w17162.pdf
File-Format: application/pdf
Abstract: The extent of pharmaceutical advertising and promotion can be characterized by a balancing act between profitable demand expansions and potentially unfavorable subsequent regulatory actions. However, this balance also depends on the nature of competition (e.g. monopoly versus oligopoly). In this paper we model the firm's behavior under different competitive scenarios and test the model's predictions using a novel combination of sales, promotion, advertising, and adverse event reports data. We focus on the market for erectile dysfunction drugs as the basis for estimation. This market is ideal for analysis as it is characterized by an abrupt shift in structure, all drugs are branded, the drugs are associated with adverse health events, and have extensive advertising and promotion. We find that advertising and promotion expenditures increase own market share but also increase the share of adverse drug reactions. Competitors' spending decreases market share, while also having an influence on adverse drug reactions.
Handle: RePEc:nbr:nberwo:17162
Template-Type: ReDIF-Paper 1.0
Title: A Testable Theory of Imperfect Perception
Classification-JEL: D01; D03
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: Daniel Martin
Author-Person: pma1484
Note: TWP
Number: 17163
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17163
File-URL: http://www.nber.org/papers/w17163.pdf
File-Format: application/pdf
Publication-Status: published as Caplin, Andrew, and Daniel Martin (2014), “A Testable Theory of Imperfect Perception,” The Economic Journal, forthcoming.
Abstract: We introduce a rational choice theory that allows for many forms of imperfect perception, including failures of memory, selective attention, and adherence to simplifying rules of thumb. Despite its generality, the theory has strong, simple, and intuitive implications for standard choice data and for more enriched choice data. The central assumption is rational expectations: decision makers understand the relationship between their perceptions, however limited they may be, and the (stochastic) consequences of their available choices. Our theory separately identifies two distinct "framing" effects: standard effects involving the layout of the prizes (e.g. order in a list) and novel effects relating to the information content of the environment (e.g. how likely is the first in the list to be the best). Simple experimental tests both affirm the basic model and confirm the existence of information-based framing effects.
Handle: RePEc:nbr:nberwo:17163
Template-Type: ReDIF-Paper 1.0
Title: A "Second Opinion" on the Economic Health of the American Middle Class
Classification-JEL: H2; H24; I18; J3
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Jeff Larrimore
Author-Person: pla377
Author-Name: Kosali I. Simon
Author-Person: psi314
Note: EH LS PE
Number: 17164
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17164
File-URL: http://www.nber.org/papers/w17164.pdf
File-Format: application/pdf
Publication-Status: published as Richard V. Burkhauser & Jeff Larrimore & Kosali I. Simon, 2012. "A "Second Opinion" on the Economic Health of the American Middle Class," National Tax Journal, vol 65(1), pages 7-32.
Abstract: Researchers considering levels and trends in the resources available to the middle class traditionally measure the pre-tax cash income of either tax units or households. In this paper, we demonstrate that this choice carries significant implications for assessing income trends. Focusing on tax units rather than households greatly reduces measured growth in middle class income. Furthermore, excluding the effect of taxes and the value of in-kind benefits further reduces observed improvements in the resources of the middle class. Finally, we show how these distinctions change the observed distribution of benefits from the tax exclusion of employer provided health insurance.
Handle: RePEc:nbr:nberwo:17164
Template-Type: ReDIF-Paper 1.0
Title: Residential Rivalry and Constraints on the Availability of Child Labor
Classification-JEL: O15
Author-Name: Richard Akresh
Author-Person: pak31
Author-Name: Eric V. Edmonds
Author-Person: ped27
Note: CH ED
Number: 17165
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17165
File-URL: http://www.nber.org/papers/w17165.pdf
File-Format: application/pdf
Abstract: We consider the influence of household-based production on human capital investment. In data from rural Burkina Faso, we document a positive correlation between the presence of girls and enrollment that disappears in households that are able to send out or receive in children. We argue that the connection between education and the sex composition of co-resident children in households that are constrained in their ability to adjust child labor owes to residential rivalry, the idea that having a greater share of resident children with an advantage in household based production increases education by reducing the within-household equilibrium value of child time.
Handle: RePEc:nbr:nberwo:17165
Template-Type: ReDIF-Paper 1.0
Title: How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-century GI Bills
Classification-JEL: N00; N22; N92; R00; R28
Author-Name: Daniel K. Fetter
Author-Person: pfe278
Note: DAE
Number: 17166
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17166
File-URL: http://www.nber.org/papers/w17166.pdf
File-Format: application/pdf
Publication-Status: published as Daniel K. Fetter, 2013. "How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-century GI Bills," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 111-47, May.
Abstract: The largest 20th-century increase in U.S. home ownership occurred between 1940 and 1960, associated largely with declining age at first ownership. I shed light on the contribution of coincident government mortgage market interventions by examining home loan benefits granted under the World War II and Korean War GI Bills. The impact of veterans' housing benefits on home ownership is positive for young men, and declines with age. Veterans' benefits increased aggregate home ownership rates primarily by shifting purchase earlier in life, explaining 7.4 percent of the overall 1940-60 increase and 25 percent of the increase for affected cohorts. A rough extrapolation suggests that broader changes in mortgage terms may explain 40 percent of the 1940-60 increase.
Handle: RePEc:nbr:nberwo:17166
Template-Type: ReDIF-Paper 1.0
Title: The Incidence of Local Labor Demand Shocks
Classification-JEL: H53; J01; R31
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Note: LS
Number: 17167
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17167
File-URL: http://www.nber.org/papers/w17167.pdf
File-Format: application/pdf
Publication-Status: published as Matthew J. Notowidigdo, 2020. "The Incidence of Local Labor Demand Shocks," Journal of Labor Economics, vol 38(3), pages 687-725.
Abstract: Low-skill workers are comparatively immobile: when labor demand slumps in a city, low-skill workers are disproportionately likely to remain to face declining wages and employment. This paper estimates the extent to which (falling) housing prices and (rising) social transfers can account for this fact using a spatial equilibrium model. Nonlinear reduced form estimates of the model using U.S. Census data document that positive labor demand shocks increase population more than negative shocks reduce population, this asymmetry is larger for low-skill workers, and such an asymmetry is absent for wages, housing values, and rental prices. GMM estimates of the full model suggest that the comparative immobility of low-skill workers is not due to higher mobility costs per se, but rather a lower incidence of adverse labor demand shocks.
Handle: RePEc:nbr:nberwo:17167
Template-Type: ReDIF-Paper 1.0
Title: The Impacts of the Affordable Care Act: How Reasonable Are the Projections?
Classification-JEL: H3; I18
Author-Name: Jonathan Gruber
Author-Person: pgr20
Note: EH PE
Number: 17168
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17168
File-URL: http://www.nber.org/papers/w17168.pdf
File-Format: application/pdf
Publication-Status: published as “The Impacts of the Affordable Care Act: How Reasonable Are the Projections?,” National Tax Journal , 64, September 2011, 893 - 908.
Abstract: The Patient Protection and Affordable Care Act (ACA) is the most comprehensive reform of the U.S. medical system in at least 45 years. The ACA transforms the non-group insurance market in the United States, mandates that most residents have health insurance, significantly expands public insurance and subsidizes private insurance coverage, raises revenues from a variety of new taxes, and reduces and reorganizes spending under the nation's largest health insurance plan, Medicare. Projecting the impacts of such fundamental reform to the health care system is fraught with difficulty. But such projections were required for the legislative process, and were delivered by the Congressional Budget Office (CBO). This paper discusses the projected impact of the ACA in more detail, and describes the evidence that sheds light upon the accuracy of the projections. It begins by reviewing in broad details the structure of the ACA and then reviews evidence from a key case study that informs our understanding of the ACA's impacts: a comparable health reform that was carried out in Massachusetts four years earlier. The paper discusses the key results from that earlier reform and what they might imply for the impacts of the ACA. The paper ends with a discussion of the projected impact of the ACA and offers some observations on those estimates.
Handle: RePEc:nbr:nberwo:17168
Template-Type: ReDIF-Paper 1.0
Title: Does Financial Constraint Affect Shareholder Taxes and the Cost of Equity Capital?
Classification-JEL: G12; G32; G35; H24
Author-Name: Chongyang Chen
Author-Name: Zhonglan Dai
Author-Name: Douglas Shackelford
Author-Person: psh631
Author-Name: Harold Zhang
Author-Person: pzh586
Note: AP CF PE
Number: 17169
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17169
File-URL: http://www.nber.org/papers/w17169.pdf
File-Format: application/pdf
Publication-Status: published as Dai, Zhonglan, Douglas A. Shackelford, Harold H. Zhang, and Chongyang Chen, “Does Financial Constraint Affect the Relation between Sharehol der Taxes and the Cost of Equity Capital?” The Accounting Review 88:5 , September 2013, 1603-1627.
Abstract: We show that firms with the least elastic demand for equity capital should benefit the most from reductions in shareholder taxes. Consistent with this prediction, we find that, following 1997 and 2003 cuts in U.S. individual shareholder taxes, financially constrained firms, and particularly those with disproportionate ownership by U.S. individuals, enjoyed larger reductions in their cost of equity capital than did other firms. The results are consistent with the incidence of the tax reductions falling mostly on firms with the most pressing needs for capital. Furthermore, the findings provide an explanation for the heretofore puzzling finding that, following the unprecedented 2003 reduction in dividend tax rates, non-dividend-paying firms outperformed dividend-paying firms. Not surprisingly, we find that non-dividend-paying firms are more financial constrained than dividend-paying firms are. When a firm's financial constraint and dividend choice are jointly considered, we find that the extent of financial constraint affects the change in the cost of equity capital, but whether a firm issues a dividend does not. In other words, it appears that the extant studies suffered from the omission of a correlated variation, the extent to which a firm is financially constrained.
Handle: RePEc:nbr:nberwo:17169
Template-Type: ReDIF-Paper 1.0
Title: Pounds that Kill: The External Costs of Vehicle Weight
Classification-JEL: H23; I18; Q48; Q58; R41
Author-Name: Michael Anderson
Author-Person: pan105
Author-Name: Maximilian Auffhammer
Author-Person: pau60
Note: EEE PE
Number: 17170
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17170
File-URL: http://www.nber.org/papers/w17170.pdf
File-Format: application/pdf
Publication-Status: published as “Pounds Th at Kill: Th e External Costs of Vehicle Weight.” Joint with Max Au ff hammer, UC Berkeley. 2014. Review of Economic Studies . 81(2): pp. 535-571.
Abstract: Heavier vehicles are safer for their own occupants but more hazardous for the occupants of other vehicles. In this paper we estimate the increased probability of fatalities from being hit by a heavier vehicle in a collision. We show that, controlling for own-vehicle weight, being hit by a vehicle that is 1,000 pounds heavier results in a 47% increase in the baseline fatality probability. Estimation results further suggest that the fatality risk is even higher if the striking vehicle is a light truck (SUV, pickup truck, or minivan). We calculate that the value of the external risk generated by the gain in fleet weight since 1989 is approximately 27 cents per gallon of gasoline. We further calculate that the total fatality externality is roughly equivalent to a gas tax of $1.08 per gallon. We consider two policy options for internalizing this external cost: a gas tax and an optimal weight varying mileage tax. Comparing these options, we find that the cost is similar for most vehicles.
Handle: RePEc:nbr:nberwo:17170
Template-Type: ReDIF-Paper 1.0
Title: Committee Jurisdiction, Congressional Behavior and Policy Outcomes
Classification-JEL: H11
Author-Name: John M. de Figueiredo
Note: LE PE POL
Number: 17171
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17171
File-URL: http://www.nber.org/papers/w17171.pdf
File-Format: application/pdf
Publication-Status: published as de Figueiredo, John M. (2013). “Committee Jurisdiction, Congressional Behavior, and Policy Outcomes,” Public Choice 154(1-2): 119-137.
Abstract: The literature on congressional committees has largely overlooked the impact of jurisdictional fights on policy proposals and outcomes. This paper develops a theory of how legislators balance the benefits of expanded committee jurisdiction against preferred policy outcomes. It shows why a) senior members and young members in safe districts are most likely to challenge a committee's jurisdiction; b) policy proposals may be initiated off the proposer's ideal point in order to obtain jurisdiction; c) policy outcomes will generally be more moderate with jurisdictional fights than without these turf wars. We empirically investigate these results examining proposed Internet intellectual property protection legislation in the 106th Congress.
Handle: RePEc:nbr:nberwo:17171
Template-Type: ReDIF-Paper 1.0
Title: Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets
Classification-JEL: D43; L1; L2; O3
Author-Name: Christos Genakos
Author-Person: pge261
Author-Name: Kai-Uwe Kühn
Author-Person: pku64
Author-Name: John Van Reenen
Author-Person: pva45
Note: IO PR
Number: 17172
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17172
File-URL: http://www.nber.org/papers/w17172.pdf
File-Format: application/pdf
Publication-Status: published as Christos Genakos & Kai-Uwe Kühn & John Van Reenen, 2018. "Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets," Economica, vol 85(340), pages 873-902.
Abstract: When will a monopolist have incentives to foreclose a complementary market by degrading compatibility/interoperability of his products with those of rivals? We develop a framework where leveraging extracts more rents from the monopoly market by "restoring" second degree price discrimination. In a random coefficient model with complements we derive a policy test for when incentives to reduce rival quality will hold. Our application is to Microsoft's strategic incentives to leverage market power from personal computer to server operating systems. We estimate a structural random coefficients demand system which allows for complements (PCs and servers). Our estimates suggest that there were incentives to reduce interoperability which were particularly strong at the turn of the 21st Century.
Handle: RePEc:nbr:nberwo:17172
Template-Type: ReDIF-Paper 1.0
Title: Should Unemployment Insurance Vary With the Unemployment Rate? Theory and Evidence
Classification-JEL: H5; J64; J65
Author-Name: Kory Kroft
Author-Person: pkr410
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Note: LS PE
Number: 17173
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17173
File-URL: http://www.nber.org/papers/w17173.pdf
File-Format: application/pdf
Publication-Status: published as Kory Kroft & Matthew J. Notowidigdo, 2016. "Should Unemployment Insurance Vary with the Unemployment Rate? Theory and Evidence," The Review of Economic Studies, vol 83(3), pages 1092-1124.
Abstract: We study how the level of unemployment insurance (UI) benefits that trades off the consumption smoothing benefit with the moral hazard cost of distorting job search behavior varies over the business cycle. Empirically, we find that the moral hazard cost is procyclical, greater when the unemployment rate is relatively low. By contrast, our evidence suggests that the consumption smoothing benefit of UI is acyclical. Using these estimates to calibrate our model, we find that a one standard deviation increase in the unemployment rate leads to a roughly 14 to 27 percentage point increase in the welfare-maximizing wage replacement rate.
Handle: RePEc:nbr:nberwo:17173
Template-Type: ReDIF-Paper 1.0
Title: Pharmaceutical Pricing in Emerging Markets: Effects of Income, Competition and Procurement
Classification-JEL: I11; L11; O14; O25
Author-Name: Patricia M. Danzon
Author-Person: pda291
Author-Name: Andrew W. Mulcahy
Author-Name: Adrian K. Towse
Author-Person: pto443
Note: EH IO
Number: 17174
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17174
File-URL: http://www.nber.org/papers/w17174.pdf
File-Format: application/pdf
Publication-Status: published as “Pharmaceutical pricing in emerging markets: Effects of income, competition, and procurement” with Andrew W. Mulcahy and Adrian K. Towse. Health Economics 2013. DOI: 10.1002/hec.3013
Abstract: This paper analyzes determinants of ex-manufacturer prices for originator and generic drugs across a large sample of countries. We focus on drugs to treat HIV/AIDS, TB and malaria in middle and low income countries (MLICs), with robustness checks to other therapeutic categories and other countries. We examine effects of per capita income, income dispersion, number and type of therapeutic and generic competitors, and whether the drugs are sold to retail pharmacies vs. tendered procurement by NGOs. The cross-national income elasticity of prices is 0.4 across high and low income countries, but is only 0.15 between MLICs, implying that drugs are least affordable relative to income in the lowest income countries. Within-country income inequality contributes to relatively high prices in MLICs. Number of therapeutic and generic competitors only weakly affects prices to retail pharmacies, plausibly because uncertain quality leads to competition on brand rather than price. Tendered procurement attracts multi-national generic suppliers and significantly reduces prices for originators and generics, compared to prices to retail pharmacies.
Handle: RePEc:nbr:nberwo:17174
Template-Type: ReDIF-Paper 1.0
Title: Productivity Volatility and the Misallocation of Resources in Developing Economies
Classification-JEL: D24; L2; O47
Author-Name: Allan Collard-Wexler
Author-Name: John Asker
Author-Person: pas7
Author-Name: Jan De Loecker
Author-Person: pde165
Note: PR
Number: 17175
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17175
File-URL: http://www.nber.org/papers/w17175.pdf
File-Format: application/pdf
Publication-Status: published as "Dynamic Inputs and (Mis)Allocation" Journal of Political Economy, 122(5), 1013-1063, 2014
Abstract: We investigate the role of dynamic production inputs and their associated adjustment costs in shaping the dispersion of total factor productivity (TFP) and static measures of capital misallocation within a country. Using data on 5,010 establishments in 33 developing countries from the World Bank's Enterprise Research Data, we find that countries exhibiting greater time-series volatility of productivity are also characterized by greater cross-sectional dispersion in productivity. Volatility in TFP explains one quarter to one third of cross-country productivity dispersion. We document a similar relationship between productivity volatility and the dispersion of the marginal revenue product of capital (static capital misallocation). We then use a standard model of investment with adjustment costs, parameterized using numbers calibrated to U.S. data, to show that increasing the volatility of productivity to the level observed in these developing economies can quantitatively replicate the observed relationship between static misallocation and volatility observed in the data. We find that sixty-one percent of the static capital misallocation in the data is captured by the model's prediction. Our findings suggest that the dynamic process governing productivity shocks is a first-order determinant of differences in misallocation and, hence, income across countries.
Handle: RePEc:nbr:nberwo:17175
Template-Type: ReDIF-Paper 1.0
Title: How Teacher Turnover Harms Student Achievement
Classification-JEL: I21
Author-Name: Matthew Ronfeldt
Author-Name: Hamilton Lankford
Author-Name: Susanna Loeb
Author-Name: James Wyckoff
Author-Person: pwy10
Note: ED
Number: 17176
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17176
File-URL: http://www.nber.org/papers/w17176.pdf
File-Format: application/pdf
Publication-Status: published as How teacher turnover harms student achievement (with Matthew Ronfeldt, and James Wyckoff). American Educational Research Journal, 50(1), pp. 4-36. 2013 .
Abstract: Researchers and policymakers often assume that teacher turnover harms student achievement, but recent evidence calls into question this assumption. Using a unique identification strategy that employs grade-level turnover and two classes of fixed-effects models, this study estimates the effects of teacher turnover on over 600,000 New York City 4th and 5th grade student observations over 5 years. The results indicate that students in grade-levels with higher turnover score lower in both ELA and math and that this effect is particularly strong in schools with more low-performing and black students. Moreover, the results suggest that there is a disruptive effect of turnover beyond changing the composition in teacher quality.
Handle: RePEc:nbr:nberwo:17176
Template-Type: ReDIF-Paper 1.0
Title: Effective Schools: Teacher Hiring, Assignment, Development, and Retention
Classification-JEL: I21
Author-Name: Susanna Loeb
Author-Name: Demetra Kalogrides
Author-Name: Tara Béteille
Note: ED
Number: 17177
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17177
File-URL: http://www.nber.org/papers/w17177.pdf
File-Format: application/pdf
Publication-Status: published as Effective schools: Teacher hiring, assignment, development, and retention (with Tara Beteille and Demetra Kalogrides). Education Finance and Policy, 7(3), pp. 269–304. 2012 .
Abstract: The literature on effective schools emphasizes the importance of a quality teaching force in improving educational outcomes for students. In this paper, we use value-added methods to examine the relationship between a school's effectiveness and the recruitment, assignment, development and retention of its teachers. We ask whether effective schools systematically recruit more effective teachers; whether they assign teachers to students more effectively; whether they do a better job of helping their teachers improve; whether they retain more effective teachers; or whether they do a combination of these processes. Our results reveal four key findings. First, we find that more effective schools are able to attract and hire more effective teachers from other schools when vacancies arise. Second, we find that more effective schools assign novice teachers to students in a more equitable fashion. Third, we find that teachers who work in schools that were more effective at raising achievement in a prior period improve more rapidly in a subsequent period than do those in less effective schools. Finally, we find that more effective schools are better able to retain higher-quality teachers, though they are not differentially able to remove ineffective teachers. The results point to the importance of personnel, and perhaps, school personnel practices, for improving student outcomes.
Handle: RePEc:nbr:nberwo:17177
Template-Type: ReDIF-Paper 1.0
Title: Innovation and Productivity
Classification-JEL: O30
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Note: PR
Number: 17178
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17178
File-URL: http://www.nber.org/papers/w17178.pdf
File-Format: application/pdf
Abstract: What do we know about the relationship between innovation and productivity among firms? The workhorse model of this relationship is presented and the implications of analysis using this model and the usually available data on product and process innovation are derived. The recent empirical evidence on the relationship between innovation and productivity in firms is then surveyed. The conclusion is that there are substantial positive impacts of product innovation on revenue productivity, but that the impact of process innovation is more ambiguous, suggesting some market power on the part of the firms being analyzed.
Handle: RePEc:nbr:nberwo:17178
Template-Type: ReDIF-Paper 1.0
Title: Clashing Theories of Unemployment
Classification-JEL: E12; E22; E32
Author-Name: Robert E. Hall
Note: EFG
Number: 17179
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17179
File-URL: http://www.nber.org/papers/w17179.pdf
File-Format: application/pdf
Abstract: General-equilibrium models for studying monetary influences in general and the zero lower bound on the nominal interest rate in particular contain implicit theories of unemployment. In some cases, the theory is explicit. When the nominal rate is above the level that clears the current market for output, the excess supply shows up as diminished output, lower employment, and higher unemployment. Quite separately, the Diamond-Mortensen-Pissarides model is a widely accepted and well-developed account of turnover, wage determination, and unemployment. The DMP model is a clashing theory of unemployment, in the sense that its determinants of unemployment do not include any variables that signal an excess supply of current output. In consequence, a general-equilibrium monetary model with a DMP labor market generally has no equilibrium. After demonstrating the clash in a minimal but adequate setting, I consider modifications of the DMP model that permit the complete model to have an equilibrium. No fully satisfactory modification has yet appeared.
Handle: RePEc:nbr:nberwo:17179
Template-Type: ReDIF-Paper 1.0
Title: Weekends and Subjective Well-Being
Classification-JEL: D69; J28; J81; Z19
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Shun Wang
Note: LS PE
Number: 17180
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17180
File-URL: http://www.nber.org/papers/w17180.pdf
File-Format: application/pdf
Publication-Status: published as John Helliwell & Shun Wang, 2014. "Weekends and Subjective Well-Being," Social Indicators Research, Springer, vol. 116(2), pages 389-407, April.
Abstract: This paper exploits the richness and large sample size of the Gallup/Healthways US daily poll to illustrate significant differences in the dynamics of two key measures of subjective well-being: emotions and life evaluations. We find that there is no day-of-week effect for life evaluations, represented here by the Cantril Ladder, but significantly more happiness, enjoyment, and laughter, and significantly less worry, sadness, and anger on weekends (including public holidays) than on weekdays. We then find strong evidence of the importance of the social context, both at work and at home, in explaining the size and likely determinants of the weekend effects for emotions. Weekend effects are twice as large for full-time paid workers as for the rest of the population, and are much smaller for those whose work supervisor is considered a partner rather than a boss and who report trustable and open work environments. A large portion of the weekend effects is explained by differences in the amount of time spent with friends or family between weekends and weekdays (7.1 vs. 5.4 hours). The extra daily social time of 1.7 hours in weekends raises average happiness by about 2%.
Handle: RePEc:nbr:nberwo:17180
Template-Type: ReDIF-Paper 1.0
Title: Business Partners, Financing, and the Commercialization of Inventions
Classification-JEL: G24; J24; M13; O31
Author-Name: Thomas Åstebro
Author-Person: pas216
Author-Name: Carlos J. Serrano
Author-Person: pse144
Note: CF PR
Number: 17181
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17181
File-URL: http://www.nber.org/papers/w17181.pdf
File-Format: application/pdf
Abstract: This paper studies the effect of business partners on the commercialization of nvention based ventures, and it assesses the relative importance of partners' human and social capital on commercialization outcomes. Projects run by partnerships were five times more likely to reach commercialization, and they had mean revenues approximately ten times greater than projects run by solo-entrepreneurs. These gross differences may be due both to business partners' value added and to selection. After controlling for selection effects and observed/unobserved heterogeneity, our smallest estimate of partner value added approximately doubles the probability of commercialization and increases expected revenues by 29% at the sample mean.
Handle: RePEc:nbr:nberwo:17181
Template-Type: ReDIF-Paper 1.0
Title: Regime Changes and Financial Markets
Classification-JEL: G11; G12
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Allan Timmermann
Author-Person: pti8
Note: AP
Number: 17182
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17182
File-URL: http://www.nber.org/papers/w17182.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Ang & Allan Timmermann, 2012. "Regime Changes and Financial Markets," Annual Review of Financial Economics, Annual Reviews, vol. 4(1), pages 313-337.
Abstract: Regime switching models can match the tendency of financial markets to often change their behavior abruptly and the phenomenon that the new behavior of financial variables often persists for several periods after such a change. While the regimes captured by regime switching models are identified by an econometric procedure, they often correspond to different periods in regulation, policy, and other secular changes. In empirical estimates, the regime switching means, volatilities, autocorrelations, and cross-covariances of asset returns often differ across regimes, which allow regime switching models to capture the stylized behavior of many financial series including fat tails, heteroskedasticity, skewness, and time-varying correlations. In equilibrium models, regimes in fundamental processes, like consumption or dividend growth, strongly affect the dynamic properties of equilibrium asset prices and can induce non-linear risk-return trade-offs. Regime switches also lead to potentially large consequences for investors' optimal portfolio choice.
Handle: RePEc:nbr:nberwo:17182
Template-Type: ReDIF-Paper 1.0
Title: Using Implementation Intentions Prompts to Enhance Influenza Vaccination Rates
Classification-JEL: D03; I10; J18
Author-Name: Katherine L. Milkman
Author-Person: pmi292
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: EH
Number: 17183
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17183
File-URL: http://www.nber.org/papers/w17183.pdf
File-Format: application/pdf
Publication-Status: published as Milkman, Katherine L., John Beshears, James J. Choi, David Laibson, and Brigitte C. Madrian. "Using Implementation Intentions Prompts to Enhance Influenza Vaccination Rates." Proceedings of the National Academy of Sciences of the United States of America 108, no. 26 (June 28, 2011): 10415–10420.
Abstract: We evaluate the results of a field experiment designed to measure the effect of prompts to form implementation intentions on realized behavioral outcomes. The outcome of interest is influenza vaccination receipt at free on-site clinics offered by a large firm to its employees. All employees eligible for study participation received reminder mailings that listed the times and locations of the relevant vaccination clinics. Mailings to employees randomly assigned to the treatment conditions additionally included a prompt to write down either (1) the date the employee planned to be vaccinated or (2) the date and time the employee planned to be vaccinated. Vaccination rates increased when these implementation intentions prompts were included in the mailing. The vaccination rate among control condition employees was 33.1%. Employees who received the prompt to write down just a date had a vaccination rate 1.5 percentage points higher than the control group, a difference that is not statistically significant. Employees who received the more specific prompt to write down both a date and a time had a 4.2 percentage point higher vaccination rate, a difference that is both statistically significant and of meaningful magnitude.
Handle: RePEc:nbr:nberwo:17183
Template-Type: ReDIF-Paper 1.0
Title: Divide and Rule or the Rule of the Divided? Evidence from Africa
Classification-JEL: N0; N17; O1; O11; O55
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Author-Name: Elias Papaioannou
Author-Person: ppa701
Note: IFM POL
Number: 17184
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17184
File-URL: http://www.nber.org/papers/w17184.pdf
File-Format: application/pdf
Abstract: We investigate jointly the importance of contemporary country-level institutional structures and local ethnic-specific pre-colonial institutions in shaping comparative regional development in Africa. We utilize information on the spatial distribution of African ethnicities before colonization and regional variation in contemporary economic performance, as proxied by satellite light density at night. We exploit the fact that political boundaries across the African landscape partitioned ethnic groups in different countries subjecting identical cultures to different country-level institutions. Our regression discontinuity estimates reveal that differences in countrywide institutional arrangements across the border do not explain differences in economic performance within ethnic groups. In contrast, we document a strong association between pre-colonial ethnic institutional traits and contemporary regional development. While this correlation does not necessarily identify a causal relationship, this result obtains conditional on country fixed-effects, controlling for other ethnic traits and when we focus on pairs of contiguous ethnic homelands.
Handle: RePEc:nbr:nberwo:17184
Template-Type: ReDIF-Paper 1.0
Title: Improving Reading Skills by Encouraging Children to Read in School: A Randomized Evaluation of the Sa Aklat Sisikat Reading Program in the Philippines
Classification-JEL: I21; I28; O15
Author-Name: Ama Baafra Abeberese
Author-Person: pab344
Author-Name: Todd J. Kumler
Author-Name: Leigh L. Linden
Author-Person: pli719
Note: CH ED LS PE
Number: 17185
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17185
File-URL: http://www.nber.org/papers/w17185.pdf
File-Format: application/pdf
Publication-Status: published as Improving Reading Skills by Encouraging Children to Read in School: A Randomized Evaluation of the Sa Aklat Sisikat Reading Program in the Philippines Ama Baafra Abeberese, Todd J. Kumler, Leigh L. Linden From: Journal of Human Resources Volume 49, Number 3, Summer 2014
Abstract: We show that a short-term (31 day) reading program, designed to provide age-appropriate reading material, to train teachers in their use, and to support teachers' initial efforts for about a month improves students' reading skills by 0.13 standard deviations. The effect is still present three months after the program but diminishes to 0.06 standard deviations, probably due to a reduced emphasis on reading after the program. We find that the program also encourages students to read more on their own at home. We find no evidence that improved reading ability improves test scores on other subjects.
Handle: RePEc:nbr:nberwo:17185
Template-Type: ReDIF-Paper 1.0
Title: The Economic Impact of Social Ties: Evidence from German Reunification
Classification-JEL: L14; O1; O11; O43; O52
Author-Name: Konrad B. Burchardi
Author-Person: pbu275
Author-Name: Tarek Alexander Hassan
Author-Person: pha489
Note: CF ITI EFG LS
Number: 17186
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17186
File-URL: http://www.nber.org/papers/w17186.pdf
File-Format: application/pdf
Publication-Status: published as Konrad B. Burchardi & Tarek A. Hassan, 2013. "The Economic Impact of Social Ties: Evidence from German Reunification," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1219-1271.
Abstract: We use the fall of the Berlin Wall in 1989 to show that personal relationships which individuals maintain for non-economic reasons can be an important determinant of regional economic growth. We show that West German households who have social ties to East Germany in 1989 experience a persistent rise in their personal incomes after the fall of the Berlin Wall. Moreover, the presence of these households significantly affects economic performance at the regional level: it increases the returns to entrepreneurial activity, the share of households who become entrepreneurs, and the likelihood that firms based within a given West German region invest in East Germany. As a result, West German regions which (for idiosyncratic reasons) have a high concentration of households with social ties to the East exhibit substantially higher growth in income per capita in the early 1990s. A one standard deviation rise in the share of households with social ties to East Germany in 1989 is associated with a 4.6 percentage point rise in income per capita over six years. We interpret our findings as evidence of a causal link between social ties and regional economic development.
Handle: RePEc:nbr:nberwo:17186
Template-Type: ReDIF-Paper 1.0
Title: What Explains the German Labor Market Miracle in the Great Recession?
Classification-JEL: E24; E32; J6
Author-Name: Michael C. Burda
Author-Person: pbu123
Author-Name: Jennifer Hunt
Author-Person: phu9
Note: EFG LS
Number: 17187
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17187
File-URL: http://www.nber.org/papers/w17187.pdf
File-Format: application/pdf
Publication-Status: published as Michael C. Burda & Jennifer Hunt, 2011. "What Explains the German Labor Market Miracle in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 273-335.
Abstract: Germany experienced an even deeper fall in GDP in the Great Recession than the United States, with little employment loss. Employers' reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession. Another 20 percent may be explained by wage moderation. A third important element was the widespread adoption of working time accounts, which permit employers to avoid overtime pay if hours per worker average to standard hours over a window of time. We find that this provided disincentives for employers to lay off workers in the downturn. Although the overall cuts in hours per worker were consistent with the severity of the Great Recession, reduction of working time account balances substituted for traditional government-sponsored short-time work.
Handle: RePEc:nbr:nberwo:17187
Template-Type: ReDIF-Paper 1.0
Title: Regulation and Welfare: Evidence from Paragraph IV Generic Entry in the Pharmaceutical Industry
Classification-JEL: I11; I38; O3
Author-Name: Lee G. Branstetter
Author-Person: pbr854
Author-Name: Chirantan Chatterjee
Author-Name: Matthew Higgins
Author-Person: phi60
Note: PR IO
Number: 17188
Creation-Date: 2011-06
Order-URL: http://www.nber.org/papers/w17188
File-URL: http://www.nber.org/papers/w17188.pdf
File-Format: application/pdf
Publication-Status: published as RAND Journal of Economics, Volume 47, Issue 4 Pages 857–890, 2016
Abstract: With increasing frequency, generic drug manufacturers in the United States are able to challenge the monopoly status of patent-protected drugs even before their patents expire. The legal foundation for these challenges is found in Paragraph IV of the Hatch-Waxman Act. If successful, these Paragraph IV challenges generally lead to large market share losses for incumbents and sharp declines in average market prices. This paper estimates, for the first time, the welfare effects of accelerated generic entry via these challenges. Using aggregate brand level sales data between 1997 and 2008 for hypertension drugs in the U.S. we estimate demand using a nested logit model in order to back out cumulated consumer surplus, which we find to be approximately $270 billion. We then undertake a counterfactual analysis, removing the stream of Paragraph IV facilitated generic products, finding a corresponding cumulated consumer surplus of $177 billion. This implies that gains flowing to consumers as a result of this regulatory mechanism amount to around $92 billion or about $133 per consumer in this market. These gains come at the expense to producers who lose, approximately, $14 billion. This suggests that net short-term social gains stands at around $78 billion. We also demonstrate significant cross-molecular substitution within the market and discuss the possible appropriation of consumer rents by the insurance industry. Policy and innovation implications are also discussed.
Handle: RePEc:nbr:nberwo:17188
Template-Type: ReDIF-Paper 1.0
Title: Using Non-Pecuniary Strategies to Influence Behavior: Evidence from a Large Scale Field Experiment
Classification-JEL: C93; D03; Q2
Author-Name: Paul J. Ferraro
Author-Person: pfe373
Author-Name: Michael K. Price
Author-Person: ppr89
Note: EEE PE
Number: 17189
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17189
File-URL: http://www.nber.org/papers/w17189.pdf
File-Format: application/pdf
Publication-Status: published as Paul J. Ferraro & Michael K. Price, 2013. "Using Nonpecuniary Strategies to Influence Behavior: Evidence from a Large-Scale Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 64-73, March.
Abstract: Policymakers are increasingly using norm-based messages to influence individual decision-making. We partner with a metropolitan water utility to implement a natural field experiment examining the effect of such messages on residential water demand. The data, drawn from more than 100,000 households, indicate that social comparison messages had a greater influence on behavior than simple pro-social messages or technical information alone. Moreover, our data suggest social comparison messages are most effective among households identified as the least price sensitive: high-users. Yet the effectiveness of such messages wanes over time. Our results thus highlight important complementarities between pecuniary and non-pecuniary strategies.
Handle: RePEc:nbr:nberwo:17189
Template-Type: ReDIF-Paper 1.0
Title: The Oregon Health Insurance Experiment: Evidence from the First Year
Classification-JEL: H51; H75; I1
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Sarah Taubman
Author-Name: Bill Wright
Author-Name: Mira Bernstein
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Joseph P. Newhouse
Author-Name: Heidi Allen
Author-Name: Katherine Baicker
Author-Name: The Oregon Health Study Group
Note: AG EH PE
Number: 17190
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17190
File-URL: http://www.nber.org/papers/w17190.pdf
File-Format: application/pdf
Publication-Status: published as Amy Finkelstein & Sarah Taubman & Bill Wright & Mira Bernstein & Jonathan Gruber & Joseph P. Newhouse & Heidi Allen & Katherine Baicker, 2012. "The Oregon Health Insurance Experiment: Evidence from the First Year," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1057-1106.
Abstract: In 2008, a group of uninsured low-income adults in Oregon was selected by lottery to be given the chance to apply for Medicaid. This lottery provides a unique opportunity to gauge the effects of expanding access to public health insurance on the health care use, financial strain, and health of low-income adults using a randomized controlled design. In the year after random assignment, the treatment group selected by the lottery was about 25 percentage points more likely to have insurance than the control group that was not selected. We find that in this first year, the treatment group had substantively and statistically significantly higher health care utilization (including primary and preventive care as well as hospitalizations), lower out-of-pocket medical expenditures and medical debt (including fewer bills sent to collection), and better self-reported physical and mental health than the control group.
Handle: RePEc:nbr:nberwo:17190
Template-Type: ReDIF-Paper 1.0
Title: Customer Capital
Classification-JEL: D83; D92; E22; L11
Author-Name: Francois Gourio
Author-Person: pgo158
Author-Name: Leena Rudanko
Author-Person: pru114
Note: CF EFG IO ME
Number: 17191
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17191
File-URL: http://www.nber.org/papers/w17191.pdf
File-Format: application/pdf
Publication-Status: published as \Customer Capital" with Francois Gourio Review of Economic Studies, forthcoming
Abstract: Firms spend substantial resources on marketing and selling. Interpreting this as evidence of frictions in product markets, which require firms to spend resources on customer acquisition, this paper develops a search theoretic model of firm dynamics in frictional product markets. Introducing search frictions generates long-term customer relationships, rendering the customer base a state variable for firms, which is sluggish to adjust. This affects: the level and volatility of firm investment, sales, profits, value and markups, the timing of firm responses to shocks, and the relationship between investment and Tobin's q. We document support for these predictions in firm-level data from Compustat, using cross-industry variation in selling expenses to quantify differences in the degree of friction across markets.
Handle: RePEc:nbr:nberwo:17191
Template-Type: ReDIF-Paper 1.0
Title: Negotiating with Labor Under Financial Distress
Classification-JEL: G23; G32; G33; J21; J24; J26; J31
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Nittai K. Bergman
Author-Name: Ricardo Enriquez
Note: CF LS
Number: 17192
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17192
File-URL: http://www.nber.org/papers/w17192.pdf
File-Format: application/pdf
Publication-Status: published as Benmelech, Efraim, Nittai Bergman and Ricardo Enriquez. 2012. Negotiating with Labor Under Financial Distress. Review of Corporate Finance Studies. 1: 28-67.
Abstract: We analyze how firms renegotiate labor contracts to extract concessions from labor. While anecdotal evidence suggests that firms tend to renegotiate down wages in times of financial distress, there is no empirical evidence that documents such renegotiation, its determinants, and its magnitude. This paper attempts to fill this gap. Using a unique data set of airlines that includes detailed information on wages and pension plans we document an empirical link between airline financial distress, pension underfunding, and wage concessions.
Handle: RePEc:nbr:nberwo:17192
Template-Type: ReDIF-Paper 1.0
Title: Connected Substitutes and Invertibility of Demand
Classification-JEL: C3; D01
Author-Name: Steven T. Berry
Author-Person: pbe18
Author-Name: Amit Gandhi
Author-Name: Philip Haile
Author-Person: pha381
Note: IO TWP
Number: 17193
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17193
File-URL: http://www.nber.org/papers/w17193.pdf
File-Format: application/pdf
Publication-Status: published as Steven Berry, Amit Gandhi and Philip Haile (2013), \Connected Substitutes and Invertibility of Demand," Econometrica v. 81(5) (September), pp. 2087-2111 (also Cowles Foundation Discussion Paper # 1806R.)
Abstract: We consider the invertibility of a nonparametric nonseparable demand system. Invertibility of demand is important in several contexts, including identification of demand, estimation of demand, testing of revealed preference, and economic theory requiring uniqueness of market clearing prices. We introduce the notion of "connected substitutes" and show that this structure is sufficient for invertibility. The connected substitutes conditions require weak substitution between all goods and sufficient strict substitution to necessitate treating them in a single demand system. These conditions are satisfied in many standard models, have transparent economic interpretation, and allow us to show invertibility without functional form restrictions, smoothness assumptions, or strong domain restrictions.
Handle: RePEc:nbr:nberwo:17193
Template-Type: ReDIF-Paper 1.0
Title: Pay for Percentile
Classification-JEL: I20; I28; J33; J41
Author-Name: Gadi Barlevy
Author-Person: pba129
Author-Name: Derek Neal
Note: ED LS
Number: 17194
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17194
File-URL: http://www.nber.org/papers/w17194.pdf
File-Format: application/pdf
Publication-Status: published as Gadi Barlevy & Derek Neal, 2012. "Pay for Percentile," American Economic Review, American Economic Association, vol. 102(5), pages 1805-31, August.
Abstract: We analyze an incentive pay scheme for educators that links educator compensation to the ranks of their students within appropriately defined comparison sets, and we show that under certain conditions this scheme induces teachers to allocate socially optimal levels of effort to all students. Moreover, because this scheme employs only ordinal information, it allows education authorities to employ completely new assessments at each testing date without ever having to equate various assessment forms. This approach removes incentives for teachers to teach to a particular assessment form and eliminates opportunities to influence reward pay by corrupting the equating process or the scales used to report assessment results. Education authorities can use the incentive scheme we describe while employing a separate no-stakes assessment system to track secular trends in scaled measures of student achievement.
Handle: RePEc:nbr:nberwo:17194
Template-Type: ReDIF-Paper 1.0
Title: Policy Response to Pandemic Influenza: The Value of Collective Action
Classification-JEL: D62; I18
Author-Name: Georgiy Bobashev
Author-Name: Maureen L. Cropper
Author-Person: pcr77
Author-Name: Joshua M. Epstein
Author-Name: D. Michael Goedecke
Author-Name: Stephen Hutton
Author-Name: Mead Over
Author-Person: pov11
Note: EEE
Number: 17195
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17195
File-URL: http://www.nber.org/papers/w17195.pdf
File-Format: application/pdf
Abstract: This paper examines positive externalities and complementarities in the use of antiviral pharmaceuticals to mitigate pandemic influenza. The paper demonstrates the presence of treatment externalities in simple epidemiological SIR models, and then through simulations of a Global Epidemiological Model, in which the pandemic spreads between cities through the international airline network, and between cities and rural areas through ground transport. While most treatment benefits are private, spillovers may mean that it is in the self-interest of rich countries to pay for some AV treatment in poor countries. The most cost-effective policy is for rich countries to donate doses to the outbreak source country; however, donating doses to poor countries in proportion to their populations may also be cost-effective. These results depend on the transmissibility of the flu strain, the efficacy of antivirals in reducing transmissibility and on the proportion of infectious that can be identified and treated.
Handle: RePEc:nbr:nberwo:17195
Template-Type: ReDIF-Paper 1.0
Title: The Empirical Content of Models with Multiple Equilibria in Economies with Social Interactions
Classification-JEL: C51; C52; I1
Author-Name: Alberto Bisin
Author-Person: pbi10
Author-Name: Andrea Moro
Author-Person: pmo78
Author-Name: Giorgio Topa
Author-Person: pto149
Note: CH EH
Number: 17196
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17196
File-URL: http://www.nber.org/papers/w17196.pdf
File-Format: application/pdf
Abstract: We study a general class of models with social interactions that might display multiple equilibria. We propose an estimation procedure for these models and evaluate its efficiency and computational feasibility relative to different approaches taken to the curse of dimensionality implied by the multiplicity. Using data on smoking among teenagers, we implement the proposed estimation procedure to understand how group interactions affect health-related choices. We find that interaction effects are strong both at the school level and at the smaller friends-network level. Multiplicity of equilibria is pervasive at the estimated parameter values, and equilibrium selection accounts for about 15 percent of the observed smoking behavior. Counterfactuals show that student interactions, surprisingly, reduce smoking by approximately 70 percent with respect to the equilibrium smoking that would occur without interactions.
Handle: RePEc:nbr:nberwo:17196
Template-Type: ReDIF-Paper 1.0
Title: Issuer Quality and the Credit Cycle
Classification-JEL: E32; E51; G12; G32
Author-Name: Robin Greenwood
Author-Name: Samuel G. Hanson
Author-Person: pha1258
Note: AP CF ME
Number: 17197
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17197
File-URL: http://www.nber.org/papers/w17197.pdf
File-Format: application/pdf
Publication-Status: published as Greenwood, Robin, and Samuel G. Hanson. "Issuer Quality and Corporate Bond Returns." Review of Financial Studies 26, no. 6 (June 2013): 1483–1525.
Abstract: We show that the credit quality of corporate debt issuers deteriorates during credit booms, and that this deterioration forecasts low excess returns to corporate bondholders. The key insight is that changes in the pricing of credit risk disproportionately affect the financing costs faced by low quality firms, so the debt issuance of low quality firms is particularly useful for forecasting bond returns. We show that a significant decline in issuer quality is a more reliable signal of credit market overheating than rapid aggregate credit growth. We use these findings to investigate the forces driving time-variation in expected corporate bond returns.
Handle: RePEc:nbr:nberwo:17197
Template-Type: ReDIF-Paper 1.0
Title: The Labor Market Impact of Employer Health Benefit Mandates: Evidence from San Francisco's Health Care Security Ordinance
Classification-JEL: I18; J2; J3
Author-Name: Carrie H. Colla
Author-Person: pco1087
Author-Name: William H. Dow
Author-Person: pdo236
Author-Name: Arindrajit Dube
Author-Person: pdu263
Note: EH LS
Number: 17198
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17198
File-URL: http://www.nber.org/papers/w17198.pdf
File-Format: application/pdf
Abstract: A key issue surrounding employer benefit mandates is the incidence on workers through wages and employment. In this paper, we address this question using a pay-or-play policy implemented in San Francisco in 2008 that requires employers to either provide health benefits or contribute to a public option health plan. We estimate the impact on employment and earnings for the private sector overall, as well as for high impact sectors: retail and accommodation and food services. We develop a novel approach for individual case studies by combining both spatial discontinuity in policies and permutation-type inference using other MSAs. We find that, compared to control counties, employment and earnings patterns in San Francisco did not change appreciably following the policy. This was true for industries most affected by the mandate, as well as for overall private sector employment. The results are generally robust to inclusion of different control groups, county-specific time trends, and varying pre-periods. In contrast to the small effects on the labor market, we do find that about 25% of surveyed restaurants imposed customer surcharges, with the median surcharge being 4% of the bill. These results indicate that while little of the burden of the mandate fell on San Francisco workers, approximately half of the incidence of the mandate fell on consumers.
Handle: RePEc:nbr:nberwo:17198
Template-Type: ReDIF-Paper 1.0
Title: The Behavior of Savings and Asset Prices When Preferences and Beliefs are Heterogeneous
Classification-JEL: D51; G12
Author-Name: Ngoc-Khanh Tran
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: AP CF
Number: 17199
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17199
File-URL: http://www.nber.org/papers/w17199.pdf
File-Format: application/pdf
Abstract: Movements in asset prices are a major risk confronting individuals. This paper establishes new asset pricing results when agents differ in risk preference, time preference and/or expectations. It shows that risk tolerance is a critical concept driving savings decisions, consumption allocations, prices and return volatilities. Surprisingly, due to the equilibrium risk sharing, the precautionary savings motive in the aggregate can vastly exceed that of even the most prudent actual agent in the economy. Consequently, a low real interest rate, resulting from large aggregate savings, can prevail with reasonable risk aversions for all agents. One downside of a large aggregate savings motive is that savings rates become extremely sensitive to output fluctuation. Thus, the same mechanism that produces realistically low interest rates tends to make them unrealistically volatile. A powerful isomorphism allows differences in time preference and expectations to be swept away in the analysis, yielding an equivalent economy whose agents differ merely in risk aversion. These results hold great potential to simplify the analysis of heterogeneous-agent economies, as we demonstrate in quantifying how asset prices move and bounding their volatilities. All results are obtained in closed form for any number of agents possessing additively separable preferences in an endowment economy.
Handle: RePEc:nbr:nberwo:17199
Template-Type: ReDIF-Paper 1.0
Title: Understanding the Solar Home Price Premium: Electricity Generation and "Green" Social Status
Classification-JEL: Q54; Q55; R31
Author-Name: Samuel Dastrup
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Dora L. Costa
Author-Person: pco358
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE
Number: 17200
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17200
File-URL: http://www.nber.org/papers/w17200.pdf
File-Format: application/pdf
Publication-Status: published as Dastrup, Samuel R. & Graff Zivin, Joshua & Costa, Dora L. & Kahn, Matthew E., 2012. "Understanding the Solar Home price premium: Electricity generation and âGreenâ social status," European Economic Review, Elsevier, vol. 56(5), pages 961-973.
Abstract: This study uses a large sample of homes in the San Diego area and Sacramento, California area to provide some of the first capitalization estimates of the sales value of homes with solar panels relative to comparable homes without solar panels. Although the residential solar home market continues to grow, there is little direct evidence on the market capitalization effect. Using both hedonics and a repeat sales index approach we find that solar panels are capitalized at roughly a 3.5% premium. This premium is larger in communities with a greater share of college graduates and of registered Prius hybrid vehicles.
Handle: RePEc:nbr:nberwo:17200
Template-Type: ReDIF-Paper 1.0
Title: International Recessions
Classification-JEL: E3; F3; F41
Author-Name: Fabrizio Perri
Author-Person: ppe52
Author-Name: Vincenzo Quadrini
Author-Person: pqu2
Note: EFG IFM
Number: 17201
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17201
File-URL: http://www.nber.org/papers/w17201.pdf
File-Format: application/pdf
Publication-Status: published as Fabrizio Perri & Vincenzo Quadrini, 2018. "International Recessions," American Economic Review, vol 108(4-5), pages 935-984.
Abstract: The 2008-2009 crisis was characterized by an unprecedented degree of international synchronization as all major industrialized countries experienced large macroeconomic contractions around the date of Lehman bankruptcy. At the same time countries also experienced large and synchronized tightening of credit conditions. We present a two-country model with financial market frictions where a credit tightening can emerge as a self-fulling equilibrium caused by pessimistic but fully rational expectations. As a result of the credit tightening, countries experience large and endogenously synchronized declines in asset prices and economic activity (international recessions). The model suggests that these recessions are more severe if they happen after a prolonged period of credit expansion.
Handle: RePEc:nbr:nberwo:17201
Template-Type: ReDIF-Paper 1.0
Title: Tax Policy and the Efficiency of U.S. Direct Investment Abroad
Classification-JEL: D92; H21; H25
Author-Name: Mihir A. Desai
Author-Name: C. Fritz Foley
Author-Name: James R. Hines Jr.
Author-Person: phi111
Note: CF ITI PE
Number: 17202
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17202
File-URL: http://www.nber.org/papers/w17202.pdf
File-Format: application/pdf
Publication-Status: published as Desai, Mihir A. & Foley, C. Fritz & Hines, James R. Jr., 2011. "Tax Policy And The Efficiency Of U.S. Direct Investment Abroad," National Tax Journal, National Tax Association, vol. 64(4), pages 1055-82, December .
Abstract: Deferral of U.S. taxes on foreign source income is commonly characterized as a subsidy to foreign investment, as reflected in its inclusion among "tax expenditures" and occasional calls for its repeal. This paper analyzes the extent to which tax deferral and other policies inefficiently subsidize U.S. direct investment abroad. Investments are dynamically inefficient if they consistently generate fewer returns to investors than they absorb in new investment funds. From 1982-2010, repatriated earnings from foreign affiliates exceeded net capital investments by $1.1 trillion in 2010 dollars; and from 1950-2010, repatriated earnings and net interest from foreign affiliates exceeded net equity investments and loans by $2.1 trillion in 2010 dollars. By either measure, cash flows received from abroad exceeded 160 percent of net investments, implying that foreign investment over these periods was dynamically efficient.
Handle: RePEc:nbr:nberwo:17202
Template-Type: ReDIF-Paper 1.0
Title: Economic Preparation for Retirement
Classification-JEL: E21; J14; J26
Author-Name: Michael D. Hurd
Author-Person: phu137
Author-Name: Susann Rohwedder
Author-Person: pro270
Note: AG
Number: 17203
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17203
File-URL: http://www.nber.org/papers/w17203.pdf
File-Format: application/pdf
Publication-Status: published as Economic Preparation for Retirement, Michael D. Hurd, Susann Rohwedder. in Investigations in the Economics of Aging, Wise. 2012
Abstract: We define and estimate measures of economic preparation for retirement based on a complete inventory of economic resources while taking into account the risk of living to advanced old age and the risk of high out-of-pocket spending for health care services. We ask whether, in a sample of 66-69 year-olds, observed economic resources could support with high probability a life-cycle consumption path anchored at the initial level of consumption until the end of life. We account for taxes, widowing, differential mortality and out-of-pocket health spending risk. We find that 71% of persons in our target age group are adequately prepared according to our definitions, but there is substantial variation by observable characteristics: 80% of married persons are adequately prepared compared with just 55% of single persons. We estimate that a reduction in Social Security benefits of 30 percent would reduce the fraction adequately prepared by 7.8 percentage points among married persons and by as much as 10.7 percentage points among single persons.
Handle: RePEc:nbr:nberwo:17203
Template-Type: ReDIF-Paper 1.0
Title: Supplier Responses to Wal-Mart's Invasion of Mexico
Classification-JEL: F23; L1; O33
Author-Name: Leonardo Iacovone
Author-Person: pia8
Author-Name: Beata Smarzynska Javorcik
Author-Person: pja78
Author-Name: Wolfgang Keller
Author-Person: pke8
Author-Name: James R. Tybout
Note: IO ITI PR
Number: 17204
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17204
File-URL: http://www.nber.org/papers/w17204.pdf
File-Format: application/pdf
Publication-Status: published as Iacovone, Leonardo & Javorcik, Beata & Keller, Wolfgang & Tybout, James, 2015. "Supplier responses to Walmart's invasion in Mexico," Journal of International Economics, Elsevier, vol. 95(1), pages 1-15.
Abstract: This paper examines the effect of Wal-Mart's entry into Mexico on Mexican manufacturers of consumer goods. Guided by firm interviews that suggested substantial heterogeneity across firms in how they responded to Wal-Mart's entry, we develop a dynamic industry model in which firms decide whether to sell their products through Walmex (short for Wal-Mart de Mexico), or use traditional retailers. Walmex provides access to a larger market, but it puts continuous pressure on its suppliers to improve their product's appeal, and it forces them to accept relatively low prices relative to product appeal. Simulations of the model show that the arrival of Walmex separates potential suppliers into two groups. Those with relatively high-appeal products choose Walmex as their retailer, whereas those with lower appeal products do not. For the industry as a whole, the model predicts that the associated market share reallocations, adjustments in innovative effort, and exit patterns increase productivity and the rate of innovation. These predictions accord well with the results from our firm interviews. The model's predictions are also supported by establishment-level panel data that characterize Mexican producers' domestic sales, investments, and productivity gains in regions with differing levels of Walmex presence during the years 1994 to 2002.
Handle: RePEc:nbr:nberwo:17204
Template-Type: ReDIF-Paper 1.0
Title: Vaccine Supply: Effects Of Regulation And Competition
Classification-JEL: D4; I11; I18; L11
Author-Name: Patricia M. Danzon
Author-Person: pda291
Author-Name: Nuno S. Pereira
Note: EH
Number: 17205
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17205
File-URL: http://www.nber.org/papers/w17205.pdf
File-Format: application/pdf
Publication-Status: published as Patricia Danzon & Nuno Sousa Pereira, 2011. "Vaccine Supply: Effects of Regulation and Competition," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 18(2), pages 239-271.
Abstract: In US vaccine markets, competing producers with high fixed, sunk costs face relatively concentrated demand. The resulting price and quality competition leads to the exit of all but one or very few producers per vaccine. Our empirical analysis of exits from US vaccine markets supports the hypothesis that high fixed costs and both price and quality competition contribute to vaccine exits. We find no evidence that government purchasing has significant effects, possibly because government purchase tends to increase volume but lower price, with offsetting effects. Evidence from the flu vaccine market confirms that government purchasing is not a necessary condition for exits and the existence of few suppliers per vaccine in the US.
Handle: RePEc:nbr:nberwo:17205
Template-Type: ReDIF-Paper 1.0
Title: What Really Happened During the Glorious Revolution?
Classification-JEL: D78; N13; N43
Author-Name: Steven C.A. Pincus
Author-Name: James A. Robinson
Author-Person: pro179
Note: DAE POL
Number: 17206
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17206
File-URL: http://www.nber.org/papers/w17206.pdf
File-Format: application/pdf
Publication-Status: published as “What Really Happened D uring the Glorious Revolution?” (2014 ) (joint with Steven Pincus, Yale University) in Sebastián Galiani and Itai Sened ed s . Institutions, Property Rights and Growth: The Legacy of Douglass North , New York: Cambridge U niversity Press.
Abstract: The English Glorious Revolution of 1688-89 is one of the most famous instances of 'institutional' change in world history which has fascinated scholars because of the role it may have played in creating an environment conducive to making England the first industrial nation. This claim was most forcefully advanced by North and Weingast yet the existing literature in history and economic history dismisses their arguments. In this paper we argue that North and Weingast were entirely correct in arguing that the Glorious Revolution represented a critical change in institutions. In addition, and contrary to the claims of many historians, most of the things they claimed happened, for example parliamentary sovereignty, did happen. However, we argue that they happened for reasons different from those put forward by North and Weingast. We show that rather than being an instance of a de jure 're-writing the rules', as North and Weingast argued, the Glorious Revolution was actually an interlinked series of de facto institutional changes which came from a change in the balance of power and authority and was part of a broader reorientation in the political equilibrium of England. Moreover, it was significant for the economy not because it solved a problem of credible commitment, but for two other reasons. First, because the institutional changes it led to meant that party political ministries, rather than the king's private advisors, now initiated policy. Second, because these ministries were dominated by Whigs with a specific program of economic modernization.
Handle: RePEc:nbr:nberwo:17206
Template-Type: ReDIF-Paper 1.0
Title: When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana
Classification-JEL: O12; O16
Author-Name: Marcel Fafchamps
Author-Person: pfa2
Author-Name: David McKenzie
Author-Person: pmc29
Author-Name: Simon R. Quinn
Author-Person: pqu106
Author-Name: Christopher Woodruff
Author-Person: pwo165
Note: PR
Number: 17207
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17207
File-URL: http://www.nber.org/papers/w17207.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Development Economics Volume 106, January 2014, Pages 211–226 Cover image Microenterprise growth and the flypaper effect: Evidence from a randomized experiment in Ghana ☆ Marcel Fafchampsa, , David McKenzieb, , Simon Quinna, , , Christopher Woodruffc,
Abstract: Standard models of investment predict that credit-constrained firms should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. We randomly gave cash and in-kind grants to male- and female-owned microenterprises in urban Ghana. Our findings cast doubt on the ability of capital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zero for women with initial profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women we strongly reject equality of the cash and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in-kind grants are less robust. The difference in the effects of cash and in-kind grants is associated more with a lack of self-control than with external pressure. As a result, the manner in which funding is provided affects microenterprise growth.
Handle: RePEc:nbr:nberwo:17207
Template-Type: ReDIF-Paper 1.0
Title: Competition in Health Care Markets
Classification-JEL: I11; I18; L10; L13; L30; L40
Author-Name: Martin Gaynor
Author-Person: pga1
Author-Name: Robert J. Town
Author-Person: pto430
Note: EH
Number: 17208
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17208
File-URL: http://www.nber.org/papers/w17208.pdf
File-Format: application/pdf
Publication-Status: published as Gaynor, M and Town, R. (2011) “Provider Competition,” in Handbook of Health Economics, Vol 2, Borras, P., McGuire, T. and Pauly, M., eds., Amsterdam: Elsevier.
Abstract: This paper reviews the literature devoted to studying markets for health care services and health insurance. There has been tremendous growth and progress in this field. A tremendous amount of new research has been done in this area over the last 10 years. In addition, there has been increasing development and use of frontier industrial organization methods. We begin by examining research on the determinants of market structure, considering both static and dynamic models. We then model the strategic determination of prices between health insurers and providers where insurers market their products to consumers based, in part, on the quality and breadth of their provider network. We then review the large empirical literature on the strategic determination of hospital prices through the lens of this model. Variation in the quality of health care clearly can have large welfare consequences. We therefore also describe the theoretical and empirical literature on the impact of market structure on quality of health care. The paper then moves on to consider competition in health insurance markets and physician services markets. We conclude by considering vertical restraints and monopsony power.
Handle: RePEc:nbr:nberwo:17208
Template-Type: ReDIF-Paper 1.0
Title: State Redemption of the Continental Dollar, 1779-1790
Classification-JEL: E42; E51; H11; N11; N21; N41
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 17209
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17209
File-URL: http://www.nber.org/papers/w17209.pdf
File-Format: application/pdf
Publication-Status: published as “State Redemption of the Continental Dollar, 1779 - 90, ” W illiam and Mary Quarterly , 3d ser., vol. 69, no. 1 ( Jan. 2012), pp. 147 - 180.
Abstract: Remittances of Continental Dollars to the national treasury from each state by year from 1779 through 1789 are used to determine state compliance with congressional resolutions regarding Continental-Dollar redemption. From 1781 through 1789, the states as a whole stayed well ahead of the remittance schedule set by Congress in 1779. Individual state compliance, however, varied considerably. By the time Congress changed redemption requirements with the Funding Act of 4 August 1790, a majority of the net new Continental Dollars ever emitted by Congress had already been redeemed by the states and remitted to the national treasury to be burned.
Handle: RePEc:nbr:nberwo:17209
Template-Type: ReDIF-Paper 1.0
Title: Environmental Regulations, Air and Water Pollution, and Infant Mortality in India
Classification-JEL: H2; O1; Q2; Q5; R5
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: Rema Hanna
Author-Person: pha883
Note: CH EEE EH LE PE
Number: 17210
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17210
File-URL: http://www.nber.org/papers/w17210.pdf
File-Format: application/pdf
Publication-Status: published as “Environmental Regulations, Air and Water Pollution, and Infant Mortality in India,” (with Rema Hanna), forthcoming American Economic Review, 2014; also NBER WP # 17210; MIT Dept. of Economics WP No. 11- 11, 2011; CEEPR WP 2011-014.
Abstract: Using the most comprehensive data file ever compiled on air pollution, water pollution, environmental regulations, and infant mortality from a developing country, the paper examines the effectiveness of India's environmental regulations. The air pollution regulations were effective at reducing ambient concentrations of particulate matter, sulfur dioxide, and nitrogen dioxide. The most successful air pollution regulation is associated with a modest and statistically insignificant decline in infant mortality. However, the water pollution regulations had no observable effect. Overall, these results contradict the conventional wisdom that environmental quality is a deterministic function of income and underscore the role of institutions and politics.
Handle: RePEc:nbr:nberwo:17210
Template-Type: ReDIF-Paper 1.0
Title: American Incomes before and after the Revolution
Classification-JEL: N11; N91; O47; O51
Author-Name: Peter H. Lindert
Author-Person: pli466
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 17211
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17211
File-URL: http://www.nber.org/papers/w17211.pdf
File-Format: application/pdf
Publication-Status: published as Peter H. Lindert and Jeffrey G. Williamson. “American Incomes before and after the Revolution”. Forthcoming Journal of Economic History. Earlier version: NBER working paper 17211 (2011; revised February 2013).
Abstract: Building social tables in the tradition of Gregory King, we develop new estimates suggesting that between 1774 and 1800 American incomes fell in real per capita terms. The colonial South was richer than the North at the start, but was already beginning to lose its income lead by 1800. We also find that free American colonists had much more equal incomes than did households in England and Wales. The colonists also had greater purchasing power than their English counterparts over all of the income ranks except in the top few percent.
Handle: RePEc:nbr:nberwo:17211
Template-Type: ReDIF-Paper 1.0
Title: Early Maternal Employment and Family Wellbeing
Classification-JEL: I1
Author-Name: Pinka Chatterji
Author-Person: pch732
Author-Name: Sara Markowitz
Author-Person: pma138
Author-Name: Jeanne Brooks-Gunn
Note: EH
Number: 17212
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17212
File-URL: http://www.nber.org/papers/w17212.pdf
File-Format: application/pdf
Abstract: This study uses longitudinal data from the NICHD Study on Early Child Care (SECC) to examine the effects of maternal employment on family well-being, measured by maternal mental and overall health, parenting stress, and parenting quality. First, we estimate the effects of maternal employment on these outcomes measured when children are 6 months old. Next, we use dynamic panel data models to examine the effects of maternal employment on family outcomes during the first 4.5 years of children's lives. Among mothers of six month old infants, maternal work hours are positively associated with depressive symptoms and self-reported parenting stress, and negatively associated with self-rated overall health among mothers. Compared to mothers who are on leave 3 months after childbirth, mothers who are working full-time score 22 percent higher on the CES-D scale of depressive symptoms. However, maternal employment is not associated with the quality of parenting at 6 months, based on trained assessors' observations of maternal sensitivity. Moreover, during the first 4.5 years of life as a whole, we find only weak evidence that maternal work hours are associated with maternal health, and no evidence that maternal employment is associated with parenting stress and quality. We find that unobserved heterogeneity is an important factor in modeling family outcomes.
Handle: RePEc:nbr:nberwo:17212
Template-Type: ReDIF-Paper 1.0
Title: Future Skill Shortages in the U.S. Economy?
Classification-JEL: J11; J24
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Hans P. Johnson
Author-Name: Marisol Cuellar Mejia
Note: AG LS
Number: 17213
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17213
File-URL: http://www.nber.org/papers/w17213.pdf
File-Format: application/pdf
Publication-Status: published as Neumark, David & Johnson, Hans & Mejia, Marisol Cuellar, 2013. "Future skill shortages in the U.S. economy?," Economics of Education Review, Elsevier, vol. 32(C), pages 151-167.
Abstract: The impending retirement of the baby boom cohort represents the first time in the history of the United States that such a large and well-educated group of workers will exit the labor force. This could imply skill shortages in the U.S. economy. We develop near-term labor force projections of the educational demands on the workforce and the supply of workers by education to assess the potential for skill imbalances to emerge. Based on our formal projections, we see little likelihood of skill shortages emerging by the end of this decade. More tentatively, though, skill shortages are more likely as all of the baby boomers retire in later years, and skill shortages are more likely in the near-term in states with large and growing immigrant populations.
Handle: RePEc:nbr:nberwo:17213
Template-Type: ReDIF-Paper 1.0
Title: An Optimal Tax System
Classification-JEL: H20; H21; H23; H24; H53
Author-Name: Louis Kaplow
Author-Person: pka44
Note: PE
Number: 17214
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17214
File-URL: http://www.nber.org/papers/w17214.pdf
File-Format: application/pdf
Publication-Status: published as An Optimal Tax System, Fiscal Studies , vol. 32, pp. 415-435 (2011).
Abstract: A notable feature and principal virtue of Tax by Design is its system-wide perspective on different elements of the tax system. This review essay builds on this trait and offers a more explicit foundation for the report's general approach, drawing on a distribution-neutral methodology that is developed in other work. This technique is then employed to illuminate and extend Tax by Design's analysis regarding the VAT, environmental taxation, wealth transfer taxation, and income transfers.
Handle: RePEc:nbr:nberwo:17214
Template-Type: ReDIF-Paper 1.0
Title: Economic Growth in the Mid Atlantic Region: Conjectural Estimates for 1720 to 1800
Classification-JEL: N1; N11; N71; N9; N91; O19
Author-Name: Joshua L. Rosenbloom
Author-Person: pro664
Author-Name: Thomas J. Weiss
Author-Person: pwe260
Note: DAE
Number: 17215
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17215
File-URL: http://www.nber.org/papers/w17215.pdf
File-Format: application/pdf
Publication-Status: published as Rosenbloom, Joshua L. & Weiss, Thomas, 2014. "Economic growth in the Mid-Atlantic region: Conjectural estimates for 1720 to 1800," Explorations in Economic History, Elsevier, vol. 51(C), pages 41-59.
Abstract: We employ the conjectural approach to estimate the growth of GDP per capita for the colonies and states of the mid-Atlantic region (Del., NJ, NY and Penn). In contrast to previous studies of the region's growth that relied heavily on the performance of the export sector, the conjectural method enables us to take into account the impact of domestic sector, in particular the production of agricultural products for the domestic market. We find that the region experienced modest growth of real GDP per capita. Although the rate of growth was modest in comparison to what would materialize in the late nineteenth century, it was faster than that of the Lower South in the eighteenth century, and at times as fast as that for the U.S. in the first half of the nineteenth century. In its heyday of growth from 1740 to 1750--before the dislocations produced by the spread of the Seven Years' War--real GDP per capita rose at 0.7 percent per year, driven by the growth of output per worker in both agriculture and nonagriculture, and by capital accumulation.
Handle: RePEc:nbr:nberwo:17215
Template-Type: ReDIF-Paper 1.0
Title: The "Out of Africa" Hypothesis, Human Genetic Diversity, and Comparative Economic Development
Classification-JEL: N10; N30; N50; O11; O50; Z10
Author-Name: Quamrul Ashraf
Author-Name: Oded Galor
Author-Person: pga46
Note: EFG
Number: 17216
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17216
File-URL: http://www.nber.org/papers/w17216.pdf
File-Format: application/pdf
Publication-Status: published as Quamrul Ashraf & Oded Galor, 2013. "The 'Out of Africa' Hypothesis, Human Genetic Diversity, and Comparative Economic Development," American Economic Review, American Economic Association, vol. 103(1), pages 1-46, February.
Abstract: This research argues that deep-rooted factors, determined tens of thousands of years ago, had a significant effect on the course of economic development from the dawn of human civilization to the contemporary era. It advances and empirically establishes the hypothesis that, in the course of the exodus of Homo sapiens out of Africa, variation in migratory distance from the cradle of humankind to various settlements across the globe affected genetic diversity and has had a long-lasting effect on the pattern of comparative economic development that is not captured by geographical, institutional, and cultural factors. In particular, the level of genetic diversity within a society is found to have a hump-shaped effect on development outcomes in both the pre-colonial and the modern era, reflecting the trade-off between the beneficial and the detrimental effects of diversity on productivity. While the intermediate level of genetic diversity prevalent among Asian and European populations has been conducive for development, the high degree of diversity among African populations and the low degree of diversity among Native American populations have been a detrimental force in the development of these regions.
Handle: RePEc:nbr:nberwo:17216
Template-Type: ReDIF-Paper 1.0
Title: Understanding Cross-National Trends in High-Tech Renewable Power Equipment Exports to the United States
Classification-JEL: F14; Q55; Q56
Author-Name: Aparna Sawhney
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE ITI
Number: 17217
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17217
File-URL: http://www.nber.org/papers/w17217.pdf
File-Format: application/pdf
Publication-Status: published as Sawhney, Aparna & Kahn, Matthew E., 2012. "Understanding cross-national trends in high-tech renewable power equipment exports to the United States," Energy Policy, Elsevier, vol. 46(C), pages 308-318.
Abstract: We track US imports of advanced technology wind and solar power-generation equipment from a panel of countries during 1989-2010, and examine the determining factors including sector-specific US FDI outflow, country size, and domestic wind and solar power generation. Differentiating between the core high-tech and the balance of system equipment, we find US imports of the both categories have grown at significantly higher rate from the relatively poorer countries, particularly China and India. US FDI is found to play a significant positive role in the exports of high-tech equipment from both rich and poor countries, especially for the balance of system equipment. For the core wind and solar equipment, we find domestic renewable power generation played a significant positive role, and the effect is more pronounced for the rich countries as well as China compared to other poor countries.
Handle: RePEc:nbr:nberwo:17217
Template-Type: ReDIF-Paper 1.0
Title: Post-Secondary Attendance by Parental Income in the U.S. and Canada: What Role for Financial Aid Policy?
Classification-JEL: H52; I21; I28
Author-Name: Philippe Belley
Author-Name: Marc Frenette
Author-Name: Lance Lochner
Author-Person: plo31
Note: ED LS PE
Number: 17218
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17218
File-URL: http://www.nber.org/papers/w17218.pdf
File-Format: application/pdf
Publication-Status: published as Post-secondary attendance by parental income in the U.S. and Canada: Do financial aid policies explain the differences? Philippe Belley1,*, Marc Frenette2 andLance Lochner3 Canadian Journal of Economics/Revue canadienne d'économique Volume 47, Issue 2, pages 664–696, May/mai 2014
Abstract: This paper examines the implications of tuition and need-based financial aid policies for family income - post-secondary (PS) attendance relationships. We first conduct a parallel empirical analysis of the effects of parental income on PS attendance for recent high school cohorts in both the U.S. and Canada using data from the 1997 Cohort of the National Longitudinal Survey of Youth and Youth in Transition Survey. We estimate substantially smaller PS attendance gaps by parental income in Canada relative to the U.S., even after controlling for family background, adolescent cognitive achievement, and local residence fixed effects. We next document that U.S. public tuition and financial aid policies are actually more generous to low-income youth than are Canadian policies. By contrast, Canada offers more generous aid to middle-class youth than does the U.S. These findings suggest that the much stronger family income - PS attendance relationship in the U.S. is not driven by differences in the need-based nature of financial aid policies. Based on previous estimates of the effects of tuition and aid on PS attendance, we consider how much stronger income - attendance relationships would be in the absence of need-based aid and how much additional aid would need to be offered to lower income families to eliminate existing income - attendance gaps entirely.
Handle: RePEc:nbr:nberwo:17218
Template-Type: ReDIF-Paper 1.0
Title: Sources of Entropy in Representative Agent Models
Classification-JEL: E44; G12
Author-Name: David Backus
Author-Person: pba242
Author-Name: Mikhail Chernov
Author-Person: pch756
Author-Name: Stanley E. Zin
Author-Person: pzi46
Note: AP
Number: 17219
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17219
File-URL: http://www.nber.org/papers/w17219.pdf
File-Format: application/pdf
Publication-Status: published as \Sources of entropy in representative agent models," with M. Chernov and S. Zin, 2014, Journal of Finance 69, 51-99.
Abstract: We propose two metrics for asset pricing models and apply them to representative agent models with recursive preferences, habits, and jumps. The metrics describe the pricing kernel's dispersion (the entropy of the title) and dynamics (time dependence, a measure of how entropy varies over different time horizons). We show how each model generates entropy and time dependence and compare their magnitudes to estimates derived from asset returns. This exercise -- and transparent loglinear approximations -- clarifies the mechanisms underlying these models. It also reveals, in some cases, tension between entropy, which should be large enough to account for observed excess returns, and time dependence, which should be small enough to account for mean yield spreads.
Handle: RePEc:nbr:nberwo:17219
Template-Type: ReDIF-Paper 1.0
Title: Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices
Classification-JEL: L11; L13; L81; R10
Author-Name: Charles J. Courtemanche
Author-Person: pco421
Author-Name: Art Carden
Note: EH IO
Number: 17220
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17220
File-URL: http://www.nber.org/papers/w17220.pdf
File-Format: application/pdf
Publication-Status: published as Charles Courtemanche & Art Carden, 2014. "Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices," Southern Economic Journal, Southern Economic Association, vol. 80(3), pages 565-585, January.
Abstract: Prior research shows grocery stores reduce prices to compete with Walmart Supercenters. This study finds evidence that the competitive effects of two other big box retailers - Costco and Walmart-owned Sam's Club - are quite different. Using city-level panel grocery price data matched with a unique data set on Walmart and warehouse club locations, we find that Costco entry is associated with higher grocery prices at incumbent retailers, and that the effect is strongest in cities with small populations and high grocery store densities. This could be explained by a segmented-market model, or by incumbents competing with Costco along non-price dimensions such as product quality or quality of the shopping experience. We find no evidence that Sam's Club entry affects grocery stores' prices, consistent with Sam's Club's focus on small businesses instead of consumers.
Handle: RePEc:nbr:nberwo:17220
Template-Type: ReDIF-Paper 1.0
Title: Conglomerate Industry Choice and Product Differentiation
Classification-JEL: G34; L1; L22; L25
Author-Name: Gerard Hoberg
Author-Name: Gordon M. Phillips
Author-Person: pph31
Note: CF IO
Number: 17221
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17221
File-URL: http://www.nber.org/papers/w17221.pdf
File-Format: application/pdf
Abstract: We use text-based computational analysis of business descriptions from 10-Ks to examine in which industries conglomerates are most likely to operate and to understand conglomerate valuations. We find that conglomerates are more likely to operate in industry pairs that are closer together in the product space and in industry pairs that have profitable opportunities "between" them. Conglomerate firms have lower stock market valuations than matched single-segment firms when their products are easier to replicate with single-segment firms. Conglomerate firms have stock market premiums when they have higher product differentiation and produce in more profitable industries. These findings are consistent with successful conglomerate firms having higher product differentiation and lower cost entry into profitable markets when operating in strategically chosen industry pairs.
Handle: RePEc:nbr:nberwo:17221
Template-Type: ReDIF-Paper 1.0
Title: Caution, Drivers! Children Present: Traffic, Pollution, and Infant Health
Classification-JEL: I18; Q51; Q53
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Douglas L. Miller
Author-Person: pmi179
Author-Name: Nicholas J. Sanders
Author-Person: psa898
Note: CH EEE EH PE
Number: 17222
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17222
File-URL: http://www.nber.org/papers/w17222.pdf
File-Format: application/pdf
Publication-Status: published as Christopher R. Knittel & Douglas L. Miller & Nicholas J. Sanders, 2016. "Caution, Drivers! Children Present: Traffic, Pollution, and Infant Health," Review of Economics and Statistics, vol 98(2), pages 350-366.
Abstract: Since the Clean Air Act Amendments of 1990 (CAAA), atmospheric concentration of local pollutants has fallen drastically. A natural question is whether further reductions will yield additional health benefits. We further this research by addressing two related research questions: (1) what is the impact of automobile driving (and especially congestion) on ambient air pollution levels, and (2) what is the impact of modern air pollution levels on infant health? Our setting is California (with a focus on the Central Valley and Southern California) in the years 2002-2007. Using an instrumental variables approach that exploits the relationship between traffic, ambient weather conditions, and various pollutants, our findings suggest that ambient pollution levels, specifically particulate matter, still have large impacts on weekly infant mortality rates. Our results also illustrate the importance of weather controls in measuring pollution's impact on infant mortality.
Handle: RePEc:nbr:nberwo:17222
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Health Shocks on Employment and Health Insurance: The Role of Employer-Provided Health Insurance
Classification-JEL: I18; J22; J38
Author-Name: Cathy J. Bradley
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Meryl I. Motika
Author-Person: pmo590
Note: AG EH LS
Number: 17223
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17223
File-URL: http://www.nber.org/papers/w17223.pdf
File-Format: application/pdf
Publication-Status: published as Cathy Bradley & David Neumark & Meryl Motika, 2012. "The effects of health shocks on employment and health insurance: the role of employer-provided health insurance," International Journal of Health Care Finance and Economics, Springer, vol. 12(4), pages 253-267, December.
Abstract: We study how men's dependence on their own employer for health insurance affects labor supply responses and loss of health insurance coverage when faced with a serious health shock. Men with employment-contingent health insurance (ECHI) are more likely to remain working following some kinds of adverse health shocks, and are more likely to lose insurance. With the passage of health care reform, the tendency of men with ECHI as opposed to other sources of insurance to remain employed following a health shock may be diminished, along with the likelihood of losing health insurance.
Handle: RePEc:nbr:nberwo:17223
Template-Type: ReDIF-Paper 1.0
Title: House Price Booms and the Current Account
Classification-JEL: E44; F32; F41
Author-Name: Klaus Adam
Author-Person: pad1
Author-Name: Pei Kuang
Author-Person: pku353
Author-Name: Albert Marcet
Note: AP IFM
Number: 17224
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17224
File-URL: http://www.nber.org/papers/w17224.pdf
File-Format: application/pdf
Publication-Status: published as Klaus Adam & Pei Kuang & Albert Marcet, 2012. "House Price Booms and the Current Account," NBER Macroeconomics Annual, University of Chicago Press, vol. 26(1), pages 77 - 122.
Publication-Status: published as House Price Booms and the Current Account, Klaus Adam, Pei Kuang, Albert Marcet. in NBER Macroeconomics Annual 2011, Volume 26, Acemoglu and Woodford. 2012
Abstract: A simple open economy asset pricing model can account for the house price and current account dynamics in the G7 over the years 2001-2008. The model features rational households, but assumes that households entertain subjective beliefs about price behavior and update these using Bayes' rule. The resulting beliefs dynamics considerably propagate economic shocks and crucially contribute to replicating the empirical evidence. Belief dynamics can temporarily delink house prices from fundamentals, so that low interest rates can fuel a house price boom. House price booms, however, are not necessarily synchronized across countries and the model is consistent with the heterogeneous response of house prices across the G7 following the reduction in real interest rates at the beginning of the millennium. The response to interest rates depends sensitively on agents' beliefs at the time of the interest rate reduction, which in turn are a function of the country specific history prior to the year 2000. According to the model, the US house price boom could have been largely avoided, if real interest rates had decreased by less after the year 2000.
Handle: RePEc:nbr:nberwo:17224
Template-Type: ReDIF-Paper 1.0
Title: School Competition and Teacher Labor Markets: Evidence from Charter School Entry in North Carolina
Classification-JEL: I2; I28; J00; J18
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Note: CH ED LS PE
Number: 17225
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17225
File-URL: http://www.nber.org/papers/w17225.pdf
File-Format: application/pdf
Publication-Status: published as Jackson, C. Kirabo., School competition and teacher labor markets: Evidence from charter school entry in North Carolina, Journal of Public Economics, Volume 96, Issues 56, June 2012, Pages 431-448.
Abstract: I analyze changes in teacher turnover, hiring, effectiveness, and salaries at traditional public schools after the opening of a nearby charter school. While I find small effects on turnover overall, difficult to staff schools (low-income, high-minority share) hired fewer new teachers and experienced small declines in teacher quality. I also find evidence of a demand side response where schools increased teacher compensation to better retain quality teachers. The results are robust across a variety of alternate specifications to account for non-random charter entry.
Handle: RePEc:nbr:nberwo:17225
Template-Type: ReDIF-Paper 1.0
Title: Cross-National Evidence on Generic Pharmaceuticals: Pharmacy vs. Physician-Driven Markets
Classification-JEL: I11; I18; K2; L5; L65
Author-Name: Patricia M. Danzon
Author-Person: pda291
Author-Name: Michael F. Furukawa
Note: EH
Number: 17226
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17226
File-URL: http://www.nber.org/papers/w17226.pdf
File-Format: application/pdf
Abstract: This paper examines the role of regulation and competition in generic markets. Generics offer large potential savings to payers and consumers of pharmaceuticals. Whether the potential savings are realized depends on the extent of generic entry and uptake and the level of generic prices. In the U.S., the regulatory, legal and incentive structures encourage prompt entry, aggressive price competition and patient switching to generics. Key features are that pharmacists are authorized and incentivized to switch patients to cheap generics. By contrast, in many other high and middle income countries, generics traditionally competed on brand rather than price because physicians rather than pharmacies are the decision-makers. Physician-driven generic markets tend to have higher generic prices and may have lower generic uptake, depending on regulations and incentives. Using IMS data to analyze generic markets in the U.S., Canada, France, Germany, U.K., Italy, Spain, Japan, Australia, Mexico, Chile, Brazil over the period 1998-2009, we estimate a three-equation model for number of generic entrants, generic prices and generic volume shares. We find little effect of originator defense strategies, significant differences between unbranded and unbranded generics, variation across countries in volume response to prices. Policy changes adopted to stimulate generic uptake and reduce generic prices have been successful in some E.U. countries.
Handle: RePEc:nbr:nberwo:17226
Template-Type: ReDIF-Paper 1.0
Title: The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston
Classification-JEL: L0; L00; L1; L5; L8; L85; R0; R00
Author-Name: Panle Jia Barwick
Author-Person: pji114
Author-Name: Parag A. Pathak
Note: IO PE
Number: 17227
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17227
File-URL: http://www.nber.org/papers/w17227.pdf
File-Format: application/pdf
Publication-Status: published as Panle Jia Barwick & Parag A. Pathak, 2015. "The costs of free entry: an empirical study of real estate agents in Greater Boston," RAND Journal of Economics, RAND Corporation, vol. 46(1), pages 103-145, 03.
Abstract: This paper studies the real estate brokerage industry in Greater Boston, an industry with low entry barriers and substantial turnover. Using a comprehensive dataset of agents and transactions from 1998-2007, we find that entry does not increase sales probabilities or reduce the time it takes for properties to sell, decreases the market share of experienced agents, and leads to a reduction in average service quality. These empirical patterns motivate an econometric model of the dynamic optimizing behavior of agents that serves as the foundation for simulating counterfactual market structures. A one-half reduction in the commission rate leads to a 73% increase in the number of houses each agent sells and benefits consumers by about $2 billion. House price appreciation in the first half of the 2000s accounts for 24% of overall entry and a 31% decline in the number of houses sold by each agent. Low cost programs that provide information about past agent performance have the potential to increase overall productivity and generate significant social savings.
Handle: RePEc:nbr:nberwo:17227
Template-Type: ReDIF-Paper 1.0
Title: Capital Flow Types, External Financing Needs, and Industrial Growth: 99 countries, 1991-2007
Classification-JEL: F15; F21; F36; F43
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Vladyslav Sushko
Author-Person: psu268
Note: ITI
Number: 17228
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17228
File-URL: http://www.nber.org/papers/w17228.pdf
File-Format: application/pdf
Abstract: We examine the differential impact of portfolio debt, portfolio equity, and FDI inflows on 37 manufacturing industries, 99 countries, 1991-2007, extending Rajan-Zingales (1998). We utilize external finance dependence measures in a series of cross-sectional regressions of manufacturing industries' growth rates covering 17 years. Net portfolio debt inflows are negatively associated with growth during the mid 1990s. The magnitudes of the negative effect of surges in portfolio debt inflows on growth are substantial in the late 1990s for a number of countries. The effect of debt inflows on growth in the 2000s is rather muted. Surges in portfolio equity inflows also exhibit a negative association with aggregate growth in the manufacturing sector. For instance, the inflow surge during the financial liberalization period, 1993-1994, is associated with a sharp decline in aggregate manufacturing sector growth, but a rise in the growth of relatively more financially constrained industries. Equity inflows exhibited economically significant positive impact on the growth of financially constrained industries, unlike their negative impact on the average manufacturing growth rate. FDI inflows exhibit a positive association with aggregate manufacturing growth during most of the sample period, both at the aggregate level and specifically for the industries in need of external financing.
Handle: RePEc:nbr:nberwo:17228
Template-Type: ReDIF-Paper 1.0
Title: Cycles, Gaps, and the Social Value of Information
Classification-JEL: C7; D6; D8
Author-Name: George-Marios Angeletos
Author-Person: pan143
Author-Name: Luigi Iovino
Author-Person: pio51
Author-Name: Jennifer La'O
Author-Person: pla396
Note: EFG ME
Number: 17229
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17229
File-URL: http://www.nber.org/papers/w17229.pdf
File-Format: application/pdf
Abstract: What are the welfare effects of the information contained in macroeconomic statistics, central-bank communications, or news in the media? We address this question in a business-cycle framework that nests the neoclassical core of modern DSGE models. Earlier lessons that were based on "beauty contests" (Morris and Shin, 2002) are found to be inapplicable. Instead, the social value of information is shown to hinge on essentially the same conditions as the optimality of output stabilization policies. More precise information is unambiguously welfare-improving as long as the business cycle is driven primarily by technology and preference shocks--but can be detrimental when shocks to markups and wedges cause sufficient volatility in "output gaps." A numerical exploration suggests that the first scenario is more plausible.
Handle: RePEc:nbr:nberwo:17229
Template-Type: ReDIF-Paper 1.0
Title: Public Consumption Over the Business Cycle
Classification-JEL: E30; E32; E60; E62; H30
Author-Name: Ruediger Bachmann
Author-Person: pba751
Author-Name: Jinhui Bai
Author-Person: pba367
Note: EFG PE POL
Number: 17230
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17230
File-URL: http://www.nber.org/papers/w17230.pdf
File-Format: application/pdf
Publication-Status: published as Rüdiger Bachmann & Jinhui H. Bai, 2013. "Public consumption over the business cycle," Quantitative Economics, Econometric Society, vol. 4(3), pages 417-451, November.
Abstract: What fraction of the business cycle volatility of government purchases is accounted for as endogenous reactions to overall macroeconomic conditions? We answer this question in the framework of a neoclassical representative household model where the provision of a public consumption good is decided upon endogenously and in a time-consistent fashion. A simple frictionless version of such a model with aggregate productivity as the sole driving force can explain almost all the volatility of U.S. non-defense government consumption expenditures. However, such a model fails to match other important features of the business cycle dynamics of public consumption, which comes out as not persistent enough and too synchronized with the cycle. We add implementation lags and implementation costs in the budgeting process to the model, plus taste shocks for public consumption relative to private consumption, and achieve a substantially better match to the data. All these ingredients are essential to improve the fit. Depending on the precise specification of the flow utility function over private consumption, public consumption and leisure, 25-40 percent of the variance of public consumption is driven by aggregate productivity shocks.
Handle: RePEc:nbr:nberwo:17230
Template-Type: ReDIF-Paper 1.0
Title: The Land that Lean Manufacturing Forgot? Management Practices in Transition Countries
Classification-JEL: M11
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Helena Schweiger
Author-Name: John Van Reenen
Author-Person: pva45
Note: EFG LE LS PR
Number: 17231
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17231
File-URL: http://www.nber.org/papers/w17231.pdf
File-Format: application/pdf
Publication-Status: published as “The land that Lean manufacturi ng forgot? Management practices in transition countries”, with Helena Schweiger and John Van Reenen, September 2012 Economics of Transition
Abstract: We have conducted the first survey on management practices in transition countries. We found that Central Asian transition countries, such as Uzbekistan and Kazakhstan, have on average very poor management practices. Their average scores are below emerging countries such as Brazil, China and India. In contrast, the central European transition countries such as Poland and Lithuania operate with management practices that are only moderately worse than those of western European countries such as Germany. Since we find these practices are strongly linked to firm performance, this suggests poor management practices may be impeding the development of Central Asian transition countries. We find that competition, multinational ownership, private ownership and human capital are all strongly correlated with better management. This implies that the continued opening of markets to domestic and foreign competition, privatisation of state-owned firms and increased levels of workforce education should promote better management, and ultimately faster economic growth.
Handle: RePEc:nbr:nberwo:17231
Template-Type: ReDIF-Paper 1.0
Title: Gauging the Generosity of Employer-Sponsored Insurance: Differences Between Households With and Without a Chronic Condition
Classification-JEL: I1
Author-Name: Jean M. Abraham
Author-Name: Anne Beeson Royalty
Author-Person: pro396
Author-Name: Thomas DeLeire
Author-Person: pde167
Note: EH
Number: 17232
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17232
File-URL: http://www.nber.org/papers/w17232.pdf
File-Format: application/pdf
Abstract: We develop an empirical method to assess the generosity of employer-sponsored insurance across groups within the U.S. population. A key feature of this method is its simplicity - it only requires data on out-of-pocket (OOP) health care spending and total health care spending and does not require detailed knowledge of health insurance benefit design. We apply our method to assess whether households with a chronically ill member have more or less generous insurance relative to households with no chronically ill members. We find that the chronically ill have less generous insurance coverage than the non-chronically ill. Additional analyses suggest that the reason for this less generous coverage is not that households with a chronically ill member are in different, less generous plans, on average. Rather, households with a chronically ill member have higher spending on certain types of medical services (e.g., pharmaceutical drugs) that are covered less generously by insurance. Given recent work on value-based insurance design and coinsurance as an obstacle to medication adherence, our findings suggest that the current design of health plans may put the health and financial well-being of the chronically ill at risk.
Handle: RePEc:nbr:nberwo:17232
Template-Type: ReDIF-Paper 1.0
Title: How Do Firm Financial Conditions Affect Product Quality and Pricing?
Classification-JEL: G33; L1; L21; L22; L93
Author-Name: Gordon M. Phillips
Author-Person: pph31
Author-Name: Giorgo Sertsios
Author-Person: pse533
Note: CF IO
Number: 17233
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17233
File-URL: http://www.nber.org/papers/w17233.pdf
File-Format: application/pdf
Publication-Status: published as “How Do Firm Financial Conditions A ff ect Product Quality and Pricing?” with Giorgo Sertsios, Management Science , 2013, 59(8): 1764-1782.
Abstract: We analyze the interaction of firm product quality and pricing decisions with financial distress and bankruptcy in the airline industry. We consider an airline's choices of quality and price as dynamic decisions that trade off current cash flows for future revenue. We examine how airline mishandled baggage, on-time performance and pricing are related to financial distress and bankruptcy, controlling for the endogeneity of financial distress and bankruptcy. We find that an airline's quality decisions are differentially affected by financial distress and bankruptcy. Product quality decreases when airlines are in financial distress, consistent with financial distress reducing a firm's incentive to invest in quality. In contrast, in bankruptcy product quality increases relative to financial distress. In addition, we find that firms price more aggressively when in financial distress consistent with firms trying to increase short-term market share and revenues.
Handle: RePEc:nbr:nberwo:17233
Template-Type: ReDIF-Paper 1.0
Title: "Last-place Aversion": Evidence and Redistributive Implications
Classification-JEL: C91; D31; D72; H23; I3; J38
Author-Name: Ilyana Kuziemko
Author-Name: Ryan W. Buell
Author-Name: Taly Reich
Author-Name: Michael I. Norton
Note: LS PE POL
Number: 17234
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17234
File-URL: http://www.nber.org/papers/w17234.pdf
File-Format: application/pdf
Publication-Status: published as “Last-Place Aversion”: Evidence and Redistributive Implications* Ilyana Kuziemko, Ryan W. Buell, Taly Reich and Michael I. Norton The Quarterly Journal of Economics (2014) 129 (1): 105-149. doi: 10.1093/qje/qjt035
Abstract: Why do low-income individuals often oppose redistribution? We hypothesize that an aversion to being in "last place" undercuts support for redistribution, with low-income individuals punishing those slightly below themselves to keep someone "beneath" them. In laboratory experiments, we find support for "last-place aversion" in the contexts of risk aversion and redistributive preferences. Participants choose gambles with the potential to move them out of last place that they reject when randomly placed in other parts of the distribution. Similarly, in money- transfer games, those randomly placed in second-to-last place are the least likely to costlessly give money to the player one rank below. Last-place aversion predicts that those earning just above the minimum wage will be most likely to oppose minimum-wage increases as they would no longer have a lower-wage group beneath them, a prediction we confirm using survey data.
Handle: RePEc:nbr:nberwo:17234
Template-Type: ReDIF-Paper 1.0
Title: Human Capital Spillovers in Families: Do Parents Learn from or Lean on their Children?
Classification-JEL: H23; I2; I28; J12; J13; J24
Author-Name: Ilyana Kuziemko
Note: CH ED LS PE
Number: 17235
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17235
File-URL: http://www.nber.org/papers/w17235.pdf
File-Format: application/pdf
Publication-Status: published as Kuziemko, I. “Human Capital Spillovers in Families: Do Parents Learn from or Lean on their Children?” Journal of Labor Economics, Volume 32, Number 4, October 2014
Abstract: I develop a model in which a child's acquisition of a given form of human capital incentivizes adults in his household to either learn from him (if children act as teachers then adults' cost of learning the skill falls) or lean on him (if children's human capital substitutes for that of adults in household production then adults' benefit of learning the skill falls). I exploit regional variation in two shocks to children's human capital and examine the effect on adults. The rapid introduction of primary education for black children in the South during Reconstruction not only increased literacy of children but also of adults living in the same household ("learning" outweighs "leaning"). Conversely, the 1998 introduction of English immersion in California public schools appears to have increased the English skills of children but discouraged adults living with them from acquiring the language ("leaning" outweighs "learning"). Whether family members learn from or lean on each other has implications for the externalities associated with education policies.
Handle: RePEc:nbr:nberwo:17235
Template-Type: ReDIF-Paper 1.0
Title: Has the Shift to Managed Care Reduced Medicaid Expenditures? Evidence from State and Local-Level Mandates
Classification-JEL: H51; H72; I11; I18; L33
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Tamara Hayford
Note: EH PE
Number: 17236
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17236
File-URL: http://www.nber.org/papers/w17236.pdf
File-Format: application/pdf
Publication-Status: published as Mark Duggan & Tamara Hayford, 2013. "Has the Shift to Managed Care Reduced Medicaid Expenditures? Evidence from State and LocalâLevel Mandates," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(3), pages 505-535, 06.
Abstract: From 1991 to 2003, the fraction of Medicaid recipients enrolled in HMOs and other forms of Medicaid managed care (MMC) increased from 11 percent to 58 percent. This increase was largely driven by state and local mandates that required most Medicaid recipients to enroll in an MMC plan. Theoretically, it is ambiguous whether the shift from fee-for-service into managed care would lead to an increase or a reduction in Medicaid spending. This paper investigates this effect using a data set on state and local level MMC mandates and detailed data from CMS on state Medicaid expenditures. The findings suggest that shifting Medicaid recipients from fee-for-service into MMC did not reduce Medicaid spending in the typical state. However, the effects of the shift varied significantly across states as a function of the generosity of the state's baseline Medicaid provider reimbursement rates. These results are consistent with recent research on managed care among the privately insured, which finds that HMOs and other forms of managed care achieve their savings largely through reduced prices rather than lower quantities.
Handle: RePEc:nbr:nberwo:17236
Template-Type: ReDIF-Paper 1.0
Title: Corporate and Personal Bankruptcy Law
Classification-JEL: G33; K2; K35; K36
Author-Name: Michelle J. White
Author-Person: pwh52
Note: LE
Number: 17237
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17237
File-URL: http://www.nber.org/papers/w17237.pdf
File-Format: application/pdf
Publication-Status: published as Michelle J. White, 2011. "Corporate and Personal Bankruptcy Law," Annual Review of Law and Social Science, vol 7(1), pages 139-164.
Abstract: Bankruptcy is the legal process by which the debts of firms, individuals, and occasionally governments in financial distress are resolved. Bankruptcy law always includes three components. First, it provides a collective framework for simultaneously resolving all debts of the bankrupt entity, regardless of when they are due. Second, it provides rules for determining how the assets and earnings used to repay are divided among creditors. Third, bankruptcy law specifies punishments intended to discourage debtors from defaulting on their debts and filing for bankruptcy. This review discusses and evaluates bankruptcy law by examining whether and when the law encourages debtors and creditors to behave in economically efficient ways. It also considers how bankruptcy law might be changed to improve economic efficiency. The review shows that there are multiple economic objectives of bankruptcy law, because the law affects has very diverse effects. Some of these objectives differ for individuals versus corporations in bankruptcy.
Handle: RePEc:nbr:nberwo:17237
Template-Type: ReDIF-Paper 1.0
Title: Are All Ratings Created Equal? The Impact of Issuer Size on the Pricing of Mortgage-backed Securities
Classification-JEL: G01; G2
Author-Name: Jie (Jack) He
Author-Name: Jun 'QJ' Qian
Author-Person: pqi75
Author-Name: Philip E. Strahan
Note: CF
Number: 17238
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17238
File-URL: http://www.nber.org/papers/w17238.pdf
File-Format: application/pdf
Publication-Status: published as A RE ALL R ATINGS C REATED E QUAL ? T HE I MPACT OF I SSUER S IZE ON THE P RICING OF M ORTGAGE -B ACKED S ECURITIES , 2012, Journal of Finance 67(6), 2097-2138, with Jie He and Jun Qian.
Abstract: We examine whether rating agencies (Moody's, S&P, and Fitch) reward large issuers of mortgage-backed securities, who bring substantial business, by granting them unduly favorable ratings. The initial yield on both AAA-rated and non-AAA rated tranches sold by large issuers is higher than that on similar tranches sold by small issuers during the market boom years of 2004-2006. Moreover, the prices of MBS sold by large issuers drop more than those sold by small issuers, and the differences are concentrated among tranches issued during 2004-2006. We conclude that large issuers receive more favorable ratings and that the market prices the risk of inflated ratings, especially during booming periods.
Handle: RePEc:nbr:nberwo:17238
Template-Type: ReDIF-Paper 1.0
Title: Over-optimism in Forecasts by Official Budget Agencies and Its Implications
Classification-JEL: E62; H50
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: IFM
Number: 17239
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17239
File-URL: http://www.nber.org/papers/w17239.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey Frankel, 2011. "Over-optimism in forecasts by official budget agencies and its implications," Oxford Review of Economic Policy, Oxford University Press, vol. 27(4), pages 536-562.
Abstract: The paper studies forecasts of real growth rates and budget balances made by official government agencies among 33 countries. In general, the forecasts are found: (i) to have a positive average bias, (ii) to be more biased in booms, (iii) to be even more biased at the 3-year horizon than at shorter horizons. This over-optimism in official forecasts can help explain excessive budget deficits, especially the failure to run surpluses during periods of high output: if a boom is forecasted to last indefinitely, retrenchment is treated as unnecessary. Many believe that better fiscal policy can be obtained by means of rules such as ceilings for the deficit or, better yet, the structural deficit. But we also find: (iv) countries subject to a budget rule, in the form of euroland's Stability and Growth Path, make official forecasts of growth and budget deficits that are even more biased and more correlated with booms than do other countries. This effect may help explain frequent violations of the SGP. One country, Chile, has managed to overcome governments' tendency to satisfy fiscal targets by wishful thinking rather than by action. As a result of budget institutions created in 2000, Chile's official forecasts of growth and the budget have not been overly optimistic, even in booms. Unlike many countries in the North, Chile took advantage of the 2002-07 expansion to run budget surpluses, and so was able to ease in the 2008-09 recession.
Handle: RePEc:nbr:nberwo:17239
Template-Type: ReDIF-Paper 1.0
Title: On Measuring the Effects of Fiscal Policy in Recessions
Classification-JEL: E17; E5; E62
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Note: EFG ME PE
Number: 17240
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17240
File-URL: http://www.nber.org/papers/w17240.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan A. Parker, 2011. "On Measuring the Effects of Fiscal Policy in Recessions," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 703-18, September.
Abstract: We do not have a good measure of the effects of fiscal policy in a recession because the methods that we use to estimate the effects of fiscal policy -- both those using the observed outcomes following different policies in aggregate data and those studying counterfactuals in fitted model economies -- almost entirely ignore the state of the economy and estimate 'the' government multiplier, which is presumably a weighted average of the one we care about -- the multiplier in a recession -- and one we care less about -- the multiplier in an expansion. Notable exceptions to this general claim suggest this difference is potentially large. Our lack of knowledge stems significantly from the focus on linear dynamics: VARs and linearized (or close-to-linear) DSGEs. Our lack of knowledge also reflects a lack of data: deep recessions are few and nonlinearities hard to measure. The lack of statistical power in the estimation of nonlinear models using aggregate data can be addressed by exploiting estimates of partial-equilibrium responses in dissaggregated data. Microeconomic estimates of the partial-equilibrium causal effects of a policy can discipline the causal channels inherent in any DSGE model of the general equilibrium effects of policy. Microeconomic studies can also provide measures of the dependence of the effects of a policy on the states of different agents which is a key component of the dependence of the general-equilibrium effects of fiscal policy on the state of the economy.
Handle: RePEc:nbr:nberwo:17240
Template-Type: ReDIF-Paper 1.0
Title: The Feasibility and Importance of Adding Measures of Actual Experience to Cross-Sectional Data Collection
Classification-JEL: C81; J16; J24
Author-Name: Francine D. Blau
Author-Person: pbl16
Author-Name: Lawrence M. Kahn
Author-Person: pka63
Note: LS
Number: 17241
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17241
File-URL: http://www.nber.org/papers/w17241.pdf
File-Format: application/pdf
Publication-Status: published as Francine D. Blau & Lawrence M. Kahn, 2013. "The Feasibility and Importance of Adding Measures of Actual Experience to Cross-Sectional Data Collection," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages S17 - S58.
Abstract: We use Michigan Panel Study of Income Dynamics data and data from a 2008 telephone survey of adults conducted by Westat for the Princeton Data Improvement Initiative (PDII) to explore the importance and feasibility of adding retrospective questions about actual work experience to cross-sectional data sets. We demonstrate that having such actual experience data is important for analyzing women's post-school human capital accumulation, residual wage inequality, and the gender pay gap. Further, our PDII survey results show that it is feasible to collect actual experience data in cross-sectional telephone surveys like the March Current Population Survey annual supplement.
Handle: RePEc:nbr:nberwo:17241
Template-Type: ReDIF-Paper 1.0
Title: Defying Gravity: The 1932 Imperial Economic Conference and the Reorientation of Canadian Trade
Classification-JEL: F1; N7
Author-Name: David S. Jacks
Author-Person: pja138
Note: DAE
Number: 17242
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17242
File-URL: http://www.nber.org/papers/w17242.pdf
File-Format: application/pdf
Publication-Status: published as Explorations in Economic History Volume 53, July 2014, Pages 19–39 Cover image Defying gravity: The Imperial Economic Conference and the reorientation of Canadian trade ☆ David S. Jacks
Abstract: In the wake of the Great Depression, the Canadian government embarked on a stunning reversal in its commercial policy. A key element of its response was the promotion of intra-imperial trade at the Imperial Economic Conference of 1932. This paper addresses whether or not Canadian trade was able to defy gravity and divert trade flows towards other signatories at Ottawa. The results strongly suggest that the conference was a failure from the Canadian perspective. Potential sources of this failure include unreasonable expectations about the likely reductions in trade costs and a neglect of key considerations related to certainty and credibility.
Handle: RePEc:nbr:nberwo:17242
Template-Type: ReDIF-Paper 1.0
Title: Stepping Stones: Principal Career Paths and School Outcomes
Classification-JEL: I21
Author-Name: Tara Béteille
Author-Name: Demetra Kalogrides
Author-Name: Susanna Loeb
Note: ED
Number: 17243
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17243
File-URL: http://www.nber.org/papers/w17243.pdf
File-Format: application/pdf
Publication-Status: published as Analyzing the Determinants of the Matching of Public School Teachers to Jobs: Disentangling the Preferences of Teachers and Employers (with Donald Boyd, Hamilton Lankford, and James Wyckoff). Journal of Labor Economics, 31(1), pp. 83-117. 2013 . Different teachers, different peers: The magnitude of student sorting within schools (with Demetra Kalogrides). Educational Researcher, 42(6), pp. 304-316. 2013 . Measuring test measurement error: A general approach (with Donald Boyd, Hamilton Lankford, and James Wyckoff). Journal of Educational and Behavioral Statistics, 38(6), pp. 629-663. 2013 . 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 . The early childhood care and education workforce in the United States: Understanding changes from 1990 through 2010 (with Daphna Bassok, Maria Fitzpatrick, and Agustina S. Paglayan). Education Finance and Policy, 8(4), pp. 581–601. 2013 . Effective Instructional Time Use for School Leaders: Longitudinal Evidence from Observations of Principals (with Jason Grissom and Ben Master). Educational Researcher, 42(8), pp. 433-444. 2013 . Systematic sorting: Teacher characteristics and class assignments (with Demetra Kalogrides, and Tara Beteille). Sociology of Education, 86(2), pp. 103-123. 2013 . How teacher turnover harms student achievement (with Matthew Ronfeldt, and James Wyckoff). American Educational Research Journal, 50(1), pp. 4-36. 2013 . Principals’ perceptions of competition for students in Milwaukee schools (with Matthew Kasman). Education Finance and Policy, 8(1), pp. 43-73. 2013 . 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 . Stepping stones: Principal career paths and school outcomes (with Tara Beteille and Demetra Kalogrides). Social Science Research, 41(4), pp. 904–919. 2012 .
Abstract: More than one out of every five principals leaves their school each year. In some cases, these career changes are driven by the choices of district leadership. In other cases, principals initiate the move, often demonstrating preferences to work in schools with higher achieving students from more advantaged socioeconomic backgrounds. Principals often use schools with many poor or low-achieving students as stepping stones to what they view as more desirable assignments. We use longitudinal data from one large urban school district to study the relationship between principal turnover and school outcomes. We find that principal turnover is, on average, detrimental to school performance. Frequent turnover of school leadership results in lower teacher retention and lower student achievement gains. Leadership changes are particularly harmful for high poverty schools, low-achieving schools, and schools with many inexperienced teachers. These schools not only suffer from high rates of principal turnover but are also unable to attract experienced successors. The negative effect of leadership changes can be mitigated when vacancies are filled by individuals with prior experience leading other schools. However, the majority of new principals in high poverty and low-performing schools lack prior leadership experience and leave when more attractive positions become available in other schools.
Handle: RePEc:nbr:nberwo:17243
Template-Type: ReDIF-Paper 1.0
Title: How Survey Design Affects Inference Regarding Health Perceptions and Outcomes
Classification-JEL: C83; D03; D84; I1
Author-Name: Anneke Exterkate
Author-Name: Robin L. Lumsdaine
Note: AG EH
Number: 17244
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17244
File-URL: http://www.nber.org/papers/w17244.pdf
File-Format: application/pdf
Publication-Status: published as "How Survey Design Affects Self-Assessed Health Responses in the Survey of Health, Ageing, and Retirement in Europe (SHARE)," European Economic Review, 63, pp. 299-307, 2013[with Anneke Exterkate].
Abstract: This paper considers the role of survey design and question phrasing in evaluating the subjective health assessment responses using the Survey of Health, Ageing and Retirement in Europe (SHARE) dataset. A unique feature of this dataset is that respondents were twice asked during the survey to evaluate their health on a five-point scale, using two different sets of descriptors to define the five points, with the ordering of which set was first given determined randomly. We find no evidence to refute the assertion that the order was determined by random assignment. Yet we document differences in the response distributions between the two questions, as well as differences in inference in comparing the two populations (those that were asked one question first versus those that were asked the other). We then consider determinants of the degree of concordance between the two questions, as well as the determinants of individuals that provide conflicting responses. There appears to be evidence to suggest that individuals' assessments of their health in response to the second question may be influenced by the battery of health questions that were asked following the first assessment. We find that information in self-assessed health responses is useful in examining health outcomes. Our results suggest that adjusting such responses to take into account framing and sequencing of questions may improve inference. In addition, we show that accounting for survey design may be important in models for predicting outcomes of interest, such as the probability of a major health event.
Handle: RePEc:nbr:nberwo:17244
Template-Type: ReDIF-Paper 1.0
Title: Chemical Fertilizer and Migration in China
Classification-JEL: O1; O13
Author-Name: Avraham Ebenstein
Author-Person: peb32
Author-Name: Jian Zhang
Author-Person: pzh439
Author-Name: Margaret S. McMillan
Author-Person: pmc26
Author-Name: Kevin Chen
Author-Person: pch1225
Note: EEE ITI
Number: 17245
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17245
File-URL: http://www.nber.org/papers/w17245.pdf
File-Format: application/pdf
Abstract: This paper examines a possible connection between China's massive rural to urban migration and high chemical fertilizer use rates during the late 1980s and 1990s. Using panel data on villages in rural China (1987-2002), we find that labor out-migration and fertilizer use per hectare are positively correlated. Using 2SLS, employing the opening of a Special Economic Zone in a nearby city as an instrument, we find that village fertilizer use is linked to contemporaneous short-term out-migration of farm workers. We also examine the long-term environmental consequences of chemical fertilizer use during this period. Using OLS, we find that fertilizer use intensity is correlated with future fertilizer use rates and diminished effectiveness of fertilizer, demonstrating persistency in use patterns, and suggesting that in areas with high use of fertilizer, the land is becoming less responsive. We also demonstrate that fertilizer use within a river basin is correlated with organic forms of water pollution, suggesting that industrialization has induced pollution in China both directly and through its impact on rural labor supply.
Handle: RePEc:nbr:nberwo:17245
Template-Type: ReDIF-Paper 1.0
Title: Network Stability, Network Externalities and Technology Adoption
Classification-JEL: L0; L86; L96
Author-Name: Catherine Tucker
Author-Person: ptu36
Note: PR
Number: 17246
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17246
File-URL: http://www.nber.org/papers/w17246.pdf
File-Format: application/pdf
Abstract: This paper investigates how the destabilizing of a social network may increase the scope of network externalities, using data on sales of a video-calling system made to an investment bank's employees and subsequent usage by these customers. The terrorist attacks of 2001 led potential customers in New York to start communicating with a new and less predictable set of people when their work teams were reorganized as a result of the physical displacement that resulted from the attacks. This did not happen in other comparable cities. These destabilized communication patterns were associated with potential adopters in New York being more likely to take into account a wider spectrum of the user base when deciding whether to adopt relative to those in other cities. Empirical analysis suggests that the aggregate effect of network externalities on adoption was doubled by this instability.
Handle: RePEc:nbr:nberwo:17246
Template-Type: ReDIF-Paper 1.0
Title: The Value of Honesty: Empirical Estimates from the Case of the Missing Children
Classification-JEL: H24; H26
Author-Name: Sara LaLumia
Author-Person: pla486
Author-Name: James M. Sallee
Author-Person: psa1187
Note: PE
Number: 17247
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17247
File-URL: http://www.nber.org/papers/w17247.pdf
File-Format: application/pdf
Publication-Status: published as Sara LaLumia & James Sallee, 2013. "The value of honesty: empirical estimates from the case of the missing children," International Tax and Public Finance, Springer, vol. 20(2), pages 192-224, April.
Abstract: How much are people willing to forego to be honest, to follow the rules? When people do break the rules, what can standard data sources tell us about their behavior? Standard economic models of crime typically assume that individuals are indifferent to dishonesty, so that they will cheat or lie as long as the expected pecuniary benefits exceed the expected costs of being caught and punished. We investigate this presumption by studying the response to a change in tax reporting rules that made it much more difficult for taxpayers to evade taxes by inappropriately claiming additional dependents. The policy reform induced a substantial reduction in the number of dependents claimed, which indicates that many filers had been cheating before the reform. Yet, the number of filers who availed themselves of this evasion opportunity is dwarfed by the number of filers who passed up substantial tax savings by not claiming extra dependents. By declining the opportunity to cheat, these taxpayers reveal information about their willingness to pay to be honest. We present a novel method for inferring the characteristics of taxpayers in the absence of audit data. Our analysis suggests both that this willingness to pay to be honest is large on average and that it varies significantly across the population of taxpayers.
Handle: RePEc:nbr:nberwo:17247
Template-Type: ReDIF-Paper 1.0
Title: Prospective Analysis of a Wage Subsidy for Cape Town Youth
Classification-JEL: J64; J68
Author-Name: James A. Levinsohn
Author-Person: ple386
Author-Name: Todd Pugatch
Note: LS
Number: 17248
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17248
File-URL: http://www.nber.org/papers/w17248.pdf
File-Format: application/pdf
Publication-Status: published as Levinsohn, James & Pugatch, Todd, 2014. "Prospective analysis of a wage subsidy for Cape Town youth," Journal of Development Economics, Elsevier, vol. 108(C), pages 169-183.
Abstract: Recognizing that a credible estimate of a wage subsidy's impact requires a model of the labor market that itself generates high unemployment in equilibrium, we estimate a structural search model that incorporates both observed heterogeneity and measurement error in wages. Using the model to examine the impact of a wage subsidy, we find that a R1000/month wage subsidy paid to employers leads to an increase of R660 in mean accepted wages and a decrease of 15 percentage points in the share of youth experiencing long-term unemployment.
Handle: RePEc:nbr:nberwo:17248
Template-Type: ReDIF-Paper 1.0
Title: China and India as Suppliers of Affordable Medicines to Developing Countries
Classification-JEL: I10; O10; O34
Author-Name: Tamara Hafner
Author-Name: David Popp
Note: PR
Number: 17249
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17249
File-URL: http://www.nber.org/papers/w17249.pdf
File-Format: application/pdf
Abstract: As countries reform their patent laws to be in compliance with the Trade Related Intellectual Property Rights Agreement, an important question is how increased patent protection will affect drug prices in low-income countries. Using pharmaceutical trade data from 1996 to 2005, we examine the role of China and India as suppliers of medicines to other middle- and low-income countries and evaluate the competitive effect of medicine imports from these countries on the price of medicines from high- income countries. We find that imports of antibiotics and unspecified medicaments from India and China significantly depress the average price of these commodities imported from high-income trading partners, suggesting that India and China are not only important sources of inexpensive medicines but also have an indirect effect by lowering prices through competition. As India is the leading supplier of medicines in Sub-Saharan Africa, this region will likely be affected most adversely.
Handle: RePEc:nbr:nberwo:17249
Template-Type: ReDIF-Paper 1.0
Title: A Dynamic Model of Demand for Houses and Neighborhoods
Classification-JEL: H0; H23; H41; H7; L85; R0; R14; R21; R31; R51
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Robert McMillan
Author-Name: Alvin Murphy
Author-Person: pmu503
Author-Name: Christopher Timmins
Note: EEE IO PE
Number: 17250
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17250
File-URL: http://www.nber.org/papers/w17250.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bayer & Robert McMillan & Alvin Murphy & Christopher Timmins, 2016. "A Dynamic Model of Demand for Houses and Neighborhoods," Econometrica, Econometric Society, vol. 84, pages 893-942, 05.
Abstract: This paper develops a dynamic model of neighborhood choice along with a computationally light multi-step estimator. The proposed empirical framework captures observed and unobserved preference heterogeneity across households and locations in a flexible way. The model is estimated using a newly assembled data set that matches demographic information from mortgage applications to the universe of housing transactions in the San Francisco Bay Area from 1994- 2004. The results provide the first estimates of the marginal willingness to pay for several non-marketed amenities – neighborhood air pollution, violent crime and racial composition – in a dynamic framework. Comparing these estimates with those from a static version of the model highlights several important biases that arise when dynamic considerations are ignored.
Handle: RePEc:nbr:nberwo:17250
Template-Type: ReDIF-Paper 1.0
Title: Inefficiencies from Metropolitan Political and Fiscal Decentralization: Failures of Tiebout Competition
Classification-JEL: H1; H4; H7; H73; R1
Author-Name: Stephen Calabrese
Author-Person: pca1347
Author-Name: Dennis N. Epple
Author-Person: pep21
Author-Name: Richard Romano
Author-Person: pro223
Note: PE
Number: 17251
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17251
File-URL: http://www.nber.org/papers/w17251.pdf
File-Format: application/pdf
Publication-Status: published as Stephen M. Calabrese & Dennis N. Epple & Richard E. Romano, 2012. "Inefficiencies from Metropolitan Political and Fiscal Decentralization: Failures of Tiebout Competition," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 1081-1111.
Abstract: We examine the welfare effects of provision of local public goods in an empirically relevant setting using a multi-community model with mobile and heterogeneous households, and with flexible housing supplies. We characterize the first-best allocation and show efficiency can be implemented with decentralization using head taxes. We calibrate the model and compare welfare in property-tax equilibria, both decentralized and centralized, to the efficient allocation. Inefficiencies with decentralization and property taxation are large, dissipating most if not all the potential welfare gains that efficient decentralization could achieve. In property tax equilibrium centralization is frequently more efficient! An externality in community choice underlies the failure to achieve efficiency with decentralization and property taxes: Poorer households crowd richer communities and free ride by consuming relatively little housing thereby avoiding taxes.
Handle: RePEc:nbr:nberwo:17251
Template-Type: ReDIF-Paper 1.0
Title: Stories of the Twentieth Century for the Twenty-First
Classification-JEL: E32; E51; F32; F34; G15; G21
Author-Name: Pierre-Olivier Gourinchas
Author-Person: pgo28
Author-Name: Maurice Obstfeld
Author-Person: pob13
Note: EFG IFM
Number: 17252
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17252
File-URL: http://www.nber.org/papers/w17252.pdf
File-Format: application/pdf
Publication-Status: published as Pierre-Olivier Gourinchas & Maurice Obstfeld, 2012. "Stories of the Twentieth Century for the Twenty-First," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(1), pages 226-65, January.
Abstract: A key precursor of twentieth-century financial crises in emerging and advanced economies alike was the rapid buildup of leverage. Those emerging economies that avoided leverage booms during the 2000s also were most likely to avoid the worst effects of the twenty-first century's first global crisis. A discrete-choice panel analysis using 1973-2010 data suggests that domestic credit expansion and real currency appreciation have been the most robust and significant predictors of financial crises, regardless of whether a country is emerging or advanced. For emerging economies, however, higher foreign exchange reserves predict a sharply reduced probability of a subsequent crisis.
Handle: RePEc:nbr:nberwo:17252
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneity and the Dynamics of Technology Adoption
Classification-JEL: C10; L10; O32
Author-Name: Stephen P. Ryan
Author-Person: pry32
Author-Name: Catherine Tucker
Author-Person: ptu36
Note: IO
Number: 17253
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17253
File-URL: http://www.nber.org/papers/w17253.pdf
File-Format: application/pdf
Publication-Status: published as Stephen Ryan & Catherine Tucker, 2012. "Heterogeneity and the dynamics of technology adoption," Quantitative Marketing and Economics, Springer, vol. 10(1), pages 63-109, March.
Abstract: We estimate the demand for a videocalling technology in the presence of both network effects and heterogeneity. Using a unique dataset from a large multinational firm, we pose and estimate a fully dynamic model of technology adoption. We propose a novel identification strategy based on post-adoption technology usage to disentangle equilibrium beliefs concerning the evolution of the network from observed and unobserved heterogeneity in technology adoption costs and use benefits. We find that employees have significant heterogeneity in both adoption costs and network benefits, and have preferences for diverse networks. Using our estimates, we evaluate a number of counterfactual adoption policies, and find that a policy of strategically targeting the right subtype for initial adoption can lead to a faster-growing and larger network than a policy of uncoordinated or diffuse adoption.
Handle: RePEc:nbr:nberwo:17253
Template-Type: ReDIF-Paper 1.0
Title: Corporate Social Responsibility for Irresponsibility
Classification-JEL: M0
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Author-Name: Jon Jungbien Moon
Note: EEE PE
Number: 17254
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17254
File-URL: http://www.nber.org/papers/w17254.pdf
File-Format: application/pdf
Publication-Status: published as Kotchen, M. and J. Moon, “Corporate Social Responsibility for Irresponsibility,” The B.E. Journal of Economic Analysis & Policy (Contributions), 12:1 (2012) Article 55 .
Abstract: This paper provides an empirical investigation of the hypothesis that companies engage in corporate social responsibility (CSR) in order to offset corporate social irresponsibility (CSI). We find general support for the causal relationship: when companies do more "harm," they also do more "good." The empirical analysis is based on an extensive 15-year panel dataset that covers nearly 3,000 publicly traded companies. In addition to the overall finding that more CSI results in more CSR, we find evidence of heterogeneity among industries, where the effect is stronger in industries where CSI tends to be the subject of greater public scrutiny. We also investigate the degree of substitutability between different categories of CSR and CSI. Within the categories of community relations, environment, and human rights--arguably among those dimensions of social responsibility that are most salient--there is a strong within-category relationship. In contrast, the within-category relationship for corporate governance is weak, but CSI related to corporate governance appears to increase CSR in most other categories. Thus, when CSI concerns arise about corporate governance, companies seemingly choose to offset with CSR in other dimensions, rather than reform governance itself.
Handle: RePEc:nbr:nberwo:17254
Template-Type: ReDIF-Paper 1.0
Title: Why Don't the Poor Save More? Evidence from Health Savings Experiments
Classification-JEL: D14; D91; O16
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: Jonathan Robinson
Author-Person: pro377
Note: CH EH
Number: 17255
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17255
File-URL: http://www.nber.org/papers/w17255.pdf
File-Format: application/pdf
Publication-Status: published as Pascaline Dupas & Jonathan Robinson, 2013. "Why Don't the Poor Save More? Evidence from Health Savings Experiments," American Economic Review, American Economic Association, vol. 103(4), pages 1138-71, June.
Abstract: Using data from a field experiment in Kenya, we document that providing individuals with simple informal savings technologies can substantially increase investment in preventative health and reduce vulnerability to health shocks. Simply providing a safe place to keep money was sufficient to increase health savings, through a mental accounting effect. Adding an earmarking feature was only helpful when funds were put towards emergencies; earmarking for preventative health reduced savings on average, because the liquidity cost of tying up money was too great. Providing social pressure and credit through a ROSCA-based savings scheme had very large effects.
Handle: RePEc:nbr:nberwo:17255
Template-Type: ReDIF-Paper 1.0
Title: Wage Effects of Trade Reform with Endogenous Worker Mobility
Classification-JEL: F16
Author-Name: Pravin Krishna
Author-Person: pkr50
Author-Name: Jennifer P. Poole
Author-Person: ppo413
Author-Name: Mine Zeynep Senses
Author-Person: pse143
Note: ITI
Number: 17256
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17256
File-URL: http://www.nber.org/papers/w17256.pdf
File-Format: application/pdf
Publication-Status: published as Krishna, Pravin & Poole, Jennifer P. & Senses, Mine Zeynep, 2014. "Wage Effects of Trade Reform with Endogenous Worker Mobility," Journal of International Economics, Elsevier, vol. 93(2), pages 239-252.
Abstract: In this paper, we use a linked employer-employee database from Brazil to evaluate the wage effects of trade reform. With an aggregate (firm-level) analysis of this question, we find that a decline in trade protection is associated with an increase in average wages in exporting firms relative to domestic firms, consistent with earlier studies. However, using disaggregated, employer-employee level data, and allowing for the endogenous assignment of workers to firms due to match-specific productivity, we find that the premium paid to workers at exporting firms is economically and statistically insignificant, as is the differential impact of trade openness on the wages of workers at exporting firms relative to otherwise identical workers at domestic firms. We also find that workforce composition improves systematically in exporting firms, in terms of the combination of worker ability and the quality of worker-firm matches, post-liberalization. These results stand in stark contrast to the findings reported in many earlier studies and underscore the importance of endogenous matching and, more generally, non-random labor market allocation mechanisms, in determining the effects of trade policy changes on wages.
Handle: RePEc:nbr:nberwo:17256
Template-Type: ReDIF-Paper 1.0
Title: Trade and Inequality in India
Classification-JEL: F1; F14; F16
Author-Name: Pravin Krishna
Author-Person: pkr50
Author-Name: Guru Sethupathy
Note: ITI
Number: 17257
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17257
File-URL: http://www.nber.org/papers/w17257.pdf
File-Format: application/pdf
Publication-Status: published as “Trade and Income Inequality in India ,” with Guru Sethupathy, in India: Trade, Poverty, Inequality and Democracy , Bhagwati and Panagariya editors, Oxford University Press,
Abstract: To study the effects of the dramatic economic reforms undertaken in India in the early 1990s on inequality, this paper examines Theil inequality as well as other inequality measures constructed using Indian household expenditure survey data from 1988-2005. Overall inequality shows some variation over the period, falling between 1988 and 1994, rising between 1994 and 2000, but falling again by 2005. The evolution of inequality in the post reform period is thus non-monotonic. A similar inequality trend is seen within most Indian states over this time period. Finally, the change in inequality across households within states is found to be uncorrelated with the change in state-level measures of tariff and non-tariff protection.
Handle: RePEc:nbr:nberwo:17257
Template-Type: ReDIF-Paper 1.0
Title: Capital flows: Catalyst or Hindrance to economic takeoffs?
Classification-JEL: F15; F21; F36; F43
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Vladyslav Sushko
Author-Person: psu268
Note: ITI
Number: 17258
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17258
File-URL: http://www.nber.org/papers/w17258.pdf
File-Format: application/pdf
Abstract: This paper applies a probit estimation to assess the relationship between economic takeoffs during 1950-2000 and inflows of portfolio debt, portfolio equity, and FDI, controlling for country's stock of short-term external debt and commodity terms of trade. Average level of FDI inflows is associated with a 23 percent higher takeoff probability relative to a zero FDI inflow benchmark, and this effect is highest for the Latin America subsample, with a 65 rise in takeoff probability. Higher stock of short term external debt has been associated with a substantial negative effect on the probability of a takeoff, and the effect of the short terms debt overhang is largest for Latin American countries. Yet, virtually all the takeoffs were associated with a rise in portfolio debt inflows. At the sample mean, inflow of portfolio debt is associated with approximately 25 percent higher probability of a takeoff. In contrast, a one standard deviation increase in equity outflows (inflows) is associated with a 47 percent (17 percent) decline in the probability of a takeoff. A one standard deviation improvement in commodity terms of trade is associated with 28 percent higher takeoff probability.
Handle: RePEc:nbr:nberwo:17258
Template-Type: ReDIF-Paper 1.0
Title: Time Use During Recessions
Classification-JEL: D13; E32; J22
Author-Name: Mark A. Aguiar
Author-Person: pag57
Author-Name: Erik Hurst
Author-Person: phu87
Author-Name: Loukas Karabarbounis
Author-Person: pka357
Note: AG EFG LS PE
Number: 17259
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17259
File-URL: http://www.nber.org/papers/w17259.pdf
File-Format: application/pdf
Publication-Status: published as “Time Use During the Great Recession ,” (with Erik Hurst and Loukas Karabarbounis ), American Economic Review , August 2013 .
Abstract: We use data from the American Time Use Survey (ATUS), covering both the recent recession and the pre-recessionary period, to explore how foregone market work hours are allocated to other activities over the business cycle. Given the short time series, it is hard to distinguish business cycle effects from low frequency trends by simply comparing time spent on a given category prior to the recession with time spent on that category during the recession. Instead, we identify the business cycle effects on time use using cross state variation with respect to the severity of the recessions. We find that roughly 30% to 40% of the foregone market work hours are allocated to increased home production. Additionally, 30% of the foregone hours are allocated to increased sleep time and increased television watching. Other leisure activities absorb 20% of the foregone market work hours. We use our evidence from the ATUS to calibrate and test the predictions of workhorse macroeconomic models with home production. We show that the quantitative implications of these models regarding the allocation of time over the business cycle matches reasonably well the actual behavior of households.
Handle: RePEc:nbr:nberwo:17259
Template-Type: ReDIF-Paper 1.0
Title: What's Next for the Dollar?
Classification-JEL: E3; F0; F31; F4
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: EFG IFM
Number: 17260
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17260
File-URL: http://www.nber.org/papers/w17260.pdf
File-Format: application/pdf
Abstract: The real trade weighted value of the dollar fell 11 percent against the Federal Reserve Bank's index of major currencies during the 12 months through May 2011 and 31 percent during the past ten years. Four strong market forces are likely to cause further declines over the next several years: a portfolio rebalancing by major international investors who regard their portfolios as overweight dollars, the large US current account deficit, a Chinese policy to raise consumption, and interest rate differences that make dollar investments less attractive. A declining dollar could have a powerful positive effect on the short-run performance of the American economy by raising exports (now more than $1.3 trillion) and inducing American consumers to shift from imports to American made products and services. Without a boost to demand from an increase in net exports, the U.S. recovery is likely to remain weak and could run out of steam. There are of course also negative effects of a falling dollar: reducing the real value of any given level of personal incomes by raising the cost to households of the imported products that they consume and creating inflationary pressures as import prices rise.
Handle: RePEc:nbr:nberwo:17260
Template-Type: ReDIF-Paper 1.0
Title: Global Asset Pricing
Classification-JEL: G11; G12; G13; G14; G15
Author-Name: Karen K. Lewis
Author-Person: ple1119
Note: AP IFM
Number: 17261
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17261
File-URL: http://www.nber.org/papers/w17261.pdf
File-Format: application/pdf
Publication-Status: published as “Global Asset Pricing,” Annual Review of Financial Economics, Vol. 3: pp. 435-466, 2011.
Abstract: Financial markets have become increasingly global in recent decades, yet the pricing of internationally traded assets continues to depend strongly upon local risk factors, leading to several observations that are difficult to explain with standard frameworks. Equity returns depend upon both domestic and global risk factors. Further, local investors tend to overweight their asset portfolios in local equity. The stock prices of firms that begin to trade across borders increase in response to this information. Foreign exchange markets also display anomalous relationships. The forward rate predicts the wrong sign of future movements in the exchange rate, implying that traders can make profits by borrowing in lower interest rate currencies and investing in higher interest rate currencies. Furthermore, the sign of the foreign exchange premium changes over time, a fact difficult to reconcile with consumption variability. In this review, I describe the implications of the current body of research for addressing these and other global asset pricing challenges.
Handle: RePEc:nbr:nberwo:17261
Template-Type: ReDIF-Paper 1.0
Title: Trade Policy Making in a Model of Legislative Bargaining
Classification-JEL: C72; C78; D72; F13
Author-Name: Levent Celik
Author-Person: pce84
Author-Name: Bilgehan Karabay
Author-Person: pka331
Author-Name: John McLaren
Author-Person: pmc174
Note: ITI POL
Number: 17262
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17262
File-URL: http://www.nber.org/papers/w17262.pdf
File-Format: application/pdf
Publication-Status: published as Celik, Levent & Karabay, Bilgehan & McLaren, John, 2013. "Trade policy-making in a model of legislative bargaining," Journal of International Economics, Elsevier, vol. 91(2), pages 179-190.
Abstract: In democracies, trade policy is the result of interactions among many agents with different agendas. In accordance with this observation, we construct a dynamic model of legislative trade policy-making in the realm of distributive politics. An economy consists of different sectors, each of which is concentrated in one or more electoral districts. Each district is represented by a legislator in the Congress. Legislative process is modeled as a multilateral sequential bargaining game à la Baron and Ferejohn (1989). Some surprising results emerge: bargaining can be welfare-worsening for all participants; legislators may vote for bills that make their constituents worse off; identical industries will receive very different levels of tariff. The results pose a challenge to empirical work, since equilibrium trade policy is a function not only of economic fundamentals but also of political variables at the time of congressional negotiations - some of them random realizations of mixed bargaining strategies.
Handle: RePEc:nbr:nberwo:17262
Template-Type: ReDIF-Paper 1.0
Title: The Balanced U.S. Press
Classification-JEL: D72; L82
Author-Name: Riccardo Puglisi
Author-Name: James M. Snyder, Jr.
Author-Person: psn39
Note: IO POL
Number: 17263
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17263
File-URL: http://www.nber.org/papers/w17263.pdf
File-Format: application/pdf
Publication-Status: published as Riccardo Puglisi & James M. Snyder Jr., 2015. "The Balanced Us Press," Journal of the European Economic Association, European Economic Association, vol. 13(2), pages 240-264, 04.
Abstract: We propose a new method for measuring the relative ideological positions of newspapers, voters, interest groups, and political parties. The method uses data on ballot propositions. We exploit the fact that newspapers, parties, and interest groups take positions on these propositions, and the fact that citizens ultimately vote on them. We find that, on average, newspapers in the U.S. are located almost exactly at the median voter in their states. Newspapers also tend to be centrist relative to interest groups.
Handle: RePEc:nbr:nberwo:17263
Template-Type: ReDIF-Paper 1.0
Title: The Elite Illusion: Achievement Effects at Boston and New York Exam Schools
Classification-JEL: I20
Author-Name: Atila Abdulkadiroglu
Author-Name: Joshua D. Angrist
Author-Person: pan29
Author-Name: Parag A. Pathak
Note: ED LS
Number: 17264
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17264
File-URL: http://www.nber.org/papers/w17264.pdf
File-Format: application/pdf
Publication-Status: published as Atila AbdulkadiroÄlu & Joshua Angrist & Parag Pathak, 2014. "The Elite Illusion: Achievement Effects at Boston and New York Exam Schools," Econometrica, Econometric Society, vol. 82(1), pages 137-196, 01.
Abstract: Talented students compete fiercely for seats at Boston and New York exam schools. These schools are characterized by high levels of peer achievement and a demanding curriculum tailored to each district's highest achievers. While exam school students do very well in school, the question of whether an exam school education adds value relative to a regular public education remains open. We estimate the causal effect of exam school attendance using a regression-discontinuity design, reporting both parametric and non- parametric estimates. The outcomes studied here include scores on state standardized achievement tests, PSAT and SAT participation and scores, and AP scores. Our estimates show little effect of exam school offers on most students' achievement. We use two-stage least squares to convert reduced form estimates of the effects of exam school offers into estimates of peer and tracking effects, arguing that these appear to be unimportant in this context. Finally, we explore the external validity of RD estimates, arguing that as best we can tell, there is little effect of an exam school education on achievement even for the highest-ability marginal applicants and for applicants to the right of admissions cutoffs. On the other hand, a Boston exam school education seems to have a modest effect on high school English scores for minority applicants. A small group of 9th grade applicants also appears to do better on SAT Reasoning. These localized gains notwithstanding, the intense competition for exam school seats does not appear to be justified by improved learning for a broad set of students.
Handle: RePEc:nbr:nberwo:17264
Template-Type: ReDIF-Paper 1.0
Title: The Incredible Shrinking Portuguese Firm
Classification-JEL: J21; J58; J80; K3; L51; O12; O41; O52
Author-Name: Serguey Braguinsky
Author-Person: pbr60
Author-Name: Lee G. Branstetter
Author-Person: pbr854
Author-Name: Andre Regateiro
Note: PR
Number: 17265
Creation-Date: 2011-07
Order-URL: http://www.nber.org/papers/w17265
File-URL: http://www.nber.org/papers/w17265.pdf
File-Format: application/pdf
Abstract: Using Portugal's extensive matched employer-employee data set, this paper documents an unusual feature of the Portuguese economy. For decades, the entire Portuguese firm size distribution has been shifting to the left. We argue in this paper that Portugal's shrinking firms are linked to the country's anemic growth and low productivity. We show that the shift in the Portuguese firm size distribution is not reflected in other advanced industrial economies for which we have been able to obtain comparable data. Careful attempts to account for expanding data coverage, a structural shift from manufacturing to services, and aggressive efforts to "demonopolize" the Portuguese economy leave about half of this shift unexplained by these factors. So, what does explain the shift? We argue that Portugal's uniquely strong protections for regular workers have played an important role. Drawing upon an emerging literature that that attributes much of the productivity gap between advanced nations and developing nations to the misallocation of resources across firms in developing countries, we develop a theoretical model that shows how Portugal's labor market institutions could prevent more productive firms from reaching their optimal size, thereby constraining GDP per capita. Calibration exercises based on this model quantify the degree of labor market distortion consistent with recent shifts in the Portuguese firm size distribution. These calibration exercises suggest quite substantial growth effects could arise if the distortions were lessened or abolished altogether.
Handle: RePEc:nbr:nberwo:17265
Template-Type: ReDIF-Paper 1.0
Title: Constituencies and Legislation: The Fight over the McFadden Act of 1927
Classification-JEL: G21; K2; N22
Author-Name: Raghuram G. Rajan
Author-Person: pra149
Author-Name: Rodney Ramcharan
Author-Person: pra554
Note: CF DAE POL
Number: 17266
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17266
File-URL: http://www.nber.org/papers/w17266.pdf
File-Format: application/pdf
Publication-Status: published as Raghuram G. Rajan & Rodney Ramcharan, 2016. "Constituencies and Legislation: The Fight Over the McFadden Act of 1927," Management Science, INFORMS, vol. 62(7), pages 1843-1859, July.
Abstract: The McFadden Act of 1927 was one of the most hotly contested pieces of legislation in U.S. banking history, and its influence was felt over half a century later. This paper studies the Congressional voting behavior surrounding the Act’s passage. We find congressmen in districts in which landholdings were concentrated, and credit costlier were significantly more likely to oppose the act. The evidence suggests that while the law and the overall regulatory structure can shape the financial system far into the future, they themselves are likely to be shaped by elites, even in countries with benign political institutions.
Handle: RePEc:nbr:nberwo:17266
Template-Type: ReDIF-Paper 1.0
Title: The Influence of Irving Fisher on Milton Friedman's Monetary Economics
Classification-JEL: B21; B31; N10
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Hugh Rockoff
Author-Person: pro65
Note: DAE
Number: 17267
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17267
File-URL: http://www.nber.org/papers/w17267.pdf
File-Format: application/pdf
Publication-Status: published as Bordo, Michael D. & Rockoff, Hugh, 2013. "The Influence Of Irving Fisher On Milton FriedmanâS Monetary Economics," Journal of the History of Economic Thought, Cambridge University Press, vol. 35(02), pages 153-177, June.
Abstract: This paper examines the influence of Irving Fisher's writings on Milton Friedman's work in monetary economics. We focus first on Fisher's influences in monetary theory (the quantity theory of money, the Fisher effect, Gibson's Paradox, the monetary theory of business cycles, and the Phillips Curve, and empirics, e.g. distributed lags.). Then we discuss Fisher and Friedman's views on monetary policy and various schemes for monetary reform (the k% rule, freezing the monetary base, the compensated dollar, a mandate for price stability, 100% reserve money, and stamped money.) Assessing the influence of an earlier economist's writings on that of later scholars is a challenge. As a science progresses the views of its earlier pioneers are absorbed in the weltanschauung. Fisher's Purchasing Power of Money as well as the work of Pigou and Marshall were the basic building blocks for later students of monetary economics. Thus, the Chicago School of the 1930s absorbed Fisher's approach, and Friedman learned from them. However, in some salient aspects of Friedman's work we can clearly detect a major direct influence of Fisher's writings on Friedman's. Thus, for example with the buildup of inflation in the 1960s Friedman adopted the Fisher effect and Fisher's empirical approach to inflationary expectations into his analysis. Thus, Fisher's influence on Friedman was both indirect through the Chicago School and direct. Regardless of the weight attached to the two influences, Fisher' impact on Friedman was profound.
Handle: RePEc:nbr:nberwo:17267
Template-Type: ReDIF-Paper 1.0
Title: Tax Expenditures, the Size and Efficiency of Government, and Implications for Budget Reform
Classification-JEL: H21; H24; H50; H62
Author-Name: Leonard E. Burman
Author-Name: Marvin Phaup
Note: PE
Number: 17268
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17268
File-URL: http://www.nber.org/papers/w17268.pdf
File-Format: application/pdf
Publication-Status: published as Tax Expenditures, the Size and Efficiency of Government, and Implications for Budget Reform, Leonard E. Burman, Marvin Phaup. in Tax Policy and the Economy, Volume 26, Brown. 2012
Abstract: One possible explanation for the difficulty in controlling the budget is that a major component of spending --tax expenditures--receives privileged status. It is treated as tax cuts rather than spending. This paper explores the implications of that classification and illustrates how it can lead to higher taxes, larger government, and an inefficient mix of spending (too many tax expenditures). The paper then analyzes alternative budgeting approaches that would explicitly incorporate and measure tax expenditures. It concludes by analyzing ways to control tax expenditures (and other spending) and the special challenges presented by tax expenditures.
Handle: RePEc:nbr:nberwo:17268
Template-Type: ReDIF-Paper 1.0
Title: Why Did U.S. Banks Invest in Highly-Rated Securitization Tranches?
Classification-JEL: G01; G21
Author-Name: Isil Erel
Author-Name: Taylor D. Nadauld
Author-Name: René M. Stulz
Note: CF
Number: 17269
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17269
File-URL: http://www.nber.org/papers/w17269.pdf
File-Format: application/pdf
Publication-Status: published as “Why Did Holdings of High - Rated Securitization Tranches Differ So Much Across Banks?” with Isil Erel and Taylor Nadauld, The Review of Financial Studies, 2014, v27(2), 404-453.
Abstract: We estimate holdings of highly-rated tranches of mortgage securitizations of American deposit-taking banks ahead of the credit crisis and evaluate hypotheses that have been advanced to explain these holdings. We find that holdings of highly-rated tranches were economically trivial for the typical bank, but banks with greater holdings performed more poorly during the crisis. Though univariate comparisons show that banks with large trading books had greater holdings, the holdings of highly-rated tranches are not higher for banks with large trading books in regressions that control for bank size. The ratio of highly-rated tranches holdings to assets increases with bank assets, but not for banks with more than $50 billion of assets. This evidence is inconsistent with explanations for holdings of highly-rated tranches that emphasize the incentives of banks deemed "too-big-to-fail". Further, the evidence does not provide support for "bad incentives" theories of holdings of highly-rated tranches. We find, however, that banks active in securitization held more highly-rated tranches. Such a result can be consistent with regulatory arbitrage as well as with securitizing banks holding highly-rated tranches to convince investors of the quality of these securities. Our evidence supports the latter hypothesis.
Handle: RePEc:nbr:nberwo:17269
Template-Type: ReDIF-Paper 1.0
Title: Employment, Wages and Voter Turnout
Classification-JEL: D72; D80; J22
Author-Name: Kerwin Kofi Charles
Author-Name: Melvin Stephens Jr.
Author-Person: pst400
Note: LS POL
Number: 17270
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17270
File-URL: http://www.nber.org/papers/w17270.pdf
File-Format: application/pdf
Publication-Status: published as Kerwin Kofi Charles & Melvin Stephens Jr., 2013. "Employment, Wages, and Voter Turnout," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 111-43, October.
Abstract: This paper argues that, since activities that provide political information are complementary with leisure, increased labor market activity should lower turnout, but should do so least in prominent elections where information is ubiquitous. Using official county-level voting data and a variety of OLS and TSLS models, we find that increases in wages and employment: reduce voter turnout in gubernatorial elections by a significant amount; have no effect on Presidential turnout; and raise the share of persons voting in a Presidential election who do not vote on a House of Representative election on the same ballot. We argue that this pattern (which contradicts some previous findings in the literature) can be fully accounted for by an information argument, and is either inconsistent with or not fully explicable by arguments based on citizens' psychological motivations to vote in good or bad times; changes in logistical voting costs; or transitory migration. Using individual-level panel data methods and multiple years' data from the American National Election Study (ANES) we confirm that increases in employment lead to less use of the media and reduced political knowledge, and present associational individual evidence that corroborates our main argument.
Handle: RePEc:nbr:nberwo:17270
Template-Type: ReDIF-Paper 1.0
Title: Long-Term Barriers to the International Diffusion of Innovations
Classification-JEL: F43; O33; O57
Author-Name: Enrico Spolaore
Author-Person: psp27
Author-Name: Romain Wacziarg
Author-Person: pwa67
Note: IFM POL
Number: 17271
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17271
File-URL: http://www.nber.org/papers/w17271.pdf
File-Format: application/pdf
Publication-Status: published as Enrico Spolaore & Romain Wacziarg, 2012. "Long-Term Barriers to the International Diffusion of Innovations," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 8(1), pages 11 - 46.
Publication-Status: published as Long-Term Barriers to the International Diffusion of Innovations, Enrico Spolaore, Romain Wacziarg. in NBER International Seminar on Macroeconomics 2011, Frankel and Pissarides. 2012
Abstract: We document an empirical relationship between the cross-country adoption of technologies and the degree of long-term historical relatedness between human populations. Historical relatedness is measured using genetic distance, a measure of the time since two populations' last common ancestors. We find that the measure of human relatedness that is relevant to explain international technology diffusion is genetic distance relative to the world technological frontier ("relative frontier distance"). This evidence is consistent with long-term historical relatedness acting as a barrier to technology adoption: societies that are more distant from the technological frontier tend to face higher imitation costs. The results can help explain current differences in total factor productivity and income per capita across countries.
Handle: RePEc:nbr:nberwo:17271
Template-Type: ReDIF-Paper 1.0
Title: Country Heterogeneity and the International Evidence on the Effects of Fiscal Policy
Classification-JEL: E62; H60
Author-Name: Carlo Favero
Author-Person: pfa12
Author-Name: Francesco Giavazzi
Author-Person: pgi18
Author-Name: Jacopo Perego
Note: IFM ME
Number: 17272
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17272
File-URL: http://www.nber.org/papers/w17272.pdf
File-Format: application/pdf
Publication-Status: published as Carlo Favero & Francesco Giavazzi & Jacopo Perego, 2011. "Country Heterogeneity and the International Evidence on the Effects of Fiscal Policy," IMF Economic Review, Palgrave Macmillan, vol. 59(4), pages 652-682, November.
Abstract: This paper shows how the richer frequency and variety of fiscal policy shocks available in an international sample can be analyzed recognizing the heterogeneity that exists across different countries. The main conclusion of our empirical analysis is that the question "what is the fiscal policy multiplier" is an ill-posed one. There is no unconditional fiscal policy multiplier. The effect of fiscal policy on output is different depending on the different debt dynamics, the different degree of openness and the different fiscal reaction functions across different countries. There are many fiscal multipliers and an average fiscal multiplier is of very little use to describe the effect of exogenous shifts in fiscal policy on output.
Handle: RePEc:nbr:nberwo:17272
Template-Type: ReDIF-Paper 1.0
Title: "Healthy, Wealthy and Wise?" Revisited: An Analysis of the Causal Pathways from Socio-economic Status to Health
Classification-JEL: C33; C52; I0; I12; I30; J0; J20
Author-Name: Till Stowasser
Author-Name: Florian Heiss
Author-Person: phe378
Author-Name: Daniel McFadden
Author-Name: Joachim Winter
Author-Person: pwi1
Note: AG EH
Number: 17273
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17273
File-URL: http://www.nber.org/papers/w17273.pdf
File-Format: application/pdf
Publication-Status: published as "Healthy, Wealthy and Wise?" Revisited: An Analysis of the Causal Pathways from Socioeconomic Status to Health, Till Stowasser, Florian Heiss, Daniel McFadden, Joachim Winter. in Investigations in the Economics of Aging, Wise. 2012
Abstract: Much has been said about the stylized fact that the economically successful are not only wealthier but also healthier than the less affluent. There is little doubt about the existence of this socio-economic gradient in health, but there remains a vivid debate about its source. In this paper, we review the methodological challenges involved in testing the causal relationships between socio-economic status and health. We describe the approach of testing for the absence of causal channels developed by Adams et al. (2003) that seeks identification without the need to isolate exogenous variation in economic variables, and we repeat their analysis using the full range of data that have become available in the Health and Retirement Study since, both in terms of observations years and age ranges covered. This analysis shows that causal inference critically depends on which time periods are used for estimation. Using the information of longer panels has the greatest effect on results. We find that SES causality cannot be ruled out for a larger number of health conditions than in the original study. An approach based on a reduced-form interpretation of causality thus is not very informative, at least as long as the confounding influence of hidden common factors is not fully controlled.
Handle: RePEc:nbr:nberwo:17273
Template-Type: ReDIF-Paper 1.0
Title: Unemployment in Latin America and the Caribbean
Classification-JEL: E24; E52; F41; J60
Author-Name: Laurence M. Ball
Author-Person: pba605
Author-Name: Nicolás De Roux
Author-Person: pde891
Author-Name: Marc Hofstetter
Author-Person: pho141
Note: EFG IFM LS ME
Number: 17274
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17274
File-URL: http://www.nber.org/papers/w17274.pdf
File-Format: application/pdf
Publication-Status: published as Laurence Ball & Nicolás Roux & Marc Hofstetter, 2013. "Unemployment in Latin America and the Caribbean," Open Economies Review, Springer, vol. 24(3), pages 397-424, July.
Abstract: This study constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. We compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak. We also examine large, persistent increases in unemployment over time, finding that they are caused by contractions in aggregate demand. These demand contractions result from either disinflationary monetary policy or the defense of an exchange-rate peg in the face of capital flight. Our evidence supports hysteresis theories in which short-run changes in unemployment influence the natural rate.
Handle: RePEc:nbr:nberwo:17274
Template-Type: ReDIF-Paper 1.0
Title: Substitution Between Individual and Cultural Capital: Pre-Migration Labor Supply, Culture and US Labor Market Outcomes Among Immigrant Women
Classification-JEL: J16; J22; J24; J61
Author-Name: Francine D. Blau
Author-Person: pbl16
Author-Name: Lawrence M. Kahn
Author-Person: pka63
Note: LS
Number: 17275
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17275
File-URL: http://www.nber.org/papers/w17275.pdf
File-Format: application/pdf
Publication-Status: published as Francine D. Blau and Lawrence M. Kahn, “Substitution between Individual and Source Country Characteristics: Social Capital, Culture, and US Labor Market Outcomes among Immigrant Women,” Journal of Human Capital 9, no. 4 (Winter 2015): 439-482.
Abstract: In this paper we use New Immigrant Survey data to investigate the impact of immigrant women's own labor supply prior to migrating and female labor supply in their source country to provide evidence on the role of human capital and culture in affecting their labor supply and wages in the United States. We find, as expected, that women who migrate from countries with relatively high levels of female labor supply work more in the United States. Moreover, most of this effect remains when we further control for each woman's own labor supply prior to migrating, which itself also strongly affects labor supply in the United States. Importantly, we find a significantly negative interaction between pre-migration labor supply and source country female labor supply. We obtain broadly similar effects analyzing the determinants of hourly earnings among the employed in the United States, although the results are not always significant. These results suggest an important role for culture and norms in affecting immigrant women's labor supply, since the effect of source country female labor supply on immigrant women's US work hours is still strong even controlling for the immigrant's own pre-migration labor supply. The negative interaction effects between previous work experience and source country female labor supply on women's US work hours and wages suggest that cultural capital and individual job-related human capital act as substitutes in affecting preparedness for work in the US.
Handle: RePEc:nbr:nberwo:17275
Template-Type: ReDIF-Paper 1.0
Title: The Continental Dollar: Initial Design, Ideal Performance, and the Credibility of Congressional Commitment
Classification-JEL: E42; E52; G12; G18; H11; H56; H6; H71; N11; N21; N41
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 17276
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17276
File-URL: http://www.nber.org/papers/w17276.pdf
File-Format: application/pdf
Publication-Status: published as Farley Grubb, The Continental Dollar: How the American Revolution was Financed with Paper Money (Chicago: University of Chicago Press, 2023).
Abstract: An alternative history of the Continental dollar is constructed from original sources and tested against evidence on prices and exchange rates. The Continental dollar was a zero-interest bearer bond, not a pure fiat currency. The public was promised redemption at face value in specie at fixed future dates. When time-discounting (rational bond pricing) is separated from depreciation, little depreciation occurred before 1779. In 1779, and again in 1780, Congress passed ex post facto laws altering Continental-dollar maturity dates. Because these new dates were not fiscally feasible, Congress' commitment to the Continental dollar lost credibility. Depreciation and collapse followed shortly thereafter.
Handle: RePEc:nbr:nberwo:17276
Template-Type: ReDIF-Paper 1.0
Title: International Risk Cycles
Classification-JEL: E32; E44; F31; G12
Author-Name: François Gourio
Author-Person: pgo158
Author-Name: Michael Siemer
Author-Name: Adrien Verdelhan
Author-Person: pve80
Note: AP EFG IFM
Number: 17277
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17277
File-URL: http://www.nber.org/papers/w17277.pdf
File-Format: application/pdf
Publication-Status: published as Gourio, François & Siemer, Michael & Verdelhan, Adrien, 2013. "International risk cycles," Journal of International Economics, Elsevier, vol. 89(2), pages 471-484.
Abstract: Recent work in international finance suggests that the forward premium puzzle can be accounted for if (1) aggregate uncertainty is time-varying, and (2) countries have heterogeneous exposures to a world aggregate shock. We embed these features in a standard two-country real business cycle framework, and calibrate the model to match the differences between low and high interest rates countries. Unlike traditional real business cycle models, our model generates volatile exchange rates, a large currency forward premium, "excess comovement'' of asset prices relative to quantities, and an imperfect correlation between relative consumption growth and exchange rates. Our model implies, however, that high interest rate countries have smoother quantities, equity returns and interest rates than low interest rate countries, contrary to the data.
Handle: RePEc:nbr:nberwo:17277
Template-Type: ReDIF-Paper 1.0
Title: Carry Trades and Risk
Classification-JEL: F31
Author-Name: Craig Burnside
Author-Person: pbu20
Note: AP EFG IFM
Number: 17278
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17278
File-URL: http://www.nber.org/papers/w17278.pdf
File-Format: application/pdf
Publication-Status: published as “Carry Trades and Risk,” in Jessica James, Ian W. Marsh and Lucio Sarno, eds., Handbook of Exchange Rates. Hoboken: John Wiley & Sons, 2012.
Abstract: Carry trades, in which an investor borrows a low interest rate currency and lends a high interest rate currency, have been profitable historically. The risk exposure of carry traders might explain their high returns, but conventional models of risk do not work because traditional risk factors, used to price the stock market, do not price currency returns. Less traditional factors that are more successful in explaining currency returns, are, however, unsuccessful in explaining the returns to the stock market. More exotic models of "crisis risk" are another possibility, but I show that any time-variation in the exposure of the carry trade to market risk has been insufficient, in sample, to explain the average returns earned by carry traders. Instead, peso events remain a candidate explanation of the returns to the carry trade.
Handle: RePEc:nbr:nberwo:17278
Template-Type: ReDIF-Paper 1.0
Title: The Importance of the Meaning and Measurement of "Affordable" in the Affordable Care Act
Classification-JEL: I0
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Sean Lyons
Author-Name: Kosali I. Simon
Author-Person: psi314
Note: EH
Number: 17279
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17279
File-URL: http://www.nber.org/papers/w17279.pdf
File-Format: application/pdf
Abstract: This paper focuses on the practical importance of a critical but under-explored interpretation of a provision in the Affordable Care Act (ACA): whether "affordable" refers to the cost of single coverage alone, or to family or single coverage as applicable to the worker, in determining the employer's mandated coverage requirement and workers' (and their dependents') access to subsidized exchange coverage. Since the average annual total premium for family coverage is substantially higher than that for single coverage (on average $12,298 vs. $4,386 in 2008) this is a non-trivial distinction. Using data on workers from the Current Population Survey merged with estimates of employer and exchange policy premiums, we investigate the impact of the affordability decision on the fraction of workers who could then access exchange coverage subsidies and on the correspondingly lower employer sponsored insurance (ESI) coverage rates. We do via a series of calculations for each worker that first shows the financial incentives at stake in deciding between ESI and subsidized exchange coverage. We then show how many of those who stand to gain from exchange coverage could do so under the two different affordability rules and different levels of employee contributions. Finally, we show the extent to which a single affordability rule would cause low-income workers with families to fall into a "no-man's land" with no source of affordable family coverage. We estimate that choosing a family affordability rule could initially lead to as many as 1.3 million more workers accessing exchange subsidies for themselves and their families than under a single affordability rule. If employees pay 50 percent of the premiums in the future, this number increases to 6 million. Increased use of exchange subsidies would be accompanied by reductions in ESI coverage and increased costs to taxpayers. Alternatively, choosing a single affordability rule would initially result in close to 4 million dependents of workers with affordable single coverage not having affordable health insurance. This would grow to close to 13 million if employees pay 50 percent of the premium.
Handle: RePEc:nbr:nberwo:17279
Template-Type: ReDIF-Paper 1.0
Title: The Exact Law of Large Numbers for Independent Random Matching
Classification-JEL: C02; D83
Author-Name: Darrell Duffie
Author-Person: pdu341
Author-Name: Yeneng Sun
Note: AP
Number: 17280
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17280
File-URL: http://www.nber.org/papers/w17280.pdf
File-Format: application/pdf
Publication-Status: published as Duffie, Darrell & Sun, Yeneng, 2012. "The exact law of large numbers for independent random matching," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1105-1139.
Abstract: This paper provides a mathematical foundation for independent random matching of a large population, as widely used in the economics literature. We consider both static and dynamic systems with random mutation, partial matching arising from search, and type changes induced by matching. Under independence assumptions at each randomization step, we show that there is an almost-sure constant cross-sectional distribution of types in a large population, and moreover that the multi-period cross-sectional distribution of types is deterministic and evolves according to the transition matrices of the type process of a given agent. We also show the existence of a joint agent-probability space, and randomized mutation, partial matching and match-induced type-changing functions that satisfy appropriate independence conditions, where the agent space is an extension of the classical Lebesgue unit interval.
Handle: RePEc:nbr:nberwo:17280
Template-Type: ReDIF-Paper 1.0
Title: Systemic Risk Exposures: A 10-by-10-by-10 Approach
Classification-JEL: G01; G28; G32
Author-Name: Darrell Duffie
Author-Person: pdu341
Note: AP
Number: 17281
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17281
File-URL: http://www.nber.org/papers/w17281.pdf
File-Format: application/pdf
Publication-Status: published as Systemic Risk Exposures: A 10-by-10-by-10 Approach, Darrell Duffie. in Risk Topography: Systemic Risk and Macro Modeling, Brunnermeier and Krishnamurthy. 2014
Abstract: Here, I present and discuss a "10-by-10-by-10" network-based approach to monitoring systemic financial risk. Under this approach, a regulator would analyze the exposures of a core group of systemically important financial firms to a list of stressful scenarios, say 10 in number. For each scenario, about 10 such designated firms would report their gains or losses. Each reporting firm would also provide the identities of the 10, say, counterparties with whom the gain or loss for that scenario is the greatest in magnitude relative to all counterparties. The gains or losses with each of those 10 counterparties would also be reported, scenario by scenario. Gains and losses would be measured in terms of market value and also in terms of cash flow, allowing regulators to assess risk magnitudes in terms of stresses to both economic values and also liquidity. Exposures would be measured before and after collateralization. One of the scenarios would be the failure of a counterparty. The "top ten" counterparties for this scenario would therefore be those whose defaults cause the greatest losses to the reporting firm. In eventual practice, the number of reporting firms, the number of stress scenarios, and the number of major counterparties could all exceed 10, but it is reasonable to start with a small reporting system until the approach is better understood and agreed upon internationally.
Handle: RePEc:nbr:nberwo:17281
Template-Type: ReDIF-Paper 1.0
Title: Foreign Firms and Local Communities
Classification-JEL: F23; M14
Author-Name: Bruce Blonigen
Author-Person: pbl165
Author-Name: Cheyney O'Fallon
Note: ITI
Number: 17282
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17282
File-URL: http://www.nber.org/papers/w17282.pdf
File-Format: application/pdf
Abstract: The literature on the effects of foreign direct investment (FDI) and activities of multinational enterprises (MNEs) on host-countries has been almost exclusively focused on issues of productivity, growth and wages. We argue that this leaves quite a bit of important unexplored areas of inquiry, particularly those connected with the interactions of local communities and governments with MNEs. As an example, we provide a novel analysis of local corporate philanthropy, which shows significant differences between local- and foreign-owned corporations. We find that foreign-owned enterprises are less likely to give, but that when they do give, it is substantially more in magnitude than domestic firms, everything else equal. This evidence is consistent with the hypothesis that foreign-owned firms would prefer to use corporate social responsibility (CSR) activities on a more international scale, but will strategically use CSR activities for public relation motives when the MNE faces greater local scrutiny and/or bias.
Handle: RePEc:nbr:nberwo:17282
Template-Type: ReDIF-Paper 1.0
Title: A Simple Nonparametric Approach to Estimating the Distribution of Random Coefficients in Structural Models
Classification-JEL: C14; L0
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Author-Name: Kyoo il Kim
Author-Person: pki456
Note: IO TWP
Number: 17283
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17283
File-URL: http://www.nber.org/papers/w17283.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy T. Fox & Kyoo il Kim & Chenyu Yang, 2016. "A simple nonparametric approach to estimating the distribution of random coefficients in structural models," Journal of Econometrics, .
Abstract: We explore a nonparametric mixtures estimator for recovering the joint distribution of random coefficients in economic models. The estimator is based on linear regression subject to linear inequality constraints and is computationally attractive compared to alternative, nonparametric estimators. We provide conditions under which the estimated distribution function converges to the true distribution in the weak topology on the space of distributions. We verify the consistency conditions for discrete choice, continuous outcome and selection models.
Handle: RePEc:nbr:nberwo:17283
Template-Type: ReDIF-Paper 1.0
Title: Equilibrium Wage and Employment Dynamics in a Model of Wage Posting without Commitment
Classification-JEL: D83; E24; J31; J6
Author-Name: Melvyn G. Coles
Author-Person: pco324
Author-Name: Dale T. Mortensen
Author-Person: pmo42
Note: EFG
Number: 17284
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17284
File-URL: http://www.nber.org/papers/w17284.pdf
File-Format: application/pdf
Abstract: A rich but tractable variant of the Burdett-Mortensen model of wage setting behavior is formulated and a dynamic market equilibrium solution to the model is defined and characterized. In the model, firms cannot commit to wage contracts. Instead, the Markov perfect equilibrium to the wage setting game, characterized by Coles (2001), is assumed. In addition, firm recruiting decisions, firm entry and exit, and transitory firm productivity shocks are incorporated into the model. Given that the cost of recruiting workers is proportional to firm employment, we establish the existence of an equilibrium solution to the model in which wages are not contingent on firm size but more productive employers always pay higher wages. Although the state space, the distribution of workers over firms, is large in the general case, it reduces to a scalar that can be interpreted as the unemployment rate in the special case of homogenous firms. Furthermore, the equilibrium is unique. As the dimension of the state space is equal to the number of firms types in general, an (approximate) equilibrium is computable.
Handle: RePEc:nbr:nberwo:17284
Template-Type: ReDIF-Paper 1.0
Title: Covariances versus Characteristics in General Equilibrium
Classification-JEL: D51; D53; D58; E22; E44; G12; G14; G31
Author-Name: Xiaoji Lin
Author-Person: pli453
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP CF
Number: 17285
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17285
File-URL: http://www.nber.org/papers/w17285.pdf
File-Format: application/pdf
Abstract: We question a deep-ingrained doctrine in asset pricing: If an empirical characteristic-return relation is consistent with investor "rationality," the relation must be "explained" by a risk factor model. The investment approach changes the big picture of asset pricing. Factors formed on characteristics are not necessarily risk factors: Characteristics-based factor models are linear approximations of firm-level investment returns. The evidence that characteristics dominate covariances in horse races does not necessarily mean mispricing: Measurement errors in covariances are more likely to blame. Most important, the investment approach completes the consumption approach in general equilibrium, especially for cross-sectional asset pricing.
Handle: RePEc:nbr:nberwo:17285
Template-Type: ReDIF-Paper 1.0
Title: Exam High Schools and Academic Achievement: Evidence from New York City
Classification-JEL: I20; J00
Author-Name: Will Dobbie
Author-Name: Roland G. Fryer, Jr.
Author-Person: pfr43
Note: CH ED LS
Number: 17286
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17286
File-URL: http://www.nber.org/papers/w17286.pdf
File-Format: application/pdf
Abstract: Publicly funded exam schools educate many of the world's most talented students. These schools typically contain higher achieving peers, more rigorous instruction, and additional resources compared to regular public schools. This paper uses a sharp discontinuity in the admissions process at three prominent exam schools in New York City to provide the first causal estimate of the impact of attending an exam school in the United States on longer term academic outcomes. Attending an exam school increases the rigor of high school courses taken and the probability that a student graduates with an advanced high school degree. Surprisingly, however, attending an exam school has little impact on Scholastic Aptitude Test scores, college enrollment, or college graduation -- casting doubt on their ultimate long term impact.
Handle: RePEc:nbr:nberwo:17286
Template-Type: ReDIF-Paper 1.0
Title: Would People Behave Differently If They Better Understood Social Security? Evidence From a Field Experiment
Classification-JEL: C93; D83; H55; J26
Author-Name: Jeffrey B. Liebman
Author-Person: pli184
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Note: AG LS PE
Number: 17287
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17287
File-URL: http://www.nber.org/papers/w17287.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey B. Liebman & Erzo F. P. Luttmer, 2015. "Would People Behave Differently If They Better Understood Social Security? Evidence from a Field Experiment," American Economic Journal: Economic Policy, American Economic Association, vol. 7(1), pages 275-99, February.
Abstract: This paper presents the results of a field experiment in which a sample of older workers was randomized between a treatment group that was given information about key Social Security provisions and a control group that was not. The experiment was designed to examine whether it is possible to affect individual behavior using a relatively inexpensive informational intervention about the provisions of a public program and to explore the mechanisms underlying the behavior change. We find that our relatively mild intervention (sending an informational brochure and an invitation to a web-tutorial) increased labor force participation one year later by 4 percentage points relative to the control group mean of 74 percent and that this effect is driven by a 7.2 percentage point increase among female subjects. In addition to affecting actual labor supply behavior, the information intervention increased survey measures of the perceived returns to working longer, especially among female respondents.
Handle: RePEc:nbr:nberwo:17287
Template-Type: ReDIF-Paper 1.0
Title: Consumption Risk-Sharing and the Real Exchange Rate: Why does the Nominal Exchange Rate Make Such a Difference?
Classification-JEL: F3; F4
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Viktoria Hnatkovska
Author-Person: phn1
Note: IFM
Number: 17288
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17288
File-URL: http://www.nber.org/papers/w17288.pdf
File-Format: application/pdf
Abstract: A basic prediction of effcient risk-sharing is that relative consumption growth rates across countries or regions should be positively related to real exchange rate growth rates across the same areas. We investigate this hypothesis, employing a newly constructed multi-country and multi-regional data set. Within countries, we find signifcant evidence for risk sharing: episodes of high relative regional consumption growth are associated with regional real exchange rate depreciation. Across countries however, the association is reversed: relative consumption and real exchange rates are negatively correlated. We identify this failure of risk sharing as a border effect. We find that the border effect is substantially (but not fully) accounted for by nominal exchange rate variability. We then ask whether standard open economy macro models can explain these features of the data. We argue that they cannot. To explain the role of the nominal exchange rate in deviations from cross country consumption risk sharing, it is necessary to combine multiple sources of shocks, ex-ante price setting, and incomplete financial markets.
Handle: RePEc:nbr:nberwo:17288
Template-Type: ReDIF-Paper 1.0
Title: The Extensive Margin, Sectoral Shares and International Business Cycles
Classification-JEL: F3; F4
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Viktoria Hnatkovska
Author-Person: phn1
Note: IFM
Number: 17289
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17289
File-URL: http://www.nber.org/papers/w17289.pdf
File-Format: application/pdf
Publication-Status: published as Michael B. Devereux & Viktoria Hnatkovska, 2012. "The extensive margin, sectoral shares, and international business cycles," Canadian Journal of Economics, Canadian Economics Association, vol. 45(2), pages 509-534, May.
Publication-Status: published as Michael B. Devereux & Viktoria Hnatkovska, 2012. "The extensive margin, sectoral shares, and international business cycles," Canadian Journal of Economics/Revue canadienne d'économique, vol 45(2), pages 509-534.
Abstract: This paper documents some previously neglected features of sectoral shares at business cycle frequencies in OECD economies. In particular, we find that the nontraded sector share of output is as volatile as aggregate GDP, and that for most countries, the nontraded sector is distinctly countercyclical. While the standard international real business cycle model has difficulty in accounting for these properties of the data, an extended model which allows for sectoral adjustment along both the intensive and extensive margins does a much better job in replicating the volatilities and co-movements in the data. In addition, the model provides a closer match between theory and data with respect to the correlation between relative consumption growth and real exchange rate changes, a key measure of international risk-sharing.
Handle: RePEc:nbr:nberwo:17289
Template-Type: ReDIF-Paper 1.0
Title: Are Corporate Default Probabilities Consistent with the Static Tradeoff Theory?
Classification-JEL: G3; G33
Author-Name: Armen Hovakimian
Author-Name: Ayla Kayhan
Author-Person: pka249
Author-Name: Sheridan Titman
Author-Person: pti51
Note: CF
Number: 17290
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17290
File-URL: http://www.nber.org/papers/w17290.pdf
File-Format: application/pdf
Publication-Status: published as Armen Hovakimian & Ayla Kayhan & Sheridan Titman, 2012. "Are Corporate Default Probabilities Consistent with the Static Trade-off Theory?," Review of Financial Studies, Society for Financial Studies, vol. 25(2), pages 315-340.
Abstract: Default probability plays a central role in the static tradeoff theory of capital structure. We directly test this theory by regressing the probability of default on proxies for costs and benefits of debt. Contrary to predictions of the theory, firms with higher bankruptcy costs, i.e., smaller firms and firms with lower asset tangibility, choose capital structures with higher bankruptcy risk. Further analysis suggests that the capital structures of smaller firms with lower asset tangibility, which tend to have less access to capital markets, are more sensitive to negative profitability and equity value shocks, making them more susceptible to bankruptcy risk.
Handle: RePEc:nbr:nberwo:17290
Template-Type: ReDIF-Paper 1.0
Title: A Gains from Trade Perspective on Macroeconomic Fluctuations
Classification-JEL: E32
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: Franck Portier
Author-Person: ppo12
Note: EFG
Number: 17291
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17291
File-URL: http://www.nber.org/papers/w17291.pdf
File-Format: application/pdf
Abstract: Business cycles reflect changes over time in the amount of trade between individuals. In this paper we show that incorporating explicitly intra-temporal gains from trade between individuals into a macroeconomic model can provide new insight into the potential mechanisms driving economic fluctuations as well as modify key policy implications. We first show how a "gains from trade" approach can easily explain why changes in perceptions about the future (including "news" about the future) can cause booms and bust. We then turn to fiscal policy, and discuss under what conditions fiscal multipliers can be observed. While much of our analysis is conducted in a flexible price environment, we also present implications of our model for a sticky price environments, as it allows to understand stable-inflation boom-bust cycles. The source of the explicit gains from trade in our setup derives from simply assuming that in the short run workers are not perfect mobile across all sectors of the economy. We provide evidence from the PSID in support of this modeling assumption.
Handle: RePEc:nbr:nberwo:17291
Template-Type: ReDIF-Paper 1.0
Title: Spillover Effects in Mutual Fund Companies
Classification-JEL: G11; G23; G30
Author-Name: Clemens Sialm
Author-Person: psi59
Author-Name: T. Mandy Tham
Note: AP CF
Number: 17292
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17292
File-URL: http://www.nber.org/papers/w17292.pdf
File-Format: application/pdf
Publication-Status: published as Clemens Sialm & T. Mandy Tham, 2016. "Spillover Effects in Mutual Fund Companies," Management Science, INFORMS, vol. 62(5), pages 1472-1486, May.
Abstract: Our paper investigates spillover effects across different business segments of publicly traded mutual fund management companies. We find that the prior stock price performance of the management company has a significant impact on the money flows and the management turnover of the affiliated mutual funds. Mutual funds managed by poorly performing firms experience unexpectedly low flows of new money and exhibit a significantly higher attrition of fund managers even if the mutual funds themselves performed well. Our results remain strong for companies where mutual funds account for only a small fraction of the overall revenues and hold for both equity and bond mutual funds. These results indicate that the financial health of a diversified firm has a significant impact on the prospects of the various business segments.
Handle: RePEc:nbr:nberwo:17292
Template-Type: ReDIF-Paper 1.0
Title: Why Do Voters Dismantle Checks and Balances?
Classification-JEL: H1; O17; P48
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Ragnar Torvik
Author-Person: pto24
Note: POL
Number: 17293
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17293
File-URL: http://www.nber.org/papers/w17293.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & James A. Robinson & Ragnar Torvik, 2013. "Why Do Voters Dismantle Checks and Balances?," Review of Economic Studies, Oxford University Press, vol. 80(3), pages 845-875.
Abstract: Voters often dismantle constitutional checks and balances on the executive. If such checks and balances limit presidential abuses of power and rents, why do voters support their removal? We argue that by reducing politician rents, checks and balances also make it cheaper to bribe or influence politicians through non-electoral means. In weakly-institutionalized polities where such non-electoral influences, particularly by the better organized elite, are a major concern, voters may prefer a political system without checks and balances as a way of insulating politicians from these influences. When they do so, they are effectively accepting a certain amount of politician (presidential) rents in return for redistribution. We show that checks and balances are less likely to emerge when the elite is better organized and is more likely to be able to influence or bribe politicians, and when inequality and potential taxes are high (which makes redistribution more valuable to the majority). We also provide case study evidence from Bolivia, Ecuador and Venezuela and econometric evidence on voter attitudes from a Latin American survey consistent with the model.
Handle: RePEc:nbr:nberwo:17293
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Flows in the Cross Section and Over Time
Classification-JEL: E24; J63; J64
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: Jason Faberman
Author-Person: pfa260
Author-Name: John C. Haltiwanger
Author-Person: pha231
Note: EFG LS
Number: 17294
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17294
File-URL: http://www.nber.org/papers/w17294.pdf
File-Format: application/pdf
Publication-Status: published as Davis, Steven J. & Faberman, R. Jason & Haltiwanger, John, 2012. "Labor market flows in the cross section and over time," Journal of Monetary Economics, Elsevier, vol. 59(1), pages 1-18.
Abstract: Many theoretical models of labor market search imply a tight link between worker flows (hires and separations) and job gains and losses at the employer level. Partly motivated by these theories, we exploit establishment-level data from U.S. sources to study the relationship between worker flows and job flows in the cross section and over time. We document strong, highly nonlinear relationships of hiring, quit and layoff rates to employer growth in the cross section. Simple statistical models that capture these cross-sectional relationships greatly improve our ability to account for fluctuations in aggregate worker flows. We also evaluate how well various theoretical models and views fit the patterns in the data. Aggregate fluctuations in layoffs are well captured by micro specifications that impose a tight cross-sectional link between worker flows and job flows. Aggregate fluctuations in quits are not. Instead, quit rates rise and fall with booms and recessions across the distribution of establishment growth rates, but more so at shrinking employers. Finally, we use our preferred statistical models - in combination with data on the cross-sectional distribution of establishment growth rates - to construct synthetic JOLTS-type measures of hires, separations, quits and layoffs back to 1990.
Handle: RePEc:nbr:nberwo:17294
Template-Type: ReDIF-Paper 1.0
Title: Information Percolation in Segmented Markets
Classification-JEL: D53; D83; G14
Author-Name: Darrell Duffie
Author-Person: pdu341
Author-Name: Semyon Malamud
Author-Person: pma1192
Author-Name: Gustavo Manso
Note: AP
Number: 17295
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17295
File-URL: http://www.nber.org/papers/w17295.pdf
File-Format: application/pdf
Publication-Status: published as "Information Percolation in Segmented Markets" (with Semyon Malamud and Gustavo Manso), Graduate School of Business, Stanford University, forthcoming, Journal of Economic Theory, 2014, Technical Appendices (published online only).
Abstract: We calculate equilibria of dynamic double-auction markets in which agents are distinguished by their preferences and information. Over time, agents are privately informed by bids and offers. Investors are segmented into groups that differ with respect to characteristics determining information quality, including initial information precision as well as market "connectivity," the expected frequency of their trading opportunities. Investors with superior information sources attain strictly higher expected profits, provided their counterparties are unable to observe the quality of those sources. If, however, the quality of bidders' information sources are commonly observable, then, under conditions, investors with superior information sources have strictly lower expected profits.
Handle: RePEc:nbr:nberwo:17295
Template-Type: ReDIF-Paper 1.0
Title: Capital Mobility and Asset Pricing
Classification-JEL: D4; D53
Author-Name: Darrell Duffie
Author-Person: pdu341
Author-Name: Bruno Strulovici
Author-Person: pst187
Note: AP
Number: 17296
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17296
File-URL: http://www.nber.org/papers/w17296.pdf
File-Format: application/pdf
Publication-Status: published as Darrell Duffie & Bruno Strulovici, 2012. "Capital Mobility and Asset Pricing," Econometrica, Econometric Society, vol. 80(6), pages 2469-2509, November.
Abstract: We present a model for the equilibrium movement of capital between asset markets that are distinguished only by the levels of capital invested in each. Investment in that market with the greatest amount of capital earns the lowest risk premium. Intermediaries optimally trade off the costs of intermediation against fees that depend on the gain they can offer to investors for moving their capital to the market with the higher mean return. Those fees also depend on the bargaining power of the investor, in light of potential alternative intermediaries. In equilibrium, the speeds of adjustment of mean returns and of capital between the two markets are increasing in the degree to which capital is imbalanced between the two markets.
Handle: RePEc:nbr:nberwo:17296
Template-Type: ReDIF-Paper 1.0
Title: Building Peace: The Impact of Aid on the Labor Market for Insurgents
Classification-JEL: J2; J4; O17
Author-Name: Radha Iyengar
Author-Name: Jonathan Monten
Author-Name: Matthew Hanson
Author-Person: pha394
Note: LS
Number: 17297
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17297
File-URL: http://www.nber.org/papers/w17297.pdf
File-Format: application/pdf
Abstract: Employment growth could reduce violence during civil conflicts. To determine if increased employment affects violence we analyzed varying employment in development programs run by different US military divisions in Iraqi districts. Employment levels vary with funding periods and the military division in charge. Controlling for variability between districts, we find that a 10% increase in labor-related spending generates a 15-20% decline in labor-intensive insurgent violence. Overall the 10% spending increase is associated with a nearly 10% violence reduction, due to reduction in attacks which kill civilians, but increased attacks against the military. These findings indicate that labor-intensive development programs can reduce violence during insurgencies.
Handle: RePEc:nbr:nberwo:17297
Template-Type: ReDIF-Paper 1.0
Title: The "CAPS" Prediction System and Stock Market Returns
Classification-JEL: G12; G14
Author-Name: Christopher Avery
Author-Person: pav7
Author-Name: Judith A. Chevalier
Author-Person: pch151
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: AP
Number: 17298
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17298
File-URL: http://www.nber.org/papers/w17298.pdf
File-Format: application/pdf
Publication-Status: published as Christopher N. Avery & Judith A. Chevalier & Richard J. Zeckhauser, 2016. "The “CAPS” Prediction System and Stock Market Returns," Review of Finance, vol 20(4), pages 1363-1381.
Abstract: We study the predictive power of approximately 2.5 million stock picks submitted by individual users to the "CAPS" website run by the Motley Fool company (www.caps.fool.com). These picks prove to be surprisingly informative about future stock prices. Indeed, a strategy of shorting stocks with a disproportionate number of negative picks on the site and buying stocks with a disproportionate number of positive picks produces a return of over nine percent per annum over the sample period. These results are mostly driven by the fact that negative picks on the site strongly predict future stock price declines; positive picks on the site produce returns that are statistically indistinguishable from the market. A Fama French decomposition suggests that these results are largely due to stock-picking rather than style factors or market timing.
Handle: RePEc:nbr:nberwo:17298
Template-Type: ReDIF-Paper 1.0
Title: Inefficient Provision of Liquidity
Classification-JEL: E41; E51; G21
Author-Name: Oliver D. Hart
Author-Person: pha222
Author-Name: Luigi Zingales
Note: CF
Number: 17299
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17299
File-URL: http://www.nber.org/papers/w17299.pdf
File-Format: application/pdf
Abstract: We study an economy where the lack of a simultaneous double coincidence of wants creates the need for a relatively safe asset (money). We show that, even in the absence of asymmetric information or an agency problem, the private provision of liquidity is inefficient. The reason is that liquidity affects prices and the welfare of others, and creators do not internalize this. This distortion is present even if we introduce lending and government money. To eliminate the inefficiency the government must restrict the creation of liquidity by the private sector.
Handle: RePEc:nbr:nberwo:17299
Template-Type: ReDIF-Paper 1.0
Title: Do Hospitals Cross Subsidize?
Classification-JEL: I11; L21; L23
Author-Name: Guy David
Author-Name: Richard Lindrooth
Author-Person: pli313
Author-Name: Lorens A. Helmchen
Author-Name: Lawton R. Burns
Note: EH
Number: 17300
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17300
File-URL: http://www.nber.org/papers/w17300.pdf
File-Format: application/pdf
Publication-Status: published as David, Guy & Lindrooth, Richard C. & Helmchen, Lorens A. & Burns, Lawton R., 2014. "Do hospitals cross-subsidize?," Journal of Health Economics, Elsevier, vol. 37(C), pages 198-218.
Abstract: Cross-subsidies are often considered the principal mechanism through which hospitals provide unprofitable care. Yet, hospitals' reliance on and extent of cross-subsidization are difficult to establish. We exploit entry by cardiac specialty hospitals as an exogenous shock to incumbent hospitals' profitability and in turn to their ability to cross-subsidize unprofitable services. Using patient-level data from general short-term hospitals in Arizona and Colorado before and after entry, we find that the hospitals most exposed to entry reduced their provision of services considered to be unprofitable (psychiatric, substance- abuse, and trauma care) and expanded their admissions for neurosurgery, a highly profitable service.
Handle: RePEc:nbr:nberwo:17300
Template-Type: ReDIF-Paper 1.0
Title: Natural Expectations, Macroeconomic Dynamics, and Asset Pricing
Classification-JEL: D84; E32; G12
Author-Name: Andreas Fuster
Author-Person: pfu92
Author-Name: Benjamin Hebert
Author-Name: David Laibson
Author-Person: pla164
Note: AG AP IFM
Number: 17301
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17301
File-URL: http://www.nber.org/papers/w17301.pdf
File-Format: application/pdf
Publication-Status: published as Andreas Fuster & Benjamin Hebert & David Laibson, 2012. "Natural Expectations, Macroeconomic Dynamics, and Asset Pricing," NBER Macroeconomics Annual, University of Chicago Press, vol. 26(1), pages 1 - 48.
Publication-Status: published as Natural Expectations, Macroeconomic Dynamics, and Asset Pricing, Andreas Fuster, Benjamin Hebert, David Laibson. in NBER Macroeconomics Annual 2011, Volume 26, Acemoglu and Woodford. 2012
Abstract: How does an economy behave if (1) fundamentals are truly hump-shaped, exhibiting momentum in the short run and partial mean reversion in the long run, and (2) agents do not know that fundamentals are hump-shaped and base their beliefs on parsimonious models that they fit to the available data? A class of parsimonious models leads to qualitatively similar biases and generates empirically observed patterns in asset prices and macroeconomic dynamics. First, parsimonious models will robustly pick up the short-term momentum in fundamentals but will generally fail to fully capture the long-run mean reversion. Beliefs will therefore be characterized by endogenous extrapolation bias and pro-cyclical excess optimism. Second, asset prices will be highly volatile and exhibit partial mean reversion--i.e., overreaction. Excess returns will be negatively predicted by lagged excess returns, P/E ratios, and consumption growth. Third, real economic activity will have amplified cycles. For example, consumption growth will be negatively auto-correlated in the medium run. Fourth, the equity premium will be large. Agents will perceive that equities are very risky when in fact long-run equity returns will co-vary only weakly with long-run consumption growth. If agents had rational expectations, the equity premium would be close to zero. Fifth, sophisticated agents--i.e., those who are assumed to know the true model--will hold far more equity than investors who use parsimonious models. Moreover, sophisticated agents will follow a counter-cyclical asset allocation policy. These predicted effects are qualitatively confirmed in U.S. data.
Handle: RePEc:nbr:nberwo:17301
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Pollution on Labor Supply: Evidence from a Natural Experiment in Mexico City
Classification-JEL: O1; Q0; Q5; Q53
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Paulina Oliva
Author-Person: pol147
Note: EEE
Number: 17302
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17302
File-URL: http://www.nber.org/papers/w17302.pdf
File-Format: application/pdf
Publication-Status: published as Hanna, Rema & Oliva, Paulina, 2015. "The effect of pollution on labor supply: Evidence from a natural experiment in Mexico City," Journal of Public Economics, Elsevier, vol. 122(C), pages 68-79.
Abstract: Moderate effects of pollution on health may exert an important influence on labor market decisions. We exploit exogenous variation in pollution due to the closure of a large refinery in Mexico City to understand how pollution impacts labor supply. The closure led to an 8 percent decline in pollution in the surrounding neighborhoods. We find that a one percent increase in sulfur dioxide results in a 0.61 percent decrease in the hours worked. The effects do not appear to be driven by labor demand shocks nor differential migration as a result of the closure in the areas located near the refinery.
Handle: RePEc:nbr:nberwo:17302
Template-Type: ReDIF-Paper 1.0
Title: Pay Cuts for the Boss: Executive Compensation in the 1940s
Classification-JEL: G3; J31; M50; N32
Author-Name: Carola Frydman
Author-Person: pfr240
Author-Name: Raven Molloy
Note: CF DAE LS
Number: 17303
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17303
File-URL: http://www.nber.org/papers/w17303.pdf
File-Format: application/pdf
Publication-Status: published as Frydman, Carola & Molloy, Raven, 2012. "Pay Cuts for the Boss: Executive Compensation in the 1940s," The Journal of Economic History, Cambridge University Press, vol. 72(01), pages 225-251, March.
Abstract: Executive pay fell during the 1940s, marking the last notable decrease in the past 70 years. We study this decline using a new panel dataset on the remuneration of top executives in 246 firms. We find that government regulation--including explicit salary restrictions and taxation--had, at best, a modest effect on executive pay. By contrast, a decline in the returns to firm size and an increase in the power of labor unions contributed greatly to the reduction in executive compensation relative to other workers' earnings from 1940 to 1946. The continued decrease in relative executive pay remains largely unexplained.
Handle: RePEc:nbr:nberwo:17303
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Gains from Trade in the Market for Innovation: Evidence from the Transfer of Patents
Classification-JEL: L24; O32; O34
Author-Name: Carlos J. Serrano
Author-Person: pse144
Note: IO PR
Number: 17304
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17304
File-URL: http://www.nber.org/papers/w17304.pdf
File-Format: application/pdf
Abstract: The "market for innovation" -- the sale and licensing of patents -- is an often discussed source of incentives to invest in R&D. This article presents and estimates a model of the transfer and renewal of patents that, under some assumptions, allows us to quantify the gains resulting from the transfer of patents in the market for innovation. The gains from trade measure the benefits of reallocating the ownership of a patent from the original inventor to a new owner for whom the patent has a higher value. In addition, we study the effect that lowering the costs of technology transfer has on the proportion of patents traded and the gains from trade.
Handle: RePEc:nbr:nberwo:17304
Template-Type: ReDIF-Paper 1.0
Title: Japanese Government Debt and Sustainability of Fiscal Policy
Classification-JEL: E62; H62; H63
Author-Name: Takero Doi
Author-Person: pdo15
Author-Name: Takeo Hoshi
Author-Person: pho107
Author-Name: Tatsuyoshi Okimoto
Note: CF ME PE
Number: 17305
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17305
File-URL: http://www.nber.org/papers/w17305.pdf
File-Format: application/pdf
Publication-Status: published as Doi, Takero & Hoshi, Takeo & Okimoto, Tatsuyoshi, 2011. "Japanese government debt and sustainability of fiscal policy," Journal of the Japanese and International Economies, Elsevier, vol. 25(4), pages 414-433.
Publication-Status: published as Japanese Government Debt and Sustainability of Fiscal Policy, Takero Doi, Takeo Hoshi, Tatsuyoshi Okimoto. in Fiscal Policy and Crisis, Fukuda, Hoshi, and Leeper. 2011
Abstract: We construct quarterly series of the revenues, expenditures, and debt outstanding for Japan from 1980 to 2010, and analyze the sustainability of the fiscal policy. We pursue three approaches to examine the sustainability. First, we calculate the minimum tax rate that stabilizes the debt to GDP ratio given the future government expenditures. Using 2010 as the base year, we find that the government revenue to GDP ratio must rise permanently to 40%-47% (from the current 33%) to stabilize the debt to GDP ratio. Second, we estimate the response of the primary surplus when the debt to GDP ratio increases. We allow the relationship to fluctuate between two "regimes" using a Markov switching model. In both regimes, the primary surplus to GDP ratio fails to respond positively to debt, which suggests the process is explosive. Finally, we estimate a fiscal policy function and a monetary policy function with Markov switching. We find that the fiscal policy is "active" (the tax revenues do not rise when the debt increases) and the monetary policy is "passive" (the interest rate does not react to the inflation rate sufficiently) in both regimes. These results suggest that the current fiscal situation for the Japanese government is not sustainable.
Handle: RePEc:nbr:nberwo:17305
Template-Type: ReDIF-Paper 1.0
Title: A Political Theory of Populism
Classification-JEL: C71; D71; D74
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Georgy Egorov
Author-Person: peg15
Author-Name: Konstantin Sonin
Author-Person: pso47
Note: POL
Number: 17306
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17306
File-URL: http://www.nber.org/papers/w17306.pdf
File-Format: application/pdf
Publication-Status: published as Georgy Egorov & Konstantin Sonin, 2013. "A Political Theory of Populism," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 771-805.
Abstract: When voters fear that politicians may have a right-wing bias or that they may be influenced or corrupted by the rich elite, signals of true left-wing conviction are valuable. As a consequence, even a moderate politician seeking reelection chooses "populist' policies - i.e., policies to the left of the median voter - as a way of signaling that he is not from the right. Truly right-wing politicians respond by choosing more moderate, or even left-of-center policies. This populist bias of policy is greater when the value of remaining in office is higher for the politician; when there is greater polarization between the policy preferences of the median voter and right-wing politicians; when politicians are indeed more likely to have a hidden right-wing agenda; when there is an intermediate amount of noise in the information that voters receive; when politicians are more forward-looking; and when there is greater uncertainty about the type of the incumbent. We show that similar results apply when some politicians can be corrupted or influenced through other non-electoral means by the rich elite. We also show that 'soft term limits' may exacerbate, rather than reduce, the populist bias of policies.
Handle: RePEc:nbr:nberwo:17306
Template-Type: ReDIF-Paper 1.0
Title: Internal Migration in the United States
Classification-JEL: J1; J61; R23
Author-Name: Raven Molloy
Author-Name: Christopher L. Smith
Author-Person: psm208
Author-Name: Abigail K. Wozniak
Author-Person: pwo113
Note: LS
Number: 17307
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17307
File-URL: http://www.nber.org/papers/w17307.pdf
File-Format: application/pdf
Publication-Status: published as Raven Molloy & Christopher L. Smith & Abigail Wozniak, 2011. "Internal Migration in the United States," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 173-96, Summer.
Abstract: We review patterns in migration within the US over the past thirty years. Internal migration has fallen noticeably since the 1980s, reversing increases from earlier in the century. The decline in migration has been widespread across demographic and socioeconomic groups, as well as for moves of all distances. Although a convincing explanation for the secular decline in migration remains elusive and requires further research, we find only limited roles for the housing market contraction and the economic recession in reducing migration recently. Despite its downward trend, migration within the US remains higher than that within most other developed countries.
Handle: RePEc:nbr:nberwo:17307
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Trade on Organization and Productivity
Classification-JEL: D21; D24; F12; F13
Author-Name: Lorenzo Caliendo
Author-Person: pca537
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EFG ITI
Number: 17308
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17308
File-URL: http://www.nber.org/papers/w17308.pdf
File-Format: application/pdf
Publication-Status: published as Lorenzo Caliendo & Esteban Rossi-Hansberg, 2012. "The Impact of Trade on Organization and Productivity," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1393-1467.
Abstract: A firm's productivity depends on how production is organized given the level of demand for its product. To capture this mechanism, we develop a theory of an economy where firms with heterogeneous demands use labor and knowledge to produce. Entrepreneurs decide the number of layers of management and the knowledge and span of control of each agent. As a result, in the theory, heterogeneity in demand leads to heterogeneity in productivity and other firms' outcomes. We use the theory to analyze the impact of international trade on organization and calibrate the model to the U.S. economy. Our results indicate that, as a result of a bilateral trade liberalization, firms that export will increase the number of layers of management and will decentralize decisions. The new organization of the average exporter results in higher productivity, although the responses of productivity are heterogeneous across these firms. In contrast, non-exporters reduce their number of layers, decentralization, and, on average, their productivity. The marginal exporter increases its productivity by about 1% and its revenue productivity by about 1.8%.
Handle: RePEc:nbr:nberwo:17308
Template-Type: ReDIF-Paper 1.0
Title: Free to Punish? The American Dream and the Harsh Treatment of Criminals
Classification-JEL: E62; K14; P16
Author-Name: Rafael Di Tella
Author-Person: pdi128
Author-Name: Juan Dubra
Author-Person: pdu45
Note: LE PE
Number: 17309
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17309
File-URL: http://www.nber.org/papers/w17309.pdf
File-Format: application/pdf
Publication-Status: published as Di Tella, Rafael. "Free to Punish? The American Dream and the Harsh Treatment of Criminals." Cato Papers on Public Policy 1 (2011).
Abstract: We describe the evolution of selective aspects of punishment in the US over the period 1980-2004. We note that imprisonment increased around 1980, a period that coincides with the "Reagan revolution" in economic matters. We build an economic model where beliefs about economic opportunities and beliefs about punishment are correlated. We present three pieces of evidence (across countries, within the US and an experimental exercise) that are consistent with the model.
Handle: RePEc:nbr:nberwo:17309
Template-Type: ReDIF-Paper 1.0
Title: Is there a Link Between Foreclosure and Health?
Classification-JEL: I12
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Erdal Tekin
Author-Person: pte12
Note: EH LS PE
Number: 17310
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17310
File-URL: http://www.nber.org/papers/w17310.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie & Erdal Tekin, 2015. "Is There a Link between Foreclosure and Health?," American Economic Journal: Economic Policy, American Economic Association, vol. 7(1), pages 63-94, February.
Abstract: We investigate the relationship between foreclosures and hospital visits using data on all foreclosures and all hospital and emergency room visits from four states that were among the hardest hit by the foreclosure crisis. We find that living in a neighborhood with a spike in foreclosures is associated with significant increases in urgent unscheduled visits, including increases in visits for preventable conditions. The estimated relationships cannot be accounted for by increasing unemployment, declines in housing prices, migration, or by people switching from out-patient providers to hospitals.
Handle: RePEc:nbr:nberwo:17310
Template-Type: ReDIF-Paper 1.0
Title: Credit Shocks and Aggregate Fluctuations in an Economy with Production Heterogeneity
Classification-JEL: E22; E32; E44
Author-Name: Aubhik Khan
Author-Person: pkh5
Author-Name: Julia K. Thomas
Author-Person: pth42
Note: EFG PR
Number: 17311
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17311
File-URL: http://www.nber.org/papers/w17311.pdf
File-Format: application/pdf
Publication-Status: published as Aubhik Khan & Julia K. Thomas, 2013. "Credit Shocks and Aggregate Fluctuations in an Economy with Production Heterogeneity," Journal of Political Economy, University of Chicago Press, vol. 121(6), pages 1055 - 1107.
Abstract: We study the cyclical implications of credit market imperfections in a calibrated dynamic, stochastic general equilibrium model wherein firms face persistent shocks to aggregate and individual productivity. In our model economy, optimal capital reallocation is distorted by two frictions: collateralized borrowing and partial capital irreversibility yielding (S,s) firm-level investment policies. In the presence of persistent heterogeneity in capital, debt and total factor productivity, the effects of a financial shock are amplified and propagated through large and long-lived disruptions to the distribution of capital that, in turn, imply large and persistent reductions in aggregate total factor productivity. We find that an unanticipated tightening in borrowing conditions can, on its own, generate a large recession far more persistent than the financial shock itself. This recession, and the subsequent recovery, is distinguished both quantitatively and qualitatively from that driven by exogenous shocks to total factor productivity.
Handle: RePEc:nbr:nberwo:17311
Template-Type: ReDIF-Paper 1.0
Title: Why didn't Canada have a banking crisis in 2008 (or in 1930, or 1907, or ...)?
Classification-JEL: N20
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Angela Redish
Author-Person: pre9
Author-Name: Hugh Rockoff
Author-Person: pro65
Note: DAE
Number: 17312
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17312
File-URL: http://www.nber.org/papers/w17312.pdf
File-Format: application/pdf
Publication-Status: published as Michael D. Bordo & Angela Redish & Hugh Rockoff, 2015. "Why didn't Canada have a banking crisis in 2008 (or in 1930, or 1907, or …)?," The Economic History Review, vol 68(1), pages 218-243.
Abstract: The financial crisis of 2008 engulfed the banking system of the United States and many large European countries. Canada was a notable exception. In this paper we argue that the structure of financial systems is path dependent. The relative stability of the Canadian banks in the recent crisis compared to the United States in our view reflected the original institutional foundations laid in place in the early 19th century in the two countries. The Canadian concentrated banking system that had evolved by the end of the twentieth century had absorbed the key sources of systemic risk -- the mortgage market and investment banking -- and was tightly regulated by one overarching regulator. In contrast the relatively weak, fragmented, and crisis prone U.S. banking system that had evolved since the early nineteenth century, led to the rise of securities markets, investment banks and money market mutual funds (the shadow banking system) combined with multiple competing regulatory authorities. The consequence was that the systemic risk that led to the crisis of 2007-2008 was not contained.
Handle: RePEc:nbr:nberwo:17312
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Dysfunction During the Great Recession
Classification-JEL: E0; J0
Author-Name: Kyle F. Herkenhoff
Author-Name: Lee E. Ohanian
Author-Person: poh1
Note: EFG LS
Number: 17313
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17313
File-URL: http://www.nber.org/papers/w17313.pdf
File-Format: application/pdf
Publication-Status: published as “Labor Market Dysfunction during the Great Recession,” with Lee E. Ohanian (UCLA), Cato Papers on Public Policy, edited by Jeffrey Miron, Volume 1, 2011.
Abstract: This paper documents the abnormally slow recovery in the labor market during the Great Recession, and analyzes how mortgage modification policies contributed to delayed recovery. By making modifications means-tested by reducing mortgage payments based on a borrower's current income, these programs change the incentive for households to relocate from a relatively poor labor market to a better labor market. We find that modifications raise the unemployment rate by about 0.5 percentage points, and reduce output by about 1 percent, reflecting both lower employment and lower productivity, which is the result of individuals losing skills as unemployment duration is longer.
Handle: RePEc:nbr:nberwo:17313
Template-Type: ReDIF-Paper 1.0
Title: How the West 'Invented' Fertility Restriction
Classification-JEL: E20; N13; N33; O14; O41
Author-Name: Nico Voigtländer
Author-Name: Hans-Joachim Voth
Author-Person: pvo5
Note: DAE POL
Number: 17314
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17314
File-URL: http://www.nber.org/papers/w17314.pdf
File-Format: application/pdf
Publication-Status: published as Nico Voigtl?nder & Hans-Joachim Voth, 2013. "How the West "Invented" Fertility Restriction," American Economic Review, American Economic Association, vol. 103(6), pages 2227-64, October.
Abstract: Europeans restricted their fertility long before the Demographic Transition. By raising the marriage age of women and ensuring that a substantial proportion remained celibate, the "European Marriage Pattern" (EMP) reduced childbirths by up to one third between the 14th and 18th century. In a Malthusian environment, this translated into lower population pressure, raising average wages significantly, which in turn facilitated industrialization. We analyze the rise of this first socio-economic institution in history that limited fertility through delayed marriage. Our model emphasizes changes in agricultural production following the Black Death in 1348-50. The land-intensive production of pastoral products increased in relative importance. Using detailed data from England after 1290, we show that women had a comparative advantage in livestock farming. They often worked as servants in husbandry, where they remained unmarried until their mid-twenties. Where pastoral agriculture dominated, marriage occurred markedly later. Overall, we estimate that pastoral farming raised female age at first marriage by more than 4 years.
Handle: RePEc:nbr:nberwo:17314
Template-Type: ReDIF-Paper 1.0
Title: Complex Mortgages
Classification-JEL: E60; G01; G10; H31
Author-Name: Gene Amromin
Author-Person: pam179
Author-Name: Jennifer Huang
Author-Person: phu418
Author-Name: Clemens Sialm
Author-Person: psi59
Author-Name: Edward Zhong
Note: AP CF PE
Number: 17315
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17315
File-URL: http://www.nber.org/papers/w17315.pdf
File-Format: application/pdf
Publication-Status: published as Gene Amromin & Jennifer Huang & Clemens Sialm & Edward Zhong, 2018. "Complex Mortgages*," Review of Finance, vol 22(6), pages 1975-2007.
Abstract: We investigate the characteristics and the default behavior of households who take out complex mortgages. Unlike traditional fixed rate or adjustable rate mortgages, complex mortgages are not fully amortizing and enable households to postpone loan repayment. We find that complex mortgages are used by sophisticated households with high income levels and prime credit scores, in contrast to the low income population targeted by subprime mortgages. Complex mortgage borrowers have significantly higher delinquency rates than traditional mortgage borrowers even after controlling for leverage, payment resets, and other household and loan characteristics. The difference in the delinquency rates between complex and traditional borrowers increases with measures of financial sophistication and leverage, suggesting that complex borrowers are more strategic in their default decisions than traditional borrowers.
Handle: RePEc:nbr:nberwo:17315
Template-Type: ReDIF-Paper 1.0
Title: Vertical Integration and Optimal Reimbursement Policy
Classification-JEL: I1; I11; I18; L2
Author-Name: Christopher Afendulis
Author-Name: Daniel Kessler
Note: EH IO LE
Number: 17316
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17316
File-URL: http://www.nber.org/papers/w17316.pdf
File-Format: application/pdf
Publication-Status: published as Afendulis, Christopher C., and Daniel P. Kessler. “Vertical Integration and Optimal Reimibursement Policy,” International Journal of Health Care Finance and Economics 11:3 (September 2011) 165-179.
Abstract: Health care providers may vertically integrate not only to facilitate coordination of care, but also for strategic reasons that may not be in patients' best interests. Optimal Medicare reimbursement policy depends upon the extent to which each of these explanations is correct. To investigate, we compare the consequences of the 1997 adoption of prospective payment for skilled nursing facilities (SNF PPS) in geographic areas with high versus low levels of hospital/SNF integration. We find that SNF PPS decreased spending more in high integration areas, with no measurable consequences for patient health outcomes. Our findings suggest that subjecting integrated providers to higher-powered reimbursement incentives, i.e., less cost-sharing, may enhance medical productivity. More generally, we conclude that it may be efficient for purchasers of health services (and other services subject to agency problems) to consider the organizational form of their suppliers when choosing a reimbursement mechanism.
Handle: RePEc:nbr:nberwo:17316
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Volatility Shocks and Economic Activity
Classification-JEL: C11; E10; E30
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: Pablo A. Guerrón-Quintana
Author-Person: pgu174
Author-Name: Keith Kuester
Author-Name: Juan Rubio-Ramírez
Author-Person: pru25
Note: EFG
Number: 17317
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17317
File-URL: http://www.nber.org/papers/w17317.pdf
File-Format: application/pdf
Publication-Status: published as Jesús Fernández-Villaverde & Pablo Guerrón-Quintana & Keith Kuester & Juan Rubio-Ramírez, 2015. "Fiscal Volatility Shocks and Economic Activity," American Economic Review, American Economic Association, vol. 105(11), pages 3352-84, November.
Abstract: We study the effects of changes in uncertainty about future fiscal policy on aggregate economic activity. Fiscal deficits and public debt have risen sharply in the wake of the financial crisis. While these developments make fiscal consolidation inevitable, there is considerable uncertainty about the policy mix and timing of such budgetary adjustment. To evaluate the consequences of this increased uncertainty, we first estimate tax and spending processes for the U.S. that allow for time-varying volatility. We then feed these processes into an otherwise standard New Keynesian business cycle model calibrated to the U.S. economy. We find that fiscal volatility shocks have an adverse effect on economic activity that is comparable to the effects of a 25-basis-point innovation in the federal funds rate.
Handle: RePEc:nbr:nberwo:17317
Template-Type: ReDIF-Paper 1.0
Title: How Reliable are De Facto Exchange Rate Regime Classifications?
Classification-JEL: F0; F31
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Raul Razo-Garcia
Note: IFM
Number: 17318
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17318
File-URL: http://www.nber.org/papers/w17318.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen & Raul RazoâGarcia, 2013. "How Reliable Are De Facto Exchange Rate Regime Classifications?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 18(3), pages 216-239, 07.
Abstract: We analyze disagreements over de facto exchange-rate-regime classifications using three popular de facto regime data series. While there is a moderate degree of concurrence across classifications, disagreements are not uncommon, and they are not random. They are most prevalent in middle-income countries (emerging markets) and low-income (developing) countries as opposed to advanced economies. They are most prevalent for countries with well-developed financial markets, low reserves and open capital accounts. This suggests caution when attempting to relate the exchange rate regime to financial development, the openness of the financial account, and reserve management and accumulation decisions.
Handle: RePEc:nbr:nberwo:17318
Template-Type: ReDIF-Paper 1.0
Title: Optimal Fiscal Policy with Endogenous Product Variety
Classification-JEL: E32; E62; H21
Author-Name: Sanjay K. Chugh
Author-Person: pch1272
Author-Name: Fabio Ghironi
Author-Person: pgh2
Note: EFG PE
Number: 17319
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17319
File-URL: http://www.nber.org/papers/w17319.pdf
File-Format: application/pdf
Abstract: We study Ramsey-optimal fiscal policy in an economy in which product varieties are the result of forward-looking investment decisions by firms. There are two main results. First, depending on the particular form of variety aggregation in preferences, firms' dividend payments may be either subsidized or taxed in the long run. This policy balances monopoly incentives for product creation with consumers' welfare benefit of product variety. In the most empirically relevant form of variety aggregation, socially efficient outcomes entail a substantial tax on dividend income, removing the incentive for over-accumulation of capital, which takes the form of variety. Second, optimal policy induces dramatically smaller, but efficient, fluctuations of both capital and labor markets than in a calibrated exogenous policy. Decentralization requires zero intertemporal distortions and constant static distortions over the cycle. The results relate to Ramsey theory, which we show by developing welfare-relevant concepts of efficiency that take into account product creation.
Handle: RePEc:nbr:nberwo:17319
Template-Type: ReDIF-Paper 1.0
Title: Nonparametric Evidence on the Effects of Financial Incentives on Retirement Decisions
Classification-JEL: H55; J22; J26
Author-Name: Dayanand S. Manoli
Author-Person: pma1770
Author-Name: Andrea Weber
Author-Person: pwe32
Note: AG LS PE
Number: 17320
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17320
File-URL: http://www.nber.org/papers/w17320.pdf
File-Format: application/pdf
Publication-Status: published as Day Manoli & Andrea Weber, 2016. "Nonparametric Evidence on the Effects of Financial Incentives on Retirement Decisions," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 160-182, November.
Abstract: This paper presents new empirical evidence on the effects of retirement benefits on labor force participation decisions. We use administrative data on the census of private sector employees in Austria and variation from mandated discontinuous changes in retirement benefits from the Austrian pension system. We present graphical evidence documenting labor supply responses to the policy discontinuities. Next, we develop nonparametric procedures to estimate labor supply elasticities based on the graphical evidence and mandated financial incentives. We estimate elasticities of 0.12 for men and 0.38 for women. These relatively low elasticities highlight that many retirement decisions are likely to be affected by factors beyond only financial incentives from retirement benefits.
Handle: RePEc:nbr:nberwo:17320
Template-Type: ReDIF-Paper 1.0
Title: Implicit Guarantees and Risk Taking: Evidence from Money Market Funds
Classification-JEL: E44; E5; G01; G1; G11; G14; G2; G21; G32; G33
Author-Name: Marcin Kacperczyk
Author-Name: Philipp Schnabl
Author-Person: psc789
Note: AP CF ME
Number: 17321
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17321
File-URL: http://www.nber.org/papers/w17321.pdf
File-Format: application/pdf
Abstract: A firm's termination generates bankruptcy costs. This may create incentives for a firm's owner to bail out a firm in bankruptcy and to curb the firm's risk taking outside bankruptcy. We analyze the role of such implicit guarantees in the context of financial institutions that sponsor money market mutual funds. Our identification strategy exploits a large, exogenous expansion in risk-taking opportunities of money market funds during the period of August 2007 to August 2008. We find that a fund's response to the expansion depends on its sponsor's ability to provide implicit guarantees: Funds sponsored by financial institutions with higher equity take on less risk than those sponsored by financial institutions with lower equity. Moreover, fund sponsors with higher equity are more likely to provide financial support to their funds during a market-wide run in September 2008. The difference in risk taking disappears once implicit guarantees by fund sponsors are replaced with an explicit government guarantee. Overall, our findings suggest that implicit guarantees may reduce, rather than increase, risk taking.
Handle: RePEc:nbr:nberwo:17321
Template-Type: ReDIF-Paper 1.0
Title: Was What Ail'd Ya' What Kill'd Ya'?
Classification-JEL: I1; N11
Author-Name: Robert W. Fogel
Author-Name: Louis Cain
Author-Name: Joseph Burton
Author-Name: Brian Bettenhausen
Note: AG
Number: 17322
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17322
File-URL: http://www.nber.org/papers/w17322.pdf
File-Format: application/pdf
Publication-Status: published as Fogel, Robert W. & Cain, Louis & Burton, Joseph & Bettenhausen, Brian, 2013. "Was what ailâd ya what killâd ya?," Economics & Human Biology, Elsevier, vol. 11(3), pages 269-280.
Abstract: Making use of those Union Army veterans for whom death certificates are available, we compare the conditions with which they were diagnosed by Civil War pension surgeons to the causes of death on the certificates. We divide the data between those veterans who entered the pension system early because of war injuries and those who entered the pension system after the 1890 reform that made it available to many more veterans. We examine the correlation between specific conditions and death causes to gauge support for the hypothesis that death is attributable to something specific. We also examine the correlation between the accumulation of rated conditions to time until death to gauge support for the "insult hypothesis." In general, we find support for both hypotheses. Examining the hazard ratios for dying of a specific condition, there is support for the idea that what ail'd ya' is what kill'd ya'.
Handle: RePEc:nbr:nberwo:17322
Template-Type: ReDIF-Paper 1.0
Title: The Recovery Theorem
Classification-JEL: E1; G0; G11; G12; G17
Author-Name: Stephen A. Ross
Note: AP ME
Number: 17323
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17323
File-URL: http://www.nber.org/papers/w17323.pdf
File-Format: application/pdf
Publication-Status: published as STEVE ROSS, 2015. "The Recovery Theorem," The Journal of Finance, vol 70(2), pages 615-648.
Abstract: We can only estimate the distribution of stock returns but we observe the distribution of risk neutral state prices. Risk neutral state prices are the product of risk aversion - the pricing kernel - and the natural probability distribution. The Recovery Theorem enables us to separate these and to determine the market's forecast of returns and the market's risk aversion from state prices alone. Among other things, this allows us to determine the pricing kernel, the market risk premium, the probability of a catastrophe, and to construct model free tests of the efficient market hypothesis.
Handle: RePEc:nbr:nberwo:17323
Template-Type: ReDIF-Paper 1.0
Title: Organ Allocation Policy and the Decision to Donate
Classification-JEL: C91; C92; D02; D71; I11; I28
Author-Name: Judd B. Kessler
Author-Name: Alvin E. Roth
Author-Person: pro40
Note: EH
Number: 17324
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17324
File-URL: http://www.nber.org/papers/w17324.pdf
File-Format: application/pdf
Publication-Status: published as Judd B. Kessler & Alvin E. Roth, 2012. "Organ Allocation Policy and the Decision to Donate," American Economic Review, American Economic Association, vol. 102(5), pages 2018-47, August.
Abstract: Organ donations from deceased donors provide the majority of transplanted organs in the United States, and one deceased donor can save numerous lives by providing multiple organs. Nevertheless, most Americans are not registered organ donors despite the relative ease of becoming one. We study in the laboratory an experimental game modeled on the decision to register as an organ donor, and investigate how changes in the management of organ waiting lists might impact donations. We find that an organ allocation policy giving priority on waiting lists to those who previously registered as donors has a significant positive impact on registration.
Handle: RePEc:nbr:nberwo:17324
Template-Type: ReDIF-Paper 1.0
Title: Health and Mortality Delta: Assessing the Welfare Cost of Household Insurance Choice
Classification-JEL: D14; D91; G11; I13
Author-Name: Ralph Koijen
Author-Person: pko589
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Author-Name: Motohiro Yogo
Author-Person: pyo20
Note: AG AP EH
Number: 17325
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17325
File-URL: http://www.nber.org/papers/w17325.pdf
File-Format: application/pdf
Publication-Status: published as Ralph S.J. Koijen & Stijn Nieuwerburgh & Motohiro Yogo, 2016. "Health and Mortality Delta: Assessing the Welfare Cost of Household Insurance Choice," Journal of Finance, American Finance Association, vol. 71(2), pages 957-1010, 04.
Abstract: We develop a pair of risk measures, health and mortality delta, for the universe of life and health insurance products. A life-cycle model of insurance choice simplifies to replicating the optimal health and mortality delta through a portfolio of insurance products. We estimate the model to explain the observed variation in health and mortality delta implied by the ownership of life insurance, annuities including private pensions, and long-term care insurance in the Health and Retirement Study. For the median household aged 51 to 57, the lifetime welfare cost of market incompleteness and suboptimal choice is 3.2% of total wealth.
Handle: RePEc:nbr:nberwo:17325
Template-Type: ReDIF-Paper 1.0
Title: Cycles of Wage Discrimination
Classification-JEL: E29; J71
Author-Name: Jeff Biddle
Author-Person: pbi98
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: LS
Number: 17326
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17326
File-URL: http://www.nber.org/papers/w17326.pdf
File-Format: application/pdf
Publication-Status: published as "Wage discrimination over the business cycle." Jeff E Biddle and Daniel S Hamermesh. Journal of Labor Policy, 2013 2:7
Abstract: Using CPS data from 1979-2009 we examine how cyclical downturns and industry-specific demand shocks affect wage differentials between white non-Hispanic males and women, Hispanics and African-Americans. Women's and Hispanics' relative earnings are harmed by negative shocks, while the earnings disadvantage of African-Americans may drop with negative shocks. Negative shocks also appear to increase the earnings disadvantage of bad-looking workers. A theory of job search suggests two opposite-signed mechanisms that affect these wage differentials. It suggests greater absolute effects among job-movers, which is verified using the longitudinal component of the CPS.
Handle: RePEc:nbr:nberwo:17326
Template-Type: ReDIF-Paper 1.0
Title: "Beauty Is the Promise of Happiness"?
Classification-JEL: C20; I30; J10
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Author-Name: Jason Abrevaya
Note: LS
Number: 17327
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17327
File-URL: http://www.nber.org/papers/w17327.pdf
File-Format: application/pdf
Publication-Status: published as "Beauty Is the Promise of Happiness"? European Economic Review, Volume 64 (2013): 351-368
Abstract: We measure the impact of individuals' looks on life satisfaction/happiness. Using five data sets, from the U.S., Canada, the U.K., and Germany, we construct beauty measures in different ways that allow placing lower bounds on the effects of beauty. Beauty raises happiness: A one standard-deviation change in beauty generates about 0.10 standard deviations of additional satisfaction/happiness among men, 0.12 among women. Accounting for a wide variety of covariates, particularly effects in the labor and marriage markets, including those that might be affected by differences in beauty, the impact among men is more than halved, among women slightly less than halved.
Handle: RePEc:nbr:nberwo:17327
Template-Type: ReDIF-Paper 1.0
Title: Rare Macroeconomic Disasters
Classification-JEL: E01; E44; G01; G12; G15
Author-Name: Robert J. Barro
Author-Person: pba251
Author-Name: José F. Ursua
Note: AP EFG ME PE
Number: 17328
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17328
File-URL: http://www.nber.org/papers/w17328.pdf
File-Format: application/pdf
Publication-Status: published as Robert J. Barro & Jos� F. Urs�a, 2012. "Rare Macroeconomic Disasters," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 83-109, 07.
Abstract: The potential for rare macroeconomic disasters may explain an array of asset-pricing puzzles. Our empirical studies of these extreme events rely on long-term data now covering 28 countries for consumption and 40 for GDP. A baseline model calibrated with observed peak-to-trough disaster sizes accords with the average equity premium with a reasonable coefficient of relative risk aversion. High stock-price volatility can be explained by incorporating time-varying long-run growth rates and disaster probabilities. Business-cycle models with shocks to disaster probability have implications for the cyclical behavior of asset returns and corporate leverage, and international versions may explain the uncovered-interest-parity puzzle. Richer models of disaster dynamics allow for transitions between normalcy and disaster, bring in post-crisis recoveries, and use the full time series on consumption. Potential future research includes applications to long-term economic growth and environmental economics and the use of stock-price options and other variables to gauge time-varying disaster probabilities.
Handle: RePEc:nbr:nberwo:17328
Template-Type: ReDIF-Paper 1.0
Title: Is Leisure a Normal Good? Evidence from the European Parliament
Classification-JEL: J22; J33; J4
Author-Name: Naci H. Mocan
Author-Person: pmo270
Author-Name: Duha Tore Altindag
Author-Person: pal449
Note: EH LE
Number: 17329
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17329
File-URL: http://www.nber.org/papers/w17329.pdf
File-Format: application/pdf
Publication-Status: published as “ Salaries and Work Effort: Evidence from the Europea n Parliament ,” with Duha Altı ndag . ( NBER Working Paper No: 17329) . The Economic Journal. December 2013. Vol. 123; pp. 1130 - 67.
Abstract: Prior to July 2009, salaries of the members of the European Parliament were paid by their home country and there were substantial salary differences between parliamentarians representing different EU countries. Starting in July 2009, the salary of each member of the Parliament is pegged to 38.5% of a European Court judge's salary, paid by the EU. This created an exogenous change in salaries, the magnitude and direction of which varied substantially between parliamentarians. Parliamentarians receive per diem compensation for each plenary session they attend, but salaries constitute unearned income as they are independent of attendance to the Parliament. Using detailed information on each parliamentarian of the European Parliament between 2004 and 2011 we show that an increase in salaries reduces attendance to plenary sessions and an increase in per diem compensation increases it. We also show that corruption in home country has a negative effect on attendance for seasoned members of the Parliament.
Handle: RePEc:nbr:nberwo:17329
Template-Type: ReDIF-Paper 1.0
Title: Information Aggregation, Investment, and Managerial Incentives
Classification-JEL: G10; G12; G30
Author-Name: Elias Albagli
Author-Name: Christian Hellwig
Author-Person: phe110
Author-Name: Aleh Tsyvinski
Note: AP CF EFG
Number: 17330
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17330
File-URL: http://www.nber.org/papers/w17330.pdf
File-Format: application/pdf
Abstract: We study the interplay of share prices and firm decisions when share prices aggregate and convey noisy information about fundamentals to investors and managers. First, we show that the informational feedback between the firm's share price and its investment decisions leads to a systematic premium in the firm's share price relative to expected dividends. Noisy information aggregation leads to excess price volatility, over-valuation of shares in response to good news, and undervaluation in response to bad news. By optimally increasing its exposure to fundamental risks when the market price conveys good news, the firm shifts its dividend risk to the upside, which amplifies the overvaluation and explains the premium. Second, we argue that explicitly linking managerial compensation to share prices gives managers an incentive to manipulate the firm's decisions to their own benefit. The managers take advantage of shareholders by taking excessive investment risks when the market is optimistic, and investing too little when the market is pessimistic. The amplified upside exposure is rewarded by the market through a higher share price, but is inefficient from the perspective of dividend value.
Handle: RePEc:nbr:nberwo:17330
Template-Type: ReDIF-Paper 1.0
Title: Asset Liquidity and International Portfolio Choice
Classification-JEL: E44; F15; F36; G11
Author-Name: Athanasios Geromichalos
Author-Person: pge140
Author-Name: Ina Simonovska
Author-Person: psi395
Note: IFM
Number: 17331
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17331
File-URL: http://www.nber.org/papers/w17331.pdf
File-Format: application/pdf
Publication-Status: published as Geromichalos, A., and I. Simonovska (2014): “Asset Liquidity and International Portfolio Choice,” Journal of Economic Theory, 151(1), 342-380.
Abstract: We study optimal portfolio choice in a two-country model where assets represent claims on future consumption and facilitate trade in markets with imperfect credit. Assuming that foreign assets trade at a cost, agents hold relatively more domestic assets. Consequently, agents have larger claims to domestic over foreign consumption. Moreover, foreign assets turn over faster than domestic assets because the former have desirable liquidity properties, but represent inferior saving tools. Our mechanism offers an answer to a long-standing puzzle in international finance: a positive relationship between consumption and asset home bias coupled with higher turnover rates of foreign over domestic assets.
Handle: RePEc:nbr:nberwo:17331
Template-Type: ReDIF-Paper 1.0
Title: Explaining Charter School Effectiveness
Classification-JEL: H75; I21; I22; I28; J24
Author-Name: Joshua D. Angrist
Author-Person: pan29
Author-Name: Parag A. Pathak
Author-Name: Christopher R. Walters
Note: CH ED LS PE
Number: 17332
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17332
File-URL: http://www.nber.org/papers/w17332.pdf
File-Format: application/pdf
Publication-Status: published as Joshua D. Angrist & Parag A. Pathak & Christopher R. Walters, 2013. "Explaining Charter School Effectiveness," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 1-27, October.
Abstract: Estimates using admissions lotteries suggest that urban charter schools boost student achievement, while charter schools in other settings do not. We explore student-level and school-level explanations for these differences using a large sample of Massachusetts charter schools. Our results show that urban charter schools boost achievement well beyond ambient non-charter levels (that is, the average achievement level for urban non-charter students), and beyond non-urban achievement in math. Student demographics explain some of these gains since urban charters are most effective for non-whites and low-baseline achievers. At the same time, non-urban charter schools are uniformly ineffective. Our estimates also reveal important school-level heterogeneity in the urban charter sample. A non-lottery analysis suggests that urban schools with binding, well-documented admissions lotteries generate larger score gains than under-subscribed urban charter schools with poor lottery records. We link the magnitude of charter impacts to distinctive pedagogical features of urban charters such as the length of the school day and school philosophy. The relative effectiveness of urban lottery-sample charters is accounted for by over-subscribed urban schools' embrace of the No Excuses approach to education.
Handle: RePEc:nbr:nberwo:17332
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Corporate Finance: An Updated Survey
Classification-JEL: G3; G30; G31; G32; G34; G35
Author-Name: Malcolm Baker
Author-Person: pba735
Author-Name: Jeffrey Wurgler
Author-Person: pwu8
Note: CF
Number: 17333
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17333
File-URL: http://www.nber.org/papers/w17333.pdf
File-Format: application/pdf
Publication-Status: published as Baker, Malcolm, and Jeffrey Wurgler. "Behavioral Corporate Finance: A Current Survey." In Handbook of the Economics of Finance. Vol. 2, edited by George M. Constantinides, Milton Harris, and Rene M. Stulz. Handbooks in Economics. New York, NY: Elsevier, 2012.
Abstract: We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing. The managerial biases approach studies the direct effects of managers' biases and nonstandard preferences on their decisions. We review relevant psychology, economic theory and predictions, empirical challenges, empirical evidence, new directions such as behavioral signaling, and open questions.
Handle: RePEc:nbr:nberwo:17333
Template-Type: ReDIF-Paper 1.0
Title: What is the Chance that the Equity Premium Varies over Time? Evidence from Regressions on the Dividend-Price Ratio
Classification-JEL: C11; C22; G11; G17
Author-Name: Jessica A. Wachter
Author-Person: pwa346
Author-Name: Missaka Warusawitharana
Author-Person: pwa244
Note: AP
Number: 17334
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17334
File-URL: http://www.nber.org/papers/w17334.pdf
File-Format: application/pdf
Publication-Status: published as What is the chance that the equity premium varies over time? Evidence from regressions on the dividend-price ratio, with Missaka Warusawitharana, forthcoming, Journal of Econometrics.
Abstract: We examine the evidence on excess stock return predictability in a Bayesian setting in which the investor faces uncertainty about both the existence and strength of predictability. When we apply our methods to the dividend-price ratio, we find that even investors who are quite skeptical about the existence of predictability sharply modify their views in favor of predictability when confronted by the historical time series of returns and predictor variables. Correctly taking into account the stochastic properties of the regressor has a dramatic impact on inference, particularly over the 2000-2005 period.
Handle: RePEc:nbr:nberwo:17334
Template-Type: ReDIF-Paper 1.0
Title: Country Size, International Trade, and Aggregate Fluctuations in Granular Economies
Classification-JEL: F12; F15; F41
Author-Name: Julian di Giovanni
Author-Person: pdi67
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Note: IFM ITI
Number: 17335
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17335
File-URL: http://www.nber.org/papers/w17335.pdf
File-Format: application/pdf
Publication-Status: published as Julian di Giovanni & Andrei A. Levchenko, 2012. "Country Size, International Trade, and Aggregate Fluctuations in Granular Economies," Journal of Political Economy, University of Chicago Press, vol. 120(6), pages 1083 - 1132.
Abstract: This paper proposes a new mechanism by which country size and international trade affect macroeconomic volatility. We study a multi-country, multi-sector model with heterogeneous firms that are subject to idiosyncratic firm-specific shocks. When the distribution of firm sizes follows a power law with an exponent close to -1, the idiosyncratic shocks to large firms have an impact on aggregate output volatility. We explore the quantitative properties of the model calibrated to data for the 50 largest economies in the world. Smaller countries have fewer firms, and thus higher volatility. The model performs well in matching this pattern both qualitatively and quantitatively: the rate at which macroeconomic volatility decreases in country size in the model is very close to what is found in the data. Opening to trade increases the importance of large firms to the economy, thus raising macroeconomic volatility. Our simulation exercise shows that the contribution of trade to aggregate fluctuations depends strongly on country size: in the largest economies in the world, such as the U.S. or Japan, international trade increases volatility by only 1.5-3.5%. By contrast, trade increases aggregate volatility by some 15-20% in a small open economy, such as Denmark or Romania.
Handle: RePEc:nbr:nberwo:17335
Template-Type: ReDIF-Paper 1.0
Title: Ethnic Innovation and U.S. Multinational Firm Activity
Classification-JEL: F22; F23; J44; J61; O31; O32; O33; O57
Author-Name: C. Fritz Foley
Author-Name: William R. Kerr
Author-Person: pke127
Note: ITI LS PR
Number: 17336
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17336
File-URL: http://www.nber.org/papers/w17336.pdf
File-Format: application/pdf
Publication-Status: published as With William R. Kerr, “Ethnic Innovation and U.S. Multinational Activity,” Management Science , Vol. 59, No. 7, pp. 1529-1544, 2013.
Abstract: This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity are associated with increases in the share of that firm's affiliate activity in their native countries. Ethnic innovators also appear to facilitate the disintegration of innovative activity across borders and to allow U.S. multinationals to form new affiliates abroad without the support of local joint venture partners. Thus, this paper points out that immigration can enhance the competitiveness of multinational firms.
Handle: RePEc:nbr:nberwo:17336
Template-Type: ReDIF-Paper 1.0
Title: Dressed for Success? The Effect of School Uniforms on Student Achievement and Behavior
Classification-JEL: I21
Author-Name: Elisabetta Gentile
Author-Name: Scott A. Imberman
Author-Person: pim24
Note: CH ED LS
Number: 17337
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17337
File-URL: http://www.nber.org/papers/w17337.pdf
File-Format: application/pdf
Publication-Status: published as Gentile, Elisabetta & Imberman, Scott A., 2012. "Dressed for success? The effect of school uniforms on student achievement and behavior," Journal of Urban Economics, Elsevier, vol. 71(1), pages 1-17.
Abstract: Uniform use in public schools is rising, but we know little about how they affect students. Using a unique dataset from a large urban school district in the southwest United States, we assess how uniforms affect behavior, achievement and other outcomes. Each school in the district determines adoption independently, providing variation over schools and time. By including student and school fixed-effects we find evidence that uniform adoption improves attendance in secondary grades, while in elementary schools they generate large increases in teacher retention.
Handle: RePEc:nbr:nberwo:17337
Template-Type: ReDIF-Paper 1.0
Title: A Model of the Consumption Response to Fiscal Stimulus Payments
Classification-JEL: D31; D91; E21; H31
Author-Name: Greg Kaplan
Author-Person: pka660
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG PE
Number: 17338
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17338
File-URL: http://www.nber.org/papers/w17338.pdf
File-Format: application/pdf
Publication-Status: published as Kaplan, Greg and Giovanni Violante (2014). "A Model of the Consumption Response to Fiscal Stimulus Payments." Econometrica, 82(4), 1199-1239.
Abstract: A wide body of empirical evidence finds that around 25 percent of fiscal stimulus payments (e.g., tax rebates) are spent on nondurable household consumption in the quarter that they are received. To interpret this fact, we develop a structural economic model where households can hold two assets: a low-return liquid asset (e.g., cash, checking account) and a high-return illiquid asset that carries a transaction cost (e.g., housing, retirement account). The optimal life-cycle pattern of portfolio choice implies that many households in the model are "wealthy hand-to-mouth": they hold little or no liquid wealth despite owning sizeable quantities of illiquid assets. They therefore display large propensities to consume out of additional transitory income, and small propensities to consume out of news about future income. We document the existence of such households in data from the Survey of Consumer Finances. A version of the model parameterized to the 2001 tax rebate episode yields consumption responses to fiscal stimulus payments that are in line with the evidence, and an order of magnitude larger than in the standard "one-asset" framework. The model's nonlinearities with respect to the size of the rebate, its degree of phasing-out, and aggregate economic conditions have implications for policy design.
Handle: RePEc:nbr:nberwo:17338
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy, Retirement Planning, and Household Wealth
Classification-JEL: D12; D91; J26
Author-Name: Maarten van Rooij
Author-Person: pva83
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Rob J. Alessie
Author-Person: pal293
Note: AG
Number: 17339
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17339
File-URL: http://www.nber.org/papers/w17339.pdf
File-Format: application/pdf
Publication-Status: published as Maarten C.J. van Rooij & Annamaria Lusardi & Rob J.M. Alessie, 2012. "Financial Literacy, Retirement Planning and Household Wealth," Economic Journal, Royal Economic Society, vol. 122(560), pages 449-478, 05.
Abstract: There is ample empirical evidence documenting widespread financial illiteracy and limited pension knowledge. At the same time, the distribution of wealth is widely dispersed and many workers arrive on the verge of retirement with few or no personal assets. In this paper, we investigate the relationship between financial literacy and household net worth, relying on comprehensive measures of financial knowledge designed for a special module of the Dutch Central Bank Household Survey (DHS). Our findings provide evidence of a strong positive association between financial literacy and net worth, even after controlling for many determinants of wealth. Moreover, we discuss two channels through which financial literacy might facilitate wealth accumulation. First, financial knowledge increases the likelihood of investing in the stock market, allowing individuals to benefit from the equity premium. Second, financial literacy is positively related to retirement planning, and the development of a savings plan has been shown to boost wealth. Overall, financial literacy, both directly and indirectly, is found to have a strong link to household wealth.
Handle: RePEc:nbr:nberwo:17339
Template-Type: ReDIF-Paper 1.0
Title: Propose with a Rose? Signaling in Internet Dating Markets
Classification-JEL: C78; C93; J0
Author-Name: Soohyung Lee
Author-Name: Muriel Niederle
Author-Person: pni95
Author-Name: Hye-Rim Kim
Author-Person: ple235
Author-Name: Woo-Keum Kim
Note: LS
Number: 17340
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17340
File-URL: http://www.nber.org/papers/w17340.pdf
File-Format: application/pdf
Publication-Status: published as Soohyung Lee & Muriel Niederle, 2015. "Propose with a rose? Signaling in internet dating markets," Experimental Economics, Springer, vol. 18(4), pages 731-755, December.
Abstract: The large literature on costly signaling and the somewhat scant literature on preference signaling had varying success in showing the effectiveness of signals. We use a field experiment to show that even when everyone can send a signal, signals are free and the only costs are opportunity costs, sending a signal increases the chances of success. In an online dating experiment, participants can attach "virtual roses" to a proposal to signal special interest in another participant. We find that attaching a rose to an offer substantially increases the chance of acceptance. This effect is driven by an increase in the acceptance rate when the offer is made to a participant who is less desirable than the proposer. Furthermore, participants endowed with more roses have more of their offers accepted than their counterparts.
Handle: RePEc:nbr:nberwo:17340
Template-Type: ReDIF-Paper 1.0
Title: Deregulation, Consolidation, and Efficiency: Evidence from U.S. Nuclear Power
Classification-JEL: D21; D40; L51; L94; Q48
Author-Name: Lucas W. Davis
Author-Person: pda367
Author-Name: Catherine Wolfram
Note: EEE IO PR
Number: 17341
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17341
File-URL: http://www.nber.org/papers/w17341.pdf
File-Format: application/pdf
Publication-Status: published as Lucas W. Davis & Catherine Wolfram, 2012. "Deregulation, Consolidation, and Efficiency: Evidence from US Nuclear Power," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 194-225, October.
Abstract: For the first four decades of its existence the U.S. nuclear power industry was run by regulated utilities, with most companies owning only one or two reactors. Beginning in the late 1990s electricity markets in many states were deregulated and almost half of the nation's 103 reactors were sold to independent power producers selling power in competitive wholesale markets. Deregulation has been accompanied by substantial market consolidation and today the three largest companies control more than one-third of all U.S. nuclear capacity. We find that deregulation and consolidation are associated with a 10 percent increase in operating efficiency, achieved primarily by reducing the frequency and duration of reactor outages. At average wholesale prices the value of this increased efficiency is approximately $2.5 billion annually and implies an annual decrease of almost 40 million metric tons of carbon dioxide emissions.
Handle: RePEc:nbr:nberwo:17341
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty Equivalents: Testing the Limits of the Independence Axiom
Classification-JEL: D81
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Charles Sprenger
Note: PE
Number: 17342
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17342
File-URL: http://www.nber.org/papers/w17342.pdf
File-Format: application/pdf
Abstract: There is convincing experimental evidence that Expected Utility fails, but when does it fail, how severely, and for what fraction of subjects? We explore these questions using a novel measure we call the uncertainty equivalent. We find Expected Utility performs well away from certainty, but fails near certainty for about 40% of subjects. Comparing non-Expected Utility theories, we strongly reject Prospect Theory probability weighting, we support disappointment aversion if amended to allow violations of stochastic dominance, but find the u-v model of a direct preference for certainty the most parsimonious approach.
Handle: RePEc:nbr:nberwo:17342
Template-Type: ReDIF-Paper 1.0
Title: Reexamining the Impact of Family Planning Programs on U.S. Fertility: Evidence from the War on Poverty and the Early Years of Title X
Classification-JEL: J1; J13; J18
Author-Name: Martha J. Bailey
Author-Person: pba669
Note: CH DAE LS
Number: 17343
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17343
File-URL: http://www.nber.org/papers/w17343.pdf
File-Format: application/pdf
Publication-Status: published as Martha J. Bailey, 2012. "Reexamining the Impact of Family Planning Programs on US Fertility: Evidence from the War on Poverty and the Early Years of Title X," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 62-97, April.
Abstract: Almost 50 years after domestic U.S. family planning programs began, their effects on childbearing remain controversial. Using the county-level roll-out of these programs from 1964 to 1973, this paper reevaluates their shorter- and longer-term effects on U.S. fertility rates. I find that the introduction of family planning is associated with significant and persistent reductions in fertility driven both by falling completed childbearing and childbearing delay. Although federally-funded family planning accounted for a small portion of the post-baby boom U.S. fertility decline, the estimates imply that they reduced childbearing among poor women by 21 to 29 percent.
Handle: RePEc:nbr:nberwo:17343
Template-Type: ReDIF-Paper 1.0
Title: Managing a Liquidity Trap: Monetary and Fiscal Policy
Classification-JEL: E0; H5
Author-Name: Ivan Werning
Author-Person: pwe141
Note: EFG ME
Number: 17344
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17344
File-URL: http://www.nber.org/papers/w17344.pdf
File-Format: application/pdf
Abstract: I study monetary and fiscal policy in liquidity trap scenarios, where the zero bound on the nominal interest rate is binding. I work with a continuous-time version of the standard New Keynesian model. Without commitment, the economy suffers from deflation and depressed output. I show that, surprisingly, both are exacerbated with greater price flexibility. I examine monetary and fiscal policies that maximize utility for the agent in the model and refer to these as optimal throughout the paper. I find that the optimal interest rate is set to zero past the liquidity trap and jumps discretely up upon exit. Inflation may be positive throughout, so the absence of deflation is not evidence against a liquidity trap. Output, on the other hand, always starts below its efficient level and rises above it. I then study fiscal policy and show that, regardless of parameters that govern the value of "fiscal multipliers" during normal or liquidity trap times, at the start of a liquidity trap optimal spending is above its natural level. However, it declines over time and goes below its natural level. I propose a decomposition of spending according to "opportunistic" and "stimulus" motives. The former is defined as the level of government purchases that is optimal from a static, cost-benefit standpoint, taking into account that, due to slack resources, shadow costs may be lower during a slump; the latter measures deviations from the former. I show that stimulus spending may be zero throughout, or switch signs, depending on parameters. Finally, I consider the hybrid where monetary policy is discretionary, but fiscal policy has commitment. In this case, stimulus spending is typically positive and increasing throughout the trap.
Handle: RePEc:nbr:nberwo:17344
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Providing Peer Information on Retirement Savings Decisions
Classification-JEL: D03; D14; D83; D91
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Author-Name: Katherine L. Milkman
Author-Person: pmi292
Note: AG LS
Number: 17345
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17345
File-URL: http://www.nber.org/papers/w17345.pdf
File-Format: application/pdf
Publication-Status: published as JOHN BESHEARS & JAMES J. CHOI & DAVID LAIBSON & BRIGITTE C. MADRIAN & KATHERINE L. MILKMAN, 2015. "The Effect of Providing Peer Information on Retirement Savings Decisions," The Journal of Finance, vol 70(3), pages 1161-1201.
Abstract: We conducted a field experiment in a 401(k) plan to measure the effect of disseminating information about peer behavior on savings. Low-saving employees received simplified plan enrollment or contribution increase forms. A randomized subset of forms stated the fraction of age-matched coworkers participating in the plan or age-matched participants contributing at least 6% of pay to the plan. We document an oppositional reaction: the presence of peer information decreased the savings of non-participants who were ineligible for 401(k) automatic enrollment, and higher observed peer savings rates also decreased savings. Discouragement from upward social comparisons seems to drive this reaction.
Handle: RePEc:nbr:nberwo:17345
Template-Type: ReDIF-Paper 1.0
Title: Partial Identification of Heterogeneity in Preference Orderings Over Discrete Choices
Classification-JEL: C25; L0
Author-Name: Itai Sher
Author-Person: psh280
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Author-Name: Kyoo il Kim
Author-Person: pki456
Author-Name: Patrick Bajari
Note: IO TWP
Number: 17346
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17346
File-URL: http://www.nber.org/papers/w17346.pdf
File-Format: application/pdf
Abstract: We study a variant of a random utility model that takes a probability distribution over preference relations as its primitive. We do not model products using a space of observed characteristics. The distribution of preferences is only partially identified using cross-sectional data on varying budget sets. Imposing monotonicity in product characteristics does not restore full identification. Using a linear programming approach to partial identification, we show how to obtain bounds on probabilities of any ordering relation. We also do constructively point identify the proportion of consumers who prefer one budget set over one or two others. This result is useful for welfare. Panel data and special regressors are two ways to gain full point identification.
Handle: RePEc:nbr:nberwo:17346
Template-Type: ReDIF-Paper 1.0
Title: Trade Wars and Trade Talks with Data
Classification-JEL: F11; F12; F13
Author-Name: Ralph Ossa
Author-Person: pos139
Note: EFG ITI
Number: 17347
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17347
File-URL: http://www.nber.org/papers/w17347.pdf
File-Format: application/pdf
Publication-Status: published as Ossa, Ralph. 2014. "Trade Wars and Trade Talks with Data." American Economic Review, 104(12): 4104-46.
Abstract: How large are optimal tariffs? What tariffs would prevail in a worldwide trade war? How costly would be a breakdown of international trade policy cooperation? And what is the scope for future multilateral trade negotiations? I address these and other questions using a unified framework which nests traditional, new trade, and political economy motives for protection. I find that optimal tariffs average 62 percent, world trade war tariffs average 63 percent, the government welfare losses from a breakdown of international trade policy cooperation average 2.9 percent, and the possible government welfare gains from future multilateral trade negotiations average 0.5 percent. Optimal tariffs are tariffs which maximize a political economy augmented measure of real income.
Handle: RePEc:nbr:nberwo:17347
Template-Type: ReDIF-Paper 1.0
Title: Optimal Taxes on Fossil Fuel in General Equilibrium
Classification-JEL: E13; E17; E6; H23; Q28; Q4; Q5
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: John Hassler
Author-Name: Per Krusell
Author-Person: pkr102
Author-Name: Aleh Tsyvinski
Note: EEE EFG PE
Number: 17348
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17348
File-URL: http://www.nber.org/papers/w17348.pdf
File-Format: application/pdf
Publication-Status: published as Mikhail Golosov & John Hassler & Per Krusell & Aleh Tsyvinski, 2014. "Optimal Taxes on Fossil Fuel in General Equilibrium," Econometrica, Econometric Society, vol. 82(1), pages 41-88, 01.
Abstract: We analyze a dynamic stochastic general-equilibrium (DSGE) model with an externality through climate change from using fossil energy. A central result of our paper is an analytical derivation of a simple formula for the marginal externality damage of emissions. This formula, which holds under quite plausible assumptions, reveals that the damage is proportional to current GDP, with the proportion depending only on three factors: (i) discounting, (ii) the expected damage elasticity (how many percent of the output flow is lost from an extra unit of carbon in the atmosphere), and (iii) the structure of carbon depreciation in the atmosphere. Very importantly, future values of output, consumption, and the atmospheric CO2 concentration, as well as the paths of technology and population, and so on, all disappear from the formula. The optimal tax, using a standard Pigou argument, is then equal to this marginal externality. The simplicity of the formula allows the optimal tax to be easily parameterized and computed. Based on parameter estimates that rely on updated natural-science studies, we find that the optimal tax should be a bit higher than the median, or most well-known, estimates in the literature. We also show how the optimal taxes depend on the expectations and the possible resolution of the uncertainty regarding future damages. Finally, we compute the optimal and market paths for the use of energy and the corresponding climate change.
Handle: RePEc:nbr:nberwo:17348
Template-Type: ReDIF-Paper 1.0
Title: Gender Gaps across Countries and Skills: Supply, Demand and the Industry Structure
Classification-JEL: E24; J16; J31
Author-Name: Claudia Olivetti
Author-Person: pol63
Author-Name: Barbara Petrongolo
Author-Person: ppe484
Note: LS
Number: 17349
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17349
File-URL: http://www.nber.org/papers/w17349.pdf
File-Format: application/pdf
Publication-Status: published as “Gender Gaps across Countries and Skills: Supply, De mand and the Industry Structure, ” Review of Economic Dynamics , March 2014, http://dx.doi.org/10.1016/j.red.2014.03.001 , with Barbara Petrongolo .
Abstract: The gender wage gap varies widely across countries and across skill groups within countries. Interestingly, there is a positive cross-country correlation between the unskilled-to-skilled gender wage gap and the corresponding gap in hours worked. Based on a canonical supply and demand framework, this positive correlation would reveal the presence of net demand forces shaping gender differences in labor market outcomes across skills and countries. We use a simple multi-sector framework to illustrate how differences in labor demand for different inputs can be driven by both within-industry and between-industry factors. The main idea is that, if the service sector is more developed in the US than in continental Europe, and unskilled women tend to be over-represented in this sector, we expect unskilled women to suffer a relatively large wage and/or employment penalty in the latter than in the former. We find that, overall, the between-industry component of labor demand explains more than half of the total variation in labor demand between the US and the majority of countries in our sample, as well as one-third of the correlation between wage and hours gaps. The between-industry component is relatively more important in countries where the relative demand for unskilled females is lowest.
Handle: RePEc:nbr:nberwo:17349
Template-Type: ReDIF-Paper 1.0
Title: ABS Inflows to the United States and the Global Financial Crisis
Classification-JEL: F3; G1
Author-Name: Carol Bertaut
Author-Name: Laurie Pounder DeMarco
Author-Name: Steven B. Kamin
Author-Name: Ralph W. Tryon
Note: IFM
Number: 17350
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17350
File-URL: http://www.nber.org/papers/w17350.pdf
File-Format: application/pdf
Publication-Status: published as ABS Inflows to the United States and the Global Financial Crisis, Carol Bertaut, Laurie Pounder DeMarco, Steve Kamin, Ralph Tryon. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Publication-Status: published as Carol Bertaut & Laurie Pounder DeMarco & Steven Kamin & Ralph Tryon, 2012. "ABS inflows to the United States and the global financial crisis," Journal of International Economics, vol 88(2), pages 219-234.
Abstract: The "global saving glut" (GSG) hypothesis argues that the surge in capital inflows from emerging market economies to the United States led to significant declines in long-term interest rates in the United States and other industrial economies. In turn, these lower interest rates, when combined with both innovations and deficiencies of the U.S. credit market, are believed to have contributed to the U.S. housing bubble and to the buildup in financial vulnerabilities that led to the financial crisis. Because the GSG countries for the most part restricted their U.S. purchases to Treasuries and Agency debt, their provision of savings to ultimately risky subprime mortgage borrowers was necessarily indirect, pushing down yields on safe assets and increasing the appetite for alternative investments on the part of other investors. We present a more complete picture of how capital flows contributed to the crisis, drawing attention to the sizable inflows from European investors into U.S. private-label asset-backed securities (ABS), including mortgage-backed securities and other structured investment products. By adding to domestic demand for private-label ABS, substantial foreign acquisitions of these securities contributed to the decline in their spreads over Treasury yields. Through a combination of empirical estimation and model simulation, we verify that both GSG inflows into Treasuries and Agencies, as well as European acquisitions of ABS, played a role in contributing to downward pressures on U.S. interest rates.
Handle: RePEc:nbr:nberwo:17350
Template-Type: ReDIF-Paper 1.0
Title: Capital Flow Waves: Surges, Stops, Flight, and Retrenchment
Classification-JEL: F3
Author-Name: Kristin J. Forbes
Author-Person: pfo1
Author-Name: Francis E. Warnock
Note: CF IFM ITI
Number: 17351
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17351
File-URL: http://www.nber.org/papers/w17351.pdf
File-Format: application/pdf
Publication-Status: published as Forbes, Kristin J. & Warnock, Francis E., 2012. "Capital flow waves: Surges, stops, flight, and retrenchment," Journal of International Economics, Elsevier, vol. 88(2), pages 235-251.
Publication-Status: published as Capital Flow Waves: Surges, Stops, Flight, and Retrenchment, Kristin J. Forbes, Francis E. Warnock. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: This paper analyzes waves in international capital flows. We develop a new methodology for identifying episodes of extreme capital flow movements using data that differentiates activity by foreigners and domestics. We identify episodes of "surges" and "stops" (sharp increases and decreases, respectively, of gross inflows) and "flight" and "retrenchment" (sharp increases and decreases, respectively, of gross outflows). Our approach yields fundamentally different results than the previous literature that used measures of net flows. Global factors, especially global risk, are significantly associated with extreme capital flow episodes. Contagion, whether through trade, banking, or geography, is also associated with stop and retrenchment episodes. Domestic macroeconomic characteristics are generally less important, and we find little association between capital controls and the probability of having surges or stops driven by foreign capital flows. The results provide insights for different theoretical approaches explaining crises and capital flow volatility.
Handle: RePEc:nbr:nberwo:17351
Template-Type: ReDIF-Paper 1.0
Title: External Adjustment and the Global Crisis
Classification-JEL: F32; F34; F41; F42
Author-Name: Philip R. Lane
Author-Person: pla15
Author-Name: Gian Maria Milesi Ferretti
Author-Person: pmi28
Note: IFM
Number: 17352
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17352
File-URL: http://www.nber.org/papers/w17352.pdf
File-Format: application/pdf
Publication-Status: published as Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2012. "External adjustment and the global crisis," Journal of International Economics, Elsevier, vol. 88(2), pages 252-265.
Publication-Status: published as External Adjustment and the Global Crisis, Philip R. Lane, Gian Maria Milesi-Ferretti. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: The period preceding the global financial crisis was characterized by a substantial widening of current account imbalances across the world. Since the onset of the crisis, these imbalances have contracted to a significant extent. In this paper, we analyze the ongoing process of external adjustment in advanced economies and emerging markets. We find that countries whose pre-crisis current account balances were in excess of what could be explained by standard economic fundamentals have experienced the largest contractions in their external balance. We subsequently examine the contributions of real exchange rates, domestic demand and domestic output to the adjustment process (allowing for differences across exchange rate regimes) and find that external adjustment in deficit countries was achieved primarily through demand compression, rather than expenditure switching. Finally, we show that changes in other investment flows were the main channel of financial account adjustment, with official external assistance and ECB liquidity cushioning the exit of private capital flows for some countries.
Handle: RePEc:nbr:nberwo:17352
Template-Type: ReDIF-Paper 1.0
Title: The Financial Crisis and The Geography of Wealth Transfers
Classification-JEL: F3; F33; F41
Author-Name: Pierre-Olivier Gourinchas
Author-Person: pgo28
Author-Name: Hélène Rey
Author-Person: pre8
Author-Name: Kai Truempler
Note: AP IFM ME
Number: 17353
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17353
File-URL: http://www.nber.org/papers/w17353.pdf
File-Format: application/pdf
Publication-Status: published as Gourinchas, Pierre-Olivier & Rey, Hélène & Truempler, Kai, 2012. "The financial crisis and the geography of wealth transfers," Journal of International Economics, Elsevier, vol. 88(2), pages 266-283.
Publication-Status: published as The Financial Crisis and the Geography of Wealth Transfers, Pierre-Olivier Gourinchas, Hélène Rey, Kai Truempler. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: This paper studies the geography of wealth transfers during the 2008 global financial crisis. We construct valuation changes on bilateral external positions in equity, direct investment and portfolio debt at the height of the crisis to map who benefited and who lost on their external exposure. We find a very diverse set of fortunes governed by the structure of countries' external portfolios. In particular, we are able to relate the gains and losses on debt portfolios to the country's exposure to ABCP conduits and the extent of dollar shortage.
Handle: RePEc:nbr:nberwo:17353
Template-Type: ReDIF-Paper 1.0
Title: Leverage Across Firms, Banks, and Countries
Classification-JEL: F3
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Bent Sorensen
Author-Person: pso113
Author-Name: Sevcan Yesiltas
Author-Person: pye103
Note: IFM
Number: 17354
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17354
File-URL: http://www.nber.org/papers/w17354.pdf
File-Format: application/pdf
Publication-Status: published as Kalemli-Ozcan, Sebnem & Sorensen, Bent & Yesiltas, Sevcan, 2012. "Leverage across firms, banks, and countries," Journal of International Economics, Elsevier, vol. 88(2), pages 284-298.
Publication-Status: published as Leverage across Firms, Banks, and Countries, Sebnem Kalemli-Ozcan, Bent Sorensen, Sevcan Yesiltas. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: We present new stylized facts on bank and firm leverage for 2000-2009 using extensive internationally comparable micro level data from several countries. The main result is that there was very little buildup in leverage for the average non-financial firm and commercial bank before the crisis, but the picture was quite different for large commercial banks in the United States and for investment banks worldwide. We document the following patterns: a) there was an increase in leverage ratios of investment banks and financial firms during the early 2000s; b) there was no visible increase for commercial banks and non-financial firms; c) off balance-sheet items constitute a big fraction of assets, especially for large commercial banks in the United States; d) the leverage ratio is procyclical for investment banks and for large commercial banks in the United States; e) banks in emerging markets with tighter bank regulation and stronger investor protection experienced significantly less deleveraging during the crisis. These results show that excessive risk taking before the crisis was not easily detectable because the risk involved the quality rather than the amount of assets.
Handle: RePEc:nbr:nberwo:17354
Template-Type: ReDIF-Paper 1.0
Title: Liquidity management of U.S. global banks: Internal capital markets in the great recession
Classification-JEL: F3; G15; G21
Author-Name: Nicola Cetorelli
Author-Person: pce70
Author-Name: Linda S. Goldberg
Author-Person: pgo256
Note: IFM
Number: 17355
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17355
File-URL: http://www.nber.org/papers/w17355.pdf
File-Format: application/pdf
Publication-Status: published as Cetorelli, Nicola & Goldberg, Linda S., 2012. "Liquidity management of U.S. global banks: Internal capital markets in the great recession," Journal of International Economics, Elsevier, vol. 88(2), pages 299-311.
Publication-Status: published as Liquidity Management of US Global Banks: Internal Capital Markets in the Great Recession, Nicola Cetorelli, Linda S. Goldberg. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: The recent crisis highlighted the importance of globally active banks in linking markets. One channel for this linkage is through how these banks manage liquidity across their entire banking organization. We document that funds regularly flow between parent banks and their affiliates in diverse foreign markets. We use the Great Recession as an opportunity to identify the balance sheet shocks to parent banks in the United States, and then explore which foreign affiliate features are associated with those businesses being protected, for example their status as important locations in sourcing funding or as destinations for foreign investment activity. We show that distance from the parent organization lays a significant role in this allocation, where distance is bank-affiliate specific and depends on the ex ante relative importance of such locations as local funding pools and in their overall foreign investment strategies. These flows are a form of global interdependence previously unexplored in the literature on international shock transmission.
Handle: RePEc:nbr:nberwo:17355
Template-Type: ReDIF-Paper 1.0
Title: Bank Relationships, Business Cycles, and Financial Crises
Classification-JEL: F34; F36
Author-Name: Galina Hale
Author-Person: pha89
Note: IFM
Number: 17356
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17356
File-URL: http://www.nber.org/papers/w17356.pdf
File-Format: application/pdf
Publication-Status: published as Hale, Galina, 2012. "Bank relationships, business cycles, and financial crises," Journal of International Economics, Elsevier, vol. 88(2), pages 312-325.
Publication-Status: published as Bank Relationships, Business Cycles, and Financial Crises, Galina Hale. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: The importance of information asymmetries in the capital markets is commonly accepted as one of the main reasons for home bias in investment. We posit that effects of such asymmetries may be reduced through relationships between banks established through bank-to-bank lending and provide evidence to support this claim. To analyze dynamics of formation of such relationships during 1980-2009 time period, we construct a global banking network of 7938 banking institutions from 141 countries. We find that recessions and banking crises tend to have negative effects on the formation of new connections and that these effects are not the same for all countries or all banks. We also find that the global financial crisis of 2008-09 had a large negative impact on the formation of new relationships in the global banking network, especially by large banks that have been previously immune to effects of banking crises and recessions.
Handle: RePEc:nbr:nberwo:17356
Template-Type: ReDIF-Paper 1.0
Title: Capital Flows, Push versus Pull Factors and the Global Financial Crisis
Classification-JEL: F21; F30; G11
Author-Name: Marcel Fratzscher
Author-Person: pfr34
Note: IFM
Number: 17357
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17357
File-URL: http://www.nber.org/papers/w17357.pdf
File-Format: application/pdf
Publication-Status: published as Fratzscher, Marcel, 2012. "Capital flows, push versus pull factors and the global financial crisis," Journal of International Economics, Elsevier, vol. 88(2), pages 341-356.
Publication-Status: published as Capital Flows, Push versus Pull Factors and the Global Financial Crisis, Marcel Fratzscher. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: The causes of the 2008 collapse and subsequent surge in global capital flows remain an open and highly controversial issue. Employing a factor model coupled with a dataset of high-frequency portfolio capital flows to 50 economies, the paper finds that common shocks - key crisis events as well as changes to global liquidity and risk - have exerted a large effect on capital flows both in the crisis and in the recovery. However, these effects have been highly heterogeneous across countries, with a large part of this heterogeneity being explained by differences in the quality of domestic institutions, country risk and the strength of domestic macroeconomic fundamentals. Comparing and quantifying these effects shows that common factors ("push" factors) were overall the main drivers of capital flows during the crisis, while country-specific determinants ("pull" factors) have been dominant in accounting for the dynamics of global capital flows in 2009 and 2010, in particular for emerging markets.
Handle: RePEc:nbr:nberwo:17357
Template-Type: ReDIF-Paper 1.0
Title: On the International Transmission of Shocks: Micro-Evidence from Mutual Fund Portfolios
Classification-JEL: F3; F32; F36; G01; G1; G11; G15; G2; G23
Author-Name: Claudio Raddatz
Author-Person: pra328
Author-Name: Sergio L. Schmukler
Author-Person: psc64
Note: IFM
Number: 17358
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17358
File-URL: http://www.nber.org/papers/w17358.pdf
File-Format: application/pdf
Publication-Status: published as Raddatz, Claudio & Schmukler, Sergio L., 2012. "On the international transmission of shocks: Micro-evidence from mutual fund portfolios," Journal of International Economics, Elsevier, vol. 88(2), pages 357-374.
Publication-Status: published as On the International Transmission of Shocks: Micro-Evidence from Mutual Fund Portfolios, Claudio Raddatz, Sergio L. Schmukler. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: This paper uses micro-level data on mutual funds from different financial centers investing in equity and bonds to study how investors and managers behave and transmit shocks across countries. The paper finds that the volatility of mutual fund investments is driven quantitatively by both the underlying investors and fund managers through (i) injections/redemptions into each fund and (ii) managerial changes in country weights and cash. Both investors and managers respond to country returns and crises and adjust their investments substantially, for example, generating large reallocations during the global crisis. Their behavior tends to be pro-cyclical, reducing their exposure to countries during bad times and increasing it when conditions improve. Managers actively change country weights over time, although there is significant short-run pass-through from returns to these weights. Consequently, capital flows from mutual funds do not seem to have a stabilizing role and expose countries in their portfolios to foreign shocks.
Handle: RePEc:nbr:nberwo:17358
Template-Type: ReDIF-Paper 1.0
Title: Dollar Illiquidity and Central Bank Swap Arrangements During the Global Financial Crisis
Classification-JEL: E42; E58; F31; F33; F41; F42; G15; O24
Author-Name: Andrew K. Rose
Author-Person: pro71
Author-Name: Mark M. Spiegel
Author-Person: psp18
Note: IFM
Number: 17359
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17359
File-URL: http://www.nber.org/papers/w17359.pdf
File-Format: application/pdf
Publication-Status: published as Rose, Andrew K. & Spiegel, Mark M., 2012. "Dollar illiquidity and central bank swap arrangements during the global financial crisis," Journal of International Economics, Elsevier, vol. 88(2), pages 326-340.
Publication-Status: published as Dollar Illiquidity and Central Bank Swap Arrangements during the Global Financial Crisis, Andrew K. Rose, Mark M. Spiegel. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: While the global financial crisis was centered in the United States, it led to a surprising appreciation in the dollar, suggesting global dollar illiquidity. In response, the Federal Reserve partnered with other central banks to inject dollars into the international financial system. Empirical studies of the success of these efforts have yielded mixed results, in part because their timing is likely to be endogenous. In this paper, we examine the cross-sectional impact of these interventions. Theory consistent with dollar appreciation in the crisis suggests that their impact should be greater for countries that have greater exposure to the United States through trade and financial channels, less transparent holdings of dollar assets, and greater illiquidity difficulties. We examine these predictions for observed cross-sectional changes in CDS spreads, using a new proxy for innovations in perceived changes in sovereign risk based upon Google-search data. We find robust evidence that auctions of dollar assets by foreign central banks disproportionately benefited countries that were more exposed to the United States through either trade linkages or asset exposure. We obtain weaker results for differences in asset transparency or illiquidity. However, several of the important announcements concerning the international swap programs disproportionately benefited countries exhibiting greater asset opaqueness.
Handle: RePEc:nbr:nberwo:17359
Template-Type: ReDIF-Paper 1.0
Title: From the Financial Crisis to the Real Economy: Using Firm-level Data to Identify Transmission Channels
Classification-JEL: F3
Author-Name: Stijn Claessens
Author-Person: pcl16
Author-Name: Hui Tong
Author-Person: pto159
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: IFM
Number: 17360
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17360
File-URL: http://www.nber.org/papers/w17360.pdf
File-Format: application/pdf
Publication-Status: published as Claessens, Stijn & Tong, Hui & Wei, Shang-Jin, 2012. "From the financial crisis to the real economy: Using firm-level data to identify transmission channels," Journal of International Economics, Elsevier, vol. 88(2), pages 375-387.
Publication-Status: published as From the Financial Crisis to the Real Economy: Using Firm-level Data to Identify Transmission Channels, Stijn Claessens, Hui Tong, Shang-Jin Wei. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: Using accounting data for 7722 non-financial firms in 42 countries, we examine how the 2007-2009 crisis affected firm performance and how various linkages propagated shocks across borders. We isolate and compare effects from changes in external financing conditions, domestic demand, and international trade on firms' profits, sales and investment using both sectoral benchmarks and firm-specific sensitivities estimated prior to the crisis. We find that the crisis had a bigger negative impact on firms with greater sensitivity to demand and trade, particularly in countries more open to trade. Interestingly, financial openness appears to have made limited difference.
Handle: RePEc:nbr:nberwo:17360
Template-Type: ReDIF-Paper 1.0
Title: International Financial Crises and the Multilateral Response: What the Historical Record Shows
Classification-JEL: F0; F4
Author-Name: Bergljot Barkbu
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Ashoka Mody
Note: IFM
Number: 17361
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17361
File-URL: http://www.nber.org/papers/w17361.pdf
File-Format: application/pdf
Publication-Status: published as Financial Crises and the Multilateral Response: What the Historical Record Shows, Bergljot Barkbu, Barry Eichengreen, Ashoka Mody. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: We review the modern history of financial crises, providing a context for analyses of the world's recent bout of financial instability. Along with indicators of economic performance in the subject countries, we present a comprehensive description of multilateral rescue efforts spanning the last 30 years. We show that while emergency lending has grown, reliance on debt restructuring has declined. This leads us to ask what can be done to rebalance the management of debt problems toward a better mix of emergency lending and private sector burden sharing. Building on the literature on collective action clauses, we explore the idea of sovereign cocos, contingent debt securities that automatically reduce payment obligations in the event of debt-sustainability problems.
Handle: RePEc:nbr:nberwo:17361
Template-Type: ReDIF-Paper 1.0
Title: International Reserves and the Global Financial Crisis
Classification-JEL: F3; F31; F32; F33; F41
Author-Name: Kathryn M.E. Dominguez
Author-Person: pdo227
Author-Name: Yuko Hashimoto
Author-Name: Takatoshi Ito
Note: IFM
Number: 17362
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17362
File-URL: http://www.nber.org/papers/w17362.pdf
File-Format: application/pdf
Publication-Status: forthcoming in the Journal of International Economics
Publication-Status: published as International Reserves and the Global Financial Crisis, Kathryn M. E. Dominguez, Yuko Hashimoto, Takatoshi Ito. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: This study examines whether pre-crisis international reserve accumulations, as well as exchange rate and reserve policy decisions made during the global financial crisis, can help to explain cross-country differences in post-crisis economic performance. Our approach focuses not only on the total stock of official reserves held by countries, but also on the decisions by governments to purchase or sell reserve assets during the crisis period. We introduce new data made available through the IMF Special Data Dissemination Standard (SDDS) Reserve Template, which allow us to distinguish interest income and valuation changes in the stock of official reserves from the actively managed component of reserves. We use this novel data to gauge how (and whether) reserve accumulation policies influenced the economic and financial performance of countries during and after the global crisis. Our findings support the view that higher reserve accumulations prior to the crisis are associated with higher post-crisis GDP growth.
Handle: RePEc:nbr:nberwo:17362
Template-Type: ReDIF-Paper 1.0
Title: Managing Capital Inflows: The Role of Capital Controls and Prudential Policies
Classification-JEL: F21; F32
Author-Name: Mahvash S. Qureshi
Author-Person: pqu82
Author-Name: Jonathan D. Ostry
Author-Person: pos23
Author-Name: Atish R. Ghosh
Author-Person: pgh16
Author-Name: Marcos Chamon
Author-Person: pch173
Note: IFM
Number: 17363
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17363
File-URL: http://www.nber.org/papers/w17363.pdf
File-Format: application/pdf
Publication-Status: published as Tools for Managing Financial-Stability Risks from Capital Inflows, Jonathan D. Ostry, Atish R. Ghosh, Marcos Chamon, Mahvash S. Qureshi. in Global Financial Crisis, Engel, Forbes, and Frankel. 2012
Abstract: We examine whether macroprudential policies and capital controls can contribute to enhancing financial stability in the face of large capital inflows. We construct new indices of foreign currency (FX)-related prudential measures, domestic prudential measures, and financial-sector capital controls for 51 emerging market economies over the period 1995-2008. Our results indicate that both capital controls and FX-related prudential measures are associated with a lower proportion of FX lending in total domestic bank credit and a lower proportion of portfolio debt in total external liabilities. Other prudential policies appear to help restrain the intensity of aggregate credit booms. Experience from the global financial crisis suggests that prudential and capital control policies in place during the boom seem to have enhanced economic resilience during the bust.
Handle: RePEc:nbr:nberwo:17363
Template-Type: ReDIF-Paper 1.0
Title: Tiebout Sorting and Neighborhood Stratification
Classification-JEL: H41; I20; R21
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Robert McMillan
Note: ED PE
Number: 17364
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17364
File-URL: http://www.nber.org/papers/w17364.pdf
File-Format: application/pdf
Publication-Status: published as Tiebout Sorting and Neighborhood Stratification, Patrick Bayer, Robert McMillan. in Fiscal Federalism, Cullen and Gordon. 2012
Publication-Status: published as Bayer, Patrick & McMillan, Robert, 2012. "Tiebout sorting and neighborhood stratification," Journal of Public Economics, Elsevier, vol. 96(11), pages 1129-1143.
Abstract: Tiebout's classic 1956 paper has strong implications regarding stratification across and within jurisdictions, predicting in the simplest instance a hierarchy of internally homogeneous communities ordered by income. Typically, urban areas are less than fully stratified, and the question arises how much departures from standard Tiebout assumptions contribute to observed within-neighborhood mixing. This paper quantifies the separate effects on neighborhood stratification of employment geography (via costly commuting) and preferences for housing attributes. It does so using an equilibrium sorting model, estimated with rich Census micro-data. Simulations based on the model using credible preference estimates show that counterfactual reductions in commuting costs lead to marked increases in racial and education segregation and, to a lesser degree, increases in income segregation, given that households now find it easier to locate in neighborhoods with like households. While turning off preferences for housing characteristics increases racial segregation, especially for blacks, doing so reduces income segregation, indicating that heterogeneity in the housing stock serves to stratify households based on ability-to-pay. Further, we show that differences in housing also help accentuate differences in the consumption of local amenities.
Handle: RePEc:nbr:nberwo:17364
Template-Type: ReDIF-Paper 1.0
Title: The WTO Government Procurement Agreement and Its Impacts on Trade
Classification-JEL: F0; F1; F13
Author-Name: Hejing Chen
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 17365
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17365
File-URL: http://www.nber.org/papers/w17365.pdf
File-Format: application/pdf
Abstract: This paper assesses the impacts of the WTO Government Procurement Agreement (GPA) on trade in both goods and services among members using a gravity model applied to a panel dataset covering 20 OECD countries over the period 1996-2008 for trade in goods and 1999-2008 for trade in services. The agreement dates from 1996 and covers 41 (mainly OECD) countries (/areas). China is now negotiating possible membership. Little has been written on the GPA which is a plurilateral agreement covering both goods and services. It mutually extends commitments only to signatories, but has commitments going beyond those in the earlier GATT procurement code. Government service markets are large, and trade in these also has spillover effects on trade in services and goods. Results suggest that GPA membership has a positive impact on trade in both goods and services between parties as well as on outward foreign affiliate service sales. The number of GPA parties has a small marginal negative effect on trade in goods. Service exports also increase slightly with more parties participating in the GPA. The growth of government procurement contracts above the threshold under the GPA also fosters service imports, exports and outward foreign affiliate sales.
Handle: RePEc:nbr:nberwo:17365
Template-Type: ReDIF-Paper 1.0
Title: Gains and Losses from Potential Bilateral US-China Trade Retaliation
Classification-JEL: F00; F1
Author-Name: Yan Dong
Author-Person: pdo210
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 17366
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17366
File-URL: http://www.nber.org/papers/w17366.pdf
File-Format: application/pdf
Publication-Status: published as Dong, Yan & Whalley, John, 2012. "Gains and losses from potential bilateral USâChina trade retaliation," Economic Modelling, Elsevier, vol. 29(6), pages 2226-2236.
Abstract: Two closely related numerical general equilibrium models of world trade are used to analyze the potential consequences of US-China bilateral retaliation on trade flows and welfare. One is a conventional Armington trade model with five regions, the US, China, EU, Japan and Rest of the World, and calibrated to a global 2009 micro consistent data set. The other is a modified version of this model with monetary non neutrals and including China's trade surplus as an endogenous variable. Who may gain or loss from global trade conflicts spawned by adjustment pressures in the post crisis world is much debated. In a US-China trade conflict, Europe and Japan would seem gainers from preferential access to US and Chinese markets. The loss of markets would hurt the US, but moving closer to an optimal tariff could be the source of terms of trade gains. And the ease of substitution across trading partners practices would determine costs for China. Results from the conventional model suggest that retaliation between the two countries can be welfare improving for US as it substitutes expenditures into own goods and improve its terms of trade with non retaliatory regions, while China and non retaliatory regions maybe adversely affected. Results in the endogenous trade surplus model from the central case model specification ,however, suggest that both the US and the EU (the deficit regions) have welfare losses in most cases, while the surplus region, China, and the ROW have welfare gains. In both models, when the bilateral tariff rates are very high, gains accrue to the EU and Japan from trade diversion if the substitutions elasticities of imports are high. Costs will are borne by the US and China in lost exports, lowered terms of trade and adjustment costs at home.
Handle: RePEc:nbr:nberwo:17366
Template-Type: ReDIF-Paper 1.0
Title: Trading and Enforcing Patent Rights
Classification-JEL: H24; K41; O32; O34
Author-Name: Alberto Galasso
Author-Person: pga404
Author-Name: Mark Schankerman
Author-Name: Carlos J. Serrano
Author-Person: pse144
Note: IO LE PR
Number: 17367
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17367
File-URL: http://www.nber.org/papers/w17367.pdf
File-Format: application/pdf
Publication-Status: published as Galasso A ., M. Schankerman and C. Serrano, 2013 , Trading and Enforcing Patent Rights , RAND Journal of Economics 44, 275 - 312 .
Abstract: We study how the market for innovation affects enforcement of patent rights. Conventional wisdom associates the gains from trade with comparative advantage in manufacturing or marketing. We show that these gains imply that patent transactions should increase litigation risk. We identify a new source of gains from trade, comparative advantage in patent enforcement, and show that transactions driven by this motive should reduce litigation. Using data on trade and litigation of individually-owned patents in the U.S., we exploit variation in capital gains tax rates as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that reallocation of patent rights reduces litigation risk on average, but the impact is heterogeneous. We show that patents with larger potential gains from trade are more likely to change ownership, suggesting that the market for innovation is efficient, and the impact of trade on litigation depends on characteristics of the transactions.
Handle: RePEc:nbr:nberwo:17367
Template-Type: ReDIF-Paper 1.0
Title: Managerial Attributes and Executive Compensation
Classification-JEL: C23; G22; G3; J24; J31; J33
Author-Name: John R. Graham
Author-Name: Si Li
Author-Name: Jiaping Qiu
Author-Person: pqi44
Note: TWP
Number: 17368
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17368
File-URL: http://www.nber.org/papers/w17368.pdf
File-Format: application/pdf
Publication-Status: published as Graham, John R., Si Li, and Jiaping Qiu, 2011, Managerial Attributes and Executive Compensation, Review of Financial Studies 24, 1944-1979.
Abstract: We study the role of firm- and manager-specific heterogeneities in executive compensation. We decompose the variation in executive compensation and find that time invariant firm and especially manager fixed effects explain a majority of the variation in executive pay. We then show that in many settings, it is important to include fixed effects to mitigate potential omitted variable bias. Furthermore, we find that compensation fixed effects are significantly correlated with management styles (i.e., manager fixed effects in corporate policies). Finally, the method used in the paper has a number of potential applications in financial economics.
Handle: RePEc:nbr:nberwo:17368
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Housing and Neighborhood Conditions on Child Mortality
Classification-JEL: H75; I12; R38
Author-Name: Brian A. Jacob
Author-Name: Jens Ludwig
Author-Name: Douglas L. Miller
Author-Person: pmi179
Note: CH EH PE
Number: 17369
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17369
File-URL: http://www.nber.org/papers/w17369.pdf
File-Format: application/pdf
Publication-Status: published as Jacob, Brian A. & Ludwig, Jens & Miller, Douglas L., 2013. "The effects of housing and neighborhood conditions on child mortality," Journal of Health Economics, Elsevier, vol. 32(1), pages 195-206.
Abstract: In this paper we estimate the causal effects on child mortality from moving into less distressed neighborhood environments. We match mortality data to information on every child in public housing that applied for a housing voucher in Chicago in 1997 (N=11,848). Families were randomly assigned to the voucher wait list, and only some families were offered vouchers. The odds ratio for the effects of being offered a housing voucher on overall mortality rates is equal to 1.11 for all children (95% CI 0.54 to 2.10), 1.50 for boys (95% CI 0.72 to 2.89) and 0.00 for girls - that is, the voucher offer is perfectly protective for mortality for girls (95% CI 0 to 0.79). Our paper also addresses a methodological issue that may arise in studies of low-probability outcomes - perfect prediction by key explanatory variables.
Handle: RePEc:nbr:nberwo:17369
Template-Type: ReDIF-Paper 1.0
Title: Capital Allocation and Delegation of Decision-Making Authority within Firms
Classification-JEL: G30; G32; G34; L20; L22
Author-Name: John R. Graham
Author-Name: Campbell R. Harvey
Author-Person: pha102
Author-Name: Manju Puri
Author-Person: ppu153
Note: CF
Number: 17370
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17370
File-URL: http://www.nber.org/papers/w17370.pdf
File-Format: application/pdf
Publication-Status: published as Graham, John R. & Harvey, Campbell R. & Puri, Manju, 2015. "Capital allocation and delegation of decision-making authority within firms," Journal of Financial Economics, Elsevier, vol. 115(3), pages 449-470.
Abstract: We survey more than 1,000 CEOs and CFOs to understand how capital is allocated, and decision-making authority is delegated, within firms. We find that CEOs are least likely to share or delegate decision-making authority in mergers and acquisitions, relative to delegation of capital structure, payout, investment, and capital allocation decisions. We also find that CEOs are more likely to delegate decision authority when the firm is large or complex. Delegation is less likely when the CEO is particularly knowledgeable about a project, when the CEO has an MBA degree or long tenure, and when the CEO's pay is tilted towards incentive compensation. We study capital allocation in detail and learn that most companies allocate funds across divisions using the net present value rule, the reputation of the divisional manager, the timing of a project‟s cash flows, and senior management's "gut feel." Corporate politics and corporate socialism are more important allocation criteria in foreign countries than in the U.S.
Handle: RePEc:nbr:nberwo:17370
Template-Type: ReDIF-Paper 1.0
Title: Comparative Effectiveness Research, COURAGE, and Technological Abandonment
Classification-JEL: I11; O33
Author-Name: David H. Howard
Author-Name: Yu-Chu Shen
Note: EH
Number: 17371
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17371
File-URL: http://www.nber.org/papers/w17371.pdf
File-Format: application/pdf
Publication-Status: published as Howard, D. and Shen, Y. 2012. Comparative Effectiveness Research, Technological Abandonment, and Health Care Spending. Advances in Health Economics and Health Services Research, Volume 23: 103-121.
Abstract: When a major study finds that a widely used medical treatment is no better than a less expensive alternative, do physicians stop using it? Policymakers hope that comparative effectiveness research will identify less expensive substitutes for widely-used treatments, but physicians may be reluctant to abandon profitable therapies. We examine the impact of the COURAGE trial, which found that medical therapy is as effective as percutaneous coronary intervention (PCI) for patients with stable angina, on practice patterns. Using hospital discharge data from US community, Veterans Administration, and English hospitals, we detect a moderate decline in PCI volume post-COURAGE. However, many patients with stable angina continue to receive PCI. We do not find differences in PCI volume trends by reimbursement scheme or hospitals' teaching status, ownership, or degree of vertical integration.
Handle: RePEc:nbr:nberwo:17371
Template-Type: ReDIF-Paper 1.0
Title: Labor Reallocation in Response to Trade Reform
Classification-JEL: F14; F16; J23; J63
Author-Name: Naércio Aquino Menezes-Filho
Author-Name: Marc-Andreas Muendler
Author-Person: pmu63
Note: LS
Number: 17372
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17372
File-URL: http://www.nber.org/papers/w17372.pdf
File-Format: application/pdf
Abstract: Tracking individual workers across jobs after Brazil's trade liberalization in the 1990s shows that tariff cuts trigger worker displacements, but neither exporters nor comparative-advantage sectors absorb trade-displaced labor. On the contrary, exporters separate from significantly more and hire fewer workers than the average employer. Trade liberalization increases transitions to services, unemployment, and out of the labor force. Results are consistent with faster labor productivity growth than sales expansions so that output shifts to more productive firms while labor does not. Higher rates of failed reallocations and longer durations of complete reallocations result, associated with a costly incidence of idle resources.
Handle: RePEc:nbr:nberwo:17372
Template-Type: ReDIF-Paper 1.0
Title: Estimating Lost Output from Allocative Inefficiency, with an Application to Chile and Firing Costs
Classification-JEL: D24; J65; O47; O54
Author-Name: Amil Petrin
Author-Name: Jagadeesh Sivadasan
Author-Person: psi292
Note: IO LS PR
Number: 17373
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17373
File-URL: http://www.nber.org/papers/w17373.pdf
File-Format: application/pdf
Publication-Status: published as Amil Petrin & Jagadeesh Sivadasan, 2013. "Estimating Lost Output from Allocative Inefficiency, with an Application to Chile and Firing Costs," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 286-301, March.
Abstract: We propose a new measure of allocative efficiency based on unrealized increases in aggregate productivity growth. We show that the difference in the value of the marginal product of an input and its marginal cost at any plant - the plant-input "gap" - is exactly equal to the change in aggregate output that would occur if that plant changed that input's use by one unit. The mean absolute gap across plants for any input can then be interpreted as an approximation to the gain to society that would occur if every plant had a one-unit change in that input in the efficient direction, holding everything else constant. We show how to estimate this average gap using plant-level data for 1982-1994 from Chilean manufacturing, a sector largely viewed as being one of South America's least distorted. We find the gaps for blue and white collar labor are quite large in absolute value and imply that a one-unit move in the correct direction for blue collar would increase aggregate value added by almost 0.5%. We also find that the gaps for blue and white collar workers are increasing over time while the gaps for materials and electricity are not. The timing of the two separate increases in firing costs and the sharpest increases in the labor gaps is suggestive that the increases in average within-firm labor gaps may be related to the increases in severance pay.
Handle: RePEc:nbr:nberwo:17373
Template-Type: ReDIF-Paper 1.0
Title: Anatomy of the Beginning of the Housing Boom: U.S. Neighborhoods and Metropolitan Areas, 1993-2009
Classification-JEL: R11; R21; R31
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Joseph Gyourko
Author-Person: pgy3
Note: PE
Number: 17374
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17374
File-URL: http://www.nber.org/papers/w17374.pdf
File-Format: application/pdf
Abstract: We provide novel estimates of the timing, magnitudes, and potential determinants of the start of the last housing boom across American neighborhoods and metropolitan areas (MSAs) using a rich new micro data set containing 23 million housing transactions in 94 metropolitan areas between 1993 and 2009. We also match transactions data with loan information, enabling us to observe household income and other demographics for each neighborhood. Five major findings are reported. First, the start of the boom was not a single, national event. Booms, which are defined by the global breakpoint in an area's price appreciation series, begin at different times over a decade-long period from 1995-2006. Second, the magnitude of the initial jump in house price appreciation at the start of the boom is economically, not just statistically, significant. On average, log house prices are over four points higher during the first year of the boom relative to the previous twelve month period for both MSAs and neighborhoods. There is no evidence that price growth was trending up prior to the start of the boom. Third, local income is the only potential demand shifter found that also had an economically and statistically significant change around the time that local housing booms began. Contemporaneous local income growth is large enough to account for half or more of the initial jump in house price appreciation. While these estimates indicate that the beginning of the boom was fundamentally justified on average, they do not imply that what followed was rational. Fourth, there is important heterogeneity in that result. Income growth is large and jumps at the same time as house price appreciation in areas that boomed early and have inelastic supplies of housing, but not in late booming areas and those with elastic supply sides. Fifth and finally, none of the demand-shifters analyzed show positive pre-trends, but some such as the share of subprime lending, do lag the beginning of the boom. This suggests that key players in the lending market more responded to the boom, rather than caused it to start.
Handle: RePEc:nbr:nberwo:17374
Template-Type: ReDIF-Paper 1.0
Title: Do Religious Proscriptions Matter? Evidence from a Theory-Based Test
Classification-JEL: H23; I1; Z12
Author-Name: Daniel M. Hungerman
Author-Person: phu114
Note: CH EH PE
Number: 17375
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17375
File-URL: http://www.nber.org/papers/w17375.pdf
File-Format: application/pdf
Publication-Status: published as “Do Religious Proscriptions Matter? Evidence from a Theory-Based Test,” forthcoming at the Journal of Human Resources
Abstract: A large literature shows that religious participation is associated with a wide range of behaviors and outcomes, but what drives this association is unclear. On the one hand, this association may stem from correlations in preferences, where those with tastes for religion coincidentally have particular tastes for other behaviors as well. Alternately, religious participation may directly affect behavior; for example many religious organizations impose rules and proscriptions on their members and these rules may affect members' decisions. Using the canonical economic model of religiosity, I develop an empirical test to investigate the importance of religious proscriptions on behavior. Several empirical applications of this test are conducted; the results indicate a strong role for religious proscriptions in determining behavior. The test developed here does not require an instrumental variable for religion and could be applied to the study of criminal gangs, terrorist organizations, fraternities, communes, political groups, and other "social clubs."
Handle: RePEc:nbr:nberwo:17375
Template-Type: ReDIF-Paper 1.0
Title: Embodied Carbon Tariffs
Classification-JEL: F18; H23; Q54; Q56
Author-Name: Christoph Böhringer
Author-Person: pbh106
Author-Name: Jared C. Carbone
Author-Person: pca579
Author-Name: Thomas F. Rutherford
Author-Person: pru142
Note: EEE
Number: 17376
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17376
File-URL: http://www.nber.org/papers/w17376.pdf
File-Format: application/pdf
Publication-Status: published as Christoph Böhringer & Jared Carbone & Thomas F. Rutherford, 2016. "Embodied Carbon Tariffs," The Scandinavian Journal of Economics, .
Abstract: In a world where the prospects of a global agreement to control greenhouse gas emissions are bleak, the idea of using trade policy as an implicit regulation of foreign emission sources has gained many supporters in countries contemplating unilateral climate policies. Embodied carbon tariffs tax the direct and indirect carbon emissions embodied in imported goods. The appeal seems obvious: as OECD countries are, on average, large net importers of embodied emissions from non-OECD countries, carbon tariffs could substantially extend the reach of OECD climate policies. We investigate this claim by simulating the effects of embodied carbon tariffs with a computable general equilibrium model of global trade and energy use. We find that embodied carbon tariffs do effectively reduce carbon leakage. However, the scope for improvements in the global cost-effectiveness of unilateral climate policy is limited. The main welfare effect of the tariffs is to shift the burden of OECD climate policy to the developing world.
Handle: RePEc:nbr:nberwo:17376
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Interventions to Reduce Fertility on Economic Growth
Classification-JEL: E17; J11; J13; J18; O11
Author-Name: Quamrul H. Ashraf
Author-Name: David N. Weil
Author-Person: pwe24
Author-Name: Joshua Wilde
Author-Person: pwi261
Note: EFG
Number: 17377
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17377
File-URL: http://www.nber.org/papers/w17377.pdf
File-Format: application/pdf
Publication-Status: published as "The Effect of Fertility Reduction on Economic Growth" (with Quamrul H. Ashraf and David N. Weil); Population and Development Review, 2013. 39(1): 97-130.
Abstract: We assess quantitatively the effect of exogenous reductions in fertility on output per capita. Our simulation model allows for effects that run through schooling, the size and age structure of the population, capital accumulation, parental time input into child-rearing, and crowding of fixed natural resources. The model is parameterized using a combination of microeconomic estimates, data on demographics and natural resource income in developing countries, and standard components of quantitative macroeconomic theory. We apply the model to examine the effect of a change in fertility from the UN medium-variant to the UN low-variant projection, using Nigerian vital rates as a baseline. For a base case set of parameters, we find that such a change would raise output per capita by 5.6 percent at a horizon of 20 years, and by 11.9 percent at a horizon of 50 years.
Handle: RePEc:nbr:nberwo:17377
Template-Type: ReDIF-Paper 1.0
Title: Integrating Personality Psychology into Economics
Classification-JEL: I2; J24
Author-Name: James J. Heckman
Note: CH ED
Number: 17378
Creation-Date: 2011-08
Order-URL: http://www.nber.org/papers/w17378
File-URL: http://www.nber.org/papers/w17378.pdf
File-Format: application/pdf
Abstract: This paper reviews the problems and potential benefits of integrating personality psychology into economics. Economists have much to learn from and contribute to personality psychology.
Handle: RePEc:nbr:nberwo:17378
Template-Type: ReDIF-Paper 1.0
Title: International Liquidity: The Fiscal Dimension
Classification-JEL: F33; F34; F36; H87
Author-Name: Maurice Obstfeld
Author-Person: pob13
Note: IFM ME
Number: 17379
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17379
File-URL: http://www.nber.org/papers/w17379.pdf
File-Format: application/pdf
Publication-Status: published as Keynote Speech by Maurice Obstfeld, 2011. "International Liquidity: The Fiscal Dimension," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 29, pages 33-48, November.
Abstract: This paper argues that if policymakers seek to enhance global liquidity, then the international community must provide a higher and better coordinated level of fiscal support than it has in the past. Loans to troubled sovereigns or financial institutions imply a credit risk that ultimately must be lodged somewhere. Expanded international lending facilities, including an expanded IMF, cannot remain unconditionally solvent absent an expanded level of fiscal backup. The same point obviously applies to the European framework for managing internal sovereign debt problems, including proposals for a jointly guaranteed eurozone sovereign bond. Even attainment of a significant role for the Special Drawing Right depends upon enhanced fiscal resources and burden sharing at the international level.
Handle: RePEc:nbr:nberwo:17379
Template-Type: ReDIF-Paper 1.0
Title: A Fiscal Union for the Euro: Some Lessons from History
Classification-JEL: H10; H70; H73
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Agnieszka Markiewicz
Author-Person: pma1048
Author-Name: Lars Jonung
Note: DAE ME
Number: 17380
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17380
File-URL: http://www.nber.org/papers/w17380.pdf
File-Format: application/pdf
Publication-Status: published as Michael D. Bordo & Lars Jonung & Agnieszka Markiewicz, 2013. "A Fiscal Union for the Euro: Some Lessons from History ," CESifo Economic Studies, CESifo, vol. 59(3), pages 449-488, September.
Abstract: The recent financial crisis 2007-2009 was the longest and the deepest recession since the Great Depression of 1930. The crisis that originated in subprime mortgage markets was spread and amplified through globalised financial markets and resulted in severe debt crises in several European countries in 2010 and 2011. Events revealed that the European Union had insufficient means to halt the spiral of European debt crisis. In particular, no pan-European fiscal mechanism to face a global crisis is available at present. The aim of this study is to identify the characteristics of a robust common fiscal policy framework that could have alleviated the consequences of the recent crisis. This is done by using the political and fiscal history of five federal states; Argentina, Brazil, Canada, Germany and the United States.
Handle: RePEc:nbr:nberwo:17380
Template-Type: ReDIF-Paper 1.0
Title: A Community College Instructor Like Me: Race and Ethnicity Interactions in the Classroom
Classification-JEL: I20; I23; J24; J71
Author-Name: Robert W. Fairlie
Author-Person: pfa338
Author-Name: Florian Hoffmann
Author-Name: Philip Oreopoulos
Author-Person: por38
Note: CH ED LS
Number: 17381
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17381
File-URL: http://www.nber.org/papers/w17381.pdf
File-Format: application/pdf
Publication-Status: published as Fairlie, Robert W., Florian Hoffmann, and Philip Oreopoulos. "A community college instructor like me: Race and ethnicity interactions in the classroom" American Economic Review (forthcoming)
Abstract: Detailed administrative data from a large and diverse community college are used to examine if academic performance depends on whether students are the same race or ethnicity as their instructors. To identify racial interactions and address many threats to internal validity we estimate models that include both student and classroom fixed effects. Given the large sample sizes and computational complexity of the 2-way fixed effects model we rely on numerical algorithms that exploit the particular structure of the model's normal equations. Although we find no evidence of endogenous sorting, we further limit potential biases from sorting by focusing on students with restricted course enrollment options due to low registration priorities, students not getting first section choices, and on courses with no within-term or within-year racial variation in instructors. We find that the performance gap in terms of class dropout rates, pass rates, and grade performance between white and underrepresented minority students falls by 20-50 percent when taught by an underrepresented minority instructor. We also find these interactions affect longer term outcomes such as subsequent course selection, retention, and degree completion. Potential mechanisms for these positive interactions are examined.
Handle: RePEc:nbr:nberwo:17381
Template-Type: ReDIF-Paper 1.0
Title: Leaders: Privilege, Sacrifice, Opportunity and Personnel Economics in the American Civil War
Classification-JEL: M5; N31
Author-Name: Dora Costa
Author-Person: pco358
Note: DAE
Number: 17382
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17382
File-URL: http://www.nber.org/papers/w17382.pdf
File-Format: application/pdf
Publication-Status: published as “Leaders: Privilege, Sacrifice, Opportunity and Personnel Economics in the American Civil War.” First published on-line, June 14, 2013. Journal of Law, Economics, and Organization.
Abstract: The US Civil War provides researchers a unique opportunity to identify wartime leaders and thus to test theories of leadership. By observing both leaders and followers during the war and forty years after it, I establish that the most able became wartime leaders, that leading by example from the front was an effective strategy in reducing desertion rates, and that leaders later migrated to the larger cities because this is where their superior skills would have had the highest pay-offs. I find that US cities were magnets for the most able and provided training opportunities for both leaders and followers: men might start in a low social status occupation in a city but then move to a higher status occupation.
Handle: RePEc:nbr:nberwo:17382
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Impact of Restructuring on Electricity Generation Efficiency: The Case of the Indian Thermal Power Sector
Classification-JEL: L43; L94; O13; O25; Q4
Author-Name: Kabir Malik
Author-Person: pma1504
Author-Name: Maureen Cropper
Author-Person: pcr77
Author-Name: Alexander Limonov
Author-Name: Anoop Singh
Author-Person: psi430
Note: EEE
Number: 17383
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17383
File-URL: http://www.nber.org/papers/w17383.pdf
File-Format: application/pdf
Abstract: We examine the impact of electricity sector restructuring on the operating efficiency of coal-fired power plants in India. Between 1995 and 2009, 85 percent of coal-based generation capacity owned by state governments was unbundled from vertically integrated State Electricity Boards into state generating companies. We find that generating units in states that unbundled before the Electricity Act of 2003 experienced reductions in forced outages of about 25% and improvements in availability of about 10%, with the largest results occurring 3-5 years after restructuring. We find no evidence of improvements in thermal efficiency at state-owned power plants due to reform.
Handle: RePEc:nbr:nberwo:17383
Template-Type: ReDIF-Paper 1.0
Title: An Experimental Study of Alternative Campaign Finance Systems: Donations, Elections and Policy Choices
Classification-JEL: D72
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Dmitry A. Shapiro
Author-Name: Arthur Zillante
Author-Person: pzi22
Note: LE PE POL
Number: 17384
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17384
File-URL: http://www.nber.org/papers/w17384.pdf
File-Format: application/pdf
Abstract: We experimentally study the effect of alternative campaign finance systems - as characterized by different information structure about donors - on donations, election outcomes, political candidates' policy choices, and welfare. Three alternative campaign finance systems are considered: a full anonymity (FA) system in which neither the politicians nor the voters are informed about the donors' ideal policies or levels of donations; a partial anonymity (PA) system in which only the politicians, but not the voters, are informed about the donors' ideal policies and donations; and finally a no anonymity (NA) system in which both the politicians and the voters are informed about the donors' ideal policies and donations. We find that donors contribute less in the FA system than in the PA and NA system, and candidates are less likely to deviate from their ideal policies under FA than under the PA and NA systems. The effect of donations on the candidate's policy deviations differs in FA from that in PA and NA. Specifically, in the FA system larger donations lead to smaller deviations from the candidate's ideal policy; but in the NA and PA systems, larger donations lead to larger deviations. As a result we observe that the donations lead to a centrist bias in the candidate's policy choices, i.e., donations are more likely to make extreme candidate move to the center than to make centrist candidate move to the right. This centrist bias is present more robustly in FA treatments. Finally, we find that donors greatly benefit from the possibility of donations regardless of the finance system. Voter welfare remains virtually unchanged under the PA and NA systems, especially when there is competition among the donors. Our findings provide the first experimental evidence supportive of Ayres and Ackerman's (2002) campaign finance reform proposal.
Handle: RePEc:nbr:nberwo:17384
Template-Type: ReDIF-Paper 1.0
Title: Learning from Seller Experiments in Online Markets
Classification-JEL: C93; D44; L13; L86
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Theresa Kuchler
Author-Name: Jonathan D. Levin
Author-Person: ple318
Author-Name: Neel Sundaresan
Note: IO PR
Number: 17385
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17385
File-URL: http://www.nber.org/papers/w17385.pdf
File-Format: application/pdf
Abstract: The internet has dramatically reduced the cost of varying prices, displays and information provided to consumers, facilitating both active and passive experimentation. We document the prevalence of targeted pricing and auction design variation on eBay, and identify hundreds of thousands of experiments conducted by sellers across a wide array of retail products. We show how this type of data can be used to address questions about consumer behavior and market outcomes, and provide illustrative results on price dispersion, the frequency of over-bidding, the choice of reserve prices, "buy now" options and other auction design parameters, and on consumer sensitivity to shipping fees. We argue that leveraging the experiments of market participants takes advantage of the scale and heterogeneity of online markets and can be a powerful approach for testing and measurement.
Handle: RePEc:nbr:nberwo:17385
Template-Type: ReDIF-Paper 1.0
Title: Some Inconvenient Truths About Climate Change Policy: The Distributional Impacts of Transportation Policies
Classification-JEL: H2; H3; K0; K2; L5; L7; L9
Author-Name: Stephen P. Holland
Author-Person: pho374
Author-Name: Jonathan E. Hughes
Author-Person: phu390
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Nathan C. Parker
Note: EEE IO POL
Number: 17386
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17386
File-URL: http://www.nber.org/papers/w17386.pdf
File-Format: application/pdf
Publication-Status: published as Some Inconvenient Truths About Climate Change Policy: The Distributional Impacts of Transportation Policies Stephen P. Holland, Jonathan E. Hughes, Christopher R. Knittel, and Nathan C. Parker Review of Economics and Statistics, Vol. 97, no. 5
Abstract: Instead of efficiently pricing greenhouse gases, policy makers have favored measures that implicitly or explicitly subsidize low carbon fuels. We simulate a transportation-sector cap & trade program (CAT) and three policies currently in use: ethanol subsidies, a renewable fuel standard (RFS), and a low carbon fuel standard (LCFS). Our simulations confirm that the alternatives to CAT are quite costly-2.5 to 4 times more expensive. We provide evidence that the persistence of these alternatives in spite of their higher costs lies in the political economy of carbon policy. The alternatives to CAT exhibit a feature that make them amenable to adoption-a right skewed distribution of gains and losses where many counties have small losses, but a smaller share of counties gain considerably-as much as $6,800 per capita, per year. We correlate our estimates of gains from CAT and the RFS with Congressional voting on the Waxman-Markey cap & trade bill, H.R. 2454. Because Waxman-Markey (WM) would weaken the RFS, House members likely viewed the two policies as competitors. Conditional on a district's CAT gains, increases in a district's RFS gains are associated with decreases in the likelihood of voting for WM. Furthermore, we show that campaign contributions are correlated with a district's gains under each policy and that these contributions are correlated with a Member's vote on WM.
Handle: RePEc:nbr:nberwo:17386
Template-Type: ReDIF-Paper 1.0
Title: Corporate Governance, Debt, and Investment Policy during the Great Depression
Classification-JEL: G31; G32; G34
Author-Name: John R. Graham
Author-Name: Sonali Hazarika
Author-Name: Krishnamoorthy Narasimhan
Note: TWP
Number: 17387
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17387
File-URL: http://www.nber.org/papers/w17387.pdf
File-Format: application/pdf
Publication-Status: published as Graham, John R., Sonali Hazarika, and Krishnamoorthy Narasimhan, 2011, Corporate Governance, Debt, and Investment Policy during the Great Depression, Management Science 57, 2083-2100.
Abstract: We study a period of severe disequilibrium to investigate whether board characteristics are related to corporate investment, debt usage, and firm value. During the 1930-1938 Depression era, when the corporate sector was shocked by an unprecedented downturn, we document a relation between board characteristics and firm performance that varies in economically sensible ways: Complex firms (that would benefit more from board advice) exhibit a positive relation between board size and firm value, and simple firms exhibit a negative relation between board size and firm value. Moreover, simple firms with large boards do not downsize adequately in response to the severe economic contraction: they invest more (or shrink less) and use more debt during the 1930s. We document similar effects for the number of outside directors on the board. Finally, we also find that companies with properly aligned governance structures are more likely to replace the company president following poor performance.
Handle: RePEc:nbr:nberwo:17387
Template-Type: ReDIF-Paper 1.0
Title: Financial Distress in the Great Depression
Classification-JEL: G0
Author-Name: John R. Graham
Author-Name: Sonali Hazarika
Author-Name: Krishnamoorthy Narasimhan
Note: TWP
Number: 17388
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17388
File-URL: http://www.nber.org/papers/w17388.pdf
File-Format: application/pdf
Publication-Status: published as Graham, John R., Sonali Hazarika, and Krishnamoorthy Narasimhan, 2011, Financial Distress in the Great Depression, Financial Management 40, 821-844. -- Lead article
Abstract: We use firm-level data to study corporate performance during the Great Depression era for all industrial firms on the NYSE. Our goal is to identify the factors that contribute to business insolvency and valuation changes during the period 1928 to 1938. We find that firms with more debt and lower bond ratings in 1928 became financially distressed more frequently during the Depression, consistent with the trade-off theory of leverage and the information production role of credit rating agencies. We also document for the first time that firms responded to tax incentives to use debt during the Depression era, but that the extra debt used in response to this tax-driven "debt bias" did not contribute significantly to the occurrence of distress. Finally, we conduct an out of sample test during the recent 2008-2009 Recession and find that higher leverage and lower bond ratings also increased the occurrence of financial distress during this period.
Handle: RePEc:nbr:nberwo:17388
Template-Type: ReDIF-Paper 1.0
Title: Financial Markets and Unemployment
Classification-JEL: E24; E32; E44
Author-Name: Tommaso Monacelli
Author-Person: pmo32
Author-Name: Vincenzo Quadrini
Author-Person: pqu2
Author-Name: Antonella Trigari
Author-Person: ptr17
Note: EFG
Number: 17389
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17389
File-URL: http://www.nber.org/papers/w17389.pdf
File-Format: application/pdf
Publication-Status: published as Tommaso Monacelli & Vincenzo Quadrini & Antonella Trigari, 2023. "Financial markets and unemployment," Journal of Financial Economics, .
Abstract: We study the importance of financial markets for (un)employment fluctuations in a model with searching and matching frictions where firms issue debt under limited enforcement. Higher debt allows employers to bargain lower wages which in turn increases the incentive to create jobs. The transmission mechanism of 'credit shocks' is fundamentally different from the typical credit channel and the model can explain why firms cut hiring after a credit contraction even if they have not shortage of funds for hiring workers. The theoretical predictions are consistent with the estimation of a structural VAR whose identifying restrictions are derived from the theoretical model.
Handle: RePEc:nbr:nberwo:17389
Template-Type: ReDIF-Paper 1.0
Title: Cleaning the Bathwater with the Baby: The Health Co-Benefits of Carbon Pricing in Transportation
Classification-JEL: D62; H2; H3; I18; L0; L9; Q5; R2; R4
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Ryan Sandler
Note: EEE EH IO PE
Number: 17390
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17390
File-URL: http://www.nber.org/papers/w17390.pdf
File-Format: application/pdf
Abstract: Efforts to reduce greenhouse gas emissions in the US have relied on Corporate Average Fuel Economy (CAFE) Standards and Renewable Fuel Standards (RFS). Economists often argue that these policies are inefficient relative to carbon pricing because they ignore existing vehicles and do not adequately reduce the incentive to drive. This paper presents evidence that the net social costs of carbon pricing are significantly less than previous thought. The bias arises from the fact that the demand elasticity for miles travelled varies systematically with vehicle emissions; dirtier vehicles are more responsive to changes in gasoline prices. This is true for all four emissions for which we have data--nitrogen oxides, carbon monoxide, hydrocarbon, and greenhouse gases--as well as weight. This reduces the net social costs associated with carbon pricing through increasing the co-benefits. Accounting for this heterogeneity implies that the welfare losses from $1.00 gas tax, or a $110 per ton of CO2 tax, are negative over the period of 1998 to 2008 even when we ignore the climate change benefits from the tax. Co-benefits increase by over 60 percent relative to ignoring the heterogeneity that we document. In addition, accounting for this heterogeneity raises the optimal gas tax associated with local pollution, as calculated by Parry and Small (2005), by as much as 57 percent. While our empirical setting is California, we present evidence that the effects may be larger for the rest of the US.
Handle: RePEc:nbr:nberwo:17390
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Stimulus in a Monetary Union: Evidence from U.S. Regions
Classification-JEL: E32; E62
Author-Name: Emi Nakamura
Author-Person: pna121
Author-Name: Jón Steinsson
Author-Person: pst155
Note: EFG IFM ME
Number: 17391
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17391
File-URL: http://www.nber.org/papers/w17391.pdf
File-Format: application/pdf
Publication-Status: published as Emi Nakamura & J?n Steinsson, 2014. "Fiscal Stimulus in a Monetary Union: Evidence from US Regions," American Economic Review, American Economic Association, vol. 104(3), pages 753-92, March.
Abstract: We use rich historical data on military procurement spending across U.S. regions to estimate the effects of government spending in a monetary union. Aggregate military build-ups and draw- downs have differential effects across regions. We use this variation to estimate an "open economy relative multiplier" of approximately 1.5. We develop a framework for interpreting this estimate and relating it to estimates of the standard closed economy aggregate multiplier. The closed economy aggregate multiplier is highly sensitive to how strongly aggregate monetary and tax policy "leans against the wind." In contrast, our open economy relative multiplier "differences out" these effects because different regions in the union share a common monetary and tax policy. Our estimates provide evidence in favor of models in which demand shocks can have large effects on output.
Handle: RePEc:nbr:nberwo:17391
Template-Type: ReDIF-Paper 1.0
Title: Cyclicality of Credit Supply: Firm Level Evidence
Classification-JEL: E32; E44; G21
Author-Name: Bo Becker
Author-Person: pbe183
Author-Name: Victoria Ivashina
Note: CF
Number: 17392
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17392
File-URL: http://www.nber.org/papers/w17392.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Monetary Economics Available online 7 November 2013 In Press, Corrected Proof — Note to users Cover image Cyclicality of credit supply: Firm level evidence ☆ Bo Beckera, b, Victoria Ivashinaa, b,
Abstract: Theory predicts that there is a close link between bank credit supply and the evolution of the business cycle. Yet fluctuations in bank-loan supply have been hard to quantify in the time-series. While loan issuance falls in recessions, it is not clear if this is due to demand or supply. We address this question by studying firms' substitution between bank debt and non-bank debt (public bonds) using firm-level data. Any firm that raises new debt must have a positive demand for external funds. Conditional on issuance of new debt, we interpret firm's switching from loans to bonds as a contraction in bank credit supply. We find strong evidence of substitution from loans to bonds at times characterized by tight lending standards, high levels of non-performing loans and loan allowances, low bank share prices and tight monetary policy. The bank-to-bond substitution can only be measured for firms with access to bond markets. However, we show that this substitution behavior has strong predictive power for bank borrowing and investments by small, out-of-sample firms. We consider and reject several alternative explanations of our findings.
Handle: RePEc:nbr:nberwo:17392
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Effects of Large Shareholders Using a Geographic Instrument
Classification-JEL: D31; G32; G34
Author-Name: Bo Becker
Author-Person: pbe183
Author-Name: Henrik Cronqvist
Author-Person: pcr199
Author-Name: Rüdiger Fahlenbrach
Author-Person: pfa388
Note: CF
Number: 17393
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17393
File-URL: http://www.nber.org/papers/w17393.pdf
File-Format: application/pdf
Publication-Status: published as Becker, Bo & Cronqvist, Henrik & Fahlenbrach, Rüdiger, 2011. "Estimating the Effects of Large Shareholders Using a Geographic Instrument," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(04), pages 907-942, September.
Abstract: Large shareholders may play an important role for firm performance and policies, but identifying this empirically presents a challenge due to the endogeneity of ownership structures. We develop and test an empirical framework which allows us to separate selection from treatment effects of large shareholders. Individual blockholders tend to hold blocks in public firms located close to where they reside. Using this empirical observation, we develop an instrument - the density of wealthy individuals near a firm's headquarters - for the presence of a large, non-managerial individual shareholder in a firm. These shareholders have a large impact on firms, controlling for selection effects.
Handle: RePEc:nbr:nberwo:17393
Template-Type: ReDIF-Paper 1.0
Title: Comparing the Investment Behavior of Public and Private Firms
Classification-JEL: D21; D92; G31; G32; G34
Author-Name: John Asker
Author-Person: pas7
Author-Name: Joan Farre-Mensa
Author-Name: Alexander Ljungqvist
Author-Person: plj2
Note: CF
Number: 17394
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17394
File-URL: http://www.nber.org/papers/w17394.pdf
File-Format: application/pdf
Abstract: We evaluate differences in investment behavior between stock market listed and privately held firms in the U.S. using a rich new data source on private firms. Listed firms invest less and are less responsive to changes in investment opportunities compared to observably similar, matched private firms, especially in industries in which stock prices are particularly sensitive to current earnings. These differences do not appear to be due to unobserved differences between public and private firms, how we measure investment opportunities, lifecycle differences, or our matching criteria. We suggest that the patterns we document are most consistent with theoretical models emphasizing the role of managerial myopia.
Handle: RePEc:nbr:nberwo:17394
Template-Type: ReDIF-Paper 1.0
Title: Information Manipulation, Coordination, and Regime Change
Classification-JEL: C7; D7; D8
Author-Name: Chris Edmond
Author-Person: ped23
Note: POL
Number: 17395
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17395
File-URL: http://www.nber.org/papers/w17395.pdf
File-Format: application/pdf
Publication-Status: published as Chris Edmond, 2013. "Information Manipulation, Coordination, and Regime Change," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1422-1458.
Abstract: This paper presents a model of information and political regime change. If enough citizens act against a regime, it is overthrown. Citizens are imperfectly informed about how hard this will be and the regime can, at a cost, engage in propaganda so that at face-value it seems hard. This coordination game with endogenous information manipulation has a unique equilibrium and the paper gives a complete analytic characterization of its comparative statics. If the quantity of information available to citizens is sufficiently high, then the regime has a better chance of surviving. However, an increase in the reliability of information can reduce the regime's chances. These two effects are always in tension: a regime benefits from an increase in information quantity if and only if an increase in information reliability reduces its chances. The model allows for two kinds of information revolutions. In the first, associated with radio and mass newspapers under the totalitarian regimes of the early twentieth century, an increase in information quantity coincides with a shift towards media institutions more accommodative of the regime and, in this sense, a decrease in information reliability. In this case, both effects help the regime. In the second kind, associated with diffuse technologies like modern social media, an increase in information quantity coincides with a shift towards sources of information less accommodative of the regime and an increase in information reliability. This makes the quantity and reliability effects work against each other. The model predicts that a given percentage increase in information reliability has exactly twice as large an effect on the regime's chances as the same percentage increase in information quantity, so, overall, an information revolution that leads to roughly equal-sized percentage increases in both these characteristics will reduce a regime's chances of surviving.
Handle: RePEc:nbr:nberwo:17395
Template-Type: ReDIF-Paper 1.0
Title: Sovereigns, Upstream Capital Flows, and Global Imbalances
Classification-JEL: F2; F41; O1
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Vadym Volosovych
Author-Person: pvo44
Note: IFM
Number: 17396
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17396
File-URL: http://www.nber.org/papers/w17396.pdf
File-Format: application/pdf
Publication-Status: published as Alfaro, Laura, Sebnem Kalemli-Ozcan, and Vadym Volosovych. "Sovereigns, Upstream Capital Flows and Global Imbalances." Journal of the European Economic Association (forthcoming). (Also NBER Working Paper 17396.)
Abstract: We construct measures of net private and public capital flows for a large cross-section of developing countries considering both creditor and debtor side of the international debt transactions. Using these measures, we demonstrate that sovereign-to-sovereign transactions account for upstream capital flows and global imbalances. Specifically, we find that i) international net private capital flows (inflows minus outflows of private capital) are positively correlated with countries' productivity growth, ii) net sovereign debt flows (government borrowing minus reserves) are negatively correlated with growth only if net public debt is financed by another sovereign, iii) net public debt financed by private creditors is positively correlated with growth, iv) public savings are strongly positively correlated with growth, whereas correlation between private savings and growth is flat and statistically insignificant. These empirical facts contradict the conventional wisdom and constitute a challenge for the existing theories on upstream capital flows and global imbalances.
Handle: RePEc:nbr:nberwo:17396
Template-Type: ReDIF-Paper 1.0
Title: Smooth Politicians and Paternalistic Voters: A Theory of Large Elections
Classification-JEL: D72; H0
Author-Name: Marco Faravelli
Author-Person: pfa266
Author-Name: Randall Walsh
Author-Person: pwa222
Note: LE PE POL
Number: 17397
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17397
File-URL: http://www.nber.org/papers/w17397.pdf
File-Format: application/pdf
Abstract: We propose a new game theoretic approach to modeling large elections that overcomes the "paradox of voting" in a costly voting framework, without reliance on the assumption of ad hoc preferences for voting. The key innovation that we propose is the adoption of a "smooth" policy rule under which the degree to which parties favor their own interests is increasing in their margin of victory. In other words, mandates matter. We argue that this approach is an improvement over the existing literature as it is consistent with the empirical evidence. Incorporating this policy rule into a costly voting model with paternalistic voters yields a parsimonious model with attractive properties. Specifically, the model predicts that when the size of the electorate grows without bound, limiting turnout is strictly positive both in terms of numbers and proportions. Further, the model preserves the typical comparative statics predictions that have been identified in the extant costly voting models such as the underdog effect and the competition effect. Finally, under the case of selfish agents, we are able to extend Palfrey and Rosenthal's (1985) zero turnout result to a general class of smooth policy rules. Thus, this new approach reconciles the predictions of standard costly voting, both in terms of positive turnout and comparative statics predictions with the assumption of a large electorate environment.
Handle: RePEc:nbr:nberwo:17397
Template-Type: ReDIF-Paper 1.0
Title: Corruption in Developing Countries
Classification-JEL: D73; H83; O12
Author-Name: Benjamin A. Olken
Author-Person: pol170
Author-Name: Rohini Pande
Author-Person: ppa900
Note: EFG PE POL
Number: 17398
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17398
File-URL: http://www.nber.org/papers/w17398.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin A. Olken & Rohini Pande, 2012. "Corruption in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 479-509, 07.
Abstract: Recent years have seen a remarkable expansion in economists' ability to measure corruption. This, in turn, has led to a new generation of well-identified, microeconomic studies. We review the evidence on corruption in developing countries in light of these recent advances, focusing on three questions: how much corruption is there, what are the efficiency consequences of corruption, and what determines the level of corruption. We find robust evidence that corruption responds to standard economic incentive theory, but also that effects of anti-corruption policies often attenuate as officials find alternate strategies to pursue rents.
Handle: RePEc:nbr:nberwo:17398
Template-Type: ReDIF-Paper 1.0
Title: Private Equity and Employment
Classification-JEL: G24; G34; J23; L25
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Ron S. Jarmin
Author-Person: pja54
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Javier Miranda
Author-Person: pmi185
Note: CF EFG LS PR
Number: 17399
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17399
File-URL: http://www.nber.org/papers/w17399.pdf
File-Format: application/pdf
Abstract: Private equity critics claim that leveraged buyouts bring huge job losses. To investigate this claim, we construct and analyze a new dataset that covers U.S. private equity transactions from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing outcomes to controls similar in terms of industry, size, age, and prior growth. Relative to controls, employment at target establishments declines 3 percent over two years post buyout and 6 percent over five years. The job losses are concentrated among public-to-private buyouts, and transactions involving firms in the service and retail sectors. But target firms also create more new jobs at new establishments, and they acquire and divest establishments more rapidly. When we consider these additional adjustment margins, net relative job losses at target firms are less than 1 percent of initial employment. In contrast, the sum of gross job creation and destruction at target firms exceeds that of controls by 13 percent of employment over two years. In short, private equity buyouts catalyze the creative destruction process in the labor market, with only a modest net impact on employment. The creative destruction response mainly involves a more rapid reallocation of jobs across establishments within target firms.
Handle: RePEc:nbr:nberwo:17399
Template-Type: ReDIF-Paper 1.0
Title: The Future of Economic Convergence
Classification-JEL: O40
Author-Name: Dani Rodrik
Author-Person: pro60
Note: EFG ITI PR
Number: 17400
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17400
File-URL: http://www.nber.org/papers/w17400.pdf
File-Format: application/pdf
Publication-Status: published as “The Future of Economic Convergence,” in Achieving Maximum Long - Run Growth , Federal Reserve Bank of Kansas City, 20 12 .
Publication-Status: published as Dani Rodrik, 2011. "The future of economic convergence," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 13-52.
Abstract: The question addressed in this paper is whether the gap in performance between the developed and developing worlds can continue, and in particular, whether developing nations can sustain the rapid growth they have experienced of late. The good news is that growth in the developing world should depend not on growth in the advanced economies themselves, but on the difference in the productivity levels of the two groups of countries - on the "convergence gap" - which remains quite large. Yet much of this convergence potential is likely to go to waste. Convergence is anything but automatic, and depends on sustaining rapid structural change in the direction of tradables such as manufacturing and modern services. The policies that successful countries have used to achieve this are hard to emulate. Moreover, these policies - such as currency undervaluation and industrial policies - will meet greater resistance on the part of industrial countries struggling with stagnant economies and high unemployment.
Handle: RePEc:nbr:nberwo:17400
Template-Type: ReDIF-Paper 1.0
Title: Who Should Supervise? The Structure of Bank Supervision and the Performance of the Financial System
Classification-JEL: G0; G01; H1
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Nergiz Dincer
Author-Person: pdi515
Note: IFM
Number: 17401
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17401
File-URL: http://www.nber.org/papers/w17401.pdf
File-Format: application/pdf
Publication-Status: published as “ The Architecture and Governance of Financial Supervision: Sources and Implications ” International Finance, Vol. 15, No. 3: 309 - 325, Winter 2012. A lso, NBER Working Paper, 17401, 2011 (with Barry Eichengreen).
Abstract: We assemble data on the structure of bank supervision, distinguishing supervision by the central bank from supervision by a nonbank governmental agency and independent from dependent governmental supervisors. Using observations for 140 countries from 1998 through 2010, we find that supervisory responsibility tends to be assigned to the central bank in low-income countries where that institution is one of few public-sector agencies with the requisite administrative capacity. It is more likely to be undertaken by a non-independent agency of the government in countries ranked high in terms of government efficiency and regulatory quality. We show that the choice of institutional arrangement makes a difference for outcomes. Countries with independent supervisors other than the central bank have fewer nonperforming loans as a share of GDP even after controlling for inflation, per capita income, and country and/or year fixed effects. Their banks are required to hold less capital against assets, presumably because they have less need to protect against loan losses. Savers in such countries enjoy higher deposit rates. There is some evidence, albeit more tentative, that countries with these arrangements are less prone to systemic banking crises.
Handle: RePEc:nbr:nberwo:17401
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Youth Service on Future Outcomes: Evidence from Teach For America
Classification-JEL: I00; J01
Author-Name: Will Dobbie
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Note: ED LS
Number: 17402
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17402
File-URL: http://www.nber.org/papers/w17402.pdf
File-Format: application/pdf
Publication-Status: published as Will Dobbie & Roland G. Fryer, Jr., 2015. "The Impact of Voluntary Youth Service on Future Outcomes: Evidence from Teach For America," The B.E. Journal of Economic Analysis & Policy, vol 15(3), pages 1031-1065.
Abstract: Nearly one million American youth have participated in service programs such as Peace Corps and Teach For America. This paper provides the first causal estimate of the impact of service programs on those who serve, using data from a web-based survey of former Teach For America applicants. We estimate the effect of voluntary youth service using a sharp discontinuity in the Teach For America application process. Participating in Teach For America increases racial tolerance, makes individuals more optimistic about the life chances of poor children, and makes them more likely to work in education. We argue that these facts are broadly consistent with the "Contact Hypothesis," which states that, under appropriate conditions, interpersonal contact can reduce prejudice.
Handle: RePEc:nbr:nberwo:17402
Template-Type: ReDIF-Paper 1.0
Title: Corporate Demand for Insurance: An Empirical Analysis of the U.S. Market for Catastrophe and Non-Catastrophe Risks
Classification-JEL: D21; D81; G22; H56
Author-Name: Erwann Michel-Kerjan
Author-Person: pmi64
Author-Name: Paul Raschky
Author-Person: pra269
Author-Name: Howard Kunreuther
Note: PE
Number: 17403
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17403
File-URL: http://www.nber.org/papers/w17403.pdf
File-Format: application/pdf
Abstract: Using a unique dataset of insurance decisions by over 1,800 large U.S. corporations, this study provides the first empirical analysis of firm behavior that compares corporate demand for property and catastrophe insurance (here, terrorism). We combine demand and supply data and apply a simultaneous-equation approach to address the problem of endogenous premium decisions. The main finding is that demand for property and catastrophe insurance are not very different and that the demand for catastrophe coverage is actually more price inelastic. We also show that a corporation's ability to self-insure affects the demand for catastrophe insurance but not for property insurance.
Handle: RePEc:nbr:nberwo:17403
Template-Type: ReDIF-Paper 1.0
Title: Communitywide Database Designs for Tracking Innovation Impact: COMETS, STARS and Nanobank
Classification-JEL: C81; J44; J61; J62; M13; O31; O33; O34; O38
Author-Name: Lynne G. Zucker
Author-Person: pzu2
Author-Name: Michael R. Darby
Author-Name: Jason Fong
Note: PR
Number: 17404
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17404
File-URL: http://www.nber.org/papers/w17404.pdf
File-Format: application/pdf
Publication-Status: published as Annals of Economics and Statistics, Annals of Economics and Statistics No. 115-116, SPECIAL ISSUE ON KNOWLEDGE CAPITAL IN NANOTECHNOLOGY AND OTHER HIGH TECHNOLOGY INDUSTRIES (December 2014), pp. 277-311
Abstract: Data availability is arguably the greatest impediment to advancing the science of science and innovation policy and practice (SciSIPP). This paper describes the contents, methodology and use of the public online COMETS (Connecting Outcome Measures in Entrepreneurship Technology and Science) database spanning all sciences, technologies, and high-tech industries; its parent COMETSandSTARS database which adds more data at organization and individual scientist-inventor-entrepreneur level restricted by vendor licenses to onsite use at NBER and/or UCLA; and their prototype Nanobank covering only nano-scale sciences and technologies. Some or all of these databases include or will include: US patents (granted and applications); NIH, NSF, SBIR, STTR Grants; Thomson Reuters Web of Knowledge; ISI Highly Cited; US doctoral dissertations; IPEDS/HEGIS universities; all firms and other organizations which ever publish in ISI listed journals beginning in 1981, are assigned US patents (from 1975), or are listed on a covered grant; additional nanotechnology firms based on web search. Ticker/CUSIP codes enable linking public firms to the major databases covering them. A major matching/disambiguation effort assigns unique identifiers for an organization or individual so that their appearances are linked within and across the constituent legacy databases. Extensive geographic coding enables analysis at country, region, state, county, or city levels. The databases provide very flexible sources of data for serious research on many issues in the study of organizations in innovation systems in the development and spread of knowledge, and the economics of science. Enabling the study of these topics, among others, COMETS contributes substantially to the science of science and technology.
Handle: RePEc:nbr:nberwo:17404
Template-Type: ReDIF-Paper 1.0
Title: Housing Busts and Household Mobility: An Update
Classification-JEL: R21; R23
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Joseph Gyourko
Author-Person: pgy3
Author-Name: Joseph Tracy
Author-Person: ptr23
Note: PE
Number: 17405
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17405
File-URL: http://www.nber.org/papers/w17405.pdf
File-Format: application/pdf
Publication-Status: published as Fernando Ferreira & Joseph Gyourko & Joseph Tracy, 2012. "Housing busts and household mobility: an update," Economic Policy Review, Federal Reserve Bank of New York, issue Nov, pages 1-15.
Publication-Status: published as Fernando Ferreira & Joseph Gyourko & Joseph Tracy, 2010. "Housing busts and household mobility," Journal of Urban Economics, vol 68(1), pages 34-45.
Abstract: This paper provides updated estimates of the impact of three financial frictions - negative equity, mortgage lock-in, and property tax lock-in - on household mobility. We add the 2009 wave of the American Housing Survey (AHS) to our sample and also create an improved measure of permanent moves in response to Schulhofer-Wohl's (2011) critique of our earlier work (Ferreira, Gyourko and Tracy (2010)). Our updated estimates corroborate our previous results: negative equity reduces household mobility by 30 percent, and $1,000 of additional mortgage or property tax costs reduces household mobility by 10%-16%. Schulhofer-Wohl's finding of a slight positive correlation between mobility and negative equity appears due to a large fraction of false positives, as his coding methodology has the propensity to misclassify almost half of the additional moves it identifies relative to our measure of permanent moves. This also makes his mobility measure dynamically inconsistent, as many transitions originally classified as a move are reclassified as a non-move when additional AHS panels become available. We conclude with directions for future research, including potential improvements to measures of household mobility.
Handle: RePEc:nbr:nberwo:17405
Template-Type: ReDIF-Paper 1.0
Title: Exercise, Physical Activity, and Exertion over the Business Cycle
Classification-JEL: D01; D1; I1; J1; J22
Author-Name: Gregory J. Colman
Author-Person: pco455
Author-Name: Dhaval M. Dave
Author-Person: pda245
Note: EFG EH LS PE
Number: 17406
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17406
File-URL: http://www.nber.org/papers/w17406.pdf
File-Format: application/pdf
Publication-Status: published as Colman, Gregory & Dave, Dhaval, 2013. "Exercise, physical activity, and exertion over the business cycle," Social Science & Medicine, Elsevier, vol. 93(C), pages 11-20.
Abstract: As economic recessions reduce employment and wages, associated shifts in time and income constraints would be expected to also impact individuals' health behaviors. Prior work has focused exclusively on recreational exercise, which typically represents only about 4% of total daily physical exertion. The general presumption in these studies is that, because exercise improves health, if unemployment increases exercise it must also improve health. Yet a person may be laid off from a physically demanding job, exercise more, and still be less physically active than when employed. Thus the relevant question is whether unemployment leads persons to become more physically active. We study this question with the American Time Use Survey (2003-2010), exploring the impact of the business cycle (and specifically the Great Recession) on individuals' exercise, other uses of time, and physical activity during the day. We also utilize more precise measures of exercise (and all other physical activities), which reflect information on the duration as well as intensity of each component activity, than has been employed in past studies. Using within-state variation in employment and unemployment, we find that recreational exercise tends to increase as employment decreases. In addition, we also find that individuals substitute into television watching, sleeping, childcare, and housework. However, this increase in exercise as well as other activities does not compensate for the decrease in work-related exertion due to job-loss. Thus total physical exertion, which prior studies have not analyzed, declines. These behavioral effects are strongest among low-educated males, which is validating given that the Great Recession led to some of the largest layoffs within the manufacturing, mining, and construction sectors. Due to the concentration of low-educated workers in boom-and-bust industries, the drop in total physical activity during recessions is especially problematic for vulnerable populations and may play a role in exacerbating the SES-health gradient during recessions. We also find some evidence of intra-household spillover effects, wherein individuals respond to shifts in spousal employment conditional on their own labor supply.
Handle: RePEc:nbr:nberwo:17406
Template-Type: ReDIF-Paper 1.0
Title: What is the Risk of European Sovereign Debt Defaults? Fiscal Space, CDS Spreads and Market Pricing of Risk
Classification-JEL: E43; F34; F36; G01; H63
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Michael M. Hutchison
Author-Person: phu149
Author-Name: Yothin Jinjarak
Note: IFM ITI
Number: 17407
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17407
File-URL: http://www.nber.org/papers/w17407.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Hutchison, Michael & Jinjarak, Yothin, 2013. "What is the risk of European sovereign debt defaults? Fiscal space, CDS spreads and market pricing of risk," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 37-59.
Abstract: We estimate the pricing of sovereign risk for sixty countries based on fiscal space (debt/tax; deficits/tax) and other economic fundamentals over 2005-10. We measure how accurately the model predicts sovereign credit default swap (CDS) spreads, focusing in particular on the five countries in the South-West Eurozone Periphery (Greece, Ireland, Italy, Portugal, and Spain). Dynamic panel estimates of the model suggest that fiscal space and other macroeconomic factors are statistically significant and economically important determinants of market-based sovereign risk. Although the explanatory power of fiscal space measures drop during the crisis, the TED spread, trade openness, external debt and inflation play a larger role. As expectations of market volatility jumped during the crisis, the weakly concavity of creditors' payoff probably accounts for the emergence of TED spread as a key pricing factor. However, risk-pricing of the South-West Eurozone Periphery countries is not predicted accurately by the model either in-sample or out-of-sample: unpredicted high spreads are evident during global crisis period, especially in 2010 when the sovereign debt crisis swept over the periphery area. We "match" the periphery group with five middle income countries outside Europe that were closest in terms of fiscal space during the European fiscal crisis. We find that Eurozone periphery default risk is priced much higher than the "matched" countries in 2010, even allowing for differences in fundamentals. One interpretation is that the market has mispriced risk in the Eurozone periphery. An alternative interpretation is that the market is pricing not on current fundamentals but future fundamentals, expecting the periphery fiscal space to deteriorate markedly and posing a high risk of debt restructuring. Adjustment challenges of the Eurozone periphery may be perceived as economically and politically more difficult than the matched group of middle income countries because of exchange rate and monetary constraints.
Handle: RePEc:nbr:nberwo:17407
Template-Type: ReDIF-Paper 1.0
Title: Heaping-Induced Bias in Regression-Discontinuity Designs
Classification-JEL: C14; C21; I12
Author-Name: Alan I. Barreca
Author-Person: pba1012
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: Glen R. Waddell
Author-Person: pwa85
Note: ED EH LS TWP
Number: 17408
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17408
File-URL: http://www.nber.org/papers/w17408.pdf
File-Format: application/pdf
Publication-Status: published as Alan I. Barreca & Jason M. Lindo & Glen R. Waddell, 2016. "Heaping-Induced Bias In Regression-Discontinuity Designs," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 268-293, 01.
Abstract: This study uses Monte Carlo simulations to demonstrate that regression-discontinuity designs arrive at biased estimates when attributes related to outcomes predict heaping in the running variable. After showing that our usual diagnostics are poorly suited to identifying this type of problem, we provide alternatives. We also demonstrate how the magnitude and direction of the bias varies with bandwidth choice and the location of the data heaps relative to the treatment threshold. Finally, we discuss approaches to correcting for this type of problem before considering these issues in several non-simulated environments.
Handle: RePEc:nbr:nberwo:17408
Template-Type: ReDIF-Paper 1.0
Title: The Market for Conservation and Other Hostages
Classification-JEL: D62; D78; F5; H87; Q15; Q23; Q27; Q30; Q54
Author-Name: Bård Harstad
Author-Person: pha247
Note: EEE LE PE POL
Number: 17409
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17409
File-URL: http://www.nber.org/papers/w17409.pdf
File-Format: application/pdf
Publication-Status: published as Bård Harstad, 2016. "The market for conservation and other hostages," Journal of Economic Theory, .
Abstract: A conservation good, such as the rainforest, is a hostage: it is possessed by S who may prefer to consume it, but B receives a larger value from continued conservation. A range of prices would make trade mutually beneficial. So, why doesn't B purchase conservation, or the forest, from S? If this were an equilibrium, S would never consume, anticipating a higher price at the next stage. Anticipating this, B prefers to deviate and not pay. The Markov-perfect equilibria are in mixed strategies, implying that the good is consumed (or the forest is cut) at a positive rate. If conservation is more valuable, it is less likely to occur. If there are several interested buyers, cutting increases. If S sets the price and players are patient, the forest disappears with probability one. A rental market has similar properties. By comparison, a rental market dominates a sale market if the value of conservation is low, the consumption value high, and if remote protection is costly. Thus, the theory can explain why optimal conservation does not always occur and why conservation abroad is rented, while domestic conservation is bought.
Handle: RePEc:nbr:nberwo:17409
Template-Type: ReDIF-Paper 1.0
Title: Comparison Friction: Experimental Evidence from Medicare Drug Plans
Classification-JEL: D89; I11
Author-Name: Jeffrey R. Kling
Author-Person: pkl126
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Author-Name: Eldar Shafir
Author-Name: Lee Vermeulen
Author-Name: Marian Wrobel
Note: AG EH IO PE
Number: 17410
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17410
File-URL: http://www.nber.org/papers/w17410.pdf
File-Format: application/pdf
Publication-Status: published as Quarterly Journal of Economics, 127:1 (February 2012), 199-235.
Abstract: Consumers need information to compare alternatives for markets to function efficiently. Recognizing this, public policies often pair competition with easy access to comparative information. The implicit assumption is that comparison friction--the wedge between the availability of comparative information and consumers' use of it--is inconsequential because information is readily available and consumers will access this information and make effective choices. We examine the extent of comparison friction in the market for Medicare Part D prescription drug plans in the United States. In a randomized field experiment, an intervention group received a letter with personalized cost information. That information was readily available for free and widely advertised. However, this additional step--providing the information rather than having consumers actively access it--had an impact. Plan switching was 28 percent in the intervention group, versus 17 percent in the comparison group, and the intervention caused an average decline in predicted consumer cost of about $100 per year among letter recipients--roughly 5 percent of the cost in the comparison group. Our results suggest that comparison friction can be large even when the cost of acquiring information is small, and may be relevant for a wide range of public policies that incorporate consumer choice.
Handle: RePEc:nbr:nberwo:17410
Template-Type: ReDIF-Paper 1.0
Title: Vote-Buying and Reciprocity
Classification-JEL: H23; H41; O1
Author-Name: Frederico Finan
Author-Person: pfi199
Author-Name: Laura A. Schechter
Author-Person: psc469
Note: POL
Number: 17411
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17411
File-URL: http://www.nber.org/papers/w17411.pdf
File-Format: application/pdf
Publication-Status: published as Frederico Finan & Laura Schechter, 2012. "Vote‐Buying and Reciprocity," Econometrica, Econometric Society, vol. 80(2), pages 863-881, 03.
Abstract: While vote-buying is common, little is known about how politicians determine who to target. We argue that vote-buying can be sustained by an internalized norm of reciprocity. Receiving money engenders feelings of obligation. Combining survey data on vote-buying with an experiment-based measure of reciprocity, we show that politicians target reciprocal individuals. Overall, our findings highlight the importance of social preferences in determining political behavior.
Handle: RePEc:nbr:nberwo:17411
Template-Type: ReDIF-Paper 1.0
Title: Educational "Goodwill": Measuring the Intangible Assets at Highly Selective Private Colleges and Universities
Classification-JEL: I21
Author-Name: Peter Nurnberg
Author-Name: Morton Schapiro
Author-Name: David Zimmerman
Author-Person: pzi72
Note: ED
Number: 17412
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17412
File-URL: http://www.nber.org/papers/w17412.pdf
File-Format: application/pdf
Abstract: In this paper we utilize data on the head-to-head loss rate for students accepted at Williams College, but who opt to enroll elsewhere. For example, we employ data that measure the fraction of students admitted to Williams and to Amherst (or Harvard or Yale, etc.) but who opt to attend Amherst (or Harvard or Yale, etc.) instead of Williams. We then model this head-to-head loss rate using data from a variety of sources. A better understanding of the head-to-head loss rate can assist an institution in the competition for high quality students. Importantly, it can also shed light on the degree to which some part of the loss rate might be due to "intangible" differences between the schools being compared. These intangibles (positive or negative) might grant a school greater success (or failure) in the market for students than an objective accounting of its characteristics might suggest. Such an advantage (or disadvantage) is closely aligned with the business concept of "goodwill." We present preliminary evidence on how a quantitative measure of educational goodwill can be computed.
Handle: RePEc:nbr:nberwo:17412
Template-Type: ReDIF-Paper 1.0
Title: Racial, Ethnic and Gender Differences in Physical Activity
Classification-JEL: I12
Author-Name: Henry Saffer
Author-Person: psa935
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Michael Grossman
Author-Person: pgr107
Note: EH
Number: 17413
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17413
File-URL: http://www.nber.org/papers/w17413.pdf
File-Format: application/pdf
Publication-Status: published as Henry Saffer & Dhaval Dave & Michael Grossman & Leigh Ann Leung, 2013. "Racial, Ethnic, and Gender Differences in Physical Activity," Journal of Human Capital, University of Chicago Press, vol. 7(4), pages 378 - 410.
Abstract: This study examines racial, ethnic and gender differentials in physical activity. Individuals engage in physical activity during leisure-time and also during in many other activities such as walking to work, home maintenance, shopping and child care. Physical activity also occurs on the job is this is referred to as work physical activity. Prior studies have shown that non-work physical activity has a positive impact on health while work physical activity has a negative impact on health. Many prior studies have relied primarily on leisure-time physical activity, which typically constitutes only about 10% of non-work physical activity and does not capture specific information on the intensity or duration of the activity. This study addresses these limitations by constructing measures of physical activity from the American Time Use Surveys, which are all-inclusive and capture the duration of each activity combined with its intensity based on the Metabolic Equivalent of Task (MET). Non-work physical activity tends to be significantly lower for Blacks, Hispanics, other racial groups than for Whites and lower for males than for females. These adjusted differentials are consistent with racial, ethnic and gender differentials in health. About 25-46% of the differentials in non-work physical activity can be attributed to differences in education, socio-economic status, proxies for time constraints, and locational attributes.
Handle: RePEc:nbr:nberwo:17413
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Therapeutic Procedure Innovation on Hospital Patient Longevity: Evidence from Western Australia, 2000-2007
Classification-JEL: I12; J11; O33
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: EH PR
Number: 17414
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17414
File-URL: http://www.nber.org/papers/w17414.pdf
File-Format: application/pdf
Publication-Status: published as Lichtenberg, Frank R., 2013. "The impact of therapeutic procedure innovation on hospital patient longevity: Evidence from Western Australia, 2000â2007," Social Science & Medicine, Elsevier, vol. 77(C), pages 50-59.
Abstract: We investigate the effect of therapeutic procedure innovation in general on the longevity of all hospital patients, i.e. patients with a variety of medical conditions. The analysis is based on data on over one million discharges from public and private hospitals in Western Australia (WA) during the period 2000-2007. We can measure survival for a period as long as 8 years after admission, and we know the date each procedure was added to the Medicare Benefits Schedule. Estimates based on patient-level data indicate that therapeutic procedure innovation increased the life expectancy of WA hospital patients by almost 3 months between 2000 and 2007, controlling for the patient's age, sex, Diagnosis Related Group (DRG, over 600 categories), Aboriginal status, marital status, insurance coverage (whether or not the patient had private insurance), postcode (over 400 postcodes), year of hospital admission, and number of procedures performed.. Estimates based on longitudinal DRG-level data also indicate that therapeutic procedure innovation increased the life expectancy of WA hospital patients, but the implied increase may be smaller--about 2 months. In either case, therapeutic procedure innovation in WA hospitals appears to have been remarkably cost-effective, because it increased the cost of medical procedures by a negligible amount.
Handle: RePEc:nbr:nberwo:17414
Template-Type: ReDIF-Paper 1.0
Title: Who Benefits from Regional Trade Agreements? The View from the Stock Market
Classification-JEL: F10; F13; G14
Author-Name: Christoph Moser
Author-Person: pmo1040
Author-Name: Andrew K. Rose
Author-Person: pro71
Note: IFM ITI
Number: 17415
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17415
File-URL: http://www.nber.org/papers/w17415.pdf
File-Format: application/pdf
Publication-Status: published as Moser, Christoph & Rose, Andrew K., 2014. "Who benefits from regional trade agreements? The view from the stock market," European Economic Review, Elsevier, vol. 68(C), pages 31-47.
Abstract: The effects of Regional Trade Agreements (RTAs) are disputed. In this paper, we assess these effects using capital market data and an event-study approach, using a daily data set covering a thousand announcements spanning over eighty economies and a hundred RTAs over twenty recent years. We measure the effects of news concerning RTAs on the returns of national stock markets, adjusted for international stock market movements. We then link these excess returns to features of the RTA members and the agreements themselves. We find evidence of the natural trading partner hypothesis; stock markets rise more when RTAs are signed between countries that already engage in high volumes of trade. Stock markets also rise more when poorer countries sign RTAs.
Handle: RePEc:nbr:nberwo:17415
Template-Type: ReDIF-Paper 1.0
Title: Equity Yields
Classification-JEL: E32; E43; E44; F01; G10; G12
Author-Name: Jules H. van Binsbergen
Author-Person: pva668
Author-Name: Wouter Hueskes
Author-Name: Ralph Koijen
Author-Person: pko589
Author-Name: Evert B. Vrugt
Author-Person: pvr15
Note: AP CF EFG
Number: 17416
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17416
File-URL: http://www.nber.org/papers/w17416.pdf
File-Format: application/pdf
Publication-Status: published as van Binsbergen, Jules & Hueskes, Wouter & Koijen, Ralph & Vrugt, Evert, 2013. "Equity yields," Journal of Financial Economics, Elsevier, vol. 110(3), pages 503-519.
Abstract: We study a new data set of prices of traded dividends with maturities up to 10 years across three world regions: the US, Europe, and Japan. We use these asset prices to construct equity yields, analogous to bond yields. We decompose these yields to obtain a term structure of expected dividend growth rates and a term structure of risk premia, which allows us to decompose the equity risk premium by maturity. We find that both expected dividend growth rates and risk premia exhibit substantial variation over time, particularly for short maturities. In addition to predicting dividend growth, equity yields help predict other measures of economic growth such as consumption growth. We relate the dynamics of growth expectations to recent events such as the financial crisis and the earthquake in Japan.
Handle: RePEc:nbr:nberwo:17416
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of Deforestation in the Tropics
Classification-JEL: D73; L73
Author-Name: Robin Burgess
Author-Person: pbu12
Author-Name: Matthew Hansen
Author-Name: Benjamin A. Olken
Author-Person: pol170
Author-Name: Peter Potapov
Author-Name: Stefanie Sieber
Note: EEE POL
Number: 17417
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17417
File-URL: http://www.nber.org/papers/w17417.pdf
File-Format: application/pdf
Publication-Status: published as Robin Burgess & Matthew Hansen & Benjamin A. Olken & Peter Potapov & Stefanie Sieber, 2012. "The Political Economy of Deforestation in the Tropics," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1707-1754.
Abstract: Tropical deforestation accounts for almost one-fifth of greenhouse gas emissions worldwide and threatens the world's most diverse ecosystems. The prevalence of illegal forest extraction in the tropics suggests that understanding the incentives of local bureaucrats and politicians who enforce forest policy may be critical to understanding tropical deforestation. We find support for this thesis using a novel satellite-based dataset that tracks annual changes in forest cover across eight years of institutional change in post-Soeharto Indonesia. Increases in the numbers of political jurisdictions are associated with increased deforestation and with lower prices in local wood markets, consistent with a model of Cournot competition between jurisdictions. Illegal logging increases dramatically in the years leading up to local elections, suggesting the presence of "political logging cycles". And, illegal logging and rents from unevenly distributed oil and gas revenues are short run substitutes, but this effect dissapears over time as political turnover occurs. The results illustrate how incentives faced by local government officials affect deforestation, and provide an example of how standard economic theories can explain illegal behavior.
Handle: RePEc:nbr:nberwo:17417
Template-Type: ReDIF-Paper 1.0
Title: How to Solve Dynamic Stochastic Models Computing Expectations Just Once
Classification-JEL: C63
Author-Name: Kenneth L. Judd
Author-Person: pju19
Author-Name: Lilia Maliar
Author-Name: Serguei Maliar
Note: EFG TWP
Number: 17418
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17418
File-URL: http://www.nber.org/papers/w17418.pdf
File-Format: application/pdf
Publication-Status: published as Kenneth L. Judd & Lilia Maliar & Serguei Maliar & Inna Tsener, 2017. "How to solve dynamic stochastic models computing expectations just once," Quantitative Economics, vol 8(3), pages 851-893.
Abstract: We introduce a technique called "precomputation of integrals" that makes it possible to compute conditional expectations in dynamic stochastic models in the initial stage of the solution procedure. This technique can be applied to any set of equations that contains conditional expectations, in particular, to the Bellman and Euler equations. After the integrals are precomputed, we can solve stochastic models as if they were deterministic. We illustrate the benefits of precomputation of integrals using one- and multi-agent numerical examples.
Handle: RePEc:nbr:nberwo:17418
Template-Type: ReDIF-Paper 1.0
Title: Integration and Task Allocation: Evidence from Patient Care
Classification-JEL: I12; L23
Author-Name: Guy David
Author-Name: Evan Rawley
Author-Name: Daniel Polsky
Note: EH IO
Number: 17419
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17419
File-URL: http://www.nber.org/papers/w17419.pdf
File-Format: application/pdf
Publication-Status: published as Guy David & Evan Rawley & Daniel Polsky, 2013. "Integration and Task Allocation: Evidence from Patient Care," Journal of Economics & Management Strategy, vol 22(3), pages 617-639.
Abstract: We develop a formal model to show how integration solves task allocation problems between organizations and test the predictions of the model, using a large and rich patient-level dataset on hospital discharges to nursing homes and home health care. As predicted by the theory, we find that vertical integration allows hospitals to shift patient recovery tasks downstream to lower cost delivery systems by discharging patients earlier and in poorer health, and integration leads to greater post-hospitalization service intensity. While integration facilitates a shift in the allocation of tasks, health outcomes are no worse when patients receive care from an integrated provider. The evidence suggests that by improving the allocation of tasks, integration solves coordination problems that arise in market exchange.
Handle: RePEc:nbr:nberwo:17419
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Hours Worked in OECD Countries: New Measurement and Implications for Business Cycles
Classification-JEL: E0; F41; J22
Author-Name: Lee E. Ohanian
Author-Person: poh1
Author-Name: Andrea Raffo
Author-Person: pra187
Note: EFG LS
Number: 17420
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17420
File-URL: http://www.nber.org/papers/w17420.pdf
File-Format: application/pdf
Publication-Status: published as Ohanian, Lee E. & Raffo, Andrea, 2012. "Aggregate hours worked in OECD countries: New measurement and implications for business cycles," Journal of Monetary Economics, Elsevier, vol. 59(1), pages 40-56.
Abstract: We build a new quarterly dataset of aggregate hours worked consistent with standard NIPA constructs for 14 OECD countries over the last fifty years. We find that cyclical features of labor markets across countries differ markedly from the accepted empirical facts reported in the literature based on either just U.S. hours data, or based on cross-country employment data. We document that total hours worked in many OECD countries are about as volatile as output, that a relatively large fraction of labor market adjustment takes place along the intensive margin outside the United States, and that the volatility of total hours relative to output volatility has increased over time in almost all countries. We use these data to re-assess productivity and labor wedges during the Great Recession and during prior recessions. We find that the Great Recession in many OECD countries is a significant puzzle in that labor wedges are quite small, while those in the U.S. Great Recession - and those in previous European recessions - are much larger. These new data indicate that understanding cyclical labor fluctuations in OECD countries requires understanding why hours fluctuate so much more than previously considered, how and why labor markets changed so much in the last few years, why cyclical adjustment of hours per worker in countries with large firing costs is not even larger than observed, and why the Great Recession differs so much across countries.
Handle: RePEc:nbr:nberwo:17420
Template-Type: ReDIF-Paper 1.0
Title: Improving GDP Measurement: A Forecast Combination Perspective
Classification-JEL: E01; E32
Author-Name: S. Boragan Aruoba
Author-Person: par34
Author-Name: Francis X. Diebold
Author-Person: pdi1
Author-Name: Jeremy Nalewaik
Author-Name: Frank Schorfheide
Author-Person: psc19
Author-Name: Dongho Song
Author-Person: pso450
Note: AP EFG IFM
Number: 17421
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17421
File-URL: http://www.nber.org/papers/w17421.pdf
File-Format: application/pdf
Publication-Status: published as "Improving GDP Measurement: A Forecast Combination Perspective," in X. Chen and N. Swanson (eds.), Recent Advances and Future Directions in Causality, Prediction, and Specification Analysis: Essays in Honor of Halbert L. White Jr., Springer, 1- 26, 2012. With B. Aruoba, J. Nalewaik, F. Schorfheide and D. Song,
Abstract: Two often-divergent U.S. GDP estimates are available, a widely-used expenditure side version, GDPE, and a much less widely-used income-side version GDPI . We propose and explore a "forecast combination" approach to combining them. We then put the theory to work, producing a superior combined estimate of GDP growth for the U.S., GDPC. We compare GDPC to GDPE and GDPI , with particular attention to behavior over the business cycle. We discuss several variations and extensions.
Handle: RePEc:nbr:nberwo:17421
Template-Type: ReDIF-Paper 1.0
Title: Crashes and Collateralized Lending
Classification-JEL: G01; G12; G2
Author-Name: Jakub W. Jurek
Author-Name: Erik Stafford
Author-Person: pst291
Note: AP CF
Number: 17422
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17422
File-URL: http://www.nber.org/papers/w17422.pdf
File-Format: application/pdf
Abstract: This paper develops a parsimonious static model for characterizing financing terms in collateralized lending markets. We characterize the systematic risk exposures for a variety of securities and develop a simple indifference-pricing framework to value the systematic crash risk exposure of the collateral. We then apply Modigliani and Miller's (1958) Proposition Two (MM) to split the cost of bearing this risk between the borrower and lender, resulting in a schedule of haircuts and financing rates. The model produces comparative statics and time-series dynamics that are consistent with the empirical features of repo market data, including the dramatic change in financing terms for structured products during the credit crisis of 2007-2008.
Handle: RePEc:nbr:nberwo:17422
Template-Type: ReDIF-Paper 1.0
Title: The Socio-Economic Causes of Obesity
Classification-JEL: I1; I12
Author-Name: Charles L. Baum
Author-Person: pba503
Author-Name: Shin-Yi Chou
Note: EH
Number: 17423
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17423
File-URL: http://www.nber.org/papers/w17423.pdf
File-Format: application/pdf
Abstract: An increasing number of Americans are obese, with a body mass index of 30 or more. In fact, the latest estimates indicate that about 30% of Americans are currently obese, which is roughly a 100% increase from 25 years ago. It is well accepted that weight gain is caused by caloric imbalance, where more calories are consumed than expended. Nevertheless, it is not clear why the prevalence of obesity has increased so dramatically over the last 30 years. We simultaneously estimate the effects of the various socio-economic factors on weight status, considering in our analysis many of the socio-economic factors that have been identified by other researchers as important influences on caloric imbalance: employment, physical activity at work, food prices, the prevalence of restaurants, cigarette smoking, cigarette prices and taxes, food stamp receipt, and urbanization. We use 1979- and 1997-cohort National Longitudinal Survey of Youth (NLSY) data, which allows us to compare the prevalence of obesity between cohorts surveyed roughly 25 years apart. Using the traditional Blinder-Oaxaca decomposition technique, we find that cigarette smoking has the largest effect: the decline in cigarette smoking explains about 2% of the increase in the weight measures. The other significant factors explain less.
Handle: RePEc:nbr:nberwo:17423
Template-Type: ReDIF-Paper 1.0
Title: Estimators for Persistent and Possibly Non-Stationary Data with Classical Properties
Classification-JEL: C22; C32; E27; E37; G17
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Anna Mikusheva
Author-Name: Serena Ng
Author-Person: png6
Note: AP EFG IFM ME TWP
Number: 17424
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17424
File-URL: http://www.nber.org/papers/w17424.pdf
File-Format: application/pdf
Publication-Status: published as Gorodnichenko, Yuriy & Mikusheva, Anna & Ng, Serena, 2012. "Estimators For Persistent And Possibly Nonstationary Data With Classical Properties," Econometric Theory, Cambridge University Press, vol. 28(05), pages 1003-1036, October.
Abstract: This paper considers a moments based non-linear estimator that is root-T consistent and uniformly asymptotically normal irrespective of the degree of persistence of the forcing process. These properties hold for linear autoregressive models, linear predictive regressions, as well as certain non-linear dynamic models. Asymptotic normality is obtained because the moments are chosen so that the objective function is uniformly bounded in probability and that a central limit theorem can be applied. Critical values from the normal distribution can be used irrespective of the treatment of the deterministic terms. Simulations show that the estimates are precise, and the t-test has good size in the parameter region where the least squares estimates usually yield distorted inference.
Handle: RePEc:nbr:nberwo:17424
Template-Type: ReDIF-Paper 1.0
Title: The Federal Reserve as an Informed Foreign Exchange Trader: 1973 - 1995
Classification-JEL: E52; E58; F31; N22
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: 17425
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17425
File-URL: http://www.nber.org/papers/w17425.pdf
File-Format: application/pdf
Publication-Status: published as Michael D. Bordo & Owen F. Humpage & Anna J. Schwartz, 2012. "The Federal Reserve as an Informed Foreign Exchange Trader: 1973–1995," International Journal of Central Banking, International Journal of Central Banking, vol. 8(1), pages 127-160, March.
Abstract: If official interventions convey private information useful for price discovery in foreign-exchange markets, then they should have value as a forecast of near-term exchange-rate movements. Using a set of standard criteria, we show that approximately 60 percent of all U.S. foreign-exchange interventions between 1973 and 1995 were successful in this sense. This percentage, however, is no better than random. U.S. intervention sales and purchases of foreign exchange were incapable of forecasting dollar appreciations or depreciations. U.S. interventions, however, were associated with more moderate dollar movements in a manner consistent with leaning against the wind, but only about 22 percent of all U.S. interventions conformed to this pattern. We also found that the larger the size of an intervention, the greater was its probability of success, although some interventions were inefficiently large. Other potential characteristics of intervention, notably coordination and secrecy, did not seem to influence our success rates.
Handle: RePEc:nbr:nberwo:17425
Template-Type: ReDIF-Paper 1.0
Title: The FDA and ABCs: The Unintended Consequences of Antidepressant Warnings on Human Capital
Classification-JEL: I12; J18; J24
Author-Name: Susan Busch
Author-Name: Ezra Golberstein
Author-Name: Ellen Meara
Note: CH EH
Number: 17426
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17426
File-URL: http://www.nber.org/papers/w17426.pdf
File-Format: application/pdf
Publication-Status: published as Susan H. Busch & Ezra Golberstein & Ellen Meara, 2014. "The FDA and ABCs," Journal of Human Resources, vol 49(3), pages 540-571.
Abstract: Using annual cross-sectional data on over 100,000 adolescents aged 12-17, we studied academic and behavioral outcomes among those who were and were not likely affected by FDA warnings regarding the safety of antidepressants. Just before the FDA warnings, adolescents with probable depression had grade point averages 0.14 points higher than adolescents with depression just after the warnings. The FDA warnings also coincided with increased delinquency, use of tobacco and illicit drugs. Together, our results stress the importance of mental health and its treatment as an input into cognitive and non-cognitive aspects of human capital.
Handle: RePEc:nbr:nberwo:17426
Template-Type: ReDIF-Paper 1.0
Title: The Fiscal Stimulus of 2009-10: Trade Openness, Fiscal Space and Exchange Rate Adjustment
Classification-JEL: E62; F42; O23
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Note: IFM ITI
Number: 17427
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17427
File-URL: http://www.nber.org/papers/w17427.pdf
File-Format: application/pdf
Publication-Status: published as The Fiscal Stimulus of 2009-2010: Trade Openness, Fiscal Space, and Exchange Rate Adjustment, Joshua Aizenman, Yothin Jinjarak. in NBER International Seminar on Macroeconomics 2011, Frankel and Pissarides. 2012
Abstract: This paper studies the cross-country variation of the fiscal stimulus and the exchange rate adjustment propagated by the global crisis of 2008-9, identifying the role of economic structure in accounting for the heterogeneity of response. We find that greater de facto fiscal space prior to the global crisis and lower trade openness were associated with a higher fiscal stimulus/GDP during 2009-2010 (where the de facto fiscal space is the inverse of the average tax-years it would take to repay the public debt). Lowering the 2006 public debt/average tax base from the level of low-income countries (5.94) down to the average level of the Euro minus the Euro-area peripheral countries (1.97), was associated with a larger crisis stimulus in 2009-11 of 2.78 GDP percentage points. Joint estimation of fiscal stimuli and exchange rate depreciations indicates that higher trade openness was associated with a smaller fiscal stimulus and a higher depreciation rate during the crisis. Overall, the results are in line with the predictions of the neo-Keynesian open-economy model.
Handle: RePEc:nbr:nberwo:17427
Template-Type: ReDIF-Paper 1.0
Title: Cyclicality, Performance Measurement, and Cash Flow Liquidity in Private Equity
Classification-JEL: G10; G11; G20; G24
Author-Name: David T. Robinson
Author-Person: pro347
Author-Name: Berk A. Sensoy
Note: AP CF
Number: 17428
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17428
File-URL: http://www.nber.org/papers/w17428.pdf
File-Format: application/pdf
Publication-Status: published as David T. Robinson & Berk A. Sensoy, 2016. "Cyclicality, performance measurement, and cash flow liquidity in private equity," Journal of Financial Economics, vol 122(3), pages 521-543.
Abstract: Public and private equity waves move together. Using quarterly cash-flow data for a large sample of venture capital and buyout funds from 1984-2010, we investigate the implications of this co-cyclicality for understanding private equity cash flows and performance. In the cross-section, varying the beta used to assess relative performance has a large effect on inference near a beta of zero, but only a modest effect for more reasonable beta estimates. A similar message comes through in the time series. Though funds raised in hot markets underperform in absolute terms, this underperformance is sharply reduced by a comparison to the S&P 500, and disappears entirely at the levels of beta recently estimated in the literature. These findings imply that high private equity fundraising forecasts both low private equity cash flows and low market returns, suggesting a positive correlation between private equity net cash flows and public equity valuations. Examining cash flows directly, we find that this is indeed the case. While both capital calls and distributions rise with public equity valuations, distributions are more sensitive than calls. Net cash flows are therefore procyclical and private equity funds are liquidity providers (sinks) when market valuations are high (low). Venture cash flows and performance are considerably more procyclical than buyout. Debt market conditions also have a significant impact on private equity cash flows. At the same time, most cash-flow variation is idiosyncratic across funds, and most predictable variation is explained by the age of the fund.
Handle: RePEc:nbr:nberwo:17428
Template-Type: ReDIF-Paper 1.0
Title: The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the US and Europe
Classification-JEL: E0; E24
Author-Name: Alejandro Justiniano
Author-Person: pju154
Author-Name: Claudio Michelacci
Author-Person: pmi94
Note: EFG
Number: 17429
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17429
File-URL: http://www.nber.org/papers/w17429.pdf
File-Format: application/pdf
Publication-Status: published as The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the United States and Europe, Alejandro Justiniano, Claudio Michelacci. in NBER International Seminar on Macroeconomics 2011, Frankel and Pissarides. 2012
Abstract: We set-up a real business cycle model with search and matching frictions driven by several shocks, which nests full Nash Bargaining and wage rigidity as special cases and includes other transmission mechanisms suggested by the literature for the propagation and amplification of disturbances. The model is estimated using full information methods for two Anglo-Saxon countries (the US and the UK), two Continental European countries (France and Germany) and two Scandinavian countries (Norway and Sweden). We conduct inference with mixed frequency data, combining quarterly series for unemployment, vacancies, GDP, consumption, and investment, with annual data on unemployment flows. Parameters and shocks are estimated separately for each country, which can then vary in terms of search and hiring costs, workers' bargaining power, unemployment benefits levels, wage rigidity and the stochastic properties of disturbances. Overall, the structural model accounts reasonably well for differences in labor market dynamics observed between the two sides of the Atlantic and within Europe. Our estimates indicate that there is considerable cross-country variation in the contribution of technology shocks to the cyclical fluctuations of the labor market. Technology shocks alone replicate remarkably well the volatility in vacancies, unemployment and finding probabilities observed in US, with mixed success in Europe. In contrast, matching shocks and job destruction shocks play a larger role in most European countries relative to the US.
Handle: RePEc:nbr:nberwo:17429
Template-Type: ReDIF-Paper 1.0
Title: Reconciling Micro and Macro Labor Supply Elasticities: A Structural Perspective
Classification-JEL: E24; J22
Author-Name: Michael P. Keane
Author-Person: pke18
Author-Name: Richard Rogerson
Author-Person: pro53
Note: EFG
Number: 17430
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17430
File-URL: http://www.nber.org/papers/w17430.pdf
File-Format: application/pdf
Publication-Status: published as Micro and Macro Labor Supply Elasticities: A Reassessment of Conventional Wisdom June 2012 By: Richard Rogerson With Michael Keane; Journal of Economic Literature, Vol. 50, No. 2
Publication-Status: published as Michael Keane & Richard Rogerson, 2015. "Reconciling Micro and Macro Labor Supply Elasticities: A Structural Perspective," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 89-117, 08.
Abstract: The response of aggregate labor supply to various changes in the economic environment is central to many economic issues, especially the optimal design of tax policies. This paper surveys recent work that uses structural models and micro data to evaluate the size of this response. Whereas the earlier literature on this issue often concluded that aggregate labor supply elasticities were small, recent work has identified three key reasons that the aggregate elasticity may be quite large. First, earlier estimates abstracted from several key features, including human capital accumulation, leading to estimates that are dramatically negatively biased. Second, failure to understand that aggregate labor supply adjustments can occur along both the hours per worker and employment margins has led economists to misinterpret the implications of previous estimates for aggregate labor supply. Third, structural estimation of responses along the extensive (i.e., employment) margin are typically quite large.
Handle: RePEc:nbr:nberwo:17430
Template-Type: ReDIF-Paper 1.0
Title: Toward a Political Economy of Macroeconomic Thinking
Classification-JEL: A11; E6
Author-Name: Gilles St. Paul
Author-Person: psa60
Note: ME POL
Number: 17431
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17431
File-URL: http://www.nber.org/papers/w17431.pdf
File-Format: application/pdf
Publication-Status: published as Gilles Saint-Paul, 2012. "Toward a Political Economy of Macroeconomic Thinking," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 8(1), pages 249 - 284.
Publication-Status: published as Toward a Political Economy of Macroeconomic Thinking, Gilles Saint-Paul. in NBER International Seminar on Macroeconomics 2011, Frankel and Pissarides. 2012
Abstract: This paper investigates, in a simplified macro context, the joint determination of the (incorrect) perceived model and the equilibrium. I assume that the model is designed by a self-interested economist who knows the true structural model, but reports a distorted one so as to influence outcomes. This model influences both the people and the government; the latter tries to stabilize an unobserved demand shock and will make different inferences about that shock depending on the model it uses. The model's choice is constrained by a set of autocoherence conditions that state that, in equilibrium, if everybody uses the model then it must correctly predict the moments of the observables. I then study, in particular, how the models devised by the economists vary depending on whether they are "progressive" vs. "conservative". The predictions depend greatly on the specifics of the economy being considered. But in many cases, they are plausible. For example, conservative economists will tend to report a lower keynesian multiplier, and a greater long-term inflationary impact of output expansions. On the other hand, the economists' margin of manoeuver is constrained by the autocoherence conditions. Here, a "progressive" economist who promotes a Keynesian multiplier larger than it really is, must, to remain consistent, also claim that demand shocks are more volatile than they really are. Otherwise, people will be disappointed by the stabilization performance of fiscal policy and reject the hypothesized value of the multiplier. In some cases, autocoherence induces the experts to make, loosely speaking, ideological concessions on some parameter values. The analysis is illustrated by empirical evidence from the Survey of Professional Forecasters.
Handle: RePEc:nbr:nberwo:17431
Template-Type: ReDIF-Paper 1.0
Title: The Democratic Transition
Classification-JEL: N10; O43; O57
Author-Name: Fabrice Murtin
Author-Person: pmu294
Author-Name: Romain Wacziarg
Author-Person: pwa67
Note: POL
Number: 17432
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17432
File-URL: http://www.nber.org/papers/w17432.pdf
File-Format: application/pdf
Publication-Status: published as The Democratic Transition (with Fabrice Murtin), Journal of Economic Growth, 19(2), June 2014, pp. 141-181. Lead article.
Abstract: Over the last two centuries, many countries experienced regime transitions toward democracy. We document this democratic transition over a long time horizon. We use historical time series of income, education and democracy levels from 1870 to 2000 to explore the economic factors associated with rising levels of democracy. We find that primary schooling, and to a weaker extent per capita income levels, are strong determinants of the quality of political institutions. We find little evidence of causality running the other way, from democracy to income or education.
Handle: RePEc:nbr:nberwo:17432
Template-Type: ReDIF-Paper 1.0
Title: Firm Heterogeneity, Endogenous Entry, and the Business Cycle
Classification-JEL: E20; E32; L11; L16
Author-Name: Gianmarco I.P. Ottaviano
Author-Person: pot15
Note: EFG
Number: 17433
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17433
File-URL: http://www.nber.org/papers/w17433.pdf
File-Format: application/pdf
Publication-Status: published as Gianmarco I. P. Ottaviano, 2012. "Firm Heterogeneity, Endogenous Entry, and the Business Cycle," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 8(1), pages 57 - 86.
Publication-Status: published as Firm Heterogeneity, Endogenous Entry, and the Business Cycle, Gianmarco I. P. Ottaviano. in NBER International Seminar on Macroeconomics 2011, Frankel and Pissarides. 2012
Abstract: This paper investigates the role that the entry and exit of heterogeneous firms plays in shaping aggregate fluctuations in economic activity. In so doing, it develops a dynamic stochastic general equilibrium model in which procyclical entry and countercyclical exit along a real business cycle lead to endogenous cyclical movements in average firm productivity. These movements stem from a composition effect due to the reallocation of market shares among firms with different levels of efficiency and affect the propagation of exogenous technological shocks. Numerical analysis suggests that existing models with representative firms may overstate the actual role of procyclical entry and exit in imperfectly competitive markets as a propagation mechanism of exogenous technology shocks. The reason is that procyclical entry and countercyclical exit disproportionately involve less efficiency firms whose impact on aggregate economic activity is hampered by their smaller size.
Handle: RePEc:nbr:nberwo:17433
Template-Type: ReDIF-Paper 1.0
Title: Where Have All the Young Men Gone? Using Gender Ratios to Measure Fetal Death Rates
Classification-JEL: I12; Q51; Q53
Author-Name: Nicholas J. Sanders
Author-Person: psa898
Author-Name: Charles F. Stoecker
Author-Person: pst692
Note: CH EEE EH PE
Number: 17434
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17434
File-URL: http://www.nber.org/papers/w17434.pdf
File-Format: application/pdf
Publication-Status: published as Sanders, Nicholas J. & Stoecker, Charles, 2015. "Where have all the young men gone? Using sex ratios to measure fetal death rates," Journal of Health Economics, Elsevier, vol. 41(C), pages 30-45.
Abstract: Fetal health is an important consideration in the formation of health-based policy. However, a complete census of true fetal deaths is impossible to obtain. We present the gender ratio of live births as an under-exploited metric of fetal health and apply it to examine the effects of air quality on fetal health. Males are more vulnerable to side effects of maternal stress in utero, and thus are more likely to suffer fetal death due to pollution exposure. We demonstrate this metric in the context of the Clean Air Act Amendments of 1970 (CAAA) which provide a source of exogenous variation in county-level ambient total suspended particulate matter (TSPs). We find that a standard deviation increase in annual average TSPs (approximately 35 μg/m³) decreases the percentage of live births that are male by 3.1 percentage points. We then explore the use of observed differences in neonatal and one-year mortality rates across genders in response to pollution exposure as a metric to estimate total fetal losses in utero. These calculations suggest the pollution reductions from the CAAA prevented approximately 21,000-134,000 fetal deaths in 1972.
Handle: RePEc:nbr:nberwo:17434
Template-Type: ReDIF-Paper 1.0
Title: Credit Constraints in Education
Classification-JEL: D14; H52; I22; I23; J24
Author-Name: Lance Lochner
Author-Person: plo31
Author-Name: Alexander Monge-Naranjo
Author-Person: pmo730
Note: CH ED LS PE
Number: 17435
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17435
File-URL: http://www.nber.org/papers/w17435.pdf
File-Format: application/pdf
Publication-Status: published as Lance Lochner & Alexander Monge-Naranjo, 2012. "Credit Constraints in Education," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 225-256, 07.
Abstract: We review studies of the impact of credit constraints on the accumulation of human capital. Evidence suggests that credit constraints are increasingly important for schooling and other aspects of households' behavior. We highlight the importance of early childhood investments, since their response largely determines the impact of credit constraints on the overall lifetime acquisition of human capital. We also review the intergenerational literature and examine the macroeconomic impacts of credit constraints on social mobility and the income distribution. A common limitation across all areas of the human capital literature is the imposition of ad hoc constraints on credit. We propose a more careful treatment of the structure of government student loan programs as well as the incentive problems underlying private credit. We show that endogenizing constraints on credit for human capital helps explain observed borrowing, schooling, and default patterns and offers new insights about the design of government policy.
Handle: RePEc:nbr:nberwo:17435
Template-Type: ReDIF-Paper 1.0
Title: Competition in Persuasion
Classification-JEL: D83; L15; M37
Author-Name: Matthew Gentzkow
Author-Person: pge43
Author-Name: Emir Kamenica
Note: IO LE POL
Number: 17436
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17436
File-URL: http://www.nber.org/papers/w17436.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Gentzkow & Emir Kamenica, 2017. "Competition in Persuasion," The Review of Economic Studies, vol 84(1), pages 300-322.
Abstract: We study symmetric information games where a number of senders choose what information to communicate. We show that the impact of competition on information revelation is ambiguous in general. We identify a condition on the information environment (i.e., the set of signals available to each sender) that is necessary and sufficient for equilibrium outcomes to be no less informative than the collusive outcome, regardless of preferences. The same condition also provides an easy way to characterize the equilibrium set and governs whether introducing additional senders or decreasing the alignment of senders’ preferences necessarily increases the amount of information revealed.
Handle: RePEc:nbr:nberwo:17436
Template-Type: ReDIF-Paper 1.0
Title: In the Eye of a Storm: Manhattan's Money Center Banks During the International Financial Crisis of 1931
Classification-JEL: E02; E42; E44; G21; N1; N12; N14; N2; N22; N24
Author-Name: Gary Richardson
Author-Person: pri185
Author-Name: Patrick Van Horn
Author-Person: pva512
Note: DAE
Number: 17437
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17437
File-URL: http://www.nber.org/papers/w17437.pdf
File-Format: application/pdf
Publication-Status: published as Gary Richardson & Patrick Van Horn, 2017. "In the Eye of a Storm: Manhattan's Money Center Banks during the International Financial Crisis of 1931," Explorations in Economic History, .
Abstract: In the summer of 1931, a financial crisis began in Austria, spread to Germany, forced Britain to abandon the gold standard, crossed the Atlantic, and afflicted financial institutions in the United States. This article describes how banks in New York City, the central money market of the United States, reacted to this trans-Atlantic trauma. New York’s money-center banks anticipated the onset of a financial crisis, prepared for it by accumulating substantial reserves, and during the European crisis, continued business as usual. New York’s leading bankers deliberately and collectively decided on the business-as-usual policy in order to minimize the impact of the panic in the United States. New York banks’ behavior changed only after the Federal Reserve raised discount rates to stem gold outflows in the fall of 1931.
Handle: RePEc:nbr:nberwo:17437
Template-Type: ReDIF-Paper 1.0
Title: School Choice, School Quality and Postsecondary Attainment
Classification-JEL: H4; I2; I21
Author-Name: David J. Deming
Author-Person: pde497
Author-Name: Justine S. Hastings
Author-Person: pha804
Author-Name: Thomas J. Kane
Author-Name: Douglas O. Staiger
Author-Person: pst466
Note: CH ED LS PE
Number: 17438
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17438
File-URL: http://www.nber.org/papers/w17438.pdf
File-Format: application/pdf
Publication-Status: published as “School Choice, School Quality and Postsecondary Attainment” (with Tom Kane, Justine Hastings and Doug Staiger). 2014. American Economic Review, 104(3): 991-1014.
Abstract: We study the impact of a public school choice lottery in Charlotte-Mecklenburg schools on college enrollment and degree completion. We find a significant overall increase in college attainment among lottery winners who attend their first choice school. Using rich administrative data on peers, teachers, course offerings and other inputs, we show that the impacts of choice are strongly predicted by gains on several measures of school quality. Gains in attainment are concentrated among girls. Girls respond to attending a better school with higher grades and increases in college-preparatory course-taking, while boys do not.
Handle: RePEc:nbr:nberwo:17438
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Changes in Women's Labor Market Attachment on Redistribution Under the Social Security Benefit Formula
Classification-JEL: D31; H55; J11; J14; J16; J18; J26; J38
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Author-Name: Nahid Tabatabai
Note: AG LS
Number: 17439
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17439
File-URL: http://www.nber.org/papers/w17439.pdf
File-Format: application/pdf
Publication-Status: published as "Redistribution Under the Social Security Benefit Formula at the Individual and Household Levels, 1992 and 2004". Journal of Pension Economics and Finance 12(1), January, 2013: 1-27
Abstract: Studies using data from the early 1990s suggested that while the progressive Social Security benefit formula succeeded in redistributing benefits from individuals with high earnings to individuals with low earnings, it was much less successful in redistributing benefits from households with high earnings to households with low earnings. Wives often earned much less than their husbands. As a result, much of the redistribution at the individual level was effectively from high earning husbands to their own lower earning wives. In addition, spouse and survivor benefits accrue disproportionately to women from high income households. Both factors mitigate redistribution at the household level. This paper compares outcomes for the earlier cohort with those of a cohort born twelve years later. The aim of the study is to see whether, after the recent growth in two earner households, and the growth in women's labor market activity and earnings, the Social Security system now fosters somewhat more redistribution from high to low earning households. The analysis is based on data from the Health and Retirement Study and includes members of households with at least one person age 51 to 56 in either 1992 or in 2004. As expected, women enjoyed a more rapid growth of labor force participation, hours of work and covered earnings than men. This increased the redistribution of Social Security benefits among households. Nevertheless, a considerable gap remains between the labor market activities and earnings of women versus men. As a result, the Social Security system remains much less successful in redistributing benefits from households with high covered earnings to those with lower covered earnings than in redistributing benefits from individuals with high covered earnings to those with lower covered earnings.
Handle: RePEc:nbr:nberwo:17439
Template-Type: ReDIF-Paper 1.0
Title: Does Widowhood Explain Gender Differences in Out-of-Pocket Medical Spending Among the Elderly?
Classification-JEL: I11; J12; J14; J16
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: John B. Shoven
Author-Name: Sita Nataraj Slavov
Author-Person: pna81
Note: AG EH PE
Number: 17440
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17440
File-URL: http://www.nber.org/papers/w17440.pdf
File-Format: application/pdf
Publication-Status: published as Goda, Gopi Shah & Shoven, John B. & Slavov, Sita Nataraj, 2013. "Does widowhood explain gender differences in out-of-pocket medical spending among the elderly?," Journal of Health Economics, Elsevier, vol. 32(3), pages 647-658.
Abstract: Despite the presence of Medicare, out-of-pocket medical spending is a large expenditure risk facing the elderly. While women live longer than men, elderly women incur higher out-of-pocket medical spending than men at each age. In this paper, we examine whether differences in marital status and living arrangements can explain this difference. We find that out-of-pocket medical spending is approximately 29 percent higher when an individual becomes widowed, a large portion of which is spending on nursing homes. Our results suggest a substantial role of living arrangements in out-of-pocket medical spending; however, our estimates combined with differences in rates of widowhood across gender suggest that marital status can explain only one third of the gender difference in total out-of-pocket medical spending, leaving a large portion unexplained. On the other hand, gender differences in widowhood more than explain the observed gender difference in out-of-pocket spending on nursing homes.
Handle: RePEc:nbr:nberwo:17440
Template-Type: ReDIF-Paper 1.0
Title: Creativity and the Family Tree: Human Capital Endowments and the Propensity of Entrepreneurs to Patent
Classification-JEL: J24; L26; O31
Author-Name: Albert N. Link
Author-Person: pli161
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: LS PR
Number: 17441
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17441
File-URL: http://www.nber.org/papers/w17441.pdf
File-Format: application/pdf
Publication-Status: published as “Fathers’ Patenting Behavior and the Propensity of Offspring to Patent: An Intergenerational Analysis” (with Albert N. Link), the Journal of Technology Transfer, 38(3), June 2013, 332-340.
Abstract: In this paper we show that the patenting behavior of creative entrepreneurs is correlated with the patenting behavior of their fathers, which we refer to as a source of the entrepreneurs' human capital endowments. Our argument for this relationship follows from established theories of developmental creativity, and our empirical analysis is based on survey data collected from MIT's Technology Review winners.
Handle: RePEc:nbr:nberwo:17441
Template-Type: ReDIF-Paper 1.0
Title: Robust Inference for Misspecified Models Conditional on Covariates
Classification-JEL: C01
Author-Name: Alberto Abadie
Author-Person: pab7
Author-Name: Guido W. Imbens
Author-Person: pim4
Author-Name: Fanyin Zheng
Note: TWP
Number: 17442
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17442
File-URL: http://www.nber.org/papers/w17442.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Abadie, Guido W. Imbens & Fanyin Zheng pages 1601-1614 Inference for Misspecified Models With Fixed Regressors Journal of the American Statistical Association Volume 109, Issue 508, 2014
Abstract: Following the work by White (1980ab; 1982) it is common in empirical work in economics to report standard errors that are robust against general misspecification. In a regression setting these standard errors are valid for the parameter that in the population minimizes the squared difference between the conditional expectation and the linear approximation, averaged over the population distribution of the covariates. In nonlinear settings a similar interpretation applies. In this note we discuss an alternative parameter that corresponds to the approximation to the conditional expectation based on minimization of the squared difference averaged over the sample, rather than the population, distribution of a subset of the variables. We argue that in some cases this may be a more interesting parameter. We derive the asymptotic variance for this parameter, generally smaller than the White robust variance, and we propose a consistent estimator for the asymptotic variance.
Handle: RePEc:nbr:nberwo:17442
Template-Type: ReDIF-Paper 1.0
Title: A Brief History of Regulations Regarding Financial Markets in the United States: 1789 to 2009
Classification-JEL: G01; G2; G21; G22; G28; N2; N21; N22
Author-Name: Alejandro Komai
Author-Name: Gary Richardson
Author-Person: pri185
Note: DAE
Number: 17443
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17443
File-URL: http://www.nber.org/papers/w17443.pdf
File-Format: application/pdf
Abstract: In the United States today, the system of financial regulation is complex and fragmented. Responsibility to regulate the financial services industry is split between about a dozen federal agencies, hundreds of state agencies, and numerous industry-sponsored self-governing associations. Regulatory jurisdictions often overlap, so that most financial firms report to multiple regulators; but gaps exist in the supervisory structure, so that some firms report to few, and at times, no regulator. The overlapping jumble of standards; laws; and federal, state, and private jurisdictions can confuse even the most sophisticated student of the system. This article explains how that confusion arose. The story begins with the Constitutional Convention and the foundation of our nation. Our founding fathers fragmented authority over financial markets between federal and state governments. That legacy survives today, complicating efforts to create a financial system that can function effectively during the twenty-first century.
Handle: RePEc:nbr:nberwo:17443
Template-Type: ReDIF-Paper 1.0
Title: Clearing Up the Fiscal Multiplier Morass
Classification-JEL: C11; E62; E63
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Nora Traum
Author-Person: ptr159
Author-Name: Todd B. Walker
Author-Person: pwa179
Note: EFG
Number: 17444
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17444
File-URL: http://www.nber.org/papers/w17444.pdf
File-Format: application/pdf
Publication-Status: published as Eric M. Leeper & Nora Traum & Todd B. Walker, 2017. "Clearing Up the Fiscal Multiplier Morass," American Economic Review, vol 107(8), pages 2409-2454.
Abstract: Bayesian prior predictive analysis of five nested DSGE models suggests that model specifications and prior distributions tightly circumscribe the range of possible government spending multipliers. Multipliers are decomposed into wealth and substitution effects, yielding uniform comparisons across models. By constraining the multiplier to tight ranges, model and prior selections bias results, revealing less about fiscal effects in data than about the lenses through which researchers choose to interpret data. When monetary policy actively targets inflation, output multipliers can exceed one, but investment multipliers are likely to be negative. Passive monetary policy produces consistently strong multipliers for output, consumption, and investment.
Handle: RePEc:nbr:nberwo:17444
Template-Type: ReDIF-Paper 1.0
Title: Means-Tested Subsidies and Economic Performance Since 2007
Classification-JEL: E24; E32; H31; O41
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG PE
Number: 17445
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17445
File-URL: http://www.nber.org/papers/w17445.pdf
File-Format: application/pdf
Abstract: The aggregate neoclassical growth model - with means-tested subsidies whose replacement rates began rising 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. Despite having no explicit financial market, the model 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 that real consumption fell significantly below trend during 2008 suggests that labor usage per capita is expected to remain well below pre-recession levels for several years.
Handle: RePEc:nbr:nberwo:17445
Template-Type: ReDIF-Paper 1.0
Title: The Impacts of the Climate Change Levy on Manufacturing: Evidence from Microdata
Classification-JEL: D21; Q41; Q48; Q54
Author-Name: Ralf Martin
Author-Person: pma225
Author-Name: Laure B. de Preux
Author-Name: Ulrich J. Wagner
Note: EEE PE
Number: 17446
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17446
File-URL: http://www.nber.org/papers/w17446.pdf
File-Format: application/pdf
Abstract: We estimate the impacts of the Climate Change Levy (CCL) on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a Climate Change Agreement (CCA). Exploiting exogenous variation in eligibility for CCA participation, we find that the CCL had a strong negative impact on energy intensity and electricity use. We cannot reject the hypothesis that the tax had no detrimental effects on economic performance and on plant exit.
Handle: RePEc:nbr:nberwo:17446
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Multipliers in Recession and Expansion
Classification-JEL: E32; E62
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG PE
Number: 17447
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17447
File-URL: http://www.nber.org/papers/w17447.pdf
File-Format: application/pdf
Publication-Status: published as Fiscal Multipliers in Recession and Expansion, Alan J. Auerbach, Yuriy Gorodnichenko. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: In this paper, we estimate government purchase multipliers for a large number of OECD countries, allowing these multipliers to vary smoothly according to the state of the economy and using real-time forecast data to purge policy innovations of their predictable components. We adapt our previous methodology (Auerbach and Gorodnichenko, 2011) to use direct projections rather than the SVAR approach to estimate multipliers, to economize on degrees of freedom and to relax the assumptions on impulse response functions imposed by the SVAR method. Our findings confirm those of our earlier paper. In particular, GDP multipliers of government purchases are larger in recession, and controlling for real-time predictions of government purchases tends to increase the estimated multipliers of government purchases in recession. We also consider the responses of other key macroeconomic variables and find that these responses generally vary over the cycle as well, in a pattern consistent with the varying impact on GDP.
Handle: RePEc:nbr:nberwo:17447
Template-Type: ReDIF-Paper 1.0
Title: Costly Contracts and Consumer Credit
Classification-JEL: E21; E49; G18; K35
Author-Name: Igor Livshits
Author-Person: pli188
Author-Name: James MacGee
Author-Person: pma48
Author-Name: Michèle Tertilt
Author-Person: pte114
Note: EFG
Number: 17448
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17448
File-URL: http://www.nber.org/papers/w17448.pdf
File-Format: application/pdf
Abstract: Financial innovations are a common explanation of the rise in consumer credit and bankruptcies. To evaluate this story, we develop a simple model that incorporates two key frictions: asymmetric information about borrowers' risk of default and a fixed cost to create each contract offered by lenders. Innovations which reduce the fixed cost or ameliorate asymmetric information have large extensive margin effects via the entry of new lending contracts targeted at riskier borrowers. This results in more defaults and borrowing, as well as increased dispersion of interest rates. Using the Survey of Consumer Finance and interest rate data collected by the Board of Governors, we find evidence supporting these predictions, as the dispersion of credit card interest rates nearly tripled, and the share of credit card debt of lower income households nearly doubled.
Handle: RePEc:nbr:nberwo:17448
Template-Type: ReDIF-Paper 1.0
Title: Credit Market Consequences of Improved Personal Identification: Field Experimental Evidence from Malawi
Classification-JEL: O12; O16
Author-Name: Xavier Giné
Author-Person: pgi131
Author-Name: Jessica Goldberg
Author-Person: pgo591
Author-Name: Dean Yang
Author-Person: pya75
Note: LS
Number: 17449
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17449
File-URL: http://www.nber.org/papers/w17449.pdf
File-Format: application/pdf
Publication-Status: published as Xavier Gine & Jessica Goldberg & Dean Yang, 2012. "Credit Market Consequences of Improved Personal Identification: Field Experimental Evidence from Malawi," American Economic Review, American Economic Association, vol. 102(6), pages 2923-54, October.
Abstract: We report the results of a randomized field experiment that examines the credit market impacts of improvements in a lender's ability to determine borrowers' identities. Improved personal identification enhances the credibility of a lender's dynamic repayment incentives by allowing it to withhold future loans from past defaulters and expand credit for good borrowers. The experimental context, rural Malawi, is characterized by an imperfect identification system. Consistent with a simple model of borrower heterogeneity and information asymmetries, fingerprinting led to substantially higher repayment rates for borrowers with the highest ex ante default risk, but had no effect for the rest of the borrowers. The change in repayment rates is driven by reductions in adverse selection (smaller loan sizes) and lower moral hazard (for example, less diversion of loan-financed fertilizer from its intended use on the cash crop).
Handle: RePEc:nbr:nberwo:17449
Template-Type: ReDIF-Paper 1.0
Title: Racial Discrimination in the Labor Market: Theory and Empirics
Classification-JEL: J31; J64; J71
Author-Name: Kevin Lang
Author-Person: pla83
Author-Name: Jee-Yeon K. Lehmann
Note: LS
Number: 17450
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17450
File-URL: http://www.nber.org/papers/w17450.pdf
File-Format: application/pdf
Publication-Status: published as Kevin Lang & Jee-Yeon K. Lehmann, 2012. "Racial Discrimination in the Labor Market: Theory and Empirics," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 959-1006, December.
Abstract: We review theories of race discrimination in the labor market. Taste-based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread, but no existing model explains the unemployment rate differential. Models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment. At their current state of development, models of statistical discrimination based on rational stereotypes have little empirical content. It is plausible that models combining elements of the search models with statistical discrimination could fit the data. We suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy.
Handle: RePEc:nbr:nberwo:17450
Template-Type: ReDIF-Paper 1.0
Title: Insuring Long Term Care In the US
Classification-JEL: I11; I28
Author-Name: Jeffrey Brown
Author-Person: pbr264
Author-Name: Amy Finkelstein
Author-Person: pfi264
Note: AG EH PE
Number: 17451
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17451
File-URL: http://www.nber.org/papers/w17451.pdf
File-Format: application/pdf
Publication-Status: published as “Insuring Long-Term Care in the U.S.” Journal of Economic Perspectives. Vol. 25 (4): pages 119-142. Fall 2011. With Amy Finkelstein.
Abstract: Long-term care expenditures constitute one of the largest uninsured financial risks facing the elderly in the United States. This paper provides an overview of the economic and policy issues surrounding insuring long-term care expenditure risk. Through this lens we also discuss the likely impact of recent long-term care public policy initiatives at both the state and federal level.
Handle: RePEc:nbr:nberwo:17451
Template-Type: ReDIF-Paper 1.0
Title: Does Head Start Do Any Lasting Good?
Classification-JEL: I21; I38
Author-Name: Chloe Gibbs
Author-Person: pgi306
Author-Name: Jens Ludwig
Author-Name: Douglas L. Miller
Author-Person: pmi179
Note: CH
Number: 17452
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17452
File-URL: http://www.nber.org/papers/w17452.pdf
File-Format: application/pdf
Publication-Status: published as Chapter 1 Legacies of the War on Poverty 1 Martha J. Bailey and Sheldon Danziger
Abstract: Head Start is a federal early childhood intervention designed to reduce disparities in preschool outcomes. The first randomized experimental study of Head Start, the National Head Start Impact Study (NHSIS), found impacts on academic outcomes of .15 to .3 standard deviations measured at the end of the program year, although the estimated impacts were no longer significant when measured at the end of kindergarten or first grade. Assessments that Head Start is ineffective based on the NHSIS results are in our view premature, given our currently limited understanding of how and why early childhood education improves long-term life chances. Many of the specific changes to Head Start that have been proposed could potentially wind up doing more harm than good.
Handle: RePEc:nbr:nberwo:17452
Template-Type: ReDIF-Paper 1.0
Title: Gender Discrimination in Job Ads: Theory and Evidence
Classification-JEL: J16; J63; J71
Author-Name: Peter J. Kuhn
Author-Person: pku26
Author-Name: Kailing Shen
Author-Person: psh250
Note: LS
Number: 17453
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17453
File-URL: http://www.nber.org/papers/w17453.pdf
File-Format: application/pdf
Publication-Status: published as “Gender Discrimination in Job Ads: Evidence from China” Quarterly Journal of Economics 128(1) (February 2013) (with Kaling Shen).
Abstract: We study firms' advertised gender preferences in a population of ads on a Chinese internet job board, and interpret these patterns using a simple employer search model. The model allows us to distinguish firms' underlying gender preferences from firms' propensities to restrict their search to their preferred gender. The model also predicts that higher job skill requirements should reduce the tendency to gender-target a job ad; this is strongly confirmed in our data, and suggests that rising skill demands may be a potent deterrent to explicit discrimination of the type we document here. We also find that firms' underlying gender preferences are highly job-specific, with many firms requesting men for some jobs and women for others, and with one third of the variation in gender preferences within firm*occupation cells.
Handle: RePEc:nbr:nberwo:17453
Template-Type: ReDIF-Paper 1.0
Title: CoVaR
Classification-JEL: G17; G21; G22
Author-Name: Tobias Adrian
Author-Person: pad61
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Note: AP CF EFG ME
Number: 17454
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17454
File-URL: http://www.nber.org/papers/w17454.pdf
File-Format: application/pdf
Publication-Status: published as Tobias Adrian & Markus K. Brunnermeier, 2016. "CoVaR," American Economic Review, American Economic Association, vol. 106(7), pages 1705-1741, July.
Abstract: We propose a measure for systemic risk: CoVaR, the value at risk (VaR) of the financial system conditional on institutions being under distress. We define an institution's contribution to systemic risk as the difference between CoVaR conditional on the institution being under distress and the CoVaR in the median state of the institution. From our estimates of CoVaR for the universe of publicly traded financial institutions, we quantify the extent to which characteristics such as leverage, size, and maturity mismatch predict systemic risk contribution. We also provide out of sample forecasts of a countercyclical, forward looking measure of systemic risk and show that the 2006Q4 value of this measure would have predicted more than half of realized covariances during the financial crisis.
Handle: RePEc:nbr:nberwo:17454
Template-Type: ReDIF-Paper 1.0
Title: Deterrence and the Death Penalty: Partial Identification Analysis Using Repeated Cross Sections
Classification-JEL: C21; K14
Author-Name: Charles F. Manski
Author-Person: pma111
Author-Name: John V. Pepper
Author-Person: ppe216
Note: LE
Number: 17455
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17455
File-URL: http://www.nber.org/papers/w17455.pdf
File-Format: application/pdf
Publication-Status: published as “Deterrence and the Death Penalty: Partial Identification Analysis Using Repeated Cross Sections,” with J. Pepper, Journal of Quantitative Criminology, Vol. 29, 2013, No. 1, pp. 123-141.
Abstract: Researchers have long used repeated cross sectional observations of homicide rates and sanctions to examine the deterrent effect of the adoption and implementation of death penalty statutes. The empirical literature, however, has failed to achieve consensus. A fundamental problem is that the outcomes of counterfactual policies are not observable. Hence, the data alone cannot identify the deterrent effect of capital punishment. How then should research proceed? It is tempting to impose assumptions strong enough to yield a definitive finding, but strong assumptions may be inaccurate and yield flawed conclusions. Instead, we study the identifying power of relatively weak assumptions restricting variation in treatment response across places and time. The results are findings of partial identification that bound the deterrent effect of capital punishment. By successively adding stronger identifying assumptions, we seek to make transparent how assumptions shape inference. We perform empirical analysis using state-level data in the United States in 1975 and 1977. Under the weakest restrictions, there is substantial ambiguity: we cannot rule out the possibility that having a death penalty statute substantially increases or decreases homicide. This ambiguity is reduced when we impose stronger assumptions, but inferences are sensitive to the maintained restrictions. Combining the data with some assumptions implies that the death penalty increases homicide, but other assumptions imply that the death penalty deters it.
Handle: RePEc:nbr:nberwo:17455
Template-Type: ReDIF-Paper 1.0
Title: The Price Effects of Cash Versus In-Kind Transfers
Classification-JEL: H4; O12
Author-Name: Jesse M. Cunha
Author-Name: Giacomo De Giorgi
Author-Person: pde483
Author-Name: Seema Jayachandran
Author-Person: pja86
Note: PE
Number: 17456
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17456
File-URL: http://www.nber.org/papers/w17456.pdf
File-Format: application/pdf
Publication-Status: published as Jesse M Cunha & Giacomo De Giorgi & Seema Jayachandran, 2019. "The Price Effects of Cash Versus In-Kind Transfers," The Review of Economic Studies, vol 86(1), pages 240-281.
Abstract: This paper compares how cash and in-kind transfers affect local prices. Both types of transfers increase the demand for normal goods, but only in-kind transfers also increase supply. Hence, in-kind transfers should lead to lower prices than cash transfers, which helps consumers at the expense of local producers. We test and confirm this prediction using a program in Mexico that randomly assigned villages to receive boxes of food (trucked into the village), equivalently-valued cash transfers, or no transfers. The pecuniary benefit to consumers of in-kind transfers, relative to cash transfers, equals 11% of the direct transfer.
Handle: RePEc:nbr:nberwo:17456
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Policy in Debt Constrained Economies
Classification-JEL: E62; F41; H63
Author-Name: Mark A. Aguiar
Author-Person: pag57
Author-Name: Manuel Amador
Author-Person: pam50
Note: EFG IFM
Number: 17457
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17457
File-URL: http://www.nber.org/papers/w17457.pdf
File-Format: application/pdf
Publication-Status: published as Mark Aguiar & Manuel Amador, 2016. "Fiscal policy in debt constrained economies," Journal of Economic Theory, vol 161, pages 37-75.
Abstract: We study optimal fiscal policy in a small open economy (SOE) with sovereign and private default risk. The SOE's government uses linear taxation to fund exogenous expenditures and uses public debt to inter-temporally allocate tax distortions. We characterize a class of environments in which the tax on labor goes to zero in the long run, while the tax on capital income may be non-zero, reversing the standard prediction of the Ramsey tax literature. The zero labor tax is an optimal long run outcome if the private agents are impatient relative to the international interest rate and the economy is subject to sovereign debt constraints. The front loading of labor taxes allows the economy to build a large (aggregate) debt position in the presence of limited commitment. We show that a similar result holds in a closed economy with imperfect inter-generational altruism.
Handle: RePEc:nbr:nberwo:17457
Template-Type: ReDIF-Paper 1.0
Title: Slum Clearance and Urban Renewal in the United States
Classification-JEL: H7; K0; N12; R0
Author-Name: William J. Collins
Author-Person: pco315
Author-Name: Katharine L. Shester
Note: DAE LE PE
Number: 17458
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17458
File-URL: http://www.nber.org/papers/w17458.pdf
File-Format: application/pdf
Publication-Status: published as William J. Collins & Katharine L. Shester, 2013. "Slum Clearance and Urban Renewal in the United States," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 239-73, January.
Abstract: We study the local effects of a federal program that helped cities clear areas for redevelopment, rehabilitate structures, complete city plans, and enforce building codes. We use an instrumental variable strategy to estimate the program's effects on city-level measures of income, property values, employment and poverty rates, and population. The estimated effects on income, property values, and population are positive and economically significant. They are not driven by changes in demographic composition. Estimated effects on poverty reduction and employment are positive but imprecise. The results are consistent with a model in which local productivity is enhanced.
Handle: RePEc:nbr:nberwo:17458
Template-Type: ReDIF-Paper 1.0
Title: Adverse Selection and Switching Costs in Health Insurance Markets: When Nudging Hurts
Classification-JEL: D81; D82; D83; G22; I11; I18
Author-Name: Benjamin R. Handel
Note: EH IO
Number: 17459
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17459
File-URL: http://www.nber.org/papers/w17459.pdf
File-Format: application/pdf
Publication-Status: published as “Adverse Selection and Inertia in Health Insurance Markets: When Nudging Hurts.” http://emlab.berkeley.edu/~bhandel/wp/Handel_ASIN_2013.pdf American Economic Review, vol. 103(7), 2013, 2643-2682 (lead article)
Abstract: This paper investigates consumer switching costs in the context of health insurance markets, where adverse selection is a potential concern. Though previous work has studied these phenomena in isolation, they interact in a way that directly impacts market outcomes and consumer welfare. Our identification strategy leverages a unique natural experiment that occurred at a large firm where we also observe individual-level panel data on health insurance choices and medical claims. We present descriptive results to show that (i) switching costs are large and (ii) adverse selection is present. To formalize this analysis we develop and estimate a choice model that jointly quantifies switching costs, risk preferences, and ex ante health risk. We use these estimates to study the welfare impact of an information provision policy that nudges consumers toward better decisions by reducing switching costs. This policy increases welfare in a naive setting where insurance plan prices are held fixed. However, when insurance prices change endogenously to reflect updated enrollee risk pools, the same policy substantially exacerbates adverse selection and reduces consumer welfare, doubling the existing welfare loss from adverse selection.
Handle: RePEc:nbr:nberwo:17459
Template-Type: ReDIF-Paper 1.0
Title: Importing Skill-Biased Technology
Classification-JEL: F1
Author-Name: Ariel Burstein
Author-Name: Javier Cravino
Author-Person: pcr150
Author-Name: Jonathan Vogel
Author-Person: pvo58
Note: ITI
Number: 17460
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17460
File-URL: http://www.nber.org/papers/w17460.pdf
File-Format: application/pdf
Publication-Status: published as Ariel Burstein & Javier Cravino & Jonathan Vogel, 2013. "Importing Skill-Biased Technology," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(2), pages 32-71, April.
Abstract: Capital equipment - such as computers and industrial machinery - embodies skill-biased technology, in the sense that it is complementary to skilled labor. Most countries import a large share of their capital equipment, and by doing so import skill-biased technology. In this paper we develop a tractable quantitative model of international trade in capital goods to quantify the extent to which trade, through capital-skill complementarity, raises the relative demand for skill and hence increases the skill premium. In one counterfactual, we find that moving from the trade levels observed in the year 2000 to autarky would decrease the skill premium by 16% in the median country in our sample, by 5% in the US, and by a much larger magnitude in countries that heavily rely on imported capital equipment.
Handle: RePEc:nbr:nberwo:17460
Template-Type: ReDIF-Paper 1.0
Title: Substitution Between Immigrants, Natives, and Skill Groups
Classification-JEL: J61
Author-Name: George J. Borjas
Author-Person: pbo44
Author-Name: Jeffrey Grogger
Author-Person: pgr125
Author-Name: Gordon H. Hanson
Author-Person: pha80
Note: ITI LS
Number: 17461
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17461
File-URL: http://www.nber.org/papers/w17461.pdf
File-Format: application/pdf
Publication-Status: published as “Comment: Substitution between Immigrants, Natives, and Skill Groups.” Journal of the European Economic Association, 10(1), 2012. (with George Borjas and Jeffrey Grogger)
Abstract: The wage impact of immigration depends crucially on the elasticity of substitution between similarly skilled immigrants and natives and the elasticity of substitution between high school dropouts and graduates. This paper revisits the estimation of these elasticities. The U.S. data indicate that equally skilled immigrants and natives are perfect substitutes. The value of the second elasticity depends on how one controls for changes in demand that have differentially affected high school dropouts and graduates. The groups are imperfect substitutes under standard trend assumptions, but even slight deviations from these assumptions can lead to an outright rejection of the CES framework.
Handle: RePEc:nbr:nberwo:17461
Template-Type: ReDIF-Paper 1.0
Title: Racial Disparities in Job Finding and Offered Wages
Classification-JEL: J01; J15; J71
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Author-Name: Devah Pager
Author-Name: Jörg L. Spenkuch
Author-Person: psp102
Note: LS
Number: 17462
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17462
File-URL: http://www.nber.org/papers/w17462.pdf
File-Format: application/pdf
Publication-Status: published as Roland G. Fryer , Jr. & Devah Pager & J�rg L. Spenkuch, 2013. "Racial Disparities in Job Finding and Offered Wages," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 633 - 689.
Abstract: The extent to which discrimination can explain racial wage gaps is one of the most divisive subjects in the social sciences. Using a newly available dataset, this paper develops a simple empirical test which, under plausible conditions, provides a lower bound on the extent of discrimination in the labor market. Taken at face value, our estimates imply that differential treatment accounts for at least one third of the black-white wage gap. We argue that the patterns in our data are consistent with a search-matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers, but learn about their marginal product over time. However, we cannot rule out other forms of discrimination.
Handle: RePEc:nbr:nberwo:17462
Template-Type: ReDIF-Paper 1.0
Title: Corporate Acquisitions, Diversification, and the Firm's Lifecycle
Classification-JEL: G3
Author-Name: Asli M. Arikan
Author-Name: René M. Stulz
Note: CF
Number: 17463
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17463
File-URL: http://www.nber.org/papers/w17463.pdf
File-Format: application/pdf
Publication-Status: published as Asli Musaoglu Arikan & René Stulz, 2012. "Corporate Acquisitions, Diversification, and the Firm’s Lifecycle," Academy of Management Proceedings, vol 2012(1).
Publication-Status: published as Asli M. Arikan & René M. Stulz, 2016. "Corporate Acquisitions, Diversification, and the Firm's Life Cycle," Journal of Finance, American Finance Association, vol. 71(1), pages 139-194, February.
Abstract: Lifecycle theories of mergers and diversification predict that firms make acquisitions and diversify when their internal growth opportunities become exhausted. Free cash flow theories make similar predictions. In contrast to these theories, we find that the acquisition rate of firms (defined as the number of acquisitions in an IPO cohort-year divided by the number of firms in that cohort-year) follows a u-shape through their lifecycle as public firms, with young and mature firms being equally acquisitive but more so than middle-aged firms. Firms that go public during the merger/IPO wave of the 1990s are significantly more acquisitive early in their public life than firms that go public at other times. Young public firms have a lower acquisition rate of public firms than mature firms, but the opposite is true for acquisitions of private firms and subsidiaries. Strikingly, firms diversify early in their life and there is a 41% chance that a firm's first acquisition is a diversifying acquisition. The stock market reacts more favorably to acquisitions by young firms than to acquisitions by mature firms except for acquisitions of public firms paid for with stock. There is no evidence that the market reacts more adversely to diversifying acquisitions by young firms than to other acquisitions.
Handle: RePEc:nbr:nberwo:17463
Template-Type: ReDIF-Paper 1.0
Title: Political Uncertainty and Risk Premia
Classification-JEL: G01; G12; G18
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Pietro Veronesi
Note: AP EFG POL
Number: 17464
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17464
File-URL: http://www.nber.org/papers/w17464.pdf
File-Format: application/pdf
Publication-Status: published as Pástor, Ľuboš & Veronesi, Pietro, 2013. "Political uncertainty and risk premia," Journal of Financial Economics, Elsevier, vol. 110(3), pages 520-545.
Abstract: We develop a general equilibrium model of government policy choice in which stock prices respond to political news. The model implies that political uncertainty commands a risk premium whose magnitude is larger in weaker economic conditions. Political uncertainty reduces the value of the implicit put protection that the government provides to the market. It also makes stocks more volatile and more correlated, especially when the economy is weak. We find empirical evidence consistent with these predictions.
Handle: RePEc:nbr:nberwo:17464
Template-Type: ReDIF-Paper 1.0
Title: Grade Non-Disclosure
Classification-JEL: D0; D82; I21; J24
Author-Name: Daniel Gottlieb
Author-Person: pgo110
Author-Name: Kent Smetters
Author-Person: psm21
Note: ED LS PE
Number: 17465
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17465
File-URL: http://www.nber.org/papers/w17465.pdf
File-Format: application/pdf
Abstract: This paper documents and explains the existence of grade non-disclosure policies in Masters in Business Administration programs, why these policies are concentrated in highly-ranked programs, and why these policies are not prevalent in most other professional degree programs. Related policies, including honors and minimum grade requirements, are also consistent with our model.
Handle: RePEc:nbr:nberwo:17465
Template-Type: ReDIF-Paper 1.0
Title: Who Offers Tax-Based Business Development Incentives?
Classification-JEL: H25; H71; H73
Author-Name: R. Alison Felix
Author-Person: pfe339
Author-Name: James R. Hines, Jr.
Author-Person: phi111
Note: PE
Number: 17466
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17466
File-URL: http://www.nber.org/papers/w17466.pdf
File-Format: application/pdf
Publication-Status: published as Felix, R. Alison & Hines, James R., 2013. "Who offers tax-based business development incentives?," Journal of Urban Economics, Elsevier, vol. 75(C), pages 80-91.
Abstract: Many American communities seek to attract or retain businesses with tax abatements, tax credits, or tax increment financing of infrastructure projects (TIFs). The evidence for 1999 indicates that communities are most likely to offer one or more of these business development incentives if their residents have low incomes, if they are located close to state borders, and if their states have troubled political cultures. Ten percent greater median household income is associated with a 3.2 percent lower probability of offering incentives; ten percent greater distance from a state border is associated with a 1.0 percent lower probability of offering incentives; and a 10 percent higher rate at which government officials are convicted of federal corruption crimes is associated with a 1.2 percent greater probability of offering business incentives. TIFs are the preferred incentive of communities whose residents have household incomes between $25,000 and $75,000; whereas TIFs are much less commonly offered by communities whose residents have household incomes below $25,000. The need to finance TIFs out of incremental tax revenues may make it infeasible for many of the poorest of communities to use TIFs for local business development.
Handle: RePEc:nbr:nberwo:17466
Template-Type: ReDIF-Paper 1.0
Title: Do Stronger Age Discrimination Laws Make Social Security Reforms More Effective?
Classification-JEL: H55; J14; J71; J78; K31
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Joanne Song
Author-Person: pso374
Note: AG LE LS PE
Number: 17467
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17467
File-URL: http://www.nber.org/papers/w17467.pdf
File-Format: application/pdf
Publication-Status: published as Neumark, David & Song, Joanne, 2013. "Do stronger age discrimination laws make Social Security reforms more effective?," Journal of Public Economics, Elsevier, vol. 108(C), pages 1-16.
Abstract: Supply-side Social Security reforms intended to increase employment and delay benefit claiming among older individuals may be frustrated by age discrimination. We test for policy complementarities between these reforms and demand-side efforts to deter age discrimination, specifically studying whether stronger state-level age discrimination protections enhanced the impact of the 1983 Social Security reforms that increased the Full Retirement Age (FRA) and reduced benefits. The evidence indicates that, for older individuals for whom early retirement benefits fell and the FRA increased, stronger state age discrimination protections were associated with delayed benefit claiming and increases in employment, with benefit claiming pushed from 65 to the new FRA, and increased employment after age 62 and age 65 that is then curtailed at the new FRA.
Handle: RePEc:nbr:nberwo:17467
Template-Type: ReDIF-Paper 1.0
Title: Does Short-Term Debt Increase Vulnerability to Crisis? Evidence from the East Asian Financial Crisis
Classification-JEL: F32; F34; G21; G32; G38
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Eyal Dvir
Author-Person: pdv5
Note: CF EFG IFM ITI ME
Number: 17468
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17468
File-URL: http://www.nber.org/papers/w17468.pdf
File-Format: application/pdf
Publication-Status: published as Eyal Dvir & Efraim Benmelech, 2010. "Does short-term debt increase vulnerability to crisis? Evidence from the East Asian financial crisis," Proceedings, Federal Reserve Bank of San Francisco, issue Oct.
Publication-Status: published as Benmelech, Efraim & Dvir, Eyal, 2013. "Does Short-Term Debt Increase Vulnerability to Crisis? Evidence from the East Asian Financial Crisis," Journal of International Economics, Elsevier, vol. 89(2), pages 485-494.
Abstract: Does short-term debt increase vulnerability to financial crisis, or does short-term debt reflect -- rather than cause -- the incipient crisis? We study the role that short-term debt played in the collapse of the East Asian financial sector in 1997-1998. We alleviate concerns about the endogeneity of short-term debt by using long-term debt obligations that matured during the crisis. We find that debt obligations issued at least three years before the crisis had a negative, albeit sometimes insignificant, effect on the probability of failure. Our results are consistent with the view that short-term debt reflects, rather than causes, distress in financial institutions.
Handle: RePEc:nbr:nberwo:17468
Template-Type: ReDIF-Paper 1.0
Title: State Gun Policy and Cross-State Externalities: Evidence from Crime Gun Tracing
Classification-JEL: H7; K4
Author-Name: Brian G. Knight
Author-Person: pkn7
Note: PE POL
Number: 17469
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17469
File-URL: http://www.nber.org/papers/w17469.pdf
File-Format: application/pdf
Publication-Status: published as Brian Knight, 2013. "State Gun Policy and Cross-State Externalities: Evidence from Crime Gun Tracing," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 200-229, November.
Abstract: This paper provides a theoretical and empirical analysis of cross-state externalities associated with gun regulations in the context of the gun trafficking market. Using gun tracing data, which identify the source state for crime guns recovered in destination states, we find that firearms in this market tend to flow from states with weak gun laws to states with strict gun laws, satisfying a necessary condition for the existence of cross-state externalities in the theoretical model. We also find an important role for transportation costs in this market, with gun flows more significant between nearby states; this finding suggests that externalities are spatial in nature. Finally, we present evidence that criminal possession of guns is higher in states exposed to weak gun laws in nearby states.
Handle: RePEc:nbr:nberwo:17469
Template-Type: ReDIF-Paper 1.0
Title: Grossman-Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production
Classification-JEL: D23; F10; F12; F14; F21; F23; L22; L23
Author-Name: Pol Antràs
Author-Person: pan181
Note: ITI
Number: 17470
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17470
File-URL: http://www.nber.org/papers/w17470.pdf
File-Format: application/pdf
Publication-Status: published as Pol Antràs, 2014. "Grossman–Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production," Journal of Law, Economics and Organization, Oxford University Press, vol. 30(suppl_1), pages i118-i175.
Abstract: I survey the influence of Grossman and Hart's (1986) seminal paper in the field of International Trade. I discuss the implementation of the theory in open-economy environments and its implications for the international organization of production and the structure of international trade flows. I also review empirical work suggestive of the empirical relevance of the property-rights theory. Along the way, I develop novel theoretical results and also outline some of the key limitations of existing contributions.
Handle: RePEc:nbr:nberwo:17470
Template-Type: ReDIF-Paper 1.0
Title: The Geographic Accessibility of Child Care Subsidies and Evidence on the Impact of Subsidy Receipt on Childhood Obesity
Classification-JEL: I12; I18; J13; R53
Author-Name: Chris M. Herbst
Author-Name: Erdal Tekin
Author-Person: pte12
Note: CH EH
Number: 17471
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17471
File-URL: http://www.nber.org/papers/w17471.pdf
File-Format: application/pdf
Publication-Status: published as Herbst, Chris M. & Tekin, Erdal, 2012. "The geographic accessibility of child care subsidies and evidence on the impact of subsidy receipt on childhood obesity," Journal of Urban Economics, Elsevier, vol. 71(1), pages 37-52.
Abstract: This paper examines the impact of the spatial accessibility of public human services agencies on the likelihood of receiving a child care subsidy among disadvantaged mothers with young children. In particular, we collect data on the location of virtually every human services agency in the U.S. and use this information to calculate the approximate distance that families must travel from home in order to reach the nearest office that administers the subsidy application process. Using data from the Kindergarten cohort of the Early Childhood Longitudinal Study (ECLS-K), our results indicate that an increase in the distance to a public human services agency reduces the likelihood that a family receives a child care subsidy. Specifically, we estimate an elasticity of subsidy receipt with respect to distance of -0.13. The final section of the paper provides an empirical application in which we use variation in families' travel distance to identify the causal effect of child care subsidies on children's weight outcomes. Our instrumental variables estimates suggest that subsidized child care leads to sizeable increases in the prevalence of overweight and obesity among low-income children.
Handle: RePEc:nbr:nberwo:17471
Template-Type: ReDIF-Paper 1.0
Title: Is There a 'Hidden Cost of Control' in Naturally-Occurring Markets? Evidence from a Natural Field Experiment
Classification-JEL: C93; D03; J3; J33
Author-Name: Craig E. Landry
Author-Person: pla339
Author-Name: Andreas Lange
Author-Person: pla289
Author-Name: John A. List
Author-Person: pli176
Author-Name: Michael K. Price
Author-Person: ppr89
Author-Name: Nicholas G. Rupp
Author-Person: pru112
Note: LS PR
Number: 17472
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17472
File-URL: http://www.nber.org/papers/w17472.pdf
File-Format: application/pdf
Abstract: Several recent laboratory experiments have shown that the use of explicit incentives--such as conditional rewards and punishment--entail considerable "hidden" costs. The costs are hidden in the sense that they escape our attention if our reasoning is based on the assumption that people are exclusively self-interested. This study represents a first attempt to explore whether, and to what extent, such considerations affect equilibrium outcomes in the field. Using data gathered from nearly 3000 households, we find little support for the negative consequences of control in naturally-occurring labor markets. In fact, even though we find evidence that workers are reciprocal, we find that worker effort is maximized when we use conditional--not unconditional--rewards to incent workers.
Handle: RePEc:nbr:nberwo:17472
Template-Type: ReDIF-Paper 1.0
Title: The Hidden Benefits of Control: Evidence from a Natural Field Experiment
Classification-JEL: C93; D03; H41; Q5
Author-Name: Craig E. Landry
Author-Person: pla339
Author-Name: Andreas Lange
Author-Person: pla289
Author-Name: John A. List
Author-Person: pli176
Author-Name: Michael K. Price
Author-Person: ppr89
Author-Name: Nicholas G. Rupp
Author-Person: pru112
Note: EEE PE
Number: 17473
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17473
File-URL: http://www.nber.org/papers/w17473.pdf
File-Format: application/pdf
Abstract: An important dialogue between theorists and experimentalists over the past few decades has raised the study of the interaction of psychological and economic incentives from academic curiosity to a bona fide academic field. One recent area of study within this genre that has sparked interest and debate revolves around the "hidden costs" of conditional incentives. This study overlays randomization on a naturally-occurring environment in a series of temporally-linked field experiments to advance our understanding of the economics of charity and test if such "costs" exist in the field. This approach permits us to examine why people initially give to charities, and what factors keep them committed to the cause. Several key findings emerge. First, there are hidden benefits of conditional incentives that would have gone undetected had we maintained a static theory and an experimental design that focused on short run substitution effects rather than dynamic interactions. Second, we can reject the pure altruism model of giving. Third, we find that public good provision is maximized in both the short and long run by using conditional, rather than unconditional, incentives.
Handle: RePEc:nbr:nberwo:17473
Template-Type: ReDIF-Paper 1.0
Title: Human Capital and Organizational Performance: Evidence from the Healthcare Sector
Classification-JEL: I11; I12; J24
Author-Name: Ann P. Bartel
Author-Name: Ciaran S. Phibbs
Author-Name: Nancy Beaulieu
Author-Name: Patricia Stone
Note: EH LS
Number: 17474
Creation-Date: 2011-09
Order-URL: http://www.nber.org/papers/w17474
File-URL: http://www.nber.org/papers/w17474.pdf
File-Format: application/pdf
Publication-Status: published as “Human Capital and Productivity in a Team Environment: Evidence from the Healthcare Sector” (with Nancy Beaulieu, Ciaran Phibbs and Patricia Stone), American Economic Journal: Applied Economics, April 2014.
Abstract: This paper contributes to the literature on the relationship between human capital and organizational performance. We use detailed longitudinal monthly data on nursing units in the Veterans Administration hospital system to identify how the human capital (general, hospital-specific and unit or team-specific) of the nursing team on the unit affects patients' outcomes. Since we use monthly, not annual, data, we are able to avoid the omitted variable bias and endogeneity bias that could result when annual data are used. Nurse staffing levels, general human capital, and unit-specific human capital have positive and significant effects on patient outcomes while the use of contract nurses, who have less specific capital than regular staff nurses, negatively impacts patient outcomes. Policies that would increase the specific human capital of the nursing staff are found to be cost-effective.
Handle: RePEc:nbr:nberwo:17474
Template-Type: ReDIF-Paper 1.0
Title: List Randomization for Sensitive Behavior: An Application for Measuring Use of Loan Proceeds
Classification-JEL: B4; D03; O12
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: LE
Number: 17475
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17475
File-URL: http://www.nber.org/papers/w17475.pdf
File-Format: application/pdf
Publication-Status: published as Karlan, Dean S. & Zinman, Jonathan, 2012. "List randomization for sensitive behavior: An application for measuring use of loan proceeds," Journal of Development Economics, Elsevier, vol. 98(1), pages 71-75.
Abstract: Policymakers and microfinance institutions (MFIs) often claim to target poor entrepreneurs who then invest loan proceeds in their businesses. Typically in nonresearch settings these claims are assessed using readily available but unverified self-reports from client loan applications. Alternatively, independent surveyors could directly elicit how borrowers spent their loan proceeds. That too, however, could suffer from deliberate misreporting. We use data from the Peru and the Philippines in which independent surveyors elicited loan use both directly (i.e., by asking how individuals spent their loan proceeds) and indirectly (i.e., through a list-randomization technique that allows individuals to hide their answer from the surveyor). We find that direct elicitation under-reports the non-enterprise uses of loan proceeds.
Handle: RePEc:nbr:nberwo:17475
Template-Type: ReDIF-Paper 1.0
Title: The Price Effects of a Large Merger of Manufacturers: A Case Study of Maytag-Whirlpool
Classification-JEL: K2; K21; L11; L4
Author-Name: Orley C. Ashenfelter
Author-Person: pas9
Author-Name: Daniel S. Hosken
Author-Name: Matthew C. Weinberg
Author-Person: pwe301
Note: IO LE
Number: 17476
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17476
File-URL: http://www.nber.org/papers/w17476.pdf
File-Format: application/pdf
Publication-Status: published as Orley C. Ashenfelter & Daniel S. Hosken & Matthew C. Weinberg, 2013. "The Price Effects of a Large Merger of Manufacturers: A Case Study of Maytag-Whirlpool," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 239-61, February.
Abstract: Many experts speculate that U.S. antitrust policy towards horizontal mergers has been too lenient. We estimate the price effects of Whirlpool's acquisition of Maytag to provide new evidence on this debate. We compare price changes in appliance markets most affected by the merger to markets where concentration changed much less or not at all. We estimate price increases for dishwashers and relatively large price increases for clothes dryers, but no price effects for refrigerators or clothes washers. The combined firm's market share fell across all four affected categories and the number of distinct appliance products fell.
Handle: RePEc:nbr:nberwo:17476
Template-Type: ReDIF-Paper 1.0
Title: Sticking with What (Barely) Worked
Classification-JEL: C11; D03; D81; L83
Author-Name: Lars Lefgren
Author-Person: ple392
Author-Name: Brennan Platt
Author-Person: ppl35
Author-Name: Joseph Price
Author-Person: ppr64
Note: LS
Number: 17477
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17477
File-URL: http://www.nber.org/papers/w17477.pdf
File-Format: application/pdf
Abstract: Outcome bias occurs when an evaluator considers ex-post outcomes when judging whether a choice was correct, ex-ante. We formalize this cognitive bias in a simple model of distorted Bayesian updating. We then examine strategy changes made by professional football coaches. We find they are more likely to revise their strategy after a loss than a win -- even for narrow losses, which are uninformative about future success. This increased revision following a loss occurs even when a loss was expected, and the offensive strategy is revised even when failure is attributable to the defense. These results are consistent with our model's predictions.
Handle: RePEc:nbr:nberwo:17477
Template-Type: ReDIF-Paper 1.0
Title: Evidence on the Efficacy of School-Based Incentives for Healthy Living
Classification-JEL: I12
Author-Name: Harold E. Cuffe
Author-Person: pcu146
Author-Name: William T. Harbaugh
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: Giancarlo Musto
Author-Name: Glen R. Waddell
Author-Person: pwa85
Note: CH ED EH
Number: 17478
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17478
File-URL: http://www.nber.org/papers/w17478.pdf
File-Format: application/pdf
Publication-Status: published as Cuffe, H.E. & Harbaugh, W.T. & Lindo, J.M. & Musto, G. & Waddell, G.R., 2012. "Evidence on the efficacy of school-based incentives for healthy living," Economics of Education Review, Elsevier, vol. 31(6), pages 1028-1036.
Abstract: We analyze the effects of a school-based incentive program on children's exercise habits. The program offers children an opportunity to win prizes if they walk or bike to school during prize periods. We use daily child-level data and individual fixed effects models to measure the impact of the prizes by comparing behavior during prize periods with behavior during non-prize periods. Variation in the timing of prize periods across different schools allows us to estimate models with calendar-date fixed effects to control for day-specific attributes, such as weather and proximity to holidays. On average, we find that being in a prize period increases riding behavior by sixteen percent, a large impact given that the prize value is just six cents per participating student. We also find that winning a prize lottery has a positive impact on ridership over subsequent weeks; consider heterogeneity across prize type, gender, age, and calendar month; and explore differential effects on the intensive versus extensive margins.
Handle: RePEc:nbr:nberwo:17478
Template-Type: ReDIF-Paper 1.0
Title: The Stock Market Crash of 2008 Caused the Great Recession: Theory and Evidence
Classification-JEL: E0; E2
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Note: EFG
Number: 17479
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17479
File-URL: http://www.nber.org/papers/w17479.pdf
File-Format: application/pdf
Publication-Status: published as Farmer, Roger E.A., 2012. "The stock market crash of 2008 caused the Great Recession: Theory and evidence," Journal of Economic Dynamics and Control, Elsevier, vol. 36(5), pages 693-707.
Abstract: This paper argues that the stock market crash of 2008, triggered by a collapse in house prices, caused the Great Recession. The paper has three parts. First, it provides evidence of a high correlation between the value of the stock market and the unemployment rate in U.S. data since 1929. Second, it compares a new model of the economy developed in recent papers and books by Farmer, with a classical model and with a textbook Keynesian approach. Third, it provides evidence that fiscal stimulus will not permanently restore full employment. In Farmer's model, as in the Keynesian model, employment is demand determined. But aggregate demand depends on wealth, not on income.
Handle: RePEc:nbr:nberwo:17479
Template-Type: ReDIF-Paper 1.0
Title: Separating the Opposing Effects of Bilateral Tax Treaties
Classification-JEL: F21; F23; H25
Author-Name: Bruce A. Blonigen
Author-Person: pbl165
Author-Name: Lindsay Oldenski
Author-Person: pol135
Author-Name: Nicholas Sly
Author-Person: psl56
Note: ITI
Number: 17480
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17480
File-URL: http://www.nber.org/papers/w17480.pdf
File-Format: application/pdf
Publication-Status: published as The Differential Effects of Bilateral Tax Treaties, Bruce A. Blonigen, Lindsay Oldenski, Nicholas Sly. in Business Taxation (Trans-Atlantic Public Economics Seminar), Devereux and Gordon. 2014
Abstract: Bilateral tax treaties (BTT) are intended to promote foreign direct investment and foreign affiliate activity through double taxation relief. However, BTTs also typically contain provisions that facilitate sharing of tax information between countries intended to curtail tax avoidance by multinational firms. These provisions should disproportionately affect firms that intensively use inputs for which an arms-length price is easily observed, since strategic transfer practices that manipulate tax liabilities are no longer effective with information sharing between countries. Using BEA firm-level data we are able to separately estimate the impacts of double-taxation relief and sharing of tax information on investment behavior of US multinational firms. We find a significant positive effect of new tax treaties on foreign affiliate activity between member nations that is offset (and even reversed) the more a firm relies on inputs traded on an organized exchange (i.e., inputs for which the arms-length price is easily observed). We find these opposing BTT effects for both the intensive margin (sales of existing affiliates) and the extensive margin (entry of new affiliates).
Handle: RePEc:nbr:nberwo:17480
Template-Type: ReDIF-Paper 1.0
Title: Payout Taxes and the Allocation of Investment
Classification-JEL: G30; G31; H25
Author-Name: Bo Becker
Author-Person: pbe183
Author-Name: Marcus Jacob
Author-Name: Martin Jacob
Note: CF
Number: 17481
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17481
File-URL: http://www.nber.org/papers/w17481.pdf
File-Format: application/pdf
Publication-Status: published as Becker, Bo & Jacob, Marcus & Jacob, Martin, 2013. "Payout taxes and the allocation of investment," Journal of Financial Economics, Elsevier, vol. 107(1), pages 1-24.
Abstract: When corporate payout is taxed, internal equity (retained earnings) is cheaper than external equity (share issues). High taxes will favor firms who can finance internally. If there are no perfect substitutes for equity finance, payout taxes may thus change the investment behavior of firms. Using an international panel with many changes in payout taxes, we show that this prediction holds well. Payout taxes have a large impact on the dynamics of corporate investment and growth. Investment is "locked in" in profitable firms when payout is heavily taxed. Thus, apart from any aggregate effects, payout taxes change the allocation of capital.
Handle: RePEc:nbr:nberwo:17481
Template-Type: ReDIF-Paper 1.0
Title: Estimating Patients' Preferences for Medical Devices: Does the Number of Profile in Choice Experiments Matter?
Classification-JEL: C91; I11; I18
Author-Name: John Bridges
Author-Name: Christine Buttorff
Author-Name: Karin Groothuis-Oudshoorn
Note: EH
Number: 17482
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17482
File-URL: http://www.nber.org/papers/w17482.pdf
File-Format: application/pdf
Abstract: Background: Most applications of choice-based conjoint analysis in health use choice tasks with only two profiles, while those in marketing routinely use three or more. This study reports on a randomized trial comparing paired with triplet profile choice formats focused on measuring patient preference for hearing aids. Methods: Respondents with hearing loss were drawn from a nationally representative cohort, completed identical surveys incorporating a conjoint analysis, but were randomized to choice tasks with two or three profiles. Baseline differences between the two groups were explored using ANOVA and chi-square tests. The primary outcomes of differences in estimated preferences were explored using t-tests, likelihood ratio tests, and analysis of individual-level models estimated with ordinary least squares. Results: 500 respondents were recruited. 127 had no hearing loss, 28 had profound loss and 22 declined to participate and were not analyzed. Of the remaining 323 participants, 146 individuals were randomized to the pairs and 177 to triplets. The only significant difference between the groups was time to complete the survey (11.5 and 21 minutes respectively). Pairs and triplets produced identical rankings of attribute importance but homogeneity was rejected (P<0.0001). Pairs led to more variation, and were systematically biased toward the null because a third (32.2%) of respondents focused on only one attribute. This is in contrast to respondents in the triplet design who traded across all attributes. Discussion: The number of profiles in choice tasks affects the results of conjoint analysis studies. Here triplets are preferred to pairs as they avoid non-trading and allow for more accurate estimation of preferences models.
Handle: RePEc:nbr:nberwo:17482
Template-Type: ReDIF-Paper 1.0
Title: Impatience, Incentives, and Obesity
Classification-JEL: D9; I10
Author-Name: Charles J. Courtemanche
Author-Person: pco421
Author-Name: Garth Heutel
Author-Person: phe315
Author-Name: Patrick McAlvanah
Author-Person: pmc147
Note: EEE EH
Number: 17483
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17483
File-URL: http://www.nber.org/papers/w17483.pdf
File-Format: application/pdf
Publication-Status: published as "Impatience, Incentives, and Obesity." (with Charles Courtemanche and Patrick McAlvanah), forthcoming, The Economic Journal.
Abstract: This paper explores the relationship between time preferences, economic incentives, and body mass index (BMI). Using data from the 1979 cohort of the National Longitudinal Survey of Youth, we first show that greater impatience increases BMI even after controlling for demographic, human capital, and occupational characteristics as well as income and risk preference. Next, we provide evidence of an interaction effect between time preference and food prices, with cheaper food leading to the largest weight gains among those exhibiting the most impatience. The interaction of changing economic incentives with heterogeneous discounting may help explain why increases in BMI have been concentrated amongst the right tail of the distribution, where the health consequences are especially severe. Lastly, we model time-inconsistent preferences by computing individuals'quasi-hyperbolic discounting parameters (β and δ). Both long-run patience (δ) and present-bias (β) predict BMI, suggesting obesity is partly attributable to rational intertemporal tradeoffs but also partly to time inconsistency.
Handle: RePEc:nbr:nberwo:17483
Template-Type: ReDIF-Paper 1.0
Title: Price Dividend Ratio Factors : Proxies for Long Run Risk
Classification-JEL: G11; G12
Author-Name: Ravi Jagannathan
Author-Person: pja91
Author-Name: Srikant Marakani
Note: AP
Number: 17484
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17484
File-URL: http://www.nber.org/papers/w17484.pdf
File-Format: application/pdf
Publication-Status: published as R. Jagannathan & S. Marakani, 2015. "Price-Dividend Ratio Factor Proxies for Long-Run Risks," Review of Asset Pricing Studies, vol 5(1), pages 1-47.
Abstract: We evaluate the empirical support for a broad class of long run risk models using information in factors extracted through principal component analysis of the covariance matrix of log price dividend ratios of twenty five equity portfolios formed on Size and Book-to-Market. We identify two price-dividend ratio factor proxies for economy wide long run risk, one tracking the volatility of the growth rate in economy wide aggregate consumption, and the other predicting the growth rates in the stock index portfolio dividends and aggregate consumption, consistent with the implications of these models. We show that that the long run risk factor driving expected consumption growth is not recoverable from the cross section of excess returns alone. The price dividend ratio factors perform better than the stock index price dividend ratio and the corporate yield spread, and has information in addition to what is in the slope of the term structure of interest rates, in forecasting the growth rate in real time consumption and stock index dividends. The covariance of excess returns with factor innovations explain the cross section of excess returns on size, book/market, earnings/price ratio, long term reversal, and short term reversal sorted portfolios in a manner robust to look-ahead and useless factor biases. Our findings suggest that the widely used Fama and French (1993) three factor model and the long run risk models studied in the literature are not necessarily inconsistent with each other. They may be representing the same underlying phenomenon, but emphasizing different aspects of reality.
Handle: RePEc:nbr:nberwo:17484
Template-Type: ReDIF-Paper 1.0
Title: House Prices and Birth Rates: The Impact of the Real Estate Market on the Decision to Have a Baby
Classification-JEL: D1; J13; R21
Author-Name: Lisa J. Dettling
Author-Person: pde770
Author-Name: Melissa Schettini Kearney
Note: CH LS PE
Number: 17485
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17485
File-URL: http://www.nber.org/papers/w17485.pdf
File-Format: application/pdf
Publication-Status: published as Dettling, Lisa and Melisa S. Kearney. “House Prices and Birth Rates: The Impact of the Real Estate Market on the Decision to Have a Baby,” Journal of Public Economics 110, February 2014: 1-166.
Abstract: This project investigates how changes in Metropolitan Statistical Area (MSA)- level housing prices affect household fertility decisions. Recognizing that housing is a major cost associated with child rearing, and assuming that children are normal goods, we hypothesize that an increase in house prices will have a negative price effect on current period fertility. This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child. On the other hand, for current homeowners, an increase in MSA-level house prices will increase home equity, leading to a positive effect on birth rates. Our results suggest that indeed, short-term increases in house prices lead to a decline in births among non-owners and a net increase among owners. The estimates imply that a $10,000 increase leads to a 5 percent increase in fertility rates among owners and a 2.4 percent decrease among non-owners. At the mean U.S. home ownership rate, these estimates imply that the net effect of a $10,000 increase in house prices is a 0.8 percent increase in current period fertility rates. Given underlying differences in home ownership rates, the predicted net effect of house price changes varies across demographic groups. In addition, we find that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates. This project investigates how changes in Metropolitan Statistical Area (MSA)- level housing prices affect household fertility decisions. Recognizing that housing is a major cost associated with child rearing, and assuming that children are normal goods, we hypothesize that an increase in house prices will have a negative price effect on current period fertility. This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child. On the other hand, for current homeowners, an increase in MSA-level house prices will increase home equity, leading to a positive effect on birth rates. Our results suggest that indeed, short-term increases in house prices lead to a decline in births among non-owners and a net increase among owners. The estimates imply that a $10,000 increase leads to a 5 percent increase in fertility rates among owners and a 2.4 percent decrease among non-owners. At the mean U.S. home ownership rate, these estimates imply that the net effect of a $10,000 increase in house prices is a 0.8 percent increase in current period fertility rates. Given underlying differences in home ownership rates, the predicted net effect of house price changes varies across demographic groups. In addition, we find that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates.
Handle: RePEc:nbr:nberwo:17485
Template-Type: ReDIF-Paper 1.0
Title: If You Build It Will They Come? Teacher Use of Student Performance Data on a Web-Based Tool
Classification-JEL: I21
Author-Name: John H. Tyler
Author-Person: pty2
Note: ED
Number: 17486
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17486
File-URL: http://www.nber.org/papers/w17486.pdf
File-Format: application/pdf
Publication-Status: published as If You Build it Will They Come? Teachers’ Online Use of Student Performance Data John H. Tyler Education Finance and Policy Spring 2013, Vol. 8, No. 2, Pages 168-207
Abstract: The past decade has seen increased testing of students and the concomitant proliferation of computer-based systems to store, manage, analyze, and report the data that comes from these tests. The research to date on teacher use of these data has mostly been qualitative and has mostly focused on the conditions that are necessary (but not necessarily sufficient) for effective use of data by teachers. Absent from the research base in this area is objective information on how much and in what ways teachers actually use student test data, even when supposed precursors of teacher data use are in place. This paper addresses this knowledge gap by analyzing usage data generated when teachers in one mid-size urban district log onto the web-based, district-provided data deliver and analytic tool. Based on information contained in the universe of web logs from the 2008-2009 and 2009-2010 school years, I find relatively low levels of teacher interaction with pages on the web tool that contain student test information that could potentially inform practice. I also find no evidence that teacher usage of web-based student data is related student achievement, but there is reason to believe these estimates are downwardly biased.
Handle: RePEc:nbr:nberwo:17486
Template-Type: ReDIF-Paper 1.0
Title: The Human Capital Stock: A Generalized Approach
Classification-JEL: I2; J2; J3; O1; O4
Author-Name: Benjamin F. Jones
Author-Person: pjo400
Note: ED EFG PR
Number: 17487
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17487
File-URL: http://www.nber.org/papers/w17487.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin F. Jones, 2014. "The Human Capital Stock: A Generalized Approach," American Economic Review, vol 104(11), pages 3752-3777.
Abstract: This paper presents a new framework for human capital measurement. The generalized framework can (i) substantially amplify the role of human capital in accounting for cross-country income differences and (ii) reconcile the existing conflict between regression and accounting evidence in assessing the wealth and poverty of nations. One natural interpretation emphasizes differences across economies in the acquisition of advanced knowledge by skilled workers.
Handle: RePEc:nbr:nberwo:17487
Template-Type: ReDIF-Paper 1.0
Title: Using the Market to Address Climate Change: Insights from Theory and Experience
Classification-JEL: Q40; Q48; Q54; Q58
Author-Name: Joseph E. Aldy
Author-Person: pal158
Author-Name: Robert N. Stavins
Author-Person: pst167
Note: EEE
Number: 17488
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17488
File-URL: http://www.nber.org/papers/w17488.pdf
File-Format: application/pdf
Publication-Status: published as “Using the Market to Address Climate Change: Insights from Theory and Experience.” Daedalus 141(2): 45-60, with Robert N. Stavins, 2012.
Abstract: Emissions of greenhouse gases linked with global climate change are affected by diverse aspects of economic activity, including individual consumption, business investment, and government spending. An effective climate policy will have to modify the decision calculus for these activities in the direction of more efficient generation and use of energy, lower carbon intensity of energy, and - more broadly - a more carbon-lean economy. The only approach to doing this on a meaningful scale that would be technically feasible and cost-effective is carbon pricing, that is, market-based climate policies that place a shadow-price on carbon dioxide emissions. We examine alternative designs of three such instruments - carbon taxes, cap-and-trade, and clean energy standards. We note that the U.S. political response to possible market-based approaches to climate policy has been and will continue to be largely a function of issues and structural factors that transcend the scope of environmental and climate policy.
Handle: RePEc:nbr:nberwo:17488
Template-Type: ReDIF-Paper 1.0
Title: Optimal Monetary Policy with Endogenous Entry and Product Variety
Classification-JEL: E31; E32; E52
Author-Name: Florin O. Bilbiie
Author-Person: pbi78
Author-Name: Ippei Fujiwara
Author-Person: pfu32
Author-Name: Fabio Ghironi
Author-Person: pgh2
Note: EFG ME
Number: 17489
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17489
File-URL: http://www.nber.org/papers/w17489.pdf
File-Format: application/pdf
Publication-Status: published as "Optimal Monetary Policy with Endogenous Entry and Product Variety" with Florin O. Bilbiie, Ippei Fujiwara, Journal of Monetary Economics, forthcoming.
Abstract: We show that deviations from long-run stability of product prices are optimal in the presence of endogenous producer entry and product variety in a sticky-price model with monopolistic competition in which price stability would be optimal in the absence of entry. Specifically, a long-run positive (negative) rate of inflation is optimal when the benefit of variety to consumers falls short of (exceeds) the market incentives for creating that variety under flexible prices, governed by the desired markup. Plausible preference specifications and parameter values justify a long-run inflation rate of two percent or higher. Price indexation implies even larger deviations from long-run price stability. However, price stability (around this non-zero trend) is close to optimal in the short run, even in the presence of time-varying flexible-price markups that distort the allocation of resources across time and states. The central bank uses its leverage over real activity in the long run, but not in the short run. Our results point to the need for continued empirical research on the determinants of markups and investigation of the benefit of product variety to consumers.
Handle: RePEc:nbr:nberwo:17489
Template-Type: ReDIF-Paper 1.0
Title: On the Network Topology of Variance Decompositions: Measuring the Connectedness of Financial Firms
Classification-JEL: C3; G2
Author-Name: Francis X. Diebold
Author-Person: pdi1
Author-Name: Kamil Yilmaz
Author-Person: pyi43
Note: AP EFG IFM
Number: 17490
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17490
File-URL: http://www.nber.org/papers/w17490.pdf
File-Format: application/pdf
Publication-Status: published as Diebold, F.X. and Yilmaz, K. (2014), "On the Network Topology of Variance Decompositions: Measuring the Connectedness of Financial Firms," Journal of Econometrics, 182, 119-134.
Abstract: We propose several connectedness measures built from pieces of variance decompositions, and we argue that they provide natural and insightful measures of connectedness among financial asset returns and volatilities. We also show that variance decompositions define weighted, directed networks, so that our connectedness measures are intimately-related to key measures of connectedness used in the network literature. Building on these insights, we track both average and daily time-varying connectedness of major U.S. financial institutions' stock return volatilities in recent years, including during the financial crisis of 2007-2008.
Handle: RePEc:nbr:nberwo:17490
Template-Type: ReDIF-Paper 1.0
Title: Mutual Fund Performance and the Incentive to Generate Alpha
Classification-JEL: G14; G23
Author-Name: Diane Del Guercio
Author-Name: Jonathan Reuter
Author-Person: pre328
Note: AP
Number: 17491
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17491
File-URL: http://www.nber.org/papers/w17491.pdf
File-Format: application/pdf
Publication-Status: published as Del Guercio, Diane, and Jonathan Reuter, 2014, "Mutual Fund Performance and the Incentive to Generate Alpha," Journal of Finance 69(4): 1673-1704.
Abstract: Financial economists have long been puzzled by investor demand for actively managed funds that generate, on average, negative after-fee, risk-adjusted returns. To shed new light on this puzzle, we exploit the fact that funds in different market segments compete for different types of retail investors. Within the segment of funds marketed directly to retail investors, we find that flows chase risk-adjusted returns, and that funds respond by investing more in active management. Importantly, within this direct-sold segment, we find little evidence that actively managed funds underperform index funds. In contrast, within the segment of funds sold through brokers, which we demonstrate face a weaker incentive to generate alpha, we find that actively managed funds significantly underperform index funds. We conclude that the well-known underperformance of the average actively managed fund in the full sample is driven by the large fraction of funds with weak incentives to identify and motivate skilled managers.
Handle: RePEc:nbr:nberwo:17491
Template-Type: ReDIF-Paper 1.0
Title: Reserves and Baskets
Classification-JEL: F02; F33; F55
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Harold James
Author-Person: pja546
Note: DAE ME
Number: 17492
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17492
File-URL: http://www.nber.org/papers/w17492.pdf
File-Format: application/pdf
Publication-Status: published as Michael Bordo & Harold James, 2012. "Reserves and Baskets," Open Economies Review, Springer, vol. 23(1), pages 113-127, February.
Abstract: We discuss three well known plans that were offered in the twentieth century to provide an artificial replacement for gold and key currencies as international reserves: Keynes' Bancor, the SDR and the Ecu( predecessor to the euro).The latter two of these reserve substitutes were institutionalized but neither replaced the dollar as the principal medium of international reserve.
Handle: RePEc:nbr:nberwo:17492
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Implications of Innovation Policy
Classification-JEL: E6; O11; O3
Author-Name: Andrew Atkeson
Author-Person: pat52
Author-Name: Ariel T. Burstein
Note: EFG
Number: 17493
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17493
File-URL: http://www.nber.org/papers/w17493.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Atkeson & Ariel Burstein, 2019. "Aggregate Implications of Innovation Policy," Journal of Political Economy, vol 127(6), pages 2625-2683.
Abstract: We examine the quantitative impact of policy-induced changes in innovative investment by firms on growth in aggregate productivity and output in a model that nests several of the canonical models in the literature. We isolate two statistics, the impact elasticity of aggregate productivity growth with respect to an increase in aggregate innovative investment and the degree of intertemporal knowledge spillovers in research, that play a key role in shaping the model’s predicted dynamic response of aggregate productivity, output, and welfare to a policy-induced change in the innovation intensity of the economy. Given estimates of these statistics, we find that there is only modest scope for increasing aggregate productivity and output over a 20-year horizon with uniform subsidies to firms’ investments in innovation of a reasonable magnitude, but the welfare gains from such a subsidy may be substantial.
Handle: RePEc:nbr:nberwo:17493
Template-Type: ReDIF-Paper 1.0
Title: Injecting Successful Charter School Strategies into Traditional Public Schools: A Field Experiment in Houston
Classification-JEL: H0; I0; I21; J0; K0
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Note: ED LS
Number: 17494
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17494
File-URL: http://www.nber.org/papers/w17494.pdf
File-Format: application/pdf
Abstract: We implemented five strategies gleaned from practices in achievement-increasing charter schools - increased instructional time, a more rigorous approach to building human capital of teachers and administrators, high-dosage tutoring, frequent use of data to inform instruction, and a culture of high expectations - in twenty of the lowest performing schools in Houston, Texas. We show that the average impact of these changes on student achievement is 0.206 standard deviations in math and 0.043 standard deviations in reading, per year, which is comparable to reported impacts of attending high-performing charter schools. This suggests that the best practices of charter schools may be general lessons about the education production function.
Handle: RePEc:nbr:nberwo:17494
Template-Type: ReDIF-Paper 1.0
Title: Knowledge Growth and the Allocation of Time
Classification-JEL: O1; O15
Author-Name: Robert E. Lucas, Jr.
Author-Name: Benjamin Moll
Author-Person: pmo661
Note: EFG
Number: 17495
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17495
File-URL: http://www.nber.org/papers/w17495.pdf
File-Format: application/pdf
Publication-Status: published as Robert E. Lucas Jr. & Benjamin Moll, 2014. "Knowledge Growth and the Allocation of Time," Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 1 - 51.
Abstract: We analyze a model economy with many agents, each with a different productivity level. Agents divide their time between two activities: producing goods with the production-related knowledge they already have, and interacting with others in search of new, productivity-increasing ideas. These choices jointly determine the economy's current production level and its rate of learning and real growth. Individuals' time allocation decisions depend on the knowledge distribution because the productivity levels of others determine their own chances of improving their productivities through search. The time allocations of everyone in the economy in turn determine the evolution of its knowledge distribution. We construct the balanced growth path for this economy, thereby obtaining a theory of endogenous growth that captures in a tractable way the social nature of knowledge creation. We also study the allocation chosen by an idealized planner who takes into account and internalizes the external benefits of search, and tax structures that implement an optimal solution. Finally, we provide two examples of alternative learning technologies, as concrete illustrations of other directions that might be pursued.
Handle: RePEc:nbr:nberwo:17495
Template-Type: ReDIF-Paper 1.0
Title: The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data
Classification-JEL: F16
Author-Name: David Hummels
Author-Person: phu100
Author-Name: Rasmus Jørgensen
Author-Name: Jakob R. Munch
Author-Person: pmu97
Author-Name: Chong Xiang
Author-Person: pxi42
Note: ITI LS
Number: 17496
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17496
File-URL: http://www.nber.org/papers/w17496.pdf
File-Format: application/pdf
Publication-Status: published as David Hummels & Rasmus J?rgensen & Jakob Munch & Chong Xiang, 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," American Economic Review, American Economic Association, vol. 104(6), pages 1597-1629, June.
Abstract: We estimate how offshoring and exporting affect wages by skill type. Our data match the population of Danish workers to the universe of private-sector Danish firms, whose trade flows are broken down by product and origin and destination countries. Our data reveal new stylized facts about offshoring activities at the firm level, and allow us to both condition our identification on within-job-spell changes and construct instruments for offshoring and exporting that are time varying and uncorrelated with the wage setting of the firm. We find that within job spells, (1) offshoring tends to increase the high-skilled wage and decrease the low-skilled wage; (2) exporting tends to increase the wages of all skill types; (3) the net wage effect of trade varies substantially across workers of the same skill type; and (4) conditional on skill, the wage effect of offshoring exhibits additional variation depending on task characteristics. We then track the outcomes for workers after a job spell and find that those displaced from offshoring firms suffer greater earnings losses than other displaced workers, and that low-skilled workers suffer greater and more persistent earnings losses than high-skilled workers.
Handle: RePEc:nbr:nberwo:17496
Template-Type: ReDIF-Paper 1.0
Title: Role Reversal in Global Finance
Classification-JEL: F3; F4
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Note: IFM
Number: 17497
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17497
File-URL: http://www.nber.org/papers/w17497.pdf
File-Format: application/pdf
Publication-Status: published as Eswar S. Prasad, 2011. "Role reversal in global finance," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 339-390.
Abstract: I document that emerging markets have cast off their "original sin"--their external liabilities are no longer dominated by foreign-currency debt and have instead shifted sharply towards direct investment and portfolio equity. Their external assets are increasingly concentrated in foreign exchange reserves held in advanced economy government bonds. Given the enormous and rising public debt burdens of reserve currency economies, this means that the long-term risk on emerging markets' external balance sheets is shifting to the asset side. However, emerging markets continue to look for more insurance against balance of payments crises, even as self-insurance through reserve accumulation itself becomes riskier. I discuss a possible mechanism for global liquidity insurance that would meet emerging markets' demand for insurance with fewer domestic policy distortions while facilitating a quicker adjustment of global imbalances. I also argue that emerging markets have become less dependent on foreign finance and more resilient to capital flow volatility. The main risk that increasing financial openness poses for these economies is that capital flows exacerbate vulnerabilities arising from weak domestic policies and institutions.
Handle: RePEc:nbr:nberwo:17497
Template-Type: ReDIF-Paper 1.0
Title: What Role for Trade in a Post 2012 Global Climate Policy Regime
Classification-JEL: F13; F18; Q54; Q56
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE
Number: 17498
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17498
File-URL: http://www.nber.org/papers/w17498.pdf
File-Format: application/pdf
Publication-Status: published as John Whalley, 2011. "What Role for Trade in a Post‐2012 Global Climate Policy Regime," The World Economy, Wiley Blackwell, vol. 34(11), pages 1844-1862, November.
Abstract: This paper discusses the role that trade can potentially play in both negotiating and operating a post Kyoto/post 2012 global climate policy regime. As an addition to the bargaining set for a global climate negotiation, trade in principle widens the range of jointly beneficial potential outcomes and can in this sense be a potential facilitator of an agreed global climate regime. The reverse is also true, that in a linked climate-trade-finance global policy coordination structure that goes well beyond what was envisioned at Bretton Woods, climate now added to the global policy bargaining set also offers the prospect of potentially stronger trade disciplines (and even beyond WTO disciplines being negotiated). Trade policy can as well be an instrument for the implementation of a global climate regime, since trade provides a mechanism for achieving an internalization outcome for the global externality that climate change represents, and that provides a potentially more efficient outcome and also helps meet distributional objectives. In short, trade added to the emerging post 2012 climate regime can both expand the bargaining set for both (effectively linked) negotiations, and additionally provide an instrument for the implementation of an agreed outcome.
Handle: RePEc:nbr:nberwo:17498
Template-Type: ReDIF-Paper 1.0
Title: The Design and Implementation of U.S. Climate Policy: An Introduction
Classification-JEL: H23; Q54; Q58
Author-Name: Don Fullerton
Author-Person: pfu10
Author-Name: Catherine Wolfram
Note: EEE IO PE
Number: 17499
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17499
File-URL: http://www.nber.org/papers/w17499.pdf
File-Format: application/pdf
Publication-Status: published as Introduction and Summary to "The Design and Implementation of U.S. Climate Policy", Don Fullerton, Catherine Wolfram. in The Design and Implementation of US Climate Policy, Fullerton and Wolfram. 2012
Abstract: While economic models have already proven useful to analyze big picture questions about climate policy such as the choice between a carbon tax or cap-and-trade permit system, the 19 chapters in this book show how economic models also are useful to address the many remaining smaller questions that arise as policy is implemented. For example, chapters consider: the tradeoffs policymakers confront in deciding whether to implement the policy upstream on energy producers or downstream on energy users; how to monitor and enforce climate policy; how Federal actions might interact with climate policies at other levels of government or with other non-climate policies; the distributional effects of different policy variations; policies that might impact particular sectors, including residential energy use, agriculture and transportation; and specific questions regarding offsets, trade, innovation, and adaptation.
Handle: RePEc:nbr:nberwo:17499
Template-Type: ReDIF-Paper 1.0
Title: Liquidity and the Threat of Fraudulent Assets
Classification-JEL: E41; E44; E5; E58; G1; G12
Author-Name: Yiting Li
Author-Person: pli48
Author-Name: Guillaume Rocheteau
Author-Person: pro264
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: AP EFG ME
Number: 17500
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17500
File-URL: http://www.nber.org/papers/w17500.pdf
File-Format: application/pdf
Publication-Status: published as Yiting Li & Guillaume Rocheteau & Pierre-Olivier Weill, 2012. "Liquidity and the Threat of Fraudulent Assets," Journal of Political Economy, University of Chicago Press, vol. 120(5), pages 000 - 000.
Abstract: We study an over-the-counter (OTC) market with bilateral meetings and bargaining where the usefulness of assets, as means of payment or collateral, is limited by the threat of fraudulent practices. We assume that agents can produce fraudulent assets at a positive cost, which generates endogenous upper bounds on the quantity of each asset that can be sold, or posted as collateral in the OTC market. Each endogenous, asset-specific, resalability constraint depends on the vulnerability of the asset to fraud, on the frequency of trade, and on the current and future prices of the asset. In equilibrium, the set of assets can be partitioned into three liquidity tiers, which differ in their resalability, their prices, their sensitivity to shocks, and their responses to policy interventions. The dependence of an asset's resalability on its price creates a pecuniary externality, which leads to the result that some policies commonly thought to improve liquidity can be welfare reducing.
Handle: RePEc:nbr:nberwo:17500
Template-Type: ReDIF-Paper 1.0
Title: Traded and Nontraded Goods Prices, and International Risk Sharing: an Empirical Investigation.
Classification-JEL: F41; F42
Author-Name: Giancarlo Corsetti
Author-Name: Luca Dedola
Author-Person: pde41
Author-Name: Francesca Viani
Author-Person: pvi239
Note: IFM
Number: 17501
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17501
File-URL: http://www.nber.org/papers/w17501.pdf
File-Format: application/pdf
Publication-Status: published as Giancarlo Corsetti & Luca Dedola & Francesca Viani, 2012. "Traded and Nontraded Goods Prices, and International Risk Sharing: An Empirical Investigation," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 8(1), pages 403 - 466.
Abstract: Accounting for the pervasive evidence of limited international risk sharing is an important hurdle for open-economy models, especially when these are adopted in the analysis of policy trade-offs likely to be affected by imperfections in financial markets. Key to the literature is the evidence, at odds with efficiency, that consumption is relatively high in countries where its international relative price (the real exchange rate) is also high. We reconsider the relation between cross-country consumption differentials and real exchange rates, by decomposing it into two components, reflecting the prices of tradable and nontradable goods, respectively. We document that, as a common pattern among OECD countries, both components tend to contribute to the overall lack of risk sharing, with the tradable price component playing the dominant role in accounting for efficiency deviations. We relate these findings to two mechanisms proposed by the literature to reconcile open economy models with the data. One features strong Balassa-Samuelson effects on nontradable prices due to productivity gains in the tradable sector, with a muted offsetting response of tradable prices. The other, endogenous income effects causing nontradable but especially tradable prices to appreciate with a rise in domestic consumption demand.
Handle: RePEc:nbr:nberwo:17501
Template-Type: ReDIF-Paper 1.0
Title: Capital Flows and Economic Growth in the Era of Financial Integration and Crisis, 1990-2010
Classification-JEL: F21; F32; F43
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Author-Name: Donghyun Park
Author-Person: ppa611
Note: ITI
Number: 17502
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17502
File-URL: http://www.nber.org/papers/w17502.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Yothin Jinjarak & Donghyun Park, 2013. "Capital Flows and Economic Growth in the Era of Financial Integration and Crisis, 1990â2010," Open Economies Review, Springer, vol. 24(3), pages 371-396, July.
Abstract: We investigate the relationship between economic growth and lagged international capital flows, disaggregated into FDI, portfolio investment, equity investment, and short-term debt. We follow about 100 countries during 1990-2010 when emerging markets became more integrated into the international financial system. We look at the relationship both before and after the global crisis. Our study reveals a complex and mixed picture. The relationship between growth and lagged capital flows depends on the type of flows, economic structure, and global growth patterns. We find a large and robust relationship between FDI - both inflows and outflows - and growth. The relationship between growth and equity flows is smaller and less stable. Finally, the relationship between growth and short-term debt is nil before the crisis, and negative during the crisis.
Handle: RePEc:nbr:nberwo:17502
Template-Type: ReDIF-Paper 1.0
Title: Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music since Napster
Classification-JEL: K11; L82
Author-Name: Joel Waldfogel
Author-Person: pwa46
Note: IO LE
Number: 17503
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17503
File-URL: http://www.nber.org/papers/w17503.pdf
File-Format: application/pdf
Publication-Status: published as Joel Waldfogel, 2012. "Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music since Napster," Journal of Law and Economics, University of Chicago Press, vol. 55(4), pages 715 - 740.
Abstract: Recent technological changes may have altered the balance between technology and copyright law for digital products. While file-sharing has reduced revenue, other technological changes have reduced the costs of bringing creative works to market. As a result, we don't know whether the effective copyright protection currently available provides adequate incentives to bring forth a steady stream of valuable new products. This paper assesses the quality of new recorded music since Napster, using three independent approaches. The first is an index of the quantity of high-quality music based on critics' retrospective lists. The second and third approaches rely directly on music sales and airplay data, respectively, using of the idea that if one vintage's music is better than another's, its superior quality should generate higher sales or greater airplay through time, after accounting for depreciation. The three resulting indices of vintage quality for the past half-century are both consistent with each other and with other historical accounts of recorded music quality. There is no evidence of a reduction in the quality of music released since Napster, and the two usage-based indices suggest an increase since 1999. Hence, researchers and policymakers thinking about the strength of copyright protection should supplement their attention to producer surplus with concern for consumer surplus as well.
Handle: RePEc:nbr:nberwo:17503
Template-Type: ReDIF-Paper 1.0
Title: General Education, Vocational Education, and Labor-Market Outcomes over the Life-Cycle
Classification-JEL: I20; J24; J31; J64
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Ludger Woessmann
Author-Person: pwo29
Author-Name: Lei Zhang
Author-Person: pzh150
Note: ED LS PE
Number: 17504
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17504
File-URL: http://www.nber.org/papers/w17504.pdf
File-Format: application/pdf
Publication-Status: published as Eric A. Hanushek & Guido Schwerdt & Ludger Woessmann & Lei Zhang, 2017. "General Education, Vocational Education, and Labor-Market Outcomes over the Lifecycle," Journal of Human Resources, University of Wisconsin Press, vol. 52(1), pages 48-87.
Abstract: Policy debates about the balance of vocational and general education programs focus on the school-to-work transition. But with rapid technological change, gains in youth employment from vocational education may be offset by less adaptability and thus diminished employment later in life. To test our main hypothesis that any relative labor-market advantage of vocational education decreases with age, we employ a difference-in-differences approach that compares employment rates across different ages for people with general and vocational education. Using micro data for 18 countries from the International Adult Literacy Survey, we find strong support for the existence of such a trade-off, which is most pronounced in countries emphasizing apprenticeship programs. Results are robust to accounting for ability patterns and to propensity-score matching.
Handle: RePEc:nbr:nberwo:17504
Template-Type: ReDIF-Paper 1.0
Title: Lifecycle Portfolio Choice with Systematic Longevity Risk and Variable Investment-Linked Deferred Annuities
Classification-JEL: G11; G2; G22; G23; H55; I3
Author-Name: Vasily Kartashov
Author-Name: Raimond Maurer
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Ralph Rogalla
Note: AG LS PE
Number: 17505
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17505
File-URL: http://www.nber.org/papers/w17505.pdf
File-Format: application/pdf
Publication-Status: published as Raimond Maurer & Olivia S. Mitchell & Ralph Rogalla & Vasily Kartashov, 2013. "Lifecycle Portfolio Choice With Systematic Longevity Risk and Variable InvestmentâLinked Deferred Annuities," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 80(3), pages 649-676, 09.
Abstract: This paper assesses the impact of variable investment-linked deferred annuities (VILDAs) on lifecycle consumption, saving, and portfolio allocation patterns given stochastic and systematic mortality. Insurers have taken two approaches to manage systematic mortality risks, namely self-insurance and risk transfer to purchasers of the annuity products. We demonstrate that self-insurance leads to high loadings, so that households offered a choice would favor the risk transfer scheme. Reservation loadings on the actuarially fair VILDA price for non-participation are 0.5-8%; if insurers cannot hedge within this range, they will transfer systematic longevity risks to the annuitants. Our findings have implications for new payout products that may be attractive to older households seeking to protect against retirement shortfalls.
Handle: RePEc:nbr:nberwo:17505
Template-Type: ReDIF-Paper 1.0
Title: Speculation and Risk Sharing with New Financial Assets
Classification-JEL: D53; D61; G1; G11
Author-Name: Alp Simsek
Note: AP CF IFM
Number: 17506
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17506
File-URL: http://www.nber.org/papers/w17506.pdf
File-Format: application/pdf
Publication-Status: published as “Speculation and Risk Sharing with New Financial Assets,” Quarterly Journal of Economics, Vol. 128-3, p.1365-1396.
Abstract: While the traditional view of financial innovation emphasizes the risk sharing role of new financial assets, belief disagreements about these assets naturally lead to speculation, which represents a powerful economic force in the opposite direction. This paper investigates the effect of financial innovation on portfolio risks in an economy when both the risk sharing and the speculation forces are present. I consider this question in a standard mean-variance framework. Financial assets provide hedging services but they are also subject to speculation because traders do not necessarily agree about their payoffs. I define the average variance of traders' net worths as a measure of portfolio risks for this economy, and I decompose it into two components: the uninsurable variance, defined as the average variance that would obtain if there were no belief disagreements, and the speculative variance, defined as the residual variance that results from speculative trades based on belief disagreements. Financial innovation always decreases the uninsurable variance because new assets increase the possibilities for risk sharing. My main result shows that financial innovation also always increases the speculative variance. This is true even if traders completely agree about the payoffs of new assets. The intuition behind this result is the hedge-more/bet-more effect: Traders use new assets to hedge their bets on existing assets, which in turn enables them to place larger bets and take on greater risks. The net effect of financial innovation on portfolio risks depends on the quantitative strength of its effects on the uninsurable and the speculative variances. I consider a calibration of the model for new assets linked to national incomes of G7 countries, which were recommended by Athanasoulis and Shiller (2001) to facilitate risk sharing. For reasonable levels of belief disagreements, these assets would actually increase the average consumption risks of individuals in G7 countries. In addition, a profit seeking market maker would introduce a different subset of these assets than the ones proposed by Athanasoulis and Shiller (2001). The endogenous set of new assets would be directed towards increasing the opportunities for speculation rather than risk sharing.
Handle: RePEc:nbr:nberwo:17506
Template-Type: ReDIF-Paper 1.0
Title: Fathers and Youth's Delinquent Behavior
Classification-JEL: J12; J13; K42
Author-Name: Deborah A. Cobb-Clark
Author-Person: pco192
Author-Name: Erdal Tekin
Author-Person: pte12
Note: CH EH
Number: 17507
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17507
File-URL: http://www.nber.org/papers/w17507.pdf
File-Format: application/pdf
Publication-Status: published as “Fathers and Youth’s Delinquent Behavior,” with Deborah Cobb-Clark. NBER Working Paper No. 17507. Forthcoming in Review of Economics of the Household. DOI: 10.1007/s11150-013-9194-9.
Abstract: This paper analyzes the relationship between having one or more father figures and the likelihood that young people engage in delinquent criminal behavior. We pay particular attention to distinguishing the roles of residential and non-residential, biological fathers as well as stepfathers. Using data from the National Longitudinal Study of Adolescent Health, we find that adolescent boys engage in more delinquent behavior if there is no father figure in their lives. However, adolescent girls' behavior is largely independent of the presence (or absence) of their fathers. The strong effect of family structure is not explained by the lack of paternal involvement that generally comes with fathers' absence, even though adolescents, especially boys, who spend time doing things with their fathers usually have better outcomes. There is also a link between adult delinquent behavior and adolescent family structure that cannot be explained by fathers' involvement with their adolescent sons and is only partially explained by fathers' involvement with their adolescent daughters. Finally, the strong link between adolescent family structure and delinquent behavior is not accounted for by the income differentials associated with fathers' absence. Our results suggest that the presence of a father figure during adolescence is likely to have protective effects, particularly for males, in both adolescence and young adulthood.
Handle: RePEc:nbr:nberwo:17507
Template-Type: ReDIF-Paper 1.0
Title: The Disappearing Gender Gap: The Impact of Divorce, Wages, and Preferences on Education Choices and Women's Work
Classification-JEL: D91; E2; J12; J16; J22; Z1
Author-Name: Raquel Fernández
Author-Person: pfe17
Author-Name: Joyce Cheng Wong
Note: ED EFG LS
Number: 17508
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17508
File-URL: http://www.nber.org/papers/w17508.pdf
File-Format: application/pdf
Abstract: Women born in 1935 went to college significantly less than their male counterparts and married women's labor force participation (LFP) averaged 40% between the ages of thirty and forty. The cohort born twenty years later behaved very differently. The education gender gap was eliminated and married women's LFP averaged 70% over the same ages. In order to evaluate the quantitative contributions of the many significant changes in the economic environment, family structure, and social norms that occurred over this period, this paper develops a dynamic life-cycle model calibrated to data relevant to the 1935 cohort. We find that the higher probability of divorce and the changes in wage structure faced by the 1955 cohort are each able to explain, in isolation, a large proportion (about 60%) of the observed changes in female LFP. After combining all economic and family structure changes, we find that a simple change in preferences towards work can account for the remaining change in LFP. To eliminate the education gender gap requires, on the other hand, for the psychic cost of obtaining higher education to change asymmetrically for women versus men.
Handle: RePEc:nbr:nberwo:17508
Template-Type: ReDIF-Paper 1.0
Title: What do Boards Really Do? Evidence from Minutes of Board Meetings
Classification-JEL: G3; L2
Author-Name: Miriam Schwartz-Ziv
Author-Name: Michael Weisbach
Note: CF LE
Number: 17509
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17509
File-URL: http://www.nber.org/papers/w17509.pdf
File-Format: application/pdf
Publication-Status: published as “What do Boards Really do? Evidence from Minutes of Board Meetings” (with Miriam Schwartz- Ziv), Journal of Financial Economics, Vol. 108 (May 2013), pp. 349-366.
Abstract: We analyze a unique database from a sample of real-world boardrooms - minutes of board meetings and board-committee meetings of eleven business companies for which the Israeli government holds a substantial equity interest. We use these data to evaluate the underlying assumptions and predictions of models of boards of directors. These models generally fall into two categories: "managerial models" assume boards play a direct role in managing the firm, and "supervisory models" assume that boards' monitor top management but do not make business decisions themselves. Consistent with the supervisory models, our minutes-based data suggest that boards spend most of their time monitoring management: 67% of the issues they discussed were of a supervisory nature, they were presented with only a single option in 99% of the issues discussed, and they disagreed with the CEO only 3.3% of the time. In addition, managerial models describe boards at times as well: Boards requested to receive further information or an update for 8% of the issues discussed, and they took an initiative with respect to 8.1% of them. In 63% of the meetings, boards took at least one of these actions or did not vote in line with the CEO.
Handle: RePEc:nbr:nberwo:17509
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Credit Cycles
Classification-JEL: E32; E44
Author-Name: Chao Gu
Author-Person: pgu383
Author-Name: Randall Wright
Author-Person: pwr2
Note: EFG
Number: 17510
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17510
File-URL: http://www.nber.org/papers/w17510.pdf
File-Format: application/pdf
Publication-Status: published as Chao Gu & Fabrizio Mattesini & Cyril Monnet & Randall Wright, 2013. "Endogenous Credit Cycles," Journal of Political Economy, University of Chicago Press, vol. 121(5), pages 940 - 965.
Abstract: We study models of credit with limited commitment, which implies endogenous borrowing constraints. We show that there are multiple stationary equilibria, as well as nonstationary equilibria, including some that display deterministic cyclic and chaotic dynamics. There are also stochastic (sunspot) equilibria, in which credit conditions change randomly over time, even though fundamentals are deterministic and stationary. We show this can occur when the terms of trade are determined by Walrasian pricing or by Nash bargaining. The results illustrate how it is possible to generate equilibria with credit cycles (crunches, freezes, crises) in theory, and as recently observed in actual economies.
Handle: RePEc:nbr:nberwo:17510
Template-Type: ReDIF-Paper 1.0
Title: Buyers, Sellers and Middlemen: Variations on Search-Theoretic Themes
Classification-JEL: D2; D4; D83
Author-Name: Yuet-Yee Wong
Author-Person: pwo51
Author-Name: Randall Wright
Author-Person: pwr2
Note: EFG IO
Number: 17511
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17511
File-URL: http://www.nber.org/papers/w17511.pdf
File-Format: application/pdf
Publication-Status: published as Randall Wright & Yuet‐Yee Wong, 2014. "Buyers, Sellers, And Middlemen: Variations On Search‐Theoretic Themes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(2), pages 375-397, May.
Abstract: We study bilateral exchange, both direct trade and indirect trade that happens through chains of intermediaries or middlemen. We develop a model of this activity and present applications. This illustrates how, and how many, intermediaries get involved, and how the terms of trade are determined. We show how bargaining with one intermediary depends on upcoming negotiations with downstream intermediaries, leading to holdup problems. We discuss the roles of buyers and sellers in bilateral exchanges, and how to interpret prices. We develop a particular bargaining solution and relate it to other solutions. In addition to contrasting our framework with other models of middlemen, we discuss the connection to different branches of search theory. We also illustrate how bubbles can emerge in intermediation.
Handle: RePEc:nbr:nberwo:17511
Template-Type: ReDIF-Paper 1.0
Title: Innovation and Growth with Financial, and other, Frictions
Classification-JEL: O12; O16; O3; O31; O33
Author-Name: Jonathan Chiu
Author-Person: pch353
Author-Name: Cesaire Meh
Author-Person: pme48
Author-Name: Randall Wright
Author-Person: pwr2
Note: EFG IO PR
Number: 17512
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17512
File-URL: http://www.nber.org/papers/w17512.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Chiu & Cesaire Meh & Randall Wright, 2017. "INNOVATION AND GROWTH WITH FINANCIAL, AND OTHER, FRICTIONS," International Economic Review, vol 58(1), pages 95-125.
Abstract: The generation and implementation of ideas, or knowledge, is crucial for economic performance. We study this process in a model of endogenous growth with frictions. Productivity increases with knowledge, which advances via innovation, and with the exchange of ideas from those who generate them to those best able to implement them (technology transfer). But frictions in this market, including search, bargaining, and commitment problems, impede exchange and thus slow growth. We characterize optimal policies to subsidize research and trade in ideas, given both knowledge and search externalities. We discuss the roles of liquidity and financial institutions, and show two ways in which intermediation can enhance efficiency and innovation. First, intermediation allows us to finance more transactions with fewer assets. Second, it ameliorates certain bargaining problems, by allowing entrepreneurs to undo otherwise sunk investments in liquidity. We also discuss some evidence, suggesting that technology transfer is a significant source of innovation and showing how it is affected by credit considerations.
Handle: RePEc:nbr:nberwo:17512
Template-Type: ReDIF-Paper 1.0
Title: A Forensic Analysis of Global Imbalances
Classification-JEL: F32; F41
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Hiro Ito
Author-Person: pit4
Note: IFM
Number: 17513
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17513
File-URL: http://www.nber.org/papers/w17513.pdf
File-Format: application/pdf
Publication-Status: published as "A Forensic Analysis of Global Imbalances," Oxford Economic Papers (2013), (March 2013 version) (with Barry Eichengreen and Hiro Ito).
Abstract: We examine whether the behavior of current account balances changed in the years preceding the global crisis of 2008-09, and assess the prospects for global imbalances in the post-crisis period. Changes in the budget balance are an important factor affecting current account balances for deficit countries such as the U.S. and the U.K. The effect of the "saving glut variables" on current account balances has been relatively stable for emerging market countries, suggesting that those factors cannot explain the bulk of their recent current account movements. We also find the 2006-08 period to constitute a structural break for emerging market countries, and to a lesser extent, for industrialized countries. We attribute the anomalous behavior of pre-crisis current account balances to stock market performance and real housing appreciation; fiscal procyclicality and the stance of monetary policy do not matter as much. Household leverage also appears to explain some of the standard model's prediction errors. Looking forward, U.S., fiscal consolidation alone cannot induce significant deficit reduction. For China, financial development might help shrink its current account surplus, but only when it is coupled with financial liberalization. These findings suggest that unless countries implement substantially more policy change, global imbalances are unlikely to disappear.
Handle: RePEc:nbr:nberwo:17513
Template-Type: ReDIF-Paper 1.0
Title: Spatial Determinants of Entrepreneurship in India
Classification-JEL: L10; L26; L60; L80; M13; O10; R00; R10; R12
Author-Name: Ejaz Ghani
Author-Person: pgh75
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Stephen D. O'Connell
Author-Person: poc22
Note: PR
Number: 17514
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17514
File-URL: http://www.nber.org/papers/w17514.pdf
File-Format: application/pdf
Publication-Status: published as Ghani, Ejaz, William R. Kerr, and Stephen O'Connell. "Spatial Determinants of Entrepreneurship in India." Special Issue on Entrepreneurship in a Regional Context . Regional Studies 48, no. 6 (December 2013).
Abstract: We analyze the spatial determinants of entrepreneurship in India in the manufacturing and services sectors. Among general district traits, quality of physical infrastructure and workforce education are the strongest predictors of entry, with labor laws and household banking quality also playing important roles. Looking at the district-industry level, we find extensive evidence of agglomeration economies among manufacturing industries. In particular, supportive incumbent industrial structures for input and output markets are strongly linked to higher establishment entry rates. We also find substantial evidence for the Chinitz effect where small local incumbent suppliers encourage entry. The importance of agglomeration economies for entry hold when considering changes in India's incumbent industry structures from 1989, determined before large-scale deregulation began, to 2005.
Handle: RePEc:nbr:nberwo:17514
Template-Type: ReDIF-Paper 1.0
Title: Welfare Magnet Hypothesis, Fiscal Burden and Immigration Skill Selectivity
Classification-JEL: F22; H3; J48
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Jackline Wahba
Author-Person: pwa885
Note: IFM
Number: 17515
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17515
File-URL: http://www.nber.org/papers/w17515.pdf
File-Format: application/pdf
Publication-Status: published as Assaf Razin and Jackie Wahba “Welfare Magnet Hypothesis, Fiscal Burden and Immigration Skill Selectivity,” The Scandinavian Journal of Economics special issue on “Migration and Development”, 2014.
Abstract: This paper revisits the magnet hypothesis and investigates the impact of the welfare generosity on the difference between skilled and unskilled migration rates. The main purpose of the paper is to assess the role of mobility restriction on shaping the effect of the welfare state genrosity. In a free migration regime, the impact is expected to be negative on the skill composition of migrants while in a restricted mobility regime, the impact will be the opposite, as voters will prefer selective migration policies, favoring skilled migrants who tend to be net contributors to the fiscal system. We utilize the free labor movement within EUR (the EU, Norway and Switzerland) and the restricted movement from outside of the EUR to compare the free migration.
Handle: RePEc:nbr:nberwo:17515
Template-Type: ReDIF-Paper 1.0
Title: A Model of Mortgage Default
Classification-JEL: E21; G21; G33
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: João F. Cocco
Note: AP CF ME
Number: 17516
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17516
File-URL: http://www.nber.org/papers/w17516.pdf
File-Format: application/pdf
Publication-Status: published as JOHN Y. CAMPBELL & JOÃO F. COCCO, 2015. "A Model of Mortgage Default," The Journal of Finance, vol 70(4), pages 1495-1554.
Abstract: This paper solves a dynamic model of a household's decision to default on its mortgage, taking into account labor income, house price, inflation, and interest rate risk. Mortgage default is triggered by negative home equity, which results from declining house prices in a low inflation environment with large mortgage balances outstanding. Not all households with negative home equity default, however. The level of negative home equity that triggers default depends on the extent to which households are borrowing constrained. High loan-to-value ratios at mortgage origination increase the probability of negative home equity. High loan-to-income ratios also increase the probability of default by tightening borrowing constraints. Comparing mortgage types, adjustable-rate mortgage defaults occur when nominal interest rates increase and are substantially affected by idiosyncratic shocks to labor income. Fixed-rate mortgages default when interest rates and inflation are low, and create a higher probability of a default wave with a large number of defaults. Interest-only mortgages trade off an increased probability of negative home equity against a relaxation of borrowing constraints, but overall have the highest probability of a default wave.
Handle: RePEc:nbr:nberwo:17516
Template-Type: ReDIF-Paper 1.0
Title: The Real Effects of Hedge Fund Activism: Productivity, Asset Allocation, and Labor Outcomes
Classification-JEL: G23; G3; G34
Author-Name: Alon Brav
Author-Name: Wei Jiang
Author-Person: pji52
Author-Name: Hyunseob Kim
Author-Person: pki563
Note: CF
Number: 17517
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17517
File-URL: http://www.nber.org/papers/w17517.pdf
File-Format: application/pdf
Publication-Status: published as Alon Brav & Wei Jiang & Hyunseob Kim, 2015. "The Real Effects of Hedge Fund Activism: Productivity, Asset Allocation, and Labor Outcomes," Review of Financial Studies, vol 28(10), pages 2723-2769.
Abstract: This paper studies the long-term effect of hedge fund activism on the productivity of target firms using plant-level information from the U.S. Census Bureau. A typical target firm improves its production efficiency in the three years after an activist intervention, and the improvements are most pronounced in those interventions specifically targeting the firm’s business strategy. We also find that plants sold post-intervention exhibit a significant improvement in productivity under new ownership, consistent with the view that efficient capital redeployment is an important channel via which activists create value. We further find that employees of target firms experience a reduction in work hours and stagnation in wages despite an increase in labor productivity. Additional tests refute alternative explanations that attribute the improvement to mean reversion, management’s voluntary reforms, industry consolidation shocks, or hedge funds’ stock picking abilities. The overall evidence is consistent with hedge fund intervention having a real and long-term effect on the fundamental values of target firms.
Handle: RePEc:nbr:nberwo:17517
Template-Type: ReDIF-Paper 1.0
Title: Ending "Too Big To Fail": Government Promises vs. Investor Perceptions
Classification-JEL: E44; G18; G21; G3
Author-Name: Todd A. Gormley
Author-Name: Simon Johnson
Author-Person: pjo44
Author-Name: Changyong Rhee
Note: CF EFG IFM POL
Number: 17518
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17518
File-URL: http://www.nber.org/papers/w17518.pdf
File-Format: application/pdf
Publication-Status: published as T. A. Gormley & S. Johnson & C. Rhee, 2015. "Ending "Too Big To Fail": Government Promises Versus Investor Perceptions," Review of Finance, vol 19(2), pages 491-518.
Abstract: Can a government credibly promise not to bailout firms whose failure would have major negative systemic consequences? Our analysis of Korea's 1997-99 crisis, suggests an answer: No. Despite a general "no bailout" policy during the crisis, the largest Korean corporate groups (chaebol) - facing severe financial and governance problems - could still borrow heavily from households through issuing bonds at prices implying very low expected default risk. The evidence suggests "too big to fail" beliefs were not eliminated by government promises, presumably because investors believed that this policy was not time consistent. Subsequent government handling of potential and actual defaults by Daewoo and Hyundai confirmed the market view that creditors would be protected.
Handle: RePEc:nbr:nberwo:17518
Template-Type: ReDIF-Paper 1.0
Title: Identification and Inference with Many Invalid Instruments
Classification-JEL: C01; C2; C26; C36
Author-Name: Michal Kolesár
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: John N. Friedman
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Guido W. Imbens
Author-Person: pim4
Note: LS PE
Number: 17519
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17519
File-URL: http://www.nber.org/papers/w17519.pdf
File-Format: application/pdf
Publication-Status: published as Michal Kolesár & Raj Chetty & John Friedman & Edward Glaeser & Guido W. Imbens, 2015. "Identification and Inference With Many Invalid Instruments," Journal of Business & Economic Statistics, vol 33(4), pages 474-484.
Abstract: We analyze linear models with a single endogenous regressor in the presence of many instrumental variables. We weaken a key assumption typically made in this literature by allowing all the instruments to have direct effects on the outcome. We consider restrictions on these direct effects that allow for point identification of the effect of interest. The setup leads to new insights concerning the properties of conventional estimators, novel identification strategies, and new estimators to exploit those strategies. A key assumption underlying the main identification strategy is that the product of the direct effects of the instruments on the outcome and the effects of the instruments on the endogenous regressor has expectation zero. We argue in the context of two specific examples with a group structure that this assumption has substantive content.
Handle: RePEc:nbr:nberwo:17519
Template-Type: ReDIF-Paper 1.0
Title: Sticky Prices: A New Monetarist Approach
Classification-JEL: E0
Author-Name: Allen Head
Author-Person: phe15
Author-Name: Lucy Qian Liu
Author-Person: pli607
Author-Name: Guido Menzio
Author-Person: pme246
Author-Name: Randall Wright
Author-Person: pwr2
Note: EFG
Number: 17520
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17520
File-URL: http://www.nber.org/papers/w17520.pdf
File-Format: application/pdf
Publication-Status: published as Allen Head & Lucy Qian Liu & Guido Menzio & Randall Wright, 2012. "Sticky Prices: A New Monetarist Approach," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 939-973, October.
Abstract: Why do some sellers set nominal prices that apparently do not respond to changes in the aggregate price level? In many models, prices are sticky by assumption; here it is a result. We use search theory, with two consequences: prices are set in dollars, since money is the medium of exchange; and equilibrium implies a nondegenerate price distribution. When the money supply increases, some sellers may keep prices constant, earning less per unit but making it up on volume, so profit stays constant. The calibrated model matches price-change data well. But, in contrast with other sticky-price models, money is neutral.
Handle: RePEc:nbr:nberwo:17520
Template-Type: ReDIF-Paper 1.0
Title: The Simple Analytics of the Melitz Model in a Small Open Economy
Classification-JEL: F1
Author-Name: Svetlana Demidova
Author-Person: pde534
Author-Name: Andrés Rodríguez-Clarez
Author-Person: pro372
Note: ITI
Number: 17521
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17521
File-URL: http://www.nber.org/papers/w17521.pdf
File-Format: application/pdf
Publication-Status: published as “The Simple Analytics of the Melitz Model in a Small Economy” (with Andrés Rodríguez-Clare), Journal of International Economics, July 2013, 90(2), pp. 266-272
Abstract: In this paper we present a version of the Melitz (2003) model for the case of a small economy and summarize its key relationships with the aid of a simple figure. We then use this figure to provide an intuitive analysis of the implications of asymmetric changes in trade barriers and show that a decline in import costs always benefits the liberalizing country. This stands in contrast to variants of the Melitz model with a freely traded (outside) sector, such as Demidova (2008) and Melitz and Ottaviano (2008), where the country that reduces importing trade costs experiences a decline in welfare.
Handle: RePEc:nbr:nberwo:17521
Template-Type: ReDIF-Paper 1.0
Title: Government Policy and Ownership of Financial Assets
Classification-JEL: G10; G20; H22; H30
Author-Name: Kristian Rydqvist
Author-Name: Joshua Spizman
Author-Name: Ilya A. Strebulaev
Author-Person: pst526
Note: AP CF PE
Number: 17522
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17522
File-URL: http://www.nber.org/papers/w17522.pdf
File-Format: application/pdf
Publication-Status: published as Government Policy and Ownership of Financial Assets, 2014 Journal of Financial Economics 111, 70-85 (with Kristian Rydqvist and Joshua Spizman)
Abstract: Since World War II, direct stock ownership by households across the globe has largely been replaced by indirect stock ownership by financial institutions. We argue that tax policy is the driving force. Using long time-series from eight countries, we show that the fraction of household ownership decreases with measures of the tax benefits of holding stocks inside tax-deferred plans. This finding is important for policy considerations on effective taxation and for financial economics research on the long-term effects of taxation on corporate finance and asset prices.
Handle: RePEc:nbr:nberwo:17522
Template-Type: ReDIF-Paper 1.0
Title: A survey of venture capital research
Classification-JEL: G21; G23; G24
Author-Name: Marco Da Rin
Author-Person: pda43
Author-Name: Thomas F. Hellmann
Author-Person: phe157
Author-Name: Manju Puri
Author-Person: ppu153
Note: CF PR
Number: 17523
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17523
File-URL: http://www.nber.org/papers/w17523.pdf
File-Format: application/pdf
Publication-Status: published as in George Constantinides, Milton Harris, and René Stulz (eds.) Handbook of the Economics of Finance. Volume 2, Part A, 2013, Pages 573–648
Abstract: This survey reviews the growing body of academic work on venture capital. It lays out the major data sources used. It examines the work on venture capital investments in companies, looking at issues of selection, contracting, post-investment services and exits. The survey considers recent work on organizational structures of venture capital firms, and the relationship between general and limited partners. It discusses the work on the returns to venture capital investments. It also examines public policies, and the role of venture capital in the economy at large.
Handle: RePEc:nbr:nberwo:17523
Template-Type: ReDIF-Paper 1.0
Title: Trade Liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters
Classification-JEL: F1; O1
Author-Name: Amit K. Khandelwal
Author-Person: pkh138
Author-Name: Peter K. Schott
Author-Person: psc98
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: ITI
Number: 17524
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17524
File-URL: http://www.nber.org/papers/w17524.pdf
File-Format: application/pdf
Publication-Status: published as Amit K. Khandelwal & Peter K. Schott & Shang-Jin Wei, 2013. "Trade Liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters," American Economic Review, American Economic Association, vol. 103(6), pages 2169-95, October.
Abstract: If trade barriers are managed by inefficient institutions, trade liberalization can lead to greater-than-expected gains. We examine Chinese textile and clothing exports before and after the elimination of externally imposed export quotas. We find that the surge in export value and decline in export prices following quota removal is driven by net entry, and show that this dominance is inconsistent with use of a productivity-based allocation of quota licenses by the Chinese government. Our counterfactual implies that elimination of misallocated quotas raised the overall productivity gain of quota removal by 28 percent.
Handle: RePEc:nbr:nberwo:17524
Template-Type: ReDIF-Paper 1.0
Title: Optimal Monetary Policy with Informational Frictions
Classification-JEL: D61; D83; E32; E52
Author-Name: George-Marios Angeletos
Author-Person: pan143
Author-Name: Jennifer La'O
Author-Person: pla396
Note: EFG ME
Number: 17525
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17525
File-URL: http://www.nber.org/papers/w17525.pdf
File-Format: application/pdf
Publication-Status: published as George-Marios Angeletos & Jennifer La’O, 2020. "Optimal Monetary Policy with Informational Frictions," Journal of Political Economy, vol 128(3), pages 1027-1064.
Abstract: This paper studies optimal policy in a business-cycle setting in which firms have a blurry understanding of the state of the economy due to informational or cognitive constraints. The latter are not only the source of nominal rigidity but also an impediment in the coordination of production. The optimal allocation thus differs from familiar Ramsey benchmarks (Lucas and Stokey, 1983; Correia, Nicolini, and Teles, 2008) in manners that may be misinterpreted as a call for macroeconomic stabilization. Furthermore, conventional policy instruments serve new functions: they manipulate the firms’ collection and use of information or their cognitive efforts. Despite these facts, the optimal taxes are similar to those in the aforementioned benchmarks and the optimal monetary policy replicates flexible-price allocations. On the other hand, the rationale for price stability falls apart: replicating flexible-price allocations and minimizing relative-price distortions become equivalent to a certain form of “leaning against the wind”.
Handle: RePEc:nbr:nberwo:17525
Template-Type: ReDIF-Paper 1.0
Title: Agricultural Policy, Migration, and Malaria in the 1930s United States
Classification-JEL: H3; H51; I15; N32
Author-Name: Alan Barreca
Author-Person: pba1012
Author-Name: Price V. Fishback
Author-Person: pfi13
Author-Name: Shawn Kantor
Author-Person: pka54
Note: DAE EH
Number: 17526
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17526
File-URL: http://www.nber.org/papers/w17526.pdf
File-Format: application/pdf
Publication-Status: published as “Agricultural Policy, Migration, and Malaria in the 1930s United States.” With Alan Barreca and Shawn Kantor. Explorations in Economic History 49 (2012): 381-398.
Abstract: The Agricultural Adjustment Act (AAA) caused a population shift in the United States in the 1930s. Evaluating the effects of the AAA on the incidence of malaria can therefore offer important lessons regarding the broader consequences of demographic changes. Using a quasi-first difference model and a robust set of controls, we find a negative association between AAA expenditures and malaria death rates at the county level. Further, we find the AAA caused relatively low-income groups to migrate from counties with high-risk malaria ecologies. These results suggest that the AAA-induced migration played an important role in the reduction of malaria.
Handle: RePEc:nbr:nberwo:17526
Template-Type: ReDIF-Paper 1.0
Title: Teaching Practices and Social Capital
Classification-JEL: I2; Z1
Author-Name: Yann Algan
Author-Person: pal51
Author-Name: Pierre Cahuc
Author-Person: pca333
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: ED PE POL
Number: 17527
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17527
File-URL: http://www.nber.org/papers/w17527.pdf
File-Format: application/pdf
Publication-Status: published as Yann Algan & Pierre Cahuc & Andrei Shleifer, 2013. "Teaching Practices and Social Capital," American Economic Journal: Applied Economics, American Economic Association, vol. 5(3), pages 189-210, July.
Abstract: We use several data sets to consider the effect of teaching practices on student beliefs, as well as on organization of firms and institutions. In cross-country data, we show that teaching practices (such as copying from the board versus working on projects together) are strongly related to various dimensions of social capital, from beliefs in cooperation to institutional outcomes. We then use micro-data to investigate the influence of teaching practices on student beliefs about cooperation both with each other and with teachers, and students' involvement in civic life. A two-stage least square strategy provides evidence that teaching practices have an independent sizeable effect on student social capital. The relationship between teaching practices and student test performance is nonlinear. The evidence supports the idea that progressive education promotes social capital.
Handle: RePEc:nbr:nberwo:17527
Template-Type: ReDIF-Paper 1.0
Title: The Effect of FDA Advisories on Branded Pharmaceutical Firms' Valuations and Promotion Efforts
Classification-JEL: D22; D43; I11; I18; K23; L1; L11
Author-Name: Rena M. Conti
Author-Name: Haiden A. Huskamp
Author-Name: Ernst R. Berndt
Note: EH LE
Number: 17528
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17528
File-URL: http://www.nber.org/papers/w17528.pdf
File-Format: application/pdf
Abstract: The US Food and Drug Administration (FDA) expends considerable efforts in regulating medications approved for use. Yet the impact of medication labeling changes on brand pharmaceutical products, and whether and what firms do to respond to increased information regarding the safety and efficacy of a drug, have not be characterized. We propose a behavioral framework for examining the effects of FDA advisories on branded pharmaceutical firms and their products. We empirically assess the impact of recent FDA advisories on the stock market valuations of a sample of branded pharmaceutical manufacturing firms using event study methods. We examine whether and how branded pharmaceutical manufacturers respond to an advisory by assessing changes in promotion compared to non-affected firms. We find firms targeted by an advisory have average stock price declines of 3% in three days and 11% in five days following the advisory release, and in turn appear to decrease total physician-directed promotion spending, journals ads and detailing visits significantly six months following the advisory release; the provision of free samples is unaffected. We find no changes among therapeutic substitutes unaffected by the advisory. Results of sensitivity analyses suggest firms with market dominant positions experience similar decreases in stock market valuations and physician-directed promotion compared to pooled results. The results are also robust to alternative definitions of the timing of advisory release dates and the severity of advisories' wording. Theory and empirical results suggest the public release of FDA advisories negatively impacts firm's short-term market valuations. The results suggest an additional rationale for previously documented declines in prescribing after FDA advisory releases - significant declines in physician-directed promotion following FDA advisory releases; the combined (and likely correlated) effects of the release of the advisory and declines in physician-directed promotion on prescribing behavior are likely larger than the sum of the independent effects.
Handle: RePEc:nbr:nberwo:17528
Template-Type: ReDIF-Paper 1.0
Title: Allocating Time: Individuals' Technologies, Household Technology, Perfect Substitutes, and Specialization
Classification-JEL: D13; J22
Author-Name: Robert A. Pollak
Author-Person: ppo36
Note: LS
Number: 17529
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17529
File-URL: http://www.nber.org/papers/w17529.pdf
File-Format: application/pdf
Publication-Status: published as Robert A. Pollak, 2012. "Allocating Time: Individuals' Technologies, Household Technology, Perfect Substitutes, and Specialization," Annals of Economics and Statistics, .
Abstract: In an efficient household if the spouses' time inputs are perfect substitutes, then spouses will "specialize" regardless of their preferences and the governance structure. That is, both spouses will not allocate time to both household production and the market sector. The perfect substitutes assumption implies that spouses' "unilateral" production functions (i.e., the household production function when only one spouse allocates time to home production) are closely related, satisfying a highly restrictive condition that I call "compatibility." I introduce the "correspondence assumption," which postulates that the unilateral production functions in a newly formed household coincide with individuals' production functions before they enter marriage. The correspondence assumption provides a plausible account of the genesis of household technology and simplifies its estimation. I introduce the "additivity assumption" which postulates that the household production function is the sum of the spouses' unilateral production functions and argue that additivity is implicit in much of the new home economics. Together, the correspondence and additivity assumptions imply that individuals' technologies reveal the entire household technology. I show that perfect substitutes, additivity and concavity imply that the household production function is of the same form as the unilateral production functions, exhibits constant returns to scale, and depends on the spouses' total time inputs, measured in efficiency units.
Handle: RePEc:nbr:nberwo:17529
Template-Type: ReDIF-Paper 1.0
Title: Financial Sector Ups and Downs and the Real Sector: Up by the stairs, down by the parachute
Classification-JEL: F15; F31; F36; F4
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Brian Pinto
Author-Name: Vladyslav Sushko
Author-Person: psu268
Note: IFM ITI
Number: 17530
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17530
File-URL: http://www.nber.org/papers/w17530.pdf
File-Format: application/pdf
Publication-Status: published as "Financial Sector Ups and Downs and the Real Sector: Up by the Stairs and Down by the Parachute," (with B. Pinto and V. Sushko), Emerging Markets Review, 2013, 16, pp 1-30.
Abstract: We examine how financial expansion and contraction cycles affect the broader economy through their impact on real economic sectors in a panel of countries over 1960-2005. Periods of accelerated growth of the financial sector are more likely to be followed by abrupt financial contractions than are periods of slower financial sector growth. Sharp fluctuations in the financial sector have strongly asymmetric effects, with the majority of real sectors adversely affected by contractions, but not helped by expansions. The adverse effects of financial contractions are transmitted almost exclusively through the financial openness channel, with precautionary foreign exchange reserve holdings serving as a key buffer.
Handle: RePEc:nbr:nberwo:17530
Template-Type: ReDIF-Paper 1.0
Title: The Tax Reform Act of 1986: Comment on the 25th Anniversary
Classification-JEL: H0; H2; H21; H3; H31
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: PE
Number: 17531
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17531
File-URL: http://www.nber.org/papers/w17531.pdf
File-Format: application/pdf
Publication-Status: published as The Tax Reform Evidence From 1986 ,October 24, 2011
Abstract: The Tax Reform Act of 1986 was a powerful pro-growth force for the American economy. Equally important, as we look back on it after 25 years, we also see that it taught us two important lessons. First, it showed that politicians with very different political philosophies on the right and on the left could agree on a major program of tax rate reduction and tax reform. Second, it showed that the amount of taxable income is very sensitive to marginal tax rates. More specifically, the evidence based on the 1986 tax rate reductions shows that the response of taxpayers to reductions in marginal tax rates offsets a substantial portion of the revenue that would otherwise be lost. This implies that combining a broadening of the tax base that raises revenue equal to 10 percent of existing personal income tax revenue with a 10 percent across the board cut in all marginal tax rates would raise revenue equal to about four percent of existing tax revenue. With personal income tax revenue in 2011 of about $1 trillion, that four percent increase in net revenue would be $40 billion at the current level of taxable income or more than $500 billion over the next ten years.
Handle: RePEc:nbr:nberwo:17531
Template-Type: ReDIF-Paper 1.0
Title: The Value-Added Tax Reform Puzzle
Classification-JEL: F21; F23; H25
Author-Name: Jing Cai
Author-Person: pca932
Author-Name: Ann Harrison
Author-Person: pha441
Note: ITI
Number: 17532
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17532
File-URL: http://www.nber.org/papers/w17532.pdf
File-Format: application/pdf
Abstract: We explore the impact of a tax reform in some provinces of China which eliminated the value-added tax on some investment goods. While the goal of the experiment was to encourage upgrading of technology, our results suggest that there was no evident increase overall in fixed investment, and employment fell significantly in the treated provinces and sectors. The reform reduced the total number of employees for all types of firms. For domestic firms, it reduced employment by almost 8%. Our results are robust to a variety of approaches, and suggest that the primary impact of the policy has been to induce labor-saving growth. This experiment has since been extended to the rest of China.
Handle: RePEc:nbr:nberwo:17532
Template-Type: ReDIF-Paper 1.0
Title: Experimental Evidence on the Effect of Childhood Investments on Postsecondary Attainment and Degree Completion
Classification-JEL: I21; I24; I28; J24
Author-Name: Susan Dynarski
Author-Person: pdy1
Author-Name: Joshua M. Hyman
Author-Person: phy28
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Note: CH ED LS PE
Number: 17533
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17533
File-URL: http://www.nber.org/papers/w17533.pdf
File-Format: application/pdf
Publication-Status: published as Experimental Evidence on the Effect of Childhood Investments on Postsecondary Attainment and Degree Completion (with Joshua Hyman and Diane Schanzenbach). 2013. Journal of Policy Analysis and Management 32:4, pp. 692-717 (lead article). Ray Vernon Memorial Prize for best paper in JPAM.
Abstract: This paper examines the effect of early childhood investments on college enrollment and degree completion. We use the random assignment in the Project STAR experiment to estimate the effect of smaller classes in primary school on college entry, college choice, and degree completion. We improve on existing work in this area with unusually detailed data on college enrollment spells and the previously unexplored outcome of college degree completion. We find that assignment to a small class increases the probability of attending college by 2.7 percentage points, with effects more than twice as large among blacks. Among students enrolled in the poorest third of schools, the effect is 7.3 percentage points. Smaller classes increase the likelihood of earning a college degree by 1.6 percentage points and shift students towards high-earning fields such as STEM (science, technology, engineering and mathematics), business and economics. We find that test score effects at the time of the experiment are an excellent predictor of long-term improvements in postsecondary outcomes.
Handle: RePEc:nbr:nberwo:17533
Template-Type: ReDIF-Paper 1.0
Title: Unemployment Insurance and Job Search in the Great Recession
Classification-JEL: H53; I38; J64; J65
Author-Name: Jesse Rothstein
Author-Person: pro180
Note: EFG LS PE
Number: 17534
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17534
File-URL: http://www.nber.org/papers/w17534.pdf
File-Format: application/pdf
Publication-Status: published as Jesse Rothstein, 2011. "Unemployment Insrance and Job Search in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 143-213.
Abstract: Nearly two years after the official end of the "Great Recession," the labor market remains historically weak. One candidate explanation is supply-side effects driven by dramatic expansions of Unemployment Insurance (UI) benefit durations, to as many as 99 weeks. This paper investigates the effect of these UI extensions on job search and reemployment. I use the longitudinal structure of the Current Population Survey to construct unemployment exit hazards that vary across states, over time, and between individuals with differing unemployment durations. I then use these hazards to explore a variety of comparisons intended to distinguish the effects of UI extensions from other determinants of employment outcomes. The various specifications yield quite similar results. UI extensions had significant but small negative effects on the probability that the eligible unemployed would exit unemployment, concentrated among the long-term unemployed. The estimates imply that UI benefit extensions raised the unemployment rate in early 2011 by only about 0.1-0.5 percentage points, much less than is implied by previous analyses, with at least half of this effect attributable to reduced labor force exit among the unemployed rather than to the changes in reemployment rates that are of greater policy concern.
Handle: RePEc:nbr:nberwo:17534
Template-Type: ReDIF-Paper 1.0
Title: Organizational Economics and Physician Practices
Classification-JEL: D02; D23; I11; I12; J4; J44; M5
Author-Name: James B. Rebitzer
Author-Person: pre77
Author-Name: Mark E. Votruba
Note: EH LS
Number: 17535
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17535
File-URL: http://www.nber.org/papers/w17535.pdf
File-Format: application/pdf
Publication-Status: published as Rebitzer, J and Votruba, M. “Organizational Economics and Physician Practices”, Encyclopedia of Health Economics, Elsevier Limited (accepted February 2013, to be published 2014)
Abstract: Economists seeking to improve the efficiency of health care delivery frequently emphasize two issues: the fragmented structure of physician practices and poorly designed physician incentives. This paper analyzes these issues from the perspective of organizational economics. We begin with a brief overview of the structure of physician practices and observe that the long anticipated triumph of integrated care delivery has largely gone unrealized. We then analyze the special problems that fragmentation poses for the design of physician incentives. Organizational economics suggests some promising incentive strategies for this setting, but implementing these strategies is complicated by norms of autonomy in the medical profession and by other factors that inhibit effective integration between hospitals and physicians. Compounding these problems are patterns of medical specialization that complicate coordination among physicians. We conclude by considering the policy implications of our analysis - paying particular attention to proposed Accountable Care Organizations.
Handle: RePEc:nbr:nberwo:17535
Template-Type: ReDIF-Paper 1.0
Title: The Composition and Draw-down of Wealth in Retirement
Classification-JEL: D14; D91; J14
Author-Name: James M. Poterba
Author-Person: ppo19
Author-Name: Steven F. Venti
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG EFG PE
Number: 17536
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17536
File-URL: http://www.nber.org/papers/w17536.pdf
File-Format: application/pdf
Publication-Status: published as James Poterba & Steven Venti & David Wise, 2011. "The Composition and Drawdown of Wealth in Retirement," Journal of Economic Perspectives, American Economic Association, vol. 25(4), pages 95-118, Fall.
Abstract: This paper presents evidence on the resources available to households as they enter retirement. It draws heavily on data collected by the Health and Retirement Study and calculates the "potential additional annuity income" that households could purchase, given their holdings of non-annuitized financial assets at the start of retirement. Even if households used all of their financial assets inside and outside personal retirement accounts to purchase a life annuity, only 47 percent of households between the ages of 65 and 69 in 2008 could increase their life-contingent income by more than $5,000 per year. At the upper end of the wealth distribution, however, a substantial number of households could make large annuity purchases. The paper also considers the role of housing equity in the portfolios of retirement-age households, and explores the extent to which households draw down housing equity and financial assets as they age. Many households appear to treat housing equity and non-annuitized financial assets as "precautionary savings," tending to draw them down only when they experience a shock such as the death of a spouse or a period of substantial medical outlays. Because home equity is often conserved until very late in life, for many households it may provide some insurance against the risk of living longer than expected.
Handle: RePEc:nbr:nberwo:17536
Template-Type: ReDIF-Paper 1.0
Title: Housing and the Macroeconomy: The Role of Bailout Guarantees for Government Sponsored Enterprises
Classification-JEL: E21; G11; R21
Author-Name: Karsten Jeske
Author-Name: Dirk Krueger
Author-Person: pkr7
Author-Name: Kurt Mitman
Author-Person: pmi418
Note: AP EFG
Number: 17537
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17537
File-URL: http://www.nber.org/papers/w17537.pdf
File-Format: application/pdf
Publication-Status: published as Housing, Mortgage Bailout Guarantees and the Macro Economy (with K. Jeske and Kurt Mitman), Journal of Monetary Economics, Vol. 60, 917- 935.
Abstract: This paper evaluates the macroeconomic and distributional effects of government bailout guarantees for Government Sponsored Enterprises (such as Fannie Mae and Freddy Mac) in the mortgage market. In order to do so we construct a model with heterogeneous, infinitely lived households and competitive housing and mortgage markets. Households have the option to default on their mortgages, with the consequence of having their homes foreclosed. We model the bailout guarantee as a government provided and tax-financed mortgage interest rate subsidy. We find that eliminating this subsidy leads to substantially lower equilibrium mortgage origination and increases aggregate welfare, but has little effect on foreclosure rates and housing investment. The interest rate subsidy is a regressive policy: eliminating it benefits low-income and low-asset households who did not own homes or had small mortgages, while lowering the welfare of high-income, high-asset households.
Handle: RePEc:nbr:nberwo:17537
Template-Type: ReDIF-Paper 1.0
Title: Adverse Selection and Incentives in an Early Retirement Program
Classification-JEL: I23; J26; J33
Author-Name: Kenneth T. Whelan
Author-Name: Ronald G. Ehrenberg
Author-Person: peh2
Author-Name: Kevin F. Hallock
Author-Person: pha176
Author-Name: Ronald L. Seeber
Note: ED LS
Number: 17538
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17538
File-URL: http://www.nber.org/papers/w17538.pdf
File-Format: application/pdf
Publication-Status: published as “Adverse Selection and Incentives in Early Retirement Programs” (with K. Whelan, K. Hallock, and R. Seeber) Research in Labor Economics (2012)
Abstract: We evaluate potential determinants of enrollment in an early retirement incentive program for non-tenure-track employees of a large university. Using administrative record on the eligible population of employees not covered by collective bargaining agreements, historical employee count and layoff data by budget units, and public information on unit budgets, we find dips in per-employee finance in a budget unit during the application year and higher recent per employee layoffs were associated with increased probabiliites of eligible employee program enrollment. Our results also suggest, on average, that employees whose salaries are lower than we would predict given their personal characteristics and job titles were more likely to enroll in the early retirement program. To the extent that employees' compensation reflects their productivity, as it should under a pay system in which annual salary increases are based on merit, this finidng suggests that adverse selection was not a problem with the program. That is, we find no evidence that on average the "most productive" employees took the incentive.
Handle: RePEc:nbr:nberwo:17538
Template-Type: ReDIF-Paper 1.0
Title: Policy-Instrument Choice and Benefit Estimates for Climate-Change Policy in the United States
Classification-JEL: Q4; Q48; Q5
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Author-Name: Kevin J. Boyle
Author-Person: pbo516
Author-Name: Anthony A. Leiserowitz
Note: EEE
Number: 17539
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17539
File-URL: http://www.nber.org/papers/w17539.pdf
File-Format: application/pdf
Publication-Status: published as Energy Policy, Volume 55, April 2013, Pages 617–625
Abstract: This paper provides the first willingness-to-pay (WTP) estimates in support of a national climate-change policy that are comparable with the costs of actual legislative efforts in the U.S. Congress. Based on a survey of 2,034 American adults, we find that households are, on average, willing to pay between $79 and $89 per year in support of reducing domestic greenhouse-gas (GHG) emissions 17 percent by 2020. Even very conservative estimates yield an average WTP at or above $60 per year. Taking advantage of randomized treatments within the survey valuation question, we find that mean WTP does not vary substantially among the policy instruments of a cap-and-trade program, a carbon tax, or a GHG regulation. But there are differences in the sociodemographic characteristics of those willing to pay across policy instruments. Greater education always increases WTP. Older individuals have a lower WTP for a carbon tax and a GHG regulation, while greater household income increases WTP for these same two policy instruments. Republicans, along with those indicating no political party affiliation, have a significantly lower WTP regardless of the policy instrument. But many of these differences are no longer evident after controlling for respondent opinions about whether global warming is actually happening.
Handle: RePEc:nbr:nberwo:17539
Template-Type: ReDIF-Paper 1.0
Title: Estimates of the Social Cost of Carbon: Background and Results from the RICE-2011 Model
Classification-JEL: H21; H23; H87; Q5; Q54
Author-Name: William D. Nordhaus
Author-Person: pno115
Note: EEE PE
Number: 17540
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17540
File-URL: http://www.nber.org/papers/w17540.pdf
File-Format: application/pdf
Abstract: A new and important concept in global warming economics and policy is the social cost of carbon or SCC. This concept represents the economic cost caused by an additional ton of carbon-dioxide emissions or its equivalent. The present study describes the development of the concept as well as its analytical background. We estimate the SCC using an updated version of the RICE-2011 model. Additional concerns are uncertainty about different aspects of global warming as well as the treatment of different countries or generations. The most important results are: First, the estimated social cost of carbon for the current time (2015) including uncertainty, equity weighting, and risk aversion is $44 per ton of carbon (or $12 per ton CO2) in 2005 US$ and international prices). Second, including uncertainty increases the expected value of the SCC by approximately 8 percent. Third, equity weighting generally tends to reduce the SCC. Finally, the major open issue concerning the SCC continues to be the appropriate discount rate.
Handle: RePEc:nbr:nberwo:17540
Template-Type: ReDIF-Paper 1.0
Title: The Trouble with Boys: Social Influences and the Gender Gap in Disruptive Behavior
Classification-JEL: J13; J16
Author-Name: Marianne Bertrand
Author-Person: pbe697
Author-Name: Jessica Pan
Author-Person: ppa763
Note: CH ED LS
Number: 17541
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17541
File-URL: http://www.nber.org/papers/w17541.pdf
File-Format: application/pdf
Publication-Status: published as Marianne Bertrand & Jessica Pan, 2013. "The Trouble with Boys: Social Influences and the Gender Gap in Disruptive Behavior," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 32-64, January.
Abstract: This paper explores the importance of the home and school environments in explaining the gender gap in disruptive behavior. We document large differences in the gender gap across key features of the home environment - boys do especially poorly in broken families. In contrast, we find little impact of the early school environment on non-cognitive gaps. Differences in endowments explain a small part of boys' non-cognitive deficit in single-mother families. More importantly, non-cognitive returns to parental inputs differ markedly by gender. Broken families are associated with worse parental inputs and boys' non-cognitive development, unlike girls', appears extremely responsive to such inputs.
Handle: RePEc:nbr:nberwo:17541
Template-Type: ReDIF-Paper 1.0
Title: Sovereign Debt, Government Myopia, and the Financial Sector
Classification-JEL: E62; G2; H63
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Raghuram G. Rajan
Author-Person: pra149
Note: CF EFG IFM
Number: 17542
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17542
File-URL: http://www.nber.org/papers/w17542.pdf
File-Format: application/pdf
Publication-Status: published as Viral V. Acharya & Raghuram G. Rajan, 2013. "Sovereign Debt, Government Myopia, and the Financial Sector," Review of Financial Studies, Society for Financial Studies, vol. 26(6), pages 1526-1560.
Abstract: What determines the sustainability of sovereign debt? We develop a model where myopic governments seek popularity but can nevertheless commit credibly to service external debt. They do not default when debt is low because they would lose access to debt markets and be forced to reduce spending; they do not default as debt builds up, and net new borrowing becomes difficult, because of the adverse consequences from default to the domestic financial sector. More myopic governments default less often, but tax in a more distortionary way and increase the vulnerability of the domestic financial sector to future government debt default.
Handle: RePEc:nbr:nberwo:17542
Template-Type: ReDIF-Paper 1.0
Title: Supply-Side Policies and the Zero Lower Bound
Classification-JEL: E3; E4; E52
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: 17543
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17543
File-URL: http://www.nber.org/papers/w17543.pdf
File-Format: application/pdf
Publication-Status: published as IMF Economic Review (2014) 62, 248–260. doi:10.1057/imfer.2014.10; published online 15 July 2014 Supply-Side Policies and the Zero Lower Bound Jesús Fernández-Villaverde*, Pablo Guerrón-Quintana* and Juan F Rubio-Ramírez*
Abstract: This paper examines how supply-side policies may play a role in fighting a low aggregate demand that traps an economy at the zero lower bound (ZLB) of nominal interest rates. Future increases in productivity or reductions in mark-ups triggered by supply-side policies generate a wealth effect that pulls current consumption and output up. Since the economy is at the ZLB, increases in the interest rates do not undo this wealth effect, as we will have in the case outside the ZLB. We illustrate this mechanism with a simple two-period New Keynesian model. We discuss possible objections to this set of policies and the relation of supply-side policies with more conventional monetary and fiscal policies.
Handle: RePEc:nbr:nberwo:17543
Template-Type: ReDIF-Paper 1.0
Title: The Contribution of Chinese FDI to Africa's Pre Crisis Growth Surge
Classification-JEL: F21; F43; O4; O47; O55
Author-Name: Aaron Weisbrod
Author-Name: John Whalley
Author-Person: pwh8
Note: EFG ITI
Number: 17544
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17544
File-URL: http://www.nber.org/papers/w17544.pdf
File-Format: application/pdf
Publication-Status: published as Whalley John & Weisbrod Aaron, 2012. "The Contribution of Chinese FDI to Africa's Pre Crisis Growth Surge," Global Economy Journal, De Gruyter, vol. 12(4), pages 1-28, December.
Abstract: In the 3 years before the 2008 Financial Crisis, GDP growth in sub Saharan Africa (averaged over individual economies) was around 6%, or 2 percentage points above mean growth rates for the preceding 10 years. This period also coincided with significant Chinese FDI flows into these countries, accounting for up to 10% of total inward FDI flows for certain countries in these years. We use growth accounting methods to assess what portion of this elevated growth can be attributed to Chinese inward FDI. We follow Solow (1957), Dennison (1962), and others and use data for individual economies between 1990 and 2008 to calculate Solow residuals for these years for individual economies. We use capital stock data, workforce, and factor share data by country. Capital stock data is unavailable directly, and so we use perpetual inventory methods to construct the data. Factor shares come from UN National Accounts data. We then run counterfactual growth accounting experiments for thirteen Sub-Saharan African countries excluding Chinese FDI inflows for 2005-2007 and also 2003-2009. Our individual results vary by year and country, but there are several year/country combinations where Chinese FDI contributed to an additional one half of a percentage point or above to GDP growth. These results suggest that a significant, even if in some cases small, portion of the elevated growth in sub Saharan Africa in the three years before the Financial Crisis and also in the two years afterwards (2008-2009) can be attributed to Chinese inward investment.
Handle: RePEc:nbr:nberwo:17544
Template-Type: ReDIF-Paper 1.0
Title: How Do Informal Agreements and Renegotiation Shape Contractual Reference Points?
Classification-JEL: C91; D03; D86; J41
Author-Name: Ernst Fehr
Author-Person: pfe29
Author-Name: Oliver D. Hart
Author-Person: pha222
Author-Name: Christian Zehnder
Author-Person: pze32
Note: CF LE
Number: 17545
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17545
File-URL: http://www.nber.org/papers/w17545.pdf
File-Format: application/pdf
Abstract: Previous experimental work provides encouraging support for some of the central assumptions underlying Hart and Moore (2008)'s theory of contractual reference points. However, existing studies ignore realistic aspects of trading relationships such as informal agreements and ex post renegotiation. We investigate the relevance of these features experimentally. Our evidence indicates that the central behavioral mechanism underlying the concept of contractual reference points is robust to the presence of informal agreements and ex post renegotiation. However, our data also reveal new behavioral features that suggest refinements of the theory. In particular, we find that the availability of informal agreements and ex post renegotiation changes how trading parties evaluate ex post outcomes. Interestingly, the availability of these additional options affects ex post evaluations even in situations in which the parties do not use them.
Handle: RePEc:nbr:nberwo:17545
Template-Type: ReDIF-Paper 1.0
Title: Unconditional Convergence
Classification-JEL: O1; O4
Author-Name: Dani Rodrik
Author-Person: pro60
Note: EFG ITI PR
Number: 17546
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17546
File-URL: http://www.nber.org/papers/w17546.pdf
File-Format: application/pdf
Publication-Status: published as “Unconditional Convergence in Manufacturing,” Quarterly Journal of Economics, 128 (1), February 2013, 165-204.
Abstract: Unlike economies as a whole, manufacturing industries exhibit unconditional convergence in labor productivity. The paper documents this finding for 4-digit manufacturing sectors for a large group of developed and developing countries over the period since 1990. The coefficient of unconditional convergence is estimated quite precisely and is large, at 3.0-5.6 percent per year depending on the estimation horizon. The result is robust to a large number of specification tests, and statistically highly significant. Because of data coverage, these findings should be as viewed as applying to the organized, formal parts of manufacturing.
Handle: RePEc:nbr:nberwo:17546
Template-Type: ReDIF-Paper 1.0
Title: How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?
Classification-JEL: D31; D91; E21; H55; I3; J14; J26; J32
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Author-Name: Nahid Tabatabai
Note: AG EFG LS PE
Number: 17547
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17547
File-URL: http://www.nber.org/papers/w17547.pdf
File-Format: application/pdf
Publication-Status: published as “How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?”. Social Security Bulletin. 72(4), November, 2012: 47-66.
Abstract: This paper uses asset and labor market data from the Health and Retirement Study (HRS) to investigate how the recent "Great Recession" has affected the wealth and retirement of those in the population who were just approaching retirement age at the beginning of the recession, a potentially vulnerable segment of the working age population. The retirement wealth held by those ages 53 to 58 before the onset of the recession in 2006 declined by a relatively modest 2.8 percentage points by 2010. In more normal times, their wealth would have increased over these four years. Members of older cohorts accumulated an additional 5 percent of wealth over the same age span. To be sure, a part of their accumulation was the result of the upside of the housing bubble. The wealth holdings of poorer households were least affected by the recession. Relative losses are greatest for those who initially had the highest wealth when the recession began. The adverse labor market effects of the Great Recession are more modest. Although there is an increase in unemployment, that increase is not mirrored in the rate of flow out of full-time work or partial retirement. All told, the retirement behavior of the Early Boomer cohort looks similar, at least so far, to the behavior observed for members of older cohorts at comparable ages. Very few in the population nearing retirement age have experienced multiple adverse events. Although most of the loss in wealth is due to a fall in the net value of housing, because very few in this cohort have found their housing wealth under water, and housing is the one asset this cohort is not likely to cash in for another decade or two, there is time for their losses in housing wealth to recover.
Handle: RePEc:nbr:nberwo:17547
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Asset Pricing Based on Heterogeneous Information
Classification-JEL: E44; G12; G14; G30
Author-Name: Elias Albagli
Author-Name: Christian Hellwig
Author-Person: phe110
Author-Name: Aleh Tsyvinski
Note: AP CF EFG
Number: 17548
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17548
File-URL: http://www.nber.org/papers/w17548.pdf
File-Format: application/pdf
Abstract: We propose a theory of asset prices that emphasizes heterogeneous information as the main element determining prices of different securities. Our main analytical innovation is in formulating a model of noisy information aggregation through asset prices, which is parsimonious and tractable, yet flexible in the specification of cash flow risks. We show that the noisy aggregation of heterogeneous investor beliefs drives a systematic wedge between the impact of fundamentals on an asset price, and the corresponding impact on cash flow expectations. The key intuition behind the wedge is that the identity of the marginal trader has to shift for different realization of the underlying shocks to satisfy the market-clearing condition. This identity shift amplifies the impact of price on the marginal trader's expectations. We derive tight characterization for both the conditional and the unconditional expected wedges. Our first main theorem shows how the sign of the expected wedge (that is, the difference between the expected price and the dividends) depends on the shape of the dividend payoff function and on the degree of informational frictions. Our second main theorem provides conditions under which the variability of prices exceeds the variability for realized dividends. We conclude with two applications of our theory. First, we highlight how heterogeneous information can lead to systematic departures from the Modigliani-Miller theorem. Second, in a dynamic extension of our model we provide conditions under which bubbles arise.
Handle: RePEc:nbr:nberwo:17548
Template-Type: ReDIF-Paper 1.0
Title: On the Connections between Intertemporal and Intra-temporal Trades
Classification-JEL: F30; F41
Author-Name: Jiandong Ju
Author-Person: pju209
Author-Name: Kang Shi
Author-Person: psh107
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: IFM ITI
Number: 17549
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17549
File-URL: http://www.nber.org/papers/w17549.pdf
File-Format: application/pdf
Publication-Status: published as Journal of International Economics Available online 7 January 2014
Abstract: This paper develops a new theory of international economics by introducing Heckscher-Ohlin features of intra-temporal trade into an intertemporal trade approach of current account. To do so, we consider a dynamic general equilibrium model with tradable sectors of different factor intensities, which allows for substitution between intertemporal trade (current account adjustment) and intra-temporal trade (goods trade). An economy's response to a shock generally involves a combination of a change in the composition of goods trade and a change in the current account. Flexible factor markets reduce the need for the current account to adjust. On the other hand, the more rigid the factor markets, the larger the size of current account adjustment relative to the volume of goods trade, and the slower the speed of adjustment of the current account towards its long-run equilibrium. We present empirical evidence consistent with the theory.
Handle: RePEc:nbr:nberwo:17549
Template-Type: ReDIF-Paper 1.0
Title: A Linder Hypothesis for Foreign Direct Investment
Classification-JEL: F12; F23
Author-Name: Pablo D. Fajgelbaum
Author-Name: Gene M. Grossman
Author-Person: pgr21
Author-Name: Elhanan Helpman
Author-Person: phe205
Note: ITI
Number: 17550
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17550
File-URL: http://www.nber.org/papers/w17550.pdf
File-Format: application/pdf
Publication-Status: published as P. Fajgelbaum & G. M. Grossman & E. Helpman, 2015. "A Linder Hypothesis for Foreign Direct Investment," The Review of Economic Studies, vol 82(1), pages 83-121.
Abstract: We study patterns of FDI in a multi-country world economy. We develop a model featuring non-homothetic preferences for quality and monopolistic competition in which specialization is purely demand-driven and the decision to serve foreign countries via exports or FDI depends on a proximity-concentration trade-off. We characterize the joint patterns of trade and FDI when countries differ in income distribution and size and show that FDI is more likely to occur between countries with similar per capita income levels. The model predicts a Linder Hypothesis for horizontal FDI, which is consistent with the patterns we find using establishment-level data on multinational activity.
Handle: RePEc:nbr:nberwo:17550
Template-Type: ReDIF-Paper 1.0
Title: The Stock of External Sovereign Debt: Can We Take the Data At 'Face Value'?
Classification-JEL: E01; F30; F34; H63
Author-Name: Daniel A. Dias
Author-Person: pdi137
Author-Name: Christine J. Richmond
Author-Person: pri126
Author-Name: Mark L.J. Wright
Author-Person: pwr6
Note: EFG IFM
Number: 17551
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17551
File-URL: http://www.nber.org/papers/w17551.pdf
File-Format: application/pdf
Publication-Status: published as Dias, Daniel A. & Richmond, Christine & Wright, Mark L.J., 2014. "The stock of external sovereign debt: Can we take the data at ‘face value’?," Journal of International Economics, Elsevier, vol. 94(1), pages 1-17.
Abstract: The stock of sovereign debt is typically measured at face value. This is a misleading indicator when debts are issued with different contractual forms. In this paper we construct a new measure of the stock of external sovereign debt for 100 developing countries from 1979 to 2006 that is invariant to contractual form, and illustrate five problems with debt stocks measured at face value. First, we show that correcting for differences in the contractual form of debt paints a very different quantitative, and in some cases also qualitative, picture of the stock of developing country external sovereign debt. Second, rankings of indebtedness across countries, which were historically used to define eligibility for debt forgiveness, are sometimes inverted once we correct for differences in contractual form. Third, the empirical performance of the benchmark quantitative model of sovereign debt deteriorates by between 40 to 70 percent once model-consistent measures of debt are used. Fourth, we show how the spread of aggregation clauses in debt contracts which award creditors voting power in proportion to the contractual face value may introduce inefficiencies into the process of restructuring sovereign debts. Fifth, we show how the use of contractual face values gives issuing countries the ability to manipulate their debt stock data, and illustrate the use of these techniques in practice.
Handle: RePEc:nbr:nberwo:17551
Template-Type: ReDIF-Paper 1.0
Title: The Costs of Financial Crises: Resource Misallocation, Productivity and Welfare in the 2001 Argentine Crisis
Classification-JEL: E01; F32; F34
Author-Name: Guido Sandleris
Author-Person: psa482
Author-Name: Mark L.J. Wright
Author-Person: pwr6
Note: EFG IFM
Number: 17552
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17552
File-URL: http://www.nber.org/papers/w17552.pdf
File-Format: application/pdf
Publication-Status: published as Guido Sandleris & Mark L. J. Wright, 2014. "The Costs of Financial Crises: Resource Misallocation, Productivity, and Welfare in the 2001 Argentine Crisis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(1), pages 87-127, 01.
Abstract: Financial crises in emerging market countries appear to be very costly: both output and a host of partial welfare indicators decline dramatically. The magnitude of these costs is puzzling both from an accounting perspective -- factor usage does not decline as much as output, resulting in large falls in measured productivity -- and from a theoretical perspective. Towards a resolution of this puzzle, we present a framework that allows us to (i) account for changes in a country's measured productivity during a financial crises as the result of changes in the underlying technology of the economy, the efficiency with which resources are allocated across sectors, and the efficiency of the resource allocation within sectors driven both by reallocation amongst existing plants and by entry and exit; and (ii) measure the change in the country's welfare resulting from changes in productivity, government spending, the terms of trade, and a country's international investment position. We apply this framework to the Argentine crisis of 2001 using a unique establishment level data-set and find that more than half of the roughly 10% decline in measured total factor productivity can be accounted for by deterioration in the allocation of resources both across and within sectors. We measure the decline in welfare to be on the order of one-quarter of one years GDP.
Handle: RePEc:nbr:nberwo:17552
Template-Type: ReDIF-Paper 1.0
Title: A Unified Theory of Firm Selection and Growth
Classification-JEL: F12; L11; L16
Author-Name: Costas Arkolakis
Author-Person: par274
Note: EFG IO ITI
Number: 17553
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17553
File-URL: http://www.nber.org/papers/w17553.pdf
File-Format: application/pdf
Publication-Status: published as Costas Arkolakis, 2016. "A Unified Theory of Firm Selection and Growth," The Quarterly Journal of Economics, vol 131(1), pages 89-155.
Abstract: This paper studies the effects of marketing choice to firm growth. I assume that firm-level growth is the result of idiosyncratic productivity improvements with continuous arrival of new potential producers. A firm enters a market if it is profitable to incur the marginal cost to reach the first consumer and pays an increasing marketing cost to reach additional consumers. The model is calibrated using data on the cross-section of firms and their sales across markets as well as the rate of incumbent firm-exit. The calibrated model quantitatively predicts firm exit, growth, and the resulting firm size distribution in the US manufacturing data. It also predicts a distribution of firm growth rates that deviates from Gibrat's law -i.e. independence of firm size and growth- in a manner consistent with the data.
Handle: RePEc:nbr:nberwo:17553
Template-Type: ReDIF-Paper 1.0
Title: School Resources and Educational Outcomes in Developing Countries: A Review of the Literature from 1990 to 2010
Classification-JEL: H4; I25; J24; O15
Author-Name: Paul W. Glewwe
Author-Person: pgl14
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Sarah D. Humpage
Author-Name: Renato Ravina
Note: ED LS PE
Number: 17554
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17554
File-URL: http://www.nber.org/papers/w17554.pdf
File-Format: application/pdf
Publication-Status: published as School resources and educational outcomes in developing countries: A review of the literature from 1990 to 2010. Paul W. Glewwe, Eric A. Hanushek, Sarah D. Humpage, Renato Ravina. Paul Glewwe, Education Policy in Developing Countries, Chicago: University of Chicago Press, December 2013, pp. 13-64.
Abstract: Developing countries spend hundreds of billions of dollars each year on schools, educational materials and teachers, but relatively little is known about how effective these expenditures are at increasing students' years of completed schooling and, more importantly, the skills that they learn while in school. This paper examines studies published between 1990 and 2010, in both the education literature and the economics literature, to investigate which specific school and teacher characteristics, if any, appear to have strong positive impacts on learning and time in school. Starting with over 9,000 studies, 79 are selected as being of sufficient quality. Then an even higher bar is set in terms of econometric methods used, leaving 43 "high quality" studies. Finally, results are also shown separately for 13 randomized trials. The estimated impacts on time in school and learning of most school and teacher characteristics are statistically insignificant, especially when the evidence is limited to the "high quality" studies. The few variables that do have significant effects - e.g. availability of desks, teacher knowledge of the subjects they teach, and teacher absence - are not particularly surprising and thus provide little guidance for future policies and programs.
Handle: RePEc:nbr:nberwo:17554
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy
Classification-JEL: E4; E5; G01; G14; G18
Author-Name: Arvind Krishnamurthy
Author-Person: pkr393
Author-Name: Annette Vissing-Jorgensen
Author-Person: pvi437
Note: AP EFG ME
Number: 17555
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17555
File-URL: http://www.nber.org/papers/w17555.pdf
File-Format: application/pdf
Publication-Status: published as Brookings Papers on Economic Activity The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy Fall 2011, Annette Vissing-Jorgensen and Arvind Krishnamurthy
Abstract: We evaluate the effect of the Federal Reserve's purchase of long-term Treasuries and other long-term bonds ("QE1" in 2008-2009 and "QE2" in 2010-2011) on interest rates. Using an event-study methodology we reach two main conclusions. First, it is inappropriate to focus only on Treasury rates as a policy target because QE works through several channels that affect particular assets differently. We find evidence for a signaling channel, a unique demand for long-term safe assets, and an inflation channel for both QE1 and QE2, and an MBS pre-payment channel and a corporate bond default risk channel for QE1. Second, effects on particular assets depend critically on which assets are purchased. The event-study suggests that (a) mortgage-backed securities purchases in QE1 were crucial for lowering mortgage-backed security yields as well as corporate credit risk and thus corporate yields for QE1, and (b) Treasuries-only purchases in QE2 had a disproportionate effect on Treasuries and Agencies relative to mortgage-backed securities and corporates, with yields on the latter falling primarily through the market's anticipation of lower future federal funds rates.
Handle: RePEc:nbr:nberwo:17555
Template-Type: ReDIF-Paper 1.0
Title: Cost-Effectiveness of Electricity Energy Efficiency Programs
Classification-JEL: H76; L94; Q41; Q48
Author-Name: Toshi H. Arimura
Author-Name: Shanjun Li
Author-Person: pli535
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: Karen Palmer
Author-Person: ppa255
Note: EEE PE
Number: 17556
Creation-Date: 2011-10
Order-URL: http://www.nber.org/papers/w17556
File-URL: http://www.nber.org/papers/w17556.pdf
File-Format: application/pdf
Publication-Status: published as Toshi H. Arimura, Shanjun Li, Richard G. Newell, and Karen Palmer, 2012. "Cost-Effectiveness of Electricity Energy Efficiency Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
Abstract: We analyze the cost-effectiveness of electric utility ratepayer-funded programs to promote demand-side management (DSM) and energy efficiency (EE) investments. We specify a model that relates electricity demand to previous EE DSM spending, energy prices, income, weather, and other demand factors. In contrast to previous studies, we allow EE DSM spending to have a potential long-term demand effect and explicitly address possible endogeneity in spending. We find that current period EE DSM expenditures reduce electricity demand and that this effect persists for a number of years. Our findings suggest that ratepayer funded DSM expenditures between 1992 and 2006 produced a central estimate of 0.9 percent savings in electricity consumption over that time period and a 1.8 percent savings over all years. These energy savings came at an expected average cost to utilities of roughly 5 cents per kWh saved when future savings are discounted at a 5 percent rate.
Handle: RePEc:nbr:nberwo:17556
Template-Type: ReDIF-Paper 1.0
Title: Identifying Demand with Multidimensional Unobservables: A Random Functions Approach
Classification-JEL: C0; L0
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Author-Name: Amit Gandhi
Note: IO TWP
Number: 17557
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17557
File-URL: http://www.nber.org/papers/w17557.pdf
File-Format: application/pdf
Abstract: We explore the identification of nonseparable models without relying on the property that the model can be inverted in the econometric unobservables. In particular, we allow for infinite dimensional unobservables. In the context of a demand system, this allows each product to have multiple unobservables. We identify the distribution of demand both unconditional and conditional on market observables, which allows us to identify several quantities of economic interest such as the (conditional and unconditional) distributions of elasticities and the distribution of price effects following a merger. Our approach is based on a significant generalization of the linear in random coefficients model that only restricts the random functions to be analytic in the endogenous variables, which is satisfied by several standard demand models used in practice. We assume an (unknown) countable support for the the distribution of the infinite dimensional unobservables.
Handle: RePEc:nbr:nberwo:17557
Template-Type: ReDIF-Paper 1.0
Title: A Transparency Standard for Derivatives
Classification-JEL: G01; G13; G18; G28
Author-Name: Viral V. Acharya
Author-Person: pac33
Note: AP CF
Number: 17558
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17558
File-URL: http://www.nber.org/papers/w17558.pdf
File-Format: application/pdf
Publication-Status: published as A Transparency Standard for Derivatives, Viral V. Acharya. in Risk Topography: Systemic Risk and Macro Modeling, Brunnermeier and Krishnamurthy. 2014
Abstract: Derivatives exposures across large financial institutions often contribute to - if not necessarily create - systemic risk. Current reporting standards for derivatives exposures are nevertheless inadequate for assessing these systemic risk contributions. In this paper, I explain how a transparency standard, in contrast to the current standard, would facilitate such risk analysis. I also demonstrate that such a standard is implementable by providing examples of existing disclosures from large dealer firms in their quarterly filings. These disclosures often contain useful firm-level data on derivatives, but due to a lack of standardization, they cannot be aggregated to assess the risk to the system. I highlight the important contribution that reporting the "margin coverage ratio" (MCR), namely the ratio of a derivatives dealer's cash (or liquidity, more broadly) to its contingent collateral or margin calls in case of a significant downgrade of its credit quality, could make toward assessing systemic risk contributions.
Handle: RePEc:nbr:nberwo:17558
Template-Type: ReDIF-Paper 1.0
Title: A Sorted Tale of Globalization: White Collar Jobs and the Rise of Service Offshoring
Classification-JEL: F16
Author-Name: Runjuan Liu
Author-Person: pli274
Author-Name: Daniel Trefler
Author-Person: ptr44
Note: ITI
Number: 17559
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17559
File-URL: http://www.nber.org/papers/w17559.pdf
File-Format: application/pdf
Publication-Status: published as A Sorted Tale of Globalization: White Collar Jobs and the Rise of Service Offshoring, Runjuan Liu, Daniel Trefler. in Trade and Labor Markets, Hanson and Redding. 2019
Publication-Status: published as Runjuan Liu & Daniel Trefler, 2019. "A Sorted Tale of Globalization: White Collar Jobs and the rise of Service Offshoring," Journal of International Economics, .
Abstract: We study how the rise of trade in services with China and India has impacted U.S. labour markets. The topic has two understudied aspects: it deals with service trade (most studies deal with manufacturing trade) and it examines the historical first of U.S. workers competing with educated but low-wage foreign workers. Our empirical agenda is made complicated by the endogeneity of service imports and the endogenous sorting of workers across occupations. To develop an estimation framework that deals with these, we imbed a partial equilibrium model of 'trade in tasks' within a general equilibrium model of occupational choice. The model highlights the need to estimate labour market outcomes using changes in the outcomes of individual workers and, in particular, to distinguish workers who switch 'up' from those who switch 'down'. (Switching 'down' means switching to an occupation that pays less on average than the current occupation). We apply these insights to matched CPS data for 1996-2007. The cumulative 10-year impact of rising service imports from China and India has been as follows. (1) Downward and upward occupational switching increased by 17% and 4%, respectively. (2) Transitions to unemployment increased by a large 0.9 percentage points. (3) The earnings of occupational 'stayers' fell by a tiny 2.3%. (4) The earnings impact for occupational switchers is not identified without an assumption about worker sorting. Under the assumption of no worker sorting, downward (upward) switching was associated with an earning change of -13.9% (+12.1%). Under the assumption of worker sorting, there is no statistically significant impact on earnings.
Handle: RePEc:nbr:nberwo:17559
Template-Type: ReDIF-Paper 1.0
Title: When Bonds Matter: Home Bias in Goods and Assets
Classification-JEL: F30; F41; G11
Author-Name: Nicolas Coeurdacier
Author-Person: pco481
Author-Name: Pierre-Olivier Gourinchas
Author-Person: pgo28
Note: AP EFG IFM
Number: 17560
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17560
File-URL: http://www.nber.org/papers/w17560.pdf
File-Format: application/pdf
Publication-Status: published as Coeurdacier, Nicolas & Gourinchas, Pierre-Olivier, 2016. "When bonds matter: Home bias in goods and assets," Journal of Monetary Economics, Elsevier, vol. 82(C), pages 119-137.
Abstract: This paper presents a model of international portfolios with real exchange rate and non financial risks that accounts for observed levels of equity home bias. A key feature is that investors can trade equities as well as domestic and foreign real bonds. Bonds matter: in equilibrium, investors structure their bond portfolio to hedge real exchange rate risk since relative bond returns are strongly correlated with real exchange rate movements. Equity home bias does not arise from the co-movements between relative stock returns and real exchange rates, but from the hedging properties of stock returns against other sources of risk, conditionally on bond returns. We estimate the optimal equity and bond portfolios implied by the model for G-7 countries and find strong empirical support for the theory. We are able to account for a significant share of the equity home bias and obtain a currency exposure of bond portfolios comparable to the data.
Handle: RePEc:nbr:nberwo:17560
Template-Type: ReDIF-Paper 1.0
Title: Testing Conditional Factor Models
Classification-JEL: C12; C13; C14; C32; G12
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Dennis Kristensen
Author-Person: pkr127
Note: AP
Number: 17561
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17561
File-URL: http://www.nber.org/papers/w17561.pdf
File-Format: application/pdf
Publication-Status: published as Ang, Andrew & Kristensen, Dennis, 2012. "Testing conditional factor models," Journal of Financial Economics, Elsevier, vol. 106(1), pages 132-156.
Abstract: Using nonparametric techniques, we develop a methodology for estimating conditional alphas and betas and long-run alphas and betas, which are the averages of conditional alphas and betas, respectively, across time. The tests can be performed for a single asset or jointly across portfolios. The traditional Gibbons, Ross, and Shanken (1989) test arises as a special case of no time variation in the alphas and factor loadings and homoskedasticity. As applications of the methodology, we estimate conditional CAPM and multifactor models on book-to-market and momentum decile portfolios. We reject the null that long-run alphas are equal to zero even though there is substantial variation in the conditional factor loadings of these portfolios.
Handle: RePEc:nbr:nberwo:17561
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Policy and Unemployment
Classification-JEL: E6; E62; H3; H63
Author-Name: Marco Battaglini
Author-Person: pba170
Author-Name: Stephen Coate
Author-Person: pco66
Note: EFG PE POL
Number: 17562
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17562
File-URL: http://www.nber.org/papers/w17562.pdf
File-Format: application/pdf
Abstract: This paper explores the interaction between fiscal policy and unemployment. It develops a dynamic economic model in which unemployment can arise but can be mitigated by tax cuts and public spending increases. Such policies are fiscally costly, but can be financed by issuing government debt. In the context of this model, the paper analyzes the simultaneous determination of fiscal policy and unemployment in long run equilibrium. Outcomes with both a benevolent government and political decision-making are studied. With political decision-making, the model yields a simple positive theory of fiscal policy and unemployment.
Handle: RePEc:nbr:nberwo:17562
Template-Type: ReDIF-Paper 1.0
Title: The Lucas Orchard
Classification-JEL: G12
Author-Name: Ian Martin
Author-Person: pma1585
Note: AP EFG IFM
Number: 17563
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17563
File-URL: http://www.nber.org/papers/w17563.pdf
File-Format: application/pdf
Publication-Status: published as Ian Martin, 2013. "The Lucas Orchard," Econometrica, Econometric Society, vol. 81(1), pages 55-111, 01.
Abstract: This paper investigates the behavior of asset prices in an endowment economy in which a representative agent with power utility consumes the dividends of multiple assets. The assets are Lucas trees; a collection of Lucas trees is a Lucas orchard. The model generates return correlations that vary endogenously, spiking at times of disaster. Since disasters spread across assets, the model generates large risk premia even for assets with stable fundamentals. Very small assets may comove endogenously and hence earn positive risk premia even if their fundamentals are independent of the rest of the economy. I provide conditions under which the variation in a small asset's price-dividend ratio can be attributed almost entirely to variation in its risk premium.
Handle: RePEc:nbr:nberwo:17563
Template-Type: ReDIF-Paper 1.0
Title: The Forward Premium Puzzle in a Two-Country World
Classification-JEL: G12; G15
Author-Name: Ian Martin
Author-Person: pma1585
Note: AP EFG IFM
Number: 17564
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17564
File-URL: http://www.nber.org/papers/w17564.pdf
File-Format: application/pdf
Abstract: I explore the behavior of asset prices and the exchange rate in a two-country world. When the large country has bad news, the relative price of the small country's output declines. As a result, the small country's bonds are risky, and uncovered interest parity fails, with positive excess returns available to investors who borrow at the large country's interest rate and lend at the small country's interest rate. I use a diagrammatic approach to derive these and other results in a calibration-free way.
Handle: RePEc:nbr:nberwo:17564
Template-Type: ReDIF-Paper 1.0
Title: Ownership Characteristics, Real Exchange Rate Movements and Labor Market Adjustment in China
Classification-JEL: F16; F31; J21; J31
Author-Name: Risheng Mao
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI LS
Number: 17565
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17565
File-URL: http://www.nber.org/papers/w17565.pdf
File-Format: application/pdf
Abstract: This paper uses a firm level multi-industry data set covering 456 Chinese manufacturing sectors to assess the implications of Renminbi (RMB) real exchange rate appreciation for adjustments in employment and wage rates. We stress differences in both industry and firm characteristics within sectors. Our empirical results show that modest (and also larger) RMB real exchange rate appreciation would likely have pronounced effects on both net employment and wage rates. A 10% RMB appreciation would likely cause a net employment decline in Chinese manufacturing industries of between 4.1% and 5.3%, and a wage rate drop of 4% after controlling for other factors. Real exchange rate change effects by industry on net employment and wage rates vary significantly with the ownership characteristics of firms within industries. Employment and wage rates for private enterprises are less responsive to RMB real exchange rate fluctuations than is true for state owned enterprises (SOEs) and foreign invested enterprises (FIEs). This finding is opposite to the widely held belief that the labor market behavior of Chinese SOEs shows stronger labor market rigidities than for private firms. Impacts of exchange rate movements emerge as systematically related to export openness, overall import penetration and profit margins of individual manufacturing industries.
Handle: RePEc:nbr:nberwo:17565
Template-Type: ReDIF-Paper 1.0
Title: Persistent Liquidity Effects and Long Run Money Demand
Classification-JEL: E31; E4; E41; E43; E5
Author-Name: Fernando E. Alvarez
Author-Name: Francesco Lippi
Author-Person: pli62
Note: AP EFG ME
Number: 17566
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17566
File-URL: http://www.nber.org/papers/w17566.pdf
File-Format: application/pdf
Publication-Status: published as Fernando Alvarez & Francesco Lippi, 2014. "Persistent Liquidity Effects and Long-Run Money Demand," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(2), pages 71-107, April.
Abstract: We present a monetary model in the presence of segmented asset markets that implies a persistent fall in interest rates after a once and for all increase in liquidity. The gradual propagation mechanism produced by our model is novel in the literature. We provide an analytical characterization of this mechanism, showing that the magnitude of the liquidity effect on impact, and its persistence, depend on the ratio of two parameters: the long-run interest rate elasticity of money demand and the intertemporal substitution elasticity. At the same time, the model has completely classical long-run predictions, featuring quantity theoretic and Fisherian properties. The model simultaneously explains the short-run "instability" of money demand estimates as-well-as the stability of long-run interest-elastic money demand.
Handle: RePEc:nbr:nberwo:17566
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Liquidity on Governance
Classification-JEL: G12; G23; G34; G38
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Vivian W. Fang
Author-Name: Emanuel Zur
Note: CF LE
Number: 17567
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17567
File-URL: http://www.nber.org/papers/w17567.pdf
File-Format: application/pdf
Publication-Status: published as Alex Edmans & Vivian W. Fang & Emanuel Zur, 2013. "The Effect of Liquidity on Governance," Review of Financial Studies, Society for Financial Studies, vol. 26(6), pages 1443-1482.
Abstract: This paper studies the effect of stock liquidity on blockholders' choice of governance mechanisms. We focus on hedge funds as they are unconstrained by legal restrictions and business ties, and thus have all governance channels at their disposal. Since the threat of governance, not just actual governance, can discipline managers, we use Section 13 filings to measure governance intent rather than only studying instances of actual governance. We find that liquidity increases the likelihood that a hedge fund acquires a block in a firm. Conditional upon acquiring a stake, liquidity reduces the likelihood that a blockholder governs through voice (intervention) - as evidenced by the greater propensity to file Schedule 13Gs (passive investment) rather than 13Ds (active investment). Liquidity is more likely to lead to a 13G filing if the manager's wealth is sensitive to the stock price, consistent with governance through exit (trading). A 13G filing leads to positive announcement returns, especially in liquid firms. These two results suggest that liquidity does not dissuade blockholders from governing altogether, but instead encourages them to govern through exit rather than voice. We use decimalization as an exogenous shock to liquidity to identify causal effects.
Handle: RePEc:nbr:nberwo:17567
Template-Type: ReDIF-Paper 1.0
Title: A Model of Private Equity Fund Compensation
Classification-JEL: G24
Author-Name: Wonho Wilson Choi
Author-Name: Andrew Metrick
Author-Person: pme99
Author-Name: Ayako Yasuda
Note: AP CF
Number: 17568
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17568
File-URL: http://www.nber.org/papers/w17568.pdf
File-Format: application/pdf
Publication-Status: published as A Model of Private Equity Fund Compensation A. Metrick, W. W. Choi, and A. Yasuda Global Macro Economy and Finance Type: Article 2012
Abstract: This paper analyzes the economics of the private equity fund compensation. We build a novel model to estimate the expected revenue to fund managers as a function of their investor contracts. In particular, we evaluate the present value of the fair-value test (FVT) carried interest scheme, which is one of the most common profit-sharing arrangements observed in practice. We extend the simulation model developed in Metrick and Yasuda (2010a) and compare the relative values of the FVT carry scheme to other benchmark carry schemes. We find that the FVT carry scheme is substantially more valuable to the fund managers than other commonly observed (and more conservative) carry schemes, largely due to the early timing of carry compensation that frequently occurs under the FVT scheme. Interestingly, conditional on having an FVT carry scheme, fund managers' incremental gains from inflating the reported values of the funds' un- exited portfolio companies would be negligible.
Handle: RePEc:nbr:nberwo:17568
Template-Type: ReDIF-Paper 1.0
Title: The Promise and Problems of Pricing Carbon: Theory and Experience
Classification-JEL: D02; F18; H23; K32; L38; Q28; Q48; Q5; Q54; Q58
Author-Name: Joseph E. Aldy
Author-Person: pal158
Author-Name: Robert Stavins
Author-Person: pst167
Note: EEE IO LE PE
Number: 17569
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17569
File-URL: http://www.nber.org/papers/w17569.pdf
File-Format: application/pdf
Publication-Status: published as “The Promise and Problems of Pricing Carbon: Theory and Experience.” Journal of Environment and Development 21(2): 152-180, with Robert N. Stavins, 2012.
Abstract: Because of the global commons nature of climate change, international cooperation among nations will likely be necessary for meaningful action at the global level. At the same time, it will inevitably be up to the actions of sovereign nations to put in place policies that bring about meaningful reductions in the emissions of greenhouse gases. Due to the ubiquity and diversity of emissions of greenhouse gases in most economies, as well as the variation in abatement costs among individual sources, conventional environmental policy approaches, such as uniform technology and performance standards, are unlikely to be sufficient to the task. Therefore, attention has increasingly turned to market-based instruments in the form of carbon-pricing mechanisms. We examine the opportunities and challenges associated with the major options for carbon pricing: carbon taxes, cap-and-trade, emission reduction credits, clean energy standards, and fossil fuel subsidy reductions.
Handle: RePEc:nbr:nberwo:17569
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Immigration on Native Poverty through Labor Market Competition
Classification-JEL: J3; J61
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: LS PE
Number: 17570
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17570
File-URL: http://www.nber.org/papers/w17570.pdf
File-Format: application/pdf
Publication-Status: published as Chapter 2 Immigration, Native Poverty, and the Labor Market Giovanni Peri Immigration, Poverty, and Socioeconomic Inequality David Card Steven Raphael Editors
Abstract: In this paper I first analyze the wage effects of immigrants on native workers in the US economy and its top immigrant-receiving states and metropolitan areas. Then I quantify the consequences of these wage effects on the poverty rates of native families. The goal is to establish whether the labor market effects of immigrants have significantly affected the percentage of "poor" families among U.S.-born individuals. I consider the decade 2000-2009 during which poverty rates increased significantly in the U.S. As a reference, I also analyze the decade 1990-2000. To calculate the wage impact of immigrants I adopt a simple general equilibrium model of productive interactions, regulated by the elasticity of substitution across schooling groups, age groups and between US and foreign-born workers. Considering the inflow of immigrants by age, schooling and location I evaluate their impact in local markets (cities and states) assuming no mobility of natives and on the US market as a whole allowing for native internal mobility. Our findings show that for all plausible parameter values there is essentially no effect of immigration on native poverty at the national level. At the local level, only considering the most extreme estimates and only in some localities, we find non-trivial effects of immigration on poverty. In general, however, even the local effects of immigration bear very little correlation with the observed changes in poverty rates and they explain a negligible fraction of them.
Handle: RePEc:nbr:nberwo:17570
Template-Type: ReDIF-Paper 1.0
Title: The "Austerity Myth": Gain Without Pain?
Classification-JEL: E62; E65; F32
Author-Name: Roberto Perotti
Author-Person: ppe66
Note: EFG IFM POL
Number: 17571
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17571
File-URL: http://www.nber.org/papers/w17571.pdf
File-Format: application/pdf
Publication-Status: published as The "Austerity Myth": Gain without Pain?, Roberto Perotti. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: As governments around the world contemplate slashing budget deficits, the "expansionary fiscal consolidation hypothesis" is back in vogue. I argue that, as a statement about the short run, it should be taken with caution. I present four detailed case studies, two - Denmark and Ireland - undertaken under fixed exchange rates (the most relevant case for many Eurozone countries today) and two - Finland and Sweden - after floating the currency. All four episodes were associated with an expansion; but only in Denmark the driver of growth was internal demand. However, after three years a long slump set in as the economy lost competitiveness. In all the others for a long time the main driver of growth was exports. In Ireland this occurred because the sterling coincidentally appreciated. In Finland and Sweden the currency experienced an extremely large depreciation after floating. In all consolidations interest rate fell fast, and wage moderation played a key role in generating a gain competitiveness and a decline in interest rates. These results cast doubt on at least some versions of the "expansionary fiscal consolidations" hypothesis.
Handle: RePEc:nbr:nberwo:17571
Template-Type: ReDIF-Paper 1.0
Title: Academic Dynasties: Decentralization and Familism in the Italian Academia
Classification-JEL: D71; D73; I23; J44; Z1
Author-Name: Ruben Durante
Author-Person: pdu242
Author-Name: Giovanna Labartino
Author-Person: pla564
Author-Name: Roberto Perotti
Author-Person: ppe66
Note: ED PE POL
Number: 17572
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17572
File-URL: http://www.nber.org/papers/w17572.pdf
File-Format: application/pdf
Abstract: Decentralization can lead to "good" or "bad" outcomes depending on the socio-cultural norms of the targeted communities. We investigate this issue by looking at the evolution of familism and nepotism in the Italian academia before and after the 1998 reform, which decentralized the recruitment of professors from the national to the university level. To capture familism we use a novel dataset on Italian university professors between 1988 and 2008 focusing on the informative content of last names. We construct two indices of "homonymy" which capture the concentration of last names in a given academic department relative to that in the underlying general population. Our results suggest that increased autonomy by local university officials resulted in a significant increase in the incidence of familism in areas characterized by low civic capital but not in areas with higher civic capital.
Handle: RePEc:nbr:nberwo:17572
Template-Type: ReDIF-Paper 1.0
Title: Patent Pools and the Direction of Innovation - Evidence from the 19th-century Sewing Machine Industry
Classification-JEL: D4; K21; L10; L24; L4; N61; N81; O3
Author-Name: Ryan L. Lampe
Author-Name: Petra Moser
Author-Person: pmo257
Note: DAE IO PR
Number: 17573
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17573
File-URL: http://www.nber.org/papers/w17573.pdf
File-Format: application/pdf
Publication-Status: published as “Patent Pools and Innovation in Substitute Technologies – Evidence from the U.S. Sewing Machine Industry” (with Ryan Lampe) http://ssrn.com/abstract=1468062. RAND Journal of Economics, 2014, Volume 44, Issue 4, pp. 757-778.
Abstract: Patent pools allow a group of firms to combine their patents as if they were a single firm. Theoretical models predict that pools encourage innovation in pool technologies, albeit at the cost of innovation in substitutes. Empirical evidence is scarce because modern pools are too recent to allow empirical analyses. This article examines data on patents and innovations by new firms for a historical pool in the sewing machine industry (1856-1877) to examine effects on innovation. Contrary to theoretical predictions, this analysis suggests that pools may discourage innovation in pool technologies and shift R&D towards technologically inferior substitutes.
Handle: RePEc:nbr:nberwo:17573
Template-Type: ReDIF-Paper 1.0
Title: Welfare Costs of Long-Run Temperature Shifts
Classification-JEL: E0; G0; Q0
Author-Name: Ravi Bansal
Author-Person: pba818
Author-Name: Marcelo Ochoa
Author-Person: poc3
Note: AP EEE EFG
Number: 17574
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17574
File-URL: http://www.nber.org/papers/w17574.pdf
File-Format: application/pdf
Abstract: This article makes a contribution towards understanding the impact of temperature fluctuations on the economy and financial markets. We present a long-run risks model with temperature related natural disasters. The model simultaneously matches observed temperature and consumption growth dynamics, and key features of financial markets data. We use this model to evaluate the role of temperature in determining asset prices, and to compute utility-based welfare costs as well as dollar costs of insuring against temperature fluctuations. We find that the temperature related utility-costs are about 0.78% of consumption, and the total dollar costs of completely insuring against temperature variation are 2.46% of world GDP. If we allow for temperature-triggered natural disasters to impact growth, insuring against temperature variation raise to 5.47% of world GDP. We show that the same features, long-run risks and recursive-preferences, that account for the risk-free rate and the equity premium puzzles also imply that temperature-related economic costs are important. Our model implies that a rise in global temperature lowers equity valuations and raises risk premiums.
Handle: RePEc:nbr:nberwo:17574
Template-Type: ReDIF-Paper 1.0
Title: Temperature, Aggregate Risk, and Expected Returns
Classification-JEL: E0; G12; Q0
Author-Name: Ravi Bansal
Author-Person: pba818
Author-Name: Marcelo Ochoa
Author-Person: poc3
Note: AP EEE EFG
Number: 17575
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17575
File-URL: http://www.nber.org/papers/w17575.pdf
File-Format: application/pdf
Abstract: In this paper we show that temperature is an aggregate risk factor that adversely affects economic growth. Our argument is based on evidence from global capital markets which shows that the covariance between country equity returns and temperature (i.e., temperature betas) contains sharp information about the cross-country risk premium; countries closer to the Equator carry a positive temperature risk premium which decreases as one moves farther away from the Equator. The differences in temperature betas mirror exposures to aggregate growth rate risk, which we show is negatively impacted by temperature shocks. That is, portfolios with larger exposure to risk from aggregate growth also have larger temperature betas; hence, a larger risk premium. We further show that increases in global temperature have a negative impact on economic growth in countries closer to the Equator, while its impact is negligible in countries at high latitudes. Consistent with this evidence, we show that there is a parallel between a country's distance to the Equator and the economy's dependence on climate sensitive sectors; in countries closer to the Equator industries with a high exposure to temperature are more prevalent. We provide a Long-Run Risks based model that quantitatively accounts for cross-sectional differences in temperature betas, its link to expected returns, and the connection between aggregate growth and temperature risks.
Handle: RePEc:nbr:nberwo:17575
Template-Type: ReDIF-Paper 1.0
Title: How Would EU Corporate Tax Reform Affect US Investment in Europe?
Classification-JEL: H25
Author-Name: Michael P. Devereux
Author-Person: pde32
Author-Name: Simon Loretz
Note: PE
Number: 17576
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17576
File-URL: http://www.nber.org/papers/w17576.pdf
File-Format: application/pdf
Publication-Status: published as How Would EU Corporate Tax Reform Affect US Investment in Europe?, Michael P. Devereux, Simon Loretz. in Tax Policy and the Economy, Volume 26, Brown. 2012
Abstract: This paper examines the likely impact of a proposed formula apportionment system for corporation tax in the EU on the inbound investment of US multinational companies. We pay attention to tax planning strategies that may be employed by US multinationals and investigate whether effective tax rates in Europe of US companies differ from those of European companies. The proposal is for an optional system: we estimate the extent to which both European and US companies would be likely to choose it taking into account their existing structures and future investment incentives. The relative position of US and European companies depends crucially on the taxation of foreign passive income.
Handle: RePEc:nbr:nberwo:17576
Template-Type: ReDIF-Paper 1.0
Title: The Dynamics of Firm Lobbying
Classification-JEL: D72; D73; D78; F22; F23; J61; O31; O38
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: William F. Lincoln
Author-Person: pli709
Author-Name: Prachi Mishra
Note: LE LS PE POL PR
Number: 17577
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17577
File-URL: http://www.nber.org/papers/w17577.pdf
File-Format: application/pdf
Publication-Status: published as Kerr, William R., William F. Lincoln, and Prachi Mishra. "The Dynamics of Firm Lobbying." American Economic Journal: Economic Policy (forthcoming).
Abstract: We study the determinants of the dynamics of firm lobbying behavior using a panel data set covering 1998-2006. Our data exhibit three striking facts: (i) few firms lobby, (ii) lobbying status is strongly associated with firm size, and (iii) lobbying status is highly persistent over time. Estimating a model of a firm's decision to engage in lobbying, we find significant evidence that up-front costs associated with entering the political process help explain all three facts. We then exploit a natural experiment in the expiration in legislation surrounding the H-1B visa cap for high-skilled immigrant workers to study how these costs affect firms' responses to policy changes. We find that companies primarily adjusted on the intensive margin: the firms that began to lobby for immigration were those who were sensitive to H-1B policy changes and who were already advocating for other issues, rather than firms that became involved in lobbying anew. For a firm already lobbying, the response is determined by the importance of the issue to the firm's business rather than the scale of the firm's prior lobbying efforts. These results support the existence of significant barriers to entry in the lobbying process.
Handle: RePEc:nbr:nberwo:17577
Template-Type: ReDIF-Paper 1.0
Title: What U.S. Data Should be Used to Measure the Price Elasticity of Demand for Alcohol?
Classification-JEL: H2; I12; I18
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Author-Name: Alison Snow Jones
Author-Name: William C. Kerr
Author-Name: Thomas K. Greenfield
Author-Name: Joseph V. Terza
Author-Person: pte168
Author-Name: Ravi S. Pandian
Author-Name: Kerry Anne McGeary
Author-Person: pmc116
Note: EH PE
Number: 17578
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17578
File-URL: http://www.nber.org/papers/w17578.pdf
File-Format: application/pdf
Publication-Status: published as Ruhm, Christopher J. & Jones, Alison Snow & McGeary, Kerry Anne & Kerr, William C. & Terza, Joseph V. & Greenfield, Thomas K. & Pandian, Ravi S., 2012. "What U.S. data should be used to measure the price elasticity of demand for alcohol?," Journal of Health Economics, Elsevier, vol. 31(6), pages 851-862.
Abstract: This paper examines how estimates of the price elasticity of demand for beer vary with the choice of alcohol price series examined. Our most important finding is that the commonly used ACCRA price data are unlikely to reliably indicate alcohol demand elasticities--estimates obtained from this source vary drastically and unpredictably. As an alternative, researchers often use beer taxes to proxy for alcohol prices. While the estimated beer taxes elasticities are more stable, there are several problems with using taxes, including difficulties in accounting for cross-price effects. We believe that the most useful estimates reported in this paper are obtained using annual Uniform Product Code (UPC) "barcode" scanner data on grocery store alcohol prices. These estimates suggest relatively low demand elasticity, probably around -0.3, with evidence that the elasticities are considerably overstated in models that control for beer but not wine or spirits prices.
Handle: RePEc:nbr:nberwo:17578
Template-Type: ReDIF-Paper 1.0
Title: Laws and Norms
Classification-JEL: D64; D82; H41; K1; K42; Z13
Author-Name: Roland Benabou
Author-Person: pbe27
Author-Name: Jean Tirole
Author-Person: pti33
Note: LE PE
Number: 17579
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17579
File-URL: http://www.nber.org/papers/w17579.pdf
File-Format: application/pdf
Abstract: This paper analyzes how private decisions and public policies are shaped by personal and societal preferences ("values"), material or other explicit incentives ("laws") and social sanctions or rewards ("norms"). It first examines how honor, stigma and social norms arise from individuals' behaviors and inferences, and how they interact with material incentives. It then characterizes optimal incentive-setting in the presence of norms, deriving in particular appropriately modified versions of Pigou and Ramsey taxation. Incorporating agents' imperfect knowledge of the distribution of preferences opens up to analysis several new questions. The first is social psychologists' practice of "norms-based interventions", namely campaigns and messages that seek to alter people's perceptions of what constitutes "normal" behavior or values among their peers. The model makes clear how such interventions operate but also how their effectiveness is limited by a credibility problem, particularly when the descriptive and prescriptive norms conflict. The next main question is the expressive role of law. The choices of legislators and other principals naturally reflect their knowledge of societal preferences, and these same "community standards" are also what shapes social judgments and moral sentiments. Setting law thus means both imposing material incentives and sending a message about society's values, and hence about the norms that different behaviors are likely to encounter. The analysis, combining an informed principal with individually signaling agents, makes precise the notion of expressive law, determining in particular when a weakening or a strengthening of incentives is called for. Pushing further this logic, the paper also sheds light on why societies are often resistant to the message of economists, as well as on why they renounce certain policies, such as "cruel and unusual" punishments, irrespective of effectiveness considerations, in order to express their being "civilized".
Handle: RePEc:nbr:nberwo:17579
Template-Type: ReDIF-Paper 1.0
Title: Socioeconomic Differences in the Impact of Smoking Tobacco and Alcohol Prices on Smoking in India
Classification-JEL: H2; I18
Author-Name: G. Emmanuel Guindon
Author-Name: Arindam Nandi
Author-Person: pna336
Author-Name: Frank J. Chaloupka, IV
Author-Person: pch236
Author-Name: Prabhat Jha
Note: EH
Number: 17580
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17580
File-URL: http://www.nber.org/papers/w17580.pdf
File-Format: application/pdf
Abstract: The threat posed by smoking to health in India is severe. Already 1 in 5 of all adult male deaths and 1 in 20 of all adult female deaths at ages 30-69 are due to smoking and India will soon have 1 million smoking deaths a year. Increasing tobacco prices has been found to be the single most effective method to reduce smoking. Yet, bidis, the most common form of smoked tobacco in India, are largely untaxed, while cigarettes are taxed at about 40% of retail price, well below the 65-80% rate noted by the World Bank in countries with effective tobacco control policies. Moreover, low and stagnant tax rates have occurred in a period in which all tobacco products have become more affordable with income growth. First, we use data from the most recent three consecutive quinquennial National Sample Survey (NSS) rounds (NSS 50, 55 and 61 conducted in 1993/94, 1999/00 and 200/05) and a two-equation system of budget shares and unit values that attempts to correct for quality and measurement error. Second, we pool data from the most recent nine rounds of NSS (NSS 55-57, 59-64, conducted between 1999/00 to 2007/08). Our analyses of single and repeated cross-sections yield own-price elasticity for bidis that are roughly in keeping with existing evidence. We find that a 10% increase in bidi prices would reduce the demand for bidis by about 6 to 9.5%. We find, however, that own-price elasticity for cigarettes in India is substantially larger than previously thought. Our estimates suggest that cigarette users are at least as responsive as bidi users to price changes. On the whole, our analyses suggest that low SES households are likely more responsive to price changes than high SES households. Our analyses also uncovers important and policy-relevant cross-prices effects. Findings from this study provide additional evidence of the effectiveness of tobacco prices at reducing tobacco use.
Handle: RePEc:nbr:nberwo:17580
Template-Type: ReDIF-Paper 1.0
Title: The Determinants and Long-term Projections of Saving Rates in Developing Asia
Classification-JEL: D91; E21; G10; J11
Author-Name: Charles Yuji Horioka
Author-Person: pho41
Author-Name: Akiko Terada-Hagiwara
Author-Person: pha183
Note: AG IFM
Number: 17581
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17581
File-URL: http://www.nber.org/papers/w17581.pdf
File-Format: application/pdf
Publication-Status: published as Horioka, Charles Yuji & Terada-Hagiwara, Akiko, 2012. "The determinants and long-term projections of saving rates in Developing Asia," Japan and the World Economy, Elsevier, vol. 24(2), pages 128-137.
Abstract: In this paper, we present data on trends over time in domestic saving rates in twelve economies in developing Asia during the 1966-2007 period and analyze the determinants of these trends. We find that domestic saving rates in developing Asia have, in general, been high and rising but that there have been substantial differences from economy to economy and that the main determinants of these trends appear to have been the age structure of the population (especially the aged dependency ratio), income levels, and the level of financial sector development. We then project future trends in domestic saving rates in developing Asia for the 2011-2030 period based on our estimation results and find that the domestic saving rate in developing Asia as a whole will remain roughly constant during the next two decades despite rapid population aging in some economies in developing Asia because population aging will occur much later in other economies and because the negative impact of population aging on the domestic saving rate will be largely offset by the positive impact of higher income levels.
Handle: RePEc:nbr:nberwo:17581
Template-Type: ReDIF-Paper 1.0
Title: Feedback Effects and the Limits to Arbitrage
Classification-JEL: G14; G34
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Itay Goldstein
Author-Name: Wei Jiang
Author-Person: pji52
Note: AP CF
Number: 17582
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17582
File-URL: http://www.nber.org/papers/w17582.pdf
File-Format: application/pdf
Abstract: This paper identifies a limit to arbitrage that arises from the fact that a firm's fundamental value is endogenous to the act of exploiting the arbitrage. Trading on private information reveals this information to managers and helps them improve their real decisions, in turn enhancing fundamental value. While this increases the profitability of a long position, it reduces the profitability of a short position -- selling on negative information reveals that firm prospects are poor, causing the manager to cancel investment. Optimal abandonment increases firm value and may cause the speculator to realize a loss on her initial sale. Thus, investors may strategically refrain from trading on negative information, and so bad news is incorporated more slowly into prices than good news. The effect has potentially important real consequences -- if negative information is not incorporated into stock prices, negative-NPV projects may not be abandoned, leading to overinvestment.
Handle: RePEc:nbr:nberwo:17582
Template-Type: ReDIF-Paper 1.0
Title: Credit Crises, Precautionary Savings, and the Liquidity Trap
Classification-JEL: E2; E4
Author-Name: Veronica Guerrieri
Author-Person: pgu220
Author-Name: Guido Lorenzoni
Author-Person: plo185
Note: EFG ME
Number: 17583
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17583
File-URL: http://www.nber.org/papers/w17583.pdf
File-Format: application/pdf
Publication-Status: published as Veronica Guerrieri & Guido Lorenzoni, 2017. "Credit Crises, Precautionary Savings, and the Liquidity Trap*," The Quarterly Journal of Economics, vol 132(3), pages 1427-1467.
Abstract: We study the effects of a credit crunch on consumer spending in a heterogeneous-agent incomplete-market model. After an unexpected permanent tightening in consumers' borrowing capacity, some consumers are forced to deleverage and others increase their precautionary savings. This depresses interest rates, especially in the short run, and generates an output drop, even with flexible prices. The output drop is larger with nominal rigidities, if the zero lower bound prevents the interest rate from adjusting downwards. Adding durable goods to the model, households take larger debt positions and the output response may be larger.
Handle: RePEc:nbr:nberwo:17583
Template-Type: ReDIF-Paper 1.0
Title: Rising Labor Productivity during the 2008-9 Recession
Classification-JEL: E24; E32; J22
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG PE PR
Number: 17584
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17584
File-URL: http://www.nber.org/papers/w17584.pdf
File-Format: application/pdf
Abstract: During the recession of 2008-9, labor hours fell sharply, while wages and output per hour rose. Some, but not all, of the productivity and wage increase can be attributed to changing quality of the workforce. The rest of the increase appears to be due to increases in production inputs other than labor hours. All of these findings, plus the drop in consumer expenditure, are consistent with the hypothesis that labor market "distortions" were increasing during the recession and have remained in place during the slow "recovery." Producers appear to be trying to continue production with less labor, rather than cutting labor hours as a means of cutting output.
Handle: RePEc:nbr:nberwo:17584
Template-Type: ReDIF-Paper 1.0
Title: Charitable Giving When Altruism and Similarity are Linked
Classification-JEL: D03; D64; H31
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: PE
Number: 17585
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17585
File-URL: http://www.nber.org/papers/w17585.pdf
File-Format: application/pdf
Publication-Status: published as Rotemberg, Julio J., 2014. "Charitable giving when altruism and similarity are linked," Journal of Public Economics, Elsevier, vol. 114(C), pages 36-49.
Abstract: This paper presents a model in which anonymous charitable donations are rationalized by two human tendencies drawn from the psychology literature. The first is people's disproportionate disposition to help those they agree with while the second is the dependence of peoples' self-esteem on the extent to which they perceive that others agree with them. Government spending crowds out the charity that ensues from these forces only modestly. Moreover, people's donations tend to rise when others donate. In some equilibria of the model, poor people give little because they expect donations to come mainly from richer individuals. In others, donations by poor individuals constitute a large fraction of donations and this raises the incentive for poor people to donate. The model predicts that, under some circumstances, charities with identical objectives can differ by obtaining funds from distinct donor groups. The model then provides an interpretation for situations in which the number of charities rises while total donations are stagnant.
Handle: RePEc:nbr:nberwo:17585
Template-Type: ReDIF-Paper 1.0
Title: Sovereign CDS and Bond Pricing Dynamics in the Euro-area
Classification-JEL: F34; G12; G15
Author-Name: Giorgia Palladini
Author-Name: Richard Portes
Author-Person: ppo132
Note: AP IFM
Number: 17586
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17586
File-URL: http://www.nber.org/papers/w17586.pdf
File-Format: application/pdf
Abstract: This analysis tests the price discovery relationship between sovereign CDS premia and bond yield spreads on the same reference entity. The theoretical no-arbitrage relationship between the two credit spreads is confronted with daily data from six Euro-area countries over the period 2004-2011. As a first step, the supposed non stationarity of the two series is verified. Then, we examine whether the non-stationary CDS and bond spreads series are bound by a cointegration relationship. Overall the cointegration analysis confirms that the two prices should be equal to each other in equilibrium, as theory predicts. Nonetheless the theoretical value [1, -1] for the cointegrating vector is rejected, meaning that in the short run the cash and synthetic market's valuation of credit risk differ to various degrees. The VECM analysis suggests that the CDS market moves ahead of the bond market in terms of price discovery. These findings are further supported by the Granger Causality Test: for most sovereigns in the sample, past values of CDS spreads help to forecast bond yield spreads. Short-run deviations from the equilibrium persist longer than it would take for participants in one market to observe the price in the other. That is consistent with the hypothesis of imperfections in the arbitrage relationship between the two markets.
Handle: RePEc:nbr:nberwo:17586
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Economics of Default Options in 401(k) Plans
Classification-JEL: D03; D14; D60; D91; J26
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Author-Name: Andrey Fradkin
Author-Name: Igor Popov
Note: PE
Number: 17587
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17587
File-URL: http://www.nber.org/papers/w17587.pdf
File-Format: application/pdf
Publication-Status: published as B. Douglas Bernheim & Andrey Fradkin & Igor Popov, 2015. "The Welfare Economics of Default Options in 401(k) Plans," American Economic Review, vol 105(9), pages 2798-2837.
Abstract: Default contribution rates for 401(k) pension plans powerfully influence workers’ choices. Potential causes include opt-out costs, procrastination, inattention, and psychological anchoring. We examine the welfare implications of defaults under each of these theories. We show how the optimal default, the magnitude of the welfare effects, and the degree of normative ambiguity depend on the behavioral model, the scope of the choice domain deemed welfare-relevant, the use of penalties for passive choice, and other 401(k) plan features. Depending on which theory and welfare perspective one adopts, virtually any default contribution rate may be optimal. Still, our analysis provides reasonably robust justifications for setting the default either at the highest contribution rate matched by the employer or – contrary to common wisdom – at zero. We also identify the types of empirical evidence needed to determine which case is applicable.
Handle: RePEc:nbr:nberwo:17587
Template-Type: ReDIF-Paper 1.0
Title: Marginal Effects in Multivariate Probit and Kindred Discrete and Count Outcome Models, with Applications in Health Economics
Classification-JEL: C35; I1
Author-Name: John Mullahy
Note: EH TWP
Number: 17588
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17588
File-URL: http://www.nber.org/papers/w17588.pdf
File-Format: application/pdf
Abstract: Estimation of marginal or partial effects of covariates x on various conditional parameters or functionals is often the main target of applied microeconometric analysis. In the specific context of probit models such estimation is straightforward in univariate models, and Greene, 1996, 1998, has extended these results to cover the case of quadrant probability marginal effects in bivariate probit models. The purpose of this paper is to extend these results to the general multivariate probit context for arbitrary orthant probabilities and to demonstrate the applicability of such extensions in contexts of interest in health economics applications. The baseline results are extended to models that condition on subvectors of y, to count data structures that derive from the probability structure of y, to multivariate ordered probit data structures, and to multinomial probit models whose marginal effects turn out to be a special case of those of the multivariate probit model. Simulations reveal that analytical formulae versus fully numerical derivatives result in a reduction in computational time as well as an increase in accuracy.
Handle: RePEc:nbr:nberwo:17588
Template-Type: ReDIF-Paper 1.0
Title: Substitution and Stigma: Evidence on Religious Competition from the Catholic Sex-Abuse Scandal
Classification-JEL: H41; Z12
Author-Name: Daniel M. Hungerman
Author-Person: phu114
Note: CH LS PE
Number: 17589
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17589
File-URL: http://www.nber.org/papers/w17589.pdf
File-Format: application/pdf
Publication-Status: published as “Substitution and Stigma: Evidence on Religious Competition from the Catholic Sex-Abuse Scandal,” the American Economic Journal: Economic Policy 5(3) (2013), 227-253.
Abstract: This paper considers substituting one charitable activity for another in the context of religious practice. I examine the impact of the Catholic Church sex-abuse scandal on both Catholic and non-Catholic religiosity. I find that the scandal led to a 2-million-member fall in the Catholic population that was compensated by an increase in non-Catholic participation and by an increase in non-affiliation. Back-of-the-envelope calculations suggest the scandal generated over 3 billion dollars in donations to non-Catholic faiths. Those substituting out of Catholicism frequently chose highly dissimilar alternatives; for example, Baptist churches gained significantly from the scandal while the Episcopal Church did not. These results challenge several theories of religious participation and suggest that regulatory policies or other shocks specific to one religious group could have important spillover effects on other religious groups.
Handle: RePEc:nbr:nberwo:17589
Template-Type: ReDIF-Paper 1.0
Title: Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles
Classification-JEL: D21; D23; G3; G31; G32
Author-Name: Antoinette Schoar
Author-Person: psc180
Author-Name: Luo Zuo
Note: CF
Number: 17590
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17590
File-URL: http://www.nber.org/papers/w17590.pdf
File-Format: application/pdf
Publication-Status: published as The Review of Financial Studies, Volume 30, Issue 5, 1 May 2017, Pages 1425–1456
Abstract: We show that economic conditions when managers enter the labor market have long-run effects on their career paths and managerial styles. Managers who began their careers during recessions become CEOs more quickly, but at smaller firms. They also have more conservative styles, such as lower investment in capital expenditures and research and development, more cost cutting, and lower leverage and working capital needs. These recession effects appear to be largely driven by the characteristics of the CEO’s first job (recession CEOs tend to start in smaller or private firms), which suggests that the early work environment is important to the formation and selection of managers.
Handle: RePEc:nbr:nberwo:17590
Template-Type: ReDIF-Paper 1.0
Title: Does School Autonomy Make Sense Everywhere? Panel Estimates from PISA
Classification-JEL: H4; I20; I25; J24; O15
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Susanne Link
Author-Person: pli704
Author-Name: Ludger Woessmann
Author-Person: pwo29
Note: ED LS PE POL
Number: 17591
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17591
File-URL: http://www.nber.org/papers/w17591.pdf
File-Format: application/pdf
Publication-Status: published as Hanushek, Eric A. & Link, Susanne & Woessmann, Ludger, 2013. "Does school autonomy make sense everywhere? Panel estimates from PISA," Journal of Development Economics, Elsevier, vol. 104(C), pages 212-232.
Abstract: Decentralization of decision-making is among the most intriguing recent school reforms, in part because countries went in opposite directions over the past decade and because prior evidence is inconclusive. We suggest that autonomy may be conducive to student achievement in well-developed systems but detrimental in low-performing systems. We construct a panel dataset from the four waves of international PISA tests spanning 2000-2009, comprising over one million students in 42 countries. Relying on panel estimation with country fixed effects, we identify the effect of school autonomy from within-country changes in the average share of schools with autonomy over key elements of school operations. Our results show that autonomy affects student achievement negatively in developing and low-performing countries, but positively in developed and high-performing countries. These results are unaffected by a wide variety of robustness and specification tests, providing confidence in the need for nuanced application of reform ideas.
Handle: RePEc:nbr:nberwo:17591
Template-Type: ReDIF-Paper 1.0
Title: The Leverage Effect Puzzle: Disentangling Sources of Bias at High Frequency
Classification-JEL: C22; G12
Author-Name: Yacine Ait-Sahalia
Author-Person: pai23
Author-Name: Jianqing Fan
Author-Person: pfa165
Author-Name: Yingying Li
Note: AP
Number: 17592
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17592
File-URL: http://www.nber.org/papers/w17592.pdf
File-Format: application/pdf
Publication-Status: published as Aït-Sahalia, Yacine & Fan, Jianqing & Li, Yingying, 2013. "The leverage effect puzzle: Disentangling sources of bias at high frequency," Journal of Financial Economics, Elsevier, vol. 109(1), pages 224-249.
Abstract: The leverage effect refers to the generally negative correlation between an asset return and its changes of volatility. A natural estimate consists in using the empirical correlation between the daily returns and the changes of daily volatility estimated from high-frequency data. The puzzle lies in the fact that such an intuitively natural estimate yields nearly zero correlation for most assets tested, despite the many economic reasons for expecting the estimated correlation to be negative. To better understand the sources of the puzzle, we analyze the different asymptotic biases that are involved in high frequency estimation of the leverage effect, including biases due to discretization errors, to smoothing errors in estimating spot volatilities, to estimation error, and to market microstructure noise. This decomposition enables us to propose novel bias correction methods for estimating the leverage effect.
Handle: RePEc:nbr:nberwo:17592
Template-Type: ReDIF-Paper 1.0
Title: The External Impact of China's Exchange Rate Policy: Evidence from Firm Level Data
Classification-JEL: F0; F3; F30; F31
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Hui Tong
Author-Person: pto159
Note: IFM
Number: 17593
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17593
File-URL: http://www.nber.org/papers/w17593.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen & Hui Tong, 2011. "The External Impact of China's Exchange Rate Policy: Evidence from Firm Level Data," IMF Working Papers, vol 11(155).
Abstract: We examine the impact of renminbi revaluation on firm valuations, considering two surprise announcements of changes in China's exchange rate policy in 2005 and 2010 and data on 6,050 firms in 44 countries. Renminbi appreciation has a positive effect on firms exporting to China but little positive or even a negative impact on those providing inputs for China's processing exports. Stock prices rise for firms competing with China in their home market while falling for firms importing Chinese products with large imported-input content. Renminbi appreciation also reduces the valuation of financially-constrained firms, particularly in more financially integrated countries.
Handle: RePEc:nbr:nberwo:17593
Template-Type: ReDIF-Paper 1.0
Title: Trade Prices and the Global Trade Collapse of 2008-2009
Classification-JEL: E3; F1; F4
Author-Name: Gita Gopinath
Author-Name: Oleg Itskhoki
Author-Person: pit14
Author-Name: Brent Neiman
Author-Person: pne85
Note: EFG IFM ITI ME
Number: 17594
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17594
File-URL: http://www.nber.org/papers/w17594.pdf
File-Format: application/pdf
Publication-Status: published as “Trade Prices and the Global Trade Collapse of 2008-09” (with Oleg Itskhoki and Brent Neiman) IMF Economic Review, September 2012, Volume 60
Abstract: We document the behavior of trade prices during the Great Trade Collapse of 2008-2009 using transaction-level data from the U.S. Bureau of Labor Statistics. First, we find that differentiated manufactures exhibited marked stability in their trade prices during the large decline in their trade volumes. Prices of non-differentiated manufactures, by contrast, declined sharply. Second, while the trade collapse was much steeper among differentiated durable manufacturers than among non-durables, prices in both categories barely changed. Third, the frequency and magnitude of price adjustments at the product level changed with the onset of the crisis, consistent with a state-dependent view of price adjustment. The quantitative magnitudes of the changes, however, were not pronounced enough to affect aggregate prices. Our findings present a challenge for theories of the trade collapse based on cost shocks specific to traded goods that work through prices.
Handle: RePEc:nbr:nberwo:17594
Template-Type: ReDIF-Paper 1.0
Title: Gold Sterilization and the Recession of 1937-38
Classification-JEL: E5; N12
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: DAE ME
Number: 17595
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17595
File-URL: http://www.nber.org/papers/w17595.pdf
File-Format: application/pdf
Publication-Status: published as Financial History Review / Volume 19 / Issue 03 / December 2012, pp 249 - 267 Copyright © European Association for Banking and Financial History e.V. 2012 DOI: http://dx.doi.org/10.1017/S0968565012000236 (About DOI), Published online: 31 October 2012
Abstract: The Recession of 1937-38 is often cited as illustrating the dangers of withdrawing fiscal and monetary stimulus too early in a weak recovery. Yet our understanding of this severe downturn is incomplete: existing studies find that changes in fiscal policy were small in comparison to the magnitude of the downturn and that higher reserve requirements were not binding on banks. This paper focuses on a neglected change in monetary policy, the sterilization of gold inflows during 1937, and finds that it exerted a powerful contractionary force during this period. The transmission of this monetary shock to the real economy appears to have worked through lower asset (equity) prices and higher interest rates.
Handle: RePEc:nbr:nberwo:17595
Template-Type: ReDIF-Paper 1.0
Title: Local Industrial Structures and Female Entrepreneurship in India
Classification-JEL: J16; L10; L26; L60; L80; M13; O10; R00; R10; R12
Author-Name: Ejaz Ghani
Author-Person: pgh75
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Stephen D. O'Connell
Author-Person: poc22
Note: LS PR
Number: 17596
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17596
File-URL: http://www.nber.org/papers/w17596.pdf
File-Format: application/pdf
Publication-Status: published as Ejaz Ghani & William R. Kerr & Stephen D. O'Connell, 2013. "Local industrial structures and female entrepreneurship in India," Journal of Economic Geography, Oxford University Press, vol. 13(6), pages 929-964, November.
Abstract: We analyze the spatial determinants of female entrepreneurship in India in the manufacturing and services sectors. We focus on the presence of incumbent female-owned businesses and their role in promoting higher subsequent female entrepreneurship relative to male entrepreneurship. We find evidence of agglomeration economies in both sectors, where higher female ownership among incumbent businesses within a district-industry predicts a greater share of subsequent entrepreneurs will be female. Moreover, higher female ownership of local businesses in related industries (e.g., those sharing similar labor needs, industries related via input-output markets) predict greater relative female entry rates even after controlling for the focal district-industry's conditions. The core patterns hold when using local industrial conditions in 1994 to instrument for incumbent conditions in 2000-2005. The results highlight that the traits of business owners in incumbent industrial structures influence the types of entrepreneurs supported.
Handle: RePEc:nbr:nberwo:17596
Template-Type: ReDIF-Paper 1.0
Title: Anticipating the Great Depression? Gustav Cassel's Analysis of the Interwar Gold Standard
Classification-JEL: E5; N1
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: DAE IFM ME
Number: 17597
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17597
File-URL: http://www.nber.org/papers/w17597.pdf
File-Format: application/pdf
Publication-Status: published as You have free access to this content Who Anticipated the Great Depression? Gustav Cassel versus Keynes and Hayek on the Interwar Gold Standard Journal of Money, Credit and Banking Volume 46, Issue 1, February 2014, Pages: 199–227, DOUGLAS A. IRWIN Article first published online : 20 JAN 2014, DOI: 10.1111/jmcb.12102
Abstract: The intellectual response to the Great Depression is often portrayed as a battle between the ideas of Friedrich Hayek and John Maynard Keynes. Yet both the Austrian and the Keynesian interpretations of the Depression were incomplete. Austrians could explain how a country might get into a depression (bust following an investment boom) but not how to get out of one (liquidation). Keynesians could explain how a country might get out of a depression (government spending on public works) but not how it got into one (animal spirits). By contrast, the monetary approach of economists such as Gustav Cassel has been ignored. As early as 1920, Cassel warned that mismanagement of the gold standard could lead to a severe depression. Cassel not only explained how this could occur, but his explanation anticipates the way that scholars today describe how the Great Depression actually occurred. Unlike Keynes or Hayek, Cassel explained both how a country could get into a depression (deflation due to tight monetary policies) and how it could get out of one (monetary expansion).
Handle: RePEc:nbr:nberwo:17597
Template-Type: ReDIF-Paper 1.0
Title: Coping with Shocks and Shifts: The Multilateral Trading System in Historical Perspective
Classification-JEL: F02; F13
Author-Name: Douglas A. Irwin
Author-Person: pir25
Author-Name: Kevin H. O'Rourke
Author-Person: por7
Note: ITI
Number: 17598
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17598
File-URL: http://www.nber.org/papers/w17598.pdf
File-Format: application/pdf
Publication-Status: published as Coping with Shocks and Shifts: The Multilateral Trading System in Historical Perspective, Douglas A. Irwin, Kevin H. O'Rourke. in Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Feenstra and Taylor. 2014
Abstract: This paper provides a historical look at how the multilateral trading system has coped with the challenge of shocks and shifts. By shocks we mean sudden jolts to the world economy in the form of financial crises and deep recessions, or wars and political conflicts. By shifts we mean slow-moving, long-term changes in comparative advantage or shifts in the geopolitical equilibrium that force economies to undergo disruptive and potentially painful adjustments. We conclude that most shocks (financial crises and regional wars) have had relatively little effect on trade policy, but that shifts pose a greater challenge to the system of open, multilateral trade.
Handle: RePEc:nbr:nberwo:17598
Template-Type: ReDIF-Paper 1.0
Title: Should Derivatives be Privileged in Bankruptcy?
Classification-JEL: G21; G33
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Martin Oehmke
Note: CF
Number: 17599
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17599
File-URL: http://www.nber.org/papers/w17599.pdf
File-Format: application/pdf
Publication-Status: published as PATRICK BOLTON & MARTIN OEHMKE, 2015. "Should Derivatives Be Privileged in Bankruptcy?," The Journal of Finance, vol 70(6), pages 2353-2394.
Abstract: Derivative contracts, swaps, and repos enjoy "super-senior" status in bankruptcy: they are exempt from the automatic stay on debt and collateral collection that applies to virtually all other claims. We propose a simple corporate finance model to assess the effect of this exemption on firms' cost of borrowing and incentives to engage in swaps and derivatives transactions. Our model shows that while derivatives are value-enhancing risk management tools, super-seniority for derivatives can lead to inefficiencies: collateralization and effective seniority of derivatives shifts credit risk to the firm's creditors, even though this risk could be borne more efficiently by derivative counterparties. In addition, because super-senior derivatives dilute existing creditors, they may lead firms to take on derivative positions that are too large from a social perspective. Hence, derivatives markets may grow inefficiently large in equilibrium.
Handle: RePEc:nbr:nberwo:17599
Template-Type: ReDIF-Paper 1.0
Title: The Impact of the Macroeconomy on Health Insurance Coverage: Evidence from the Great Recession
Classification-JEL: E32; I13; J32; J6
Author-Name: John Cawley
Author-Person: pca6
Author-Name: Asako S. Moriya
Author-Name: Kosali I. Simon
Author-Person: psi314
Note: CH EFG EH LS PE
Number: 17600
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17600
File-URL: http://www.nber.org/papers/w17600.pdf
File-Format: application/pdf
Publication-Status: published as Cawley, John, Asako S. Moriya, and Kosali Simon. 2015. "The Impact of the Macroeconomy on Health Insurance Coverage: Evidence from the Great Recession." Health Economics, 24(2): 206-223.
Abstract: This paper investigates the impact of the macroeconomy on the health insurance coverage of Americans using panel data from the Survey of Income and Program Participation (SIPP) for 2004-2010, a period that includes the Great Recession of 2007-09. We find that a one percentage point increase in the state unemployment rate is associated with a 1.67 percentage point (2.12%) reduction in the probability that men have health insurance; this effect is strongest among college-educated, white, and older (50-64 year old) men. For women and children, health insurance coverage is not significantly correlated with the unemployment rate, which may be the result of public health insurance acting as a social safety net. Compared to the previous recession, the health insurance coverage of men is more sensitive to the unemployment rate, which may be due to the nature of the Great Recession.
Handle: RePEc:nbr:nberwo:17600
Template-Type: ReDIF-Paper 1.0
Title: Resource Windfalls, Political Regimes, and Political Stability
Classification-JEL: E0; F0
Author-Name: Francesco Caselli
Author-Person: pca205
Author-Name: Andrea Tesei
Author-Person: pte191
Note: EFG POL
Number: 17601
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17601
File-URL: http://www.nber.org/papers/w17601.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Caselli & Andrea Tesei, 2016. "Resource Windfalls, Political Regimes, and Political Stability," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 573-590, July.
Abstract: We study theoretically and empirically whether natural resource windfalls affect political regimes. We document the following regularities. Natural resource windfalls have no effect on the political system when they occur in democracies. However, windfalls have significant political consequences in autocracies. In particular, when an autocratic country receives a positive shock to its flow of resource rents it responds by becoming even more autocratic. Furthermore, there is heterogeneity in the response of autocracies. In deeply entrenched autocracies the effect of windfalls on politics is virtually nil, while in moderately entrenched autocracies windfalls significantly exacerbate the autocratic nature of the political system. To frame the empirical work we present a simple model in which political incumbents choose the degree of political contestability by deciding how much to spend on vote-buying, bullying, or outright repression. Potential challengers decide whether or not to try to unseat the incumbent and replace him. The model uncovers a reason for the asymmetric impact of resource windfalls on democracies and autocracies, as well as the differential impact within autocratic regimes.
Handle: RePEc:nbr:nberwo:17601
Template-Type: ReDIF-Paper 1.0
Title: The Role of Information in Competitive Experimentation
Classification-JEL: D83; D92; O31
Author-Name: Ufuk Akcigit
Author-Person: pak203
Author-Name: Qingmin Liu
Note: EH PR TWP
Number: 17602
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17602
File-URL: http://www.nber.org/papers/w17602.pdf
File-Format: application/pdf
Abstract: Technological progress is typically a result of trial-and-error research by competing firms. While some research paths lead to the innovation sought, others result in dead ends. Because firms benefit from their competitors working in the wrong direction, they do not reveal their dead-end findings. Time and resources are wasted on projects that other firms have already found to be dead ends. Consequently, technological progress is slowed down, and the society benefits from innovations with delay, if ever. To study this prevalent problem, we build a tractable two-arm bandit model with two competing firms. The risky arm could potentially lead to a dead end and the safe arm introduces further competition to make firms keep their dead-end findings private. We characterize the equilibrium in this decentralized environment and show that the equilibrium necessarily entails significant efficiency losses due to wasteful dead-end replication and a flight to safety - an early abandonment of the risky project. Finally, we design a dynamic mechanism where firms are incentivized to disclose their actions and share their private information in a timely manner. This mechanism restores efficiency and suggests a direction for welfare improvement.
Handle: RePEc:nbr:nberwo:17602
Template-Type: ReDIF-Paper 1.0
Title: Size Inequality, Coordination Externalities and International Trade Agreements
Classification-JEL: F13; F42; K33; O1; O24
Author-Name: Nuno Limao
Author-Person: pli22
Author-Name: Kamal Saggi
Author-Person: psa191
Note: ITI
Number: 17603
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17603
File-URL: http://www.nber.org/papers/w17603.pdf
File-Format: application/pdf
Publication-Status: published as Limão, Nuno & Saggi, Kamal, 2013. "Size inequality, coordination externalities and international trade agreements," European Economic Review, Elsevier, vol. 63(C), pages 10-27.
Abstract: Developing countries now account for a significant fraction of both world trade and two thirds of the membership of the World Trade Organization (WTO). However, many are still individually small and thus have a limited ability to bilaterally extract and enforce trade concessions from larger developed economies even though as a group they would be able to do so. We show that this coordination externality generates asymmetric outcomes under agreements that rely on bilateral threats of trade retaliation. such as the WTO. but not under agreements extended to include certain financial instruments. In particular, we find that an extended agreement generates improvements in global efficiency and equity if it Includes the exchange of bonds prior to trading but not if it relies solely on ex-post fines. Moreover, a combination of bonds and fines generates similar improvements even if small countries are subject to financial constraints that prevent them from posting bonds.
Handle: RePEc:nbr:nberwo:17603
Template-Type: ReDIF-Paper 1.0
Title: Skill Biased Heterogeneous Firms, Trade Liberalization, and the Skill Premium
Classification-JEL: F1; F16; J3; J31
Author-Name: James Harrigan
Author-Person: pha151
Author-Name: Ariell Reshef
Author-Person: pre248
Note: ITI LS
Number: 17604
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17604
File-URL: http://www.nber.org/papers/w17604.pdf
File-Format: application/pdf
Publication-Status: published as James Harrigan & Ariell Reshef, 2015. "Skill-biased heterogeneous firms, trade liberalization and the skill premium," Canadian Journal of Economics/Revue canadienne d'économique, vol 48(3), pages 1024-1066.
Abstract: We propose a theory that rising globalization and rising wage inequality are related because trade liberalization raises the demand facing highly competitive skill-intensive firms. In our model, only the lowest-cost firms participate in the global economy exactly along the lines of Melitz (2003). In addition to differing in their productivity, firms differ in their skill intensity. We model skill-biased technology as a correlation between skill intensity and technological acumen, and we estimate this correlation to be large using firm-level data from Chile in 1995. A fall in trade costs leads to both greater trade volumes and an increase in the relative demand for skill, as the lowest-cost/most-skilled firms expand to serve the export market while less skill-intensive non-exporters retrench in the face of increased import competition. This mechanism works regardless of factor endowment differences, so we provide an explanation for why globalization and wage inequality move together in both skill-abundant and skill-scarce countries. In our model countries are net exporters of the services of their abundant factor, but there are no Stolper- Samuelson effects because import competition affects all domestic firms equally.
Handle: RePEc:nbr:nberwo:17604
Template-Type: ReDIF-Paper 1.0
Title: Skill-biased Technological Change, Earnings of Unskilled Workers, and Crime
Classification-JEL: J23; J24; J31; K42; O3
Author-Name: Naci H. Mocan
Author-Person: pmo270
Author-Name: Bulent Unel
Author-Person: pun11
Note: CH EH LE LS
Number: 17605
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17605
File-URL: http://www.nber.org/papers/w17605.pdf
File-Format: application/pdf
Publication-Status: published as Mocan Naci & Unel Bulent, 2017. "Skill-Biased Technological Change, Earnings of Unskilled Workers, and Crime," Review of Law & Economics, De Gruyter, vol. 13(3), pages 1-46, November.
Abstract: This paper investigates the impact of unskilled workers' earnings on crime. Following the literature on wage inequality and skill-biased technological change, we employ CPS data to create state-year as well as state-year-and (broad) industry specific measures of skill-biased technological change, which are then used as instruments for unskilled workers' earnings in crime regressions. Regressions that employ state panels reveal that technology-induced variations in unskilled workers' earnings impact property crime with an elasticity of -1, but that wages have no impact on violent crime. The paper also estimates, for the first time in this literature, structural crime equations using micro panel data from NLSY97 and instrumenting real wages of young workers. Using state-year-industry specific technology shocks as instruments yields elasticities that are in the neighborhood of -2 for most types of crime, which is markedly larger than previous estimates. In both data sets there is evidence for asymmetric impact of unskilled workers' earnings on crime. A decline in earnings has a larger effect on crime in comparison to an increase in earnings by the same absolute value.
Handle: RePEc:nbr:nberwo:17605
Template-Type: ReDIF-Paper 1.0
Title: Contracting With Synergies
Classification-JEL: D86; J31; J33
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Itay Goldstein
Author-Name: John Y. Zhu
Author-Person: pzh923
Note: CF LE LS
Number: 17606
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17606
File-URL: http://www.nber.org/papers/w17606.pdf
File-Format: application/pdf
Abstract: This paper studies optimal contracting under synergies. We define influence as the extent to which effort by one agent reduces a colleague's marginal cost of effort, and synergy to be the sum of the (unidimensional) influence parameters across a pair of agents. In a two-agent model, effort levels are equal even if influence is asymmetric. The optimal effort level depends only on total synergy and not individual influence parameters. An increase in synergy raises total effort and total pay, consistent with strong equity incentives in small firms, including among low-level employees. The influence parameters matter only for individual pay. Pay is asymmetric, with the more influential agent being paid more, even though the level and productivity of effort are both symmetric. With three agents, effort levels differ and are higher for more synergistic agents. An increase in the synergy between two agents can lead to the third agent being excluded from the team, even if his productivity is unchanged. This has implications for optimal team composition and firm boundaries. Agents that influence a greater number of colleagues receive higher wages, consistent with the salary differential between CEOs and divisional managers.
Handle: RePEc:nbr:nberwo:17606
Template-Type: ReDIF-Paper 1.0
Title: Economic History or History of Economics? A Review Essay on Sylvia Nasar's Grand Pursuit: the Story of Economic Genius
Classification-JEL: A11; B20
Author-Name: Orley C. Ashenfelter
Author-Person: pas9
Note: EFG LS
Number: 17607
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17607
File-URL: http://www.nber.org/papers/w17607.pdf
File-Format: application/pdf
Publication-Status: published as “Economic history or history of economics?” Review of Grand Pursuit: The Story of Economic Genius, Center for Economic Policy Studies, Working Papers: 1365. Journal of Economic Literature, March 2012, 50(1), 96-102.
Abstract: In this essay I review Sylvia Nasar's long awaited new history of economics, Grand Pursuit. I describe how the book is really an economic history of the period from 1850-1950, with distinguished economists' stories inserted in appropriate places. Nasar's goal is to show how economists work, but also to show that they are people too--with more than enough warts and foibles to show they are human! I contrast the general view of the role of economics in Grand Pursuit with Robert Heilbroner's remarkably different conception in The Worldly Philosophers. I also discuss more generally the question of why economists might be interested in their history at all.
Handle: RePEc:nbr:nberwo:17607
Template-Type: ReDIF-Paper 1.0
Title: Can Governments Do It Better? Merger Mania and Hospital Outcomes in the English NHS
Classification-JEL: I11; I18; L13; L32
Author-Name: Martin Gaynor
Author-Person: pga1
Author-Name: Mauro Laudicella
Author-Name: Carol Propper
Author-Person: ppr36
Note: EH
Number: 17608
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17608
File-URL: http://www.nber.org/papers/w17608.pdf
File-Format: application/pdf
Publication-Status: published as Gaynor, Martin & Laudicella, Mauro & Propper, Carol, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," Journal of Health Economics, Elsevier, vol. 31(3), pages 528-543.
Abstract: The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital merger. These mergers are initiated by a regulator, acting on behalf of the public, and justified on the grounds that merger will improve outcomes. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. In addition, mergers reduce the scope for competition between hospitals.
Handle: RePEc:nbr:nberwo:17608
Template-Type: ReDIF-Paper 1.0
Title: Immigrant-Native Substitutability: The Role of Language Ability
Classification-JEL: J24; J31; J61
Author-Name: Ethan G. Lewis
Author-Person: ple579
Note: LS
Number: 17609
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17609
File-URL: http://www.nber.org/papers/w17609.pdf
File-Format: application/pdf
Publication-Status: published as “Immigrant-Native Substitutability and The Role of Language” in Immigration, Poverty, and Socioeconomic Inequality, David Card and Steven Raphael, eds. New York: Russell Sage Foundation, 2013, pp 60-97.
Abstract: Wage evidence suggests that immigrant workers are imperfectly substitutable for native-born workers with similar education and experience. Using U.S. Censuses and recent American Community Survey data, I ask to what extent differences in language skills drive this. I find they are important. I estimate that the response of immigrants' relative wages to immigration is concentrated among immigrants with poor English skills. Similarly, immigrants who arrive at young ages, as adults, both have stronger English skills and exhibit greater substitutability for native-born workers than immigrants who arrive older. In U.S. markets where Spanish speakers are concentrated, I find a "Spanish-speaking" labor market emerges: in such markets, the return to speaking English is low, and the wages of Spanish and non-Spanish speakers respond most strongly to skill ratios in their own language group. Finally, in Puerto Rico, where almost all workers speak Spanish, I find immigrants and natives are perfect substitutes. The implications for immigrant poverty and regional settlement patterns are analyzed.
Handle: RePEc:nbr:nberwo:17609
Template-Type: ReDIF-Paper 1.0
Title: Permanent Income and the Black-White Test Score Gap
Classification-JEL: I21; I24; J15
Author-Name: Jesse Rothstein
Author-Person: pro180
Author-Name: Nathan Wozny
Author-Person: pwo279
Note: CH ED
Number: 17610
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17610
File-URL: http://www.nber.org/papers/w17610.pdf
File-Format: application/pdf
Publication-Status: published as Jesse Rothstein & Nathan Wozny, 2013. "Permanent Income and the Black-White Test Score Gap," Journal of Human Resources, University of Wisconsin Press, vol. 48(3), pages 510-544.
Abstract: Analysts often examine the black-white test score gap conditional on family income. Typically only a current income measure is available. We argue that the gap conditional on permanent income is of greater interest, and we describe a method for identifying this gap using an auxiliary data set to estimate the relationship between current and permanent income. Current income explains only about half as much of the black-white test score gap as does permanent income, and the remaining gap in math achievement among families with the same permanent income is only 0.2 to 0.3 standard deviations in two commonly used data sets. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in 3rd grade shrinks below 0.15 standard deviations, less than half of what is found with their controls.
Handle: RePEc:nbr:nberwo:17610
Template-Type: ReDIF-Paper 1.0
Title: Hedonic Prices and Implicit Markets: Estimating Marginal Willingness to Pay for Differentiated Products Without Instrumental Variables
Classification-JEL: Q51; R0
Author-Name: Kelly C. Bishop
Author-Person: pbi276
Author-Name: Christopher Timmins
Note: EEE PE
Number: 17611
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17611
File-URL: http://www.nber.org/papers/w17611.pdf
File-Format: application/pdf
Abstract: The hedonic model of Rosen (1974) has become a workhorse for valuing the characteristics of differentiated products despite a number of well-documented econometric problems. For example, Bartik (1987) and Epple (1987) each describe a source of endogeneity in the second stage of Rosen's procedure that has proven difficult to overcome. In this paper, we propose a new approach for recovering the marginal willingness-to-pay function that altogether avoids these endogeneity problems. Applying this estimator to data on large changes in violent crime rates, we find that marginal willingness-to-pay increases by ten cents with each additional violent crime per 100,000 residents.
Handle: RePEc:nbr:nberwo:17611
Template-Type: ReDIF-Paper 1.0
Title: Risk Sharing through Capital Gains
Classification-JEL: F21; F36
Author-Name: Faruk Balli
Author-Person: pba557
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Bent Sorensen
Author-Person: pso113
Note: IFM
Number: 17612
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17612
File-URL: http://www.nber.org/papers/w17612.pdf
File-Format: application/pdf
Publication-Status: published as Faruk Balli & Sebnem Kalemli-Ozcan & Bent E. Sørensen, 2012. "Risk sharing through capital gains," Canadian Journal of Economics/Revue canadienne d'économique, vol 45(2), pages 472-492.
Abstract: We estimate channels of international risk sharing between European Monetary Union (EMU), European Union, and other OECD countries 1992-2007. We focus on risk sharing through savings, factor income flows, and capital gains. Risk sharing through factor income and capital gains was close to zero before 1999 but has increased since then. Risk sharing from capital gains, at about 6 percent, is higher than risk sharing from factor income flows for European Union countries and OECD countries. Risk sharing from factor income flows is higher for Euro zone countries, at 14 percent, reflecting increased international asset and liability holdings in the Euro area.
Handle: RePEc:nbr:nberwo:17612
Template-Type: ReDIF-Paper 1.0
Title: Logical Implications of GASB's Methodology for Valuing Pension Liabilities
Classification-JEL: H55
Author-Name: Robert Novy-Marx
Note: AP PE
Number: 17613
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17613
File-URL: http://www.nber.org/papers/w17613.pdf
File-Format: application/pdf
Publication-Status: published as Novy-Marx, Robert, “Logical Implications of GASB’s Methodology for Valuing Pension Liabilities,” Financial Analysts Journal, 69(1), 2013, 26-32.
Abstract: It is well known that the funding status of state and local government defined benefit pension plans, as measured by the accounting methodology prescribed by the Governmental Accounting Standards Board (GASB), improves when the plans take on more investment risk. This paper documents several lesser known logical implications of the GASB methodology. In particular, I show that GASB accounting is susceptible to the "Yogi Berra fallacy," under which a pizza is less filling when sliced into fewer pieces: GASB gives different "valuations" for the exact same assets and liabilities when they are partitioned differently among plans. Moreover, the marginal valuation of assets can be negative under GASB. In such cases a plan can improve its GASB funding status literally by burning money. Finally, I show that GASB's methodology is exactly equivalent to fairly valuing plan liabilities, but accounting for stocks at more than twice their traded prices, and further crediting a plan an additional dollar for each dollar of stock that it intends to buy in the future.
Handle: RePEc:nbr:nberwo:17613
Template-Type: ReDIF-Paper 1.0
Title: Household Stock Market Beliefs and Learning
Classification-JEL: C31; D12; D8
Author-Name: Gábor Kézdi
Author-Person: pke76
Author-Name: Robert J. Willis
Author-Person: pwi192
Note: AG
Number: 17614
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17614
File-URL: http://www.nber.org/papers/w17614.pdf
File-Format: application/pdf
Abstract: This paper characterizes heterogeneity of the beliefs of American households about future stock market returns, provides an explanation for that heterogeneity and establishes its relationship to stock holding behavior. We find substantial belief heterogeneity that is puzzling since households can observe the same publicly available information about the stock market. We propose a simple learning model where agents can invest in the acquisition of financial knowledge. Differential incentives to learn about the returns process can explain heterogeneity in beliefs. We check this explanation by using data on beliefs elicited as subjective probabilities and a rich set of other variables from the Health and Retirement Study. Both descriptive statistics and estimated relevant heterogeneity of the structural parameters provide support for our explanation. People with higher lifetime earnings, higher education, higher cognitive abilities, defined contribution as opposed to defined benefit pension plans, for example, possess beliefs that are considerably closer to what historical time series would imply. Our results also suggest that a substantial part of the reduced form relationship between stock holding and household characteristics is due to differences in beliefs. Our methodological contribution is estimating relevant heterogeneity of structural belief parameters from noisy survey answers to probability questions.
Handle: RePEc:nbr:nberwo:17614
Template-Type: ReDIF-Paper 1.0
Title: Time-Varying Fund Manager Skill
Classification-JEL: G00; G11; G2
Author-Name: Marcin Kacperczyk
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Author-Name: Laura Veldkamp
Author-Person: pve40
Note: AP CF
Number: 17615
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17615
File-URL: http://www.nber.org/papers/w17615.pdf
File-Format: application/pdf
Publication-Status: published as Time-Varying Fund Manager Skill, (with Stijn van Nieuwerburgh and Laura Veldkamp), 2014, Journal of Finance 69, forthcoming.
Abstract: Mutual fund managers can outperform the market by picking stocks or timing the market successfully. Previous work has estimated picking and timing skill, assuming that each manager is endowed with a fixed amount of each and found some evidence of picking skills and little evidence of timing skills among successful managers. This paper estimates skill separately in booms and recessions and finds that the extent to which managers focus on stock picking or market timing fluctuates with the state of the economy. Stock picking is more prevalent in booms, while market timing dominates in recessions. We use this finding to develop a new methodology for detecting managerial skill. The results suggest that some but not all managers have skill. We describe the characteristics of the skilled managers and show that skilled managers significantly outperform the market.
Handle: RePEc:nbr:nberwo:17615
Template-Type: ReDIF-Paper 1.0
Title: Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities
Classification-JEL: H21
Author-Name: Thomas Piketty
Author-Person: ppi17
Author-Name: Emmanuel Saez
Author-Person: psa117
Author-Name: Stefanie Stantcheva
Author-Person: pst824
Note: PE
Number: 17616
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17616
File-URL: http://www.nber.org/papers/w17616.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Piketty & Emmanuel Saez & Stefanie Stantcheva, 2014. "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 230-71, February.
Abstract: This paper presents a model of optimal labor income taxation where top incomes respond to marginal tax rates through three channels: (1) standard labor supply, (2) tax avoidance, (3) compensation bargaining. We derive the optimal top tax rate formula as a function of the three corresponding behavioral elasticities. The first elasticity (labor supply) is the sole real factor limiting optimal top tax rates. The optimal tax system should be designed to minimize the second elasticity (avoidance) through tax enforcement and tax neutrality across income forms. The optimal top tax rate increases with the third elasticity (bargaining) as bargaining efforts are zero-sum in aggregate. We provide evidence using cross-country times series macro-evidence and CEO pay micro-evidence. The macro-evidence from 18 OECD countries shows that there is a strong negative correlation between top tax rates and top 1% income shares since 1960, implying that the overall elasticity is large. However, top income share increases have not translated into higher economic growth. US CEO pay evidence shows that pay for luck is quantitatively more important when top tax rates are low. International CEO pay evidence shows that CEO pay is strongly negatively correlated with top tax rates even controlling for firm characteristics and performance, and this correlation is stronger in firms with poor governance. These results are consistent with bargaining effects playing a role in the link between top incomes and top tax rates. If bargaining effects in fact exist, optimal tax rates should be higher than commonly assumed.
Handle: RePEc:nbr:nberwo:17616
Template-Type: ReDIF-Paper 1.0
Title: The Euro and European Economic Conditions
Classification-JEL: E0
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: EFG IFM ME
Number: 17617
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17617
File-URL: http://www.nber.org/papers/w17617.pdf
File-Format: application/pdf
Publication-Status: published as The Failure of the Euro, The Foreign Affairs, January/February 2012 issue
Abstract: The creation of the euro should now be recognized as an experiment that has led to the sovereign debt crisis in several countries, the fragile condition of major European banks, the high levels of unemployment, and the large trade deficits that now exist in most Eurozone countries. Although the European Central Bank managed the euro in a way that achieved a low rate of inflation, other countries both in Europe and elsewhere have also had a decade of low inflation without incurring the costs of a monetary union. The emergence of these problems just a dozen years after the start of the euro in 1999 was not an accident or the result of bureaucratic mismanagement but the inevitable consequence of imposing a single currency on a very heterogeneous group of countries, a heterogeneity that includes not only economic structures but also fiscal traditions and social attitudes. This paper reviews (1) the reasons for these economic problems, (2) the political origins of the European Monetary Union, (3) the current attempts to solve the sovereign debt problem, (4) the long-term problem of inter-country differences of productivity growth and competitiveness, (5) the special problems of Greece and Italy, (6) and the pros and cons of a Greek departure from the Eurozone.
Handle: RePEc:nbr:nberwo:17617
Template-Type: ReDIF-Paper 1.0
Title: Diversity and Donations: The Effect of Religious and Ethnic Diversity on Charitable Giving
Classification-JEL: H41; J11; R23
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Abigail Payne
Author-Person: ppa10
Author-Name: Justin D. Smith
Author-Person: psm128
Author-Name: David Karp
Note: PE
Number: 17618
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17618
File-URL: http://www.nber.org/papers/w17618.pdf
File-Format: application/pdf
Publication-Status: published as James Andreoni & A. Abigail Payne & Justin Smith & David Karp, 2016. "Diversity and donations: The effect of religious and ethnic diversity on charitable giving," Journal of Economic Behavior & Organization, .
Abstract: We explore the effects of local ethnic and religious diversity on individual donations to private charities. Using 10-year neighborhood-level panels derived from personal tax records in Canada, we find that diversity has a detrimental effect on charitable donations. A 10 percentage point increase in ethnic diversity reduces donations by 14%, and a 10 percentage point increase in religious diversity reduces donations by 10%. The ethnic diversity effect is driven by a within-group disposition among non-minorities, and is most evident in high income, but low education areas. The religious diversity effect is driven by a within-group disposition among Catholics, and is concentrated in high income and high education areas. Despite these large effects on amount donated, we find no evidence that increasing diversity affects the fraction of households that donate. Over the period studied, ethnic diversity rises by 6 percentage points and religious diversity rises by 4 percentage points; our results suggest that charities receive about 12% less in total donations. As areas like North America continue to grow more diverse over time, our results imply that these demographic changes may have significant implications for the charitable sector.
Handle: RePEc:nbr:nberwo:17618
Template-Type: ReDIF-Paper 1.0
Title: On Graduation from Fiscal Procyclicality
Classification-JEL: E62; F41
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Author-Name: Carlos A. Végh
Author-Person: pve34
Author-Name: Guillermo Vuletin
Author-Person: pvu7
Note: IFM
Number: 17619
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17619
File-URL: http://www.nber.org/papers/w17619.pdf
File-Format: application/pdf
Publication-Status: published as Frankel, Jeffrey A. & Vegh, Carlos A. & Vuletin, Guillermo, 2013. "On graduation from fiscal procyclicality," Journal of Development Economics, Elsevier, vol. 100(1), pages 32-47.
Abstract: In the past, industrial countries have tended to pursue countercyclical or, at worst, acyclical fiscal policy. In sharp contrast, emerging and developing countries have followed procyclical fiscal policy, thus exacerbating the underlying business cycle. We show that, over the last decade, about a third of the developing world has been able to escape the procyclicality trap and actually become countercyclical. We then focus on the role played by the quality of institutions, which appears to be a key determinant of a country's ability to graduate. We show that, even after controlling for the endogeneity of institutions and other determinants of ...scal procyclicality, there is a causal link running from stronger institutions to less procyclical or more countercyclical fiscal policy.
Handle: RePEc:nbr:nberwo:17619
Template-Type: ReDIF-Paper 1.0
Title: The Long-Run Effects of the Scramble for Africa
Classification-JEL: N17; N47; O10; Z10
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Author-Name: Elias Papaioannou
Author-Person: ppa701
Note: EFG IFM POL
Number: 17620
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17620
File-URL: http://www.nber.org/papers/w17620.pdf
File-Format: application/pdf
Publication-Status: published as Stelios Michalopoulos & Elias Papaioannou, 2016. "The Long-Run Effects of the Scramble for Africa," American Economic Review, vol 106(7), pages 1802-1848.
Abstract: We examine the long-run consequences of ethnic partitioning, a neglected aspect of the Scramble for Africa, and uncover the following regularities. First, apart from the land mass and presence of water bodies, historical homelands of split and non-split groups are similar across many observable characteristics. Second, using georeferenced data on political violence, that include both state-driven conflict and violence against civilians, we find that the incidence, severity and duration of violence are higher in the historical homelands of partitioned groups. Third, we shed some light on the mechanisms showing that military interventions from neighboring countries are much more likely in the homelands of split groups. Fourth, our exploration of the status of ethnic groups in the political arena reveals that partitioned ethnicities are systematically discriminated from the national government and are more likely to participate in ethnic civil wars. Fifth, using individual-level data we document that respondents identifying with split groups have lower access to public goods and worse educational outcomes. The uncovered evidence brings in the foreground the detrimental repercussions of ethnic partitioning.
Handle: RePEc:nbr:nberwo:17620
Template-Type: ReDIF-Paper 1.0
Title: When Credit Bites Back: Leverage, Business Cycles, and Crises
Classification-JEL: C14; C52; E51; F32; F42; N10; N20
Author-Name: Òscar Jordà
Author-Person: pjo46
Author-Name: Moritz HP. Schularick
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE IFM ME
Number: 17621
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17621
File-URL: http://www.nber.org/papers/w17621.pdf
File-Format: application/pdf
Publication-Status: published as When Credit Bites Back ÒSCAR JORDÀ, MORITZ SCHULARICK andALAN M. TAYLOR Journal of Money, Credit and Banking Volume 45, Issue s2, pages 3–28, December 2013
Abstract: This paper studies the role of credit in the business cycle, with a focus on private credit overhang. Based on a study of the universe of over 200 recession episodes in 14 advanced countries between 1870 and 2008, we document two key facts of the modern business cycle: financial-crisis recessions are more costly than normal recessions in terms of lost output; and for both types of recession, more credit-intensive expansions tend to be followed by deeper recessions and slower recoveries. In additional to unconditional analysis, we use local projection methods to condition on a broad set of macroeconomic controls and their lags. Then we study how past credit accumulation impacts the behavior of not only output but also other key macroeconomic variables such as investment, lending, interest rates, and inflation. The facts that we uncover lend support to the idea that financial factors play an important role in the modern business cycle.
Handle: RePEc:nbr:nberwo:17621
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomics With Heterogeneity: A Practical Guide
Classification-JEL: E1; E13; E21; E24; E32; E6
Author-Name: Fatih Guvenen
Author-Person: pgu24
Note: AP EFG LS ME PE
Number: 17622
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17622
File-URL: http://www.nber.org/papers/w17622.pdf
File-Format: application/pdf
Publication-Status: published as Fatih Guvenen, 2011. "Macroeconomics with hetereogeneity : a practical guide," Economic Quarterly, Federal Reserve Bank of Richmond, issue 3Q, pages 255-326.
Abstract: This article reviews macroeconomic models with heterogeneous households. A key question for the relevance of these models concerns the degree to which markets are complete. This is because the existence of complete markets imposes restrictions on (i) how much heterogeneity matters for aggregate phenomena and (ii) the types of cross-sectional distributions that can be obtained. The degree of market incompleteness, in turn, depends on two factors: (i) the richness of insurance opportunities provided by the economic environment and (ii) the nature and magnitude of idiosyncratic risks to be insured. First, I review a broad collection of empirical evidence--from econometric tests of "full insurance," to quantitative and empirical analyses of the permanent income ("self-insurance") model that examine how it fits the facts about life cycle allocations, to studies that try to directly measure where economies place between these two benchmarks ("partial insurance"). The empirical evidence I survey reveals significant uncertainty in the profession regarding the magnitudes of idiosyncratic risks as well as whether or not these risks have increased since the 1970s. An important difficulty stems from the fact that inequality often arises from a mixture of idiosyncratic risk and fixed (or predictable) heterogeneity, making the two challenging to disentangle. I also discuss applications of incomplete markets models to trends in wealth, consumption, and earnings inequality both over the life cycle and over time, where this challenge is evident. Third, I discuss "approximate" aggregation--the finding that some incomplete markets models generate aggregate implications very similar to representative-agent models. What approximate aggregation does and does not imply is illustrated through several examples. Finally, I discuss some computational issues relevant for solving and calibrating such models and I provide a simple yet fully parallelizable global optimization algorithm that can be used to calibrate heterogeneous agent models.
Handle: RePEc:nbr:nberwo:17622
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Monitoring and Internal Labor Markets
Classification-JEL: J01; J41
Author-Name: Gautam Bose
Author-Person: pbo375
Author-Name: Kevin Lang
Author-Person: pla83
Note: LS
Number: 17623
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17623
File-URL: http://www.nber.org/papers/w17623.pdf
File-Format: application/pdf
Abstract: We analyze a firm's job-assignment and worker-monitoring decisions when workers face occasional crises. Firms prefer to assign good workers to a difficult task and to not employ bad workers. Firms observe failures but only observe successfully resolved crises if they monitor the worker. If monitoring costs are positive but sufficiently small, for a range of probabilities that the worker is good, the firm assigns the worker to a low task (less sensitive to crises) and monitors her. At probabilities below this range and not too much above it, she is assigned to the low task and not monitored. At high probabilities of being good, she is assigned to the difficult task. We analyze the implications for internal labor markets of the case where a worker has the same ex ante probability of being good at all firms and learning is about ability at this particular firm.
Handle: RePEc:nbr:nberwo:17623
Template-Type: ReDIF-Paper 1.0
Title: When Should Sellers Use Auctions?
Classification-JEL: D04; L20
Author-Name: James W. Roberts
Author-Name: Andrew Sweeting
Author-Person: psw53
Note: IO
Number: 17624
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17624
File-URL: http://www.nber.org/papers/w17624.pdf
File-Format: application/pdf
Publication-Status: published as “When Should Sellers Use Auctions?” (with Andrew Sweeting). American Economic Review, 103(5) 2013.
Abstract: A bidding process can be organized so that offers are submitted simultaneously or sequentially. In the latter case, potential buyers can condition their behavior on previous entrants' decisions. The relative performance of these mechanisms is investigated when entry is costly and selective, meaning that potential buyers with higher values are more likely to participate. A simple sequential mechanism can give both buyers and sellers significantly higher payoffs than the commonly used simultaneous bid auction. The findings are illustrated with parameters estimated from simultaneous entry USFS timber auctions where our estimates predict that the sequential mechanism would increase revenue and efficiency.
Handle: RePEc:nbr:nberwo:17624
Template-Type: ReDIF-Paper 1.0
Title: The Evolving Impact of the Ogallala Aquifer: Agricultural Adaptation to Groundwater and Climate
Classification-JEL: N52; Q54
Author-Name: Richard Hornbeck
Author-Name: Pinar Keskin
Author-Person: pke326
Note: DAE EEE
Number: 17625
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17625
File-URL: http://www.nber.org/papers/w17625.pdf
File-Format: application/pdf
Publication-Status: published as "The Historically Evolving Impact of the Ogallala Aquifer: Agricultural Adaptation to Groundwater and Drought," with Pinar Keskin, American Economic Journal: Applied Economics, 6(1)190-219 (January 2014).
Abstract: Agriculture on the American Great Plains has been constrained by historical water scarcity. After World War II, technological improvements made groundwater from the Ogallala aquifer available for irrigation. Comparing counties over the Ogallala with nearby similar counties, groundwater access increased irrigation intensity and initially reduced the impact of droughts. Over time, land-use adjusted toward water-intensive crops and drought-sensitivity increased; conversely, farmers in water-scarce counties maintained drought-resistant practices that fully mitigated higher drought-sensitivity. Land values capitalized the Ogallala's value at $26 billion in 1974; as extraction remained high and water levels declined, the Ogallala's value fell to $9 billion in 2002.
Handle: RePEc:nbr:nberwo:17625
Template-Type: ReDIF-Paper 1.0
Title: Target Loans, Current Account Balances and Capital Flows: The ECB's Rescue Facility
Classification-JEL: E50; E58; E63; F32; F34
Author-Name: Hans-Werner Sinn
Author-Person: psi146
Author-Name: Timo Wollmershaeuser
Author-Person: pwo119
Note: PE
Number: 17626
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17626
File-URL: http://www.nber.org/papers/w17626.pdf
File-Format: application/pdf
Publication-Status: published as Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target loans, current account balances and capital flows: the ECB’s rescue facility," International Tax and Public Finance, Springer, vol. 19(4), pages 468-508, August.
Abstract: The European Monetary Union is stuck in a severe balance-of-payments imbalance of a nature similar to the one that destroyed the Bretton Woods System. Greece, Ireland, Portugal, Spain and Italy have suffered from balance-of-payments deficits whose accumulated value, as measured by the Target balances in the national central banks' balance sheets, was 404 billion euros in August 2011. The national central banks of these countries covered the deficits by creating and lending out additional central bank money that flowed to the euro core countries, Germany in particular, and crowded out the central bank money resulting from local refinancing operations. Thus the ECB forced a public capital export from the core countries that partly compensated for the now reluctant private capital flows to, and the capital flight from, the periphery countries.
Handle: RePEc:nbr:nberwo:17626
Template-Type: ReDIF-Paper 1.0
Title: The Empirics of Firm Heterogeneity and International Trade
Classification-JEL: F10; F12; F14
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: 17627
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17627
File-URL: http://www.nber.org/papers/w17627.pdf
File-Format: application/pdf
Publication-Status: published as Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2012. "The Empirics of Firm Heterogeneity and International Trade," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 283-313, 07.
Abstract: This paper reviews the empirical evidence on firm heterogeneity in international trade. A first wave of empirical findings from micro data on plants and firms proposed challenges for existing models of international trade and inspired the development of new theories emphasizing firm heterogeneity. Subsequent empirical research has examined additional predictions of these theories and explored other dimensions of the data not originally captured by them. These other dimensions include multi-product firms, offshoring, intra-firm trade and firm export market dynamics.
Handle: RePEc:nbr:nberwo:17627
Template-Type: ReDIF-Paper 1.0
Title: Conflicts of Interest Distort Public Evaluations: Evidence from the Top 25 Ballots of NCAA Football Coaches
Classification-JEL: D7; D8
Author-Name: Matthew Kotchen
Author-Person: pko326
Author-Name: Matthew Potoski
Note: EEE PE
Number: 17628
Creation-Date: 2011-11
Order-URL: http://www.nber.org/papers/w17628
File-URL: http://www.nber.org/papers/w17628.pdf
File-Format: application/pdf
Abstract: This paper provides a study on conflicts of interest among college football coaches participating in the USA Today Coaches Poll of top 25 teams. The Poll provides a unique empirical setting that overcomes many of the challenges inherent in conflict of interest studies, because many agents are evaluating the same thing, private incentives to distort evaluations are clearly defined and measurable, and there exists an alternative source of computer rankings that is bias free. Using individual coach ballots between 2005 and 2010, we find that coaches distort their rankings to reflect their own team's reputation and financial interests. On average, coaches rank teams from their own athletic conference nearly a full position more favorably and boost their own team's ranking more than two full positions. Coaches also rank teams they defeated more favorably, thereby making their own team look better. When it comes to ranking teams contending for one of the high-profile Bowl Championship Series (BCS) games, coaches favor those teams that generate higher financial payoffs for their own team. Reflecting the structure of payoff disbursements, coaches from non-BCS conferences band together, while those from BCS conferences more narrowly favor teams in their own conference. Among all coaches an additional payoff between $3.3 and $5 million induces a more favorable ranking of one position. Moreover, for each increase in a contending team's payoff equal to 10 percent of a coach's football budget, coaches respond with more favorable rankings of half a position, and this effect is more than twice as large when coaches rank teams outside the top 10.
Handle: RePEc:nbr:nberwo:17628
Template-Type: ReDIF-Paper 1.0
Title: Optimal Expectations and Limited Medical Testing: Evidence from Huntington Disease
Classification-JEL: D81; D84; I12
Author-Name: Emily Oster
Author-Person: pos39
Author-Name: Ira Shoulson
Author-Name: E. Ray Dorsey
Note: EH LS
Number: 17629
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17629
File-URL: http://www.nber.org/papers/w17629.pdf
File-Format: application/pdf
Publication-Status: published as “Optimal Expectations and Limited Medical Testing: Evidence from Huntington's Disease” (with E. Ray Dorsey and Ira Shoulson). American Economic Review, 103 (2): p. 804-830 (April 2013).
Abstract: We use novel data to study the decision to undergo genetic testing by individuals at risk for Huntington disease (HD), a hereditary neurological disorder that reduces healthy life expectancy to about age 50. Although genetic testing is perfectly predictive and carries little financial or time cost, less than 10 percent of at-risk individuals are tested prior to the onset of symptoms. Testing rates are higher for individuals with higher ex ante risk of carrying the genetic expansion for HD. Untested individuals express optimistic beliefs about their probability of having HD and make fertility, savings, labor supply, and other decisions as if they do not have HD, even though individuals with confirmed HD behave quite differently. We show that these facts are qualitatively consistent with a model of optimal expectations (Brunnermeier and Parker, 2005) and can be reconciled quantitatively in this model with reasonable parameter values. This model nests the neoclassical framework and, we argue, provides strong evidence rejecting the assumptions of that framework. Finally, we briefly develop policy implications.
Handle: RePEc:nbr:nberwo:17629
Template-Type: ReDIF-Paper 1.0
Title: The Incidence of Geography on Canada's Services Trade
Classification-JEL: F1
Author-Name: James E. Anderson
Author-Person: pan2
Author-Name: Catherine A. Milot
Author-Name: Yoto V. Yotov
Author-Person: pyo93
Note: ITI
Number: 17630
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17630
File-URL: http://www.nber.org/papers/w17630.pdf
File-Format: application/pdf
Publication-Status: published as HOW MUCH DOES GEOGRAPHY DEFLECT SERVICES TRADE? CANADIAN ANSWERS James E. Anderson1,*, Catherine A. Milot2 andYoto V. Yotov3,† International Economic Review Volume 55, Issue 3, pages 791–818, August 2014
Abstract: We estimate geographic barriers to export trade in nine service categories for Canada's provinces from 1997 to 2007 using the structural gravity model. Constructed Home, Domestic and Foreign Bias indexes (the last two new) capture the direct plus indirect effect of services trade costs on intra-provincial, inter-provincial and international trade relative to their frictionless benchmarks. Barriers to services international trade are huge relative to inter-provincial trade and large relative to goods international trade. A novel test confirms the fit of structural gravity with services trade data.
Handle: RePEc:nbr:nberwo:17630
Template-Type: ReDIF-Paper 1.0
Title: Does Trade Globalization Induce or Inhibit Corporate Transparency? Unbundling the Growth Potential and Product Market Competition Channels
Classification-JEL: F10; G30
Author-Name: Hui Tong
Author-Person: pto159
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: CF ITI
Number: 17631
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17631
File-URL: http://www.nber.org/papers/w17631.pdf
File-Format: application/pdf
Publication-Status: published as Tong, Hui & Wei, Shang-Jin, 2014. "Does trade globalization induce or inhibit corporate transparency? Unbundling the growth potential and product market competition channels," Journal of International Economics, Elsevier, vol. 94(2), pages 358-370.
Abstract: How does increasing globalization affect corporate transparency? Freer trade represents different facets and in theory has ambiguous effects on corporate transparency. On the one hand, by exposing firms to more product market competition, it could discourage discretionary disclosure. On the other hand, by opening up foreign markets and enhancing firms' growth opportunities, it may promote more transparency. Rather than simply estimating a net effect, this paper pursues an approach that allows separate estimation of the two potentially opposing channels. We employ three different measures of corporate transparency and track their evolutions for 4061 firms in 49 countries during 1992-2005. By using detailed product-level tariff schedules for these countries, we construct a measure of growth opportunities enabled by foreign tariff liberalizations at the sector-country-year level, and a second measure of globalization-induced product market competition based on a country's own tariff liberalization (again at the sector-country-year level). We find strong evidence that higher growth opportunities engendered by globalization promotes corporate transparency, especially in industries that depend heavily on external financing. At the same time, we find somewhat weaker evidence that greater product market competition engendered by globalization discourages corporate transparency. The results demonstrate the importance of disentangling the multiple and potentially conflicting effects of globalization.
Handle: RePEc:nbr:nberwo:17631
Template-Type: ReDIF-Paper 1.0
Title: Getting Beneath the Veil of Effective Schools: Evidence from New York City
Classification-JEL: I20; J10; J24
Author-Name: Will Dobbie
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Note: ED LS
Number: 17632
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17632
File-URL: http://www.nber.org/papers/w17632.pdf
File-Format: application/pdf
Publication-Status: published as Dobbie, Will, and Roland G. Fryer. 2013. "Getting beneath the Veil of Effective Schools: Evidence from New York City." American Economic Journal: Applied Economics, 5(4): 28-60.
Abstract: Charter schools were developed, in part, to serve as an R&D engine for traditional public schools, resulting in a wide variety of school strategies and outcomes. In this paper, we collect unparalleled data on the inner-workings of 35 charter schools and correlate these data with credible estimates of each school's effectiveness. We find that traditionally collected input measures -- class size, per pupil expenditure, the fraction of teachers with no certification, and the fraction of teachers with an advanced degree -- are not correlated with school effectiveness. In stark contrast, we show that an index of five policies suggested by over forty years of qualitative research -- frequent teacher feedback, the use of data to guide instruction, high-dosage tutoring, increased instructional time, and high expectations -- explains approximately 50 percent of the variation in school effectiveness. Our results are robust to controls for three alternative theories of schooling: a model emphasizing the provision of wrap-around services, a model focused on teacher selection and retention, and the "No Excuses'' model of education. We conclude by showing that our index provides similar results in a separate sample of charter schools.
Handle: RePEc:nbr:nberwo:17632
Template-Type: ReDIF-Paper 1.0
Title: Gains and Gaps: Changing Inequality in U.S. College Entry and Completion
Classification-JEL: I21; I23; I24; J1; J24
Author-Name: Martha J. Bailey
Author-Person: pba669
Author-Name: Susan M. Dynarski
Author-Person: pdy1
Note: CH DAE ED LS
Number: 17633
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17633
File-URL: http://www.nber.org/papers/w17633.pdf
File-Format: application/pdf
Publication-Status: published as “Inequality in Postsecondary Education” (with Susan Dynarski). In G.J. Duncan and R.J. Murnane (eds.), Whither Opportunity? Rising Inequality, Schools, and Children’s Life Chances. (Russell Sage: New York, New York, September 2011). Featured in the May 2012 NBER Digest (http://www.nber.org/digest/may12/may12.pdf).
Abstract: We describe changes over time in inequality in postsecondary education using nearly seventy years of data from the U.S. Census and the 1979 and 1997 National Longitudinal Surveys of Youth. We find growing gaps between children from high- and low-income families in college entry, persistence, and graduation. Rates of college completion increased by only four percentage points for low-income cohorts born around 1980 relative to cohorts born in the early 1960s, but by 18 percentage points for corresponding cohorts who grew up in high-income families. Among men, inequality in educational attainment has increased slightly since the early 1980s. But among women, inequality in educational attainment has risen sharply, driven by increases in the education of the daughters of high-income parents. Sex differences in educational attainment, which were small or nonexistent thirty years ago, are now substantial, with women outpacing men in every demographic group. The female advantage in educational attainment is largest in the top quartile of the income distribution. These sex differences present a formidable challenge to standard explanations for rising inequality in educational attainment.
Handle: RePEc:nbr:nberwo:17633
Template-Type: ReDIF-Paper 1.0
Title: The Control of Politicians in Normal Times and Times of Crisis: Wealth Accumulation by U.S. Congressmen, 1850-1880
Classification-JEL: D72; D78
Author-Name: Pablo Querubin
Author-Person: pqu97
Author-Name: James M. Snyder, Jr.
Author-Person: psn39
Note: POL
Number: 17634
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17634
File-URL: http://www.nber.org/papers/w17634.pdf
File-Format: application/pdf
Publication-Status: published as Snyder JM, Querubin P. The Control of Politicians in Normal Times and Times of Crisis: Wealth Accumulation by U.S. Congressmen, 1850-1880 . :40Quarterly Journal of Political Science. 2013;8(4)9-450.
Abstract: We employ a regression discontinuity design based on close elections to estimate the rents from a seat in the U.S. congress between 1850-1880. Using census data, we compare wealth accumulation among those who won or lost their first race by a small margin. We find evidence of significant returns for the first half of the 1860s, during the Civil War, but not for other periods. We hypothesize that increased opportunities from the sudden spike in government spending during the war and the decrease in control by the media and other monitors might have made it easier for incumbent congressmen to collect rents.
Handle: RePEc:nbr:nberwo:17634
Template-Type: ReDIF-Paper 1.0
Title: Crowding-Out Charitable Contributions in Canada: New Knowledge from the North
Classification-JEL: D64; H44; H5
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: A. Abigail Payne
Author-Person: ppa10
Note: PE
Number: 17635
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17635
File-URL: http://www.nber.org/papers/w17635.pdf
File-Format: application/pdf
Abstract: Using data from charitable organizations in the US, authors have established that government grants to charities largely crowd out giving from other sources, but that this reduction is due mostly to reduced fundraising activities of the charity itself. We use much more detailed data from over 6000 charities in Canada, measured for up to 15 years, to provide valuable new insights into this phenomenon. In particular, dollars received from individuals is largely unchanged by government grants. Instead, the crowding out is attributable to two other sources of donations not differentiated in US data: giving from other charities and charitable foundations, and donations gained from special fundraising activities, like galas or sponsorships. Only the latter-which is about half of the measured crowding out-represents a potential loss of dollars to the charitable sector as a result of government grants.
Handle: RePEc:nbr:nberwo:17635
Template-Type: ReDIF-Paper 1.0
Title: Rewarding Altruism? A Natural Field Experiment
Classification-JEL: C93; D01; D03; D64; H41; I12
Author-Name: Nicola Lacetera
Author-Person: pla61
Author-Name: Mario Macis
Author-Person: pma869
Author-Name: Robert Slonim
Author-Person: psl53
Note: EH LS PE
Number: 17636
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17636
File-URL: http://www.nber.org/papers/w17636.pdf
File-Format: application/pdf
Publication-Status: published as "Rewarding Volunteers: A Field Experiment," Management Science, 60(5), 1107–1129, 2014
Abstract: We present evidence from a natural field experiment involving nearly 100,000 individuals on the effects of offering economic incentives for blood donations. Subjects who were offered economic rewards to donate blood were more likely to donate, and more so the higher the value of the rewards. They were also more likely to attract others to donate, spatially alter the location of their donations towards the drives offering rewards, and modify their temporal donation schedule leading to a short-term reduction in donations immediately after the reward offer was removed. Although offering economic incentives, combining all of these effects, positively and significantly increased donations, ignoring individuals who took additional actions beyond donating to get others to donate would have led to an under-estimate of the total effect, whereas ignoring the spatial effect would have led to an over-estimate of the total effect. We also find that individuals who received a reward by surprise were less likely to donate after the intervention than subjects who received no reward, suggesting that for some individuals a surprise reward adversely affected their intrinsic motivations. We discuss the implications of these findings for understanding pro-social behavior.
Handle: RePEc:nbr:nberwo:17636
Template-Type: ReDIF-Paper 1.0
Title: Alcohol and Student Performance: Estimating the Effect of Legal Access
Classification-JEL: I18; I21; K32
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: Isaac D. Swensen
Author-Name: Glen R. Waddell
Author-Person: pwa85
Note: ED LE PE
Number: 17637
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17637
File-URL: http://www.nber.org/papers/w17637.pdf
File-Format: application/pdf
Publication-Status: published as Lindo, Jason M. & Swensen, Isaac D. & Waddell, Glen R., 2013. "Alcohol and student performance: Estimating the effect of legal access," Journal of Health Economics, Elsevier, vol. 32(1), pages 22-32.
Abstract: We consider the effect of legal access to alcohol on student achievement. We first estimate the effect using an RD design but argue that this approach is not well suited to the research question in our setting. Our preferred approach instead exploits the longitudinal nature of the data, identifying the effect by measuring the extent to which a student's performance changes after he gains legal access to alcohol, controlling flexibly for the expected evolution of grades as students make progress towards their degrees. We find that students' grades fall below their expected levels upon being able to drink legally, but by less than previously documented. We also show that there are effects on women and that the effects are persistent.
Handle: RePEc:nbr:nberwo:17637
Template-Type: ReDIF-Paper 1.0
Title: Recessions and the Cost of Job Loss
Classification-JEL: E24; J3; J6
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: Till M. von Wachter
Author-Person: pvo196
Note: EFG LS
Number: 17638
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17638
File-URL: http://www.nber.org/papers/w17638.pdf
File-Format: application/pdf
Publication-Status: published as Steven J. Davis & Till Von Wachter, 2011. "Recessions and the Costs of Job Loss," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 1-72.
Abstract: We develop new evidence on the cumulative earnings losses associated with job displacement, drawing on longitudinal Social Security records for U.S. workers from 1974 to 2008. In present value terms, men lose an average of 1.4 years of pre-displacement earnings if displaced in mass-layoff events that occur when the national unemployment rate is below 6 percent. They lose a staggering 2.8 years of pre-displacement earnings if displaced when the unemployment rate exceeds 8 percent. These results reflect discounting at a 5% annual rate over 20 years after displacement. We also document large cyclical movements in the incidence of job loss and job displacement and present evidence on how worker anxieties about job loss, wage cuts and job opportunities respond to contemporaneous economic conditions. Finally, we confront leading models of unemployment fluctuations with evidence on the present value earnings losses associated with job displacement. The model of Mortensen and Pissarides (1994) extended to include search on the job generates present value losses only one-fourth as large as observed losses. Moreover, present value losses in the model vary little with aggregate conditions at the time of displacement, unlike the pattern in the data.
Handle: RePEc:nbr:nberwo:17638
Template-Type: ReDIF-Paper 1.0
Title: Selecting the Best? Spillover and Shadows in Elimination Tournaments
Classification-JEL: J01; J3; J31
Author-Name: Jennifer Brown
Author-Person: pbr796
Author-Name: Dylan B. Minor
Note: IO
Number: 17639
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17639
File-URL: http://www.nber.org/papers/w17639.pdf
File-Format: application/pdf
Publication-Status: published as Jennifer Brown & Dylan B. Minor, 2014. "Selecting the Best? Spillover and Shadows in Elimination Tournaments," Management Science, vol 60(12), pages 3087-3102.
Abstract: We consider how past, current, and future competition within an elimination tournament affect the probability that the stronger player wins. We present a two-stage model that yields the following main results: (1) a shadow effect--the stronger the expected future competitor, the lower the probability that the stronger player wins in the current stage and (2) an effort spillover effect--previous effort reduces the probability that the stronger player wins in the current stage. We test our theory predictions using data from high-stakes tournaments. Empirical results suggest that shadow and spillover effects influence match outcomes and have been already been priced into betting markets.
Handle: RePEc:nbr:nberwo:17639
Template-Type: ReDIF-Paper 1.0
Title: Cultural Diversity, Geographical Isolation, and the Origin of the Wealth of Nations
Classification-JEL: N0; O1; O4
Author-Name: Quamrul Ashraf
Author-Name: Oded Galor
Author-Person: pga46
Note: EFG
Number: 17640
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17640
File-URL: http://www.nber.org/papers/w17640.pdf
File-Format: application/pdf
Abstract: This research argues that variations in the interplay between cultural assimilation and cultural diffusion have played a significant role in giving rise to differential patterns of economic development across the globe. Societies that were geographically less vulnerable to cultural diffusion benefited from enhanced assimilation, lower cultural diversity, and more intense accumulation of society-specific human capital. Thus, they operated more efficiently with respect to their production-possibility frontiers and flourished in the technological paradigm that characterized the agricultural stage of development. The lack of cultural diffusion and its manifestation in cultural rigidity, however, diminished the ability of these societies to adapt to a new technological paradigm, which delayed their industrialization and, hence, their take-off to a state of sustained economic growth. The theory thus contributes to the understanding of the advent of divergence and overtaking in the process of development. Consistently with the theory, the empirical analysis establishes that (i) geographical isolation prevalent in pre-industrial times (i.e., prior to the advent of airborne transportation technology) has had a persistent negative impact on the extent of contemporary cultural diversity; (ii) pre-industrial geographical isolation had a positive impact on economic development in the agricultural stage but has had a negative impact on income per capita in the course of industrialization; and (iii) cultural diversity, as determined exogenously by pre-industrial geographical isolation, has had a positive impact on economic development in the process of industrialization.
Handle: RePEc:nbr:nberwo:17640
Template-Type: ReDIF-Paper 1.0
Title: The International Monetary System: Living with Asymmetry
Classification-JEL: F32; F33; F36; F42; G15
Author-Name: Maurice Obstfeld
Author-Person: pob13
Note: EFG IFM
Number: 17641
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17641
File-URL: http://www.nber.org/papers/w17641.pdf
File-Format: application/pdf
Publication-Status: published as The International Monetary System: Living with Asymmetry, Maurice Obstfeld. in Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Feenstra and Taylor. 2014
Abstract: This paper analyzes current stresses in the two key areas that concerned the architects of the original Bretton Woods system: international liquidity and exchange rate management. Despite radical changes since World War II in the market context for liquidity and exchange rate concerns, they remain central to discussions of international macroeconomic policy coordination. To take two prominent examples of specific (and related) coordination problems, liquidity issues are paramount in strategies of national self-insurance through foreign reserve accumulation, while recent attempts by emerging market economies (EMEs) to limit real currency appreciation have relied heavily on nominal exchange rate management. A central message is that a diverse set of potential asymmetries among sovereign member states provides fertile ground for a variety of coordination failures. The paper goes on to discuss institutions and policies that might mitigate some of these inefficiencies.
Handle: RePEc:nbr:nberwo:17641
Template-Type: ReDIF-Paper 1.0
Title: Optimal Dynamic Taxes
Classification-JEL: E62; H21; H24; H31
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Maxim Troshkin
Author-Name: Aleh Tsyvinski
Note: EFG PE
Number: 17642
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17642
File-URL: http://www.nber.org/papers/w17642.pdf
File-Format: application/pdf
Publication-Status: published as "Optimal Taxation: Merging Micro and Macro Approaches" (with M. Troshkin and A. Tsyvinski), Journal of Money, Credit and Banking, Supplement to 43 (5), (2011): 147-174
Abstract: We study optimal labor and savings distortions in a lifecycle model with idiosyncratic shocks. We show a tight connection between its recursive formulation and a static Mirrlees model with two goods, which allows us to derive elasticity-based expressions for the dynamic optimal distortions. We derive a generalization of a savings distortion for non-separable preferences and show that, under certain conditions, the labor wedge tends to zero for sufficiently high skills. We estimate skill distributions using individual data on the U.S. taxes and labor incomes. Computed optimal distortions decrease for sufficiently high incomes and increase with age.
Handle: RePEc:nbr:nberwo:17642
Template-Type: ReDIF-Paper 1.0
Title: Regression Discontinuity Designs with an Endogenous Forcing Variable and an Application to Contracting in Health Care
Classification-JEL: D82; I10; L14
Author-Name: Patrick Bajari
Author-Name: Han Hong
Author-Name: Minjung Park
Author-Person: ppa426
Author-Name: Robert Town
Author-Person: pto430
Note: EH IO
Number: 17643
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17643
File-URL: http://www.nber.org/papers/w17643.pdf
File-Format: application/pdf
Abstract: Regression discontinuity designs (RDDs) are a popular method to estimate treatment effects. However, RDDs may fail to yield consistent estimates if the forcing variable can be manipulated by the agent. In this paper, we examine one interesting set of economic models with such a feature. Specifically, we examine the case where there is a structural relationship between the forcing variable and the outcome variable because they are determined simultaneously. We propose a modi...ed RDD estimator for such models and derive the conditions under which it is consistent. As an application of our method, we study contracts between a large managed care organization and leading hospitals for the provision of organ and tissue transplants. Exploiting "donut holes" in the reimbursement contracts we estimate how the total claims filed by the hospitals depend on the generosity of the reimbursement structure. Our results show that hospitals submit significantly larger bills when the reimbursement rate is higher, indicating informational asymmetries between the payer and hospitals in this market.
Handle: RePEc:nbr:nberwo:17643
Template-Type: ReDIF-Paper 1.0
Title: The Use of Tax Havens in Exemption Regimes
Classification-JEL: F23; H87
Author-Name: Anna Gumpert
Author-Person: pgu714
Author-Name: James R. Hines, Jr.
Author-Person: phi111
Author-Name: Monika Schnitzer
Author-Person: psc60
Note: ITI PE
Number: 17644
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17644
File-URL: http://www.nber.org/papers/w17644.pdf
File-Format: application/pdf
Abstract: This paper analyzes the tax haven investment behavior of multinational firms from a country that exempts foreign income from taxation. High foreign tax rates generally encourage firms to invest in tax havens, though significant costs of reallocating taxable income dampen these incentives. The behavior of German manufacturing firms from 2002-2008 is consistent with this prediction: at the mean, one percentage point higher foreign tax rates are associated with three percentage point greater likelihoods of owning tax haven affiliates. This contrasts with earlier evidence for U.S. firms subject to home country taxation, which are more likely to invest in tax havens if they face lower foreign tax rates. Foreign tax rates appear to be unrelated to tax haven investments of German firms in service industries, possibly reflecting the difficulty they face in reallocating taxable income.
Handle: RePEc:nbr:nberwo:17644
Template-Type: ReDIF-Paper 1.0
Title: Linking External Sector Imbalances and Changing Financial Instability before the 2008 Financial Crisis
Classification-JEL: F1; F30
Author-Name: John Whalley
Author-Person: pwh8
Author-Name: Manmohan Agarwal
Author-Name: Jing Wang
Author-Name: Sean Walsh
Author-Name: Chen Yan
Note: IFM ITI
Number: 17645
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17645
File-URL: http://www.nber.org/papers/w17645.pdf
File-Format: application/pdf
Publication-Status: published as “External Sector Rebalancing and Endogenous Trade Imbalance Models.” Contemporary Economics 6 (4), October 2012, pp. 20-26.
Abstract: The G20 Framework for Strong, Sustainable and Balanced Growth builds on the claim that growing imbalances before the 2008 Financial Crisis were a major cause of the crisis, and the further claim that reducing imbalances post crisis must be a central part of any effort to prevent a further occurrence. Analytical literature in economics seemingly does not provide satisfactory measures of financial instability, either in individual national economies or in the combined global economy; nor ways of linking imbalance change to either worsening or improving financial (or real) instability and the onset of financial crises. Here we focus on the external sector component of financial instability and link changes in country imbalances to individual economy growth rates in ways when summed across countries produce indices of expected worsening or improving financial instability at different points in time. We compute a variety of such indices for the years immediately before the 2008 Financial Crisis. We use the sum of the absolute value of external sector imbalances across countries (the trade imbalance, or the current account imbalance) as a proportion of the combined GDP of countries and link them in various ways to country growth rates. An increasing measure under an index is an indication of future widening excess demands and supplies over all countries as a group relative to gross world product. This, in turn, is an indication of increasing severity of adjustment problems ahead, and hence expected worsening financial instability. We compute such indices for all G20 countries, and various subsets of countries (G2, G8, G8+5) and examine their behavior over the period 2004-2007. Our results suggest that depending upon the index used and the base date chosen for comparative purposes in determining changes, different implications emerge for the linkage between external sector imbalances, perceived future instability and hence the onset of a financial crisis. The implication we drawn is that the links between imbalances and both the onset and best policy response to the 2008 Financial Crisis asserted by the G20 may be more tenuous than claimed. Indeed no such links were suggested earlier for the 1930s, the Asian Financial Crisis or any other crisis. In turn economies have functioned with larger imbalances relative to GDP than in 2008 for considerable periods of time and with no financial implosion (UK in the pre World War I period; Germany and Australia in the 1990s).
Handle: RePEc:nbr:nberwo:17645
Template-Type: ReDIF-Paper 1.0
Title: Does Practice-Based Teacher Preparation Increase Student Achievement? Early Evidence from the Boston Teacher Residency
Classification-JEL: I20
Author-Name: John P. Papay
Author-Name: Martin R. West
Author-Name: Jon B. Fullerton
Author-Name: Thomas J. Kane
Note: ED
Number: 17646
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17646
File-URL: http://www.nber.org/papers/w17646.pdf
File-Format: application/pdf
Publication-Status: published as John P. Papay, Martin R. West, Jon B. Fullerton, Thomas J. Kane (2012) “Does an Urban Teacher Residency Increase Student Achievement? Early Evidence From Boston” Educational Evaluation and Policy Analysis. Vol. 34, No. 4: pp. 413-434.
Abstract: The Boston Teacher Residency is an innovative practice-based preparation program in which candidates work alongside a mentor teacher for a year before becoming a teacher of record in Boston Public Schools. We find that BTR graduates are more racially diverse than other BPS novices, more likely to teach math and science, and more likely to remain teaching in the district through year five. Initially, BTR graduates for whom value-added performance data are available are no more effective at raising student test scores than other novice teachers in English language arts and less effective in math. The effectiveness of BTR graduates in math improves rapidly over time, however, such that by their fourth and fifth years they out-perform veteran teachers. Simulations of the program's overall impact through retention and effectiveness suggest that it is likely to improve student achievement in the district only modestly over the long run.
Handle: RePEc:nbr:nberwo:17646
Template-Type: ReDIF-Paper 1.0
Title: Moral Hazard, Incentive Contracts and Risk: Evidence from Procurement
Classification-JEL: D86; H57; L92
Author-Name: Gregory Lewis
Author-Name: Patrick Bajari
Note: IO LE PE
Number: 17647
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17647
File-URL: http://www.nber.org/papers/w17647.pdf
File-Format: application/pdf
Publication-Status: published as Moral Hazard, Incentive Contracts, and Risk: Evidence from Procurement Gregory Lewis Harvard University and NBER Patrick Bajari Review of Economic Studies (2014) 81 (3): 1201-1228.
Abstract: Deadlines and penalties are widely used to incentivize effort. We model how these incentive contracts affect the work rate and time taken in a procurement setting, characterizing the efficient contract design. Using new micro-level data on Minnesota highway construction contracts that includes day-by-day information on work plans, hours actually worked and delays, we find evidence of moral hazard. As an application, we build an econometric model that endogenizes the work rate, and simulate how different incentive structures affect outcomes and the variance of contractor payments. Accounting for the traffic delays caused by construction, switching to a more efficient design would substantially increase welfare without substantially increasing the risk borne by contractors.
Handle: RePEc:nbr:nberwo:17647
Template-Type: ReDIF-Paper 1.0
Title: Avoiding The Ask: A Field Experiment on Altruism, Empathy, and Charitable Giving
Classification-JEL: D03; D64; H41
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Justin M. Rao
Author-Name: Hannah Trachtman
Note: PE
Number: 17648
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17648
File-URL: http://www.nber.org/papers/w17648.pdf
File-Format: application/pdf
Publication-Status: published as Andreoni, James, Justin M. Rao, and Hannah Trachtman. "Avoiding the ask: A field experiment on altruism, empathy, and charitable giving." Journal of Political Economy 125, no. 3 (2017): 625-653.
Abstract: If people get joy from giving, then why might they avoid fundraisers? We explore this in a randomized natural field experiment during the Salvation Army's annual campaign. The familiar bell-ringers were placed at one or both of two main entrances to a supermarket, making the ask for a charitable donation either easy or difficult to avoid. Additionally, solicitors either simply rang the bell, or asked "please give" to passersby. Verbally asking dramatically increases the number of givers and the amount of giving, as does having solicitors at both main entrances. However, we also found dramatic avoidance of verbal solicitation, between 26.2% and 32.6%, but negligible avoidance of non-verbal solicitation. Asking has a powerful effect on both giving when asked, and on avoidance. We argue that this pattern likely illustrates givers' sophisticated awareness of the empathy-altruism link, rather than pernicious social costs of fundraising.
Handle: RePEc:nbr:nberwo:17648
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Impacts of a Gift of Time
Classification-JEL: E20; J11; J22
Author-Name: Jungmin Lee
Author-Person: ple117
Author-Name: Daiji Kawaguchi
Author-Person: pka57
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: LS
Number: 17649
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17649
File-URL: http://www.nber.org/papers/w17649.pdf
File-Format: application/pdf
Publication-Status: published as Jungmin Lee & Daiji Kawaguchi & Daniel S. Hamermesh, 2012. "Aggregate Impacts of a Gift of Time," American Economic Review, American Economic Association, vol. 102(3), pages 612-16, May.
Abstract: How would people spend additional time if confronted by permanent declines in market work? We examine the impacts of cuts in legislated standard hours that raised employers' overtime costs in Japan around 1990 and Korea in the early 2000s. Using time-diaries from before and after these shocks, we show that these shocks were effective--per-capita hours of market work declined discretely. The economy-wide drops in market work were reallocated solely to leisure and personal maintenance. In the absence of changing household technology a permanent time gift leads to no increase in time spent in household production by the average individual.
Handle: RePEc:nbr:nberwo:17649
Template-Type: ReDIF-Paper 1.0
Title: Can the Doha Round be a Development Round? Setting a Place at the Table
Classification-JEL: F02; F1; F13
Author-Name: Kyle Bagwell
Author-Person: pba409
Author-Name: Robert W. Staiger
Author-Person: pst85
Note: ITI
Number: 17650
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17650
File-URL: http://www.nber.org/papers/w17650.pdf
File-Format: application/pdf
Publication-Status: published as Can the Doha Round Be a Development Round? Setting a Place at the Table, Kyle Bagwell, Robert W. Staiger. in Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Feenstra and Taylor. 2014
Abstract: A fundamental objective of the Doha Round of WTO negotiations is to improve the trading prospects of developing countries. The 2001 declaration from the WTO Ministerial Conference in Doha, Qatar, commits the member governments to negotiations aimed at substantial improvements in market access with a view to phasing out export subsidies, while embracing "special and differential treatment" for developing countries as an integral part of all elements of the negotiations. The main message of this paper comes in three parts. First, these stated aims are incompatible from the perspective of our economic analysis; thus, if these aims are pursued as stated, then we conclude that they are unlikely to deliver the meaningful trade gains for developing countries that the WTO membership seeks. Second, in attempting to integrate its developing country membership into the world trading system, the WTO may face a "latecomers" problem that, while occurring also in earlier rounds, is unprecedented in its scale in the Doha Round, and which could potentially account for the current impasse. And third, we argue that if the Round maintains its stated aims but moves away from the non-reciprocal special-and-differential treatment norm as the cornerstone of the approach to meeting developing country needs in the WTO, and if developing countries prepare, in markets where they are large, to come to the bargaining table and to negotiate reciprocally with each other and with developing nations, then it might be possible to break the impasse at Doha, to address the latecomers problem, and to deliver trade gains for developing countries.
Handle: RePEc:nbr:nberwo:17650
Template-Type: ReDIF-Paper 1.0
Title: Do Mood Swings Drive Business Cycles and is it Rational?
Classification-JEL: E1; E2; E32
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: Deokwoo Nam
Author-Name: Jian Wang
Note: EFG
Number: 17651
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17651
File-URL: http://www.nber.org/papers/w17651.pdf
File-Format: application/pdf
Abstract: This paper provides new evidence in support of the idea that bouts of optimism and pessimism drive much of US business cycles. In particular, we begin by using sign-restriction based identification schemes to isolate innovations in optimism or pessimism and we document the extent to which such episodes explain macroeconomic fluctuations. We then examine the link between these identified mood shocks and subsequent developments in fundamentals using alternative identification schemes (i.e., variants of the maximum forecast error variance approach). We find that there is a very close link between the two, suggesting that agents' feelings of optimism and pessimism are at least partially rational as total factor productivity (TFP) is observed to rise 8-10 quarters after an initial bout of optimism. While this later finding is consistent with some previous findings in the news shock literature, we cannot rule out that such episodes reflect self-fulfilling beliefs. Overall, we argue that mood swings account for over 50% of business cycle fluctuations in hours and output.
Handle: RePEc:nbr:nberwo:17651
Template-Type: ReDIF-Paper 1.0
Title: Competing on Speed
Classification-JEL: G12; L13; L15
Author-Name: Emiliano Pagnotta
Author-Name: Thomas Philippon
Author-Person: pph81
Note: AP CF IO
Number: 17652
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17652
File-URL: http://www.nber.org/papers/w17652.pdf
File-Format: application/pdf
Publication-Status: published as Emiliano S. Pagnotta & Thomas Philippon, 2018. "Competing on Speed," Econometrica, Econometric Society, vol. 86(3), pages 1067-1115, May.
Abstract: Two forces have reshaped global securities markets in the last decade: Exchanges operate at much faster speeds and the trading landscape has become more fragmented. In order to analyze the positive and normative implications of these evolutions, we study a framework that captures (i) exchanges' incentives to invest in faster trading technologies and (ii) investors' trading and participation decisions. Our model predicts that regulation that protect prices will lead to fragmentation and faster trading speed. Asset prices decrease when there is intermediation competition and are further depressed by price protection. Endogenizing speed can also change the slope of asset demand curves. On normative side, we find that for a given number of exchanges, faster trading is in general socially desirable. Similarly, for a given trading speed, competition among exchange increases participation and welfare. However, when speed is endogenous, competition between exchanges is not necessarily desirable. In particular, speed can be inefficiently high. Our model sheds light on important features of the experience of European and U.S. markets since the implementation of Reg. NMS, and provides some guidance for optimal regulations.
Handle: RePEc:nbr:nberwo:17652
Template-Type: ReDIF-Paper 1.0
Title: Evaporating Liquidity
Classification-JEL: G12
Author-Name: Stefan Nagel
Author-Person: pna176
Note: AP
Number: 17653
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17653
File-URL: http://www.nber.org/papers/w17653.pdf
File-Format: application/pdf
Publication-Status: published as Stefan Nagel, 2012. "Evaporating Liquidity," Review of Financial Studies, Society for Financial Studies, vol. 25(7), pages 2005-2039.
Abstract: The returns of short-term reversal strategies in equity markets can be interpreted as a proxy for the returns from liquidity provision. Analysis of reversal strategies shows that the expected return from liquidity provision is strongly time-varying and highly predictable with the VIX index. Expected returns and conditional Sharpe Ratios increase enormously along with the VIX during times of financial market turmoil, such as the financial crisis 2007-09. Even reversal strategies formed from industry portfolios (which do not yield high returns unconditionally) produce high rates of return and high Sharpe Ratios during times of high VIX. The results point to withdrawal of liquidity supply, and an associated increase in the expected returns from liquidity provision, as a main driver behind the evaporation of liquidity during times of financial market turmoil, consistent with theories of liquidity provision by financially constrained intermediaries.
Handle: RePEc:nbr:nberwo:17653
Template-Type: ReDIF-Paper 1.0
Title: The Expanding Social Safety Net
Classification-JEL: E24; H31; H41; I38
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG LS PE
Number: 17654
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17654
File-URL: http://www.nber.org/papers/w17654.pdf
File-Format: application/pdf
Abstract: Inflation-adjusted spending on means-tested subsidies have increased sharply since 2007, and most of this growth was due to changes in eligibility rules, and increases in subsidies per eligible person, rather than increases in the number of people who would have been eligible under pre-recession subsidy rules. The non-elderly parts of the safety net have increased from about $10,000 per year of non- or under-employment by non-elderly household heads and spouses in 2007 to almost $15,000 per year in 2010, adjusted for inflation. From 2007 to 2010, inflation-adjusted safety net spending increased $35,000 for every added year of non-employment or under-employment. As a result, the average private returns to employment are substantially less than they were in 2007.
Handle: RePEc:nbr:nberwo:17654
Template-Type: ReDIF-Paper 1.0
Title: The Electoral Consequences of Large Fiscal Adjustments
Classification-JEL: H2; H3; H5
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Dorian Carloni
Author-Name: Giampaolo Lecce
Author-Person: ple947
Note: PE POL
Number: 17655
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17655
File-URL: http://www.nber.org/papers/w17655.pdf
File-Format: application/pdf
Publication-Status: published as The Electoral Consequences of Large Fiscal Adjustments, Alberto Alesina, Dorian Carloni, Giampaolo Lecce. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: The conventional wisdom regarding the political consequences of large reductions of budget deficits is that they are very costly for the governments which implement them: they are punished by voters at the following elections. In the present paper, instead, we find no evidence that governments which quickly reduce budget deficits are systematically voted out of office in a sample of 19 OECD countries from 1975 to 2008. We also take into consideration issues of reverse causality, namely the possibility that only "strong and popular" governments can implement fiscal adjustments and thus they are not voted out of office "despite" having reduced the deficits. In the end we conclude that many governments can reduce deficits avoiding an electoral defeat.
Handle: RePEc:nbr:nberwo:17655
Template-Type: ReDIF-Paper 1.0
Title: The Contribution of Schooling in Development Accounting: Results from a Nonparametric Upper Bound
Classification-JEL: E0; E00; E01; O1; O10; O11; O15; O3; O30
Author-Name: Francesco Caselli
Author-Person: pca205
Author-Name: Antonio Ciccone
Author-Person: pci47
Note: EFG
Number: 17656
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17656
File-URL: http://www.nber.org/papers/w17656.pdf
File-Format: application/pdf
Publication-Status: published as Caselli, Francesco & Ciccone, Antonio, 2013. "The contribution of schooling in development accounting: Results from a nonparametric upper bound," Journal of Development Economics, Elsevier, vol. 104(C), pages 199-211.
Abstract: How much would output increase if underdeveloped economies were to increase their levels of schooling? We contribute to the development accounting literature by describing a non-parametric upper bound on the increase in output that can be generated by more schooling. The advantage of our approach is that the upper bound is valid for any number of schooling levels with arbitrary patterns of substitution/complementarity. Another advantage is that the upper bound is robust to certain forms of endogenous technology response to changes in schooling. We also quantify the upper bound for all economies with the necessary data, compare our results with the standard development accounting approach, and provide an update on the results using the standard approach for a large sample of countries.
Handle: RePEc:nbr:nberwo:17656
Template-Type: ReDIF-Paper 1.0
Title: The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality
Classification-JEL: I1; J6
Author-Name: Ann Huff Stevens
Author-Person: pst180
Author-Name: Douglas L. Miller
Author-Person: pmi179
Author-Name: Marianne E. Page
Author-Person: ppa539
Author-Name: Mateusz Filipski
Author-Person: pfi236
Note: AG EH LS
Number: 17657
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17657
File-URL: http://www.nber.org/papers/w17657.pdf
File-Format: application/pdf
Publication-Status: published as Ann H. Stevens & Douglas L. Miller & Marianne E. Page & Mateusz Filipski, 2015. "The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 279-311, November.
Abstract: A growing literature documents cyclical movements in mortality and health. We examine this pattern more closely and attempt to identify the mechanisms behind it. Specifically, we distinguish between mechanisms that rely on fluctuations in own employment or time use and those involving factors that are external to the individual. Our investigation suggests that changes in individuals' own behavior contribute very little to pro-cyclical mortality. Looking across broad age and gender groups, we find that own-group employment rates are not systematically related to own-group mortality. In addition, we find that most of the additional deaths that occur during times of economic growth are among the elderly, particularly elderly women, who have limited labor force attachment. Focusing on mortality among the elderly, we show that cyclicality is especially strong for deaths occurring in nursing homes, and is stronger in states where a higher fraction of the elderly reside in nursing homes. We also demonstrate that staffing in skilled nursing facilities moves counter-cyclically. Taken together, these findings suggest that cyclical fluctuations in the mortality rate may be largely driven by fluctuations in the quality of health care.
Handle: RePEc:nbr:nberwo:17657
Template-Type: ReDIF-Paper 1.0
Title: Take-Up of Public Insurance and Crowd-out of Private Insurance Under Recent CHIP Expansions to Higher Income Children
Classification-JEL: I13
Author-Name: Carole Roan Gresenz
Author-Name: Sarah E. Edgington
Author-Name: Miriam J. Laugesen
Author-Name: José J. Escarce
Note: EH
Number: 17658
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17658
File-URL: http://www.nber.org/papers/w17658.pdf
File-Format: application/pdf
Publication-Status: published as Gresenz CR, Edgington S, Laugesen M, Escarce JJ, “Take-Up of Public Insurance and Crowd-Out of Private Insurance under Recent CHIP Expansions to Higher Income Children,” Health Services Research, 2012 Oct; 47(5): 1999-2011.
Abstract: We analyze the effects of states' expansions of CHIP eligibility to children in higher income families during 2002-2009 on take-up of public coverage, crowd-out of private coverage, and rates of uninsurance. Our results indicate these expansions were associated with limited uptake of public coverage and only a two percentage point reduction in the uninsurance rate among these children. Because not all of the take-up of public insurance among eligible children is accounted for by children who transfer from being uninsured to having public insurance, our results suggest that there may be some crowd-out of private insurance coverage; the upper bound crowd-out rate we calculate is 46 percent.
Handle: RePEc:nbr:nberwo:17658
Template-Type: ReDIF-Paper 1.0
Title: Cross-Sectoral Variation in The Volatility of Plant-Level Idiosyncratic Shocks
Classification-JEL: D24; L16; L60; O30; O31
Author-Name: Rui Castro
Author-Person: pca41
Author-Name: Gian Luca Clementi
Author-Name: Yoonsoo Lee
Author-Person: ple261
Note: EFG IO PR
Number: 17659
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17659
File-URL: http://www.nber.org/papers/w17659.pdf
File-Format: application/pdf
Publication-Status: published as Cross Sectoral Variation in the Volatility of Plant Level Idiosyncratic Shocks† Rui Castro1, Gian Luca Clementi2,3 andYoonsoo Lee4 The Journal of Industrial Economics Volume 63, Issue 1, pages 1–29, March 2015
Abstract: We estimate the volatility of plant-level idiosyncratic shocks in the U.S. manufacturing sector. Our measure of volatility is the variation in Revenue Total Factor Productivity which is not explained by either industry- or economy-wide factors, or by establishments' characteristics. Consistent with previous studies, we find that idiosyncratic shocks are much larger than aggregate random disturbances, accounting for about 80% of the overall uncertainty faced by plants. The extent of cross-sectoral variation in the volatility of shocks is remarkable. Plants in the most volatile sector are subject to about six times as much idiosyncratic uncertainty as plants in the least volatile. We provide evidence suggesting that idiosyncratic risk is higher in industries where the extent of creative destruction is likely to be greater.
Handle: RePEc:nbr:nberwo:17659
Template-Type: ReDIF-Paper 1.0
Title: The Valuation Effects of Geographic Diversification: Evidence from U.S. Banks
Classification-JEL: G21; G34; L22
Author-Name: Martin Goetz
Author-Name: Luc Laeven
Author-Person: pla174
Author-Name: Ross Levine
Author-Person: ple61
Note: CF
Number: 17660
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17660
File-URL: http://www.nber.org/papers/w17660.pdf
File-Format: application/pdf
Publication-Status: published as “Identifying the Valuation Effects and Agency Costs of Corporate Diversification: Evidence from the Geographic Diversification of U.S. Banks” (with Martin Goetz and Luc Laeven), Review of Financial Studies, 2013, 26(7): 1787-1823.
Abstract: This paper assesses the impact of the geographic diversification of bank holding company (BHC) assets across the United States on their market valuations. Using two novel identification strategies based on the dynamic process of interstate bank deregulation, we find that exogenous increases in geographic diversity reduce BHC valuations. These findings are consistent with the view that geographic diversity makes it more difficult for shareholders and creditors to monitor firm executives, allowing corporate insiders to extract larger private benefits from firms.
Handle: RePEc:nbr:nberwo:17660
Template-Type: ReDIF-Paper 1.0
Title: Fiduciary Duties and Equity-Debtholder Conflicts
Classification-JEL: G32; G33; H1; H10; L2
Author-Name: Bo Becker
Author-Person: pbe183
Author-Name: Per Strömberg
Author-Person: pst18
Note: CF
Number: 17661
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17661
File-URL: http://www.nber.org/papers/w17661.pdf
File-Format: application/pdf
Publication-Status: published as Bo Becker & Per Strömberg, 2012. "Fiduciary Duties and Equity-debtholder Conflicts," Review of Financial Studies, Society for Financial Studies, vol. 25(6), pages 1931-1969.
Abstract: We use an important legal event as a natural experiment to examine the effect of management fiduciary duties on equity-debt conflicts. A 1991 Delaware bankruptcy ruling changed the nature of corporate directors' fiduciary duties in firms incorporated in that state. This change limited managers' incentives to take actions favoring equity over debt for firms in the vicinity of financial distress. We show that this ruling increased the likelihood of equity issues, increased investment, and reduced firm risk, consistent with a decrease in debt-equity conflicts of interest. The changes are isolated to firms relatively closer to default. The ruling was also followed by an increase in average leverage and a reduction in covenant use. Finally, we estimate the welfare implications of this change and find that firm values increased when the rules were introduced. We conclude that managerial fiduciary duties affect equity-bond holder conflicts in a way that is economically important, has impact on ex ante capital structure choices, and affects welfare.
Handle: RePEc:nbr:nberwo:17661
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Devaluations
Classification-JEL: E32; E60; F30
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Gita Gopinath
Author-Name: Oleg Itskhoki
Author-Person: pit14
Note: EFG IFM ITI ME
Number: 17662
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17662
File-URL: http://www.nber.org/papers/w17662.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Farhi & Gita Gopinath & Oleg Itskhoki, 2014. "Fiscal Devaluations," Review of Economic Studies, Oxford University Press, vol. 81(2), pages 725-760.
Abstract: We show that even when the exchange rate cannot be devalued, a small set of conventional fiscal instruments can robustly replicate the real allocations attained under a nominal exchange rate devaluation in a dynamic New Keynesian open economy environment. We perform the analysis under alternative pricing assumptions- producer or local currency pricing, along with nominal wage stickiness; under arbitrary degrees of asset market completeness and for general stochastic sequences of devaluations. There are two types of fiscal policies equivalent to an exchange rate devaluation-one, a uniform increase in import tariff and export subsidy, and two, a value-added tax increase and a uniform payroll tax reduction. When the devaluations are anticipated, these policies need to be supplemented with a consumption tax reduction and an income tax increase. These policies are revenue neutral. In certain cases equivalence requires, in addition, a partial default on foreign bond holders. We discuss the issues of implementation of these policies, in particular, under the circumstances of a currency union.
Handle: RePEc:nbr:nberwo:17662
Template-Type: ReDIF-Paper 1.0
Title: CEO Preferences and Acquisitions
Classification-JEL: D22; D23; G3; G30; G34
Author-Name: Dirk Jenter
Author-Person: pje55
Author-Name: Katharina Lewellen
Note: CF
Number: 17663
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17663
File-URL: http://www.nber.org/papers/w17663.pdf
File-Format: application/pdf
Publication-Status: published as “CEO Preferences and Acquisitions” (2013) with Katharina Lewellen. Journal of Finance, Volume 70, Issue 6, December 2015, Pages 2813–2852
Abstract: This paper explores the impact of target CEOs' retirement preferences on the incidence, the pricing, and the outcomes of takeover bids. Mergers frequently force target CEOs to retire early, and CEOs' private merger costs are the forgone benefits of staying employed until the planned retirement date. Using retirement age as an instrument for CEOs' private merger costs, we find strong evidence that target CEO preferences affect merger patterns. The likelihood of receiving a takeover bid increases sharply when target CEOs reach age 65. The probability of a bid is close to 4% per year for target CEOs below age 65 but increases to 6% for the retirement-age group, a 50% increase in the odds of receiving a bid. This increase in takeover activity appears discretely at the age-65 threshold, with no gradual increase as CEOs approach retirement age. Moreover, observed takeover premiums and target announcement returns are significantly lower when target CEOs are older than 65, reinforcing the conclusion that retirement-age CEOs are more willing to accept takeover offers. These results suggest that the preferences of target CEOs have first-order effects on both bidder and target behavior.
Handle: RePEc:nbr:nberwo:17663
Template-Type: ReDIF-Paper 1.0
Title: Regulating Systemic Risk through Transparency: Tradeoffs in Making Data Public
Classification-JEL: D82; D83; H41
Author-Name: Augustin Landier
Author-Person: pla423
Author-Name: David Thesmar
Author-Person: pth258
Note: PE
Number: 17664
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17664
File-URL: http://www.nber.org/papers/w17664.pdf
File-Format: application/pdf
Publication-Status: published as Regulating Systemic Risk through Transparency: Trade-Offs in Making Data Public, Augustin Landier, David Thesmar. in Risk Topography: Systemic Risk and Macro Modeling, Brunnermeier and Krishnamurthy. 2014
Abstract: Public or partial disclosure of financial data is a key element in the design of a new regulatory environment. We study the costs and benefits of higher public access to financial data and analyze qualitatively how frequency, disclosure lag and granularity of such open data can be chosen to maximize welfare, depending on the relative magnitude of economic frictions. We lay out a simple framework to choose optimal transparency of financial data.
Handle: RePEc:nbr:nberwo:17664
Template-Type: ReDIF-Paper 1.0
Title: International Policy Coordination: The Long View
Classification-JEL: F0; F3; N0
Author-Name: Barry Eichengreen
Author-Person: pei2
Note: DAE IFM
Number: 17665
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17665
File-URL: http://www.nber.org/papers/w17665.pdf
File-Format: application/pdf
Publication-Status: published as International Policy Coordination: The Long View, Barry Eichengreen. in Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Feenstra and Taylor. 2014
Abstract: This paper places current efforts at international economic policy coordination in historical perspective. It argues that successful cooperation is most likely in four sets of circumstances. First, when it centers on technical issues. Second, when cooperation is institutionalized - when procedures and precedents create presumptions about the appropriate conduct of policy and reduce the transactions costs of reaching an agreement. Third, when it is concerned with preserving an existing set of policies and behaviors (when it is concerned with preserving a policy regime). Fourth, when it occurs in the context of broad comity among nations. These points are elaborated through a review of 150 years of historical experience and then used to assess the scope for cooperative responses to the current economic crisis.
Handle: RePEc:nbr:nberwo:17665
Template-Type: ReDIF-Paper 1.0
Title: Do Borrower Rights Improve Borrower Outcomes? Evidence from the Foreclosure Process
Classification-JEL: G11; K11; R31
Author-Name: Kristopher Gerardi
Author-Person: pge160
Author-Name: Lauren Lambie-Hanson
Author-Name: Paul S. Willen
Author-Person: pwi457
Note: EFG
Number: 17666
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17666
File-URL: http://www.nber.org/papers/w17666.pdf
File-Format: application/pdf
Publication-Status: published as Gerardi, Kristopher & Lambie-Hanson, Lauren & Willen, Paul S., 2013. "Do borrower rights improve borrower outcomes? Evidence from the foreclosure process," Journal of Urban Economics, Elsevier, vol. 73(1), pages 1-17.
Abstract: We evaluate laws designed to protect borrowers from foreclosure. We find that these laws delay but do not prevent foreclosures. We first compare states that require lenders to seek judicial permission to foreclose with states that do not. Borrowers in judicial states are no more likely to cure and no more likely to renegotiate their loans, but the delays lead to a build-up in these states of persistently delinquent borrowers, the vast majority of whom eventually lose their homes. We next analyze a "right-to-cure" law instituted in Massachusetts on May 1, 2008. Using a difference-in-differences approach to evaluate the effect of the policy, we compare Massachusetts with neighboring states that did not adopt similar laws. We find that the right-to-cure law lengthens the foreclosure timeline but does not lead to better outcomes for borrowers.
Handle: RePEc:nbr:nberwo:17666
Template-Type: ReDIF-Paper 1.0
Title: Immigrants, Welfare Reform, and the U.S. Safety Net
Classification-JEL: I3; I38
Author-Name: Marianne Bitler
Author-Person: pbi12
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Note: CH LS PE
Number: 17667
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17667
File-URL: http://www.nber.org/papers/w17667.pdf
File-Format: application/pdf
Publication-Status: published as \Immigrants, Welfare Reform, and the U.S. Safety Net," joint with Hilary Hoynes. In Immigration, Poverty, and Socioeconomic Inequality, D. Card and S. Raphael, eds. New York: Russell Sage, 2013.
Abstract: Beginning with the 1996 federal welfare reform law many of the central safety net programs in the U.S. eliminated eligibility for legal immigrants, who had been previously eligible on the same terms as citizens. These dramatic cutbacks affected eligibility not only for cash welfare assistance for families with children, but also for food stamps, Medicaid, SCHIP, and SSI. In this paper, we comprehensively examine the status of the U.S. safety net for immigrants and their family members. We document the policy changes that affected immigrant eligibility for these programs and use the CPS for 1995-2010 to analyze trends in program participation, income, and poverty among immigrants (and natives). We pay particular attention to the recent period and examine how immigrants and their children are faring in the "Great Recession" with an eye toward revealing how these policy changes have affected the success of the safety net in protecting this population.
Handle: RePEc:nbr:nberwo:17667
Template-Type: ReDIF-Paper 1.0
Title: Utilization of Infertility Treatments: The Effects of Insurance Mandates
Classification-JEL: I1
Author-Name: Marianne P. Bitler
Author-Person: pbi12
Author-Name: Lucie Schmidt
Author-Person: psc90
Note: EH
Number: 17668
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17668
File-URL: http://www.nber.org/papers/w17668.pdf
File-Format: application/pdf
Publication-Status: published as Marianne Bitler & Lucie Schmidt, 2012. "Utilization of Infertility Treatments: The Effects of Insurance Mandates," Demography, Springer, vol. 49(1), pages 125-149, February.
Abstract: Over the last several decades, both delay of childbearing and fertility problems have become increasingly common among women in developed countries. At the same time, technological changes have made many more options available to individuals experiencing fertility problems. However, these technologies are expensive, and only 25% of health insurance plans in the United States cover infertility treatment. As a result of these high costs, legislation has been passed in 15 states that mandates insurance coverage of infertility treatment in private insurance plans. In this paper, we examine whether mandated insurance coverage for infertility treatment affects utilization. We allow utilization effects to differ by age and education, since previous research suggests that older, more educated women should be more likely to be directly affected by the mandates than younger women and less educated women, both because they are at higher risk of fertility problems and because they are more likely to have private health insurance which is subject to the mandate. We find robust evidence that the mandates do have a significant effect on utilization for older, more educated women that is larger than the effects found for other groups. These effects are largest for the use of ovulation-inducing drugs and artificial insemination.
Handle: RePEc:nbr:nberwo:17668
Template-Type: ReDIF-Paper 1.0
Title: Sustainable Cooperation in Global Climate Policy: Specific Formulas and Emission Targets to Build on Copenhagen and Cancun
Classification-JEL: Q54
Author-Name: Valentina Bosetti
Author-Person: pbo275
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: EEE
Number: 17669
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17669
File-URL: http://www.nber.org/papers/w17669.pdf
File-Format: application/pdf
Abstract: We explore a framework that could be used to assign quantitative allocations of emissions of greenhouse gases (GHGs), across countries, one budget period at a time. Under the two-part plan: (i) China, India, and other developing countries accept targets at Business as Usual (BAU) in the coming budget period, the same period in which the US first agrees to cuts below BAU; and (ii) all countries are asked in the future to make further cuts in accordance with a common numerical formula to all. The formula is expressed as the sum of a Progressive Reductions Factor, a Latecomer Catch-up Factor, and a Gradual Equalization Factor. This paper builds on our previous work in many ways. First we update targets to reflect pledges made by governments after the Copenhagen Accord of December 2010 and confirmed at the Cancun meeting of November 2010. Second, the WITCH model, which we use to project economic and environmental effects of any given set of emission targets, has been refined and updated to reflect economic and technological developments. We include the possibility of emissions reduction from bio energy (BE), carbon capture and storage (CCS), and avoided deforestation and forest degradation (REDD+) which is an important component of pledges in several developing countries. Third, we use a Nash criterion for evaluating whether a country's costs are too high to sustain cooperation.
Handle: RePEc:nbr:nberwo:17669
Template-Type: ReDIF-Paper 1.0
Title: Capital Inflows, Exchange Rate Flexibility, and Credit Booms
Classification-JEL: E5; F2; G15
Author-Name: Nicolas E. Magud
Author-Person: pma2505
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Esteban R. Vesperoni
Note: IFM ME
Number: 17670
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17670
File-URL: http://www.nber.org/papers/w17670.pdf
File-Format: application/pdf
Publication-Status: published as Nicolas E. Magud & Carmen M. Reinhart & Esteban R. Vesperoni, 2014. "Capital Inflows, Exchange Rate Flexibility and Credit Booms," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 415-430, 08.
Abstract: The prospects of expansionary monetary policies in the advanced countries for the foreseeable future have renewed the debate over policy options to cope with large capital inflows that are, at least partly, driven by low interest rates in the financial centers. Historically, capital flow bonanzas have often fueled sharp credit expansions in advanced and emerging market economies alike. Focusing primarily on emerging markets, we analyze the impact of exchange rate flexibility on credit markets during periods of large capital inflows. We show that credit grows more rapidly and its composition tilts to foreign currency in economies with less flexible exchange rate regimes, and that these results are not explained entirely by the fact that the latter attract more capital inflows than economies with more flexible regimes. Our findings thus suggest countries with less flexible exchange rate regimes may stand to benefit the most from regulatory policies that reduce banks' incentives to tap external markets and to lend/borrow in foreign currency; these policies include marginal reserve requirements on foreign lending, currency-dependent liquidity requirements, and higher capital requirement and/or dynamic provisioning on foreign exchange loans.
Handle: RePEc:nbr:nberwo:17670
Template-Type: ReDIF-Paper 1.0
Title: Does Gender Matter for Political Leadership? The Case of U.S. Mayors
Classification-JEL: H0; J0
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Joseph Gyourko
Author-Person: pgy3
Note: LS PE POL
Number: 17671
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17671
File-URL: http://www.nber.org/papers/w17671.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Public Economics Volume 112, April 2014, Pages 24–39 Cover image Does gender matter for political leadership? The case of U.S. mayors ☆ Fernando Ferreira, Joseph Gyourko
Abstract: What are the consequences of electing a female leader for policy and political outcomes? We answer this question in the context of U.S. cities, where women's participation in mayoral elections increased from negligible numbers in 1970 to about one-third of the elections in the 2000's. We use a novel data set of U.S. mayoral elections from 1950 to 2005, and apply a regression discontinuity design to deal with the endogeneity of female candidacy to city characteristics. In contrast to most research on the influence of female leadership, we find no effect of gender of the mayor on policy outcomes related to the size of local government, the composition of municipal spending and employment, or crime rates. While female mayors do not implement different policies, they do appear to have higher unobserved political skills, as they have a 6-7 percentage point higher incumbent effect than a comparable male. But we find no evidence of political spillovers: exogenously electing a female mayor does not change the long run political success of other female mayoral candidates in the same city or of female candidates in local congressional elections.
Handle: RePEc:nbr:nberwo:17671
Template-Type: ReDIF-Paper 1.0
Title: The Economics and Politics of Women's Rights
Classification-JEL: J10; N30; O10
Author-Name: Matthias Doepke
Author-Person: pdo8
Author-Name: Michèle Tertilt
Author-Person: pte114
Author-Name: Alessandra Voena
Author-Person: pvo279
Note: EFG POL
Number: 17672
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17672
File-URL: http://www.nber.org/papers/w17672.pdf
File-Format: application/pdf
Publication-Status: published as Matthias Doepke & Mich�le Tertilt & Alessandra Voena, 2012. "The Economics and Politics of Women's Rights," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 339-372, 07.
Abstract: Women's rights and economic development are highly correlated. Today, the discrepancy between the legal rights of women and men is much larger in developing compared to developed countries. Historically, even in countries that are now rich women had few rights before economic development took off. Is development the cause of expanding women's rights, or conversely, do women's rights facilitate development? We argue that there is truth to both hypotheses. The literature on the economic consequences of women's rights documents that more rights for women lead to more spending on health and children, which should benefit development. The political-economy literature on the evolution of women's rights finds that technological change increased the costs of patriarchy for men, and thus contributed to expanding women's rights. Combining these perspectives, we discuss the theory of Doepke and Tertilt (2009), where an increase in the return to human capital induces men to vote for women's rights, which in turn promotes growth in human capital and income per capita.
Handle: RePEc:nbr:nberwo:17672
Template-Type: ReDIF-Paper 1.0
Title: Do Perceptions of Ballot Secrecy Influence Turnout? Results from a Field Experiment
Classification-JEL: H0; H1; Z0
Author-Name: Alan S. Gerber
Author-Name: Gregory A. Huber
Author-Name: David Doherty
Author-Name: Conor M. Dowling
Author-Name: Seth J. Hill
Note: PE POL
Number: 17673
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17673
File-URL: http://www.nber.org/papers/w17673.pdf
File-Format: application/pdf
Publication-Status: published as "Do Perceptions of Ballot Secrecy Influence Turnout? Results from a Field Experiment" (with Huber, Doherty, Dowling, and Seth J. Hill). 2013. American Journal of Political Science (July). DOI: 10.1111/ajps.12019
Abstract: Although the secret ballot has long been secured as a legal matter in the United States, formal secrecy protections are not equivalent to convincing citizens that they may vote privately and without fear of reprisal. We present survey evidence that those who have not previously voted are particularly likely to voice doubts about the secrecy of the voting process. We then report results from a field experiment where we provided registered voters with information about ballot secrecy protections prior to the 2010 general election. We find that these letters increased turnout for registered citizens without records of previous turnout, but did not appear to influence the behavior of citizens who had previously voted. These results suggest that although the secret ballot is a long-standing institution in the United States, providing basic information about ballot secrecy can affect the decision to participate to an important degree.
Handle: RePEc:nbr:nberwo:17673
Template-Type: ReDIF-Paper 1.0
Title: Prospects for Nuclear Power
Classification-JEL: L51; L94; Q40; Q53
Author-Name: Lucas W. Davis
Author-Person: pda367
Note: EEE IO
Number: 17674
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17674
File-URL: http://www.nber.org/papers/w17674.pdf
File-Format: application/pdf
Publication-Status: published as Lucas W. Davis, 2012. "Prospects for Nuclear Power," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 49-66, Winter.
Abstract: The prospects for a revival of nuclear power were dim even before the partial reactor meltdowns at the Fukushima nuclear plant. Nuclear power has long been controversial because of concerns about nuclear accidents, proliferation risk, and the storage of spent fuel. These concerns are real and important. In addition, however, a key challenge for nuclear power has been the high cost of construction for nuclear plants. Construction costs are high enough that it becomes difficult to make an economic argument for nuclear, even before incorporating these external costs. This is particularly true in countries like the United States where recent technological advances have dramatically increased the availability of natural gas.
Handle: RePEc:nbr:nberwo:17674
Template-Type: ReDIF-Paper 1.0
Title: International Trade and Institutional Change
Classification-JEL: F15; P45; P48
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Note: IFM ITI
Number: 17675
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17675
File-URL: http://www.nber.org/papers/w17675.pdf
File-Format: application/pdf
Publication-Status: published as Andrei A. Levchenko, 2013. "International Trade and Institutional Change," Journal of Law, Economics and Organization, Oxford University Press, vol. 29(5), pages 1145-1181, October.
Abstract: This paper analyzes the impact of international trade on the quality of institutions, such as contract enforcement, property rights, or investor protection. It presents a model in which imperfect institutions create rents for some parties within the economy, and are a source of comparative advantage in trade. Institutional quality is determined as an equilibrium of a political economy game. When countries share the same technology, there is a "race to the top'' in institutional quality: irrespective of country characteristics, both trade partners are forced to improve institutions after opening. On the other hand, domestic institutions will not improve in either country when one of the countries has a strong enough technological comparative advantage in the institutionally intensive good. We provide empirical evidence for a related cross-sectional prediction of the model. Countries whose exogenous geographical characteristics predispose them to exporting in institutionally intensive sectors exhibit significantly higher institutional quality.
Handle: RePEc:nbr:nberwo:17675
Template-Type: ReDIF-Paper 1.0
Title: From Infant to Mother: Early Disease Environment and Future Maternal Health
Classification-JEL: I12; I14
Author-Name: Douglas Almond
Author-Person: pal938
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Mariesa Herrmann
Note: CH EH
Number: 17676
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17676
File-URL: http://www.nber.org/papers/w17676.pdf
File-Format: application/pdf
Publication-Status: published as Almond, Douglas & Currie, Janet & Herrmann, Mariesa, 2012. "From infant to mother: Early disease environment and future maternal health," Labour Economics, Elsevier, vol. 19(4), pages 475-483.
Abstract: This paper examines the links between the disease environment around the time of a woman's birth, and her health at the time she delivers her own infant. Our results suggest that exposure to disease in early childhood significantly increases the incidence of diabetes in the population of future mothers. The exposed mothers are less likely to be married, have fewer years of education, are more likely to gain over 60 pounds while pregnant, and are more likely to smoke while pregnant. Not surprisingly then, exposure increases the probability of low birth weight in the next generation, at least among whites. Among whites, this effect remains when we control for maternal behaviors as well as disease exposure. Among blacks, we find that maternal exposure reduces the incidence of low birth weight. The difference between whites and blacks may reflect a "scarring" vs. selection story; whites who go on to have children are negatively impacted, while blacks who go on to have children are positively selected having survived a higher early childhood mortality rate.
Handle: RePEc:nbr:nberwo:17676
Template-Type: ReDIF-Paper 1.0
Title: Are Big-Time Sports a Threat to Student Achievement?
Classification-JEL: H0; I23; J16
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: Isaac D. Swensen
Author-Name: Glen R. Waddell
Author-Person: pwa85
Note: ED PE
Number: 17677
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17677
File-URL: http://www.nber.org/papers/w17677.pdf
File-Format: application/pdf
Publication-Status: published as Jason M. Lindo & Isaac D. Swensen & Glen R. Waddell, 2012. "Are Big-Time Sports a Threat to Student Achievement?," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 254-74, October.
Abstract: We consider the relationship between collegiate-football success and non-athlete student performance. We find that the team's success significantly reduces male grades relative to female grades. This phenomenon is only present in fall quarters, which coincides with the football season. Using survey data, we find that males are more likely than females to increase alcohol consumption, decrease studying, and increase partying in response to the success of the team. Yet, females also report that their behavior is affected by athletic success, suggesting that their performance is likely impaired but that this effect is masked by the practice of grade curving.
Handle: RePEc:nbr:nberwo:17677
Template-Type: ReDIF-Paper 1.0
Title: Family Proximity, Childcare, and Women's Labor Force Attachment
Classification-JEL: J13; J20
Author-Name: Janice Compton
Author-Person: pco813
Author-Name: Robert A. Pollak
Author-Person: ppo36
Note: LS
Number: 17678
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17678
File-URL: http://www.nber.org/papers/w17678.pdf
File-Format: application/pdf
Publication-Status: published as Compton, Janice & Pollak, Robert A., 2014. "Family proximity, childcare, and womenâs labor force attachment," Journal of Urban Economics, Elsevier, vol. 79(C), pages 72-90.
Abstract: We show that close geographical proximity to mothers or mothers-in-law has a substantial positive effect on the labor supply of married women with young children. We argue that the mechanism through which proximity increases labor supply is the availability of childcare. We interpret availability broadly enough to include not only regular scheduled childcare during work hours but also an insurance aspect of proximity (e.g., a mother or mother-in-law who can provide irregular or unanticipated childcare). Using two large datasets, the National Survey of Families and Households and the public use files of the U.S. Census, we find that the predicted probability of employment and labor force participation is 4-10 percentage points higher for married women with young children living in close proximity to their mothers or their mothers-in-law compared with those living further away.
Handle: RePEc:nbr:nberwo:17678
Template-Type: ReDIF-Paper 1.0
Title: Looking Beyond the Incumbent: The Effects of Exposing Corruption on Electoral Outcomes
Classification-JEL: H0
Author-Name: Alberto Chong
Author-Person: pch86
Author-Name: Ana L. De La O
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Leonard Wantchekon
Author-Person: pwa949
Note: POL
Number: 17679
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17679
File-URL: http://www.nber.org/papers/w17679.pdf
File-Format: application/pdf
Abstract: Does information about rampant political corruption increase electoral participation and the support for challenger parties? Democratic theory assumes that offering more information to voters will enhance electoral accountability. However, if there is consistent evidence suggesting that voters punish corrupt incumbents, it is unclear whether this translates into increased support for challengers and higher political participation. We provide experimental evidence that information about copious corruption not only decreases incumbent support in local elections in Mexico, but also decreases voter turnout, challengers' votes, and erodes voters' identification with the party of the corrupt incumbent. Our results suggest that while flows of information are necessary, they may be insufficient to improve political accountability, since voters may respond to information by withdrawing from the political process. We conclude with a discussion of the institutional contexts that could allow increased access to information to promote government accountability.
Handle: RePEc:nbr:nberwo:17679
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation
Classification-JEL: F13; F32; F33
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Guido Lorenzoni
Author-Person: plo185
Author-Name: Iván Werning
Author-Person: pwe141
Note: IFM ITI
Number: 17680
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17680
File-URL: http://www.nber.org/papers/w17680.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot & Guido Lorenzoni & Iv�n Werning, 2014. "A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation," Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 77 - 128.
Abstract: This paper develops a simple theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite horizon endowment economy with two countries. One country chooses taxes on international capital flows in order to maximize the welfare of its representative agent, while the other country is passive. We show that capital controls are not guided by the absolute desire to alter the intertemporal price of the goods produced in any given period, but rather by the relative strength of this desire between two consecutive periods. Specifically, it is optimal for the strategic country to tax capital inflows (or subsidize capital outflows) if it grows faster than the rest of the world and to tax capital outflows (or subsidize capital inflows) if it grows more slowly. In the long-run, if relative endowments converge to a steady state, taxes on international capital flows converge to zero. Although our theory emphasizes interest rate manipulation, the country's net financial position per se is irrelevant.
Handle: RePEc:nbr:nberwo:17680
Template-Type: ReDIF-Paper 1.0
Title: The Contribution of China, India and Brazil to Narrowing North-South Differences in GDP/capita, World Trade Shares, and Market Capitalization
Classification-JEL: F0; F1; F2; F4
Author-Name: Jing Wang
Author-Name: Dana Medianu
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 17681
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17681
File-URL: http://www.nber.org/papers/w17681.pdf
File-Format: application/pdf
Abstract: This paper focuses on the contribution to recent narrowing of the gap between Northern and Southern economies in GDP/capita, shares in world trade and market capitalization attributable both jointly and single to China, India, and Brazil (the three currently largest rapidly growing Southern economies). We report North‐South differences in GDP/capita which (depending slightly on definition of North and South, as well as price deflators used) fall from 22 to 15.9 in constant USD between 1990 and 2009, changing Northern and Southern shares in world trade which fall for the North from 82.3% to 64.4% and rise for the South from 17.7% to 35.6%, and a changing North‐South gap in stock market capitalizations from 27.6 to 3.3 over the same time. In contrast the North‐China gap falls from 57.2 to 13.1 between 1990 and 2009, and India from 70.4 to 38.1 using market exchange rates and from 23.4 to 5.5 for China and from 20.7 to 11.4 for India using PPP rates. We calculate the portions of North‐South gap change after 1990 which is accounted for by growth individually and jointly of China, India, and Brazil. Our calculations show that the majority of the change occurs from growth in these three economies, and the most from China. We suggest that the conventional view of a North‐South bipolar world may need recasting into a tripolar world of the North, the Large South, and the rest of the South. In this, world manufacturing activity, trade, and even more rapidly, market capitalization are gravitating towards the Large Three, with a narrowing South‐Large Three gap as well as a shrinking North‐Large Three gap.
Handle: RePEc:nbr:nberwo:17681
Template-Type: ReDIF-Paper 1.0
Title: Global Macroeconomic and Financial Supervision: Where Next?
Classification-JEL: E32; E42; E44; F02; F21; F33; F34; F4; F42; F51
Author-Name: Charles Goodhart
Note: ME POL
Number: 17682
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17682
File-URL: http://www.nber.org/papers/w17682.pdf
File-Format: application/pdf
Publication-Status: published as Global Macroeconomic and Financial Supervision: Where Next?, Charles A. E. Goodhart. in Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Feenstra and Taylor. 2014
Abstract: The overriding practical problem now is the tension between the global financial and market system and the national political and power structures. The main analytical short-coming lies in the failure to incorporate financial frictions, especially default, into our macro-economic models. Neither a move to a global sovereign authority, nor a reversion towards narrower economic nationalism, seems likely to take place in the near future. Meanwhile, the adjustment to economic imbalances remains asymmetric, with almost all the pressure on deficit countries. Almost by definition surplus countries are "virtuous". But current account surpluses have to be matched by net capital outflows. Such capital flows to weaker deficit countries have often had unattractive returns. A program to give earlier and greater warnings of the risks of investing in deficit countries could lead to earlier policy reaction, and reduce the risk of crisis.
Handle: RePEc:nbr:nberwo:17682
Template-Type: ReDIF-Paper 1.0
Title: Schooling Supply and the Structure of Production: Evidence from US States 1950-1990
Classification-JEL: F11; F16; J31; R1
Author-Name: Antonio Ciccone
Author-Person: pci47
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: ITI LS
Number: 17683
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17683
File-URL: http://www.nber.org/papers/w17683.pdf
File-Format: application/pdf
Abstract: We find that over the period 1950-1990, US states absorbed increases in the supply of schooling due to tighter compulsory schooling and child labor laws mostly through within-industry increases in the schooling intensity of production. Shifts in the industry composition towards more schooling-intensive industries played a less important role. To try and understand this finding theoretically, we consider a free trade model with two goods/industries, two skill types, and many regions that produce a fixed range of differentiated varieties of the same goods. We find that a calibrated version of the model can account for shifts in schooling supply being mostly absorbed through within-industry increases in the schooling intensity of production even if the elasticity of substitution between varieties is substantially higher than estimates in the literature.
Handle: RePEc:nbr:nberwo:17683
Template-Type: ReDIF-Paper 1.0
Title: Airports, Air Pollution, and Contemporaneous Health
Classification-JEL: H0; I1; Q5
Author-Name: Wolfram Schlenker
Author-Person: psc210
Author-Name: W. Reed Walker
Author-Person: pwa410
Note: EEE EH
Number: 17684
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17684
File-URL: http://www.nber.org/papers/w17684.pdf
File-Format: application/pdf
Publication-Status: published as Wolfram Schlenker & W. Reed Walker, 2016. "Airports, Air Pollution, and Contemporaneous Health," The Review of Economic Studies, vol 83(2), pages 768-809.
Abstract: Airports are some of the largest sources of air pollution in the United States. We demonstrate that daily airport runway congestion contributes significantly to local pollution levels and contemporaneous health of residents living nearby and downwind from airports. Our research design exploits the fact that network delays originating from large airports on the East Coast increase runway congestion in California, which in turn increases daily pollution levels around California airports. Using the component of California air pollution driven by airport congestion, we find that carbon monoxide (CO) leads to significant increases in hospitalization rates for asthma, respiratory, and heart related emergency room admissions that are an order of magnitude larger than conventional estimates: A one standard deviation increase in daily pollution levels leads to an additional $1 million in hospitalization costs for respiratory and heart related admissions for the 6 million individuals living within 10km (6.2 miles) of the 12 largest airports in California. While infants and the elderly are more sensitive to air pollution, we also find significant relationships for the adult population. The health impacts are driven by CO, not NO2 or O3, and occur at levels far below existing EPA mandates. Our results suggest there may be sizable morbidity benefits from lowering the existing CO standard.
Handle: RePEc:nbr:nberwo:17684
Template-Type: ReDIF-Paper 1.0
Title: The Future of the Government Sponsored Enterprises: The Role for Government in the U.S. Mortgage Market
Classification-JEL: G01; G2; G28; H81; R21; R3
Author-Name: Dwight Jaffee
Author-Name: John M. Quigley
Author-Person: pqu1
Note: PE
Number: 17685
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17685
File-URL: http://www.nber.org/papers/w17685.pdf
File-Format: application/pdf
Publication-Status: published as The Future of the Government-Sponsored Enterprises: The Role for Government in the U.S. Mortgage Market, Dwight Jaffee, John M. Quigley. in Housing and the Financial Crisis, Glaeser and Sinai. 2013
Abstract: This paper analyzes options for reforming the U.S. housing finance system in view of the failure of Fannie Mae and Freddie Mac as government sponsored enterprises (GSEs). The options considered include GSE reform, a range of possible new governmental mortgage guarantee plans, and greater reliance on private mortgage markets. The analysis also considers the likely consequences of adopting alternative roles for government in the U.S. housing and mortgage markets. We start by reviewing the history of the GSEs and their contributions to the operation of U.S. housing and mortgage markets, including the actions that led to their failure in conjunction with the recent mortgage market crisis. The reform options we consider include those proposed in a 2011 U.S. Treasury White Paper, plans for new government mortgage guarantees from various researchers and organizations, and the evidence from Western European countries for the efficacy of private mortgages markets.
Handle: RePEc:nbr:nberwo:17685
Template-Type: ReDIF-Paper 1.0
Title: International Contagion Through Leveraged Financial Institutions
Classification-JEL: E32; F3; F4; G12; G2
Author-Name: Eric van Wincoop
Author-Person: pva387
Note: AP EFG IFM
Number: 17686
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17686
File-URL: http://www.nber.org/papers/w17686.pdf
File-Format: application/pdf
Publication-Status: published as Eric van Wincoop, 2013. "International Contagion through Leveraged Financial Institutions," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 152-89, July.
Abstract: The 2008-2009 financial crises, while originating in the United States, witnessed a drop in asset prices and output that was at least as large in the rest of the world as in the United States. A widely held view is that this was the result of global transmission through leveraged financial institutions. We investigate this in the context of a simple two-country model. The paper highlights what the various transmission mechanisms associated with balance sheet losses are, how they operate, what their magnitudes are and what the role is of different types of borrowing constraints faced by leveraged institutions. For realistic parameters we find that the model cannot account for the global nature of the crisis, both in terms of the size of the impact and the extent of transmission.
Handle: RePEc:nbr:nberwo:17686
Template-Type: ReDIF-Paper 1.0
Title: Capitalizing China
Classification-JEL: G0; H11; J47; K0; N25; P2; Y2
Author-Name: Joseph Fan
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Bernard Yeung
Note: CF
Number: 17687
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17687
File-URL: http://www.nber.org/papers/w17687.pdf
File-Format: application/pdf
Publication-Status: published as Translating Market Socialism with Chinese Characteristics into Sustained Prosperity, Joseph P. H. Fan, Randall Morck, Bernard Yeung. in Capitalizing China, Fan and Morck. 2013
Abstract: Despite a vast accumulation of private capital, China is not embracing capitalism. Deceptively familiar capitalist features disguise the profoundly unfamiliar foundations of "market socialism with Chinese characteristics." The Chinese Communist Party (CCP), by controlling the career advancement of all senior personnel in all regulatory agencies, all state-owned enterprises (SOEs), and virtually all major financial institutions state-owned enterprises (SOEs), and senior Party positions in all but the smallest non-SOE enterprises, retains sole possession of Lenin's Commanding Heights. This manuscript introduces the chapters comprising the NBER volume Capitalizing China (Fan and Morck, eds. 2012), which examine China's high savings rate, banking system, financial markets, financial regulations, corporate governance, and public finances; and consider policy alternatives the CCP might consider if its goal is China's elevation into the ranks of high income countries.
Handle: RePEc:nbr:nberwo:17687
Template-Type: ReDIF-Paper 1.0
Title: Consumption and the Great Recession
Classification-JEL: E10; E21; E31; H31
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Author-Name: Eric French
Author-Person: pfr203
Author-Name: David Benson
Note: EFG PE
Number: 17688
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17688
File-URL: http://www.nber.org/papers/w17688.pdf
File-Format: application/pdf
Publication-Status: published as Mariacristina De Nardi & Eric French & David Benson, 2012. "Consumption and the Great Recession," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 1-16.
Abstract: We document some key facts about aggregate consumption and its subcomponents over time. We then document the behavior of some important determinants of consumption, such as consumers' expectations about their future income, and changes in the consumers' wealth positions. Finally, we use a simple permanent income model to show that the observed drop in consumption during the Great Recession can be explained by the observed drops in wealth and income expectations.
Handle: RePEc:nbr:nberwo:17688
Template-Type: ReDIF-Paper 1.0
Title: Medicaid and the Elderly
Classification-JEL: H1; H31; I13
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Author-Name: Eric French
Author-Person: pfr203
Author-Name: John Bailey Jones
Author-Person: pjo135
Author-Name: Angshuman Gooptu
Note: EH PE
Number: 17689
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17689
File-URL: http://www.nber.org/papers/w17689.pdf
File-Format: application/pdf
Publication-Status: published as Mariacristina De Nardi & Eric French & John Bailey Jones & Angshuman Gooptu, 2012. "Medicaid and the elderly," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 17-34.
Abstract: We describe the Medicaid eligibility rules for the elderly. Medicaid is administered jointly by the Federal and state governments, and each state has significant flexibility on the details of the implementation. We document the features common to all states, but we also highlight the most salient state-level differences. There are two main pathways to Medicaid eligibility for people over age 65: either having low assets and income, or being impoverished due to large medical expenses. The first group of recipients (the categorically needy) mostly includes life-long poor individuals, while the second group (the medically needy) includes people who might have earned substantial amounts of money during their lifetime but have become impoverished by large medical expenses. The categorically needy program thus only affects the savings decision of people who have been poor throughout most of their lives. In contrast, the medically needy program provides some insurance even to people who have higher income and assets. Thus, this second pathway is to some extent going to affect the savings of the relatively higher income and assets people.
Handle: RePEc:nbr:nberwo:17689
Template-Type: ReDIF-Paper 1.0
Title: Do Cash Transfers Improve Birth Outcomes? Evidence from Matched Vital Statistics, Social Security and Program Data
Classification-JEL: I38; J13; J88
Author-Name: Verónica Amarante
Author-Name: Marco Manacorda
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Andrea Vigorito
Author-Person: pvi272
Note: CH EH LS PE
Number: 17690
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17690
File-URL: http://www.nber.org/papers/w17690.pdf
File-Format: application/pdf
Publication-Status: published as Verónica Amarante & Marco Manacorda & Edward Miguel & Andrea Vigorito, 2016. "Do Cash Transfers Improve Birth Outcomes? Evidence from Matched Vital Statistics, and Program and Social Security Data," American Economic Journal: Economic Policy, vol 8(2), pages 1-43.
Abstract: There is limited empirical evidence on whether unrestricted cash social assistance to poor pregnant women improves children's birth outcomes. Using program administrative micro-data matched to longitudinal vital statistics on the universe of births in Uruguay, we estimate that participation in a generous cash transfer program led to a sizeable 15% reduction in the incidence of low birthweight. Improvements in mother nutrition and a fall in labor supply, out-of-wedlock births and mother's smoking all appear to contribute to the effect. We conclude that, by improving child health, unrestricted unconditional cash transfers may help break the cycle of intergenerational poverty.
Handle: RePEc:nbr:nberwo:17690
Template-Type: ReDIF-Paper 1.0
Title: Home Bias in Open Economy Financial Macroeconomics
Classification-JEL: F21; F3; F32; F4; F41; G11
Author-Name: Nicolas Coeurdacier
Author-Person: pco481
Author-Name: Hélène Rey
Author-Person: pre8
Note: AP CF IFM ME
Number: 17691
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17691
File-URL: http://www.nber.org/papers/w17691.pdf
File-Format: application/pdf
Publication-Status: published as Nicolas Coeurdacier & Hélène Rey, 2013. "Home Bias in Open Economy Financial Macroeconomics," Journal of Economic Literature, American Economic Association, vol. 51(1), pages 63-115, March.
Abstract: Home bias is a perennial feature of international capital markets. We review various explanations of this puzzling phenomenon highlighting recent developments in macroeconomic modelling that incorporate international portfolio choices in standard two-country general equilibrium models. We refer to this new literature as Open Economy Financial Macroeconomics. We focus on three broad classes of explanations: (i) hedging motives in frictionless financial markets (real exchange rate and non-tradable income risk), (ii) asset trade costs in international financial markets (such as transaction costs or differences in tax treatments between national and foreign assets), (iii) informational frictions and behavioural biases. Recent theories call for new portfolio facts beyond equity home bias. We present new evidence on crossborder asset holdings across different types of assets: equities, bonds and bank lending and new micro data on institutional holdings of equity at the fund level. These data should inform macroeconomic modelling of the open economy and a growing literature of models of delegated investment.
Handle: RePEc:nbr:nberwo:17691
Template-Type: ReDIF-Paper 1.0
Title: Adjustment patterns to commodity terms of trade shocks: the role of exchange rate and international reserves policies
Classification-JEL: F1; F15; F31; F32; F36; O13; O54
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Sebastian Edwards
Author-Person: ped3
Author-Name: Daniel Riera-Crichton
Author-Person: pri120
Note: IFM ITI
Number: 17692
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17692
File-URL: http://www.nber.org/papers/w17692.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Edwards, Sebastian & Riera-Crichton, Daniel, 2012. "Adjustment patterns to commodity terms of trade shocks: The role of exchange rate and international reserves policies," Journal of International Money and Finance, Elsevier, vol. 31(8), pages 1990-2016.
Abstract: We analyze the way in which Latin American countries have adjusted to commodity terms of trade (CTOT) shocks in the 1970-2007 period. Specifically, we investigate the degree to which the active management of international reserves and exchange rates impacted the transmission of international price shocks to real exchange rates. We find that active reserve management not only lowers the short-run impact of CTOT shocks significantly, but also affects the long-run adjustment of REER, effectively lowering its volatility. We also show that relatively small increases in the average holdings of reserves by Latin American economies (to levels still well below other emerging regions current averages) would provide a policy tool as effective as a fixed exchange rate regime in insulating the economy from CTOT shocks. Reserve management could be an effective alternative to fiscal or currency policies for relatively trade closed countries and economies with relatively poor institutions or high government debt. Finally, we analyze the effects of active use of reserve accumulation aimed at smoothing REERs. The result support the view that "leaning against the wind" is potent, but more effective when intervening to support weak currencies rather than intervening to slow down the pace of real appreciation. The active reserve management reduces substantially REER volatility.
Handle: RePEc:nbr:nberwo:17692
Template-Type: ReDIF-Paper 1.0
Title: Employment Protection Legislation and Plant-Level Productivity in India
Classification-JEL: D24; F16; J5; J8; K31
Author-Name: Sean Dougherty
Author-Person: pdo17
Author-Name: Verónica C. Frisancho Robles
Author-Person: pfr267
Author-Name: Kala Krishna
Author-Person: pkr26
Note: ITI PR
Number: 17693
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17693
File-URL: http://www.nber.org/papers/w17693.pdf
File-Format: application/pdf
Publication-Status: published as "Employment Protection Legislation and Plant-Level Productivity in India" With Sean Dougherty and Verónica Frisancho Robles. India Policy Forum, Volume 10.
Abstract: Using plant-level data from the Annual Survey of Industries (ASI) for the fiscal years from 1998-99 through 2007-08, this study provides plant-level cross-state/time-series evidence of the impact of employment protection legislation (EPL) on total factor productivity (TFP) and labor productivity in India. Identification of the effect of EPL follows from a difference-in-differences estimator inspired by Rajan and Zingales (1998) that takes advantage of the state-level variation in labor regulation and heterogeneous industry characteristics. The fundamental identification assumption is that EPL is more likely to restrict firms operating in industries with higher labor intensity and/or higher sales volatility. Our results show that firms in labor intensive or more volatile industries benefited the most from labor reforms in their states. Our point estimates indicate that, on average, firms in labor intensive industries and in flexible labor markets have TFP residuals 14% higher than those registered for their counterparts in states with more stringent labor laws. However, no important differences are identified among plants in industries with low labor intensity when comparing states with high and low levels of EPL reform. Similarly, the TFP of plants in volatile industries and in states that experienced more pro-employer reforms is 11% higher than that of firms in volatile industries and in more restrictive states; however, the TFP residuals of plants in industries with low labor intensity are 11% lower in high EPL reform states than in states with lower levels of EPL reform. In sum, the evidence presented here suggests that the high labor costs and rigidities imposed through Indian federal labor laws are lessened by labor market reforms at the state level.
Handle: RePEc:nbr:nberwo:17693
Template-Type: ReDIF-Paper 1.0
Title: Can Compulsory Military Service Increase Civilian Wages? Evidence from the Peacetime Draft in Portugal
Classification-JEL: J24; J31
Author-Name: David Card
Author-Person: pca271
Author-Name: Ana Rute Cardoso
Author-Person: pca97
Note: LS
Number: 17694
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17694
File-URL: http://www.nber.org/papers/w17694.pdf
File-Format: application/pdf
Publication-Status: published as Card, David, and Ana Rute Cardoso. 2012. "Can Compulsory Military Service Raise Civilian Wages? Evidence from the Peacetime Draft in Portugal." American Economic Journal: Applied Economics, 4(4): 57-93. DOI: 10.1257/app.4.4.57
Abstract: Although military conscription was widespread during most of the past century, credible evidence on the effects of mandatory service is limited. We provide new evidence on the long-term effects of peacetime conscription, using longitudinal data for Portuguese men born in 1967. These men were inducted at a relatively late age (21), allowing us to use pre-conscription wages to control for ability differences between conscripts and non-conscripts. We find that the average impact of military service for men who were working prior to age 21 is close to zero throughout the period from 2 to 20 years after their service. These small average effects arise from a significant 4-5 percentage point impact for men with only primary education, coupled with a zero-effect for men with higher education. The positive impacts for less-educated men suggest that mandatory service can be a valuable experience for those who might otherwise spend their careers in low-level jobs.
Handle: RePEc:nbr:nberwo:17694
Template-Type: ReDIF-Paper 1.0
Title: The Private and Public Economics of Renewable Electricity Generation
Classification-JEL: L94; Q42; Q48
Author-Name: Severin Borenstein
Author-Person: pbo78
Note: EEE IO
Number: 17695
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17695
File-URL: http://www.nber.org/papers/w17695.pdf
File-Format: application/pdf
Publication-Status: published as Severin Borenstein, 2012. "The Private and Public Economics of Renewable Electricity Generation," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 67-92, Winter.
Abstract: Generating electricity from renewable sources is more expensive than conventional approaches, but reduces pollution externalities. Analyzing the tradeoff is much more challenging than often presumed, because the value of electricity is extremely dependent on the time and location at which it is produced, which is not very controllable with some renewables, such as wind and solar. Likewise, the pollution benefits from renewable generation depend on what type of generation it displaces, which also depends on time and location. Without incorporating these factors, cost-benefit analyses of alternatives are likely to be misleading. However, other common arguments for subsidizing renewable power - green jobs, energy security and driving down fossil energy prices - are unlikely to substantially alter the analysis. The role of intellectual property spillovers is a strong argument for subsidizing energy science research, but less persuasive as an enhancement to the value of installing current renewable energy technologies.
Handle: RePEc:nbr:nberwo:17695
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Income Smoothing When Insiders Know More Than Outsiders
Classification-JEL: D82; D92; G32; G35; M41; M42; O43
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Bart M. Lambrecht
Note: CF LE
Number: 17696
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17696
File-URL: http://www.nber.org/papers/w17696.pdf
File-Format: application/pdf
Publication-Status: published as Viral V. Acharya & Bart M. Lambrecht, 2015. "A Theory of Income Smoothing When Insiders Know More Than Outsiders," Review of Financial Studies, vol 28(9), pages 2534-2574.
Abstract: We consider a setting in which insiders have information about income that outside shareholders do not, but property rights ensure that outside shareholders can enforce a fair payout. To avoid intervention, insiders report income consistent with outsiders' expectations based on publicly available information rather than true income, resulting in an observed income and payout process that adjust partially and over time towards a target. Insiders under-invest in production and effort so as not to unduly raise outsiders' expectations about future income, a problem that is more severe the smaller is the inside ownership and results in an "outside equity Laffer curve". A disclosure environment with adequate quality of independent auditing mitigates the problem, implying that accounting quality can enhance investments, size of public stock markets and economic growth.
Handle: RePEc:nbr:nberwo:17696
Template-Type: ReDIF-Paper 1.0
Title: The Unsustainable Rise of the Disability Rolls in the United States: Causes, Consequences, and Policy Options
Classification-JEL: H51; I13; J18
Author-Name: David H. Autor
Author-Person: pau9
Note: EH LS PE
Number: 17697
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17697
File-URL: http://www.nber.org/papers/w17697.pdf
File-Format: application/pdf
Abstract: Two ailments limit the effectiveness and threaten the long-term viability of the U.S. Social Security Disability Insurance program (SSDI). First, the program is ineffective in assisting the vast majority of workers with less severe disabilities to reach their employment potential or earn their own way. Second, the program's expenditures on cash transfers and medical benefits-- exceeding $1,500 per U.S. household--are extremely high and growing unsustainably. There is no compelling evidence, however, that the incidence of disabling conditions among the U.S. working age population is rising. This paper discusses the challenges facing the SSDI program, explains how its design has led to rapid and unsustainable growth, considers why past efforts to slow program growth have met with minimal and fleeting success, and outlines three recent proposals that would modify the program to slow growth while potentially improving the employment prospects of workers with disabilities. Because these proposals depart substantially from a program design that has seen little change in half a century, their efficacy is unproven. Additionally, even well-meaning efforts to place the SSDI program on a sustainable trajectory run the risk of creating additional hurdles for claimants who are truly unable to work. Nevertheless, the imminent exhaustion of the SSDI Trust Fund provides an impetus and an opportunity to explore innovative solutions to the longstanding policy challenges posed by the SSDI program.
Handle: RePEc:nbr:nberwo:17697
Template-Type: ReDIF-Paper 1.0
Title: Heteroskedasticity-Robust Inference in Finite Samples
Classification-JEL: C01; C12
Author-Name: Jerry A. Hausman
Author-Person: pha893
Author-Name: Christopher J. Palmer
Note: TWP
Number: 17698
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17698
File-URL: http://www.nber.org/papers/w17698.pdf
File-Format: application/pdf
Publication-Status: published as Economics Letters, Volume 116, Issue 2, August 2012, Pages 232-235
Abstract: Since the advent of heteroskedasticity-robust standard errors, several papers have proposed adjustments to the original White formulation. We replicate earlier findings that each of these adjusted estimators performs quite poorly in finite samples. We propose a class of alternative heteroskedasticity-robust tests of linear hypotheses based on an Edgeworth expansions of the test statistic distribution. Our preferred test outperforms existing methods in both size and power for low, moderate, and severe levels of heteroskedasticity.
Handle: RePEc:nbr:nberwo:17698
Template-Type: ReDIF-Paper 1.0
Title: The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in Adulthood
Classification-JEL: I2; J24
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: John N. Friedman
Author-Name: Jonah E. Rockoff
Note: ED LS PE CH
Number: 17699
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17699
File-URL: http://www.nber.org/papers/w17699.pdf
File-Format: application/pdf
Publication-Status: published as Chetty, Raj, John N. Friedman, and Jonah E. Rockoff. 2014. "Measuring the Impacts of Teachers I: Evaluating Bias in Teacher Value-Added Estimates." American Economic Review, 104(9): 2593-2632.
Abstract: Are teachers' impacts on students' test scores ("value-added") a good measure of their quality? This question has sparked debate largely because of disagreement about (1) whether value-added (VA) provides unbiased estimates of teachers' impacts on student achievement and (2) whether high-VA teachers improve students' long-term outcomes. We address these two issues by analyzing school district data from grades 3-8 for 2.5 million children linked to tax records on parent characteristics and adult outcomes. We find no evidence of bias in VA estimates using previously unobserved parent characteristics and a quasi-experimental research design based on changes in teaching staff. Students assigned to high-VA teachers are more likely to attend college, attend higher- ranked colleges, earn higher salaries, live in higher SES neighborhoods, and save more for retirement. They are also less likely to have children as teenagers. Teachers have large impacts in all grades from 4 to 8. On average, a one standard deviation improvement in teacher VA in a single grade raises earnings by about 1% at age 28. Replacing a teacher whose VA is in the bottom 5% with an average teacher would increase the present value of students' lifetime income by more than $250,000 for the average class- room in our sample. We conclude that good teachers create substantial economic value and that test score impacts are helpful in identifying such teachers.
Handle: RePEc:nbr:nberwo:17699
Template-Type: ReDIF-Paper 1.0
Title: Catch-up Growth Followed by Stagnation: Mexico, 1950-2010
Classification-JEL: N16; O11; O54
Author-Name: Timothy J. Kehoe
Author-Person: pke16
Author-Name: Felipe Meza
Author-Person: pme295
Note: EFG
Number: 17700
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17700
File-URL: http://www.nber.org/papers/w17700.pdf
File-Format: application/pdf
Publication-Status: published as “Catch-up Growth Followed by Stagnation: Mexico, 1950–2010,” Latin American Journal of Economics, 48 (2011), 227–68, with Felipe Meza.
Abstract: In 1950 Mexico entered an economic takeoff and grew rapidly for more than 30 years. Growth stopped during the crises of 1982-1995, despite major reforms, including liberalization of foreign trade and investment. Since then growth has been modest. We analyze the economic history of Mexico 1877-2010. We conclude that the growth 1950-1981 was driven by urbanization, industrialization, and education and that Mexico would have grown even more rapidly if trade and investment had been liberalized sooner. If Mexico is to resume rapid growth -- so that it can approach U.S. levels of income -- it needs further reforms.
Handle: RePEc:nbr:nberwo:17700
Template-Type: ReDIF-Paper 1.0
Title: Income Inequality and Social Preferences for Redistribution and Compensation Differentials
Classification-JEL: D31; D33; D61; D63; D64; D72; H23; H53; I38; J31; R11
Author-Name: William R. Kerr
Author-Person: pke127
Note: EFG LS PE POL PR
Number: 17701
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17701
File-URL: http://www.nber.org/papers/w17701.pdf
File-Format: application/pdf
Publication-Status: published as Kerr, William R. "Income Inequality and Social Preferences for Redistribution and Compensation Differentials." Journal of Monetary Economics (forthcoming).
Abstract: In cross-sectional studies, countries with greater income inequality typically exhibit less support for government-led redistribution and greater acceptance of wage inequality (e.g., United States versus Western Europe). If individual nations evolve along this pattern, a vicious cycle could form with reduced social concern amplifying primal increases in inequality due to forces like skill-biased technical change. Exploring movements around these long-term levels, however, this study finds mixed evidence regarding the vicious cycle hypothesis. On one hand, larger compensation differentials are accepted as inequality grows. This growth in differentials is of a smaller magnitude than the actual increase in inequality, but it is nonetheless positive and substantial in size. Weighing against this, growth in inequality is met with greater support for government-led redistribution to the poor. These patterns suggest that short-run inequality shocks can be reinforced in the labor market but do not result in weaker political preferences for redistribution.
Handle: RePEc:nbr:nberwo:17701
Template-Type: ReDIF-Paper 1.0
Title: Women's Empowerment and Economic Development
Classification-JEL: D1; O1; O12
Author-Name: Esther Duflo
Author-Person: pdu166
Note: CH
Number: 17702
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17702
File-URL: http://www.nber.org/papers/w17702.pdf
File-Format: application/pdf
Publication-Status: published as “Women’s Empowerment and Economic Development”, Journal of Economic Literature, Vol. 50, No. 4: 1051-79, December 2012. (also see NBER Working Paper No. 17702, 2011; CEPR Discussion Paper 8734, BREAD Policy Paper 29, 2011).
Abstract: Women's empowerment and economic development are closely related: in one direction, development alone can play a major role in driving down inequality between men and women; in the other direction, empowering women may benefit development. Does this imply that pushing just one of these two levers would set a virtuous circle in motion? This paper reviews the literature on both sides of the empowerment-development nexus, and argues that the inter-relationships are probably too weak to be self-sustaining, and that continuous policy commitment to equality for its own sake may be needed to bring about equality between men and women.
Handle: RePEc:nbr:nberwo:17702
Template-Type: ReDIF-Paper 1.0
Title: Does Retiree Health Insurance Encourage Early Retirement?
Classification-JEL: I11; J26; J32; J63
Author-Name: Steven Nyce
Author-Name: Sylvester Schieber
Author-Name: John B. Shoven
Author-Name: Sita Slavov
Author-Person: pna81
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG
Number: 17703
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17703
File-URL: http://www.nber.org/papers/w17703.pdf
File-Format: application/pdf
Publication-Status: published as Nyce, Steven & Schieber, Sylvester J. & Shoven, John B. & Slavov, Sita Nataraj & Wise, David A., 2013. "Does retiree health insurance encourage early retirement?," Journal of Public Economics, Elsevier, vol. 104(C), pages 40-51.
Abstract: The strong link between health insurance and employment in the United States may cause workers to delay retirement until they become eligible for Medicare at age 65. However, some employers extend health insurance benefits to their retirees, and individuals who are eligible for such retiree health benefits need not wait until age 65 to retire with group health coverage. We investigate the impact of retiree health insurance on early retirement using employee-level data from 64 diverse firms that are clients of Towers Watson, a leading benefits consulting firm. We find that retiree health coverage has its strongest effects at ages 62 and 63, resulting in a 3.7 percentage point (21.2 percent) increase in the probability of turnover at age 62 and a 5.1 percentage point (32.2 percent) increase in the probability of turnover at age 63; it has a more modest effects for individuals under the age of 62. A more generous employer contribution of 50 percent or more raises turnover by 1-3 percentage points at ages 56-61, by 5.9 percentage points (33.7 percent) at age 62, and by 6.9 percentage points (43.7 percent) at age 63. Overall, an employer contribution of 50 percent or more reduces the total number of person-years worked between ages 56 and 64 by 9.6 percent relative to no coverage.
Handle: RePEc:nbr:nberwo:17703
Template-Type: ReDIF-Paper 1.0
Title: Children's Schooling and Parents' Investment in Children: Evidence from the Head Start Impact Study
Classification-JEL: H31; H52; I21; I28; J13
Author-Name: Alexander M. Gelber
Author-Name: Adam Isen
Note: CH ED LS PE
Number: 17704
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17704
File-URL: http://www.nber.org/papers/w17704.pdf
File-Format: application/pdf
Publication-Status: published as “Children’s Schooling and Parents’ Behavior: Evidence from the Head Start Impact Study,” with Adam Isen, Journal of Public Economics 2013, 101, 25-38.
Abstract: Parents may have important effects on their children, but little work in economics explores whether children's schooling opportunities crowd out or encourage parents' investment in children. We analyze data from the Head Start Impact Study, which granted randomly-chosen preschool-aged children the opportunity to attend Head Start. We find that Head Start causes a substantial increase in parents' involvement with their children--such as time spent reading to children, math activities, or days spent with children by fathers who do not live with their children--both during and after the period when their children are potentially enrolled in Head Start. We discuss a variety of mechanisms that are consistent with our findings, including a simple model we present in which Head Start impacts parent involvement in part because parents perceive their involvement to be complementary with child schooling in the production of child qualities.
Handle: RePEc:nbr:nberwo:17704
Template-Type: ReDIF-Paper 1.0
Title: The Competitiveness Impacts of Climate Change Mitigation Policies
Classification-JEL: F18; Q52; Q54
Author-Name: Joseph E. Aldy
Author-Person: pal158
Author-Name: William A. Pizer
Author-Person: ppi108
Note: EEE ITI
Number: 17705
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17705
File-URL: http://www.nber.org/papers/w17705.pdf
File-Format: application/pdf
Publication-Status: published as Joseph E. Aldy & William A. Pizer, 2015. "The Competitiveness Impacts of Climate Change Mitigation Policies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(4), pages 565 - 595.
Abstract: The pollution haven hypothesis suggests that unilateral domestic climate change mitigation policy would impose significant economic costs on carbon-intensive industries, resulting in declining output and increasing net imports. In order to evaluate this hypothesis, we undertake a two-step empirical analysis. First, we use historic energy prices as a proxy for climate change mitigation policy. We estimate how production and net imports change in response to energy prices using a 35-year panel of approximately 450 U.S. manufacturing industries. Second, we take these estimated relationships and use them to simulate the impacts of changes in energy prices resulting from a domestic climate change mitigation policy that effectively imposes a $15 per ton carbon price. We find that energy-intensive manufacturing industries are more likely to experience decreases in production and increases in net imports than less-intensive industries. Our best estimate is that competitiveness effects – measured by the increase in net imports – are as large as 0.8 percent for the most energy-intensive industries and represent no more than about one-sixth of the estimated decrease in production under a $15 per ton carbon price.
Handle: RePEc:nbr:nberwo:17705
Template-Type: ReDIF-Paper 1.0
Title: Export Prices of U.S. Firms
Classification-JEL: F1; F10; F23
Author-Name: James Harrigan
Author-Person: pha151
Author-Name: Xiangjun Ma
Author-Name: Victor Shlychkov
Note: ITI
Number: 17706
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17706
File-URL: http://www.nber.org/papers/w17706.pdf
File-Format: application/pdf
Publication-Status: published as Harrigan, James & Ma, Xiangjun & Shlychkov, Victor, 2015. "Export prices of U.S. firms," Journal of International Economics, Elsevier, vol. 97(1), pages 100-111.
Abstract: Using confidential firm-level data from the United States in 2002, we show that exporting firms charge prices for narrowly defined goods that differ substantially with the characteristics of firms and export markets. We control for selection into export markets using a three-stage estimator. We have three main results. First, we find that highly productive and skill-intensive firms charge higher prices, while capital-intensive firms charge lower prices. Second, U.S. firms charge slightly higher prices to larger and richer markets, and substantially higher prices to markets other than Canada and Mexico. Third, the correlation between distance and product-level export prices is largely due to a composition effect.
Handle: RePEc:nbr:nberwo:17706
Template-Type: ReDIF-Paper 1.0
Title: Organization of Disaster Aid Delivery: Spending Your Donations
Classification-JEL: F35; H4; H5; H84; L2; L3
Author-Name: J. Vernon Henderson
Author-Person: phe30
Author-Name: Yong Suk Lee
Author-Person: ple637
Note: PE
Number: 17707
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17707
File-URL: http://www.nber.org/papers/w17707.pdf
File-Format: application/pdf
Publication-Status: published as J. Vernon Henderson & Yong Suk Lee, 2015. "Organization of Disaster Aid Delivery: Spending Your Donations," Economic Development and Cultural Change, University of Chicago Press, vol. 63(4), pages 617 - 664.
Abstract: This paper analyzes how different organizational structures between funding and implementing agencies affect the quality of aid delivered and social agendas pursued across neighboring villages in a set disaster context. We model the implied objective functions and trade-offs concerning aid quality, aid quantity, and social agendas of different types of agencies. We analyze three waves of survey data on fishermen and fishing villages in Aceh, Indonesia from 2005-2009, following the tsunami. Different organizational structures result in significantly different qualities of hard aid, differential willingness to share aid delivery with other NGOs in a village, and differential promotion of public good objectives and maintenance of village religious and occupational traditions. This is the first time these aspects have been modeled and quantified in the literature. Some well known international NGOs delivered housing with relatively low rates of reported faults such as leaky roofs and cracked walls; others had relatively high rates. For boats, some had very high rates of boat "failure", boats that sank upon launch, were not seaworthy, or fell apart within a month or two. We also document how a social agenda of particular agencies to promote greater equality can be thwarted and distorted by village leaders, potentially increasing inequality.
Handle: RePEc:nbr:nberwo:17707
Template-Type: ReDIF-Paper 1.0
Title: Multilateral Economic Cooperation and the International Transmission of Fiscal Policy
Classification-JEL: E62; F42
Author-Name: Giancarlo Corsetti
Author-Name: Gernot J. Müller
Author-Person: pml7
Note: IFM
Number: 17708
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17708
File-URL: http://www.nber.org/papers/w17708.pdf
File-Format: application/pdf
Publication-Status: published as Multilateral Economic Cooperation and the International Transmission of Fiscal Policy, Giancarlo Corsetti, Gernot J. Müller. in Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Feenstra and Taylor. 2014
Abstract: During the global financial crisis 2007-2009 fiscal policy was widely used as a stabilization tool. Policymakers allowed a large build-up of public debt resulting from both automatic and discretionary expansionary measures. At the same time, calls for policy coordination stressed that international spillovers of fiscal policy might be sizeable. We reconsider the case for fiscal coordination by providing new evidence on the cross-border effects of discretionary fiscal measures. We rely on a vector autoregression model as well as on a quantitative business cycle model. We find that i) large spillover effects cannot be ruled out and, in contrast to conventional wisdom, ii) financial factors rather than trade flows lie at the heart of the international transmission mechanism. We discuss the implications of these results for policy coordination when markets price sovereign default risk, and put pressure on governments for implementing budget consolidation measures.
Handle: RePEc:nbr:nberwo:17708
Template-Type: ReDIF-Paper 1.0
Title: The Virtuous Tax: Lifesaving and Crime-Prevention Effects of the 1991 Federal Alcohol-Tax Increase
Classification-JEL: H2; H23; I12; K42
Author-Name: Philip J. Cook
Author-Person: pco30
Author-Name: Christine Piette Durrance
Note: EH PE
Number: 17709
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17709
File-URL: http://www.nber.org/papers/w17709.pdf
File-Format: application/pdf
Publication-Status: published as P.J. Cook and C.P. Durrance. "The virtuous tax: Lifesaving and crime-prevention effects of the 1991 federal alcohol-tax." Journal of Health Economics 32 (2013): 261-267.
Abstract: On January 1, 1991, the federal excise tax on beer doubled, and the tax rates on wine and liquor increased as well. These changes are larger than the typical state-level changes that have been used to study the effect of price on alcohol abuse and its consequences. In this paper, we develop a method to estimate some important effects of those large 1991 changes, exploiting the interstate differences in alcohol consumption. We demonstrate that the relative importance of drinking in traffic fatalities is closely tied to per capita alcohol consumption across states. As a result, we expect that the proportional effects of the federal tax increase on traffic fatalities would be positively correlated with per capita consumption. We demonstrate that this is indeed the case, and infer estimates of the price elasticity and lives saved in each state. We repeat this exercise for other injury-fatality rates, and for nine categories of crime. For each outcome, the estimated effect of the tax increase is negatively related to average consumption, and that relationship is highly significant for the overall injury death rate, the violent crime rate, and the property crime rate. A conservative estimate is that the federal tax reduced injury deaths by 4.7%, or almost 7,000, in 1991.
Handle: RePEc:nbr:nberwo:17709
Template-Type: ReDIF-Paper 1.0
Title: The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?
Classification-JEL: I2; I23; J24
Author-Name: David J. Deming
Author-Person: pde497
Author-Name: Claudia Goldin
Author-Person: pgo601
Author-Name: Lawrence F. Katz
Author-Person: pka266
Note: CH ED LS
Number: 17710
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17710
File-URL: http://www.nber.org/papers/w17710.pdf
File-Format: application/pdf
Publication-Status: published as David J. Deming & Claudia Goldin & Lawrence F. Katz, 2012. "The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 139-64, Winter.
Abstract: Private for-profit institutions have been the fastest growing part of the U.S. higher education sector. For-profit enrollment increased from 0.2 percent to 9.1 percent of total enrollment in degree-granting schools from 1970 to 2009, and for-profit institutions account for the majority of enrollments in non-degree granting postsecondary schools. We describe the schools, students, and programs in the for-profit higher education sector, its phenomenal recent growth, and its relationship to the federal and state governments. Using the 2004 to 2009 Beginning Postsecondary Students (BPS) longitudinal survey we assess outcomes of a recent cohort of first-time undergraduates who attended for-profits relative to comparable students who attended community colleges or other public or private non-profit institutions. We find that relative to these other institutions, for-profits educate a larger fraction of minority, disadvantaged, and older students, and they have greater success at retaining students in their first year and getting them to complete short programs at the certificate and associate degree levels. But we also find that for-profit students end up with higher unemployment and "idleness" rates and lower earnings six years after entering programs than do comparable students from other schools, and that they have far greater student debt burdens and default rates on their student loans.
Handle: RePEc:nbr:nberwo:17710
Template-Type: ReDIF-Paper 1.0
Title: Intermediaries in International Trade: Direct versus indirect modes of export
Classification-JEL: D22; F12; F14; L22; L23
Author-Name: Andrew B. Bernard
Author-Name: Marco Grazzi
Author-Person: pgr124
Author-Name: Chiara Tomasi
Author-Person: pto137
Note: ITI
Number: 17711
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17711
File-URL: http://www.nber.org/papers/w17711.pdf
File-Format: application/pdf
Abstract: This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different products than manufacturing exporters. In particular, high market-specific fixed costs of exporting, the (lack of) quality of the general contracting environment and product-specific factors play important roles in explaining the existence of export intermediaries. These underlying differences between direct and intermediary exporters have important consequences for trade flows. The ability of export intermediaries to overcome country and product fixed costs means that they can more easily respond along the extensive margin to external shocks. Intermediaries and direct exporters respond differently to exchange rate fluctuations both in terms of the total value of shipments and the number of products exported as well as in terms of prices and quantities. Aggregate exports to destinations with high shares of indirect exports are much less responsive to changes in the real exchange rate than are exports to countries served primarily by direct exporters.
Handle: RePEc:nbr:nberwo:17711
Template-Type: ReDIF-Paper 1.0
Title: Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-09
Classification-JEL: F10; F15; F17; F4
Author-Name: Matthieu Bussière
Author-Person: pbu118
Author-Name: Giovanni Callegari
Author-Person: pca362
Author-Name: Fabio Ghironi
Author-Person: pgh2
Author-Name: Giulia Sestieri
Author-Person: pse336
Author-Name: Norihiko Yamano
Note: IFM ITI
Number: 17712
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17712
File-URL: http://www.nber.org/papers/w17712.pdf
File-Format: application/pdf
Publication-Status: published as Matthieu Bussière & Giovanni Callegari & Fabio Ghironi & Giulia Sestieri & Norihiko Yamano, 2013. "Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 118-51, July.
Abstract: This paper introduces a new methodology for the estimation of demand trade elasticities based on an import intensity-adjusted measure of aggregate demand, with the foundation of a stylized theoretical model. We compute the import intensity of demand components by using the OECD Input-Output tables. We argue that the composition of demand plays a key role in trade dynamics because of the large movements in the most import-intensive categories of expenditure (especially investment, but also exports). We provide evidence in favor of these mechanisms for a panel of 18 OECD countries, paying particular attention to the 2008-09 Great Trade Collapse.
Handle: RePEc:nbr:nberwo:17712
Template-Type: ReDIF-Paper 1.0
Title: Fasting During Pregnancy and Children's Academic Performance
Classification-JEL: I12; I14; I24; J15
Author-Name: Douglas Almond
Author-Person: pal938
Author-Name: Bhashkar Mazumder
Author-Person: pma1341
Author-Name: Reyn van Ewijk
Author-Person: pva404
Note: AG CH ED EH
Number: 17713
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17713
File-URL: http://www.nber.org/papers/w17713.pdf
File-Format: application/pdf
Abstract: We consider the effects of daytime fasting by pregnant women during the lunar month of Ramadan on their children's test scores at age seven. Using English register data, we find that scores are .05 to .08 standard deviations lower for Pakistani and Bangladeshi students exposed to Ramadan in early pregnancy. These estimates are downward biased to the extent that Ramadan is not universally observed. We conclude that the effects of prenatal investments on test scores are comparable to many conventional educational interventions but are likely to be more cost effective and less subject to "fade out".
Handle: RePEc:nbr:nberwo:17713
Template-Type: ReDIF-Paper 1.0
Title: Human Capital Risk, Contract Enforcement, and the Macroeconomy
Classification-JEL: D52; E21; E24; J24
Author-Name: Tom Krebs
Author-Person: pkr48
Author-Name: Moritz Kuhn
Author-Person: pku274
Author-Name: Mark L. J. Wright
Author-Person: pwr6
Note: EFG
Number: 17714
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17714
File-URL: http://www.nber.org/papers/w17714.pdf
File-Format: application/pdf
Publication-Status: published as Tom Krebs & Moritz Kuhn & Mark L. J. Wright, 2015. "Human Capital Risk, Contract Enforcement, and the Macroeconomy," American Economic Review, American Economic Association, vol. 105(11), pages 3223-72, November.
Abstract: We develop a macroeconomic model with physical and human capital, human capital risk, and limited contract enforcement. We show analytically that young (high-return) households are the most exposed to human capital risk and are also the least insured. We document this risk-insurance pattern in data on life-insurance drawn from the Survey of Consumer Finance. A calibrated version of the model can quantitatively account for the life-cycle variation of insurance observed in the US data and implies welfare costs of under-insurance for young households that are equivalent to a 4 percent reduction in lifetime consumption. A policy reform that makes consumer bankruptcy more costly leads to a substantial increase in the volume of credit and insurance.
Handle: RePEc:nbr:nberwo:17714
Template-Type: ReDIF-Paper 1.0
Title: The Effects of California's Paid Family Leave Program on Mothers' Leave-Taking and Subsequent Labor Market Outcomes
Classification-JEL: H75; J13; J18; J2
Author-Name: Maya Rossin-Slater
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Author-Name: Jane Waldfogel
Note: CH LS PE
Number: 17715
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17715
File-URL: http://www.nber.org/papers/w17715.pdf
File-Format: application/pdf
Publication-Status: published as Maya RossinâSlater & Christopher J. Ruhm & Jane Waldfogel, 2013. "The Effects of California's Paid Family Leave Program on Mothersâ LeaveâTaking and Subsequent Labor Market Outcomes," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 32(2), pages 224-245, 03.
Abstract: This analysis uses March Current Population Survey data from 1999-2010 and a differences-in-differences approach to examine how California's first in the nation paid family leave (PFL) program affected leave-taking by mothers following childbirth, as well as subsequent labor market outcomes. We obtain robust evidence that the California program more than doubled the overall use of maternity leave, increasing it from around three to six or seven weeks for the typical new mother - with particularly large growth for less advantaged groups. We also provide suggestive evidence that PFL increased the usual weekly work hours of employed mothers of one-to-three year-old children by 6 to 9% and that their wage incomes may have risen by a similar amount.
Handle: RePEc:nbr:nberwo:17715
Template-Type: ReDIF-Paper 1.0
Title: Trade And Industrialisation After Globalisation's 2nd Unbundling: How Building And Joining A Supply Chain Are Different And Why It Matters
Classification-JEL: F1; F2; F21; F23; F43
Author-Name: Richard Baldwin
Author-Person: pba124
Note: ITI
Number: 17716
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17716
File-URL: http://www.nber.org/papers/w17716.pdf
File-Format: application/pdf
Publication-Status: published as Trade and Industrialization after Globalization's Second Unbundling: How Building and Joining a Supply Chain Are Different and Why It Matters, Richard Baldwin. in Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Feenstra and Taylor. 2014
Abstract: Revolutionary transformations of industry and trade occurred from 1985 to the late-1990s - the regionalisation of supply chains. Before 1985, successful industrialisation meant building a domestic supply chain. Today, industrialisers join supply chains and grow rapidly because offshored production brings elements that took Korea and Taiwan decades to develop domestically. These changes have not been fully reflected in "high development theory" - a lacuna that may lead to misinterpretation of data and inattention to important policy questions.
Handle: RePEc:nbr:nberwo:17716
Template-Type: ReDIF-Paper 1.0
Title: Resource Allocation within Firms and Financial Market Dislocation: Evidence from Diversified Conglomerates
Classification-JEL: D92; E22; G01; G3; L21; L25
Author-Name: Gregor Matvos
Author-Name: Amit Seru
Author-Person: pse308
Note: CF EFG IO ME PR
Number: 17717
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17717
File-URL: http://www.nber.org/papers/w17717.pdf
File-Format: application/pdf
Publication-Status: published as "Resource Allocation within Firms and Financial Market Dislocation: Evidence from Diversified Conglomerates," (with Amit Seru), Review of Financial Studies, Accepted.
Abstract: When external capital markets are stressed they may not reallocate resources between firms. We show that resource allocation within firms' internal capital markets provides an important force countervailing financial market dislocation. Using data on US conglomerates we empirically verify that firms shift resources between industries in response to shocks to the financial sector. We estimate a structural model of internal capital market to separately identify and quantify the forces driving the reallocation decision and how these forces interact with external capital market stress. The frictions in internal capital markets drive a large wedge between productivity and investment: the weaker (stronger) division obtains too much (little) capital, as though it is 12 (9) percent more (less) productive than it really is. The cost of accessing external capital funds quadruple during extreme financial market dislocations, making resource allocation within firms significantly cheaper. The estimated model allows us to simulate the propagation of the 2007/2008 financial market dislocation. The counterfactual out of sample simulated data is remarkably consistent with the actual data and shows that improved resource allocation in internal capital markets offset financial market stress during the recent financial crisis by 16% to 30% relative to firms with no internal capital markets.
Handle: RePEc:nbr:nberwo:17717
Template-Type: ReDIF-Paper 1.0
Title: Rural Demography, Public Services and Land Rights in Africa: A Village-Level Analysis in Burkina Faso
Classification-JEL: F20; H41; I18; J11; O12; O20
Author-Name: Margaret S. McMillan
Author-Person: pmc26
Author-Name: William A. Masters
Author-Person: pma113
Author-Name: Harounan Kazianga
Author-Person: pka159
Note: EH PE
Number: 17718
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17718
File-URL: http://www.nber.org/papers/w17718.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Development Economics Volume 110, September 2014, Pages 313–326 Land and Property Rights Cover image Disease control, demographic change and institutional development in Africa Harounan Kaziangab, , , William A. Mastersc, , Margaret S. McMillana,
Abstract: This paper uses historical census data from Burkina Faso to characterize local demographic pressures associated with internal migration into river valleys after Onchocerciasis eradication, combined with a new survey of village elders to document change over time and differences across villages in local public goods provision, market institutions and land use rights. We hypothesize that higher local population densities are associated with more public goods and a transition from open-access to regulated land use. Controlling for province or village fixed effects, we find that villages' variance in population associated with proximity to rivers is closely correlated with higher levels of infrastructure, markets and individual land rights, as opposed to familial or communal rights. Responding to population growth with both improved public services and private property rights is consistent with both scale effects in public good provision, and changes in the scarcity of land.
Handle: RePEc:nbr:nberwo:17718
Template-Type: ReDIF-Paper 1.0
Title: The Real Effects of Financial Markets
Classification-JEL: G12; G14; G31; G34
Author-Name: Philip Bond
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Itay Goldstein
Note: AP CF LE
Number: 17719
Creation-Date: 2011-12
Order-URL: http://www.nber.org/papers/w17719
File-URL: http://www.nber.org/papers/w17719.pdf
File-Format: application/pdf
Publication-Status: published as Philip Bond & Alex Edmans & Itay Goldstein, 2012. "The Real Effects of Financial Markets," Annual Review of Financial Economics, Annual Reviews, vol. 4(1), pages 339-360, October.
Abstract: A large amount of activity in the financial sector occurs in secondary financial markets, where securities are traded among investors without capital flowing to firms. The stock market is the archetypal example, which in most developed economies captures a lot of attention and resources. Is the stock market just a side show or does it affect real economic activity? In this article, we discuss the potential real effects of financial markets that stem from the informational role of market prices. We review the theoretical literature and show that accounting for the feedback effect from market prices to the real economy significantly changes our understanding of the price formation process, the informativeness of the price, and speculators' trading behavior. We make two main points. First, we argue that a new definition of price efficiency is needed to account for the extent to which prices reflect information useful for the efficiency of real decisions (rather than the extent to which they forecast future cash flows). Second, incorporating the feedback effect into models of financial markets can explain various market phenomena that otherwise seem puzzling. Finally, we review empirical evidence on the real effects of secondary financial markets.
Handle: RePEc:nbr:nberwo:17719