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Template-Type: ReDIF-Paper 1.0
Title: The Effect of Providing Breakfast on Student Performance: Evidence from an In-Class Breakfast Program
Classification-JEL: I10; I21
Author-Name: Scott A. Imberman
Author-Person: pim24
Author-Name: Adriana D. Kugler
Author-Person: pku361
Note: CH ED EH LS
Number: 17720
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17720
File-URL: http://www.nber.org/papers/w17720.pdf
File-Format: application/pdf
Publication-Status: published as The Effect of Providing Breakfast in Class on Student Performance Scott A. Imberman andAdriana D. Kugler Journal of Policy Analysis and Management Volume 33, Issue 3, pages 669–699, Summer 2014
Abstract: In response to low take-up, many public schools have experimented with moving breakfast from the cafeteria to the classroom. We examine whether such a program increases performance as measured by standardized test scores, grades and attendance rates. We exploit quasi-random timing of program implementation that allows for a difference-in-differences identification strategy. Our main identification assumption is that schools where the program was introduced earlier would have evolved similarly to those where the program was introduced later. We find that in-class breakfast increases both math and reading achievement by about one-tenth of a standard deviation relative to providing breakfast in the cafeteria. Moreover, we find that these effects are most pronounced for low performing, free-lunch eligible, Hispanic, and low BMI students. We also find some improvements in attendance for high achieving students but no impact on grades.
Handle: RePEc:nbr:nberwo:17720
Template-Type: ReDIF-Paper 1.0
Title: Adjusting to Really Big Changes: The Labor Market in China, 1989-2009
Classification-JEL: J3
Author-Name: Wei Chi
Author-Person: pch545
Author-Name: Richard B. Freeman
Author-Person: pfr23
Author-Name: Hongbin Li
Author-Person: pli72
Note: LS
Number: 17721
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17721
File-URL: http://www.nber.org/papers/w17721.pdf
File-Format: application/pdf
Abstract: China's emerging labor market was buffeted by changes in demand and supply and institutional changes in the last two decades. Using the Chinese Urban Household Survey data from 1989 to 2009, our study shows that the market responded with substantial changes in the structure of wages and in employment and types of jobs that workers obtained that mirrors the adjustments found in labor markets in advanced economies. However, the one place where the Chinese labor market appears to diverge from the labor markets in advanced countries is the rapid convergence in earnings and occupational positions of cohorts who entered the job market under more or less favorable conditions. On this dimension, China's labor market seems more flexible than those in other countries. Three related factors may explain this pattern: (1) the rapid growth of China's economy; (2) the high rate of employee turnover; (3) the relative weakness of internal labor markets in China. Bottom line, the Chinese labor market has responded about as well as one could expect to the changes in the demand and supply factors and institutional shocks in this critical period in Chinese economic history.
Handle: RePEc:nbr:nberwo:17721
Template-Type: ReDIF-Paper 1.0
Title: Teacher Quality at the High-School Level: The Importance of Accounting for Tracks
Classification-JEL: H0; I20; J00
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Note: CH ED LS PE
Number: 17722
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17722
File-URL: http://www.nber.org/papers/w17722.pdf
File-Format: application/pdf
Publication-Status: published as "Teacher Quality at the High-School Level: The Importance of Accounting for Tracks" forthcoming Journal of Labor Economics. (available as NBER Working Paper 17722)
Abstract: Unlike in elementary school, high-school teacher effects may be confounded with both selection to tracks and unobserved track-level treatments. I document sizable confounding track effects, and show that traditional tests for the existence of teacher effects are likely biased. After accounting for these biases, high-school algebra and English teachers have much smaller test-score effects than found in previous studies. Moreover, unlike in elementary school, value-added estimates are weak predictors of teachers' future performance. Results indicate that either (a) teachers are less influential in high school than in elementary school, or (b) test scores are a poor metric to measure teacher quality at the high-school level.
Handle: RePEc:nbr:nberwo:17722
Template-Type: ReDIF-Paper 1.0
Title: The Housing Market(s) of San Diego
Classification-JEL: E21; G10; R20
Author-Name: Tim Landvoigt
Author-Name: Monika Piazzesi
Author-Person: ppi37
Author-Name: Martin Schneider
Author-Person: psc69
Note: AP EFG ME
Number: 17723
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17723
File-URL: http://www.nber.org/papers/w17723.pdf
File-Format: application/pdf
Publication-Status: published as “The Housing Market(s) of San Diego” (with Tim Landvoigt and Martin Schneider) American Economic Review, vol. 105, no. 4, April 2015 (pp. 1371-1407)
Abstract: This paper uses an assignment model to understand the cross section of house prices within a metro area. Movers' demand for housing is derived from a lifecycle problem with credit market frictions. Equilibrium house prices adjust to assign houses that differ by quality to movers who differ by age, income and wealth. To quantify the model, we measure distributions of house prices, house qualities and mover characteristics from micro data on San Diego County during the 2000s boom. The main result is that cheaper credit for poor households was a major driver of prices, especially at the low end of the market.
Handle: RePEc:nbr:nberwo:17723
Template-Type: ReDIF-Paper 1.0
Title: Reducing Petroleum Consumption from Transportation
Classification-JEL: H2; H5; L0; L4; L5; L9; Q1; Q2; Q3; Q4; Q5; R4
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Note: EEE IO PE
Number: 17724
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17724
File-URL: http://www.nber.org/papers/w17724.pdf
File-Format: application/pdf
Publication-Status: published as Christopher R. Knittel, 2012. "Reducing Petroleum Consumption from Transportation," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 93-118, Winter.
Abstract: The United States consumed more petroleum-based liquid fuel per capita than any other OECD-high-income country - 30 percent more than the second-highest country (Canada) and 40 percent more than the third-highest (Luxemburg). This paper examines the main channels through which reductions in U.S. oil consumption might take place: (a) increased fuel economy of existing vehicles, (b) increased use of non-petroleum-based low-carbon fuels, (c) alternatives to the internal combustion engine, and (d) reduced vehicles miles travelled. I then discuss how the policies for reducing petroleum consumption used in the US compare with the standard economics prescription for using a Pigouvian tax to deal with externalities. Taking into account that energy taxes are a political hot button in the United States, and also considering some evidence that consumers may not correctly value fuel economy, I offer some thoughts about the margins on which policy aimed at reducing petroleum consumption would have the largest impact on economic efficiency.
Handle: RePEc:nbr:nberwo:17724
Template-Type: ReDIF-Paper 1.0
Title: The Role of Firm Factors in Demand, Cost, and Export Market Selection for Chinese Footwear Producers
Classification-JEL: F1; L0
Author-Name: Mark J. Roberts
Author-Person: pro190
Author-Name: Daniel Yi Xu
Author-Person: pxu119
Author-Name: Xiaoyan Fan
Author-Name: Shengxing Zhang
Author-Person: pzh152
Note: IO ITI PR
Number: 17725
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17725
File-URL: http://www.nber.org/papers/w17725.pdf
File-Format: application/pdf
Publication-Status: published as Mark J Roberts & Daniel Yi Xu & Xiaoyan Fan & Shengxing Zhang, 2018. "The Role of Firm Factors in Demand, Cost, and Export Market Selection for Chinese Footwear Producers," The Review of Economic Studies, vol 85(4), pages 2429-2461.
Abstract: In this paper we use micro data on both trade and production for a sample of large Chinese manufacturing firms in the footwear industry from 2002-2006 to estimate an empirical model of export demand, pricing, and market participation by destination market. We use the model to construct indexes of firm-level demand, cost, and export market profitability. The empirical results indicate substantial firm heterogeneity in both the demand and cost dimensions with demand being more dispersed. The firm-specific demand and cost components are very useful in explaining differences in the extensive margin of trade, the length of time a firm exports to a destination, and the number and mix of destinations, as well as the export prices, while cost is more important in explaining the quantity of firm exports on the intensive margin. We use the estimates to analyze the reallocation resulting from removal of the quota on Chinese footwear exports to the EU and find that it led to a rapid restructuring of export supply sources in favor of firms with high demand and low cost indexes.
Handle: RePEc:nbr:nberwo:17725
Template-Type: ReDIF-Paper 1.0
Title: Labor Supply of Politicians
Classification-JEL: D72; D73
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Nikolaj A. Harmon
Author-Person: pha671
Author-Name: Emir Kamenica
Author-Name: Inger Munk
Note: LS POL
Number: 17726
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17726
File-URL: http://www.nber.org/papers/w17726.pdf
File-Format: application/pdf
Publication-Status: published as Raymond Fisman & Nikolaj A. Harmon & Emir Kamenica & Inger Munk, 2015. "LABOR SUPPLY OF POLITICIANS," Journal of the European Economic Association, vol 13(5), pages 871-905.
Abstract: We examine the labor supply of politicians using data on Members of the European Parliament (MEPs). We exploit the introduction of a law that equalized MEPs' salaries, which had previously differed by as much as a factor of ten. Doubling an MEP's salary increases the probability of running for reelection by 23 percentage points and increases the logarithm of the number of parties that field a candidate by 29 percent of a standard deviation. A salary increase has no discernible impact on absenteeism or shirking from legislative sessions; in contrast, non-pecuniary motives, proxied by home-country corruption, substantially impact the intensive margin of labor supply. Finally, an increase in salary lowers the quality of elected MEPs, measured by the selectivity of their undergraduate institutions.
Handle: RePEc:nbr:nberwo:17726
Template-Type: ReDIF-Paper 1.0
Title: Affirmative Action in Higher Education in India: Targeting, Catch Up, and Mismatch
Classification-JEL: I20; J15; J31; J7
Author-Name: Verónica C. Frisancho Robles
Author-Person: pfr267
Author-Name: Kala Krishna
Author-Person: pkr26
Note: ED LS
Number: 17727
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17727
File-URL: http://www.nber.org/papers/w17727.pdf
File-Format: application/pdf
Abstract: Affirmative action policies in higher education are used in many countries to try to socially advance historically disadvantaged minorities. Although the underlying social objectives of these policies are rarely criticized, there is intense debate over the actual impact of such preferences in higher education on educational performance and labor outcomes. Most of the work uses U.S. data where clean performance indicators are hard to find. Using a remarkably detailed dataset on the 2008 graduating class from an elite engineering institution (EEI) in India we evaluate the impact of affirmative action policies in higher education on minority students focusing on three central issues in the current debate: targeting, catch up, and mismatch. In addition, we present preliminary evidence on labor market discrimination. We find that admission preferences effectively target minority students who are poorer than the average displaced non-minority student. Moreover, by analyzing the college performance of minority and non-minority students as they progress through college, we find that scheduled caste and scheduled tribe students, especially those in more selective majors, fall behind their same-major peers which is the opposite of catching up. We also identify evidence in favor of the mismatch hypothesis: once we control for selection into majors, minority students who enrol in more selective majors as a consequence of admission preferences end up earning less than if they would have had if they had chosen a less selective major. Finally, although there is no evidence of discrimination against minority students in terms of wages, we find that scheduled caste and scheduled tribe students are more likely to get worse jobs, even after controlling for selection.
Handle: RePEc:nbr:nberwo:17727
Template-Type: ReDIF-Paper 1.0
Title: Contractual Versus Non-Contractual Trade: The Role of Institutions in China
Classification-JEL: F13
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: Chang Hong
Author-Person: pho594
Author-Name: Hong Ma
Author-Name: Barbara J. Spencer
Author-Person: psp2
Note: ITI
Number: 17728
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17728
File-URL: http://www.nber.org/papers/w17728.pdf
File-Format: application/pdf
Publication-Status: published as Feenstra, Robert C. & Hong, Chang & Ma, Hong & Spencer, Barbara J., 2013. "Contractual versus non-contractual trade: The role of institutions in China," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 281-294.
Abstract: Recent research has demonstrated the importance of institutional quality at the country level for both the volume of trade and the ability to trade in differentiated goods that rely on contract enforcement. This paper takes advantage of cross-provincial variation in institutional quality in China, and export data that distinguishes between foreign and domestic exporters and processing versus ordinary trade, to show that institutional quality is a significant factor in determining Chinese provincial export patterns. Institutions matter more for processing trade, and more for foreign firms, just as we would expect from a greater reliance on contracts in these cases.
Handle: RePEc:nbr:nberwo:17728
Template-Type: ReDIF-Paper 1.0
Title: Who Shrunk China? Puzzles in the Measurement of Real GDP
Classification-JEL: E01
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: Hong Ma
Author-Name: J. Peter Neary
Author-Person: pne11
Author-Name: D.S. Prasada Rao
Note: ITI
Number: 17729
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17729
File-URL: http://www.nber.org/papers/w17729.pdf
File-Format: application/pdf
Publication-Status: published as Robert C. Feenstra & Hong Ma & J. Peter Neary & D.S. Prasada Rao, 2013. "Who Shrunk China? Puzzles in the Measurement of Real GDP," Economic Journal, Royal Economic Society, vol. 123(12), pages 1100-1129, December.
Abstract: The latest World Bank estimates of real GDP per capita for China are significantly lower than previous ones. We review possible sources of this puzzle and conclude that it reflects a combination of factors, including substitution bias in consumption, reliance on urban prices which we estimate are higher than rural ones, and the use of an expenditure-weighted rather than an output-weighted measure of GDP. Taking all these together, we estimate that real per-capita GDP in China was 50% higher relative to the U.S. in 2005 than the World Bank estimates.
Handle: RePEc:nbr:nberwo:17729
Template-Type: ReDIF-Paper 1.0
Title: Land Use Controls and the Provision of Education
Classification-JEL: H4; H7; I2; J6; R2
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Kuzey Yilmaz
Note: CH ED LS PE
Number: 17730
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17730
File-URL: http://www.nber.org/papers/w17730.pdf
File-Format: application/pdf
Publication-Status: published as Land Use Controls, Fiscal Zoning, and the Local Provision of Education. Public Finance Review, September 2015 vol. 43 no. 5, pp. 559-585
Abstract: Considerable prior analysis has gone into the study of zoning restrictions on locational choice and on fiscal burdens. The prior work on zoning - particularly fiscal or exclusionary zoning - has provided both inconclusive theoretical results and quite inconsistent empirical support of the theory. More importantly, none of this work addresses important questions about the level and distribution of public goods that are provided under fiscal zoning. Since fiscal issues and Tiebout demands are central to much of the motivation for exclusionary zoning, we expand the theoretical analysis to encompass the interplay between land use restrictions and public good provision. In this, we focus on schooling outcomes, since the provision of education is one of the primary activities of local jurisdictions. We develop a general equilibrium model of location and the provision of education. Some households create a fiscal burden, motivating the use by local governments of exclusionary land-use controls. Then, the paper analyzes what the market effects of land-use controls are and how successful they are. The policies considered (minimum lot size zoning, local public finance with a head tax, and fringe zoning) demonstrate how household behavior directly affects the equilibrium outcomes and the provision of the local public good.
Handle: RePEc:nbr:nberwo:17730
Template-Type: ReDIF-Paper 1.0
Title: Foreign Corporations and the Culture of Transparency: Evidence from Russian Administrative Data
Classification-JEL: K42; P37
Author-Name: Serguey Braguinsky
Author-Person: pbr60
Author-Name: Sergey V. Mityakov
Author-Person: pmi474
Note: CF PE POL
Number: 17731
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17731
File-URL: http://www.nber.org/papers/w17731.pdf
File-Format: application/pdf
Publication-Status: published as Foreign Corporations and the Culture of Transparency: Evidence from Russian Administrative Data, Serguey Braguinsky, Sergey Mityakov. in Causes and Consequences of Corporate Culture, Zingales and Poterba. 2015
Publication-Status: published as Braguinsky, Serguey & Mityakov, Sergey, 2015. "Foreign corporations and the culture of transparency: Evidence from Russian administrative data," Journal of Financial Economics, Elsevier, vol. 117(1), pages 139-164.
Abstract: Foreign-owned firms from advanced countries carry the culture of transparency in business transactions that is orthogonal to the culture of hiding and insider dealing in many developing economies and economies in transition. In this paper, we document this using administrative data on reported earnings and market values of cars owned by workers employed in foreign-owned and domestic firms in Moscow, Russia. We examine whether closer ties to foreign corporations result in the diffusion of transparency to private Russian firms. We find that Russian firms initially founded in partnerships with foreign corporations are twice as transparent in reported earnings of their workers as other Russian firms, but they are still less than half as transparent as foreign firms themselves. We also find that increased links to foreign corporations, such as hiring more workers from them, raise the transparency of domestic firms. An important channel for this transmission appears to be the need to keep official wages and salaries of incumbent workers close to wages domestic firms have to pay to their newly hired workers with experience in multinationals.
Handle: RePEc:nbr:nberwo:17731
Template-Type: ReDIF-Paper 1.0
Title: Does Transparency Reduce Favoritism and Corruption? Evidence from the Reform of Figure Skating Judging
Classification-JEL: D7; D8
Author-Name: Eric Zitzewitz
Author-Person: pzi23
Note: LE
Number: 17732
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17732
File-URL: http://www.nber.org/papers/w17732.pdf
File-Format: application/pdf
Publication-Status: published as Eric Zitzewitz, 2014. "Does Transparency Reduce Favoritism and Corruption? Evidence From the Reform of Figure Skating Judging," Journal of Sports Economics, , vol. 15(1), pages 3-30, February.
Abstract: Transparency is usually thought to reduce favoritism and corruption by facilitating monitoring by outsiders, but there is concern it can have the perverse effect of facilitating collusion by insiders. In response to vote trading scandals in the 1998 and 2002 Olympics, the International Skating Union (ISU) introduced a number of changes to its judging system, including obscuring which judge issued which mark. The stated intent was to disrupt collusion by groups of judges, but this change also frustrates most attempts by outsiders to monitor judge behavior. I find that the "compatriot-judge effect", which aggregates favoritism (nationalistic bias from own-country judges) and corruption (vote trading), actually increased slightly after the reforms.
Handle: RePEc:nbr:nberwo:17732
Template-Type: ReDIF-Paper 1.0
Title: Impacts of Unionization on Employment, Product Quality and Productivity: Regression Discontinuity Evidence From Nursing Homes
Classification-JEL: I12; J51
Author-Name: Aaron J. Sojourner
Author-Person: pso238
Author-Name: Robert J. Town
Author-Person: pto430
Author-Name: David C. Grabowski
Author-Name: Michelle M. Chen
Note: EH LS
Number: 17733
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17733
File-URL: http://www.nber.org/papers/w17733.pdf
File-Format: application/pdf
Publication-Status: published as Aaron J. Sojourner & Brigham R. Frandsen & Robert J. Town & David C. Grabowski & Min M. Chen, 2015. "Impacts of Unionization on Quality and Productivity," ILR Review, Cornell University, ILR School, vol. 68(4), pages 771-806, August.
Abstract: This paper studies the effects of nursing home unionization on numerous labor, establishment, and consumer outcomes using a regression discontinuity design. We find negative effects of unionization on staffing levels and no decline in care quality, suggesting positive labor productivity effects. Some evidence suggests that nursing homes in less competitive local product markets and those with lower union density at the time of election experienced stronger union employment effects. Unionization appears to raise wages for a given worker while also shifting the composition of the workforce away from higher-earning workers. By combining credible identification of union effects, a comprehensive set of outcomes over time with measures of market-level characteristics, this study generates some of the best evidence available on many controversial questions in the economics of unions. Furthermore, it generates evidence from the service sector, which has grown in importance and where evidence has been thin.
Handle: RePEc:nbr:nberwo:17733
Template-Type: ReDIF-Paper 1.0
Title: Climate Change, Crop Yields, and Internal Migration in the United States
Classification-JEL: N3; N5; Q1; Q54
Author-Name: Shuaizhang Feng
Author-Name: Michael Oppenheimer
Author-Name: Wolfram Schlenker
Author-Person: psc210
Note: EEE
Number: 17734
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17734
File-URL: http://www.nber.org/papers/w17734.pdf
File-Format: application/pdf
Abstract: We investigate the link between agricultural productivity and net migration in the United States using a county-level panel for the most recent period of 1970-2009. In rural counties of the Corn Belt, we find a statistically significant relationship between changes in net outmigration and climate-driven changes in crop yields, with an estimated semi-elasticity of about -0.17, i.e., a 1% decrease in yields leads to a 0.17% net reduction of the population through migration. This effect is primarily driven by young adults. We do not detect a response for senior citizens, nor for the general population in eastern counties outside the Corn Belt. Applying this semi-elasticity to predicted yield changes under the B2 scenario of the Hadley III model, we project that, holding other factors constant, climate change would on average induce 3.7% of the adult population (ages 15-59) to leave rural counties of the Corn Belt in the medium term (2020-2049) compared to the 1960-1989 baseline, with the possibility of a much larger migration response in the long term (2077-2099). Since there is uncertainty about future warming, we also present projections for a range of uniform climate change scenarios in temperature or precipitation.
Handle: RePEc:nbr:nberwo:17734
Template-Type: ReDIF-Paper 1.0
Title: Technology and the Changing Family: A Unified Model of Marriage, Divorce, Educational Attainment and Married Female Labor-Force Participation
Classification-JEL: E13; J12; J22; O11
Author-Name: Jeremy Greenwood
Author-Person: pgr12
Author-Name: Nezih Guner
Author-Person: pgu40
Author-Name: Georgi Kocharkov
Author-Person: pko398
Author-Name: Cezar Santos
Author-Person: psa940
Note: EFG
Number: 17735
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17735
File-URL: http://www.nber.org/papers/w17735.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy Greenwood & Nezih Guner & Georgi Kocharkov & Cezar Santos, 2016. "Technology and the Changing Family: A Unified Model of Marriage, Divorce, Educational Attainment, and Married Female Labor-Force Participation," American Economic Journal: Macroeconomics, American Economic Association, vol. 8(1), pages 1-41, January.
Abstract: Marriage has declined since 1960, with the drop being bigger for non-college educated individuals versus college educated ones. Divorce has increased, more so for the non-college educated vis-à-vis the college educated. Additionally, assortative mating has risen; i.e., people are more likely to marry someone of the same educational level today than in the past. A unified model of marriage, divorce, educational attainment and married female labor-force participation is developed and estimated to fit the postwar U.S. data. The role of technological progress in the household sector and shifts in the wage structure for explaining these facts is gauged.
Handle: RePEc:nbr:nberwo:17735
Template-Type: ReDIF-Paper 1.0
Title: Inconsistent Regulators: Evidence From Banking
Classification-JEL: G21; G28
Author-Name: Sumit Agarwal
Author-Person: pag47
Author-Name: David Lucca
Author-Person: plu378
Author-Name: Amit Seru
Author-Person: pse308
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: CF ME POL
Number: 17736
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17736
File-URL: http://www.nber.org/papers/w17736.pdf
File-Format: application/pdf
Publication-Status: published as Sumit Agarwal & David Lucca & Amit Seru & Francesco Trebbi, 2014. "Inconsistent Regulators: Evidence from Banking," The Quarterly Journal of Economics, Oxford University Press, vol. 129(2), pages 889-938.
Abstract: US state chartered commercial banks are supervised alternately by state and federal regulators. Each regulator supervises a given bank for a fixed time period according to a predetermined rotation schedule. We use unique data to examine differences between federal and state regulators for these banks. Federal regulators are significantly less lenient, downgrading supervisory ratings about twice as frequently as state supervisors. Under federal regulators, banks report higher nonperforming loans, more delinquent loans, higher regulatory capital ratios, and lower ROA. There is a higher frequency of bank failures and problem-bank rates in states with more lenient supervision relative to the federal benchmark. Some states are more lenient than others. Regulatory capture by industry constituents and supervisory staff characteristics can explain some of these differences. These findings suggest that inconsistent oversight can hamper the effectiveness of regulation by delaying corrective actions and by inducing costly variability in operations of regulated entities.
Handle: RePEc:nbr:nberwo:17736
Template-Type: ReDIF-Paper 1.0
Title: Hey Look at Me: The Effect of Giving Circles on Giving
Classification-JEL: H0; J01
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Margaret A. McConnell
Note: LS PE
Number: 17737
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17737
File-URL: http://www.nber.org/papers/w17737.pdf
File-Format: application/pdf
Publication-Status: published as Karlan, Dean & McConnell, Margaret A., 2014. "Hey look at me: The effect of giving circles on giving," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 402-412.
Abstract: Theories abound for why individuals give to charity. We conduct a field experiment with donors to a Yale University service club to test the impact of a promise of public recognition on giving. Some may claim that they respond to an offer of public recognition not to improve their social standing, but rather to motivate others to give. To tease apart these two theories, we conduct a laboratory experiment with undergraduates, and find no evidence to support the alternative, altruistic motivation. We conclude that charitable gifts increase in response to the promise of public recognition primarily because of individuals' desire to improve their social image.
Handle: RePEc:nbr:nberwo:17737
Template-Type: ReDIF-Paper 1.0
Title: Education and Health: Insights from International Comparisons
Classification-JEL: I1; I12; I15
Author-Name: David M. Cutler
Author-Person: pcu64
Author-Name: Adriana Lleras-Muney
Author-Person: pll45
Note: AG EH
Number: 17738
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17738
File-URL: http://www.nber.org/papers/w17738.pdf
File-Format: application/pdf
Abstract: In this review we synthesize what is known about the relationship between education and health. A large number of studies from both rich and poor countries show that education is associated with better health. While previous work has thought of the effect of education separately for rich and poor countries, we argue that there are insights to be gained by integrating the two. For example, education is associated with lower malnutrition in most countries, but in richer countries the educated have lower BMIs whereas in poor countries the educated have higher BMIs. This suggests that the behaviors associated with better health differ depending on the level of development. We illustrate this approach by comparing the effects of education on various health and health behaviors around the world, to generate hypotheses about why education is so often (but not always) predictive of health. Finally, we review the empirical evidence on the relationship between education and health, paying particular attention to causal evidence and evidence on mechanisms linking education to better health.
Handle: RePEc:nbr:nberwo:17738
Template-Type: ReDIF-Paper 1.0
Title: Demand and Reimbursement Effects of Healthcare Reform: Health Care Utilization and Infant Mortality in Thailand
Classification-JEL: I0; I1; I13
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Nathaniel Hendren
Author-Name: Robert Townsend
Author-Person: pto99
Note: EH
Number: 17739
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17739
File-URL: http://www.nber.org/papers/w17739.pdf
File-Format: application/pdf
Publication-Status: published as The Great Equalizer: Health Care Access and Infant Mortality in Thailand (with Jonathan Gruber and Robert M. Townsend), American Economic Journal: Applied Economics. 2014; 6(1): 91-107
Abstract: The Thai 30 Baht program was one of the largest health system reforms ever undertaken by a low-middle income country. In addition to lowering the cost of care for the previously uninsured in public facilities, it also entailed a fourfold increase in funding provided to hospitals to care for the poorest 30% of the population (who were already publicly insured). For the previously uninsured, we find that the 30 Baht program led to increased health care utilization, as well as a shift from private to public sources of care. But, we find a larger increase for the poor who were previously publicly insured, especially amongst infants and women of childbearing age. Using vital statistics records, we find that the increased access to healthcare by the publicly insured poor led to a reduction in their infant mortality of at least 6.5 per 1,000 births. This suggests significant improvements in infant mortality rates can be achieved through increased access to healthcare services for the poor and marginalized groups.
Handle: RePEc:nbr:nberwo:17739
Template-Type: ReDIF-Paper 1.0
Title: The Housing Wealth Effect: The Crucial Roles of Demographics, Wealth Distribution and Wealth Shares
Classification-JEL: E21; J11
Author-Name: Charles W. Calomiris
Author-Person: pca421
Author-Name: Stanley D. Longhofer
Author-Name: William Miles
Note: DAE
Number: 17740
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17740
File-URL: http://www.nber.org/papers/w17740.pdf
File-Format: application/pdf
Publication-Status: published as Calomiris, Charles W. & Longhofer, Stanley D. & Miles, William, 2013. "The Housing Wealth Effect: The Crucial Roles of Demographics, Wealth Distribution and Wealth Shares," Critical Finance Review, now publishers, vol. 2(1), pages 049-099, July.
Abstract: Current estimates of housing wealth effects vary widely. We consider the role of omitted variables suggested by economic theory that have been absent in a number of prior studies. Our estimates take into account age composition and wealth distribution (using poverty rates as a proxy), as well as wealth shares (how much of total wealth is comprised of housing vs. stock wealth). We exploit cross-state variation in housing, stock wealth and other variables in a newly assembled panel data set and find that the impact of housing on consumer spending depends crucially on age composition, poverty rates, and the housing wealth share. In particular, young people who are more likely to be credit-constrained, and older homeowners, likely to be "trading down" on their housing stock, experience the largest housing wealth effects, as suggested by theory. Also, as suggested by theory, housing wealth effects are higher in state-years with higher housing wealth shares, and in state-years with higher poverty rates (likely reflecting the greater importance of credit constraints for those observations). Taking these various factors into account implies huge variation over time and across states in the size of housing wealth effects.
Handle: RePEc:nbr:nberwo:17740
Template-Type: ReDIF-Paper 1.0
Title: Costly Blackouts? Measuring Productivity and Environmental Effects of Electricity Shortages
Classification-JEL: D24; P2; Q4
Author-Name: Karen Fisher-Vanden
Author-Name: Erin T. Mansur
Author-Person: pma874
Author-Name: Qiong (Juliana) Wang
Note: EEE PR
Number: 17741
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17741
File-URL: http://www.nber.org/papers/w17741.pdf
File-Format: application/pdf
Publication-Status: published as Fisher-Vanden, Karen & Mansur, Erin T. & Wang, Qiong (Juliana), 2015. "Electricity shortages and firm productivity: Evidence from China's industrial firms," Journal of Development Economics, Elsevier, vol. 114(C), pages 172-188.
Abstract: In many countries, unreliable inputs, particularly those lacking storage, can significantly limit a firm's productivity. In the case of an increasing frequency of blackouts, a firm may change factor shares in a number of ways. It may decide to self generate electricity, to purchase intermediate goods that it used to produce directly, or to improve its technical efficiency. We examine how industrial firms responded to China's severe power shortages in the early 2000s. Fast-growing demand coupled with regulated electricity prices led to blackouts that varied in degree over location and time. Our data consist of annual observations from 1999 to 2004 for approximately 32,000 energy-intensive, enterprises from all industries. We estimate the losses in productivity due to factor-neutral and factor-biased effects of electricity scarcity. Our results suggest that enterprises re-optimize among factors in response to electricity scarcity by shifting from energy (both electric and non-electric sources) into materials---a shift from "make" to "buy." These effects are strongest for firms in textiles, timber, chemicals, and metals. Contrary to the literature, we do not find evidence of an increase in self generation. Finally, we find that these productivity changes, while costly to firms, led to small reductions in carbon emissions.
Handle: RePEc:nbr:nberwo:17741
Template-Type: ReDIF-Paper 1.0
Title: An Equilibrium Asset Pricing Model with Labor Market Search
Classification-JEL: G12; J23
Author-Name: Lars-Alexander Kuehn
Author-Name: Nicolas Petrosky-Nadeau
Author-Person: ppe260
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP EFG LS
Number: 17742
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17742
File-URL: http://www.nber.org/papers/w17742.pdf
File-Format: application/pdf
Abstract: Search frictions in the labor market help explain the equity premium in the financial market. We embed the Diamond-Mortensen-Pissarides search framework into a dynamic stochastic general equilibrium model with recursive preferences. The model produces a sizeable equity premium of 4.54% per annum with a low interest rate volatility of 1.34%. The equity premium is strongly countercyclical, and forecastable with labor market tightness, a pattern we confirm in the data. Intriguingly, search frictions, combined with a small labor surplus and large job destruction flows, give rise endogenously to rare disaster risks a la Rietz (1988) and Barro (2006).
Handle: RePEc:nbr:nberwo:17742
Template-Type: ReDIF-Paper 1.0
Title: The Diffusion of Microfinance
Classification-JEL: D13; D85; G21; L14; O12; O16; Z13
Author-Name: Abhijit Banerjee
Author-Name: Arun G. Chandrasekhar
Author-Person: pch1351
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Matthew O. Jackson
Author-Person: pja7
Note: TWP
Number: 17743
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17743
File-URL: http://www.nber.org/papers/w17743.pdf
File-Format: application/pdf
Publication-Status: published as “The Diffusion of Microfinance” (with Esther Duflo, Arun G. Chandrasekhar, Matthew O. Jackson), Science Magazine, Vol. 341, no. 6144, July 2013.
Abstract: We examine how participation in a microfinance program diffuses through social networks. We collected detailed demographic and social network data in 43 villages in South India before microfinance was introduced in those villages and then tracked eventual participation. We exploit exogenous variation in the importance (in a network sense) of the people who were first informed about the program, "the injection points". Microfinance participation is higher when the injection points have higher eigenvector centrality. We estimate structural models of diffusion that allow us to (i) determine the relative roles of basic information transmission versus other forms of peer influence, and (ii) distinguish information passing by participants and non-participants. We find that participants are significantly more likely to pass information on to friends and acquaintances than informed non-participants, but that information passing by non-participants is still substantial and significant, accounting for roughly a third of informedness and participation. We also find that, conditioned on being informed, an individual's decision is not significantly affected by the participation of her acquaintances.
Handle: RePEc:nbr:nberwo:17743
Template-Type: ReDIF-Paper 1.0
Title: What Explains Trends in Labor Supply Among U.S. Undergraduates, 1970-2009?
Classification-JEL: I22; I23; J22; J24
Author-Name: Judith Scott-Clayton
Note: ED LS
Number: 17744
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17744
File-URL: http://www.nber.org/papers/w17744.pdf
File-Format: application/pdf
Publication-Status: published as “What Explains Trends in Labor Supply Among U.S. Undergraduates?” National Tax Journal 65(1): 181-210.
Abstract: Recent cohorts of college enrollees are more likely to work, and work substantially more, than those of the past. October CPS data reveal that average labor supply among 18 to 22-year-old full-time undergraduates nearly doubled between 1970 and 2000, rising from 6 hours to 11 hours per week. In 2000 over half of these "traditional" college students were working for pay in the reference week, and the average working student worked 22 hours per week. After 2000, labor supply leveled off and then fell abruptly in the wake of the Great Recession to an average of 8 hours per week in 2009. This paper considers several explanations for the long-term trend of rising employment--including compositional change and rising tuition costs--and considers whether the upward trend is likely to resume when economic conditions improve.
Handle: RePEc:nbr:nberwo:17744
Template-Type: ReDIF-Paper 1.0
Title: Does Linking Worker Pay to Firm Performance Help the Best Firms Do Even Better?
Classification-JEL: J33; J53; J54; J63; M50; M52; M54; P12; P13; P17
Author-Name: Douglas L. Kruse
Author-Person: pkr335
Author-Name: Joseph R. Blasi
Author-Name: Richard B. Freeman
Author-Person: pfr23
Note: LS
Number: 17745
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17745
File-URL: http://www.nber.org/papers/w17745.pdf
File-Format: application/pdf
Abstract: This paper analyzes the linkages among group incentive methods of compensation, labor practices, worker assessments of workplace culture, turnover, and firm performance in a non-representative sample of companies: firms that applied to the "100 Best Companies to Work For in America" competition from 2005 to 2007. Although employers with good labor practices self- select into the 100 Best Companies firms sample, which should bias the analysis against finding strong associations among modes of compensation, labor policies, and outcomes, we find that in the firms that make more extensive use of group incentive pay employees participate more in decisions, have greater information sharing, trust supervisors more, and report a more positive workplace culture than in other companies. The combination of group incentive pay with policies that empower employees and create a positive workplace culture reduces voluntary turnover and increases employee intent to stay and raises return on equity. Finding these effects in the non-representative "100 Best Companies" sample strengthens the likelihood that the policies have a causal impact on employee well-being and firm performance.
Handle: RePEc:nbr:nberwo:17745
Template-Type: ReDIF-Paper 1.0
Title: Directed Search over the Life Cycle
Classification-JEL: E24; J63; J64
Author-Name: Guido Menzio
Author-Person: pme246
Author-Name: Irina A. Telyukova
Author-Name: Ludo Visschers
Note: EFG
Number: 17746
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17746
File-URL: http://www.nber.org/papers/w17746.pdf
File-Format: application/pdf
Publication-Status: published as Guido Menzio & Irina Telyukova & Ludo Visschers, 2016. "Directed Search over the Life Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19(1), January.
Abstract: We develop a life-cycle model of the labor market in which different worker-firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment and across different firms is endogenous because search is directed and, hence, workers can choose whether to seek low-wage jobs that are easy to find or high-wage jobs that are hard to find. We calibrate our theory using data on labor market transitions aggregated across workers of different ages. We validate our theory by showing that it correctly predicts the pattern of labor market transitions for workers of different ages. Finally, we use our theory to decompose the age profiles of transition rates, wages and productivity into the effects of age variation in work-life expectancy, human capital and match quality.
Handle: RePEc:nbr:nberwo:17746
Template-Type: ReDIF-Paper 1.0
Title: How Will Energy Demand Develop in the Developing World?
Classification-JEL: O13; Q47
Author-Name: Catherine Wolfram
Author-Name: Orie Shelef
Author-Name: Paul J. Gertler
Author-Person: pge194
Note: EEE IO
Number: 17747
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17747
File-URL: http://www.nber.org/papers/w17747.pdf
File-Format: application/pdf
Publication-Status: published as Catherine Wolfram & Orie Shelef & Paul Gertler, 2012. "How Will Energy Demand Develop in the Developing World?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 119-38, Winter.
Abstract: Most of the medium-run growth in energy demand is forecast to come from the developing world, which consumed more total units of energy than the developed world in 2007. We argue that the main driver of the growth is likely to be increased incomes among the poor and near-poor. We document that as households come out of poverty and join the middle class, they acquire appliances, such as refrigerators, and vehicles for the first time. These new goods require energy to use and energy to manufacture. The current forecasts for energy demand in the developing world may be understated because they do not accurately capture the dramatic increase in demand associated with poverty reduction.
Handle: RePEc:nbr:nberwo:17747
Template-Type: ReDIF-Paper 1.0
Title: Health Reform, Health Insurance, and Selection: Estimating Selection into Health Insurance Using the Massachusetts Health Reform
Classification-JEL: H51; I18
Author-Name: Martin B. Hackmann
Author-Name: Jonathan T. Kolstad
Author-Person: pko1088
Author-Name: Amanda E. Kowalski
Note: AG EH PE
Number: 17748
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17748
File-URL: http://www.nber.org/papers/w17748.pdf
File-Format: application/pdf
Publication-Status: published as Martin B. Hackmann & Jonathan T. Kolstad & Amanda E. Kowalski, 2012. "Health Reform, Health Insurance, and Selection: Estimating Selection into Health Insurance Using the Massachusetts Health Reform," American Economic Review, American Economic Association, vol. 102(3), pages 498-501, May.
Abstract: We implement an empirical test for selection into health insurance using changes in coverage induced by the introduction of mandated health insurance in Massachusetts. Our test examines changes in the cost of the newly insured relative to those who were insured prior to the reform. We find that counties with larger increases in insurance coverage over the reform period face the smallest increase in average hospital costs for the insured population, consistent with adverse selection into insurance before the reform. Additional results, incorporating cross-state variation and data on health measures, provide further evidence for adverse selection.
Handle: RePEc:nbr:nberwo:17748
Template-Type: ReDIF-Paper 1.0
Title: The Nixon Shock after Forty Years: The Import Surcharge Revisited
Classification-JEL: F13; F42; F5; N12
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: ITI
Number: 17749
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17749
File-URL: http://www.nber.org/papers/w17749.pdf
File-Format: application/pdf
Publication-Status: published as Irwin, Douglas A., 2013. "The Nixon shock after forty years: the import surcharge revisited," World Trade Review, Cambridge University Press, vol. 12(01), pages 29-56, January.
Abstract: On August 15, 1971, President Richard Nixon closed the gold window and imposed a 10 percent surcharge on all dutiable imports in an effort to force other countries to revalue their currencies against the dollar. The import surcharge was lifted four months later after the Smithsonian agreement led to new exchange rate parities. This paper examines the political, economic, and legal issues surrounding the import surcharge. This historical episode may shed light on the possible use of trade sanctions as part of the effort to get China to allow the renminbi to appreciate more rapidly.
Handle: RePEc:nbr:nberwo:17749
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Pharmaceutical Innovation on the Functional Limitations of Elderly Americans Evidence from the 2004 National Nursing Home Survey
Classification-JEL: I12; L65; O33
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: EH PR
Number: 17750
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17750
File-URL: http://www.nber.org/papers/w17750.pdf
File-Format: application/pdf
Publication-Status: published as Frank R. Lichtenberg (2012), The Effect of Pharmaceutical Innovation on the Functional Limitations of Elderly Americans: Evidence from the 2004 National Nursing Home Survey, in Kristian Bolin, Robert Kaestner (ed.) The Economics of Medical Technology (Advances in Health Economics and Health Services Research, Volume 23) Emerald Group Publishing Limited, pp.73 - 101
Abstract: I examine the effect of pharmaceutical innovation on the functional status of nursing home residents using cross-sectional, patient-level data from the 2004 National Nursing Home Survey. This was the first public-use survey of nursing homes that contains detailed information about medication use, and it contains better data on functional status than previous surveys. Residents using newer medications and a higher proportion of priority-review medications were more able to perform all five activities of daily living (ADLs), controlling for age, sex, race, marital status, veteran status, where the resident lived prior to admission, primary diagnosis at the time of admission, up to 16 diagnoses at the time of the interview, sources of payment, and facility fixed effects. The ability of nursing home residents to perform activities of daily living is positively related to the number of "new" (post-1990) medications they consume, but unrelated to the number of old medications they consume. If 2004 nursing home residents had used only old medications, the fraction of residents with all five ADL dependencies would have been 58%, instead of 50%. During the period 1990-2004, pharmaceutical innovation reduced the functional limitations of nursing home residents by between 1.2% and 2.1% per year.
Handle: RePEc:nbr:nberwo:17750
Template-Type: ReDIF-Paper 1.0
Title: International Capital Flows and House Prices: Theory and Evidence
Classification-JEL: F20; F32; G12; G21
Author-Name: Jack Favilukis
Author-Person: pfa609
Author-Name: David Kohn
Author-Person: pko701
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: AP
Number: 17751
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17751
File-URL: http://www.nber.org/papers/w17751.pdf
File-Format: application/pdf
Publication-Status: published as International Capital Flows and House Prices: Theory and Evidence, Jack Favilukis, David Kohn, Sydney C. Ludvigson, Stijn Van Nieuwerburgh. in Housing and the Financial Crisis, Glaeser and Sinai. 2013
Abstract: The last fifteen years have been marked by a dramatic boom-bust cycle in real estate prices, accompanied by economically large fluctuations in international capital flows. We argue that changes in international capital flows played, at most, a small role in driving house price movements in this episode and that, instead, the key causal factor was a financial market liberalization and its subsequent reversal. Using observations on credit standards, capital flows, and interest rates, we find that a bank survey measure of credit supply, by itself, explains 53 percent of the quarterly variation in house price growth in the U.S. over the period 1992-2010, while it explains 66 percent over the period since 2000. By contrast, once we control for credit supply, various measures of capital flows, real interest rates, and aggregate activity--collectively--add less than 5% to the fraction of variation explained for these same movements in home values. Credit supply retains its strong marginal explanatory power for house price movements over the period 2002-2010 in a panel of international data, while capital flows have no explanatory power.
Handle: RePEc:nbr:nberwo:17751
Template-Type: ReDIF-Paper 1.0
Title: Vertical versus Horizontal Incentives in Education: Evidence from Randomized Trials
Classification-JEL: I20
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Author-Name: Tanaya Devi
Author-Name: Richard T. Holden
Author-Person: pho195
Note: ED LS
Number: 17752
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17752
File-URL: http://www.nber.org/papers/w17752.pdf
File-Format: application/pdf
Abstract: This paper describes randomized field experiments in eighty-four urban public schools in two cities designed to understand the impact of aligned incentives on student achievement. In Washington DC, incentives were “horizontal” – provided to one agent (students) for various inputs in the education production function (i.e. attendance, behavior, interim assessments, homework, and uniforms). In Houston, TX, incentives were “vertical” – provided to multiple agents (parents, teachers, and students) for a single input (math objectives). On outcomes for which we provided direct incentives, there were large and statistically significant effects from both treatments. Horizontal incentives led to increases in math and reading test scores. Vertical incentives increased math achievement, but resulted in decreased reading, science, and social studies test scores. We argue that the data is consistent with agents perceiving academic achievement in various subjects as substitutes, not complements, in education production.
Handle: RePEc:nbr:nberwo:17752
Template-Type: ReDIF-Paper 1.0
Title: How is Tax Policy Conducted over the Business Cycle?
Classification-JEL: E32; E62; H20
Author-Name: Carlos A. Vegh
Author-Person: pve34
Author-Name: Guillermo Vuletin
Author-Person: pvu7
Note: IFM
Number: 17753
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17753
File-URL: http://www.nber.org/papers/w17753.pdf
File-Format: application/pdf
Publication-Status: published as Carlos A. Vegh & Guillermo Vuletin, 2015. "How Is Tax Policy Conducted over the Business Cycle?," American Economic Journal: Economic Policy, American Economic Association, vol. 7(3), pages 327-70, August.
Abstract: It is well known by now that government spending has typically been procyclical in developing economies but acyclical or countercyclical in industrial countries. Little, if any, is known, however, about the cyclical behavior of tax rates (as opposed to tax revenues, which are endogenous to the business cycle and hence cannot shed light on the cyclicality of tax policy). We build a novel dataset on tax rates for 62 countries for the period 1960-2013 that comprises corporate income, personal income, and value-added tax rates. We find that, by and large, tax policy is acyclical in industrial countries but mostly procyclical in developing countries. Further, tax policy in countries with better institutions and/or more integrated with world capital markets tends to be less procyclical/more countercyclical.
Handle: RePEc:nbr:nberwo:17753
Template-Type: ReDIF-Paper 1.0
Title: Shanghai's Trade, China's Growth: Continuity, Recovery, and Change since the Opium War
Classification-JEL: F10; F22; F23; N81; N83; N85; N95; O43
Author-Name: Wolfgang Keller
Author-Person: pke8
Author-Name: Ben Li
Author-Person: pli448
Author-Name: Carol H. Shiue
Note: DAE IFM ITI POL
Number: 17754
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17754
File-URL: http://www.nber.org/papers/w17754.pdf
File-Format: application/pdf
Publication-Status: published as Wolfgang Keller & Ben Li & Carol H Shiue, 2013. "Shanghai's Trade, China's Growth: Continuity, Recovery, and Change since the Opium Wars," IMF Economic Review, Palgrave Macmillan, vol. 61(2), pages 336-378, June.
Abstract: In this paper, we provide aggregate trends in China's trade performance from the 1840s to the present. Based on historical benchmarks, we argue that China's recent gains are not exclusively due to the reforms since 1978. Rather, foreign economic activity can be understood by developments that were set in motion in the 19th century. We turn our focus to Shanghai, currently the world's largest port. Shanghai began direct trade relations with western nations starting in 1843. By 1853, Shanghai already accounted for more than half of China's foreign trade. In tracking the levels and growth rates of the city's net and gross imports and exports, foreign direct investment, and foreign residents over more than a century, we find that Shanghai's level of bilateral trade today with the United States, the United Kingdom, or Japan, for example, are by no means high given Shanghai's 19th century experience. This paper argues that a regional approach that embeds national trading destinations within an international trading system provides a meaningful approach to understanding the history of China's trade.
Handle: RePEc:nbr:nberwo:17754
Template-Type: ReDIF-Paper 1.0
Title: Identification of Preferences and Evaluation of Income Tax Policy
Classification-JEL: C14; C25; H21; H24; J22
Author-Name: Charles F. Manski
Author-Person: pma111
Note: LS PE
Number: 17755
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17755
File-URL: http://www.nber.org/papers/w17755.pdf
File-Format: application/pdf
Publication-Status: published as “Identification of Income-Leisure Preferences and Evaluation of Income Tax Policy,” Quantitative Economics, Vol. 5, No. 1, 2014, pp. 145-174.
Abstract: The merits of alternative income tax policies depend on the population distribution of preferences for income, leisure, and public goods. Standard theory, which supposes that persons want more income and more leisure, does not predict how they resolve the tension between these desires. Empirical studies of labor supply have been numerous but have not shed much light on the matter. A persistent problem is that empirical researchers have imposed strong preference assumptions that lack foundation. This paper examines anew the problem of inference on preferences and considers the implications for comparison of tax policies. I first perform a basic revealed-preference analysis that imposes no assumptions on the preference distribution beyond the presumption that persons prefer more income and leisure. This shows that observation of a person's labor supply under a status quo tax policy may bound his labor supply under a proposed policy or may have no implications, depending on the shapes of the two tax schedules and the location of status quo labor supply. I next explore the identifying power of two assumptions restricting the population distribution of income-leisure preferences. One assumes that groups of persons who face different choice sets have the same distribution of preferences, while the other adds restrictions on the shape of this distribution. I then address utilitarian policy comparison with partial knowledge of preferences. Partial knowledge of preferences implies partial knowledge of the welfare function. Hence, it may not be possible to rank policies.
Handle: RePEc:nbr:nberwo:17755
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Foreign Liabilities on Small Firms: Firm-Level Evidence from the Korean Crisis
Classification-JEL: E44; F32; F34
Author-Name: Yun Jung Kim
Author-Person: pki359
Author-Name: Linda Tesar
Author-Person: pte111
Author-Name: Jing Zhang
Author-Person: pzh153
Note: IFM
Number: 17756
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17756
File-URL: http://www.nber.org/papers/w17756.pdf
File-Format: application/pdf
Publication-Status: published as Kim, Yun Jung & Tesar, Linda L. & Zhang, Jing, 2015. "The impact of foreign liabilities on small firms: Firm-level evidence from the Korean crisis," Journal of International Economics, Elsevier, vol. 97(2), pages 209-230.
Abstract: Using Korean firm-level data on publicly-listed and privately-held firms together with firm exit data, we find strong evidence of the balance-sheet effect for small firms at both the intensive and extensive margins. During the crisis, small firms with more short-term foreign debt are more likely to go bankrupt, and experience larger sales declines conditional on survival. The extensive margin accounts for a large fraction of small firms' adjustment during the crisis. Consistent with many studies in the literature, large firms with larger exposure to foreign debt paradoxically have better performance during the crisis at both the intensive and extensive margin.
Handle: RePEc:nbr:nberwo:17756
Template-Type: ReDIF-Paper 1.0
Title: Economics and Climate Change: Integrated Assessment in a Multi-Region World
Classification-JEL: H23; O44; Q0
Author-Name: John Hassler
Author-Name: Per Krusell
Author-Person: pkr102
Note: EEE EFG PE
Number: 17757
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17757
File-URL: http://www.nber.org/papers/w17757.pdf
File-Format: application/pdf
Publication-Status: published as John Hassler & Per Krusell, 2012. "Economics And Climate Change: Integrated Assessment In A Multi-Region World," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 974-1000, October.
Abstract: This paper develops a model that integrates the climate and the global economy---an integrated assessment model---with which different policy scenarios can be analyzed and compared. The model is a dynamic stochastic general-equilibrium setup with a continuum of regions. Thus, it is a full stochastic general-equilibrium version of RICE, Nordhaus's pioneering multi-region integrated assessment model. Like RICE, our model features traded fossil fuel but otherwise has no markets across regions---there is no insurance nor any intertemporal trade across them. The extreme form of market incompleteness is not fully realistic but arguably not a decent approximation of reality. Its major advantage is that, along with a set of reasonable assumptions on preferences, technology, and nature, it allows a closed-form model solution. We use the model to assess the welfare consequences of carbon taxes that differ across as well as within oil-consuming and -producing regions. We show that, surprisingly, only taxes on oil producers can improve the climate: taxes on oil consumers have no effect at all. The calibrated model suggests large differences in views on climate policy across regions.
Handle: RePEc:nbr:nberwo:17757
Template-Type: ReDIF-Paper 1.0
Title: Time as a Trade Barrier
Classification-JEL: F1; F15
Author-Name: David Hummels
Author-Person: phu100
Author-Name: Georg Schaur
Author-Person: psc304
Note: ITI
Number: 17758
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17758
File-URL: http://www.nber.org/papers/w17758.pdf
File-Format: application/pdf
Publication-Status: published as David L. Hummels & Georg Schaur, 2013. "Time as a Trade Barrier," American Economic Review, American Economic Association, vol. 103(7), pages 2935-59, December.
Abstract: A large and growing share of international trade is carried on airplanes. Air cargo is many times more expensive than maritime transport but arrives in destination markets much faster. We model firms' choice between exporting goods using fast but expensive air cargo and slow but cheap ocean cargo. This choice depends on the price elasticity of demand and the value that consumers attach to fast delivery and is revealed in the relative market shares of firms who air and ocean ship. We use US imports data that provide rich variation in the premium paid for air shipping and in time lags for ocean transit to identify these parameters and extract consumer's valuation of time. By exploiting variation across US entry coasts we are able to control for selection and for unobserved shocks to product quality and variety that affect market shares. We estimate that each day in transit is equivalent to an ad-valorem tariff of 0.6 to 2.3 percent and that the most time-sensitive trade flows are those involving parts and components trade. These results suggest a link between sharp declines in the price of air shipping and rapid growth in trade as well as growth in world-wide fragmentation of production. Our estimates are also useful for assessing the economic impact of policies that raise or lower time to trade such as security screening of cargo, port infrastructure investment, or streamlined customs procedures.
Handle: RePEc:nbr:nberwo:17758
Template-Type: ReDIF-Paper 1.0
Title: Oil Prices, Exhaustible Resources, and Economic Growth
Classification-JEL: O40; Q30; Q41; Q43
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EEE EFG
Number: 17759
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17759
File-URL: http://www.nber.org/papers/w17759.pdf
File-Format: application/pdf
Publication-Status: published as “Oil Prices, Exhaustible Resources, and Economic Growth,” in Handbook on Energy and Climate Change, pp. 29-63, edited by Roger Fouqet, Cheltenham, United Kingdom: Edward Elgar Publishing, 2013.
Abstract: This paper explores details behind the phenomenal increase in global crude oil production over the last century and a half and the implications if that trend should be reversed. I document that a key feature of the growth in production has been exploitation of new geographic areas rather than application of better technology to existing sources, and suggest that the end of that era could come soon. The economic dislocations that historically followed temporary oil supply disruptions are reviewed, and the possible implications of that experience for what the transition era could look like are explored.
Handle: RePEc:nbr:nberwo:17759
Template-Type: ReDIF-Paper 1.0
Title: The Corporation in Finance
Classification-JEL: G32; L22; L26
Author-Name: Raghuram Rajan
Author-Person: pra149
Note: CF IO LE PR
Number: 17760
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17760
File-URL: http://www.nber.org/papers/w17760.pdf
File-Format: application/pdf
Abstract: The nature of the firm and its financing are closely interlinked. To produce significant net present value, an entrepreneur has to transform her enterprise into one that is differentiated from the ordinary. To achieve the control that will allow her to execute this strategy, she needs to have substantial ownership, and thus financing. But it is hard to raise finance against differentiated assets. So an entrepreneur has to commit to undertake a second transformation, standardization, that will make the human capital in the firm, including her own, replaceable, so that outside financiers obtain control rights that will allow them to be repaid. I argue that the availability of a vibrant stock market helps the entrepreneur commit to these two transformations in a way that a debt market would not. This helps explain why the nature of firms and the extent of innovation differ so much in different financing environments.
Handle: RePEc:nbr:nberwo:17760
Template-Type: ReDIF-Paper 1.0
Title: Salience in Experimental Tests of the Endowment Effect
Classification-JEL: D03; D81
Author-Name: Pedro Bordalo
Author-Person: pbo515
Author-Name: Nicola Gennaioli
Author-Person: pge95
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: AP CF
Number: 17761
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17761
File-URL: http://www.nber.org/papers/w17761.pdf
File-Format: application/pdf
Publication-Status: published as Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2012. "Salience in Experimental Tests of the Endowment Effect," American Economic Review, American Economic Association, vol. 102(3), pages 47-52, May.
Abstract: We provide a novel account of experimental evidence for the endowment effect using the salience mechanism (Bordalo, Gennaioli, and Shleifer, 2011). The two-stage procedure implemented in experiments implies that the endowed good and other goods are evaluated in different contexts. We describe conditions under which the standard effect occurs, but also account for recent evidence such as a reverse endowment effect for bads and a role for reference prices in modulating the WTA-WTP gap.
Handle: RePEc:nbr:nberwo:17761
Template-Type: ReDIF-Paper 1.0
Title: Do Consumers Exploit Precommitment Opportunities? Evidence from Natural Experiments Involving Liquor Consumption
Classification-JEL: D03; D12; H31; I10
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Author-Name: Jonathan Meer
Author-Person: pme529
Author-Name: Neva K. Novarro
Note: PE
Number: 17762
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17762
File-URL: http://www.nber.org/papers/w17762.pdf
File-Format: application/pdf
Abstract: This paper provides evidence concerning the extent to which consumers of liquor employ commitment devices. One widely recommended commitment strategy is to regulate alcohol consumption by deliberately manipulating availability. The paper assesses the prevalence of the “availability strategy” by evaluating the effects of policies that would influence its effectiveness – specifically, changes in allowable Sunday sales hours. It finds that consumers increase their liquor consumption in response to extended Sunday on-premises sales hours, but not in response to extended off-premises sales hours. The latter finding is inconsistent with widespread use of the availability strategy.
Handle: RePEc:nbr:nberwo:17762
Template-Type: ReDIF-Paper 1.0
Title: How Firms Use Domestic and International Corporate Bond Markets
Classification-JEL: F36; G12; G15; G32
Author-Name: Juan Carlos Gozzi
Author-Name: Ross Levine
Author-Person: ple61
Author-Name: Maria Soledad Martinez Peria
Author-Person: pma855
Author-Name: Sergio L. Schmukler
Author-Person: psc64
Note: CF IFM ITI
Number: 17763
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17763
File-URL: http://www.nber.org/papers/w17763.pdf
File-Format: application/pdf
Abstract: This paper provides the first comprehensive documentation of the main features of corporate bond issues in domestic and international markets and analyzes how firms use these markets after they internationalize. We find that debt issues in domestic and international bond markets have different characteristics, not explained by differences across firms or their country of origin. International issues tend to be larger, of shorter maturity, denominated in foreign currency, and include a higher fraction of fixed rate contracts. Moreover, a large proportion of firms remain active in domestic bond markets after accessing international markets, and many of these firms use both markets for different types of issues. This evidence suggests that domestic and international bond markets provide different financial services and are not substitutes, but rather complements.
Handle: RePEc:nbr:nberwo:17763
Template-Type: ReDIF-Paper 1.0
Title: Is Tanzania a Success Story? A Long Term Analysis
Classification-JEL: F31; F32; G01; N17; N72; O55
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM
Number: 17764
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17764
File-URL: http://www.nber.org/papers/w17764.pdf
File-Format: application/pdf
Publication-Status: published as Is Tanzania a Success Story? A Long-Term Analysis, Sebastian Edwards. in African Successes, Volume I: Government and Institutions, Edwards, Johnson, and Weil. 2016
Abstract: The purpose of this paper is to provide a historical perspective on the reform process initiated in Tanzania in 1986, and deepened in 1996. In order to do this I concentrate mostly on the period spanning from 1967, when the Arusha Declaration was adopted by the official political party the TANU, and 1996, when a new approach towards foreign aid was implemented. I am particularly interested in investigating how external aid affected Tanzania during the early years, and how it contributed to the demise of the economy in the 1970s and 1980s. I also analyze the role played by foreign aid in the subsequent (after 1996) recovery of the country. I emphasize both technical as well as political economy issues related to imbalances, disequilibria, devaluation, black markets, adjustment, and reform. Because of the emphasis on foreign aid and macroeconomics, I pay special attention to three important episodes in Tanzania's economic history: (a) the exchange rate crisis of the late 1970's and early 1980s; (b) the IMF Stand-by Program and the maxi-devaluation of 1986; and (c) The serious impasse between donors and the Tanzanian authorities in the mid 1990s. At the end of the analysis I ask whether Tanzania is, as officials from the multilateral institutions have claimed repeatedly, a "success story."
Handle: RePEc:nbr:nberwo:17764
Template-Type: ReDIF-Paper 1.0
Title: On the Optimal Burden of Proof
Classification-JEL: D81; K14; K41; K42
Author-Name: Louis Kaplow
Author-Person: pka44
Note: LE
Number: 17765
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17765
File-URL: http://www.nber.org/papers/w17765.pdf
File-Format: application/pdf
Publication-Status: published as On the Optimal Burden of Proof, Journal of Political Economy, vol. 119, pp. 1104-1140 (2011).
Abstract: The burden of proof is a central feature of adjudication, and analogues exist in many other settings. It constitutes an important but largely unappreciated policy instrument that interacts with the level of enforcement effort and magnitude of sanctions in controlling harmful activity. Models are examined in which the prospect of sanctions affects not only harmful acts but also benign ones, on account of the prospect of mistaken application of sanctions. Accordingly, determination of the optimal strength of the burden of proof, as well as optimal enforcement effort and sanctions, involves trading off deterrence and the chilling of desirable behavior, the latter being absent in previous work. The character of the optimum differs markedly from prior results and from conventional understandings of proof burdens, which can be understood as involving Bayesian posterior probabilities. Additionally, there are important divergences across models in which enforcement involves monitoring (posting officials to be on the lookout for harmful acts), investigation (inquiry triggered by the costless observation of particular harmful acts), and auditing (scrutiny of a random selection of acts). A number of extensions are analyzed, in one instance nullifying key results in prior work.
Handle: RePEc:nbr:nberwo:17765
Template-Type: ReDIF-Paper 1.0
Title: Is There an Energy Efficiency Gap?
Classification-JEL: D11; D18; D61; D62; H23; L91; L94; Q41
Author-Name: Hunt Allcott
Author-Person: pal171
Author-Name: Michael Greenstone
Author-Person: pgr38
Note: EEE PE
Number: 17766
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17766
File-URL: http://www.nber.org/papers/w17766.pdf
File-Format: application/pdf
Publication-Status: published as Hunt Allcott & Michael Greenstone, 2012. "Is There an Energy Efficiency Gap?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 3-28, Winter.
Abstract: Many analysts have argued that energy efficiency investments offer an enormous "win-win" opportunity to both reduce negative externalities and save money. This overview paper presents a simple model of investment in energy-using capital stock with two types of market failures: first, uninternalized externalities from energy consumption, and second, forces such as imperfect information that cause consumers and firms not to exploit privately-profitable energy efficiency investments. The model clarifies that only if the second type of market failure cannot be addressed directly through mechanisms such as information provision, energy efficiency subsidies and standards may be merited. We therefore review the empirical work on the magnitude of profitable unexploited energy efficiency investments, a literature which frequently does not meet modern standards for credibly estimating the net present value of energy cost savings and often leaves other benefits and costs unmeasured. These problems notwithstanding, recent empirical work in a variety of contexts implies that on average the magnitude of profitable unexploited investment opportunities is much smaller than engineering-accounting studies suggest. Finally, there is tremendous opportunity and need for policy-relevant research that utilizes randomized controlled trials and quasi-experimental techniques to estimate the returns to energy efficiency investments and the welfare effects of energy efficiency programs.
Handle: RePEc:nbr:nberwo:17766
Template-Type: ReDIF-Paper 1.0
Title: Measured Aggregate Gains from International Trade
Classification-JEL: E01; F1
Author-Name: Ariel Burstein
Author-Name: Javier Cravino
Author-Person: pcr150
Note: EFG ITI
Number: 17767
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17767
File-URL: http://www.nber.org/papers/w17767.pdf
File-Format: application/pdf
Publication-Status: published as Ariel Burstein & Javier Cravino, 2015. "Measured Aggregate Gains from International Trade," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(2), pages 181-218, April.
Abstract: Do theoretical welfare gains from trade translate into aggregate measures of economic activity? We calculate the changes in real GDP and real consumption that result from changes in trade costs in a range of workhorse trade models, following the procedures outlined by statistical agencies in the United States. Our main findings are as follows: First, real GDP and measured aggregate productivity rise in response to reductions in variable trade costs if GDP deflators capture the decline in trade costs. Second, with balanced trade in each country, changes in world real consumption and changes in world real GDP (i.e.: weighting the change in each country by its nominal GDP) in response to changes in variable trade costs coincide, up to a first-order approximation, with changes in world theoretical (welfare-based) consumption. The equivalence between measured consumption and theoretical consumption holds country-by-country under stronger conditions. Third, for given trade shares and changes in variable trade costs, changes in real GDP and changes in world real consumption are approximately equal in magnitude across the models we consider.
Handle: RePEc:nbr:nberwo:17767
Template-Type: ReDIF-Paper 1.0
Title: Sizing Up Repo
Classification-JEL: G01; G21; G24
Author-Name: Arvind Krishnamurthy
Author-Person: pkr393
Author-Name: Stefan Nagel
Author-Person: pna176
Author-Name: Dmitry Orlov
Note: AP CF ME
Number: 17768
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17768
File-URL: http://www.nber.org/papers/w17768.pdf
File-Format: application/pdf
Publication-Status: published as “Sizing Up Repo,” Journal of Finance, forthcoming.
Abstract: We measure the repo funding extended by money market funds (MMF) and securities lenders to the shadow banking system, including quantities, haircuts, and repo rates by type of underlying collateral. We find that repo played only a small role in funding private sector assets prior to the crisis, as most repos are backed by Treasury and Agency collateral. Repo with private sector collateral contracts during the crisis, but the magnitude is relatively insignificant compared with the contraction in asset-backed commercial paper (ABCP). While relatively small in aggregate, the contraction in repo particularly affected key dealer banks with large exposures to private sector securities, which then had knock-on effects on security markets, and led these dealer banks to resort to the Fed's emergency lending programs. We also find that haircuts in MMF-to-dealer repo rise less than the dealer-to-dealer or dealer-to-hedge fund repo haircuts reported in earlier papers. This finding suggests that the contraction in repo led dealers to take defensive actions, given their own capital and liquidity problems, raising credit terms to their borrowers. The picture that emerges from these findings looks less like a traditional bank run of depositors and more like a credit crunch among dealer banks.
Handle: RePEc:nbr:nberwo:17768
Template-Type: ReDIF-Paper 1.0
Title: Technological Innovation, Resource Allocation, and Growth
Classification-JEL: E32; G14; O3; O4
Author-Name: Leonid Kogan
Author-Person: pko698
Author-Name: Dimitris Papanikolaou
Author-Person: ppa463
Author-Name: Amit Seru
Author-Person: pse308
Author-Name: Noah Stoffman
Author-Person: pst980
Note: AP CF EFG ME PR
Number: 17769
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17769
File-URL: http://www.nber.org/papers/w17769.pdf
File-Format: application/pdf
Publication-Status: published as Leonid Kogan & Dimitris Papanikolaou & Amit Seru & Noah Stoffman, 2017. "Technological Innovation, Resource Allocation, and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 132(2), pages 665-712.
Abstract: We propose a new measure of the economic importance of each innovation. Our measure uses newly collected data on patents issued to US firms in the 1926 to 2010 period, combined with the stock market response to news about patents. Our patent- level estimates of private economic value are positively related to the scientific value of these patents, as measured by the number of citations that the patent receives in the future. Our new measure is associated with substantial growth, reallocation and creative destruction, consistent with the predictions of Schumpeterian growth models. Aggregating our measure suggests that technological innovation accounts for significant medium-run fluctuations in aggregate economic growth and TFP. Our measure contains additional information relative to citation-weighted patent counts; the relation between our measure and firm growth is considerably stronger. Importantly, the degree of creative destruction that is associated with our measure is higher than previous estimates, confirming that it is a useful proxy for the private valuation of patents.
Handle: RePEc:nbr:nberwo:17769
Template-Type: ReDIF-Paper 1.0
Title: Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States
Classification-JEL: D73; H25; M14
Author-Name: Jason M. DeBacker
Author-Name: Bradley T. Heim
Author-Person: phe227
Author-Name: Anh Tran
Note: CF ITI LE PE POL
Number: 17770
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17770
File-URL: http://www.nber.org/papers/w17770.pdf
File-Format: application/pdf
Publication-Status: published as Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States, Jason DeBacker, Bradley T. Heim, Anh Tran. in Causes and Consequences of Corporate Culture, Zingales and Poterba. 2015
Publication-Status: published as DeBacker, Jason & Heim, Bradley T. & Tran, Anh, 2015. "Importing corruption culture from overseas: Evidence from corporate tax evasion in the United States," Journal of Financial Economics, Elsevier, vol. 117(1), pages 122-138.
Abstract: This paper studies how cultural norms and enforcement policies influence illicit corporate activities. Using confidential IRS audit data, we show that corporations with owners from countries with higher corruption norms engage in higher amounts of tax evasion in the U.S. This effect is strong for small corporations and decreases as the size of the corporation increases. In the mid-2000s, the United States implemented several enforcement measures which significantly increased tax compliance. However, we find that these enforcement efforts were less effective in reducing tax evasion by corporations whose owners are from countries with higher corruption norms. This suggests that cultural norms can be a challenge to legal enforcement.
Handle: RePEc:nbr:nberwo:17770
Template-Type: ReDIF-Paper 1.0
Title: Collateral Crises
Classification-JEL: E2; E20; E32; E44; G01; G2; G20
Author-Name: Gary B. Gorton
Author-Person: pgo458
Author-Name: Guillermo Ordonez
Author-Person: por40
Note: AP CF ME
Number: 17771
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17771
File-URL: http://www.nber.org/papers/w17771.pdf
File-Format: application/pdf
Publication-Status: published as Gary Gorton & Guillermo Ordo?ez, 2014. "Collateral Crises," American Economic Review, American Economic Association, vol. 104(2), pages 343-78, February.
Abstract: Short-term collateralized debt, such as demand deposits and money market instruments - private money, is efficient if agents are willing to lend without producing costly information about the collateral backing the debt. When the economy relies on such informationally-insensitive debt, firms with low quality collateral can borrow, generating a credit boom and an increase in output and consumption. Financial fragility builds up over time as information about counterparties decays. A crisis occurs when a small shock then causes a large change in the information environment. Agents suddenly have incentives to produce information, asymmetric information becomes a threat and there is a decline in output and consumption. A social planner would produce more information than private agents, but would not always want to eliminate fragility.
Handle: RePEc:nbr:nberwo:17771
Template-Type: ReDIF-Paper 1.0
Title: Identification and Estimation of Gaussian Affine Term Structure Models
Classification-JEL: C13; E43; G12
Author-Name: James D. Hamilton
Author-Person: pha60
Author-Name: Jing Cynthia Wu
Author-Person: pwu111
Note: AP ME
Number: 17772
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17772
File-URL: http://www.nber.org/papers/w17772.pdf
File-Format: application/pdf
Publication-Status: published as Hamilton, James D. & Wu, Jing Cynthia, 2012. "Identification and estimation of Gaussian affine term structure models," Journal of Econometrics, Elsevier, vol. 168(2), pages 315-331.
Abstract: This paper develops new results for identification and estimation of Gaussian affine term structure models. We establish that three popular canonical representations are unidentified, and demonstrate how unidentified regions can complicate numerical optimization. A separate contribution of the paper is the proposal of minimum-chi-square estimation as an alternative to MLE. We show that, although it is asymptotically equivalent to MLE, it can be much easier to compute. In some cases, MCSE allows researchers to recognize with certainty whether a given estimate represents a global maximum of the likelihood function and makes feasible the computation of small-sample standard errors.
Handle: RePEc:nbr:nberwo:17772
Template-Type: ReDIF-Paper 1.0
Title: Recent Research on the Economics of Patents
Classification-JEL: K11; L20; O34
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Dietmar Harhoff
Author-Person: pha276
Note: LE PR
Number: 17773
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17773
File-URL: http://www.nber.org/papers/w17773.pdf
File-Format: application/pdf
Publication-Status: published as Bronwyn H. Hall & Dietmar Harhoff, 2012. "Recent Research on the Economics of Patents," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 541-565, 07.
Abstract: Recent research on the economics of patents is surveyed. The topics covered include theoretical and empirical evidence on patents as an incentive for innovation, the effectiveness of patents for invention disclosure, patent valuation, and what we know about the design of patent systems. We also look at what is known about some current policy areas, including software and business method patents, university patenting, and the growth in patent litigation.
Handle: RePEc:nbr:nberwo:17773
Template-Type: ReDIF-Paper 1.0
Title: Child Care Subsidies, Maternal Well-Being, and Child-Parent Interactions: Evidence from Three Nationally Representative Datasets
Classification-JEL: I18; J13
Author-Name: Chris M. Herbst
Author-Name: Erdal Tekin
Author-Person: pte12
Note: CH EH
Number: 17774
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17774
File-URL: http://www.nber.org/papers/w17774.pdf
File-Format: application/pdf
Publication-Status: published as CHILD CARE SUBSIDIES, MATERNAL HEALTH, AND CHILD–PARENT INTERACTIONS: EVIDENCE FROM THREE NATIONALLY REPRESENTATIVE DATASETS Chris M. Herbst1,* andErdal Tekin2 Health Economics Volume 23, Issue 8, pages 894–916, August 2014
Abstract: A complete account of the U.S. child care subsidy system requires an understanding of its implications for both parental and child well-being. Although the effects of child care subsidies on maternal employment and child development have been recently studied, many other dimensions of family well-being have received little attention. This paper attempts to fill this gap by examining the impact of child care subsidy receipt on maternal health and the quality of child-parent interactions. The empirical analyses use data from three nationally representative surveys, providing access to numerous measures of family well-being. In addition, we attempt to handle the possibility of non-random selection into subsidy receipt by using several identification strategies both within and across the surveys. Our results consistently indicate that child care subsidies are associated with worse maternal health and poorer interactions between parents and their children. In particular, subsidized mothers report lower levels of overall health and are more likely to show symptoms consistent with anxiety, depression, and parenting stress. Such mothers also reveal more psychological and physical aggression toward their children and are more likely to utilize spanking as a disciplinary tool. Together, these findings suggest that work-based public policies aimed at economically disadvantaged mothers may ultimately undermine family well-being.
Handle: RePEc:nbr:nberwo:17774
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Implications of a Credit Crunch
Classification-JEL: E32; E44
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Benjamin Moll
Author-Person: pmo661
Note: EFG
Number: 17775
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17775
File-URL: http://www.nber.org/papers/w17775.pdf
File-Format: application/pdf
Abstract: We take an off-the-shelf model with financial frictions and heterogeneity, and study the mapping from a credit crunch, modeled as a shock to collateral constraints, to simple aggregate wedges. We study three variants of this model that only differ in the form of underlying heterogeneity. We find that in all three model variants a credit crunch shows up as a different wedge: efficiency, investment, and labor wedges. Furthermore, all three model variants have an undistorted Euler equation for the aggregate of firm owners. These results highlight the limitations of using representative agent models to identify sources of business cycle fluctuations.
Handle: RePEc:nbr:nberwo:17775
Template-Type: ReDIF-Paper 1.0
Title: Valuing the Vote: The Redistribution of Voting Rights and State Funds Following the Voting Rights Act of 1965
Classification-JEL: D72; H7; I2; J15; N32
Author-Name: Elizabeth U. Cascio
Author-Person: pca757
Author-Name: Ebonya L. Washington
Note: DAE ED POL
Number: 17776
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17776
File-URL: http://www.nber.org/papers/w17776.pdf
File-Format: application/pdf
Publication-Status: published as “Valuing the Vote: The Redistribution of Voting Rights and State Funds Following the Voting Rights Act of 1965” (with Ebonya Washington), The Quarterly Journal of Economics, 129(1), 379-433, February 2014.
Abstract: The Voting Rights Act of 1965 (VRA) has been called one of the most effective pieces of civil rights legislation in U.S. history, having generated dramatic increases in black voter registration across the South. We show that the expansion of black voting rights in some southern states brought about by one requirement of the VRA - the elimination of literacy tests at voter registration - was accompanied by a shift in the distribution of state aid toward localities with higher proportions of black residents, a finding that is consistent with models of distributive politics. Our estimates imply an elasticity of state transfers to counties with respect to turnout in presidential elections - the closest available measure of enfranchisement - of roughly one.
Handle: RePEc:nbr:nberwo:17776
Template-Type: ReDIF-Paper 1.0
Title: The Safe-Asset Share
Classification-JEL: E02; E41; E44; E52; G2; G21
Author-Name: Gary B. Gorton
Author-Person: pgo458
Author-Name: Stefan Lewellen
Author-Name: Andrew Metrick
Author-Person: pme99
Note: AP CF ME
Number: 17777
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17777
File-URL: http://www.nber.org/papers/w17777.pdf
File-Format: application/pdf
Publication-Status: published as Gary Gorton & Stefan Lewellen & Andrew Metrick, 2012. "The Safe-Asset Share," American Economic Review, American Economic Association, vol. 102(3), pages 101-06, May.
Abstract: We document that the percentage of all U.S. assets that are "safe" has remained stable at about 33 percent since 1952. This stable ratio is a rare example of calm in a rapidly changing financial world. Over the same time period, the ratio of U.S. assets to GDP has increased by a factor of 2.5, and the main supplier of safe financial debt has shifted from commercial banks to the "shadow banking system." We analyze this pattern of stylized facts and offer some tentative conclusions about the composition of the safe-asset share and its role within the overall economy.
Handle: RePEc:nbr:nberwo:17777
Template-Type: ReDIF-Paper 1.0
Title: Getting up to Speed on the Financial Crisis: A One-Weekend-Reader's Guide
Classification-JEL: A1; D0; E0; G0
Author-Name: Gary B. Gorton
Author-Person: pgo458
Author-Name: Andrew Metrick
Author-Person: pme99
Note: AP CF ME
Number: 17778
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17778
File-URL: http://www.nber.org/papers/w17778.pdf
File-Format: application/pdf
Publication-Status: published as Gary Gorton & Andrew Metrick, 2012. "Getting Up to Speed on the Financial Crisis: A One-Weekend-Reader's Guide," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 128-50, March.
Abstract: All economists should be conversant with "what happened?" during the financial crisis of 2007-2009. We select and summarize 16 documents, including academic papers and reports from regulatory and international agencies. This reading list covers the key facts and mechanisms in the build-up of risk, the panics in short-term-debt markets, the policy reactions, and the real effects of the financial crisis.
Handle: RePEc:nbr:nberwo:17778
Template-Type: ReDIF-Paper 1.0
Title: Is Labor Supply Important for Business Cycles?
Classification-JEL: E24; J22; J64
Author-Name: Per Krusell
Author-Person: pkr102
Author-Name: Toshihiko Mukoyama
Author-Person: pmu40
Author-Name: Richard Rogerson
Author-Person: pro53
Author-Name: Ayşegül Şahin
Author-Person: psa123
Note: EFG
Number: 17779
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17779
File-URL: http://www.nber.org/papers/w17779.pdf
File-Format: application/pdf
Abstract: We build a general equilibrium model that features uninsurable idiosyncratic shocks, search frictions and an operative labor supply choice along the extensive margin. The model is calibrated to match the average levels of gross flows across the three labor market states: employment, unemployment, and non-participation. We use it to study the implications of two kinds of aggregate shocks for the cyclical behavior of labor market aggregates and flows: shocks to search frictions (the rates of job finding and job loss) and shocks to the return on the market activity (any factors affecting aggregate productivity). We find that both kinds of shocks are needed to explain the labor market data, and that an active labor supply channel is key. A model with friction shocks only, calibrated to match unemployment fluctuations, accounts for only a small fraction of employment fluctuations and has counterfactual cyclical predictions for participation.
Handle: RePEc:nbr:nberwo:17779
Template-Type: ReDIF-Paper 1.0
Title: Macroprudential Policies in Open Emerging Economies
Classification-JEL: E44; E52; E58; G28
Author-Name: Joon-Ho Hahm
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Author-Name: Hyun Song Shin
Author-Person: psh692
Author-Name: Kwanho Shin
Author-Person: psh131
Note: EFG ME
Number: 17780
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17780
File-URL: http://www.nber.org/papers/w17780.pdf
File-Format: application/pdf
Publication-Status: published as Hahm, Joon-Ho & Mishkin, Frederic S. & Shin, Hyun Song & Shin, Kwanho, 2011. "Macroprudential policies in open emerging economies," Proceedings, Federal Reserve Bank of San Francisco, issue Nov, pages 63-114.
Abstract: This paper examines macroprudential policies in open emerging economies. It discusses how the recent financial crisis has provided a rationale for macroprudential policies to help manage the economy and the need for policymakers to monitor the financial cycle and systemic risks. It also discusses one particularly promising measure of the state of the financial cycle, the growth of non-core liabilities of the financial sector, and evaluates macroprudential policy frameworks. The paper uses Korea as an example and conducts an empirical evaluation of non-core liabilities of Korean banks as a measure of the financial cycle.
Handle: RePEc:nbr:nberwo:17780
Template-Type: ReDIF-Paper 1.0
Title: Child Gender And Parental Investments In India: Are Boys And Girls Treated Differently?
Classification-JEL: I15; J16
Author-Name: Silvia H. Barcellos
Author-Person: pba1324
Author-Name: Leandro Carvalho
Author-Name: Adriana Lleras-Muney
Author-Person: pll45
Note: CH EH LS
Number: 17781
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17781
File-URL: http://www.nber.org/papers/w17781.pdf
File-Format: application/pdf
Publication-Status: published as “Child gender and Parental Investments in India: Are boys and Girls Treated Differently?” forthcoming, American Economic Journal: Applied Economics. (joint with Silvia H. Barcellos and Leandro Carvalho)
Abstract: Although previous research has not always found that boys and girls are treated differently in rural India, son-biased stopping rules imply that estimates of the effect of gender on parental investments are likely to be biased because girls systematically end up in larger families. We propose a novel identification strategy for overcoming this bias. We document that boys receive significantly more childcare time than girls. In addition boys are more likely to be breastfed longer, and to be given vaccinations and vitamin supplementation. We then present suggestive evidence that the differential treatment of boys is neither due to their greater needs nor to the effect of anticipated family size.
Handle: RePEc:nbr:nberwo:17781
Template-Type: ReDIF-Paper 1.0
Title: Recruiting Intensity during and after the Great Recession: National and Industry Evidence
Classification-JEL: E24; J63
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: R. Jason Faberman
Author-Person: pfa260
Author-Name: John C. Haltiwanger
Author-Person: pha231
Note: EFG LS
Number: 17782
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17782
File-URL: http://www.nber.org/papers/w17782.pdf
File-Format: application/pdf
Publication-Status: published as Steven J. Davis & R. Jason Faberman & John C. Haltiwanger, 2012. "Recruiting Intensity during and after the Great Recession: National and Industry Evidence," American Economic Review, American Economic Association, vol. 102(3), pages 584-88, May.
Abstract: We measure job-filling rates and recruiting intensity per vacancy at the national and industry levels from January 2001 to September 2011 using data from the Job Openings and Labor Turnover Survey. Construction makes up less than 5 percent of employment but accounts for more than 40 percent of the large swings in the job-filling rate during and after the Great Recession. Leisure & Hospitality accounts for nearly a quarter of the large drop in recruiting intensity during the Great Recession. We show that industry-level movements in job-filling rates and recruiting intensity are at odds with the implications of the standard matching function in labor search theory but consistent with a generalized function that incorporates an important role for recruiting intensity per vacancy.
Handle: RePEc:nbr:nberwo:17782
Template-Type: ReDIF-Paper 1.0
Title: Boundedly Rational Dynamic Programming: Some Preliminary Results
Classification-JEL: D03; E21
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: AG EFG
Number: 17783
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17783
File-URL: http://www.nber.org/papers/w17783.pdf
File-Format: application/pdf
Abstract: A key open question in economics is the practical, portable modeling of bounded rationality. In this short note, I report ongoing progress that is more fully developed elsewhere. I present some results from a new model in which the decision-maker builds a simplified representation of the world. The model allows to model boundedly rational dynamic programming in a parsimonious and quite tractable way. I illustrate the approach via a boundedly rational version of the consumption-saving life cycle problem. The consumer can pay attention to the variables such as the interest rate and his income, or replace them, in his mental model, by their average values. Endogenously, the consumer pays little attention to interest rate but pays keen attention to his income. One consequence of this is that Euler equations will be biased, and the intertemporal elasticity of substitution will be biased toward 0, in a manner that is quantitatively important.
Handle: RePEc:nbr:nberwo:17783
Template-Type: ReDIF-Paper 1.0
Title: De Gustibus non est Taxandum: Heterogeneity in Preferences and Optimal Redistribution
Classification-JEL: H2; H21
Author-Name: Benjamin B. Lockwood
Author-Name: Matthew C. Weinzierl
Author-Person: pwe206
Note: PE
Number: 17784
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17784
File-URL: http://www.nber.org/papers/w17784.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin B. Lockwood & Matthew Weinzierl, 2015. "De Gustibus non est Taxandum: Heterogeneity in preferences and optimal redistribution," Journal of Public Economics, vol 124, pages 74-80.
Abstract: The prominent but unproven intuition that preference heterogeneity reduces re-distribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance, with income. Given mainstream functional form assumptions on utility and the distributions of ability and preferences, a simple statistic for the effect of preference heterogeneity on marginal tax rates is derived. Numerical simulations and suggestive empirical evidence demonstrate the link between this potentially measurable statistic and the quantitative implications of preference heterogeneity for policy.
Handle: RePEc:nbr:nberwo:17784
Template-Type: ReDIF-Paper 1.0
Title: Alternative Cash Transfer Delivery Mechanisms: Impacts on Routine Preventative Health Clinic Visits in Burkina Faso
Classification-JEL: I15; I38; J13; O15
Author-Name: Richard Akresh
Author-Person: pak31
Author-Name: Damien de Walque
Author-Person: pde180
Author-Name: Harounan Kazianga
Author-Person: pka159
Note: EH
Number: 17785
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17785
File-URL: http://www.nber.org/papers/w17785.pdf
File-Format: application/pdf
Publication-Status: published as Alternative Cash Transfer Delivery Mechanisms: Impacts on Routine Preventative Health Clinic Visits in Burkina Faso, Richard Akresh, Damien de Walque, Harounan Kazianga. in African Successes, Volume II: Human Capital, Edwards, Johnson, and Weil. 2016
Abstract: We conducted a unique randomized experiment to estimate the impact of alternative cash transfer delivery mechanisms on household demand for routine preventative health services in rural Burkina Faso. The two-year pilot program randomly distributed cash transfers that were either conditional or unconditional and were given to either mothers or fathers. Families under the conditional cash transfer schemes were required to obtain quarterly child growth monitoring at local health clinics for all children under 60 months old. There were no such requirements under the unconditional programs. Compared with control group households, we find that conditional cash transfers significantly increase the number of preventative health care visits during the previous year, while unconditional cash transfers do not have such an impact. For the conditional cash transfers, transfers given to mothers or fathers showed similar magnitude beneficial impacts on increasing routine visits.
Handle: RePEc:nbr:nberwo:17785
Template-Type: ReDIF-Paper 1.0
Title: Positive and Negative Mental Health Consequences of Early Childhood Television Watching
Classification-JEL: I12
Author-Name: Michael Waldman
Author-Person: pwa40
Author-Name: Sean Nicholson
Author-Person: pni108
Author-Name: Nodir Adilov
Note: EH
Number: 17786
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17786
File-URL: http://www.nber.org/papers/w17786.pdf
File-Format: application/pdf
Abstract: An extensive literature in medicine investigates the health consequences of early childhood television watching. However, this literature does not address the issue of reverse causation, i.e., does early childhood television watching cause specific health outcomes or do children more likely to have these health outcomes watch more television? This paper uses a natural experiment to investigate the health consequences of early childhood television watching and so is not subject to questions concerning reverse causation. Specifically, we use repeated cross-sectional data from 1972 through 1992 on county-level mental retardation rates, county-level autism rates, and county-level children's cable-television subscription rates to investigate how early childhood television watching affects the prevalence of mental retardation and autism. We find a strong negative correlation between average county-level cable subscription rates when a birth cohort is below three and subsequent mental retardation diagnosis rates, but a strong positive correlation between the same cable subscription rates and subsequent autism diagnosis rates. Our results thus suggest that early childhood television watching has important positive and negative health consequences.
Handle: RePEc:nbr:nberwo:17786
Template-Type: ReDIF-Paper 1.0
Title: Government Spending and Private Activity
Classification-JEL: E24; E62
Author-Name: Valerie A. Ramey
Author-Person: pra154
Note: EFG ME
Number: 17787
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17787
File-URL: http://www.nber.org/papers/w17787.pdf
File-Format: application/pdf
Publication-Status: published as Government Spending and Private Activity, Valerie A. Ramey. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: This paper asks whether increases in government spending stimulate private activity. The first part of the paper studies private spending. Using a variety of identification methods and samples, I find that in most cases private spending falls significantly in response to an increase in government spending. These results imply that the average GDP multiplier lies below unity. In order to determine whether concurrent increases in tax rates dampen the spending multiplier, I use two different methods to adjust for tax effects. Neither method suggests significant effects of current tax rate changes on the spending multiplier. In the second part of the paper, I explore the effects of government spending on labor markets. I find that increases in government spending lower unemployment. Most specifications and samples imply, however, that virtually all of the effect is through an increase in government employment, not private employment. I thus conclude that on balance government spending does not appear to stimulate private activity.
Handle: RePEc:nbr:nberwo:17787
Template-Type: ReDIF-Paper 1.0
Title: Investment and Growth in Rich and Poor Countries
Classification-JEL: F43; O4; O57
Author-Name: Yin-Wong Cheung
Author-Person: pch261
Author-Name: Michael P. Dooley
Author-Person: pdo13
Author-Name: Vladyslav Sushko
Author-Person: psu268
Note: IFM
Number: 17788
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17788
File-URL: http://www.nber.org/papers/w17788.pdf
File-Format: application/pdf
Abstract: This paper revisits the association between investment and growth. The empirical findings highlight substantial heterogeneity for the effect of investment on growth and suggest a possible negative association. Results based on a battery of cross-sectional and time-series regressions show that the link between investment and growth has weakened over time and that investment in high-income countries is more likely to have a negative effect on growth. The adverse effect for high-income countries appears to have increased over time. An implication is that uphill capital flows could be associated with negative or zero returns. The result is robust to the presence of control variables that are commonly included in growth studies.
Handle: RePEc:nbr:nberwo:17788
Template-Type: ReDIF-Paper 1.0
Title: The Double Facetted Nature of Health Investments - Implications for Equilibrium and Stability in a Demand-for-Health Framework
Classification-JEL: I12
Author-Name: Kristian Bolin
Author-Name: Bjorn Lindgren
Note: EH
Number: 17789
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17789
File-URL: http://www.nber.org/papers/w17789.pdf
File-Format: application/pdf
Abstract: A number of behaviours influence health in a non-monotonic way. Physical activity and alcohol consumption, for instance, may be beneficial to one's health in moderate but detrimental in large quantities. We develop a demand-for-health framework that incorporates the feature of a physiologically optimal level. An individual may still choose a physiologically non-optimal level, because of the trade-off in his or her preferences for health versus other utility-affecting commodities. However, any deviation from the physiologically optimal level will be punished with respect to health. A set of steady-state comparative statics is derived regarding the effects on the demand for health and health-related behaviour, indicating that individuals react differently to exogenous changes, depending on the amount of the health-related behaviour they demand. We also show (a) that a steady-state equilibrium is a saddle-point and (b) that the physiologically optimal level may be a steady-state equilibrium for the individual. Our analysis suggests that general public-health policies may, to some extent, be counterproductive due to the responses induced in part of the population.
Handle: RePEc:nbr:nberwo:17789
Template-Type: ReDIF-Paper 1.0
Title: Trade and Investment under Policy Uncertainty: Theory and Firm Evidence
Classification-JEL: D8; D92; E22; F02; F1; F5; H32; O24
Author-Name: Kyle Handley
Author-Person: pha333
Author-Name: Nuno Limão
Author-Person: pli22
Note: IFM ITI POL
Number: 17790
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17790
File-URL: http://www.nber.org/papers/w17790.pdf
File-Format: application/pdf
Publication-Status: published as Kyle Handley & Nuno Limão, 2015. "Trade and Investment under Policy Uncertainty: Theory and Firm Evidence," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 189-222, November.
Abstract: We provide theoretical and empirical evidence that policy uncertainty can significantly affect firm level investment and entry decisions in the context of international trade. When market entry costs are sunk, policy uncertainty can create a real option value of waiting to enter foreign markets until conditions improve or uncertainty is resolved. Using a dynamic, heterogeneous firms model we show that: (i) investment and entry into export markets is reduced when trade policy is uncertain, and (ii) preferential trade agreements (PTAs) are valuable to exporters even if applied trade barriers are currently low or zero. We derive a structural equation that predicts how firm entry responds to changes in applied tariffs and a theory-based measure of policy uncertainty. Our novel approach using observable trade policies allows us to estimate the impact of policy uncertainty and quantify its aggregate implications. We apply this method to Portugal's accession to the European Community in 1986 using new firm-level trade data. We find that (i) the trade policy reform accounted for a large fraction of the observed Portuguese exporting firms' entry and sales upon accession (ii) the accession removed uncertainty about future preferences and (iii) this uncertainty channel accounted for a large fraction of the predicted growth. These results have broader implications for other PTAs and our approach can be applied to analyze other sources of policy uncertainty.
Handle: RePEc:nbr:nberwo:17790
Template-Type: ReDIF-Paper 1.0
Title: Confronting Model Misspecification in Macroeconomics
Classification-JEL: C52; E2; E4
Author-Name: Daniel F. Waggoner
Author-Person: pwa463
Author-Name: Tao Zha
Author-Person: pzh80
Note: EFG ME
Number: 17791
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17791
File-URL: http://www.nber.org/papers/w17791.pdf
File-Format: application/pdf
Publication-Status: published as Waggoner, Daniel F. & Zha, Tao, 2012. "Confronting model misspecification in macroeconomics," Journal of Econometrics, Elsevier, vol. 171(2), pages 167-184.
Abstract: We estimate a Markov-switching mixture of two familiar macroeconomic models: a richly parameterized DSGE model and a corresponding BVAR model. We show that the Markov-switching mixture model dominates both individual models and improves the fit considerably. Our estimation indicates that the DSGE model plays an important role only in the late 1970s and the early 1980s. We show how to use the mixture model as a data filter for estimation of the DSGE model when the BVAR model is not identified. Moreover, we show how to compute the impulse responses to the same type of shock shared by the DSGE and BVAR models when the shock is identified in the BVAR model. Our exercises demonstrate the importance of integrating model uncertainty and parameter uncertainty to address potential model misspecification in macroeconomics.
Handle: RePEc:nbr:nberwo:17791
Template-Type: ReDIF-Paper 1.0
Title: Technology Variation vs. R&D Uncertainty: What Matters Most for Energy Patent Success?
Classification-JEL: O31; Q4; Q42; Q54; Q55
Author-Name: David Popp
Author-Name: Nidhi Santen
Author-Name: Karen Fisher-Vanden
Author-Name: Mort Webster
Note: EEE PR
Number: 17792
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17792
File-URL: http://www.nber.org/papers/w17792.pdf
File-Format: application/pdf
Publication-Status: published as David Popp & Nidhi Santen & Karen Fisher-Vanden & Mort Webster, 2013. "Technology variation vs. R&D uncertainty: What matters most for energy patent success?," Resource and Energy Economics, vol 35(4), pages 505-533.
Abstract: R&D is an uncertain activity with highly skewed outcomes. Nonetheless, most recent empirical studies and modeling estimates of the potential of technological change focus on the average returns to research and development (R&D) for a composite technology and contain little or no information about the distribution of returns to R&D--which could be important for capturing the range of costs associated with climate change mitigation policies--by individual technologies. Through an empirical study of patent citation data, this paper adds to the literature on returns to energy R&D by focusing on the behavior of the most successful innovations for six energy technologies, allowing us to determine whether uncertainty or differences in technologies matter most for success. We highlight two key results. First, we compare the results from an aggregate analysis of six energy technologies to technology-by-technology results. Our results show that existing work that assumes diminishing returns but assumes one generic technology is too simplistic and misses important differences between more successful and less successful technologies. Second, we use quantile regression techniques to learn more about patents that have a high positive error term in our regressions - that is, patents that receive many more citations than predicted based on observable characteristics. We find that differences across technologies, rather than differences across quantiles within technologies, are more important. The value of successful technologies persists longer than those of less successful technologies, providing evidence that success is the culmination of several advances building upon one another, rather than resulting from one single breakthrough. Diminishing returns to research efforts appear most problematic during rapid increases of research investment, such as experienced by solar energy in the 1970s.
Handle: RePEc:nbr:nberwo:17792
Template-Type: ReDIF-Paper 1.0
Title: Why are Some Regions More Innovative than Others? The Role of Firm Size Diversity
Classification-JEL: O31; R11
Author-Name: Ajay K. Agrawal
Author-Person: pag38
Author-Name: Iain M. Cockburn
Author-Person: pco166
Author-Name: Alberto Galasso
Author-Person: pga404
Author-Name: Alexander Oettl
Note: PR
Number: 17793
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17793
File-URL: http://www.nber.org/papers/w17793.pdf
File-Format: application/pdf
Abstract: Large labs may spawn spin-outs caused by innovations deemed unrelated to the firm's overall business. Small labs generate demand for specialized services that lower entry costs for others. We develop a theoretical framework to study the interplay of these two localized externalities and their impact on regional innovation. We examine MSA-level patent data during the period 1975-2000 and find that innovation output is higher where large and small labs coexist. The finding is robust to across-region as well as within-region analysis, IV analysis, and the effect is stronger in certain subsamples consistent with our explanation but not the plausible alternatives.
Handle: RePEc:nbr:nberwo:17793
Template-Type: ReDIF-Paper 1.0
Title: Aiding Conflict: The Impact of U.S. Food Aid on Civil War
Classification-JEL: D74; F35; H84
Author-Name: Nathan Nunn
Author-Person: pnu17
Author-Name: Nancy Qian
Author-Person: pqi25
Note: DAE EFG ITI PE POL
Number: 17794
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17794
File-URL: http://www.nber.org/papers/w17794.pdf
File-Format: application/pdf
Publication-Status: published as Nunn, Nathan, and Nancy Qian. 2014. "US Food Aid and Civil Conflict." American Economic Review, 104(6): 1630-66.
Abstract: This paper examines the effect of U.S. food aid on conflict in recipient countries. To establish a causal relationship, we exploit time variation in food aid caused by fluctuations in U.S. wheat production together with cross-sectional variation in a country's tendency to receive any food aid from the United States. Our estimates show that an increase in U.S. food aid increases the incidence, onset and duration of civil conflicts in recipient countries. Our results suggest that the effects are larger for smaller scale civil conflicts. No effect is found on interstate warfare.
Handle: RePEc:nbr:nberwo:17794
Template-Type: ReDIF-Paper 1.0
Title: Growth Opportunities, Technology Shocks, and Asset Prices
Classification-JEL: E22; E32; G12; O3; O4
Author-Name: Leonid Kogan
Author-Person: pko698
Author-Name: Dimitris Papanikolaou
Author-Person: ppa463
Note: AP
Number: 17795
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17795
File-URL: http://www.nber.org/papers/w17795.pdf
File-Format: application/pdf
Publication-Status: published as Kogan, L., D. Papanikolaou, 2014, “Growth Opportunities, Technology Shocks, and Asset Prices.” Journal of Finance, 69, 675-718.
Abstract: We explore the impact of investment-specific technology (IST) shocks on the crosssection of stock returns. IST shocks reflect technological advances embodied in new capital goods. Using a structural model, we show that IST shocks have a differential effect on the two fundamental components of firm value, the value of assets in place and the value of growth opportunities. This differential sensitivity to IST shocks has two main implications. First, risk premia on firms with abundant growth opportunities are different from those on firms with limited growth opportunities. Second, firms with similar levels of growth opportunities comove with each other, giving rise to the value factor in stock returns. Our model replicates the failure of the conditional CAPM to capture the value premium. Our empirical tests confirm the model's predictions for asset returns and investment rates.
Handle: RePEc:nbr:nberwo:17795
Template-Type: ReDIF-Paper 1.0
Title: Nominal Stability and Financial Globalization
Classification-JEL: F3; F33; F4; F41
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Ozge Senay
Author-Person: pse42
Author-Name: Alan Sutherland
Author-Person: psu35
Note: IFM
Number: 17796
Creation-Date: 2012-01
Order-URL: http://www.nber.org/papers/w17796
File-URL: http://www.nber.org/papers/w17796.pdf
File-Format: application/pdf
Publication-Status: published as Michael B. Devereux & Ozge Senay & Alan Sutherland, 2014. "Nominal Stability and Financial Globalization," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(5), pages 921-959, 08.
Abstract: Over the one and a half decades prior to the global financial crisis, advanced economies experienced a large growth in gross external portfolio positions. This phenomenon has been described as Financial Globalization. Over roughly the same time frame, most of these countries also saw a substantial fall in the level and variability of inflation. Many economists have conjectured that financial globalization contributed to the improved performance in the level and predictability of inflation. In this paper, we explore the causal link running in the opposite direction. We show that a monetary policy rule which reduces inflation variability leads to an increase in the size of gross external positions, both in equity and bond portfolios. This is a highly robust prediction of open economy macro models with endogenous portfolio choice. It holds across many different modeling specifications and parameterizations. We also present preliminary empirical evidence which shows a negative relationship between inflation volatility and the size of gross external positions.
Handle: RePEc:nbr:nberwo:17796
Template-Type: ReDIF-Paper 1.0
Title: Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge
Classification-JEL: G14; G32; G34; G38
Author-Name: Bo Becker
Author-Person: pbe183
Author-Name: Daniel Bergstresser
Author-Person: pbe639
Author-Name: Guhan Subramanian
Note: CF
Number: 17797
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17797
File-URL: http://www.nber.org/papers/w17797.pdf
File-Format: application/pdf
Publication-Status: published as Bo Becker & Daniel Bergstresser & Guhan Subramanian, 2013. "Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtableâs Challenge," Journal of Law and Economics, University of Chicago Press, vol. 56(1), pages 127 - 160.
Abstract: We use the Business Roundtable's challenge to the SEC's 2010 proxy access rule as a natural experiment to measure the value of shareholder proxy access. We find that firms that would have been most vulnerable to proxy access, as measured by institutional ownership and activist institutional ownership in particular, lost value on October 4, 2010, when the SEC unexpectedly announced that it would delay implementation of the Rule in response to the Business Roundtable challenge. We also examine intra-day returns and find that the value loss occurred just after the SEC's announcement on October 4. We find similar results on July 22, 2011, when the D.C. Circuit ruled in favor of the Business Roundtable. These findings are consistent with the view that financial markets placed a positive value on shareholder access, as implemented in the SEC's 2010 Rule.
Handle: RePEc:nbr:nberwo:17797
Template-Type: ReDIF-Paper 1.0
Title: Inflation and Individual Equities
Classification-JEL: G11; G12
Author-Name: Andrew Ang
Author-Person: pan374
Author-Name: Marie Brière
Author-Person: pbr176
Author-Name: Ombretta Signori
Author-Person: psi317
Note: AP
Number: 17798
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17798
File-URL: http://www.nber.org/papers/w17798.pdf
File-Format: application/pdf
Publication-Status: published as “Inflation and Individual Equities,” with Marie Brière and Ombretta Signori, 2012, Financial Analysts Journal, 68, 4, 36-55. Funded by Netspar.
Abstract: We study the inflation hedging ability of individual stocks. While the poor inflation hedging ability of the aggregate stock market has long been documented, there is considerable heterogeneity in how individual stock returns covary with inflation. Stocks with good inflation-hedging abilities since 1990 have had higher returns, on average, than stocks with low inflation betas and tend to be drawn from the Oil and Gas and Technology sectors. However, we show that there is substantial time variation of stock inflation betas. This makes it difficult to construct portfolios of stocks that are good inflation hedges out of sample. This is true for portfolios constructed on past inflation betas, sector portfolios, and portfolios constructed from high-paying dividend stocks.
Handle: RePEc:nbr:nberwo:17798
Template-Type: ReDIF-Paper 1.0
Title: Understanding the Democratic Transition in South Africa
Classification-JEL: D74; H7; H77
Author-Name: Robert P. Inman
Author-Name: Daniel L. Rubinfeld
Note: PE POL
Number: 17799
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17799
File-URL: http://www.nber.org/papers/w17799.pdf
File-Format: application/pdf
Publication-Status: published as R. P. Inman & D. L. Rubinfeld, 2013. "Understanding the Democratic Transition in South Africa," American Law and Economics Review, vol 15(1), pages 1-38.
Abstract: South Africa's transition from apartheid to democracy stands as one of the past century's most important political events. The transition has been successful to this point because the new constitution adopted a form of federal governance that has been able to provide protection for the economic elite from maximal redistributive taxation. Appropriately structured, federal governance creates a "hostage game" in which the majority central government controls the tax rate but elite run province(s) control the provision of important redistributive services to a significant fraction of lower income households. At least to today, the political economy of South Africa has found a stable equilibrium with less than maximal redistributive taxation. Moreover, the move to a democratic federalist system has improved the economic welfare of both the white minority and the black majority. Whether the federal structure can continue to check maximal taxation depends crucially upon the rate of time preference of the majority and their demands for redistributive public services. A new, impatient and more radical majority (ANC) party threatens the current equilibrium.
Handle: RePEc:nbr:nberwo:17799
Template-Type: ReDIF-Paper 1.0
Title: The Collapse of the Soviet Union and the Productivity of American Mathematicians
Classification-JEL: J61; O31
Author-Name: George J. Borjas
Author-Person: pbo44
Author-Name: Kirk B. Doran
Author-Person: pdo228
Note: LS
Number: 17800
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17800
File-URL: http://www.nber.org/papers/w17800.pdf
File-Format: application/pdf
Publication-Status: published as George J. Borjas & Kirk B. Doran, 2012. "The Collapse of the Soviet Union and the Productivity of American Mathematicians," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1143-1203.
Abstract: It has been difficult to open up the black box of knowledge production. We use unique international data on the publications, citations, and affiliations of mathematicians to examine the impact of a large post-1992 influx of Soviet mathematicians on the productivity of their American counterparts. We find a negative productivity effect on those mathematicians whose research overlapped with that of the Soviets. We also document an increased mobility rate (to lower-quality institutions and out of active publishing) and a reduced likelihood of producing "home run" papers. Although the total product of the pre-existing American mathematicians shrank, the Soviet contribution to American mathematics filled in the gap. However, there is no evidence that the Soviets greatly increased the size of the "mathematics pie." Finally, we find that there are significant international differences in the productivity effects of the collapse of the Soviet Union, and that these international differences can be explained by both differences in the size of the émigré flow into the various countries and in how connected each country is to the global market for mathematical publications.
Handle: RePEc:nbr:nberwo:17800
Template-Type: ReDIF-Paper 1.0
Title: The Sahel's Silent Maize Revolution: Analyzing Maize Productivity in Mali at the Farm-level
Classification-JEL: O13; O33; Q12; Q16
Author-Name: Jeremy D. Foltz
Author-Person: pfo303
Author-Name: Ursula T. Aldana
Author-Person: pal1079
Author-Name: Paul Laris
Note: PR
Number: 17801
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17801
File-URL: http://www.nber.org/papers/w17801.pdf
File-Format: application/pdf
Publication-Status: published as The Sahel's Silent Maize Revolution: Analyzing Maize Productivity in Mali at the Farm Level, Jeremy Foltz, Ursula Aldana, Paul Laris. in African Successes, Volume IV: Sustainable Growth, Edwards, Johnson, and Weil. 2016
Abstract: Since independence a quiet revolution has taken place in maize production in the Sahel with Mali increasing production more than ten-fold and yields going up ~2% a year. This research work uses farm level panel data from southern Mali's maize growing regions to demonstrate this success in agricultural production and technological change. We analyze the determinants of production to unpack increases in input use from technological change. The estimations show that farmer adoption of increased fertilizer use has driven much of the productivity growth rather than the adoption of improvements in seeds and management. Additionally, we find strong evidence of observed and unobserved heterogeneity, which affects both the choice of fertilizer amounts and the marginal returns to fertilizer use. The results demonstrate the key changes behind this silent maize revolution and point to the importance of taking into account farmer heterogeneity in estimating productivity and returns to fertilizer.
Handle: RePEc:nbr:nberwo:17801
Template-Type: ReDIF-Paper 1.0
Title: Moral Hazard in Health Insurance: How Important Is Forward Looking Behavior?
Classification-JEL: D12; G22
Author-Name: Aviva Aron-Dine
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Mark R. Cullen
Note: AG EH IO PE
Number: 17802
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17802
File-URL: http://www.nber.org/papers/w17802.pdf
File-Format: application/pdf
Publication-Status: published as “Selection on Moral Hazard in Health Insurance,” with Amy Finkelstein, Stephen Ryan, Paul Schrimpf, and Mark Cullen, American Economic Review, 103(1), 178-219, February 2013.
Abstract: We investigate whether individuals exhibit forward looking behavior in their response to the non-linear pricing common in health insurance contracts. Our empirical strategy exploits the fact that employees who join an employer-provided health insurance plan later in the calendar year face the same initial ("spot") price of medical care but a higher expected end-of-year ("future") price than employees who join the same plan earlier in the year. Our results reject the null of completely myopic behavior; medical utilization appears to respond to the future price, with a statistically significant elasticity of medical utilization with respect to the future price of -0.4 to -0.6. To try to quantify the extent of forward looking behavior, we develop a stylized dynamic model of individual behavior and calibrate it using our estimated behavioral response and additional data from the RAND Health Insurance Experiment. Our calibration suggests that the elasticity estimate may be substantially smaller than the one implied by fully forward-looking behavior, yet it is sufficiently high to have an economically significant effect on the response of annual medical utilization to a non-linear health insurance contract. Overall, our results point to the empirical importance of accounting for dynamic incentives in analyses of the impact of health insurance on medical utilization.
Handle: RePEc:nbr:nberwo:17802
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Effect of Leaders on Public Sector Productivity: The Case of School Principals
Classification-JEL: H4; I2; J4
Author-Name: Gregory F. Branch
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Steven G. Rivkin
Author-Person: pri265
Note: CH ED LS PE
Number: 17803
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17803
File-URL: http://www.nber.org/papers/w17803.pdf
File-Format: application/pdf
Abstract: Although much has been written about the importance of leadership in the determination of organizational success, there is little quantitative evidence due to the difficulty of separating the impact of leaders from other organizational components - particularly in the public sector. Schools provide an especially rich environment for studying the impact of public sector management, not only because of the hypothesized importance of leadership but also because of the plentiful achievement data that provide information on institutional outcomes. Outcome-based estimates of principal value-added to student achievement reveal significant variation in principal quality that appears to be larger for high-poverty schools. Alternate lower-bound estimates based on direct estimation of the variance yield smaller estimates of the variation in principal productivity but ones that are still important, particularly for high poverty schools. Patterns of teacher exits by principal quality validate the notion that a primary channel for principal influence is the management of the teacher force. Finally, looking at principal transitions by quality reveals little systematic evidence that more effective leaders have a higher probability of exiting high poverty schools.
Handle: RePEc:nbr:nberwo:17803
Template-Type: ReDIF-Paper 1.0
Title: Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training
Classification-JEL: D04; D14; D22; H32; H43; I38; J21; J24
Author-Name: Robert W. Fairlie
Author-Person: pfa338
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: LE LS PE
Number: 17804
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17804
File-URL: http://www.nber.org/papers/w17804.pdf
File-Format: application/pdf
Publication-Status: published as Robert W. Fairlie & Dean Karlan & Jonathan Zinman, 2015. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 125-61, May.
Abstract: Various theories of market failures and targeting motivate the promotion of entrepreneurship training programs throughout the world. Using data from the largest randomized control trial ever conducted on entrepreneurship training, we examine the validity of such motivations and find that training does not have strong effects (in either relative or absolute terms) on those most likely to face credit or human capital constraints, or labor market discrimination. On the other hand, training does have a relatively strong short-run effect on business ownership for those unemployed at baseline, but not at other horizons or for other outcomes. On average, training increases short-run business ownership and employment, but there is no evidence of broader or longer-run effects on business ownership, business performance or broader outcomes.
Handle: RePEc:nbr:nberwo:17804
Template-Type: ReDIF-Paper 1.0
Title: The Firm-Level Credit Multiplier
Classification-JEL: G31; G32
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: Dirk Hackbarth
Author-Person: pha342
Note: CF
Number: 17805
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17805
File-URL: http://www.nber.org/papers/w17805.pdf
File-Format: application/pdf
Publication-Status: published as Campello, Murillo & Hackbarth, Dirk, 2012. "The firm-level credit multiplier," Journal of Financial Intermediation, Elsevier, vol. 21(3), pages 446-472.
Abstract: We study the effect of asset tangibility on corporate financing and investment decisions. Financially constrained firms benefit the most from investing in tangible assets because those assets help relax constraints, allowing for further investment. Using a dynamic model, we characterize this effect - which we call firm-level credit multiplier - and show how asset tangibility increases the sensitivity of investment to Tobin's Q for financially constrained firms. Examining a large sample of manufacturers over the 1971-2005 period as well as simulated data, we find support for our theory's tangibility-investment channel. We further verify that our findings are driven by firms' debt issuance activities. Consistent with our empirical identification strategy, the firm-level credit multiplier is absent from samples of financially unconstrained firms and samples of financially constrained firms with low spare debt capacity.
Handle: RePEc:nbr:nberwo:17805
Template-Type: ReDIF-Paper 1.0
Title: Trilemma Policy Convergence Patterns and Output Volatility
Classification-JEL: F15; F2; F32; F36; F4
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Hiro Ito
Author-Person: pit4
Note: IFM ITI
Number: 17806
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17806
File-URL: http://www.nber.org/papers/w17806.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Ito, Hiro, 2012. "Trilemma policy convergence patterns and output volatility," The North American Journal of Economics and Finance, Elsevier, vol. 23(3), pages 269-285.
Abstract: We examine the open macroeconomic policy choices of developing economies from the perspective of the economic "trilemma" hypothesis. We construct an index of divergence of the three trilemma policy choices, and evaluate its patterns in recent decades. We find that the three dimensions of the trilemma configurations are converging towards a "middle ground" among emerging market economies -- managed exchange rate flexibility underpinned by sizable holdings of international reserves, intermediate levels of monetary independence, and controlled financial integration. Emerging market economies with more converged policy choices tend to experience smaller output volatility in the last two decades. Emerging markets with relatively low international reserves/GDP could experience higher levels of output volatility when they choose a policy combination with a greater degree of policy divergence. Yet this heightened output volatility effect does not apply to economies with relatively high international reserves/GDP holding.
Handle: RePEc:nbr:nberwo:17806
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Constraints and Consumer Bankruptcy: Evidence from Tax Rebates
Classification-JEL: H31; K35
Author-Name: Tal Gross
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Author-Name: Jialan Wang
Author-Person: pwa486
Note: PE
Number: 17807
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17807
File-URL: http://www.nber.org/papers/w17807.pdf
File-Format: application/pdf
Publication-Status: published as “Liquidity Constraints and Consumer Bankruptcy: Evidence from Tax Rebates,” with Matthew Notowidigdo and Jialan Wang. Review of Economics and Statistics, accepted. Manuscript. Appendix. Featured in the June 2012 NBER Digest Media Coverage: Los Angeles Times; Huffington Post; Vox; Forbes; CNN. Older Version: NBER Working Paper #17807
Abstract: This paper estimates the extent to which legal fees prevent liquidity-constrained households from declaring bankruptcy. To do so, it studies how the 2001 and 2008 tax rebates affected consumer bankruptcy filings. We exploit the randomized timing of the rebate checks and estimate that the rebates caused a significant, short-run increase in consumer bankruptcies in both years, with larger effects in 2008 when the rebates were more generous and more widely distributed. Using hand-collected data from individual bankruptcy petitions, we document that the rebates caused an increase in the average liabilities and the liabilities-to-income ratios of filers.
Handle: RePEc:nbr:nberwo:17807
Template-Type: ReDIF-Paper 1.0
Title: Voting Rights, Share Concentration, and Leverage at Nineteenth-Century US Banks
Classification-JEL: G21; G3; N2
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Note: DAE
Number: 17808
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17808
File-URL: http://www.nber.org/papers/w17808.pdf
File-Format: application/pdf
Publication-Status: published as “Voting Rights, Share Concentration, and Leverage in Nineteenth-Century US Banks.” Journal of Law & Economics 57 (May 2014 forthcoming).
Abstract: Studies of corporate governance are concerned with two features of modern shareholding: diffuse ownership and the resulting separation of ownership and control, which potentially leads to managerial self-dealing; and, majority shareholding, which potentially mitigates some managerial self-dealing but opens the door for the expropriation of minority shareholders. This paper provides a study of the second issue for nineteenth-century US corporations. It investigates two related questions. First, did voting rules that limited the control rights of large shareholders encourage diffuse ownership? It did. Second, did diffuse ownership systematically alter bank risk taking? It did. Banks with less concentrated ownership followed policies that reduced liquidity and bankruptcy risk.
Handle: RePEc:nbr:nberwo:17808
Template-Type: ReDIF-Paper 1.0
Title: Interjurisdictional Housing Prices and Spatial Amenities: Which Measures of Housing Prices Reflect Local Public Goods?
Classification-JEL: H4; R2; R30
Author-Name: H. Spencer Banzhaf
Author-Person: pba328
Author-Name: Omar Farooque
Note: EEE PE
Number: 17809
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17809
File-URL: http://www.nber.org/papers/w17809.pdf
File-Format: application/pdf
Publication-Status: published as Banzhaf, H. Spencer & Farooque, Omar, 2013. "Interjurisdictional housing prices and spatial amenities: Which measures of housing prices reflect local public goods?," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 635-648.
Abstract: Understanding the spatial variation in housing prices plays a crucial role in topics ranging from the cost of living to quality-of-life indices to studies of public goods and household mobility. Yet analysts have not reached a consensus on the best source of such data, variously using self-reported values from the census, transactions values, tax assessments, and rental values. Additionally, while most studies use micro-level data, some have used summary statistics such as the median housing value. Assessing neighborhood price indices in Los Angeles, we find that indices based on transactions prices are highly correlated with indices based on self-reported values, but the former are better correlated with public goods. Moreover, rental values have a higher correlation with public goods and income levels than either asset-value measure. Finally, indices based on median values are poorly correlated with the other indices, public goods, and income.
Handle: RePEc:nbr:nberwo:17809
Template-Type: ReDIF-Paper 1.0
Title: When is it Optimal to Delegate: The Theory of Fast-track Authority
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: 17810
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17810
File-URL: http://www.nber.org/papers/w17810.pdf
File-Format: application/pdf
Publication-Status: published as Levent Celik & Bilgehan Karabay & John McLaren, 2015. "When Is It Optimal to Delegate: The Theory of Fast-Track Authority," American Economic Journal: Microeconomics, American Economic Association, vol. 7(3), pages 347-89, August.
Abstract: With fast-track authority (FTA), the US Congress delegates trade-policy authority to the President by committing not to amend a trade agreement. We suggest an interpretation in which Congress uses FTA to forestall destructive competition between its members for protectionist rents. We show that FTA is never granted if an industry is operating in the majority of districts. Second, the more equally distributed are the industries across districts and the more similar are the industries' sizes, the more likely it is that FTA is granted. This is true since competition over rents is most punishing when bargaining power is symmetrically distributed, and in that case the ex ante expected welfare of each district is lower without FTA. Third, if existing levels of protection are very different across industries, even if FTA is granted, it may not lead to free trade because a majority of industries may prefer the status quo to free trade.
Handle: RePEc:nbr:nberwo:17810
Template-Type: ReDIF-Paper 1.0
Title: Information Constraints and Financial Aid Policy
Classification-JEL: I22; I23; I24; I28
Author-Name: Judith Scott-Clayton
Note: ED
Number: 17811
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17811
File-URL: http://www.nber.org/papers/w17811.pdf
File-Format: application/pdf
Abstract: One justification for public support of higher education is that prospective students, particularly those from underprivileged groups, lack complete information about the costs and benefits of a college degree. Beyond financial considerations, students may also lack information about what they need to do academically to prepare for and successfully complete college. Yet until recently, college aid programs have typically paid little attention to students' information constraints, and the complexity of some programs can exacerbate the problem. This chapter describes the information problems facing prospective students as well as their consequences, drawing upon economic theory and empirical evidence.
Handle: RePEc:nbr:nberwo:17811
Template-Type: ReDIF-Paper 1.0
Title: Accounting for Real Exchange Rates Using Micro-data
Classification-JEL: F0; F2; F3; F4
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Anthony Landry
Author-Person: pla203
Note: IFM ITI
Number: 17812
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17812
File-URL: http://www.nber.org/papers/w17812.pdf
File-Format: application/pdf
Publication-Status: published as Mario J. Crucini & Anthony Landry, 2018. "Accounting for Real Exchange Rates Using Micro-Data," Journal of International Money and Finance, .
Abstract: The classical dichotomy predicts that all of the time series variance in the aggregate real exchange rate is accounted for by non-traded goods in the CPI basket because traded goods obey the Law of One Price. In stark contrast, Engel (1999) found that traded goods had comparable volatility to the aggregate real exchange rate. Our work reconciles these two views by successfully applying the classical dichotomy at the level of intermediate inputs into the production of final goods using highly disaggregated retail price data. Since the typical good found in the CPI basket is about equal parts traded and non-traded inputs, we conclude that the classical dichotomy applied to intermediate inputs restores its conceptual value.
Handle: RePEc:nbr:nberwo:17812
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Extended Unemployment Insurance over the Business Cycle: Evidence from Regression Discontinuity Estimates Over Twenty Years
Classification-JEL: J64; J65
Author-Name: Johannes F. Schmieder
Author-Name: Till M. von Wachter
Author-Person: pvo196
Author-Name: Stefan Bender
Author-Person: pbe1185
Note: EFG LS PE
Number: 17813
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17813
File-URL: http://www.nber.org/papers/w17813.pdf
File-Format: application/pdf
Publication-Status: published as in Quarterly Journal of Economics. Volume 127, Issue 2, May 2012
Abstract: One goal of extending the duration of unemployment insurance (UI) in recessions is to increase UI coverage in the face of longer unemployment spells. Although it is a common concern that such extensions may themselves raise nonemployment durations, it is not known how recessions would affect the magnitude of this moral hazard. To obtain causal estimates of the differential effects of UI in booms and recessions, this paper exploits the fact that, in Germany, potential UI benefit duration is a function of exact age which is itself invariant over the business cycle. We implement a regression discontinuity design separately for twenty years and correlate our estimates with measures of the business cycle. We find that the nonemployment effects of a month of additional UI benefits are, at best, somewhat declining in recessions. Yet, the UI exhaustion rate, and therefore the additional coverage provided by UI extensions, rises substantially during a downturn. The ratio of these two effects represents the nonemployment response of workers weighted by the probability of being affected by UI extensions. Hence, our results imply that the effective moral hazard effect of UI extensions is significantly lower in recessions than in booms. Using a model of job search with liquidity constraints, we also find that, in the absence of market-wide effects, the net social benefits from UI extensions can be expressed either directly in terms of the exhaustion rate and the nonemployment effect of UI durations, or as a declining function of our measure of effective moral hazard.
Handle: RePEc:nbr:nberwo:17813
Template-Type: ReDIF-Paper 1.0
Title: The Long-Term Effects of Unemployment Insurance Extensions on Employment
Classification-JEL: J64; J65
Author-Name: Johannes F. Schmieder
Author-Name: Till M. von Wachter
Author-Person: pvo196
Author-Name: Stefan Bender
Author-Person: pbe1185
Note: EFG LS PE
Number: 17814
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17814
File-URL: http://www.nber.org/papers/w17814.pdf
File-Format: application/pdf
Publication-Status: published as Schmieder, Johannes F., Till von Wachter, and Stefan Bender. 2012. "The Long-Term Effects of UI Extensions on Employment." American Economic Review, 102(3): 514–19.
Abstract: The majority of papers analyzing the employment effects of unemployment insurance (UI) benefit durations focuses on the duration of the first unemployment spell. In this paper, we make two contributions. First, we use a regression discontinuity design to analyze the long-term effects of extensions in UI durations. These estimates differ from standard estimates that they incorporate differences in UI benefit receipt and employment due to recurrent unemployment spells. Second, we derive a welfare formula of UI extensions that incorporates recurrent nonemployment spells. We find that accounting for nonemployment beyond the initial spell leads to a significant reduction in estimates of the nonemployment effect of UI extensions by about 25 percent. We show this effect is only partly explained by a mechanical effect due to finite follow-up durations, and mainly arises from a lower probability of days in nonemployment in months after end of the initial nonemployment spell.
Handle: RePEc:nbr:nberwo:17814
Template-Type: ReDIF-Paper 1.0
Title: Noisy Information, Distance and Law of One Price Dynamics Across US Cities
Classification-JEL: D40; E31; F31
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Mototsugu Shintani
Author-Person: psh5
Author-Name: Takayuki Tsuruga
Author-Person: pts33
Note: IFM
Number: 17815
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17815
File-URL: http://www.nber.org/papers/w17815.pdf
File-Format: application/pdf
Publication-Status: published as Crucini, Mario J. & Shintani, Mototsugu & Tsuruga, Takayuki, 2015. "Noisy information, distance and law of one price dynamics across US cities," Journal of Monetary Economics, Elsevier, vol. 74(C), pages 52-66.
Abstract: Using micro price data across US cities, we provide evidence that both the volatility and persistence of deviations from the law of one price (LOP) are positively correlated with the distance between cities. A standard, two-city, equilibrium model with time-varying technology under homogeneous information can predict the relationship between the volatility and distance but not between the persistence and distance. To account for the latter fact, we augment the standard model with noisy signals about the state of nominal aggregate demand that are asymmetric across cities. We further establish that the interaction of imperfect information and sticky prices improves the fit of the model.
Handle: RePEc:nbr:nberwo:17815
Template-Type: ReDIF-Paper 1.0
Title: Plant-level Productivity and Imputation of Missing Data in U.S. Census Manufacturing Data
Classification-JEL: C80; L11; L60
Author-Name: T. Kirk White
Author-Person: pwh3
Author-Name: Jerome P. Reiter
Author-Name: Amil Petrin
Note: PR
Number: 17816
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17816
File-URL: http://www.nber.org/papers/w17816.pdf
File-Format: application/pdf
Abstract: Within-industry differences in measured plant-level productivity are large. A large literature has been devoted to explaining the causes and consequences of these differences. In the U.S. Census Bureau's manufacturing data, the Bureau imputes for missing values using methods known to result in underestimation of variability and potential bias in multivariate inferences. We present an alternative strategy for handling the missing data based on multiple imputation via sequences of classification and regression trees. We use our imputations and the Bureau's imputations to estimate within-industry productivity dispersions. The results suggest that there is more within-industry productivity dispersion than previous research has indicated. We also estimate relationships between productivity and market structure and between output prices, capital, and the probability of plant exit (controlling for productivity) based on the improved imputations. For some estimands, we find substantially different results than those based on the Census Bureau's imputations.
Handle: RePEc:nbr:nberwo:17816
Template-Type: ReDIF-Paper 1.0
Title: Optimal Asset Taxes in Financial Markets with Aggregate Uncertainty
Classification-JEL: D8; E2; E6; G1; H2
Author-Name: Florian Scheuer
Author-Person: psc147
Note: PE
Number: 17817
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17817
File-URL: http://www.nber.org/papers/w17817.pdf
File-Format: application/pdf
Publication-Status: published as Florian Scheuer, 2013. "Optimal Asset Taxes in Financial Markets with Aggregate Uncertainty," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 405-420, July.
Abstract: This paper studies Pareto-optimal risk-sharing arrangements in a private information economy with aggregate uncertainty and ex ante heterogeneous agents. I show how to implement Pareto-optima as equilibria when agents can trade claims to consumption contingent on aggregate shocks in financial markets. The first result is that if aggregate and idiosyncratic shocks are independent, the implementation of optimal allocations does not require any interventions in financial markets. This result can be extended to dynamic settings in the sense that, in this case, only savings need to be distorted, but not trades in financial markets. Second, I characterize optimal trading distortions in financial markets when aggregate and idiosyncratic shocks are not independent. In this case, optimal asset taxes must be higher for those securities that pay out in aggregate states in which consumption is more volatile. For instance, this can provide an efficiency justification for the frequently observed differential tax treatment of different asset classes, such as debt and equity claims.
Handle: RePEc:nbr:nberwo:17817
Template-Type: ReDIF-Paper 1.0
Title: Drawn into Violence: Evidence on 'What Makes a Criminal' from the Vietnam Draft Lotteries
Classification-JEL: H56; K42
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: Charles F. Stoecker
Author-Person: pst692
Note: PE
Number: 17818
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17818
File-URL: http://www.nber.org/papers/w17818.pdf
File-Format: application/pdf
Publication-Status: published as Jason M. Lindo & Charles Stoecker, 2014. "Drawn Into Violence: Evidence On âWhat Makes A Criminalâ From The Vietnam Draft Lotteries," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 239-258, 01.
Abstract: Draft lottery number assignment during the Vietnam Era provides a natural experiment to examine the effects of military service on crime. Using exact dates of birth for inmates in state and federal prisons in 1979, 1986, and 1991, we find that draft eligibility increases incarceration for violent crimes but decreases incarceration for non-violent crimes among whites. This is particularly evident in 1979, where two-sample instrumental variable estimates indicate that military service increases the probability of incarceration for a violent crime by 0.34 percentage points and decreases the probability of incarceration for a nonviolent crime by 0.30 percentage points. We conduct two falsification tests, one that applies each of the three binding lotteries to unaffected cohorts and another that considers the effects of lotteries that were not used to draft servicemen.
Handle: RePEc:nbr:nberwo:17818
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Upstreamness of Production and Trade Flows
Classification-JEL: F10; F14; L16; L23; O14
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: Davin Chor
Author-Person: pch787
Author-Name: Thibault Fally
Author-Person: pfa184
Author-Name: Russell Hillberry
Author-Person: phi69
Note: IO ITI
Number: 17819
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17819
File-URL: http://www.nber.org/papers/w17819.pdf
File-Format: application/pdf
Publication-Status: published as Pol Antras & Davin Chor & Thibault Fally & Russell Hillberry, 2012. "Measuring the Upstreamness of Production and Trade Flows," American Economic Review, American Economic Association, vol. 102(3), pages 412-16, May.
Abstract: We propose two distinct approaches to the measurement of industry upstreamness (or average distance from final use) and show that they yield an equivalent measure. Furthermore, we provide two additional interpretations of this measure, one of them related to the concept of forward linkages in Input-Output analysis. On the empirical side, we construct this measure for 426 industries using the 2002 US Input-Output Tables. We also verify the stability of upstreamness across countries in the OECD STAN database, albeit with a more aggregated industry classification. Finally, we present an application that explores the determinants of the average upstreamness of exports at the country level using trade flows for 2002.
Handle: RePEc:nbr:nberwo:17819
Template-Type: ReDIF-Paper 1.0
Title: What Does Human Capital Do? A Review of Goldin and Katz's The Race between Education and Technology
Classification-JEL: J30; J31; O14; O31; O33
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: David Autor
Author-Person: pau9
Note: ED
Number: 17820
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17820
File-URL: http://www.nber.org/papers/w17820.pdf
File-Format: application/pdf
Publication-Status: published as -(with David Autor) What Does Human Capital Do? A Review of Goldin and Katz's Race between Education and Technology, June 2012, Journal of Economic Literature, 50(2), pp. 426–463.
Abstract: Goldin and Katz's The Race between Education and Technology is a monumental achievement that supplies a unified framework for interpreting how the demand and supply of human capital have shaped the distribution of earnings in the U.S. labor market over the 20th century. This essay reviews the theoretical and conceptual underpinnings of this work and documents the success of Goldin and Katz's framework in accounting for numerous broad labor market trends. The essay also considers areas where the framework falls short in explaining several key labor market puzzles of recent decades and argues that these shortcomings can potentially be overcome by relaxing the implicit equivalence drawn between workers' skills and their job tasks in the conceptual framework on which Goldin and Katz build. The essay argues that allowing for a richer set of interactions between skills and technologies in accomplishing job tasks both augments and refines the predictions of Goldin and Katz's approach and suggests an even more important role for human capital in economic growth than indicated by their analysis.
Handle: RePEc:nbr:nberwo:17820
Template-Type: ReDIF-Paper 1.0
Title: Numeracy, financial literacy, and financial decision-making
Classification-JEL: D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: AG
Number: 17821
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17821
File-URL: http://www.nber.org/papers/w17821.pdf
File-Format: application/pdf
Publication-Status: published as “Numeracy, Financial Literacy, and Financial Decision-Making,” in Numeracy, 5(1), Article 2, January 2012. [Winner of the inaugural Steen Award]
Abstract: Financial decisions, be they related to asset building or debt management, require the capacity to do calculations, including some complex ones. But how numerate are individuals, in particular when it comes to calculations related to financial decisions? Studies and surveys implemented in both the United States and in other countries that are described in this paper show the level of numeracy among the population to be very low. Moreover, lack of numeracy is not only widespread but is particularly severe among some demographic groups, such as women, the elderly, and those with low educational attainment. This has potential consequences for individuals and for society as a whole because numeracy is found to be linked to many financial decisions. Now more than ever, numeracy and financial literacy are lifetime skills necessary to succeed in today's complex economic environment.
Handle: RePEc:nbr:nberwo:17821
Template-Type: ReDIF-Paper 1.0
Title: Does Macro-Pru Leak? Evidence from a UK Policy Experiment
Classification-JEL: E32; E51; F30; G21; G28
Author-Name: Shekhar Aiyar
Author-Person: pai7
Author-Name: Charles W. Calomiris
Author-Person: pca421
Author-Name: Tomasz Wieladek
Author-Person: pwi271
Note: CF EFG ME
Number: 17822
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17822
File-URL: http://www.nber.org/papers/w17822.pdf
File-Format: application/pdf
Abstract: The regulation of bank capital as a means of smoothing the credit cycle is a central element of forthcoming macro-prudential regimes internationally. For such regulation to be effective in controlling the aggregate supply of credit it must be the case that: (i) changes in capital requirements affect loan supply by regulated banks, and (ii) unregulated substitute sources of credit are unable to offset changes in credit supply by affected banks. This paper examines micro evidence--lacking to date--on both questions, using a unique dataset. In the UK, regulators have imposed time-varying, bank-specific minimum capital requirements since Basel I. It is found that regulated banks (UK-owned banks and resident foreign subsidiaries) reduce lending in response to tighter capital requirements. But unregulated banks (resident foreign branches) increase lending in response to tighter capital requirements on a relevant reference group of regulated banks. This "leakage" is substantial, amounting to about one-third of the initial impulse from the regulatory change.
Handle: RePEc:nbr:nberwo:17822
Template-Type: ReDIF-Paper 1.0
Title: Practical Monetary Policy: Examples from Sweden and the United States
Classification-JEL: E42; E43; E47; E52; E58
Author-Name: Lars E.O. Svensson
Author-Person: psv2
Note: ME
Number: 17823
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17823
File-URL: http://www.nber.org/papers/w17823.pdf
File-Format: application/pdf
Publication-Status: published as Lars E. O. Svensson, 2011. "Practical Monetary Policy: Examples from Sweden and the United States," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(1 (Spring), pages 289-352.
Abstract: In the summer of 2010, the Federal Reserve's and the Swedish Riksbank's inflation forecasts were below the former's mandate-consistent rate and the latter's target, respectively, and their unemployment forecasts were above sustainable rates. Given the mandates of the Federal Reserve and the Riksbank, conditions in both countries clearly called for policy easing. The Federal Reserve maintained a minimum policy rate, soon started to communicate possible future easing, and in the fall launched QE2. In contrast, the Riksbank started a period of rapid tightening. I examine the arguments that were raised in opposition to the Federal Reserve's easing, and those for the Riksbank's tightening. Although the Swedish economy subsequently performed better than expected, probably an important reason was that the market implemented much easier financial conditions than were consistent with the Riksbank's policy rate path. Without the policy tightening, performance would have been even better. The U.S. economy meanwhile performed worse than expected because of factors other than monetary policy. Without the policy easing, performance would have been even worse. Thus, the Federal Reserve appears to have followed its mandate in the summer of 2010, and subsequent adverse economic shocks contributed to weak performance of the U.S. economy. In contrast, the Riksbank appears to have deviated from its mandate, but favorable circumstances contributed to an economic outcome with better performance than might have been expected based on policy choices.
Handle: RePEc:nbr:nberwo:17823
Template-Type: ReDIF-Paper 1.0
Title: Were They Prepared for Retirement? Financial Status at Advanced Ages in the HRS and AHEAD Cohorts
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
Number: 17824
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17824
File-URL: http://www.nber.org/papers/w17824.pdf
File-Format: application/pdf
Publication-Status: published as Were They Prepared for Retirement? Financial Status at Advanced Ages in the HRS and AHEAD Cohorts, James M. Poterba, Steven F. Venti, David A. Wise. in Investigations in the Economics of Aging, Wise. 2012
Abstract: Many analysts have considered whether households approaching retirement age have accumulated enough assets to be well prepared for retirement. In this paper, we shift from studying household finances at the start of the retirement period, an ex ante measure of retirement preparation, to studying the asset holdings of households in their last years of life. The analysis is based on Health and Retirement Study with special attention to Asset and Health Dynamics Among the Oldest Old (AHEAD) cohort that was first surveyed in 1993. We consider the level of assets that households hold in the last survey wave preceding their death. We study how assets at the end of life depend on three family status pathways prior to death - (1) original one-person households in 1993, (2) persons in two-person household in 1993 with a deceased spouse in the last year observed, and (3) persons in two-person households in 1993 with the spouse alive when last observed. We find that a substantial fraction of persons die with virtually no financial assets - 46.1 percent with less than $10,000 - and many of these households also have no housing wealth and rely almost entirely on Social Security benefits for support. In addition this group is disproportionately in poor health. Based on a replacement rate comparison, many of these households may be deemed to have been well-prepared for retirement, in the sense that their income in their final years was not substantially lower than their income in their late 50s or early 60s. Yet with such low asset levels, they would have little capacity to pay for unanticipated needs such as health expenses or other financial shocks or to pay for entertainment, travel, or other activities. This raises a question of whether the replacement ratio is a sufficient statistic for the "adequacy" of retirement preparation.
Handle: RePEc:nbr:nberwo:17824
Template-Type: ReDIF-Paper 1.0
Title: Raising the Barcode Scanner: Technology and Productivity in the Retail Sector
Classification-JEL: D22; L81; O33
Author-Name: Emek Basker
Author-Person: pba96
Note: IO PR
Number: 17825
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17825
File-URL: http://www.nber.org/papers/w17825.pdf
File-Format: application/pdf
Publication-Status: published as Emek Basker, 2012. "Raising the Barcode Scanner: Technology and Productivity in the Retail Sector," American Economic Journal: Applied Economics, American Economic Association, vol. 4(3), pages 1-27, July.
Publication-Status: published as Raising the Barcode Scanner: Technology and Productivity in the Retail Sector, Emek Basker. in Standards, Patents and Innovations, Simcoe, Agrawal, and Graham. 2014
Abstract: Barcodes and barcode scanners transformed the grocery industry in the 1970s. I use store-level data from the 1972, 1977, and 1982 Census of Retail Trade, matched to data on store scanner installations, to estimate scanners' effect on labor productivity. I find that early scanners increased a store's labor productivity, on average, by approximately 4.5 percent in the first few years. The effect was larger in stores carrying more packaged products, consistent with the presence of network externalities. Short-run gains were small relative to fixed costs, suggesting that the impediment to widespread adoption of the new technology was profitability, not coordination problems.
Handle: RePEc:nbr:nberwo:17825
Template-Type: ReDIF-Paper 1.0
Title: China's Potential Future Growth and Gains from Trade Policy Bargaining: Some Numerical Simulation Results
Classification-JEL: C68; C78; D60
Author-Name: Chunding Li
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 17826
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17826
File-URL: http://www.nber.org/papers/w17826.pdf
File-Format: application/pdf
Publication-Status: published as Li, Chunding & Whalley, John, 2014. "China's potential future growth and gains from trade policy bargaining: Some numerical simulation results," Economic Modelling, Elsevier, vol. 37(C), pages 65-78.
Abstract: Numerical simulation analysis of bargaining solutions is little developed in existing literature. Here we use a multi country, single period numerical general equilibrium model which captures China and her major trading partners and examine the outcomes of trade policy bargaining solutions (bargaining over tariffs and financial transfers) over time as China grows more rapidly than her trade partners. We compute gains relative to non-cooperative Nash equilibria for a range of model parameterizations. This yields a measure of both absolute and relative gain to China from bargaining. We calibrate our model to base case data for 2008 and use a model formulation where there are heterogeneous goods across countries. The gains from trade bargaining accrue more heavily to other countries when we use 2008 data rather than later year data. We then consider the impacts out into the future of different country growth rates which sharply increases China's relative size. Our objective is to assess how China's gains from bargaining change over time; whether they grow at a faster rate than GDP growth and for which parameterizations. Our simulation results indicate that China's welfare gain from trade bargaining will increase over time if countries keep their present GDP growth rates for several decades, but there are major difference when using different bargaining solution concepts. These differences have not been noted in existing literature but have an intuitive explanation. Our results also indicate that if China jointly bargains along with India, Brazil and other developing countries with the OECD, China's gain will further increase. Bargaining gains are also sensitive to country size. When we use PPP to adjust China's relative GDP size; China's trade bargaining welfare gain increases by about 37%.
Handle: RePEc:nbr:nberwo:17826
Template-Type: ReDIF-Paper 1.0
Title: Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges
Classification-JEL: I20; I22; I23
Author-Name: Stephanie Riegg Cellini
Author-Name: Claudia Goldin
Author-Person: pgo601
Note: DAE ED PE
Number: 17827
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17827
File-URL: http://www.nber.org/papers/w17827.pdf
File-Format: application/pdf
Publication-Status: published as Cellini, Stephanie Riegg and Claudia Goldin, “Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges.” American Economic Journal: Economic Policy, forthcoming.
Abstract: We use administrative data from five states to provide the first comprehensive estimates of the size of the for-profit higher education sector in the U.S. Our estimates include schools that are not currently eligible to participate in federal student aid programs under Title IV of the Higher Education Act and are therefore missed in official counts. We find that the number of for-profit institutions is double the official count and the number of students enrolled during the year is between one-quarter and one-third greater. Many for-profit institutions that are not Title IV eligible offer certificate (non-degree) programs that are similar, if not identical, to those given by institutions that are Title IV eligible. We find that the Title IV institutions charge tuition that is about 78 percent higher than that charged by comparable institutions whose students cannot apply for federal financial aid. The dollar value of the premium is about equal to the amount of grant aid and loan subsidy received by students in eligible institutions, lending some credence to a variant of the "Bennett hypothesis" that aid-eligible for-profit institutions capture a large part of the federal student aid subsidy.
Handle: RePEc:nbr:nberwo:17827
Template-Type: ReDIF-Paper 1.0
Title: China's Financial System: Opportunities and Challenges
Classification-JEL: J2; K0; O5
Author-Name: Franklin Allen
Author-Person: pal67
Author-Name: Jun "QJ" Qian
Author-Person: pqi75
Author-Name: Chenying Zhang
Author-Name: Mengxin Zhao
Note: CF
Number: 17828
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17828
File-URL: http://www.nber.org/papers/w17828.pdf
File-Format: application/pdf
Publication-Status: published as China's Financial System: Opportunities and Challenges, Franklin Allen, Jun "QJ" Qian, Chenying Zhang, Mengxin Zhao. in Capitalizing China, Fan and Morck. 2013
Abstract: We provide a comprehensive review of China's financial system, and explore directions of future development. First, the financial system has been dominated by a large banking sector. In recent years banks have made considerable progress in reducing the amount of non-performing loans and improving their efficiency. Second, the role of the stock market in allocating resources in the economy has been limited and ineffective. We discuss issues related to the further development of China's stock market and other financial markets. Third, the most successful part of the financial system, in terms of supporting the growth of the overall economy, is a non-standard sector that consists of alternative financing channels, governance mechanisms, and institutions. The co-existence of this sector with banks and markets can continue to support the growth of the Hybrid Sector (non-state, non-listed firms). Finally, among the policies that will help to sustain stable economic growth in China are those that reduce the likelihood of damaging financial crises, including a banking sector crisis, a real estate or stock market crash, and a "twin crisis" in the currency market and banking sector.
Handle: RePEc:nbr:nberwo:17828
Template-Type: ReDIF-Paper 1.0
Title: Wintertime for Deceptive Advertising?
Classification-JEL: D82; D83; K29; L15
Author-Name: Jonathan Zinman
Author-Person: pzi83
Author-Name: Eric Zitzewitz
Author-Person: pzi23
Note: LE
Number: 17829
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17829
File-URL: http://www.nber.org/papers/w17829.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Zinman & Eric Zitzewitz, 2016. "Wintertime for Deceptive Advertising?," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 177-92, January.
Abstract: Casual empiricism suggests that deceptive advertising about product quality is prevalent, and several classes of theories explore its causes and consequences. We provide some unusually sharp empirical evidence on the extent, mechanics, and dynamics of deceptive advertising. Ski resorts self-report substantially more natural snowfall on weekends. Resorts that plausibly reap greater benefits from exaggerating do it more. Data on website visits suggests that consumers are appropriately skeptical of weekend reports. We find little evidence that competition restrains or encourages exaggeration. Near the end of our sample period, a new iPhone application feature makes it easier for skiers share information on ski conditions in real time. Exaggeration falls sharply, especially at resorts with better iPhone reception.
Handle: RePEc:nbr:nberwo:17829
Template-Type: ReDIF-Paper 1.0
Title: What explains high unemployment? The aggregate demand channel
Classification-JEL: E2; E32; E51
Author-Name: Atif R. Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Note: CF EFG ME
Number: 17830
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17830
File-URL: http://www.nber.org/papers/w17830.pdf
File-Format: application/pdf
Abstract: A drop in aggregate demand driven by shocks to household balance sheets is responsible for a large fraction of the decline in U.S. employment from 2007 to 2009. The aggregate demand channel for unemployment predicts that employment losses in the non-tradable sector are higher in high leverage U.S. counties that were most severely impacted by the balance sheet shock, while losses in the tradable sector are distributed uniformly across all counties. We find exactly this pattern from 2007 to 2009. Alternative hypotheses for job losses based on uncertainty shocks or structural unemployment related to construction do not explain our results. Using the relation between non-tradable sector job losses and demand shocks and assuming Cobb-Douglas preferences over tradable and non-tradable goods, we quantify the effect of aggregate demand channel on total employment. Our estimates suggest that the decline in aggregate demand driven by household balance sheet shocks accounts for almost 4 million of the lost jobs from 2007 to 2009, or 65% of the lost jobs in our data.
Handle: RePEc:nbr:nberwo:17830
Template-Type: ReDIF-Paper 1.0
Title: Resolving Debt Overhang: Political Constraints in the Aftermath of Financial Crises
Classification-JEL: G01; G33; G38; H1
Author-Name: Atif R. Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: CF EFG POL
Number: 17831
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17831
File-URL: http://www.nber.org/papers/w17831.pdf
File-Format: application/pdf
Publication-Status: published as Atif Mian & Amir Sufi & Francesco Trebbi, 2014. "Resolving Debt Overhang: Political Constraints in the Aftermath of Financial Crises," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(2), pages 1-28, April.
Abstract: Debtors bear the brunt of a decline in asset prices associated with financial crises and policies aimed at partial debt relief may be warranted to boost growth in the midst of crises. Drawing on the US experience during the Great Recession of 2008-09 and historical evidence in a large panel of countries, we explore why the political system may fail to deliver such policies. We find that during the Great Recession creditors were able to use the political system more effectively to protect their interests through bailouts. More generally we show that politically countries become more polarized and fractionalized following financial crises. This results in legislative stalemate, making it less likely that crises lead to meaningful macroeconomic reforms.
Handle: RePEc:nbr:nberwo:17831
Template-Type: ReDIF-Paper 1.0
Title: Credit Supply and House Prices: Evidence from Mortgage Market Segmentation
Classification-JEL: D12; G10; R20
Author-Name: Manuel Adelino
Author-Name: Antoinette Schoar
Author-Person: psc180
Author-Name: Felipe Severino
Author-Person: pse646
Note: AP CF
Number: 17832
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17832
File-URL: http://www.nber.org/papers/w17832.pdf
File-Format: application/pdf
Abstract: We show that easier access to credit significantly increases house prices by using exogenous changes in the conforming loan limit as an instrument for lower cost of financing. Houses that become eligible for financing with a conforming loan show an increase in house value of 1.16 dollars per square foot (for an average price per square foot of 220 dollars) and higher overall house prices controlling for a rich set of house characteristics. However, these estimated coefficients are consistent with a local elasticity of house prices to interest rates that is lower than some previous studies proposed (below 10). In addition, loan to value ratios around the conforming loan limit deviate significantly from the common 80 percent norm, which confirms that it is an important factor in the financing choices of home buyers. In line with our interpretation, the results are stronger in the first half of our sample (1998-2001) when the conforming loan limit was more important, given that other forms of financing were less common and substantially more expensive. Results are also stronger in zip codes where personal income growth is low or declining, and in regions with lower elasticity of housing supply.
Handle: RePEc:nbr:nberwo:17832
Template-Type: ReDIF-Paper 1.0
Title: Signalling, Incumbency Advantage, and Optimal Reelection Thresholds
Classification-JEL: D72; D78; D82
Author-Name: Francesco Caselli
Author-Person: pca205
Author-Name: Thomas E. Cunningham
Author-Person: pcu107
Author-Name: Massimo Morelli
Author-Person: pmo645
Author-Name: Inés Moreno de Barreda
Author-Person: pmo681
Note: PE POL
Number: 17833
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17833
File-URL: http://www.nber.org/papers/w17833.pdf
File-Format: application/pdf
Publication-Status: published as The Incumbency Effects of Signalling Francesco Caselli1, Tom Cunningham2, Massimo Morelli3 andInés Moreno de Barreda4
Abstract: Much literature on political behavior treats politicians as motivated by reelection, choosing actions to signal their types to voters. We identify two novel implications of models in which signalling incentives are important. First, because incumbents only care about clearing a reelection hurdle, signals will tend to cluster just above the threshold needed for reelection. This generates a skew distribution of signals leading to an incumbency advantage in the probability of election. Second, voters can exploit the signalling behavior of politicians by precommitting to a higher threshold for signals received. Raising the threshold discourages signalling effort by low quality politicians but encourages effort by high quality politicians, thus increasing the separation of signals and improving the selection function of an election. This precommitment has a simple institutional interpretation as a supermajority rule, requiring that incumbents exceed some fraction of votes greater than 50% to be reelected.
Handle: RePEc:nbr:nberwo:17833
Template-Type: ReDIF-Paper 1.0
Title: Student Aid Simplification: Looking Back and Looking Ahead
Classification-JEL: I22; I28
Author-Name: Susan Dynarski
Author-Person: pdy1
Author-Name: Mark Wiederspan
Note: CH ED PE
Number: 17834
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17834
File-URL: http://www.nber.org/papers/w17834.pdf
File-Format: application/pdf
Publication-Status: published as “Student Aid Simplification: Looking Back and Looking Ahead.” 2012. National Tax Journal 65:1, pp. 211-234. Co-author: Mark Wiederspan.
Abstract: Each year, fourteen million households seeking federal aid for college complete a detailed questionnaire about their finances, the Free Application for Federal Student Aid (FAFSA). At 116 questions, the FAFSA is almost as long as IRS Form 1040 and substantially longer than Forms 1040EZ and 1040A. Aid for college is intended to increase college attendance by reducing its price and loosening liquidity constraints. Economic theory, empirical evidence and common sense suggest that complexity in aid could undermine its ability to affect schooling decisions. In 2006, Dynarski and Scott-Clayton published an analysis of complexity in the aid system that generated considerable discussion in academic and policy circles. Over the next few years, complexity in the aid system drew the attention of the media, advocacy groups, presidential candidates, the National Economic Council and the Council of Economic Advisers. A flurry of legislative and agency activity followed. In this article, we provide a five-year retrospective of what has changed in the aid application process, what has not, and the possibilities for future reform.
Handle: RePEc:nbr:nberwo:17834
Template-Type: ReDIF-Paper 1.0
Title: Gold Standard Gravity
Classification-JEL: F1
Author-Name: James E. Anderson
Author-Person: pan2
Author-Name: Yoto V. Yotov
Author-Person: pyo93
Note: ITI
Number: 17835
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17835
File-URL: http://www.nber.org/papers/w17835.pdf
File-Format: application/pdf
Abstract: This paper provides striking confirmation of the restrictions of the structural gravity model of trade. Structural forces predicted by theory explain 95% of the variation of the fixed effects used to control for them in the recent gravity literature, fixed effects that in principle could reflect other forces. This validation opens avenues to inferring unobserved sectoral activity and multilateral resistance variables by equating fixed effects with structural gravity counterparts. Our findings also provide important validation of a host of general equilibrium comparative static exercises based on the structural gravity model.
Handle: RePEc:nbr:nberwo:17835
Template-Type: ReDIF-Paper 1.0
Title: Ben Bernanke and the Zero Bound
Classification-JEL: E52; E58; E65
Author-Name: Laurence M. Ball
Author-Person: pba605
Note: EFG ME
Number: 17836
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17836
File-URL: http://www.nber.org/papers/w17836.pdf
File-Format: application/pdf
Publication-Status: published as Laurence Ball, 2016. "Ben Bernanke And The Zero Bound," Contemporary Economic Policy, Western Economic Association International, vol. 34(1), pages 7-20, 01.
Abstract: From 2000 to 2003, when Ben Bernanke was a professor and then a Fed Governor, he wrote extensively about monetary policy at the zero bound on interest rates. He advocated aggressive stimulus policies, such as a money-financed tax cut and an inflation target of 3-4%. Yet, since U.S. interest rates hit zero in 2008, the Fed under Chairman Bernanke has taken more cautious actions. This paper asks when and why Bernanke changed his mind about zero-bound policy. The answer, at one level, is that he was influenced by analysis from the Fed staff that was presented at the FOMC meeting of June 2003. This answer raises another question: why did the staff's views influence Bernanke so strongly? I seek answers to this question in the social psychology literature on group decision-making.
Handle: RePEc:nbr:nberwo:17836
Template-Type: ReDIF-Paper 1.0
Title: The Households Effects of Government Consumption
Classification-JEL: D12; E21; E24; E62
Author-Name: Francesco Giavazzi
Author-Person: pgi18
Author-Name: Michael McMahon
Author-Person: pmc143
Note: IFM
Number: 17837
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17837
File-URL: http://www.nber.org/papers/w17837.pdf
File-Format: application/pdf
Publication-Status: published as The Household Effects of Government Spending, Francesco Giavazzi, Michael McMahon. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: This paper provides new evidence on the effects of fiscal policy by studying, using household-level data, how households respond to shifts in government spending. Our identification strategy allows us to control for time-specific aggregate effects, such as the stance of monetary policy or the U.S.-wide business cycle. However, it potentially prevents us from estimating the wealth effects associated with a shift in spending. We find significant heterogeneity in households' response to a spending shock; the effects appear vary over time depending, among other factors, on the state of business cycle and, at a lower frequency, on the composition of employment (such as the share of workers in part-time jobs). Shifts in spending could also have important distributional effects that are lost when estimating an aggregate multiplier. Heads of households working relatively few (weekly) hours, for instance, suffer from a spending shock of the type we analyzed: their consumption falls, their hours increase and their real wages fall.
Handle: RePEc:nbr:nberwo:17837
Template-Type: ReDIF-Paper 1.0
Title: Are Banks Passive Liquidity Backstops? Deposit Rates and Flows during the 2007-2009 Crisis
Classification-JEL: E4; G01; G11; G21; G28
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Nada Mora
Note: CF ME
Number: 17838
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17838
File-URL: http://www.nber.org/papers/w17838.pdf
File-Format: application/pdf
Abstract: Can banks maintain their advantage as liquidity providers when they are heavily exposed to a financial crisis? The standard argument - that banks can - hinges on deposit inflows that are seeking a safe haven and provide banks with a natural hedge to fund drawn credit lines and other commitments. We shed new light on this issue by studying the behavior of bank deposit rates and inflows during the 2007-09 crisis. Our results indicate that the role of the banking system as a stabilizing liquidity insurer is not one of the passive recipient, but of an active seeker, of deposits. We find that banks facing a funding squeeze sought to attract deposits by offering higher rates. Banks offering higher rates were also those most exposed to liquidity demand shocks (as measured by their unused commitments, wholesale funding dependence, and limited liquid assets), as well as with fundamentally weak balance-sheets (as measured by their non-performing loans or by subsequent failure). Such rate increases have a competitive effect in that they lead other banks to offer higher rates as well. Overall, the results present a nuanced view of deposit rates and flows to banks in a crisis, one that reflects banks not just as safety havens but also as stressed entities scrambling for deposits.
Handle: RePEc:nbr:nberwo:17838
Template-Type: ReDIF-Paper 1.0
Title: U.S. International Equity Investment
Classification-JEL: F3; G11
Author-Name: John Ammer
Author-Name: Sara B. Holland
Author-Name: David C. Smith
Author-Name: Francis E. Warnock
Note: IFM
Number: 17839
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17839
File-URL: http://www.nber.org/papers/w17839.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Accounting Research. Volume 50, Issue 5, pages 1109–1139, December 2012
Abstract: U.S. investors are the largest group of international equity investors in the world, but to date conclusive evidence on which types of foreign firms are able to attract U.S. investment is not available. Using a comprehensive dataset of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. We also show that our firm-level analysis has implications for country-level studies, suggesting that research investigating equity investment patterns at the country-level should include cross-listing as an endogenous control variable. We describe easy-to-implement methods for including the importance of cross-listing at the country level.
Handle: RePEc:nbr:nberwo:17839
Template-Type: ReDIF-Paper 1.0
Title: Preferential Trade Agreements and the World Trade System: A Multilateralist View
Classification-JEL: F1; F13
Author-Name: Pravin Krishna
Author-Person: pkr50
Note: ITI
Number: 17840
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17840
File-URL: http://www.nber.org/papers/w17840.pdf
File-Format: application/pdf
Publication-Status: published as Preferential Trade Agreements and the World Trade System: A Multilateralist View, Pravin Krishna. in Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Feenstra and Taylor. 2014
Abstract: This paper reviews recent developments in international trade to evaluate several arguments concerning the merits of preferential trade agreements (PTAs) and their place in the world trade system. Taking a multilateralist perspective, it makes several points: First, despite the proliferation of PTAs in recent years, the actual amount of liberalization that has been achieved through PTAs is actually quite limited. Second, at least a few studies point to significant trade diversion in the context of particular PTAs and thus serve as a cautionary note against casual dismissals of trade diversion as a merely theoretical concern. Equally, adverse effects on the terms-of-trade of non-member countries have also been found in the literature. Third, while the literature has found mixed results on the question of whether tariff preferences help or hurt multilateral liberalization, the picture is different with the more elastic tools of trade policy, such as antidumping duties (ADs); the use of ADs against non-members appears to have dramatically increased while the use of ADs against partner countries within PTAs has fallen. Fourth, despite the rapid expansion of preferences in trade, intra-PTA trade shares are relatively small for most PTAs; multilateral remain relevant to most member countries of the WTO.
Handle: RePEc:nbr:nberwo:17840
Template-Type: ReDIF-Paper 1.0
Title: From Growth to Green Growth - a Framework
Classification-JEL: D90; Q01; Q32; Q4
Author-Name: Stéphane Hallegatte
Author-Name: Geoffrey Heal
Author-Person: phe40
Author-Name: Marianne Fay
Author-Person: pfa168
Author-Name: David Treguer
Author-Person: ptr79
Note: EEE EFG
Number: 17841
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17841
File-URL: http://www.nber.org/papers/w17841.pdf
File-Format: application/pdf
Abstract: Green growth is about making growth resource-efficient, cleaner and more resilient without slowing it. This paper aims at clarifying this in an analytical framework and proposing foundations for green growth. This framework identifies channels through which green policies can potentially contribute to economic growth. Finally, the paper discusses the policies that can be implemented to capture co-benefits and environmental benefits. Since green growth policies pursue a variety of goals, they are best served by a combination of instruments: price-based policies are important but are only one component in a policy tool-box that can also include norms and regulation, public production and direct investment, information creation and dissemination, education and moral suasion, or industrial and innovation policies.
Handle: RePEc:nbr:nberwo:17841
Template-Type: ReDIF-Paper 1.0
Title: The Causal Effects of an Industrial Policy
Classification-JEL: H25; L52; L53; O47
Author-Name: Chiara Criscuolo
Author-Person: pcr53
Author-Name: Ralf Martin
Author-Person: pma225
Author-Name: Henry Overman
Author-Person: pov5
Author-Name: John Van Reenen
Author-Person: pva45
Note: IO LS PE PR
Number: 17842
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17842
File-URL: http://www.nber.org/papers/w17842.pdf
File-Format: application/pdf
Publication-Status: published as Chiara Criscuolo & Ralf Martin & Henry G. Overman & John Van Reenen, 2019. "Some Causal Effects of an Industrial Policy," American Economic Review, vol 109(1), pages 48-85.
Abstract: Business support policies designed to raise productivity and employment are common worldwide, but rigorous micro-econometric evaluation of their causal effects is rare. We exploit multiple changes in the area-specific eligibility criteria for a major program to support manufacturing jobs ("Regional Selective Assistance"). Area eligibility is governed by pan-European state aid rules which change every seven years and we use these rule changes to construct instrumental variables for program participation. We match two decades of UK panel data on the population of firms to all program participants. IV estimates find positive program treatment effect on employment, investment and net entry but not on TFP. OLS underestimates program effects because the policy targets underperforming plants and areas. The treatment effect is confined to smaller firms with no effect for larger firms (e.g. over 150 employees). We also find the policy raises area level manufacturing employment mainly through significantly reducing unemployment. The positive program effect is not due to substitution between plants in the same area or between eligible and ineligible areas nearby. We estimate that "cost per job" of the program was only $6,300 suggesting that in some respects investment subsidies can be cost effective.
Handle: RePEc:nbr:nberwo:17842
Template-Type: ReDIF-Paper 1.0
Title: Small Cues Change Savings Choices
Classification-JEL: D03; D14; D91; G02
Author-Name: James J. Choi
Author-Name: Emily Haisley
Author-Name: Jennifer Kurkoski
Author-Name: Cade Massey
Note: AG AP PE
Number: 17843
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17843
File-URL: http://www.nber.org/papers/w17843.pdf
File-Format: application/pdf
Publication-Status: published as Choi, James J. & Haisley, Emily & Kurkoski, Jennifer & Massey, Cade, 2017. "Small cues change savings choices," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 378-395.
Abstract: In randomized field experiments, we embedded one- to two-sentence anchoring, goal-setting, or savings threshold cues in emails to employees about their 401(k) savings plan. We find that anchors increase or decrease 401(k) contribution rates by up to 1.9% of income. A high savings goal example raises contribution rates by up to 2.2% of income. Highlighting a higher savings threshold in the match incentive structure raises contributions by up to 1.5% of income relative to highlighting the lower threshold. Highlighting the maximum possible contribution rate raises contribution rates by up to 2.9% of income among low savers.
Handle: RePEc:nbr:nberwo:17843
Template-Type: ReDIF-Paper 1.0
Title: Uncertain Fiscal Consolidations
Classification-JEL: E3; E31; E52; E62
Author-Name: Huixin Bi
Author-Person: pbi174
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Campbell B. Leith
Author-Person: ple41
Note: EFG
Number: 17844
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17844
File-URL: http://www.nber.org/papers/w17844.pdf
File-Format: application/pdf
Publication-Status: published as Huixin Bi & Eric M. Leeper & Campbell Leith, 2013. "Uncertain Fiscal Consolidations," Economic Journal, Royal Economic Society, vol. 0, pages F31-F63, 02.
Abstract: The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition are uncertain. Drawing on the evidence in Alesina and Ardagna (2010), we emphasize whether or not the fiscal consolidation is driven by tax rises or expenditure cuts. We find that the composition of the fiscal consolidation, its duration, the monetary policy stance, the level of government debt and expectations over the likelihood and composition of fiscal consolidations all matter in determining the extent to which a given consolidation is expansionary and/or successful in stabilizing government debt.
Handle: RePEc:nbr:nberwo:17844
Template-Type: ReDIF-Paper 1.0
Title: The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation
Classification-JEL: Q52; Q53; Q55; Q58
Author-Name: Gabriel Chan
Author-Name: Robert Stavins
Author-Person: pst167
Author-Name: Robert Stowe
Author-Name: Richard Sweeney
Author-Person: psw60
Note: EEE IO PE POL
Number: 17845
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17845
File-URL: http://www.nber.org/papers/w17845.pdf
File-Format: application/pdf
Publication-Status: published as AThe SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on 20 Years of Policy Innovation.@ National Tax Journal 65(2), June 2012, pp. 419-452. With G. Chan, R. Stowe, and R. Sweeney. [A-72]
Abstract: The introduction of the U.S. SO2 allowance-trading program to address the threat of acid rain as part of the Clean Air Act Amendments of 1990 is a landmark event in the history of environmental regulation. The program was a great success by almost all measures. This paper, which draws upon a research workshop and a policy roundtable held at Harvard in May 2011, investigates critically the design, enactment, implementation, performance, and implications of this path-breaking application of economic thinking to environmental regulation. Ironically, cap and trade seems especially well suited to addressing the problem of climate change, in that emitted greenhouse gases are evenly distributed throughout the world's atmosphere. Recent hostility toward cap and trade in debates about U.S. climate legislation may reflect the broader political environment of the climate debate more than the substantive merits of market-based regulation.
Handle: RePEc:nbr:nberwo:17845
Template-Type: ReDIF-Paper 1.0
Title: Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management
Classification-JEL: D22; J31; L2; M12; M5
Author-Name: Maria Guadalupe
Author-Person: pgu118
Author-Name: Hongyi Li
Author-Name: Julie Wulf
Note: CF LS PR
Number: 17846
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17846
File-URL: http://www.nber.org/papers/w17846.pdf
File-Format: application/pdf
Publication-Status: published as Maria Guadalupe & Hongyi Li & Julie Wulf, 2014. "Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management," Management Science, vol 60(4), pages 824-844.
Abstract: This paper shows that top management structures in large US firms radically changed since the mid-1980s. While the number of managers reporting directly to the CEO doubled, the growth was driven primarily by functional managers rather than general managers. Using panel data on senior management positions, we explore the relationship between changes in executive team composition, firm diversification, and IT investments--which arguably alter returns to exploiting synergies through corporate-wide coordination by functional managers in headquarters. We find that the number of functional managers closer to the product ("product" functions i.e., marketing, R&D) increase as firms focus their businesses, while the number of functional managers farther from the product ("administrative" functions i.e., finance, law, HR) increase with IT investments. Finally, we show that general manager pay decreases as functional managers join the executive team suggesting a shift in activities from general to functional managers--a phenomenon we term "functional centralization."
Handle: RePEc:nbr:nberwo:17846
Template-Type: ReDIF-Paper 1.0
Title: Vote Trading With and Without Party Leaders
Classification-JEL: C72; C78; C92; D70; P16
Author-Name: Alessandra Casella
Author-Person: pca496
Author-Name: Thomas Palfrey
Author-Person: ppa1164
Author-Name: Sébastien Turban
Note: POL
Number: 17847
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17847
File-URL: http://www.nber.org/papers/w17847.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Public Economics Volume 112, April 2014, Pages 115–128 Cover image Vote trading with and without party leaders ☆ Alessandra Casellaa, b, c, , , Thomas Palfreyb, d, , Sébastien Turband,
Abstract: Two groups of voters of known sizes disagree over a single binary decision to be taken by simple majority. Individuals have different, privately observed intensities of preferences and before voting can buy or sell votes among themselves for money. We study the implication of such trading for outcomes and welfare when trades are coordinated by the two group leaders and when they take place anonymously in a competitive market. The theory has strong predictions. In both cases, trading falls short of full efficiency, but for opposite reasons: with group leaders, the minority wins too rarely; with market trades, the minority wins too often. As a result, with group leaders, vote trading improves over no-trade; with market trades, vote trading can be welfare reducing. All predictions are strongly supported by experimental results.
Handle: RePEc:nbr:nberwo:17847
Template-Type: ReDIF-Paper 1.0
Title: The "Out of Sample" Performance of Long-run Risk Models
Classification-JEL: E21; E27; G12
Author-Name: Wayne E. Ferson
Author-Person: pfe32
Author-Name: Suresh K. Nallareddy
Author-Name: Biqin Xie
Note: AP
Number: 17848
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17848
File-URL: http://www.nber.org/papers/w17848.pdf
File-Format: application/pdf
Publication-Status: published as "The 'out of sample' Performance of Long-run Risk Models," with Biqin Xie and Suresh Nallareddy, 2013, Journal of Financial Economics 107 (3) 537-556.
Abstract: This paper studies the ability of long-run risk models to explain out-of-sample asset returns during 1931-2009. The long-run risk models perform relatively well on the momentum effect. A cointegrated version of the model outperforms the classical, stationary version. Both the long-run and the short run consumption shocks in the models are empirically important for the models' performance. The models' average pricing errors are especially small in the decades from the 1950s to the 1990s. When we restrict the risk premiums to identify structural parameters, this results in larger average pricing errors but often smaller error variances. The mean squared errors are not substantially better than those of the classical CAPM, except for Momentum.
Handle: RePEc:nbr:nberwo:17848
Template-Type: ReDIF-Paper 1.0
Title: Brand Management and Strategies Against Counterfeits
Classification-JEL: D21; D22; D4; K42; L26
Author-Name: Yi Qian
Note: IO LE PR
Number: 17849
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17849
File-URL: http://www.nber.org/papers/w17849.pdf
File-Format: application/pdf
Publication-Status: published as Qian, Yi. "Brand Management and Strategies Against Counterfeits." Journal of Economics and Management Strategy. Volume 23, Issue 2, pages 317–343, Summer 2014
Abstract: In this paper I provide a theory for brand-protection strategies to reduce counterfeiting under weak intellectual property rights. My theoretical framework has general implications for endogenous sunk cost investments as a means of deterring counterfeiters. My model incorporates two layers of asymmetric information that counterfeits can incur: counterfeiters fooling consumers, and buyers of counterfeits fooling other consumers. Brands have a number of tools at their disposal to maintain a separating equilibrium in the face of counterfeits. One of the theoretical predictions of this study is that counterfeit entry induces incumbent brands to introduce new products. This helps to explain the innovation strategies that authentic firms employ in response to entry by counterfeiters in practice. Authentic prices rise if and only if the counterfeit quality is lower than a threshold level. In addition, the model demonstrates how authentic producers could invest in self-enforcement to increase counterfeiters' incentives to separate themselves from brands. Better channel management through company stores and other costly devices are forms of non-price signals and complement a company's own enforcements against counterfeits. These predictions are validated using unique panel data collected from Chinese shoe companies covering the years 1993-2004. Data further reveal that companies with worse relationships with the government invest more in various self-enforcement strategies, which are effective in reducing counterfeit sales, and that the set of strategies are complements rather than substitutes for each other.
Handle: RePEc:nbr:nberwo:17849
Template-Type: ReDIF-Paper 1.0
Title: Management Practices Across Firms and Countries
Classification-JEL: M1
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Christos Genakos
Author-Person: pge261
Author-Name: Raffaella Sadun
Author-Person: psa385
Author-Name: John Van Reenen
Author-Person: pva45
Note: EFG EH IO LS PE PR
Number: 17850
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17850
File-URL: http://www.nber.org/papers/w17850.pdf
File-Format: application/pdf
Publication-Status: published as Bloom, Nicholas, Christos Genakos, Raffaella Sadun, and John Van Reenen. "Management Practices across Firms and Countries." Academy of Management Perspectives 26, no. 1 (February 2012): 12–33.
Abstract: For the last decade we have been using double-blind survey techniques and randomized sampling to construct management data on over 10,000 organizations across twenty countries. On average, we find that in manufacturing American, Japanese, and German firms are the best managed. Firms in developing countries, such as Brazil, China and India tend to be poorly managed. American retail firms and hospitals are also well managed by international standards, although American schools are worse managed than those in several other developed countries. We also find substantial variation in management practices across organizations in every country and every sector, mirroring the heterogeneity in the spread of performance in these sectors. One factor linked to this variation is ownership. Government, family, and founder owned firms are usually poorly managed, while multinational, dispersed shareholder and private-equity owned firms are typically well managed. Stronger product market competition and higher worker skills are associated with better management practices. Less regulated labor markets are associated with improvements in incentive management practices such as performance based promotion.
Handle: RePEc:nbr:nberwo:17850
Template-Type: ReDIF-Paper 1.0
Title: Challenges in Banking the Rural Poor: Evidence from Kenya's Western Province
Classification-JEL: D14; G21; O16
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: Sarah Green
Author-Name: Anthony Keats
Author-Name: Jonathan Robinson
Author-Person: pro377
Note: CH
Number: 17851
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17851
File-URL: http://www.nber.org/papers/w17851.pdf
File-Format: application/pdf
Publication-Status: published as Challenges in Banking the Rural Poor: Evidence from Kenya's Western Province, Pascaline Dupas, Sarah Green, Anthony Keats, Jonathan Robinson. in African Successes, Volume III: Modernization and Development, Edwards, Johnson, and Weil. 2016
Abstract: Most people in rural Africa do not have bank accounts. In this paper, we combine experimental and survey evidence from Western Kenya to document some of the supply and demand factors behind such low levels of financial inclusion. Our experiment had two parts. In the first part, we waived the fixed cost of opening a basic savings account at a local bank for a random subset of individuals who were initially unbanked. While 63% of people opened an account, only 18% actively used it. Survey evidence suggests that the main reasons people did not begin saving in their bank accounts are that: (1) they do not trust the bank, (2) service is unreliable, and (3) withdrawal fees are prohibitively expensive. In the second part of the experiment, we provided information on local credit options and lowered the eligibility requirements for an initial small loan. Within the following 6 months, only 3% of people initiated the loan application process. Survey evidence suggests that people do not borrow because they do not want to risk losing their collateral. These results suggest that, while simply expanding access to banking services (for instance by lowering account opening fees) will benefit a minority, broader success may be unobtainable unless the quality of services is simultaneously improved. There are also challenges on the demand side, however. More work needs to be done to understand what savings and credit products are best suited for the majority of rural households.
Handle: RePEc:nbr:nberwo:17851
Template-Type: ReDIF-Paper 1.0
Title: Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China
Classification-JEL: I22; I28; N30; O15
Author-Name: Latika Chaudhary
Author-Person: pch1335
Author-Name: Aldo Musacchio
Author-Person: pmu132
Author-Name: Steven Nafziger
Author-Person: pna313
Author-Name: Se Yan
Author-Person: pya183
Note: DAE
Number: 17852
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17852
File-URL: http://www.nber.org/papers/w17852.pdf
File-Format: application/pdf
Publication-Status: published as Chaudhary, Latika, Aldo Musacchio, Steven Nafziger, and Se Yan. "Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China." Explorations in Economic History 49, no. 2 (April 2012): 221-240
Abstract: Our paper provides a comparative perspective on the development of public primary education in four of the largest developing economies circa 1910: Brazil, Russia, India and China (BRIC). These four countries encompassed more than 50 percent of the world's population in 1910, but remarkably few of their citizens attended any school by the early 20th century. We present new, comparable data on school inputs and outputs for BRIC drawn from contemporary surveys and government documents. Recent studies emphasize the importance of political decentralization, and relatively broad political voice for the early spread of public primary education in developed economies. We identify the former and the lack of the latter to be important in the context of BRIC, but we also outline how other factors such as factor endowments, colonialism, serfdom, and, especially, the characteristics of the political and economic elite help explain the low achievement levels of these four countries and the incredible amount of heterogeneity within each of them.
Handle: RePEc:nbr:nberwo:17852
Template-Type: ReDIF-Paper 1.0
Title: The Slow Growth of New Plants: Learning about Demand?
Classification-JEL: D2; E23; L1; L6
Author-Name: Lucia Foster
Author-Person: pfo74
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Chad Syverson
Author-Person: psy13
Note: EFG IO PR
Number: 17853
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17853
File-URL: http://www.nber.org/papers/w17853.pdf
File-Format: application/pdf
Publication-Status: published as Lucia Foster & John Haltiwanger & Chad Syverson, 2016. "The Slow Growth of New Plants: Learning about Demand?," Economica, London School of Economics and Political Science, vol. 83(329), pages 91-129, 01.
Abstract: It is well known that new businesses are typically much smaller than their established industry competitors, and that this size gap closes slowly. We show that even in commodity-like product markets, these patterns do not reflect productivity gaps, but rather differences in demand-side fundamentals. We document and explore patterns in plants' idiosyncratic demand levels by estimating a dynamic model of plant expansion in the presence of a demand accumulation process (e.g., building a customer base). We find active accumulation driven by plants' past production decisions quantitatively dominates passive demand accumulation, and that within-firm spillovers affect demand levels but not growth.
Handle: RePEc:nbr:nberwo:17853
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Effects of Corporate Default Crises: A Long-Term Perspective
Classification-JEL: E3; E32; E44; G01; G21; G33
Author-Name: Kay Giesecke
Author-Name: Francis A. Longstaff
Author-Person: plo283
Author-Name: Stephen Schaefer
Author-Name: Ilya Strebulaev
Author-Person: pst526
Note: AP CF DAE EFG
Number: 17854
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17854
File-URL: http://www.nber.org/papers/w17854.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics Volume 111, Issue 2, February 2014, Pages 297–310 Cover image Macroeconomic effects of corporate default crisis: A long-term perspective ☆ Kay Gieseckea, Francis A. Longstaffb, c, , , Stephen Schaeferd, Ilya A. Strebulaeve, c
Abstract: Using an extensive new data set on corporate bond defaults in the U.S. from 1866 to 2010, we study the macroeconomic effects of bond market crises and contrast them with those resulting from banking crises. During the past 150 years, the U.S. has experienced many severe corporate default crises in which 20 to 50 percent of all corporate bonds defaulted. Although the total par amount of corporate bonds has often rivaled the amount of bank loans outstanding, we find that corporate default crises have far fewer real effects than do banking crises. These results provide empirical support for current theories that emphasize the unique role that banks and the credit and collateral channels play in amplifying macroeconomic shocks.
Handle: RePEc:nbr:nberwo:17854
Template-Type: ReDIF-Paper 1.0
Title: Toward an Understanding of Why People Discriminate: Evidence from a Series of Natural Field Experiments
Classification-JEL: C93; J71
Author-Name: Uri Gneezy
Author-Person: pgn18
Author-Name: John List
Author-Person: pli176
Author-Name: Michael K. Price
Author-Person: ppr89
Note: EEE IO LS
Number: 17855
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17855
File-URL: http://www.nber.org/papers/w17855.pdf
File-Format: application/pdf
Abstract: Social scientists have presented evidence that suggests discrimination is ubiquitous: women, nonwhites, and the elderly have been found to be the target of discriminatory behavior across several labor and product markets. Scholars have been less successful at pinpointing the underlying motives for such discriminatory patterns. We employ a series of field experiments across several market and agent types to examine the nature and extent of discrimination. Our exploration includes examining discrimination based on gender, age, sexual orientation, race, and disability. Using data from more than 3000 individual transactions, we find evidence of discrimination in each market. Interestingly, we find that when the discriminator believes the object of discrimination is controllable, any observed discrimination is motivated by animus. When the object of discrimination is not due to choice, the evidence suggests that statistical discrimination is the underlying reason for the disparate behavior.
Handle: RePEc:nbr:nberwo:17855
Template-Type: ReDIF-Paper 1.0
Title: Equity-Holding Institutional Lenders: Do they Receive Better Terms?
Classification-JEL: G21; G3; G32
Author-Name: Jongha Lim
Author-Name: Bernadette A. Minton
Author-Name: Michael S. Weisbach
Note: CF
Number: 17856
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17856
File-URL: http://www.nber.org/papers/w17856.pdf
File-Format: application/pdf
Publication-Status: published as “Syndicated Loan Spreads and the Composition of the Syndicate” (with Jongha Lim and Bernadette A. Minton), Journal of Financial Economics, Vol. 111 (January 2014), pp. 45-69.
Abstract: The past decade has seen significant changes in the structure of the corporate lending market, with non-commercial bank institutional investors playing larger roles than they historically have played. In addition, non-commercial bank institutional lenders are often equity holders in their borrowing firms. In our sample of 11,137 tranches of institutional "leveraged" loans, 2,008 (18%) have a non-commercial bank institution that also owns at least 0.1% of the firm's equity. Such "dual holder" loan tranches have higher spreads than otherwise similar loan tranches without equity holder participation. The dual holder premium is present for both revolver and term loans, and exists within all non-investment grade credit rating classes. Contrary to risk-based explanations of this finding, dual holder tranches are priced with premiums relative to other tranches of the same loan package. Dual holding premiums are higher when the equity-holder's stake is larger, when the dual-holder's share in the loan is larger, and when the equity holder is a hedge fund or a private equity fund. These premiums likely represent additional compensation to dual holders for providing capital to firms when the firms are having difficulty raising capital otherwise.
Handle: RePEc:nbr:nberwo:17856
Template-Type: ReDIF-Paper 1.0
Title: Insurance as Delegated Purchasing: Theory and Evidence from Health Care
Classification-JEL: G22; I13
Author-Name: Robin McKnight
Author-Name: Jonathan Reuter
Author-Person: pre328
Author-Name: Eric Zitzewitz
Author-Person: pzi23
Note: AG EH
Number: 17857
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17857
File-URL: http://www.nber.org/papers/w17857.pdf
File-Format: application/pdf
Abstract: Household demand for actuarially unfair insurance against small risks has long puzzled economists. One way to potentially rationalize this demand is to recognize that (non-life) insurance is an incentive-compatible means of engaging an expert buyer. To quantify the benefits of expert buying, we compare prices paid by the insured and uninsured for health care. In categories of health care where uncompensated care is more difficult to obtain (drugs, doctor office visits, and hospital outpatient visits), we find that insurers pay 10-20% less than the uninsured. For forms of care where payment by the uninsured is more likely to be negotiated after services are rendered (hospitalizations and emergency room visits) the uninsured pay about 30% less on average, due largely to the nontrivial share of uninsured who pay 5% or less of their billed charges. At least in settings where free services are difficult to obtain, expert buying is an important benefit of insurance. We discuss the implications of the delegated-purchasing view of insurance for con-sumer-driven health insurance and for self-insurance by employers.
Handle: RePEc:nbr:nberwo:17857
Template-Type: ReDIF-Paper 1.0
Title: Repossession and the Democratization of Credit
Classification-JEL: G21; G28; K22
Author-Name: Juliano J. Assunção
Author-Person: pas101
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Fernando S. S. Silva
Note: CF LE ME
Number: 17858
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17858
File-URL: http://www.nber.org/papers/w17858.pdf
File-Format: application/pdf
Publication-Status: published as Benmelech, Efraim, Juliano Assuncao and Fernando S. S. Silva. Forthcoming. Repossession and the Democratization of Credit. Review of Financial Studies.
Abstract: We exploit a 2004 credit reform in Brazil that simplified the sale of repossessed cars used as collateral for auto loans. We show that the change has led to larger loans with lower spreads and longer maturities. The reform expanded credit to riskier, low-income borrowers for newer, more expensive cars. Although the credit reform improved riskier borrowers' access to credit, it also led to increased incidences of delinquency and default. Our results shed light on the consequences of a credit reform, highlighting the crucial role that collateral and repossession play in the liberalization and democratization of credit.
Handle: RePEc:nbr:nberwo:17858
Template-Type: ReDIF-Paper 1.0
Title: Do College-Prep Programs Improve Long-Term Outcomes?
Classification-JEL: H0; I20; J01
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Note: CH ED LS PE
Number: 17859
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17859
File-URL: http://www.nber.org/papers/w17859.pdf
File-Format: application/pdf
Publication-Status: published as You have free access to this content DO COLLEGE-PREPARATORY PROGRAMS IMPROVE LONG-TERM OUTCOMES? Economic Inquiry Volume 52, Issue 1, January 2014, Pages: 72–99, C. KIRABO JACKSON Article first published online : 18 OCT 2013, DOI: 10.1111/ecin.12040
Abstract: This paper presents an analysis of the longer-run effects of a college-preparatory program implemented in inner-city schools that provided teacher training in addition to payments to eleventh- and twelfth- grade students and their teachers for passing scores on Advanced Placement (AP) exams. Affected students passed more AP exams, were more likely to remain in college beyond their first and second years, and earned higher wages. Effects are particularly pronounced for Hispanic students who experienced a 2.5-percentage-point increase in college degree attainment and an 11-percent increase in earnings. While the study is based on non-experimental variation, the results are robust across a variety of specifications, and most plausible sources of bias are ruled out. The results provide credible evidence that implementing high-quality college-preparatory programs in existing urban schools can improve the long-run educational and labor market outcomes of disadvantaged youth.
Handle: RePEc:nbr:nberwo:17859
Template-Type: ReDIF-Paper 1.0
Title: The Incentive Effects of Marginal Tax Rates: Evidence from the Interwar Era
Classification-JEL: E62; H24; H31; N42
Author-Name: Christina D. Romer
Author-Person: pro407
Author-Name: David H. Romer
Author-Person: pro406
Note: DAE EFG ME PE
Number: 17860
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17860
File-URL: http://www.nber.org/papers/w17860.pdf
File-Format: application/pdf
Publication-Status: published as “The Incentive Effects of Marginal Tax Rates: Evidence from the Interwar Era” (with David H. Romer), American Economic Journal: Economic Policy, forthcoming.
Abstract: This paper uses the interwar period in the United States as a laboratory for investigating the incentive effects of changes in marginal income tax rates. Marginal rates changed frequently and drastically in the 1920s and 1930s, and the changes varied greatly across income groups at the top of the income distribution. We examine the effect of these changes on taxable income using time-series/cross-section analysis of data on income and taxes by small slices of the income distribution. We find that the elasticity of taxable income to changes in the log after-tax share (one minus the marginal rate) is positive but small (approximately 0.2) and precisely estimated (a t-statistic over 6). The estimate is highly robust. We also examine the time-series response of available indicators of investment and entrepreneurial activity to changes in marginal rates. We find suggestive evidence of an impact on business formation, but no evidence of an important impact on other indicators.
Handle: RePEc:nbr:nberwo:17860
Template-Type: ReDIF-Paper 1.0
Title: Does Generosity Beget Generosity? Alumni Giving and Undergraduate Financial Aid
Classification-JEL: I22; I23
Author-Name: Jonathan Meer
Author-Person: pme529
Author-Name: Harvey S. Rosen
Author-Person: pro55
Note: ED PE
Number: 17861
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17861
File-URL: http://www.nber.org/papers/w17861.pdf
File-Format: application/pdf
Publication-Status: published as Meer, Jonathan & Rosen, Harvey S., 2012. "Does generosity beget generosity? Alumni giving and undergraduate financial aid," Economics of Education Review, Elsevier, vol. 31(6), pages 890-907.
Abstract: We investigate how undergraduates' financial aid packages affect their subsequent donative behavior as alumni. The empirical work is based upon micro data on alumni giving at an anonymous research university. We focus on three types of financial aid, scholarships, loans, and campus jobs. A novel aspect of our modeling strategy is that, consistent with the view of some professional fundraisers, we allow the receipt of a given form of aid per se to affect alumni giving. At the same time, our model allows the amount of the support to affect giving behavior nonlinearly. Our main findings are: 1) Individuals who took out student loans are less likely to make a gift, other things being the same. We conjecture that this phenomenon is caused by an "annoyance effect" -- alumni resent the fact that they are burdened with loans. 2) Scholarship aid reduces the size of a gift, but has little effect on the probability of donating. The negative effect of receiving a scholarship on donations decreases in absolute value with the size of the scholarship. We do not find any evidence that scholarship recipients give less because they have relatively low incomes post graduation. 3) Aid in the form of campus jobs does not have a strong effect on donative behavior.
Handle: RePEc:nbr:nberwo:17861
Template-Type: ReDIF-Paper 1.0
Title: How Do Laffer Curves Differ Across Countries?
Classification-JEL: E0; E13; E2; E3; E62; H0; H2; H3; H6
Author-Name: Mathias Trabandt
Author-Person: ptr71
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG
Number: 17862
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17862
File-URL: http://www.nber.org/papers/w17862.pdf
File-Format: application/pdf
Publication-Status: published as How Do Laffer Curves Differ across Countries?, Mathias Trabandt, Harald Uhlig. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: We seek to understand how Laffer curves differ across countries in the US and the EU-14, thereby providing insights into fiscal limits for government spending and the service of sovereign debt. As an application, we analyze the consequences for the permanent sustainability of current debt levels, when interest rates are permanently increased e.g. due to default fears. We build on the analysis in Trabandt and Uhlig (2011) and extend it in several ways. To obtain a better fit to the data, we allow for monopolistic competition as well as partial taxation of pure profit income. We update the sample to 2010, thereby including recent increases in government spending and their fiscal consequences. We provide new tax rate data. We conduct an analysis for the pessimistic case that the recent fiscal shifts are permanent. We include a cross-country analysis on consumption taxes as well as a more detailed investigation of the inclusion of human capital considerations for labor taxation.
Handle: RePEc:nbr:nberwo:17862
Template-Type: ReDIF-Paper 1.0
Title: Financial Sophistication in the Older Population
Classification-JEL: D91; G11; J14; J18
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Vilsa Curto
Note: AG LS PE
Number: 17863
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17863
File-URL: http://www.nber.org/papers/w17863.pdf
File-Format: application/pdf
Abstract: This paper examines data on financial sophistication among the U.S. older population, using a special-purpose module implemented in the Health and Retirement Study. We show that financial sophistication is deficient for older respondents (aged 55+). Specifically, many in this group lack a basic grasp of asset pricing, risk diversification, portfolio choice, and investment fees. Subpopulations with particular deficits include women, the least educated, persons over the age of 75, and non-Whites. In view of the fact that people are increasingly being asked to take on responsibility for their own retirement security, such lack of knowledge can have serious implications.
Handle: RePEc:nbr:nberwo:17863
Template-Type: ReDIF-Paper 1.0
Title: International Trade: Linking Micro and Macro
Classification-JEL: F1; F12; L16
Author-Name: Jonathan Eaton
Author-Person: pea5
Author-Name: Samuel S. Kortum
Author-Person: pko74
Author-Name: Sebastian Sotelo
Author-Person: pso464
Note: ITI PR
Number: 17864
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17864
File-URL: http://www.nber.org/papers/w17864.pdf
File-Format: application/pdf
Publication-Status: published as "International Trade: Linking Micro and Macro," (with Jonathan Eaton and Sebastian Sotelo) in Daron Acemoglu, Manuel Arellano, and Eddie Dekel, eds., Advances in Economics and Econometrics: Theory and Applications, Tenth World Congress, Volumes I, II, and III.
Abstract: A recent literature has introduced heterogeneous firms into models of international trade. This literature has adopted the convention of treating individual firms as points on a continuum. While the continuum offers many advantages this convenience comes at some cost: (1) Shocks to individual firms can never have an aggregate effect. (2) It is hard to reconcile the small (sometimes zero) number of firms engaged in selling from one country to another with a continuum. (3) For such models to deliver finite solutions for aggregates, such as the price index, requires restrictions on parameter values that may not hold in the data. We show how a standard heterogeneous-firm trade model can be amended to allow for only an integer number of firms. The model overcomes the deficiencies of the continuum model enumerated above. Taking the model to aggregate data on bilateral trade in manufactures among 92 countries and to firm-level export data for a much narrower sample shows that it accounts for both the large share of a small number of firms in sales around the world and for zeros in bilateral trade data while maintaining the good fit of the standard gravity equation among country pairs with thick trade volumes. Randomness at the firm level adds substantially to aggregate variability.
Handle: RePEc:nbr:nberwo:17864
Template-Type: ReDIF-Paper 1.0
Title: Stimulating Demand for AIDS Prevention: Lessons from the RESPECT Trial
Classification-JEL: I12; I15
Author-Name: Damien de Walque
Author-Person: pde180
Author-Name: William H. Dow
Author-Person: pdo236
Author-Name: Carol Medlin
Author-Name: Rose Nathan
Note: EH
Number: 17865
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17865
File-URL: http://www.nber.org/papers/w17865.pdf
File-Format: application/pdf
Publication-Status: published as Stimulating Demand for AIDS Prevention: Lessons from the RESPECT Trial, Damien de Walque, William H. Dow, Carol Medlin, Rose Nathan. in African Successes, Volume II: Human Capital, Edwards, Johnson, and Weil. 2016
Abstract: HIV-prevention strategies have yielded only limited success so far in slowing down the AIDS epidemic. This paper examines novel intervention strategies that use incentives to discourage risky sexual behaviors. Widely-adopted conditional cash transfer programs that offer payments conditioning on easily monitored behaviors, such as well-child health care visits have shown positive impact on health outcomes. Similarly, contingency management approaches have successfully used outcome-based rewards to encourage behaviors that aren't easily monitored, such as stopping drug abuse. These strategies have not been used in the sexual domain, so we assess how incentives can be used to reduce risky sexual behavior. After discussing theoretical pathways, we discuss the use of sexual-behavior incentives in the Tanzanian RESPECT trial. There, participants who tested negative for sexually transmitted infections are eligible for outcome-based cash rewards. The trial was well-received in the communities, with high enrollment rates and over 90% of participants viewing the incentives favorably. After one year, 57% of enrollees in the "low-value" reward arm stated that the cash rewards "very much" motivated sexual behavioral change, rising to 79% in the "high-value" reward arm. Despite its controversial nature, we argue for further testing of such incentive-based approaches to encouraging reductions in risky sexual behavior.
Handle: RePEc:nbr:nberwo:17865
Template-Type: ReDIF-Paper 1.0
Title: The Decision to Delay Social Security Benefits: Theory and Evidence
Classification-JEL: D14; H55
Author-Name: John B. Shoven
Author-Name: Sita Nataraj Slavov
Author-Person: pna81
Note: AG
Number: 17866
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17866
File-URL: http://www.nber.org/papers/w17866.pdf
File-Format: application/pdf
Publication-Status: published as “Does It Pay to Delay Social Security?” (with John Shoven) Journal of Pension Economics and Finance, 13(2), April 2014, 121-144. (Earlier versions: NBER Working Paper no. 17866 and NBER Working Paper no. 18210)
Abstract: Social Security benefits may be commenced at any time between age 62 and age 70. As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit amount to reflect the age at which benefits are claimed. We investigate the actuarial fairness of this adjustment. Our simulations suggest that delaying is actuarially advantageous for a large subset of people, particularly for real interest rates of 3.5 percent or below. The gains from delaying are greater at lower interest rates, for married couples relative to singles, for single women relative to single men, and for two-earner couples relative to one-earner couples. In a two-earner couple, the gains from deferring the primary earner's benefit are greater than the gains from deferring the secondary earner's benefit. We then use panel data from the Health and Retirement Study to investigate whether individuals' actual claiming behavior appears to be influenced by the degree of actuarial advantage to delaying. We find no evidence of a consistent relationship between claiming behavior and factors that influence the actuarial advantage of delay, including gender and marital status, interest rates, subjective discount rates, or subjective assessments of life expectancy.
Handle: RePEc:nbr:nberwo:17866
Template-Type: ReDIF-Paper 1.0
Title: Financing-Motivated Acquisitions
Classification-JEL: G3; G32; G34; L22
Author-Name: Isil Erel
Author-Name: Yeejin Jang
Author-Name: Michael S. Weisbach
Note: CF
Number: 17867
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17867
File-URL: http://www.nber.org/papers/w17867.pdf
File-Format: application/pdf
Publication-Status: published as Do Acquisitions Relieve Target Firms’ Financial Constraints? Authors ISIL EREL, YEEJIN JANG, The Journal of Finance Volume 70, Issue 1, pages 289–328, February 2015
Abstract: Managers often claim that an important source of value in acquisitions is the acquiring firm's ability to finance investments for the target firm. This claim implies that targets are financially constrained prior to being acquired and that these constraints are eased following the acquisition. We evaluate the extent to which acquisitions lower financial constraints on a sample of 5,187 European acquisitions occurring between 2001 and 2008. Each of these targets remains a subsidiary of its new parent, so we can observe the target's financial policies following the acquisition. We examine whether these post-acquisition financial policies reflect improved access to capital. We find that the level of cash target firms hold, the sensitivity of cash to cash flow, and the sensitivity of investment to cash flow all decline significantly, while investment significantly increases following the acquisition. These effects are stronger in deals more likely associated with financing improvements. These findings are consistent with the view that easing financial frictions is a source of value that motivates acquisitions.
Handle: RePEc:nbr:nberwo:17867
Template-Type: ReDIF-Paper 1.0
Title: Crisis-Related Shifts in the Market Valuation of Banking Activities
Classification-JEL: E32; E43; G01; G21
Author-Name: Charles W. Calomiris
Author-Person: pca421
Author-Name: Doron Nissim
Note: CF
Number: 17868
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17868
File-URL: http://www.nber.org/papers/w17868.pdf
File-Format: application/pdf
Publication-Status: published as Calomiris, Charles W. & Nissim, Doron, 2014. "Crisis-related shifts in the market valuation of banking activities," Journal of Financial Intermediation, Elsevier, vol. 23(3), pages 400-435.
Abstract: We examine changes in the market valuation of banking activities over the last decade, focusing on the effects of the financial crisis. Our valuation model recognizes that banks create value through the types of assets and liabilities that they create and the various types of risk they undertake (including their leverage, their lending risk, and their interest rate risk). The model also allows for heterogeneous bank income streams, dividend signaling effects, and changes in capitalization rates for income streams over time depending on changing market conditions. This approach explains substantial cross-sectional variation in observed market-to-book values, allowing us to identify the market pricing of various banking activities and changes in market pricing over time. We find that the declines in bank stock values since 2007 reflect declining values of various categories of banking activity and changes in market conditions. Dividend payments matter for market values increasingly over time. "Carry-trade" effects from taking on interest rate risk are also apparent. The effects of leverage on bank valuation changed sign during the crisis; while the market rewarded high leverage with higher market values prior to the crisis, leverage become associated with lower values during and after the crisis. Contrary to the view that the declines in market-to-book values for U.S. banks from 2006-2011 mainly reflect unrecognized losses, we find that other factors explain most of the decline in market-to-book ratios. Although model parameters do change over time, more than three-quarters of the change in market-to-book values that occurred from 2006 to the end of 2008 were predictable based on changes in fundamental determinants of value using the model coefficients estimated in 2006.
Handle: RePEc:nbr:nberwo:17868
Template-Type: ReDIF-Paper 1.0
Title: Culture and the Historical Process
Classification-JEL: B52; N00
Author-Name: Nathan Nunn
Author-Person: pnu17
Note: DAE POL
Number: 17869
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17869
File-URL: http://www.nber.org/papers/w17869.pdf
File-Format: application/pdf
Publication-Status: published as “Culture and the Historical Process,” Economic History of Developing Regions, Vol. 27, Supplement 1, 2012, pp. 108-126.
Abstract: This article discusses the importance of accounting for cultural values and beliefs when studying the process of historical economic development. A notion of culture as heuristics or rules-of-thumb that aid in decision making is described. Because cultural traits evolve based upon relative fitness, historical shocks can have persistent impacts if they alter the costs and benefits of different traits. A number of empirical studies confirm that culture is an important mechanism that helps explain why historical shocks can have persistent impacts; these are reviewed here. As an example, I discuss the colonial origins hypothesis (Acemoglu, Johnson and Robinson, 2001), and show that our understanding of the transplantation of European legal and political institutions during the colonial period remains incomplete unless the values and beliefs brought by European settlers are taken into account. It is these cultural beliefs that formed the foundation of the initial institutions that in turn were key for long-term economic development.
Handle: RePEc:nbr:nberwo:17869
Template-Type: ReDIF-Paper 1.0
Title: Effects of Medicare Payment Reform: Evidence from the Home Health Interim and Prospective Payment Systems
Classification-JEL: H42; I1
Author-Name: Peter J. Huckfeldt
Author-Name: Neeraj Sood
Author-Person: pso62
Author-Name: José J. Escarce
Author-Name: David C. Grabowski
Author-Name: Joseph P. Newhouse
Note: EH
Number: 17870
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17870
File-URL: http://www.nber.org/papers/w17870.pdf
File-Format: application/pdf
Publication-Status: published as Huckfeldt, Peter J. & Sood, Neeraj & Escarce, José J. & Grabowski, David C. & Newhouse, Joseph P., 2014. "Effects of Medicare payment reform: Evidence from the home health interim and prospective payment systems," Journal of Health Economics, Elsevier, vol. 34(C), pages 1-18.
Abstract: Medicare continues to implement payment reforms that shift reimbursement from fee-for-service towards episode-based payment, affecting average and marginal reimbursement. We contrast the effects of two reforms for home health agencies. The Home Health Interim Payment System in 1997 lowered both types of reimbursement; our conceptual model predicts a decline in the likelihood of use and costs, both of which we find. The Home Health Prospective Payment System in 2000 raised average but lowered marginal reimbursement with theoretically ambiguous effects; we find a modest increase in use and costs. We find little substantive effect of either policy on readmissions or mortality.
Handle: RePEc:nbr:nberwo:17870
Template-Type: ReDIF-Paper 1.0
Title: Right-Wing Political Extremism in the Great Depression
Classification-JEL: N0; N14
Author-Name: Alan de Bromhead
Author-Person: pde717
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Kevin H. O'Rourke
Author-Person: por7
Note: DAE IFM
Number: 17871
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17871
File-URL: http://www.nber.org/papers/w17871.pdf
File-Format: application/pdf
Publication-Status: published as "Political Extremism in the 1920s and 1930s: Do the German Lessons Generalize?" (with Alan de Bromhead and Keven O'Rourke), Journal of Economic History (July 2013).
Abstract: We examine the impact of the Great Depression on the share of votes for right-wing anti-system parties in elections in the 1920s and 1930s. We confirm the existence of a link between political extremism and economic hard times as captured by growth or contraction of the economy. What mattered was not simply growth at the time of the election but cumulative growth performance. But the effect of the Depression on support for right-wing anti-system parties was not equally powerful under all economic, political and social circumstances. It was greatest in countries with relatively short histories of democracy, with existing extremist parties, and with electoral systems that created low hurdles to parliamentary representation. Above all, it was greatest where depressed economic conditions were allowed to persist.
Handle: RePEc:nbr:nberwo:17871
Template-Type: ReDIF-Paper 1.0
Title: International Consumption Risk Is Shared After All: An Asset Return View
Classification-JEL: E21; F30; F40; G15
Author-Name: Karen K. Lewis
Author-Person: ple1119
Author-Name: Edith X. Liu
Author-Person: pli469
Note: AP EFG IFM
Number: 17872
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17872
File-URL: http://www.nber.org/papers/w17872.pdf
File-Format: application/pdf
Abstract: International consumption risk sharing studies have largely ignored their models' counterfactual implications for asset returns although these returns incorporate direct market measures of risk. In this paper, we modify a canonical risk-sharing model to generate more plausible asset return behavior and then consider the effects on welfare gains. Matching the mean and variance of equity returns and the risk-free rate requires persistent consumption risk, leading to three main findings: (1) risk-sharing gains decrease as the ability to diversify persistent consumption risk decreases; (2) the international correlation of equity returns is high relative to the correlation of consumption and dividends, implying low diversification potential for persistent consumption risk; and (3) increasing persistent consumption risk reduces the gains. Taken together, our findings suggest that asset returns imply more international risk sharing than previously thought.
Handle: RePEc:nbr:nberwo:17872
Template-Type: ReDIF-Paper 1.0
Title: Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession
Classification-JEL: E44; F36; G32
Author-Name: Nicola Cetorelli
Author-Person: pce70
Author-Name: Linda S. Goldberg
Author-Person: pgo256
Note: IFM
Number: 17873
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17873
File-URL: http://www.nber.org/papers/w17873.pdf
File-Format: application/pdf
Publication-Status: published as Nicola Cetorelli & Linda S. Goldberg, 2012. "Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession," American Economic Review, American Economic Association, vol. 102(3), pages 213-18, May.
Abstract: Foreign banks pulled significant funding from their U.S. branches during the Great Recession. We estimate that the average-sized branch experienced a 12 percent net internal fund "withdrawal," with the fund transfer disproportionately bigger for larger branches. This internal shock to the balance sheets of U.S. branches of foreign banks had sizable effects on their lending. On average, for each dollar of funds transferred internally to the parent, branches decreased lending supply by about 40 to 50 cents. However, the extent of the lending effects was very different across branches, depending on their pre-crisis modes of operation in the United States.
Handle: RePEc:nbr:nberwo:17873
Template-Type: ReDIF-Paper 1.0
Title: Private Equity Performance: What Do We Know?
Classification-JEL: G10; G24; G30
Author-Name: Robert S. Harris
Author-Name: Tim Jenkinson
Author-Person: pje16
Author-Name: Steven N. Kaplan
Note: AP CF
Number: 17874
Creation-Date: 2012-02
Order-URL: http://www.nber.org/papers/w17874
File-URL: http://www.nber.org/papers/w17874.pdf
File-Format: application/pdf
Publication-Status: published as “Private Equity Performance: What Do We Know?” with Robert Harris and Tim Jenkinson, Journal of Finance, forthcoming.
Abstract: We present evidence on the performance of nearly 1400 U.S. private equity (buyout and venture capital) funds using a new research-quality dataset from Burgiss, sourced from over 200 institutional investors. Using detailed cash-flow data, we compare buyout and venture capital returns to the returns produced by public markets. We also compare the evidence from Burgiss to that derived from other commercial datasets - Venture Economics, Preqin and Cambridge Associates - as well as recent research. We find better buyout fund performance than has previously been documented. This in part reflects recently discovered problems with data provided by Venture Economics, upon which several previous studies had relied. Average U.S. buyout fund performance has exceeded that of public markets for most vintages for a long period of time. The outperformance versus the S&P 500 averages 20% to 27% over the life of the fund and more than 3% per year. Average U.S. venture capital funds, on the other hand, outperformed public equities in the 1990s, but have underperformed public equities in the 2000s. Using individual fund data, we explore the relationship between absolute measures of performance - internal rates of return (IRRs) and multiples of invested capital - and performance relative to public markets. Within a given vintage year, performance relative to public markets can be predicted well by a fund's multiple of invested capital and IRR, so we are able to estimate the performance relative to public markets that would have been derived from the other commercial datasets, had the required cash-flow data been available. Private equity performance in the other commercial sources - other than Venture Economics - is qualitatively similar to that we find using the Burgiss data.
Handle: RePEc:nbr:nberwo:17874
Template-Type: ReDIF-Paper 1.0
Title: Are Chinese Trade Flows Different?
Classification-JEL: F4
Author-Name: Yin-Wong Cheung
Author-Person: pch261
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: XingWang Qian
Author-Person: pqi34
Note: IFM
Number: 17875
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17875
File-URL: http://www.nber.org/papers/w17875.pdf
File-Format: application/pdf
Publication-Status: published as Cheung, Yin-Wong & Chinn, Menzie D. & Qian, XingWang, 2012. "Are Chinese trade flows different?," Journal of International Money and Finance, Elsevier, vol. 31(8), pages 2127-2146.
Abstract: We find that Chinese trade flows respond to economic activity and relative prices - as represented by a trade weighted exchange rate - but the relationships are not always precisely or robustly estimated. Chinese exports are generally well-behaved, rising with foreign GDP and decreasing as the Chinese renminbi (RMB) appreciates. However, the estimated income elasticity is sensitive to the treatment of time trends. Estimates of aggregate imports are more problematic. In many cases, Chinese aggregate imports actually rise in response to a RMB depreciation and decline with Chinese GDP. This is true even after accounting for the fact a substantial share of imports are subsequently incorporated into Chinese exports. We find that some of these counter-intuitive results are mitigated when we disaggregate the trade flows by customs type, commodity type, and the type of firm undertaking the transactions. However, for imports, we only obtain more reasonable estimates of elasticities when we allow for different import intensities for different components of aggregate demand (specifically, consumption versus investment), or when we include a relative productivity variable.
Handle: RePEc:nbr:nberwo:17875
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Adverse Selection: A Theory of Illiquidity, Fire Sales, and Flight to Quality
Classification-JEL: D82; E44; G14
Author-Name: Veronica Guerrieri
Author-Person: pgu220
Author-Name: Robert Shimer
Author-Person: psh9
Note: AP EFG
Number: 17876
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17876
File-URL: http://www.nber.org/papers/w17876.pdf
File-Format: application/pdf
Publication-Status: published as Veronica Guerrieri & Robert Shimer, 2014. "Dynamic Adverse Selection: A Theory of Illiquidity, Fire Sales, and Flight to Quality," American Economic Review, American Economic Association, vol. 104(7), pages 1875-1908, July.
Abstract: We develop a dynamic equilibrium model of asset markets affected by adverse selection. There exists a unique equilibrium where better assets trade at higher prices but in less liquid markets. Sellers of high-quality assets can separate because they are more willing to accept a lower trading probability. As a result, the emergence of adverse selection generates a drop in liquidity. It may also lead to a decline in the price-dividend ratio--a fire sale--and a flight to quality. Subsidies to purchasing assets may be Pareto improving and can reverse the fire sale and flight to quality.
Handle: RePEc:nbr:nberwo:17876
Template-Type: ReDIF-Paper 1.0
Title: Does the Current Account Still Matter?
Classification-JEL: F32; F34; F36
Author-Name: Maurice Obstfeld
Author-Person: pob13
Note: EFG IFM ITI
Number: 17877
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17877
File-URL: http://www.nber.org/papers/w17877.pdf
File-Format: application/pdf
Publication-Status: published as Maurice Obstfeld, 2012. "Does the Current Account Still Matter?," American Economic Review, American Economic Association, vol. 102(3), pages 1-23, May.
Abstract: Do global current account imbalances still matter in a world of deep international financial markets where gross two-way financial flows often dwarf the net flows measured in the current account? Contrary to a complete markets or "consenting adults" view of the world, large current account imbalances, while very possibly warranted by fundamentals and welcome, can also signal elevated macroeconomic and financial stresses, as was arguably the case in the mid-2000s. Furthermore, the increasingly big valuation changes in countries' net international investment positions, while potentially important in risk allocation, cannot be relied upon systematically to offset the changes in national wealth implied by the current account. The same factors that dictate careful attention to global imbalances also imply, however, that data on gross international financial flows and positions are central to any assessment of financial stability risks. The balance sheet mismatches of leveraged entities provide the most direct indicators of potential instability, much more so than do global imbalances, though the imbalances may well be a symptom that deeper financial threats are gathering.
Handle: RePEc:nbr:nberwo:17877
Template-Type: ReDIF-Paper 1.0
Title: Prices versus Quantities versus Bankable Quantities
Classification-JEL: Q52; Q54; Q58
Author-Name: Harrison Fell
Author-Person: pfe226
Author-Name: Ian A. MacKenzie
Author-Name: William A. Pizer
Author-Person: ppi108
Note: EEE
Number: 17878
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17878
File-URL: http://www.nber.org/papers/w17878.pdf
File-Format: application/pdf
Publication-Status: published as Fell, Harrison & MacKenzie, Ian A. & Pizer, William A., 2012. "Prices versus quantities versus bankable quantities," Resource and Energy Economics, Elsevier, vol. 34(4), pages 607-623.
Abstract: Quantity-based regulation with banking allows regulated firms to shift obligations across time in response to periods of unexpectedly high or low marginal costs. Despite its wide prevalence in existing and proposed emission trading programs, banking has received limited attention in past welfare analyses of policy choice under uncertainty. We address this gap with a model of banking behavior that captures two key constraints: uncertainty about the future from the firm's perspective and a limit on negative bank values (e.g., borrowing). We show conditions where banking provisions reduce price volatility and lower expected costs compared to quantity policies without banking. For plausible parameter values related to U.S. climate change policy, we find that bankable quantities produce behavior quite similar to price policies for about two decades and, during this period, improve welfare by about a $1 billion per year over fixed quantities.
Handle: RePEc:nbr:nberwo:17878
Template-Type: ReDIF-Paper 1.0
Title: Engines of Growth: Farm Tractors and Twentieth-Century U.S. Economic Welfare
Classification-JEL: N52; O30; Q16
Author-Name: Richard H. Steckel
Author-Person: pst352
Author-Name: William J. White
Note: DAE PR
Number: 17879
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17879
File-URL: http://www.nber.org/papers/w17879.pdf
File-Format: application/pdf
Abstract: The role of twentieth-century agricultural mechanization in changing the productivity, employment opportunities, and appearance of rural America has long been appreciated. Less attention has been paid to the impact made by farm tractors, combines, and associated equipment on the standard of living of the U.S. population as a whole. This paper demonstrates, through use of a detailed counterfactual analysis, that mechanization in the production of farm products increased GDP by more than 8.0 percent, using 1954 as a base year. This result suggests that studying individual innovations can significantly increase our understanding of the nature of economic growth.
Handle: RePEc:nbr:nberwo:17879
Template-Type: ReDIF-Paper 1.0
Title: Business Cycles and Household Formation: The Micro vs the Macro Labor Elasticity
Classification-JEL: E32; J10; J22
Author-Name: Sebastian Dyrda
Author-Person: pdy6
Author-Name: Greg Kaplan
Author-Person: pka660
Author-Name: José-Víctor Ríos-Rull
Author-Person: pri8
Note: EFG LS
Number: 17880
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17880
File-URL: http://www.nber.org/papers/w17880.pdf
File-Format: application/pdf
Abstract: We provide new evidence on the the cyclical behavior of household size in the United States from 1979 to 2010. During economic downturns, people live in larger households. This is mostly, but not entirely, driven by young people moving into or delaying departure from the parental home. We assess the importance of these cyclical movements for aggregate labor supply by building a model of endogenous household formation within a real business cycle structure. We use the model to measure how much more volatile are hours due to two mechanisms: (i) the presence of a large group of mostly young individuals with non-traditional living arrangements; and (ii) the possibility for these individuals to change their living situation in response to aggregate conditions. Our exercise assumes that older people living in stable households have a Frisch elasticity that is consistent with the micro evidence that is based on such people. The inclusion of people living in unstable households yields an implied aggregate, or macro, Frisch elasticity that is around 45% larger than the assumed micro elasticity.
Handle: RePEc:nbr:nberwo:17880
Template-Type: ReDIF-Paper 1.0
Title: Can Public Sector Wage Bills Be Reduced?
Classification-JEL: E62; H76; J45
Author-Name: Pïerre Cahuc
Author-Person: pca333
Author-Name: Stephane Carcillo
Note: PE
Number: 17881
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17881
File-URL: http://www.nber.org/papers/w17881.pdf
File-Format: application/pdf
Publication-Status: published as Can Public Sector Wage Bills Be Reduced?, Pierre Cahuc, Stéphane Carcillo. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: This paper analyzes the relation between public wage bills and public deficits in the OECD countries from 1995 to 2009. The paper shows that fiscal drift episodes, characterized by simultaneous increases in the GDP shares of public wage bills and budget deficits, are more frequent during booms and election years, but not during recessions, except for the 2009 exceptionally strong recession. The emergence of fiscal drift episodes during booms and election years is less frequent in countries with more transparent government, more freedom of the press, as well as in countries with presidential regimes and less union coverage. Inversely, fiscal tightening episodes, characterized by simultaneous decreases in the GDP shares of public wage bills and budget deficits, occur less often during booms than during recessions. The emergence of fiscal tightening episodes during recessions and election years is less frequent in countries with more union coverage.
Handle: RePEc:nbr:nberwo:17881
Template-Type: ReDIF-Paper 1.0
Title: Estimating Loan-to-Value and Foreclosure Behavior
Classification-JEL: C11; C23; C24; C43; R21; R3
Author-Name: Arthur Korteweg
Author-Name: Morten Sorensen
Note: PE
Number: 17882
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17882
File-URL: http://www.nber.org/papers/w17882.pdf
File-Format: application/pdf
Abstract: We develop and estimate a unified model of house prices, loan-to-value ratios (LTVs), and trade and foreclosure behavior. House prices are only observed for traded properties, and trades are endogenous, creating sample-selection problems for traditional estimators. We develop a Bayesian filtering procedure to recover the price path for each individual property and produce selection-corrected estimates of historical LTVs and foreclosure behavior, both showing large unprecedented changes since 2007. Our model reduces the index revision problem by nearly half, and has applications in economics and finance (e.g., pricing mortgage-backed securities).
Handle: RePEc:nbr:nberwo:17882
Template-Type: ReDIF-Paper 1.0
Title: Referrals: Peer Screening and Enforcement in a Consumer Credit Field Experiment
Classification-JEL: C93; D12; D14; D82; O12; O16
Author-Name: Gharad T. Bryan
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: CF LE LS
Number: 17883
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17883
File-URL: http://www.nber.org/papers/w17883.pdf
File-Format: application/pdf
Publication-Status: published as Gharad Bryan & Dean Karlan & Jonathan Zinman, 2015. "Referrals: Peer Screening and Enforcement in a Consumer Credit Field Experiment," American Economic Journal: Microeconomics, vol 7(3), pages 174-204.
Abstract: Empirical evidence on peer intermediation lags behind many years of lending practice and a large body of theory in which lenders use peers to mitigate adverse selection and moral hazard. Using a simple referral incentive mechanism under individual liability, we develop and implement a two-stage field experiment that permits separate identification of peer screening and enforcement effects. We allow for borrower heterogeneity in both ex-ante repayment type and ex-post susceptibility to social pressure. Our key contribution is how we deal with the interaction between these two sources of asymmetric information. Our method allows us to cleanly identify selection on the likelihood of repayment, selection on the susceptibility to social pressure, and loan enforcement. We estimate peer effects on loan repayment in our setting, and find no evidence of screening (albeit with an imprecisely estimated zero) and large effects on enforcement. We then discuss the potential utility and portability of the methodological innovation, for both science and for practice.
Handle: RePEc:nbr:nberwo:17883
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Rules: Theoretical Issues and Historical Experiences
Classification-JEL: E61; E62; H62; H77
Author-Name: Charles Wyplosz
Author-Person: pwy2
Note: IFM
Number: 17884
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17884
File-URL: http://www.nber.org/papers/w17884.pdf
File-Format: application/pdf
Publication-Status: published as Fiscal Rules: Theoretical Issues and Historical Experiences, Charles Wyplosz. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: Fiscal indiscipline is a feature of many developed countries. It is generally accepted that the source of the phenomenon lies in the common pool problem, the fact that recipients of public spending to fail to fully internalize the costs that taxpayers must assume. As a result, democratically elected governments are led to postpone tax collection, or to cut spending. Solving the fiscal discipline problem requires internalizing this externality. This calls for adequate institutions or for rules, or both. This paper reviews the various types of solutions that have been discussed in the literature and surveys a number of experiments. With the European debt crisis in mind, the paper pays particular attention to the common pool problem that emerges in federal states. The main conclusions are the following. First, rules are unlikely to exist unless they come with supporting institutions. Second, fiscal institutions are neither necessary nor sufficient to achieve fiscal discipline, but they help. Third, because institutions must bind the policymakers without violating the democratic requirement that elected officials have the power to decide on budgets, effective arrangements are those that give institutions the authority to apply legal rules or to act as official watchdogs.
Handle: RePEc:nbr:nberwo:17884
Template-Type: ReDIF-Paper 1.0
Title: The Barnett Critique After Three Decades: A New Keynesian Analysis
Classification-JEL: C43; E32; E41; E52
Author-Name: Michael T. Belongia
Author-Name: Peter N. Ireland
Author-Person: pir1
Note: ME
Number: 17885
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17885
File-URL: http://www.nber.org/papers/w17885.pdf
File-Format: application/pdf
Publication-Status: published as “The Barnett Critique After Three Decades: A New Keynesian Analysis” (co-authored with Michael T. Belongia), Journal of Econometrics, forthcoming.
Abstract: This paper extends a New Keynesian model to include roles for currency and deposits as competing sources of liquidity services demanded by households. It shows that, both qualitatively and quantitatively, the Barnett critique applies: While a Divisia aggregate of monetary services tracks the true monetary aggregate almost perfectly, a simple-sum measure often behaves quite differently. The model also shows that movements in both quantity and price indices for monetary services correlate strongly with movements in output following a variety of shocks. Finally, the analysis characterizes the optimal monetary policy response to disturbances that originate in the financial sector.
Handle: RePEc:nbr:nberwo:17885
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneity in Target-Date Funds: Optimal Risk-Taking or Risk Matching?
Classification-JEL: G11; G18; G23
Author-Name: Pierluigi Balduzzi
Author-Name: Jonathan Reuter
Author-Person: pre328
Note: AG IO
Number: 17886
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17886
File-URL: http://www.nber.org/papers/w17886.pdf
File-Format: application/pdf
Publication-Status: published as Balduzzi, Pierluigi, and Jonathan Reuter, 2019, “Heterogeneity in Target Date Funds: Strategic Risk-taking or Risk Matching?” Review of Financial Studies 32 (1): 300-337.
Abstract: Following the Pension Protection Act of 2006, there was a sharp increase in the use of TDFs as default investment options in defined contribution retirement plans. We document large differences in realized TDF returns and risk profiles, even for funds with the same target retirement date. Using fund-level data, we find evidence that this heterogeneity reflects optimal risk-taking by fund families with low market share, especially those entering the market after 2006. Using plan-level data, we find little evidence that 401(k) plan sponsors match the risk profile of the TDFs in their plans to the risks of their companies.
Handle: RePEc:nbr:nberwo:17886
Template-Type: ReDIF-Paper 1.0
Title: The Role of Age in Jury Selection and Trial Outcomes
Classification-JEL: J16; K0; K14; K4; K41
Author-Name: Shamena Anwar
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Randi Hjalmarsson
Author-Person: phj5
Note: AG LE LS PE
Number: 17887
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17887
File-URL: http://www.nber.org/papers/w17887.pdf
File-Format: application/pdf
Publication-Status: published as Shamena Anwar, Patrick Bayer and Randi Hjalmarsson, (2014) “The Role of Age in Jury Selection and Trial Outcomes,” forthcoming, Journal of Law and Economics.
Abstract: This paper uses data from 700+ felony trials in Sarasota and Lake Counties in Florida from 2000-2010 to examine the role of age in jury selection and trial outcomes. The results imply that prosecutors are more likely to use their peremptory challenges to exclude younger members of the jury pool, while defense attorneys exclude older potential jurors. To examine the causal impact of age on trial outcomes, the paper employs a research design that isolates the effect of the random variation in the age composition of the pool of eligible jurors called for jury duty. Consistent with the jury selection patterns, the empirical evidence implies that older jurors are significantly more likely to convict. Results are robust to the inclusion of broad set of controls including county, time, and judge fixed effects. These findings imply that many cases are decided differently for reasons that are completely independent of the true nature of the evidence in the case - i.e., that there is substantial randomness in the application of criminal justice.
Handle: RePEc:nbr:nberwo:17887
Template-Type: ReDIF-Paper 1.0
Title: Why Don't Women Patent?
Classification-JEL: J7; O31
Author-Name: Jennifer Hunt
Author-Person: phu9
Author-Name: Jean-Philippe Garant
Author-Name: Hannah Herman
Author-Name: David J. Munroe
Note: LS PR
Number: 17888
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17888
File-URL: http://www.nber.org/papers/w17888.pdf
File-Format: application/pdf
Publication-Status: published as Why are women underrepresented amongst patentees? Original Research Article Research Policy, Volume 42, Issue 4, May 2013, Pages 831-843 Jennifer Hunt, Jean-Philippe Garant, Hannah Herman, David J. Munroe
Abstract: We investigate women's underrepresentation among holders of commercialized patents: only 5.5% of holders of such patents are female. Using the National Survey of College Graduates 2003, we find only 7% of the gap is accounted for by women's lower probability of holding any science or engineering degree, because women with such a degree are scarcely more likely to patent than women without. Differences among those without a science or engineering degree account for 15%, while 78% is accounted for by differences among those with a science or engineering degree. For the latter group, we find that women's underrepresentation in engineering and in jobs involving development and design explain much of the gap; closing it would increase U.S. GDP per capita by 2.7%.
Handle: RePEc:nbr:nberwo:17888
Template-Type: ReDIF-Paper 1.0
Title: Vertical Integration and Market Structure
Classification-JEL: D23; L14; L22; M20
Author-Name: Timothy F. Bresnahan
Author-Person: pbr34
Author-Name: Jonathan D. Levin
Author-Person: ple318
Note: IO PR CF
Number: 17889
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17889
File-URL: http://www.nber.org/papers/w17889.pdf
File-Format: application/pdf
Publication-Status: published as Vertical Integration and Market Structure,with Timothy Bresnahan, in R. Gibbons and D.J. Roberts, ed. Handbook of Organizational Economics, Princeton University Press, 2012.
Abstract: Contractual theories of vertical integration derive firm boundaries as an efficient response to market transaction costs. These theories predict a relationship between underlying features of transactions and observed integration decisions. There has been some progress in testing these predictions, but less progress in quantifying their importance. One difficulty is that empirical applications often must consider firm structure together with industry structure. Research in industrial organization frequently has adopted this perspective, emphasizing how scale and scope economies, and strategic considerations, influence patterns of industry integration. But this research has paid less attention to contractual or organizational details, so that these two major lines of research on vertical integration have proceeded in parallel with only rare intersection. We discuss the value of combining different viewpoints from organizational economics and industrial organization.
Handle: RePEc:nbr:nberwo:17889
Template-Type: ReDIF-Paper 1.0
Title: Approximating High-Dimensional Dynamic Models: Sieve Value Function Iteration
Classification-JEL: C13; C14; C54; C61; C63; C73
Author-Name: Peter Arcidiacono
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Federico A. Bugni
Author-Person: pbu197
Author-Name: Jonathan James
Note: IO LS PE TWP
Number: 17890
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17890
File-URL: http://www.nber.org/papers/w17890.pdf
File-Format: application/pdf
Publication-Status: published as "Approximating High Dimensional Dynamic Models: Sieve Value Function Iteration" with Pat Bayer, Federico Bugni, and Jon James, Advances in Econometrics, Vol. 31 (December 2013), 45-96.
Abstract: Many dynamic problems in economics are characterized by large state spaces which make both computing and estimating the model infeasible. We introduce a method for approximating the value function of high-dimensional dynamic models based on sieves and establish results for the: (a) consistency, (b) rates of convergence, and (c) bounds on the error of approximation. We embed this method for approximating the solution to the dynamic problem within an estimation routine and prove that it provides consistent estimates of the model's parameters. We provide Monte Carlo evidence that our method can successfully be used to approximate models that would otherwise be infeasible to compute, suggesting that these techniques may substantially broaden the class of models that can be solved and estimated.
Handle: RePEc:nbr:nberwo:17890
Template-Type: ReDIF-Paper 1.0
Title: Gasoline Taxes and Consumer Behavior
Classification-JEL: H3; Q4; Q5
Author-Name: Shanjun Li
Author-Person: pli535
Author-Name: Joshua Linn
Author-Person: pli288
Author-Name: Erich Muehlegger
Author-Person: pmu479
Note: EEE IO PE
Number: 17891
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17891
File-URL: http://www.nber.org/papers/w17891.pdf
File-Format: application/pdf
Publication-Status: published as Gasoline Taxes and Consumer Behavior (with Shanjun Li and Erich Muehlegger). American Economic Journal: Economic Policy, forthcoming.
Abstract: Gasoline taxes can be employed to correct externalities from automobile use and to raise government revenue. Our understanding of the optimal gasoline tax and the efficacy of existing taxes is largely based on empirical analysis of consumer responses to gasoline price changes. In this paper, we directly examine how gasoline taxes affect gasoline consumption as distinct from tax-inclusive retail gasoline prices. We find robust evidence that consumers respond more strongly to gasoline tax changes under a variety of model specifications. We discuss two potential reasons for our main findings as well as their implications.
Handle: RePEc:nbr:nberwo:17891
Template-Type: ReDIF-Paper 1.0
Title: Should Aid Reward Performance? Evidence from a Field Experiment on Health and Education in Indonesia
Classification-JEL: I15; I25; O38
Author-Name: Benjamin A. Olken
Author-Person: pol170
Author-Name: Junko Onishi
Author-Name: Susan Wong
Note: CH ED EH PE
Number: 17892
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17892
File-URL: http://www.nber.org/papers/w17892.pdf
File-Format: application/pdf
Publication-Status: published as “Should Aid Reward Performance? Evidence from a field experiment on health and education in Indonesia” (with Junko Onishi and Susan Wong). American Economic Journal: Applied Economics, vol. 6, no. 4, October 2014 (pp. 1-34).
Abstract: This paper reports an experiment in over 3,000 Indonesian villages designed to test the role of performance incentives in improving the efficacy of aid programs. Villages in a randomly-chosen one-third of subdistricts received a block grant to improve 12 maternal and child health and education indicators, with the size of the subsequent year's block grant depending on performance relative to other villages in the subdistrict. Villages in remaining subdistricts were randomly assigned to either an otherwise identical block grant program with no financial link to performance, or to a pure control group. We find that the incentivized villages performed better on health than the non-incentivized villages, particularly in less developed areas, but found no impact of incentives on education. We find no evidence of negative spillovers from the incentives to untargeted outcomes, and no evidence that villagers manipulated scores. The relative performance design was crucial in ensuring that incentives did not result in a net transfer of funds toward richer areas. Incentives led to what appear to be more efficient spending of block grants, and led to an increase in labor from health providers, who are partially paid fee-for-service, but not teachers. On net, between 50-75% of the total impact of the block grant program on health indicators can be attributed to the performance incentives.
Handle: RePEc:nbr:nberwo:17892
Template-Type: ReDIF-Paper 1.0
Title: Does Universal Coverage Improve Health? The Massachusetts Experience
Classification-JEL: I12; I13; I18
Author-Name: Charles J. Courtemanche
Author-Person: pco421
Author-Name: Daniela Zapata
Note: EH PE
Number: 17893
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17893
File-URL: http://www.nber.org/papers/w17893.pdf
File-Format: application/pdf
Publication-Status: published as Charles J. Courtemanche & Daniela Zapata, 2014. "Does Universal Coverage Improve Health? The Massachusetts Experience," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 33(1), pages 36-69, 01.
Abstract: In 2006, Massachusetts passed health care reform legislation designed to achieve nearly universal coverage through a combination of insurance market reforms, mandates, and subsidies that later served as the model for national reform. Using data from the Behavioral Risk Factor Surveillance System, we provide evidence that health care reform in Massachusetts led to better overall self-assessed health. Various robustness checks and placebo tests support a causal interpretation of the results. We also document improvements in several determinants of overall health: physical health, mental health, functional limitations, joint disorders, and body mass index. Next, we show that the effects on overall health were strongest among those with low incomes, non-whites, near-elderly adults, and women. Finally, we use the reform to instrument for health insurance and estimate a sizeable impact of coverage on health.
Handle: RePEc:nbr:nberwo:17893
Template-Type: ReDIF-Paper 1.0
Title: Central Banks and Gold Puzzles
Classification-JEL: E58; F31; F33
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Kenta Inoue
Note: IFM ITI
Number: 17894
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17894
File-URL: http://www.nber.org/papers/w17894.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Inoue, Kenta, 2013. "Central banks and gold puzzles," Journal of the Japanese and International Economies, Elsevier, vol. 28(C), pages 69-90.
Abstract: We study the curious patterns of gold holding and trading by central banks during 1979-2010. With the exception of several discrete step adjustments, central banks keep maintaining passive stocks of gold, independently of the patterns of the real price of gold. We also observe the synchronization of gold sales by central banks, as most reduced their positions in tandem, and their tendency to report international reserves valuation excluding gold positions. Our analysis suggests that the intensity of holding gold is correlated with 'global power' - by the history of being a past empire, or by the sheer size of a country, especially by countries that are or were the suppliers of key currencies. These results are consistent with the view that central bank's gold position signals economic might, and that gold retains the stature of a 'safe haven' asset at times of global turbulence. The under-reporting of gold positions in the international reserve/GDP statistics is consistent with loss aversion, wishing to maintain a sizeable gold position, while minimizing the criticism that may occur at a time when the price of gold declines.
Handle: RePEc:nbr:nberwo:17894
Template-Type: ReDIF-Paper 1.0
Title: Search Fatigue
Classification-JEL: D43; D83
Author-Name: Bruce Ian Carlin
Author-Name: Florian Ederer
Author-Person: ped10
Note: CF IO POL
Number: 17895
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17895
File-URL: http://www.nber.org/papers/w17895.pdf
File-Format: application/pdf
Publication-Status: published as Bruce I. Carlin & Florian Ederer, 2019. "Search Fatigue," Review of Industrial Organization, vol 54(3), pages 485-508.
Abstract: Consumer search is not only costly but also tiring. We characterize the intertemporal effects that search fatigue has on oligopoly prices, product proliferation, and the provision of consumer assistance (i.e., advice). These effects vary based on whether search is all-or-nothing or sequential in nature, whether learning takes place, and whether consumers exhibit brand loyalty. We perform welfare analysis and highlight the novel empirical implications that our analysis generates.
Handle: RePEc:nbr:nberwo:17895
Template-Type: ReDIF-Paper 1.0
Title: Does Inequality Lead to a Financial Crisis?
Classification-JEL: E51; N1
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Christopher M. Meissner
Author-Person: pme45
Note: DAE ME
Number: 17896
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17896
File-URL: http://www.nber.org/papers/w17896.pdf
File-Format: application/pdf
Publication-Status: published as Bordo, Michael D. & Meissner, Christopher M., 2012. "Does inequality lead to a financial crisis?," Journal of International Money and Finance, Elsevier, vol. 31(8), pages 2147-2161.
Abstract: The recent global crisis has sparked interest in the relationship between income inequality, credit booms, and financial crises. Rajan (2010) and Kumhof and Rancière (2011) propose that rising inequality led to a credit boom and eventually to a financial crisis in the US in the first decade of the 21st century as it did in the 1920s. Data from 14 advanced countries between 1920 and 2000 suggest these are not general relationships. Credit booms heighten the probability of a banking crisis, but we find no evidence that a rise in top income shares leads to credit booms. Instead, low interest rates and economic expansions are the only two robust determinants of credit booms in our data set. Anecdotal evidence from US experience in the 1920s and in the years up to 2007 and from other countries does not support the inequality, credit, crisis nexus. Rather, it points back to a familiar boom-bust pattern of declines in interest rates, strong growth, rising credit, asset price booms and crises.
Handle: RePEc:nbr:nberwo:17896
Template-Type: ReDIF-Paper 1.0
Title: On the Road: Access to Transportation Infrastructure and Economic Growth in China
Classification-JEL: D2; O11; O4; R4
Author-Name: Abhijit Banerjee
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Nancy Qian
Author-Person: pqi25
Note: EFG PR
Number: 17897
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17897
File-URL: http://www.nber.org/papers/w17897.pdf
File-Format: application/pdf
Publication-Status: published as Abhijit Banerjee & Esther Duflo & Nancy Qian, 2020. "On the Road: Access to Transportation Infrastructure and Economic Growth in China," Journal of Development Economics, .
Abstract: This paper estimates the effect of access to transportation networks on regional economic outcomes in China over a twenty-period of rapid income growth. It addresses the problem of the endogenous placement of networks by exploiting the fact that these networks tend to connect historical cities. Our results show that proximity to transportation networks have a moderate positive causal effect on per capita GDP levels across sectors, but no effect on per capita GDP growth. We provide a simple theoretical framework with empirically testable predictions to interpret our results. We argue that our results are consistent with factor mobility playing an important role in determining the economic benefits of infrastructure development.
Handle: RePEc:nbr:nberwo:17897
Template-Type: ReDIF-Paper 1.0
Title: Optimal Regulation in the Presence of Reputation Concerns
Classification-JEL: D21; D82; L15; L51
Author-Name: Andrew Atkeson
Author-Person: pat52
Author-Name: Christian Hellwig
Author-Person: phe110
Author-Name: Guillermo Ordonez
Author-Person: por40
Note: EFG IO
Number: 17898
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17898
File-URL: http://www.nber.org/papers/w17898.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Atkeson & Christian Hellwig & Guillermo Ordoñez, 2015. "Optimal Regulation in the Presence of Reputation Concerns," The Quarterly Journal of Economics, Oxford University Press, vol. 130(1), pages 415-464.
Abstract: We study a market with free entry and exit of firms who can produce high-quality output by making a costly but efficient initial unobservable investment. If no learning about this investment occurs, an extreme "lemons problem" develops, no firm invests, and the market shuts down. Learning introduces reputation incentives such that a fraction of entrants do invest. If the market operates with spot prices, simple regulation can enhance the role of reputation to induce investment, thus mitigating the "lemons problem" and improving welfare.
Handle: RePEc:nbr:nberwo:17898
Template-Type: ReDIF-Paper 1.0
Title: Why Do Life Insurance Policyholders Lapse? The Roles of Income, Health and Bequest Motive Shocks
Classification-JEL: G22; H31; L11
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Edward Kung
Note: IO PE
Number: 17899
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17899
File-URL: http://www.nber.org/papers/w17899.pdf
File-Format: application/pdf
Publication-Status: published as Hanming Fang & Edward Kung, 2021. "Why do life insurance policyholders lapse? The roles of income, health, and bequest motive shocks," Journal of Risk and Insurance, vol 88(4), pages 937-970.
Abstract: Previous research has shown that the reasons for lapsation have important implications regarding the effects of the emerging life settlement market on consumer welfare. We present and empirically implement a dynamic discrete choice model of life insurance decisions to assess the importance of various factors in explaining life insurance lapsations. In order to explain some key features in the data, our model incorporates serially correlated unobservable state variables which we deal with using posterior distributions of the unobservables simulated from Sequential Monte Carlo (SMC) method. We estimate the model using the life insurance holding information from the Health and Retirement Study (HRS) data. Counterfactual simulations using the estimates of our model suggest that a large fraction of life insurance lapsations are driven by i.i.d choice specific shocks, particularly when policyholders are relatively young. But as the remaining policyholders get older, the role of such i.i.d. shocks gets smaller, and more of their lapsations are driven either by income, health or bequest motive shocks. Income and health shocks are relatively more important than bequest motive shocks in explaining lapsations when policyholders are young, but as they age, the bequest motive shocks play a more important role. We also suggest the implications of these findings regarding the effects of the emerging life settlement market on consumer welfare.
Handle: RePEc:nbr:nberwo:17899
Template-Type: ReDIF-Paper 1.0
Title: Ambiguous Business Cycles
Classification-JEL: E32
Author-Name: Cosmin Ilut
Author-Person: pil25
Author-Name: Martin Schneider
Author-Person: psc69
Note: EFG ME
Number: 17900
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17900
File-URL: http://www.nber.org/papers/w17900.pdf
File-Format: application/pdf
Publication-Status: published as \Ambiguous Business Cycles", with Martin Schneider, American Economic Review, forthcoming
Abstract: This paper considers business cycle models with agents who dislike both risk and ambiguity (Knightian uncertainty). Ambiguity aversion is described by recursive multiple priors preferences that capture agents' lack of confidence in probability assessments. While modeling changes in risk typically requires higher-order approximations, changes in ambiguity in our models work like changes in conditional means. Our models thus allow for uncertainty shocks but can still be solved and estimated using first-order approximations. In our estimated medium-scale DSGE model, a loss of confidence about productivity works like 'unrealized' bad news. Time-varying confidence emerges as a major source of business cycle fluctuations.
Handle: RePEc:nbr:nberwo:17900
Template-Type: ReDIF-Paper 1.0
Title: Geographic and Racial Variation in Premature Mortality in the US: Analyzing the Disparities
Classification-JEL: I0; I00; I10; I14; I3; I31
Author-Name: Mark R. Cullen
Author-Name: Clint Cummins
Author-Name: Victor R. Fuchs
Author-Person: pfu157
Note: AG EH
Number: 17901
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17901
File-URL: http://www.nber.org/papers/w17901.pdf
File-Format: application/pdf
Publication-Status: published as Geographic and Racial Variation in Premature Mortality in the U.S.: Analyzing the Disparities Mark R. Cullen, Clint Cummins, Victor R. Fuchs Research Article | published 17 Apr 2012 | PLOS ONE 10.1371/journal.pone.0032930
Abstract: Life expectancy at birth, estimated from United States period life tables, has been shown to vary systematically and widely by region and race. We use the same tables to estimate the probability of survival from birth to age 70 (S70), a measure of mortality more sensitive to disparities and more reliably calculated for small populations, to describe the variation and identify its sources in greater detail to assess the patterns of this variation. Examination of the unadjusted probability of S70 for each US county with a sufficient population of whites and blacks reveals large geographic differences for each race-sex group. For example, white males born in the ten percent healthiest counties have a 77 percent probability of survival to age 70, but only a 61 percent chance if born in the ten percent least healthy counties. Similar geographical disparities face white women and blacks of each sex. Moreover, within each county, large differences in S70 prevail between blacks and whites, on average 17 percentage points for men and 12 percentage points for women. In linear regressions for each race-sex group, nearly all of the geographic variation is accounted for by a common set of 22 socio-economic and environmental variables, selected for previously suspected impact on mortality; R2 ranges from 0.86 for white males to 0.72 for black females. Analysis of black-white survival chances within each county reveals that the same variables account for most of the race gap in S70 as well. When actual white male values for each explanatory variable are substituted for black in the black male prediction equation to assess the role explanatory variables play in the black-white survival difference, residual black-white differences at the county level shrink markedly to a mean of -2.4% (+/-2.4); for women the mean difference is -3.7 % (+/-2.3).
Handle: RePEc:nbr:nberwo:17901
Template-Type: ReDIF-Paper 1.0
Title: An Exploration of Luxury Hotels in Tanzania
Classification-JEL: L1; L89
Author-Name: Diego A. Comin
Author-Person: pco55
Note: CF
Number: 17902
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17902
File-URL: http://www.nber.org/papers/w17902.pdf
File-Format: application/pdf
Abstract: Tourism is a tradable service activity that could allow some African countries to generate significant growth. Tanzania, given its unique natural assets, is an ideal candidate. However, despite being so richly endowed in touristic resources, Tanzania receives very few tourists and revenues from tourism. To explore the determinants of this performance, I conduct an international survey for upscale hotel managers to measure supply-side constraints on the operation of hotels. The survey reveals that hotels in the safari area in Tanzania are more expensive than comparable hotels, and that this difference in price cannot be accounted for by differences in supply constraints. Further, using cross-country panel data, I show that upscale hotel prices account for a significant fraction of cross-country differences in tourists.
Handle: RePEc:nbr:nberwo:17902
Template-Type: ReDIF-Paper 1.0
Title: Perceptions and Misperceptions of Fiscal Inflation
Classification-JEL: E31; E52; E62; E63
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Todd B. Walker
Author-Person: pwa179
Note: EFG
Number: 17903
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17903
File-URL: http://www.nber.org/papers/w17903.pdf
File-Format: application/pdf
Publication-Status: published as Perceptions and Misperceptions of Fiscal Inflation, Eric M. Leeper, Todd B. Walker. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: The Great Recession and worldwide financial crisis have exploded fiscal imbalances and brought fiscal policy and inflation to the forefront of policy concerns. Those concerns will only grow as aging populations increase demands on government expenditures in coming decades. It is widely perceived that fiscal policy is inflationary if and only if it leads the central bank to print new currency to monetize deficits. Monetization can be inflationary. But it is a misperception that this is the only channel for fiscal inflations. Nominal bonds, the predominant form of government debt in advanced economies, derive their value from expected future nominal primary surpluses and money creation; changes in the price level can align the market value of debt to its expected real backing. This introduces a fresh channel, not requiring explicit monetization, through which fiscal deficits directly affect inflation. The paper describes various ways in which fiscal policy can directly affect inflation and explains why these fiscal effects are difficult to detect in time series data.
Handle: RePEc:nbr:nberwo:17903
Template-Type: ReDIF-Paper 1.0
Title: Status, Marriage, and Managers' Attitudes To Risk
Classification-JEL: D92; G02; G32
Author-Name: Nikolai Roussanov
Author-Person: pro355
Author-Name: Pavel G. Savor
Author-Person: psa1110
Note: AP CF LE PR
Number: 17904
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17904
File-URL: http://www.nber.org/papers/w17904.pdf
File-Format: application/pdf
Publication-Status: published as "Marriage and Managers' Attitudes to Risk," Nikolai Roussanov and Pavel Savor, current draft: December 2013. Management Science, Volume 60, Issue 10, October 2014
Abstract: Status concerns can drive risk-taking behavior by affecting the payoff to a marginal dollar of wealth. If status concerns arise endogenously due to competition in the marriage market, then unmarried individuals should take greater risks. We test this hypothesis by studying corporate CEOs. We find that single CEOs are associated with firms exhibiting higher stock return volatility, pursue more aggressive investment policies, and are not affected by increases in idiosyncratic risk. These effects are weaker for older CEOs. Our results also hold when we use variation in divorce laws across states to instrument for CEO marital status.
Handle: RePEc:nbr:nberwo:17904
Template-Type: ReDIF-Paper 1.0
Title: The Macroeconomics of Microfinance
Classification-JEL: D91; D92; E44; O11
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Joseph P. Kaboski
Author-Person: pka175
Author-Name: Yongseok Shin
Author-Person: psh383
Note: EFG
Number: 17905
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17905
File-URL: http://www.nber.org/papers/w17905.pdf
File-Format: application/pdf
Publication-Status: published as Francisco J Buera & Joseph P Kaboski & Yongseok Shin, 2021. "The Macroeconomics of Microfinance," The Review of Economic Studies, vol 88(1), pages 126-161.
Abstract: We provide a quantitative evaluation of the aggregate and distributional impact of microfinance or credit programs targeted toward small businesses. We find that the redistributive impact of microfinance is stronger in general equilibrium than in partial equilibrium, but the impact on aggregate output and capital is smaller in general equilibrium. Aggregate total factor productivity (TFP) increases with microfinance in general equilibrium but decreases in partial equilibrium. When general equilibrium effects are accounted for, scaling up the microfinance program will have only a small impact on per-capita income, because the increase in TFP is counterbalanced by lower capital accumulation resulting from the redistribution of income from high-savers to low-savers. Nevertheless, the vast majority of the population will be positively affected by microfinance through the increase in equilibrium wages.
Handle: RePEc:nbr:nberwo:17905
Template-Type: ReDIF-Paper 1.0
Title: Posterior Predictive Analysis for Evaluating DSGE Models
Classification-JEL: C52; E1; E32; E37
Author-Name: Jon Faust
Author-Person: pfa9
Author-Name: Abhishek Gupta
Author-Person: pgu326
Note: IFM ME
Number: 17906
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17906
File-URL: http://www.nber.org/papers/w17906.pdf
File-Format: application/pdf
Abstract: While dynamic stochastic general equilibrium (DSGE) models for monetary policy analysis have come a long way, there is considerable difference of opinion over the role these models should play in the policy process. The paper develops three main points about assessing the value of these models. First, we document that DSGE models continue to have aspects of crude approximation and omission. This motivates the need for tools to reveal the strengths and weaknesses of the models--both to direct development efforts and to inform how best to use the current flawed models. Second, posterior predictive analysis provides a useful and economical tool for finding and communicating strengths and weaknesses. In particular, we adapt a form of discrepancy analysis as proposed by Gelman, et al. (1996). Third, we provide a nonstandard defense of posterior predictive analysis in the DSGE context against long-standing objections. We use the iconic Smets-Wouters model for illustrative purposes, showing a number of heretofore unrecognized properties that may be important from a policymaking perspective.
Handle: RePEc:nbr:nberwo:17906
Template-Type: ReDIF-Paper 1.0
Title: International Portfolio Diversification and Multilateral Effects of Correlations
Classification-JEL: F36; F41; G11; G15
Author-Name: Paul R. Bergin
Author-Person: pbe249
Author-Name: Ju Hyun Pyun
Author-Person: ppy10
Note: IFM
Number: 17907
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17907
File-URL: http://www.nber.org/papers/w17907.pdf
File-Format: application/pdf
Publication-Status: published as Bergin, Paul R. & Pyun, Ju Hyun, 2016. "International portfolio diversification and multilateral effects of correlations," Journal of International Money and Finance, Elsevier, vol. 62(C), pages 52-71.
Abstract: Not only are investors biased toward home assets, but when they do invest abroad, they appear to favor countries with returns more correlated with home assets. Often attributed to a preference for familiarity, this ‘correlation puzzle’ further reduces effective diversification. However, a multi-country DSGE model of portfolio choice makes clear that the effects of a bilateral stock return correlation must be studied in the context of the full covariance structure. For example, the attractiveness of a foreign country as a hedge depends upon its hedging potential relative to other potential destination countries. This paper develops a new empirical approach based upon a multi-country theoretical model that controls for the full covariance structure in a theoretically rigorous yet tractable manner. Estimation under this approach overturns the correlation puzzle, and finds that international investors do seek the diversification benefits of low cross-country correlations as theory would predict. Since covariances are central to modern theories of portfolio choice, this empirical methodology should be useful also for other applications.
Handle: RePEc:nbr:nberwo:17907
Template-Type: ReDIF-Paper 1.0
Title: Exit from a Monetary Union through Euroization: Discipline without Chaos
Classification-JEL: E02; E58; E61; E63; F33; F34; F36
Author-Name: Russell Cooper
Note: EFG
Number: 17908
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17908
File-URL: http://www.nber.org/papers/w17908.pdf
File-Format: application/pdf
Abstract: This paper studies the role of exit from a monetary union during a debt crisis. A monetary union, such as the European Monetary Union, needs to establish a procedure for exit as a tool to cope with debt default. The paper studies various forms of exit and argues that "Euroization" is both a credible and effective means of punishment for countries in default.
Handle: RePEc:nbr:nberwo:17908
Template-Type: ReDIF-Paper 1.0
Title: Financial Regulation in General Equilibrium
Classification-JEL: G38; L51
Author-Name: Charles A.E. Goodhart
Author-Name: Anil K. Kashyap
Author-Person: pka35
Author-Name: Dimitrios P. Tsomocos
Author-Person: pts27
Author-Name: Alexandros P. Vardoulakis
Note: ME CF EFG
Number: 17909
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17909
File-URL: http://www.nber.org/papers/w17909.pdf
File-Format: application/pdf
Abstract: This paper explores how different types of financial regulation could combat many of the phenomena that were observed in the financial crisis of 2007 to 2009. The primary contribution is the introduction of a model that includes both a banking system and a "shadow banking system" that each help households finance their expenditures. Households sometimes choose to default on their loans, and when they do this triggers forced selling by the shadow banks. Because the forced selling comes when net worth of potential buyers is low, the ensuing price dynamics can be described as a fire sale. The proposed framework can assess five different policy options that officials have advocated for combating defaults, credit crunches and fire sales, namely: limits on loan to value ratios, capital requirements for banks, liquidity coverage ratios for banks, dynamic loan loss provisioning for banks, and margin requirements on repurchase agreements used by shadow banks. The paper aims to develop some general intuition about the interactions between the tools and to determine whether they act as complements and substitutes.
Handle: RePEc:nbr:nberwo:17909
Template-Type: ReDIF-Paper 1.0
Title: Hiring, Churn and the Business Cycle
Classification-JEL: J21; J63
Author-Name: Edward P. Lazear
Author-Person: pla64
Author-Name: James R. Spletzer
Author-Person: psp146
Note: LS
Number: 17910
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17910
File-URL: http://www.nber.org/papers/w17910.pdf
File-Format: application/pdf
Publication-Status: published as “Hiring, Churn, and the Business Cycle” (with Edward P. Lazear). American Economic Review Papers and Proceedings, Vol. 102, No 3, May 2012, pp. 575-579.
Abstract: Churn, defined as replacing departing workers with new ones as workers move to more productive uses, is an important feature of labor dynamics. The majority of hiring and separation reflects churn rather than hiring for expansion or separation for contraction. Using the JOLTS data, we show that churn decreased significantly during the most recent recession with almost four-fifths of the decline in hiring reflecting decreases in churn. Reductions in churn have costs because they reflect a reduction in labor movement to higher valued uses. We estimate the cost of reduced churn to be $208 billion. On an annual basis, this amounts to about .4% of GDP for a period of 3 1/2 years.
Handle: RePEc:nbr:nberwo:17910
Template-Type: ReDIF-Paper 1.0
Title: Target-Date Funds in 401(k) Retirement Plans
Classification-JEL: G02; G11; G2; G23; J14; J26
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Stephen Utkus
Note: AG LS PE
Number: 17911
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17911
File-URL: http://www.nber.org/papers/w17911.pdf
File-Format: application/pdf
Abstract: Individual responsibility for portfolio construction is a central theme for defined contribution pensions, yet the rise of target-date funds is shifting investment decisions from workers back to employers. A complex choice architecture including automatic enrollment, reenrollment, and fund mapping, is increasing the number of participants defaulting into employer-selected target-date funds. At the same time, portfolios of non-defaulted participants undergo sizeable changes, with equity share ratios widening by over 40 percent points between younger/older participants. Among active decision-makers, these funds act as a form of implicit employer-provided lifecycle investment advice. More broadly, our findings highlight malleable preferences among retirement investors and a demand for default-based guidance or simplified advice for households facing complex choices.
Handle: RePEc:nbr:nberwo:17911
Template-Type: ReDIF-Paper 1.0
Title: Improving Police Performance in Rajasthan, India: Experimental Evidence on Incentives, Managerial Autonomy and Training
Classification-JEL: H11; H76; K42; O22
Author-Name: Abhijit Banerjee
Author-Name: Raghabendra Chattopadhyay
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Daniel Keniston
Author-Name: Nina Singh
Note: LE POL
Number: 17912
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17912
File-URL: http://www.nber.org/papers/w17912.pdf
File-Format: application/pdf
Publication-Status: published as Abhijit Banerjee & Raghabendra Chattopadhyay & Esther Duflo & Daniel Keniston & Nina Singh, 2021. "Improving Police Performance in Rajasthan, India: Experimental Evidence on Incentives, Managerial Autonomy, and Training," American Economic Journal: Economic Policy, American Economic Association, vol. 13(1), pages 36-66, February.
Abstract: The role of good management practices in organizations has recently been emphasized. Do the same principles also apply in government organizations, even the most bureaucratic and hierarchical of them? And can skilled, motivated managers identify how to improve these practices, or is there a role for outsiders to help them in this task? Two unique large-scale randomized trials conducted in collaboration with the state police of Rajasthan, India sought to increase police efficiency and improve interactions with the public. In a sample of 162 police stations serving almost 8 million people, the first experiment tested four interventions recommended by police reform panels: limitations of arbitrary transfers, rotation of duty assignments and days off, increased community involvement, and on-duty training. Field experience motivated a novel fifth intervention: “decoy” visits by field officers posing as citizens attempting to register cases, which gave constables incentives to behave more professionally. Only two of these, training and decoy visits, had robust impacts. The other three, which would have reduced middle managers’ autonomy, were poorly implemented and ineffective. Building upon these findings, we designed a second experiment that provided explicit incentives to police officers to carry out sobriety traffic checkpoints and did not rely on middle managers. Linking good performance with the promise of a transfer from the reserve barracks to a desirable police station posting, these incentives worked within existing organizational constraints and had very large effects on performance.
Handle: RePEc:nbr:nberwo:17912
Template-Type: ReDIF-Paper 1.0
Title: 'Fiscal Devaluation' and Fiscal Consolidation: The VAT in Troubled Times
Classification-JEL: F32; H20
Author-Name: Ruud de Mooij
Author-Person: pmo473
Author-Name: Michael Keen
Author-Person: pke22
Note: IFM ITI PE
Number: 17913
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17913
File-URL: http://www.nber.org/papers/w17913.pdf
File-Format: application/pdf
Publication-Status: published as "Fiscal Devaluation" and Fiscal Consolidation: The VAT in Troubled Times, Ruud de Mooij, Michael Keen. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: This paper focuses on two core tax design issues that arise in addressing current fiscal challenges It first explores the idea, prominent in troubled Eurozone countries, of a 'fiscal devaluation:' shifting from social contributions to the VAT as a way to mimic a nominal devaluation. Empirical evidence is presented which suggests that in Eurozone countries this may indeed improve the trade balance quite sizably in the short-run, though, as theory predicts, the effects eventually disappear. The paper then assesses the wider scope for VAT reform in meeting fiscal consolidation needs, developing and beginning to apply a methodology for finding additional VAT revenue in ways less distortionary and fairer than further raising the standard rate.
Handle: RePEc:nbr:nberwo:17913
Template-Type: ReDIF-Paper 1.0
Title: Housing Booms and City Centers
Classification-JEL: D0; R3
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Joshua D. Gottlieb
Author-Name: Kristina Tobio
Note: PE
Number: 17914
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17914
File-URL: http://www.nber.org/papers/w17914.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser & Joshua D. Gottlieb & Kristina Tobio, 2012. "Housing Booms and City Centers," American Economic Review, American Economic Association, vol. 102(3), pages 127-33, May.
Abstract: Popular discussions often treat the great housing boom of the 1996-2006 period as if it were a national phenomenon with similar impacts across locales, but across metropolitan areas, price growth was dramatically higher in warmer, less educated cities with less initial density and higher initial housing values. Within metropolitan areas, price growth was faster in neighborhoods closer to the city center. The centralization of price growth during the boom was particularly dramatic in those metropolitan areas where income is higher away from the city center. We consider four different explanations for why city centers grew more quickly when wealth was more suburbanized: (1) gentrification, which brings rapid price growth, is more common in areas with centralized poverty; (2) areas with centralized poverty had more employment concentration which led to faster centralized price growth; (3) areas with centralized poverty had the weakest supply response to the boom in prices in the city center; and (4) poverty is centralized in cities with assets, like public transit, at the city center that became more valuable over the boom. We find some support for several of these hypotheses, but taken together they explain less than half of the overall connection between centralized poverty and centralized price growth.
Handle: RePEc:nbr:nberwo:17914
Template-Type: ReDIF-Paper 1.0
Title: You Get a Book! Demand Spillovers, Combative Advertising, and Celebrity Endorsements
Classification-JEL: D20; D22; I2; L0; L1; L2; L8
Author-Name: Craig L. Garthwaite
Note: IO
Number: 17915
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17915
File-URL: http://www.nber.org/papers/w17915.pdf
File-Format: application/pdf
Abstract: This paper studies the economic effects of endorsements. In the publishing sector, endorsements from the Oprah Winfrey Book Club are found to be a business stealing form of advertising that raises title level sales without increasing the market size. The endorsements decrease aggregate adult fiction sales; likely as a result of the endorsed books being more difficult than those that otherwise would have been purchased. Economically meaningful sales increases are also found for non-endorsed titles by endorsed authors. These spillover demand estimates demonstrate a broad range of benefits from advertising for firms operating in a multiproduct brand setting.
Handle: RePEc:nbr:nberwo:17915
Template-Type: ReDIF-Paper 1.0
Title: Evaluating Estimates of Materials Offshoring from U.S. Manufacturing
Classification-JEL: F1
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: J. Bradford Jensen
Author-Person: pje75
Note: ITI
Number: 17916
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17916
File-URL: http://www.nber.org/papers/w17916.pdf
File-Format: application/pdf
Publication-Status: published as Feenstra, Robert C. & Jensen, J. Bradford, 2012. "Evaluating estimates of materials offshoring from US manufacturing," Economics Letters, Elsevier, vol. 117(1), pages 170-173.
Abstract: When materials offshoring is measured by estimating imported intermediate inputs, a common assumption used is that an industry's imports of each input, relative to its total demand, is the same as the economy-wide imports relative to total demand: this is the so-called "import comparability" or "proportionality" assumption. A report to the National Research Council identified this assumption as being a significant limitation of current data collection and analysis. In this note we move beyond this assumption to obtain a direct measure of imported materials by industry for the United States in 1997. At the 3-digit I-O industry level, there is a correlation of 0.68 between the offshoring shares made with and without the proportionality assumption, and a higher correlation of 0.87 when the shares are value weighted. While most value-weighted industry have differences below 50 percentage points in the two estimates, there is significant number of cases that differ by 10 percentage points or more.
Handle: RePEc:nbr:nberwo:17916
Template-Type: ReDIF-Paper 1.0
Title: Game Over: Simulating Unsustainable Fiscal Policy
Classification-JEL: C63; C68; E62; H55
Author-Name: Richard W. Evans
Author-Person: pev25
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Author-Name: Kerk L. Phillips
Author-Person: pph20
Note: EFG PE
Number: 17917
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17917
File-URL: http://www.nber.org/papers/w17917.pdf
File-Format: application/pdf
Publication-Status: published as Game Over: Simulating Unsustainable Fiscal Policy, Richard W. Evans, Laurence J. Kotlikoff, Kerk L. Phillips. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: Fiscal sustainability is one of the most pressing policy issues of our time. Yet it remains difficult to quantify. Official debt is plagued with a number of measurement difficulties since its measurement reflects the choice of words, not policies. And forming the fiscal gap-the imbalance in the government's intertemporal budget-requires strong discount rate assumptions. An alternative approach, taken here, is specifying a stochastic general equilibrium model and determining via simulation how long it takes for the economy to reach game over-the point where current policy can no longer be maintained. Our simulations, based on an OLG model calibrated to the U.S. economy, produce an average duration to game over of roughly one century, with a 35 percent chance of reaching the fiscal limit in roughly 30 years. The prospect of man-made economic collapse produces large equity premia, like those observed in the data. Our simulations show that both the fiscal gap and the equity premium rise as the economy gets closer to hitting its fiscal limit, suggesting that the fiscal gap and the equity premium may be good indicators of unsustainable policy.
Handle: RePEc:nbr:nberwo:17917
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Relationship between Alcohol Policies and Criminal Violence and Victimization
Classification-JEL: I0; K0
Author-Name: Sara Markowitz
Author-Person: pma138
Author-Name: Erik Nesson
Author-Person: pne149
Author-Name: Eileen Poe-Yamagata
Author-Name: Curtis Florence
Author-Name: Partha Deb
Author-Person: pde75
Author-Name: Tracy Andrews
Author-Name: Sarah Beth L. Barnett
Note: EH LE
Number: 17918
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17918
File-URL: http://www.nber.org/papers/w17918.pdf
File-Format: application/pdf
Publication-Status: published as Sara Markowitz & Erik Nesson & Eileen Poe-Yamagata & Curtis Florence & Partha Deb & Tracy Andrews & Sarah Beth L. Barnett, 2012. "Estimating the Relationship between Alcohol Policies and Criminal Violence and Victimization," German Economic Review, Verein für Socialpolitik, vol. 13(4), pages 416-435, November.
Abstract: Violence is one of the leading social problems in the United States. The development of appropriate public policies to curtail violence is confounded by the relationship between alcohol and violence. In this paper, we estimate the propensity of alcohol control policies to reduce the perpetration and victimization of criminal violence. We measure violence with data on individual level victimizations from the U.S. National Crime Victimization Survey. We examine the effects of a number of different alcohol control policies in reducing violent crime. These policies include the retail price of beer, drunk driving laws and penalties, keg laws, and serving and selling laws. We find some evidence of a negative relationship between alcohol prices and the probability of alcohol or drug related assault victimizations. However, we find no strong evidence that other alcohol policies are effective in reducing violent crimes. These results provide policy makers with guidance on potential approaches for reducing violence through alcohol beverage control.
Handle: RePEc:nbr:nberwo:17918
Template-Type: ReDIF-Paper 1.0
Title: Indirect Tax Initiatives and Global Rebalancing
Classification-JEL: F10; F32; F47; H20
Author-Name: Chunding Li
Author-Name: John Whalley
Author-Person: pwh8
Note: IFM ITI PE
Number: 17919
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17919
File-URL: http://www.nber.org/papers/w17919.pdf
File-Format: application/pdf
Publication-Status: published as Chunding Li & John Whalley, 2017. "Indirect Tax Initiatives and Global Rebalancing," CESifo Economic Studies, CESifo, vol. 63(1), pages 24-44.
Abstract: This paper discusses how joint cross country indirect tax initiatives can be used to achieve global rebalancing. This is potentially an important development for G20 discussions which thus far have centered on exchange rates as the instruments to achieve rebalancing. We suggest that if China and Germany (as major surplus countries) switch their present VAT systems from a destination principle to an origin principle, and the US (as the major deficit country) adopts a VAT on a destination principle VAT, jointly these actions can significantly reduce the three countries' joint imbalances and so contribute to global rebalancing. We use a numerical general equilibrium model with a monetary structure incorporating inside money to capture endogeneity of trade imbalances, and to also investigate the potential impacts of such initiatives. These confirm that VAT structures are not only good for global rebalancing but also the changes we consider are beneficial for welfare and revenue collection. Our research is aimed to inject new ideas to the present global rebalancing debate.
Handle: RePEc:nbr:nberwo:17919
Template-Type: ReDIF-Paper 1.0
Title: Debt and Creative Destruction: Why Could Subsidizing Corporate Debt be Optimal?
Classification-JEL: D82; G32; H25
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Gregor Matvos
Note: CF IO PE
Number: 17920
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17920
File-URL: http://www.nber.org/papers/w17920.pdf
File-Format: application/pdf
Publication-Status: published as Zhiguo He & Gregor Matvos, 2016. "Debt and Creative Destruction: Why Could Subsidizing Corporate Debt Be Optimal?," Management Science, vol 62(2), pages 303-325.
Abstract: We illustrate the welfare benefit of tax subsidies to corporate debt financing. Two firms engage in a socially wasteful competition for survival in a declining industry. Firms differ on two dimensions: exogenous productivity and endogenously chosen amount of debt financing, resulting in a two dimensional war of attrition. Debt financing increases incentives to exit, which, while socially beneficial, is costly for the firm. Therefore the planner can increase welfare by subsidizing debt financing. The duration of industry distress determines the tradeoff between the welfare benefit illustrated in our model and the costs of subsidizing corporate debt from the existing literature. Our theory also sheds light on why the IRS considers "conflict of interest" as one of the key determinants in identifying securities that are qualified for tax-benefits.
Handle: RePEc:nbr:nberwo:17920
Template-Type: ReDIF-Paper 1.0
Title: Convective Risk Flows in Commodity Futures Markets
Classification-JEL: G01; G12; G20; Q02
Author-Name: Ing-Haw Cheng
Author-Person: pch1278
Author-Name: Andrei Kirilenko
Author-Person: pki451
Author-Name: Wei Xiong
Author-Person: pxi88
Note: AP CF
Number: 17921
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17921
File-URL: http://www.nber.org/papers/w17921.pdf
File-Format: application/pdf
Publication-Status: published as Ing-Haw Cheng & Andrei Kirilenko & Wei Xiong, 2015. "Convective Risk Flows in Commodity Futures Markets," Review of Finance, European Finance Association, vol. 19(5), pages 1733-1781.
Abstract: This paper analyzes the joint responses of commodity futures prices and traders' futures positions to changes in the VIX before and after the recent financial crisis. We find that while financial traders accommodate the needs of commercial hedgers in normal times, in times of distress, financial traders reduce their net long positions in response to an increase in the VIX causing the risk to flow to commercial hedgers. By exploiting a cross-section of traders, we provide micro-level evidence for a convective flow of risk from distressed financial traders to the ultimate producers of commodities in the real economy.
Handle: RePEc:nbr:nberwo:17921
Template-Type: ReDIF-Paper 1.0
Title: The Opt-In Revolution? Contraception and the Gender Gap in Wages
Classification-JEL: J13; J16; J3; N32
Author-Name: Martha J. Bailey
Author-Person: pba669
Author-Name: Brad Hershbein
Author-Person: phe422
Author-Name: Amalia R. Miller
Author-Person: pmi419
Note: CH DAE ED LS
Number: 17922
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17922
File-URL: http://www.nber.org/papers/w17922.pdf
File-Format: application/pdf
Publication-Status: published as Martha J. Bailey & Brad Hershbein & Amalia R. Miller, 2012. "The Opt-In Revolution? Contraception and the Gender Gap in Wages," American Economic Journal: Applied Economics, American Economic Association, vol. 4(3), pages 225-54, July.
Abstract: Decades of research on the U.S. gender gap in wages describes its correlates, but little is known about why women changed their career paths in the 1960s and 1970s. This paper explores the role of "the Pill" in altering women's human capital investments and its ultimate implications for life-cycle wages. Using state-by-birth-cohort variation in legal access, we show that younger access to the Pill conferred an 8-percent hourly wage premium by age fifty. Our estimates imply that the Pill can account for 10 percent of the convergence of the gender gap in the 1980s and 30 percent in the 1990s.
Handle: RePEc:nbr:nberwo:17922
Template-Type: ReDIF-Paper 1.0
Title: Price Setting with menu cost for Multi-product firms
Classification-JEL: E31; E4; E52; E60
Author-Name: Fernando E. Alvarez
Author-Name: Francesco Lippi
Author-Person: pli62
Note: EFG
Number: 17923
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17923
File-URL: http://www.nber.org/papers/w17923.pdf
File-Format: application/pdf
Publication-Status: published as Price setting with menu cost for multi-product firms, with Francesco Lippi, 2013. forthcoming, Econometrica.
Abstract: We model the decisions of a multi-product firm that faces a fixed "menu" cost: once it is paid, the firm can adjust the price of all its products. We characterize analytically the steady state firm's decisions in terms of the structural parameters: the variability of the flexible prices, the curvature of the profit function, the size of the menu cost, and the number of products sold. We provide expressions for the steady state frequency of adjustment, the hazard rate of price adjustments, and the size distribution of price changes, all in terms of the structural parameters. We study analytically the impulse response of aggregate prices and output to a monetary shock. The size of the output response and its duration increase with the number of products, they more than double as the number of products goes from 1 to ten, quickly converging to the ones of Taylor's staggered price model.
Handle: RePEc:nbr:nberwo:17923
Template-Type: ReDIF-Paper 1.0
Title: Lumpy Investment, Lumpy Inventories
Classification-JEL: E20; E22; E3; E32
Author-Name: Rüdiger Bachmann
Author-Person: pba751
Author-Name: Lin Ma
Author-Person: pma2378
Note: EFG ME
Number: 17924
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17924
File-URL: http://www.nber.org/papers/w17924.pdf
File-Format: application/pdf
Publication-Status: published as RÜDIGER BACHMANN & LIN MA, 2016. "Lumpy Investment, Lumpy Inventories," Journal of Money, Credit and Banking, vol 48(5), pages 821-855.
Abstract: How do microeconomic frictions and microeconomic heterogeneity affect macroeconomic dynamics? We revisit the recent claim in the literature that nonconvex capital adjustment costs do not matter for aggregate dynamics. We argue that the neutrality of fixed adjustment frictions in general equilibrium hinges on the assumption of capital good homogeneity. With only one type of capital good to save and invest in, fixed capital investment dynamics are tightly linked to consumption dynamics, which are similar across lumpy and frictionless investment models. With capital goods heterogeneity, households optimally substitute between different ways of saving, which renders their consumption/saving decisions more sensitive to capital adjustment frictions. We quantify our arguments by introducing inventories into a two-sector lumpy investment model. We find that with inventories, frictionless fixed capital adjustment leads to an initial response of fixed capital investment to productivity shocks that is 50% higher than with capital adjustment frictions, calibrated to the fraction of plants undergoing lumpy investment episodes. We argue more generally that the details of how general equilibrium is introduced into the physical environment of a model matters for the aggregate relevance of microeconomic frictions and microeconomic heterogeneity.
Handle: RePEc:nbr:nberwo:17924
Template-Type: ReDIF-Paper 1.0
Title: Prices, Markups and Trade Reform
Classification-JEL: F1; L1
Author-Name: Jan De Loecker
Author-Person: pde165
Author-Name: Pinelopi K. Goldberg
Author-Person: pgo1
Author-Name: Amit K. Khandelwal
Author-Person: pkh138
Author-Name: Nina Pavcnik
Author-Person: ppa511
Note: IO ITI PR
Number: 17925
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17925
File-URL: http://www.nber.org/papers/w17925.pdf
File-Format: application/pdf
Publication-Status: published as Jan De Loecker & Pinelopi K. Goldberg & Amit K. Khandelwal & Nina Pavcnik, 2016. "Prices, Markups, and Trade Reform," Econometrica, Econometric Society, vol. 84, pages 445-510, 03.
Abstract: This paper examines how prices, markups and marginal costs respond to trade liberalization. We develop a framework to estimate markups from production data with multi-product firms. This approach does not require assumptions on the market structure or demand curves faced by firms, nor assumptions on how firms allocate their inputs across products. We exploit quantity and price information to disentangle markups from quantity-based productivity, and then compute marginal costs by dividing observed prices by the estimated markups. We use India’s trade liberalization episode to examine how firms adjust these performance measures. Not surprisingly, we find that trade liberalization lowers factory-gate prices and that output tariff declines have the expected pro-competitive effects. However, the price declines are small relative to the declines in marginal costs, which fall predominantly because of the input tariff liberalization. The reason for this incomplete cost pass-through to prices is that firms offset their reductions in marginal costs by raising markups. Our results demonstrate substantial heterogeneity and variability in markups across firms and time and suggest that producers benefited relative to consumers, at least immediately after the reforms.
Handle: RePEc:nbr:nberwo:17925
Template-Type: ReDIF-Paper 1.0
Title: The Free Rider Problem: a Dynamic Analysis
Classification-JEL: D78; H41
Author-Name: Marco Battaglini
Author-Person: pba170
Author-Name: Salvatore Nunnari
Author-Person: pnu47
Author-Name: Thomas Palfrey
Author-Person: ppa1164
Note: PE POL
Number: 17926
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17926
File-URL: http://www.nber.org/papers/w17926.pdf
File-Format: application/pdf
Abstract: We present a dynamic model of free riding in which n infinitely lived agents choose between private consumption and contributions to a durable public good g. We characterize the set of continuous Markov equilibria in economies with reversibility, where investments can be positive or negative; and in economies with irreversibility, where investments are non negative and g can only be reduced by depreciation. With reversibility, there is a continuum of equilibrium steady states: the highest equilibrium steady state of g is increasing in n, and the lowest is decreasing. With irreversibility, the set of equilibrium steady states converges to a unique point as depreciation converges to zero: the highest steady state possible with reversibility. In both cases, the highest steady state converges to the efficient steady state as agents become increasingly patient. In economies with reversibility there are always non-monotonic equilibria in which g converges to the steady state with damped oscillations; and there can be equilibria with no stable steady state, but a unique persistent limit cycle.
Handle: RePEc:nbr:nberwo:17926
Template-Type: ReDIF-Paper 1.0
Title: What Will My Account Really Be Worth? An Experiment on Exponential Growth Bias and Retirement Saving
Classification-JEL: H3; J14
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: Colleen Flaherty Manchester
Author-Name: Aaron Sojourner
Author-Person: pso238
Note: AG PE
Number: 17927
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17927
File-URL: http://www.nber.org/papers/w17927.pdf
File-Format: application/pdf
Publication-Status: published as Goda, Gopi Shah & Manchester, Colleen Flaherty & Sojourner, Aaron J., 2014. "What will my account really be worth? Experimental evidence on how retirement income projections affect saving," Journal of Public Economics, Elsevier, vol. 119(C), pages 80-92.
Abstract: Recent findings on limited financial literacy and exponential growth bias suggest saving decisions may not be optimal because such decisions require an accurate understanding of how current contributions can translate into income in retirement. This study uses a large-scale field experiment to measure how a low-cost, direct-mail intervention designed to inform subjects about this relationship affects their saving behavior. Using administrative data prior to and following the intervention, we measure its effect on participation and the level of contributions in retirement saving accounts. Those sent income projections along with enrollment information were more likely to change contribution levels and increase annual contributions relative to the control group. Among those who made a change in contribution, the increase in annual contributions was approximately $1,150. Results from a follow-up survey corroborate these findings and show heterogeneous effects of the intervention by rational and behavioral factors known to affect saving. Finally, we find evidence of behavioral influences on decision-making in that the assumptions used to generate the projections influence the saving response.
Handle: RePEc:nbr:nberwo:17927
Template-Type: ReDIF-Paper 1.0
Title: Does March Madness Lead to Irrational Exuberance in the NBA Draft? High-Value Employee Selection Decisions and Decision-Making Bias
Classification-JEL: J61
Author-Name: Casey Ichniowski
Author-Name: Anne E. Preston
Note: LS
Number: 17928
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17928
File-URL: http://www.nber.org/papers/w17928.pdf
File-Format: application/pdf
Publication-Status: published as Casey Ichniowski & Anne Preston, 2017. "Does March Madness lead to irrational exuberance in the NBA draft? High-value employee selection decisions and decision-making bias," Journal of Economic Behavior & Organization, vol 142, pages 105-119.
Abstract: Using a detailed personally-assembled data set on the performance of collegiate and professional basketball players over the 1997-2010 period, we conduct a very direct test of two questions. Does performance in the NCAA "March Madness" college basketball tournament affect NBA teams' draft decisions? If so, is this effect the result of decision making biases which overweight player performance in these high-visibility college basketball games or rational judgments of how the players later perform in the NBA? The data provide very clear answers to these two questions. First, unexpected March Madness performance, in terms of unexpected team wins and unexpected player scoring, affects draft decisions. This result persists even when models control for a direct measure of the drafted players' unobserved counterfactual - various mock draft rankings of where the players were likely to be drafted just prior to any participation in the March Madness tournament. Second, NBA personnel who are making these draft decisions are certainly not irrationally overweighting this MM information. If anything, the unexpected performance in the March Madness tournament deserves more weight than it gets in the draft decisions. Finally, there is no evidence that players who played in the March Madness tournament comprise a pool of players with a lower variance in future NBA performance and who are therefore less likely to become NBA superstars than are players who do not play in MM. Players with positive draft bumps due to unexpectedly good performance in the March Madness tournament are in fact more likely than those without bumps from March Madness participation to become one of the rare NBA superstars in the league.
Handle: RePEc:nbr:nberwo:17928
Template-Type: ReDIF-Paper 1.0
Title: The Market for Financial Advice: An Audit Study
Classification-JEL: G02; G1; G11; G2; G23; G24
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Author-Name: Markus Noeth
Author-Name: Antoinette Schoar
Author-Person: psc180
Note: AP CF
Number: 17929
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17929
File-URL: http://www.nber.org/papers/w17929.pdf
File-Format: application/pdf
Abstract: Do financial advisers undo or reinforce the behavioral biases and misconceptions of their clients? We use an audit methodology where trained auditors meet with financial advisers and present different types of portfolios. These portfolios reflect either biases that are in line with the financial interests of the advisers (e.g., returns-chasing portfolio) or run counter to their interests (e.g., a portfolio with company stock or very low-fee index funds). We document that advisers fail to de-bias their clients and often reinforce biases that are in their interests. Advisers encourage returns-chasing behavior and push for actively managed funds that have higher fees, even if the client starts with a well-diversified, low-fee portfolio.
Handle: RePEc:nbr:nberwo:17929
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy and the Financial Crisis
Classification-JEL: D14
Author-Name: Leora F. Klapper
Author-Person: pkl66
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Georgios A. Panos
Author-Person: ppa506
Note: AG
Number: 17930
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17930
File-URL: http://www.nber.org/papers/w17930.pdf
File-Format: application/pdf
Publication-Status: published as Financial Literacy and its Consequences: Evidence from Russia during the Financial Crisis,” joint with Leora Klapper and Georgios Panos, Journal of Banking and Finance, October 2013, Vol, 37, Issue 10, pp. 3904-3923.
Abstract: The ability of consumers to make informed financial decisions improves their ability to develop sound personal finance. This paper uses a panel dataset from Russia, an economy in which consumer loans grew at an astounding rate - from about US$10 billion in 2003 to over US$170 billion in 2008 - to examine the importance of financial literacy and its effects on behavior. The survey contains questions on financial literacy, consumer borrowing (formal and informal), saving and spending behavior. The paper studies both the financial consequences and the real consequences of financial illiteracy. Even though consumer borrowing increased very rapidly in Russia, the authors find that only 41% of respondents demonstrate understanding of the workings of interest compounding and only 46% can answer a simple question about inflation. Financial literacy is positively related to participation in financial markets and negatively related to the use of informal sources of borrowing. Moreover, individuals with higher financial literacy are significantly more likely to report having greater availability of unspent income and higher spending capacity. The relationship between financial literacy and availability of unspent income is higher during the financial crisis, suggesting that financial literacy may better equip individuals to deal with macroeconomic shocks.
Handle: RePEc:nbr:nberwo:17930
Template-Type: ReDIF-Paper 1.0
Title: Limited Life Expectancy, Human Capital and Health Investments: Evidence from Huntington Disease
Classification-JEL: I15; I25; J24
Author-Name: Emily Oster
Author-Person: pos39
Author-Name: Ira Shoulson
Author-Name: E. Ray Dorsey
Note: AG LS
Number: 17931
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17931
File-URL: http://www.nber.org/papers/w17931.pdf
File-Format: application/pdf
Publication-Status: published as “Limited Life Expectancy, Human Capital and Health Investments” (with E. Ray Dorsey and Ira Shoulson). American Economic Review, 103 (5): p. 1977-2002 (August 2013).
Abstract: One of the most basic predictions of human capital theory is that life expectancy should impact human capital investment. Limited exogenous variation in life expectancy makes this difficult to test, especially in the contexts most relevant to the macroeconomic applications. We estimate the relationship between life expectancy and human capital investments using genetic variation in life expectancy driven by Huntington disease (HD), an inherited degenerative neurological disorder with large impacts on mortality. We compare investment levels for individuals who have ex ante identical risks of HD but learn (through early symptom development or genetic testing) that they do or do not carry the genetic mutation which causes the disease. We find strong qualitative support: individuals with more limited life expectancy complete less education and less job training. We estimate the elasticity of demand for college completion with respect to years of life expectancy of 0.40. This figure implies that differences in life expectancy explain about 10% of cross-country differences in college enrollment. Finally, we use smoking and cancer screening data to test the corollary that health capital is responsive to life expectancy.
Handle: RePEc:nbr:nberwo:17931
Template-Type: ReDIF-Paper 1.0
Title: Education and Mortality: Evidence from a Social Experiment
Classification-JEL: I12; I18; I21
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Mårten Palme
Author-Person: ppa618
Author-Name: Emilia Simeonova
Author-Person: psi303
Note: CH ED EH
Number: 17932
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17932
File-URL: http://www.nber.org/papers/w17932.pdf
File-Format: application/pdf
Publication-Status: published as Costas Meghir & Mårten Palme & Emilia Simeonova, 2018. "Education and Mortality: Evidence from a Social Experiment," American Economic Journal: Applied Economics, vol 10(2), pages 234-256.
Abstract: We examine the effects of a major Swedish educational reform, that increased the years of compulsory schooling, on mortality and health. Using the gradual phase-in of the reform between 1949 and 1962 across municipalities, we estimate insignificant effects of the reform on mortality in the affected cohorts. From the confidence intervals we can rule out effects larger than 1-1.4 months of increased life expectancy. We find no significant impacts on mortality for individuals of low SES backgrounds, on deaths that are more likely to be affected by behavior, on hospitalizations, and consumption of prescribed drugs.
Handle: RePEc:nbr:nberwo:17932
Template-Type: ReDIF-Paper 1.0
Title: Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform
Classification-JEL: I11; I28
Author-Name: Jonathan T. Kolstad
Author-Person: pko1088
Author-Name: Amanda E. Kowalski
Note: AG EH PE
Number: 17933
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17933
File-URL: http://www.nber.org/papers/w17933.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Health Economics, Volume 47, May 2016, Pages 81–106
Abstract: We model the labor market impact of the three key provisions of the recent Massachusetts and national "mandate-based" health reforms: individual and employer mandates and expansions in publicly-subsidized coverage. Using our model, we characterize the compensating differential for employer-sponsored health insurance (ESHI) -- the causal change in wages associated with gaining ESHI. We also characterize the welfare impact of the labor market distortion induced by health reform. We show that the welfare impact depends on a small number of "sufficient statistics" that can be recovered from labor market outcomes. Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We find that jobs with ESHI pay wages that are lower by an average of $6,058 annually, indicating that the compensating differential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.
Handle: RePEc:nbr:nberwo:17933
Template-Type: ReDIF-Paper 1.0
Title: Liquidity, Business Cycles, and Monetary Policy
Classification-JEL: E10; E44; E50
Author-Name: Nobuhiro Kiyotaki
Author-Name: John Moore
Author-Person: pmo265
Note: EFG ME
Number: 17934
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17934
File-URL: http://www.nber.org/papers/w17934.pdf
File-Format: application/pdf
Publication-Status: published as Nobuhiro Kiyotaki & John Moore, 2019. "Liquidity, Business Cycles, and Monetary Policy," Journal of Political Economy, vol 127(6), pages 2926-2966.
Abstract: The paper presents a model of a monetary economy where there are differences in liquidity across assets. Money circulates because it is more liquid than other assets, not because it has any special function. There is a spectrum of returns on assets, reflecting their differences in liquidity. The model is used, first, to investigate how aggregate activity and asset prices fluctuate with shocks to productivity and liquidity; second, to examine what role government policy might have through open market operations that change the mix of assets held by the private sector. With its emphasis on liquidity rather than sticky prices, the model harks back to an earlier interpretation of Keynes (1936), following Tobin (1969).
Handle: RePEc:nbr:nberwo:17934
Template-Type: ReDIF-Paper 1.0
Title: Debt Financing in Asset Markets
Classification-JEL: G01; G1; G32
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Wei Xiong
Author-Person: pxi88
Note: AP CF
Number: 17935
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17935
File-URL: http://www.nber.org/papers/w17935.pdf
File-Format: application/pdf
Publication-Status: published as Zhiguo He & Wei Xiong, 2012. "Debt Financing in Asset Markets," American Economic Review, American Economic Association, vol. 102(3), pages 88-94, May.
Abstract: We study rollover risk and collateral value in a dynamic asset pricing model with endogenous debt financing by extending the framework of Geanakoplos (2009) with a generic binomial tree and time-varying heterogeneous beliefs. Optimistic borrowers face rollover risk if the belief dispersion between the borrowers and the pessimistic lenders widens after interim bad news. We demonstrate the optimality of the maximum riskless short-term debt financing for optimistic borrowers even in the presence of the rollover risk. We also highlight the role of interim trading which, by allowing creditors to sell seized collateral to other optimists with saved cashes, boosts the asset's collateral value and equilibrium price.
Handle: RePEc:nbr:nberwo:17935
Template-Type: ReDIF-Paper 1.0
Title: Do High-Cost Hospitals Deliver Better Care? Evidence from Ambulance Referral Patterns
Classification-JEL: I12
Author-Name: Joseph J. Doyle, Jr.
Author-Name: John A. Graves
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Samuel Kleiner
Author-Person: pkl120
Note: AG EH
Number: 17936
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17936
File-URL: http://www.nber.org/papers/w17936.pdf
File-Format: application/pdf
Publication-Status: published as "Measuring Returns to Hospital Care: Evidence from Ambulance Referral Patterns." (with John Graves, Jonathan Gruber, and Samuel Kleiner) Journal of Political Economy, Volume 123, Number 1, February 2015
Abstract: Endogenous patient sorting across hospitals can confound performance comparisons. This paper provides a new lens to compare hospital performance for emergency patients: plausibly exogenous variation in ambulance-company assignment. Ambulances are effectively randomly assigned to patients in the same area based on rotational dispatch mechanisms. Using Medicare data from 2002-2008, we show that ambulance company assignment importantly affects hospital choice for patients in the same zip code. Using data for New York state from 2000-2006 that matches exact patient addresses to hospital discharge records, we show that patients who live very near each other but on either side of ambulance-dispatch boundaries go to different types of hospitals. Both strategies show that higher-cost hospitals have significantly lower one-year mortality rates compared to lower-cost hospitals. We find that common indicators of hospital quality, such as indicators for "appropriate care" for heart attacks, are generally not associated with better patient outcomes. On the other hand, we find that measures of "leading edge" hospitals, such as teaching hospitals and hospitals that quickly adopt the latest technologies, are associated with better outcomes, but have little impact on the estimated mortality-hospital cost relationship. We also find that hospital procedure intensity is a key determinant of the mortality-cost relationship, suggesting that treatment intensity, and not differences in quality reflected in prices, drives much of our findings. The evidence also suggests that there are diminishing returns to hospital spending and treatment intensity.
Handle: RePEc:nbr:nberwo:17936
Template-Type: ReDIF-Paper 1.0
Title: Is There "Too Much" Inequality in Health Spending Across Income Groups?
Classification-JEL: H4; H51; I18; I38
Author-Name: Laurence Ales
Author-Person: pal707
Author-Name: Roozbeh Hosseini
Author-Person: pho350
Author-Name: Larry E. Jones
Author-Person: pjo88
Note: EFG EH PE
Number: 17937
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17937
File-URL: http://www.nber.org/papers/w17937.pdf
File-Format: application/pdf
Abstract: In this paper we study the efficient allocation of health resources across individuals. We focus on the relation between health resources and income (taken as a proxy for productivity). In particular we determine the efficient level of the health care social safety net for the indigent. We assume that individuals have different life cycle profiles of productivity. Health care increases survival probability. We adopt the classical approach of welfare economics by considering how a central planner with an egalitarian (ex-ante) perspective would allocate resources. We show that, under the efficient allocation, health care spending increases with labor productivity, but only during the working years. Post retirement, everyone would get the same health care. Quantitatively, we find that the amount of inequality across the income distribution in the data is larger that what would be justified solely on the basis of production efficiency, but not drastically so. As a rough summary, in U.S. data top to bottom spending ratios are about 1.5 for most of the life cycle. Efficiency implies a decline from about 2 (at age 25) to 1 at retirement. We find larger inefficiencies in the lower part of the income distribution and in post retirement ages.
Handle: RePEc:nbr:nberwo:17937
Template-Type: ReDIF-Paper 1.0
Title: Remedies for Sick Insurance
Classification-JEL: D4; D62; I13; I18
Author-Name: Daniel L. McFadden
Author-Name: Carlos E. Noton
Author-Person: pno120
Author-Name: Pau Olivella
Author-Person: pol53
Note: AG
Number: 17938
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17938
File-URL: http://www.nber.org/papers/w17938.pdf
File-Format: application/pdf
Abstract: This expository paper describes the factors that contribute to failure of health insurance markets, and the regulatory mechanisms that have been and can be used to combat these failures. Standardized contracts and creditable coverage mandates are discussed, along with premium support, enrollment mandates, guaranteed issue, and risk adjustment, as remedies for selection-related market damage. An overall conclusion of the paper is that the design and management of creditable coverage mandates are likely to be key determinants of the performance of the health insurance exchanges that are a core provision of the PPACA of 2010. Enrollment mandates, premium subsidies, and risk adjustment can improve the stability and relative efficiency of the exchanges, but with carefully designed creditable coverage mandates are not necessarily critical for their operation.
Handle: RePEc:nbr:nberwo:17938
Template-Type: ReDIF-Paper 1.0
Title: School Governance, Teacher Incentives, and Pupil-Teacher Ratios: Experimental Evidence from Kenyan Primary Schools
Classification-JEL: D71; I21; M51; O15
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: Michael Kremer
Author-Person: pkr20
Note: CH ED
Number: 17939
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17939
File-URL: http://www.nber.org/papers/w17939.pdf
File-Format: application/pdf
Publication-Status: published as Duflo, Esther & Dupas, Pascaline & Kremer, Michael, 2015. "School governance, teacher incentives, and pupil–teacher ratios: Experimental evidence from Kenyan primary schools," Journal of Public Economics, Elsevier, vol. 123(C), pages 92-110.
Abstract: Some education policymakers focus on bringing down pupil-teacher ratios. Others argue that resources will have limited impact without systematic reforms to education governance, teacher incentives, and pedagogy. We examine a program under which Kenyan Parent-Teacher Associations (PTAs) at randomly selected schools were funded to hire an additional teacher on an annual contract renewable conditional on performance, outside normal Ministry of Education civil-service channels, at one-quarter normal compensation levels. For students randomly assigned to stay with existing classes, test scores did not increase significantly, despite a reduction in class size from 82 to 44 on average. In contrast, scores increased for students assigned to be taught by locally-hired contract teachers. One reason may be that contract teachers had low absence rates, while centrally-hired civil-service teachers in schools randomly assigned PTA contract teachers endogenously reduced their effort. Civil-service teachers also captured rents for their families, with approximately 1/3 of contract teacher positions going to relatives of existing teachers. A governance program that empowered parents within PTAs reduced both forms of capture. The best contract teachers obtained civil service jobs over time, and we estimate large potential dynamic benefits from supplementing a civil service system with locally-hired contract teachers brought in on a probationary basis and granted tenure conditional on performance.
Handle: RePEc:nbr:nberwo:17939
Template-Type: ReDIF-Paper 1.0
Title: Tailspotting: Identifying and profiting from CEO vacation trips
Classification-JEL: G14; G34
Author-Name: David Yermack
Author-Person: pye42
Note: CF LE
Number: 17940
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17940
File-URL: http://www.nber.org/papers/w17940.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics Volume 113, Issue 2, August 2014, Pages 252–269 Cover image Tailspotting: Identifying and profiting from CEO vacation trips ☆ David Yermacka, b,
Abstract: This paper shows close connections between CEOs' absences from headquarters and corporate news disclosures. I identify CEO absences by merging corporate jet flight histories with records of CEOs' property ownership near leisure destinations. I find that CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. When CEOs are away, companies announce less news than usual, mandatory disclosures are more likely to occur late, and stock prices exhibit sharply lower volatility. Volatility increases when CEOs return to work. CEOs spend fewer days out of the office when their ownership is high and when the weather is bad at their vacation homes.
Handle: RePEc:nbr:nberwo:17940
Template-Type: ReDIF-Paper 1.0
Title: A Series of Unfortunate Events: Common Sequencing Patterns in Financial Crises
Classification-JEL: E32; E44; E50; F30; F33; G01; N20
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Note: ME
Number: 17941
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17941
File-URL: http://www.nber.org/papers/w17941.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart, 2011. "A Series of Unfortunate Events: Common Sequencing Patterns in Financial Crises," Rivista di Politica Economica, SIPI Spa, issue 4, pages 11-36, October-D.
Publication-Status: published as Carmen M. Reinhart, 2011. "A Series of Unfortunate Events: Common Sequencing Patterns in Financial Crises," 'Angelo Costa' Lectures Serie, SIPI Spa, issue Lect. XII.
Abstract: We document that the global scope and depth of the crisis the began with the collapse of the subprime mortgage market in the summer of 2007 is unprecedented in the post World War II era and, as such, the most relevant comparison benchmark is the Great Depression (or the Great Contraction, as dubbed by Friedman and Schwartz, 1963) of the 1930s. Some of the similarities between these two global episodes are examined but the analysis of the aftermath of severe financial crises is extended to also include the most severe post-WWII crises as well. As to the causes of these great crises, we focus on those factors that are common across time and geography. We discriminate between root causes of the crises, recurring crises symptoms, and common features (such as misguided financial regulation or inadequate supervision) which serve as amplifiers of the boom-bust cycle. There are recurring temporal patterns in the boom-bust cycle and their broad sequencing is analyzed.
Handle: RePEc:nbr:nberwo:17941
Template-Type: ReDIF-Paper 1.0
Title: Do Private Equity Managers Earn Their Fees? Compensation, Ownership, and Cash Flow Performance
Classification-JEL: G00; G23; G24; G34
Author-Name: David T. Robinson
Author-Person: pro347
Author-Name: Berk A. Sensoy
Note: CF PR
Number: 17942
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17942
File-URL: http://www.nber.org/papers/w17942.pdf
File-Format: application/pdf
Publication-Status: published as David T. Robinson & Berk A. Sensoy, 2013. "Do Private Equity Fund Managers Earn Their Fees? Compensation, Ownership, and Cash Flow Performance," Review of Financial Studies, vol 26(11), pages 2760-2797.
Abstract: We study the relation between compensation practices, incentives, and performance in private equity using new data that connect ownership structures, management contracts, and quarterly cash flows for a large sample of buyout and venture capital funds from 1984-2010. Although many critics of private equity argue that PE firms earn excessive compensation and have muted performance incentives, we find no evidence that higher compensation or lower managerial ownership are associated with worse net-of-fee performance, in stark contrast to other asset management settings. Instead, compensation is largely unrelated to net-of-fee cash flow performance. Nevertheless, market conditions during fundraising are an important driver of compensation, as pay rises and shifts to fixed components during fundraising booms. In addition, the behavior of distributions around contractual triggers for fees and carried interest is consistent with an underlying agency conflict between investors and general partners. Our evidence is most consistent with an equilibrium in which compensation terms reflect agency concerns and the productivity of manager skills, and in which managers with higher compensation earn back their pay by delivering higher gross performance.
Handle: RePEc:nbr:nberwo:17942
Template-Type: ReDIF-Paper 1.0
Title: Price Subsidies, Diagnostic Tests, and Targeting of Malaria Treatment: Evidence from a Randomized Controlled Trial
Classification-JEL: D61; H23; I18; O1
Author-Name: Jessica Cohen
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: Simone G. Schaner
Author-Person: psc483
Note: CH EH
Number: 17943
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17943
File-URL: http://www.nber.org/papers/w17943.pdf
File-Format: application/pdf
Publication-Status: published as Jessica Cohen & Pascaline Dupas & Simone Schaner, 2015. "Price Subsidies, Diagnostic Tests, and Targeting of Malaria Treatment: Evidence from a Randomized Controlled Trial," American Economic Review, American Economic Association, vol. 105(2), pages 609-45, February.
Abstract: Both under- and over-treatment of communicable diseases are public bads. But efforts to decrease one run the risk of increasing the other. Using rich experimental data on household treatment-seeking behavior in Kenya, we study the implications of this tradeoff for subsidizing life-saving antimalarials sold over-the-counter at retail drug outlets. We show that a very high subsidy (such as the one under consideration by the international community) dramatically increases access, but nearly half of subsidized pills go to patients without malaria. We study two ways to better target subsidized drugs: reducing the subsidy level and introducing rapid malaria tests over-the-counter.
Handle: RePEc:nbr:nberwo:17943
Template-Type: ReDIF-Paper 1.0
Title: Debt Deleveraging and The Exchange Rate
Classification-JEL: E52; F32; F41
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Federica Romei
Author-Person: pro885
Note: EFG IFM ME
Number: 17944
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17944
File-URL: http://www.nber.org/papers/w17944.pdf
File-Format: application/pdf
Publication-Status: published as “Debt Deleveraging and The Exchange Rate,” Journal of International Economics, 93, 1-16, (2014). (with F. Romei)
Abstract: Deleveraging from high debt can provoke deep recession with significant international side effects. The exchange rate of the deleveraging country will depreciate in the short run and appreciate in the long run. The real interest rate will fall by more than in the rest of the world. Bounds and policies that constrain the adjustment can prolong and deepen the recession. Early exit strategies from accommodating monetary policy can be quite harmful, as can such other policies as keeping interest rates too high during the deleveraging period. The analysis also applies to a monetary union facing internal adjustment of current account imbalances.
Handle: RePEc:nbr:nberwo:17944
Template-Type: ReDIF-Paper 1.0
Title: Investment Busts, Reputation, and the Temptation to Blend in with the Crowd
Classification-JEL: G01; G24; G31; G32; G33
Author-Name: Steven Grenadier
Author-Name: Andrey Malenko
Author-Name: Ilya A. Strebulaev
Author-Person: pst526
Note: CF PR
Number: 17945
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17945
File-URL: http://www.nber.org/papers/w17945.pdf
File-Format: application/pdf
Publication-Status: published as Investment, Reputation, and the Temptation to Blend in with the Crowd (co-authored with Steven R. Grenadier and Andrey Malenko) Journal of Financial Economics, 2014, 111, 137-157
Abstract: We provide a dynamic model of an industry in which agents strategically time liquidation decisions in an effort to protect their reputations. As in traditional models, agents delay liquidation attempting to signal their quality. However, when the industry faces a common shock that indiscriminately forces liquidation of a subset of projects, agents with bad enough projects choose to liquidate even if their projects are unaffected by the shock. Such "blending in with the crowd" creates an additional incentive to delay liquidation, further amplifying the shock. As a result, even minuscule common shocks can be evidenced by massive liquidations. As agents await common shocks, the industry accumulates "living dead" projects. Surprisingly, the potential for moderate negative common shocks often improves agents values.
Handle: RePEc:nbr:nberwo:17945
Template-Type: ReDIF-Paper 1.0
Title: The Mystery of Zero-Leverage Firms
Classification-JEL: G3; G32; G34; G35
Author-Name: Ilya A. Strebulaev
Author-Person: pst526
Author-Name: Baozhong Yang
Note: CF
Number: 17946
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17946
File-URL: http://www.nber.org/papers/w17946.pdf
File-Format: application/pdf
Publication-Status: published as The Mystery of Zero-Leverage Firms (co-authored with Baozhong Yang) Journal of Financial Economics, 2013, 109, 1-23
Abstract: This paper documents the puzzling evidence that a substantial number of large public non-financial US firms follow a zero-debt policy. Over the 1962-2009 period, on average 10.2% of such firms have zero debt and almost 22% have less than 5% book leverage ratio. Neither industry nor size can account for such puzzling behavior. Zero-leverage behavior is a persistent phenomenon, with 30% of zero-debt firms refrain from debt for at least five consecutive years. Particularly surprising is the presence of a large number of zero-leverage firms who pay dividends. They are more profitable, pay higher taxes, issue less equity, and have higher cash balances than their proxies chosen by industry and size. These firms also pay substantially higher dividends than their proxies and thus their total payout ratio is virtually independent of leverage. Firms with higher CEO ownership and longer CEO tenure are more likely to follow a zero-leverage policy, especially if boards are smaller and less independent. Family firms are also more likely to be zero-levered. Our results suggest that managerial and governance characteristics are related to the zero-leverage phenomena in an important way.
Handle: RePEc:nbr:nberwo:17946
Template-Type: ReDIF-Paper 1.0
Title: Salience and Consumer Choice
Classification-JEL: D03; D11
Author-Name: Pedro Bordalo
Author-Person: pbo515
Author-Name: Nicola Gennaioli
Author-Person: pge95
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: CF IO
Number: 17947
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17947
File-URL: http://www.nber.org/papers/w17947.pdf
File-Format: application/pdf
Publication-Status: published as Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2013. "Salience and Consumer Choice," Journal of Political Economy, University of Chicago Press, vol. 121(5), pages 803 - 843.
Abstract: We present a theory of context-dependent choice in which a consumer's attention is drawn to salient attributes of goods, such as quality or price. An attribute is salient for a good when it stands out among the good's characteristics, in the precise sense of being furthest away in that good from its average level in the choice set (or more generally, an evoked set). A local thinker chooses among goods by attaching disproportionately high weights to their salient attributes. When goods are characterized by only one quality attribute and price, salience tilts choices toward goods with higher ratios of quality to price. We use the model to account for a variety of disparate bits of evidence, including decoy effects in consumer choice, context-dependent willingness to pay, balance of qualities in desirable goods, and shifts in demand toward low quality goods when all prices in a category rise. We then apply the model to study discounts and sales, and to explain demand for low deductible insurance.
Handle: RePEc:nbr:nberwo:17947
Template-Type: ReDIF-Paper 1.0
Title: Costly Labor Adjustment: Effects of China's Employment Regulations
Classification-JEL: E24; J08; J23; O38; O53; P2
Author-Name: Russell Cooper
Author-Name: Guan Gong
Author-Name: Ping Yan
Note: EFG
Number: 17948
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17948
File-URL: http://www.nber.org/papers/w17948.pdf
File-Format: application/pdf
Abstract: This paper studies the employment and productivity implications of new labor regulations in China. These new restrictions are intended to protect workers' employment conditions by, among other things, increasing firing costs and increasing compensation. We estimate a model of costly labor adjustment from data prior to the policy. We use the estimated model to simulate the effects of the policy. We find that increases in severance payments lead to sizable job creation, a significant reduction in labor reallocation and an increase in the exit rate. A policy of credit market liberalization will reduce employment, slightly increase labor reallocation and reduce exit. The estimated elasticity of labor demand is about unity so that an increase in the base wage leads to sizable job losses.
Handle: RePEc:nbr:nberwo:17948
Template-Type: ReDIF-Paper 1.0
Title: Education, Cognition, Health Knowledge, and Health Behavior
Classification-JEL: I12; I20
Author-Name: Naci H. Mocan
Author-Person: pmo270
Author-Name: Duha Tore Altindag
Author-Person: pal449
Note: CH EH
Number: 17949
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17949
File-URL: http://www.nber.org/papers/w17949.pdf
File-Format: application/pdf
Publication-Status: published as “Health Knowledge, Education and the Demand for Health Inputs,” European Journal of Health Economics, (2014), 15(3), pp. 265-79 . (with Naci Mocan).
Abstract: Using data from the NLSY97 we analyze the impact of education on health behaviors, measured by smoking and heavy drinking. Controlling for health knowledge does not influence the impact of education on health behaviors, supporting the productive efficiency hypothesis. Although cognition, as measured by test scores, appears to have an effect on the relationship between education and health behaviors, this effect disappears once the models control for family fixed effects. Similarly, the impact of education on smoking and heavy drinking is the same between those with and without a learning disability, suggesting that cognition is not likely to be a significant factor in explaining the impact of education on health behaviors.
Handle: RePEc:nbr:nberwo:17949
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Corporate Sustainability on Organizational Processes and Performance
Classification-JEL: G3; M14
Author-Name: Robert G. Eccles
Author-Name: Ioannis Ioannou
Author-Name: George Serafeim
Note: CF
Number: 17950
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17950
File-URL: http://www.nber.org/papers/w17950.pdf
File-Format: application/pdf
Publication-Status: published as Robert G. Eccles & Ioannis Ioannou & George Serafeim, 2014. "The Impact of Corporate Sustainability on Organizational Processes and Performance," Management Science, vol 60(11), pages 2835-2857.
Abstract: We investigate the effect of corporate sustainability on organizational processes and performance. Using a matched sample of 180 US companies, we find that corporations that voluntarily adopted sustainability policies by 1993 - termed as High Sustainability companies - exhibit by 2009 distinct organizational processes compared to a matched sample of companies that adopted almost none of these policies - termed as Low Sustainability companies. The boards of directors of High Sustainability companies are more likely to be formally responsible for sustainability and top executive compensation incentives are more likely to be a function of sustainability metrics. High Sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. Finally, High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.
Handle: RePEc:nbr:nberwo:17950
Template-Type: ReDIF-Paper 1.0
Title: Who Suffers During Recessions?
Classification-JEL: J11; J21
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Author-Name: Douglas L. Miller
Author-Person: pmi179
Author-Name: Jessamyn Schaller
Author-Person: psc907
Note: CH ED LS AP
Number: 17951
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17951
File-URL: http://www.nber.org/papers/w17951.pdf
File-Format: application/pdf
Publication-Status: published as Hilary Hoynes & Douglas L. Miller & Jessamyn Schaller, 2012. "Who Suffers during Recessions?," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 27-48, Summer.
Abstract: In this paper we examine how business cycles affect labor market outcomes in the United States. We conduct a detailed analysis of how cycles affect outcomes differentially across persons of differing age, education, race, and gender, and we compare the cyclical sensitivity during the Great Recession to that in the early 1980s recession. We present raw tabulations and estimate a state panel data model that leverages variation across US states in the timing and severity of business cycles. We find that the impacts of the Great Recession are not uniform across demographic groups and have been felt most strongly for men, black and Hispanic workers, youth, and low education workers. These dramatic differences in the cyclicality across demographic groups are remarkably stable across three decades of time and throughout recessionary periods and expansionary periods. For the 2007 recession, these differences are largely explained by differences in exposure to cycles across industry-occupation employment.
Handle: RePEc:nbr:nberwo:17951
Template-Type: ReDIF-Paper 1.0
Title: A Personal Touch: Text Messaging for Loan Repayment
Classification-JEL: D21; D92; G21; O16; O17
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Melanie Morten
Author-Person: pmo833
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: CF LS
Number: 17952
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17952
File-URL: http://www.nber.org/papers/w17952.pdf
File-Format: application/pdf
Abstract: We worked with two microlenders to test impacts of randomly assigned reminders for loan repayments in the "text messaging capital of the world". We do not find strong evidence that loss versus gain framing or messaging timing matter. Messages only robustly improve repayment when they include the loan officer's name. This effect holds for clients serviced by the loan officer previously but not for first-time borrowers. Taken together, the results highlight the potential and limits of communications technology for mitigating moral hazard, and suggest that personal obligation/reciprocity between borrowers and bank employees can be harnessed to help overcome market failures.
Handle: RePEc:nbr:nberwo:17952
Template-Type: ReDIF-Paper 1.0
Title: A theory of the perturbed consumer with general budgets
Classification-JEL: C25; D11
Author-Name: Daniel L. McFadden
Author-Name: Mogens Fosgerau
Author-Person: pfo10
Note: AG
Number: 17953
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17953
File-URL: http://www.nber.org/papers/w17953.pdf
File-Format: application/pdf
Abstract: We consider demand systems for utility-maximizing consumers facing general budget constraints whose utilities are perturbed by additive linear shifts in marginal utilities. Budgets are required to be compact but are not required to be convex. We define demand generating functions (DGF) whose subgradients with respect to these perturbations are convex hulls of the utility-maximizing demands. We give necessary as well as sufficient conditions for DGF to be consistent with utility maximization, and establish under quite general conditions that utility-maximizing demands are almost everywhere single-valued and smooth in their arguments. We also give sufficient conditions for integrability of perturbed demand. Our analysis provides a foundation for applications of consumer theory to problems with nonlinear budget constraints.
Handle: RePEc:nbr:nberwo:17953
Template-Type: ReDIF-Paper 1.0
Title: How Can Bill and Melinda Gates Increase Other People's Donations to Fund Public Goods?
Classification-JEL: C93; D64; H4
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: John A. List
Author-Person: pli176
Note: PE
Number: 17954
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17954
File-URL: http://www.nber.org/papers/w17954.pdf
File-Format: application/pdf
Publication-Status: published as Dean Karlan & John A. List, 2020. "How can Bill and Melinda Gates increase other people's donations to fund public goods?," Journal of Public Economics, vol 191.
Abstract: We conducted a fundraising experiment with an international development nonprofit organization in which a matching grant offered by the Bill and Melinda Gates Foundation raised more funds than one from an anonymous donor. The effect is strongest for solicitees who previously gave to other BMGF-supported, poverty charities. With supporting evidence from two other fundraising experiments as well as a survey experiment, we argue this is consistent with a quality signal mechanism. Alternative mechanisms are discussed, and not ruled out. The results help inform theories about charitable giving decision-making, and provide guidance to organizations and large donors on how to overcome information asymmetries hindering fundraising.
Handle: RePEc:nbr:nberwo:17954
Template-Type: ReDIF-Paper 1.0
Title: In Whom We Trust: The Role of Certification Agencies in Online Drug Markets
Classification-JEL: D18; D8; I18
Author-Name: Roger Bate
Author-Name: Ginger Zhe Jin
Author-Name: Aparna Mathur
Author-Person: pma1162
Note: IO
Number: 17955
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17955
File-URL: http://www.nber.org/papers/w17955.pdf
File-Format: application/pdf
Publication-Status: published as Roger Bate, Ginger Zhe Jin and Aparna Mathur# “In Whom We Trust: the Role of Certification Agencies in Online Drug Markets,” the Berkeley Express Journal of Economic Analysis & Policy, Contribution Tier, Volume 14, Issue 1, Pages 111–150, ISSN (Online) 1935-1682, ISSN (Print) 2194-6108, DOI: 10.1515/bejeap-2013-0085, December 2013. Also available as NBER working paper #17955.
Abstract: This paper uses an audit sample and a consumer survey to study the intriguing market of online prescription drugs facing US customers, and assesses the role that certification agencies play in online drug markets. On the supply side, we acquire samples of five popular brand-name prescription drugs from three types of online pharmacies: tier 1 are US-based and certified by the National Association of Boards of Pharmacy (NABP) or LegitScript.com, tier 2 are certified by PharmacyChecker.com or the Canadian International Pharmacy Association (CIPA) but not by NABP or LegitScript, tier 3 are not certified by any of the four agencies. Most tier 2 and tier 3 websites are foreign. We find that 37 of the 365 delivered samples are different from the products we ordered and therefore non-testable. Conditional on testable samples, Raman spectrometry test finds no failure of authenticity except for 8 Viagra samples from tier-3 websites. After controlling for testability and authenticity, tier 2 websites are 49.2% cheaper (p<0.01) and tier 3 websites are 54.8% cheaper (p<0.01) than tier 1 sites. These differences are driven by non-Viagra drugs. For Viagra, failing samples are cheaper but there is no significant price difference across tiers once we condition on testability and authenticity. To study the demand side, we designed a survey that was distributed by RxRights. Among the 2,522 respondents who have purchased prescription medication and are concerned about the price of US pharmaceuticals, results show that 61.54% purchase drugs online and mostly from foreign websites, citing cost saving as the leading reason. Conditional on shopping online, 41.11% check with a credentialing agency. Both samples convey a consistent message that certification agencies deliver useful information for foreign websites and online consumers. Further, while these findings confirm the FDA warning against rogue websites, they do suggest that a blanket ban against all foreign websites may deny consumers substantial savings from certified tier 2 websites.
Handle: RePEc:nbr:nberwo:17955
Template-Type: ReDIF-Paper 1.0
Title: How Frequent Are Small Price Changes?
Classification-JEL: E3; E4
Author-Name: Martin S. Eichenbaum
Author-Person: pei4
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Sergio Rebelo
Author-Name: Josephine Smith
Author-Person: psm126
Note: EFG ME
Number: 17956
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17956
File-URL: http://www.nber.org/papers/w17956.pdf
File-Format: application/pdf
Publication-Status: published as Martin Eichenbaum & Nir Jaimovich & Sergio Rebelo & Josephine Smith, 2014. "How Frequent Are Small Price Changes?," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(2), pages 137-55, April.
Abstract: Recent empirical work suggests that small price changes are relatively common. This evidence has been used to criticize classic menu-cost models. In this paper, we use scanner data from a national supermarket chain and micro data from the Consumer Price Index to reassess the importance of small price changes. We argue that the vast majority of these changes are due to measurement error. We conclude that the evidence on the prevalence of small price changes is much too weak to be used as a litmus test of nominal rigidity models.
Handle: RePEc:nbr:nberwo:17956
Template-Type: ReDIF-Paper 1.0
Title: On the Generalizability of Experimental Results in Economics
Classification-JEL: C9; C91; C92; C93; D03
Author-Name: Omar Al-Ubaydli
Author-Person: pal295
Author-Name: John A. List
Author-Person: pli176
Note: PE
Number: 17957
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17957
File-URL: http://www.nber.org/papers/w17957.pdf
File-Format: application/pdf
Publication-Status: published as in "Handbook of Experimental Economic Methodology," eds. Guillaume R. Fréchette and Andrew Schotter. Oxford University Press, 2013.
Abstract: Economists are increasingly turning to the experimental method as a means to estimate causal effects. By using randomization to identify key treatment effects, theories previously viewed as untestable are now scrutinized, efficacy of public policies are now more easily verified, and stakeholders can swiftly add empirical evidence to aid their decision-making. This study provides an overview of experimental methods in economics, with a special focus on developing an economic theory of generalizability. Given that field experiments are in their infancy, our secondary focus pertains to a discussion of the various parameters that they identify, and how they add to scientific knowledge. We conclude that until we conduct more field experiments that build a bridge between the lab and the naturally-occurring settings of interest we cannot begin to make strong conclusions empirically on the crucial question of generalizability from the lab to the field.
Handle: RePEc:nbr:nberwo:17957
Template-Type: ReDIF-Paper 1.0
Title: Inflation Expectations and Readiness to Spend: Cross-Sectional Evidence
Classification-JEL: D12; E21; E31; E52
Author-Name: Rüdiger Bachmann
Author-Person: pba751
Author-Name: Tim O. Berg
Author-Name: Eric R. Sims
Author-Person: psi336
Note: EFG ME
Number: 17958
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17958
File-URL: http://www.nber.org/papers/w17958.pdf
File-Format: application/pdf
Publication-Status: published as “Inflation Expectations and Readiness to Spend at the Zero Lower Bound: Cross-Sectional Evidence” with Rudi Bachmann and Tim Berg (January 2014), forthcoming, American Economic Journal: Economic Policy
Abstract: There have recently been suggestions for monetary policy to engineer higher inflation expectations so as to stimulate current spending. But what is the empirical relationship between inflation expectations and spending? We use the underlying micro data from the Michigan Survey of Consumers to test whether increased inflation expectations are indeed associated with greater reported readiness to spend. Cross-sectional data deliver the necessary variation to test whether the relationship between inflation expectations and spending changes in the recent zero lower bound regime compared to normal times, as suggested by many standard models. We find that the impact of inflation expectations on the reported readiness to spend on durable goods is statistically insignificant and small in absolute value when compared to other variables, such as household income or expected business conditions. Moreover, it appears that higher expected price changes have an adverse impact on the reported readiness to spend. A one percent increase in expected inflation reduces the probability that households have a positive attitude towards spending by about 0.1 percentage points. At the zero lower bound this small adverse effect remains, and is, if anything, slightly stronger. We also extend our analysis to the reported readiness to spend on cars and houses and obtain similar results. Altogether our results tell a cautionary tale for monetary (or fiscal) policy designed to engineer inflation expectations in order to generate greater current spending.
Handle: RePEc:nbr:nberwo:17958
Template-Type: ReDIF-Paper 1.0
Title: Platform Pricing at Sports Card Conventions
Classification-JEL: D4; L1; L8
Author-Name: Ginger Zhe Jin
Author-Name: Marc Rysman
Author-Person: pry6
Note: IO
Number: 17959
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17959
File-URL: http://www.nber.org/papers/w17959.pdf
File-Format: application/pdf
Publication-Status: published as Ginger Zhe Jin & Marc Rysman, 2015. "Platform Pricing at Sports Card Conventions," The Journal of Industrial Economics, vol 63(4), pages 704-735.
Abstract: We study a new data set of US sports card conventions in order to evaluate the pricing theory of two-sided markets. Conventions are two-sided because organizers must set fees to attract both consumers and dealers. We have detailed information on consumer price, dealer price and, since most conventions are local, the market structure for conventions. We present several findings: first, consumer pricing decreases with competition at any reasonable distance, but pricing to dealers is insensitive to competition and in longer distances even increases with competition. Second, when consumer price is zero (and thus constrained), dealer price decreases more strongly with competition. These results are compatible with existing models of two-sided markets, but are difficult to explain without such models.
Handle: RePEc:nbr:nberwo:17959
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of the Black-White Test Score Gap in Grades K-3: The Fragility of Results
Classification-JEL: C18; I24; J15
Author-Name: Timothy N. Bond
Author-Person: pbo438
Author-Name: Kevin Lang
Author-Person: pla83
Note: CH ED LS
Number: 17960
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17960
File-URL: http://www.nber.org/papers/w17960.pdf
File-Format: application/pdf
Publication-Status: published as Timothy N. Bond & Kevin Lang, 2013. "The Evolution of the Black-White Test Score Gap in Grades Kâ3: The Fragility of Results," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1468-1479, December.
Abstract: Although both economists and psychometricians typically treat them as interval scales, test scores are reported using ordinal scales. Using the Early Childhood Longitudinal Study and the Children of the National Longitudinal Survey, we examine the effect of order-preserving scale transformations on the evolution of the black-white reading test score gap from kindergarten entry through third grade. Plausible transformations reverse the growth of the gap in the CNLSY and greatly mitigate it in the ECLS-K during early school years. All growth from entry through first grade and a nontrivial proportion from first to third grade probably reflects scaling decisions.
Handle: RePEc:nbr:nberwo:17960
Template-Type: ReDIF-Paper 1.0
Title: The Rise of Middle Kingdoms: Emerging Economies in Global Trade
Classification-JEL: F10
Author-Name: Gordon H. Hanson
Author-Person: pha80
Note: ITI
Number: 17961
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17961
File-URL: http://www.nber.org/papers/w17961.pdf
File-Format: application/pdf
Publication-Status: published as Gordon H. Hanson, 2012. "The Rise of Middle Kingdoms: Emerging Economies in Global Trade," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 41-64, Spring.
Abstract: In this paper, I examine changes in international trade associated with the integration of low- and middle-income countries into the global economy. Led by China and India, the share of developing economies in global exports more than doubled between 1994 and 2008. One feature of new trade patterns is greater South-South trade. China and India have booming demand for imported raw materials, which they use to build cities and factories. Industrialization throughout the South has deepened global production networks, contributing to greater trade in intermediate inputs. A second feature of new trade patterns is the return of comparative advantage as a driver of global commerce. Growth in low- and middle-income nations makes specialization according to comparative advantage more important for the global composition of trade, as North-South and South-South commerce overtakes North-North flows. China's export specialization evolves rapidly over time, revealing a capacity to speed up product ladders. Most developing countries hyper-specialize in handful of export products. The emergence of low- and middle-income countries in trade reveals significant gaps in knowledge about the deep empirical determinants of export specialization, the dynamics of specialization patterns, and why South-South and North-North trade differ.
Handle: RePEc:nbr:nberwo:17961
Template-Type: ReDIF-Paper 1.0
Title: Layoffs, Lemons and Temps
Classification-JEL: D82; E24; J23
Author-Name: Christopher L. House
Author-Person: pho56
Author-Name: Jing Zhang
Author-Person: pzh153
Note: EFG LS
Number: 17962
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17962
File-URL: http://www.nber.org/papers/w17962.pdf
File-Format: application/pdf
Abstract: We develop a dynamic equilibrium model of labor demand with adverse selection. Firms learn the quality of newly hired workers after a period of employment. Adverse selection makes it costly to hire new workers and to release productive workers. As a result, firms hoard labor and under-react to labor demand shocks. The adverse selection problem also creates a market for temporary workers. In equilibrium, firms hire a buffer stock of permanent workers and respond to changing business conditions by varying their temp workers. A hiring subsidy or tax can improve welfare by discouraging firms from hoarding too many productive workers.
Handle: RePEc:nbr:nberwo:17962
Template-Type: ReDIF-Paper 1.0
Title: Trade, Variety, and Immigration
Classification-JEL: F1
Author-Name: Chen Bo
Author-Name: David S. Jacks
Author-Person: pja138
Note: DAE ITI
Number: 17963
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17963
File-URL: http://www.nber.org/papers/w17963.pdf
File-Format: application/pdf
Publication-Status: published as Chen, Bo & Jacks, David S., 2012. "Trade, variety, and immigration," Economics Letters, Elsevier, vol. 117(1), pages 243-246.
Abstract: What are the gains from international trade? And how do immigrants influence this process? While economists have considered these questions before, particularly in the context of aggregate trade flows, there has been no work assessing the relation between immigration and international trade in varieties--that is, the trade of particular goods from particular geographic areas. We consider the case of Canada, document its impressive experience with import variety growth in the period from 1988 to 2007, and relate this variety growth to the process of immigration. We find that import varieties grew 76%, that this growth is associated with a welfare gain to Canadian consumers as large as 28%, and that enhanced immigration flows may be responsible for 25% of this variety growth and its attendant welfare gains for native-born Canadians.
Handle: RePEc:nbr:nberwo:17963
Template-Type: ReDIF-Paper 1.0
Title: Explaining Recent Trends in the U.S. Teen Birth Rate
Classification-JEL: I28; J13
Author-Name: Melissa Schettini Kearney
Author-Name: Phillip B. Levine
Author-Person: ple553
Note: CH LS
Number: 17964
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17964
File-URL: http://www.nber.org/papers/w17964.pdf
File-Format: application/pdf
Abstract: We investigate trends in the U.S. rate of teen childbearing between 1981 and 2010, giving particular attention to the sizable decline that has occurred since 1991. Our primary focus is on establishing the role of state-level demographic changes, economic conditions, and targeted policies in driving recent aggregate trends. We offer three main observations. First, the recent decline cannot be explained by the changing racial and ethnic composition of teens; in fact, all else equal, a rising share of Hispanic teens would have led to an increase in teen childbearing. A temporary increase in the share of teens aged 18-19 can account for nearly half of the transitory increase in teen childbearing around 1991. Second, the only targeted policies that have had a statistically discernible impact on teen birth rates are declining welfare benefits and expanded access to family planning services through Medicaid. However, the combined effect of these two policies is estimated to account for only 12 percent of the observed decline in teen childbearing from 1991-2010. Third, weak labor market conditions, as measured by the unemployment rate, do appear to lead to lower teen birth rates and can account for 28 percent of the decline in teen birth rates since the Great Recession began.
Handle: RePEc:nbr:nberwo:17964
Template-Type: ReDIF-Paper 1.0
Title: Why is the Teen Birth Rate in the United States so High and Why Does it Matter?
Classification-JEL: I28; J13
Author-Name: Melissa Schettini Kearney
Author-Name: Phillip B. Levine
Author-Person: ple553
Note: CH EH LS
Number: 17965
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17965
File-URL: http://www.nber.org/papers/w17965.pdf
File-Format: application/pdf
Publication-Status: published as Melissa S. Kearney & Phillip B. Levine, 2012. "Why Is the Teen Birth Rate in the United States So High and Why Does It Matter?," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 141-63, Spring.
Abstract: This paper examines two aspects of teen childbearing in the United States. First, it reviews and synthesizes the evidence on the reasons why teen birth rates are so uniquely high in the United States and especially in some states. Second, it considers why and how it matters. We argue that economists' typical explanations are unable to account for any sizable share of the geographic variation. We describe some recent analysis indicating that the combination of being poor and living in a more unequal (and less mobile) location, like the United States, leads young women to choose early, non-marital childbearing at elevated rates, potentially because of their lower expectations of future economic success. Consistent with this view, the most rigorous studies on the topic find that teen childbearing has very little, if any, direct negative economic consequence. If it is explained by the low economic trajectory that some young women face, then it makes sense that having a child as a teen would not be an additional cause of poor economic outcomes. These findings lead us to conclude that the high rate of teen childbearing in the United States matters mostly because it is a marker of larger, underlying social problems.
Handle: RePEc:nbr:nberwo:17965
Template-Type: ReDIF-Paper 1.0
Title: The Labor Market Four Years Into the Crisis: Assessing Structural Explanations
Classification-JEL: E24; E32; E6; J21; J3; J63; J64
Author-Name: Jesse Rothstein
Author-Person: pro180
Note: EFG LS
Number: 17966
Creation-Date: 2012-03
Order-URL: http://www.nber.org/papers/w17966
File-URL: http://www.nber.org/papers/w17966.pdf
File-Format: application/pdf
Publication-Status: published as Jesse Rothstein, 2012. "The Labor Market Four Years into the Crisis: Assessing Structural Explanations," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 65(3), pages 437-500, July.
Abstract: Four years after the beginning of the Great Recession, the labor market remains historically weak. Many observers have concluded that "structural" impediments to recovery bear some of the blame. This paper reviews such structural explanations. I find that there is little evidence supporting these hypotheses, and that the bulk of the evidence is more consistent with the hypothesis that continued poor performance is primarily attributable to shortfalls in the aggregate demand for labor.
Handle: RePEc:nbr:nberwo:17966
Template-Type: ReDIF-Paper 1.0
Title: Inflation Targeting and Financial Stability
Classification-JEL: E52
Author-Name: Michael Woodford
Author-Person: pwo3
Note: ME
Number: 17967
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17967
File-URL: http://www.nber.org/papers/w17967.pdf
File-Format: application/pdf
Abstract: A number of commentators have argued that the desirability of inflation targeting as a framework for monetary policy analysis should be reconsidered in light of the global financial crisis, on the ground that it requires neglect of the implications of monetary policy for financial stability. This paper argues that monetary policy may indeed affect the severity of risks to financial stability, but that it is possible to generalize an inflation targeting framework to take account of financial stability concerns alongside traditional stabilization objectives. The resulting framework can still be viewed as a form of flexible inflation targeting; in particular, the paper proposes a target criterion that would still imply an invariant long-run price level, despite fluctuations over time in risks to financial stability or even the occurrence of occasional financial crises.
Handle: RePEc:nbr:nberwo:17967
Template-Type: ReDIF-Paper 1.0
Title: Corruption
Classification-JEL: D02; O10; O12; O43
Author-Name: Abhijit Banerjee
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Author-Name: Rema Hanna
Author-Person: pha883
Note: POL
Number: 17968
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17968
File-URL: http://www.nber.org/papers/w17968.pdf
File-Format: application/pdf
Publication-Status: published as “Corruption,” (with Rema Hanna and Sendhil Mullainathan), The Handbook of Organizational Economics. Ed. Robert Gibbons and John Roberts. Princeton University Press, 1109-‐1147, 2012.
Abstract: In this paper, we provide a new framework for analyzing corruption in public bureaucracies. The standard way to model corruption is as an example of moral hazard, which then leads to a focus on better monitoring and stricter penalties with the eradication of corruption as the final goal. We propose an alternative approach which emphasizes why corruption arises in the first place. Corruption is modeled as a consequence of the interaction between the underlying task being performed by bureaucrat, the bureaucrat's private incentives and what the principal can observe and control. This allows us to study not just corruption but also other distortions that arise simultaneously with corruption, such as red-tape and ultimately, the quality and efficiency of the public services provided, and how these outcomes vary depending on the specific features of this task. We then review the growing empirical literature on corruption through this perspective and provide guidance for future empirical research.
Handle: RePEc:nbr:nberwo:17968
Template-Type: ReDIF-Paper 1.0
Title: Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence
Classification-JEL: F11; Q11; Q15; Q17; R14
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Dave Donaldson
Note: ITI
Number: 17969
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17969
File-URL: http://www.nber.org/papers/w17969.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot & Dave Donaldson, 2012. "Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence," American Economic Review, American Economic Association, vol. 102(3), pages 453-58, May.
Abstract: When asked to name one proposition in the social sciences that is both true and non-trivial, Paul Samuelson famously replied: 'Ricardo's theory of comparative advantage'. Truth, however, in Samuelson's reply refers to the fact that Ricardo's theory of comparative advantage is mathematically correct, not that it is empirically valid. The goal of this paper is to assess the empirical performance of Ricardo's ideas. We use novel agricultural data that describe the productivity in 17 crops of 1.6 million parcels of land in 55 countries around the world. Crucially, this dataset contains information about the productivity of each parcel of land in all crops, not just those that are currently being grown. This direct information about relative productivity differences across economic activities allows us to compute, for the first time, the output predicted by Ricardo's theory of comparative advantage. Despite all of the real-world considerations from which this theory abstracts, we find that Ricardo's theory of comparative advantage has significant explanatory power in the data, at least within the scope of our analysis.
Handle: RePEc:nbr:nberwo:17969
Template-Type: ReDIF-Paper 1.0
Title: Choice Probability Generating Functions
Classification-JEL: C25; D11
Author-Name: Mogens Fosgerau
Author-Person: pfo10
Author-Name: Daniel L. McFadden
Author-Name: Michel Bierlaire
Note: AG
Number: 17970
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17970
File-URL: http://www.nber.org/papers/w17970.pdf
File-Format: application/pdf
Publication-Status: published as Mogens Fosgerau & Daniel McFadden & Michel Bierlaire, 2013. "Choice probability generating functions," Journal of Choice Modelling, vol 8(), pages 1-18.
Abstract: This paper considers discrete choice, with choice probabilities coming from maximization of preferences from a random utility field perturbed by additive location shifters (ARUM). Any ARUM can be characterized by a choice-probability generating function (CPGF) whose gradient gives the choice probabilities, and every CPGF is consistent with an ARUM. We relate CPGF to multivariate extreme value distributions, and review and extend methods for constructing CPGF for applications.
Handle: RePEc:nbr:nberwo:17970
Template-Type: ReDIF-Paper 1.0
Title: Productivity and the Welfare of Nations
Classification-JEL: D24; D90; E20; O47
Author-Name: Susanto Basu
Author-Person: pba274
Author-Name: Luigi Pascali
Author-Person: ppa551
Author-Name: Fabio Schiantarelli
Author-Person: psc8
Author-Name: Luis Serven
Author-Person: pse75
Note: EFG ITI PR
Number: 17971
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17971
File-URL: http://www.nber.org/papers/w17971.pdf
File-Format: application/pdf
Publication-Status: published as Susanto Basu & Luigi Pascali & Fabio Schiantarelli & Luis Serven, 2022. "Productivity and the Welfare of Nations," Journal of the European Economic Association, vol 20(4), pages 1647-1682.
Abstract: We show that the welfare of a country's infinitely-lived representative consumer is summarized, to a first order, by total factor productivity (TFP) and by the capital stock per capita. These variables suffice to calculate welfare changes within a country, as well as welfare differences across countries. The result holds regardless of the type of production technology and the degree of product market competition. It applies to open economies as well, if TFP is constructed using domestic absorption, instead of gross domestic product, as the measure of output. Welfare relevant TFP needs to be constructed with prices and quantities as perceived by consumers, not firms. Thus, factor shares need to be calculated using after-tax wages and rental rates, and will typically sum to less than one. These results are used to calculate welfare gaps and growth rates in a sample of advanced countries with high-quality data on output, hours worked, and capital. We also present evidence for a broader sample that includes both advanced and developing countries.
Handle: RePEc:nbr:nberwo:17971
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Work First Job Placements on the Distribution of Earnings: An Instrumental Variable Quantile Regression Approach
Classification-JEL: J24; J48; J62
Author-Name: David H. Autor
Author-Person: pau9
Author-Name: Susan N. Houseman
Author-Person: pho473
Author-Name: Sari Pekkala Kerr
Note: LS
Number: 17972
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17972
File-URL: http://www.nber.org/papers/w17972.pdf
File-Format: application/pdf
Publication-Status: published as David H. Autor & Susan N. Houseman & Sari Pekkala Kerr, 2017. "The Effect of Work First Job Placements on the Distribution of Earnings: An Instrumental Variable Quantile Regression Approach," Journal of Labor Economics, University of Chicago Press, vol. 35(1), pages 149-190.
Abstract: Federal and state employment programs for low-skilled workers typically emphasize rapid placement of participants into jobs and often place a large fraction of participants into temporary-help agency jobs. Using unique administrative data from Detroit's welfare-to-work program, we apply the Chernozhukov-Hansen instrumental variables quantile regression (IVQR) method to estimate the causal effects of welfare-to-work job placements on the distribution of participants' earnings. We find that neither direct-hire nor temporary-help job placements significantly affect the lower tail of the earnings distribution. Direct-hire placements, however, substantially raise the upper tail, yielding sizable earnings increases for more than fifty percent of participants over the medium-term (one to two years following placement). Conversely, temporary-help placements have zero or negative earnings impacts at all quantiles, and these effects are economically large and significant at higher quantiles. In net, we find that the widespread practice of placing disadvantaged workers into temporary-help jobs is an ineffective tool for improving earnings and, moreover, that programs focused solely on job placement fail to improve earnings among those who are hardest to serve. Methodologically, one surprising result is that a reduced-form quantile IV approach, akin to two-step instrumental variables, produces near-identical point estimates to the structural IVQR approach, which is based on much stronger assumptions.
Handle: RePEc:nbr:nberwo:17972
Template-Type: ReDIF-Paper 1.0
Title: Stock Price Expectations and Stock Trading
Classification-JEL: D83; D84; G11
Author-Name: Michael D. Hurd
Author-Person: phu137
Author-Name: Susann Rohwedder
Author-Person: pro270
Note: AG
Number: 17973
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17973
File-URL: http://www.nber.org/papers/w17973.pdf
File-Format: application/pdf
Abstract: Background: The fact that many individuals inexplicably fail to buy stocks, despite the historical evidence for a good return on investment has been referred to as the stock market puzzle. However, measurements of the subjective probability of a gain show that people are more pessimistic than historical outcomes would suggest. Further, expectations of future stock price increases apparently depend on old information, which would seem to be at odds with rational expectations in the context of efficient markets. To shed light on these apparent paradoxes, we analyzed the relationships between actual stock market price changes and the subjective probability of price changes, and between the subjective probability of price changes and the likelihood of engaging in stock trading. Approach: Drawing on 31 waves of longitudinal data on investment behavior from the American Life Panel surveys from November 2008 to the present, we tracked high frequency changes in expectations at the individual level and related them to high frequency changes in stock market prices. We analyzed both individuals who held stock in retirement accounts and those who held stocks outside of these accounts. Results: Changes in the subjective probability for one-year and 10-year gains in stock prices correlated with the Standard and Poor 500 Index with lags ranging from changes during the most recent week to changes more than a month before. This relationship was stronger among those who professed to follow the stock market and to have good knowledge than among those whose understanding is poor. Among individuals who held stock outside of retirement accounts, the likelihood of buying and selling stock was more strongly associated with recent stock behavior than among those who held stocks only within retirement accounts. Conclusions: On average, subjective expectations of stock market behavior depend on stock price changes. Furthermore, stock trading responds to changes in expectations even when the change in expectations was several weeks before the trade. These results suggest that expectations and trading are related to stock price changes in an intertemporally complex manner. Our findings also confirm that expectations about stock market gains are pessimistic, which would imply that many people simply view savings accounts as a better investment. We conclude that we need a better understanding of expectation formation and how those expectations are translated into choice.
Handle: RePEc:nbr:nberwo:17973
Template-Type: ReDIF-Paper 1.0
Title: Measuring Total Household Spending in a Monthly Internet Survey: Evidence from the American Life Panel
Classification-JEL: C81; C83; D12
Author-Name: Michael D. Hurd
Author-Person: phu137
Author-Name: Susann Rohwedder
Author-Person: pro270
Note: AG
Number: 17974
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17974
File-URL: http://www.nber.org/papers/w17974.pdf
File-Format: application/pdf
Publication-Status: published as Measuring Total Household Spending in a Monthly Internet Survey: Evidence from the American Life Panel, Michael D. Hurd, Susann Rohwedder. in Improving the Measurement of Consumer Expenditures, Carroll, Crossley, and Sabelhaus. 2015
Abstract: Beginning in May 2009 we fielded a monthly Internet survey designed to measure total household spending as the aggregate of about 40 spending components. This paper reports on a number of outcomes from 30 waves of data collection. These outcomes include sample attrition, indicators of data quality such as item nonresponse and the variance in total spending, and substantive results such as the trajectory of total spending and the trajectories of some components of spending. We conclude that high-frequency surveying for total spending is feasible and that the resulting data show expected patterns of levels and change.
Handle: RePEc:nbr:nberwo:17974
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Firm Characteristics and Stock Returns: The Role of Investment-Specific Shocks
Classification-JEL: E22; E32; G12
Author-Name: Leonid Kogan
Author-Person: pko698
Author-Name: Dimitris Papanikolaou
Author-Person: ppa463
Note: AP
Number: 17975
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17975
File-URL: http://www.nber.org/papers/w17975.pdf
File-Format: application/pdf
Publication-Status: published as Kogan, L., D. Papanikolaou, 2013, “Firm Characteristics and Stock Returns: The Role of Investment-Specific Shocks.” Review of Financial Studies, 26, 2718-2759.
Abstract: We provide a theoretical model linking firm characteristics and expected returns. The key ingredient of our model is technological shocks embodied in new capital (IST shocks), which affect the profitability of new investments. Firms' exposure to IST shocks is endogenously determined by the fraction of firm value due to growth opportunities. In our structural model, several firm characteristics - Tobin's Q, past investment, earnings-price ratios, market betas, and idiosyncratic volatility of stock returns - help predict the share of growth opportunities in the firm's market value, and are therefore correlated with the firm's exposure to IST shocks and risk premia. Our calibrated model replicates: i) the predictability of returns by firm characteristics; ii) the comovement of stock returns on firms with similar characteristics; iii) the failure of the CAPM to price portfolio returns of firms sorted on characteristics; iv) the time-series predictability of market portfolio returns by aggregate investment and valuation ratios; and v) a downward sloping term structure of risk premia for dividend strips. Our model delivers testable predictions about the behavior of firm-level real variables - investment and output growth - that are supported by the data.
Handle: RePEc:nbr:nberwo:17975
Template-Type: ReDIF-Paper 1.0
Title: Global Supply Chains and Wage Inequality
Classification-JEL: F1
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Jonathan Vogel
Author-Person: pvo58
Author-Name: Su Wang
Note: ITI
Number: 17976
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17976
File-URL: http://www.nber.org/papers/w17976.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot & Jonathan Vogel & Su Wang, 2012. "Global Supply Chains and Wage Inequality," American Economic Review, American Economic Association, vol. 102(3), pages 396-401, May.
Abstract: A salient feature of globalization in recent decades is the emergence of "global supply chains" in which different countries specialize in different stages of a sequential production process. In Arnaud Costinot, Jonathan Vogel and Su Wang (2011), CVW hereafter, we have developed a simple theory of trade with sequential production to shed light on how global supply chains affect the interdependence of nations. In this paper we develop a multi-factor extension of CVW to explore how the emergence of global supply chains may affect wage inequality within countries. Our main theoretical prediction is that the emergence of global supply chains has opposite effects on wage inequality among workers employed at the bottom and the top of these chains. This suggests that the consequences of globalization on wage inequality may be very different in primary sectors like agriculture or mining than in manufacturing sectors.
Handle: RePEc:nbr:nberwo:17976
Template-Type: ReDIF-Paper 1.0
Title: Energy Policy with Externalities and Internalities
Classification-JEL: D03; D04; D11; H21; H22; H23; L51; L62; L97; Q41; Q48
Author-Name: Hunt Allcott
Author-Person: pal171
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Author-Name: Dmitry Taubinsky
Note: EEE PE
Number: 17977
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17977
File-URL: http://www.nber.org/papers/w17977.pdf
File-Format: application/pdf
Publication-Status: published as Allcott, Hunt, Sendhil Mullainathan, and Dmitry Taubinsky (Forthcoming). “Energy Policy with Externalities and Internalities.” Journal of Public Economics. Volume 112, April 2014, Pages 72–88
Abstract: We analyze optimal policy when consumers of energy-using durables undervalue energy costs relative to their private optima. First, there is an Internality Dividend from Externality Taxes: aside from reducing externalities, they also offset distortions from underinvestment in energy efficiency. Discrete choice simulations of the auto market suggest that the Internality Dividend could more than double the social welfare gains from a carbon tax at marginal damages. Second, we develop the Internality Targeting Principle: the optimal combination of multiple instruments depends on the average internality of the consumers marginal to each instrument. Because consumers who undervalue energy costs are mechanically less responsive to energy taxes, the optimal policy will tend to involve an energy tax below marginal damages coupled with a larger subsidy for energy efficient products. Third, although the exact optimal policy depends on joint distributions of unobservables which would be difficult to estimate, we develop formulas to closely approximate optimal policy and welfare effects based on reduced form "sufficient statistics" that can be estimated using field experiments or quasi-experimental variation in product prices and energy costs.
Handle: RePEc:nbr:nberwo:17977
Template-Type: ReDIF-Paper 1.0
Title: Microeconomic Sources of Real Exchange Rate Variability
Classification-JEL: E3; F31; F4
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Christopher I. Telmer
Author-Person: pte102
Note: EFG IFM ITI ME
Number: 17978
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17978
File-URL: http://www.nber.org/papers/w17978.pdf
File-Format: application/pdf
Abstract: We provide three sets of variance decompositions on microeconomic international relative price data. The first shows that the overall distribution of absolute deviations from the Law of One Price (LOP) is dominated by cross-sectional variation in long-term averages, not by time-series variation around the long-term averages. The second shows that time-series variation in changes in LOP deviations is dominated by idiosyncratic, goods-specific variation, not by aggregate variation such as that arising from nominal exchange rates. The third shows that time-series and cross-sectional variance are connected across goods. Goods that exhibit high cross-sectional variance also exhibit high time-series variance. Moreover, when this connection is made conditional on the tradeability of a goods, a two-factor structure for the goods-specific cross-section is revealed. We argue that this factor structure, in addition to our other variance decompositions, is informative for the construction of models that can synthesize the micro and macroeconomic behavior of relative prices.
Handle: RePEc:nbr:nberwo:17978
Template-Type: ReDIF-Paper 1.0
Title: Medieval Universities, Legal Institutions, and the Commercial Revolution
Classification-JEL: I25; N13; N33; O10
Author-Name: Davide Cantoni
Author-Name: Noam Yuchtman
Author-Person: pyu185
Note: DAE ED LE LS POL
Number: 17979
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17979
File-URL: http://www.nber.org/papers/w17979.pdf
File-Format: application/pdf
Publication-Status: published as “Medieval Universities, Legal Institutions, and the Commercial Revolution,” Quarterly Journal of Economics, 129(2), 823–887. (joint with Davide Cantoni)
Abstract: We present new data documenting medieval Europe's "Commercial Revolution'' using information on the establishment of markets in Germany. We use these data to test whether medieval universities played a causal role in expanding economic activity, examining the foundation of Germany's first universities after 1386 following the Papal Schism. We find that the trend rate of market establishment breaks upward in 1386 and that this break is greatest where the distance to a university shrank most. There is no differential pre-1386 trend associated with the reduction in distance to a university, and there is no break in trend in 1386 where university proximity did not change. These results are not affected by excluding cities close to universities or cities belonging to territories that included universities. Universities provided training in newly-rediscovered Roman and Canon law; students with legal training served in positions that reduced the uncertainty of trade in medieval Europe. We argue that training in the law, and the consequent development of legal and administrative institutions, was an important channel linking universities and greater economic activity.
Handle: RePEc:nbr:nberwo:17979
Template-Type: ReDIF-Paper 1.0
Title: University Entrepreneurship and Professor Privilege
Classification-JEL: O3; O33; O34
Author-Name: Erika Farnstrand Damsgaard
Author-Name: Marie C. Thursby
Author-Person: pth283
Note: PR
Number: 17980
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17980
File-URL: http://www.nber.org/papers/w17980.pdf
File-Format: application/pdf
Publication-Status: published as Erika Färnstrand Damsgaard & Marie C. Thursby, 2013. "University entrepreneurship and professor privilege," Industrial and Corporate Change, Oxford University Press, vol. 22(1), pages 183-218, February.
Abstract: This paper analyzes how institutional differences affect university entrepreneurship. We focus on ownership of faculty inventions, and compare two institutional regimes; the US and Sweden. In the US, the Bayh Dole Act gives universities the right to own inventions from publicly funded research, whereas in Sweden, the professor privilege gives the university faculty this right. We develop a theoretical model and examine the effects of institutional differences on modes of commercialization; entrepreneurship or licenses to established firms, as well as on probabilities of successful commercialization. We find that the US system is less conducive to entrepreneurship than the Swedish system if established firms have some advantage over faculty startups, and that on average the probability of successful commercialization is somewhat higher in the US. We also use the model to perform four policy experiments as suggested by recent policy debates in both countries.
Handle: RePEc:nbr:nberwo:17980
Template-Type: ReDIF-Paper 1.0
Title: How much do firms pay as bribes and what benefits do they get? Evidence from corruption cases worldwide
Classification-JEL: F23; G14; G34; K42; M14
Author-Name: Yan Leung Cheung
Author-Name: P. Raghavendra Rau
Author-Person: pra1
Author-Name: Aris Stouraitis
Note: LE
Number: 17981
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17981
File-URL: http://www.nber.org/papers/w17981.pdf
File-Format: application/pdf
Abstract: We analyze a hand-collected sample of 166 prominent bribery cases, involving 107 publicly listed firms from 20 stock markets that have been reported to have bribed government officials in 52 countries worldwide during 1971-2007. We focus on the initial date of award of the contract for which the bribe was paid (rather than of the revelation of the bribery). Our data enable us to describe in detail the mechanisms through which bribes affect firm value. We find that firm performance, the rank of the politicians bribed, as well as bribe-paying and bribe-taking country characteristics affect the magnitude of the bribes and the benefits that firms derive from them.
Handle: RePEc:nbr:nberwo:17981
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Income, Consumption, and Leisure Inequality in The US, 1980-2010
Classification-JEL: D12; E21
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Erik Hurst
Author-Person: phu87
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Note: EFG
Number: 17982
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17982
File-URL: http://www.nber.org/papers/w17982.pdf
File-Format: application/pdf
Publication-Status: published as The Evolution of Income, Consumption, and Leisure Inequality in the United States, 1980–2010, Orazio Attanasio, Erik Hurst, Luigi Pistaferri. in Improving the Measurement of Consumer Expenditures, Carroll, Crossley, and Sabelhaus. 2015
Abstract: Recent research has documented that income inequality in the United States has increased dramatically over the prior three decades. There has been less of a consensus, however, on whether the increase in income inequality was matched by an equally large increase in consumption inequality. Most researchers have studied this question using data from the Consumer Expenditure Survey (CE) and some studies have suggested that the increase in consumption inequality has been modest. Unfortunately ,there is now mounting evidence that the CE is plagued by serious non-classical measurement error, which hinders the extent to which definitive conclusions can be made about the extent to which consumption inequality has evolved over the last three decades. In this paper, we use a variety of different techniques to overcome the measurement error problems with the CE. First, we use data from the diary component of the CE, focusing on categories where measurement error has been found to be less of an issue. Second, we explore inequality measures within the CE using the value of vehicles owned, a consumption component that is considered to be measured well. Third, we try to account directly for the non-classical measurement error of the CE by comparing the spending on luxuries (entertainment) relative to necessities (food). This is similar to the recent approach taken by Browning and Crossley (2009) and Aguiar and Bils (2011). Finally, we use expenditure data from the Panel Study of Income Dynamics to explore the dynamics of alternative measures of consumption inequality. All of our different methods yield similar results. We find that consumption inequality within the U.S. between 1980 and 2010 has increased by nearly the same amount as income inequality.
Handle: RePEc:nbr:nberwo:17982
Template-Type: ReDIF-Paper 1.0
Title: The Choice between Formal and Informal Intellectual Property: A Literature Review
Classification-JEL: K11; L29; O34
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Christian Helmers
Author-Person: phe349
Author-Name: Mark Rogers
Author-Name: Vania Sena
Note: IO LE PR
Number: 17983
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17983
File-URL: http://www.nber.org/papers/w17983.pdf
File-Format: application/pdf
Publication-Status: published as Bronwyn Hall, Christian Helmers, Mark Rogers, Vania Sena “The Choice between Formal and Informal Intellectual Property: A Review.” Journal of Economic Literature, Vol. 52, No. 2, June 2014 (pp. 375-423)
Abstract: We survey the economic literature, both theoretical and empirical, on the choice of intellectual property protection by firms. Our focus is on the tradeoffs between using patents and disclosing versus the use of secrecy, although we also look briefly at the use of other means of formal intellectual property protection.
Handle: RePEc:nbr:nberwo:17983
Template-Type: ReDIF-Paper 1.0
Title: Epilogue: Foreign-Exchange-Market Operations in the Twenty-First Century
Classification-JEL: F31; F33; N2
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Owen Humpage
Author-Person: phu403
Author-Name: Anna J. Schwartz
Note: DAE ME
Number: 17984
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17984
File-URL: http://www.nber.org/papers/w17984.pdf
File-Format: application/pdf
Publication-Status: published as Epilogue: Foreign-Exchange-Market Operations in the Twenty-First Century, Michael D. Bordo, Owen F. Humpage, Anna J. Schwartz. in Strained Relations: US Foreign-Exchange Operations and Monetary Policy in the Twentieth Century, Bordo, Humpage, and Schwartz. 2015
Abstract: Foreign-exchange operations did not end after the United States stopped its activist approach to intervention. Japan persisted in such operations, but avoided overt conflict with its monetary policy. With the on-set of the Great Recession, Switzerland has transacted in foreign exchange both for monetary and exchange-rate purposes, and key central banks have used swap facilities to extended their lender-of-last-resort functions. Developing and emerging market economies continue to intervene, but their actions may hamper the development of their own foreign-exchange markets. China's undervalued exchange rate is producing inflation and real appreciation, despite China's efforts to sterilize its reserve accumulation.
Handle: RePEc:nbr:nberwo:17984
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers
Classification-JEL: I21; J24
Author-Name: Joseph G. Altonji
Author-Person: pal266
Author-Name: Erica Blom
Author-Name: Costas Meghir
Author-Person: pme144
Note: ED LS
Number: 17985
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17985
File-URL: http://www.nber.org/papers/w17985.pdf
File-Format: application/pdf
Publication-Status: published as Joseph G. Altonji & Erica Blom & Costas Meghir, 2012. "Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 185-223, 07.
Abstract: Motivated by the large differences in labor market outcomes across college majors, we survey the literature on the demand for and return to high school and post-secondary education by field of study. We combine elements from several papers to provide a dynamic model of education and occupation choice that stresses the roles of specificity of human capital and uncertainty about preferences, ability, education outcomes, and labor market returns. The model implies an important distinction between the ex ante and ex post returns to education decisions. We also discuss some of the econometric difficulties in estimating the causal effects of field of study on wages in the context of a sequential choice model with learning. Finally, we review the empirical literature on choice of curriculum and the effects of high school courses and college major on labor market outcomes.
Handle: RePEc:nbr:nberwo:17985
Template-Type: ReDIF-Paper 1.0
Title: On The Political Economy Of Educational Vouchers
Classification-JEL: D72; H44; I22
Author-Name: Dennis N. Epple
Author-Person: pep21
Author-Name: Richard Romano
Author-Person: pro223
Note: CH ED PE
Number: 17986
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17986
File-URL: http://www.nber.org/papers/w17986.pdf
File-Format: application/pdf
Publication-Status: published as Epple, Dennis & Romano, Richard, 2014. "On the political economy of educational vouchers," Journal of Public Economics, Elsevier, vol. 120(C), pages 62-73.
Abstract: Two significant challenges hamper analyses of the collective choice of educational vouchers. One is the multi-dimensional choice set arising from the interdependence of the voucher, public education spending, and taxation. Second, even absent a voucher, preferences over public spending are not single-peaked; a middling level of public school spending may be less attractive to a household than either high public school spending or private education coupled with low public spending. We show that Besley and Coate's (1997) representative democracy model provides a viable approach to overcome these hurdles. We provide a complete characterization of equilibria with an endogenous voucher. A voucher is adopted in political equilibrium provided the coefficient of variation of income is sufficiently small. We undertake a parallel quantitative analysis. We find that no voucher arises in equilibrium for the U.S. income distribution, which exhibits too much heterogeneity. For tighter income distributions, including those in Douglas County, Colorado (where a voucher was recently adopted) and in Denmark (which has a national voucher program) our model predicts a positive voucher. Public support for a not-too-large voucher arises because the cross subsidy to public school expenditure from those switching to private schools outweighs the subsidy to those who attend private school in the absence of a voucher.
Handle: RePEc:nbr:nberwo:17986
Template-Type: ReDIF-Paper 1.0
Title: The Role of Government Reimbursement in Drug Shortages
Classification-JEL: I11; I18; L51
Author-Name: Ali Yurukoglu
Author-Person: pyu85
Author-Name: Eli Liebman
Author-Name: David B. Ridley
Note: EH IO
Number: 17987
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17987
File-URL: http://www.nber.org/papers/w17987.pdf
File-Format: application/pdf
Publication-Status: published as Ali Yurukoglu & Eli Liebman & David B. Ridley, 2017. "The Role of Government Reimbursement in Drug Shortages," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 348-382, May.
Abstract: Beginning in the mid-2000s, the incidence of drug shortages rose, especially for generic injectable drugs such as anesthetics and chemotherapy treatments. We examine whether reimbursement changes contributed to the shortages, focusing on a reduction in Medicare Part B reimbursement to providers for drugs. We hypothesize that lower reimbursement put downward pressure on manufacturers’ prices which reduced manufacturers’ incentives to invest in capacity, reliability, and new launches. We show that, after the policy change, shortages rose more for drugs with (i) higher shares of patients insured by Medicare, (ii) greater decreases in provider reimbursement, and (iii) greater decreases in manufacturer prices.
Handle: RePEc:nbr:nberwo:17987
Template-Type: ReDIF-Paper 1.0
Title: Defaults and Attention: The Drop Out Effect
Classification-JEL: D01; D03; D04; D82
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: Daniel J. Martin
Author-Person: pma1484
Note: PE
Number: 17988
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17988
File-URL: http://www.nber.org/papers/w17988.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Caplin & Daniel Martin, 2017. "Defaults and Attention: The Drop Out Effect," Revue économique, vol 68(5).
Abstract: When choice options are complex, policy makers may seek to reduce decision making errors by making a high quality option the default. We show that this positive effect is at risk because such a policy creates incentives for decision makers to "drop out" by paying no attention to the decision and accepting the default sight unseen. Using decision time as a proxy for attention, we confirm the importance of this effect in an experimental setting. A key challenge for policy makers is to measure, and if possible mitigate, such drop out behavior in the field.
Handle: RePEc:nbr:nberwo:17988
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Optimal Capital Taxation
Classification-JEL: H21
Author-Name: Thomas Piketty
Author-Person: ppi17
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: PE
Number: 17989
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17989
File-URL: http://www.nber.org/papers/w17989.pdf
File-Format: application/pdf
Publication-Status: published as "A Theory of Optimal Inheritance Taxation" with Thomas Piketty, Econometrica 81(5), 2013, 1851-1886 (longer version "A Theory of Optimal Capital Taxation", NBER Working Paper No. 17989, April 2012) (Slides) (excel file) (Data and Programs)
Abstract: This paper develops a realistic, tractable theoretical model that can be used to investigate socially-optimal capital taxation. We present a dynamic model of savings and bequests with heterogeneous random tastes for bequests to children and for wealth per se. We derive formulas for optimal tax rates on capitalized inheritance expressed in terms of estimable parameters and social preferences. Under our model assumptions, the long-run optimal tax rate increases with the aggregate steady-state flow of inheritances to output, decreases with the elasticity of bequests to the net-of-tax rate, and decreases with the strength of preferences for leaving bequests. For realistic parameters of our model, the optimal tax rate on capitalized inheritance would be as high as 50%-60%-or even higher for top wealth holders-if the social objective is meritocratic (i.e., the social planner puts higher welfare weights on those receiving little inheritance) and if capital is highly concentrated (as it is in the real world). In contrast to the Atkinson-Stiglitz result, the optimal tax on bequest remains positive in our model even with optimal labor taxation because inequality is two-dimensional: with inheritances, labor income is no longer the unique determinant of lifetime resources. In contrast to Chamley-Judd, the optimal tax on capital is positive in our model because we have finite long run elasticities of inheritance to tax rates. Finally, we discuss how adding capital market imperfections and uninsurable shocks to rates of return to our optimal tax model leads to shifting one-off inheritance taxation toward lifetime capital taxation, and can account for the actual structure and mix of inheritance and capital taxation.
Handle: RePEc:nbr:nberwo:17989
Template-Type: ReDIF-Paper 1.0
Title: School Turnarounds: Evidence from the 2009 Stimulus
Classification-JEL: H52; I2
Author-Name: Thomas Dee
Note: ED
Number: 17990
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17990
File-URL: http://www.nber.org/papers/w17990.pdf
File-Format: application/pdf
Abstract: The American Recovery and Reinvestment Act of 2009 (ARRA) targeted substantial School Improvement Grants (SIGs) to the nation's "persistently lowest achieving" public schools (i.e., up to $2 million per school annually over 3 years) but required schools accepting these awards to implement a federally prescribed school-reform model. Schools that met the "lowest-achieving" and "lack of progress" thresholds within their state had prioritized eligibility for these SIG-funded interventions. Using data from California, this study leverages these two discontinuous eligibility rules to identify the effects of SIG-funded whole-school reforms. The results based on these "fuzzy" regression-discontinuity designs indicate that there were significant improvements in the test-based performance of schools on the "lowest-achieving" margin but not among schools on the "lack of progress" margin. Complementary panel-based estimates suggest that these improvements were largely concentrated among schools adopting the federal "turnaround" model, which compels more dramatic staff turnover.
Handle: RePEc:nbr:nberwo:17990
Template-Type: ReDIF-Paper 1.0
Title: Trade and Inequality: From Theory to Estimation
Classification-JEL: E24; F12; F16
Author-Name: Elhanan Helpman
Author-Person: phe205
Author-Name: Oleg Itskhoki
Author-Person: pit14
Author-Name: Marc-Andreas Muendler
Author-Person: pmu63
Author-Name: Stephen J. Redding
Author-Person: pre64
Note: ITI
Number: 17991
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17991
File-URL: http://www.nber.org/papers/w17991.pdf
File-Format: application/pdf
Publication-Status: published as Elhanan Helpman & Oleg Itskhoki & Marc-Andreas Muendler & Stephen J. Redding, 2017. "Trade and Inequality: From Theory to Estimation," The Review of Economic Studies, vol 84(1), pages 357-405.
Abstract: While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and sectors. Using linked employer-employee data for Brazil, we show that much of overall wage inequality arises within sector-occupations and for workers with similar observable characteristics; this within component is driven by wage dispersion between firms; and wage dispersion between firms is related to firm employment size and trade participation. We then extend the heterogenous-firm model of trade and inequality from Helpman, Itskhoki, and Redding (2010) and estimate it with Brazilian data. We show that the estimated model provides a close approximation to the observed distribution of wages and employment. We use the estimated model to undertake counterfactuals, in which we find sizable effects of trade on wage inequality.
Handle: RePEc:nbr:nberwo:17991
Template-Type: ReDIF-Paper 1.0
Title: Is India's Manufacturing Sector Moving Away From Cities?
Classification-JEL: J61; L10; L60; O10; O14; O17; R11; R12; R13; R14; R23
Author-Name: Ejaz Ghani
Author-Person: pgh75
Author-Name: Arti Grover Goswami
Author-Person: pgr182
Author-Name: William R. Kerr
Author-Person: pke127
Note: PR
Number: 17992
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17992
File-URL: http://www.nber.org/papers/w17992.pdf
File-Format: application/pdf
Abstract: This paper investigates the urbanization of the Indian manufacturing sector by combining enterprise data from formal and informal sectors. We find that plants in the formal sector are moving away from urban and into rural locations, while the informal sector is moving from rural to urban locations. While the secular trend for India's manufacturing urbanization has slowed down, the localized importance of education and infrastructure have not. Our results suggest that districts with better education and infrastructure have experienced a faster pace of urbanization, although higher urban-rural cost ratios cause movement out of urban areas. This process is associated with improvements in the spatial allocation of plants across urban and rural locations. Spatial location of plants has implications for policy on investments in education, infrastructure, and the livability of cities. The high share of urbanization occurring in the informal sector suggests that urbanization policies that contain inclusionary approaches may be more successful in promoting local development and managing its strains than those focused only on the formal sector.
Handle: RePEc:nbr:nberwo:17992
Template-Type: ReDIF-Paper 1.0
Title: Trends in Occupational Segregation by Gender 1970-2009: Adjusting for the Impact of Changes in the Occupational Coding System
Classification-JEL: J16; J24; J62; J71
Author-Name: Francine D. Blau
Author-Person: pbl16
Author-Name: Peter Brummund
Author-Name: Albert Yung-Hsu Liu
Author-Person: pli226
Note: LS
Number: 17993
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17993
File-URL: http://www.nber.org/papers/w17993.pdf
File-Format: application/pdf
Publication-Status: published as Francine Blau & Peter Brummund & Albert Liu, 2013. "Trends in Occupational Segregation by Gender 1970â2009: Adjusting for the Impact of Changes in the Occupational Coding System," Demography, Springer, vol. 50(2), pages 471-492, April.
Abstract: In this paper, we develop a gender-specific crosswalk based on dual-coded Current Population Survey data to bridge the change in the Census occupational coding system that occurred in 2000 and use it to provide the first analysis of the trends in occupational segregation by sex for the 1970-2009 period based on a consistent set of occupational codes and data sources. We show that our gender-specific crosswalk more accurately captures the trends in occupational segregation that are masked using the aggregate crosswalk (based on combined male and female employment) provided by the U.S. Census Bureau. Using the 2000 occupational codes, we find that segregation by sex declined over the period but at a diminished pace over the decades, falling by 6.1 percentage points over the 1970s, 4.3 percentage points over the 1980s, 2.1 percentage points over the 1990s, and only 1.1 percentage points (on a decadal basis) over the 2000s. A primary mechanism by which occupational segregation was reduced over the 1970-2009 period was through the entry of new cohorts of women, presumably better prepared than their predecessors and/or encountering less labor market discrimination; during the 1970s and 1980s, however, there were also decreases in occupational segregation within cohorts. Reductions in segregation were correlated with education, with the largest decrease among college graduates and very little change in segregation among high school dropouts.
Handle: RePEc:nbr:nberwo:17993
Template-Type: ReDIF-Paper 1.0
Title: The World our Grandchildren Will Inherit: The Rights Revolution and Beyond
Classification-JEL: O10; O30; P16; P17
Author-Name: Daron Acemoglu
Author-Person: pac16
Note: DAE
Number: 17994
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17994
File-URL: http://www.nber.org/papers/w17994.pdf
File-Format: application/pdf
Abstract: Following on Keynes's Economic Possibilities for Our Grandchildren, this paper develops conjectures about the world we will leave to our grandchildren. It starts by outlining the 10 most important trends that have defined our economic, social, and political lives over the last 100 years. It then provides a framework for interpreting these trends, emphasizing the role of the expansion of political and civil rights and institutional changes in this process. It then uses this framework for extrapolating these 10 trends into the next 100 years.
Handle: RePEc:nbr:nberwo:17994
Template-Type: ReDIF-Paper 1.0
Title: Following Through on Good Intentions: The Power of Planning Prompts
Classification-JEL: D03; D91; I12
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: AG EH
Number: 17995
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17995
File-URL: http://www.nber.org/papers/w17995.pdf
File-Format: application/pdf
Publication-Status: published as Milkman, Katherine L., John Beshears, James J. Choi, David Laibson, and Brigitte C. Madrian. "Planning Prompts as a Means of Increasing Preventive Screening Rates." Preventive Medicine 56, no. 1 (January 2013): 92–93.
Abstract: We study whether prompts to form and recall a plan can increase individuals' responsiveness to reminders to make and attend beneficial appointments. At four companies, all employees due for a colonoscopy were randomly assigned to receive either a control mailing or a treatment mailing. The mailings were identical except that the control mailing included a blank sticky note while the treatment mailing included a sticky note that prompted the recipient to write down the appointment date for a colonoscopy and the name of the doctor who would conduct the procedure. During the seven-month follow-up period, 7.2% of treatment employees received a colonoscopy compared to 6.2% of control employees, a statistically significant difference that is roughly equal to the variation in compliance associated with a 10 percent increase in the fraction of the procedure's cost covered by insurance. The treatment effect was largest for demographic groups judged to be at the highest risk of failing to receive a colonoscopy due to forgetfulness.
Handle: RePEc:nbr:nberwo:17995
Template-Type: ReDIF-Paper 1.0
Title: Saving Babies: The Contribution of Sheppard-Towner to the Decline in Infant Mortality in the 1920s
Classification-JEL: H51; I18; N32
Author-Name: Carolyn M. Moehling
Author-Person: pmo729
Author-Name: Melissa A. Thomasson
Author-Person: pth24
Note: DAE
Number: 17996
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17996
File-URL: http://www.nber.org/papers/w17996.pdf
File-Format: application/pdf
Publication-Status: published as “Saving Babies: The Impact of Public Health Education Programs on Infant Mortality.” (with Carolyn Moehling). Demography, 51(2), April 2014, 367-386.
Abstract: From 1922 to 1929, the Sheppard-Towner Act provided matching grants to states to fund maternal and infant care education initiatives. We examine the effects of this public health program on infant mortality. States engaged in different types of activities, allowing us to examine whether different interventions had differential effects on mortality. Interventions that provided one-on-one contact and opportunities for follow-up care, such as home visits by public health nurses, reduced infant deaths more than classes and conferences. Overall, we estimate that Sheppard-Towner activities can account for 9 to 21 percent of the decline in infant mortality over the period.
Handle: RePEc:nbr:nberwo:17996
Template-Type: ReDIF-Paper 1.0
Title: Is Paper Money Just Paper Money? Experimentation and Variation in the Paper Monies Issued by the American Colonies from 1690 to 1775
Classification-JEL: E42; E50; F31; G10; H60; K29; N11; N21; N41
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 17997
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17997
File-URL: http://www.nber.org/papers/w17997.pdf
File-Format: application/pdf
Publication-Status: published as Farley Grubb, “Is Paper Money Just Paper Money? Experimentation and Variation in the Paper Monies Issued by the American Colonies from 1690 to 1775.” RESEARCH IN ECONOMIC HISTORY, vol. 32 (2016), pp. 147-224.
Abstract: The British North American colonies were the first western economies to rely on legislature-issued paper monies as an important internal media of exchange. This system arose piecemeal. In the absence of banks and treasuries that exchanged paper monies at face value for specie monies on demand, colonial governments experimented with other ways to anchor their paper monies to real values in the economy. These mechanisms included tax-redemption, land-backed loans, sinking funds, interest-bearing notes, and legal tender laws. The structure and performance of these mechanisms are explained and assessed. This was monetary experimentation on a grand scale. "[The colonies] cannot keep Gold and Silver among them sufficient for the Purposes of their internal Commerce... Paper Bills called Bills of Credit or Paper Money have therefore in the colonies long been substituted for real Money. Various Ways of issuing these and on different Foundations, have at different Times been thought of and practised.... On the whole no Method has been found to give any Degree of fixed, steady, uniform Value to Bills of Credit in America,..." (Benjamin Franklin, 13 Feb. 1767)
Handle: RePEc:nbr:nberwo:17997
Template-Type: ReDIF-Paper 1.0
Title: Can Oil Prices Forecast Exchange Rates?
Classification-JEL: C22; C53; F31; F37
Author-Name: Domenico Ferraro
Author-Person: pfe393
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Author-Name: Barbara Rossi
Author-Person: pro86
Note: IFM ME
Number: 17998
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17998
File-URL: http://www.nber.org/papers/w17998.pdf
File-Format: application/pdf
Abstract: This paper investigates whether oil prices have a reliable and stable out-of-sample relationship with the Canadian/U.S dollar nominal exchange rate. Despite state-of-the-art methodologies, we find little systematic relation between oil prices and the exchange rate at the monthly and quarterly frequencies. In contrast, the main contribution is to show the existence of a very short-term relationship at the daily frequency, which is rather robust and holds no matter whether we use contemporaneous (realized) or lagged oil prices in our regression. However, in the latter case the predictive ability is ephemeral, mostly appearing after instabilities have been appropriately taken into account
Handle: RePEc:nbr:nberwo:17998
Template-Type: ReDIF-Paper 1.0
Title: Patent Disclosure in Standard Setting
Classification-JEL: D71; D83; L15; O34
Author-Name: Bernhard Ganglmair
Author-Person: pga159
Author-Name: Emanuele Tarantino
Author-Person: pta448
Note: IO LE
Number: 17999
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w17999
File-URL: http://www.nber.org/papers/w17999.pdf
File-Format: application/pdf
Publication-Status: published as Patent Disclosure in Standard Setting, Bernhard Ganglmair, Emanuele Tarantino. in Standards, Patents and Innovations, Simcoe, Agrawal, and Graham. 2014
Abstract: In a model of industry standard setting with private information about firms' intellectual property, we analyze (a) firms' incentives to contribute to the development and improvement of a standard, and (b) firms' decision to disclose the existence of relevant intellectual property to other participants of the standard-setting process. If participants can disclose after the end of the process and fully exploit their bargaining leverage, then patent holders aspire to disclose always after the end of the process. However, if a patent holder cannot rely on the other participants to always contribute to the process, then it may be inclined to disclose before the end of the process. We also analyze under which conditions firms enter cross-licensing agreements that eliminate the strategic aspect of patent disclosure, and show that, in an institutional setting that implies a waiver of intellectual property rights if patents are not disclosed timely, firms aspire to disclose before the end of the process. Finally, we study the effect of product-market competition on patent disclosure.
Handle: RePEc:nbr:nberwo:17999
Template-Type: ReDIF-Paper 1.0
Title: Status Competition and Housing Prices
Classification-JEL: G12; R2; R3
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Author-Name: Xiaobo Zhang
Author-Person: pzh45
Author-Name: Yin Liu
Note: AP IFM
Number: 18000
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18000
File-URL: http://www.nber.org/papers/w18000.pdf
File-Format: application/pdf
Abstract: While in standard housing economics housing is regarded as an asset and a consumption good, we study in this paper the consequences for housing prices if housing is also a status good. More concretely, if a family's housing wealth relative to others is an important marker for relative status in the marriage market, then competition for marriage partners might motivate people to pursue a bigger and more expensive house/apartment beyond its direct consumption (and financial investment) value. To test the empirical validity of the hypothesis, we have to overcome the usual difficulty of not being able to observe the intensity of status competition. Our innovation is to explore regional variations in the sex ratio for the pre-marital age cohort across China, which likely has triggered variations in the intensity of competition in the marriage market. The empirical evidence appears to support this hypothesis. We estimate that due to the status good feature of housing, a rise in the sex ratio accounts for 30-48% of the rise in real urban housing prices in China during 2003-2009.
Handle: RePEc:nbr:nberwo:18000
Template-Type: ReDIF-Paper 1.0
Title: Executives' "Off-The-Job" Behavior, Corporate Culture, and Financial Reporting Risk
Classification-JEL: G30; G34; G38
Author-Name: Robert Davidson
Author-Name: Aiyesha Dey
Author-Name: Abbie J. Smith
Note: CF
Number: 18001
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18001
File-URL: http://www.nber.org/papers/w18001.pdf
File-Format: application/pdf
Publication-Status: published as Executives' "Off-The-Job" Behavior, Corporate Culture, and Financial Reporting Risk, Robert Davidson, Aiyesha Dey, Abbie Smith. in Causes and Consequences of Corporate Culture, Zingales and Poterba. 2015
Publication-Status: published as Robert Davidson & Aiyesha Dey & Abbie Smith, 2015. "Executives' “off-the-job” behavior, corporate culture, and financial reporting risk," Journal of Financial Economics, vol 117(1), pages 5-28.
Abstract: We examine how executives' behavior outside the workplace, as measured by their ownership of luxury goods (low "frugality") and prior legal infractions, is related to financial reporting risk. We predict and find that CEOs and CFOs with a legal record are more likely to perpetrate fraud. In contrast, we do not find a relation between executives' frugality and the propensity to perpetrate fraud. However, as predicted, we find that unfrugal CEOs oversee a relatively loose control environment characterized by relatively high probabilities of other insiders perpetrating fraud and unintentional material reporting errors. Further, cultural changes associated with an increase in fraud risk are more likely during unfrugal (vs. frugal) CEOs' reign, including the appointment of an unfrugal CFO, an increase in executives' equity-based incentives to misreport, and a decline in measures of board monitoring intensity.
Handle: RePEc:nbr:nberwo:18001
Template-Type: ReDIF-Paper 1.0
Title: Primate Evidence on the Late Health Effects of Early Life Adversity
Classification-JEL: I12; J13
Author-Name: Gabriella Conti
Author-Person: pco273
Author-Name: Christopher Hansman
Author-Name: James J. Heckman
Author-Name: Matthew F. X. Novak
Author-Name: Angela Ruggiero
Author-Name: Stephen J. Suomi
Note: CH EH
Number: 18002
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18002
File-URL: http://www.nber.org/papers/w18002.pdf
File-Format: application/pdf
Publication-Status: published as G. Conti & C. Hansman & J. J. Heckman & M. F. X. Novak & A. Ruggiero & S. J. Suomi, 2012. "Primate evidence on the late health effects of early-life adversity," Proceedings of the National Academy of Sciences, vol 109(23), pages 8866-8871.
Abstract: This paper exploits a unique ongoing experiment to analyze the effects of early rearing conditions on physical and mental health in a sample of rhesus monkeys (Macaca mulatta). We analyze the health records of 231 monkeys which were randomly allocated at birth across three rearing conditions: Mother Rearing, Peer Rearing, and Surrogate Peer Rearing. We show that the lack of a secure attachment relationship in the early years engendered by adverse rearing conditions has detrimental long-term effects on health which are not compensated by a normal social environment later in life.
Handle: RePEc:nbr:nberwo:18002
Template-Type: ReDIF-Paper 1.0
Title: Demand for Smokeless Tobacco: Role of Magazine Advertising
Classification-JEL: D12; I1; M3
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Henry Saffer
Author-Person: psa935
Note: EH IO
Number: 18003
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18003
File-URL: http://www.nber.org/papers/w18003.pdf
File-Format: application/pdf
Publication-Status: published as in the Journal of Health Economics. Volume 32, Issue 4, July 2013, Pages 682–697
Abstract: While the prevalence of smokeless tobacco (ST) is low relative to smoking, the distribution of ST use is highly skewed with consumption concentrated among certain segments of the population (rural residents, males, whites, low-educated individuals). Furthermore, there is suggestive evidence that use has trended upwards recently for groups that have traditionally been at low risk of using ST, and thus started to diffuse across demographics. This study provides the first estimates, at the national level, of the effects of magazine advertising on ST use. The focus on magazine advertising is significant given that ST manufacturers have been banned from using other conventional media since the 1986 Comprehensive ST Act and the 1998 ST Master Settlement Agreement. This study is based on the 2003-2009 waves of the National Consumer Survey (NCS), a unique data source that contains extensive information on the reading habits of individuals, matched with magazine-specific advertising information over the sample period. This allows detailed and salient measures of advertising exposure at the individual level and addresses potential bias due to endogeneity and selective targeting. We find consistent and robust evidence that exposure to ST ads in magazines raises ST use, especially among males, with an estimated elasticity of 0.06. There is suggestive evidence that both ST taxes and cigarette taxes reduce ST use, indicating contemporaneous complementarity between these tobacco products. Sub-analyses point to some differences in the advertising and tax response across segments of the population. The effects from this study inform the debate on the cost and benefits of ST use and its potential to be a tool in overall tobacco harm reduction.
Handle: RePEc:nbr:nberwo:18003
Template-Type: ReDIF-Paper 1.0
Title: The Evolving Importance of Banks and Securities Markets
Classification-JEL: F3; G1; G2; O16
Author-Name: Asli Demirguc-Kunt
Author-Person: pde226
Author-Name: Erik Feyen
Author-Name: Ross Levine
Author-Person: ple61
Note: CF EFG IFM
Number: 18004
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18004
File-URL: http://www.nber.org/papers/w18004.pdf
File-Format: application/pdf
Publication-Status: published as Asli Demirgü�-Kunt & Erik Feyen & Ross Levine, 2013. "The Evolving Importance of Banks and Securities Markets," World Bank Economic Review, World Bank Group, vol. 27(3), pages 476-490.
Abstract: This paper examines the evolving importance of banks and securities markets during the process of economic development. We find that as countries develop economically, (1) the size of both banks and securities markets increases relative to the size of the economy, (2) the association between an increase in economic output and an increase in bank development becomes smaller, and (3) the association between an increase in economic output and an increase in securities market development becomes larger. The results are consistent with theories predicting that as economies develop, the services provided by securities markets become more important for economic activity, while those provided by banks become less important.
Handle: RePEc:nbr:nberwo:18004
Template-Type: ReDIF-Paper 1.0
Title: Would You Buy a Honda Made in the U.S.? The Impact of Production Location on Manufacturing Quality
Classification-JEL: D24; F23; L62; M11
Author-Name: Nicola Lacetera
Author-Person: pla61
Author-Name: Justin R. Sydnor
Note: IO PR
Number: 18005
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18005
File-URL: http://www.nber.org/papers/w18005.pdf
File-Format: application/pdf
Publication-Status: published as "Would You Buy a Honda Made in the U.S.? The impact of Production Location on Manufacturing Quality." (with Justin Sydnor), Review of Economics and Statistics, October 2015, Vol. 97, No. 4, Pages 855-876
Abstract: Are location-specific factors--such as the education and attitude of the local workforce, supplier networks, institutional infrastructure, and local "culture"--important for understanding persistent heterogeneities among firms? We address this question in the context of the automobile industry. Using a unique data set of over 565,000 used-car transactions at wholesale auctions, we test whether the long-run value and quality of otherwise identical cars depends on the country of assembly. We exploit the natural experiment provided by the establishment of assembly plants in the U.S. by Japanese auto manufacturers, and the fact that some of the most popular Japanese car models are assembled both in Japan and the U.S. We find evidence that the Japan-assembled cars on average sell for more than those built in the U.S., but the estimated difference is only $62. The average differences are driven almost entirely by older-model Toyotas, for which we find a more meaningful difference between the Japanese and U.S. built cars. For Hondas and more recent models of Toyotas, the Japan-built cars are no more valuable than those built in the U.S. These results suggest that Japanese automakers have been successful, though perhaps with some lag, at transferring their high-quality practices to their U.S. transplants. Our findings also suggest that there is not an inherent limitation to the U.S. manufacturing environment that prevents the production of high-quality cars in America.
Handle: RePEc:nbr:nberwo:18005
Template-Type: ReDIF-Paper 1.0
Title: Comparing Real Wages
Classification-JEL: J3; O40; O57
Author-Name: Orley C. Ashenfelter
Author-Person: pas9
Note: LS
Number: 18006
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18006
File-URL: http://www.nber.org/papers/w18006.pdf
File-Format: application/pdf
Abstract: A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. In this paper I set out the conceptual basis for such measures, provide some historical examples, and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries--workers at McDonald's restaurants. The results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1, and that these gaps declined over the period 2000-2007, but with much less progress since the Great Recession.
Handle: RePEc:nbr:nberwo:18006
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Conventional and Unconventional Monetary Policy Rules on Inflation Expectations: Theory and Evidence
Classification-JEL: E31; E4
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Note: EFG
Number: 18007
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18007
File-URL: http://www.nber.org/papers/w18007.pdf
File-Format: application/pdf
Publication-Status: published as Roger E. A. Farmer, 2012. "The effect of conventional and unconventional monetary policy rules on inflation expectations: theory and evidence," Oxford Review of Economic Policy, Oxford University Press, vol. 28(4), pages 622-639, WINTER.
Abstract: This paper has three parts. Part 1 constructs a classical economic model of inflation, augmented by a complete set of financial markets; I call this the core monetary model. Part 2 develops a series of calibrated examples to illustrate how the core monetary model explains the history of inflation after WWII and Part 3 provides evidence to show that the unconventional monetary policy, followed in the wake of the 2008 financial crisis, was effective in stabilizing inflation expectations. The core monetary model provides a unified framework to explain how an interest rule can be used to control inflation in normal times, and to explain the purpose of unconventional monetary policy when policy attains the zero lower bound. I argue that management of the variation in the composition of the Fed's balance sheet, is an important tool in a central bank's arsenal that can be used to help prevent deflation in the wake of a financial crisis.
Handle: RePEc:nbr:nberwo:18007
Template-Type: ReDIF-Paper 1.0
Title: Goods Trade, Factor Mobility and Welfare
Classification-JEL: F11; F12; F16
Author-Name: Stephen J. Redding
Author-Person: pre64
Note: ITI
Number: 18008
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18008
File-URL: http://www.nber.org/papers/w18008.pdf
File-Format: application/pdf
Publication-Status: published as Stephen J. Redding, 2016. "Goods trade, factor mobility and welfare," Journal of International Economics, vol 101, pages 148-167.
Abstract: We develop a quantitative spatial model that incorporates a rich geography of trade and imperfect labor mobility between locations. We provide general results for the existence, uniqueness and comparative statics of the equilibrium. We show how the model can be used to undertake counterfactuals using only data in an initial equilibrium. In these counterfactuals, the welfare gains from trade depend on changes in both domestic trade shares and reallocations of population across locations. We show that factor mobility introduces quantitatively relevant differences in the counterfactual predictions of constant and increasing returns to scale models.
Handle: RePEc:nbr:nberwo:18008
Template-Type: ReDIF-Paper 1.0
Title: Entitlement Reforms in Europe: Policy Mixes in the Current Pension Reform Process
Classification-JEL: H51; H55; H68
Author-Name: Axel H. Börsch-Supan
Note: AG PE
Number: 18009
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18009
File-URL: http://www.nber.org/papers/w18009.pdf
File-Format: application/pdf
Publication-Status: published as Entitlement Reforms in Europe: Policy Mixes in the Current Pension Reform Process, Axel H. Börsch-Supan. in Fiscal Policy after the Financial Crisis, Alesina and Giavazzi. 2013
Abstract: Many European countries have begun (or have announced) programs intended to reduce the growth of entitlement programs, in particular of public pensions. Current costs are high, and the pressures will increase due to population aging and negative incentive effects. This paper focuses on the pension reform process in Europe. It links the causes for current problems to the cures required to make the pay-as-you-go entitlement programs in Continental Europe sustainable above and beyond the financial crisis. It discusses examples which appear, from a current point of view, to be the most viable and effective options to bring entitlement systems closer to fiscal balance and still achieve their key aims. There is no single policy prescription that can solve all problems at once. Reform elements include a freeze in the contribution and tax rates, an indexation of benefits to the dependency ratio, measures to stop the current trend towards early retirement, an adaptation of the normal retirement age to increased life expectancy, and more reliance on private savings - elements of a sustainable but complex multipillar system of pensions and similar entitlement programs.
Handle: RePEc:nbr:nberwo:18009
Template-Type: ReDIF-Paper 1.0
Title: Measuring Test Measurement Error: A General Approach
Classification-JEL: I21
Author-Name: Donald Boyd
Author-Name: Hamilton Lankford
Author-Name: Susanna Loeb
Author-Name: James Wyckoff
Author-Person: pwy10
Note: ED
Number: 18010
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18010
File-URL: http://www.nber.org/papers/w18010.pdf
File-Format: application/pdf
Publication-Status: published as D. Boyd & H. Lankford & S. Loeb & J. Wyckoff, 2013. "Measuring Test Measurement Error: A General Approach," Journal of Educational and Behavioral Statistics, vol 38(6), pages 629-663.
Abstract: Test-based accountability including value-added assessments and experimental and quasi-experimental research in education rely on achievement tests to measure student skills and knowledge. Yet we know little regarding important properties of these tests, an important example being the extent of test measurement error and its implications for educational policy and practice. While test vendors provide estimates of split-test reliability, these measures do not account for potentially important day-to-day differences in student performance. We show there is a credible, low-cost approach for estimating the total test measurement error that can be applied when one or more cohorts of students take three or more tests in the subject of interest (e.g., state assessments in three consecutive grades). Our method generalizes the test-retest framework allowing for either growth or decay in knowledge and skills between tests as well as variation in the degree of measurement error across tests. The approach maintains relatively unrestrictive, testable assumptions regarding the structure of student achievement growth. Estimation only requires descriptive statistics (e.g., correlations) for the tests. When student-level test-score data are available, the extent and pattern of measurement error heteroskedasticity also can be estimated. Utilizing math and ELA test data from New York City, we estimate the overall extent of test measurement error is more than twice as large as that reported by the test vendor and demonstrate how using estimates of the total measurement error and the degree of heteroskedasticity along with observed scores can yield meaningful improvements in the precision of student achievement and achievement-gain estimates.
Handle: RePEc:nbr:nberwo:18010
Template-Type: ReDIF-Paper 1.0
Title: A Nation of Immigrants: Assimilation and Economic Outcomes in the Age of Mass Migration
Classification-JEL: F22; J61; N31
Author-Name: Ran Abramitzky
Author-Person: pab108
Author-Name: Leah Platt Boustan
Author-Person: pbo332
Author-Name: Katherine Eriksson
Author-Person: per213
Note: DAE LS
Number: 18011
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18011
File-URL: http://www.nber.org/papers/w18011.pdf
File-Format: application/pdf
Publication-Status: published as “A Nation of Immigrants: Assimilation and Economic Outcomes in the Age of Mass Migration,” with Leah Boustan and Katherine Eriksson, Journal of Political Economy, Volume 122, Number 3, June 2014
Abstract: During the Age of Mass Migration (1850-1913), the US maintained an open border, absorbing 30 million European immigrants. Prior cross-sectional work on this era finds that immigrants initially held lower-paid occupations than natives but experienced rapid convergence over time. In newly-assembled panel data, we show that, in fact, the average immigrant did not face a substantial occupation-based earnings penalty upon first arrival and experienced occupational advancement at the same rate as natives. Cross-sectional patterns are driven by biases from declining arrival cohort quality and departures of negatively-selected return migrants. We show that assimilation patterns vary substantially across sending countries and persist in the second generation.
Handle: RePEc:nbr:nberwo:18011
Template-Type: ReDIF-Paper 1.0
Title: Fuel Economy and Safety: The Influences of Vehicle Class and Driver Behavior
Classification-JEL: L9; Q4; Q5
Author-Name: Mark R. Jacobsen
Note: EEE
Number: 18012
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18012
File-URL: http://www.nber.org/papers/w18012.pdf
File-Format: application/pdf
Publication-Status: published as “Fuel Economy and Safety: The Influences of Vehicle Class and Driver Behavior,” American Economic Journal: Applied Economics, Vol. 5, No. 3, 2013.
Abstract: Fuel economy standards change the composition of the vehicle fleet, potentially influencing accident safety. I introduce a model of the fleet that captures risks across interactions between vehicle types while simultaneously recovering estimates of unobserved driving safety behavior. The model importantly includes the ability to consider the selection of driver types across vehicles. I apply the model to the present structure of U.S. fuel economy standards and find an adverse effect on safety: Each MPG increment to the standard results in an additional 149 fatalities per year in expectation. I next show how two alternative regulatory provisions, including one slated to enter effect next year, can fully offset the negative safety consequences; minor changes in the regulation produce a robust, near-zero change in accident fatalities while conserving the same quantity of gasoline.
Handle: RePEc:nbr:nberwo:18012
Template-Type: ReDIF-Paper 1.0
Title: Resolving the African Financial Development Gap: Cross-Country Comparisons and a Within-Country Study of Kenya
Classification-JEL: G0; K0; O5
Author-Name: Franklin Allen
Author-Person: pal67
Author-Name: Elena Carletti
Author-Name: Robert Cull
Author-Person: pcu60
Author-Name: Jun Qian
Author-Person: pqi75
Author-Name: Lemma Senbet
Author-Name: Patricio Valenzuela
Author-Person: pva264
Note: IFM
Number: 18013
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18013
File-URL: http://www.nber.org/papers/w18013.pdf
File-Format: application/pdf
Publication-Status: published as Resolving the African Financial Development Gap: Cross-Country Comparisons and a Within-Country Study of Kenya, Franklin Allen, Elena Carletti, Robert Cull, Jun Qian, Lemma Senbet, Patricio Valenzuela. in African Successes, Volume III: Modernization and Development, Edwards, Johnson, and Weil. 2016
Abstract: With extensive country- and firm-level data sets we first document that the financial sectors of most sub-Saharan African countries remain significantly underdeveloped by the standards of other developing countries. We also find that population density appears to be considerably more important for banking sector development in Africa than elsewhere. To better understand how countries can overcome the high costs of developing viable banking sectors outside large metropolitan areas, we focus on Kenya, which has made significant strides in financial inclusion and development in recent years. We find a positive and significant impact of Equity Bank, a leading private commercial bank on financial access, especially for under-privileged households. Equity Bank's business model--providing financial services to population segments typically ignored by traditional commercial banks and generating sustainable profits in the process--can be a potential solution to the financial access problem that has hindered the development of inclusive financial sectors in many other African countries.
Handle: RePEc:nbr:nberwo:18013
Template-Type: ReDIF-Paper 1.0
Title: Riester Pensions in Germany: Design, Dynamics, Targetting Success and Crowding-In
Classification-JEL: D14; D91; H31; H55
Author-Name: Axel H. Börsch-Supan
Author-Name: Michela Coppola
Author-Name: Anette Reil-Held
Note: AG
Number: 18014
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18014
File-URL: http://www.nber.org/papers/w18014.pdf
File-Format: application/pdf
Publication-Status: published as Riester Pensions in Germany: Design, Dynamics, Targeting Success, and Crowding-In Authors/Editors: Axel Börsch-Supan, Michela Coppola and Anette Reil-Held Matching Contributions for Pensions Published: October 2012 Pages: 81 - 102 http://dx.doi.org/10.1596/9780821394922_CH04
Abstract: Riester pensions are voluntary, but heavily subsidized private pension schemes in Germany. They were designed as a matching defined contribution scheme to fill the emerging "pension gap" that is being generated by the gradually declining generosity of the public pay-as-you-go pensions in response to population aging. This paper investigates how the uptake of the recently introduced "Riester pensions" depends on the state-provided saving incentives and how well the targeting to families and low-income households has worked in practice. It documents the costs of the scheme, and collects circumstantial evidence on displacement effects between saving for old-age provision and other purposes. After a slow start and several design changes, Riester pension plans took off very quickly. While saving incentives were effective in reaching parents, they were somewhat less successful in attracting low-income earners, although Riester pensions exhibit a more equal pattern by income than occupational pensions and unsubsidized private pension plans. Riester pension savings totaled €9.4bn in 2010 with an associated cost of €3.5bn. One average one Euro of subsidies is thus associated with 2 Euros of households' own Riester saving. There is no evidence that Riester pensions have crowded out other saving. While households who plan to purchase housing and who attach high importance to a bequest motive are less likely to have a Riester pension, several regression results show that occupational pensions and other forms of private pensions act as complements rather than as substitutes. Aggregate national saving has increased since the introduction of Riester pensions.
Handle: RePEc:nbr:nberwo:18014
Template-Type: ReDIF-Paper 1.0
Title: Debt Overhangs: Past and Present
Classification-JEL: E44; E62; E63; F30; F41; H6; H63; N1
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Vincent R. Reinhart
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM ME
Number: 18015
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18015
File-URL: http://www.nber.org/papers/w18015.pdf
File-Format: application/pdf
Publication-Status: published as "Public Debt Overhangs: Advanced-Economy Episodes since 1800" (with Carmen M. Reinhart and Vincent R. Reinhart), Journal of Economic Perspectives, Vol. 26, No. 3, Summer 2012, 69-86. An earlier version was published as "Debt Overhangs: Past and Present," NBER Working Paper No. 18015, April 2012.
Abstract: We identify the major public debt overhang episodes in the advanced economies since the early 1800s, characterized by public debt to GDP levels exceeding 90% for at least five years. Consistent with Reinhart and Rogoff (2010) and other more recent research, we find that public debt overhang episodes are associated with growth over one percent lower than during other periods. Perhaps the most striking new finding here is the duration of the average debt overhang episode. Among the 26 episodes we identify, 20 lasted more than a decade. Five of the six shorter episodes were immediately after World Wars I and II. Across all 26 cases, the average duration in years is about 23 years. The long duration belies the view that the correlation is caused mainly by debt buildups during business cycle recessions. The long duration also implies that cumulative shortfall in output from debt overhang is potentially massive. We find that growth effects are significant even in the many episodes where debtor countries were able to secure continual access to capital markets at relatively low real interest rates. That is, growth-reducing effects of high public debt are apparently not transmitted exclusively through high real interest rates.
Handle: RePEc:nbr:nberwo:18015
Template-Type: ReDIF-Paper 1.0
Title: Empowering Women Through Education: Evidence from Sierra Leone
Classification-JEL: I12; I15; I18; I21; I25; I28; J13; J18
Author-Name: Naci H. Mocan
Author-Person: pmo270
Author-Name: Colin Cannonier
Author-Person: pca1215
Note: CH ED EH
Number: 18016
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18016
File-URL: http://www.nber.org/papers/w18016.pdf
File-Format: application/pdf
Abstract: We use data from Sierra Leone where a substantial education program provided increased access to education for primary-school age children but did not benefit children who were older. We exploit the variation in access to the program generated by date of birth and the variation in resources between various districts of the country. We find that the program has increased educational attainment and that an increase in education has changed women's preferences. An increase in schooling, triggered by the program, had an impact on women's attitudes towards matters that impact women's health and on attitudes regarding violence against women. An increase in education has also reduced the number of desired children by women and increased their propensity to use modern contraception and to be tested for AIDS. While education makes women more intolerant of practices that conflict with their well-being, increased education has no impact on men's attitudes towards women's well-being.
Handle: RePEc:nbr:nberwo:18016
Template-Type: ReDIF-Paper 1.0
Title: Toward an Understanding of Learning by Doing: Evidence from an Automobile Assembly Plant
Classification-JEL: D2; L2; L6; O3
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: John A. List
Author-Person: pli176
Author-Name: Chad Syverson
Author-Person: psy13
Note: IO PR
Number: 18017
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18017
File-URL: http://www.nber.org/papers/w18017.pdf
File-Format: application/pdf
Publication-Status: published as Steven D. Levitt & John A. List & Chad Syverson, 2013. "Toward an Understanding of Learning by Doing: Evidence from an Automobile Assembly Plant," Journal of Political Economy, University of Chicago Press, vol. 121(4), pages 643 - 681.
Abstract: Productivity improvements within establishments (e.g., factories, mines, or retail stores) are an important source of aggregate productivity growth. Past research has documented that learning by doing-productivity improvements that occur in concert with production increases-is one source of such improvements. Yet little is known about the specific mechanisms through which such learning occurs. We address this question using extremely detailed data from an assembly plant of a major auto producer. Beyond showing that there is rapid learning by doing at the plant, we are able to pinpoint the processes by which these improvements have occurred.
Handle: RePEc:nbr:nberwo:18017
Template-Type: ReDIF-Paper 1.0
Title: Sales Taxes and Internet Commerce
Classification-JEL: D12; H20; H71; L81
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Dan Knoepfle
Author-Name: Jonathan D. Levin
Author-Person: ple318
Author-Name: Neel Sundaresan
Note: IO ITI LE PE
Number: 18018
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18018
File-URL: http://www.nber.org/papers/w18018.pdf
File-Format: application/pdf
Publication-Status: published as Liran Einav & Dan Knoepfle & Jonathan Levin & Neel Sundaresan, 2014. "Sales Taxes and Internet Commerce," American Economic Review, American Economic Association, vol. 104(1), pages 1-26, January.
Abstract: We estimate the sensitivity of Internet retail purchasing to sales taxes using data from the eBay marketplace. Our first approach exploits the fact that seller locations are revealed only after buyers have expressed interest in an item by clicking on its listing. We use millions of location "surprises" to estimate price elasticities with respect to the effective sales tax. We then use aggregated data to estimate cross-state substitution parameters, and substitution between offline and online purchases, relying on the variation in state and local sales taxes, and on changes in these rates over time. We find substantial sensitivity to sales taxes. Using our item-level approach, we find a price elasticity of around -2 for interested buyers. Using our aggregate approach, we find that a one percentage point increase in a state's sales tax increases online purchases by state residents by just under two percent, but decreases their online purchases from home-state retailers by 3-4 percent.
Handle: RePEc:nbr:nberwo:18018
Template-Type: ReDIF-Paper 1.0
Title: The demand for, and consequences of, formalization among informal firms in Sri Lanka
Classification-JEL: O14; O17
Author-Name: Suresh De Mel
Author-Name: David McKenzie
Author-Person: pmc29
Author-Name: Christopher Woodruff
Author-Person: pwo165
Note: PR
Number: 18019
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18019
File-URL: http://www.nber.org/papers/w18019.pdf
File-Format: application/pdf
Publication-Status: published as Suresh de Mel & David McKenzie & Christopher Woodruff, 2013. "The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 122-50, April.
Abstract: We conduct a field experiment in Sri Lanka providing informal firms incentives to formalize. Information about the registration process and reimbursement of direct costs has no effect. Payments equivalent to one-half to one month (alternatively, 2 months) of the median firm's profits leads to registration of around one-fifth (alternatively, one-half) of firms. Land ownership issues are the most common reason for not registering. Follow-up surveys 15 to 31 months later show higher mean profits, but largely in a few firms which grew rapidly. We find little evidence for other changes in behavior, but formalized firms express more trust in the state.
Handle: RePEc:nbr:nberwo:18019
Template-Type: ReDIF-Paper 1.0
Title: Why Do Firms Own Production Chains?
Classification-JEL: L0; L23; L24
Author-Name: Enghin Atalay
Author-Person: pat77
Author-Name: Ali Hortacsu
Author-Name: Chad Syverson
Author-Person: psy13
Note: IO PR
Number: 18020
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18020
File-URL: http://www.nber.org/papers/w18020.pdf
File-Format: application/pdf
Publication-Status: published as Atalay, Enghin, Ali Hortaçsu, and Chad Syverson. 2014. "Vertical Integration and Input Flows." American Economic Review, 104(4): 1120-48. DOI: 10.1257/aer.104.4.1120
Abstract: We use broad-based yet detailed data from the economy's goods-producing sectors to investigate firms' ownership of production chains. It does not appear that vertical ownership is primarily used to facilitate transfers of goods along the production chain, as is often presumed: Roughly one-half of upstream plants report no shipments to their firms' downstream units. We propose an alternative explanation for vertical ownership, namely that it promotes efficient intra-firm transfers of intangible inputs. We show evidence consistent with this hypothesis, including the fact that upon a change of ownership, an acquired plant begins to resemble the acquiring firm along multiple dimensions.
Handle: RePEc:nbr:nberwo:18020
Template-Type: ReDIF-Paper 1.0
Title: Banks, Free Banks, and U.S. Economic Growth
Classification-JEL: G21; N21; O43
Author-Name: Matthew Jaremski
Author-Person: pja349
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: DAE ME
Number: 18021
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18021
File-URL: http://www.nber.org/papers/w18021.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Jaremski & Peter L. Rousseau, 2013. "Banks, Free Banks, And U.S. Economic Growth," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1603-1621, 04.
Abstract: The "Federalist financial revolution" may have jump-started the U.S. economy into modern growth, but the Free Banking System (1837-1862) did not play a direct role in sustaining it. Despite lowering entry barriers and extending banking into developing regions, we find in county-level data that free banks had little or no effect on growth. The result is not just a symptom of the era, as state-chartered banks seem to have strong and positive effects on manufacturing and urbanization.
Handle: RePEc:nbr:nberwo:18021
Template-Type: ReDIF-Paper 1.0
Title: Equilibrium Labor Turnover, Firm Growth and Unemployment
Classification-JEL: D21; D49; D8; E24; J42; J64
Author-Name: Melvyn G. Coles
Author-Person: pco324
Author-Name: Dale T. Mortensen
Author-Person: pmo42
Note: EFG
Number: 18022
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18022
File-URL: http://www.nber.org/papers/w18022.pdf
File-Format: application/pdf
Publication-Status: published as Melvyn G. Coles & Dale T. Mortensen, 2016. "Equilibrium Labor Turnover, Firm Growth, and Unemployment," Econometrica, Econometric Society, vol. 84, pages 347-363, 01.
Abstract: This paper considers a dynamic, non-steady state environment in which wage dispersion exists and evolves in response to shocks. Workers do not observe firm productivity and firms do not commit to future wages, but there is on-the-job search for higher paying jobs. The model allows for firm turnover (new start-up firms are created, some existing firms die) and firm specific productivity shocks. In a separating equilibrium, more productive firms signal their type by paying strictly higher wages in every state of the market. Consequently, workers always quit to firms paying a higher wage and so move efficiently from less to more productive firms. As a further implication of the cost structure assumed, endogenous firm size growth is consistent with Gibrat's law. The paper provides a complete characterization and establishes existence and uniqueness of the separating (non-steady state) equilibrium in the limiting case of equally productive firms. The existence of equilibrium with any finite number of firm types is also established. Finally, the model provides a coherent explanation of Danish manufacturing data on firm wage and labor productivity dispersion as well as the cross firm relationship between them.
Handle: RePEc:nbr:nberwo:18022
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Patient Cost-Sharing on the Poor: Evidence from Massachusetts
Classification-JEL: I13
Author-Name: Amitabh Chandra
Author-Person: pch893
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Robin McKnight
Note: EH
Number: 18023
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18023
File-URL: http://www.nber.org/papers/w18023.pdf
File-Format: application/pdf
Publication-Status: published as “The Impact of Patient Cost-Sharing on the Poor: Evidence from Massachusetts,” Journal of Health Economics, Volume 33, January 2014, Pages 57–66
Abstract: Greater patient cost-sharing could help reduce the fiscal pressures associated with insurance expansion by reducing the scope for moral hazard. But it is possible that low-income recipients are unable to cut back on utilization wisely and that, as a result, higher cost-sharing will lead to worse health and higher downstream costs through hospitalizations. We use exogenous variation in the copayments faced by low-income enrollees in the Massachusetts' Commonwealth Care program to study these effects. We estimate separate price elasticities of demand by type of service (hospital care, drugs, outpatient care). Overall, we find price elasticities of about -0.15 for this low-income population -- fairly similar to elasticities calculated for higher-income populations in other settings. These elasticities are somewhat larger for the chronically sick and older enrollees. A substantial portion of the decline in utilization comes from some patients cutting back on use completely, but we find no (detectable) evidence of offsetting increases in hospitalizations or emergency department visits in response to the higher copayments, either overall or for the chronically ill in particular.
Handle: RePEc:nbr:nberwo:18023
Template-Type: ReDIF-Paper 1.0
Title: Winning by Losing: Evidence on the Long-Run Effects of Mergers
Classification-JEL: G02; G14; G34
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Author-Name: Enrico Moretti
Author-Person: pmo392
Author-Name: Florian S. Peters
Note: AP CF
Number: 18024
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18024
File-URL: http://www.nber.org/papers/w18024.pdf
File-Format: application/pdf
Publication-Status: published as Ulrike Malmendier & Enrico Moretti & Florian S Peters, 2018. "Winning by Losing: Evidence on the Long-run Effects of Mergers," The Review of Financial Studies, vol 31(8), pages 3212-3264.
Abstract: Do acquirors profit from acquisitions, or do CEOs overbid and destroy shareholder value? We propose a novel approach to measuring the long-run returns to mergers. In a new data set of close bidding contests we use losers' post-merger performance to construct the counterfactual performance of winners had they not won the contest. We find that winner and loser returns are closely comoving in the years before the contest, providing support for our approach to identification. After the merger, they diverge: Winners underperform losers by 24 percent over the following three years in the U.S. sample, and by 14 percent in the international sample. Merger characteristics commonly associated with underperformance, such as acquiror size, acquiror Q, or stock financing do not explain the underperformance. Instead, the large underperformance of cash-financed mergers and their post-merger increase in leverage is consistent with behavioral and practitioner views on the determinants of merger outcomes. We also show that commonly used methodologies such as the announcement effect fail to identify the acquiror underperformance.
Handle: RePEc:nbr:nberwo:18024
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Health Information Technology on Hospital Productivity
Classification-JEL: D24; L31
Author-Name: Jinhyung Lee
Author-Name: Jeffrey S. McCullough
Author-Name: Robert J. Town
Author-Person: pto430
Note: EH PR
Number: 18025
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18025
File-URL: http://www.nber.org/papers/w18025.pdf
File-Format: application/pdf
Publication-Status: published as The impact of health information technology on hospital productivity Jinhyung Lee; Jeffrey S. Mccullough; Robert J. Town (Profiled Author: Jeffrey S McCullough) RAND Journal of Economics. 2013;44(3):545-568.
Abstract: The US health care sector is, by most accounts, extraordinarily inefficient. Health information technology (IT) has been championed as a tool that can transform health care delivery. Recently, the federal government has taken an active role in promoting health IT diffusion. There is little systematic analysis of the causal impact of health IT on productivity or whether private and public returns to health IT diverge thereby justifying government intervention. We estimate the parameters of a value-added hospital production function correcting for endogenous input choices in order to assess the private returns hospitals earn from health IT. Despite high marginal products, the potential benefits from expanded IT adoption are modest. Over the span of our data, health IT inputs increased by more than 210% and contributed about 6% to the increase in value-added. Virtually all the increase in value-added is attributable to the increased use of inputs{there was little change in hospital multi-factor productivity. Not-for-profits invested more heavily and differently in IT than for-profit hospitals. Finally, we find no evidence of labor complementarities or network externalities from health IT.
Handle: RePEc:nbr:nberwo:18025
Template-Type: ReDIF-Paper 1.0
Title: The Impact of the 2009 Federal Tobacco Excise Tax Increase on Youth Tobacco Use
Classification-JEL: I10; I18
Author-Name: Jidong Huang
Author-Name: Frank J. Chaloupka, IV
Author-Person: pch236
Note: EH
Number: 18026
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18026
File-URL: http://www.nber.org/papers/w18026.pdf
File-Format: application/pdf
Abstract: This study examined the impact of the 2009 federal tobacco excise tax increase on the use of cigarettes and smokeless tobacco products among youth using the Monitoring the Future survey, a nationally representative survey of 8th, 10th, and 12th grade students. The results of this analysis showed that this tax increase had a substantial short-term impact. The percentage of students who reported smoking in the past 30 days dropped between 9.7% and 13.3% immediately following the tax increase, depending on model specifications, and the percentage of students who reported using smokeless tobacco products dropped between 16% and 24%. It is estimated that there would have been approximately 220,000 - 287,000 more current smokers and 135,000 - 203,000 more smokeless tobacco users among middle school and high school students (age 14 - 18) in the United States in May 2009 had the federal tax not increased in April 2009. The long-term projected number of youth prevented from smoking or using smokeless tobacco that resulted from the 2009 federal tax increase could be much larger given the resulting higher tobacco prices would deter more and more children from initiating smoking and smokeless tobacco use over time.
Handle: RePEc:nbr:nberwo:18026
Template-Type: ReDIF-Paper 1.0
Title: The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s.
Classification-JEL: G01; G21; N1
Author-Name: Raghuram Rajan
Author-Person: pra149
Author-Name: Rodney Ramcharan
Author-Person: pra554
Note: CF DAE ME
Number: 18027
Creation-Date: 2012-04
Order-URL: http://www.nber.org/papers/w18027
File-URL: http://www.nber.org/papers/w18027.pdf
File-Format: application/pdf
Publication-Status: published as Raghuram Rajan & Rodney Ramcharan, 2015. "The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s," American Economic Review, American Economic Association, vol. 105(4), pages 1439-77, April.
Abstract: Does credit availability exacerbate asset price inflation? Are there long run consequences? During the farm land price boom and bust before the Great Depression, we find that credit availability directly inflated land prices. Credit also amplified the relationship between positive fundamentals and land prices, leading to greater indebtedness. When fundamentals soured, areas with higher credit availability suffered a greater fall in land prices and had more bank failures. Land prices and credit availability also remained disproportionately low for decades in these areas, suggesting that leverage might render temporary credit induced booms and busts persistent. We draw lessons for regulatory policy.
Handle: RePEc:nbr:nberwo:18027
Template-Type: ReDIF-Paper 1.0
Title: Developing countries' financial vulnerability to the euro crisis: An event study of equity and bond markets
Classification-JEL: F30; F32; G15
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Author-Name: Minsoo Lee
Author-Person: ple201
Author-Name: Donghyun Park
Author-Person: ppa611
Note: IFM
Number: 18028
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18028
File-URL: http://www.nber.org/papers/w18028.pdf
File-Format: application/pdf
Abstract: The global crisis highlights the continued vulnerability of developing countries to shocks from advanced economies. Just a few years after the global crisis, the eurozone sovereign debt crisis has emerged as the single biggest threat to the global outlook. In this paper, we apply the event study methodology to gauge the scope for financial contagion from the EU to developing countries. More specifically, we estimate the responsiveness of equity and bond markets in developing countries to global crisis news and euro crisis news. Overall, we find that whereas global crisis news had a consistently negative effect on returns of equity and bond markets in developing countries, the effect of euro crisis news was more mixed and limited.
Handle: RePEc:nbr:nberwo:18028
Template-Type: ReDIF-Paper 1.0
Title: Testing Motives for Charitable Giving: A Revealed-Preference Methodology with Experimental Evidence
Classification-JEL: C91; D01; D64; H41
Author-Name: Rahul Deb
Author-Person: pde363
Author-Name: Robert S. Gazzale
Author-Person: pga178
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Note: EEE PE
Number: 18029
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18029
File-URL: http://www.nber.org/papers/w18029.pdf
File-Format: application/pdf
Publication-Status: published as Deb, Rahul & Gazzale, Robert S. & Kotchen, Matthew J., 2014. "Testing motives for charitable giving: A revealed-preference methodology with experimental evidence," Journal of Public Economics, Elsevier, vol. 120(C), pages 181-192.
Abstract: A large economics literature seeks to understand the reasons why individuals make charitable contributions. Fundamental features of most models of charitable giving are the inclusion of externalities induced by other agents and the Lancasterian characteristics approach to specifying utility functions. This paper develops a general, revealed-preference methodology for testing a variety of preference structures that allow for both externalities and characteristics. The tests are simple linear programs that are transparent, computationally efficient, and straightforward to implement. We show how the technique applies to standard models of privately provided public goods and novel models that account for social comparisons based on relative consumption and donations among individuals. We also conduct an original experiment that enables nonparametric tests of many models on a single data set. The results provide the first revealed-preference evidence on the importance of social comparisons when individuals make charitable contributions. Models that include preferences for either relative consumption or donations yield greater explanatory power than the standard model of impure altruism.
Handle: RePEc:nbr:nberwo:18029
Template-Type: ReDIF-Paper 1.0
Title: Misallocation, Property Rights, and Access to Finance: Evidence from Within and Across Africa
Classification-JEL: F40; O10
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Bent E. Sorensen
Author-Person: pso113
Note: IFM
Number: 18030
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18030
File-URL: http://www.nber.org/papers/w18030.pdf
File-Format: application/pdf
Publication-Status: published as Misallocation, Property Rights, and Access to Finance: Evidence from within and across Africa, Sebnem Kalemli-Ozcan, Bent E. Sørensen. in African Successes, Volume III: Modernization and Development, Edwards, Johnson, and Weil. 2016
Abstract: We study capital misallocation within and across 10 African countries using the World Bank Enterprise Surveys. First, we compare the extent of misallocation among firms within countries. We document high variation in firms' marginal product of capital (MPK), implying that countries could produce significantly more with the same aggregate capital stock if capital were allocated optimally. Such variation differs from country to country with some African countries (success stories) closer to developed country benchmarks. Small firms and non-exporters have less access to finance and have higher returns to capital in general. Self reported measures of obstacles to firms' operations suggest access to finance is the most important obstacle: A firm with the worst access to finance has MPK 45 percent higher than a firm with the worst access to finance as a result of low capital per worker. We compare average levels of the MPK across countries, finding evidence that the strength of property rights and the quality of the legal system help explain country-level differences in capital misallocation.
Handle: RePEc:nbr:nberwo:18030
Template-Type: ReDIF-Paper 1.0
Title: Prudential Policy for Peggers
Classification-JEL: E31; E62; F41
Author-Name: Stephanie Schmitt-Grohe
Author-Person: psc44
Author-Name: Martin Uribe
Note: EFG IFM ME
Number: 18031
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18031
File-URL: http://www.nber.org/papers/w18031.pdf
File-Format: application/pdf
Abstract: This paper shows that in a small open economy model with downward nominal wage rigidity pegging the nominal exchange rate creates a negative pecuniary externality. This peg-induced externality is shown to cause unemployment, overborrowing, and depressed levels of consumption. The paper characterizes the optimal capital control policy in this model and shows that it is prudential in nature. For it restricts capital inflows in good times and subsidizes external borrowing in bad times. Under plausible calibrations of the model, this type of macro prudential policy is shown to lower the average unemployment rate by 10 percentage points, reduce average external debt by more than 50 percent, and increase welfare by over 7 percent of consumption per period.
Handle: RePEc:nbr:nberwo:18031
Template-Type: ReDIF-Paper 1.0
Title: Comovement in GDP Trends and Cycles Among Trading Partners
Classification-JEL: C22; E32; F42
Author-Name: Bruce A. Blonigen
Author-Person: pbl165
Author-Name: Jeremy Piger
Author-Person: ppi14
Author-Name: Nicholas Sly
Author-Person: psl56
Note: IFM ITI
Number: 18032
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18032
File-URL: http://www.nber.org/papers/w18032.pdf
File-Format: application/pdf
Publication-Status: published as “Comovement in GDP Trends and Cycles among Trading Partners” with Bruce Blonigen and Nicholas Sly, Journal of International Economics, forthcoming.
Abstract: It has long been recognized that business cycle comovement is greater between countries that trade intensively with one another. Surprisingly, no one has previously examined the relationship between trade intensity and comovement of shocks to the trend level of output. Contrary to the result for cyclical fluctuations, we find that comovement of shocks to trend levels of real GDP is significantly weaker among countries that trade intensively with one another. We also find that the influence of trade on comovement between shocks to trends has remained stable, or become stronger in recent decades, while the role of trade in generating cyclical comovement has diminished steadily over time. In short, we find that international trade relationships have a substantial impact on comovement of shocks to output trends across countries, and these effects stand in stark contrast to the conventional wisdom regarding cyclical comovement.
Handle: RePEc:nbr:nberwo:18032
Template-Type: ReDIF-Paper 1.0
Title: Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves
Classification-JEL: I15; I18; O10; O12; O13; Q0; Q23; Q3; Q51; Q53; Q56
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Michael Greenstone
Author-Person: pgr38
Note: EEE EH PE
Number: 18033
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18033
File-URL: http://www.nber.org/papers/w18033.pdf
File-Format: application/pdf
Publication-Status: published as Rema Hanna & Esther Duflo & Michael Greenstone, 2016. "Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 80-114, February.
Abstract: It is conventional wisdom that it is possible to reduce exposure to indoor air pollution, improve health outcomes, and decrease greenhouse gas emissions in the rural areas of developing countries through the adoption of improved cooking stoves. This belief is largely supported by observational field studies and engineering or laboratory experiments. However, we provide new evidence, from a randomized control trial conducted in rural Orissa, India (one of the poorest places in India), on the benefits of a commonly used improved stove that laboratory tests showed to reduce indoor air pollution and require less fuel. We track households for up to four years after they received the stove. While we find a meaningful reduction in smoke inhalation in the first year, there is no effect over longer time horizons. We find no evidence of improvements in lung functioning or health and there is no change in fuel consumption (and presumably greenhouse gas emissions). The difference between the laboratory and field findings appear to result from households' revealed low valuation of the stoves. Households failed to use the stoves regularly or appropriately, did not make the necessary investments to maintain them properly, and usage rates ultimately declined further over time. More broadly, this study underscores the need to test environmental and health technologies in real-world settings where behavior may temper impacts, and to test them over a long enough horizon to understand how this behavioral effect evolves over time.
Handle: RePEc:nbr:nberwo:18033
Template-Type: ReDIF-Paper 1.0
Title: Misallocation and Productivity Effects of the Smoot-Hawley Tariff
Classification-JEL: E6; F1; F13
Author-Name: Eric W. Bond
Author-Person: pbo305
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Tristan Potter
Author-Person: ppo606
Author-Name: Joel Rodrigue
Author-Person: pro340
Note: DAE IFM ITI
Number: 18034
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18034
File-URL: http://www.nber.org/papers/w18034.pdf
File-Format: application/pdf
Publication-Status: published as Eric Bond & Mario Crucini & Joel Rodrigue & Tristan Potter, 2013. "Misallocation and Productivity Effects of the Smoot-Hawley Tariff," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 120-134, January.
Abstract: Using a newly created microeconomic archive of U.S. imports at the tariff-line level for 1930-33, we construct industry-level tariff wedges incorporating the input-output structure of U.S. economy and the heterogenous role of imports across sectors of the economy. We use these wedges to show that the average tariff rate of 46% in 1933 substantially understated the true impact of the Smoot-Hawley (SH) tariff structure, which we estimate to be equivalent to a uniform tariff rate of 70%. We use these wedges to calculate the impact of the Smoot Hawley tariffs on total factor productivity and welfare. In our benchmark parameterization, we find that tariff protection reduced TFP by 1.2% relative to free trade prior to the Smoot Hawley legislation. TFP fell by an additional 0.5% between 1930 and 1933 due to Smoot Hawley. We also conduct counterfactual policy exercises and examine the sensitivity of our results to changes in the elasticity of substitution and the import share. A doubling of the substitution elasticities yields a TFP decline of almost 5% relative to free trade, with an additional reduction due to SH of 0.4%.
Handle: RePEc:nbr:nberwo:18034
Template-Type: ReDIF-Paper 1.0
Title: The Nature of Countercyclical Income Risk
Classification-JEL: E24; E32; E44; J21; J31
Author-Name: Fatih Guvenen
Author-Person: pgu24
Author-Name: Serdar Ozkan
Author-Person: poz42
Author-Name: Jae Song
Author-Person: pso277
Note: AP EFG IFM LS ME
Number: 18035
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18035
File-URL: http://www.nber.org/papers/w18035.pdf
File-Format: application/pdf
Publication-Status: published as The Nature of Countercyclical Income Risk (with S. Ozkan and J. Song), Journal of Political Economy, 2014, Vol. 122, No. 3, pp. 621-660.
Abstract: This paper studies the cyclical nature of individual income risk using a confidential dataset from the U.S. Social Security Administration, which contains (uncapped) earnings histories for millions of individuals. The base sample is a nationally representative panel containing 10 percent of all U.S. males from 1978 to 2010. We use these data to decompose individual income growth during recessions into "between-group" and "within-group" components. We begin with the behavior of within-group shocks. Contrary to past research, we do not find the variance of idiosyncratic income shocks to be countercyclical. Instead, it is the left-skewness of shocks that is strongly countercyclical. That is, during recessions, the upper end of the shock distribution collapses--large upward income movements become less likely--whereas the bottom end expands--large drops in income become more likely. Thus, while the dispersion of shocks does not increase, shocks become more left skewed and, hence, risky during recessions. Second, to study between-group differences, we group individuals based on several observable characteristics at the time a recession hits. One of these characteristics--the average income of an individual at the beginning of a business cycle episode--proves to be an especially good predictor of fortunes during a recession: prime-age workers that enter a recession with high average earnings suffer substantially less compared with those who enter with low average earnings (which is not the case during expansions). Finally, we find that the cyclical nature of income risk is dramatically different for the top 1 percent compared with all other individuals--even relative to those in the top 2 to 5 percent.
Handle: RePEc:nbr:nberwo:18035
Template-Type: ReDIF-Paper 1.0
Title: Macro-Prudential Policy in a Fisherian model of Financial Innovation
Classification-JEL: D62; D82; E32; E44; F32; F41
Author-Name: Javier Bianchi
Author-Person: pbi159
Author-Name: Emine Boz
Author-Person: pbo393
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Note: IFM
Number: 18036
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18036
File-URL: http://www.nber.org/papers/w18036.pdf
File-Format: application/pdf
Publication-Status: published as Javier Bianchi & Emine Boz & Enrique Gabriel Mendoza, 2012. "Macroprudential Policy in a Fisherian Model of Financial Innovation," IMF Economic Review, Palgrave Macmillan, vol. 60(2), pages 223-269, July.
Publication-Status: published as Javier Bianchi & Emine Boz & Enrique G. Mendoza, 2012. "Macro-prudential Policy in a Fisherian Model of Financial Innovation," IMF Working Papers, vol 12(181).
Abstract: The interaction between credit frictions, financial innovation, and a switch from optimistic to pessimistic beliefs played a central role in the 2008 financial crisis. This paper develops a quantitative general equilibrium framework in which this interaction drives the financial amplification mechanism to study the effects of macro-prudential policy. Financial innovation enhances the ability of agents to collateralize assets into debt, but the riskiness of this new regime can only be learned over time. Beliefs about transition probabilities across states with high and low ability to borrow change as agents learn from observed realizations of financial conditions. At the same time, the collateral constraint introduces a pecuniary externality, because agents fail to internalize the effect of their borrowing decisions on asset prices. Quantitative analysis shows that the effectiveness of macro-prudential policy in this environment depends on the government's information set, the tightness of credit constraints and the pace at which optimism surges in the early stages of financial innovation. The policy is least effective when the government is as uninformed as private agents, credit constraints are tight, and optimism builds quickly.
Handle: RePEc:nbr:nberwo:18036
Template-Type: ReDIF-Paper 1.0
Title: Effective and Equitable Adoption of Opt-In Residential Dynamic Electricity Pricing
Classification-JEL: L51; L94
Author-Name: Severin Borenstein
Author-Person: pbo78
Note: EEE IO
Number: 18037
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18037
File-URL: http://www.nber.org/papers/w18037.pdf
File-Format: application/pdf
Publication-Status: published as S. Borenstein, 2013. "Effective and Equitable Adoption of Opt-In Residential Dynamic Electricity Pricing," Review of Industrial Organization, Springer, vol. 42(2), pages 127-160, March.
Abstract: While time-varying retail electricity pricing is very popular with economists, that support is not matched among regulators and consumers. Many papers have been written estimating and extolling the societal benefits of time-varying rates -- especially dynamic rates that change on a day's notice or less. Yet, such tariffs have been almost completely absent in the residential sector. In this paper, I present a potential approach to implementing an opt-in dynamic pricing plan that would be equitable to both customers who choose the rate and to those who choose to remain on a default flat-rate tariff. The approach bases the dynamic and the flat rate on the same underlying cost structure, and minimizes cross-subsidies between the two groups. I study the potential distributional impact of such a tariff structure using hourly consumption data for stratified random samples of customers from California's two largest utilities. I find that low-income households would, on average, see almost no change in their bills, while low-consumption households would see their bills decline somewhat and high-consumption households would see their bills rise. I also show that the opt-in approach is unlikely to increase the flat rate charged to other customers by more than a few percentage points. I then discuss the most common approach to implementing dynamic electricity pricing -- critical-peak pricing -- and suggest how it might be designed to more accurately match retail price spikes with periods of true supply shortages. Finally, I study the incentive problems created by an alternative program in growing use that pays customers to reduce their consumption on peak usage days.
Handle: RePEc:nbr:nberwo:18037
Template-Type: ReDIF-Paper 1.0
Title: Knowledge, Tests, and Fadeout in Educational Interventions
Classification-JEL: I20; I21; I28; J24
Author-Name: Elizabeth U. Cascio
Author-Person: pca757
Author-Name: Douglas O. Staiger
Author-Person: pst466
Note: CH ED LS
Number: 18038
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18038
File-URL: http://www.nber.org/papers/w18038.pdf
File-Format: application/pdf
Abstract: Educational interventions are often evaluated and compared on the basis of their impacts on test scores. Decades of research have produced two empirical regularities: interventions in later grades tend to have smaller effects than the same interventions in earlier grades, and the test score impacts of early educational interventions almost universally "fade out" over time. This paper explores whether these empirical regularities are an artifact of the common practice of rescaling test scores in terms of a student's position in a widening distribution of knowledge. If a standard deviation in test scores in later grades translates into a larger difference in knowledge, an intervention's effect on normalized test scores may fall even as its effect on knowledge does not. We evaluate this hypothesis by fitting a model of education production to correlations in test scores across grades and with college-going using both administrative and survey data. Our results imply that the variance in knowledge does indeed rise as children progress through school, but not enough for test score normalization to fully explain these empirical regularities.
Handle: RePEc:nbr:nberwo:18038
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Village-Based Schools: Evidence from a Randomized Controlled Trial in Afghanistan
Classification-JEL: I25; I28; O12; O22; O38
Author-Name: Dana Burde
Author-Name: Leigh L. Linden
Author-Person: pli719
Note: CH ED LS PE
Number: 18039
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18039
File-URL: http://www.nber.org/papers/w18039.pdf
File-Format: application/pdf
Publication-Status: published as Burde, Dana and Leigh L. Linden. 2013. "Bringing Education to Afghan Girls: A Randomized Controlled Trial of Village-Based Schools," American Economic Journal: Applied Economics. 5(3): 27-40.
Abstract: We conduct a randomized evaluation of the effect of village-based schools on children's academic performance using a sample of 31 villages and 1,490 children in rural northwestern Afghanistan. The program significantly increases enrollment and test scores among all children, eliminates the 21 percentage point gender disparity in enrollment, and dramatically reduces the disparity in test scores. The intervention increases formal school enrollment by 42 percentage points among all children and increases test scores by 0.51 standard deviations (1.2 standard deviations for children that enroll in school). While all students benefit, the effects accrue disproportionately to girls. Evidence suggests that the village-based schools provide a comparable education to traditional schools. Estimating the effects of distance on academic outcomes, children prove very sensitive: enrollment and test scores fall by 16 percentage points and 0.19 standard deviations per mile. Distance affects girls more than boys--girls' enrollment falls by 6 percentage points more per mile (19 percentage points total per mile) and their test scores fall by an additional 0.09 standard deviations (0.24 standard deviations total per mile).
Handle: RePEc:nbr:nberwo:18039
Template-Type: ReDIF-Paper 1.0
Title: On Fiscal Illusion and Ricardian Equivalence in Local Public Finance
Classification-JEL: H3; H4; H7; Q2; R2; R5
Author-Name: H. Spencer Banzhaf
Author-Person: pba328
Author-Name: Wallace E. Oates
Author-Person: poa3
Note: EEE PE
Number: 18040
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18040
File-URL: http://www.nber.org/papers/w18040.pdf
File-Format: application/pdf
Publication-Status: published as "On Fiscal Illusion in Local Public Finance: Re-examining Ricardian Equivalence and the Renter Effect," National Tax Journal 66(3), 2013, pp. 511-40 (with W.E. Oates).
Abstract: We re-evaluate two forms of fiscal illusion in local public finance: debt illusion and renter illusion. The Ricardian Equivalence Theorem for local governments suggests the form of finance of a public program (tax or debt finance) has no effects on substantive outcomes. For the local case, this results from the capitalization of local fiscal differentials into property values. We show that this version of the model is quite restrictive. In particular, in the U.S, context, where state and local interest is exempt from federal taxation, rational behavior may be inconsistent with Ricardian equivalence if local governments can borrow on more favorable terms than individuals. We also suggest a new test for renter illusion (or the renter effect). In particular, whether or not renters are more likely to support public investments in general, the renter effect suggests that renters are more likely to support them when financed with property taxes than with sales taxes. Using data from hundreds of open space referenda in the U.S. using a variety of finance mechanisms, we find evidence that households do prefer debt financing to tax financing, but find no evidence of the renter effect.
Handle: RePEc:nbr:nberwo:18040
Template-Type: ReDIF-Paper 1.0
Title: Competition, Markups, and the Gains from International Trade
Classification-JEL: E23; F1; O4
Author-Name: Chris Edmond
Author-Person: ped23
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Author-Name: Daniel Yi Xu
Author-Person: pxu119
Note: EFG IO ITI PR
Number: 18041
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18041
File-URL: http://www.nber.org/papers/w18041.pdf
File-Format: application/pdf
Publication-Status: published as Chris Edmond & Virgiliu Midrigan & Daniel Yi Xu, 2015. "Competition, Markups, and the Gains from International Trade," American Economic Review, American Economic Association, vol. 105(10), pages 3183-3221, October.
Abstract: We study the gains from trade in a model with endogenously variable markups. We show that the pro-competitive gains from trade are large if the economy is characterized by (i) extensive misallocation, i.e., large inefficiencies associated with markups, and (ii) a weak pattern of cross-country comparative advantage in individual sectors. We find strong evidence for both of these ingredients using producer-level data for Taiwanese manufacturing establishments. Parameterizations of the model consistent with this data thus predict large pro-competitive gains from trade, much larger than those in standard Ricardian models. In stark contrast to standard Ricardian models, data on changes in trade volume are not sufficient for determining the gains from trade.
Handle: RePEc:nbr:nberwo:18041
Template-Type: ReDIF-Paper 1.0
Title: Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment
Classification-JEL: E62; H54; R11
Author-Name: Sylvain Leduc
Author-Person: ple111
Author-Name: Daniel Wilson
Author-Person: pwi26
Note: EFG PE
Number: 18042
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18042
File-URL: http://www.nber.org/papers/w18042.pdf
File-Format: application/pdf
Publication-Status: published as Sylvain Leduc & Daniel Wilson, 2013. "Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment," NBER Macroeconomics Annual, University of Chicago Press, vol. 27(1), pages 89 - 142.
Publication-Status: published as Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment, Sylvain Leduc, Daniel Wilson. in NBER Macroeconomics Annual 2012, Volume 27, Acemoglu, Parker, and Woodford. 2013
Abstract: We examine the dynamic macroeconomic effects of public infrastructure investment both theoretically and empirically, using a novel data set we compiled on various highway spending measures. Relying on the institutional design of federal grant distributions among states, we construct a measure of government highway spending shocks that captures revisions in expectations about future government investment. We find that shocks to federal highway funding has a positive effect on local GDP both on impact and after 6 to 8 years, with the impact effect coming from shocks during (local) recessions. However, we find no permanent effect (as of 10 years after the shock). Similar impulse responses are found in a number of other macroeconomic variables. The transmission channel for these responses appears to be through initial funding leading to building, over several years, of public highway capital which then temporarily boosts private sector productivity and local demand. To help interpret these findings, we develop an open economy New Keynesian model with productive public capital in which regions are part of a monetary and fiscal union. We show that the presence of productive public capital in this model can yield impulse responses with the same qualitative pattern that we find empirically.
Handle: RePEc:nbr:nberwo:18042
Template-Type: ReDIF-Paper 1.0
Title: Tracking Variation in Systemic Risk at US Banks During 1974-2013
Classification-JEL: G01; G21; G28
Author-Name: Armen Hovakimian
Author-Name: Edward J. Kane
Author-Person: pka853
Author-Name: Luc Laeven
Author-Person: pla174
Note: CF
Number: 18043
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18043
File-URL: http://www.nber.org/papers/w18043.pdf
File-Format: application/pdf
Abstract: This paper proposes a theoretically based and easy-to-implement way to measure the systemic risk of financial institutions using publicly available accounting and stock market data. The measure models the credit enhancement taxpayers provide to individual banks in the Merton tradition (1974) as a combination put option for the deep tail of bank losses and a knock-in stop-loss call on bank assets. This model expresses the value of taxpayer loss exposure from a string of defaults as the value of this combination option written on the portfolio of industry assets. The exercise price of the call is the face value of the debt of the entire sector. We conceive of an individual bank’s systemic risk as its contribution to the value of this sector-wide option on the financial safety net. To the extent that authorities are slow to see bank losses or reluctant to exercise the call, the government itself becomes a secondary source of systemic risk. We apply our model to quarterly data over the period 1974-2013. The model indicates that systemic risk reached unprecedented highs during the financial crisis years 2008-2009, and that bank size, leverage, and asset risk are key drivers of systemic risk.
Handle: RePEc:nbr:nberwo:18043
Template-Type: ReDIF-Paper 1.0
Title: Cash for Coolers
Classification-JEL: D12; H23; Q40; Q54
Author-Name: Lucas W. Davis
Author-Person: pda367
Author-Name: Alan Fuchs
Author-Name: Paul J. Gertler
Author-Person: pge194
Note: EEE
Number: 18044
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18044
File-URL: http://www.nber.org/papers/w18044.pdf
File-Format: application/pdf
Publication-Status: published as Cash for Coolers: Evaluating a Large-Scale Appliance Replacement Program in Mexico” (with Alan Fuchs and Paul Gertler), American Economic Journal: Economic Policy, vol. 6, no. 4, November 2014 (pp. 207-38).
Abstract: This paper examines a large-scale appliance replacement program in Mexico that since 2009 has helped 1.5 million households replace their old refrigerators and air-conditioners with energy-efficient models. Using household-level electric billing records from the population of Mexican residential customers we find that refrigerator replacement reduces electricity consumption by an average of 11 kilowatt hours per month, about a 7% decrease. We find that air conditioning replacement, in contrast, increases electricity consumption by an average of 6 kilowatt hours per month, with larger increases during the summer. To put these results in context we present a simple conceptual framework in which energy-efficient durable goods cost less to operate, so households use them more. This behavioral response, sometimes called the "rebound" effect, is important for air-conditioners, but not important for refrigerators.
Handle: RePEc:nbr:nberwo:18044
Template-Type: ReDIF-Paper 1.0
Title: Why do we Redistribute so Much but Tag so Little? The principle of equal sacrifice and optimal taxation
Classification-JEL: D63; H2; H21
Author-Name: Matthew C. Weinzierl
Author-Person: pwe206
Note: PE
Number: 18045
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18045
File-URL: http://www.nber.org/papers/w18045.pdf
File-Format: application/pdf
Abstract: The workhorse model of optimal taxation strongly recommends tagging, but its use in policy is limited. I argue that this puzzle is a symptom of a more fundamental problem. Conventional theory neglects the diverse normative criteria with which, as extensive evidence has shown, most people evaluate policy. In particular, if the classic principle of Equal Sacri...ce augments the standard Utilitarian criterion, optimal tagging is limited. Calibrated simulations of optimal policy with normative diversity of this type simultaneously match three features of U.S. policy: substantial income redistribution; rejection of gender, race, and height tags; and acceptance of a blindness tag. Additional implications increase the appeal of this revision to conventional theory.
Handle: RePEc:nbr:nberwo:18045
Template-Type: ReDIF-Paper 1.0
Title: Parametric Inference and Dynamic State Recovery from Option Panels
Classification-JEL: C51; C52; C58; G12; G13
Author-Name: Torben G. Andersen
Author-Name: Nicola Fusari
Author-Name: Viktor Todorov
Note: AP
Number: 18046
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18046
File-URL: http://www.nber.org/papers/w18046.pdf
File-Format: application/pdf
Publication-Status: published as Torben G. Andersen & Nicola Fusari & Viktor Todorov, 2015. "Parametric Inference and Dynamic State Recovery From Option Panels," Econometrica, vol 83(3), pages 1081-1145.
Abstract: We develop a new parametric estimation procedure for option panels observed with error which relies on asymptotic approximations assuming an ever increasing set of observed option prices in the moneyness- maturity (cross-sectional) dimension, but with a fixed time span. We develop consistent estimators of the parameter vector and the dynamic realization of the state vector that governs the option price dynamics. The estimators converge stably to a mixed-Gaussian law and we develop feasible estimators for the limiting variance. We provide semiparametric tests for the option price dynamics based on the distance between the spot volatility extracted from the options and the one obtained nonparametrically from high-frequency data on the underlying asset. We further construct new formal tests of the model fit for specific regions of the volatility surface and for the stability of the risk-neutral dynamics over a given period of time. A large-scale Monte Carlo study indicates the inference procedures work well for empirically realistic specifications and sample sizes. In an empirical application to S&P 500 index options we extend the popular double-jump stochastic volatility model to allow for time-varying jump risk premia and a flexible relation between risk premia and the level of risk. Both extensions lead to an improved characterization of observed option prices.
Handle: RePEc:nbr:nberwo:18046
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Immigration on the Educational Attainment of Natives
Classification-JEL: J15
Author-Name: Jennifer Hunt
Author-Person: phu9
Note: LS
Number: 18047
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18047
File-URL: http://www.nber.org/papers/w18047.pdf
File-Format: application/pdf
Publication-Status: published as Jennifer Hunt, 2017. "The Impact of Immigration on the Educational Attainment of Natives," Journal of Human Resources, vol 52(4), pages 1060-1118.
Abstract: Using a state panel based on census data from 1940-2010, I examine the impact of immigration on the high school completion of natives in the United States. Immigrant children could compete for schooling resources with native children, lowering the return to native education and discouraging native high school completion. Conversely, native children might be encouraged to complete high school in order to avoid competing with immigrant high-school dropouts in the labor market. I find evidence that both channels are operative and that the net effect is positive, particularly for native-born blacks, though not for native-born Hispanics. An increase of one percentage point in the share of immigrants in the population aged 11-64 increases the probability that natives aged 11-17 eventually complete 12 years of schooling by 0.3 percentage points, and increases the probability for native-born blacks by 0.4 percentage points. I account for the endogeneity of immigrant flows by using instruments based on 1940 settlement patterns.
Handle: RePEc:nbr:nberwo:18047
Template-Type: ReDIF-Paper 1.0
Title: Industrial Policy and Competition
Classification-JEL: D2; L5; L6; O2; O3
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Mathias Dewatripont
Author-Person: pde423
Author-Name: Luosha Du
Author-Name: Ann Harrison
Author-Person: pha441
Author-Name: Patrick Legros
Author-Person: ple192
Note: EFG IO
Number: 18048
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18048
File-URL: http://www.nber.org/papers/w18048.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & Jing Cai & Mathias Dewatripont & Luosha Du & Ann Harrison & Patrick Legros, 2015. "Industrial Policy and Competition," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(4), pages 1-32, October.
Abstract: Using a comprehensive dataset of all medium and large enterprises in China between 1998 and 2007, we show that industrial policies allocated to competitive sectors or that foster competition in a sector increase productivity growth. We measure competition using the Lerner Index and include as industrial policies subsidies, tax holidays, loans, and tariffs. Measures to foster competition include policies that are more dispersed across firms in a sector or measures that encourage younger and more productive enterprises.
Handle: RePEc:nbr:nberwo:18048
Template-Type: ReDIF-Paper 1.0
Title: Education and Military Rivalry
Classification-JEL: D70; E24; F52; I20; N30; O10
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Torsten Persson
Author-Person: ppe28
Author-Name: Dorothee Rouzet
Author-Person: pro887
Note: POL
Number: 18049
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18049
File-URL: http://www.nber.org/papers/w18049.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & Xavier Jaravel & Torsten Persson & Dorothée Rouzet, 2019. "Education and Military Rivalry," Journal of the European Economic Association, vol 17(2), pages 376-412.
Abstract: Using data from the last 150 years in a small set of countries, and from the postwar period in a large set of countries, we show that large investments in state primary education systems tend to occur when countries face military rivals or threats from their neighbors. By contrast, we find that democratic transitions are negatively associated with education investments, while the presence of democratic political institutions magnifies the positive effect of military rivalries. These empirical results are robust to a number of statistical concerns and continue to hold when we instrument military rivalries with commodity prices or rivalries in a certain country's immediate neighborhood. We also present historical case studies, as well as a simple model, that are consistent with the econometric evidence.
Handle: RePEc:nbr:nberwo:18049
Template-Type: ReDIF-Paper 1.0
Title: Should Benchmark Indices Have Alpha? Revisiting Performance Evaluation
Classification-JEL: G11; G14; G23
Author-Name: Martijn Cremers
Author-Name: Antti Petajisto
Author-Name: Eric Zitzewitz
Author-Person: pzi23
Note: AP CF
Number: 18050
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18050
File-URL: http://www.nber.org/papers/w18050.pdf
File-Format: application/pdf
Publication-Status: published as Cremers, Martijn & Petajisto, Antti & Zitzewitz, Eric, 2013. "Should Benchmark Indices Have Alpha? Revisiting Performance Evaluation," Critical Finance Review, now publishers, vol. 2(1), pages 1-48, July.
Abstract: Standard Fama-French and Carhart models produce economically and statistically significant nonzero alphas, even for passive benchmark indices such as the S&P 500 and Russell 2000. We find that these alphas arise primarily from the disproportionate weight the Fama-French factors place on small value stocks, which have performed well, and from the CRSP value-weighted market index, which is historically a downward-biased benchmark for U.S. stocks. We propose small methodological changes to the Fama-French factors to eliminate the nonzero alphas, and we also propose factor models based on common and tradable benchmark indices. Both kinds of alternative models improve performance evaluation of actively managed portfolios, with the index-based models exhibiting the best performance.
Handle: RePEc:nbr:nberwo:18050
Template-Type: ReDIF-Paper 1.0
Title: How is Economic Hardship Avoided by Those Retiring Before the Social Security Entitlement Age?
Classification-JEL: J14; J26
Author-Name: Kevin S. Milligan
Author-Person: pmi14
Note: AG
Number: 18051
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18051
File-URL: http://www.nber.org/papers/w18051.pdf
File-Format: application/pdf
Publication-Status: published as "How is hardship avoided by those retiring before the Social Security entitlement age?" Journal of Pension Economics and Finance, forthcoming.
Abstract: Governments around the world are reacting to extended lifespans and troubled pension finances by increasing the age of retirement benefit entitlement. One concern that arises is how those who are not working before reaching entitlement age are able to bridge their consumption to the age of entitlement. This paper studies those who retire before the age of full pension entitlement in the United States using data drawn from the Health and Retirement Study. The major finding is that four out of five people who have zero earnings at pre-entitlement ages are able to find a way to lift their incomes over the poverty line. For men, pension and annuity income is important while for women, spousal income helps most to get them over the line. Reaching the early retirement entitlement age at 62 also has a significant impact on poverty avoidance.
Handle: RePEc:nbr:nberwo:18051
Template-Type: ReDIF-Paper 1.0
Title: Bubble Thy Neighbor: Portfolio Effects and Externalities from Capital Controls
Classification-JEL: F3; F4; F5; G01; G11
Author-Name: Kristin Forbes
Author-Person: pfo1
Author-Name: Marcel Fratzscher
Author-Person: pfr34
Author-Name: Thomas Kostka
Author-Name: Roland Straub
Note: CF IFM
Number: 18052
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18052
File-URL: http://www.nber.org/papers/w18052.pdf
File-Format: application/pdf
Publication-Status: published as Forbes, Kristin & Fratzscher, Marcel & Kostka, Thomas & Straub, Roland, 2016. "Bubble thy neighbour: Portfolio effects and externalities from capital controls," Journal of International Economics, Elsevier, vol. 99(C), pages 85-104.
Publication-Status: published as Forbes, Kristin J. & Fratzscher, Marcel & Kostka, Thomas & Straub, Roland, 2012. "Bubble thy neighbor: portfolio effects and externalities from capital controls," Proceedings, Federal Reserve Bank of San Francisco, issue Nov, pages 1-48.
Abstract: We use changes in Brazil's tax on capital inflows from 2006 to 2011 to test for direct portfolio effects and externalities from capital controls on investor portfolios. The analysis is structured based on information from investor interviews. We find that an increase in Brazil's tax on foreign investment in bonds causes investors to significantly decrease their portfolio allocations to Brazil in both bonds and equities. Investors simultaneously increase allocations to other countries that have substantial exposure to China and decrease allocations to countries viewed as more likely to use capital controls. Much of the effect of capital controls on portfolio flows appears to occur through signalling --i.e. changes in investor expectations about future policies-- rather than the direct cost of the controls. This evidence of significant externalities from capital controls suggests that any assessment of controls should consider their effects on portfolio flows to other countries.
Handle: RePEc:nbr:nberwo:18052
Template-Type: ReDIF-Paper 1.0
Title: Evidence on the Impact of R&D and ICT Investment on Innovation and Productivity in Italian Firms
Classification-JEL: L60; O31; O33
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Francesca Lotti
Author-Person: plo19
Author-Name: Jacques Mairesse
Author-Person: pma712
Note: PR
Number: 18053
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18053
File-URL: http://www.nber.org/papers/w18053.pdf
File-Format: application/pdf
Publication-Status: published as Bronwyn H. Hall & Francesca Lotti & Jacques Mairesse, 2013. "Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(3), pages 300-328, April.
Abstract: Both Research and Development (R&D) and Information and Communication Technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the United States. In this paper we investigate R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, together with a version of the CDM model (Crepon et al., 1998) that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities.
Handle: RePEc:nbr:nberwo:18053
Template-Type: ReDIF-Paper 1.0
Title: The China Syndrome: Local Labor Market Effects of Import Competition in the United States
Classification-JEL: F16; H53; J23; J31
Author-Name: David H. Autor
Author-Person: pau9
Author-Name: David Dorn
Author-Person: pdo78
Author-Name: Gordon H. Hanson
Author-Person: pha80
Note: IFM LS
Number: 18054
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18054
File-URL: http://www.nber.org/papers/w18054.pdf
File-Format: application/pdf
Publication-Status: published as David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-68, October.
Abstract: We analyze the effect of rising Chinese import competition between 1990 and 2007 on local U.S. labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization while instrumenting for imports using changes in Chinese imports by industry to other high-income countries. Rising exposure increases unemployment, lowers labor force participation, and reduces wages in local labor markets. Conservatively, it explains one-quarter of the contemporaneous aggregate decline in U.S. manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in exposed labor markets.
Handle: RePEc:nbr:nberwo:18054
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Economic Impacts of Living Wage Mandates Using Ex Ante Simulations, Longitudinal Estimates, and New Public and Administrative Data: Evidence for New York City
Classification-JEL: J18; J23; J38
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Matthew Thompson
Author-Name: Francesco Brindisi
Author-Name: Leslie Koyle
Author-Name: Clayton Reck
Note: LS
Number: 18055
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18055
File-URL: http://www.nber.org/papers/w18055.pdf
File-Format: application/pdf
Publication-Status: published as Neumark, David, Matthew Thompson, Francesco Brindisi, Leslie Koyle, and Clayton Reck, 2013, “Simulating the Economic Impacts of Living Wage Mandates Using New Public and Administrative Data: Evidence for New York City,” Economic Development Quarterly, pp. 271-83.
Abstract: Policy researchers often have to estimate the future effect of imposing a policy in a particular location. There is often historical information on the effects of similar policies in other jurisdictions, but no information on the effects of the policy in the jurisdiction in question, and the policy may have specific features not reflected in the experiences of other areas. It is then necessary to combine the historical evidence from other locations with information and data specific to the jurisdiction in question. In this paper, we illustrate and use this approach in estimating the impact of a proposed living wage mandate for New York City. We explain how we combined elements of "ex ante" evaluations of living wage laws with before-and-after (longitudinal) estimates of the effects of living wage laws. We also incorporate detailed location-specific information on workers, families, and employers using administrative data and other new public data sources.
Handle: RePEc:nbr:nberwo:18055
Template-Type: ReDIF-Paper 1.0
Title: Estimating Person-Centered Treatment (PeT) Effects Using Instrumental Variables
Classification-JEL: C21; C26; D04; I12
Author-Name: Anirban Basu
Author-Person: pba977
Note: EH TWP
Number: 18056
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18056
File-URL: http://www.nber.org/papers/w18056.pdf
File-Format: application/pdf
Publication-Status: published as Basu A. Person-Centered Treatment (PeT) effects using instrumental variables: An application to evaluating prostate cancer treatments.. 2012 National Bureau of Economic Research Working Paper No w18056. Journal of Applied Econometrics 2014; 29:671-691.
Abstract: This paper builds on the methods of local instrumental variables developed by Heckman and Vytlacil (1999, 2001, 2005) to estimate person-centered treatment (PeT) effects that are conditioned on the person's observed characteristics and averaged over the potential conditional distribution of unobserved characteristics that lead them to their observed treatment choices. PeT effects are more individualized than conditional treatment effects from a randomized setting with the same observed characteristics. PeT effects can be easily aggregated to construct any of the mean treatment effect parameters and, more importantly, are well-suited to comprehend individual-level treatment effect heterogeneity. The paper presents the theory behind PeT effects, studies their finite-sample properties using simulations and presents a novel analysis of treatment evaluation in health care.
Handle: RePEc:nbr:nberwo:18056
Template-Type: ReDIF-Paper 1.0
Title: Country Size, Currency Unions, and International Asset Returns
Classification-JEL: F3; F31; F4; G0; G12; G15
Author-Name: Tarek Alexander Hassan
Author-Person: pha489
Note: AP IFM ITI
Number: 18057
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18057
File-URL: http://www.nber.org/papers/w18057.pdf
File-Format: application/pdf
Publication-Status: published as Tarek A. Hassan, 2013. "Country Size, Currency Unions, and International Asset Returns," Journal of Finance, American Finance Association, vol. 68(6), pages 2269-2308, December.
Abstract: Differences in real interest rates across developed economies are puzzlingly large and persistent. I propose a simple explanation: Bonds issued in the currencies of larger economies are expensive because they insure against shocks that affect a larger fraction of the world economy. I show that differences in the size of economies indeed explain a large fraction of the cross-sectional variation in currency returns. The data also support a number of additional implications of the model: The introduction of a currency union lowers interest rates in participating countries and stocks in the non-traded sector of larger economies pay lower expected returns.
Handle: RePEc:nbr:nberwo:18057
Template-Type: ReDIF-Paper 1.0
Title: Nonlinear Adventures at the Zero Lower Bound
Classification-JEL: E30; E50; E60
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: Grey Gordon
Author-Person: pgo464
Author-Name: Pablo A. Guerrón-Quintana
Author-Person: pgu174
Author-Name: Juan Rubio-Ramírez
Author-Person: pru25
Note: EFG
Number: 18058
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18058
File-URL: http://www.nber.org/papers/w18058.pdf
File-Format: application/pdf
Publication-Status: published as Fernández-Villaverde, Jesús & Gordon, Grey & Guerrón-Quintana, Pablo & Rubio-Ramírez, Juan F., 2015. "Nonlinear adventures at the zero lower bound," Journal of Economic Dynamics and Control, Elsevier, vol. 57(C), pages 182-204.
Abstract: Motivated by the recent experience of the U.S. and the Eurozone, we describe the quantitative properties of a New Keynesian model with a zero lower bound (ZLB) on nominal interest rates, explicitly accounting for the nonlinearities that the bound brings. Besides showing how such a model can be efficiently computed, we find that the behavior of the economy is substantially affected by the presence of the ZLB. In particular, we document 1) the unconditional and conditional probabilities of hitting the ZLB; 2) the unconditional and conditional probabilty distributions of the duration of a spell at the ZLB; 3) the responses of output to government expenditure shocks at the ZLB, 4) the distribution of shocks that send the economy to the ZLB; and 5) the distribution of shocks that keep the economy at the ZLB.
Handle: RePEc:nbr:nberwo:18058
Template-Type: ReDIF-Paper 1.0
Title: House Price Moments in Boom-Bust Cycles
Classification-JEL: G12; R12; R21; R3; Y1
Author-Name: Todd M. Sinai
Author-Person: psi354
Note: EFG ME PE
Number: 18059
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18059
File-URL: http://www.nber.org/papers/w18059.pdf
File-Format: application/pdf
Publication-Status: published as House Price Moments in Boom-Bust Cycles, Todd Sinai. in Housing and the Financial Crisis, Glaeser and Sinai. 2013
Abstract: This paper describes six stylized patterns among housing markets in the United States that potential explanations of the housing boom and bust should seek to explain. First, individual housing markets in the U.S. experienced considerable heterogeneity in the amplitudes of their cycles. Second, the areas with the biggest boom-bust cycles in the 2000s also had the largest boom-busts in the 1980s and 1990s, with a few telling exceptions. Third, the timing of the cycles differed across housing markets. Fourth, the largest booms and busts, and their timing, seem to be clustered geographically. Fifth, the cross sectional variance of annual house price changes rises in booms and declines in busts. Finally, these stylized facts are robust to controlling for housing demand fundamentals - namely, rents, incomes, or employment - although changes in fundamentals are correlated with changes in prices.
Handle: RePEc:nbr:nberwo:18059
Template-Type: ReDIF-Paper 1.0
Title: Does Employer-Provided Health Insurance Constrain Labor Supply Adjustments to Health Shocks? New Evidence on Women Diagnosed with Breast Cancer
Classification-JEL: I13; J2
Author-Name: Cathy J. Bradley
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Scott Barkowski
Author-Person: pba1328
Note: EH LS
Number: 18060
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18060
File-URL: http://www.nber.org/papers/w18060.pdf
File-Format: application/pdf
Publication-Status: published as Bradley, Cathy J. & Neumark, David & Barkowski, Scott, 2013. "Does employer-provided health insurance constrain labor supply adjustments to health shocks? New evidence on women diagnosed with breast cancer," Journal of Health Economics, Elsevier, vol. 32(5), pages 833-849.
Abstract: Employment-contingent health insurance creates incentives for ill workers to remain employed at a sufficient level (usually full-time) to maintain access to health insurance coverage. We study employed married women, newly diagnosed with breast cancer, comparing labor supply responses to breast cancer diagnoses between women dependent on their own employment for health insurance and women with access to health insurance through their spouse's employer. We find evidence that women more dependent on their own job for health insurance reduce their labor supply by less after a diagnosis of breast cancer - the estimate difference is about 5.5 to 7 percent. Women's subjective responses to questions about working more to maintain health insurance are consistent with the conclusions from observed behavior.
Handle: RePEc:nbr:nberwo:18060
Template-Type: ReDIF-Paper 1.0
Title: Comparative Advantage and the Welfare Impact of European Integration
Classification-JEL: F11; F14; F15
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Author-Name: Jing Zhang
Author-Person: pzh153
Note: IFM ITI
Number: 18061
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18061
File-URL: http://www.nber.org/papers/w18061.pdf
File-Format: application/pdf
Publication-Status: published as Andrei A. Levchenko & Jing Zhang, 2012. "Comparative advantage and the welfare impact of European integration," Economic Policy, CEPR & CES & MSH, vol. 27(72), pages 567-602, October.
Abstract: This paper investigates the welfare gains from European trade integration, and the role of comparative advantage in determining the magnitude of those gains. We use a multisector Ricardian model implemented on 79 countries, and compare welfare in the 2000s to a counterfactual scenario in which East European countries are closed to trade. For West European countries, the mean welfare gain from trade integration with Eastern Europe is 0.16%, rang- ing from zero for Portugal to 0.4% for Austria. For East European countries, gains from trade are 9.23% at the mean, ranging from 2.85% for Russia to 20% for Estonia. For Eastern Europe, comparative advantage is a key determinant of the variation in the welfare gains: countries whose comparative advantage is most similar to Western Europe tend to gain less, while countries with technology most different from Western Europe gain the most.
Handle: RePEc:nbr:nberwo:18061
Template-Type: ReDIF-Paper 1.0
Title: Protectionism Isn't Counter‐Cyclic (anymore)
Classification-JEL: E32; F13
Author-Name: Andrew K. Rose
Author-Person: pro71
Note: EFG IFM ITI
Number: 18062
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18062
File-URL: http://www.nber.org/papers/w18062.pdf
File-Format: application/pdf
Publication-Status: published as “Protectionism isn’t Counter-Cyclic (anymore)”, NBER WP 18,062, CEPR DP 8937, Economic Policy 2013.
Abstract: Conventional wisdom holds that protectionism is counter-cyclic; tariffs, quotas and the like grow during recessions. While that may have been a valid description of the data before the Second World War, it is now inaccurate. In the post-war era, protectionism has not actually moved counter-cyclically. Tariffs and non-tariff barriers simply do not rise systematically during cyclic downturns. I document this new stylized fact with a panel of data covering over 60 countries and 30 years, using eighteen measures of protectionism and seven of business cycles. I also provide some hints as to why protectionism is no longer counter-cyclic.
Handle: RePEc:nbr:nberwo:18062
Template-Type: ReDIF-Paper 1.0
Title: Pseudo-Predictability in Conditional Asset Pricing Tests: Explaining Anomaly Performance with Politics, the Weather, Global Warming, Sunspots, and the Stars
Classification-JEL: C53; G0; G12
Author-Name: Robert Novy-Marx
Note: AP CF
Number: 18063
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18063
File-URL: http://www.nber.org/papers/w18063.pdf
File-Format: application/pdf
Publication-Status: published as Novy-Marx, Robert, “Predicting anomaly performance with politics, the weather, global warming, sunspots, and the stars,” Journal of Financial Economics, Volume 112, Issue 2, May 2014, Pages 137–146
Abstract: Ferson, Sarkissian and Simin (2003) warn that persistence in expected returns generates spurious regression bias in predictive regressions of stock returns, even though stock returns are themselves only weakly autocorrelated. Despite this fact a growing literature attempts to explain the performance of stock market anomalies with highly persistent investor sentiment. The data suggest, however, that the potential misspecification bias may be large. Predictive regressions of real returns on simulated regressors are too likely to reject the null of independence, and it is far too easy to find real variables that have "significant power" predicting returns. Standard OLS predictive regressions find that the party of the U.S. President, cold weather in Manhattan, global warming, the El Niño phenomenon, atmospheric pressure in the Arctic, the conjunctions of the planets, and sunspots, all have "significant power" predicting the performance of anomalies. These issues appear particularly acute for anomalies prominent in the sentiment literature, including those formed on the basis of size, distress, asset growth, investment, profitability, and idiosyncratic volatility.
Handle: RePEc:nbr:nberwo:18063
Template-Type: ReDIF-Paper 1.0
Title: Identifying Confirmatory Bias in the Field: Evidence from a Poll of Experts
Classification-JEL: D01; D03; N32
Author-Name: Rodney J. Andrews
Author-Name: Trevon D. Logan
Author-Person: plo110
Author-Name: Michael J. Sinkey
Note: DAE
Number: 18064
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18064
File-URL: http://www.nber.org/papers/w18064.pdf
File-Format: application/pdf
Publication-Status: published as Rodney J. Andrews & Trevon D. Logan & Michael J. Sinkey, 2018. "Identifying Confirmatory Bias in the Field," Journal of Sports Economics, vol 19(1), pages 50-81.
Abstract: Laboratory experiments have established the existence of cognitive biases, but their explanatory power in real-world economic settings has been difficult to measure. We estimate the extent of a cognitive bias, confirmatory bias, among experts in a real-world environment. In the Associated Press Top 25 College Football Poll expert pollsters are tasked with assessing team quality, and their beliefs are treated week-to-week with game results that serve as signals about an individual team's quality. We exploit the variation provided by actual game results relative to market expectations to develop a novel regression-discontinuity approach to identify confirmatory bias in this real-world setting. We construct a unique personally-assembled dataset that matches more than twenty years of individual game characteristics to poll results and betting market information, and show that teams that slightly exceed and barely miss market expectations are exchangeable. The likelihood of winning the game, the average number of points scored by teams and their opponents, and even the average week of the season are no different between teams that slightly exceed and barely miss market expectations. Pollsters, however, significantly upgrade their beliefs about a team's quality when a team slightly exceeds market expectations. The effects are sizeable-- nearly half of the voters in the poll rank a team one slot higher when they slightly exceed market expectations; one-fifth of the standard deviation in poll points in a given week can be attributed to confirmatory bias. This type of updating suggests that even when informed agents make repeated decisions they may act in a manner which is consistent with confirmatory bias.
Handle: RePEc:nbr:nberwo:18064
Template-Type: ReDIF-Paper 1.0
Title: Revising Commitments: Field Evidence on the Adjustment of Prior Choices
Classification-JEL: D81; D91; O10
Author-Name: Xavier Giné
Author-Person: pgi131
Author-Name: Jessica Goldberg
Author-Person: pgo591
Author-Name: Dan Silverman
Author-Person: psi181
Author-Name: Dean Yang
Author-Person: pya75
Note: LS PE
Number: 18065
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18065
File-URL: http://www.nber.org/papers/w18065.pdf
File-Format: application/pdf
Publication-Status: published as Xavier Giné & Jessica Goldberg & Dan Silverman & Dean Yang, 2017. "Revising Commitments: Field Evidence on the Adjustment of Prior Choices," The Economic Journal, .
Abstract: The very poor in developing countries often make intertemporal choices that seem at odds with their individual self-interest. There are many possible reasons why. We investigate several of these reasons with a lab-in-the-field experiment in rural Malawi involving large stakes. We make two contributions. First, we construct a new dependent variable: revisions of prior choices regarding the allocation of future income. This allows us to directly examine intertemporal choice revision and its determinants. In particular, this dependent variable permits a novel test for the existence of self-control problems: we find that revisions of money allocations toward the present are positively associated with measures of present-bias from an earlier baseline survey, as well as the (randomly assigned) closeness in time to the first possible date of money disbursement. Second, we investigate other potential determinants of revision, aside from self-control problems. We find little evidence that revisions of money allocations toward the present are associated with spousal preferences for such revision, household shocks or the financial sophistication of respondents.
Handle: RePEc:nbr:nberwo:18065
Template-Type: ReDIF-Paper 1.0
Title: The Money Value of a Man
Classification-JEL: D91; E21; G12; J24
Author-Name: Mark Huggett
Author-Person: phu6
Author-Name: Greg Kaplan
Author-Person: pka660
Note: AP EFG LS
Number: 18066
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18066
File-URL: http://www.nber.org/papers/w18066.pdf
File-Format: application/pdf
Abstract: This paper posits a notion of the value of an individual's human capital and the associated return on human capital. These concepts are examined using U.S. data on male earnings and financial asset returns. We find that (1) the value of human capital is far below the value implied by discounting earnings at the risk-free rate, (2) mean human capital returns exceed stock returns early in life and decline with age, (3) the stock component of the value of human capital is smaller than the bond component at all ages and (4) human capital returns and stock returns have a small positive correlation over the working lifetime.
Handle: RePEc:nbr:nberwo:18066
Template-Type: ReDIF-Paper 1.0
Title: Foreign Born Scientists: Mobility Patterns for Sixteen Countries
Classification-JEL: F32; J24; O30
Author-Name: Chiara Franzoni
Author-Person: pfr158
Author-Name: Giuseppe Scellato
Author-Name: Paula Stephan
Author-Person: pst458
Note: ED LS PR
Number: 18067
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18067
File-URL: http://www.nber.org/papers/w18067.pdf
File-Format: application/pdf
Publication-Status: published as FRANZONI, C., SCELLATO, G., STEPHAN, P. (2012) “Foreign-born scientists: mobility patterns for 16 countries” Nature Biotechnology, 30 (12) , pp. 1250-1253
Abstract: We report results from the first systematic study of the mobility of scientists engaged in research in a large number of countries. Data were collected from 17,182 respondents using a web-based survey of corresponding authors in 16 countries in four fields during 2011. We find considerable variation across countries, both in terms of immigration and emigration patterns. Switzerland has the largest percent of immigrant scientists working in country (56.7); Canada, and Australia trail by nine or more percent; the U.S. and Sweden by approximately eighteen percent. India has the lowest (0.8), followed closely by Italy and Japan. The most likely reason to come to a country for postdoctoral study or work is professional. Our survey methodology also allows us to study emigration patterns of individuals who were living in one of the 16 countries at age 18. Again, considerable variation exists by country. India heads the list with three in eight of those living in country when they were 18 out of country in 2011. The country with the lowest diaspora is Japan. Return rates also vary by country, with emigrants from Spain being most likely to return and those from India being least like to return. Regardless of country, the most likely reason respondents report for returning to one's home country is family or personal.
Handle: RePEc:nbr:nberwo:18067
Template-Type: ReDIF-Paper 1.0
Title: Quantile Treatment Effects of College Quality on Earnings: Evidence from Administrative Data in Texas
Classification-JEL: I21; J24
Author-Name: Rodney J. Andrews
Author-Name: Jing Li
Author-Name: Michael F. Lovenheim
Author-Person: plo162
Note: ED LS
Number: 18068
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18068
File-URL: http://www.nber.org/papers/w18068.pdf
File-Format: application/pdf
Publication-Status: published as R. J. Andrews & J. Li & M. F. Lovenheim, 2016. "Quantile Treatment Effects of College Quality on Earnings," Journal of Human Resources, vol 51(1), pages 200-238.
Abstract: This paper uses administrative data on schooling and earnings from Texas to estimate the effect of college quality on the distribution of earnings. We proxy college quality using the college sector from which students graduate and focus on identifying how graduating from UT-Austin, Texas A\&M or a community college affects the distribution of earnings relative to graduating from a non-flagship university in Texas. Our methodological approach uses the rich set of observable student academic ability and background characteristics in the data to adjust the earnings distributions across college sectors for the fact that college sector quality is correlated with factors that also affect earnings. Although our mean earnings estimates are similar to previous work in this area, we find evidence of substantial heterogeneity in the returns to college quality. At UT-Austin, the returns increase across the earnings distribution, while at Texas A\&M they tend to decline with one's place in the distribution. For community college graduates, the returns relative to non-flagship four-year graduates are negative across most of the distribution of earnings, but they approach zero and become positive for higher earners. Our data also allow us to estimate effects separately by race and ethnicity, and we find that historically under-represented minorities experience the highest returns in the upper tails of the earnings distribution, particularly among UT-Austin and community college graduates. While we focus on graduates, we also show our estimates are robust to examining college attendees as well as to many other changes in the sample and to the estimation strategy. Overall, these estimates provide the first direct evidence of the extent of heterogeneity in the effect of college quality on subsequent earnings, and our estimates point to the need to consider such heterogeneity in human capital models that incorporate college quality.
Handle: RePEc:nbr:nberwo:18068
Template-Type: ReDIF-Paper 1.0
Title: Estimating Racial Price Differentials in the Housing Market
Classification-JEL: H0; J15; K4; R2; R3
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Marcus D. Casey
Author-Person: pca1334
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Robert McMillan
Note: PE
Number: 18069
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18069
File-URL: http://www.nber.org/papers/w18069.pdf
File-Format: application/pdf
Abstract: This paper uses unique panel data covering over two million repeat-sales housing transactions from four metropolitan areas to test for the presence of racial price differentials in the housing market. Drawing on the strengths of these data, our research design controls carefully for unobserved differences in the quality of neighborhoods and the homes purchased by buyers of each race. We find that black and Hispanic homebuyers pay premiums of about three percent on average across the four cities, differences that are not explained by variation in buyer income, wealth or access to credit. Further, the estimated premiums do not vary significantly with the racial composition of the neighborhood; nor, strikingly, do they vary with the race of the seller. This latter finding suggests that racial prejudice on the part of sellers is not the primary explanation for the robust premiums we uncover. The results have implications for the evolution of racial differences in wealth and home ownership and the persistence of residential segregation.
Handle: RePEc:nbr:nberwo:18069
Template-Type: ReDIF-Paper 1.0
Title: Weathering the Storm: Hurricanes and Birth Outcomes
Classification-JEL: I12
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Maya Rossin-Slater
Note: CH EH
Number: 18070
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18070
File-URL: http://www.nber.org/papers/w18070.pdf
File-Format: application/pdf
Publication-Status: published as Currie, Janet & Rossin-Slater, Maya, 2013. "Weathering the storm: Hurricanes and birth outcomes," Journal of Health Economics, Elsevier, vol. 32(3), pages 487-503.
Abstract: A growing literature suggests that stressful events in pregnancy can have negative effects on birth outcomes. Some of the estimates in this literature may be affected by small samples, omitted variables, endogenous mobility in response to disasters, and errors in the measurement of gestation, as well as by a mechanical correlation between longer gestation and the probability of having been exposed. We use millions of individual birth records to examine the effects of exposure to hurricanes during pregnancy. The data allow us to measure outcomes precisely and to follow the same mother over time; we also suggest estimation methods that correct for omitted unobserved fixed characteristics of the mother, endogenous moving in response to storms, and the above mentioned correlation between gestation length and exposure. We find that exposure to a hurricane during pregnancy increases the probability of complications of labor and delivery, and of abnormal conditions of the newborn such as being on a ventilator more than 30 minutes and meconium aspiration syndrome. Although we do not directly measure stress, our results are supportive of the idea that stressful events in pregnancy can damage the health of the fetus. However our results suggest that the effects may be subtle and not readily apparent in terms of widely-used metrics such as birth weight and gestation.
Handle: RePEc:nbr:nberwo:18070
Template-Type: ReDIF-Paper 1.0
Title: The Smart Grid, Entry, and Imperfect Competition in Electricity Markets
Classification-JEL: D24; D43; D44; L10; L51; L94; Q4; Q41
Author-Name: Hunt Allcott
Author-Person: pal171
Note: EEE
Number: 18071
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18071
File-URL: http://www.nber.org/papers/w18071.pdf
File-Format: application/pdf
Abstract: Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. The Smart Grid is a set of emerging technologies that, among other effects, will facilitate "real-time pricing" for electricity and increase price elasticity of demand. This paper simulates the effects of this increased demand elasticity using counterfactual simulations in a structural model of the Pennsylvania-Jersey-Maryland electricity market. The model includes a different approach to the problem of multiple equilibria in multi-unit auctions: I non-parametrically estimate unobservables that rationalize past bidding behavior and use learning algorithms to move from the observed equilibrium counterfactual bid functions. This routine is nested as the second stage of a static entry game that models the Capacity Market, an important element of market design in some restructured electricity markets. There are three central results. First, I find that an increase in demand elasticity could actually increase wholesale electricity prices in peak hours, contrary to predictions from short run models, while decreasing Capacity Market prices and total entry. Second, although the increased demand elasticity from the Smart Grid reduces producers' market power, in practice this would be a small channel of efficiency gains relative to forestalled entry. Third, I find that the gross welfare gains from moving a typical consumer to the Smart Grid, under the assumed demand parameters and before subtracting out the initial infrastructure costs, are about 10 percent of the consumer's total wholesale electricity costs.
Handle: RePEc:nbr:nberwo:18071
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy, Liquidity, and Growth
Classification-JEL: E32; E43; E52
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Enisse Kharroubi
Author-Person: pkh36
Note: EFG ME
Number: 18072
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18072
File-URL: http://www.nber.org/papers/w18072.pdf
File-Format: application/pdf
Abstract: In this paper, we use cross-industry, cross-country panel data to test whether industry growth is positively affected by the interaction between the reactivity of real short term interest rates to the business cycle and industry-level measures of financial constraints. Financial constraints are measured, either by the extent to which an industry is prone to being "credit constrained", or by the extent to which it is prone to being "liquidity constrained". Our main findings are that: (i) the interaction between credit or liquidity constraints and monetary policy countercyclicality, has a positive, significant, and robust impact on the average annual rate of labor productivity in the domestic industry; (ii) these interaction effects tend to be more significant in downturns than in upturns.
Handle: RePEc:nbr:nberwo:18072
Template-Type: ReDIF-Paper 1.0
Title: Counterfeit or Substandard? Assessing Price and Non-Price Signals of Drug Quality
Classification-JEL: D8; I15; I18; L15; L51
Author-Name: Roger Bate
Author-Name: Ginger Zhe Jin
Author-Name: Aparna Mathur
Author-Person: pma1162
Note: IO
Number: 18073
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18073
File-URL: http://www.nber.org/papers/w18073.pdf
File-Format: application/pdf
Publication-Status: published as Roger Bate, Ginger Zhe Jin and Aparna Mathur “Falsified or Substandard? Assessing Price and Non-Price Signals of Drug Quality” forthcoming the Journal of Economics & Management Strategy, Volume 24, Issue 4, pages 687–711, Winter 2015
Abstract: Pharmaceutical products can be of poor quality either because they contain zero correct active ingredient (referred to as "counterfeit") or because they contain a non-zero but incorrect amount of the right active ingredient (referred to as "substandard"). While both types of poor-quality drugs can be dangerous, they differ in health consequence, price, and potential policy remedies. Assessing basic quality of 1437 samples of Ciprofloxacin from 18 low-to-middle-income countries, we aim to understand how price and non-price signals can help distinguish counterfeits, substandard drugs, and passing drugs. Following the Global Pharma Health Fund e.V. Minilab® protocol, we find 9.88% of samples have less than 80% of the correct active ingredient and 41.5% of these failures are counterfeits. Both product registration and chain affiliation of retailers are strong indicators of higher probability to pass in the Minilab test and higher retail price. Within quality failures, chain affiliation is more likely to indicate substandard while product registration with local government is more likely to indicate counterfeit. This suggests that registered products are more likely to be targeted by counterfeiters. Furthermore, substandard drugs are priced much lower than comparable generics in the same city but counterfeits offer almost no discount from the targeted genuine version. These findings are consistent with economic theory, and have important implications for both consumers and policy makers.
Handle: RePEc:nbr:nberwo:18073
Template-Type: ReDIF-Paper 1.0
Title: Financial Constraints, Endogenous Markups, and Self-fulfilling Equilibria
Classification-JEL: E02; E2; E44
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Pengfei Wang
Author-Person: pwa169
Note: EFG
Number: 18074
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18074
File-URL: http://www.nber.org/papers/w18074.pdf
File-Format: application/pdf
Publication-Status: published as Benhabib, Jess & Wang, Pengfei, 2013. "Financial constraints, endogenous markups, and self-fulfilling equilibria," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 789-805.
Abstract: We show that self-fulfilling equilibria and indeterminacy can easily arise in a simple financial accelerator model with reasonable parameter calibrations and without increasing returns in production. A key feature for generating indeterminacy in our model is the countercyclical markup due to the procyclical loan to output ratio. We illustrate, via simulations, that our financial accelerator model can generate rich business cycle dynamics, including hump-shaped output in response to demand shocks as well as serial autocorrelation in output growth rates.
Handle: RePEc:nbr:nberwo:18074
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Housing Wealth on College Choice: Evidence from the Housing Boom
Classification-JEL: I21; I23; J24; R31
Author-Name: Michael F. Lovenheim
Author-Person: plo162
Author-Name: C. Lockwood Reynolds
Author-Person: pre335
Note: ED
Number: 18075
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18075
File-URL: http://www.nber.org/papers/w18075.pdf
File-Format: application/pdf
Publication-Status: published as Michael F. Lovenheim & C. Lockwood Reynolds, 2013. "The Effect of Housing Wealth on College Choice: Evidence from the Housing Boom," Journal of Human Resources, University of Wisconsin Press, vol. 48(1), pages 1-35.
Abstract: The higher education system in the United States is characterized by a large degree of quality heterogeneity, and there is a growing literature suggesting students attending higher quality universities have better educational and labor market outcomes. In this paper, we use NLSY97 data combined with the difference in the timing and strength of the housing boom across cities to examine how short-run home price growth affects the quality of postsecondary schools chosen by students. Our findings indicate a $10,000 increase in a family's housing wealth in the four years prior to a student becoming of college-age increases the likelihood she attends a flagship public university relative to a non-flagship public university by 2.0 percent and decreases the relative probability of attending a community college by 1.6 percent. These effects are driven by relatively lower and middle-income families. We show that these changes are due to the effect of housing wealth on where students apply, not on whether they are admitted. We also find that short-run increases in home prices lead to increases in direct quality measures of the institutions students attend. Finally, for the lower-income sample, we find home price increases reduce student labor supply and that each $10,000 increase in home prices is associated with a 1.8% increase in the likelihood of completing college.
Handle: RePEc:nbr:nberwo:18075
Template-Type: ReDIF-Paper 1.0
Title: Sequential or Simultaneous Elections? A Welfare Analysis
Classification-JEL: D7; D8
Author-Name: Patrick Hummel
Author-Name: Brian Knight
Author-Person: pkn7
Note: PE POL
Number: 18076
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18076
File-URL: http://www.nber.org/papers/w18076.pdf
File-Format: application/pdf
Publication-Status: published as “Sequential or Simultaneous Elections? An Empirical Welfare Analysis” (with Patrick Hummell), NBER working paper 18076, 2012, forthcoming at the International Economic Review.
Abstract: This paper addresses a key question on the design of electoral systems. Should all voters vote on the same day or should elections be staggered, with late voters observing early returns before making their decisions? Using a model of voting and social learning, we illustrate that sequential elections place too much weight on the preferences and information of early states but also provide late voters with valuable information. Under simultaneous elections, voters equally weigh the available information but place too much weight on their priors, providing an inappropriate advantage to front-runners. Given these trade-offs, simultaneous elections are welfare-preferred if the front-runner initially has a small advantage, but sequential elections are welfare-preferred if the front-runner initially has a large advantage. We then quantitatively evaluate this trade-off using data based on the 2004 presidential primary. The results suggest that simultaneous systems outperform sequential systems although the difference in welfare is relatively small.
Handle: RePEc:nbr:nberwo:18076
Template-Type: ReDIF-Paper 1.0
Title: Has the U.S. Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation
Classification-JEL: E2; G2; N2
Author-Name: Thomas Philippon
Author-Person: pph81
Note: AP CF EFG PR
Number: 18077
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18077
File-URL: http://www.nber.org/papers/w18077.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Philippon, 2015. "Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation," American Economic Review, American Economic Association, vol. 105(4), pages 1408-38, April.
Abstract: I provide a quantitative interpretation of financial intermediation in the U.S. over the past 130 years. Measuring separately the cost of intermediation and the production of financial services, I find that: (i) the quantity of intermediation varies a lot over time; (ii) intermediation is produced under constant returns to scale; (iii) the annual cost of intermediation is around 2% of outstanding assets; (iv) adjustments for borrowers' quality are quantitatively important; and (v) the unit cost of intermediation has increased over the past 30 years.
Handle: RePEc:nbr:nberwo:18077
Template-Type: ReDIF-Paper 1.0
Title: A Markov-Switching Multi-Fractal Inter-Trade Duration Model, with Application to U.S. Equities
Classification-JEL: C22; C41
Author-Name: Fei Chen
Author-Name: Francis X. Diebold
Author-Person: pdi1
Author-Name: Frank Schorfheide
Author-Person: psc19
Note: AP
Number: 18078
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18078
File-URL: http://www.nber.org/papers/w18078.pdf
File-Format: application/pdf
Publication-Status: published as Chen, Fei & Diebold, Francis X. & Schorfheide, Frank, 2013. "A Markov-switching multifractal inter-trade duration model, with application to US equities," Journal of Econometrics, Elsevier, vol. 177(2), pages 320-342.
Abstract: We propose and illustrate a Markov-switching multi-fractal duration (MSMD) model for analysis of inter-trade durations in financial markets. We establish several of its key properties with emphasis on high persistence (indeed long memory). Empirical exploration suggests MSMD's superiority relative to leading competitors.
Handle: RePEc:nbr:nberwo:18078
Template-Type: ReDIF-Paper 1.0
Title: The Rise and Fall of Unions in the U.S.
Classification-JEL: J23; J24; J51; L11; L16; L23; O14; O33
Author-Name: Emin M. Dinlersoz
Author-Person: pdi19
Author-Name: Jeremy Greenwood
Author-Person: pgr12
Note: EFG
Number: 18079
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18079
File-URL: http://www.nber.org/papers/w18079.pdf
File-Format: application/pdf
Abstract: Union membership displayed a ∩-shaped pattern over the 20th century, while the distribution of income sketched a ∪. A model of unions is developed to analyze these phenomena. There is a distribution of firms in the economy. Firms hire capital, plus skilled and unskilled labor. Unionization is a costly process. A union decides how many firms to organize and its members' wage rate. Simulation of the developed model establishes that skilled-biased technological change, which affects the productivity of skilled labor relative to unskilled labor, can potentially explain the above facts. Statistical analysis suggests that skill-biased technological change is an important factor in de-unionization.
Handle: RePEc:nbr:nberwo:18079
Template-Type: ReDIF-Paper 1.0
Title: Family Ties, Inheritance Rights, and Successful Poverty Alleviation: Evidence from Ghana
Classification-JEL: G18; G23; H55; K36; O17; O55; Z1
Author-Name: Edward Kutsoati
Author-Person: pku32
Author-Name: Randall Morck
Author-Person: pmo146
Note: CF
Number: 18080
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18080
File-URL: http://www.nber.org/papers/w18080.pdf
File-Format: application/pdf
Publication-Status: published as Family Ties, Inheritance Rights, and Successful Poverty Alleviation: Evidence from Ghana, Edward Kutsoati, Randall Morck. in African Successes, Volume II: Human Capital, Edwards, Johnson, and Weil. 2016
Abstract: Ghanaian custom views children as members of either their mother's or father's lineage (extended family), but not both. Patrilineal custom charges a man's lineage with caring for his widow and children, while matrilineal custom places this burden on the widows' lineage - her father, brothers, and uncles. Deeming custom inadequate, and to promote the nuclear family, Ghana enacted the Intestate Succession (PNDC) Law 111, 1985 and 1998 Children's Act 560 to force men to provide for their widows and children, as in Western cultures. Our survey shows that, although most people die intestate and many profess to know Law 111, it is rarely implemented. Knowledge of the law correlates with couples accumulating assets jointly and with inter-vivos husband to wife transfers, controlling for education. These effects are least evident for widows of matrilineal lineage men, suggesting a persistence of traditional norms. Widows with closer ties with their own or their spouse's lineage report greater financial support, as do those very few who benefit from legal wills or access Law 111 and, importantly, widows of matrilineal lineage. Some evidence also supports Act 560 benefiting nuclear families, especially if the decedent's lineage is matrilineal. Overall, our study confirms African traditional institutions' persistent importance, and the limited effects of formal law.
Handle: RePEc:nbr:nberwo:18080
Template-Type: ReDIF-Paper 1.0
Title: Fixing the Patent Office
Classification-JEL: K30
Author-Name: Mark A. Lemley
Note: PR
Number: 18081
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18081
File-URL: http://www.nber.org/papers/w18081.pdf
File-Format: application/pdf
Publication-Status: published as Fixing the Patent Office, Mark A. Lemley. in Innovation Policy and the Economy, Volume 13, Lerner and Stern. 2013
Abstract: How can we allow patent examiners to effectively distinguish between patentable and unpatentable inventions, without slowing the process to a crawl or wasting a bunch of money? This essay reviews the recent literature and considers a number of proposals and their limitations. It concludes that the system can be improved, but that we are unlikely to solve the problem of bad patents altogether. The focus in reform discussions should be on understanding and changing applicant and examiner incentives rather than simply spending money.
Handle: RePEc:nbr:nberwo:18081
Template-Type: ReDIF-Paper 1.0
Title: Why Did So Many People Make So Many Ex Post Bad Decisions? The Causes of the Foreclosure Crisis
Classification-JEL: D14; D18; D53; D82; G01; G02; G38
Author-Name: Christopher L. Foote
Author-Person: pfo133
Author-Name: Kristopher S. Gerardi
Author-Person: pge160
Author-Name: Paul S. Willen
Author-Person: pwi457
Note: EFG
Number: 18082
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18082
File-URL: http://www.nber.org/papers/w18082.pdf
File-Format: application/pdf
Abstract: We present 12 facts about the mortgage crisis. We argue that the facts refute the popular story that the crisis resulted from finance industry insiders deceiving uninformed mortgage borrowers and investors. Instead, we argue that borrowers and investors made decisions that were rational and logical given their ex post overly optimistic beliefs about house prices. We then show that neither institutional features of the mortgage market nor financial innovations are any more likely to explain those distorted beliefs than they are to explain the Dutch tulip bubble 400 years ago. Economists should acknowledge the limits of our understanding of asset price bubbles and design policies accordingly.
Handle: RePEc:nbr:nberwo:18082
Template-Type: ReDIF-Paper 1.0
Title: Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates
Classification-JEL: F21; F23
Author-Name: Richard Baldwin
Author-Person: pba124
Author-Name: Toshihiro Okubo
Author-Person: pok11
Note: ITI
Number: 18083
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18083
File-URL: http://www.nber.org/papers/w18083.pdf
File-Format: application/pdf
Publication-Status: published as Richard Baldwin & Toshihiro Okubo, 2014. "Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates," The World Economy, Wiley Blackwell, vol. 37(8), pages 1051-1080, 08.
Abstract: This paper applies a novel empirical approach to characterising the horizontal-ness and vertical-ness of affiliates based on Yeaple's complex FDI concept. In its simplest form, horizontal-ness is measured as affiliates' local sales share while their vertical-ness is measures as their share of non-local sourcing of intermediates. Japanese affiliates in most sectors and nations are partly vertical and partly horizontal but those in North American are far more 'horizontal' than those in the EU and Asia. Affiliates became more vertical between 1996 and 2005. A four-way sales and sourcing split (host, home, regional and RoW) suggests that affiliates act as nodes in regional production networks - especially in Asia. We posit several hypotheses that could be tested with our empirical approach.
Handle: RePEc:nbr:nberwo:18083
Template-Type: ReDIF-Paper 1.0
Title: Financial Risk Measurement for Financial Risk Management
Classification-JEL: C1; G1
Author-Name: Torben G. Andersen
Author-Name: Tim Bollerslev
Author-Person: pbo66
Author-Name: Peter F. Christoffersen
Author-Person: pch343
Author-Name: Francis X. Diebold
Author-Person: pdi1
Note: AP EFG IFM
Number: 18084
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18084
File-URL: http://www.nber.org/papers/w18084.pdf
File-Format: application/pdf
Abstract: Current practice largely follows restrictive approaches to market risk measurement, such as historical simulation or RiskMetrics. In contrast, we propose flexible methods that exploit recent developments in financial econometrics and are likely to produce more accurate risk assessments, treating both portfolio-level and asset-level analysis. Asset-level analysis is particularly challenging because the demands of real-world risk management in financial institutions - in particular, real-time risk tracking in very high-dimensional situations - impose strict limits on model complexity. Hence we stress powerful yet parsimonious models that are easily estimated. In addition, we emphasize the need for deeper understanding of the links between market risk and macroeconomic fundamentals, focusing primarily on links among equity return volatilities, real growth, and real growth volatilities. Throughout, we strive not only to deepen our scientific understanding of market risk, but also cross-fertilize the academic and practitioner communities, promoting improved market risk measurement technologies that draw on the best of both.
Handle: RePEc:nbr:nberwo:18084
Template-Type: ReDIF-Paper 1.0
Title: Slow Recoveries: A Structural Interpretation
Classification-JEL: 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: 18085
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18085
File-URL: http://www.nber.org/papers/w18085.pdf
File-Format: application/pdf
Publication-Status: published as Jordi Galà & Frank Smets & Rafael Wouters, 2012. "Slow Recoveries: A Structural Interpretation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 9-30, December.
Abstract: An analysis of the performance of GDP, employment and other labor market variables following the troughs in postwar U.S. business cycles points to much slower recoveries in the three most recent episodes, but does not reveal any significant change over time in the relation between GDP and employment. This leads us to characterize the last three episodes as slow recoveries, as opposed to jobless recoveries. We use the estimated New Keynesian model in Galí-Smets-Wouters (2011) to provide a structural interpretation for the slower recoveries since the early nineties.
Handle: RePEc:nbr:nberwo:18085
Template-Type: ReDIF-Paper 1.0
Title: Care or Cash? The Effect of Child Care Subsidies on Student Performance
Classification-JEL: J13
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Katrine V. Løken
Author-Person: plk4
Author-Name: Kjell G. Salvanes
Author-Person: psa3
Note: CH ED LS
Number: 18086
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18086
File-URL: http://www.nber.org/papers/w18086.pdf
File-Format: application/pdf
Publication-Status: published as Cash or Care? The Effect of Childcare Subsidies on Academic Outcomes, (Joint with Paul Devereux, Katrine Loken, and Kjell Salvanes.) Review of Economics and Statistics, forthcoming.
Abstract: Given the wide use of childcare subsidies across countries, it is surprising how little we know about the effect of these subsidies on children's longer run outcomes. Using a sharp discontinuity in the price of childcare in Norway, we are able to isolate the effects of childcare subsidies on both parental and student outcomes. We find very small and statistically insignificant effects of childcare subsidies on childcare utilization and parental labor force participation. Despite this, we find significant positive effect of the subsidies on children's academic performance in junior high school, suggesting the positive shock to disposable income provided by the subsidies may be helping to improve children's scholastic aptitude.
Handle: RePEc:nbr:nberwo:18086
Template-Type: ReDIF-Paper 1.0
Title: The Heterogeneity of the Cigarette Price Effect on Body Mass Index
Classification-JEL: I10
Author-Name: George Wehby
Author-Name: Charles J. Courtemanche
Author-Person: pco421
Note: EH
Number: 18087
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18087
File-URL: http://www.nber.org/papers/w18087.pdf
File-Format: application/pdf
Publication-Status: published as Wehby, George L. & Courtemanche, Charles J., 2012. "The heterogeneity of the cigarette price effect on body mass index," Journal of Health Economics, Elsevier, vol. 31(5), pages 719-729.
Abstract: Previous studies estimate the average effect of cigarette price on body mass index (BMI), with recent research showing that their different methodologies all point to a negative effect after several years. This literature, however, ignores the possibility that the effect could vary throughout the BMI distribution or across socioeconomic and demographic groups due to differences in underlying preferences for health or risks for obesity. We evaluate heterogeneity in the long-run impact of cigarette price on BMI by performing quantile regressions and stratifying the sample by race, education, age, and sex. Cigarette price has a highly heterogeneous negative effect that is more than three times as strong at high BMI levels - where weight loss is most beneficial for health - than at low levels. The effects are also strongest for blacks, college graduates, middle-aged adults, and women. We also assess the implications for disparities, conduct robustness checks, and evaluate potential mechanisms.
Handle: RePEc:nbr:nberwo:18087
Template-Type: ReDIF-Paper 1.0
Title: Do Welfare Policies Matter for Labor Market Aggregates? Quantifying Safety Net Work Incentives since 2007
Classification-JEL: E24; H31; I38
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG PE
Number: 18088
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18088
File-URL: http://www.nber.org/papers/w18088.pdf
File-Format: application/pdf
Abstract: Inflation-adjusted spending on means-tested subsidies has increased sharply since 2007, and most of the 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. In 2007, the non-elderly parts of the safety net paid about $10,000 in benefits per person-year that non-elderly heads of household or spouses were unemployed. By the end of 2009, the annual subsidy rate per person-year unemployed was up to $16,000. As a result, the average private returns to employment are substantially less than they were in 2007. One result of the paper is a monthly time series for the overall safety net's marginal income tax rate from the point of view of the average marginal worker.
Handle: RePEc:nbr:nberwo:18088
Template-Type: ReDIF-Paper 1.0
Title: Pricing Regulation and Imperfect Competition on the Massachusetts Health Insurance Exchange
Classification-JEL: I11; I13
Author-Name: Keith M. Marzilli Ericson
Author-Name: Amanda Starc
Note: EH
Number: 18089
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18089
File-URL: http://www.nber.org/papers/w18089.pdf
File-Format: application/pdf
Publication-Status: published as Keith M. Marzilli Ericson & Amanda Starc, 2015. "Pricing Regulation and Imperfect Competition on the Massachusetts Health Insurance Exchange," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 667-682, July.
Abstract: We analyze consumer demand and model the effect of pricing regulation under imperfect competition using data from the Massachusetts health insurance exchange. We identify consumer demand using coarse insurer pricing strategies. There is substantial heterogeneity in preferences by consumer type, with younger consumers twice as price sensitive as older consumers. As a result, older consumers face higher markups over costs. Modified community rating links prices for consumers that differ in both costs and preferences. Constrained prices are not simply the population-weighted average of unconstrained prices, because community rating changes the marginal consumer firms face. Tightening rating regulations transfers resources from low cost to high cost consumers, but also reduces firm profits and increases overall consumer surplus. We use our model to examine other insurance regulations. For instance, minimum loss ratios (designed to limit firm profits) will also alter the transfers between consumers. Moreover, risk adjustment will be insufficient to equalize prices across consumer types, as markups still differ. As a result, without a mandate, the market can unravel due to differences in preferences alone
Handle: RePEc:nbr:nberwo:18089
Template-Type: ReDIF-Paper 1.0
Title: China and the TPP: A Numerical Simulation Assessment of the Effects Involved
Classification-JEL: C68; F47; F53
Author-Name: Chunding Li
Author-Name: John Whalley
Author-Person: pwh8
Note: IFM
Number: 18090
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18090
File-URL: http://www.nber.org/papers/w18090.pdf
File-Format: application/pdf
Publication-Status: published as C. Li and J. Whalley, “China and the TPP: A Numerical Simulation Assessment of the Effects Involved,” NBER Working Paper, No. 18090, May 2012, and The World Economy, 37(2), 2014, pp.169–92 (published as “China and the Trans-Pacific Partnership: A Numerical Simulation Assessment of the Effects Involved”).
Abstract: The Trans-Pacific Partnership (TPP) is a new negotiation on cross border liberalization of goods and service flows going beyond WTO disciplines and focused on issues such as regulation and border controls. Though the US, Australia and other pacific countries are included, China is notable for its exclusion from the process thus far. This paper uses numerical simulation methods to assess the potential effects of a TPP agreement on China and the other participating countries. We use a numerical five-country global general equilibrium model with trade costs and monetary structure incorporating inside money to allow for impacts on trade imbalances. Trade costs are calculated using a method based on gravity equations. Simulation results reveal that China will be hurt by TPP initiatives, but the negative effects are relatively small given the geographical and commodity composition of China's trade. Other non-TPP countries will be hurt but member countries will all gain. Japan's joining TPP would be beneficial to both herself and all other TPP countries, but negative effects on China and other non-TPP countries will increase further. If China takes part in TPP, it will increase China's and other TPP countries' gain, but non-TPP countries will be hurt more. As a regional free trade arrangement, TPP effects are different from global free trade effects which will benefit all countries (not just member countries) in the world, and the positive effects of global free trade are stronger than TPP effects.
Handle: RePEc:nbr:nberwo:18090
Template-Type: ReDIF-Paper 1.0
Title: Catch-up and Fall-back through Innovation and Imitation
Classification-JEL: O14; O30; O31; O33; O40
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Jesse Perla
Author-Name: Christopher Tonetti
Author-Person: pto237
Note: EFG
Number: 18091
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18091
File-URL: http://www.nber.org/papers/w18091.pdf
File-Format: application/pdf
Publication-Status: published as Jess Benhabib & Jesse Perla & Christopher Tonetti, 2014. "Catch-up and fall-back through innovation and imitation," Journal of Economic Growth, Springer, vol. 19(1), pages 1-35, March.
Abstract: Will fast growing emerging economies sustain rapid growth rates until they "catch-up" to the technology frontier? Are there incentives for some developed countries to free-ride off of innovators and optimally "fallback" relative to the frontier? This paper models agents growing as a result of investments in innovation and imitation. Imitation facilitates technology diffusion, with the productivity of imitation modeled by a catch-up function that increases with distance to the frontier. The resulting equilibrium is an endogenous segmentation between innovators and imitators, where imitating agents optimally choose to "catch-up" or "fall-back" to a productivity ratio below the frontier.
Handle: RePEc:nbr:nberwo:18091
Template-Type: ReDIF-Paper 1.0
Title: Managing Currency Pegs
Classification-JEL: F41
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martín Uribe
Note: IFM
Number: 18092
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18092
File-URL: http://www.nber.org/papers/w18092.pdf
File-Format: application/pdf
Publication-Status: published as “Managing Currency Pegs,” (with Mart´ın Uribe), American Economic Review: Papers & Pro- ceedings 102, May 2012, 192-197.
Abstract: The combination of a fixed exchange rate and downward nominal wage rigidity creates a real rigidity. In turn, this real rigidity makes the economy prone to involuntary unemployment during external crises. This paper presents a graphical analysis of alternative policy strategies aimed at mitigating this source of inefficiency. First- and second-best monetary and fiscal solutions are analyzed. Second-best solutions are found to be prudential, whereas first-best solutions are not.
Handle: RePEc:nbr:nberwo:18092
Template-Type: ReDIF-Paper 1.0
Title: Gender Differences in Bargaining Outcomes: A Field Experiment on Discrimination
Classification-JEL: C78; C93; J16
Author-Name: Marco Castillo
Author-Person: pca1237
Author-Name: Ragan Petrie
Author-Person: ppe391
Author-Name: Máximo Torero
Author-Person: pto34
Author-Name: Lise Vesterlund
Author-Person: pve25
Note: LS PE
Number: 18093
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18093
File-URL: http://www.nber.org/papers/w18093.pdf
File-Format: application/pdf
Publication-Status: published as Castillo, Marco & Petrie, Ragan & Torero, Maximo & Vesterlund, Lise, 2013. "Gender differences in bargaining outcomes: A field experiment on discrimination," Journal of Public Economics, Elsevier, vol. 99(C), pages 35-48.
Abstract: We examine gender differences in bargaining outcomes in a highly competitive and commonly used market: the taxi market in Lima, Peru. Examining the entire path of negotiation we find that men face higher initial prices and rejection rates. These differentials are consistent with both statistical and taste-based discrimination. To identify the source of the inferior treatment of men we conduct an experiment where passengers send a signal on valuation before negotiating. The signal eliminates gender differences and the response is shown only to be consistent with statistical discrimination. Our study secures identification within the market of interest and demonstrates that there are environments where sophisticated statistical inference is the sole source of differential gender outcomes.
Handle: RePEc:nbr:nberwo:18093
Template-Type: ReDIF-Paper 1.0
Title: Disentangling the Channels of the 2007-2009 Recession
Classification-JEL: E24; E32; E37; E44
Author-Name: James H. Stock
Author-Person: pst148
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: EFG ME
Number: 18094
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18094
File-URL: http://www.nber.org/papers/w18094.pdf
File-Format: application/pdf
Publication-Status: published as Disentangling the Channels of the 2007-2009 Recession (with James Stock), Brookings Papers on Economic Activity, Spring 2012, 81-135.
Abstract: This paper examines the macroeconomic dynamics of the 2007-09 recession in the United States and the subsequent slow recovery. Using a dynamic factor model with 200 variables, we reach three main conclusions. First, although many of the events of the 2007-2009 collapse were unprecedented, their net effect was to produce macro shocks that were larger versions of shocks previously experienced, to which the economy responded in an historically predictable way. Second, the shocks that produced the recession primarily were associated with financial disruptions and heightened uncertainty, although oil shocks played a role in the initial slowdown and subsequent drag was added by effectively tight conventional monetary policy arising from the zero lower bound. Third, while the slow nature of the recovery is partly due to the shocks of this recession, most of the slow recovery in employment, and nearly all of the slow recovery in output, is due to a secular slowdown in trend labor force growth.
Handle: RePEc:nbr:nberwo:18094
Template-Type: ReDIF-Paper 1.0
Title: Private Returns to Public Office
Classification-JEL: D72; D73; D78
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Florian Schulz
Author-Name: Vikrant Vig
Author-Person: pvi304
Note: CF LE LS PE POL
Number: 18095
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18095
File-URL: http://www.nber.org/papers/w18095.pdf
File-Format: application/pdf
Publication-Status: published as Raymond Fisman & Florian Schulz & Vikrant Vig, 2014. "The Private Returns to Public Office," Journal of Political Economy, vol 122(4), pages 806-862.
Abstract: We study the wealth accumulation of Indian parliamentarians using public disclosures required of all candidates since 2003. Annual asset growth of winners is on average 3 to 6 percentage points higher than runners-up. By performing a within-constituency comparison where both runner-up and winner run in consecutive elections, and by looking at the subsample of very close elections, we rule out a range of alternative explanations for differential earnings of politicians and a relevant control group. The ``winner's premium" comes from parliamentarians holding positions in the Council of Ministers, with asset returns 13 to 29 percentage points higher than non-winners. The benefit of winning is also concentrated among incumbents, because of low asset growth for incumbent non-winners.
Handle: RePEc:nbr:nberwo:18095
Template-Type: ReDIF-Paper 1.0
Title: Cultural Proximity and Loan Outcomes
Classification-JEL: D82; G21; J15
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Daniel Paravisini
Author-Name: Vikrant Vig
Author-Person: pvi304
Note: CF LS
Number: 18096
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18096
File-URL: http://www.nber.org/papers/w18096.pdf
File-Format: application/pdf
Publication-Status: published as Raymond Fisman & Daniel Paravisini & Vikrant Vig, 2017. "Cultural Proximity and Loan Outcomes," American Economic Review, American Economic Association, vol. 107(2), pages 457-492, February.
Abstract: We present evidence that shared codes, religious beliefs, ethnicity - cultural proximity - between lenders and borrowers improves the efficiency of credit allocation. We identify in-group preferential treatment using dyadic data on the religion and caste of bank officers and borrowers from a bank in India, and a rotation policy that induces exogenous matching between officers and borrowers. Cultural proximity increases lending on both intensive and extensive margins and improves repayment performance, even after the in-group officer is replaced by an out-group one. Further, cultural proximity increases loan dispersion and reduces loan to collateral ratios. Our results imply that cultural proximity mitigates informational problems that adversely affect lending, which in turn relaxes financial constraints and improves access to finance.
Handle: RePEc:nbr:nberwo:18096
Template-Type: ReDIF-Paper 1.0
Title: When did the dollar overtake sterling as the leading international currency? Evidence from the bond markets
Classification-JEL: F30; N20
Author-Name: Livia Chitu
Author-Person: pch1134
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Arnaud J. Mehl
Author-Person: pme225
Note: DAE IFM
Number: 18097
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18097
File-URL: http://www.nber.org/papers/w18097.pdf
File-Format: application/pdf
Publication-Status: published as "When Did the Dollar Overtake Sterling as the Leading International Currency? Evidence from the Bond Markets", Journal of Development Economics (2013).
Abstract: This paper offers new evidence on the emergence of the dollar as the leading international currency, focusing on its role as currency of denomination in global bond markets. We show that the dollar overtook sterling much earlier than commonly supposed, as early as in 1929. Financial market development appears to have been the main factor helping the dollar to surmount sterling's head start. The finding that a shift from a unipolar to a multipolar international monetary and financial system has happened before suggests that it can happen again. That the shift occurred earlier than commonly believed suggests that the advantages of incumbency are not all they are cracked up to be. And that financial deepening was a key determinant of the dollar's emergence points to the challenges facing currencies aspiring to international status.
Handle: RePEc:nbr:nberwo:18097
Template-Type: ReDIF-Paper 1.0
Title: Market Design in Cap and Trade Programs: Permit Validity and Compliance Timing
Classification-JEL: H4; Q4; Q5
Author-Name: Stephen P. Holland
Author-Person: pho374
Author-Name: Michael R. Moore
Note: EEE
Number: 18098
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18098
File-URL: http://www.nber.org/papers/w18098.pdf
File-Format: application/pdf
Publication-Status: published as Holland, Stephen P. & Moore, Michael R., 2013. "Market design in cap and trade programs: Permit validity and compliance timing," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 671-687.
Abstract: Cap and trade programs have considerable heterogeneity in permit validity and compliance timing. For example, permits have different validity across time (e.g., banking, borrowing, and seasons) and space (e.g., zonal restrictions), and compliance timing can be annual, in overlapping cycles, or in multi-year periods. We compare and contrast nine prominent cap and trade programs along these dimensions and construct a general model of permit validity and compliance timing. We derive sufficient conditions under which abatement is invariant to compliance timing, i.e., compliance timing cannot smooth abatement cost shocks. Under these conditions, i) expected compliance costs are invariant, ii) the variance of compliance costs increases with delayed compliance, iii) equilibrium prices may not be unique, and iv) the delayed compliance equilibrium may rely upon non-unique, "degenerate" prices not determined by marginal abatement costs. Degenerate prices are unlikely to be discovered by market forces. We then present two examples which are not invariant to compliance timing. If permit allocation is delayed or if a price cap is implemented with a reserve fund, abatement may depend on compliance timing. We demonstrate the model's broad applicability by illustrating different types of temporal and spatial permit validity.
Handle: RePEc:nbr:nberwo:18098
Template-Type: ReDIF-Paper 1.0
Title: Chronic Specie Scarcity and Efficient Barter: The Problem of Maintaining an Outside Money Supply in British Colonial America
Classification-JEL: B12; B22; B31; D61; E41; E42; E51; E52; F11; F41; F54; N11; N21; N41
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 18099
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18099
File-URL: http://www.nber.org/papers/w18099.pdf
File-Format: application/pdf
Abstract: Colonial Americans complained that gold and silver coins (specie) were chronically scarce. These coins could be acquired only through importation. Given unrestricted trade in specie, market arbitrage should have eliminated chronic scarcity. A model of efficient barter and local inside money is developed to show how chronic specie scarcity in colonial America could prevail despite unrestricted specie-market arbitrage, thus justifying colonial complaints. The creation of inside paper monies by colonial governments was a welfare-enhancing response to preexisting chronic specie scarcity, not the cause of that scarcity.
Handle: RePEc:nbr:nberwo:18099
Template-Type: ReDIF-Paper 1.0
Title: Human Capital, Economic Growth, and Inequality in China
Classification-JEL: I25; J24; O15
Author-Name: James J. Heckman
Author-Name: Junjian Yi
Author-Person: pyi76
Note: CH ED LS
Number: 18100
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18100
File-URL: http://www.nber.org/papers/w18100.pdf
File-Format: application/pdf
Publication-Status: published as “Human Capital, Economic Growth, and Inequality in China,” (with J. Yi). Forthcoming in The Oxford Companion to the Economics of China on Human Capital, Shenggen Fan, Ravi Kanbur, Shang-Jin Wei and Xiaobo Zhang, editors. Oxford, UK: Oxford University Press. (2014).
Abstract: China's rapid growth was fueled by substantial physical capital investments applied to a large stock of medium skilled labor acquired before economic reforms began. As development proceeded, the demand for high skilled labor has grown, and, in the past decade, China has made substantial investments in producing it. The egalitarian access to medium skilled education characteristic of the pre-reform era has given rise to substantial inequality in access to higher levels of education. China's growth will be fostered by expanding access to all levels of education, reducing impediments to labor mobility, and expanding the private sector.
Handle: RePEc:nbr:nberwo:18100
Template-Type: ReDIF-Paper 1.0
Title: Elections in China
Classification-JEL: H11; O38; 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: POL PE
Number: 18101
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18101
File-URL: http://www.nber.org/papers/w18101.pdf
File-Format: application/pdf
Abstract: We examine the effects of introducing village elections on public goods expenditures, income distribution and land use in rural China. We construct a large panel data set of village administrative records to document the history of political reforms and economic policies for over two hundred villages. We exploit the staggered timing of the introduction of village elections to find that elections significantly increased public goods expenditure financed by villagers. In addition, we find that the introduction of elections caused a moderate decline in income inequality and likely reduced corruption. The results suggest that local officials are better controlled by local elections rather than by centrally managed bureaucratic monitoring.
Handle: RePEc:nbr:nberwo:18101
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomics with Financial Frictions: A Survey
Classification-JEL: A23; E1; E3; E4; E5; G01; G1; G2
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Author-Name: Thomas M. Eisenbach
Author-Person: pei36
Author-Name: Yuliy Sannikov
Note: AP CF EFG IFM ME
Number: 18102
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18102
File-URL: http://www.nber.org/papers/w18102.pdf
File-Format: application/pdf
Publication-Status: published as “Macroeconomics with Financial Frictions: A Survey” (with Thomas Eisenbach and Yuliy Sannikov), in Daron Acemoglu, Manuel Arellano and Eddie Dekel (eds.), Advances in Economics and Econometrics, Tenth World Congress of the Econometric Society, Vol. II: Applied Economics, Cambridge University Press, New York, 2013, pp. 4-94.
Abstract: This article surveys the macroeconomic implications of financial frictions. Financial frictions lead to persistence and when combined with illiquidity to non-linear amplification effects. Risk is endogenous and liquidity spirals cause financial instability. Increasing margins further restrict leverage and exacerbate downturns. A demand for liquid assets and a role for money emerges. The market outcome is generically not even constrained efficient and the issuance of government debt can lead to a Pareto improvement. While financial institutions can mitigate frictions, they introduce additional fragility and through their erratic money creation harm price stability.
Handle: RePEc:nbr:nberwo:18102
Template-Type: ReDIF-Paper 1.0
Title: Quality of Life, Firm Productivity, and the Value of Amenities across Canadian Cities
Classification-JEL: J31; J61; Q51; R1
Author-Name: David Albouy
Author-Person: pal128
Author-Name: Fernando Leibovici
Author-Person: ple692
Author-Name: Casey Warman
Author-Person: pwa250
Note: LS PE
Number: 18103
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18103
File-URL: http://www.nber.org/papers/w18103.pdf
File-Format: application/pdf
Publication-Status: published as David Albouy & Fernando Leibovici & Casey Warman, 2013. "Quality of life, firm productivity, and the value of amenities across Canadian cities," Canadian Journal of Economics/Revue canadienne d'économique, vol 46(2), pages 379-411.
Abstract: We present hedonic general-equilibrium estimates of quality-of-life and productivity differences across Canada's metropolitan areas. These are based off of the estimated willingness-to-pay of heterogeneous households and firms to locate in various cities, which differ in their wage levels, housing costs, and land values. Using 2006 Canadian Census data, our metropolitan quality-of-life estimates are somewhat consistent with popular rankings, but find Canadians care more about climate and culture. Quality-of-life is highest in Victoria for Anglophones, Montreal for Francophones, and Vancouver for Allophones, and lowest in more remote cities. Toronto is Canada's most productive city; Vancouver is the overall most valuable city.
Handle: RePEc:nbr:nberwo:18103
Template-Type: ReDIF-Paper 1.0
Title: Volatility, the Macroeconomy and Asset Prices
Classification-JEL: E0; G0; G01; G12
Author-Name: Ravi Bansal
Author-Person: pba818
Author-Name: Dana Kiku
Author-Name: Ivan Shaliastovich
Author-Name: Amir Yaron
Author-Person: pya156
Note: AP EFG
Number: 18104
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18104
File-URL: http://www.nber.org/papers/w18104.pdf
File-Format: application/pdf
Publication-Status: published as “Volatility, the Macroeconomy and Asset Prices” (Dana Kiku, Ivan Shaliastovich, and Amir Yaron) Journal of Finance, Volume 69, Issue 6, December 2014, Pages 2471–2511
Abstract: We show that volatility movements have first-order implications for consumption dynamics and asset prices. Volatility news affects the stochastic discount factor and carries a separate risk premium. In the data, volatility risks are persistent and are strongly correlated with discount-rate news. This evidence has important implications for the return on aggregate wealth and the cross-sectional differences in risk premia. Estimation of our volatility risks based model yields an economically plausible positive correlation between the return to human capital and equity, while this correlation is implausibly negative when volatility risk is ignored. Our model setup implies a dynamics capital asset pricing model (DCAPM) which underscores the importance of volatility risk in addition to cash-flow and discount-rate risks. We show that our DCAPM accounts for the level and dispersion of risk premia across book-to-market and size sorted portfolios, and that equity portfolios carry positive volatility-risk premia.
Handle: RePEc:nbr:nberwo:18104
Template-Type: ReDIF-Paper 1.0
Title: Bankruptcy as Implicit Health Insurance
Classification-JEL: H51; I13; K35
Author-Name: Neale Mahoney
Note: EH LE PE
Number: 18105
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18105
File-URL: http://www.nber.org/papers/w18105.pdf
File-Format: application/pdf
Publication-Status: published as Neale Mahoney, 2015. "Bankruptcy as Implicit Health Insurance," American Economic Review, vol 105(2), pages 710-746.
Abstract: This paper examines the implicit health insurance households receive from the ability to declare bankruptcy. Exploiting cross-state and within-state variation in asset exemption law, I show that uninsured households with greater seizable assets make higher out-of-pocket medical payments, conditional on the amount of care received. In turn, I find that households with greater wealth-at-risk are more likely to hold health insurance. The implicit insurance from bankruptcy distorts the insurance coverage decision. Using a microsimulation model, I calculate that the optimal Pigovian penalties are similar on average to the penalties under the Affordable Care Act (ACA).
Handle: RePEc:nbr:nberwo:18105
Template-Type: ReDIF-Paper 1.0
Title: Men, Women, and Machines: How Trade Impacts Gender Inequality
Classification-JEL: F1; J2; J31
Author-Name: Chinhui Juhn
Author-Person: pju42
Author-Name: Gergely Ujhelyi
Author-Person: puj2
Author-Name: Carolina Villegas-Sanchez
Author-Person: pvi348
Note: ITI LS
Number: 18106
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18106
File-URL: http://www.nber.org/papers/w18106.pdf
File-Format: application/pdf
Publication-Status: published as Juhn, Chinhui & Ujhelyi, Gergely & Villegas-Sanchez, Carolina, 2014. "Men, women, and machines: How trade impacts gender inequality," Journal of Development Economics, Elsevier, vol. 106(C), pages 179-193.
Abstract: This paper studies the effect of trade liberalization on an under-explored aspect of wage inequality - gender inequality. We consider a model where firms differ in their productivity and workers are differentiated by skill as well as gender. A reduction in tariffs induces more productive firms to modernize their technology and enter the export market. New technologies involve computerized production processes and lower the need for physically demanding skills. As a result, the relative wage and employment of women improves in blue-collar tasks, but not in white-collar tasks. We test our model using a panel of establishment level data from Mexico exploiting tariff reductions associated with the North American Free Trade Agreement (NAFTA). Consistent with our theory we find that tariff reductions caused new firms to enter the export market, update their technology and replace male blue-collar workers with female blue-collar workers.
Handle: RePEc:nbr:nberwo:18106
Template-Type: ReDIF-Paper 1.0
Title: Trade Credit and Taxes
Classification-JEL: F23; G31; G32; 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: 18107
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18107
File-URL: http://www.nber.org/papers/w18107.pdf
File-Format: application/pdf
Publication-Status: published as Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2016. "Trade Credit and Taxes," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 132-139, March.
Abstract: This paper analyzes the extent to which firms use trade credit to reallocate capital in response to tax incentives. Tax-induced differences in pretax returns encourage the use of trade credit to reallocate capital from firms facing low tax rates to those facing high tax rates. Evidence from the worldwide operations of U.S. multinational firms indicates that affiliates in low-tax jurisdictions use trade credit to lend, whereas those in high-tax jurisdictions use trade credit to borrow: ten percent lower local tax rates are associated with net trade credit positions that are 1.4 percent higher as a fraction of sales. The use of trade credit to get capital out of low-tax, low-return environments is also illustrated by reactions of U.S. firms to the temporary repatriation tax holiday in 2005, when affiliates with positive net trade credit positions were significantly more likely than others to repatriate dividends to parent companies in the United States.
Handle: RePEc:nbr:nberwo:18107
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Tradeoff Between Risk Protection and Moral Hazard with a Nonlinear Budget Set Model of Health Insurance
Classification-JEL: H00; I13
Author-Name: Amanda E. Kowalski
Note: AG EH PE
Number: 18108
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18108
File-URL: http://www.nber.org/papers/w18108.pdf
File-Format: application/pdf
Publication-Status: published as Kowalski, Amanda E., 2015. "Estimating the tradeoff between risk protection and moral hazard with a nonlinear budget set model of health insurance," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 122-135.
Abstract: Insurance induces a well-known tradeoff between the welfare gains from risk protection and the welfare losses from moral hazard. Empirical work traditionally estimates each side of the tradeoff separately, potentially yielding mutually inconsistent results. I develop a nonlinear budget set model of health insurance that allows for the calculation of both sides of the tradeoff simultaneously, allowing for a relationship between moral hazard and risk protection. An important feature of this model is that it considers nonlinearities in the consumer budget set that arise from deductibles, coinsurance rates, and stoplosses that alter moral hazard as well as risk protection relative to no insurance. I illustrate the properties of my model by estimating it using data on employer sponsored health insurance from a large firm. Within my empirical context, the average deadweight losses from moral hazard substantially outweigh the average welfare gains from risk protection. However, the welfare impact of moral hazard and risk protection are both small relative to transfers from the government through the tax preference for employer sponsored health insurance and transfers from some agents to other agents through a common premium.
Handle: RePEc:nbr:nberwo:18108
Template-Type: ReDIF-Paper 1.0
Title: Meeting Urban Housing Needs: Do People Really Come to the Nuisance?
Classification-JEL: Q5; Q52; Q53; R3
Author-Name: Brooks M. Depro
Author-Name: Christopher Timmins
Author-Name: Maggie O'Neil
Note: EEE
Number: 18109
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18109
File-URL: http://www.nber.org/papers/w18109.pdf
File-Format: application/pdf
Abstract: Understanding the forces that lead to correlations between pollution exposure, poverty, and race is crucial to the formation of sound environmental justice (EJ) policy. In particular, what are the roles of disproportionate siting of pollution sources versus post-siting housing market dynamics (e.g., "white flight")? Empirical analysis of post-siting dynamics has yielded mixed evidence. We demonstrate that this is because the models traditionally used to analyze it are not capable of identifying individual responses to pollution exposure. We address this limitation in two ways. First, we show how additional structure can be used along with traditional EJ data to recover behavioral parameters describing market dynamics. Second, we show how market dynamics can be directly observed using a new and distinctive data set that describes the decisions of individual homebuyers and details their circumstances (including pollution exposure) both before and after their moves. An application of the first approach shows that whites are more likely to flee TRI exposure in Los Angeles County than are other minority groups - particularly Hispanics, who constitute a plurality and the largest group of people of color. The second approach shows that whites are both more likely to flee and less likely to come to the nuisance, compared with all other groups (particularly Hispanics). Importantly, these results contrast with those of a traditional EJ analysis, which fails to provide any consistent evidence of post-siting dynamics. If the moving patterns we recover with our two models persist over time, we would expect to see higher percentages of minority residents (particularly Hispanics) living in closer proximity to L.A. County TRI plants, lending support to the post-siting market dynamics hypothesis.
Handle: RePEc:nbr:nberwo:18109
Template-Type: ReDIF-Paper 1.0
Title: Housing Productivity and the Social Cost of Land-Use Restrictions
Classification-JEL: D24; R31; R52
Author-Name: David Albouy
Author-Person: pal128
Author-Name: Gabriel Ehrlich
Note: LS PE
Number: 18110
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18110
File-URL: http://www.nber.org/papers/w18110.pdf
File-Format: application/pdf
Publication-Status: published as David Albouy & Gabriel Ehrlich, 2018. "Housing Productivity and the Social Cost of Land-Use Restrictions," Journal of Urban Economics, .
Abstract: We use metro-level variation in land and structural input prices to test and estimate a housing cost function with differences in local housing productivity. Both OLS and IV estimates imply that stringent regulatory and geographic restrictions substantially increase housing prices relative to land and construction input costs. The typical cost share of land is one-third, and substitution between inputs is inelastic. A disaggregated analysis of regulations finds state-level restrictions are costlier than local ones and provides a Regulatory Cost Index (RCI). Housing productivity falls with city population. Typical land-use restrictions impose costs that appear to exceed quality-of-life benefits, reducing welfare on net.
Handle: RePEc:nbr:nberwo:18110
Template-Type: ReDIF-Paper 1.0
Title: When Walmart Comes to Town: Always Low Housing Prices? Always?
Classification-JEL: R20
Author-Name: Devin G. Pope
Author-Name: Jaren C. Pope
Author-Person: ppo329
Note: LS PE
Number: 18111
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18111
File-URL: http://www.nber.org/papers/w18111.pdf
File-Format: application/pdf
Publication-Status: published as Pope, Devin G. & Pope, Jaren C., 2015. "When Walmart comes to town: Always low housing prices? Always?," Journal of Urban Economics, Elsevier, vol. 87(C), pages 1-13.
Abstract: Walmart often faces strong local opposition when trying to build a new store. Opponents often claim that Walmart lowers nearby housing prices. In this study we use over one million housing transactions located near 159 Walmarts that opened between 2000 and 2006 to test if the opening of a Walmart does indeed lower housing prices. Using a difference-in-differences specification, our estimates suggest that a new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within 0.5 miles of the store and by 1 to 2 percent for houses located between 0.5 and 1 mile.
Handle: RePEc:nbr:nberwo:18111
Template-Type: ReDIF-Paper 1.0
Title: The Political Risks of Fighting Market Failures: Subversion, Populism and the Government Sponsored Enterprises
Classification-JEL: D0; G0; H0
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Note: PE POL
Number: 18112
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18112
File-URL: http://www.nber.org/papers/w18112.pdf
File-Format: application/pdf
Publication-Status: published as E. L. Glaeser, 2012. "The Political Risks of Fighting Market Failures: Subversion, Populism and the Government Sponsored Enterprises," Journal of Legal Analysis, vol 4(1), pages 41-82.
Abstract: There are many possible ways of reforming the Government-Sponsored Enterprises that insure mortgages against default, including a purely public option, complete privatization or a hybrid model with private firms and public catastrophic insurance. If the government is sufficiently capable and benign, either public intervention can yield desirable outcomes; the key risks of any reform come from the political process. This paper examines the political risks, related to corruption and populism, of differing approaches to the problems of monopoly, externalities and market breakdowns in asset insurance. If there is a high probability that political leadership will be induced to pursue policies that maximize the profitability of private entities at the expense of taxpayers, then purely public options create lower social losses. If there is a high probability that leaders will pursue a populist agenda of lowering prices or borrowing costs, then catastrophic risk insurance can lead to lower social losses than either complete laissez-faire of a pure public option.
Handle: RePEc:nbr:nberwo:18112
Template-Type: ReDIF-Paper 1.0
Title: Why Trade Matters After All
Classification-JEL: F10
Author-Name: Ralph Ossa
Author-Person: pos139
Note: ITI
Number: 18113
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18113
File-URL: http://www.nber.org/papers/w18113.pdf
File-Format: application/pdf
Publication-Status: published as Ralph Ossa, 2015. "Why trade matters after all," Journal of International Economics, vol 97(2), pages 266-277.
Abstract: I show that accounting for cross-industry variation in trade elasticities greatly magnifies the estimated gains from trade. The main idea is as simple as it is general: While imports in the average industry do not matter too much, imports in some industries are critical to the functioning of the economy, so that a complete shutdown of international trade is very costly overall.
Handle: RePEc:nbr:nberwo:18113
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Traps and Expectation Dynamics: Fiscal Stimulus or Fiscal Austerity?
Classification-JEL: E52; E58; E63
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: George W. Evans
Author-Person: pev4
Author-Name: Seppo Honkapohja
Author-Person: pho12
Note: EFG
Number: 18114
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18114
File-URL: http://www.nber.org/papers/w18114.pdf
File-Format: application/pdf
Publication-Status: published as “Liquidity Traps and Expectation Dynamics: Fiscal Stimulus or Fiscal Austerity?,” (with George Evans and Seppo Honkapohja), forthcoming, Journal of Economic Dynamics and Control, 2015.
Abstract: We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), the intended steady state is locally but not globally stable. Unstable deflationary paths emerge after large pessimistic shocks to expectations. For large expectation shocks that push interest rates to the zero bound, a temporary fiscal stimulus or a policy of fiscal austerity, appropriately tailored in magnitude and duration, will insulate the economy from deflation traps. However "fiscal switching rules" that automatically kick in without discretionary fine tuning can be equally effective.
Handle: RePEc:nbr:nberwo:18114
Template-Type: ReDIF-Paper 1.0
Title: The Effects of "Girl-Friendly" Schools: Evidence from the BRIGHT School Construction Program in Burkina Faso
Classification-JEL: I24; I25; I28; O15
Author-Name: Harounan Kazianga
Author-Person: pka159
Author-Name: Dan Levy
Author-Name: Leigh L. Linden
Author-Person: pli719
Author-Name: Matt Sloan
Note: CH ED LS PE
Number: 18115
Creation-Date: 2012-05
Order-URL: http://www.nber.org/papers/w18115
File-URL: http://www.nber.org/papers/w18115.pdf
File-Format: application/pdf
Publication-Status: published as Harounan Kazianga & Dan Levy & Leigh L. Linden & Matt Sloan, 2013. "The Effects of "Girl-Friendly" Schools: Evidence from the BRIGHT School Construction Program in Burkina Faso," American Economic Journal: Applied Economics, American Economic Association, vol. 5(3), pages 41-62, July.
Abstract: We evaluate the causal effects of a program that constructed high quality "girl-friendly" primary schools in Burkina Faso, using a regression discontinuity design 2.5 years after the program started. We find that the program increased enrollment of all children between the ages of 5 and 12 by 20 percentage points and increased their test scores by 0.45 standard deviations. The change in test scores for those children caused to attend school by the program is 2.2 standard deviations. We also find that the program was particularly effective for girls, increasing their enrollment rate by 5 percentage points more than boys', although this did not translate into a differential effect on test scores. Disentangling the effects of school access from the unique characteristics of the new schools, we find that the unique characteristics were responsible for a 13 percentage point increase in enrollment and 0.35 standard deviations in test scores, while simply providing a school increased enrollment by 26.5 percentage points and test scores by 0.323 standard deviations. The unique characteristics of the school account for the entire difference in the treatment effect by gender.
Handle: RePEc:nbr:nberwo:18115
Template-Type: ReDIF-Paper 1.0
Title: NIH Peer Review: Challenges and Avenues for Reform
Classification-JEL: O31; O32
Author-Name: Pierre Azoulay
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Gustavo Manso
Note: PR
Number: 18116
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18116
File-URL: http://www.nber.org/papers/w18116.pdf
File-Format: application/pdf
Publication-Status: published as National Institutes of Health Peer Review: Challenges and Avenues for Reform, Pierre Azoulay, Joshua S. Graff Zivin, Gustavo Manso. in Innovation Policy and the Economy, Volume 13, Lerner and Stern. 2013
Abstract: The National Institute of Health (NIH), through its extramural grant program, is the primary public funder of health-related research in the United States. Peer review at NIH is organized around the twin principles of investigator initiation and rigorous peer review, and this combination has long been a model that science funding agencies throughout the world seek to emulate. However, lean budgets and the rapidly changing ecosystem within which scientific inquiry takes place have led many to ask whether the peer-review practices inherited from the immediate post-war era are still well-suited to twenty first century realities. In this essay, we examine two salient issues: (1) the aging of the scientist population supported by NIH and (2) the innovativeness of the research supported by the institutes. We identify potential avenues for reform as well as a means for implementing and evaluating them.
Handle: RePEc:nbr:nberwo:18116
Template-Type: ReDIF-Paper 1.0
Title: Democracy and Reforms: Evidence from a New Dataset
Classification-JEL: E6; O57
Author-Name: Paola Giuliano
Author-Person: pgi66
Author-Name: Prachi Mishra
Author-Name: Antonio Spilimbergo
Author-Person: psp16
Note: POL
Number: 18117
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18117
File-URL: http://www.nber.org/papers/w18117.pdf
File-Format: application/pdf
Publication-Status: published as Paola Giuliano & Prachi Mishra & Antonio Spilimbergo, 2013. "Democracy and Reforms: Evidence from a New Dataset," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(4), pages 179-204, October.
Abstract: Empirical evidence on the relationship between democracy and economic reforms is limited to few reforms, countries, and periods. This paper studies the effect of democracy on the adoption of economic reforms using a new dataset on reforms in the financial, capital and banking sectors, product markets, agriculture, and trade for 150 countries over the period 1960-2004. Democracy has a positive and significant impact on the adoption of economic reforms but there is scarce evidence that economic reforms foster democracy. Our results are robust to the inclusion of a large variety of controls and estimation strategies.
Handle: RePEc:nbr:nberwo:18117
Template-Type: ReDIF-Paper 1.0
Title: Does Decentralization Facilitate Access to Poverty-Related Services? Evidence from Benin
Classification-JEL: D73; H41; H42; H52; H77; I38; O17
Author-Name: Emilie Caldeira
Author-Person: pca657
Author-Name: Martial Foucault
Author-Person: pfo40
Author-Name: Grégoire Rota-Graziosi
Author-Person: pro182
Note: PE
Number: 18118
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18118
File-URL: http://www.nber.org/papers/w18118.pdf
File-Format: application/pdf
Publication-Status: published as Does Decentralization Facilitate Access to Poverty-Related Services? Evidence from Benin, Emilie Caldeira, Martial Foucault, Grégoire Rota-Graziosi. in African Successes, Volume I: Government and Institutions, Edwards, Johnson, and Weil. 2016
Abstract: We study the effect of decentralization on the access to some poverty-related public services in Benin. Compiling panel data from local governments' accounts and from surveys on 18,000 Beninese households performed in 2006 and 2007, our study suggests that decentralization has a positive overall effect on access to basic services. However, this effect appears to be nonmonotone following an inverted U-shaped curve. It varies according to local jurisdictions' wealth and to the nature of basic services. Decentralization in Benin contributes positively to the reduction of poverty by improving the average access to poverty-related services. However, the devil is in the details, as decentralization seems to increase inequality among local governments in terms of access. Another result relying on the success of decentralization in Benin is the prioritization of basic services, which differs among local governments according to their wealth. While the poorest jurisdictions neglect primary education, focusing more on access to drinking water, the richest ones get less attention to sewage services, since these are already provided at a sufficiently high level.
Handle: RePEc:nbr:nberwo:18118
Template-Type: ReDIF-Paper 1.0
Title: Education and the Quality of Government
Classification-JEL: D73; D78; O43
Author-Name: Juan Botero
Author-Name: Alejandro Ponce
Author-Person: ppo288
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: PE POL
Number: 18119
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18119
File-URL: http://www.nber.org/papers/w18119.pdf
File-Format: application/pdf
Publication-Status: published as Juan Botero, Alejandro Ponce, and Andrei Shleifer Journal of Law and Economics Vol. 56, No. 4 (November 2013), pp. 959-996 Published by: The University of Chicago Press
Abstract: Generally speaking, better educated countries have better governments, an empirical regularity that holds in both dictatorships and democracies. We suggest that a possible reason for this fact is that educated people are more likely to complain about misconduct by government officials, so that, even when each complaint is unlikely to succeed, more frequent complaints encourage better behavior from officials. Newly assembled individual-level survey data from the World Justice Project show that, within countries, better educated people are more likely to report official misconduct. The results are confirmed using other survey data on reporting crime and corruption. Citizen complaints might thus be an operative mechanism that explains the link between education and the quality of government.
Handle: RePEc:nbr:nberwo:18119
Template-Type: ReDIF-Paper 1.0
Title: Multinationals and the High Cash Holdings Puzzle
Classification-JEL: F23; G32
Author-Name: Lee Pinkowitz
Author-Name: René M. Stulz
Author-Name: Rohan Williamson
Note: CF
Number: 18120
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18120
File-URL: http://www.nber.org/papers/w18120.pdf
File-Format: application/pdf
Abstract: Defining as normal cash holdings the holdings a firm with the same characteristics would have had in the late 1990s, we find that the abnormal cash holdings of U.S. firms after the crisis represent on average 1.86% of assets. While U.S. firms held less cash than comparable foreign firms in the late 1990s, by 2010 they hold more. However, only U.S. multinational firms experience an increase in abnormal cash holdings during the 2000s. U.S. multinational firms had cash holdings similar to those of purely domestic firms in the late 1990s, but they hold over 3% more assets in cash than comparable purely domestic firms after the crisis. Further, U.S. multinationals increased their cash holdings since the late 1990s relative to foreign multinationals by roughly the same percentage as they increased their cash holdings relative to U.S. domestic firms. A detailed analysis shows that the increase in cash holdings of multinational firms cannot be explained by the tax treatment of profit repatriations, that it is intrinsically linked to their R&D intensity, and that firms that become multinational do not increase their abnormal cash holdings after they become multinational. There is no evidence that poor investment opportunities, regulation, or poor governance can explain the abnormal cash holdings of U.S. firms after the crisis.
Handle: RePEc:nbr:nberwo:18120
Template-Type: ReDIF-Paper 1.0
Title: Hard Evidence on Soft Skills
Classification-JEL: D01; I20
Author-Name: James J. Heckman
Author-Name: Tim D. Kautz
Note: CH LS
Number: 18121
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18121
File-URL: http://www.nber.org/papers/w18121.pdf
File-Format: application/pdf
Publication-Status: published as Heckman, James J. & Kautz, Tim, 2012. "Hard evidence on soft skills," Labour Economics, Elsevier, vol. 19(4), pages 451-464.
Abstract: This paper summarizes recent evidence on what achievement tests measure; how achievement tests relate to other measures of "cognitive ability" like IQ and grades; the important skills that achievement tests miss or mismeasure, and how much these skills matter in life. Achievement tests miss, or perhaps more accurately, do not adequately capture, soft skills--personality traits, goals, motivations, and preferences--that are valued in the labor market, in school, and in many other domains. The larger message of this paper is that soft skills predict success in life, that they causally produce that success, and that programs that enhance soft skills have an important place in an effective portfolio of public policies.
Handle: RePEc:nbr:nberwo:18121
Template-Type: ReDIF-Paper 1.0
Title: Distance and Political Boundaries: Estimating Border Effects under Inequality Constraints.
Classification-JEL: F40; F41
Author-Name: Fernando Borraz
Author-Person: pbo609
Author-Name: Alberto Cavallo
Author-Person: pca605
Author-Name: Roberto Rigobon
Author-Person: pri12
Author-Name: Leandro Zipitría
Note: IFM ITI
Number: 18122
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18122
File-URL: http://www.nber.org/papers/w18122.pdf
File-Format: application/pdf
Publication-Status: published as Fernando Borraz & Alberto Cavallo & Roberto Rigobon & Leandro Zipitria, 2016. "Distance and Political Boundaries: Estimating Border Effects under Inequality Constraints," International Journal of Finance & Economics, vol 21(1), pages 3-35.
Abstract: The "border effect" literature finds that political borders have a very large impact on relative prices, implicitly adding several thousands of miles to trade. In this paper we show that the standard empirical specification suffers from selection bias, and propose a new methodology based on quantile regressions. Using a novel data set from Uruguay, we apply our procedure to measure the segmentation introduced by city borders. City borders should matter little for trade. We find that when the standard methodology is used, two supermarkets separated by 10 kilometers across two different cities have the same price dispersion as two supermarkets separated by 30 kilometers within the same city; so the city border triples the distance. When our methodology is used, the city border effect becomes insignificant. We further test our methodology using online prices for the largest supermarket chain in the country, and show that the "online border" is equivalent to the average distance from the online warehouse to each of the offline stores.
Handle: RePEc:nbr:nberwo:18122
Template-Type: ReDIF-Paper 1.0
Title: Tall or Taller, Pretty or Prettier: Is Discrimination Absolute or Relative?
Classification-JEL: J71; J78
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: LS
Number: 18123
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18123
File-URL: http://www.nber.org/papers/w18123.pdf
File-Format: application/pdf
Publication-Status: published as IZA Journal of Labor Economics 2012, 1:2 doi:10.1186/2193-8997-1-2
Abstract: Using several microeconomic data sets from the United States and the Netherlands, and the examples of height and beauty, this study examines whether: 1) Absolute or relative differences in a characteristic are what affect labor-market and other outcomes; and 2) The effects of a characteristic change when all agents acquire more of it--become taller or better-looking. Confronted with a choice among individuals, decision-makers respond more to absolute than to relative differences among them. Also, an increase in the mean of a characteristic's distribution does not alter market responses to differences in it.
Handle: RePEc:nbr:nberwo:18123
Template-Type: ReDIF-Paper 1.0
Title: Water Availability as a Constraint on China's Future Growth
Classification-JEL: O44; O47; Q25
Author-Name: Dana Medianu
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE EFG
Number: 18124
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18124
File-URL: http://www.nber.org/papers/w18124.pdf
File-Format: application/pdf
Abstract: Recent writings on China's water situation often portray China's water problems as severe and suggest that water availability could threaten the sustainability of China's future growth. However, China's high growth of the last 20 years or more has been obtained with relatively little increase in the physical volume of water. In this paper, we use a growth accounting approach to investigate both the contribution played in the past by water availability in constraining China's growth performance, and what would be involved in the future. We use a modified version of Solow growth accounting in which water in efficiency units enters the production technology, and investment in water management assets raises efficiency of water use. Our results suggest that if investments in water assets in the future were lower than they were in the past, growth might slightly increase by about 0.1 percentage points if non-water capital and water in efficiency units are close substitutes but growth rates could decrease by as much as 0.2-3.9 percentage points if investments in water assets were small, and if the elasticities of substitution were low. On the other hand, our experiments suggest that with faster growth of investments in water assets than in the past and a low elasticity of substitution growth rates could increase. But if non-water capital and water in efficiency units are close substitutes growth rates could even decrease, as in other cases.
Handle: RePEc:nbr:nberwo:18124
Template-Type: ReDIF-Paper 1.0
Title: Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge Massachusetts
Classification-JEL: D61; H23; R23; R31; R32; R38
Author-Name: David H. Autor
Author-Person: pau9
Author-Name: Christopher J. Palmer
Author-Name: Parag A. Pathak
Note: LS PE
Number: 18125
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18125
File-URL: http://www.nber.org/papers/w18125.pdf
File-Format: application/pdf
Publication-Status: published as David H. Autor & Christopher J. Palmer & Parag A. Pathak, 2014. "Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 661 - 717.
Abstract: Understanding potential spillovers from the attributes and actions of neighborhood residents onto the value of surrounding properties and neighborhoods is central to both the theory of urban economics and the development of efficient housing policy. This paper measures the capitalization of housing market spillovers by studying the sudden and largely unanticipated 1995 elimination of stringent rent controls in Cambridge, Massachusetts that had previously muted landlords' investment incentives and altered the assignment of residents to locations. Pooling administrative data on the assessed values of each residential property and the prices and characteristics of all residential transactions between 1988 and 2005, we find that rent control's removal produced large, positive, and robust spillovers onto the price of never-controlled housing from nearby decontrolled units. Elimination of rent control added about $1.8 billion to the value of Cambridge's housing stock between 1994 and 2004, equal to nearly a quarter of total Cambridge residential price appreciation in this period. Positive spillovers to never-controlled properties account for more half of the induced price appreciation. Residential investments can explain only a small fraction of the total.
Handle: RePEc:nbr:nberwo:18125
Template-Type: ReDIF-Paper 1.0
Title: Decentralisation in Africa and the Nature of Local Governments' Competition: Evidence from Benin
Classification-JEL: D72; H2; H7
Author-Name: Emilie Caldeira
Author-Person: pca657
Author-Name: Martial Foucault
Author-Person: pfo40
Author-Name: Grégoire Rota-Graziosi
Author-Person: pro182
Note: PE
Number: 18126
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18126
File-URL: http://www.nber.org/papers/w18126.pdf
File-Format: application/pdf
Publication-Status: published as Emilie Caldeira & Martial Foucault & Gregoire Rota-Graziosi, 2015. "Decentralization in Africa and the nature of local governments’ competition: evidence from Benin," International Tax and Public Finance, Springer, vol. 22(6), pages 1048-1076, December.
Abstract: Decentralization has been put forward as a powerful tool to reduce poverty and improve governance in Africa. The aim of this paper is to study the existence, and identify the nature, of spillovers resulting from local expenditure policies. These spillovers impact the efficiency of decentralization. We develop a two-jurisdiction model of public expenditure, which differs from existing literature by capturing the extreme poverty of some local governments in developing countries through a generalized notion of the Nash equilibrium, namely, the constrained Nash equilibrium. We show how and under which conditions spillovers among jurisdictions induce strategic behaviours from local officials. By estimating a spatial lag model for a panel data analysis of the 77 communes in Benin from 2002 to 2008, our empirical analysis establishes the existence of the strategic complementarity of jurisdictions' public spending. Thus, any increase in the local public provision in one jurisdiction should induce a similar variation among the neighbouring jurisdictions. This result raises the issue of coordination among local governments, and more broadly, it questions the effeciency of decentralisation in developing countries in line with Oates' theorem.
Handle: RePEc:nbr:nberwo:18126
Template-Type: ReDIF-Paper 1.0
Title: The Incidence of an Oil Glut: Who Benefits from Cheap Crude Oil in the Midwest?
Classification-JEL: L71; L95; Q41
Author-Name: Severin Borenstein
Author-Person: pbo78
Author-Name: Ryan Kellogg
Note: EEE IO
Number: 18127
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18127
File-URL: http://www.nber.org/papers/w18127.pdf
File-Format: application/pdf
Publication-Status: published as Severin Borenstein and Ryan Kellogg, 2014. "The Incidence of an Oil Glut: Who Benefits from Cheap Crude Oil in the Midwest?," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 1).
Abstract: Beginning in early 2011, crude oil production in the U.S. Midwest and Canada surpassed the pipeline capacity to transport it to the Gulf Coast where it could access the world oil market. As a result, the U.S. "benchmark" crude oil price in Cushing, Oklahoma, declined substantially relative to internationally traded oil. In this paper, we study how this development affected prices for refined products, focusing on the markets for motor gasoline and diesel. We find that the relative decrease in Midwest crude oil prices did not pass through to wholesale gasoline and diesel prices. This result is consistent with evidence that the marginal gallon of fuel in the Midwest is still imported from coastal locations. Our findings imply that investments in new pipeline infrastructure between the Midwest and the Gulf Coast, such as the southern segment of the controversial Keystone XL pipeline, will not raise gasoline prices in the Midwest.
Handle: RePEc:nbr:nberwo:18127
Template-Type: ReDIF-Paper 1.0
Title: Growth-Rate and Uncertainty Shocks in Consumption: Cross-Country Evidence
Classification-JEL: E21; G12
Author-Name: Emi Nakamura
Author-Person: pna121
Author-Name: Dmitriy Sergeyev
Author-Person: pse609
Author-Name: Jón Steinsson
Author-Person: pst155
Note: AP EFG IFM ME
Number: 18128
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18128
File-URL: http://www.nber.org/papers/w18128.pdf
File-Format: application/pdf
Publication-Status: published as Emi Nakamura & Dmitriy Sergeyev & Jón Steinsson, 2017. "Growth-Rate and Uncertainty Shocks in Consumption: Cross-Country Evidence," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(1), pages 1-39, January.
Abstract: We provide new estimates of the importance of growth rate and uncertainty shocks for developed countries. The shocks we estimate are large and correspond to well-known macroeconomic episodes such as the Great Moderation and the productivity slowdown. We compare our results to earlier estimates of “long-run risks” and assess the implications for asset pricing. Our estimates yield greater return predictability and a more volatile price-dividend ratio. In addition, we can explain a substantial fraction of cross-country variation in the equity premium. An advantage of our approach, based on macroeconomic data alone, is that the parameter estimates cannot be viewed as backward engineered to fit asset pricing data. We provide intuition for our results using the recently developed framework of shock-exposure and shock-price elasticities.
Handle: RePEc:nbr:nberwo:18128
Template-Type: ReDIF-Paper 1.0
Title: Suffrage, Schooling, and Sorting in the Post-Bellum U.S. South
Classification-JEL: H7; N11
Author-Name: Suresh Naidu
Note: DAE ED LE POL
Number: 18129
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18129
File-URL: http://www.nber.org/papers/w18129.pdf
File-Format: application/pdf
Abstract: This paper estimates the political and economic effects of the 19th century disenfranchisement of black citizens in the U.S. South. Using adjacent county-pairs that straddle state boundaries, I examine the effect of voting restrictions on political competition, public goods, and factor markets. I find that poll taxes and literacy tests each lowered overall electoral turnout by 8-22% and increased the Democratic vote share in elections by 1-7%. Employing newly collected data on schooling inputs, I show that disenfranchisement reduced the teacher-child ratio in black schools by 10-23%, with no significant effects on white teacher-child ratios. I develop a model of suffrage restriction and redistribution in a 2-factor economy with migration and agricultural production to generate sufficient statistics for welfare analysis of the incidence of black disenfranchisement. Consistent with the model, disenfranchised counties experienced a 3.5% increase in farm values per acre, despite a 4% fall in the black population. The estimated factor market responses suggest that black labor bore a collective loss from disenfranchisement equivalent to at least 15% of annual income, with landowners experiencing a 12% gain.
Handle: RePEc:nbr:nberwo:18129
Template-Type: ReDIF-Paper 1.0
Title: How Deep Are the Roots of Economic Development?
Classification-JEL: N10; O1; O33; O4; O5; O57
Author-Name: Enrico Spolaore
Author-Person: psp27
Author-Name: Romain Wacziarg
Author-Person: pwa67
Note: DAE EFG POL
Number: 18130
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18130
File-URL: http://www.nber.org/papers/w18130.pdf
File-Format: application/pdf
Publication-Status: published as Enrico Spolaore & Romain Wacziarg, 2013. "How Deep Are the Roots of Economic Development?," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 325-69, June.
Abstract: The empirical literature on economic growth and development has moved from the study of proximate determinants to the analysis of ever deeper, more fundamental factors, rooted in long-term history. A growing body of new empirical work focuses on the measurement and estimation of the effects of historical variables on contemporary income by explicitly taking into account the ancestral composition of current populations. The evidence suggests that economic development is affected by traits that have been transmitted across generations over the very long run. This article surveys this new literature and provides a framework to discuss different channels through which intergenerationally transmitted characteristics may impact economic development, biologically (via genetic or epigenetic transmission) and culturally (via behavioral or symbolic transmission). An important issue is whether historically transmitted traits have affected development through their direct impact on productivity, or have operated indirectly as barriers to the diffusion of productivity-enhancing innovations across populations.
Handle: RePEc:nbr:nberwo:18130
Template-Type: ReDIF-Paper 1.0
Title: Skill Premium and Trade Puzzles: a Solution Linking Production and Preferences
Classification-JEL: F10; F14
Author-Name: Justin Caron
Author-Name: Thibault Fally
Author-Person: pfa184
Author-Name: James R. Markusen
Author-Person: pma528
Note: ITI
Number: 18131
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18131
File-URL: http://www.nber.org/papers/w18131.pdf
File-Format: application/pdf
Publication-Status: published as "International Trade Puzzles: A Solution Linking Production and Preferences" With Justin Caron and James R. Markusen, Quarterly Journal of Economics, August 2014, Vol. 129 (3).
Abstract: International trade theory is a general-equilibrium discipline, yet most of the standard portfolio of research focuses on the production side of general equilibrium. In addition, we do not have a good understanding of the relationship between characteristics of goods in production and characteristics of preferences. This paper conducts an empirical investigation into the relationship between a good's factor intensity in production and its income elasticity of demand in consumption. In particular, we find a strong and significant positive relationship between skilled-labor intensity in production and income elasticity of demand for several types of preferences, with and without accounting for trade costs and differences in prices. Counter-factual simulations yield a number of results. We can explain about half of "missing trade", and show an important role for per-capita income in understanding trade/GDP ratios, the choice of trading partners, and the composition of trade. Furthermore, an equal rise in productivity in all sectors in all countries leads to a rising skill premium in all countries, with particularly large increases in developing countries.
Handle: RePEc:nbr:nberwo:18131
Template-Type: ReDIF-Paper 1.0
Title: International Standards and International Trade: Empirical Evidence from ISO 9000 Diffusion
Classification-JEL: C51; F13; L15
Author-Name: Joseph A. Clougherty
Author-Person: pcl37
Author-Name: Michal Grajek
Author-Person: pgr123
Note: IO ITI PR
Number: 18132
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18132
File-URL: http://www.nber.org/papers/w18132.pdf
File-Format: application/pdf
Publication-Status: published as International Standards and International Trade: Empirical Evidence from ISO 9000 Diffusion, Joseph A. Clougherty, Michał Grajek. in Standards, Patents and Innovations, Simcoe, Agrawal, and Graham. 2014
Publication-Status: published as Clougherty, Joseph A. & Grajek, Michał, 2014. "International standards and international trade: Empirical evidence from ISO 9000 diffusion," International Journal of Industrial Organization, Elsevier, vol. 36(C), pages 70-82.
Abstract: Empirical scholarship on the standards-trade relationship has been held up due to methodological challenges: measurement, varied effects, and endogeneity. Considering the trade-effects of one particular standard (ISO 9000), we surmount methodological challenges by measuring standardization via national penetration of ISO 9000, allowing standardization to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) channels, and using instrumental variable, multilateral resistance and panel data techniques to overcome endogeneity. We find evidence of common-language and quality-signaling augmenting country-pair trade. Yet, ISO-rich nations (most notably European) benefit the most from standardization, while ISO-poor nations find ISO 9000 to represent a trade barrier due to compliance-cost effects.
Handle: RePEc:nbr:nberwo:18132
Template-Type: ReDIF-Paper 1.0
Title: The Life Cycle of Plants in India and Mexico
Classification-JEL: D24; O40
Author-Name: Chang-Tai Hsieh
Author-Name: Peter J. Klenow
Note: EFG PR
Number: 18133
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18133
File-URL: http://www.nber.org/papers/w18133.pdf
File-Format: application/pdf
Publication-Status: published as "The Life Cycle of Manufacturing Plants in India and Mexico," Quarterly Journal of Economics, August 2014 (With Peter Klenow).
Abstract: In the U.S., the average 40 year old plant employs almost eight times as many workers as the typical plant five years or younger. In contrast, surviving Indian plants exhibit little growth in terms of either employment or output. Mexico is intermediate to India and the U.S. in these respects: the average 40 year old Mexican plant employs twice as many workers as an average new plant. This pattern holds across many industries and for formal and informal establishments alike. The divergence in plant dynamics suggests lower investments by Indian and Mexican plants in process efficiency, quality, and in accessing markets at home and abroad. In simple GE models, we find that the difference in life cycle dynamics could lower aggregate manufacturing productivity on the order of 25% in India and Mexico relative to the U.S.
Handle: RePEc:nbr:nberwo:18133
Template-Type: ReDIF-Paper 1.0
Title: Does Strengthening Self-Defense Law Deter Crime or Escalate Violence? Evidence from Castle Doctrine
Classification-JEL: K0; K14
Author-Name: Cheng Cheng
Author-Name: Mark Hoekstra
Author-Person: pho613
Note: LE
Number: 18134
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18134
File-URL: http://www.nber.org/papers/w18134.pdf
File-Format: application/pdf
Publication-Status: published as “Does Strengthening Self-Defense Law Deter Crime or Escalate Violence? Evidence from Expansions to Castle Doctrine (with Cheng Cheng) Journal of Human Resources 2013, 48(3): 821-854.
Abstract: From 2000 to 2010, more than 20 states passed laws that make it easier to use lethal force in self-defense. Elements of these laws include removing the duty to retreat in places outside of one's home, adding a presumption of reasonable belief of imminent harm, and removing civil liability for those acting under the law. This paper examines whether aiding self-defense in this way deters crime or, alternatively, increases homicide. To do so, we apply a difference-in-differences research design by exploiting the within-state variation in law adoption. We find no evidence of deterrence; burglary, robbery, and aggravated assault are unaffected by the laws. On the other hand, we find that homicides are increased by around 8 percent, and that these homicides are largely classified by police as murder. This suggests that a primary consequence of strengthened self-defense law is a net increase in homicide. Finally, we present back-of-the-envelope calculations using evidence on the relative increase in reported justifiable homicide, along with assumptions about the degree and nature of underreporting, to assess whether the entire increase was legally justified.
Handle: RePEc:nbr:nberwo:18134
Template-Type: ReDIF-Paper 1.0
Title: Inflation Tracking Portfolios
Classification-JEL: G11
Author-Name: Christopher T. Downing
Author-Name: Francis A. Longstaff
Author-Person: plo283
Author-Name: Michael A. Rierson
Note: AP
Number: 18135
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18135
File-URL: http://www.nber.org/papers/w18135.pdf
File-Format: application/pdf
Abstract: We propose a new approach to constructing inflation tracking portfolios. The key to this approach is the insight that asset returns track expected inflation far better than they track current realized inflation. Thus, we can construct portfolios that track next month's inflation much more closely than they track this month's inflation. We show this staggered hedging approach can eliminate nearly 90 percent of the tracking error of more conventional inflation hedging strategies. We also find that long-short positions in equities play a dominant role in the effective hedging of inflation risk over extended horizons. These results suggest that the goal of protecting portfolios against inflation may be more feasible that is commonly believed.
Handle: RePEc:nbr:nberwo:18135
Template-Type: ReDIF-Paper 1.0
Title: Managing Catastrophic Risk
Classification-JEL: D62; D80; D85; H20
Author-Name: Howard Kunreuther
Author-Name: Geoffrey Heal
Author-Person: phe40
Note: EEE
Number: 18136
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18136
File-URL: http://www.nber.org/papers/w18136.pdf
File-Format: application/pdf
Publication-Status: published as "Managing Catastrophic Risk" (with Geoffrey Heal). Encyclopedia of Energy, Natural Resources and Environmental Economics (ed.) J. Shogren, Elsevier, Vol. 3, pp 52-59 2013.
Abstract: A principal reason that losses from catastrophic risks have been increasing over time is that more individuals and firms are locating in harm's way while not taking appropriate protective measures. Several behavioural biases lead decision-makers not to invest in adaptation measures until after it is too late. In an interdependent world with no intervention by the public sector, it may be economically rational for those at risk not to invest in protective measures. Risk management strategies that involve private-public partnerships that address these issues may help in reducing future catastrophic losses. These may include multi-year insurance contracts, well-enforced regulations, third-party inspections, and alternative risk transfer instruments such as catastrophe bonds.
Handle: RePEc:nbr:nberwo:18136
Template-Type: ReDIF-Paper 1.0
Title: Does Mutual Fund Performance Vary over the Business Cycle?
Classification-JEL: G11; G23
Author-Name: André de Souza
Author-Name: Anthony W. Lynch
Note: AP
Number: 18137
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18137
File-URL: http://www.nber.org/papers/w18137.pdf
File-Format: application/pdf
Abstract: We develop a new methodology that allows conditional performance to be a function of information available at the start of the performance period but does not make assumptions about the behavior of the conditional betas. We use econometric techniques developed by Lynch and Wachter (2011) that use all available factor return, instrument, and mutual fund data, and so allow us to produce more precise parameter estimates than those obtained from the usual GMM estimation. We use our SDF-based method to assess the conditional performance of fund styles in the CRSP mutual fund data set, and are careful to condition only on information available to investors, and to control for any cyclical performance by the underlying stocks held by the various fund styles. Moskowitz (2000) suggests that mutual funds may add value by performing well during economic downturns, but we find that not all funds styles produce counter-cyclical performance when using dividend yield or term spread as the instrument: instead, many fund styles exhibit pro-cyclical or non-cyclical performance, especially after controlling for any cyclicality in the performance of the underlying stocks. For many fund styles, conditional performance switches from counter-cyclical to pro- or non- cyclical depending on the instrument or pricing model used. Moreover, we find very little evidence of any business cycle variation in conditional performance for the 4 oldest fund styles (growth and income, growth, maximum capital gains and income) using dividend yield or term spread as the instrument, despite estimating the cyclicality parameter using the GMM method of Lynch and Wachter (2011) that produces more precise parameter estimates than the usual GMM estimation. Our results are important because they call into question the accepted wisdom and Moskowitz's conjecture that the typical mutual fund improves investor utility by producing counter-cyclical abnormal performance.
Handle: RePEc:nbr:nberwo:18137
Template-Type: ReDIF-Paper 1.0
Title: The Euro and the global crises: finding the balance between short term stabilization and forward looking reforms
Classification-JEL: F02; F33; F34; F36
Author-Name: Joshua Aizenman
Author-Person: pai8
Note: IFM
Number: 18138
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18138
File-URL: http://www.nber.org/papers/w18138.pdf
File-Format: application/pdf
Abstract: This paper analyzes reforms and adjustments in the context of the Euro and the global financial crises. Taking the perspective of the evolutionary approach to institutions, the formation of a new currency area is not unidirectional. The process leading to the euro is an example of a common upbeat and optimistic attitude to the formation of new institutions. Such a Panglossian attitude to policies may reflect built-in fiscal myopia, possibly both at the level of the principal [the policy maker] and of the agents [consumers and households]. Next, the paper reviews the evolution of institutions buffering the stability of unions in the aftermath of crises, where fiscal restraints and the allocation of significant bargaining clout to the Federal Center increase the stability of a union. The paper concludes with an overview of the challenges associated with finding the proper balance between financial integration and financial regulations.
Handle: RePEc:nbr:nberwo:18138
Template-Type: ReDIF-Paper 1.0
Title: Does Finance Cause Growth? Evidence from the Origins of Banking in Russia
Classification-JEL: O16; O43; P3
Author-Name: Daniel Berkowitz
Author-Person: pbe136
Author-Name: Mark Hoekstra
Author-Person: pho613
Author-Name: Koen Schoors
Author-Person: psc203
Note: EFG LE
Number: 18139
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18139
File-URL: http://www.nber.org/papers/w18139.pdf
File-Format: application/pdf
Publication-Status: published as Berkowitz, Daniel & Hoekstra, Mark & Schoors, Koen, 2014. "Bank privatization, finance, and growth," Journal of Development Economics, Elsevier, vol. 110(C), pages 93-106.
Abstract: This paper examines the effect of banking on economic growth in modern Russia. To overcome simultaneity and selection, we exploit regional banking variation induced by the creation of "specialized banks" (spetsbanks) in the last years of the Soviet Union (1988-1991). Consistent with the qualitative work of Joel Hellman [1993] and Juliet Johnson [2000], we show that these reforms generated an ideal natural experiment in that the concentration of spetsbanks is jointly uncorrelated with 15 predictors of future growth, including pre-banking income, education, anti-market sentiment, institutional quality, and government interference in the economy. Results indicate that while the presence of one additional spetsbank per million inhabitants increased total within-state lending to private firms and individuals by 14 to 26 percent in the early 2000s, it had no effect on investment or per capita income. In contrast, we find that spetsbanks increased employment. Additional results indicate that spetsbanks increased growth in regions in which they were less connected to government and were generally more similar to non-spetsbanks, as well as in regions that were better at protecting property rights. Our results thus indicate that bank origins, political connections, and property rights are important determinants of effective finance.
Handle: RePEc:nbr:nberwo:18139
Template-Type: ReDIF-Paper 1.0
Title: Post-Durban Climate Policy Architecture Based on Linkage of Cap-and-Trade Systems
Classification-JEL: Q28; Q38; Q48; Q5; Q58
Author-Name: Matthew Ranson
Author-Name: Robert N. Stavins
Author-Person: pst167
Note: EEE PE POL
Number: 18140
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18140
File-URL: http://www.nber.org/papers/w18140.pdf
File-Format: application/pdf
Publication-Status: published as APost-Durban Climate Policy Architecture Based on Linkage of Cap-and-Trade Systems.@ The Chicago Journal of International Law, Volume 13, Number 2, Winter 2013, pp. 403-438. With M. Ranson. [A-76]
Abstract: The outcome of the December 2011 United Nations climate negotiations in Durban, South Africa, provides an important new opportunity to move toward an international climate policy architecture that is capable of delivering broad international participation and significant global CO2 emissions reductions at reasonable cost. We evaluate one important component of potential climate policy architecture for the post-Durban era: links among independent tradable permit systems for greenhouse gases. Because linkage reduces the cost of achieving given targets, there is tremendous pressure to link existing and planned cap-and-trade systems, and in fact, a number of links already or will soon exist. We draw on recent political and economic experience with linkage to evaluate potential roles that linkage may play in post-Durban international climate policy, both in a near-term, de facto architecture of indirect links between regional, national, and sub-national cap-and-trade systems, and in longer-term, more comprehensive bottom-up architecture of direct links. Although linkage will certainly help to reduce long-term abatement costs, it may also serve as an effective mechanism for building institutional and political structure to support a future climate agreement.
Handle: RePEc:nbr:nberwo:18140
Template-Type: ReDIF-Paper 1.0
Title: The Cost of Friendship
Classification-JEL: G02; G24; G3; L14; L2
Author-Name: Paul Gompers
Author-Person: pgo301
Author-Name: Vladimir Mukharlyamov
Author-Name: Yuhai Xuan
Note: CF
Number: 18141
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18141
File-URL: http://www.nber.org/papers/w18141.pdf
File-Format: application/pdf
Publication-Status: published as Paul A. Gompers & Vladimir Mukharlyamov & Yuhai Xuan, 2016. "The cost of friendship," Journal of Financial Economics, vol 119(3), pages 626-644.
Abstract: This paper explores two broad questions on collaboration between individuals. First, we investigate what personal characteristics affect people's desire to work together. Second, given the influence of these personal characteristics, we analyze whether this attraction enhances or detracts from performance. Addressing these problems in the venture capital syndication setting, we show that venture capitalists exhibit strong detrimental homophily in their co-investment decisions. We find that individual venture capitalists choose to collaborate with other venture capitalists for both ability-based characteristics (e.g., whether both individuals in a dyad obtained a degree from a top university) and affinity-based characteristics (e.g., whether individuals in a pair share the same ethnic background, attended the same school, or worked for the same employer previously). Moreover, frequent collaborators in syndication are those venture capitalists who display a high level of mutual affinity. We find that while collaborating for ability-based characteristics enhances investment performance, collaborating for affinity-based characteristics dramatically reduces the probability of investment success. A variety of tests show that the cost of affinity is not driven by selection into inferior deals; the effect is most likely attributable to poor decision-making by high-affinity syndicates post investment. Taken together, our results suggest that non-ability-based "birds-of-a-feather-flock-together" effects in collaboration can be costly.
Handle: RePEc:nbr:nberwo:18141
Template-Type: ReDIF-Paper 1.0
Title: "Getting the Biggest Bang for the Buck in Fiscal Policy"
Classification-JEL: E6
Author-Name: Miles S. Kimball
Author-Person: pki97
Note: EFG IFM ME PE
Number: 18142
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18142
File-URL: http://www.nber.org/papers/w18142.pdf
File-Format: application/pdf
Abstract: In ranking fiscal stimulus programs, it is useful to focus on the ratio of extra aggregate demand to extra national debt that results. This note argues that (because of repayment after the end of a recession) "national lines of credit"-that is, government-issued credit cards with countercyclical credit limits and favorable interest rates--would generate a higher ratio of extra aggregate demand to extra national debt than tax rebates. Because it involves government loans that are anticipated in advance to involve some losses and therefore involve a fiscal cost even after efforts to minimize losses, such a policy lies between traditional monetary policy and traditional fiscal policy.
Handle: RePEc:nbr:nberwo:18142
Template-Type: ReDIF-Paper 1.0
Title: The Dollar and its Discontents
Classification-JEL: F02; F3; F31; F33
Author-Name: Olivier Jeanne
Author-Person: pje59
Note: IFM
Number: 18143
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18143
File-URL: http://www.nber.org/papers/w18143.pdf
File-Format: application/pdf
Publication-Status: published as Jeanne, Olivier, 2012. "The dollar and its discontents," Journal of International Money and Finance, Elsevier, vol. 31(8), pages 1976-1989.
Abstract: Has the US dollar delivered the benefits that the rest of the world is expecting from its holdings of international liquidity? US government debt has been liquid and safe, and it is supplied in sufficient quantity. But it has given a low return to the countries that accumulated the most reserves, especially when those returns are measured in terms of the countries' own consumption. I argue in this paper that the countries that accumulate the most reserves should expect a low return in terms of their own consumption, and that there is little that international monetary reform can do to change that fact.
Handle: RePEc:nbr:nberwo:18143
Template-Type: ReDIF-Paper 1.0
Title: A Precautionary Tale of Uncertain Tail Fattening
Classification-JEL: Q5; Q54
Author-Name: Martin L. Weitzman
Note: EEE
Number: 18144
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18144
File-URL: http://www.nber.org/papers/w18144.pdf
File-Format: application/pdf
Publication-Status: published as Martin Weitzman, 2013. "A Precautionary Tale of Uncertain Tail Fattening," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 55(2), pages 159-173, June.
Abstract: Suppose that there is a probability density function for how bad things might get, but that the overall rate at which this probability density function slims down to approach zero in the tail is uncertain. The paper shows how a basic precautionary principle of tail fattening could then apply. The worse is the contemplated damage, the more should a decision maker consider the bad tail to be among the relatively fatter-tailed possibilities. A rough numerical example is applied to the uncertain tail distribution of climate sensitivity.
Handle: RePEc:nbr:nberwo:18144
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Education Policy on Crime: An Intergenerational Perspective
Classification-JEL: I24; J1; J18; J24; J62
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Mårten Palme
Author-Person: ppa618
Author-Name: Marieke Schnabel
Note: CH ED LS
Number: 18145
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18145
File-URL: http://www.nber.org/papers/w18145.pdf
File-Format: application/pdf
Abstract: We study the intergenerational effect of education policy on crime. We use Swedish administrative data that links outcomes across generations with crime records and we show that the comprehensive school reform, gradually implemented between 1949 and 1962, reduced conviction rates both for the generation directly affected by the reform and for their sons. The reduction in conviction rates occurred across many types of crime. Key mediators for this reduction in the child generation are an increase in education and a decline in crime amongst their fathers.
Handle: RePEc:nbr:nberwo:18145
Template-Type: ReDIF-Paper 1.0
Title: Evaluating the Role of Science Philanthropy in American Research Universities
Classification-JEL: O31; O32; O43
Author-Name: Fiona E. Murray
Note: PR
Number: 18146
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18146
File-URL: http://www.nber.org/papers/w18146.pdf
File-Format: application/pdf
Publication-Status: published as Evaluating the Role of Science Philanthropy in American Research Universities, Fiona Murray. in Innovation Policy and the Economy, Volume 13, Lerner and Stern. 2013
Abstract: Philanthropy plays a major role in university-based scientific, engineering and medical research in the United States contributing over $4Billion annually to operations, endowment and buildings devoted to research. When combined with endowment income, university research funding from science philanthropy is $7Billion a year. This major contribution to U.S. scientific competitiveness comes from private foundations as well as gifts from wealthy individuals. From the researcher's perspective, analysis in this paper demonstrates that science philanthropy provides almost 30% of the annual research funds of those in leading universities. And yet science philanthropy has been largely overshadowed by the massive rise of Federal research funding and, to a lesser extent, industry funding. Government and industry funding have drawn intensive analysis, partly because their objectives are measureable: governments generally support broad national goals and basic research, while industry finances projects likely to contribute directly to useful products. In contrast, philanthropy's contribution to overall levels of scientific funding, and, more importantly, the distribution of philanthropy across different types of research is poorly understood. To fill this gap, we provide the first empirical evaluation of the role of science philanthropy in American research universities. The documented extent of science philanthropy and its strong emphasis on translational medical research raises important questions for Federal policymakers. In determining their own funding strategies, they must no longer assume that their funding is the only source in shaping some fields of research, while recognizing that philanthropy may ignore other important fields.
Handle: RePEc:nbr:nberwo:18146
Template-Type: ReDIF-Paper 1.0
Title: Real Assets and Capital Structure
Classification-JEL: G32
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: Erasmo Giambona
Author-Person: pgi83
Note: CF
Number: 18147
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18147
File-URL: http://www.nber.org/papers/w18147.pdf
File-Format: application/pdf
Publication-Status: published as Campello, Murillo; Giambona, Erasmo. "Real Assets and Capital Structure" Journal of Financial and Quantitative Analysis 48.5 (2013): 1333-1370.
Abstract: We characterize the relation between asset structure and capital structure by exploiting variation in the salability of corporate assets. Theory suggests that asset tangibility increases borrowing capacity because it allows creditors to more easily repossess a firm's assets. Tangible assets, however, are often illiquid. We show that the redeployability of tangible assets is a main determinant of corporate leverage --- beyond standard proxies for tangibility. To establish this link, we distinguish across different asset categories in firms' balance sheets (e.g., machinery, land and buildings) and use an instrumental approach that incorporates measures of supply and demand for those individual assets. We also use a natural experiment driving differential increases in the supply of real estate assets in some regions of the country: The Defense Base Closure and Realignment Act of 1990. Consistent with a credit supply-side view of capital structure, we find that asset redeployability is a particularly important driver of leverage for firms that are likely to face credit frictions (e.g., small, unrated firms). Our tests also show that asset redeployability facilitates borrowing the most during periods of tight credit in the economy. Our work contributes new evidence to capital structure models that are based on contract incompleteness and limited enforceability. It does so characterizing a well-defined channel through which credit frictions affect firm financial decisions.
Handle: RePEc:nbr:nberwo:18147
Template-Type: ReDIF-Paper 1.0
Title: Real Options, Taxes and Financial Leverage
Classification-JEL: G31; G32
Author-Name: Stewart C. Myers
Author-Name: James A. Read, Jr.
Note: CF
Number: 18148
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18148
File-URL: http://www.nber.org/papers/w18148.pdf
File-Format: application/pdf
Publication-Status: published as Stewart C. Myers & James A. Read Jr., 2020. "Real Options, Taxes and Financial Leverage," Critical Finance Review, vol 9(1-2), pages 29-76.
Abstract: We show how the value of a real option depends on corporate income taxes and the option's "debt capacity," defined as the amount of debt supported or displaced by the option. The value of the underlying asset must be an adjusted present value (APV). The risk-free rate of interest must be after-tax. Debt capacity depends on the APV and target debt ratio for the underlying asset, on the option delta and on the amount of risk-free borrowing or lending that would be needed for replication. The target debt ratio for a real call option is almost always negative. Observed debt ratios for growth firms that follow the tradeoff theory of capital structure will be lower than target ratios for assets in place. Our results can rationalize some empirical financing patterns that seem inconsistent with the tradeoff theory, but rigorous tests of the theory for growth firms seem nearly impossible.
Handle: RePEc:nbr:nberwo:18148
Template-Type: ReDIF-Paper 1.0
Title: Testing for Keynesian Labor Demand
Classification-JEL: E12; E2; E3; E6
Author-Name: Mark Bils
Author-Person: pbi148
Author-Name: Peter J. Klenow
Author-Name: Benjamin A. Malin
Author-Person: pma830
Note: EFG ME
Number: 18149
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18149
File-URL: http://www.nber.org/papers/w18149.pdf
File-Format: application/pdf
Publication-Status: published as Mark Bils & Peter J. Klenow & Benjamin A. Malin, 2013. "Testing for Keynesian Labor Demand," NBER Macroeconomics Annual, University of Chicago Press, vol. 27(1), pages 311 - 349.
Publication-Status: published as Testing for Keynesian Labor Demand, Mark Bils, Peter J. Klenow, Benjamin A. Malin. in NBER Macroeconomics Annual 2012, Volume 27, Acemoglu, Parker, and Woodford. 2013
Abstract: According to the textbook Keynesian model, short-run demand for labor is sensitive to the demand for goods. In this view, sellers deviate from setting the marginal product of labor proportional to the real wage, instead enduring or choosing lower price markups when demand for goods is high. We test this prediction across U.S. industries in the two decades up through the Great Recession. To identify movements in goods demand, we exploit how durability varies across 70 categories of consumption and investment. We also take into account the flexibility of prices and capital-intensity of production across goods. We find evidence in support of Keynesian Labor Demand.
Handle: RePEc:nbr:nberwo:18149
Template-Type: ReDIF-Paper 1.0
Title: Corrupting Learning: Evidence from Missing Federal Education Funds in Brazil
Classification-JEL: D73; H72; I21
Author-Name: Claudio Ferraz
Author-Person: pfe125
Author-Name: Frederico Finan
Author-Person: pfi199
Author-Name: Diana B. Moreira
Note: PE POL ED
Number: 18150
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18150
File-URL: http://www.nber.org/papers/w18150.pdf
File-Format: application/pdf
Publication-Status: published as Claudio Ferraz & Frederico Finan & Diana B. Moreira, 2012. "Corrupting learning," Journal of Public Economics, vol 96(9-10), pages 712-726.
Abstract: This paper examines if money matters in education by looking at whether missing resources due to corruption affect student outcomes. We use data from the auditing of Brazil's local governments to construct objective measures of corruption involving educational block grants transferred from the central government to municipalities. Using variation in the incidence of corruption across municipalities and controlling for student, school, and municipal characteristics, we find a significant negative association between corruption and the school performance of primary school students. Students residing in municipalities where corruption in education was detected score 0.35 standard deviations less on standardized tests, and have significantly higher dropout and failure rates. Using a rich dataset of school infrastructure and teacher and principal questionnaires, we also find that school inputs such as computer labs, teaching supplies, and teacher training are reduced in the presence of corruption. Overall, our findings suggest that in environments where basic schooling resources are lacking, money does matter for student achievement.
Handle: RePEc:nbr:nberwo:18150
Template-Type: ReDIF-Paper 1.0
Title: Taxation and Redistribution of Residual Income Inequality
Classification-JEL: H21; J64; J65
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Pricila Maziero
Author-Person: pma1794
Author-Name: Guido Menzio
Author-Person: pme246
Note: EFG
Number: 18151
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18151
File-URL: http://www.nber.org/papers/w18151.pdf
File-Format: application/pdf
Publication-Status: published as Mikhail Golosov & Pricila Maziero & Guido Menzio, 2013. "Taxation and Redistribution of Residual Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 121(6), pages 1160 - 1204.
Abstract: This paper studies the optimal redistribution of income inequality in a model with search and matching frictions in the labor market. We study this problem in the context of a directed search model of the labor market populated by homogeneous workers and heterogeneous firms. The optimal redistribution in this model, which is associated with the constrained efficient allocation, can be attained using a positive unemployment benefit and an increasing and regressive labor income tax. The positive unemployment benefit serves the purpose of lowering the search risk faced by workers. The increasing and regressive labor tax serves the purpose of aligning the cost to the firm of attracting an additional applicant with the value of an application to society.
Handle: RePEc:nbr:nberwo:18151
Template-Type: ReDIF-Paper 1.0
Title: The Demand of Liquid Assets with Uncertain Lumpy Expenditures
Classification-JEL: E41
Author-Name: Fernando Alvarez
Author-Name: Francesco Lippi
Author-Person: pli62
Note: EFG
Number: 18152
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18152
File-URL: http://www.nber.org/papers/w18152.pdf
File-Format: application/pdf
Publication-Status: published as Alvarez, Fernando & Lippi, Francesco, 2013. "The demand of liquid assets with uncertain lumpy expenditures," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 753-770.
Abstract: We consider an inventory model for a liquid asset where the per-period net expenditures have two components: one that is frequent and small and another that is infrequent and large. We give a theoretical characterization of the optimal management of liquid asset as well as of the implied observable statistics. We use our characterization to interpret some aspects of households' currency management in Austria, as well as the management of demand deposits by a large sample of Italian investors.
Handle: RePEc:nbr:nberwo:18152
Template-Type: ReDIF-Paper 1.0
Title: Using Audit Studies to Test for Physician Induced Demand: The Case of Antibiotic Abuse in China
Classification-JEL: I11
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Wanchuan Lin
Author-Person: pli411
Author-Name: Juanjuan Meng
Author-Person: pme419
Note: EH
Number: 18153
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18153
File-URL: http://www.nber.org/papers/w18153.pdf
File-Format: application/pdf
Publication-Status: published as "Addressing Antibiotic Abuse in China: An Experimental Audit Study," Journal of Development Economics, v. 110, Sept. 2014, with Wanchuan Lin and Juanjuan Meng, 39-51
Abstract: The overuse of medical services including antibiotics is often blamed on Physician Induced Demand. But since this theory is about physician motivations, it is difficult to test. We conduct an audit study in which physician financial incentives, beliefs about what patients want, and desires to reciprocate for a small gift are systematically varied. We find that all of these treatments reduce antibiotics prescriptions, suggesting that antibiotics abuse in China is not driven by patients actively demanding antibiotics, by physicians believing that patients want antibiotics, or by physicians believing that antibiotics are in the best interests of their patients, but is largely driven by financial incentives. Our results also show that physician behavior can be significantly influenced by the receipt of a token gift, such as a pen.
Handle: RePEc:nbr:nberwo:18153
Template-Type: ReDIF-Paper 1.0
Title: Declining Labor Shares and the Global Rise of Corporate Saving
Classification-JEL: E21; E22; E25; G32; G35
Author-Name: Loukas Karabarbounis
Author-Person: pka357
Author-Name: Brent Neiman
Author-Person: pne85
Note: CF EFG IFM
Number: 18154
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18154
File-URL: http://www.nber.org/papers/w18154.pdf
File-Format: application/pdf
Abstract: The stability of the labor share is a key foundation in macroeconomic models. We document, however, that the global labor share has significantly declined over the last 30 years. This decline was associated with a significant increase in corporate saving, generally the largest component of national saving. We relate the labor share to corporate saving empirically and theoretically using a model featuring CES production and imperfections in the flow of funds between households and corporations. These two departures from the standard neoclassical model imply that the labor share fluctuates and that corporate saving affects macroeconomic allocations. We argue that it is important to study the labor share and corporate saving jointly, and offer a unified explanation for their trends. A global decline in the cost of capital beginning around 1980 induced firms to shift away from labor and toward capital, financed in part with an increase in corporate saving.
Handle: RePEc:nbr:nberwo:18154
Template-Type: ReDIF-Paper 1.0
Title: Identification of Potential Games and Demand Models for Bundles
Classification-JEL: C35; L13
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Author-Name: Natalia Lazzati
Note: IO LS TWP
Number: 18155
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18155
File-URL: http://www.nber.org/papers/w18155.pdf
File-Format: application/pdf
Abstract: This paper studies nonparametric identification in binary choice games of complete information. We allow for correlated unobservables across players. We propose conditions under which the binary choice game is a so-called potential game and impose that the selected equilibrium maximizes its associated potential function. Our framework is formally equivalent to a multinomial choice demand model where a consumer can elect to purchase any bundle of products. We present a separate identification result for two-player games that does not rely on equilibrium selection.
Handle: RePEc:nbr:nberwo:18155
Template-Type: ReDIF-Paper 1.0
Title: Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service
Classification-JEL: H1; J24; J3; J42; J45
Author-Name: Ernesto Dal Bó
Author-Person: pda416
Author-Name: Frederico Finan
Author-Person: pfi199
Author-Name: Martín Rossi
Author-Person: pro457
Note: LS PE POL
Number: 18156
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18156
File-URL: http://www.nber.org/papers/w18156.pdf
File-Format: application/pdf
Publication-Status: published as Ernesto Dal Bó & Frederico Finan & MartÃn A. Rossi, 2013. "Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1169-1218.
Abstract: We study a recent recruitment drive for public sector positions in Mexico. Different salaries were announced randomly across recruitment sites, and job offers were subsequently randomized. Screening relied on exams designed to measure applicants' intellectual ability, personality, and motivation. This allows the first experimental estimates of (i) the role of financial incentives in attracting a larger and more qualified pool of applicants, (ii) the elasticity of the labor supply facing the employer, and (iii) the role of job attributes (distance, attractiveness of the municipal environment) in helping fill vacancies, as well as the role of wages in helping fill positions in less attractive municipalities. A theoretical model guides each stage of the empirical inquiry. We find that higher wages attract more able applicants as measured by their IQ, personality, and proclivity towards public sector work - i.e., we find no evidence of adverse selection effects on motivation; higher wage offers also increased acceptance rates, implying a labor supply elasticity of around 2 and some degree of monopsony power. Distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities.
Handle: RePEc:nbr:nberwo:18156
Template-Type: ReDIF-Paper 1.0
Title: The Ramsey Discounting Formula for a Hidden-State Stochastic Growth Process
Classification-JEL: Q5; Q54
Author-Name: Martin L. Weitzman
Note: EEE
Number: 18157
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18157
File-URL: http://www.nber.org/papers/w18157.pdf
File-Format: application/pdf
Publication-Status: published as Martin Weitzman, 2012. "The Ramsey Discounting Formula for a Hidden-State Stochastic Growth Process," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 53(3), pages 309-321, November.
Abstract: The long term discount rate is critically dependent upon projections of future growth rates that are fuzzier in proportion to the remoteness of the time horizon. This paper models such increasing fuzziness as an evolving hidden-state stochastic process. The underlying trend growth rate is an unobservable random walk hidden by noisy transitory shocks and recoverable only as a probability distribution via Bayesian updating. A simple expression is derived for the time-declining Ramsey discount rate. The components of this hidden-state Ramsey discounting formula are then analyzed, followed by a few remarks about possible implications and applications.
Handle: RePEc:nbr:nberwo:18157
Template-Type: ReDIF-Paper 1.0
Title: Is Conflicted Investment Advice Better than No Advice?
Classification-JEL: D14; G11; G23
Author-Name: John Chalmers
Author-Name: Jonathan Reuter
Author-Person: pre328
Note: AG
Number: 18158
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18158
File-URL: http://www.nber.org/papers/w18158.pdf
File-Format: application/pdf
Publication-Status: published as John Chalmers & Jonathan Reuter, 2020. "Is conflicted investment advice better than no advice?," Journal of Financial Economics, .
Abstract: The answer depends on how broker clients would have invested in the absence of broker recommendations. To identify counterfactual retirement portfolios, we exploit time-series variation in access to brokers by new plan participants. When brokers are available, they are chosen by new participants who value recommendations on asset allocation and fund selection because they are less financially experienced. When brokers are no longer available, demand for target-date funds (TDFs) increases differentially among participants with the highest predicted demand for brokers. Broker client portfolios earn significantly lower risk-adjusted returns and Sharpe ratios than matched portfolios based on TDFs—due in part to broker fees that average 0.90% per year—but offer similar levels of risk. More generally, the portfolios of participants with high predicted demand for brokers who lack access to brokers comparable favorably to the portfolios of similar participants who had access to brokers when they joined. Exploiting across-fund variation in the level of broker fees, we find that broker clients allocate more dollars to higher fee funds. This finding increases our confidence that actual broker client portfolios reflect broker recommendations, and it highlights an agency conflict that can be eliminated when TDFs replace brokers.
Handle: RePEc:nbr:nberwo:18158
Template-Type: ReDIF-Paper 1.0
Title: Do Male-Female Wage Differentials Reflect Differences in the Return to Skill? Cross-City Evidence From 1980-2000
Classification-JEL: J16; J24; J31; O33
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: Ethan Lewis
Author-Person: ple579
Note: LS
Number: 18159
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18159
File-URL: http://www.nber.org/papers/w18159.pdf
File-Format: application/pdf
Publication-Status: published as Paul Beaudry & Ethan Lewis, 2014. "Do Male-Female Wage Differentials Reflect Differences in the Return to Skill? Cross-City Evidence from 1980-2000," American Economic Journal: Applied Economics, American Economic Association, vol. 6(2), pages 178-94, April.
Abstract: Over the 1980s and 1990s the wage differentials between men and women (with similar observable characteristics) declined significantly. At the same time, the returns to education increased. It has been suggested that these two trends may reflect a common change in the relative price of a skill which is more abundant in both women and more educated workers. In this paper we explore the relevance of this hypothesis by examining the cross-city co-movement in both male-female wage differentials and returns to education over the 1980-2000 period. In parallel to the aggregate pattern, we find that male-female wage differentials at the city levels moved in opposite direction to the changes in the return to education. We also find this relationship to be particularly strong when we isolate data variation which most likely reflects the effect of technological change on relative prices. We take considerable care of controlling for potential selection issues which could bias our interpretation. Overall, our cross-city estimates suggest that most of the aggregate reduction in the male-female wage differential observed over the 1980-2000 period was likely due to a change in the relative price of skill that both females and educated workers have in greater abundance.
Handle: RePEc:nbr:nberwo:18159
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Debt Maturity: The Long and Short of Debt Overhang
Classification-JEL: G32
Author-Name: Douglas W. Diamond
Author-Person: pdi80
Author-Name: Zhiguo He
Author-Person: phe657
Note: CF
Number: 18160
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18160
File-URL: http://www.nber.org/papers/w18160.pdf
File-Format: application/pdf
Publication-Status: published as Douglas W. Diamond & Zhiguo He, 2014. "A Theory of Debt Maturity: The Long and Short of Debt Overhang," Journal of Finance, American Finance Association, vol. 69(2), pages 719-762, 04.
Abstract: Debt maturity influences debt overhang: the reduced incentive for highly- levered borrowers to make real investments because some value accrues to debt. Reducing maturity can increase or decrease overhang even when shorter-term debt's value depends less on firm value. Future overhang is more volatile for shorter-term debt, making future investment incentives volatile and influencing immediate investment incentives. With immediate investment, shorter-term debt typically imposes lower overhang; longer-term debt can impose less if firm value is more volatile in bad times. For future investments, reduced correlation between the value of assets-in-place and profitability of investment increases the overhang of shorter-term debt.
Handle: RePEc:nbr:nberwo:18160
Template-Type: ReDIF-Paper 1.0
Title: The Aftermath of Accelerating Algebra: Evidence from a District Policy Initiative
Classification-JEL: I21; J24
Author-Name: Charles T. Clotfelter
Author-Person: pcl34
Author-Name: Helen F. Ladd
Author-Person: pla158
Author-Name: Jacob L. Vigdor
Author-Person: pvi23
Note: ED
Number: 18161
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18161
File-URL: http://www.nber.org/papers/w18161.pdf
File-Format: application/pdf
Publication-Status: published as Charles T. Clotfelter & Helen F. Ladd & Jacob L. Vigdor, 2015. "The Aftermath of Accelerating Algebra: Evidence from District Policy Initiatives," Journal of Human Resources, vol 50(1), pages 159-188.
Abstract: In 2002/03, the Charlotte-Mecklenburg Schools in North Carolina initiated a broad program of accelerating entry into algebra coursework. The proportion of moderately-performing students taking algebra in 8th grade increased from half to 85%, then reverted to baseline levels, in the span of just five years. We use this policy-induced variation to infer the impact of accelerated entry into algebra on student performance in math courses as students progress through high school. Students affected by the acceleration initiative scored significantly lower on end-of-course tests in Algebra I, and were either significantly less likely or no more likely to pass standard follow-up courses, Geometry and Algebra II, on a college-preparatory timetable. Although we also find that the district assigned teachers with weaker qualifications to Algebra I classes in the first year of the acceleration, this reduction in teacher quality accounts for only a small portion of the overall effect.
Handle: RePEc:nbr:nberwo:18161
Template-Type: ReDIF-Paper 1.0
Title: The European Origins of Economic Development
Classification-JEL: N10; O1; O4
Author-Name: William Easterly
Author-Person: pea1
Author-Name: Ross Levine
Author-Person: ple61
Note: EFG POL
Number: 18162
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18162
File-URL: http://www.nber.org/papers/w18162.pdf
File-Format: application/pdf
Publication-Status: published as William Easterly & Ross Levine, 2016. "The European origins of economic development," Journal of Economic Growth, Springer, vol. 21(3), pages 225-257, September.
Abstract: Although a large literature argues that European settlement outside of Europe shaped institutional, educational, technological, cultural, and economic outcomes, researchers have been unable to directly assess these predictions because of an absence of data on colonial European settlement. In this paper, we construct a new database on the European share of the population during colonization and examine its association with the level of economic development today. We find: (1) a strong and uniformly positive relationship between colonial European settlement and development, (2) a stronger relationship between colonial European settlement and economic development today than between development today and the proportion of the population of European descent today; and (3) no evidence that the positive relationship between colonial European settlement and economic development diminishes or becomes negative at very low levels of colonial European settlement, contradicting a large literature that focuses on the enduring adverse effects of small European settlements creating extractive institutions. The most plausible explanation of our findings is that any adverse effect of extractive institutions associated with minority European settlement was more than offset by other things the European settlers brought with them, such as human capital and technology.
Handle: RePEc:nbr:nberwo:18162
Template-Type: ReDIF-Paper 1.0
Title: Organizing the Global Value Chain
Classification-JEL: D21; D23; D57; F12; F23; L22; L23
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: Davin Chor
Author-Person: pch787
Note: IO ITI
Number: 18163
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18163
File-URL: http://www.nber.org/papers/w18163.pdf
File-Format: application/pdf
Publication-Status: published as Pol Antràs & Davin Chor, 2013. "Organizing the Global Value Chain," Econometrica, Econometric Society, vol. 81(6), pages 2127-2204, November.
Abstract: We develop a property-rights model of the firm in which production entails a continuum of uniquely sequenced stages. In each stage, a final-good producer contracts with a distinct supplier for the procurement of a customized stage-specific component. Our model yields a sharp characterization for the optimal allocation of ownership rights along the value chain. We show that the incentive to integrate suppliers varies systematically with the relative position (upstream versus downstream) at which the supplier enters the production line. Furthermore, the nature of the relationship between integration and "downstreamness" depends crucially on the elasticity of demand faced by the final-good producer. Our model readily accommodates various sources of asymmetry across final-good producers and across suppliers within a production line, and we show how it can be taken to the data with international trade statistics. Combining data from the U.S. Census Bureau's Related Party Trade database and estimates of U.S. import demand elasticities from Broda and Weinstein (2006), we find empirical evidence broadly supportive of our key predictions. In the process, we develop two novel measures of the average position of an industry in the value chain, which we construct using U.S. Input-Output Tables.
Handle: RePEc:nbr:nberwo:18163
Template-Type: ReDIF-Paper 1.0
Title: Do Newspapers Serve the State? Incumbent Party Influence on the US Press, 1869-1928
Classification-JEL: D72; L82; N41
Author-Name: Matthew Gentzkow
Author-Person: pge43
Author-Name: Nathan Petek
Author-Name: Jesse M. Shapiro
Author-Person: psh70
Author-Name: Michael Sinkinson
Note: DAE POL
Number: 18164
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18164
File-URL: http://www.nber.org/papers/w18164.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Gentzkow & Nathan Petek & Jesse M. Shapiro & Michael Sinkinson, 2015. "Do Newspapers Serve The State? Incumbent Party Influence On The Us Press, 1869–1928," Journal of the European Economic Association, European Economic Association, vol. 13(1), pages 29-61, 02.
Abstract: Using data from 1869 to 1928, we estimate the effect of party control of state governments on the entry, exit, circulation, prices, number of pages, and content of Republican and Democratic daily newspapers. We exploit changes over time in party control of the governorship and state legislatures in a differences-in-differences design. We exploit close gubernatorial elections and state legislatures with small majorities in a parallel regression-discontinuity design. Neither method reveals evidence that the party in power affects the partisan composition of the press. Our confidence intervals rule out modest effects, and we find little evidence of incumbent party influence even in times and places with high political stakes or low commercial stakes. The one exception is the Reconstruction South, an episode that we discuss in detail.
Handle: RePEc:nbr:nberwo:18164
Template-Type: ReDIF-Paper 1.0
Title: The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance
Classification-JEL: C9; C93; H75; I20
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: John A. List
Author-Person: pli176
Author-Name: Susanne Neckermann
Author-Name: Sally Sadoff
Note: ED PE
Number: 18165
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18165
File-URL: http://www.nber.org/papers/w18165.pdf
File-Format: application/pdf
Publication-Status: published as Steven D. Levitt & John A. List & Susanne Neckermann & Sally Sadoff, 2016. "The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 183-219, November.
Abstract: Research on behavioral economics has established the importance of factors such as reference dependent preferences, hyperbolic discounting, and the value placed on non-financial rewards. To date, these insights have had little impact on the way the educational system operates. Through a series of field experiments involving thousands of primary and secondary school students, we demonstrate the power of behavioral economics to influence educational performance. Several insights emerge. First, we find substantial incentive effects from both financial and non-financial incentives on test scores. Second, we find that non-financial incentives are considerably more cost-effective than financial incentives for younger students, but were less effective with older students. Third, and perhaps most importantly, consistent with hyperbolic discounting, all motivating power of the incentives vanishes when rewards are handed out with a delay. Since the rewards to educational investment virtually always come with a delay, our results suggest that the current set of incentives may lead to underinvestment. Fourth, in stark contrast to previous laboratory experiments, we do not see an increased response of effort when rewards are framed as losses. Our findings imply that in the absence of immediate incentives, many students put forth low effort on standardized tests, which may create biases in measures of student ability, teacher value added, school quality, and achievement gaps.
Handle: RePEc:nbr:nberwo:18165
Template-Type: ReDIF-Paper 1.0
Title: Plan Selection in Medicare Part D: Evidence from Administrative Data
Classification-JEL: C25; D12; H51; I11; I18
Author-Name: Florian Heiss
Author-Person: phe378
Author-Name: Adam Leive
Author-Person: ple1011
Author-Name: Daniel McFadden
Author-Name: Joachim Winter
Author-Person: pwi1
Note: AG EH
Number: 18166
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18166
File-URL: http://www.nber.org/papers/w18166.pdf
File-Format: application/pdf
Publication-Status: published as Heiss, Florian & Leive, Adam & McFadden, Daniel & Winter, Joachim, 2013. "Plan selection in Medicare Part D: Evidence from administrative data," Journal of Health Economics, Elsevier, vol. 32(6), pages 1325-1344.
Abstract: We study the Medicare Part D prescription drug insurance program as a bellwether for designs of private, non-mandatory health insurance markets, focusing on the ability of consumers to evaluate and optimize their choices of plans. Our analysis of administrative data on medical claims in Medicare Part D suggests that less than 10 percent of individuals enroll in plans that are ex post optimal with respect to total cost (premiums and co-payments). Relative to the benchmark of a static decision rule, similar to the Plan Finder provided by the Medicare administration, that conditions next year's plan choice only on the drugs consumed in the current year, enrollees lost on average about $300 per year. These numbers are hard to reconcile with decision costs alone; it appears that unless a sizeable fraction of consumers value plan features other than cost, they are not optimizing effectively.
Handle: RePEc:nbr:nberwo:18166
Template-Type: ReDIF-Paper 1.0
Title: Collective Intelligence and Neutral Point of View: The Case of Wikipedia
Classification-JEL: L17; L3; L86
Author-Name: Shane Greenstein
Author-Person: pgr134
Author-Name: Feng Zhu
Author-Person: pzh106
Note: IO PR
Number: 18167
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18167
File-URL: http://www.nber.org/papers/w18167.pdf
File-Format: application/pdf
Abstract: We examine whether collective intelligence helps achieve a neutral point of view using data from a decade of Wikipedia's articles on US politics. Our null hypothesis builds on Linus' Law, often expressed as "Given enough eyeballs, all bugs are shallow." Our findings are consistent with a narrow interpretation of Linus' Law, namely, a greater number of contributors to an article makes an article more neutral. No evidence supports a broad interpretation of Linus' Law. Moreover, several empirical facts suggest the law does not shape many articles. The majority of articles receive little attention, and most articles change only mildly from their initial slant.
Handle: RePEc:nbr:nberwo:18167
Template-Type: ReDIF-Paper 1.0
Title: Unobserved Heterogeneity in Matching Games with an Application to Venture Capital
Classification-JEL: C35; C78; J12; L0
Author-Name: Jeremy T. Fox
Author-Person: pfo144
Author-Name: David H. Hsu
Author-Name: Chenyu Yang
Note: IO LS TWP
Number: 18168
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18168
File-URL: http://www.nber.org/papers/w18168.pdf
File-Format: application/pdf
Abstract: Agents in two-sided matching games vary in characteristics that are unobservable in typical data on matching markets. We investigate the identification of the distribution of unobserved characteristics using data on who matches with whom. In full generality, we consider many-to-many matching and matching with trades. The distribution of match-specific unobservables cannot be fully recovered without information on unmatched agents, but the distribution of a combination of unobservables, which we call unobserved complementarities, can be identified. Using data on unmatched agents restores identification. We estimate the contribution of observables and unobservable complementarities to match production in venture capital investments in biotechnology and medical firms.
Handle: RePEc:nbr:nberwo:18168
Template-Type: ReDIF-Paper 1.0
Title: Tail Risk in Momentum Strategy Returns
Classification-JEL: G01; G11; G12; G13; G14
Author-Name: Kent Daniel
Author-Name: Ravi Jagannathan
Author-Person: pja91
Author-Name: Soohun Kim
Note: AP
Number: 18169
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18169
File-URL: http://www.nber.org/papers/w18169.pdf
File-Format: application/pdf
Abstract: Momentum strategies exhibit rare but dramatic losses (crashes), which we show are a result of the leverage dynamics of stocks in the momentum portfolio. When the economy is in a hidden turbulent state associated with a depressed and volatile stock market, the short-side of the momentum portfolio becomes highly levered, and behaves like a call option on the market index portfolio, making momentum crashes more likely. We develop a hidden Markov model of the unobserved turbulent state that affects the returns on the momentum strategy and the market index portfolios. We find that the use of a combination of Normal and Student-t distributions for the hidden residuals in the model to construct the likelihood of the realized momentum and market index returns dramatically improves the models ability to predict crashes. The same variable that forecasts momentum crashes also forecasts the correlation between momentum strategy and value strategy, two of the benchmark investment styles often used in performance appraisal of quant portfolio managers. The correlation is conditionally negative only when the probability of the economy being in a turbulent state is high. The conditional correlation is zero otherwise, which is two thirds of the time. Half of the negative value-momentum relation is due to leverage dynamics of stocks in the momentum strategy portfolio. The other half is due to a hidden risk factor, likely related to funding liquidity identified in Asness et al. (2013), which emerges only when the economy is more likely to be in the turbulent state.
Handle: RePEc:nbr:nberwo:18169
Template-Type: ReDIF-Paper 1.0
Title: Innocent Bystanders? Monetary Policy and Inequality in the U.S.
Classification-JEL: E2; E3; E4; E5
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Lorenz Kueng
Author-Person: pku506
Author-Name: John Silvia
Note: EFG IFM ME
Number: 18170
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18170
File-URL: http://www.nber.org/papers/w18170.pdf
File-Format: application/pdf
Abstract: We study the effects and historical contribution of monetary policy shocks to consumption and income inequality in the United States since 1980. Contractionary monetary policy actions systematically increase inequality in labor earnings, total income, consumption and total expenditures. Furthermore, monetary shocks can account for a significant component of the historical cyclical variation in income and consumption inequality. Using detailed micro-level data on income and consumption, we document the different channels via which monetary policy shocks affect inequality, as well as how these channels depend on the nature of the change in monetary policy.
Handle: RePEc:nbr:nberwo:18170
Template-Type: ReDIF-Paper 1.0
Title: An Alternative Framework for Empirically Measuring the Size of Counterfeit Markets
Classification-JEL: H32; K42
Author-Name: Rosalie Liccardo Pacula
Author-Person: ppa1299
Author-Name: Srikanth Kadiyala
Author-Name: Priscillia Hunt
Author-Person: phu152
Author-Name: Alessandro Malchiodi
Note: PE
Number: 18171
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18171
File-URL: http://www.nber.org/papers/w18171.pdf
File-Format: application/pdf
Abstract: This paper develops a new method for estimating trends in the size of counterfeit markets. The method draws on principles of microeconomic theory and uses aggregated product-level data to estimate counterfeiting activities in various geographic markets. Using confidential firm unit forecasts and actual sales information, a two stage approach is employed that first accounts for unexpected but observable factors that could lead to forecasting error and then, in the second stage, considers the influence of market susceptibility to IPR infringement. Data are analysed for 45 related products sold by a single firm operating in 16 countries during the period 2006-2011. Our models predict larger amounts of counterfeiting in countries with higher corruption norms, lower government control and effectiveness. Predictions of the level of counterfeiting obtained from the second stage are then compared to estimates of counterfeiting derived internally by the firm using shadow-shopping methods. While our two stage model generally under-predicts the level of counterfeiting in each year, it generates trends in counterfeiting that are broadly consistent with those obtained using more costly and intensive methods.
Handle: RePEc:nbr:nberwo:18171
Template-Type: ReDIF-Paper 1.0
Title: Moral Hazard and Claims Deterrence in Private Disability Insurance
Classification-JEL: H55; I13; J32
Author-Name: David Autor
Author-Person: pau9
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Jonathan Gruber
Author-Person: pgr20
Note: AG EH LS PE
Number: 18172
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18172
File-URL: http://www.nber.org/papers/w18172.pdf
File-Format: application/pdf
Publication-Status: published as David Autor & Mark Duggan & Jonathan Gruber, 2014. "Moral Hazard and Claims Deterrence in Private Disability Insurance," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 110-41, October.
Abstract: We provide a detailed analysis of the incidence, duration and determinants of claims made on private Long Term Disability (LTD) policies using a database of approximately 10,000 policies and 1 million workers from a major LTD insurer. We document that LTD claims rates are much lower than claims rates on the public analogue to LTD, the Social Security Disability Insurance program, yet LTD policies have a much higher return-to-work rate among initial claimants. Nevertheless, our analysis indicates that the impact of moral hazard on LTD claims is substantial. Using within firm, over time variation in plan parameters, we find that a higher replacement rate and a shorter waiting time to benefits receipt--also known as the Elimination Period or EP--significantly increase the likelihood that workers claim LTD. About sixty percent of the effect of a longer EP is due to censoring of shorter claims, while the remainder is due to deterrence: workers facing a longer EP are less likely to claim benefits for impairments that would lead to a only a brief period of LTD receipt. This deterrence effect is equally large among high and low-income workers, suggesting that moral hazard rather than liquidity underlies the behavioral response. Consistent with this interpretation, the response of LTD claims to plan parameters is driven primarily by the behavior of the healthiest disabled, those who would return to work after receiving LTD.
Handle: RePEc:nbr:nberwo:18172
Template-Type: ReDIF-Paper 1.0
Title: Competition Among University Endowments
Classification-JEL: D4; G2
Author-Name: William N. Goetzmann
Author-Person: pgo59
Author-Name: Sharon Oster
Note: AP
Number: 18173
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18173
File-URL: http://www.nber.org/papers/w18173.pdf
File-Format: application/pdf
Publication-Status: published as Competition among University Endowments, William N. Goetzmann, Sharon Oster. in How the Financial Crisis and Great Recession Affected Higher Education, Brown and Hoxby. 2015
Abstract: The asset allocation of university endowments has recently shifted dramatically towards alternative investments. In this paper we examine the role played by strategic competition in motivating this shift. Using a metric capturing competition for undergraduate applications, we test whether endowment performance relative to a school's nearest competitor is associated with the likelihood of changing investment policy, and conditionally, whether the nature of that change is consistent with the goal of "catching up" to its closest rival. Conditional on indicating a policy change, we find that endowments appear to use marketable alternatives - i.e. hedge funds - to catch up to competitors. More generally, we find evidence that endowments with below median holdings of alternative investments tend to shift policies in that direction. Besides herding behavior we also find trend-chasing behavior. Endowments with recent positive experience with various alternative asset classes tend to increase exposure to them. We consider the long-run implications of this competitive and trending behavior for the ability of endowments to deliver intergenerational equity.
Handle: RePEc:nbr:nberwo:18173
Template-Type: ReDIF-Paper 1.0
Title: Money Doctors
Classification-JEL: G11; G23
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: 18174
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18174
File-URL: http://www.nber.org/papers/w18174.pdf
File-Format: application/pdf
Publication-Status: published as Nicola Gennaioli & Andrei Shleifer & Robert Vishny, 2015. "Money Doctors," Journal of Finance, American Finance Association, vol. 70(1), pages 91-114, 02.
Abstract: We present a new model of money management, in which investors delegate portfolio management to professionals based not only on performance, but also on trust. Trust in the manager reduces an investor's perception of the riskiness of a given investment, and allows managers to charge higher fees to investors who trust them more. Money managers compete for investor funds by setting their fees, but because of trust the fees do not fall to costs. In the model, 1) managers consistently underperform the market net of fees but investors still prefer to delegate money management to taking risk on their own, 2) fees involve sharing of expected returns between managers and investors, with higher fees in riskier products, 3) managers pander to investors when investors exhibit biases in their beliefs, and do not correct misperceptions, and 4) despite long run benefits from better performance, the profits from pandering to trusting investors discourage managers from pursuing contrarian strategies relative to the case with no trust. We show how trust-mediated money management renders arbitrage less effective, and may help destabilize financial markets.
Handle: RePEc:nbr:nberwo:18174
Template-Type: ReDIF-Paper 1.0
Title: Overcoming the Fear of Free Falling: Monetary Policy Graduation in Emerging Markets
Classification-JEL: E52; F41
Author-Name: Carlos A. Vegh
Author-Person: pve34
Author-Name: Guillermo Vuletin
Author-Person: pvu7
Note: IFM
Number: 18175
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18175
File-URL: http://www.nber.org/papers/w18175.pdf
File-Format: application/pdf
Abstract: Developing countries have typically pursued procyclical macroeconomic policies, which tend to amplify the underlying business cycle (the "when-it-rains-it-pours" phenomenon). There is, however, evidence to suggest that about a third of developing countries have shifted from procyclical to countercyclical fiscal policy over the last decade. We show that the same is true of monetary policy: around 35 percent of developing countries have become countercyclical over the last decade. We provide evidence that links procyclical monetary policy in developing countries to what we refer as the "fear of free falling;" that is, the need to raise interest rates in bad times to defend the domestic currency.
Handle: RePEc:nbr:nberwo:18175
Template-Type: ReDIF-Paper 1.0
Title: Income inequality, tax base and sovereign spreads
Classification-JEL: F36; F41; H20
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Note: IFM
Number: 18176
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18176
File-URL: http://www.nber.org/papers/w18176.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Yothin Jinjarak, 2012. "Income Inequality, Tax Base and Sovereign Spreads," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(4), pages 431-444, December.
Abstract: This paper investigates the association between greater income inequality, de-facto fiscal space, and sovereign spreads. Using data from 50 countries in 2007, 2009 and 2011, we find that higher income inequality is associated with a lower tax base, lower de-facto fiscal space, and higher sovereign spreads. The economic magnitude of these effects is large: at the margin, a one point of the Gini coefficient of inequality (in a scale of 0-100), is associated in 2011 with a lower tax base of 2 percent of the GDP, and with a higher sovereign spread of 45 basis points.
Handle: RePEc:nbr:nberwo:18176
Template-Type: ReDIF-Paper 1.0
Title: Finding Eldorado: Slavery and Long-run Development in Colombia
Classification-JEL: H41; N96; O10; O54
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Camilo García-Jimeno
Author-Name: James A. Robinson
Author-Person: pro179
Note: EFG LE POL
Number: 18177
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18177
File-URL: http://www.nber.org/papers/w18177.pdf
File-Format: application/pdf
Publication-Status: published as Acemoglu, Daron & GarcÃa-Jimeno, Camilo & Robinson, James A., 2012. "Finding Eldorado: Slavery and long-run development in Colombia," Journal of Comparative Economics, Elsevier, vol. 40(4), pages 534-564.
Abstract: Slavery has been a major institution of labor coercion throughout history. Colonial societies used slavery intensively across the Americas, and slavery remained prevalent in most countries after independence from the European powers. We investigate the impact of slavery on long-run development in Colombia. Our identification strategy compares municipalities that had gold mines during the 17th and 18th centuries to neighboring municipalities without gold mines. Gold mining was a major source of demand for slave labor during colonial times, and all colonial gold mines are now depleted. We find that the historical presence of slavery is associated with increased poverty and reduced school enrollment, vaccination coverage and public good provision. We also find that slavery is associated with higher contemporary land inequality.
Handle: RePEc:nbr:nberwo:18177
Template-Type: ReDIF-Paper 1.0
Title: Robust Comparative Statics in Large Dynamic Economies
Classification-JEL: C61; D90; E21
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Martin Kaae Jensen
Author-Person: pje17
Note: EFG IO ME
Number: 18178
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18178
File-URL: http://www.nber.org/papers/w18178.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Martin Kaae Jensen, 2015. "Robust Comparative Statics in Large Dynamic Economies," Journal of Political Economy, University of Chicago Press, vol. 123(3), pages 587 - 640.
Abstract: We consider infinite horizon economies populated by a continuum of agents who are subject to idiosyncratic shocks. This framework contains models of saving and capital accumulation with incomplete markets in the spirit of works by Bewley, Aiyagari, and Huggett, and models of entry, exit and industry dynamics in the spirit of Hopenhayn's work as special cases. Robust and easy-to-apply comparative statics results are established with respect to exogenous parameters as well as various kinds of changes in the Markov processes governing the law of motion of the idiosyncratic shocks. These results complement the existing literature which uses simulations and numerical analysis to study this class of models and are illustrated using a number of examples.
Handle: RePEc:nbr:nberwo:18178
Template-Type: ReDIF-Paper 1.0
Title: Innovating Standards Through Informal Consortia: The Case of Wireless Telecommunications
Classification-JEL: D23; L15; L23; L24
Author-Name: Henry R. Delcamp
Author-Person: pde596
Author-Name: Aija Leiponen
Note: IO PR
Number: 18179
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18179
File-URL: http://www.nber.org/papers/w18179.pdf
File-Format: application/pdf
Publication-Status: published as Innovating Standards through Informal Consortia: The Case of Wireless Telecommunications, Henry Delcamp, Aija Leiponen. in Standards, Patents and Innovations, Simcoe, Agrawal, and Graham. 2014
Publication-Status: published as Delcamp, Henry & Leiponen, Aija, 2014. "Innovating standards through informal consortia: The case of wireless telecommunications," International Journal of Industrial Organization, Elsevier, vol. 36(C), pages 36-47.
Abstract: We empirically examine the effects of industry consortia on the coordination of innovation strategies of the members. Our analyses utilize membership data from 32 consortia in wireless telecommunication technology subfields from 2000 to 2005 and prior art citations in standards-essential patents. We find that connections among firms in informal technically-oriented consortia significantly increase the likelihood that firms cite each other's patents in subsequent patents essential for the UMTS wireless telecommunication standard. Inventions that are likely to become part of the UMTS telecommunication system tend to build on inventions by firm peers who were members in the same consortia, controlling for patent or firm fixed effects, technology class, and other characteristics. Consortia may enhance productivity of invention and increase the incentives to invest in R&D by internalizing potential externalities. They may also enhance efficiency of standardization by facilitating the interaction of committee and market processes. Consortia thus structure and constrain the process of innovating standardized technologies. This is problematic if consortia are not truly accessible for all the relevant parties. Policymakers thus need to balance these effects. For managers, the results show that participation in a variety of technical consortia enables influencing peers' innovation strategies related to compatibility standards.
Handle: RePEc:nbr:nberwo:18179
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Economics and the Demand for Alcohol: Results from the NLSY97
Classification-JEL: D03; I18
Author-Name: Henry Saffer
Author-Person: psa935
Author-Name: Dhaval Dave
Author-Person: pda245
Author-Name: Michael Grossman
Author-Person: pgr107
Note: EH
Number: 18180
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18180
File-URL: http://www.nber.org/papers/w18180.pdf
File-Format: application/pdf
Publication-Status: published as “A Behavioral Economic Model of Alcohol Advertising and Price”, in Health Economics. Volume 25, Issue 7, pages 816–828, July 2016
Abstract: The behavioral economic model presented in this paper argues that the effect of advertising and price differ by past consumption levels. The model predicts that advertising is more effective in reducing consumption at high past consumption levels but less effective at low past consumption levels. Conversely, the model predicts that higher prices are effective in reducing consumption at low past consumption levels but less effective at high past consumption levels. Unlike the models used in most prior studies, this model predicts that the effects of policy on average consumption and on the upper end of the distribution are different. Both FMM and Quantile models were estimated. The results from these regressions show that heavy drinkers are more responsive to advertising and less responsive to price than are moderate drinkers. The empirical evidence also supports the assumption that education is a proxy for self-regulation. The key conclusions are that restrictions on advertising are targeted at heavy drinkers and are an underutilized alcohol control policy. Higher excise taxes on alcohol reduce consumption by moderate drinkers and are of less importance in reducing heavy consumption.
Handle: RePEc:nbr:nberwo:18180
Template-Type: ReDIF-Paper 1.0
Title: Continuous-Time Linear Models
Classification-JEL: C01; C5; C58; E17; G17
Author-Name: John H. Cochrane
Author-Person: pco57
Note: AP EFG
Number: 18181
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18181
File-URL: http://www.nber.org/papers/w18181.pdf
File-Format: application/pdf
Publication-Status: published as John Cochrane, 2011. "Continuous-Time Linear Models," Foundations and Trends® in Finance, vol 6(3), pages 165-219.
Abstract: I translate familiar concepts of discrete-time time-series to contnuous-time equivalent. I cover lag operators, ARMA models, the relation between levels and differences, integration and cointegration, and the Hansen-Sargent prediction formulas.
Handle: RePEc:nbr:nberwo:18181
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Olley-Pakes Productivity Decomposition with Entry and Exit
Classification-JEL: C10; O47
Author-Name: Marc J. Melitz
Author-Person: pme260
Author-Name: Sašo Polanec
Author-Person: ppo75
Note: PR
Number: 18182
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18182
File-URL: http://www.nber.org/papers/w18182.pdf
File-Format: application/pdf
Publication-Status: published as Marc J. Melitz & Sašo Polanec, 2015. "Dynamic Olley-Pakes productivity decomposition with entry and exit," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 362-375, 06.
Abstract: In this paper, we propose an extension of the productivity decomposition method developed by Olley & Pakes (1996). This extension provides an accounting for the contributions of both firm entry and exit to aggregate productivity changes. It breaks down the contribution of surviving firms into a component accounting for changes in the firm-level distribution of productivity and another accounting for market share reallocations among those firms - following the same methodology as the one proposed by Olley & Pakes (1996). We argue that the other decompositions that break-down aggregate productivity changes into these same four components introduce some biases in the measurement of the contributions of entry and exit. We apply our proposed decomposition to the large measured increases of productivity in Slovenian manufacturing during the 1995-2000 period and contrast our results with those of other decompositions. We find that, over a 5-year period, the measurement bias associated with entry and exit is substantial, accounting for up to 10 percentage points of aggregate productivity growth. We also find that market share reallocations among surviving firms played a much more important role in driving aggregate productivity changes.
Handle: RePEc:nbr:nberwo:18182
Template-Type: ReDIF-Paper 1.0
Title: The Effects of School Libraries on Language Skills: Evidence from a Randomized Controlled Trial in India
Classification-JEL: I21; I28; O15
Author-Name: Evan Borkum
Author-Name: Fang He
Author-Name: Leigh L. Linden
Author-Person: pli719
Note: CH ED LS PE
Number: 18183
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18183
File-URL: http://www.nber.org/papers/w18183.pdf
File-Format: application/pdf
Abstract: We conduct a randomized controlled trial of an Indian school library program. Overall, the program had no impact on students' scores on a language skills test administered after 16 months. The estimates are sufficiently precise to rule out effects larger than 0.053 and 0.037 standard deviations, based on the 95 and 90 percent confidence intervals. This finding is robust across individual competencies and subsets of the sample. The method of treatment, however, does seem to matter--physical libraries have no effect, while visiting librarians actually reduce test scores. We find no impact on test scores in other subjects or attendance rates.
Handle: RePEc:nbr:nberwo:18183
Template-Type: ReDIF-Paper 1.0
Title: Measuring Managerial Skill in the Mutual Fund Industry
Classification-JEL: G11; G2; G20; G23
Author-Name: Jonathan B. Berk
Author-Name: Jules H. van Binsbergen
Author-Person: pva668
Note: AP
Number: 18184
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18184
File-URL: http://www.nber.org/papers/w18184.pdf
File-Format: application/pdf
Abstract: Using the dollar-value a mutual fund manager adds as the measure of skill, we find that not only does skill exist (the average mutual fund manager adds about $2 million per year), but this skill is persistent, as far out as 10 years. We further document that investors recognize this skill and reward it by investing more capital with skilled managers. Higher skilled managers are paid more and there is a strong positive correlation between current managerial compensation and future performance.
Handle: RePEc:nbr:nberwo:18184
Template-Type: ReDIF-Paper 1.0
Title: When Educators Are the Learners: Private Contracting by Public Schools
Classification-JEL: H52; I2; L14
Author-Name: Silke J. Forbes
Author-Person: pfo264
Author-Name: Nora E. Gordon
Author-Person: pgo146
Note: ED IO PE
Number: 18185
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18185
File-URL: http://www.nber.org/papers/w18185.pdf
File-Format: application/pdf
Publication-Status: published as Silke Forbes & Nora Gordon, 2012. "When Educators Are the Learners: Private Contracting by Public Schools," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 12(1), pages 31.
Abstract: We investigate decision-making and the potential for social learning among school administrators in the market for school reform consulting services. Specifically, we estimate whether public schools are more likely to choose given Comprehensive School Reform service providers if their "peer" schools--defined by common governance or geography--have performed unusually well with those providers in the past. We find strong evidence that schools tend to contract with providers used by other schools in their own districts in the past, regardless of past performance. In addition, our point estimates are consistent with school administrators using information from peers to choose the plans they perceive to have performed best in the past. Despite choosing a market with an unusually comprehensive data source on contracts between public schools and private firms, our statistical power is sufficiently weak that we cannot reject the absence of social learning.
Handle: RePEc:nbr:nberwo:18185
Template-Type: ReDIF-Paper 1.0
Title: Fragmentation and Trade in Value Added over Four Decades
Classification-JEL: F1
Author-Name: Robert C. Johnson
Author-Person: pjo146
Author-Name: Guillermo Noguera
Author-Person: pno241
Note: ITI
Number: 18186
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18186
File-URL: http://www.nber.org/papers/w18186.pdf
File-Format: application/pdf
Abstract: We combine data on trade, production, and input use to compute the value added content of trade for forty-two countries from 1970 to 2009. For the world, the ratio of value added to gross trade falls by ten to fifteen percentage points, with two-thirds of this decline in the last two decades. Across countries, declines range from zero to twenty-five percentage points, with large declines concentrated among countries undergoing structural transformation. Across bilateral trade partners, declines are larger for nearby partners and partners that adopt regional trade agreements. That is, both policy and non-policy trade costs shape production fragmentation.
Handle: RePEc:nbr:nberwo:18186
Template-Type: ReDIF-Paper 1.0
Title: Stand Your Ground Laws, Homicides, and Injuries
Classification-JEL: I1; K14; K42
Author-Name: Chandler B. McClellan
Author-Person: pmc194
Author-Name: Erdal Tekin
Author-Person: pte12
Note: EH LE
Number: 18187
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18187
File-URL: http://www.nber.org/papers/w18187.pdf
File-Format: application/pdf
Publication-Status: published as Chandler McClellan & Erdal Tekin, 2017. "Stand Your Ground Laws, Homicides, and Injuries," Journal of Human Resources, University of Wisconsin Press, vol. 52(3), pages 621-653.
Abstract: The controversies surrounding gun control policies have recently moved to the forefront of public's attention in the United States and elsewhere. Since 2005, eighteen states in the United States have passed laws extending the right to self-defense with no duty to retreat to any place a person has a legal right to be, and several additional states are debating the adoption of similar legislation. Despite the implications that these laws may have for public safety, there has been little empirical investigation of their impact on crime and victimization. In this paper, we use monthly data from the U.S. Vital Statistics to examine how Stand Your Ground laws affect homicides and firearm injuries. We identify the impact of these laws by exploiting variation in the effective date of these laws across states over time. Our results indicate that Stand Your Ground laws are associated with a significant increase in the number of homicides among whites, especially white males. According to our estimates, between 28 and 33 additional white males are killed each month as a result of these laws. We find no consistent evidence to suggest that these laws increase homicides among blacks. Auxiliary analysis using data from the Supplemental Homicide Reports indicates that our results are not driven by the killings of assailants. We also find that the stand your ground laws are not related to non-homicide deaths, which should not respond to gun laws. Finally, we analyze data from the Health Care Utilization Project to show that these laws are also associated with a significant increase in emergency room visits and hospital discharges related to firearm inflicted injuries. Taken together, these findings raise serious doubts against the argument that Stand Your Ground laws make public safer.
Handle: RePEc:nbr:nberwo:18187
Template-Type: ReDIF-Paper 1.0
Title: A Spatial Knowledge Economy
Classification-JEL: F1; F22; J24; J61; R1
Author-Name: Donald R. Davis
Author-Person: pda33
Author-Name: Jonathan I. Dingel
Author-Person: pdi319
Note: ITI LS
Number: 18188
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18188
File-URL: http://www.nber.org/papers/w18188.pdf
File-Format: application/pdf
Publication-Status: published as Donald R. Davis & Jonathan I. Dingel, 2019. "A Spatial Knowledge Economy," American Economic Review, vol 109(1), pages 153-170.
Abstract: Leading empiricists and theorists of cities have recently argued that the generation and exchange of ideas must play a more central role in the analysis of cities. This paper develops the first system of cities model with costly idea exchange as the agglomeration force. Our model replicates a broad set of established facts about the cross section of cities. It provides the first spatial equilibrium theory of why skill premia are higher in larger cities, how variation in these premia emerges from symmetric fundamentals, and why skilled workers have higher migration rates than unskilled workers when both are fully mobile.
Handle: RePEc:nbr:nberwo:18188
Template-Type: ReDIF-Paper 1.0
Title: The Returns to Education in China: Evidence from the 1986 Compulsory Education Law
Classification-JEL: J31; O15; P52
Author-Name: Hai Fang
Author-Name: Karen N. Eggleston
Author-Person: peg13
Author-Name: John A. Rizzo
Author-Person: pri334
Author-Name: Scott Rozelle
Author-Person: pro707
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: ED LS
Number: 18189
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18189
File-URL: http://www.nber.org/papers/w18189.pdf
File-Format: application/pdf
Abstract: As China transforms from a socialist planned economy to a market-oriented economy, its returns to education are expected to rise to meet those found in middle-income established market economies. This study employs a plausible instrument for education: the China Compulsory Education Law of 1986. We use differences among provinces in the dates of effective implementation of the compulsory education law to show that the law raised overall educational attainment in China by about 0.8 years of schooling. We then use this instrumental variable to control for the endogeneity of education and estimate the returns to an additional year of schooling in 1997-2006. Results imply that the overall returns to education are approximately 20 percent per year on average in contemporary China, fairly consistent with returns found in most industrialized economies. Returns differ among subpopulations; they increase after controlling for endogeneity of education.
Handle: RePEc:nbr:nberwo:18189
Template-Type: ReDIF-Paper 1.0
Title: Is the FHA Creating Sustainable Homeownership?
Classification-JEL: H81
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: Anna Cororaton
Author-Name: Joseph Tracy
Author-Person: ptr23
Note: PE
Number: 18190
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18190
File-URL: http://www.nber.org/papers/w18190.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Caplin & Anna Cororaton & Joseph Tracy, 2015. "Is the FHA Creating Sustainable Homeownership?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(4), pages 957-992, November.
Abstract: We produce first results on the sustainability of homeownership for recent (2007-2009) FHA-insured borrowers. More than 15 percent of these borrowers have already been 90 days or more delinquent, while less than 7 percent have completed their graduation to sustainable homeownership by finally paying off all FHA mortgages. We project that the proportion who have been 90 days or more delinquent will rise above 30 percent within five years, while fewer than 15 percent will have completed their graduation to sustainable homeownership. We show that the FHA uses an outmoded econometric model that leads it to underestimate delinquency risk to borrowers and financial risks to taxpayers. Fannie Mae and Freddie Mac use this same outmoded model. More accurate estimates would serve the cause of transparency and help policy-makers to determine these organizations' appropriate roles in the U.S. housing finance markets of the future.
Handle: RePEc:nbr:nberwo:18190
Template-Type: ReDIF-Paper 1.0
Title: Trade Wedges, Inventories, and International Business Cycles
Classification-JEL: F41; F44
Author-Name: George Alessandria
Author-Person: pal70
Author-Name: Joseph Kaboski
Author-Person: pka175
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Note: EFG IFM ITI
Number: 18191
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18191
File-URL: http://www.nber.org/papers/w18191.pdf
File-Format: application/pdf
Publication-Status: published as Alessandria, George & Kaboski, Joseph & Midrigan, Virgiliu, 2013. "Trade wedges, inventories, and international business cycles," Journal of Monetary Economics, Elsevier, vol. 60(1), pages 1-20.
Abstract: The large, persistent fluctuations in international trade that can not be explained in standard models by changes in expenditures and relative prices are often attributed to trade wedges. We show that these trade wedges can reflect the decisions of importers to change their inventory holdings. We find that a two-country model of international business cycles with an inventory management decision can generate trade flows and wedges consistent with the data. Moreover, matching trade flows alters the international transmission of business cycles. Specifically, real net exports become countercyclical and consumption is less correlated across countries than in standard models. We also show that ignoring inventories as a source of trade wedges substantially overstates the role of trade wedges in business cycle fluctuations.
Handle: RePEc:nbr:nberwo:18191
Template-Type: ReDIF-Paper 1.0
Title: Has Surface Water Quality Improved Since the Clean Water Act?
Classification-JEL: Q50; Q53
Author-Name: V. Kerry Smith
Author-Person: psm143
Author-Name: Carlos Valcarcel Wolloh
Note: EEE
Number: 18192
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18192
File-URL: http://www.nber.org/papers/w18192.pdf
File-Format: application/pdf
Abstract: On the fortieth anniversary of the Clean Water Act this paper reports the first quantitative assessment of the aggregate trends in water quality in the U.S. using a single standard over the years 1975 to 2011. The analysis suggests that fresh water lakes for the nation as a whole are about at the same quality levels as they were in 1975. In short, viewed in the aggregate, nothing has changed. An assessment of the factors influencing the aggregates also suggests that water quality appears to be affected by the business cycle. This result calls into question the simple descriptions of the change in environmental quality with economic growth that are associated with the Environmental Kuznets Curve.
Handle: RePEc:nbr:nberwo:18192
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Trade and Migration on Income
Classification-JEL: E25; F10; F22; O15
Author-Name: Francesc Ortega
Author-Person: por100
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: EFG
Number: 18193
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18193
File-URL: http://www.nber.org/papers/w18193.pdf
File-Format: application/pdf
Publication-Status: published as Ortega, F., Peri, G., 2013. “The Effect of Income and Immigration Policies on International Migration.” Migration Studies, Volume 1, page 1-28; Oxford University Press. DOI: 10.1093/migration/mns004.
Abstract: This paper explores the relationship between openness to trade and to immigration on income per person. To address endogeneity concerns we extend the instrumental-variables strategy first used by Frankel and Romer (1999). We show that distance (geographical and cultural) can be used to build a strong predictor of openness to immigration and to trade. Our instrumental-variables estimates establish a robust, positive effect of openness to immigration on long-run income per capita, using demanding econometric specifications that account for trade openness, the role of institutions, and early development. In contrast the positive effect of trade openness on income is not robust to controlling for the direct effects of geography, providing support for the critique by Rodriguez and Rodrik (2001). We also show that the main effect of migration operates through total factor productivity, consistent with a theory where immigration increases the variety of skills available for production. We provide further evidence in support of this mechanism by showing that the degree of diversity (by origin country) in migration flows has an additional positive effect on income. Finally, we also find that immigration increases (ethnic and linguistic) fractionalization, which are associated to negative effects on income per capita. However, the direct gains from greater skill diversity appear to be larger than the costs arising from increased fractionalization. We do not find evidence of increased income inequality due to openness to immigration or trade.
Handle: RePEc:nbr:nberwo:18193
Template-Type: ReDIF-Paper 1.0
Title: Deep Recessions, Fast Recoveries, and Financial Crises: Evidence from the American Record
Classification-JEL: N1
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Joseph G. Haubrich
Author-Person: pha107
Note: DAE ME
Number: 18194
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18194
File-URL: http://www.nber.org/papers/w18194.pdf
File-Format: application/pdf
Publication-Status: published as Michael D. Bordo & Joseph G. Haubrich, 2017. "DEEP RECESSIONS, FAST RECOVERIES, AND FINANCIAL CRISES: EVIDENCE FROM THE AMERICAN RECORD," Economic Inquiry, vol 55(1), pages 527-541.
Abstract: Do steep recoveries follow deep recessions? Does it matter if a credit crunch or banking panic accompanies the recession? Moreover does it matter if the recession is associated with a housing bust? We look at the American historical experience in an attempt to answer these questions. The answers depend on the definition of a financial crisis and on how much of the recovery is considered. But in general recessions associated with financial crises are generally followed by rapid recoveries. We find three exceptions to this pattern: the recovery from the Great Contraction in the 1930s; the recovery after the recession of the early 1990s and the present recovery. The present recovery is strikingly more tepid than the 1990s. One factor we consider that may explain some of the slowness of this recovery is the moribund nature of residential investment, a variable that is usually a key predictor of recessions and recoveries.
Handle: RePEc:nbr:nberwo:18194
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Options-Implied Inflation Probability Density Functions
Classification-JEL: C22; E31; E44; G12
Author-Name: Yuriy Kitsul
Author-Name: Jonathan H. Wright
Author-Person: pwr25
Note: ME
Number: 18195
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18195
File-URL: http://www.nber.org/papers/w18195.pdf
File-Format: application/pdf
Publication-Status: published as "The Economics of Options-Implied Inflation Probability Density Functions," Journal of Financial Economics, vol. 110, no. 3, pp. 696-711.
Abstract: Recently a market in options based on CPI inflation (inflation caps and floors) has emerged in the US. This paper uses quotes on these derivatives to construct probability densities for inflation. We study how these pdfs respond to news announcements, and find that the implied odds of deflation are sensitive to certain macroeconomic news releases. We compare the option-implied probability densities with those obtained by time series methods, and use this information to construct empirical pricing kernels. The options-implied densities assign considerably more mass to extreme inflation outcomes (either deflation or high inflation) than do their time series counterparts. This yields a U-shaped empirical pricing kernel, with investors having high marginal utility in states of the world characterized by either deflation or high inflation.
Handle: RePEc:nbr:nberwo:18195
Template-Type: ReDIF-Paper 1.0
Title: The Benefits of College Athletic Success: An Application of the Propensity Score Design with Instrumental Variables
Classification-JEL: C23; C26; I20; I23; J24
Author-Name: Michael L. Anderson
Author-Person: pan105
Note: ED LS PE
Number: 18196
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18196
File-URL: http://www.nber.org/papers/w18196.pdf
File-Format: application/pdf
Abstract: Spending on big-time college athletics is often justified on the grounds that athletic success attracts students and raises donations. Testing this claim has proven difficult because success is not randomly assigned. We exploit data on bookmaker spreads to estimate the probability of winning each game for college football teams. We then condition on these probabilities using a propensity score design to estimate the effects of winning on donations, applications, and enrollment. The resulting estimates represent causal effects under the assumption that, conditional on bookmaker spreads, winning is uncorrelated with potential outcomes. Two complications arise in our design. First, team wins evolve dynamically throughout the season. Second, winning a game early in the season reveals that a team is better than anticipated and thus increases expected season wins by more than one-for-one. We address these complications by combining an instrumental variables-type estimator with the propensity score design. We find that winning reduces acceptance rates and increases donations, applications, academic reputation, in-state enrollment, and incoming SAT scores.
Handle: RePEc:nbr:nberwo:18196
Template-Type: ReDIF-Paper 1.0
Title: Impact of Bilingual Education Programs on Limited English Proficient Students and Their Peers: Regression Discontinuity Evidence from Texas
Classification-JEL: I21; J24
Author-Name: Aimee Chin
Author-Person: pch902
Author-Name: N. Meltem Daysal
Author-Person: pda407
Author-Name: Scott A. Imberman
Author-Person: pim24
Note: CH ED LS
Number: 18197
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18197
File-URL: http://www.nber.org/papers/w18197.pdf
File-Format: application/pdf
Publication-Status: published as Chin, Aimee & Daysal, N. Meltem & Imberman, Scott A., 2013. "Impact of bilingual education programs on limited English proficient students and their peers: Regression discontinuity evidence from Texas," Journal of Public Economics, Elsevier, vol. 107(C), pages 63-78.
Abstract: Texas requires a school district to offer bilingual education when its enrollment of limited English proficient (LEP) students in a particular elementary grade and language is twenty or higher. Using school panel data, we find a significant increase in the probability that a district offers bilingual education above this 20-student cutoff. Using this discontinuity as an instrument for district bilingual education provision, we find that bilingual education programs do not significantly impact the standardized test scores of students with Spanish as their home language (comprised primarily of ever-LEP students). However, there are significant positive spillover effects to their non-LEP peers.
Handle: RePEc:nbr:nberwo:18197
Template-Type: ReDIF-Paper 1.0
Title: Peer Effects in Program Participation
Classification-JEL: D62; H23; I38; J13
Author-Name: Gordon B. Dahl
Author-Person: pda455
Author-Name: Katrine V. Løken
Author-Person: plk4
Author-Name: Magne Mogstad
Author-Person: pmo570
Note: CH LS PE
Number: 18198
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18198
File-URL: http://www.nber.org/papers/w18198.pdf
File-Format: application/pdf
Publication-Status: published as Gordon B. Dahl & Katrine V. L?ken & Magne Mogstad, 2014. "Peer Effects in Program Participation," American Economic Review, American Economic Association, vol. 104(7), pages 2049-74, July.
Abstract: The influence of peers could play an important role in the take up of social programs. However, estimating peer effects has proven challenging given the problems of reflection, correlated unobservables, and endogenous group membership. We overcome these identification issues in the context of paid paternity leave in Norway using a regression discontinuity design. In an attempt to promote gender equality, a reform made fathers of children born after April 1, 1993 in Norway eligible for one month of governmental paid paternity leave. Fathers of children born before this cutoff were not eligible. There is a sharp increase in fathers taking paternity leave immediately after the reform, with take up rising from 3% to 35%. While this quasi-random variation changed the cost of paternity leave for some fathers and not others, it did not directly affect the cost for the father's coworkers or brothers. Therefore, any effect on the coworker or brother can be attributed to the influence of the peer father in their network. Our key findings on peer effects are four-fold. First, we find strong evidence for substantial peer effects of program participation in both workplace and family networks. Coworkers and brothers are 11 and 15 percentage points, respectively, more likely to take paternity leave if their peer father was induced to take up leave by the reform. Second, the most likely mechanism is information transmission about costs and benefits, including increased knowledge of how an employer will react. Third, there is essential heterogeneity in the size of the peer effect depending on the strength of ties between peers, highlighting the importance of duration, intensity, and frequency of social interactions. Fourth, the estimated peer effect gets amplified over time, with each subsequent birth exhibiting a snowball effect as the original peer father's influence cascades through a firm. Our findings demonstrate that peer effects can lead to long-run equilibrium participation rates which are substantially higher than would otherwise be expected.
Handle: RePEc:nbr:nberwo:18198
Template-Type: ReDIF-Paper 1.0
Title: Dealing with the Trilemma: Optimal Capital Controls with Fixed Exchange Rates
Classification-JEL: E5; F3; F32; F33; F41; F42
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Ivan Werning
Author-Person: pwe141
Note: EFG IFM ME
Number: 18199
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18199
File-URL: http://www.nber.org/papers/w18199.pdf
File-Format: application/pdf
Abstract: We lay down a standard macroeconomic model of a small open economy with a fixed exchange rate and study optimal capital controls (defined as maximizing the utility of a representative household). We provide sharp analytical and numerical characterizations for a variety of shocks. We find that capital controls are employed to respond to some shocks but not others. They are particularly effective to address risk-premium shocks that affect the interest rate differential foreign investors require in a particular country. We also discuss how the solution depends on the degree of nominal rigidity and the openness of the economy. We show that capital controls may be optimal even if the exchange rate is not fixed in response to risk premium shocks or if wages, in addition to prices, are sticky. Finally, we compare the single country's optimum to a coordinated world solution. Our results show a limited need for coordination. However, the uncoordinated solution features the same capital controls as the coordinated solution.
Handle: RePEc:nbr:nberwo:18199
Template-Type: ReDIF-Paper 1.0
Title: Effects of Federal Policy to Insure Young Adults: Evidence from the 2010 Affordable Care Act Dependent Coverage Mandate
Classification-JEL: I13; I28
Author-Name: Yaa Akosa Antwi
Author-Person: pak139
Author-Name: Asako S. Moriya
Author-Name: Kosali Simon
Author-Person: psi314
Note: CH EH
Number: 18200
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18200
File-URL: http://www.nber.org/papers/w18200.pdf
File-Format: application/pdf
Publication-Status: published as Yaa Akosa Antwi & Asako S. Moriya & Kosali Simon, 2013. "Effects of Federal Policy to Insure Young Adults: Evidence from the 2010 Affordable Care Act's Dependent-Coverage Mandate," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 1-28, November.
Abstract: We study the health insurance and labor market implications of the recent Affordable Care Act (ACA) provision that allows dependents to remain on parental policies until age 26 using data from the Survey of Income and Program Participation (SIPP). Our comparison of outcomes for young adults aged 19-25 with those who are older and younger, before and after the law, shows a high take-up of parental coverage, resulting in substantial reductions in uninsurance and other forms of coverage. We also find preliminary evidence of increased labor market flexibility in the form of reduced work hours.
Handle: RePEc:nbr:nberwo:18200
Template-Type: ReDIF-Paper 1.0
Title: Evaluating Student Outcomes at For-Profit Colleges
Classification-JEL: I23; J3
Author-Name: Kevin Lang
Author-Person: pla83
Author-Name: Russell Weinstein
Author-Person: pwe342
Note: ED LS
Number: 18201
Creation-Date: 2012-06
Order-URL: http://www.nber.org/papers/w18201
File-URL: http://www.nber.org/papers/w18201.pdf
File-Format: application/pdf
Publication-Status: published as Lang, K. and Weinstein, R. "The Wage Effects of Not-For-Profit and For-Profit Certifications: Better Data, Somewhat Different Results," Labor Economics, (October 2013) 230-43
Abstract: Using the Beginning Postsecondary Student Survey, we examine the effect on earnings of obtaining certificates/degrees from for-profit, not-for-profit, and public institutions. Students who enter certificate programs at any type of institution do not gain from earning a certificate. However, among those entering associates degree programs, there are large, statistically significant benefits from obtaining certificates/degrees from public and not-for-profit but not from for-profit institutions. These results are robust to addressing selection into the labor market from college, and into positive earnings from unemployment, using imputation methods and quantile regression along with a maximum likelihood sample selection model.
Handle: RePEc:nbr:nberwo:18201
Template-Type: ReDIF-Paper 1.0
Title: The Need for (long) Chains in Kidney Exchange
Classification-JEL: C78; D02; I11
Author-Name: Itai Ashlagi
Author-Name: David Gamarnik
Author-Name: Michael A. Rees
Author-Name: Alvin E. Roth
Author-Person: pro40
Note: EH
Number: 18202
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18202
File-URL: http://www.nber.org/papers/w18202.pdf
File-Format: application/pdf
Abstract: It has been previously shown that for sufficiently large pools of patient-donor pairs, (almost) efficient kidney exchange can be achieved by using at most 3-way cycles, i.e. by using cycles among no more than 3 patient-donor pairs. However, as kidney exchange has grown in practice, cycles among n>3 pairs have proved useful, and long chains initiated by non-directed, altruistic donors have proven to be very effective. We explore why this is the case, both empirically and theoretically. We provide an analytical model of exchange when there are many highly sensitized patients, and show that large cycles of exchange or long chains can significantly increase efficiency when the opportunities for exchange are sparse. As very large cycles of exchange cannot be used in practice, long non-simultaneous chains initiated by non-directed donors significantly increase efficiency in patient pools of the size and composition that presently exist. Most importantly, long chains benefit highly sensitized patients without harming low-sensitized patients.
Handle: RePEc:nbr:nberwo:18202
Template-Type: ReDIF-Paper 1.0
Title: Managing Licensing in a Market for Technology
Classification-JEL: L2; L24; O32
Author-Name: Ashish Arora
Author-Person: par15
Author-Name: Andrea Fosfuri
Author-Name: Thomas Roende
Note: PR
Number: 18203
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18203
File-URL: http://www.nber.org/papers/w18203.pdf
File-Format: application/pdf
Publication-Status: published as “Managing licensing in a market for technology” (with Andrea Fosfuri and Thomas Roende). May 2013. Management Science. 59(5):1092-1106.
Abstract: Over the last decade, companies have paid greater attention to the management of their intellectual assets. We build a model that helps understand how licensing activity should be organized within large corporations. More specifically, we compare decentralization--where the business unit using the technology makes licensing decisions--to centralized licensing. The business unit has superior information about licensing opportunities but may not have the appropriate incentives because its rewards depend upon product market performance. If licensing is decentralized, the business unit forgoes valuable licensing opportunities since the rewards for licensing are (optimally) weaker than those for product market profits. This distortion is stronger when production-based incentives are more powerful, making centralization more attractive. Growth of technology markets favors centralization and drives higher licensing rates. Our model conforms to the existing evidence that reports heterogeneity across firms in both licensing propensity and organization of licensing.
Handle: RePEc:nbr:nberwo:18203
Template-Type: ReDIF-Paper 1.0
Title: Choosing Size of Government Under Ambiguity: Infrastructure Spending and Income Taxation
Classification-JEL: H11; H21; H54; J22
Author-Name: Charles F. Manski
Author-Person: pma111
Note: PE
Number: 18204
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18204
File-URL: http://www.nber.org/papers/w18204.pdf
File-Format: application/pdf
Publication-Status: published as Charles F. Manski, 2014. "Choosing Size of Government Under Ambiguity: Infrastructure Spending and Income Taxation," Economic Journal, Royal Economic Society, vol. 0(576), pages 359-376, 05.
Abstract: Attempting to shed light on the optimal size of government, economists have analyzed planning problems that specify a set of feasible taxation-spending policies and a social welfare function. The analysis characterizes the optimal policy choice of a planner who knows the welfare achieved by each policy. This paper examines choice of size of government by a planner who has partial knowledge of population preferences and the productivity of spending. This is a problem of decision making under ambiguity. Focusing on income-tax financed public spending for infrastructure that aims to enhance productivity, I examine scenarios where the planner observes the outcome of a status quo policy and uses various decision criteria (expected welfare, maximin, Hurwicz, minimax-regret) to choose policy. The analysis shows that the planner can reasonably choose a wide range of spending levels--thus, a society can rationalize having a small or large government. I conclude that to achieve credible conclusions about the desirable size of government, we need to vastly improve current knowledge of population preferences and the productivity of public spending.
Handle: RePEc:nbr:nberwo:18204
Template-Type: ReDIF-Paper 1.0
Title: The Climate Policy Dilemma
Classification-JEL: D81; Q51; Q54
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Note: EEE
Number: 18205
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18205
File-URL: http://www.nber.org/papers/w18205.pdf
File-Format: application/pdf
Publication-Status: published as Robert S. Pindyck, 2013. "The Climate Policy Dilemma," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(2), pages 219-237, July.
Abstract: Climate policy poses a dilemma for environmental economists. The economic argument for stringent GHG abatement is far from clear. There is disagreement among both climate scientists and economists over the likelihood of alternative climate outcomes, over the nature and extent of the uncertainty over those outcomes, and over the framework that should be used to evaluate potential benefits from GHG abatement, including key policy parameters. I argue that the case for stringent abatement cannot be based on the kinds of modeling exercises that have permeated the literature, but instead must be based on the possibility of a catastrophic outcome. I discuss how an analysis that incorporates such an outcome might be conducted.
Handle: RePEc:nbr:nberwo:18205
Template-Type: ReDIF-Paper 1.0
Title: Income, the Earned Income Tax Credit, and Infant Health
Classification-JEL: H2; H51; I38
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Author-Name: Douglas L. Miller
Author-Person: pmi179
Author-Name: David Simon
Author-Person: psi571
Note: CH EH LS PE
Number: 18206
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18206
File-URL: http://www.nber.org/papers/w18206.pdf
File-Format: application/pdf
Publication-Status: published as Hilary Hoynes & Doug Miller & David Simon, 2015. "Income, the Earned Income Tax Credit, and Infant Health," American Economic Journal: Economic Policy, American Economic Association, vol. 7(1), pages 172-211, February.
Abstract: This paper evaluates the health impact of a central piece in the U.S. safety net for families with children: the Earned Income Tax Credit. Using tax-reform induced variation in the federal EITC, we examine the impact of the credit on infant health outcomes. We find that increased EITC income reduces the incidence of low birth weight and increases mean birth weight. For single low education (<= 12 years) mothers, a policy-induced treatment on the treated increase of $1000 in EITC income is associated with 6.7 to 10.8% reduction in the low birth weight rate, with larger impacts for births to African American mothers. These impacts are evident with difference-in-difference models and event study analyses. Our results suggest that part of the mechanism for this improvement in birth outcomes is the result of more prenatal care and less negative health behaviors (smoking). We find little role for changes in health insurance. We contribute to the literature by establishing that an exogenous increase in income can improve health, and illustrating a health impact of a non-health program. More generally, we demonstrate the potential for positive external benefits of the social safety net.
Handle: RePEc:nbr:nberwo:18206
Template-Type: ReDIF-Paper 1.0
Title: Selection and Market Reallocation: Productivity Gains from Multinational Production
Classification-JEL: F2; O1; O4
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Maggie X. Chen
Author-Person: pch376
Note: IFM ITI
Number: 18207
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18207
File-URL: http://www.nber.org/papers/w18207.pdf
File-Format: application/pdf
Publication-Status: published as Laura Alfaro & Maggie X. Chen, 2018. "Selection and Market Reallocation: Productivity Gains from Multinational Production," American Economic Journal: Economic Policy, vol 10(2), pages 1-38.
Abstract: Assessing the productivity gains from multinational production has been a vital topic of economic research. Positive aggregate productivity gains are often attributed to within-firm productivity improvement; however, an alternative, less emphasized explanation is between-firm selection and market reallocation, whereby competition from multinationals leads to factor reallocation and the survival of only the most productive domestic firms. We investigate the roles of the two different mechanisms in determining the aggregate productivity gains by exploring their distinct predictions on the distributions of domestic firms: within-firm productivity improvement shifts the productivity and the revenue distributions rightward while between-firm selection and market reallocation raise the left truncation of the distributions and shift revenue leftward. Using a rich cross-country firm-level panel dataset, we find significant evidence of both mechanisms, but between-firm selection and market reallocation accounts for the majority of aggregate productivity gains, suggesting that ignoring this channel could lead to substantial bias in understanding the nature of gains from multinational production.
Handle: RePEc:nbr:nberwo:18207
Template-Type: ReDIF-Paper 1.0
Title: Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms
Classification-JEL: G20; G32; G33; J64; M5
Author-Name: Jennifer Brown
Author-Person: pbr796
Author-Name: David A. Matsa
Note: CF LS
Number: 18208
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18208
File-URL: http://www.nber.org/papers/w18208.pdf
File-Format: application/pdf
Publication-Status: published as Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms Jennifer Brown Northwestern University - Kellogg School of Management David A. Matsa Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER) January 24, 2013
Publication-Status: published as JENNIFER BROWN & DAVID A. MATSA, 2016. "Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms," The Journal of Finance, vol 71(2), pages 507-550.
Abstract: We use novel data from a leading online job search platform to examine the impact of corporate distress on firms’ ability to attract job applicants. Survey responses suggest that job seekers accurately perceive firms’ financial condition, as measured by companies’ credit default swap prices and accounting data. Analyzing responses to job postings by major financial firms during the Great Recession, we find that an increase in an employer’s distress results in fewer and lower quality applicants. These effects are particularly evident when the social safety net provides workers with weak protection against unemployment and for positions requiring a college education.
Handle: RePEc:nbr:nberwo:18208
Template-Type: ReDIF-Paper 1.0
Title: Global Banks and Crisis Transmission
Classification-JEL: E32; F15; F36
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Elias Papaioannou
Author-Person: ppa701
Author-Name: Fabrizio Perri
Author-Person: ppe52
Note: IFM
Number: 18209
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18209
File-URL: http://www.nber.org/papers/w18209.pdf
File-Format: application/pdf
Publication-Status: published as Kalemli-Ozcan, Sebnem & Papaioannou, Elias & Perri, Fabrizio, 2013. "Global banks and crisis transmission," Journal of International Economics, Elsevier, vol. 89(2), pages 495-510.
Abstract: We study the effect of financial integration (through banks) on the transmission of international business cycles. In a sample of 20 developed countries between 1978 and 2009 we find that, in periods without financial crises, increases in bilateral banking linkages are associated with more divergent output cycles.This relation is significantly weaker during financial turmoil periods, suggesting that financial crises induce co-movement among more financially integrated countries. We also show that countries with stronger, direct and indirect, financial ties to the U.S. experienced more synchronized cycles with the U.S. during the recent 2007-2009 crisis. We then interpret these findings using a simple general equilibrium model of international business cycles with banks and shocks to banking activity. The model suggests that the relation between integration and synchronization depends on the type of shocks hitting the world economy, and that shocks to global banks played an important role in triggering and spreading the 2007-2009 crisis.
Handle: RePEc:nbr:nberwo:18209
Template-Type: ReDIF-Paper 1.0
Title: When Does It Pay to Delay Social Security? The Impact of Mortality, Interest Rates, and Program Rules
Classification-JEL: D14; H55
Author-Name: John B. Shoven
Author-Name: Sita Nataraj Slavov
Author-Person: pna81
Note: AG
Number: 18210
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18210
File-URL: http://www.nber.org/papers/w18210.pdf
File-Format: application/pdf
Abstract: Social Security benefits may be commenced at any time between ages 62 and 70. As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit to reflect the age at which benefits are claimed. In earlier work (Shoven and Slavov, 2012), we investigated the actuarial fairness of this adjustment for individuals with average life expectancy for their cohort. We found that for current real interest rates, delaying is actuarially advantageous for a large subset of people, particularly for primary earners in married couples. In this paper, we quantify the degree of actuarial advantage or disadvantage for individuals whose mortality differs from the average. We find that at real interest rates close to zero, most households - even those with mortality rates that are twice the average - benefit from some delay, at least for the primary earner. At real interest rates closer to their historical average, however, singles with mortality that is substantially greater than average do not benefit from delay; however, primary earners with high mortality can still improve the present value of the household's benefits through delay. We also investigate the extent to which the actuarial advantage of delay has grown since the early 1960s, when the choice of when to claim first became available, and we decompose this growth into three effects: (1) the effect of changes in Social Security's rules, (2) the effect of changes in the real interest rate, and (3) the effect of changes in life expectancy.
Handle: RePEc:nbr:nberwo:18210
Template-Type: ReDIF-Paper 1.0
Title: Target Revaluation after Failed Takeover Attempts – Cash versus Stock
Classification-JEL: G14; G34; D03; D82
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Author-Name: Marcus Matthias Opp
Author-Person: pop19
Author-Name: Farzad Saidi
Author-Person: psa757
Note: CF
Number: 18211
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18211
File-URL: http://www.nber.org/papers/w18211.pdf
File-Format: application/pdf
Publication-Status: published as Malmendier, Ulrike & Opp, Marcus M. & Saidi, Farzad, 2016. "Target revaluation after failed takeover attempts: Cash versus stock," Journal of Financial Economics, Elsevier, vol. 119(1), pages 92-106.
Abstract: Cash- and stock-financed takeover bids induce strikingly different target revaluations. We exploit detailed data on unsuccessful takeover bids between 1980 and 2008, and show that targets of cash offers are revalued on average by +15% after deal failure, whereas stock targets return to their pre-announcement levels. The differences in revaluation do not revert over longer horizons. We find no evidence that future takeover activities or operational changes explain these differences. While the targets of failed cash and stock offers are both more likely to be acquired over the following 8 years than matched control firms, there are no differences between cash and stock targets, neither in the timing nor in the value of future offers. Similarly, we cannot detect differential operational policies following the failed bid. Our results are most consistent with cash bids revealing prior undervaluation of the target. We reconcile our findings with the opposite conclusion in earlier literature (Bradley, Desai, and Kim, 1983) by identifying a "look-ahead" bias built into their sample construction.
Handle: RePEc:nbr:nberwo:18211
Template-Type: ReDIF-Paper 1.0
Title: Projection Bias in the Car and Housing Markets
Classification-JEL: D03; D12; L62
Author-Name: Meghan R. Busse
Author-Name: Devin G. Pope
Author-Name: Jaren C. Pope
Author-Person: ppo329
Author-Name: Jorge Silva-Risso
Note: IO LS
Number: 18212
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18212
File-URL: http://www.nber.org/papers/w18212.pdf
File-Format: application/pdf
Abstract: Projection bias is the tendency to overpredict the degree to which one's future tastes will resemble one's current tastes. We test for evidence of projection bias in two of the largest and most important consumer markets - the car and housing markets. Using data for more than forty million vehicle transactions and four million housing purchases, we explore the impact of the weather on purchasing decisions. We find that the choice to purchase a convertible, a 4-wheel drive, or a vehicle that is black in color is highly dependent on the weather at the time of purchase in a way that is inconsistent with classical utility theory. Similarly, we find that the hedonic value that a swimming pool and that central air add to a house is higher when the house goes under contract in the summertime compared to the wintertime.
Handle: RePEc:nbr:nberwo:18212
Template-Type: ReDIF-Paper 1.0
Title: Individual Price Adjustment along the Extensive Margin
Classification-JEL: E31; E32
Author-Name: Etienne Gagnon
Author-Person: pga285
Author-Name: David López-Salido
Author-Person: plo26
Author-Name: Nicolas Vincent
Author-Person: pvi316
Note: EFG
Number: 18213
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18213
File-URL: http://www.nber.org/papers/w18213.pdf
File-Format: application/pdf
Publication-Status: published as Individual Price Adjustment along the Extensive Margin, Etienne Gagnon, David López-Salido, Nicolas Vincent. in NBER Macroeconomics Annual 2012, Volume 27, Acemoglu, Parker, and Woodford. 2013
Abstract: Firms employ a rich variety of pricing strategies whose implications for aggregate price dynamics often diverge. This situation poses a challenge for macroeconomists interested in bridging micro and macro price stickiness. In responding to this challenge, we note that differences in macro price stickiness across pricing mechanisms can often be traced back to price changes that are either triggered or cancelled by shocks. We exploit observed micro price behavior to quantify the importance of this margin of adjustment for the response of inflation to shocks. Across a range of empirical exercises, we find strong evidence that changes in the timing of price adjustments contribute significantly to the flexibility of the aggregate price level.
Handle: RePEc:nbr:nberwo:18213
Template-Type: ReDIF-Paper 1.0
Title: Facing the Climate Change Challenge in a Global Economy
Classification-JEL: F18; F55; Q54
Author-Name: Lee G. Branstetter
Author-Person: pbr854
Author-Name: William A. Pizer
Author-Person: ppi108
Note: EEE ITI
Number: 18214
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18214
File-URL: http://www.nber.org/papers/w18214.pdf
File-Format: application/pdf
Publication-Status: published as Facing the Climate Change Challenge in a Global Economy, Lee Branstetter, William Pizer. in Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Feenstra and Taylor. 2014
Abstract: Over the past two decades, the international community has struggled to deal constructively with the problem of mitigating climate change. This is considered by many to be the preeminent public policy challenge of our time, but actual policy responses have been relatively modest. This essay provides an abbreviated narrative history of international policy in this domain, with a special emphasis on aspects of the problem, proposed solutions, and unresolved issues that are of interest to international economists and informed observers of the global economic system. We also discuss the potential conflict that could emerge between free trade principles on the one hand and environmental policy objectives on the other.
Handle: RePEc:nbr:nberwo:18214
Template-Type: ReDIF-Paper 1.0
Title: Determinacy, Learnability, Plausibility, and the Role of Money in New Keynesian Models
Classification-JEL: C61; C62; E37; E47
Author-Name: Bennett T. McCallum
Note: EFG ME
Number: 18215
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18215
File-URL: http://www.nber.org/papers/w18215.pdf
File-Format: application/pdf
Abstract: Recent mainstream monetary policy analysis focuses on rational expectation solutions that are uniquely stable. A number of recent studies have examined the question of whether typical New Keynesian (NK) models, with policy rules that satisfy the Taylor principle, also exhibit solutions with explosive inflation that cannot be ruled out by any transversality condition or any other generally accepted economic principle. This paper contributes to that debate by supporting and developing previous arguments suggesting that such explosive solutions are informationally infeasible. It also critiques prevailing notions of "determinancy" and outlines two alternative approaches to solution selection.
Handle: RePEc:nbr:nberwo:18215
Template-Type: ReDIF-Paper 1.0
Title: Adolescent Depression and Adult Labor Market Outcomes
Classification-JEL: I1; I12; J22; J24
Author-Name: Jason M. Fletcher
Note: CH EH LS
Number: 18216
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18216
File-URL: http://www.nber.org/papers/w18216.pdf
File-Format: application/pdf
Publication-Status: published as Jason Fletcher, 2013. "Adolescent Depression and Adult Labor Market Outcomes," Southern Economic Journal, Southern Economic Association, vol. 80(1), pages 26-49, July.
Abstract: This paper uses recently released data from a national longitudinal sample to present new evidence of the longer term effects of adolescent depression on labor market outcomes. Results suggest reductions in labor force attachment of approximately 5 percentage points and earnings reductions of approximately 20% for individuals with depressive symptoms as an adolescent. These effects are only partially reduced when controlling for channels operating through educational attainment, adult depressive symptoms, or co-occurring illnesses. Further, the unique structure of the data allows for high-school fixed effects as well as suggestive evidence using sibling comparisons, which allows controls for potentially important unobserved heterogeneity. Overall, the results suggest that the links between adolescent depression and labor market outcomes are quite robust and important in magnitude, suggesting that there may be substantial labor market returns to further investments in treatment opportunities during adolescence.
Handle: RePEc:nbr:nberwo:18216
Template-Type: ReDIF-Paper 1.0
Title: Inefficient Investment Waves
Classification-JEL: E22; E32; E61
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Péter Kondor
Author-Person: pko157
Note: CF EFG
Number: 18217
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18217
File-URL: http://www.nber.org/papers/w18217.pdf
File-Format: application/pdf
Publication-Status: published as Zhiguo He & Péter Kondor, 2016. "Inefficient Investment Waves," Econometrica, Econometric Society, vol. 84, pages 735-780, 03.
Abstract: We develop a dynamic model of trading and investment with limited aggregate resources to study investment cycles. Unverifiable idiosyncratic investment opportunities imply market prices to play a role of rent distribution, distorting private investment incentives from a social point of view. This distortion is price-dependent, leading to two-sided inefficient investment cycles--too much investment in booms with high prices and too little in recessions with low prices. Interventions targeting only the underinvestment in recessions might make all agents worse off. We connect our results to both industry specific and aggregate boom-and-bust patterns.
Handle: RePEc:nbr:nberwo:18217
Template-Type: ReDIF-Paper 1.0
Title: Unions in a Frictional Labor Market
Classification-JEL: E02; E24; J51; J64
Author-Name: Per Krusell
Author-Person: pkr102
Author-Name: Leena Rudanko
Author-Person: pru114
Note: EFG LS
Number: 18218
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18218
File-URL: http://www.nber.org/papers/w18218.pdf
File-Format: application/pdf
Publication-Status: published as Per Krusell & Leena Rudanko, 2016. "Unions in a frictional labor market," Journal of Monetary Economics, vol 80, pages 35-50.
Abstract: A labor market with search and matching frictions, where wage setting is controlled by a monopoly union that follows a norm of wage solidarity, is found vulnerable to substantial distortions associated with holdup. With full commitment to future wages, the union achieves efficient hiring in the long run, but hikes up wages in the short run to appropriate rents from firms. Without commitment, in a Markov-perfect equilibrium, hiring is too low both in the short and the long run. The quantitative impact is demonstrated in an extended model with partial union coverage and multi- period union contracting.
Handle: RePEc:nbr:nberwo:18218
Template-Type: ReDIF-Paper 1.0
Title: Optimal Holdings of International Reserves: Self-Insurance against Sudden Stop
Classification-JEL: E42; E58; F15; F31; F32; F33; F41
Author-Name: Guillermo A. Calvo
Author-Person: pca694
Author-Name: Alejandro Izquierdo
Author-Person: piz6
Author-Name: Rudy Loo-Kung
Author-Person: plo100
Note: IFM
Number: 18219
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18219
File-URL: http://www.nber.org/papers/w18219.pdf
File-Format: application/pdf
Publication-Status: published as Guillermo Calvo & Alejandro Izquierdo & Rudy Loo-Kung, 2013. "Optimal Holdings of International Reserves: Self-insurance against Sudden Stops," Monetaria, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 1-35, January-J.
Abstract: This paper addresses the issue of the optimal stock of international reserves in terms of a statistical model in which reserves affect both the probability of a Sudden Stop-as well as associated output costs-by reducing the balance-sheet effects of liability dollarization. Optimal reserves are derived under the assumption that central bankers conservatively choose reserves by balancing the expected cost of a Sudden Stop against the opportunity cost of holding reserves. Results are obtained without using calibration to match observed reserves levels, providing no a priori reason for our concept of optimal reserves to be in line with observed holdings. Remarkably, however, observed reserves on the eve of the global financial crisis were-on average-not distant from optimal reserves as derived in this model, indicating that reserve over-accumulation in Emerging Markets was not obvious. However, heterogeneity prevailed across regions: from a precautionary standpoint, Latin America was closest to model-based optimal levels, while reserves in Eastern Europe lay below optimal levels, and those in Asia lay above. Nonetheless, there are other motives for reserve accumulation: we find that differences between observed reserves and precautionary-motive optimal reserves are partly explained by the perceived presence of a lender of last resort, or characteristics such as being a large oil producer. However, to a first approximation, there is no clear evidence supporting the so-called neo-mercantilist motive for reserve accumulation.
Handle: RePEc:nbr:nberwo:18219
Template-Type: ReDIF-Paper 1.0
Title: Matching Contributions and Savings Outcomes: A Behavioral Economics Perspective
Classification-JEL: D14; D91; G23; H31; J32
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: AG EFG LS PE
Number: 18220
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18220
File-URL: http://www.nber.org/papers/w18220.pdf
File-Format: application/pdf
Publication-Status: published as Matching Contributions and Savings Outcomes: A Behavioral Economics Perspective Authors/Editors: Brigitte C. Madrian Matching Contributions for Pensions Published: October 2012 Pages: 289 - 309 http://dx.doi.org/10.1596/9780821394922_CH15
Abstract: Including a matching contribution increases savings plan participation and contributions, although the impact is less significant than the impact of nonfinancial approaches. Conditional on participation, a higher match rate has only a small effect on savings plan contributions. In contrast, the match threshold has a substantial impact, probably because it serves as a natural reference point when individuals are deciding how much to save and may be viewed as advice from the savings program sponsor on how much to save. Other behavioral approaches to changing savings plan outcomes--including automatic enrollment, simplification, planning aids, reminders, and commitment features--potentially have a much greater impact on savings outcomes than do financial incentives, often at a much lower cost.
Handle: RePEc:nbr:nberwo:18220
Template-Type: ReDIF-Paper 1.0
Title: The Spread of Manufacturing to the Poor Periphery 1870---2007
Classification-JEL: F1; N7; O2
Author-Name: Agustín S. Bénétrix
Author-Person: pbn2
Author-Name: Kevin H. O'Rourke
Author-Person: por7
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 18221
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18221
File-URL: http://www.nber.org/papers/w18221.pdf
File-Format: application/pdf
Publication-Status: published as Agustín Bénétrix & Kevin O’Rourke & Jeffrey Williamson, 2015. "The Spread of Manufacturing to the Poor Periphery 1870–2007," Open Economies Review, Springer, vol. 26(1), pages 1-37, February.
Abstract: This paper documents industrial output growth around the poor periphery (Latin America, the European periphery, the Middle East and North Africa, Asia, and sub-Saharan Africa) between 1870 and 2007. We find that although the roots of rapid peripheral industrialization stretch into the late 19th century, the high point of peripheral industrialization was the 1950-1973 period, which saw widespread import- substituting industrialization. This period was also the high point of unconditional industrial catching up, defined as the tendency of less industrialized countries to post higher per capita manufacturing growth rates, and which occurred between 1920 and 1990.
Handle: RePEc:nbr:nberwo:18221
Template-Type: ReDIF-Paper 1.0
Title: Prediction Markets for Economic Forecasting
Classification-JEL: C53; G14
Author-Name: Erik Snowberg
Author-Person: psn15
Author-Name: Justin Wolfers
Author-Person: pwo9
Author-Name: Eric Zitzewitz
Author-Person: pzi23
Note: AP EFG ME
Number: 18222
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18222
File-URL: http://www.nber.org/papers/w18222.pdf
File-Format: application/pdf
Publication-Status: published as Prediction Markets for Economic Forecasting Handbook of Economic Forecasting, Volume 2, Graham Elliott and Allan Timmermann (eds.), Elsevier (2013). With Justin Wolfers and Eric Zitzewitz.
Abstract: Prediction markets--markets used to forecast future events--have been used to accurately forecast the outcome of political contests, sporting events, and, occasionally, economic outcomes. This chapter summarizes the latest research on prediction markets in order to further their utilization by economic forecasters. We show that prediction markets have a number of attractive features: they quickly incorporate new information, are largely efficient, and impervious to manipulation. Moreover, markets generally exhibit lower statistical errors than professional forecasters and polls. Finally, we show how markets can be used to both uncover the economic model behind forecasts, as well as test existing economic models.
Handle: RePEc:nbr:nberwo:18222
Template-Type: ReDIF-Paper 1.0
Title: Pegs, Downward Wage Rigidity, and Unemployment: The Role of Financial Structure
Classification-JEL: F41
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martín Uribe
Note: IFM
Number: 18223
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18223
File-URL: http://www.nber.org/papers/w18223.pdf
File-Format: application/pdf
Publication-Status: published as “Pegs, Downward Wage Rigidity, and Unemployment: The Role of Financial Structure” (with Stephanie Schmitt-Groh´e), in Capital Mobility and Monetary Policy, edited by Miguel Fuentes D., Claudio E. Raddatz, Carmen M. Reinhart, Central Bank of Chile, Santiago, Chile, 2014, 69-95.
Abstract: This paper studies the relationship between financial structure and the welfare consequences of fixed exchange rate regimes in small open emerging economies with downward nominal wage rigidity. The paper presents two surprising results. First, a pegging economy might be better off with a closed than with an open capital account. Second, the welfare gain from switching from a peg to the optimal (full-employment) monetary policy might be larger in financially open economies than in financially closed ones.
Handle: RePEc:nbr:nberwo:18223
Template-Type: ReDIF-Paper 1.0
Title: Pre-colonial Ethnic Institutions and Contemporary African Development
Classification-JEL: N17; O4; O43; Z1
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Author-Name: Elias Papaioannou
Author-Person: ppa701
Note: EFG POL
Number: 18224
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18224
File-URL: http://www.nber.org/papers/w18224.pdf
File-Format: application/pdf
Publication-Status: published as Stelios Michalopoulos & Elias Papaioannou, 2013. "PreâColonial Ethnic Institutions and Contemporary African Development," Econometrica, Econometric Society, vol. 81(1), pages 113-152, 01.
Abstract: We investigate the role of deeply-rooted pre-colonial ethnic institutions in shaping comparative regional development within African countries. We combine information on the spatial distribution of ethnicities before colonization with regional variation in contemporary economic performance, as proxied by satellite images of light density at night. We document a strong association between pre-colonial ethnic political centralization and regional development. This pattern is not driven by differences in local geographic features or by other observable ethnic-specific cultural and economic variables. The strong positive association between pre-colonial political complexity and contemporary development obtains also within pairs of adjacent ethnic homelands with different legacies of pre-colonial political institutions.
Handle: RePEc:nbr:nberwo:18224
Template-Type: ReDIF-Paper 1.0
Title: How Inflation Affects Macroeconomic Performance: An Agent-Based Computational Investigation
Classification-JEL: C63; E00; E31; E50
Author-Name: Quamrul Ashraf
Author-Name: Boris Gershman
Author-Name: Peter Howitt
Author-Person: pho22
Note: EFG ME
Number: 18225
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18225
File-URL: http://www.nber.org/papers/w18225.pdf
File-Format: application/pdf
Publication-Status: published as Ashraf, Quamrul & Gershman, Boris & Howitt, Peter, 2016. "How Inflation Affects Macroeconomic Performance: An Agent-Based Computational Investigation," Macroeconomic Dynamics, Cambridge University Press, vol. 20(02), pages 558-581, March.
Abstract: We use an agent-based computational approach to show how inflation can worsen macroeconomic performance by disrupting the mechanism of exchange in a decentralized market economy. We find that increasing the trend rate of inflation above 3 percent has a substantial deleterious effect, but lowering it below 3 percent has no significant macroeconomic consequences. Our finding remains qualitatively robust to changes in parameter values and to modifications to our model that partly address the Lucas critique. Finally, we contribute a novel explanation for why cross-country regressions may fail to detect a significant negative effect of trend inflation on output even when such an effect exists in reality.
Handle: RePEc:nbr:nberwo:18225
Template-Type: ReDIF-Paper 1.0
Title: Prevention of Mother-to-Child Transmission of HIV and Reproductive Behavior in Zambia
Classification-JEL: I10; J13
Author-Name: Nicholas Wilson
Author-Person: pwi226
Note: EH
Number: 18226
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18226
File-URL: http://www.nber.org/papers/w18226.pdf
File-Format: application/pdf
Publication-Status: published as Prevention of Mother-to-Child Transmission of HIV and Reproductive Behavior in Zambia, Nicholas Wilson. in African Successes, Volume II: Human Capital, Edwards, Johnson, and Weil. 2016
Abstract: Prevention of mother-to-child transmission of HIV (PMTCT) is the single most effective HIV prevention intervention in practice today. Nonetheless, little reliable empirical evidence exists on the behavioral effects of PMTCT. This paper documents the rapid expansion of access to PMTCT in Zambia during the period 2000-2007 and provides some of the first evidence on the change in reproductive behavior associated with PMTCT scale-up. The results of a primarily descriptive analysis suggest that PMTCT may have generated increases in knowledge about PMTCT and MTCT, large reductions in child mortality and pregnancy rates, and smaller changes in breastfeeding rates. However, additional research is required to address the potential endogeneity of PMTCT availability.
Handle: RePEc:nbr:nberwo:18226
Template-Type: ReDIF-Paper 1.0
Title: Overseas Deployment, Combat Exposure, and Well-Being in the 2010 National Survey of Veterans
Classification-JEL: H56; I1; N42
Author-Name: Ryan D. Edwards
Author-Person: ped20
Note: EH
Number: 18227
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18227
File-URL: http://www.nber.org/papers/w18227.pdf
File-Format: application/pdf
Publication-Status: published as Ryan D. Edwards (2015) "Overseas Deployment, Combat Exposure, and Well-Being in the 2010 National Survey of Veterans," Journal of Human Capital 9(1): 64-93. DOI: 10.1086/680403
Abstract: Recent military engagements in Iraq (OIF) and Afghanistan (OEF) raise questions about the effects on service members of overseas deployment, which can include service in a combat or war zone, exposure to casualties, or both. The 2010 National Survey of Veterans, which asked a broad cross section of living veteran cohorts about deployment to OEF/OIF and combat exposure, provides some new insights into short and long-term relationships between characteristics of military service and outcomes. Analysis of these data suggests that the impacts of deployment and combat on the current socioeconomic well-being of returning OEF/OIF veterans may be relatively small, but the effects of combat exposure on self-reported health and other nonpecuniary indicators of their well-being appear to be negative. Among older veteran cohorts, where there is clearer sorting into treatment and control groups because of strong variation in combat exposure by year of birth, patterns are broadly similar. These results are consistent with a veterans compensation system that replaces lost earnings but does not necessarily compensate for other harms associated with combat exposure such as mental health trauma.
Handle: RePEc:nbr:nberwo:18227
Template-Type: ReDIF-Paper 1.0
Title: Redistributive Taxation in the Roy Model
Classification-JEL: D5; D80; E2; E6; H2; J3; J6
Author-Name: Casey Rothschild
Author-Person: pro404
Author-Name: Florian Scheuer
Author-Person: psc147
Note: EFG LS PE
Number: 18228
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18228
File-URL: http://www.nber.org/papers/w18228.pdf
File-Format: application/pdf
Publication-Status: published as Casey Rothschild, 2013. "Redistributive Taxation in the Roy Model," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 623-668.
Abstract: We consider optimal redistribution in a model where individuals can self-select into one of several possible sectors based on heterogeneity in a multidimensional skill vector. We first show that when the government does not observe the sectoral choice or underlying skills of its citizens, the constrained Pareto frontier can be implemented with a single non-linear income tax. We then characterize this optimal tax schedule. If sectoral inputs are complements, a many-sector model with self-selection leads to optimal income taxes that are less progressive than the corresponding taxes in a standard single-sector model under natural conditions. However, they are more progressive than in canonical multi-sector economies with discrete types and without occupational choice or overlapping sectoral wage distributions.
Handle: RePEc:nbr:nberwo:18228
Template-Type: ReDIF-Paper 1.0
Title: Health and Work at Older Ages: Using Mortality to Assess the Capacity to Work across Countries
Classification-JEL: J14; J26
Author-Name: Kevin S. Milligan
Author-Person: pmi14
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG
Number: 18229
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18229
File-URL: http://www.nber.org/papers/w18229.pdf
File-Format: application/pdf
Publication-Status: published as Kevin Milligan & David A. Wise, 2015. "Health and Work at Older Ages: Using Mortality to Assess the Capacity to Work Across Countries," Journal of Population Ageing, vol 8(1-2), pages 27-50.
Abstract: Health and longevity have increased substantially over the last 50 years, yet the labor force participation of older men has declined in most developed countries. We use mortality as a measure of health to assess the capacity to work at older ages in 12 OECD countries. For a given level of mortality, the employment rates of older workers vary substantially across countries and over time within countries. At each mortality rate in 2007, if American men between the ages of 55 and 69 had worked as much as American men in 1977 they would have worked an additional 3.7 years between ages 55 and 69. That is, men in this age range in 2007 would have had to work 46.8 percent more to work as much as men with the same mortality worked thirty years earlier in 1977. Comparing across countries, at each mortality rate in 2007, to match the work of American men, French men for example would have to work 4.6 years more between the ages 55 to 69 than they actually did work. We also find that there is little relationship across countries between mortality improvements and the change in employment at older ages.
Handle: RePEc:nbr:nberwo:18229
Template-Type: ReDIF-Paper 1.0
Title: Tipping Points and Ambiguity in the Economics of Climate Change
Classification-JEL: C61; D81; D90; Q54
Author-Name: Derek M. Lemoine
Author-Person: ple634
Author-Name: Christian P. Traeger
Author-Person: ptr196
Note: EEE PE
Number: 18230
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18230
File-URL: http://www.nber.org/papers/w18230.pdf
File-Format: application/pdf
Abstract: We model welfare-maximizing policy in an infinite-horizon setting when the probability of a tipping point, the welfare change due to a tipping point, and knowledge about a tipping point's trigger all depend on the policy path. Analytic results demonstrate how optimal policy depends on the ability to affect both the probability of a tipping point and also welfare in a post-threshold world. Simulations with a numerical climate-economy model show that possible tipping points in the climate system increase the optimal near-term carbon tax by up to 45% in base case specifications. The resulting policy paths lower peak warming by up to 0.5°C compared to a model without possible tipping points. Different types of tipping points have qualitatively different effects on policy, demonstrating the importance of explicitly modeling tipping points' effects on system dynamics. Aversion to ambiguity in the threshold's distribution can amplify or dampen the effect of tipping points on optimal policy, but in our numerical model, ambiguity aversion increases the optimal carbon tax.
Handle: RePEc:nbr:nberwo:18230
Template-Type: ReDIF-Paper 1.0
Title: The Long of It: Odds that Investor Sentiment Spuriously Predicts Anomaly Returns
Classification-JEL: C18; G12; G14
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Author-Name: Jianfeng Yu
Author-Name: Yu Yuan
Author-Person: pyu149
Note: AP
Number: 18231
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18231
File-URL: http://www.nber.org/papers/w18231.pdf
File-Format: application/pdf
Publication-Status: published as “The Long of It: Odds That Investor Sentiment Spuriously Predicts Anomaly Returns,” Journal of Financial Economics (2014): 613–619, with Jianfeng Yu and Yu Yuan.
Abstract: Extremely long odds accompany the chance that spurious-regression bias accounts for investor sentiment's observed role in stock-return anomalies. We replace investor sentiment with a simulated persistent series in regressions reported by Stambaugh, Yu and Yuan (2012), who find higher long-short anomaly profits following high sentiment, due entirely to the short leg. Among 200 million simulated regressors, we find none that support those conclusions as strongly as investor sentiment. The key is consistency across anomalies. Obtaining just the predicted signs for the regression coefficients across the 11 anomalies examined in the above study occurs only once for every 43 simulated regressors.
Handle: RePEc:nbr:nberwo:18231
Template-Type: ReDIF-Paper 1.0
Title: Using Differences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings
Classification-JEL: H26; H31
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: John N. Friedman
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: LS PE
Number: 18232
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18232
File-URL: http://www.nber.org/papers/w18232.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & John N. Friedman & Emmanuel Saez, 2013. "Using Differences in Knowledge across Neighborhoods to Uncover the Impacts of the EITC on Earnings," American Economic Review, American Economic Association, vol. 103(7), pages 2683-2721, December.
Abstract: We develop a new method of estimating the impacts of tax policies that uses areas with little knowledge about the policy's marginal incentives as counterfactuals for behavior in the absence of the policy. We apply this method to characterize the impacts of the Earned Income Tax Credit (EITC) on earnings using administrative tax records covering all EITC-eligible filers from 1996-2009. We begin by developing a proxy for local knowledge about the EITC schedule -the degree of "sharp bunching"at the exact income level that maximizes EITC refunds by individuals who report self-employment income. The degree of self-employed sharp bunching varies significantly across geographical areas in a manner consistent with differences in knowledge. For instance, individuals who move to higher-bunching areas start to report incomes closer to the refund-maximizing level themselves, while those who move to lower-bunching areas do not. Using this proxy for knowledge, we compare W-2 wage earnings distributions across neighborhoods to uncover the impact of the EITC on real earnings. Areas with high self-employed sharp bunching (i.e., high knowledge) exhibit more mass in their W-2 wage earnings distributions around the EITC plateau. Using a quasi-experimental design that accounts for unobservable differences across neighborhoods, we find that changes in EITC incentives triggered by the birth of a child lead to larger wage earnings responses in higher bunching neighborhoods. The increase in EITC refunds comes primarily from intensive-margin increases in earnings in the phase-in region rather than reductions in earnings in the phase-out region. The increase in EITC refunds is commensurate to a phase-in earnings elasticity of 0.21 on average across the U.S. and 0.58 in high-knowledge neighborhoods.
Handle: RePEc:nbr:nberwo:18232
Template-Type: ReDIF-Paper 1.0
Title: Are Recessions Good for Your Health Behaviors? Impacts of the Economic Crisis in Iceland
Classification-JEL: I1
Author-Name: Tinna Laufey Ásgeirsdóttir
Author-Name: Hope Corman
Author-Name: Kelly Noonan
Author-Name: Þórhildur Ólafsdóttir
Author-Name: Nancy E. Reichman
Note: EH
Number: 18233
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18233
File-URL: http://www.nber.org/papers/w18233.pdf
File-Format: application/pdf
Publication-Status: published as Ásgeirsdóttir, T., Corman, H., Noonan, K., Ólafsdóttir, Þ., Reichman, N. (2014). "Was the Economic Crisis of 2008 Good for Icelanders? Impact on Health Behaviors." Economics and Human Biology 13: 1– 19,
Publication-Status: published as Pp. 111–157 in David McDaid & Cary L. Cooper (eds.). Wellbeing: A Complete Reference Guide, Vol. V: Economics and Wellbeing. UK: Wiley-Blackwell.
Abstract: This study exploits the October 2008 economic crisis in Iceland to identify the effects of a macroeconomic downturn on a range of health behaviors. Using longitudinal survey data that include pre- and post- reports from the same individuals, we investigate the effects of the crisis on smoking, heavy drinking, dietary behaviors, sleep, and other health behaviors and investigate changes in work hours, real income, wealth, and mental health as potential mediators. We also consider the role of prices in shaping health behaviors and compute participation elasticities for the various behaviors. We find that the crisis led to reductions in all health-compromising behaviors examined and that it led to reductions in certain health-promoting behaviors but increases in others. The individual-level mediators explained some, but not all of the effects. We infer that price increases played a large role in the effects of the crisis on health behaviors.
Handle: RePEc:nbr:nberwo:18233
Template-Type: ReDIF-Paper 1.0
Title: Competition and Ideological Diversity: Historical Evidence from US Newspapers
Classification-JEL: L11; L52; L82
Author-Name: Matthew Gentzkow
Author-Person: pge43
Author-Name: Jesse M. Shapiro
Author-Person: psh70
Author-Name: Michael Sinkinson
Note: DAE IO POL
Number: 18234
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18234
File-URL: http://www.nber.org/papers/w18234.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Gentzkow & Jesse M. Shapiro & Michael Sinkinson, 2014. "Competition and Ideological Diversity: Historical Evidence from US Newspapers," American Economic Review, American Economic Association, vol. 104(10), pages 3073-3114, October.
Abstract: We study the competitive forces that shaped ideological diversity in the US press in the early twentieth century. We find that households preferred like-minded news and that newspapers used their political orientation to differentiate from competitors. We formulate a model of newspaper demand, entry, and political affiliation choice in which newspapers compete for both readers and advertisers. We use a combination of estimation and calibration to identify the model's parameters from novel data on newspaper circulation, costs, and revenues. The estimated model implies that competition enhances ideological diversity, that the market undersupplies diversity, and that optimal competition policy requires accounting for the two-sidedness of the news market.
Handle: RePEc:nbr:nberwo:18234
Template-Type: ReDIF-Paper 1.0
Title: Pharmaceutical Innovation and Longevity Growth in 30 Developing and High-income Countries, 2000-2009
Classification-JEL: I12; J11; O33; O4
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: AG EFG EH PR
Number: 18235
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18235
File-URL: http://www.nber.org/papers/w18235.pdf
File-Format: application/pdf
Publication-Status: published as Health Policy and Technology Volume 3, Issue 1, March 2014, Pages 36–58
Abstract: I examine the impact of pharmaceutical innovation, as measured by the vintage (world launch year) of prescription drugs used, on longevity using longitudinal, country-level data on 30 developing and high-income countries during the period 2000-2009. I control for fixed country and year effects, real per capita income, the unemployment rate, mean years of schooling, the urbanization rate, real per capita health expenditure (public and private), the DPT immunization rate among children ages 12-23 months, HIV prevalence and tuberculosis incidence. The estimates indicate that life expectancy at all ages and survival rates above age 25 increased faster in countries with larger increases in drug vintage (measured in three different ways), ceteris paribus, and that the increase in life expectancy at birth due to the increase in the fraction of drugs consumed that were launched after 1990 was 1.27 years--73% of the actual increase in life expectancy at birth.
Handle: RePEc:nbr:nberwo:18235
Template-Type: ReDIF-Paper 1.0
Title: Back to the Future of Green Powered Economies
Classification-JEL: N0; Q4; Q5
Author-Name: Juan Moreno Cruz
Author-Person: pmo742
Author-Name: M. Scott Taylor
Author-Person: pta60
Note: EEE
Number: 18236
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18236
File-URL: http://www.nber.org/papers/w18236.pdf
File-Format: application/pdf
Abstract: The purpose of this paper is to introduce the concept of power density [Watts/m²] into economics. By introducing an explicit spatial structure into a simple general equilibrium model we are able to show how the power density of available energy resources determines the extent of energy exploitation, the density of urban agglomerations, and the peak level of income per capita. Using a simple Malthusian model to sort population across geographic space we demonstrate how the density of available energy supplies creates density in energy demands by agglomerating economic activity. We label this result the density-creates-density hypothesis and evaluate it using data from pre and post fossil-fuel England from 1086 to 1801.
Handle: RePEc:nbr:nberwo:18236
Template-Type: ReDIF-Paper 1.0
Title: Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment
Classification-JEL: J24
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: John List
Author-Person: pli176
Author-Name: Sally Sadoff
Note: ED LS
Number: 18237
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18237
File-URL: http://www.nber.org/papers/w18237.pdf
File-Format: application/pdf
Abstract: Domestic attempts to use financial incentives for teachers to increase student achievement have been ineffective. In this paper, we demonstrate that exploiting the power of loss aversion--teachers are paid in advance and asked to give back the money if their students do not improve sufficiently--increases math test scores between 0.201 (0.076) and 0.398 (0.129) standard deviations. This is equivalent to increasing teacher quality by more than one standard deviation. A second treatment arm, identical to the loss aversion treatment but implemented in the standard fashion, yields smaller and statistically insignificant results. This suggests it is loss aversion, rather than other features of the design or population sampled, that leads to the stark differences between our findings and past research.
Handle: RePEc:nbr:nberwo:18237
Template-Type: ReDIF-Paper 1.0
Title: The Effect of an Increase in Autism Prevalence on the Demand for Auxiliary Healthcare Workers: Evidence from California
Classification-JEL: I11; J2; J3
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Jose M. Fernandez
Note: EH LS
Number: 18238
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18238
File-URL: http://www.nber.org/papers/w18238.pdf
File-Format: application/pdf
Abstract: Autism is a developmental disorder characterized by impairments in social interaction, communication, and restricted or repetitive behaviors. This previously rare condition has dramatically increased in prevalence from 0.5 in 1000 children during the 1970s to 11.3 in 1000 children in 2008. Using data from the California Department of Developmental Services, we study how changes in the number of autism cases at each of the 21 regional development centers affected local wages and quantity of auxiliary health providers. We focus on this subset of health providers because, unlike physicians and psychologists who can diagnose autism, these workers cannot induce their own demand. If the incidence of autism is increasing independently of other mental disorders, then the demand for auxiliary health providers should increase, leading to higher wages and an increase in the number of these providers over time, else the increase in autism diagnosis is merely displacing other mental disorders. Using wages and provider counts from the American Community Survey, we find a 100% increase in the number of autism cases increases the wage of auxiliary health workers over non-autism health occupations by 8 to 11 percent and the number of providers by 7 to 15 percent the following year. Further, we find that four additional autism cases reduces the number of mild mental retardation cases by one, but is not found to have a statistically significant effect on the level of cerebral palsy or epilepsy.
Handle: RePEc:nbr:nberwo:18238
Template-Type: ReDIF-Paper 1.0
Title: Testing for Racial Prejudice in the Parole Board Release Process: Theory and Evidence
Classification-JEL: J71; K42
Author-Name: Shamena Anwar
Author-Name: Hanming Fang
Author-Person: pfa17
Note: LE PE
Number: 18239
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18239
File-URL: http://www.nber.org/papers/w18239.pdf
File-Format: application/pdf
Publication-Status: published as Shamena Anwar & Hanming Fang, 2015. "Testing for Racial Prejudice in the Parole Board Release Process: Theory and Evidence," The Journal of Legal Studies, University of Chicago Press, vol. 44(1), pages 1 - 37.
Abstract: We develop a model of a Parole Board contemplating whether to grant parole release to a prisoner who has finished serving their minimum sentence. The model implies a simple outcome test for racial prejudice robust to the inframarginality problem. Our test involves running simple regressions of whether a prisoner recidivates on the exposure time to the risk of recidivism and its square, using only the sample of prisoners who are granted parole release strictly between their minimum and maximum sentences and separately by race. If the coefficient estimates on the exposure time term differ by race, then there is evidence of racial prejudice against the racial group with the smaller coefficient estimate. We implement our test for prejudice using data from Pennsylvania from January 1996 to December 31, 2001. Although we find racial differences in time served, we find no evidence for racial prejudice on the part of the Parole Board based on our outcome test.
Handle: RePEc:nbr:nberwo:18239
Template-Type: ReDIF-Paper 1.0
Title: Trade in Intermediate Inputs and Business Cycle Comovement
Classification-JEL: F1; F4
Author-Name: Robert C. Johnson
Author-Person: pjo146
Note: IFM ITI
Number: 18240
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18240
File-URL: http://www.nber.org/papers/w18240.pdf
File-Format: application/pdf
Publication-Status: forthcoming in The American Economic Journal: Macroeconomics
Abstract: Does input trade synchronize business cycles across countries? I incorporate input trade into a dynamic multi-sector model with many countries, calibrate the model to match bilateral input-output data, and estimate trade-comovement regressions in simulated data. With correlated productivity shocks, the model yields high trade- comovement correlations for goods, but near-zero correlations for services and thus low aggregate correlations. With uncorrelated shocks, input trade generates more comovement in gross output than real value added. Goods comovement is higher when (a) the aggregate trade elasticity is low, (b) inputs are more substitutable than final goods, and (c) inputs are substitutable for primary factors.
Handle: RePEc:nbr:nberwo:18240
Template-Type: ReDIF-Paper 1.0
Title: Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment
Classification-JEL: C93; D03; D14; D83; G0; G11; M31
Author-Name: Leonardo Bursztyn
Author-Person: pbu249
Author-Name: Florian Ederer
Author-Person: ped10
Author-Name: Bruno Ferman
Author-Name: Noam Yuchtman
Author-Person: pyu185
Note: AP CF LS
Number: 18241
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18241
File-URL: http://www.nber.org/papers/w18241.pdf
File-Format: application/pdf
Publication-Status: published as “Understanding Mechanisms Underlying Peer Effects: Evidence from a Field Experiment on Financial Decisions” (with Florian Ederer, Bruno Ferman, and Noam Yuchtman) Econometrica, 82(4): 1273-1301 (2014)
Abstract: Using a high-stakes field experiment conducted with a financial brokerage, we implement a novel design to separately identify two channels of social influence in financial decisions, both widely studied theoretically. When someone purchases an asset, his peers may also want to purchase it, both because they learn from his choice ("social learning") and because his possession of the asset directly affects others' utility of owning the same asset ("social utility"). We find that both channels have statistically and economically significant effects on investment decisions. These results can help shed light on the mechanisms underlying herding behavior in financial markets.
Handle: RePEc:nbr:nberwo:18241
Template-Type: ReDIF-Paper 1.0
Title: Dividends as Reference Points: A Behavioral Signaling Approach
Classification-JEL: D03; D82; G35
Author-Name: Malcolm Baker
Author-Person: pba735
Author-Name: Jeffrey Wurgler
Author-Person: pwu8
Note: CF
Number: 18242
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18242
File-URL: http://www.nber.org/papers/w18242.pdf
File-Format: application/pdf
Publication-Status: published as Malcolm Baker & Brock Mendel & Jeffrey Wurgler, 2016. "Dividends as Reference Points: A Behavioral Signaling Approach," Review of Financial Studies, Society for Financial Studies, vol. 29(3), pages 697-738.
Abstract: We outline a dividend signaling approach in which rational managers signal firm strength to investors who are loss averse to reductions in dividends relative to the reference point set by prior dividends. Managers with strong but unobservable cash earnings separate themselves by paying high dividends but retain enough earnings to be likely not to fall short of the same level next period. The model is consistent with several features of the data, including equilibrium dividend policies similar to a Lintner partial-adjustment model; modal dividend changes of zero; stronger market reactions to dividend cuts than increases; relative infrequency and irregularity of repurchases versus dividends; and a core mechanism that does not center on public destruction of value, a notion that managers reject in surveys. Supportive new tests involve nominal levels and changes of dividends per share, announcement effects, and reference point currencies of ADR dividends.
Handle: RePEc:nbr:nberwo:18242
Template-Type: ReDIF-Paper 1.0
Title: Market Size, Division of Labor, and Firm Productivity
Classification-JEL: F10; F12; L22; L25
Author-Name: Thomas Chaney
Author-Person: pch504
Author-Name: Ralph Ossa
Author-Person: pos139
Note: IO ITI
Number: 18243
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18243
File-URL: http://www.nber.org/papers/w18243.pdf
File-Format: application/pdf
Publication-Status: published as Chaney, Thomas & Ossa, Ralph, 2013. "Market size, division of labor, and firm productivity," Journal of International Economics, Elsevier, vol. 90(1), pages 177-180.
Abstract: We generalize Krugman's (1979) 'new trade' model by allowing for an explicit production chain in which a range of tasks is performed sequentially by a number of specialized teams. We demonstrate that an increase in market size induces a deeper division of labor among these teams which leads to an increase in firm productivity. The paper can be thought of as a formalization of Smith's (1776) famous theorem that the division of labor is limited by the extent of the market. It also sheds light on how market size differences can limit the scope for international technology transfers.
Handle: RePEc:nbr:nberwo:18243
Template-Type: ReDIF-Paper 1.0
Title: Urban Public Finance
Classification-JEL: H0; H2; H23; H71
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Note: PE
Number: 18244
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18244
File-URL: http://www.nber.org/papers/w18244.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of Public Economics Volume 5, 2013, Pages 195–256 handbook of public economics, vol. 5
Abstract: America's local governments spend about one-eighth of our national income, one-fourth of total government spending, and employ over 14 million people. This paper surveys the large and growing economics literature on local governments and their finances. A primary difference between local and national government is the ease of labor mobility within countries, which disciplines local governments and means that heterogeneous service levels can be beneficial, but mobility also challenges local attempts at redistribution. The empirical literature on mobility responses to local government is distinguished, but remains a pressing area for future research. We have sophisticated models of local spending, tax policy and institutional design, but research is often far less developed on even basic questions of costs and benefits of core local public services.
Handle: RePEc:nbr:nberwo:18244
Template-Type: ReDIF-Paper 1.0
Title: Really Uncertain Business Cycles
Classification-JEL: E3
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Max Floetotto
Author-Person: pfl72
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Itay Saporta-Eksten
Author-Person: psa1164
Author-Name: Stephen J. Terry
Note: EFG ME PR
Number: 18245
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18245
File-URL: http://www.nber.org/papers/w18245.pdf
File-Format: application/pdf
Publication-Status: published as Nicholas Bloom & Max Floetotto & Nir Jaimovich & Itay Saporta†Eksten & Stephen J. Terry, 2018. "Really Uncertain Business Cycles," Econometrica, Econometric Society, vol. 86(3), pages 1031-1065, May.
Abstract: We propose uncertainty shocks as a new shock that drives business cycles. First, we demonstrate that microeconomic uncertainty is robustly countercyclical, rising sharply during recessions, particularly during the Great Recession of 2007-2009. Second, we quantify the impact of time-varying uncertainty on the economy in a dynamic stochastic general equilibrium model with heterogeneous firms. We find that reasonably calibrated uncertainty shocks can explain drops and rebounds in GDP of around 3%. Moreover, we show that increased uncertainty alters the relative impact of government policies, making them initially less effective and then subsequently more effective.
Handle: RePEc:nbr:nberwo:18245
Template-Type: ReDIF-Paper 1.0
Title: Carry-Along Trade
Classification-JEL: F12; F13; F14; L11
Author-Name: Andrew B. Bernard
Author-Name: Emily J. Blanchard
Author-Person: pbl73
Author-Name: Ilke Van Beveren
Author-Person: pva292
Author-Name: Hylke Y. Vandenbussche
Author-Person: pva87
Note: ITI
Number: 18246
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18246
File-URL: http://www.nber.org/papers/w18246.pdf
File-Format: application/pdf
Publication-Status: published as Andrew B Bernard & Emily J Blanchard & Ilke Van Beveren & Hylke Vandenbussche, 2019. "Carry-Along Trade," The Review of Economic Studies, vol 86(2), pages 526-563.
Abstract: Large multi-product firms dominate international trade flows. This paper documents new facts about multi-product manufacturing exporters that are not easily reconciled with existing multi-product models. Using novel linked production and export data at the firm-product level, we find that the overwhelming majority of manufacturing firms export products that they do not produce. Three quarters of the exported products and thirty percent of export value from Belgian manufacturers are in goods that are not produced by the firm, so-called Carry-Along Trade (CAT). The number of CAT products is strongly increasing in firm productivity while the number of produced products that are exported is weakly increasing in firm productivity. We propose a general model of production and sourcing at multi-product firms. While the baseline model fails to reconcile the relationships between firm productivity and the numbers of exported products observed in the data, several demand and supply-side extensions to the model are more successful. Looking at export price data, we find support for a novel theoretical extension based on demand-scope complementarities.
Handle: RePEc:nbr:nberwo:18246
Template-Type: ReDIF-Paper 1.0
Title: Econometric Analysis of Present Value Models When the Discount Factor Is near One
Classification-JEL: C58; F31; F37; G12; G15; G17
Author-Name: Kenneth D. West
Author-Person: pwe16
Note: AP IFM TWP
Number: 18247
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18247
File-URL: http://www.nber.org/papers/w18247.pdf
File-Format: application/pdf
Publication-Status: published as West, Kenneth D., 2012. "Econometric analysis of present value models when the discount factor is near one," Journal of Econometrics, Elsevier, vol. 171(1), pages 86-97.
Abstract: This paper develops asymptotic econometric theory to help understand data generated by a present value model with a discount factor near one. A leading application is to exchange rate models. A key assumption of the asymptotic theory is that the discount factor approaches 1 as the sample size grows. The finite sample approximation implied by the asymptotic theory is quantitatively congruent with modest departures from random walk behavior with imprecise estimation of a well-studied regression relating spot and forward exchange rates.
Handle: RePEc:nbr:nberwo:18247
Template-Type: ReDIF-Paper 1.0
Title: Mental Accounting and Consumer Choice: Evidence from Commodity Price Shocks
Classification-JEL: D03; D12; L15; Q41
Author-Name: Justine Hastings
Author-Person: pha804
Author-Name: Jesse M. Shapiro
Author-Person: psh70
Note: IO
Number: 18248
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18248
File-URL: http://www.nber.org/papers/w18248.pdf
File-Format: application/pdf
Publication-Status: published as The Quarterly Journal of Economics (2013) 128 (4): 1449-1498. doi: 10.1093/qje/qjt018 First published online: June 22, 2013
Abstract: We formulate a test of the fungibility of money based on parallel shifts in the prices of different quality grades of a commodity. We embed the test in a discrete-choice model of product quality choice and estimate the model using panel microdata on gasoline purchases. We find that when gasoline prices rise consumers substitute to lower octane gasoline, to an extent that cannot be explained by income effects. Across a wide range of specifications, we consistently reject the null hypothesis that households treat "gas money" as fungible with other income. We evaluate the quantitative performance of a set of psychological models of decision-making in explaining the patterns we observe. We also use our findings to shed light on extant stylized facts about the time-series properties of retail markups in gasoline markets.
Handle: RePEc:nbr:nberwo:18248
Template-Type: ReDIF-Paper 1.0
Title: The Determinants of National Competitiveness
Classification-JEL: O12; O47; O5
Author-Name: Mercedes Delgado
Author-Person: pde923
Author-Name: Christian Ketels
Author-Person: pke167
Author-Name: Michael E. Porter
Author-Name: Scott Stern
Note: PR
Number: 18249
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18249
File-URL: http://www.nber.org/papers/w18249.pdf
File-Format: application/pdf
Abstract: We define foundational competitiveness as the expected level of output per working-age individual that is supported by the overall quality of a country as a place to do business. The focus on output per potential worker, a broader measure of national productivity than output per current worker, reflects the dual role of workforce participation and output per worker in determining a nation's standard of living. Our framework highlights three broad and interrelated drivers of foundational competitiveness: social infrastructure and political institutions, monetary and fiscal policy, and the microeconomic environment. We estimate this framework using multiple data sets covering more than 130 countries over the 2001-2008 period. We find a positive and separate influence of each driver on output per potential worker. The microeconomic environment has a positive effect on output per potential worker even after controlling for historical legacies. Using our framework we define a new concept, global investment attractiveness, which is the cost of factor inputs relative to a country's competitiveness. This analysis reveals important insight into the economic trajectory of individual countries. Our framework also offers a novel methodology for the estimation of a theoretically grounded and empirically validated measure of national competitiveness.
Handle: RePEc:nbr:nberwo:18249
Template-Type: ReDIF-Paper 1.0
Title: Clusters, Convergence, and Economic Performance
Classification-JEL: L26; R11; R30
Author-Name: Mercedes Delgado
Author-Person: pde923
Author-Name: Michael E. Porter
Author-Name: Scott Stern
Note: PR
Number: 18250
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18250
File-URL: http://www.nber.org/papers/w18250.pdf
File-Format: application/pdf
Publication-Status: published as “Clusters, Convergence, and Economic Performance,” with Michael E. Porter and Scott Stern, 2014, Research Policy, 43 (10), pp. 1785–1799 (also available as NBER WP 18250).
Abstract: This paper evaluates the role of regional cluster composition in the economic performance of industries, clusters and regions. On the one hand, diminishing returns to specialization in a location can result in a convergence effect: the growth rate of an industry within a region may be declining in the level of activity of that industry. At the same time, positive spillovers across complementary economic activities provide an impetus for agglomeration: the growth rate of an industry within a region may be increasing in the size and "strength" (i.e., relative presence) of related economic sectors. Building on Porter (1998, 2003), we develop a systematic empirical framework to identify the role of regional clusters - groups of closely related and complementary industries operating within a particular region - in regional economic performance. We exploit newly available data from the US Cluster Mapping Project to disentangle the impact of convergence at the region-industry level from agglomeration within clusters. We find that, after controlling for the impact of convergence at the narrowest unit of analysis, there is strong evidence for cluster-driven agglomeration. Industries participating in a strong cluster register higher employment growth as well as higher growth of wages, number of establishments, and patenting. Industry and cluster level growth also increases with the strength of related clusters in the region and with the strength of similar clusters in adjacent regions. Importantly, we find evidence that new regional industries emerge where there is a strong cluster environment. Our analysis also suggests that the presence of strong clusters in a region enhances growth opportunities in other industries and clusters. Overall, these findings highlight the important role of cluster-based agglomeration in regional economic performance.
Handle: RePEc:nbr:nberwo:18250
Template-Type: ReDIF-Paper 1.0
Title: Market Liquidity -- Theory and Empirical Evidence
Classification-JEL: D42; D53; D82; D83; G01; G11; G12; G14
Author-Name: Dimitri Vayanos
Author-Person: pva498
Author-Name: Jiang Wang
Note: AP
Number: 18251
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18251
File-URL: http://www.nber.org/papers/w18251.pdf
File-Format: application/pdf
Publication-Status: published as Market Liquidity—Theory and Empirical Evidence, in George Constantinides, Milton Harris, and Rene Stulz, eds.: Handbook of the Economics of Finance, 2013, Chapter 19, North Holland, Amsterdam. (With Jiang Wang)
Abstract: In this paper we survey the theoretical and empirical literature on market liquidity. We organize both literatures around three basic questions: (a) how to measure illiquidity, (b) how illiquidity relates to underlying market imperfections and other asset characteristics, and (c) how illiquidity affects expected asset returns. Using a unified model from Vayanos and Wang (2010), we survey theoretical work on six main imperfections: participation costs, transaction costs, asymmetric information, imperfect competition, funding constraints, and search---and for each imperfection we address the three basic questions within that model. We review the empirical literature through the lens of the theory, using the theory to both interpret existing results and suggest new tests and analysis.
Handle: RePEc:nbr:nberwo:18251
Template-Type: ReDIF-Paper 1.0
Title: Log Odds and Ends
Classification-JEL: C25; I19
Author-Name: Edward C. Norton
Author-Person: pno89
Note: EH
Number: 18252
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18252
File-URL: http://www.nber.org/papers/w18252.pdf
File-Format: application/pdf
Abstract: Although independent unobserved heterogeneity--variables that affect the dependent variable but are independent from the other explanatory variables of interest--do not affect the point estimates or marginal effects in least squares regression, they do affect point estimates in nonlinear models such as logit and probit models. In these nonlinear models, independent unobserved heterogeneity changes the arbitrary normalization of the coefficients through the error variance. Therefore, any statistics derived from the estimated coefficients change when additional, seemingly irrelevant, variables are added to the model. Odds ratios must be interpreted as conditional on the data and model. There is no one odds ratio; each odds ratio estimated in a multivariate model is conditional on the data and model in a way that makes comparisons with other results difficult or impossible. This paper provides new Monte Carlo and graphical insights into why this is true, and new understanding of how to interpret fixed effects models, including case control studies. Marginal effects are largely unaffected by unobserved heterogeneity in both linear regression and nonlinear models, including logit and probit and their multinomial and ordered extensions.
Handle: RePEc:nbr:nberwo:18252
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Effects of Friendship Networks on Health Behaviors of Adolescents
Classification-JEL: I12
Author-Name: Jason M. Fletcher
Author-Name: Stephen L. Ross
Author-Person: pro69
Note: EH
Number: 18253
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18253
File-URL: http://www.nber.org/papers/w18253.pdf
File-Format: application/pdf
Abstract: This paper estimates the effects of friends' health behaviors, smoking and drinking, on own health behaviors for adolescents while controlling for the effects of correlated unobservables between those friends. Specifically, the effect of friends' health behaviors is identified by comparing similar individuals who have the same friendship opportunities because they attend the same school and make similar friendship choices, under the assumption that the friendship choice reveals information about an individual's unobservables. We combine this identification strategy with a cross-cohort, within school design so that the model is identified based on across grade differences in the clustering of health behaviors within specific friendship patterns. Finally, we use the estimated information on correlated unobservables to examine longitudinal data on the on-set of health behaviors, where the opportunity for reverse causality should be minimal. Our estimates for both behavior and on-set are very robust to bias from correlated unobservables.
Handle: RePEc:nbr:nberwo:18253
Template-Type: ReDIF-Paper 1.0
Title: The Role of Federal and State Dependent Coverage Eligibility Policies on the Health Insurance Status of Young Adults
Classification-JEL: I13; I18
Author-Name: Joel C. Cantor
Author-Name: Alan C. Monheit
Author-Name: Derek DeLia
Author-Name: Kristen Lloyd
Note: EH
Number: 18254
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18254
File-URL: http://www.nber.org/papers/w18254.pdf
File-Format: application/pdf
Abstract: This paper evaluates one of the first implemented provisions of the Patient Protection and Affordable Care Act (ACA) which permits young adults up to age 26 to enroll as dependents on a parent's private health plan. The paper also considers how the interaction between prior state laws expanding dependent coverage to young adults and the ACA affected young adult coverage. Using data from the Current Population Survey for calendar years 2004-2010, we apply a difference-in-differences framework to estimate how these provisions affected coverage of eligible young adults compared to slightly older adults. Our findings indicate that controlling for state laws, early implementation of the ACA increased young adult dependent coverage by 5.3 percentage points and resulted in a 3.5 percentage point decline in their uninsured rate. The interaction between state laws and the ACA suggests that the increase in dependent coverage and decline in the uninsured rate may have been greater among young adults who were targeted by both the ACA and state laws.
Handle: RePEc:nbr:nberwo:18254
Template-Type: ReDIF-Paper 1.0
Title: Does Seeing the Doctor More Often Keep You Out of the Hospital?
Classification-JEL: I12; I13
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Anthony T. Lo Sasso
Author-Person: plo241
Note: EH
Number: 18255
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18255
File-URL: http://www.nber.org/papers/w18255.pdf
File-Format: application/pdf
Publication-Status: published as Kaestner, Robert & Sasso, Anthony T. Lo, 2015. "Does seeing the doctor more often keep you out of the hospital?," Journal of Health Economics, Elsevier, vol. 39(C), pages 259-272.
Abstract: By exploiting a unique health insurance benefit design, we provide novel evidence on the causal association between outpatient and inpatient care. Our results indicate that greater outpatient spending was associated with more hospital admissions: a $100 increase in outpatient spending was associated with a 2.7% increase in the probability of having an inpatient event and a 4.6% increase in inpatient spending among enrollees in our sample. Moreover, we present evidence that the increase in hospital admissions associated with greater outpatient spending was for conditions in which it is plausible to argue that the physician and patient could exercise discretion.
Handle: RePEc:nbr:nberwo:18255
Template-Type: ReDIF-Paper 1.0
Title: FX Counterparty Risk and Trading Activity in Currency Forward and Futures Markets
Classification-JEL: F31; G15
Author-Name: Richard M. Levich
Note: IFM
Number: 18256
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18256
File-URL: http://www.nber.org/papers/w18256.pdf
File-Format: application/pdf
Publication-Status: published as “FX Counterparty Risk and Trading Activity in Currency Forward and Futures Markets,” Review of Financial Economics, September 2012, Vol. 21, No. 3, pp. 102-110.
Abstract: The Global Financial Crisis initiated a period of market turbulence and increased counterparty risk for financial institutions. Even though the Dodd-Frank Act is likely to exempt interbank foreign exchange trading from a central counterparty mandate, market participants have the option to trade currency futures on existing futures markets which standardize counterparty risks. Evidence for the period 2005-11 indicates that the market share of currency futures trading has grown relative to the pre-crisis period. This shift may be the result of a perceived increase in counterparty risk among banks, as well as changes in relative trading costs or changes in other institutional factors.
Handle: RePEc:nbr:nberwo:18256
Template-Type: ReDIF-Paper 1.0
Title: Cycles of Distrust: An Economic Model
Classification-JEL: D72; D74
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Alexander Wolitzky
Note: POL
Number: 18257
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18257
File-URL: http://www.nber.org/papers/w18257.pdf
File-Format: application/pdf
Abstract: We propose a model of cycles of distrust and conflict. Overlapping generations of agents from two groups sequentially play coordination games under incomplete information about whether the other side consists of "extremists" who will never take the good/trusting action. Good actions may be mistakenly perceived as bad/distrusting actions. We also assume that there is limited information about the history of past actions, so that an agent is unable to ascertain exactly when and how a sequence of bad actions originated. Assuming that both sides are not extremists, spirals of distrust and conflict get started as a result of a misperception, and continue because the other side interprets the bad action as evidence that it is facing extremists. However, such spirals contain the seeds of their own dissolution: after a while, Bayesian agents correctly conclude that the probability of a spiral having started by mistake is sufficiently high, and bad actions are no longer interpreted as evidence of extremism. At this point, one party experiments with a good action, and the cycle restarts. We show how this mechanism can be useful in interpreting cycles of ethnic conflict and international war, and how it also emerges in models of political participation, dynamic inter-group trade, and communication - leading to cycles of political polarization, breakdown of trade, and breakdown of communication.
Handle: RePEc:nbr:nberwo:18257
Template-Type: ReDIF-Paper 1.0
Title: Estimating Second Order Probability Beliefs from Subjective Survival Data
Classification-JEL: C11; J1
Author-Name: Péter Hudomiet
Author-Person: phu350
Author-Name: Robert J. Willis
Author-Person: pwi192
Note: AG LS
Number: 18258
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18258
File-URL: http://www.nber.org/papers/w18258.pdf
File-Format: application/pdf
Publication-Status: published as Hudomiet, Péter, and Robert Willis. 2013. "Estimating Second Order Probability Beliefs from Subjective Survival Data." Decision Analysis, 10(2): 152-170. PMCID: PMC3882032. DOI. Abstract.
Abstract: Based on subjective survival probability questions in the Health and Retirement Study (HRS), we use an econometric model to estimate the determinants of individual-level uncertainty about personal longevity. This model is built around the Modal Response Hypothesis (MRH), a mathematical expression of the idea that survey responses of 0, 50 or 100 percent to probability questions indicate a high level of uncertainty about the relevant probability. We show that subjective survival expectations in 2002 line up very well with realized mortality of the HRS respondents between 2002 and 2010. We show that the MRH model performs better than typically used models in the literature of subjective probabilities. Our model gives more accurate estimates of low probability events and it is able to predict the unusually high fraction of focal 0, 50 and 100 answers observed in many datasets on subjective probabilities. We show that subjects place too much weight on parents' age at death when forming expectations about their own longevity, while other covariates such as demographics, cognition, personality, subjective health and health behavior are underweighted. We also find that less educated people, smokers and women have less certain beliefs; and recent health shocks increase uncertainty about survival, too.
Handle: RePEc:nbr:nberwo:18258
Template-Type: ReDIF-Paper 1.0
Title: The Anatomy of French Production Hierarchies
Classification-JEL: D22; F16; J24; J31; L23
Author-Name: Lorenzo Caliendo
Author-Person: pca537
Author-Name: Ferdinando Monte
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EFG ITI PR
Number: 18259
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18259
File-URL: http://www.nber.org/papers/w18259.pdf
File-Format: application/pdf
Publication-Status: published as Lorenzo Caliendo & Ferdinando Monte & Esteban Rossi-Hansberg, 2015. "The Anatomy of French Production Hierarchies," Journal of Political Economy, University of Chicago Press, vol. 123(4), pages 000 - 000.
Abstract: We use a comprehensive dataset of French manufacturing firms to study their internal organization. We first divide the employees of each firm into `layers' using occupational categories. Layers are hierarchical in that the typical worker in a higher layer earns more, and the typical firm occupies less of them. In addition, the probability of adding (dropping) a layer is very positively (negatively) correlated with value added. We then explore the changes in the wages and number of employees that accompany expansions in layers, output, or markets (by becoming exporters). The empirical results indicate that reorganization, through changes in layers, is key to understand how firms expand and contract. For example, we find that firms that expand substantially add layers and pay lower average wages in all pre-existing layers. In contrast, firms that expand little and do not reorganize pay higher average wages in all pre-existing layers.
Handle: RePEc:nbr:nberwo:18259
Template-Type: ReDIF-Paper 1.0
Title: The Connection between Imported Intermediate Inputs and Exports: Evidence from Chinese Firms
Classification-JEL: F10; F15; F23; F31
Author-Name: Ling Feng
Author-Name: Zhiyuan Li
Author-Person: pli677
Author-Name: Deborah L. Swenson
Author-Person: psw14
Note: ITI
Number: 18260
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18260
File-URL: http://www.nber.org/papers/w18260.pdf
File-Format: application/pdf
Publication-Status: published as Ling Feng & Zhiyuan Li & Deborah L. Swenson, 2016. "The connection between imported intermediate inputs and exports: Evidence from Chinese firms," Journal of International Economics, vol 101, pages 86-101.
Abstract: We use data on Chinese manufacturing firms to study the connection between individual firm imports and firm export outcomes. Since our panel covers the years 2002 to 2006, we can use changes in import tariffs associated with China's WTO entry as instruments. Our regression results show that firms that expanded their intermediate input imports expanded the volume of their exports and increased their export scope, though the magnitude of the effects differed by import source, firm organizational form, and industry R&D intensity. On these dimensions, we find that imported intermediate inputs from OECD rather than non-OECD countries generated larger firm export improvements, that private Chinese firms derived larger benefits from imported inputs than did foreign invested firms, and that imported intermediates were especially helpful in expanding the exports of firms operating in high R&D intensity industries. Taken together, these results suggest that product upgrading facilitated by technology or quality embedded in imported inputs helped Chinese firms to increase the scale and breadth of their participation in export markets.
Handle: RePEc:nbr:nberwo:18260
Template-Type: ReDIF-Paper 1.0
Title: Social Support Substitution and the Earnings Rebound: Evidence from a Regression Discontinuity in Disability Insurance Reform
Classification-JEL: H53; I38; J22
Author-Name: Lex Borghans
Author-Person: pbo190
Author-Name: Anne C. Gielen
Author-Person: pgi82
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Note: LS PE
Number: 18261
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18261
File-URL: http://www.nber.org/papers/w18261.pdf
File-Format: application/pdf
Publication-Status: published as Lex Borghans & Anne C. Gielen & Erzo F. P. Luttmer, 2014. "Social Support Substitution and the Earnings Rebound: Evidence from a Regression Discontinuity in Disability Insurance Reform," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 34-70, November.
Abstract: In this paper, we exploit a cohort discontinuity in the stringency of the 1993 Dutch disability reforms to obtain causal estimates of the effects of decreased generosity of disability insurance (DI) on behavior of existing DI recipients. We find evidence of substantial "social support substitution": individuals on average offset a euro of lost DI benefits by collecting 31 cents more from other social assistance programs. This benefit-substitution effect declines somewhat over time, but is still a significant 20% eight years later. Individuals also exhibit a strong rebound in earnings: labor earnings increase by 62 cents on average per euro of lost DI benefits. This is novel evidence of substantial remaining earnings capacity in a sample of long-term claimants of DI. On average, individuals make up for almost the entire DI benefit reduction through increases in other forms of social assistance and in labor earnings.
Handle: RePEc:nbr:nberwo:18261
Template-Type: ReDIF-Paper 1.0
Title: Risk and Return in Environmental Economics
Classification-JEL: D81; Q5; Q54
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Note: EEE
Number: 18262
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18262
File-URL: http://www.nber.org/papers/w18262.pdf
File-Format: application/pdf
Publication-Status: published as “Risk and Return in the Design of Environmental Policy,” Journal of the Association of Environmental and Resource Economists, September 2014.
Abstract: I examine the risk/return tradeoff for environmental investments, and its implications for policy choice. Consider a policy to reduce carbon emissions. To what extent does the value of such a policy depend on the expected future damages from global warming versus uncertainty over those damages, i.e., on the expected benefits from the policy versus their riskiness? And to what extent should the policy objective be a reduction in the expected temperature increase versus a reduction in risk? Using a simple model of a stock externality (e.g., temperature) that evolves stochastically, I examine the ``willingness to pay" (WTP) for alternative policies that would reduce the expected damages under ``business as usual" (BAU) versus the variance of those damages. I also show how one can compute ``iso-WTP" curves (social indifference curves) for combinations of risk and expected returns as policy objectives. Given cost estimates for reducing risk and increasing expected returns, one can compute the optimal risk-return mix for a policy, and the policy's social surplus. I illustrate these results by calibrating the model to data for global warming.
Handle: RePEc:nbr:nberwo:18262
Template-Type: ReDIF-Paper 1.0
Title: As Certain as Debt and Taxes: Estimating the Tax Sensitivity of Leverage from Exogenous State Tax Changes
Classification-JEL: G0; G32
Author-Name: Florian Heider
Author-Person: phe212
Author-Name: Alexander Ljungqvist
Author-Person: plj2
Note: CF
Number: 18263
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18263
File-URL: http://www.nber.org/papers/w18263.pdf
File-Format: application/pdf
Publication-Status: published as As Certain as Debt and Taxes: Estimating the Tax Sensitivity of Leverage from State Tax Changes, Florian Heider, Alexander Ljungqvist. in New Perspectives on Corporate Capital Structure, Acharya, Almeida, and Baker. 2015
Publication-Status: published as Florian Heider & Alexander Ljungqvist, 2015. "As certain as debt and taxes: Estimating the tax sensitivity of leverage from state tax changes," Journal of Financial Economics, vol 118(3), pages 684-712.
Abstract: We use a natural experiment in the form of 121 staggered changes in corporate income tax rates across U.S. states to show that tax considerations are a first-order determinant of firms' capital structure choices. Over the period 1990-2011, firms increase long-term leverage by 104 basis points on average (or $32.5 million in extra debt) in response to an average tax increase of 131 basis points. Contrary to static trade-off theory, the tax sensitivity of leverage is asymmetric: firms do not reduce leverage in response to tax cuts. Using treatment reversals, we find this to be true even within-firm: tax increases that are later reversed nonetheless lead to permanent increases in a firm's leverage - an unexpected and novel form of hysteresis. Our findings are robust to various confounds such as unobserved variation in local business conditions, union power, or unemployment risk. Treatment effects are heterogeneous and confirm the tax channel: tax sensitivity is greater among profitable and investment-grade firms which respectively have a greater marginal tax benefit and lower marginal cost of issuing debt.
Handle: RePEc:nbr:nberwo:18263
Template-Type: ReDIF-Paper 1.0
Title: Economic Effects of Runs on Early 'Shadow Banks': Trust Companies and the Impact of the Panic of 1907
Classification-JEL: E44; G01; G21; N11; N21; N81
Author-Name: Carola Frydman
Author-Person: pfr240
Author-Name: Eric Hilt
Author-Person: phi104
Author-Name: Lily Y. Zhou
Note: CF DAE ME
Number: 18264
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18264
File-URL: http://www.nber.org/papers/w18264.pdf
File-Format: application/pdf
Publication-Status: published as Carola Frydman & Eric Hilt & Lily Y. Zhou, 2015. "Economic Effects of Runs on Early “Shadow Banks”: Trust Companies and the Impact of the Panic of 1907," Journal of Political Economy, University of Chicago Press, vol. 123(4), pages 000 - 000.
Abstract: We use the unique circumstances that led to the Panic of 1907 to analyze its impact on economic activity. The panic was fuelled by runs on the 'shadow banks' of the time, New York's trust companies. But the shock that triggered the runs was unrelated to the nonfinancial corporations affiliated with those institutions. Using newly collected data, we find that small corporations with close ties to the trust companies that lost the most deposits experienced an immediate decline in their stock price of 10.4 percentage points, and performed worse in the years following the panic across a range of outcomes, including their return on equity, which fell 13.1 percent, their dividend rate, which fell 22 percent, and their average interest costs, which rose 8.3 percent, relative to mean pre-panic levels. The effect on their investment rate was much greater: it fell by nearly 50 percent. The relative decline in investment induced by affiliations with the worst-affected trust companies alone accounted for at least 18.4 percent of the total decline in corporate investment in the United States in 1908. This effect diminished in magnitude over time but persisted for at least five years following the panic.
Handle: RePEc:nbr:nberwo:18264
Template-Type: ReDIF-Paper 1.0
Title: Mismatch Unemployment
Classification-JEL: E24; J24; J61; J62; J63; J64
Author-Name: Ayşegül Şahin
Author-Person: psa123
Author-Name: Joseph Song
Author-Name: Giorgio Topa
Author-Person: pto149
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG LS
Number: 18265
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18265
File-URL: http://www.nber.org/papers/w18265.pdf
File-Format: application/pdf
Publication-Status: published as Ay?egül ?ahin & Joseph Song & Giorgio Topa & Giovanni L. Violante, 2014. "Mismatch Unemployment," American Economic Review, American Economic Association, vol. 104(11), pages 3529-64, November.
Abstract: We develop a framework where mismatch between vacancies and job seekers across sectors translates into higher unemployment by lowering the aggregate job-finding rate. We use this framework to measure the contribution of mismatch to the recent rise in U.S. unemployment by exploiting two sources of cross-sectional data on vacancies, JOLTS and HWOL, a new database covering the universe of online U.S. job advertisements. Mismatch across industries and occupations explains at most 1/3 of the total observed increase in the unemployment rate, whereas geographical mismatch plays no apparent role. The share of the rise in unemployment explained by occupational mismatch is increasing in the education level.
Handle: RePEc:nbr:nberwo:18265
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Skill Acquisition and Export Manufacturing in Mexico
Classification-JEL: F16; J24; O12; O14; O19
Author-Name: David Atkin
Note: ITI
Number: 18266
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18266
File-URL: http://www.nber.org/papers/w18266.pdf
File-Format: application/pdf
Publication-Status: published as David Atkin, 2016. "Endogenous Skill Acquisition and Export Manufacturing in Mexico," American Economic Review, vol 106(8), pages 2046-2085.
Abstract: This paper presents empirical evidence that the growth of export manufacturing in Mexico during a period of major trade reforms, the years 1986-2000, altered the distribution of education. I use variation in the timing of factory openings across commuting zones to show that school dropout increased with local expansions in export manufacturing. The magnitudes I find suggest that for every twenty-five jobs created, one student dropped out of school at grade 9 rather than continuing through to grade 12. These effects are driven by less-skilled export-manufacturing jobs which raised the opportunity cost of schooling for students at the margin.
Handle: RePEc:nbr:nberwo:18266
Template-Type: ReDIF-Paper 1.0
Title: Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program and Ozone Reductions
Classification-JEL: D1; H4; I1; Q4; Q5
Author-Name: Olivier Deschenes
Author-Person: pde468
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: Joseph S. Shapiro
Author-Person: psh1006
Note: CH EEE EH LS PE
Number: 18267
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18267
File-URL: http://www.nber.org/papers/w18267.pdf
File-Format: application/pdf
Abstract: Willingness to pay for air quality is a function of health and the costly defensive investments that contribute to health, but there is little research assessing the empirical importance of defensive investments. The setting for this paper is a large US emissions cap and trade market - the NOx Budget Trading Program (NBP) - that has greatly reduced NOx emissions since its initiation in 2003. Using rich quasi-experimental variation, we find that the reductions in NOx emissions decreased the number of summer days with high ozone levels by about 25%. The NBP also led to reductions in expenditures on prescription pharmaceutical expenditures of about 1.9%. Additionally, the summer mortality rate declined by approximately 0.5%, indicating that there were about 2,200 fewer premature deaths per summer, mainly among individuals 75 and older. The monetized value of the reductions in pharmaceutical purchases and mortality rates are each roughly $900 million annually, suggesting that defensive investments are a significant portion of willingness to pay for air quality. Finally, we cautiously conclude that the reductions in ozone are the primary channel for these reductions in defensive investments and mortality rates, which indicates that willingness to pay for ozone reductions is larger than previously understood.
Handle: RePEc:nbr:nberwo:18267
Template-Type: ReDIF-Paper 1.0
Title: Letter Grading Government Efficiency
Classification-JEL: H11; L32; L87; P48
Author-Name: Alberto Chong
Author-Person: pch86
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 LE POL
Number: 18268
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18268
File-URL: http://www.nber.org/papers/w18268.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Chong & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2014. "Letter Grading Government Efficiency," Journal of the European Economic Association, European Economic Association, vol. 12(2), pages 277-299, 04.
Abstract: We mailed letters to non-existent business addresses in 159 countries (10 per country), and measured whether they come back to the return address in the US and how long it takes. About 60% of the letters were returned, taking over 6 months, on average. The results provide new objective indicators of government efficiency across countries, based on a simple and universal service, and allow us to shed light on its determinants. The evidence suggests that both technology and management quality influence the quality of government.
Handle: RePEc:nbr:nberwo:18268
Template-Type: ReDIF-Paper 1.0
Title: A New Look at Second Liens
Classification-JEL: G21; R3
Author-Name: Donghoon Lee
Author-Person: ple372
Author-Name: Christopher J. Mayer
Author-Person: pma212
Author-Name: Joseph Tracy
Author-Person: ptr23
Note: PE
Number: 18269
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18269
File-URL: http://www.nber.org/papers/w18269.pdf
File-Format: application/pdf
Publication-Status: published as A New Look at Second Liens, Donghoon Lee, Christopher Mayer, Joseph Tracy. in Housing and the Financial Crisis, Glaeser and Sinai. 2013
Abstract: We use data from credit report and deeds records to better understand the extent to which second liens contributed to the housing crisis by allowing buyers to purchase homes with small down payments. At the top of the housing market second liens were quite prevalent, with as many as 45 percent of home purchases in coastal markets and bubble locations involving a piggyback second lien. Owner-occupants were more likely to use piggyback second liens than investors. Second liens in the form of home equity lines of credit (HELOCs) were originated to relatively high quality borrowers and originations were declining near the peak of the housing boom. By contrast, characteristics of closed end second liens (CES) were worse on all these dimensions. Default rates of second liens are generally similar to that of the first lien on the same home, although HELOCs perform better than CES. About 20 to 30 percent of borrowers will continue to pay their second lien for more than a year while remaining seriously delinquent on their first mortgage. By comparison, about 40 percent of credit card borrowers and 70 percent of auto loan borrowers will continue making payments a year after defaulting on their first mortgage. Finally, we show that delinquency rates on second liens, especially HELOCs, have not declined as quickly as for most other types of credit, raising a potential concern for lenders with large portfolios of second liens on their balance sheet.
Handle: RePEc:nbr:nberwo:18269
Template-Type: ReDIF-Paper 1.0
Title: Did Capital Requirements and Fair Value Accounting Spark Fire Sales in Distressed Mortgage-Backed Securities?
Classification-JEL: G22; G28; G32; M41
Author-Name: Craig B. Merrill
Author-Name: Taylor D. Nadauld
Author-Name: René M. Stulz
Author-Name: Shane Sherlund
Note: CF
Number: 18270
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18270
File-URL: http://www.nber.org/papers/w18270.pdf
File-Format: application/pdf
Abstract: Much attention has been paid to the large decreases in value of non-agency residential mortgage-backed securities (RMBS) during the financial crisis. Many observers have argued that the fall in prices was partly driven by decreased liquidity and fire sales. We investigate whether capital requirements and accounting rules at financial institutions contributed to the selling of RMBS at fire sale prices. For financial institutions subject to credit-sensitive capital requirements, capital requirements increase as an asset's credit becomes impaired. When accounting rules require such an asset's value to be marked-to-market and the fair value loss to be recognized in earnings, a capital-constrained firm can improve its capital position by selling the credit-impaired asset even if it has to accept a liquidity discount to do so. Using a sample of 5,014 repeat transactions of non-agency RMBS by insurance companies from 2006 to 2009, we show that insurance companies that became more capital-constrained because of operating losses (uncorrelated with RMBS credit quality) and also recognized fair value losses sold comparable RMBS at much lower prices than other insurance companies during the crisis.
Handle: RePEc:nbr:nberwo:18270
Template-Type: ReDIF-Paper 1.0
Title: What Was New About the New Deal?
Classification-JEL: H11; H7; N12; N42; N9
Author-Name: Price V. Fishback
Author-Person: pfi13
Author-Name: John Joseph Wallis
Note: DAE
Number: 18271
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18271
File-URL: http://www.nber.org/papers/w18271.pdf
File-Format: application/pdf
Publication-Status: published as “What Was New About the New Deal?” The Great Depression of the 1930s: Lessons for Today, edited by Nicolas Crafts and Peter Fearon. Oxford, England: Oxford University Press, 2013, with John Joseph Wallis, pp. 290-327.
Abstract: During the presidential election of 1932 Franklin Roosevelt promised a New Deal for the American people. Our goal is to describe the changes wrought by the New Deal. To what extent did the New Deal expand existing programs? What new programs were created at all levels of government? How did the Federal government take over programs that had previously been the responsibility of state and local governments? We then survey the recent research that examines the impact of the programs. Finally, why did some programs persist and others fail?
Handle: RePEc:nbr:nberwo:18271
Template-Type: ReDIF-Paper 1.0
Title: New Multi-City Estimates of the Changes in Home Values, 1920-1940
Classification-JEL: N32; N92; R30
Author-Name: Price V. Fishback
Author-Person: pfi13
Author-Name: Trevor Kollmann
Note: DAE
Number: 18272
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18272
File-URL: http://www.nber.org/papers/w18272.pdf
File-Format: application/pdf
Publication-Status: published as New Multicity Estimates of the Changes in Home Values, 1920-1940, Price Fishback, Trevor Kollmann. in Housing and Mortgage Markets in Historical Perspective, White, Snowden, and Fishback. 2014
Abstract: The boom and bust in housing during the 2000s has led to renewed interest in the boom and bust in housing between 1920 and 1940. The most commonly used housing value series for this period is reported by Robert Shiller in Irrational Exuberance. We investigate the changes in housing values in cities between 1920 and 1940 using a variety of alternative sources with many more cities available for comparison than in the Shiller series. We find that all nominal housing value series show a strong decline between the late 1920s and the early 1930s. However, all of the series except the Shiller series imply that housing values in 1920 were well below the 1930 value and thus imply much stronger growth rates in housing values during the 1920s housing boom. Only the Shiller series predicts a strong recovery in housing values to within 5 percent of the 1930 level. All of the others suggest that nominal housing values in 1940 remained at least 18 percent below the 1930 values and several series suggest that values lurched downward between 1933 and 1940. The results suggest that a significant reconsideration of the operation of housing markets in the 1920s and 1930s is required.
Handle: RePEc:nbr:nberwo:18272
Template-Type: ReDIF-Paper 1.0
Title: The Cyclicality of Sales, Regular and Effective Prices: Business Cycle and Policy Implications
Classification-JEL: E3; E4; E5
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Gee Hee Hong
Note: EFG ME
Number: 18273
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18273
File-URL: http://www.nber.org/papers/w18273.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Coibion & Yuriy Gorodnichenko & Gee Hee Hong, 2015. "The Cyclicality of Sales, Regular and Effective Prices: Business Cycle and Policy Implications," American Economic Review, American Economic Association, vol. 105(3), pages 993-1029, March.
Abstract: We study the cyclical properties of sales, regular price changes and average prices paid by consumers ("effective" prices) in a dataset containing prices and quantities sold for numerous retailers across a variety of U.S. metropolitan areas. Both the frequency and size of sales fall when local unemployment rates rise and yet the inflation rate for effective prices paid by consumers declines significantly with higher unemployment. This discrepancy can be reconciled by consumers reallocating their expenditures across retailers, a feature of the data which we document and quantify. We propose a simple model with household shopping effort and store-switching consistent with these stylized facts and document its implications for business cycles and policymakers.
Handle: RePEc:nbr:nberwo:18273
Template-Type: ReDIF-Paper 1.0
Title: Time to Ship During Financial Crises
Classification-JEL: F10; G01; G32
Author-Name: Nicolas Berman
Author-Person: pbe303
Author-Name: José De Sousa
Author-Person: pde386
Author-Name: Philippe Martin
Author-Person: pma588
Author-Name: Thierry Mayer
Author-Person: pma443
Note: IFM ITI
Number: 18274
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18274
File-URL: http://www.nber.org/papers/w18274.pdf
File-Format: application/pdf
Publication-Status: published as Nicolas Berman & Jos� de Sousa & Philippe Martin & Thierry Mayer, 2013. "Time to Ship during Financial Crises," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 225 - 260.
Publication-Status: published as Time to Ship during Financial Crises, Nicolas Berman, José de Sousa, Philippe Martin, Thierry Mayer. in NBER International Seminar on Macroeconomics 2012, Giavazzi and West. 2013
Abstract: We show that the negative impact of financial crises on trade is magnified for destinations with longer time-to-ship. A simple model where exporters react to an increase in the probability of default of importers by increasing their export price and decreasing their export volumes to destinations in crisis is consistent with this empirical finding. For longer shipping time, those effects are indeed magnified as the probability of default increases as time passes. Some exporters also decide to stop exporting to the crisis destination, the more so the longer time-to-ship. Using aggregate data from 1950 to 2009, we find that this magnification effect is robust to alternative specifications, samples and inclusion of additional controls, including distance. The firm level predictions are also broadly consistent with French exporter data from 1995 to 2005.
Handle: RePEc:nbr:nberwo:18274
Template-Type: ReDIF-Paper 1.0
Title: National Institutions and Subnational Development in Africa
Classification-JEL: N17; O10; O4; O43; Z10
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Author-Name: Elias Papaioannou
Author-Person: ppa701
Note: EFG IFM POL
Number: 18275
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18275
File-URL: http://www.nber.org/papers/w18275.pdf
File-Format: application/pdf
Publication-Status: published as Elias Papaioannou, 2014. "National Institutions and Subnational Development in Africa," The Quarterly Journal of Economics, Oxford University Press, vol. 129(1), pages 151-213.
Abstract: We investigate the role of national institutions on subnational African development in a novel framework that accounts both for local geography and cultural-genetic traits. We exploit the fact that the political boundaries in the eve of African independence partitioned more than two hundred ethnic groups across adjacent countries subjecting similar cultures, residing in homogeneous geographic areas, to different formal institutions. Using both a matching-type and a spatial regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within-ethnicity differences in economic performance, as captured by satellite images of light density. The average non-effect of national institutions on ethnic development masks considerable heterogeneity partially driven by the diminishing role of national institutions in areas further from the capital cities.
Handle: RePEc:nbr:nberwo:18275
Template-Type: ReDIF-Paper 1.0
Title: Homework in Monetary Economics: Inflation, Home Production, and the Production of Homes
Classification-JEL: E41; E52; R21
Author-Name: S. Boragan Aruoba
Author-Person: par34
Author-Name: Morris A. Davis
Author-Person: pda51
Author-Name: Randall Wright
Author-Person: pwr2
Note: EFG
Number: 18276
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18276
File-URL: http://www.nber.org/papers/w18276.pdf
File-Format: application/pdf
Publication-Status: published as Review of Economic Dynamics Available online 25 November 2014 In Press, Corrected Proof — Note to users Cover image Homework in monetary economics: Inflation, home production, and the production of homes ☆ S. Borağan Aruobaa, , , Morris A. Davisb, Randall Wrightc, d, e, f
Abstract: We study models incorporating money, household production, and investment in housing. Inflation, as a tax on market activity, encourages substitution into household production, and thus investment in household capital. Hence, inflation increases the (appropriately deflated) value of the housing stock. This is documented in various data sources. A calibrated model accounts for a fifth to a half of the observed relationships. While this leaves much to be explained, it demonstrates the channel is economically relevant. We also show models with home production imply higher costs of inflation than models without it, especially when home and market goods are close substitutes.
Handle: RePEc:nbr:nberwo:18276
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneity in High Math Achievement Across Schools: Evidence from the American Mathematics Competitions
Classification-JEL: C25; I21
Author-Name: Glenn Ellison
Author-Person: pel10
Author-Name: Ashley Swanson
Note: ED
Number: 18277
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18277
File-URL: http://www.nber.org/papers/w18277.pdf
File-Format: application/pdf
Publication-Status: published as "The Agglomeration of High Achieving Math Students: Evidence from the American Mathematics Competitions," (with Ashley Swanson), July 2013, 42 pp.
Abstract: This paper explores differences in the frequency with which students from different schools reach high levels of math achievement. Data from the American Mathematics Competitions is used to produce counts of high-scoring students from more than two thousand public, coeducational, non-magnet, non-charter U.S. high schools. High-achieving students are found to be very far from evenly distributed. There are strong demographic predictors of high achievement. There are also large differences among seemingly similar schools. The unobserved heterogeneity across schools includes a thick tail of schools that produce many more high-achieving students than the average school. Gender-related differences and other breakdowns are also discussed.
Handle: RePEc:nbr:nberwo:18277
Template-Type: ReDIF-Paper 1.0
Title: Airports and Urban Growth: Evidence from a Quasi-Natural Policy Experiment
Classification-JEL: O18; R11; R4
Author-Name: Bruce A. Blonigen
Author-Person: pbl165
Author-Name: Anca D. Cristea
Author-Person: pcr140
Note: EFG IO PE
Number: 18278
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18278
File-URL: http://www.nber.org/papers/w18278.pdf
File-Format: application/pdf
Abstract: While significant work has been done to examine the determinants of regional development, there is little evidence on the contribution of air services toward this outcome. This paper exploits the unexpected market changes induced by the 1978 Airline Deregulation Act to bring new evidence on the link between airline traffic and local economic growth. Using data for almost 300 Metropolitan Statistical Areas (MSAs) over a two decade time period centered around the policy change, we exploit time variation in long-run growth rates to identify the effects of airline traffic on population, income and employment growth. Our results suggest that air service has a significant positive effect on regional growth, with the magnitude of the effects differing by MSA size and industrial specialization.
Handle: RePEc:nbr:nberwo:18278
Template-Type: ReDIF-Paper 1.0
Title: Am I my Brother's Keeper? Sibling Spillover Effects: The Case of Developmental Disabilities and Externalizing Behavior
Classification-JEL: I12; J24
Author-Name: Jason Fletcher
Author-Name: Nicole L. Hair
Author-Name: Barbara L. Wolfe
Author-Person: pwo47
Note: CH EH
Number: 18279
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18279
File-URL: http://www.nber.org/papers/w18279.pdf
File-Format: application/pdf
Abstract: Using a sample of sibling pairs from the PSID-CDS, we examine the effects of sibling health status on early educational outcomes. We find that sibling developmental disability and externalizing behavior ar associated with reductions in math and language achievement Estimated spillovers for developmental disability are large and robust to both a rich set of family-level controls and a fixed effects analysis that exploits the availability of in-sample cousins. Our results suggest the importance of siblings in the determination of children's human capital as well as the potential for typically uncounted benefits to improving children's health through family multiplier effects
Handle: RePEc:nbr:nberwo:18279
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Unions
Classification-JEL: E62; E63; F02; F15; F3; F40
Author-Name: Ivan Werning
Author-Person: pwe141
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Note: EFG IFM ME
Number: 18280
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18280
File-URL: http://www.nber.org/papers/w18280.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Farhi & Iván Werning, 2017. "Fiscal Unions," American Economic Review, American Economic Association, vol. 107(12), pages 3788-3834, December.
Abstract: We study cross-country risk sharing as a second-best problem for members of a currency union using an open economy model with nominal rigidities and provide two key results. First, we show that if financial markets are incomplete, the value of gaining access to any given level of aggregate risk sharing is greater for countries that are members of a currency union. Second, we show that even if financial markets are complete, privately optimal risk sharing is constrained inefficient. A role emerges for government intervention in risk sharing both to guarantee its existence and to influence its operation. The constrained efficient risk sharing arrangement can be implemented by contingent transfers within a fiscal union. We find that the benefits of such a fiscal union are larger, the more asymmetric the shocks affecting the members of the currency union, the more persistent these shocks, and the less open the member economies. Finally we compare the performance of fiscal unions and of other macroeconomic stabilization instruments available in currency unions such as capital controls, government spending, fiscal deficits, and redistribution.
Handle: RePEc:nbr:nberwo:18280
Template-Type: ReDIF-Paper 1.0
Title: The Trillion Dollar Conundrum: Complementarities and Health Information Technology
Classification-JEL: I10; L30
Author-Name: David Dranove
Author-Person: pdr111
Author-Name: Christopher Forman
Author-Name: Avi Goldfarb
Author-Person: pgo53
Author-Name: Shane Greenstein
Author-Person: pgr134
Note: IO PR
Number: 18281
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18281
File-URL: http://www.nber.org/papers/w18281.pdf
File-Format: application/pdf
Publication-Status: published as David Dranove & Chris Forman & Avi Goldfarb & Shane Greenstein, 2014. "The Trillion Dollar Conundrum: Complementarities and Health Information Technology," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 239-70, November.
Abstract: We examine the relationship between the adoption of EMR and hospital operating costs. We first identify a puzzle that has been seen in prior studies: Adoption of EMR is associated with a slight cost increase. We draw on the literature on IT and productivity to demonstrate that the average effect masks important differences across time, locations, and hospitals. We find: (1) EMR adoption is initially associated with higher costs; (2) At hospitals with access to complementary inputs, EMR adoption leads to a cost decrease after three years; (3) Hospitals in unfavorable conditions experience increased costs even after six years.
Handle: RePEc:nbr:nberwo:18281
Template-Type: ReDIF-Paper 1.0
Title: Private Information and Insurance Rejections
Classification-JEL: H0; I11; I13
Author-Name: Nathaniel Hendren
Note: AG EH IO PE
Number: 18282
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18282
File-URL: http://www.nber.org/papers/w18282.pdf
File-Format: application/pdf
Publication-Status: published as Nathaniel Hendren, 2013. "Private Information and Insurance Rejections," Econometrica, Econometric Society, vol. 81(5), pages 1713-1762, 09.
Abstract: Across a wide set of non-group insurance markets, applicants are rejected based on observable, often high-risk, characteristics. This paper argues private information, held by the potential applicant pool, explains rejections. I formulate this argument by developing and testing a model in which agents may have private information about their risk. I first derive a new no-trade result that theoretically explains how private information could cause rejections. I then develop a new empirical methodology to test whether this no-trade condition can explain rejections. The methodology uses subjective probability elicitations as noisy measures of agents beliefs. I apply this approach to three non-group markets: long-term care, disability, and life insurance. Consistent with the predictions of the theory, in all three settings I find significant amounts of private information held by those who would be rejected; I find generally more private information for those who would be rejected relative to those who can purchase insurance; and I show it is enough private information to explain a complete absence of trade for those who would be rejected. The results suggest private information prevents the existence of large segments of these three major insurance markets.
Handle: RePEc:nbr:nberwo:18282
Template-Type: ReDIF-Paper 1.0
Title: Over-optimistic Official Forecasts in the Eurozone and Fiscal Rules
Classification-JEL: F3
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Author-Name: Jesse Schreger
Author-Person: psc568
Note: EFG PE
Number: 18283
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18283
File-URL: http://www.nber.org/papers/w18283.pdf
File-Format: application/pdf
Publication-Status: published as Review of World Economics June 2013, Volume 149, Issue 2, pp 247-272 Date: 14 Feb 2013 Over-optimistic official forecasts and fiscal rules in the eurozone Jeffrey Frankel, Jesse Schreger
Abstract: Why do countries find it so hard to get their budget deficits under control? Systematic patterns in the errors that official budget agencies make in their forecasts may play an important role. Although many observers have suggested that fiscal discipline can be restored via fiscal rules such as a legal cap on the budget deficit, forecasting bias can defeat such rules. The members of the eurozone are supposedly constrained by the fiscal caps of the Stability and Growth Pact. Yet ever since the birth of the euro in 1999, members have postponed painful adjustment by making overly optimistic forecasts of future growth and budget positions and arguing that the deficits will fall below the cap within a year or two. The new fiscal compact among the euro countries is supposed to make budget rules more binding by putting them into laws and constitutions at the national level. But what is the record with such national rules? Our econometric findings are summarized as follows: • Governments' budget forecasts are biased in the optimistic direction, especially among the Eurozone countries, especially when they have large contemporaneous budget deficits, and especially during booms. • Governments' real GDP forecasts are similarly over-optimistic during booms. • Despite the well-known tendency of eurozone members to exceed the 3% cap on budget deficits, often in consecutive years, they almost never forecast that they will violate the cap in the coming years. This is the source of the extra bias among eurozone forecasts. If euro area governments are not in violation of the 3% cap at the time forecasts are made, forecasts are no more biased than other countries. • Although euro members without national budget balance rules have a larger over-optimism bias than non-member countries, national fiscal rules help counteract the wishful thinking that seems to come with euro membership. The reason is that when governments are in violation of the 3% cap the national rules apparently constrain them from making such unrealistic forecasts. • Similarly, the existence of an independent fiscal institution producing budget forecasts at the national level reduces the over-optimism bias of forecasts made when the countries are in violation of the 3% cap.
Handle: RePEc:nbr:nberwo:18283
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Endogenous Business Cycles
Classification-JEL: B22; E0; E3
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Note: EFG
Number: 18284
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18284
File-URL: http://www.nber.org/papers/w18284.pdf
File-Format: application/pdf
Publication-Status: published as Farmer, Roger E.A., 2016. "The Evolution Of Endogenous Business Cycles," Macroeconomic Dynamics, Cambridge University Press, vol. 20(02), pages 544-557, March.
Abstract: This paper distinguishes two kinds of Endogenous Business Cycle models; EBC1 models, which display dynamic indeterminacy, and EBC2 models, which display steady-state indeterminacy. Both strands of the literature have their origins in the sunspot literature that developed at the University of Pennsylvania in the 1980s. I argue that EBC1 models are part of the evolution of modern macroeconomics that has classical roots dating back to the 1920s. EBC2 models provide a microfoundation to one of the most important ideas to emerge from Keynes' (1936) General Theory; that high involuntary unemployment can persist as part of the steady-state equilibrium of a market economy.
Handle: RePEc:nbr:nberwo:18284
Template-Type: ReDIF-Paper 1.0
Title: The Price Theory of Money, Prospero's Liquidity Trap, and Sudden Stop: Back to Basics and Back
Classification-JEL: E31; E41; E44; E58; F31; F41; F42
Author-Name: Guillermo A. Calvo
Author-Person: pca694
Note: IFM
Number: 18285
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18285
File-URL: http://www.nber.org/papers/w18285.pdf
File-Format: application/pdf
Abstract: Fiat money contains the seeds of its own destruction. It has no intrinsic value and, yet, it can be exchanged for valuable consumption and production goods. As Hahn (1965) shows, this situation puts fiat money's market value or liquidity premium at the brink of collapse. In this paper I will argue that (1) sticky prices, especially when staggered, provide output backing to fiat money, helping to sustain fiat money's liquidity premium and, thus, lowering the risk of a liquidity meltdown. I call this view the Price Theory of Money; (2) fixed-income assets linked to fiat money, especially if they are perceived to have low counter-party risk (like US Treasury bills, AAA bonds or Asset-Backed Securities) can take advantage of point (1) to become quasi-moneys; (3) this gives incentives to the private sector to create those assets; (4) however, unless protected by a Lender of Last Resort, the new assets' liquidity premium can quickly and massively evaporate in what I call (with a wink to the Bard) a Prospero's Liquidity Trap; (5) the latter lowers the market value of loan collateral and clogs the credit channel, bringing about a credit event or Sudden Stop, with severe output and employment consequences.
Handle: RePEc:nbr:nberwo:18285
Template-Type: ReDIF-Paper 1.0
Title: Does it Matter if Your Health Insurer is For-Profit? Effects of Ownership on Premiums, Insurance Coverage, and Medical Spending
Classification-JEL: I11; I13; L22; L33
Author-Name: Leemore Dafny
Author-Name: Subramaniam Ramanarayanan
Note: AG EH IO
Number: 18286
Creation-Date: 2012-07
Order-URL: http://www.nber.org/papers/w18286
Publication-Status: published as Leemore Dafny, 2019. "Does It Matter if Your Health Insurer Is For Profit? Effects of Ownership on Premiums, Insurance Coverage, and Medical Spending," American Economic Journal: Economic Policy, vol 11(1), pages 222-265.
Abstract: The majority of private health insurance in the U.S. is administered or issued by for-profit insurers, but little is known about how for-profit status affects outcomes. We find that plausibly exogenous increases in local for-profit market share induced by conversions of Blue Cross and Blue Shield affiliates in 11 states (and 28 distinct geographic markets) had no significant impact on average premiums, uninsurance rates, or medical loss ratios. However, we do find significant increases in Medicaid enrollment and a reallocation of medical spending toward rivals of BCBS. Moreover, in markets where the converting BCBS affiliate had substantial market share, fully-insured premiums for employer plans increased significantly. The results suggest that the welfare effects of subsidies for new not-for-profit insurers, such as those in the Affordable Care Act, are likely to depend on entrants' eventual market share.
Handle: RePEc:nbr:nberwo:18286
Template-Type: ReDIF-Paper 1.0
Title: Defying Gravity: How Long Will Japanese Government Bond Prices Remain High?
Classification-JEL: E62; H63; H68; J11; O47; O53
Author-Name: Takeo Hoshi
Author-Person: pho107
Author-Name: Takatoshi Ito
Note: AG IFM ME PE
Number: 18287
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18287
File-URL: http://www.nber.org/papers/w18287.pdf
File-Format: application/pdf
Publication-Status: published as “Defying Gravity: Can Japanese sovereign debt continue to increase without a crisis?” (Joint with Takatoshi Ito) Economic Policy, January 2014, 5-44.
Abstract: Recent academic papers have shown that the Japanese sovereign debt situation is not sustainable. The puzzle is that the bond rate has remained low and stable. Some suggest that the low yield can be explained by domestic residents' willingness to hold Japanese government bonds (JGBs) despite its low return, and that as long as domestic residents remain home-biased, the JGBs are sustainable. About 95% of JGBs are currently owned by domestic residents. This paper argues that even with such dominance of domestic investors, if the amount of government debt breaches the ceiling imposed by the domestic private sector financial assets, the JGB rates can rapidly rise and the Japanese government can face difficulty rolling over the existing debt. A simulation is conducted on future paths of household saving and fiscal situations to show that the ceiling would be breached in the next 10 years or so without a drastic fiscal consolidation. This paper also shows that the government debt can be kept under the ceiling with sufficiently large tax increases. The JGB yields can rise even before the ceiling is hit, if the expectation of such drastic fiscal consolidation disappears. This paper points out several possible triggers for such a change in expectation. However, downgrading of JGBs by credit rating agencies is not likely to be a trigger, since past downgrades have not produced any change in the JGB yield. If and when the JGB rates rapidly rise, the Japanese financial institutions that hold a large amount of JGBs will sustain losses and the economy will suffer from fiscal austerity, financial instability, and inflation.
Handle: RePEc:nbr:nberwo:18287
Template-Type: ReDIF-Paper 1.0
Title: International Trade and Institutional Change: Medieval Venice's Response to Globalization
Classification-JEL: F1
Author-Name: Diego Puga
Author-Person: ppu2
Author-Name: Daniel Trefler
Author-Person: ptr44
Note: ITI
Number: 18288
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18288
File-URL: http://www.nber.org/papers/w18288.pdf
File-Format: application/pdf
Publication-Status: published as “International Trade and Institutional Change: Medieval Venice's Response to Globalization” Quarterly Journal of Economics, 129(2) (May 2014):753–821. (With Diego Puga.)
Abstract: International trade can have profound effects on domestic institutions. We examine this proposition in the context of medieval Venice circa 800-1350. We show that (initially exogenous) increases in long-distance trade enriched a large group of merchants and these merchants used their new-found muscle to push for constraints on the executive i.e., for the end of a de facto hereditary Doge in 1032 and for the establishment of a parliament or Great Council in 1172. The merchants also pushed for remarkably modern innovations in contracting institutions (such as the colleganza) that facilitated large-scale mobilization of capital for risky long-distance trade. Over time, a group of extraordinarily rich merchants emerged and in the almost four decades following 1297 they used their resources to block political and economic competition. In particular, they made parliamentary participation hereditary and erected barriers to participation in the most lucrative aspects of long-distance trade. We document this 'oligarchization' using a unique database on the names of 8,103 parliamentarians and their families' use of the colleganza. In short, long-distance trade first encouraged and then discouraged institutional dynamism and these changes operated via the impacts of trade on the distribution of wealth and power.
Handle: RePEc:nbr:nberwo:18288
Template-Type: ReDIF-Paper 1.0
Title: The Financial Sector in Burundi
Classification-JEL: E44; G21; O16; O55
Author-Name: Janvier D. Nkurunziza
Author-Name: Léonce Ndikumana
Author-Person: pnd1
Author-Name: Prime Nyamoya
Note: IFM
Number: 18289
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18289
File-URL: http://www.nber.org/papers/w18289.pdf
File-Format: application/pdf
Abstract: This study investigates the performance of the financial system in Burundi in mobilizing and allocating resources. Although the study does not presume that finance is the most binding constraint to growth and socio-economic development in Burundi, it takes the view that unlocking the financing constraint could alleviate other impediments to growth and poverty reduction. We use a blend of methodological approaches drawing from: (1) industrial organization in examining the structure of the banking sector, and the behavior and profitability of financial intermediaries; (2) macroeconomic analysis with a focus on the effect of economic performance and policy framework on the performance of the financial sector; and (3) political economy analysis highlighting the role of political governance and political instability, as well as ownership of financial institutions on allocative and distributional inefficiencies. The paper finds that the core of the financial sector that has survived the worst of the economic and political crises of the last decades is highly profitable. Bank profitability, however, hides several weaknesses of the financial sector: a high level of fragmentation; a narrow credit market that favors "insiders" who are mostly affiliated with the political elites, at the expense of "outsiders"; a severe shortage of long-term stable resources; inefficient allocation of resources relative to social returns and risk; and weak supervision and regulation which largely explain the failure of several financial institutions in the past and the fragility of the banking sector today. Access to finance remains an important challenge, especially for the "stranded middle" (middle income households and medium size firms) due to the "missing middle credit market" which is not filled by either banks or microfinance institutions. Recent developments in the financial sector, particularly the increasing penetration of foreign banks, may potentially boost competition, financial innovation, and access to finance with positive effects on growth and poverty reduction.
Handle: RePEc:nbr:nberwo:18289
Template-Type: ReDIF-Paper 1.0
Title: The Great Leveraging
Classification-JEL: E3; E5; E6; N1; N2
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE IFM ME
Number: 18290
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18290
File-URL: http://www.nber.org/papers/w18290.pdf
File-Format: application/pdf
Publication-Status: published as Taylor, A. M. “The Great Leveraging.” In The Social Value of the Financial Sector: Too Big to Fail or Just Too Big? edited by V. V. Acharya, T. Beck, D. D. Evanoff, G. G. Kaufman, and R. Portes. World Scientific Studies in International Economics, vol. 29. Hackensack, N.J.: World Scientific Publishing, 2014.
Abstract: What can history tell us about the relationship between the banking system, financial crises, the global economy, and economic performance? Evidence shows that in the advanced economies we live in a world that is more financialized than ever before as measured by importance of credit in the economy. I term this long---run evolution "The Great Leveraging" and present a ten‐point examination of its main contours and implications.
Handle: RePEc:nbr:nberwo:18290
Template-Type: ReDIF-Paper 1.0
Title: Legislating Stock Prices
Classification-JEL: G02; G12; G14
Author-Name: Lauren Cohen
Author-Name: Karl B. Diether
Author-Name: Christopher Malloy
Author-Person: pma1313
Note: AP LE POL
Number: 18291
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18291
File-URL: http://www.nber.org/papers/w18291.pdf
File-Format: application/pdf
Publication-Status: published as “Legislating Stock Prices” (with Karl Diether and Christopher Malloy), 2013. Journal of Financial Economics 110, 574-595.
Abstract: In this paper we demonstrate that legislation has a simple, yet previously undetected impact on firm stock prices. While it is understood that the government and firms have an important relationship, it remains difficult to determine which firms any given piece of legislation will affect, and how it will affect them. By observing the actions of legislators whose constituents are the affected firms, we can gather insights into the likely impact of government legislation on firms. Specifically, focusing attention on "interested" legislators' behavior captures important information seemingly ignored by the market. A long-short portfolio based on these legislators' views earns abnormal returns of over 90 basis points per month following the passage of legislation. Further, the more complex the legislation, the more difficulty the market has in assessing the impact of these bills. Consistent with the legislator incentive mechanism, the more concentrated the legislator's interest in the industry, the more informative are her votes for future returns.
Handle: RePEc:nbr:nberwo:18291
Template-Type: ReDIF-Paper 1.0
Title: Lens or Prism? Patent Citations as a Measure of Knowledge Flows from Public Research
Classification-JEL: C18; O3; O31; O34; O47
Author-Name: Michael Roach
Author-Name: Wesley M. Cohen
Note: PR
Number: 18292
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18292
File-URL: http://www.nber.org/papers/w18292.pdf
File-Format: application/pdf
Publication-Status: published as M. Roach and W.M. Cohen, “Lens or Prism? Patent citations as a measure of knowledge flows from public research,” Management Science, February 2013, V. 59, No. 2, pp. 504-525.
Abstract: This paper assesses the validity and accuracy of firms' backward patent citations as a measure of knowledge flows from public research by employing a newly constructed dataset that matches patents to survey data at the level of the R&D lab. Using survey-based measures of the dimensions of knowledge flows, we identify sources of systematic measurement error associated with backward citations to both patent and nonpatent references. We find that patent citations reflect the codified knowledge flows from public research, but they appear to miss knowledge flows that are more private and contract-based in nature, as well as those used in firm basic research. We also find that firms' patenting and citing strategies affect patent citations, making citations less indicative of knowledge flows. In addition, an illustrative analysis examining the magnitude and direction of measurement error bias suggests that measuring knowledge flows with patent citations can lead to substantial underestimation of the effect of public research on firms' innovative performance. Throughout our analyses we find that nonpatent references (e.g., journals, conferences, etc.), not the more commonly used patent references, are a better measure of knowledge originating from public research.
Handle: RePEc:nbr:nberwo:18292
Template-Type: ReDIF-Paper 1.0
Title: Measuring Price Elasticities for Residential Water Demand with Limited Information
Classification-JEL: H42; Q25
Author-Name: H. Allen Klaiber
Author-Person: pkl93
Author-Name: V. Kerry Smith
Author-Person: psm143
Author-Name: Michael Kaminsky
Author-Name: Aaron Strong
Note: EEE
Number: 18293
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18293
File-URL: http://www.nber.org/papers/w18293.pdf
File-Format: application/pdf
Publication-Status: published as H. Allen Klaiber & V. Kerry Smith & Michael Kaminsky & Aaron Strong, 2014. "Measuring Price Elasticities for Residential Water Demand with Limited Information," Land Economics, University of Wisconsin Press, vol. 90(1), pages 100-113.
Abstract: This paper exploits the seasonal and annual changes in marginal prices for water to estimate the price elasticity of demand by residential households for water. It uses the changes in distributions of water using the census block group levels in response to changes in marginal prices of water for matched months across years. This strategy reduces the interaction effects of outdoor use and demographic fact in determining responsiveness to price. By comparing years that vary in overall water availability the framework can recover measures of how responses to price vary with season and draught conditions. The application is the urban Phoenix metropolitan area.
Handle: RePEc:nbr:nberwo:18293
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Right to Carry Laws and the NRC Report: The Latest Lessons for the Empirical Evaluation of Law and Policy
Classification-JEL: K0
Author-Name: Abhay Aneja
Author-Name: John J. Donohue III
Author-Person: pdo40
Author-Name: Alexandria Zhang
Note: LE
Number: 18294
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18294
File-URL: http://www.nber.org/papers/w18294.pdf
File-Format: application/pdf
Publication-Status: published as A. Aneja & J. J. Donohue & A. Zhang, 2011. "The Impact of Right-to-Carry Laws and the NRC Report: Lessons for the Empirical Evaluation of Law and Policy," American Law and Economics Review, vol 13(2), pages 565-631.
Abstract: For over a decade, there has been a spirited academic debate over the impact on crime of laws that grant citizens the presumptive right to carry concealed handguns in public – so-called right-to-carry (RTC) laws. In 2004, the National Research Council (NRC) offered a critical evaluation of the “More Guns, Less Crime” hypothesis using county-level crime data for the period 1977-2000. 15 of the 16 academic members of the NRC panel essentially concluded that the existing research was inadequate to conclude that RTC laws increased or decreased crime. One member of the panel thought the NRC's panel data regressions showed that RTC laws decreased murder, but the other 15 responded by saying that “the scientific evidence does not support” that position. We evaluate the NRC evidence, and improve and expand on the report’s county data analysis by analyzing an additional six years of county data as well as state panel data for the period 1979-2010. We also present evidence using both a more plausible version of the Lott and Mustard specification, as well as our own preferred specification (which, unlike the Lott and Mustard model presented in the NRC report, does control for rates of incarceration and police). While we have considerable sympathy with the NRC’s majority view about the difficulty of drawing conclusions from simple panel data models and re-affirm its finding that the conclusion of the dissenting panel member that RTC laws reduce murder has no statistical support, we disagree with the NRC report’s judgment on one methodological point: the NRC report states that cluster adjustments to correct for serial correlation are not needed in these panel data regressions, but our randomization tests show that without such adjustments the Type 1 error soars to 22 - 73 percent. Our paper highlights some important questions to consider when using panel data methods to resolve questions of law and policy effectiveness. We buttress the NRC’s cautious conclusion regarding the effects of RTC laws by showing how sensitive the estimated impact of RTC laws is to different data periods, the use of state versus county data, particular specifications (especially the Lott-Mustard inclusion of 36 highly collinear demographic variables), and the decision to control for state trends. Across the basic seven Index I crime categories, the strongest evidence of a statistically significant effect would be for aggravated assault, with 11 of 28 estimates suggesting that RTC laws increase this crime at the .10 confidence level. An omitted variable bias test on our preferred Table 8a results suggests that our estimated 8 percent increase in aggravated assaults from RTC laws may understate the true harmful impact of RTC laws on aggravated assault, which may explain why this finding is only significant at the .10 level in many of our models. Our analysis of the year-by-year impact of RTC laws also suggests that RTC laws increase aggravated assaults. Our analysis of admittedly imperfect gun aggravated assaults provides suggestive evidence that RTC laws may be associated with large increases in this crime, perhaps increasing such gun assaults by almost 33 percent. In addition to aggravated assault, the most plausible state models conducted over the entire 1979-2010 period provide evidence that RTC laws increase rape and robbery (but usually only at the .10 level). In contrast, for the period from 1999-2010 (which seeks to remove the confounding influence of the crack cocaine epidemic), the preferred state model (for those who accept the Wolfers proposition that one should not control for state trends) yields statistically significant evidence for only one crime -- suggesting that RTC laws increase the rate of murder at the .05 significance level. It will be worth exploring whether other methodological approaches and/or additional years of data will confirm the results of this panel-data analysis and clarify some of the highly sensitive results and anomalies (such as the occasional estimates that RTC laws lead to higher rates of property crime) that have plagued this inquiry for over a decade.
Handle: RePEc:nbr:nberwo:18294
Template-Type: ReDIF-Paper 1.0
Title: Convergence and Modernization Revisited
Classification-JEL: E02; O4; O43; O47
Author-Name: Robert J. Barro
Author-Person: pba251
Note: EFG ME PE
Number: 18295
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18295
File-URL: http://www.nber.org/papers/w18295.pdf
File-Format: application/pdf
Abstract: In an 80-country panel since the 1960s, the convergence rate for per capita GDP is around 1.7% per year. This "beta convergence" is conditional on an array of explanatory variables that hold constant countries' long-run characteristics. The introduction of country fixed effects generates a much higher-and, I argue, misleading-convergence rate. In a much longer time frame-34 countries with GDP data starting between 1870 and 1896-estimation with country fixed effects is more appropriate, and the estimated convergence rate is around 2.4% per year. Combining the point estimates from the post-1960s and post-1870 panels suggests that the conditional convergence rate is between 1.7% and 2.4% per year, an interval that contains the "iron-law" rate of 2%. In the post-1960s panel, estimation without country fixed effects supports the modernization hypothesis, in the form of positive effects of per capita GDP and schooling on democracy and maintenance of law and order. The long-term panel with country fixed effects also supports modernization, in the sense of positive effects of per capita GDP and schooling on the Polity indicator for democracy. A measure of dispersion-the standard deviation of the log of per capita GDP across 25 countries-is reasonably stable since 1870. This lack of "sigma convergence" is consistent with the presence of beta convergence. For 34 countries-including China and India-observed since 1896, the dispersion of per capita GDP declines since the late 1970s, especially when the country data are weighted by population. This sigma convergence reflects particularly the incorporation of China and India into the world market economy. For 29 countries since 1919, the levels and trends in cross-country dispersion are similar for consumption and GDP.
Handle: RePEc:nbr:nberwo:18295
Template-Type: ReDIF-Paper 1.0
Title: When the Levee Breaks: Black Migration and Economic Development in the American South
Classification-JEL: N32; N52; O10
Author-Name: Richard Hornbeck
Author-Name: Suresh Naidu
Note: DAE EFG
Number: 18296
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18296
File-URL: http://www.nber.org/papers/w18296.pdf
File-Format: application/pdf
Publication-Status: published as Richard Hornbeck & Suresh Naidu, 2014. "When the Levee Breaks: Black Migration and Economic Development in the American South," American Economic Review, American Economic Association, vol. 104(3), pages 963-90, March.
Abstract: In the American South, post-bellum economic stagnation has been partially attributed to white landowners' access to low-wage black labor; indeed, Southern economic convergence from 1940 to 1970 was associated with substantial black out-migration. This paper examines the impact of the Great Mississippi Flood of 1927 on agricultural development. Flooded counties experienced an immediate and persistent out-migration of black population. Over time, landowners in flooded counties dramatically mechanized and modernized agricultural production relative to landowners in nearby similar non-flooded counties. Landowners resisted black out-migration, however, benefiting from the status quo system of labor-intensive agricultural production.
Handle: RePEc:nbr:nberwo:18296
Template-Type: ReDIF-Paper 1.0
Title: Private Equity and the Innovation Strategies of Entrepreneurial Firms: Empirical Evidence from the Small Business Innovation Research Program
Classification-JEL: G24; G34; L26; O31; O33; O38
Author-Name: Albert N. Link
Author-Person: pli161
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Author-Name: Donald S. Siegel
Note: EH IO PE PR
Number: 18297
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18297
File-URL: http://www.nber.org/papers/w18297.pdf
File-Format: application/pdf
Publication-Status: published as Peter Klein & Donald Siegel & Nick Wilson & Mike Wright & Albert N. Link & Christopher J. Ruhm & Donald S. Siegel, 2014. "Private Equity and the Innovation Strategies of Entrepreneurial Firms: Empirical Evidence from the Small Business Innovation Research Program," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(2), pages 103-113, 03.
Abstract: There is great interest in evaluating the impact of private equity investments on innovation and economic growth. However, there is no direct empirical evidence on the effects of such transactions on the innovation strategies of entrepreneurial firms. We fill this gap by examining a rich project-level data set consisting of entrepreneurial firms receiving Small Business Innovation Research (SBIR) program research awards. We find that SBIR firms attracting private equity investments are significantly more likely to license and sell their technology rights and engage in collaborative research and development agreements. Our results suggest that private equity investments accelerate the development and commercialization of research-based technologies, thus contributing to economic growth. We conclude that both public investments and private investments are key to innovation performance.
Handle: RePEc:nbr:nberwo:18297
Template-Type: ReDIF-Paper 1.0
Title: Have the Poor Always Been Less Likely to Migrate? Evidence From Inheritance Practices During the Age of Mass Migration
Classification-JEL: J61
Author-Name: Ran Abramitzky
Author-Person: pab108
Author-Name: Leah Platt Boustan
Author-Person: pbo332
Author-Name: Katherine Eriksson
Author-Person: per213
Note: DAE LS
Number: 18298
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18298
File-URL: http://www.nber.org/papers/w18298.pdf
File-Format: application/pdf
Publication-Status: published as Abramitzky, Ran & Boustan, Leah Platt & Eriksson, Katherine, 2013. "Have the poor always been less likely to migrate? Evidence from inheritance practices during the age of mass migration," Journal of Development Economics, Elsevier, vol. 102(C), pages 2-14.
Abstract: Using novel data on 50,000 Norwegian men, we study the effect of wealth on the probability of internal or international migration during the Age of Mass Migration (1850-1913), a time when the US maintained an open border to European immigrants. We do so by exploiting variation in parental wealth and in expected inheritance by birth order, gender composition of siblings, and region. We find that wealth discouraged migration in this era, suggesting that the poor could be more likely to move if migration restrictions were lifted today. We discuss the implications of these historical findings to developing countries.
Handle: RePEc:nbr:nberwo:18298
Template-Type: ReDIF-Paper 1.0
Title: Removing Financial Barriers to Organ and Bone Marrow Donation: The Effect of Leave and Tax Legislation in the U.S.
Classification-JEL: D64; H41; I12; J18; K32
Author-Name: Nicola Lacetera
Author-Person: pla61
Author-Name: Mario Macis
Author-Person: pma869
Author-Name: Sarah S. Stith
Author-Person: pst543
Note: EH LE LS
Number: 18299
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18299
File-URL: http://www.nber.org/papers/w18299.pdf
File-Format: application/pdf
Publication-Status: published as Lacetera, Nicola & Macis, Mario & Stith, Sarah S., 2014. "Removing financial barriers to organ and bone marrow donation: The effect of leave and tax legislation in the U.S," Journal of Health Economics, Elsevier, vol. 33(C), pages 43-56.
Abstract: In an attempt to alleviate the shortfall in organs and bone marrow available for transplants, many U.S. states passed legislation providing leave to organ and bone marrow donors and/or tax benefits for live and deceased organ and bone marrow donations and to employers of donors. We exploit cross-state variation in the timing and passage of such legislation to analyze its impact on organ donations by living and deceased persons, on measures of the quality of the organs transplanted, and on the number of bone marrow donations. We find that these provisions did not have a significant impact on the quantity of organs donated. The leave legislation, however, did have a positive impact on bone marrow donations. We also find some evidence of a positive impact on the quality of organ transplants, measured by post-transplant survival rates. Our results suggest that these types of legislation work for moderately invasive procedures such as bone marrow donation, but may be too low for organ donation, which is riskier and more burdensome to the donor.
Handle: RePEc:nbr:nberwo:18299
Template-Type: ReDIF-Paper 1.0
Title: Risk and Returns to Education
Classification-JEL: G12; H52; I21; J24
Author-Name: Jeffrey Brown
Author-Person: pbr264
Author-Name: Chichun Fang
Author-Name: Francisco Gomes
Author-Person: pgo69
Note: AP ED LS PE
Number: 18300
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18300
File-URL: http://www.nber.org/papers/w18300.pdf
File-Format: application/pdf
Abstract: We analyze the returns to education in a life-cycle framework that incorporates risk preferences, earnings volatility (including unemployment), and a progressive income tax and social insurance system. We show that such a framework significantly reduces the measured gains from education relative to simple present-value calculations, although the gains remain significant. For example, for a range of preference parameters, we find that individuals should be willing to pay 300 to 500 (200 to 250) thousand dollars to obtain a college (high school) degree in order to benefit from the 32 to 42 percent (20 to 38 percent) increase in annual certainty-equivalent consumption. We also explore how the measured value of education varies with preference parameters, by gender, and across time. In contrast to findings in the education wage-premia literature, which focuses on present values and which we replicate in our data, our model indicates that the gains from college education were flat in the 1980s and actually decreased significantly in 1991-2007 period. On the other hand, the gains to a high school education have increased quite dramatically over time. We also show that both high school and college education help to decrease the gender gap in life-time earnings, contrary again to the conclusion from wage premia calculations.
Handle: RePEc:nbr:nberwo:18300
Template-Type: ReDIF-Paper 1.0
Title: The Choice of Discount Rate for Climate Change Policy Evaluation
Classification-JEL: D61; D63; H43; Q54
Author-Name: Lawrence H. Goulder
Author-Name: Roberton C. Williams III
Author-Person: pwi38
Note: EEE PE
Number: 18301
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18301
File-URL: http://www.nber.org/papers/w18301.pdf
File-Format: application/pdf
Publication-Status: published as Lawrence H. Goulder & Roberton C. Williams, 2012. "The Choice Of Discount Rate For Climate Change Policy Evaluation," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1250024-1-1.
Abstract: Nearly all discussions about the appropriate consumption discount rate for climate-change policy evaluation assume that a single discount rate concept applies. We argue that two distinct concepts and associated rates apply. We distinguish a social-welfare-equivalent discount rate appropriate for determining whether a given policy would augment social welfare (according to a postulated social welfare function) and a finance-equivalent discount rate suitable for determining whether the policy would offer a potential Pareto improvement. Distinguishing the two rates helps resolve arguments as to whether the choice of discount rate should be based on ethical considerations or empirical information (such as market interest rates), and about whether the discount rate should serve a prescriptive or descriptive role. Separating out the two rates also helps clarify disputes about the appropriate stringency of climate change policy. We find that the structure of leading numerical optimization models used for climate policy analysis may have helped contribute to the blurring of the differences between the two rates. In addition, we indicate that uncertainty about underlying ethical parameters or market conditions implies that both rates should decline as the time-horizon increases.
Handle: RePEc:nbr:nberwo:18301
Template-Type: ReDIF-Paper 1.0
Title: Did the Americanization Movement Succeed? An Evaluation of the Effect of English-Only and Compulsory Schools Laws on Immigrants' Education
Classification-JEL: I28; K30; N32
Author-Name: Adriana Lleras-Muney
Author-Person: pll45
Author-Name: Allison Shertzer
Author-Person: psh847
Note: DAE ED
Number: 18302
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18302
File-URL: http://www.nber.org/papers/w18302.pdf
File-Format: application/pdf
Abstract: In the early twentieth century, education legislation was often passed based on arguments that new laws were needed to force immigrants to learn English and "Americanize." We provide the first estimates of the effect of statutes requiring English as the language of instruction and compulsory schooling laws on the school enrollment, work, literacy and English fluency of immigrant children from 1910 to 1930. English schooling statutes did increase the literacy of foreign-born children, though only modestly. Compulsory schooling and continuation school laws raised immigrants' enrollment and the effects were much larger for children born abroad than for native-born children.
Handle: RePEc:nbr:nberwo:18302
Template-Type: ReDIF-Paper 1.0
Title: Banks, Sovereign Debt and the International Transmission of Business Cycles
Classification-JEL: F4; G21; H63
Author-Name: Luca Guerrieri
Author-Person: pgu134
Author-Name: Matteo Iacoviello
Author-Person: pia2
Author-Name: Raoul Minetti
Author-Person: pmi87
Note: IFM
Number: 18303
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18303
File-URL: http://www.nber.org/papers/w18303.pdf
File-Format: application/pdf
Publication-Status: published as Luca Guerrieri & Matteo Iacoviello & Raoul Minetti, 2013. "Banks, Sovereign Debt, and the International Transmission of Business Cycles," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 181 - 213.
Publication-Status: published as Banks, Sovereign Debt, and the International Transmission of Business Cycles, Luca Guerrieri, Matteo Iacoviello, Raoul Minetti. in NBER International Seminar on Macroeconomics 2012, Giavazzi and West. 2013
Abstract: This paper studies the international propagation of sovereign debt default. We posit a two-country economy where capital constrained banks grant loans to firms and invest in bonds issued by the domestic and the foreign government. The model economy is calibrated to data from Europe, with the two countries representing the Periphery (Greece, Italy, Portugal and Spain) and the Core, respectively. Large contractionary shocks in the Periphery trigger sovereign default. We find sizable spillover effects of default from Periphery to the Core through a drop in the volume of credit extended by the banking sector.
Handle: RePEc:nbr:nberwo:18303
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Analysis of the Fed's Term Auction Facility
Classification-JEL: E44; E52; E58; G01; G21; G28
Author-Name: Efraim Benmelech
Author-Person: pbe459
Note: AP CF EFG
Number: 18304
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18304
File-URL: http://www.nber.org/papers/w18304.pdf
File-Format: application/pdf
Publication-Status: published as “An Empirical Analysis of the Fed’s Term Auction Facility,” CATO Papers on Public Policy, (2012), 2 57-91.
Abstract: The U.S. Federal Reserve used the Term Auction Facility (TAF) to provide term funding to eligible depository institutions from December 2007 to March 2010. According to the Fed, the purpose of TAF was to inject term funds through a broader range of counterparties and against a broader range of collateral than open market operations. The overall goal of the TAF was to ensure that liquidity provisions could be disseminated efficiently even when the unsecured interbank markets were under stress. In this paper I use the TAF micro-level loan data and find that about 60 percent of TAF loans went to foreign banks that pledged asset-backed securities as collateral for these loans. The data and analysis illustrate the major role that foreign - in particular, European - banks currently play in the U.S. financial system and the resultant currency mismatch in their balance sheets. The data suggest that foreign banks had to borrow from the Federal Reserve Bank to meet their dollar-denominated liabilities.
Handle: RePEc:nbr:nberwo:18304
Template-Type: ReDIF-Paper 1.0
Title: Risks For the Long Run: Estimation with Time Aggregation
Classification-JEL: E2; G1; G12
Author-Name: Ravi Bansal
Author-Person: pba818
Author-Name: Dana Kiku
Author-Name: Amir Yaron
Author-Person: pya156
Note: AP EFG ME
Number: 18305
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18305
File-URL: http://www.nber.org/papers/w18305.pdf
File-Format: application/pdf
Publication-Status: published as Ravi Bansal & Dana Kiku & Amir Yaron, 2016. "Risks for the long run: Estimation with time aggregation," Journal of Monetary Economics, vol 82, pages 52-69.
Abstract: The long-run risks (LRR) asset pricing model emphasizes the role of low-frequency movements in expected growth and economic uncertainty, along with investor preferences for early resolution of uncertainty, as an important economic-channel that determines asset prices. In this paper, we estimate the LRR model. To accomplish this we develop a method that allows us to estimate models with recursive preferences, latent state variables, and time-aggregated data. Time-aggregation makes the decision interval of the agent an important parameter to estimate. We find that time-aggregation can significantly affect parameter estimates and statistical inference. Imposing the pricing restrictions and explicitly accounting for time-aggregation, we show that the estimated LRR model can account for the joint dynamics of aggregate consumption, asset cash flows and prices, including the equity premia, risk-free rate and volatility puzzles.
Handle: RePEc:nbr:nberwo:18305
Template-Type: ReDIF-Paper 1.0
Title: The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment
Classification-JEL: Q40; Q48; Q54; Q58
Author-Name: Richard Schmalensee
Author-Person: psc313
Author-Name: Robert Stavins
Author-Person: pst167
Note: EEE PE POL
Number: 18306
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18306
File-URL: http://www.nber.org/papers/w18306.pdf
File-Format: application/pdf
Publication-Status: published as Richard Schmalensee & Robert N. Stavins, 2013. "The SO 2 Allowance Trading System: The Ironic History of a Grand Policy Experiment," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 103-22, Winter.
Abstract: Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, this system was put in place to curb acid rain, but the main source of benefits from it was unexpected. Second, a substantial source of this system's cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away.
Handle: RePEc:nbr:nberwo:18306
Template-Type: ReDIF-Paper 1.0
Title: Open Borders
Classification-JEL: E25; F11; F22; J61
Author-Name: John Kennan
Author-Person: pke13
Note: EFG ITI LS
Number: 18307
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18307
File-URL: http://www.nber.org/papers/w18307.pdf
File-Format: application/pdf
Publication-Status: published as John Kennan, 2013. "Open Borders," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages L1-L13, April.
Abstract: There is a large body of evidence indicating that cross-country differences in income levels are associated with differences in productivity. If workers are much more productive in one country than in another, restrictions on immigration lead to large efficiency losses. The paper quantifies these losses, using a model in which efficiency differences are labor-augmenting, and free trade in product markets leads to factor price equalization, so that wages are equal across countries when measured in efficiency units of labor. The estimated gains from removing immigration restrictions are huge. Using a simple static model of migration costs, the estimated net gains from open borders are about the same as the gains from a growth miracle that more than doubles the income level in less-developed countries.
Handle: RePEc:nbr:nberwo:18307
Template-Type: ReDIF-Paper 1.0
Title: The Validity of Consumption Data: Are the Consumer Expenditure Interview and Diary Surveys Informative?
Classification-JEL: C81; C82; C83; D12; D31; I32
Author-Name: Adam Bee
Author-Name: Bruce D. Meyer
Author-Person: pme273
Author-Name: James X. Sullivan
Note: AG DAE EFG LS PE TWP
Number: 18308
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18308
File-URL: http://www.nber.org/papers/w18308.pdf
File-Format: application/pdf
Publication-Status: published as The Validity of Consumption Data: Are the Consumer Expenditure Interview and Diary Surveys Informative?, Adam Bee, Bruce D. Meyer, James X. Sullivan. in Improving the Measurement of Consumer Expenditures, Carroll, Crossley, and Sabelhaus. 2015
Abstract: This paper examines the quality of data collected in the Consumer Expenditure (CE) Survey, which is the source for the Consumer Price Index weights and is the main source of U.S. consumption microdata. We compare reported spending on a large number of categories of goods and services to comparable national income account data. We do this separately for the two components of the CE--the Interview Survey and the Diary Survey--rather than a combination that has been used in past comparisons. We find that most of the largest categories of consumption are measured well in the Interview Survey as the ratio to the national account data is close to one and has not declined appreciably over time. Several other large categories are reported at a low rate or have seen the ratio to the national accounts decline over time. The results are less encouraging for the Diary Survey. There is no large Diary category that is both measured well and reported at a higher rate than in the Interview Survey. We also compare the ownership of and the value of durables, such as homes and cars, in the CE to other sources. This evidence suggests the CE performs fairly well. Based on observable characteristics, the CE Survey appears to be fairly representative, although there is strong evidence of under-representation at the top of the income distribution and under-reporting of income and expenditures at the top. We then examine the precision of the two surveys and the frequency of no spending overall or for a given spending category. In the Diary Survey, we find much greater dispersion in spending and the dispersion relative to the Interview Survey varies across goods and over time. Diary respondents are much more likely to report zero spending for a consumption category, and a high and increasing fraction of respondents reporting zero for all categories. These results suggest that using Diary data to assess inequality trends and other distributional outcomes is likely to lead to biased and misleading results. Our results have important implications for interpreting and properly using CE data and how best to redesign the CE.
Handle: RePEc:nbr:nberwo:18308
Template-Type: ReDIF-Paper 1.0
Title: Saving Teens: Using a Policy Discontinuity to Estimate the Effects of Medicaid Eligibility
Classification-JEL: I13; I14
Author-Name: Bruce D. Meyer
Author-Person: pme273
Author-Name: Laura R. Wherry
Author-Person: pwh68
Note: CH EH LS PE
Number: 18309
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18309
File-URL: http://www.nber.org/papers/w18309.pdf
File-Format: application/pdf
Publication-Status: published as Laura R. Wherry & Bruce D. Meyer, 2016. "Saving Teens: Using a Policy Discontinuity to Estimate the Effects of Medicaid Eligibility," Journal of Human Resources, University of Wisconsin Press, vol. 51(3), pages 556-588.
Abstract: This paper uses a policy discontinuity to identify the immediate and long-term effects of public health insurance coverage during childhood. Our identification strategy exploits a unique feature of several early Medicaid expansions that extended eligibility only to children born after September 30, 1983. This feature resulted in a large discontinuity in the lifetime years of Medicaid eligibility of children at this birthdate cutoff. Those with family incomes at or just below the poverty line had close to five more years of eligibility if they were born just after the cutoff than if they were born just before. We use this discontinuity in eligibility to measure the impact of public health insurance on mortality by following cohorts of children born on either side of this cutoff from childhood through early adulthood. We examine changes in rates of mortality by the underlying causes of death, distinguishing between deaths due to internal and external causes. We also examine outcomes separately for black and white children. Our analysis shows that black children were more likely to be affected by the Medicaid expansions and gained twice the amount of eligibility as white children. We find a substantial effect of public eligibility during childhood on the later life mortality of black children at ages 15-18. The estimates indicate a 13-20 percent decrease in the internal mortality rate of black teens born after September 30, 1983. We find no evidence of an improvement in the mortality of white children under the expansions.
Handle: RePEc:nbr:nberwo:18309
Template-Type: ReDIF-Paper 1.0
Title: Immigration and Production Technology
Classification-JEL: J23; J24; J61; O31; O33
Author-Name: Ethan G. Lewis
Author-Person: ple579
Note: LS PR
Number: 18310
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18310
File-URL: http://www.nber.org/papers/w18310.pdf
File-Format: application/pdf
Publication-Status: published as “Immigration and Production Technology,” Annual Review of Economics 5, August 2013.
Abstract: Research on the labor market impact of immigration typically relies on a single-good model of production with separable capital. This article discusses theory and evidence that suggest that this standard model is too simple to capture the labor market impact of immigration. A reasonable level of capital-skill complementarity, for which there is considerable support outside research on immigration, alone reduces the relative wage impact of immigration by 40 percent compared to simulations with skill-neutral capital. Other models in which the production structure responds to skill mix changes, including models with endogenous choice of technique, directed technical change, or human capital spillovers, can also imply the impact of immigration is considerably different than in the standard model. This article discusses new research which tries to credibly evaluate such models using immigration-induced variation in skill mix, an approach with further potential, and evidence that immigration impacts innovation and firm formation.
Handle: RePEc:nbr:nberwo:18310
Template-Type: ReDIF-Paper 1.0
Title: Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program
Classification-JEL: E60; E65; G18; G21; H3
Author-Name: Sumit Agarwal
Author-Person: pag47
Author-Name: Gene Amromin
Author-Person: pam179
Author-Name: Itzhak Ben-David
Author-Name: Souphala Chomsisengphet
Author-Name: Tomasz Piskorski
Author-Person: ppi49
Author-Name: Amit Seru
Author-Person: pse308
Note: CF EFG PE
Number: 18311
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18311
File-URL: http://www.nber.org/papers/w18311.pdf
File-Format: application/pdf
Publication-Status: published as Sumit Agarwal & Gene Amromin & Itzhak Ben-David & Souphala Chomsisengphet & Tomasz Piskorski & Amit Seru, 2017. "Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program," Journal of Political Economy, University of Chicago Press, vol. 125(3), pages 654-712.
Abstract: We evaluate the effects of the 2009 Home Affordable Modification Program (HAMP) that provided intermediaries with sizeable financial incentives to renegotiate mortgages. HAMP increased intensity of renegotiations and prevented substantial number of foreclosures but reached just one-third of its targeted indebted households. This shortfall was in large part due to low renegotiation intensity of a few large intermediaries and was driven by intermediary-specific factors. Exploiting regional variation in the intensity of program implementation by intermediaries suggests that the program was associated with lower rate of foreclosures, consumer debt delinquencies, house price declines, and an increase in durable spending.
Handle: RePEc:nbr:nberwo:18311
Template-Type: ReDIF-Paper 1.0
Title: Resident Networks and Firm Trade
Classification-JEL: F16; F30; G14
Author-Name: Lauren Cohen
Author-Name: Umit G. Gurun
Author-Person: pgu282
Author-Name: Christopher J. Malloy
Author-Person: pma1313
Note: AP ITI
Number: 18312
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18312
File-URL: http://www.nber.org/papers/w18312.pdf
File-Format: application/pdf
Abstract: We demonstrate that simply by using the ethnic makeup surrounding a firm's location, we can predict, on average, which trade links are valuable for firms. Using customs and port authority data on the international shipments of all U.S. publicly-traded firms, we show that firms are significantly more likely to trade with countries that have a strong resident population near their firm headquarters. We use the formation of World War II Japanese Internment Camps to isolate exogenous shocks to local ethnic populations, and identify a causal link between local networks and firm trade links. Firms that exploit their local networks (strategic traders) see significant increases in future sales growth and profitability, and outperform other importers and exporters by 5%-7% per year in risk-adjusted stock returns. In sum, our results document a surprisingly large impact of immigrants' economic role as conduits of information for firms in their new countries.
Handle: RePEc:nbr:nberwo:18312
Template-Type: ReDIF-Paper 1.0
Title: The Need for Enemies
Classification-JEL: D72
Author-Name: Leopoldo Fergusson
Author-Person: pfe176
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Ragnar Torvik
Author-Person: pto24
Author-Name: Juan F. Vargas
Author-Person: pva96
Note: POL
Number: 18313
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18313
File-URL: http://www.nber.org/papers/w18313.pdf
File-Format: application/pdf
Publication-Status: published as Leopoldo Fergusson & James A. Robinson & Ragnar Torvik & Juan F. Vargas, 2016. "The Need for Enemies," The Economic Journal, vol 126(593), pages 1018-1054.
Abstract: We develop a political economy model where some politicians have a comparative advantage in undertaking a task and this gives them an electoral advantage. This creates an incentive to underperform in the task in order to maintain their advantage. We interpret the model in the context of fighting against insurgents in a civil war and derive two main empirical implications which we test using Colombian data during the presidency of Álvaro Uribe. First, as long as rents from power are sufficiently important, large defeats for the insurgents should reduce the probability that politicians with comparative advantage, President Uribe, will fight the insurgents. Second, this effect should be larger in electorally salient municipalities. We find that after the three largest victories against the FARC rebel group, the government reduced its efforts to eliminate the group and did so differentially in politically salient municipalities. Our results therefore support the notion that such politicians need enemies to maintain their political advantage and act so as to keep the enemy alive.
Handle: RePEc:nbr:nberwo:18313
Template-Type: ReDIF-Paper 1.0
Title: International Prices and Endogenous Quality
Classification-JEL: F1; F12; F14
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: John Romalis
Note: ITI
Number: 18314
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18314
File-URL: http://www.nber.org/papers/w18314.pdf
File-Format: application/pdf
Publication-Status: published as Article: Robert C. Feenstra and John Romalis International Prices and Endogenous Quality* The Quarterly Journal of Economics first published online February 5, 2014 doi:10.1093/qje/qju001
Abstract: The unit values of internationally traded goods are heavily influenced by quality. We model this in an extended monopolistic competition framework where, in addition to choosing price, firms simultaneously choose quality. We allow countries to have non-homothetic demand for quality. The optimal choice of quality by firms reflects this non-homothetic demand as well as the costs of production, including specific transport costs, under the "Washington apples" effect. We estimate the implied gravity equation using detailed bilateral trade data for about 200 countries over 1984-2008. Our system identifies quality and quality-adjusted prices, from which we will construct price indexes for imports and exports for each country that will be incorporated into the next generation of the Penn World Table.
Handle: RePEc:nbr:nberwo:18314
Template-Type: ReDIF-Paper 1.0
Title: Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds
Classification-JEL: D24; E2; E66; J11; J15; O3; O31; O4; Q43
Author-Name: Robert J. Gordon
Author-Person: pgo50
Note: DAE EFG PR
Number: 18315
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18315
File-URL: http://www.nber.org/papers/w18315.pdf
File-Format: application/pdf
Abstract: This paper raises basic questions about the process of economic growth. It questions the assumption, nearly universal since Solow's seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever. There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely. Rather, the paper suggests that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history. The paper is only about the United States and views the future from 2007 while pretending that the financial crisis did not happen. Its point of departure is growth in per-capita real GDP in the frontier country since 1300, the U.K. until 1906 and the U.S. afterwards. Growth in this frontier gradually accelerated after 1750, reached a peak in the middle of the 20th century, and has been slowing down since. The paper is about "how much further could the frontier growth rate decline?" The analysis links periods of slow and rapid growth to the timing of the three industrial revolutions (IR's), that is, IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones) from 1960 to present. It provides evidence that IR #2 was more important than the others and was largely responsible for 80 years of relatively rapid productivity growth between 1890 and 1972. Once the spin-off inventions from IR #2 (airplanes, air conditioning, interstate highways) had run their course, productivity growth during 1972-96 was much slower than before. In contrast, IR #3 created only a short-lived growth revival between 1996 and 2004. Many of the original and spin-off inventions of IR #2 could happen only once - urbanization, transportation speed, the freedom of females from the drudgery of carrying tons of water per year, and the role of central heating and air conditioning in achieving a year-round constant temperature. Even if innovation were to continue into the future at the rate of the two decades before 2007, the U.S. faces six headwinds that are in the process of dragging long-term growth to half or less of the 1.9 percent annual rate experienced between 1860 and 2007. These include demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt. A provocative "exercise in subtraction" suggests that future growth in consumption per capita for the bottom 99 percent of the income distribution could fall below 0.5 percent per year for an extended period of decades.
Handle: RePEc:nbr:nberwo:18315
Template-Type: ReDIF-Paper 1.0
Title: Do Patent Pools Encourage Innovation? Evidence from 20 U.S. Industries under the New Deal
Classification-JEL: K0; L4; N22; O3
Author-Name: Ryan L. Lampe
Author-Name: Petra Moser
Author-Person: pmo257
Note: DAE IO PR
Number: 18316
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18316
File-URL: http://www.nber.org/papers/w18316.pdf
File-Format: application/pdf
Abstract: Patent pools, which allow competing firms to combine their patents, have emerged as a prominent mechanism to resolve litigation when multiple firms own patents for the same technology. This paper takes advantage of a window of regulatory tolerance under the New Deal to investigate the effects of pools on innovation within 20 industries. Difference-in-differences regressions imply a 16 percent decline in patenting in response to the creation of a pool. This decline is driven by technology fields in which a pool combined patents for substitute technologies by competing firms, suggesting that unregulated pools may discourage innovation by weakening competition to improve substitutes.
Handle: RePEc:nbr:nberwo:18316
Template-Type: ReDIF-Paper 1.0
Title: The Value of Bosses
Classification-JEL: J01; J24; J3
Author-Name: Edward P. Lazear
Author-Person: pla64
Author-Name: Kathryn L. Shaw
Author-Person: psh162
Author-Name: Christopher T. Stanton
Note: LS
Number: 18317
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18317
File-URL: http://www.nber.org/papers/w18317.pdf
File-Format: application/pdf
Publication-Status: published as Edward P. Lazear & Kathryn L. Shaw & Christopher T. Stanton, 2015. "The Value of Bosses," Journal of Labor Economics, vol 33(4), pages 823-861.
Abstract: How and by how much do supervisors enhance worker productivity? Using a company-based data set on the productivity of technology-based services workers, supervisor effects are estimated and found to be large. Replacing a boss who is in the lower 10% of boss quality with one who is in the upper 10% of boss quality increases a team's total output by more than would adding one worker to a nine member team. Workers assigned to better bosses are less likely to leave the firm. A separate normalization implies that the average boss is about 1.75 times as productive as the average worker.
Handle: RePEc:nbr:nberwo:18317
Template-Type: ReDIF-Paper 1.0
Title: Height, Skills, and Labor Market Outcomes in Mexico
Classification-JEL: I15; J24; O15
Author-Name: Tom Vogl
Note: CH EH LS
Number: 18318
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18318
File-URL: http://www.nber.org/papers/w18318.pdf
File-Format: application/pdf
Publication-Status: published as “Height, Skills, and Labor Market Outcomes in Mexico.” Journal of Development Economics, March 2014, 107: 84-‐‑96.
Abstract: Taller workers are paid higher wages. A prominent explanation for this pattern is that physical growth and cognitive development share childhood inputs, inducing a correlation between adult height and two productive skills: strength and intelligence. This paper explores the relative roles of strength and intelligence in explaining the labor market height premium in Mexico. While cognitive test scores account for a limited share of the height premium, roughly half of the premium can be attributed to the educational and occupational choices of taller workers. Taller workers obtain more education and sort into occupations with greater intelligence requirements and lower strength requirements, suggesting that the height premium partly reflects a return to cognitive skill.
Handle: RePEc:nbr:nberwo:18318
Template-Type: ReDIF-Paper 1.0
Title: Marriage Institutions and Sibling Competition: Evidence from South Asia
Classification-JEL: I25; J12; O12
Author-Name: Tom Vogl
Note: CH LS
Number: 18319
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18319
File-URL: http://www.nber.org/papers/w18319.pdf
File-Format: application/pdf
Publication-Status: published as “Marriage Institutions and Sibling Competition: Evidence from South Asia.” Quarterly Journal of Economics, August 2013, 128(3): 1017-‐‑1072.
Abstract: Using data from South Asia, this paper examines how arranged marriage cultivates rivalry among sisters. During marriage search, parents with multiple daughters reduce the reservation quality for an older daughter's groom, rushing her marriage to allow sufficient time to marry off her younger sisters. Relative to younger brothers, younger sisters increase a girl's marriage risk; relative to younger singleton sisters, younger twin sisters have the same effect. These effects intensify in marriage markets with lower sex ratios or greater parental involvement in marriage arrangements. In contrast, older sisters delay a girl's marriage. Because girls leave school when they marry and face limited earnings opportunities when they reach adulthood, the number of sisters has well-being consequences over the lifecycle. Younger sisters cause earlier school-leaving, lower literacy, a match to a husband with less education and a less-skilled occupation, and (marginally) lower adult economic status. Data from a broader set of countries indicate that these cross-sister pressures on marriage age are common throughout the developing world, although the schooling costs vary by setting.
Handle: RePEc:nbr:nberwo:18319
Template-Type: ReDIF-Paper 1.0
Title: Race and the Politics of Close Elections
Classification-JEL: C18; D72; J00
Author-Name: Tom Vogl
Note: LS POL
Number: 18320
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18320
File-URL: http://www.nber.org/papers/w18320.pdf
File-Format: application/pdf
Publication-Status: published as “Race and the Politics of Close Elections.” Journal of Public Economics, January 2014, 109: 101-‐‑113.
Abstract: Elections between black and white candidates tend to involve close margins and high turnout. Using a novel dataset of municipal vote returns during the rise of black mayors in U.S. cities, this paper establishes new facts about turnout and competition in close interracial elections. In the South, but not the North, close black victories were more likely than close black losses, involved higher turnout than close black losses, and were more likely than close black losses to be followed by subsequent black victories. These results are consistent with a model in which the historical exclusion of Southern blacks from politics made them disproportionately sensitive to mobilization efforts by political elites, leading to a black candidate advantage in close elections. The results contribute to a growing body of evidence that the outcomes of reasonably close elections are not always random, which suggests that detailed knowledge of the electoral context is a precondition to regression discontinuity analyses based on vote shares.
Handle: RePEc:nbr:nberwo:18320
Template-Type: ReDIF-Paper 1.0
Title: The Cost of Financial Frictions for Life Insurers
Classification-JEL: G01; G22; G28
Author-Name: Ralph S.J. Koijen
Author-Person: pko589
Author-Name: Motohiro Yogo
Author-Person: pyo20
Note: AP CF EFG IO ME PE
Number: 18321
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18321
File-URL: http://www.nber.org/papers/w18321.pdf
File-Format: application/pdf
Publication-Status: published as Ralph S. J. Koijen & Motohiro Yogo, 2015. "The Cost of Financial Frictions for Life Insurers," American Economic Review, American Economic Association, vol. 105(1), pages 445-75, January.
Abstract: During the financial crisis, life insurers sold long-term policies at deep discounts relative to actuarial value. The average markup was as low as –19 percent for annuities and –57 percent for life insurance. This extraordinary pricing behavior was due to financial and product market frictions, interacting with statutory reserve regulation that allowed life insurers to record far less than a dollar of reserve per dollar of future insurance liability. We identify the shadow cost of capital through exogenous variation in required reserves across different types of policies. The shadow cost was $0.96 per dollar of statutory capital for the average company in November 2008.
Handle: RePEc:nbr:nberwo:18321
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Income and Immigration Policies on International Migration
Classification-JEL: E25; F22; J61
Author-Name: Francesc Ortega
Author-Person: por100
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: ITI LS
Number: 18322
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18322
File-URL: http://www.nber.org/papers/w18322.pdf
File-Format: application/pdf
Publication-Status: published as “The Effect of Income and Immigration Policies on International Migrations” (with Francesc Ortega) Migration Studies, Vol. 1 Issue 1, March 2013, Oxford University Press.
Abstract: This paper makes two contributions to the literature on the determinants of international migration flows. First, we compile a new dataset on annual bilateral migration flows covering 15 OECD destination countries and 120 sending countries for the period 1980-2006. We also collect data on time-varying immigration policies that regulate the entry of immigrants in our destination countries over this period. Second, we extend the empirical model of migration choice across multiple destinations developed by Grogger and Hanson (2011) by allowing for unobserved individual heterogeneity between migrants and non-migrants. Our estimates show that international migration flows are highly responsive to income per capita at destination. This elasticity is twice as high for within-EU migration, reflecting the higher degree of labor mobility within the European Union. We also find that tightening of laws regulating immigrant entry reduce rapidly and significantly their flow.
Handle: RePEc:nbr:nberwo:18322
Template-Type: ReDIF-Paper 1.0
Title: A Continuity Refinement for Rational Expectations Solutions
Classification-JEL: C00; C61; C62
Author-Name: Bennett T. McCallum
Note: EFG ME TWP
Number: 18323
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18323
File-URL: http://www.nber.org/papers/w18323.pdf
File-Format: application/pdf
Abstract: Linear RE models typically possess a multiplicity of solutions. Consider, however, the requirement that the solution coefficients must not be infinitely discontinuous in the model's structural parameters. In particular, we require that the solutions should be continuous in the limit as those parameters, which express quantitatively the extent to which expectations affect endogenous variables, go to zero. The paper shows that under this condition there is, for a very broad class of linear RE models, only a single solution.
Handle: RePEc:nbr:nberwo:18323
Template-Type: ReDIF-Paper 1.0
Title: The Effect of School Choice on Intrinsic Motivation and Academic Outcomes
Classification-JEL: I20; I21; I24
Author-Name: Justine S. Hastings
Author-Person: pha804
Author-Name: Christopher A. Neilson
Author-Person: pne96
Author-Name: Seth D. Zimmerman
Author-Person: pzi155
Note: CH ED
Number: 18324
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18324
File-URL: http://www.nber.org/papers/w18324.pdf
File-Format: application/pdf
Abstract: Using data on student outcomes and school choice lotteries from a low-income urban school district, we examine how school choice can affect student outcomes through increased motivation and personal effort as well as through improved school and peer inputs. First we use unique daily data on individual-level student absences and suspensions to show that lottery winners have significantly lower truancies after they learn about lottery outcomes but before they enroll in their new schools. The effects are largest for male students entering high school, whose truancy rates decline by 21% in the months after winning the lottery. We then examine the impact attending a chosen school has on student test score outcomes. We find substantial test score gains from attending a charter school and some evidence that choosing and attending a high value-added magnet school improves test scores as well. Our results contribute to current evidence that school choice programs can effectively raise test scores of participants. Our findings suggest that this may occur both through an immediate effect on student behavior and through the benefit of attending a higher-performing school.
Handle: RePEc:nbr:nberwo:18324
Template-Type: ReDIF-Paper 1.0
Title: Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development
Classification-JEL: D21; D24; D83; D92; L20; M13; O12
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Ryan Knight
Author-Name: Christopher Udry
Author-Person: pud2
Note: CF LE LS
Number: 18325
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18325
File-URL: http://www.nber.org/papers/w18325.pdf
File-Format: application/pdf
Abstract: Many basic economic theories with perfectly functioning markets do not predict the existence of the vast number of microenterprises readily observed across the world. We put forward a model that illuminates why financial and managerial capital constraints may impede experimentation, and thus limit learning about the profitability of alternative firm sizes. The model shows how lack of information about one's own type, but willingness to experiment to learn one's type, may lead to short-run negative expected returns to investments on average, with some outliers succeeding. To test the model we put forward first a motivating experiment from Ghana, and second a small meta-analysis of other experiments. In the Ghana experiment, we provide inputs to microenterprises, specifically financial capital (a cash grant) and managerial capital (consulting services), to catalyze adoption of investments and practices aimed towards enterprise growth. We find that entrepreneurs invest the cash, and take the advice, but both lead to lower profits on average. In the long run, they revert back to their prior scale of operations. The small meta analysis includes results from 18 other experiments in which either capital or managerial capital were relaxed, and find mixed support for this theory.
Handle: RePEc:nbr:nberwo:18325
Template-Type: ReDIF-Paper 1.0
Title: Do Higher Tobacco Taxes Reduce Adult Smoking? New Evidence of the Effect of Recent Cigarette Tax Increases on Adult Smoking
Classification-JEL: I12; I18
Author-Name: Kevin Callison
Author-Person: pca1234
Author-Name: Robert Kaestner
Author-Person: pka42
Note: EH
Number: 18326
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18326
File-URL: http://www.nber.org/papers/w18326.pdf
File-Format: application/pdf
Publication-Status: published as Kevin Callison & Robert Kaestner, 2014. "Do Higher Tobacco Taxes Reduce Adult Smoking? New Evidence Of The Effect Of Recent Cigarette Tax Increases On Adult Smoking," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 155-172, 01.
Abstract: There is a general consensus among policymakers that raising tobacco taxes reduces cigarette consumption. However, evidence that tobacco taxes reduce adult smoking is relatively sparse. In this paper, we extend the literature in two ways: using data from the Current Population Survey Tobacco Use Supplements we focus on recent, large tax changes, which provide the best opportunity to empirically observe a response in cigarette consumption, and employ a novel paired difference-in-differences technique to estimate the association between tax increases and cigarette consumption. Estimates indicate that, for adults, the association between cigarette taxes and either smoking participation or smoking intensity is negative, small and not usually statistically significant. Our evidence suggests that increases in cigarette taxes are associated with small decreases in cigarette consumption and that it will take sizable tax increases, on the order of 100%, to decrease adult smoking by as much as 5%.
Handle: RePEc:nbr:nberwo:18326
Template-Type: ReDIF-Paper 1.0
Title: Lead Policy and Academic Performance: Insights from Massachusetts
Classification-JEL: I18; I29; J13; Q58
Author-Name: Jessica Wolpaw Reyes
Note: AG CH ED EEE EH
Number: 18327
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18327
File-URL: http://www.nber.org/papers/w18327.pdf
File-Format: application/pdf
Publication-Status: published as Jessica Wolpaw Reyes, 2015. "Lead Policy and Academic Performance: Insights from Massachusetts," Harvard Educational Review, vol 85(1), pages 75-107.
Abstract: Childhood exposure to even low levels of lead can adversely affect neurodevelopment, behavior, and cognitive performance. This paper investigates the link between lead exposure and student achievement in Massachusetts. Panel data analysis is conducted at the school-cohort level for children born between 1991 and 2000 and attending 3rd and 4th grades between 2000 and 2009 at more than 1,000 public elementary schools in the state. Massachusetts is well-suited for this analysis both because it has been a leader in the reduction of childhood lead levels and also because it has mandated standardized achievement tests in public elementary schools for almost two decades. The paper finds that elevated levels of blood lead in early childhood adversely impact standardized test performance, even when controlling for community and school characteristics. The results imply that public health policy that reduced childhood lead levels in the 1990s was responsible for modest but statistically significant improvements in test performance in the 2000s, lowering the share of children scoring unsatisfactory on standardized tests by 1 to 2 percentage points. Public health policy targeting lead thus has clear potential to improve academic performance, with particular promise for children in low income communities.
Handle: RePEc:nbr:nberwo:18327
Template-Type: ReDIF-Paper 1.0
Title: Development, Discouragement, or Diversion? New Evidence on the Effects of College Remediation
Classification-JEL: I21; I23
Author-Name: Judith Scott-Clayton
Author-Name: Olga Rodriguez
Note: ED
Number: 18328
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18328
File-URL: http://www.nber.org/papers/w18328.pdf
File-Format: application/pdf
Publication-Status: published as Judith Scott-Clayton & Olga Rodriguez, 2015. "Development, Discouragement, or Diversion? New Evidence on the Effects of College Remediation Policy," Education Finance and Policy, vol 10(1), pages 4-45.
Abstract: Half of all college students take at least one remedial course as part of their postsecondary experience, despite mixed evidence on the effectiveness of this intervention. Using a regression-discontinuity design with data from a large urban community college system, we extend the research on remediation in three ways. First, we articulate three alternative models of remediation to help guide interpretation of sometimes conflicting results in the literature. Second, in addition to credits and degree completion we examine several under-explored outcomes, including the initial decision to enroll, grades in subsequent college courses, and post-treatment proficiency test scores. Finally, we exploit rich high school background data to examine heterogeneity in the impact of remedial assignment by predicted academic risk. We find that remediation does little to develop students' skills. But we also find relatively little evidence that it discourages either initial enrollment or persistence, except for a subgroup we identify as potentially mis-assigned to remediation. Instead, the primary effect of remediation appears to be diversionary: students simply take remedial courses instead of college-level courses. These diversionary effects are largest for the lowest-risk students. Implications for remediation policy are discussed.
Handle: RePEc:nbr:nberwo:18328
Template-Type: ReDIF-Paper 1.0
Title: Debt- and Equity-Led Capital Flow Episodes
Classification-JEL: F30; G01
Author-Name: Kristin J. Forbes
Author-Person: pfo1
Author-Name: Francis E. Warnock
Note: IFM
Number: 18329
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18329
File-URL: http://www.nber.org/papers/w18329.pdf
File-Format: application/pdf
Publication-Status: published as Forbes, K., and F. Warnock, 2014. Debt- and Equity-Led Capital Flow Episodes. in Capital Mobility and Monetary Policy, edited by Miguel Fuentes, Claudio Raddatz and Carmen M. Reinhart. Santiago: Central Bank of Chile
Abstract: Forbes and Warnock (2012) identify episodes of extreme capital flow movements--surges, stops, flight, and retrenchment--and find that global factors, especially global risk, are significantly associated with extreme capital flow episodes whereas domestic macroeconomic characteristics and capital controls are less important. That analysis leads naturally to the question of which types of capital flows are driving the episodes and if debt- and equity-led episodes differ in material ways. After identifying debt- and equity-led episodes, we find that most episodes of extreme capital flow movements around the world are debt-led and the factors associated with debt-led episodes are similar to the factors behind episodes identified with aggregate capital flow data. In contrast, equity-led episodes are less frequent, more idiosyncratic, and differ in nature from other episodes.
Handle: RePEc:nbr:nberwo:18329
Template-Type: ReDIF-Paper 1.0
Title: Taylor Rule Exchange Rate Forecasting During the Financial Crisis
Classification-JEL: C22; F31
Author-Name: Tanya Molodtsova
Author-Person: pmo973
Author-Name: David Papell
Author-Person: ppa73
Note: IFM
Number: 18330
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18330
File-URL: http://www.nber.org/papers/w18330.pdf
File-Format: application/pdf
Publication-Status: published as Tanya Molodtsova & David H. Papell, 2013. "Taylor Rule Exchange Rate Forecasting during the Financial Crisis," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 55 - 97.
Publication-Status: published as Taylor Rule Exchange Rate Forecasting during the Financial Crisis, Tanya Molodtsova, David H. Papell. in NBER International Seminar on Macroeconomics 2012, Giavazzi and West. 2013
Abstract: This paper evaluates out-of-sample exchange rate predictability of Taylor rule models, where the central bank sets the interest rate in response to inflation and either the output or the unemployment gap, for the euro/dollar exchange rate with real-time data before, during, and after the financial crisis of 2008-2009. While all Taylor rule specifications outperform the random walk with forecasts ending between 2007:Q1 and 2008:Q2, only the specification with both estimated coefficients and the unemployment gap consistently outperforms the random walk from 2007:Q1 through 2012:Q1. Several Taylor rule models that are augmented with credit spreads or financial condition indexes outperform the original Taylor rule models. The performance of the Taylor rule models is superior to the interest rate differentials, monetary, and purchasing power parity models.
Handle: RePEc:nbr:nberwo:18330
Template-Type: ReDIF-Paper 1.0
Title: Mussa Redux and Conditional PPP
Classification-JEL: F15; F31
Author-Name: Paul R. Bergin
Author-Person: pbe249
Author-Name: Reuven Glick
Author-Person: pgl13
Author-Name: Jyh-Lin Wu
Note: IFM
Number: 18331
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18331
File-URL: http://www.nber.org/papers/w18331.pdf
File-Format: application/pdf
Publication-Status: published as Bergin, Paul R. & Glick, Reuven & Wu, Jyh-Lin, 2014. "Mussa redux and conditional PPP," Journal of Monetary Economics, Elsevier, vol. 68(C), pages 101-114.
Abstract: Long half-lives of real exchange rates are often used as evidence against monetary sticky price models. In this study we show how exchange rate regimes alter the long-run dynamics and half-life of the real exchange rate, and we recast the classic defense of such models by Mussa (1986) from an argument based on short-run volatility to one based on long-run dynamics. The first key result is that the extremely persistent real exchange rate found commonly in post Bretton Woods data does not apply to the preceding fixed exchange rate period in our sample, where the half-live was perhaps half as large. This result suggests a reinterpretation of Mussa's original finding, indicating that up to two thirds of the rise in variance of the real exchange rate in the recent period is actually due to the rise in persistence of the response to shocks, rather than due to a rise in the variance of shocks themselves. The second key result explains the rise in persistence over time by identifying underlying shocks using a panel VECM model. Shocks to the nominal exchange rate induce more persistent real exchange rate responses compared to price shocks, and these shocks became more prevalent under a flexible exchange rate regime.
Handle: RePEc:nbr:nberwo:18331
Template-Type: ReDIF-Paper 1.0
Title: Equalizing Outcomes and Equalizing Opportunities: Optimal Taxation when Children's Abilities Depend on Parents' Resources
Classification-JEL: H21; I30
Author-Name: Alexander M. Gelber
Author-Name: Matthew C. Weinzierl
Author-Person: pwe206
Note: CH PE
Number: 18332
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18332
File-URL: http://www.nber.org/papers/w18332.pdf
File-Format: application/pdf
Abstract: Empirical research suggests that parents' economic resources affect their children's future earnings abilities. Optimal tax policy therefore treats future ability distributions as endogenous to current taxes. We model this endogeneity, calibrate the model to match estimates of the intergenerational transmission of earnings ability in the United States, and use the model to simulate such an optimal policy numerically. The optimal policy in this context is more redistributive toward low-income parents than existing U.S. tax policy. It also increases the probability that low-income children move up the economic ladder, generating a present-value welfare gain of one and three-quarters percent of consumption in our baseline case.
Handle: RePEc:nbr:nberwo:18332
Template-Type: ReDIF-Paper 1.0
Title: Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines
Classification-JEL: L0; L1; L2; L6; N5; N9; O1; O4; R0; R1
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Sari Pekkala Kerr
Author-Name: William R. Kerr
Author-Person: pke127
Note: DAE EFG LS PR
Number: 18333
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18333
File-URL: http://www.nber.org/papers/w18333.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser & Sari Pekkala Kerr & William R. Kerr, 2015. "Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines," The Review of Economics and Statistics, MIT Press, vol. 2(97), pages 498-520, May.
Abstract: Measures of entrepreneurship, such as average establishment size and the prevalence of start-ups, correlate strongly with employment growth across and within metropolitan areas, but the endogeneity of these measures bedevils interpretation. Chinitz (1961) hypothesized that coal mines near Pittsburgh led that city to specialization in industries, like steel, with significant scale economies and that those big firms led to a dearth of entrepreneurial human capital across several generations. We test this idea by looking at the spatial location of past mines across the United States: proximity to historical mining deposits is associated with bigger firms and fewer start-ups in the middle of the 20th century. We use mines as an instrument for our entrepreneurship measures and find a persistent link between entrepreneurship and city employment growth; this connection works primarily through lower employment growth of start-ups in cities that are closer to mines. These effects hold in cold and warm regions alike and in industries that are not directly related to mining, such as trade, finance and services. We use quantile instrumental variable regression techniques and identify mostly homogeneous effects throughout the conditional city growth distribution.
Handle: RePEc:nbr:nberwo:18333
Template-Type: ReDIF-Paper 1.0
Title: Job Polarization and Jobless Recoveries
Classification-JEL: E0; J0
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Henry E. Siu
Author-Person: psi89
Note: EFG LS
Number: 18334
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18334
File-URL: http://www.nber.org/papers/w18334.pdf
File-Format: application/pdf
Publication-Status: published as Nir Jaimovich & Henry E. Siu, 2020. "Job Polarization and Jobless Recoveries," The Review of Economics and Statistics, vol 102(1), pages 129-147.
Abstract: Job polarization refers to the shrinking share of employment in middle-skill, routine occupations experienced recently, over the last 35 years. Jobless recoveries refers to the slow rebound in aggregate employment following recent recessions, despite recoveries in aggregate output. We show how these two phenomena are related. First, essentially all employment loss in routine occupations occurs in economic downturns. Second, jobless recoveries in the aggregate can be accounted for by jobless recoveries in the routine occupations that are disappearing.
Handle: RePEc:nbr:nberwo:18334
Template-Type: ReDIF-Paper 1.0
Title: Which Financial Frictions? Parsing the Evidence from the Financial Crisis of 2007-9
Classification-JEL: E2; E5; G01; G21
Author-Name: Tobias Adrian
Author-Person: pad61
Author-Name: Paolo Colla
Author-Person: pco475
Author-Name: Hyun Song Shin
Author-Person: psh692
Note: CF ME
Number: 18335
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18335
File-URL: http://www.nber.org/papers/w18335.pdf
File-Format: application/pdf
Publication-Status: published as Which Financial Frictions? Parsing the Evidence from the Financial Crisis of 2007 to 2009, Tobias Adrian, Paolo Colla, Hyun Song Shin. in NBER Macroeconomics Annual 2012, Volume 27, Acemoglu, Parker, and Woodford. 2013
Abstract: The financial crisis of 2007-9 has sparked keen interest in models of financial frictions and their impact on macro activity. Most models share the feature that borrowers suffer a contraction in the quantity of credit. However, the evidence suggests that although bank lending to firms declines during the crisis, bond financing actually increases to make up much of the gap. This paper reviews both aggregate and micro level data and highlights the shift in the composition of credit between loans and bonds. Motivated by the evidence, we formulate a model of direct and intermediated credit that captures the key stylized facts. In our model, the impact on real activity comes from the spike in risk premiums, rather than contraction in the total quantity of credit.
Handle: RePEc:nbr:nberwo:18335
Template-Type: ReDIF-Paper 1.0
Title: The Output Effect of Fiscal Consolidations
Classification-JEL: E62; H60
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Carlo Favero
Author-Person: pfa12
Author-Name: Francesco Giavazzi
Author-Person: pgi18
Note: IFM ME
Number: 18336
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18336
File-URL: http://www.nber.org/papers/w18336.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Carlo Favero & Francesco Giavazzi, 2015. "The output effect of fiscal consolidation plans," Journal of International Economics, vol 96, pages S19-S42.
Abstract: The present paper argues that the correct experiment to evaluate the effects of a fiscal adjustment is the simulation of fiscal plans rather than of individual fiscal shocks. The simulation of the fiscal plans adopted by 16 OECD countries over a 30-year period supports the hypothesis that the effects of consolidations depend on their design. Fiscal adjustments based upon spending cuts are much less costly, in terms of output losses, than tax-based ones. Fiscal adjustments have especially low output costs when they consist of permanent rather than stop and go. The difference cannot be explained by accompanying policies, including monetary policy, and appears to be mainly due to the different response of business confidence and private investment.
Handle: RePEc:nbr:nberwo:18336
Template-Type: ReDIF-Paper 1.0
Title: Sources of Comparative Advantage in Polluting Industries
Classification-JEL: F11; F18; Q53; Q56
Author-Name: Fernando Broner
Author-Person: pbr162
Author-Name: Paula Bustos
Author-Person: pbu250
Author-Name: Vasco M. Carvalho
Note: EEE ITI
Number: 18337
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18337
File-URL: http://www.nber.org/papers/w18337.pdf
File-Format: application/pdf
Abstract: We study the determinants of comparative advantage in polluting industries. We combine data on environmental policy at the country level with data on pollution intensity at the industry level to show that countries with laxer environmental regulation have a comparative advantage in polluting industries. Further, we address the potential problem of reverse causality. We propose an instrument for environmental regulation based on meteorological determinants of pollution dispersion identi...ed by the atmospheric pollution literature. We find that the effect of environmental regulation on the pattern of trade is causal and comparable in magnitude to the effect of physical and human capital.
Handle: RePEc:nbr:nberwo:18337
Template-Type: ReDIF-Paper 1.0
Title: Back to the Future? Abortion Before & After Roe
Classification-JEL: J13; J18
Author-Name: Theodore J. Joyce
Author-Person: pjo112
Author-Name: Ruoding Tan
Author-Name: Yuxiu Zhang
Note: EH
Number: 18338
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18338
File-URL: http://www.nber.org/papers/w18338.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Health Economics Volume 32, Issue 5, September 2013, Pages 804–815 Cover image Abortion before & after Roe Ted Joycea, , , Ruoding Tanb, , Yuxiu Zhangc,
Abstract: Next year marks the 40th anniversary of the U.S. Supreme Court decision in Roe v. Wade. We use unique data on abortions performed in New York State from 1971-1975 to analyze the impact of legalized abortion in New York on abortion and birth rates of non-residents. We estimate that abortion rates declined by 12.0 percent for every hundred miles a woman lived from New York in the years before Roe. If Roe were overturned average travel distance to the nearest abortion provider would increase by 157 miles in the 31 states expected to prohibit abortion. Under this scenario abortion rates would fall by 14.9 percent nationally, resulting in at most, 178,800 additional births or 4.2 percent of the U.S. total in 2008. A ban in 17 states would result in a 6.0 percent decline in abortions and at most, 1.7 percent rise in births.
Handle: RePEc:nbr:nberwo:18338
Template-Type: ReDIF-Paper 1.0
Title: Mortgage Market Design
Classification-JEL: G21; R21; R31
Author-Name: John Y. Campbell
Author-Person: pca54
Note: AP CF ME
Number: 18339
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18339
File-URL: http://www.nber.org/papers/w18339.pdf
File-Format: application/pdf
Publication-Status: published as John Y. Campbell, 2013. "Mortgage Market Design," Review of Finance, European Finance Association, vol. 17(1), pages 1-33.
Abstract: This paper explores the causes and consequences of cross-country variation in mortgage market structure. It draws on insights from several fields: urban economics, asset pricing, behavioral finance, financial intermediation, and macroeconomics. It discusses lessons from the credit boom, the challenges of mortgage modification in the aftermath of the boom, consumer financial protection, and alternative mortgage forms and funding models. The paper argues that the US has much to learn from mortgage finance in other countries, and specifically from the Danish implementation of the European covered bonds system.
Handle: RePEc:nbr:nberwo:18339
Template-Type: ReDIF-Paper 1.0
Title: Promotional Reviews: An Empirical Investigation of Online Review Manipulation
Classification-JEL: L1; L15; L83
Author-Name: Dina Mayzlin
Author-Name: Yaniv Dover
Author-Name: Judith A. Chevalier
Author-Person: pch151
Note: IO PR
Number: 18340
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18340
File-URL: http://www.nber.org/papers/w18340.pdf
File-Format: application/pdf
Publication-Status: published as Mayzlin, Dina, Yaniv Dover, and Judith Chevalier. 2014. "Promotional Reviews: An Empirical Investigation of Online Review Manipulation." American Economic Review, 104(8): 2421-55.
Abstract: Online reviews could, in principle, greatly improve consumers' ability to evaluate products. However, the authenticity of online user reviews remains a concern; firms have an incentive to manufacture positive reviews for their own products and negative reviews for their rivals. In this paper, we marry the diverse literature on economic subterfuge with the literature on organizational form. We undertake an empirical analysis of promotional reviews, examining both the extent to which fakery occurs and the market conditions that encourage or discourage promotional reviewing activity. Specifically, we examine hotel reviews, exploiting the organizational differences between two travel websites: Expedia.com and TripAdvisor.com. While anyone can post a review on TripAdvisor, a consumer can only post a review of a hotel on Expedia if she actually booked at least one night at the hotel through the website. We examine differences in the distribution of reviews for a given hotel between TripAdvisor and Expedia. We exploit the characteristics of a hotel's neighbor. We show that hotels with a nearby neighbor have more one- and two-star (negative) reviews on TripAdvisor relative to Expedia. We argue that the net gains from promotional reviewing are likely to be highest for independent hotels that are owned by single-unit owners and lowest for branded chain hotels that are owned by multi-unit owners. Our methodology thus isolates hotels with a disproportionate incentive to engage in promotional reviewing activity. We show that the hotel neighbors of hotels with a high incentive to fake have more one- and two-star (negative) reviews on TripAdvisor relative to Expedia than do hotels whose neighbors have a low incentive to fake. Furthermore, we show that hotels with a high incentive to fake have a greater share of five-star (positive) reviews on TripAdvisor relative to Expedia.
Handle: RePEc:nbr:nberwo:18340
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Physical Education on Obesity among Elementary School Children
Classification-JEL: H75; I12; I18; I21; K32
Author-Name: John Cawley
Author-Person: pca6
Author-Name: David Frisvold
Author-Person: pfr63
Author-Name: Chad Meyerhoefer
Author-Person: pme235
Note: CH ED EH LE PE
Number: 18341
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18341
File-URL: http://www.nber.org/papers/w18341.pdf
File-Format: application/pdf
Publication-Status: published as Cawley, John, David Frisvold, and Chad Meyerhoefer. "The Impact of Physical Education on Obesity among Elementary School Children." Journal of Health Economics, 2013, 32(4): 743-755.
Abstract: In response to the dramatic rise in childhood obesity, the Centers for Disease Control (CDC) and other organizations have advocated increasing the time that elementary school children spend in physical education (PE) classes. However, little is known about the effect of PE on child weight. This paper measures that effect by instrumenting for child PE time with state policies, using data from the Early Childhood Longitudinal Study, Kindergarten Cohort (ECLS-K) for 1998-2004. Results from IV models indicate that PE lowers BMI z-score and reduces the probability of obesity among 5th graders (in particular, boys), while the instrument is insufficiently powerful to reliably estimate effects for younger children. This represents some of the first evidence of a causal effect of PE on youth obesity, and thus offers at least some support to the assumptions behind the CDC recommendations. We find no evidence that increased PE time crowds out time in academic courses or has spillovers to achievement test scores.
Handle: RePEc:nbr:nberwo:18341
Template-Type: ReDIF-Paper 1.0
Title: The Distributional Effects of the Social Security Windfall Elimination Provision
Classification-JEL: H55
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: Scott Weisbenner
Note: AG PE
Number: 18342
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18342
File-URL: http://www.nber.org/papers/w18342.pdf
File-Format: application/pdf
Publication-Status: published as Brown, Jeffrey R. & Weisbenner, Scott J., 2013. "The distributional effects of the Social Security windfall elimination provision," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(04), pages 415-434, October.
Abstract: Millions of federal, state and local government employees have lifetime earnings that are divided between employment that is covered by the Social Security system and employment that is not covered. Because Social Security benefits are a non-linear function of covered lifetime earnings, the simple application of the standard benefit formula to covered earnings only would provide a higher replacement rate on those earnings than is appropriate given the individuals' total (covered plus uncovered) lifetime earnings. The Windfall Elimination Provision (WEP), established in 1983, is intended to correct this situation by applying a modified benefit formula to earnings of individuals with non-covered employment. This paper analyzes the distributional implications of the WEP, and finds that it reduces benefits disproportionately for households with lower lifetime covered earnings. It discusses an alternative method of calculating the WEP that preserves the intended redistribution of the system. In recognition of the data limitations that prevent this alternative method from being used by SSA for at least another decade, the paper also analyzes two alternative ways of calculating the WEP that use the same information that SSA currently uses, are budget neutral, and come closer to maintaining the cross-sectional progressivity of Social Security than does the existing WEP formula.
Handle: RePEc:nbr:nberwo:18342
Template-Type: ReDIF-Paper 1.0
Title: The Labor Market Returns to a For-Profit College Education
Classification-JEL: I2; I20; I21; I23
Author-Name: Stephanie Riegg Cellini
Author-Name: Latika Chaudhary
Author-Person: pch1335
Note: ED LS
Number: 18343
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18343
File-URL: http://www.nber.org/papers/w18343.pdf
File-Format: application/pdf
Publication-Status: published as Cellini, Stephanie Riegg and Latika Chaudhary, “The Labor Market Returns to a For-Profit College Education.” Economics of Education Review, December 2014, 43: 125-140.
Abstract: A lengthy literature estimating the returns to education has largely ignored the for-profit sector. In this paper, we estimate the earnings gains to for-profit college attendance using restricted-access data from the 1997 National Longitudinal Survey of Youth (NLSY97). Using an individual fixed effects estimation strategy that allows us to control for time-invariant unobservable characteristics of students, we find that students who enroll in associate's degree programs in for-profit colleges experience earnings gains of about 10 percent relative to high school graduates with no college degree, conditional on employment. Since associate's degree students attend for an average of 2.6 years, this translates to a 4 percent return per year of education in a for-profit college, slightly lower than estimates of returns for other sectors found in the literature.
Handle: RePEc:nbr:nberwo:18343
Template-Type: ReDIF-Paper 1.0
Title: Knowledge is (Less) Power: Experimental Evidence from Residential Energy Use
Classification-JEL: L94
Author-Name: Katrina Jessoe
Author-Name: David Rapson
Author-Person: pra605
Note: EEE
Number: 18344
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18344
File-URL: http://www.nber.org/papers/w18344.pdf
File-Format: application/pdf
Publication-Status: published as Katrina Jessoe & David Rapson, 2014. "Knowledge Is (Less) Power: Experimental Evidence from Residential Energy Use," American Economic Review, American Economic Association, vol. 104(4), pages 1417-38, April.
Abstract: This paper presents experimental evidence that information feedback dramatically increases the price elasticity of demand in a setting where signals about quantity consumed are traditionally coarse and infrequent. In a randomized controlled trial, residential electricity customers are exposed to price increases, with some households also receiving displays that transmit high-frequency information about usage and prices. This substantially lowers information acquisition costs and allows us to identify the marginal information effect. Households only experiencing price increases reduce demand by 0 to 7 percent whereas those also exposed to information feedback exhibit a usage reduction of 8 to 22 percent, depending on the amount of advance notice. The differential response across treatments is significant and robust to the awareness of price changes. Conservation extends beyond the treatment window, providing evidence of habit formation, spillovers, and greenhouse gas abatement. Results suggest that information about the quantity consumed facilitates learning, which likely drives the treatment differential.
Handle: RePEc:nbr:nberwo:18344
Template-Type: ReDIF-Paper 1.0
Title: Temperature, Human Health, and Adaptation: A Review of the Empirical Literature
Classification-JEL: I1; Q5; Q54
Author-Name: Olivier Deschenes
Author-Person: pde468
Note: EEE
Number: 18345
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18345
File-URL: http://www.nber.org/papers/w18345.pdf
File-Format: application/pdf
Publication-Status: published as Deschenes, Olivier, 2014. "Temperature, human health, and adaptation: A review of the empirical literature," Energy Economics, Elsevier, vol. 46(C), pages 606-619.
Abstract: This paper presents a survey of the empirical literature studying the relationship between health outcomes, temperature, and adaptation to temperature extremes. The objective of the paper is to highlight the many remaining gaps in the empirical literature and to provide guidelines for improving the current Integrated Assessment Model (IAM) literature that seeks to incorporate human health and adaptation in its framework. I begin by presenting the conceptual and methodological issues associated with the measurement of the effect of temperature extremes on health, and the role of adaptation in possibly muting these effects. The main conclusion that emerges from the literature is that despite the wide variety of data sets and settings most studies find that temperature extremes lead to significant reductions in health, generally measured with excess mortality. Regarding the role of adaptation in mitigating the effects of extreme temperature on health, the available knowledge is limited, in part due to the lack of real-world data on measures of adaptation behaviors. Finally, the paper discusses the implications of the currently available evidence for assessments of potential human health impacts of global climate change.
Handle: RePEc:nbr:nberwo:18345
Template-Type: ReDIF-Paper 1.0
Title: R&D and the Incentives from Merger and Acquisition Activity
Classification-JEL: G20; G3; G34; L11; L22; L25; O31; O34
Author-Name: Gordon M. Phillips
Author-Person: pph31
Author-Name: Alexei Zhdanov
Note: CF IO
Number: 18346
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18346
File-URL: http://www.nber.org/papers/w18346.pdf
File-Format: application/pdf
Publication-Status: published as Gordon M. Phillips & Alexei Zhdanov, 2013. "R&D and the Incentives from Merger and Acquisition Activity," Review of Financial Studies, Society for Financial Studies, vol. 26(1), pages 34-78.
Abstract: We provide a model and empirical tests showing how an active acquisition market affects firm incentives to innovate and conduct R&D. Our model shows that small firms optimally may decide to innovate more when they can sell out to larger firms. Large firms may find it disadvantageous to engage in an "R&D race" with small firms, as they can obtain access to innovation through acquisition. Our model and evidence show that the R&D responsiveness of firms increases with demand, competition and industry merger and acquisition activity. All of these effects are stronger for smaller firms than for larger firms.
Handle: RePEc:nbr:nberwo:18346
Template-Type: ReDIF-Paper 1.0
Title: Wages and Informality in Developing Countries
Classification-JEL: J24; J3; J42; J6; O17
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Renata Narita
Author-Name: Jean-Marc Robin
Note: LS
Number: 18347
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18347
File-URL: http://www.nber.org/papers/w18347.pdf
File-Format: application/pdf
Publication-Status: published as Costas Meghir & Renata Narita & Jean-Marc Robin, 2015. "Wages and Informality in Developing Countries," American Economic Review, American Economic Association, vol. 105(4), pages 1509-46, April.
Abstract: It is often argued that informal labor markets in developing countries promote growth by reducing the impact of regulation. On the other hand informality may reduce the amount of social protection offered to workers. We extend the wage-posting framework of Burdett and Mortensen (1998) to allow heterogeneous firms to decide whether to locate in the formal or the informal sector, as well as set wages. Workers engage in both off the job and on the job search. We estimate the model using Brazilian micro data and evaluate the labor market and welfare effects of policies towards informality.
Handle: RePEc:nbr:nberwo:18347
Template-Type: ReDIF-Paper 1.0
Title: Refining Linear Rational Expectations Models and Equilibria
Classification-JEL: C62; D84
Author-Name: Seonghoon Cho
Author-Person: pch580
Author-Name: Bennett T. McCallum
Note: EFG ME
Number: 18348
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18348
File-URL: http://www.nber.org/papers/w18348.pdf
File-Format: application/pdf
Publication-Status: published as Cho, Seonghoon & McCallum, Bennett T., 2015. "Refining linear rational expectations models and equilibria," Journal of Macroeconomics, Elsevier, vol. 46(C), pages 160-169.
Abstract: This paper proposes forward convergence as a model refinement scheme for linear rational expectations (LRE) models and an associated no-bubble condition as a solution selection criterion. We relate these two concepts to determinacy and characterize the complete set of economically relevant rational expectations solutions to the LRE models under determinacy and indeterminacy. Our results show (1) why a determinate solution is economically meaningful in most, but not all, cases, and (2) that those models that are not forward-convergent have no economically relevant solutions.
Handle: RePEc:nbr:nberwo:18348
Template-Type: ReDIF-Paper 1.0
Title: Does the Effect of Pollution on Infant Mortality Differ Between Developing and Developed Countries? Evidence from Mexico City
Classification-JEL: O1; Q53
Author-Name: Eva O. Arceo-Gomez
Author-Person: par290
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Paulina Oliva
Author-Person: pol147
Note: EEE EH
Number: 18349
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18349
File-URL: http://www.nber.org/papers/w18349.pdf
File-Format: application/pdf
Publication-Status: published as Eva Arceo & Rema Hanna & Paulina Oliva, 2016. "Does the Effect of Pollution on Infant Mortality Differ Between Developing and Developed Countries? Evidence from Mexico City," Economic Journal, Royal Economic Society, vol. 126(591), pages 257-280, 03.
Abstract: Much of what we know about the marginal effect of pollution on infant mortality is derived from developed country data. However, given the lower levels of air pollution in developed countries, these estimates may not be externally valid to the developing country context if there is a nonlinear dose relationship between pollution and mortality or if the costs of avoidance behavior differs considerably between the two contexts. In this paper, we estimate the relationship between pollution and infant mortality using data from Mexico. We find that an increase of 1 parts per billion in carbon monoxide (CO) over the last week results in 0.0032 deaths per 100,000 births, while a 1 μg/m3 increase in particulate matter (PM10) results in 0.24 infant deaths per 100,000 births. Our estimates for PM10 tend to be similar (or even smaller) than the U.S. estimates, while our findings on CO tend to be larger than those derived from the U.S. context. We provide suggestive evidence that a non-linearity in the relationship between CO and health explains this difference.
Handle: RePEc:nbr:nberwo:18349
Template-Type: ReDIF-Paper 1.0
Title: From Empty Pews to Empty Cradles: Fertility Decline Among European Catholics
Classification-JEL: H31; H41; I3; I38; J13; J4; Z12
Author-Name: Eli Berman
Author-Person: pbe188
Author-Name: Laurence R. Iannaccone
Author-Person: pia4
Author-Name: Giuseppe Ragusa
Author-Person: pra246
Note: CH LS PE
Number: 18350
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18350
File-URL: http://www.nber.org/papers/w18350.pdf
File-Format: application/pdf
Publication-Status: published as Eli BERMAN & Laurence R. IANNACCONE & Giuseppe RAGUSA, 2018. "From Empty Pews to Empty Cradles: Fertility Decline among European Catholics," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 84(2), pages 149-187, June.
Abstract: Catholic countries of Europe pose a demographic puzzle -fertility is unprecedentedly low (total fertility=1.3) despite low female labor force participation. We model three channels of religious effects on demand for children: through changing norms, reduced market wages, and reduced costs of childrearing. We estimate their effects using new panel data on church attendance and clergy employment for thirteen European countries from 1960-2000, spanning the Second Vatican Council (1962-65). Catholic theology is uniform across countries. Yet service varied considerably across countries and over time, especially before the Council, reflecting differences in Church provision of education, health, welfare and other social services. We use differential declines in service provision --measured by nuns/capita-- to identify its effect on fertility, controlling for secular trends. They are large: 300 to 400 children per nun. Reduced religiosity (measured by church attendance) has no effect for Protestants, but predicts fertility decline for Catholics. The data suggest that service provision and religiosity complement each other -a finding consistent with preferential provision of services to church attendees. Nuns outperform priests in predicting fertility, suggesting that the childrearing cost channel dominates theology and norms.
Handle: RePEc:nbr:nberwo:18350
Template-Type: ReDIF-Paper 1.0
Title: Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia
Classification-JEL: D83; D85; H23; O12
Author-Name: Vivi Alatas
Author-Person: pal930
Author-Name: Abhijit Banerjee
Author-Name: Arun G. Chandrasekhar
Author-Person: pch1351
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Benjamin A. Olken
Author-Person: pol170
Note: PE POL
Number: 18351
Creation-Date: 2012-08
Order-URL: http://www.nber.org/papers/w18351
File-URL: http://www.nber.org/papers/w18351.pdf
File-Format: application/pdf
Publication-Status: published as Vivi Alatas & Abhijit Banerjee & Arun G. Chandrasekhar & Rema Hanna & Benjamin A. Olken, 2016. "Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia," American Economic Review, vol 106(7), pages 1663-1704.
Abstract: We use unique data from 600 Indonesian communities on what individuals know about the poverty status of others to study how network structure influences information aggregation. We develop a model of semi-Bayesian learning on networks, which we structurally estimate using within-village data. The model generates qualitative predictions about how cross-village patterns of learning relate to different network structures, which we show are borne out in the data. We apply our findings to a community-based targeting program, where villagers chose which households should receive aid, and show that networks the model predicts to be more diffusive differentially benefit from community targeting.
Handle: RePEc:nbr:nberwo:18351
Template-Type: ReDIF-Paper 1.0
Title: A Tale of Politically-Failing Single-Currency Area
Classification-JEL: E00; F10; N0
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Steven Rosefielde
Note: IFM
Number: 18352
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18352
File-URL: http://www.nber.org/papers/w18352.pdf
File-Format: application/pdf
Abstract: The global financial crisis which erupted in the United States instantaneously swept across Europe. Like the United States, the European Monetary Union (EMU) was ripe for a crash. It had its own real estate bubble, specifically in Ireland and Spain, indulged in excessive deficit spending, financially deregulated, and rapidly expanded credit Policy responses and recovery patterns for key EU members like Germany and France, within the Eurozone, were similar. However, after the bubble burst and the crisis began unfolding it became clear that the Eurozone plight differed from America's in one fundamental respect. There was no exact counterpart of Eurozone GIIPS (Greece, Italy, Ireland, Portugal, and Spain) in the United States. Some American states had over-borrowed, but the sovereign debt crisis didn't place individual states at deflationary risk, or threaten the viability of the federal union. Not so for some members within the Eurozone. Politicians on both sides of the Atlantic can be uncooperative, but inter-state disputes are more easily finessed under the American federal system than the Eurozone politically weakly integrated system. The disparity is traced to the EU's and Eurozone's special form of governance called "supra-nationality" (a partially sovereign transnational organization) that has been largely ignored in economic treatises about the costs and benefits of monetary unions. The EZ members have put themselves in a monetary cage, akin to the gold standard, in which member states have surrendered control over their monetary and foreign exchange rate policies to the German dominated European Central Bank (ECB), without supplementary central fiscal, private banking and political union institutions.
Handle: RePEc:nbr:nberwo:18352
Template-Type: ReDIF-Paper 1.0
Title: Foreclosure externalities: Some new evidence
Classification-JEL: G12; R20; R30
Author-Name: Kristopher Gerardi
Author-Person: pge160
Author-Name: Eric Rosenblatt
Author-Name: Paul S. Willen
Author-Person: pwi457
Author-Name: Vincent Yao
Author-Person: pya131
Note: EFG
Number: 18353
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18353
File-URL: http://www.nber.org/papers/w18353.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Urban Economics Volume 87, May 2015, Pages 42–56 Cover image Foreclosure externalities: New evidence ☆ Kristopher Gerardia, , , Eric Rosenblattb, , Paul S. Willenc, , Vincent Yaob,
Abstract: In a recent set of influential papers, researchers have argued that residential mortgage foreclosures reduce the sale prices of nearby properties. We revisit this issue using a more robust identification strategy combined with new data that contain information on the location of properties secured by seriously delinquent mortgages and information on the condition of foreclosed properties. We find that while properties in virtually all stages of distress have statistically significant, negative effects on nearby home values, the magnitudes are economically small, peak before the distressed properties complete the foreclosure process, and go to zero about a year after the bank sells the property to a new homeowner. The estimates are very sensitive to the condition of the distressed property, with a positive correlation existing between house price growth and foreclosed properties identified as being in "above average" condition. We argue that the most plausible explanation for these results is an externality resulting from reduced investment by owners of distressed property. Our analysis shows that policies that slow the transition from delinquency to foreclosure likely exacerbate the negative effect of mortgage distress on house prices.
Handle: RePEc:nbr:nberwo:18353
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Political and Economic Cycles
Classification-JEL: D82; E62; H21; P16
Author-Name: Laurence Ales
Author-Person: pal707
Author-Name: Pricila Maziero
Author-Person: pma1794
Author-Name: Pierre Yared
Author-Person: pya107
Note: EFG POL
Number: 18354
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18354
File-URL: http://www.nber.org/papers/w18354.pdf
File-Format: application/pdf
Publication-Status: published as Ales, Laurence & Maziero, Pricila & Yared, Pierre, 2014. "A theory of political and economic cycles," Journal of Economic Theory, Elsevier, vol. 153(C), pages 224-251.
Abstract: We develop a theoretical framework in which political and economic cycles are jointly determined. These cycles are driven by three political economy frictions: policymakers are non-benevolent, they cannot commit to policies, and they have private information about the tightness of the government budget and rents. Our first main result is that, in the best sustainable equilibrium, distortions to production emerge and never disappear even in the long run. This result is driven by the interaction of limited commitment and private information on the side of the policymaker, since in the absence of either friction, there are no long run distortions to production. Our second result is that, if the variance of private information is sufficiently large, there is equilibrium turnover in the long run so that political cycles never disappear. Finally, our model produces a long run distribution of taxes, distortions, and turnover, where these all respond persistently to temporary economic shocks. We show that the model's predictions are consistent with the empirical evidence on the interaction of political and economic cycles in developing countries.
Handle: RePEc:nbr:nberwo:18354
Template-Type: ReDIF-Paper 1.0
Title: Elections and the Quality of Public Officials: Evidence from U.S. State Courts
Classification-JEL: D72; D78; H70; K40
Author-Name: Claire S.H. Lim
Author-Name: James M. Snyder, Jr.
Author-Person: psn39
Note: LE POL
Number: 18355
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18355
File-URL: http://www.nber.org/papers/w18355.pdf
File-Format: application/pdf
Publication-Status: published as Hirano S, Snyder JM. Primary Elections and the Quality of Elected Officials. Quarterly Journal of Political Science . 2014;9(4):473-500.
Abstract: We investigate the influence of electoral rules and voter information in elections on voting outcomes and the quality of public officials, using new data on state court judge elections in 39 states in the U.S. from 1990 to 2010. We find, first, that voting is very partisan in partisan judicial elections - i.e., there is a strong correlation between the Democratic "normal vote'' and the Democratic vote share for judges - but not in non-partisan or non-competitive "retention'' elections. This partisan voting behavior cannot be attributed to clear differences between Democratic and Republican judges in their sentencing decisions, since such differences, if any, are small and not consistent. Second, we find that incumbent judges' quality has little effect on their vote share or probability of winning in partisan general elections. By contrast, it has a substantial effect in non-partisan elections and partisan primary elections. It also has a noticeable effect on their vote share in retention elections, but the magnitude is often too small to affect reelection. Evidence on turnout is consistent with a simple "voting cue'' hypothesis. We find that about 83\% of the voters who vote on the top office on the ballot also vote on judicial elections in partisan elections. In contrast, in nonpartisan and retention elections, only 76\% and 67\% of those who vote on the top office also vote on judicial candidates, respectively. In addition, the amount of newspaper coverage affects voter turnout only in non-partisan elections.
Handle: RePEc:nbr:nberwo:18355
Template-Type: ReDIF-Paper 1.0
Title: Syndicated Loan Spreads and the Composition of the Syndicate
Classification-JEL: G21; G23; G32
Author-Name: Jongha Lim
Author-Name: Bernadette A. Minton
Author-Name: Michael Weisbach
Note: CF
Number: 18356
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18356
File-URL: http://www.nber.org/papers/w18356.pdf
File-Format: application/pdf
Publication-Status: published as Lim, Jongha & Minton, Bernadette A. & Weisbach, Michael S., 2014. "Syndicated loan spreads and the composition of the syndicate," Journal of Financial Economics, Elsevier, vol. 111(1), pages 45-69.
Abstract: The past decade has seen significant changes in the structure of the corporate lending market, with non-bank institutional investors playing larger roles than they historically have played. These non-bank institutional lenders typically have higher required rates of return than banks, but invest in the same loan facilities. We hypothesize that non-bank institutional lenders invest in loan facilities that would not otherwise be filled by banks, so that the arranger has to offer a higher spread to attract the non-bank institution. In a sample of 20,031 leveraged loan facilities originated between 1997 and 2007, we find that, loan facilities including a non-bank institution in their syndicates have higher spreads than otherwise identical bank-only facilities. Contrary to risk-based explanations of this finding, non-bank facilities are priced with premiums relative to bank-only facilities of the same loan package. These premiums for non-bank facilities are substantially larger when a hedge or private equity fund is one of the syndicate members. Consistent with the notion that firms are willing to pay spread premiums when loan facilities are particularly important to the firm, we find that firms spend the capital raised by loan facilities priced at a premium faster than other loan facilities, especially when the premium is associated with a non-bank institutional investor.
Handle: RePEc:nbr:nberwo:18356
Template-Type: ReDIF-Paper 1.0
Title: A Long-Run Risks Explanation of Predictability Puzzles in Bond and Currency Markets
Classification-JEL: E0; F0; F3; F31; G0; G1
Author-Name: Ravi Bansal
Author-Person: pba818
Author-Name: Ivan Shaliastovich
Note: AP IFM ME
Number: 18357
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18357
File-URL: http://www.nber.org/papers/w18357.pdf
File-Format: application/pdf
Publication-Status: published as Ravi Bansal & Ivan Shaliastovich, 2013. "A Long-Run Risks Explanation of Predictability Puzzles in Bond and Currency Markets," Review of Financial Studies, vol 26(1), pages 1-33.
Abstract: We show that bond risk-premia rise with uncertainty about expected inflation and fall with uncertainty about expected growth; the magnitude of return predictability using these two uncertainty measures is similar to that by multiple yields. Motivated by this evidence, we develop and estimate a long-run risks model with time-varying volatilities of expected growth and inflation. The model simultaneously accounts for bond return predictability and violations of uncovered interest parity in currency markets. We find that preference for early resolution of uncertainty, time-varying volatilities, and non-neutral effects of inflation on growth are important to account for these aspects of asset markets.
Handle: RePEc:nbr:nberwo:18357
Template-Type: ReDIF-Paper 1.0
Title: Valuation, Adverse Selection, and Market Collapses
Classification-JEL: E44; G01; G2; G28
Author-Name: Michael J. Fishman
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Note: AP CF EFG ME
Number: 18358
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18358
File-URL: http://www.nber.org/papers/w18358.pdf
File-Format: application/pdf
Publication-Status: published as Michael J. Fishman & Jonathan A. Parker, 2015. "Valuation, Adverse Selection, and Market Collapses," Review of Financial Studies, vol 28(9), pages 2575-2607.
Abstract: We study a market for funding real investment in which valuation creates information on which adverse selection can occur. Unlike in previous models, higher amounts of valuation are associated with lower market prices and so greater returns to valuation, and this strategic complementarity in the capacity to do valuation generates multiple equilibria. In this region, the equilibrium without valuation is always more efficient despite funding projects that valuation would reveal as unprofitable. Valuation equilibria look like credit crunches. A large investor can ensure the efficient equilibrium only if it can precommit to a price and, for some parameters, only if subsidized.
Handle: RePEc:nbr:nberwo:18358
Template-Type: ReDIF-Paper 1.0
Title: Consumer Inertia and Firm Pricing in the Medicare Part D Prescription Drug Insurance Exchange
Classification-JEL: H51; I1; I11; I13; I18; I28; L11; L38; L51; Z18
Author-Name: Keith M. Marzilli Ericson
Note: AG EH PE
Number: 18359
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18359
File-URL: http://www.nber.org/papers/w18359.pdf
File-Format: application/pdf
Publication-Status: published as Keith M. Marzilli Ericson, 2014. "Consumer Inertia and Firm Pricing in the Medicare Part D Prescription Drug Insurance Exchange," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 38-64, February.
Abstract: I use the Medicare Part D prescription drug insurance market to examine the dynamics of firm interaction with consumers on an insurance exchange. Enrollment data show that consumers face switching frictions leading to inertia in plan choice, and a regression discontinuity design indicates initial defaults have persistent effects. In the absence of commitment to future prices, theory predicts firms respond to inertia by raising prices on existing enrollees, while introducing cheaper alternative plans. The complete set of enrollment and price data from 2006 through 2010 confirms this prediction: older plans have approximately 10% higher premiums than comparable new plans.
Handle: RePEc:nbr:nberwo:18359
Template-Type: ReDIF-Paper 1.0
Title: The Asymmetric Effects of Financial Frictions
Classification-JEL: D53; D82; E32; E44; G33
Author-Name: Guillermo Ordoñez
Author-Person: por40
Note: EFG ME
Number: 18360
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18360
File-URL: http://www.nber.org/papers/w18360.pdf
File-Format: application/pdf
Publication-Status: published as Guillermo Ordo�ez, 2013. "The Asymmetric Effects of Financial Frictions," Journal of Political Economy, University of Chicago Press, vol. 121(5), pages 844 - 895.
Abstract: Economic variables are known to move asymmetrically over the business cycle: quickly and sharply during crises, but slowly and gradually during recoveries. Not known is the fact that this asymmetry is stronger in countries with less-developed financial systems. This new fact is documented using cross-country data on loan interest rates, investment, and output. The fact is then explained using a learning model with endogenous flows of information about economic conditions. Asymmetry is shown to be stronger in less-developed countries because these countries have greater financial frictions, which are captured in the model by higher monitoring and bankruptcy costs. These greater frictions magnify the crisis reactions of lending rates and economic activity to shocks and then delay their recovery by restricting the generation of information after the crisis. Empirical evidence and a quantitative exploration of the model show that this explanation is consistent with the data.
Handle: RePEc:nbr:nberwo:18360
Template-Type: ReDIF-Paper 1.0
Title: Recessions, Older Workers, and Longevity: How Long Are Recessions Good For Your Health?
Classification-JEL: I18; J26
Author-Name: Courtney C. Coile
Author-Person: pco557
Author-Name: Phillip B. Levine
Author-Person: ple553
Author-Name: Robin McKnight
Note: AG EH LS
Number: 18361
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18361
File-URL: http://www.nber.org/papers/w18361.pdf
File-Format: application/pdf
Publication-Status: published as Courtney C. Coile & Phillip B. Levine & Robin McKnight, 2014. "Recessions, Older Workers, and Longevity: How Long Are Recessions Good for Your Health?," American Economic Journal: Economic Policy, American Economic Association, vol. 6(3), pages 92-119, August.
Abstract: This paper examines the impact of exposure to higher unemployment rates in the pre-retirement years on subsequent mortality. Although past research has found that recessions reduce contemporaneous mortality, these short-term effects may reverse over time, particularly for older workers. If workers experience an economic downturn in their late 50s, they may face several years of reduced employment and earnings before "retiring" when they reach Social Security eligibility at age 62. They also may experience lost health insurance, and therefore higher financial barriers to health care, through age 65, when Medicare becomes available. All of these experiences could contribute to weaker long-term health outcomes. To examine these hypotheses, we use Vital Statistics mortality data between 1969 and 2008 to generate age-specific cohort survival probabilities at older ages. We then link these survival probabilities to labor market conditions at earlier ages. We also use data from the 1980-2010 March Current Population Surveys and the 1991-2010 Behavioral Risk Factor Surveillance System surveys to explore potential mechanisms for this health effect. Our results indicate that experiencing a recession in one's late 50s leads to a reduction in longevity. We also find that this exposure leads to several years of reduced employment, health insurance coverage, and health care utilization which may contribute to the lower long-term likelihood of survival.
Handle: RePEc:nbr:nberwo:18361
Template-Type: ReDIF-Paper 1.0
Title: Global House Price Fluctuations: Synchronization and Determinants
Classification-JEL: E32; E43; E52; G15; R31
Author-Name: Hideaki Hirata
Author-Person: phi34
Author-Name: M. Ayhan Kose
Author-Person: pko65
Author-Name: Christopher Otrok
Author-Person: pot2
Author-Name: Marco E. Terrones
Author-Person: pte49
Note: EFG IFM ME
Number: 18362
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18362
File-URL: http://www.nber.org/papers/w18362.pdf
File-Format: application/pdf
Publication-Status: published as Hideaki Hirata & M. Ayhan Kose & Christopher Otrok & Marco E Terrones, 2013. "Global House Price Fluctuations: Synchronization and Determinants," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 119 - 166.
Publication-Status: published as Global House Price Fluctuations: Synchronization and Determinants, Hideaki Hirata, M. Ayhan Kose, Christopher Otrok, Marco E. Terrones. in NBER International Seminar on Macroeconomics 2012, Giavazzi and West. 2013
Abstract: We examine the properties of house price fluctuations across eighteen advanced economies over the past forty years. We ask two specific questions: First, how synchronized are housing cycles across these countries? Second, what are the main shocks driving movements in global house prices? To address these questions, we first estimate the global components in house prices and various macroeconomic and financial variables. We then evaluate the roles played by a variety of global shocks, including shocks to interest rates, monetary policy, productivity, credit, and uncertainty, in explaining house price fluctuations using a wide range of FAVAR models. We find that house prices are synchronized across countries, and the degree of synchronization has increased over time. Global interest rate shocks tend to have a significant negative effect on global house prices whereas global monetary policy shocks per se do not appear to have a sizeable impact. Interestingly, uncertainty shocks seem to be important in explaining fluctuations in global house prices.
Handle: RePEc:nbr:nberwo:18362
Template-Type: ReDIF-Paper 1.0
Title: Sovereign Debt in Latin America, 1820-1913
Classification-JEL: F34; H63; N16; N26; N46
Author-Name: Gerardo della Paolera
Author-Person: pde864
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE IFM
Number: 18363
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18363
File-URL: http://www.nber.org/papers/w18363.pdf
File-Format: application/pdf
Publication-Status: published as della Paolera, Gerardo & Taylor, Alan M., 2013. "Sovereign debt in Latin America, 1820-1913," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 31(2), pages 173-217, September.
Abstract: This paper examines sovereign lending to Latin America and the Caribbean from 1820 to 1913. We examine four waves of capital flows where defaults were followed by a return to market access. In spite of extended default, countries kept promising high returns that attracted international investors again and again: financial autarky thus gave way to eras of high integration to global markets as measured by sovereign risk pricing. We discuss imperfections of the sovereign debt institutional context in the region and discuss a menu of options that some countries used to seek funds in the global financial markets after defaults. The parallel with the modern Latin American and Caribbean sovereign bond market experience is striking.
Handle: RePEc:nbr:nberwo:18363
Template-Type: ReDIF-Paper 1.0
Title: Explaining Preferences for Control Rights in Strategic Alliances: A Property Rights and Capabilities Perspective Approach
Classification-JEL: D82; L14; M13; O32
Author-Name: Carolin Haeussler
Author-Name: Matthew J. Higgins
Author-Person: phi60
Note: LE PR
Number: 18364
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18364
File-URL: http://www.nber.org/papers/w18364.pdf
File-Format: application/pdf
Publication-Status: published as Strategic Alliances: Trading Ownership for Capabilities Carolin Haeussler1 andMatthew J. Higgins2 Article first published online: 7 JAN 2014 DOI: 10.1111/jems.12047 © 2014 Wiley Periodicals, Inc. Issue Journal of Economics & Management Strategy Journal of Economics & Management Strategy Special Issue: Innovation Economics Volume 23, Issue 1, pages 178–203, Spring 2014
Abstract: Increases in alliance activity between research-intensive firms and incumbents is puzzling since it is challenging to contract upon highly uncertain R&D activities. Our paper extends prior research by exploring the relationship between firm capabilities and preferences for control rights. This link is important because the allocation of control rights has been shown to influence alliance outcomes. Using data based on a survey of biotechnology firms, we find that both current and future capabilities provide strong explanatory power for understanding preferences for control rights. Our results allow us to integrate aspects of the capabilities perspective into the property rights framework.
Handle: RePEc:nbr:nberwo:18364
Template-Type: ReDIF-Paper 1.0
Title: Continuous-Time Methods for Integrated Assessment Models
Classification-JEL: C61; C63; D81; Q54
Author-Name: Yongyang Cai
Author-Person: pca961
Author-Name: Kenneth L. Judd
Author-Person: pju19
Author-Name: Thomas S. Lontzek
Author-Person: plo108
Note: EEE TWP
Number: 18365
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18365
File-URL: http://www.nber.org/papers/w18365.pdf
File-Format: application/pdf
Abstract: Continuous time is a superior representation of both the economic and climate systems that Integrated Assessment Models (IAM) aim to study. Moreover, continuous-time representations are simple to express. Continuous-time models are usually solved by discretizing time, but the quality of a solution is significantly affected by the details of the discretization. The numerical analysis literature offers many reliable methods, and should be used because alternatives derived from "intuition" may be significantly inferior. We take the well-known DICE model as an example. DICE uses 10-year time steps. We first identify the underlying continuous-time model of DICE. Second, we present mathematical and computational methods for transforming continuous-time deterministic perfect foresight models into systems of finite difference equations. While some transformations create finite difference systems that look like a discrete-time dynamical system, the only proper way to view the finite difference system is as an approximation of the continuous-time problem. DICE is an example where the usage of finite difference methods from numerical analysis produces far superior approximations than do simple discrete-time systems.
Handle: RePEc:nbr:nberwo:18365
Template-Type: ReDIF-Paper 1.0
Title: Home Production, Labor Wedges, and International Real Business Cycles
Classification-JEL: E32; F41; F44; J22
Author-Name: Loukas Karabarbounis
Author-Person: pka357
Note: EFG IFM
Number: 18366
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18366
File-URL: http://www.nber.org/papers/w18366.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Monetary Economics Volume 64, May 2014, Pages 68–84 Cover image Home production, labor wedges, and international business cycles ☆ Loukas Karabarbounisa, b, ,
Abstract: This paper explores implications of non-separable preferences with home production for international business cycles. Home production induces substitution effects that break the link between market consumption and its marginal utility and help explain several stylized facts of the open economy. In an estimated two-country model with complete asset markets in which home production generates a labor wedge that mimics its empirical counterpart, output is more correlated than consumption across countries, labor inputs and labor wedges are positively correlated across countries, and relative market consumption is negatively related to the real exchange rate. International time use surveys corroborate predictions of the model, showing a significant relationship between time spent on home production, labor wedges, and real exchange rates, both at business cycle frequencies and in the cross section of countries. By contrast, non-separabilities based on leisure do not help explain variations in labor wedges or real exchange rates.
Handle: RePEc:nbr:nberwo:18366
Template-Type: ReDIF-Paper 1.0
Title: Systematic Risk, Debt Maturity, and the Term Structure of Credit Spreads
Classification-JEL: E32; G32; G33
Author-Name: Hui Chen
Author-Person: pch718
Author-Name: Yu Xu
Author-Person: pxu173
Author-Name: Jun Yang
Author-Person: pya437
Note: AP CF
Number: 18367
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18367
File-URL: http://www.nber.org/papers/w18367.pdf
File-Format: application/pdf
Publication-Status: published as Hui Chen & Yu Xu & Jun Yang, 2020. "Systematic Risk, Debt Maturity, and the Term Structure of Credit Spreads," Journal of Financial Economics, .
Abstract: We build a dynamic capital structure model to study the link between firms' systematic risk exposures and their time-varying debt maturity choices, as well as its implications for the term structure of credit spreads. Compared to short-term debt, long-term debt helps reduce rollover risks, but its illiquidity raises the costs of financing. With both default risk and liquidity costs changing over the business cycle, our calibrated model implies that debt maturity is pro-cyclical, firms with high systematic risk favor longer debt maturity, and that these firms will have more stable maturity structures over the cycle. Moreover, pro-cyclical maturity variation can significantly amplify the impact of aggregate shocks on the term structure of credit spreads, especially for firms with high beta, high leverage, or a lumpy maturity structure. We provide empirical evidence for the model predictions on both debt maturity and credit spreads.
Handle: RePEc:nbr:nberwo:18367
Template-Type: ReDIF-Paper 1.0
Title: Healing the Wounds: Learning from Sierra Leone's Post-war Institutional Reforms
Classification-JEL: F35; H41; O40
Author-Name: Katherine Casey
Author-Name: Rachel Glennerster
Author-Person: pgl73
Author-Name: Edward Miguel
Author-Person: pmi499
Note: POL
Number: 18368
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18368
File-URL: http://www.nber.org/papers/w18368.pdf
File-Format: application/pdf
Publication-Status: published as Healing the Wounds: Learning from Sierra Leone's Postwar Institutional Reforms, Katherine Casey, Rachel Glennerster, Edward Miguel. in African Successes, Volume I: Government and Institutions, Edwards, Johnson, and Weil. 2016
Publication-Status: published as Georgina Casey, 1998. "Wound healing," Primary Health Care, vol 8(10), pages 31-36.
Abstract: While its recent history of civil war, chronic poverty and corrupt governance would cause many to dismiss Sierra Leone as a hopeless case, the country's economic and political performance over the last decade has defied expectations. We examine how several factors--including the legacy of war, ethnic diversity, decentralization and community-driven development (CDD)--have shaped local institutions and national political dynamics. The story that emerges is a nuanced one: war does not necessarily destroy the capacity for local collective action; ethnicity affects residential choice, but does not impede local public goods provision; while politics remain heavily ethnic, voters are willing to cross ethnic boundaries when they have better information about candidates; decentralization can work even where capacity is limited, although the results are mixed; and for all of its promise, CDD does not appear to transform local institutions nor social norms. All of these findings are somewhat "unexpected," but they are quite positive in signaling that even one of the world's poorest, most violent and ethnically diverse societies can overcome major challenges and progress towards meaningful economic and political development.
Handle: RePEc:nbr:nberwo:18368
Template-Type: ReDIF-Paper 1.0
Title: Expanding School Resources and Increasing Time on Task: Effects of a Policy Experiment in Israel on Student Academic Achievement and Behavior
Classification-JEL: I21; J18; J24
Author-Name: Victor Lavy
Author-Person: pla111
Note: ED LS
Number: 18369
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18369
File-URL: http://www.nber.org/papers/w18369.pdf
File-Format: application/pdf
Abstract: This paper uses a natural experiment in Israel to assess the impact of school teaching resources and how it is used, ‘time-on-task’, on academic achievements and non-cognitive outcomes. It exploits variation induced by a change in the funding formula that reduced instructional resources funding for some schools and increased them for others. The results suggest that increased school resources and students' spending more time at school and on key tasks all lead to increased academic achievements with no behavioral costs. Separate estimations of the effect of increasing subject-specific instructional time per week also show positive and significant effects on math, science, and English test scores. However, there are no cross effects of additional instructional time across subjects. This evidence is robust to using different identification strategies. The evidence also shows that a longer school week increases the time that students spend on homework without reducing social and school satisfaction and without increasing school violence.
Handle: RePEc:nbr:nberwo:18369
Template-Type: ReDIF-Paper 1.0
Title: The Cyclical Response of Advertising Refutes Counter-Cyclical Profit Margins in Favor of Product-Market Frictions
Classification-JEL: D43; E12; E32
Author-Name: Robert E. Hall
Note: EFG LS ME
Number: 18370
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18370
File-URL: http://www.nber.org/papers/w18370.pdf
File-Format: application/pdf
Abstract: According to the standard model, advertising is remarkably sensitive to profit margins. Firms advertise to stimulate demand for their products. They advertise high-margin products aggressively and low-margin ones hardly at all. In macroeconomics, variations in profit margins over the business cycle have a key role. A widening of margins can explain the rise in unemployment in recessions. A higher margin implies a lower real wage. A variety of models ranging from Keynesian to search-and-matching map a decline in wages to higher unemployment. But a rise in profit margins should expand advertising by a lot. Really a lot. Advertising should be highly countercyclical. Instead, it is somewhat procyclical. The ratio of advertising spending to private GDP falls when the economy contracts. The behavior of advertising refutes the hypothesis that profit margins rise. But it is true that the labor share of income falls. Hence there must be another factor that lowers the labor share without raising profit margins. The only influence that fits the facts is a rise in a product-market friction that has the same effect as an increase in sales taxes.
Handle: RePEc:nbr:nberwo:18370
Template-Type: ReDIF-Paper 1.0
Title: Early-Life Health and Adult Circumstance in Developing Countries
Classification-JEL: I12; I15; J24; O15
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Tom Vogl
Note: AG CH EH LS
Number: 18371
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18371
File-URL: http://www.nber.org/papers/w18371.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie & Tom Vogl, 2013. "Early-Life Health and Adult Circumstance in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 1-36, 05.
Abstract: A growing literature documents the links between long-term outcomes and health in the fetal period, infancy, and early childhood. Much of this literature focuses on rich countries, but researchers are increasingly taking advantage of new sources of data and identification to study the long reach of childhood health in developing countries. Health in early life may be a more significant determinant of adult outcomes in these countries because health insults are more frequent, the capacity to remediate is more limited, and multiple shocks may interact. However, the underlying relationships may also be more difficult to measure, given significant mortality selection. We survey recent evidence on the adult correlates of early-life health and the long-term effects of shocks due to disease, famine, malnutrition, pollution, and war.
Handle: RePEc:nbr:nberwo:18371
Template-Type: ReDIF-Paper 1.0
Title: Capital Mobility and International Sharing of Cyclical Risk
Classification-JEL: F36; F44; G15
Author-Name: Julien Bengui
Author-Person: pbe1047
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Vincenzo Quadrini
Author-Person: pqu2
Note: IFM
Number: 18372
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18372
File-URL: http://www.nber.org/papers/w18372.pdf
File-Format: application/pdf
Publication-Status: published as Bengui, Julien & Mendoza, Enrique G. & Quadrini, Vincenzo, 2013. "Capital mobility and international sharing of cyclical risk," Journal of Monetary Economics, Elsevier, vol. 60(1), pages 42-62.
Abstract: This paper investigates whether the international globalization of financial markets allows for significant cross-country risk-sharing at the business cycle frequency. We find that cross-country risk-sharing is still limited and this is unlikely to be the result of financial frictions that limit state-contingent contracts. Part of the limited international risk sharing could be the consequence of frictions that de-facto reduce the short-term mobility of financial capital. But even with these frictions we find significant divergence between model predictions and the data.
Handle: RePEc:nbr:nberwo:18372
Template-Type: ReDIF-Paper 1.0
Title: Site Selection Bias in Program Evaluation
Classification-JEL: C93; D12; L94; O12; Q41
Author-Name: Hunt Allcott
Author-Person: pal171
Note: EEE LS
Number: 18373
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18373
File-URL: http://www.nber.org/papers/w18373.pdf
File-Format: application/pdf
Publication-Status: published as Hunt Allcott, 2015. "Site Selection Bias in Program Evaluation," The Quarterly Journal of Economics, vol 130(3), pages 1117-1165.
Abstract: "Site selection bias" can occur when the probability that a program is adopted or evaluated is correlated with its impacts. I test for site selection bias in the context of the Opower energy conservation programs, using 111 randomized control trials involving 8.6 million households across the U.S. Predictions based on rich microdata from the first ten replications substantially overstate efficacy in the next 101 sites. Several mechanisms caused this positive selection. For example, utilities in more environmentalist areas are more likely to adopt the program, and their customers are more responsive to the treatment. Also, because utilities initially target treatment at higher-usage consumer subpopulations, efficacy drops as the program is later expanded. The results illustrate how program evaluations can still give systematically biased out-of-sample predictions, even after many replications.
Handle: RePEc:nbr:nberwo:18373
Template-Type: ReDIF-Paper 1.0
Title: Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference
Classification-JEL: A13; D69; E01; I31
Author-Name: Daniel J. Benjamin
Author-Person: pbe959
Author-Name: Ori Heffetz
Author-Person: phe566
Author-Name: Miles S. Kimball
Author-Person: pki97
Author-Name: Nichole Szembrot
Note: AG PE
Number: 18374
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18374
File-URL: http://www.nber.org/papers/w18374.pdf
File-Format: application/pdf
Publication-Status: published as Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Nichole Szembrot, 2014. "Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference," American Economic Review, American Economic Association, vol. 104(9), pages 2698-2735, September.
Abstract: This paper proposes foundations and a methodology for survey-based tracking of well-being. First, we develop a theory in which utility depends on "fundamental aspects" of well-being, measurable with surveys. Second, drawing from psychologists, philosophers, and economists, we compile a comprehensive list of such aspects. Third, we demonstrate our proposed method for estimating the aspects' relative marginal utilities--a necessary input for constructing an individual-level well-being index--by asking ~4,600 U.S. survey respondents to state their preference between pairs of aspect bundles. We estimate high relative marginal utilities not only for happiness and life satisfaction, but also for aspects related to family, health, security, values, and freedoms.
Handle: RePEc:nbr:nberwo:18374
Template-Type: ReDIF-Paper 1.0
Title: Predation, Taxation, Investment, and Violence: Evidence from the Philippines
Classification-JEL: F52; F54; H41; H56; K42; N47; O1
Author-Name: Eli Berman
Author-Person: pbe188
Author-Name: Joseph Felter
Author-Name: Ethan Kapstein
Author-Name: Erin Troland
Note: PE POL
Number: 18375
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18375
File-URL: http://www.nber.org/papers/w18375.pdf
File-Format: application/pdf
Abstract: The literature relating economic activity to political violence posits greedy rebels (Collier, 2000) but not greedy governments. Could capturing tax revenue motivate governments to step up their counter insurgency operations, just as extortion motivates rebel violence? Panel data on political violence in the Philippines distinguish government from rebel attacks, which we link to private investment across 70 provinces. To formally explore these data we expand an established theory of asymmetric substate conflict –the “information-centric” model, adding firms, investment, taxation and predation (i.e., extortionary violence by rebels in response to investment) to the interplay of government, rebels and civilians, generating testable implications. The data show that increases in investment predict increases in both government-initiated attacks and rebel-initiated attacks. In the year following increased investment government attacks decrease. In the context of our expanded model, these empirical results suggest that both rebels and governments contest economic rents.
Handle: RePEc:nbr:nberwo:18375
Template-Type: ReDIF-Paper 1.0
Title: A Study of the Extent and Potential Causes of Alternative Employment Arrangements
Classification-JEL: J2; J21; J41; M12; M51; M54; M55
Author-Name: Peter Cappelli
Author-Name: J. R. Keller
Note: IO LS
Number: 18376
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18376
File-URL: http://www.nber.org/papers/w18376.pdf
File-Format: application/pdf
Publication-Status: published as P. H. Cappelli & J. Keller, 2013. "A Study of the Extent and Potential Causes of Alternative Employment Arrangements," ILR Review, vol 66(4), pages 874-901.
Abstract: The notion of regular, full-time employment as one of the defining features of the U.S. economy has been called into question in recent years by the apparent growth of alternative or "nonstandard" arrangements - part-time work, temporary help, independent contracting, and other arrangements. Identifying the extent of these arrangements, whether they are increasing, and where they occur is the first step for understanding their implications for the economy and the society. But this has been difficult to do because of the lack of appropriate data. We present estimates of the extent of these practices based on a national probability sample of U.S. establishments, evidence on changes in their use over time, and analyses that help us begin to understand why they are used.
Handle: RePEc:nbr:nberwo:18376
Template-Type: ReDIF-Paper 1.0
Title: Debt Fragility and Bailouts
Classification-JEL: E61; E63; F34; H87
Author-Name: Russell Cooper
Note: EFG
Number: 18377
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18377
File-URL: http://www.nber.org/papers/w18377.pdf
File-Format: application/pdf
Abstract: This paper studies debt fragility and the sharing of the resulting strategic uncertainty through ex post bailouts. Default arises in equilibrium because of both fundamental shocks and beliefs. The probability of default depends on borrowing rates and, in equilibrium, on the beliefs of lenders about this probability. This interaction creates a strategic complementarity and thus the basis for strategic uncertainty. The paper analyzes the role of credible ex post bailouts as a means of sharing both fundamental and strategic uncertainty. While bailouts may occur in some states, debt fragility remains.
Handle: RePEc:nbr:nberwo:18377
Template-Type: ReDIF-Paper 1.0
Title: State vs Consumer Regulation: An Evaluation of Two Road Safety Interventions in Kenya
Classification-JEL: D13; I12; O12
Author-Name: James Habyarimana
Author-Name: William Jack
Author-Person: pja302
Note: EH
Number: 18378
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18378
File-URL: http://www.nber.org/papers/w18378.pdf
File-Format: application/pdf
Publication-Status: published as State versus Consumer Regulation: An Evaluation of Two Road Safety Interventions in Kenya, James Habyarimana, William Jack. in African Successes, Volume I: Government and Institutions, Edwards, Johnson, and Weil. 2016
Abstract: This paper compares the relative impact of two road safety interventions in the Kenyan minibus or matatu sector: a top down set of regulatory requirements known as the Michuki Rules and a consumer empowerment intervention. We use very detailed insurance claims data on three classes of vehicles to implement a difference-in-differences estimation strategy to measure the impact of the Michuki Rules. Despite strong political leadership and dedicated resources, we find no statistically significant effect of the Michuki Rules on accident rates. In contrast, the consumer empowerment intervention that didn't rely on third party enforcement has very large and significant effects on accident rates. Our intent-to-treat estimates suggest reductions in accident rates of at least 50%. Our analysis suggests that in institutionally weak environments, innovative consumer-driven solutions might provide an alternative solution to low quality service provision.
Handle: RePEc:nbr:nberwo:18378
Template-Type: ReDIF-Paper 1.0
Title: An Anatomy of Credit Booms and their Demise
Classification-JEL: E32; E44; E51; G21
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Marco E. Terrones
Author-Person: pte49
Note: IFM
Number: 18379
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18379
File-URL: http://www.nber.org/papers/w18379.pdf
File-Format: application/pdf
Publication-Status: published as Enrique G. Mendoza & Marco E. Terrones, 2012. "An Anatomy of Credits Booms and their Demise," Journal EconomÃa Chilena (The Chilean Economy), Central Bank of Chile, vol. 15(2), pages 04-32, August.
Abstract: What are the stylized facts that characterize the dynamics of credit booms and the associated fluctuations in macro-economic aggregates? This paper answers this question by applying a method proposed in our earlier work for measuring and identifying credit booms to data for 61 emerging and industrial countries over the 1960-2010 period. We identify 70 credit boom events, half of them in each group of countries. Event analysis shows a systematic relationship between credit booms and a boom-bust cycle in production and absorption, asset prices, real exchange rates, capital inflows, and external deficits. Credit booms are synchronized internationally and show three striking similarities in industrial and emerging economies: (1) credit booms are similar in duration and magnitude, normalized by the cyclical variability of credit; (2) banking crises, currency crises or Sudden Stops often follow credit booms, and they do so at similar frequencies in industrial and emerging economies; and (3) credit booms often follow surges in capital inflows, TFP gains, and financial reforms, and are far more common with managed than flexible exchange rates.
Handle: RePEc:nbr:nberwo:18379
Template-Type: ReDIF-Paper 1.0
Title: On the Solvency of Nations: Cross-Country Evidence on the Dynamics of External Adjustment
Classification-JEL: E66; F32; F41
Author-Name: C. Bora Durdu
Author-Person: pdu88
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Marco E. Terrones
Author-Person: pte49
Note: IFM
Number: 18380
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18380
File-URL: http://www.nber.org/papers/w18380.pdf
File-Format: application/pdf
Publication-Status: published as Durdu, C. Bora & Mendoza, Enrique G. & Terrones, Marco E., 2013. "On the solvency of nations: Cross-country evidence on the dynamics of external adjustment," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 762-780.
Abstract: We test the hypothesis that net foreign asset positions are consistent with external solvency and examine the dynamics of external adjustment using data for 50 countries over the 1970-2006 period. Our analysis adapts Bohn's (2007) error-correction reaction function approach--which tests for a negative long-run relationship between net exports (NX) and net foreign assets (NFA) as a sufficiency condition for the intertemporal budget constraint to hold--to a dynamic panel framework. Pooled Mean Group and Mean Group error-correction estimation yield evidence of a statistically significant, negative response of NX to NFA. Moreover, we cannot reject the hypothesis that the response is largely homogeneous across countries. Our sensitivity analysis shows that the countries with relatively weaker fundamentals need to respond more strongly to the changes in NFA to keep their NFAs on a sustainable path.
Handle: RePEc:nbr:nberwo:18380
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Multipliers: Liquidity Traps and Currency Unions
Classification-JEL: E52; E62; F41
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Iván Werning
Author-Person: pwe141
Note: EFG IFM ME
Number: 18381
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18381
File-URL: http://www.nber.org/papers/w18381.pdf
File-Format: application/pdf
Abstract: We provide explicit solutions for government spending multipliers during a liquidity trap and within a fixed exchange regime using standard closed and open-economy models. We confirm the potential for large multipliers during liquidity traps. For a currency union, we show that self-financed multipliers are small, always below unity. However, outside transfers or windfalls can generate larger responses in out- put, whether or not they are spent by the government. Our solutions are relevant for local and national multipliers, providing insight into the economic mechanisms at work as well as the testable implications of these models.
Handle: RePEc:nbr:nberwo:18381
Template-Type: ReDIF-Paper 1.0
Title: Factor Model Forecasts of Exchange Rates
Classification-JEL: C53; C58; F37; G17
Author-Name: Charles Engel
Author-Person: pen14
Author-Name: Nelson C. Mark
Author-Person: pma186
Author-Name: Kenneth D. West
Author-Person: pwe16
Note: AP IFM ME
Number: 18382
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18382
File-URL: http://www.nber.org/papers/w18382.pdf
File-Format: application/pdf
Publication-Status: published as Charles Engel & Nelson C. Mark & Kenneth D. West, 2015. "Factor Model Forecasts of Exchange Rates," Econometric Reviews, Taylor & Francis Journals, vol. 34(1-2), pages 32-55, February.
Abstract: We construct factors from a cross section of exchange rates and use the idiosyncratic deviations from the factors to forecast. In a stylized data generating process, we show that such forecasts can be effective even if there is essentially no serial correlation in the univariate exchange rate processes. We apply the technique to a panel of bilateral U.S. dollar rates against 17 OECD countries. We forecast using factors, and using factors combined with any of fundamentals suggested by Taylor rule, monetary and purchasing power parity (PPP) models. For long horizon (8 and 12 quarter) forecasts, we tend to improve on the forecast of a "no change" benchmark in the late (1999-2007) but not early (1987-1998) parts of our sample.
Handle: RePEc:nbr:nberwo:18382
Template-Type: ReDIF-Paper 1.0
Title: Russian Inequality on the Eve of Revolution
Classification-JEL: N30; N33; O15
Author-Name: Steven Nafziger
Author-Person: pna313
Author-Name: Peter H. Lindert
Author-Person: pli466
Note: DAE LS PE
Number: 18383
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18383
File-URL: http://www.nber.org/papers/w18383.pdf
File-Format: application/pdf
Publication-Status: published as Lindert, Peter H. & Nafziger, Steven, 2014. "Russian Inequality on the Eve of Revolution," The Journal of Economic History, Cambridge University Press, vol. 74(03), pages 767-798, September.
Abstract: Just how unequal were the incomes of different classes of Russians on the eve of Revolution, relative to other countries, to Russia's earlier history, and to Russia's income distribution today? Careful weighing of an eclectic data set provides provisional answers. We provide detailed income estimates for economic and social classes in each of the 50 provinces of European Russia. In 1904, on the eve of military defeat and the 1905 Revolution, Russian income inequality was middling by the standards of that era, and less severe than inequality has become today in such countries as China, the United States, and Russia itself. We also note how the interplay of some distinctive fiscal and relative-price features of Imperial Russia might have shaped the now-revealed level of inequality.
Handle: RePEc:nbr:nberwo:18383
Template-Type: ReDIF-Paper 1.0
Title: A Cautionary Note on Using Industry Affiliation to Predict Income
Classification-JEL: D31; I14; I3; J31
Author-Name: Jörn-Steffen Pischke
Author-Person: ppi29
Author-Name: Hannes Schwandt
Author-Person: psc768
Note: EH LS
Number: 18384
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18384
File-URL: http://www.nber.org/papers/w18384.pdf
File-Format: application/pdf
Abstract: Many literatures investigate the causal impact of income on economic outcomes, for example in the context of intergenerational transmission or well-being and health. Some studies have proposed to use employer wage differentials and in particular industry affiliation as an instrument for income. We demonstrate that industry affiliation is correlated with fixed individual characteristics, specifically parents' education and own height, conditional on the covariates typically controlled for in these studies. These results suggest that there is selection into industries based on unobservables. As a result the exclusion restriction in many IV studies of this type is likely violated.
Handle: RePEc:nbr:nberwo:18384
Template-Type: ReDIF-Paper 1.0
Title: Public Procurement and the Private Supply of Green Buildings
Classification-JEL: L15; O33; Q55; Q58
Author-Name: Timothy Simcoe
Author-Name: Michael W. Toffel
Author-Person: pto156
Note: PR
Number: 18385
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18385
File-URL: http://www.nber.org/papers/w18385.pdf
File-Format: application/pdf
Publication-Status: published as T. Simcoe and M. Toel. Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California. Journal of Environmental Economics and Management, 68(3):411{434. Lead article. (November 2014).
Abstract: We measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and supplier investments in green building expertise. Our findings suggest that government procurement policies can accelerate the diffusion of new environmental standards that require coordinated complementary investments by various types of private adopter.
Handle: RePEc:nbr:nberwo:18385
Template-Type: ReDIF-Paper 1.0
Title: The United States Labor Market: Status Quo or A New Normal?
Classification-JEL: E24; J6; M5
Author-Name: Edward P. Lazear
Author-Person: pla64
Author-Name: James R. Spletzer
Author-Person: psp146
Note: LS PE
Number: 18386
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18386
File-URL: http://www.nber.org/papers/w18386.pdf
File-Format: application/pdf
Publication-Status: published as Edward P. Lazear & James R. Spletzer, 2012. "The United States labor market: status quo or a new normal?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 405-451.
Abstract: The recession of 2007-09 witnessed high rates of unemployment that have been slow to recede. This has led many to conclude that structural changes have occurred in the labor market and that the economy will not return to the low rates of unemployment that prevailed in the recent past. Is this true? The question is important because central banks may be able to reduce unemployment that is cyclic in nature, but not that which is structural. An analysis of labor market data suggests that there are no structural changes that can explain movements in unemployment rates over recent years. Neither industrial nor demographic shifts nor a mismatch of skills with job vacancies is behind the increased rates of unemployment. Although mismatch increased during the recession, it retreated at the same rate. The patterns observed are consistent with unemployment being caused by cyclic phenomena that are more pronounced during the current recession than in prior recessions.
Handle: RePEc:nbr:nberwo:18386
Template-Type: ReDIF-Paper 1.0
Title: Duration Dependence and Labor Market Conditions: Theory and Evidence from a Field Experiment
Classification-JEL: J64
Author-Name: Kory Kroft
Author-Person: pkr410
Author-Name: Fabian Lange
Author-Person: pla224
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Note: LS
Number: 18387
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18387
File-URL: http://www.nber.org/papers/w18387.pdf
File-Format: application/pdf
Publication-Status: published as Duration Dependence and Labor Market Conditions: Evidence from a Field Experiment* Kory Kroft University of Toronto Fabian Lange McGill University, IZA, and CESifo Matthew J. Notowidigdo The Quarterly Journal of Economics (2013) doi: 10.1093/qje/qjt015 First published online: April 16, 2013
Abstract: This paper studies the role of employer behavior in generating "negative duration dependence" -- the adverse effect of a longer unemployment spell -- by sending fictitious resumes to real job postings in 100 U.S. cities. Our results indicate that the likelihood of receiving a callback for an interview significantly decreases with the length of a worker's unemployment spell, with the majority of this decline occurring during the first eight months. We explore how this effect varies with local labor market conditions, and find that duration dependence is stronger when the labor market is tighter. We develop a theoretical framework that shows how the sign of this interaction effect can be used to discern among leading models of duration dependence based on employer screening, employer ranking, and human capital depreciation. Our results suggest that employer screening plays an important role in generating duration dependence; employers use the unemployment spell length as a signal of unobserved productivity and recognize that this signal is less informative in weak labor markets.
Handle: RePEc:nbr:nberwo:18387
Template-Type: ReDIF-Paper 1.0
Title: The New Deal and the Origins of the Modern American Real Estate Loan Contract
Classification-JEL: G21; N21; N22; O33
Author-Name: Jonathan Rose
Author-Name: Kenneth A. Snowden
Author-Person: psn37
Note: DAE
Number: 18388
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18388
File-URL: http://www.nber.org/papers/w18388.pdf
File-Format: application/pdf
Publication-Status: published as Rose, Jonathan D. & Snowden, Kenneth A., 2013. "The New Deal and the origins of the modern American real estate loan contract," Explorations in Economic History, Elsevier, vol. 50(4), pages 548-566.
Publication-Status: published as The New Deal and the Origins of the Modern American Real Estate Loan Contract, Jonathan Rose, Kenneth Snowden. in The Microeconomics of New Deal Policy, Fishback. 2013
Abstract: The introduction of the direct reduction (fully-amortized) loan contract to the U.S. residential mortgage market is an important instance of financial innovation. We describe the adoption of this contract within the building and loan (B&L) industry beginning in the 1880s and culminating in the 1930s. A long chain of complementary innovations at B&Ls gradually reduced the costs of adoption, leading to moderate use by the 1920s. The poor performance of traditional contracts during the crisis of the 1930s then radically altered the adoption calculus. At this point a new system of federal savings and loan charters incorporated many of the innovations that had been adopted within the small segment of the B&L industry that had introduced direct reduction lending by the 1920s. The B&L transition in mortgage contracts occurred primarily in the conventional loan market because B&Ls, unlike other lenders, generally avoided the use of the new FHA insurance program.
Handle: RePEc:nbr:nberwo:18388
Template-Type: ReDIF-Paper 1.0
Title: The Supply of and Demand for Charitable Donations to Higher Education
Classification-JEL: H41; I2; I22; I23
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: Stephen G. Dimmock
Author-Person: pdi378
Author-Name: Scott Weisbenner
Note: ED LS PE
Number: 18389
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18389
File-URL: http://www.nber.org/papers/w18389.pdf
File-Format: application/pdf
Publication-Status: published as The Supply of and Demand for Charitable Donations to Higher Education, Jeffrey R. Brown, Stephen G. Dimmock, Scott Weisbenner. in How the Financial Crisis and Great Recession Affected Higher Education, Brown and Hoxby. 2015
Abstract: Charitable donations are an important revenue source for many institutions of higher education. We explore how donations respond to economic and financial market shocks, accounting for both supply and demand channels through which these shocks operate. In panel data with fixed effects to control for unobservable differences across universities, we find that overall donations to higher education - and especially capital donations for university endowments or for buildings- are positively and significantly correlated with the average income and house values in the state where the university is located (supply effects). We also find that when a university suffers a negative endowment shock that is large relative to its operating budget, donations increase (demand effects). This is especially true for donations earmarked for current use. We conclude by discussing the importance of understanding how donations respond to economic shocks for effective financial risk management by colleges and universities.
Handle: RePEc:nbr:nberwo:18389
Template-Type: ReDIF-Paper 1.0
Title: Shale Gas Development and Property Values: Differences across Drinking Water Sources
Classification-JEL: Q4; Q53
Author-Name: Lucija Muehlenbachs
Author-Person: pmu561
Author-Name: Elisheba Spiller
Author-Person: psp209
Author-Name: Christopher Timmins
Note: EEE
Number: 18390
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18390
File-URL: http://www.nber.org/papers/w18390.pdf
File-Format: application/pdf
Abstract: While shale gas development can result in rapid local economic development, negative externalities associated with the process may adversely affect the prices of nearby homes. We utilize a triple-difference estimator and exploit the public water service area boundary in Washington County, Pennsylvania to identify the housing capitalization of groundwater risk, differentiating it from other externalities, lease payments to homeowners, and local economic development. We find that proximity to wells increases housing values, though risks to groundwater fully offset those gains. By itself, groundwater risk reduces property values by up to 24 percent.
Handle: RePEc:nbr:nberwo:18390
Template-Type: ReDIF-Paper 1.0
Title: Comparing Predictive Accuracy, Twenty Years Later: A Personal Perspective on the Use and Abuse of Diebold-Mariano Tests
Classification-JEL: C01; C52; C53
Author-Name: Francis X. Diebold
Author-Person: pdi1
Note: AP EFG IFM TWP
Number: 18391
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18391
File-URL: http://www.nber.org/papers/w18391.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Business & Economic Statistics Volume 33, Issue 1, 2015 Select Language▼ Translator disclaimer Comparing Predictive Accuracy, Twenty Years Later: A Personal Perspective on the Use and Abuse of Diebold–Mariano Tests Comparing Predictive Accuracy, Twenty Years Later: A Personal Perspective on the Use and Abuse of Diebold–Mariano Tests Preview View full text Download full text View & annotate PDF Add to colwiz Library Access options DOI: 10.1080/07350015.2014.983236 Francis X. Diebolda page 1 Publishing models and article dates explained Received: 1 Sep 2014 Published online: 26 Jan 2015
Abstract: The Diebold-Mariano (DM) test was intended for comparing forecasts; it has been, and remains, useful in that regard. The DM test was not intended for comparing models. Unfortunately, however, much of the large subsequent literature uses DM-type tests for comparing models, in (pseudo-) out-of-sample environments. In that case, much simpler yet more compelling full-sample model comparison procedures exist; they have been, and should continue to be, widely used. The hunch that (pseudo-) out-of-sample analysis is somehow the "only," or "best," or even a "good" way to provide insurance against in-sample over-fitting in model comparisons proves largely false. On the other hand, (pseudo-) out-of-sample analysis may be useful for learning about comparative historical predictive performance.
Handle: RePEc:nbr:nberwo:18391
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing
Classification-JEL: D2; K3; L5; L6; Q5
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: John A. List
Author-Person: pli176
Author-Name: Chad Syverson
Author-Person: psy13
Note: EEE IO PR
Number: 18392
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18392
File-URL: http://www.nber.org/papers/w18392.pdf
File-Format: application/pdf
Abstract: The economic costs of environmental regulations have been widely debated since the U.S. began to restrict pollution emissions more than four decades ago. Using detailed production data from nearly 1.2 million plant observations drawn from the 1972-1993 Annual Survey of Manufactures, we estimate the effects of air quality regulations on manufacturing plants' total factor productivity (TFP) levels. We find that among surviving polluting plants, stricter air quality regulations are associated with a roughly 2.6 percent decline in TFP. The regulations governing ozone have particularly large negative effects on productivity, though effects are also evident among particulates and sulfur dioxide emitters. Carbon monoxide regulations, on the other hand, appear to increase measured TFP, especially among refineries. The application of corrections for the confounding of price increases and output declines and sample selection on survival produce a 4.8 percent estimated decline in TFP for polluting plants in regulated areas. This corresponds to an annual economic cost from the regulation of manufacturing plants of roughly $21 billion, about 8.8 percent of manufacturing sector profits in this period.
Handle: RePEc:nbr:nberwo:18392
Template-Type: ReDIF-Paper 1.0
Title: The Joint Identification of Utility and Discount Functions From Stated Choice Data: An Application to Durable Goods Adoption
Classification-JEL: C14; D12; D9; M31
Author-Name: Jean-Pierre H. Dube
Author-Name: Günter J. Hitsch
Author-Name: Pranav Jindal
Note: IO
Number: 18393
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18393
File-URL: http://www.nber.org/papers/w18393.pdf
File-Format: application/pdf
Publication-Status: published as Quantitative Marketing and Economics December 2014, Volume 12, Issue 4, pp 331-377 Date: 10 Sep 2014 The Joint identification of utility and discount functions from stated choice data: An application to durable goods adoption Jean-Pierre Dubé, Günter J. Hitsch, Pranav Jindal
Abstract: We present a survey design that generalizes static conjoint experiments to elicit inter-temporal adoption decisions for durable goods. We show that consumers' utility and discount functions in a dynamic discrete choice model are jointly identified using data generated by this specific design. In contrast, based on revealed preference data, the utility and discount functions are generally not jointly identified even if consumers' expectations are known. The separation of current-period preferences from discounting is necessary to forecast the diffusion of a durable good under alternative marketing strategies. We illustrate the approach using two surveys eliciting Blu-ray player adoption decisions. Both model-free evidence and the estimates based on a dynamic discrete choice model indicate that consumers make forward-looking adoption decisions. In both surveys the average discount rate is 43 percent, corresponding to a substantially higher degree of impatience than the rate implied by aggregate asset returns. The estimates also reveal a large degree of heterogeneity in the discount rates across consumers, but only little evidence for hyperbolic discounting.
Handle: RePEc:nbr:nberwo:18393
Template-Type: ReDIF-Paper 1.0
Title: How Do Regulators Influence Mortgage Risk: Evidence from an Emerging Market
Classification-JEL: G21
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Tarun Ramadorai
Author-Person: pra44
Author-Name: Benjamin Ranish
Note: AP CF
Number: 18394
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18394
File-URL: http://www.nber.org/papers/w18394.pdf
File-Format: application/pdf
Abstract: To understand the effects of regulation on mortgage risk, it is instructive to track the history of regulatory changes in a country rather than to rely entirely on cross- country evidence that can be contaminated by unobserved heterogeneity. However, in developed countries with fairly stable systems of financial regulation, it is difficult to track these effects. We employ loan-level data on over a million loans disbursed in India over the 1995 to 2010 period to understand how fast-changing regulation impacted mortgage lending and risk. We use cross-sectional differences in the time- series variation of delinquency rates, conditional on initial interest rates, to detect the effects of regulation on mortgage delinquencies.
Handle: RePEc:nbr:nberwo:18394
Template-Type: ReDIF-Paper 1.0
Title: Executive Compensation and Corporate Governance in the U.S.: Perceptions, Facts and Challenges
Classification-JEL: G30; G32; J33; L2
Author-Name: Steven N. Kaplan
Note: CF
Number: 18395
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18395
File-URL: http://www.nber.org/papers/w18395.pdf
File-Format: application/pdf
Publication-Status: published as CEO Pay and Corporate Governance in the U.S.: Perceptions, Facts, and Challenges Steven N. Kaplan Article first published online: 11 SEP 2013 DOI: 10.1111/jacf.12013Journal of Applied Corporate Finance Volume 25, Issue 2, pages 8–25, Spring 2013
Abstract: In this paper, I consider the evidence for three common perceptions of U.S. public company CEO pay and corporate governance: (1) CEOs are overpaid and their pay keeps increasing; (2) CEOs are not paid for their performance; and (3) boards do not penalize CEOs for poor performance. While average CEO pay increased substantially through the 1990s, it has declined since then. CEO pay levels relative to other highly paid groups today are comparable to their average levels in the early 1990s although they remain above their long-term historical average. The ratio of large-company CEO pay to firm market value is roughly similar to its level in the late-1970s and lower than its pre-1960s levels. These patterns suggest that similar forces, likely technology and scale, have played a meaningful role in driving CEO pay and the pay of others with top incomes. With regard to performance, CEOs are paid for performance and penalized for poor performance. Finally, boards do monitor CEOs. The rate of CEO turnover has increased in the 2000s compared to the 1980s and 1990s, and is significantly tied to poor stock performance. While corporate governance failures and pay outliers as well as the very high average pay levels relative to the typical household undoubtedly have contributed to the common perceptions, a meaningful part of CEO pay appears to be market determined and boards do appear to monitor their CEOs. Consistent with that, top executive pay policies at over 98% of S&P 500 and Russell 3000 companies received majority shareholder support in the Dodd-Frank mandated Say-On-Pay votes in 2011.
Handle: RePEc:nbr:nberwo:18395
Template-Type: ReDIF-Paper 1.0
Title: American Incomes 1774-1860
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: 18396
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18396
File-URL: http://www.nber.org/papers/w18396.pdf
File-Format: application/pdf
Abstract: Building what we call social tables, this paper quantifies the level and inequality of American incomes from 1774 to 1860. In 1774 the American colonies had average incomes exceeding those of the Mother Country, even when slave households are included in the aggregate. Between 1774 and 1790, this income advantage over Britain was lost, due to the severe dislocation caused by the fight for Independence. Then between 1790 and 1860 US income per capita grew even faster than previous scholars have estimated. We also find that the South was initially much richer than the North on the eve of Revolution, but then suffered a severe reversal of fortune, so that by 1840 its white population was already poorer than free Northerners. In terms of inequality, our estimates suggest that American colonists had much more equal incomes than did households in England and Wales around 1774. Indeed, New England and the Middle Colonies appear to have been more egalitarian than anywhere else in the measureable world. Income inequality rose dramatically between 1774 and 1860, especially in the South. The paper uses an open-source style, since our data processing is posted on http://gpih.ucdavis.edu (click on the folder "American incomes 1774-1870"). Detailed defense of the 1774 and 1800 benchmarks can be found in our previous NBER working paper (17211, July 2011), although the estimates reported here are revised. The 1860 estimates are completely new.
Handle: RePEc:nbr:nberwo:18396
Template-Type: ReDIF-Paper 1.0
Title: Some Reflections on the Recent Financial Crisis
Classification-JEL: E02; E3; E30; E32; E44; G01; G1; G2; G21
Author-Name: Gary B. Gorton
Author-Person: pgo458
Note: AP CF EFG ME
Number: 18397
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18397
File-URL: http://www.nber.org/papers/w18397.pdf
File-Format: application/pdf
Publication-Status: published as Trade, Globalization and Development 2014, pp 161-184 Date: 19 Jun 2013 Some Reflections on the Recent Financial Crisis Gary Gorton
Abstract: Economic growth involves metamorphosis of the financial system. Forms of banks and bank money change. These changes, if not addressed, leave the banking system vulnerable to crisis. There is no greater challenge in economics than to understand and prevent financial crises. The financial crisis of 2007-2008 provides the opportunity to reassess our understanding of crises. All financial crises are at root bank runs, because bank debt--of all forms--is vulnerable to sudden exit by bank debt holders. The current crisis raises issues for crisis theory. And, empirically, studying crises is challenging because of small samples and incomplete data.
Handle: RePEc:nbr:nberwo:18397
Template-Type: ReDIF-Paper 1.0
Title: Bubbles, Financial Crises, and Systemic Risk
Classification-JEL: G00; G01; G20
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Author-Name: Martin Oehmke
Note: AP CF ME
Number: 18398
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18398
File-URL: http://www.nber.org/papers/w18398.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of the Economics of Finance Volume 2, Part B, 2013, Pages 1221–1288 Cover image Chapter 18 – Bubbles, Financial Crises, and Systemic Risk * Markus K. Brunnermeiera, , Martin Oehmkeb,
Abstract: This chapter surveys the literature on bubbles, financial crises, and systemic risk. The first part of the chapter provides a brief historical account of bubbles and financial crisis. The second part of the chapter gives a structured overview of the literature on financial bubbles. The third part of the chapter discusses the literatures on financial crises and systemic risk, with particular emphasis on amplification and propagation mechanisms during financial crises, and the measurement of systemic risk. Finally, we point toward some questions for future research.
Handle: RePEc:nbr:nberwo:18398
Template-Type: ReDIF-Paper 1.0
Title: Estimating Dynamic Equilibrium Models with Stochastic Volatility
Classification-JEL: C1; E30
Author-Name: Jesus Fernandez-Villaverde
Author-Person: pfe14
Author-Name: Pablo A. Guerrón-Quintana
Author-Person: pgu174
Author-Name: Juan Rubio-Ramírez
Author-Person: pru25
Note: EFG
Number: 18399
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18399
File-URL: http://www.nber.org/papers/w18399.pdf
File-Format: application/pdf
Publication-Status: published as Fernández-Villaverde, Jesús & Guerrón-Quintana, Pablo & Rubio-Ramírez, Juan F., 2015. "Estimating dynamic equilibrium models with stochastic volatility," Journal of Econometrics, Elsevier, vol. 185(1), pages 216-229.
Abstract: We propose a novel method to estimate dynamic equilibrium models with stochastic volatility. First, we characterize the properties of the solution to this class of models. Second, we take advantage of the results about the structure of the solution to build a sequential Monte Carlo algorithm to evaluate the likelihood function of the model. The approach, which exploits the profusion of shocks in stochastic volatility models, is versatile and computationally tractable even in large-scale models, such as those often employed by policy-making institutions. As an application, we use our algorithm and Bayesian methods to estimate a business cycle model of the U.S. economy with both stochastic volatility and parameter drifting in monetary policy. Our application shows the importance of stochastic volatility in accounting for the dynamics of the data.
Handle: RePEc:nbr:nberwo:18399
Template-Type: ReDIF-Paper 1.0
Title: What Have They Been Thinking? Home Buyer Behavior in Hot and Cold Markets
Classification-JEL: R30
Author-Name: Karl E. Case
Author-Person: pca484
Author-Name: Robert J. Shiller
Author-Person: psh69
Author-Name: Anne Thompson
Note: AP EFG
Number: 18400
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18400
File-URL: http://www.nber.org/papers/w18400.pdf
File-Format: application/pdf
Publication-Status: published as Karl E. Case & Robert J. Shiller & Anne K. Thompson, 2012. "What Have They Been Thinking? Homebuyer Behavior in Hot and Cold Markets," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 265-315.
Abstract: Questionnaire surveys undertaken in 1988 and annually from 2003 through 2014 of recent homebuyers in each of four U.S. metropolitan areas shed light on their expectations and reasons for buying during the recent housing boom and subsequent collapse. They also provide insight into the reasons for the housing crisis that initiated the current financial malaise. We find that homebuyers were generally well informed, and that their short-run expectations if anything underreacted to the year-to-year change in actual home prices. More of the root causes of the housing bubble can be seen in their long-term (10-year) home price expectations, which reached abnormally high levels relative to mortgage rates at the peak of the boom and have declined sharply since. The downward turning point, around 2005, of the long boom that preceded the crisis was associated with changing public understanding of speculative bubbles.
Handle: RePEc:nbr:nberwo:18400
Template-Type: ReDIF-Paper 1.0
Title: Learning Through Noticing: Theory and Experimental Evidence in Farming
Classification-JEL: D83; J24; J43; O33
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Author-Name: Joshua Schwartzstein
Author-Person: psc473
Note: DEV LS PR
Number: 18401
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18401
File-URL: http://www.nber.org/papers/w18401.pdf
File-Format: application/pdf
Publication-Status: published as Learning Through Noticing: Theory and Experimental Evidence in Farming* Rema Hanna Harvard University, NBER and BREAD Sendhil Mullainathan Harvard University and BREAD Joshua Schwartzstein The Quarterly Journal of Economics (2014) doi: 10.1093/qje/qju015 First published online: June 9, 2014
Abstract: Existing learning models attribute failures to learn to a lack of data. We model a different barrier. Given the large number of dimensions one could focus on when using a technology, people may fail to learn because they failed to notice important features of the data they possess. We conduct a field experiment with seaweed farmers to test a model of "learning through noticing". We find evidence of a failure to notice: On some dimensions, farmers do not even know the value of their own input. Interestingly, trials show that these dimensions are the ones that farmers fail to optimize. Furthermore, consistent with the model, we find that simply having access to the experimental data does not induce learning. Instead, farmers change behavior only when presented with summaries that highlight the overlooked dimensions. We also draw out the implications of learning through noticing for technology adoption, agricultural extension, and the meaning of human capital.
Handle: RePEc:nbr:nberwo:18401
Template-Type: ReDIF-Paper 1.0
Title: Cost-Sharing and Productivity
Classification-JEL: I11; I18
Author-Name: Teresa B. Gibson
Author-Name: A. Mark Fendrick
Author-Name: Michael E. Chernew
Note: EH
Number: 18402
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18402
File-URL: http://www.nber.org/papers/w18402.pdf
File-Format: application/pdf
Abstract: A growing body of literature examines the cross price elasticities between different health care services. For example, increasing the patient out of pocket price for some health care services increases the utilization of other health care services. Yet, the literature has generally ignored the connection between cost sharing for health care services and labor market outcomes. This paper examines the direction and magnitude of the reduced form relationship between patient cost-sharing and work loss following methods used to study the impact of cost-sharing and medical spending, finding a positive, quantitatively meaningful association between cost-sharing and hours absent. We find no such association between cost-sharing and the probability of incurring short-term disability days. This suggests that the cross-market ramifications of higher patient cost sharing extend beyond other health care services to include broad labor market outcomes.
Handle: RePEc:nbr:nberwo:18402
Template-Type: ReDIF-Paper 1.0
Title: Land and House Price Measurement in China
Classification-JEL: R0; R14; R3; R31
Author-Name: Yongheng Deng
Author-Person: pde836
Author-Name: Joseph Gyourko
Author-Person: pgy3
Author-Name: Jing Wu
Author-Person: pwu144
Note: PE
Number: 18403
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18403
File-URL: http://www.nber.org/papers/w18403.pdf
File-Format: application/pdf
Publication-Status: published as Yongheng Deng, Joseph Gyourko and Jing Wu, “Land and House Price Measurement in China,” in Property Markets and Financial Stability, A. Heath, F. Packer and C. Windsor (ed.), Reserve Bank of Australia, (2012), ISBN: 978-0-9873620-3-2.
Abstract: We provide the first multi-city, constant quality land price index for 35 major markets in China. While there is meaningful heterogeneity in land price growth across cities, on average the last nine years have seen land values skyrocket in many markets, not just those on or near the coast. The typical market has experienced double-digit compound average annual growth in real, constant-quality land values. The 2009-2010 stimulus period typically saw large surges in prices. Three notable characteristics about the land value appreciation series are their strong mean reversion at annual frequencies, the strong common factor in their movement, and their very high volatility. Quantities, not just prices, have been sharply increasing in recent years. The typical amount of space supplied via land auctions in our 35 city sample has doubled since 2008. Some local political economy traits such as the time the local Chinese Communist Party leader has been in office are correlated with land supply volume. We also investigate the quality of the two most prominent house price indexes in China, and conclude that a traditional hedonic index more accurately reflects how house prices have changed over time in eight major markets in China. Repeat sales indexes have become standard in many countries, but they are not as useful in emerging markets such as China because the bulk of the housing stock is relatively new and has not traded multiple times. A hedonic index shows much higher house price growth over time that do officially published series for the eight markets examined.
Handle: RePEc:nbr:nberwo:18403
Template-Type: ReDIF-Paper 1.0
Title: Capital Account Policies and the Real Exchange Rate
Classification-JEL: F31; F32; F36
Author-Name: Olivier Jeanne
Author-Person: pje59
Note: IFM
Number: 18404
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18404
File-URL: http://www.nber.org/papers/w18404.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Jeanne, 2013. "Capital Account Policies and the Real Exchange Rate," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 7 - 42.
Publication-Status: published as Capital Account Policies and the Real Exchange Rate, Olivier Jeanne. in NBER International Seminar on Macroeconomics 2012, Giavazzi and West. 2013
Abstract: This paper presents a simple model of how a small open economy can undervalue its real exchange rate using its capital account policies. The paper presents several properties of such policies, and proposes a rule of thumb to assess their welfare cost. The model is applied to an analysis of Chinese capital account policies.
Handle: RePEc:nbr:nberwo:18404
Template-Type: ReDIF-Paper 1.0
Title: The Role Of Intangible Capital in the Transformation and Growth of the Chinese Economy
Classification-JEL: O11; O30; O47; O53
Author-Name: Charles R. Hulten
Author-Name: Janet X. Hao
Note: PR
Number: 18405
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18405
File-URL: http://www.nber.org/papers/w18405.pdf
File-Format: application/pdf
Abstract: Investment in a broad array of intangible capital - R&D, organizational capital, worker training, and brand equity - has occurred in many of the most advanced world economies and has been found to be an important source of economic growth. This evidence suggests that intangible capital formation may play an important role in China's reform-driven transformation to a more market-oriented open economy. Though the literature on intangible capital is expanding, there has as yet been no general assessment of its role in China's rapid economic growth. This paper seeks to fill this gap by estimating how much intangible investment has taken place there over the last two decades. The importance of this capital as a driver of China's recent growth is then assessed using a growth accounting framework, and the results compared to similar findings for the U.S., Japan, the U.K., Germany, France, Italy, and Spain, as well as Japan during its high growth period. The paper also looks beyond the growth accounting framework to the role of saving rates and long-run convergence in shaping longer-term growth prospects. It also focuses on the problem of accurate economic measurement in an economy undergoing rapid transformation.
Handle: RePEc:nbr:nberwo:18405
Template-Type: ReDIF-Paper 1.0
Title: Adverse Selection In Credit Markets and Regressive Profit Taxation
Classification-JEL: D82; E22; E44; G11; G14; H21
Author-Name: Florian Scheuer
Author-Person: psc147
Note: AP EFG LS PE PR
Number: 18406
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18406
File-URL: http://www.nber.org/papers/w18406.pdf
File-Format: application/pdf
Publication-Status: published as Scheuer, Florian, 2013. "Adverse selection in credit markets and regressive profit taxation," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1333-1360.
Abstract: In many countries, taxes on businesses are less progressive than labor income taxes. This paper provides a justification for this pattern based on adverse selection that entrepreneurs face in credit markets. Individuals choose between becoming entrepreneurs or workers and differ in their skill in both of these occupations. I find that endogenous cross-subsidization in the credit market equilibrium results in excessive (insufficient) entry of low-skilled (high-skilled) agents into entrepreneurship. This gives rise to a corrective role for differential taxation of entrepreneurial profits and labor income. In particular, a profit tax that is regressive relative to taxes on labor income restores the efficient occupational choice.
Handle: RePEc:nbr:nberwo:18406
Template-Type: ReDIF-Paper 1.0
Title: Projecting the Effect of Changes in Smoking and Obesity on Future Life Expectancy in the United States
Classification-JEL: I0; I1; I12; I18; J1; J11; J18
Author-Name: Samuel H. Preston
Author-Name: Andrew Stokes
Author-Name: Neil K. Mehta
Author-Name: Bochen Cao
Note: EH
Number: 18407
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18407
File-URL: http://www.nber.org/papers/w18407.pdf
File-Format: application/pdf
Publication-Status: published as Demography201351:246 DOI: 10.1007/s13524-013-0246-9 Projecting the Effect of Changes in Smoking and Obesity on Future Life Expectancy in the United States Samuel H. Preston1 , Andrew Stokes1, Neil K. Mehta2 and Bochen Cao1
Abstract: We project the effects of declining smoking and increasing obesity on mortality in the United States over the period 2010-2040. Data on cohort behavioral histories are integrated into these projections. Future distributions of body mass indices are projected using transition matrices applied to the initial distribution in 2010. In addition to projections of current obesity, we project distributions of obesity when cohorts were age 25. To these distributions we apply death rates by current and age-25 obesity status observed in the National Health and Nutrition Examination Survey, 1988-2006. Projections of the effects of smoking are based on observed relations between cohort smoking patterns and cohort death rates from lung cancer. We find that both changes in smoking and in obesity are expected to have large effects on mortality. For males, the reductions in smoking have larger effects than the rise in obesity throughout the projection period. By 2040, male life expectancy at age 40 is expected to have gained 0.92 years from the combined effects. Among women, however, the two sets of effects largely offset one another throughout the projection period, with a small gain of 0.26 years expected by 2040.
Handle: RePEc:nbr:nberwo:18407
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Liquidity and Defaultable Bonds
Classification-JEL: E44; G01; G12
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Konstantin Milbradt
Note: AP CF EFG
Number: 18408
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18408
File-URL: http://www.nber.org/papers/w18408.pdf
File-Format: application/pdf
Publication-Status: published as Zhiguo He & Konstantin Milbradt, 2014. "Endogenous Liquidity and Defaultable Bonds," Econometrica, Econometric Society, vol. 82(4), pages 1443-1508, July.
Abstract: This paper studies the interaction between fundamental and liquidity for defaultable corporate bonds that are traded in an over-the-counter secondary market with search frictions. Bargaining with dealers determines a bond's endogenous liquidity, which depends on both the firm fundamental and the time-to-maturity of the bond. Corporate default decisions interact with the endogenous secondary market liquidity via the rollover channel. A default-liquidity loop arises: Earlier endogenous default worsens a bond's secondary market liquidity, which amplifies equity holders' rollover losses, which in turn leads to earlier endogenous default. Besides characterizing in closed form the full inter-dependence between liquidity premium and default premium for credit spreads, we also study the optimal maturity implied by the model based on the tradeoff between liquidity provision and inefficient default.
Handle: RePEc:nbr:nberwo:18408
Template-Type: ReDIF-Paper 1.0
Title: The Macroeconomic Effects of Interest on Reserves
Classification-JEL: E31; E32; E51; E52; E58
Author-Name: Peter N. Ireland
Author-Person: pir1
Note: ME
Number: 18409
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18409
File-URL: http://www.nber.org/papers/w18409.pdf
File-Format: application/pdf
Publication-Status: published as Ireland, Peter N., 2014. "The Macroeconomic Effects Of Interest On Reserves," Macroeconomic Dynamics, Cambridge University Press, vol. 18(06), pages 1271-1312, September.
Abstract: This paper uses a New Keynesian model with banks and deposits to study the macroeconomic effects of policies that pay interest on reserves. While their effects on output and inflation are small, these policies require major adjustments in the way that the monetary authority manages the supply of reserves, as liquidity effects vanish in the short run. In the long run, however, the additional degree of freedom the monetary authority acquires by paying interest on reserves is best described as affecting the real quantity of reserves: policy actions that change prices must still change the nominal quantity of reserves proportionally.
Handle: RePEc:nbr:nberwo:18409
Template-Type: ReDIF-Paper 1.0
Title: The Most Egalitarian of All Professions: Pharmacy and the Evolution of a Family-Friendly Occupation
Classification-JEL: J24; J31; J44
Author-Name: Claudia Goldin
Author-Person: pgo601
Author-Name: Lawrence F. Katz
Author-Person: pka266
Note: DAE LS
Number: 18410
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18410
File-URL: http://www.nber.org/papers/w18410.pdf
File-Format: application/pdf
Abstract: Pharmacy has become a female-majority profession that is highly remunerated with a small gender earnings gap and low earnings dispersion relative to other occupations. We sketch a labor market framework based on the theory of equalizing differences to integrate and interpret our empirical findings on earnings, hours of work, and the part-time work wage penalty for pharmacists. Using extensive surveys of pharmacists for 2000, 2004, and 2009 as well as samples from the American Community Surveys and the Current Population Surveys, we explore the gender earnings gap, the penalty to part-time work, labor force persistence, and the demographics of pharmacists relative to other college graduates. We address why the substantial entrance of women into the profession was associated with an increase in their earnings relative to male pharmacists. We conclude that the changing nature of pharmacy employment with the growth of large national pharmacy chains and hospitals and the related decline of independent pharmacies played key roles in the creation of a more family-friendly, female-friendly pharmacy profession. The position of pharmacist is probably the most egalitarian of all U.S. professions today.
Handle: RePEc:nbr:nberwo:18410
Template-Type: ReDIF-Paper 1.0
Title: An Intertemporal CAPM with Stochastic Volatility
Classification-JEL: G12; N22
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Stefano Giglio
Author-Person: pgi162
Author-Name: Christopher Polk
Author-Person: ppo238
Author-Name: Robert Turley
Note: AP
Number: 18411
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18411
File-URL: http://www.nber.org/papers/w18411.pdf
File-Format: application/pdf
Publication-Status: published as John Y. Campbell & Stefano Giglio & Christopher Polk & Robert Turley, 2018. "An intertemporal CAPM with stochastic volatility," Journal of Financial Economics, .
Abstract: This paper studies the pricing of volatility risk using the first-order conditions of a long-term equity investor who is content to hold the aggregate equity market rather than tilting towards value stocks and other equity portfolios that are attractive to short-term investors. We show that a conservative long-term investor will avoid such tilts in order to hedge against two types of deterioration in investment opportunities: declining expected stock returns, and increasing volatility. Empirically, we present novel evidence that low-frequency movements in equity volatility, tied to the default spread, are priced in the cross-section of stock returns.
Handle: RePEc:nbr:nberwo:18411
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy, Financial Education and Economic Outcomes
Classification-JEL: C93; D14; D18; D91; G11; G28
Author-Name: Justine S. Hastings
Author-Person: pha804
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Author-Name: William L. Skimmyhorn
Author-Person: psk114
Note: AG ED LS PE
Number: 18412
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18412
File-URL: http://www.nber.org/papers/w18412.pdf
File-Format: application/pdf
Publication-Status: published as Justine S. Hastings & Brigitte C. Madrian & William L. Skimmyhorn, 2013. "Financial Literacy, Financial Education, and Economic Outcomes," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 347-373, 05.
Abstract: In this article we review the literature on financial literacy, financial education, and consumer financial outcomes. We consider how financial literacy is measured in the current literature, and examine how well the existing literature addresses whether financial education improves financial literacy or personal financial outcomes. We discuss the extent to which a competitive market provides incentives for firms to educate consumers or offer products that facilitate informed choice. We review the literature on alternative policies to improve financial outcomes, and compare the evidence to evidence on the efficacy and cost of financial education. Finally, we discuss directions for future research.
Handle: RePEc:nbr:nberwo:18412
Template-Type: ReDIF-Paper 1.0
Title: Sentiments and Aggregate Demand Fluctuations
Classification-JEL: D8; D84; E3; E32
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Pengfei Wang
Author-Person: pwa169
Author-Name: Yi Wen
Author-Person: pwe11
Note: EFG
Number: 18413
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18413
File-URL: http://www.nber.org/papers/w18413.pdf
File-Format: application/pdf
Publication-Status: published as Jess Benhabib & Pengfei Wang & Yi Wen, 2015. "Sentiments and Aggregate Demand Fluctuations," Econometrica, Econometric Society, vol. 83, pages 549-585, 03.
Abstract: We formalize the Keynesian insight that aggregate demand driven by sentiments can generate output fluctuations under rational expectations. When production decisions must be made under imperfect information about demand, optimal decisions based on sentiments can generate stochastic self-fulfilling rational expectations equilibria in standard economies without persistent informational frictions, externalities, non-convexities or strategic complementarities in production. The models we consider are deliberately simple, but could serve as benchmarks for more complicated equilibrium models with additional features.
Handle: RePEc:nbr:nberwo:18413
Template-Type: ReDIF-Paper 1.0
Title: Cherries for Sale: Export Networks and the Incidence of Cross-Border M&A
Classification-JEL: F12; F23; G34
Author-Name: Bruce A. Blonigen
Author-Person: pbl165
Author-Name: Lionel Fontagné
Author-Person: pfo9
Author-Name: Nicholas Sly
Author-Person: psl56
Author-Name: Farid Toubal
Author-Person: pto82
Note: ITI
Number: 18414
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18414
File-URL: http://www.nber.org/papers/w18414.pdf
File-Format: application/pdf
Publication-Status: published as Journal of International Economics Volume 94, Issue 2, November 2014, Pages 341–357 Cover image Cherries for sale: The incidence and timing of cross-border M&A ☆ Bruce A. Blonigena, b, , , Lionel Fontagnéc, , Nicholas Slya, d, , Farid Toubale,
Abstract: This paper develops a dynamic model of cross-border M&A activity. We show that foreign firms will be relatively more attracted to targets in the domestic country that had high productivity levels several years prior to acquisition, but then suffered a negative productivity shock (i.e., cherries for sale). With high ex ante productivity levels, target firms are able to invest in large export networks that are valuable to foreign multinationals because of locational differences and trade costs. Subsequently, domestic firms that experience reductions in productivity no longer find their established network as valuable to serve independently, increasing the surplus generated by a foreign acquisition. From the theory we derive a dynamic panel binary choice empirical model that uses predetermined export activity and the evolution of target firm productivity over time to predict cross-border M&A activity. Administrative data from French firms across 1999-2006 provide strong evidence that both the established export networks and productivity losses among target firms promote takeover by foreign multinationals.
Handle: RePEc:nbr:nberwo:18414
Template-Type: ReDIF-Paper 1.0
Title: Corporate Taxes and Internal Borrowing within Multinational Firms
Classification-JEL: F23; G32; H25
Author-Name: Peter Egger
Author-Person: peg11
Author-Name: Christian Keuschnigg
Author-Person: pke42
Author-Name: Valeria Merlo
Author-Name: Georg Wamser
Author-Person: pwa353
Note: ITI PE
Number: 18415
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18415
File-URL: http://www.nber.org/papers/w18415.pdf
File-Format: application/pdf
Publication-Status: published as Peter Egger & Christian Keuschnigg & Valeria Merlo & Georg Wamser, 2014. "Corporate Taxes and Internal Borrowing within Multinational Firms," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 54-93, May.
Publication-Status: published as Corporate Taxes and Internal Borrowing within Multinational Firms, Peter Egger, Christian Keuschnigg, Valeria Merlo, Georg Wamser. in Business Taxation (Trans-Atlantic Public Economics Seminar), Devereux and Gordon. 2014
Abstract: This paper develops a theoretical model of multinational firms with an internal capital market. Main reasons for the emergence of such a market are tax avoidance through debt shifting and the existence of institutional weaknesses and financial frictions across host countries. The model serves to derive hypotheses regarding the role of local versus foreign characteristics such as profit tax rates, lack of institutional quality, financial underdevelopment, and productivity for internal debt at the level of a given foreign affiliate. The paper assesses hypotheses in a panel data-set covering the universe of German multinational firms and their internal borrowing. Numerous novel insights are gained. For instance, the tax-sensitivity found in this paper is many times higher than previous research suggests. This accrues mainly to three things: the consideration of the boundedness of the internal debt ratio as a dependent variable in comparison to its treatment as an unbounded variable in most of the previous work; the coverage of all (small and large) multinationals here rather than a focus on large units in previous work; and the inclusion of endogenous characteristics in other countries multinationals are invested in (due to endogenous weights) while previous work did not consider such effects at all or assumed them to be exogenous. Moreover, local and foreign (at other locations of a given affiliate) market conditions matter more or less symmetrically and in the opposite direction. There is a nonlinear trade-off between institutional quality or financial development on the one hand and higher profit tax rates on the other hand, and the strength of this trade-off depends on the characteristics of one location relative to the other ones a multinational firm has affiliates (or the headquarters) in.
Handle: RePEc:nbr:nberwo:18415
Template-Type: ReDIF-Paper 1.0
Title: Does Agriculture Generate Local Economic Spillovers? Short-run and Long-run Evidence from the Ogallala Aquifer
Classification-JEL: N32; N52; O10; Q10; R10
Author-Name: Richard Hornbeck
Author-Name: Pinar Keskin
Author-Person: pke326
Note: DAE EEE EFG
Number: 18416
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18416
File-URL: http://www.nber.org/papers/w18416.pdf
File-Format: application/pdf
Publication-Status: published as Richard Hornbeck & Pinar Keskin, 2015. "Does Agriculture Generate Local Economic Spillovers? Short-Run and Long-Run Evidence from the Ogallala Aquifer," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 192-213, May.
Abstract: Agricultural development may support broader economic development, though agricultural expansion may also crowd-out local non-agricultural activity. On the United States Plains, areas over the Ogallala aquifer experienced windfall agricultural gains when post-WWII technologies increased farmers' access to groundwater. Comparing counties over the Ogallala with nearby similar counties, local non-agricultural sectors experienced only short-run benefits. Despite substantial persistent agricultural gains, there was no long-run expansion of local non-agricultural sectors and there are some indications of crowd-out. With the benefit of long-run historical perspective, supporting local agricultural production does not appear to generate local economic spillovers that might justify its distortionary impacts.
Handle: RePEc:nbr:nberwo:18416
Template-Type: ReDIF-Paper 1.0
Title: Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device
Classification-JEL: D00; D03; D11; D12; D14; E2; E20; E21; O2; O20; O54; Z18
Author-Name: Felipe Kast
Author-Name: Stephan Meier
Author-Person: pme62
Author-Name: Dina Pomeranz
Author-Person: ppo414
Note: DEV PE
Number: 18417
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18417
File-URL: http://www.nber.org/papers/w18417.pdf
File-Format: application/pdf
Abstract: We test the effectiveness of self-help peer groups as a commitment device for precautionary savings, through two randomized field experiments among 2,687 microentrepreneurs in Chile. The first experiment finds that self-help peer groups are a powerful tool to increase savings (the number of deposits grows 3.5-fold and the average savings balance almost doubles). Conversely, a substantially higher interest rate has no effect on most participants. A second experiment tests an alternative delivery mechanism and shows that effects of a similar size can be achieved by holding people accountable through feedback text messages, without any meetings or peer pressure.
Handle: RePEc:nbr:nberwo:18417
Template-Type: ReDIF-Paper 1.0
Title: A Fundamental Enforcement Cost Advantage of the Negligence Rule over Regulation
Classification-JEL: K13; K20; L5
Author-Name: Steven Shavell
Author-Person: psh42
Note: LE
Number: 18418
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18418
File-URL: http://www.nber.org/papers/w18418.pdf
File-Format: application/pdf
Publication-Status: published as Steven Shavell, 2013. "A Fundamental Enforcement Cost Advantage of the Negligence Rule over Regulation," The Journal of Legal Studies, vol 42(2), pages 275-302.
Abstract: Regulation and the negligence rule are both designed to obtain compliance with desired standards of behavior, but they differ in a primary respect: compliance with regulation is ordinarily assessed independently of the occurrence of harm, whereas compliance with the negligence rule is evaluated only if harm occurs. It is shown in a stylized model that because the use of the negligence rule is triggered by harm, the rule enjoys an intrinsic enforcement cost advantage over regulation. Moreover, this advantage suggests that the examination of behavior under the negligence rule should tend to be more detailed than under regulation (as it is).
Handle: RePEc:nbr:nberwo:18418
Template-Type: ReDIF-Paper 1.0
Title: Teacher Quality Policy When Supply Matters
Classification-JEL: I21; J33
Author-Name: Jesse Rothstein
Author-Person: pro180
Note: CH ED LS
Number: 18419
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18419
File-URL: http://www.nber.org/papers/w18419.pdf
File-Format: application/pdf
Publication-Status: published as Jesse Rothstein, 2015. "Teacher Quality Policy When Supply Matters," American Economic Review, American Economic Association, vol. 105(1), pages 100-130, January.
Abstract: Recent proposals would strengthen the dependence of teacher pay and retention on performance, in order to attract those who will be effective teachers and repel those who will not. I model the teacher labor market, incorporating dynamic self-selection, noisy performance measurement, and Bayesian learning. Simulations indicate that labor market interactions are important to the evaluation of alternative teacher contracts. Typical bonus policies have very small effects on selection. Firing policies can have larger effects, if accompanied by substantial salary increases. However, misalignment between productivity and measured performance nearly eliminates the benefits while preserving most of the costs.
Handle: RePEc:nbr:nberwo:18419
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty Shocks in a Model of Effective Demand
Classification-JEL: E32; E52
Author-Name: Susanto Basu
Author-Person: pba274
Author-Name: Brent Bundick
Author-Person: pbu286
Note: EFG ME
Number: 18420
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18420
File-URL: http://www.nber.org/papers/w18420.pdf
File-Format: application/pdf
Publication-Status: published as Susanto Basu & Brent Bundick, 2017. "Uncertainty Shocks in a Model of Effective Demand," Econometrica, Econometric Society, vol. 85, pages 937-958, May.
Abstract: Can increased uncertainty about the future cause a contraction in output and its components? An identified uncertainty shock in the data causes significant declines in output, consumption, investment, and hours worked. Standard general-equilibrium models with flexible prices cannot reproduce this comovement. However, uncertainty shocks can easily generate comovement with countercyclical markups through sticky prices. Monetary policy plays a key role in offsetting the negative impact of uncertainty shocks during normal times. Higher uncertainty has even more negative effects if monetary policy can no longer perform its usual stabilizing function because of the zero lower bound. We calibrate our uncertainty shock process using fluctuations in implied stock market volatility, and show that the model with nominal price rigidity is consistent with empirical evidence from a structural vector autoregression. We argue that increased uncertainty about the future likely played a role in worsening the Great Recession. The economic mechanism we identify applies to a large set of shocks that change expectations of the future without changing current fundamentals.
Handle: RePEc:nbr:nberwo:18420
Template-Type: ReDIF-Paper 1.0
Title: Qualitative Easing: How it Works and Why it Matters
Classification-JEL: E0; E5; E52; E62
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Note: EFG
Number: 18421
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18421
File-URL: http://www.nber.org/papers/w18421.pdf
File-Format: application/pdf
Abstract: This paper is about the effectiveness of qualitative easing; a government policy that is designed to mitigate risk through central bank purchases of privately held risky assets and their replacement by government debt, with a return that is guaranteed by the taxpayer. Policies of this kind have recently been carried out by national central banks, backed by implicit guarantees from national treasuries. I construct a general equilibrium model where agents have rational expectations and there is a complete set of financial securities, but where agents are unable to participate in financial markets that open before they are born. I show that a change in the asset composition of the central bank's balance sheet will change equilibrium asset prices. Further, I prove that a policy in which the central bank stabilizes fluctuations in the stock market is Pareto improving and is costless to implement.
Handle: RePEc:nbr:nberwo:18421
Template-Type: ReDIF-Paper 1.0
Title: Maternal Stress and Child Outcomes: Evidence from Siblings
Classification-JEL: I12; I14; I24; J24
Author-Name: Anna Aizer
Author-Person: pai9
Author-Name: Laura Stroud
Author-Name: Stephen Buka
Note: CH ED EH LS PE
Number: 18422
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18422
File-URL: http://www.nber.org/papers/w18422.pdf
File-Format: application/pdf
Publication-Status: published as Anna Aizer & Laura Stroud & Stephen Buka, 2016. "Maternal Stress and Child Outcomes: Evidence from Siblings," Journal of Human Resources, University of Wisconsin Press, vol. 51(3), pages 523-555.
Abstract: We study how maternal stress affects offspring outcomes. We find that in-utero exposure to elevated levels of the stress hormone cortisol negatively affects offspring cognition, health and educational attainment. These findings are based on comparisons between siblings which limits variation to short-lived shocks and controls for unobserved differences between mothers that could bias estimates. Our results are consistent with recent experimental results in the neurobiological literature linking exogenous exposure to stress hormones in-utero with declines in offspring cognitive, behavioral and motor development. Moreover, we find that not only are mothers with low levels of human capital characterized by higher and more variable cortisol levels, but that the negative impact of elevated cortisol is greater for them. These results suggest that prenatal stress may play a role in the intergenerational persistence of poverty.
Handle: RePEc:nbr:nberwo:18422
Template-Type: ReDIF-Paper 1.0
Title: The design of fiscal adjustments
Classification-JEL: H2; H3; H5; H62
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Silvia Ardagna
Note: POL
Number: 18423
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18423
File-URL: http://www.nber.org/papers/w18423.pdf
File-Format: application/pdf
Publication-Status: published as The Design of Fiscal Adjustments, Alberto Alesina, Silvia Ardagna. in Tax Policy and the Economy, Volume 27, Brown. 2013
Abstract: This paper offers three results. First, in line with the previous literature, we confirm that fiscal adjustments based mostly on the spending side are less likely to be reversed. Second, spending based fiscal adjustments have caused smaller recessions than tax based fiscal adjustments. Finally, certain combinations of policies have made it possible for spending based fiscal adjustments to be associated with growth in the economy even on impact rather than with a recession. Thus, expansionary fiscal adjustments are possible.
Handle: RePEc:nbr:nberwo:18423
Template-Type: ReDIF-Paper 1.0
Title: New Tools for the Analysis of Political Power in Africa
Classification-JEL: H1; O38; O55
Author-Name: Ilia Rainer
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: POL DEV
Number: 18424
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18424
File-URL: http://www.nber.org/papers/w18424.pdf
File-Format: application/pdf
Publication-Status: published as New Tools for the Analysis of Political Power in Africa, Ilia Rainer, Francesco Trebbi. in African Successes, Volume I: Government and Institutions, Edwards, Johnson, and Weil. 2016
Abstract: The study of autocracies and weakly institutionalized countries is plagued by scarcity of information about the relative strength of different players within the political system. This paper presents novel data on the composition of government coalitions in a sample of fifteen post-colonial African countries suited to this task. We emphasize the role of the executive branch as the central fulcrum of all national political systems in our sample, especially relative to other institutional bodies such as the legislative assembly. Leveraging on the impressive body of work documenting the crucial role of ethnic fragmentation as a main driver of political and social friction in Africa, the paper further details the construction of ethnic composition measures for executive cabinets. We discuss how this novel source of information may help shed light on the inner workings of typically opaque African political elites.
Handle: RePEc:nbr:nberwo:18424
Template-Type: ReDIF-Paper 1.0
Title: How Is Power Shared In Africa?
Classification-JEL: H1; O38; O55
Author-Name: Patrick Francois
Author-Person: pfr24
Author-Name: Ilia Rainer
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: POL DEV
Number: 18425
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18425
File-URL: http://www.nber.org/papers/w18425.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Francois & Ilia Rainer & Francesco Trebbi, 2015. "How Is Power Shared in Africa?," Econometrica, Econometric Society, vol. 83, pages 465-503, 03.
Abstract: This paper presents new evidence on the power sharing layout of national political elites in a panel of African countries, most of them autocracies. We present a model of coalition formation across ethnic groups and structurally estimate it employing data on the ethnicity of cabinet ministers since independence. As opposed to the view of a single ethnic elite monolithically controlling power, we show that African ruling coalitions are large and that political power is allocated proportionally to population shares across ethnic groups. This holds true even restricting the analysis to the subsample of the most powerful ministerial posts. We argue that the likelihood of revolutions from outsiders and the threat of coups from insiders are major forces explaining such allocations. Further, over-representation of the ruling ethnic group is quantitatively substantial, but not different from standard formateur premia in parliamentary democracies. We explore theoretically how proportional allocation for the elites of each group may still result in misallocations in the non-elite population.
Handle: RePEc:nbr:nberwo:18425
Template-Type: ReDIF-Paper 1.0
Title: Recent Marginal Labor Income Tax Rate Changes by Skill and Marital Status
Classification-JEL: E24; H31; I38; J22
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: LS PE
Number: 18426
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18426
File-URL: http://www.nber.org/papers/w18426.pdf
File-Format: application/pdf
Publication-Status: published as Recent Marginal Labor Income Tax Rate Changes by Skill and Marital Status, Casey B. Mulligan. in Tax Policy and the Economy, Volume 27, Brown. 2013
Abstract: This paper calculates monthly time series for the overall safety net's statutory marginal labor income tax rate as a function of skill and marital status. Marginal tax rates increased significantly for all groups between 2007 and 2009, and dramatically so for unmarried household heads. The relationship between incentive changes and skill varies by marital status. Unemployment insurance and related expansions contribute to the patterns by skill while food stamp expansions contribute to the patterns by marital status. Remarkably, group changes in hours worked per capita line up with the statutory measures of incentive changes.
Handle: RePEc:nbr:nberwo:18426
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Reconstruction Finance Corporation Assistance on Michigan's Banks' Survival in the 1930s
Classification-JEL: G01; G18; G21; G28; N12; N22
Author-Name: Charles W. Calomiris
Author-Person: pca421
Author-Name: Joseph R. Mason
Author-Name: Marc Weidenmier
Author-Person: pwe14
Author-Name: Katherine Bobroff
Note: CF DAE ME
Number: 18427
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18427
File-URL: http://www.nber.org/papers/w18427.pdf
File-Format: application/pdf
Publication-Status: published as Calomiris, Charles W. & Mason, Joseph R. & Weidenmier, Marc & Bobroff, Katherine, 2013. "The effects of reconstruction finance corporation assistance on Michigan's banks' survival in the 1930s," Explorations in Economic History, Elsevier, vol. 50(4), pages 526-547.
Publication-Status: published as The Effects of Reconstruction Finance Corporation Assistance on Michigan's Banks' Survival in the 1930s, Charles W. Calomiris, Joseph R. Mason, Marc Weidenmier, Katherine Bobroff. in The Microeconomics of New Deal Policy, Fishback. 2013
Abstract: This paper examines the effects of the Reconstruction Finance Corporation's (RFC) loan and preferred stock programs on bank failure rates in Michigan during the period 1932-1934, which includes the important Michigan banking crisis of early 1933 and its aftermath. Using a new database on Michigan banks, we employ probit and survival duration analysis to examine the effectiveness of the RFC's loan program (the policy tool employed before March 1933) and the RFC's preferred stock purchases (the policy tool employed after March 1933) on bank failure rates. Our estimates treat the receipt of RFC assistance as an endogenous variable. We are able to identify apparently valid and powerful instruments (predictors of RFC assistance that are not directly related to failure risk) for analyzing the effects of RFC assistance on bank survival. We find that the loan program had no statistically significant effect on the failure rates of banks during the crisis; point estimates are sometimes positive, sometimes negative, and never estimated precisely. This finding is consistent with the view that the effectiveness of debt assistance was undermined by some combination of increasing the indebtedness of financial institutions and subordinating bank depositors. We find that RFC's purchases of preferred stock - which did not increase indebtedness or subordinate depositors - increased the chances that a bank would survive the financial crisis. We also perform a parallel analysis of the effects of RFC preferred stock assistance on the loan supply of surviving banks. We find that RFC assistance not only contributed to loan supply by reducing failure risk; conditional on bank survival, RFC assistance is associated with significantly higher lending by recipient banks from 1931 to 1935.
Handle: RePEc:nbr:nberwo:18427
Template-Type: ReDIF-Paper 1.0
Title: Non-Core Bank Liabilities and Financial Vulnerability
Classification-JEL: F32; F33; F34
Author-Name: Joon-Ho Hahm
Author-Name: Hyun Song Shin
Author-Person: psh692
Author-Name: Kwanho Shin
Author-Person: psh131
Note: CF IFM
Number: 18428
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18428
File-URL: http://www.nber.org/papers/w18428.pdf
File-Format: application/pdf
Publication-Status: published as JoonâHo Hahm & Hyun Song Shin & Kwanho Shin, 2013. "Noncore Bank Liabilities and Financial Vulnerability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45, pages 3-36, 08.
Abstract: A lending boom is reflected in the composition of bank liabilities when traditional retail deposits (core liabilities) cannot keep pace with asset growth and banks turn to other funding sources (non-core liabilities) to finance their lending. We formulate a model of credit supply as the flip side of a credit risk model where a large stock of non-core liabilities serves as an indicator of the erosion of risk premiums and hence of vulnerability to a crisis. We find supporting empirical evidence in a panel probit study of emerging and developing economies.
Handle: RePEc:nbr:nberwo:18428
Template-Type: ReDIF-Paper 1.0
Title: The Production of Human Capital: Endowments, Investments and Fertility
Classification-JEL: I24; J13; J24
Author-Name: Anna Aizer
Author-Person: pai9
Author-Name: Flávio Cunha
Author-Person: pcu47
Note: CH ED LS PE
Number: 18429
Creation-Date: 2012-09
Order-URL: http://www.nber.org/papers/w18429
File-URL: http://www.nber.org/papers/w18429.pdf
File-Format: application/pdf
Abstract: We study how endowments, investments and fertility interact to produce human capital in childhood. We begin by providing empirical support for two key features of existing models of human capital: that investments and existing human capital are complements in the production of later human capital (dynamic complementarity) and that parents invest more in children with higher endowments due to the complementarity between endowments and investments (static complementarity). For the former, we exploit an exogenous source of investment, the launch of Head Start in 1966, and estimate greater gains from preschool in the IQ of those with the highest stocks of early human capital, consistent with dynamic complementarity. For the latter, we are able to overcome the potential endogeneity and measurement error associated with traditional measures of endowment based on health at birth. When we do, we find that parents invest more in highly endowed children. Moreover, we find that the degree of reinforcement increases with family size. Thus, an increase in quantity leads not only to a decline in average quality (the quantity-quality tradeoff) but to an increase in the variation in quality, due to both greater variation in endowments (from more children) and greater reinforcing investments. These findings can be explained by extending the quantity-quality trade-off model to include heterogeneous child endowments and parental preferences that feature complementarity between quality and quantity and moderate aversion to inequality in child human capital within the household.
Handle: RePEc:nbr:nberwo:18429
Template-Type: ReDIF-Paper 1.0
Title: The Friends Factor: How Students' Social Networks Affect Their Academic Achievement and Well-Being?
Classification-JEL: D8; J0
Author-Name: Victor Lavy
Author-Person: pla111
Author-Name: Edith Sand
Author-Person: psa1976
Note: ED LS
Number: 18430
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18430
File-URL: http://www.nber.org/papers/w18430.pdf
File-Format: application/pdf
Abstract: In this paper, we estimate the influence of social relationships on educational attainment and social outcomes of students in school. More specifically, we investigate how losing different types of social relationships during the transition from elementary to middle school affect students' academic progress and general well-being. We use social relationships identified by the students themselves in elementary school, as part of a unique aspect of the Tel Aviv school application process which allows sixth-grade students to designate their middle schools of choice and to list up to eight friends with whom they wish to attend that school. The lists create natural "friendship hierarchies" that we exploit in our analysis. We designate the three categories of requited and unrequited friendships that stem from these lists as follows: (1) reciprocal friends (students who list one another); and for those whose friendship requests did not match: (2) followers (those who listed fellow students as friends but were not listed as friends by these same fellow students) and (3) non-reciprocal friends (parallel to followers). Following students from elementary to middle school enables us to overcome potential selection bias by using pupil fixed-effect methodology. Our results suggest that the presence of reciprocal friends and followers in class has a positive and significant effect on test scores in English, math, and Hebrew. However, the number of friends in the social network beyond the first circle of reciprocal friends has no effect at all on students. In addition, the presence of non-reciprocal friends in class has a negative effect on a student's learning outcomes. We find that these effects have interesting patterns of heterogeneity by gender, ability, and age of students. In addition, we find that these various types of friendships have positive effects on other measures of well-being, including social and overall happiness in school, time allocated for homework, and whether one exhibits violent behavior.
Handle: RePEc:nbr:nberwo:18430
Template-Type: ReDIF-Paper 1.0
Title: Financial Intermediation, Exchange Rates, and Unconventional Policy in an Open Economy
Classification-JEL: E58; F34; F41
Author-Name: Luis Felipe Céspedes
Author-Person: pce53
Author-Name: Roberto Chang
Author-Person: pch80
Author-Name: Andrés Velasco
Note: EFG IFM ME
Number: 18431
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18431
File-URL: http://www.nber.org/papers/w18431.pdf
File-Format: application/pdf
Publication-Status: published as Financial Intermediation, Real Exchange Rates, and Unconventional Policies in an Open Economy, Luis Felipe Céspedes, Roberto Chang, Andrés Velasco. in NBER International Seminar on Macroeconomics 2016, Clarida, Reichlin, and Devereux. 2017
Publication-Status: published as Luis Felipe Céspedes & Roberto Chang & Andrés Velasco, 2017. "Financial intermediation, real exchange rates, and unconventional policies in an open economy," Journal of International Economics, vol 108, pages S76-S86.
Abstract: This paper develops an open economy model in which financial intermediation is subject to occasionally binding collateral constraints, and uses the model to study unconventional policies such as credit facilities and foreign exchange intervention. The model highlights the interaction between the real exchange rate, interest rates, and financial frictions. The exchange rate can affect the financial intermediaries' international credit limit via a net worth effect and a leverage ratio effect; the latter is novel and depends on the equilibrium link between exchange rates and interest spreads. Unconventional policies are nonneutral if and only if financial constraints are binding in equilibrium. Credit programs are more effective if targeted towards financial intermediaries rather than the corporate sector. Sterilized foreign exchange interventions matter because the increased availability of tradables, resulting from the sterilizing credit, can relax financial frictions; this perspective is new in the literature. Finally, self fulfilling expectations can lead to the coexistence of financially constrained and unconstrained equilibria, justifying a policy of defending the exchange rate and the accumulation of international reserves.
Handle: RePEc:nbr:nberwo:18431
Template-Type: ReDIF-Paper 1.0
Title: Housing Dynamics over the Business Cycle
Classification-JEL: E22; E32; R21; R31
Author-Name: Finn E. Kydland
Author-Person: pky2
Author-Name: Peter Rupert
Author-Person: pru6
Author-Name: Roman Sustek
Author-Person: psu97
Note: EFG ME
Number: 18432
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18432
File-URL: http://www.nber.org/papers/w18432.pdf
File-Format: application/pdf
Publication-Status: published as Finn E. Kydland & Peter Rupert & Roman Šustek, 2016. "HOUSING DYNAMICS OVER THE BUSINESS CYCLE," International Economic Review, vol 57(4), pages 1149-1177.
Abstract: Over the U.S. business cycle, fluctuations in residential investment are well known to systematically lead GDP. These dynamics are documented here to be specific to the U.S. and Canada. In other developed economies residential investment is broadly coincident with GDP. Nonresidential investment has the opposite dynamics, being coincident with or lagging GDP. These observations are in sharp contrast with the properties of nearly all business cycle models with disaggregated investment. Including mortgages and interest rate dynamics aligns the theory more closely with U.S. observations. Longer time to build in housing construction makes residential investment coincident with output.
Handle: RePEc:nbr:nberwo:18432
Template-Type: ReDIF-Paper 1.0
Title: Social Insurance: Connecting Theory to Data
Classification-JEL: H5
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: Amy Finkelstein
Author-Person: pfi264
Note: EH LS PE
Number: 18433
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18433
File-URL: http://www.nber.org/papers/w18433.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of Public Economics Volume 5, 2013, Pages 111–193 handbook of public economics, vol. 5 Cover image Chapter 3 – Social Insurance: Connecting Theory to Data Raj Chetty*, †, Amy Finkelstein†, ‡
Abstract: We survey the literature on social insurance, focusing on recent work that has connected theory to evidence to make quantitative statements about welfare and optimal policy. Our review contains two parts. We first discuss motives for government intervention in private insurance markets, focusing primarily on selection. We review the original theoretical arguments for government intervention in the presence of adverse selection, and describe how recent work has refined and challenged the conclusions drawn from early theoretical models. We then describe empirical work that tests for selection in insurance markets, documents the welfare costs of this selection, and analyzes the welfare consequences of potential public policy interventions. In the second part of the paper, we review work on optimal social insurance policies. We discuss formulas for the optimal level of insurance benefits in terms of empirically estimable parameters. We then consider the consequences of relaxing the key assumptions underlying these formulas, e.g., by allowing for fiscal externalities or behavioral biases. We also summarize recent work on other dimensions of optimal policy, including mandated savings accounts and the optimal path of benefits. Finally, we discuss the key challenges that remain in understanding the optimal design of social insurance policies.
Handle: RePEc:nbr:nberwo:18433
Template-Type: ReDIF-Paper 1.0
Title: Structural and Cyclical Forces in the Labor Market During the Great Recession: Cross-Country Evidence
Classification-JEL: E24; E32
Author-Name: Luca Sala
Author-Person: psa132
Author-Name: Ulf Söderström
Author-Person: pso33
Author-Name: Antonella Trigari
Author-Person: ptr17
Note: ME
Number: 18434
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18434
File-URL: http://www.nber.org/papers/w18434.pdf
File-Format: application/pdf
Publication-Status: published as Luca Sala & Ulf S�derstr�m & Antonella Trigari, 2013. "Structural and Cyclical Forces in the Labor Market during the Great Recession: Cross-Country Evidence," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 345 - 404.
Publication-Status: published as Structural and Cyclical Forces in the Labor Market during the Great Recession: Cross-Country Evidence, Luca Sala, Ulf Söderstrom, Antonella Trigari. in NBER International Seminar on Macroeconomics 2012, Giavazzi and West. 2013
Abstract: We use an estimated monetary business cycle model with search and matching frictions in the labor market and nominal price and wage rigidities to study four countries (the U.S., the U.K., Sweden, and Germany) during the financial crisis and the Great Recession. We estimate the model over the period prior to the financial crisis and use the model to interpret movements in GDP, unemployment, vacancies, and wages in the period from 2007 until 2011. We show that contractionary financial factors and reduced efficiency in labor market matching were largely responsible for the experience in the U.S. Financial factors were also important in the U.K., but less so in Sweden and Germany. Reduced matching efficiency was considerably less important in the U.K. and Sweden than in the U.S., but matching efficiency improved in Germany, helping to keep unemployment low. A counterfactual experiment suggests that unemployment in Germany would have been substantially higher if the German labor market had been more similar to that in the U.S.
Handle: RePEc:nbr:nberwo:18434
Template-Type: ReDIF-Paper 1.0
Title: Digesting Anomalies: An Investment Approach
Classification-JEL: G12; G14
Author-Name: Kewei Hou
Author-Person: pho571
Author-Name: Chen Xue
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP CF EFG
Number: 18435
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18435
File-URL: http://www.nber.org/papers/w18435.pdf
File-Format: application/pdf
Publication-Status: published as Kewei Hou & Chen Xue & Lu Zhang, 2015. "Digesting Anomalies: An Investment Approach," Review of Financial Studies, vol 28(3), pages 650-705.
Abstract: Motivated from investment-based asset pricing, we propose a new factor model consisting of the market factor, a size factor, an investment factor, and a return on equity factor. The new factor model outperforms the Carhart four-factor model in pricing portfolios formed on earnings surprise, idiosyncratic volatility, financial distress, net stock issues, composite issuance, as well as on investment and return on equity. The new model performs similarly as the Carhart model in pricing portfolios formed on size and momentum, abnormal corporate investment, as well as on size and book-to-market, but underperforms in pricing the total accrual deciles. The new model's performance, combined with its clear economic intuition, suggests that it can be used as a new workhorse model for academic research and investment management practice.
Handle: RePEc:nbr:nberwo:18435
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Time Between Cognitive Tasks on Performance: Evidence from Advanced Placement Exams
Classification-JEL: D03; I20
Author-Name: Ian Fillmore
Author-Name: Devin G. Pope
Note: ED LS
Number: 18436
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18436
File-URL: http://www.nber.org/papers/w18436.pdf
File-Format: application/pdf
Publication-Status: published as Economics of Education Review Volume 48, October 2015, Pages 30–40 Cover image The impact of time between cognitive tasks on performance: Evidence from advanced placement exams Devin G. Popea, , , Ian Fillmoreb
Abstract: In many education and work environments, economic agents must perform several mental tasks in a short period of time. As with physical fatigue, it is likely that cognitive fatigue can occur and affect performance if a series of mental tasks are scheduled close together. In this paper, we identify the impact of time between cognitive tasks on performance in a particular context: the taking of Advanced Placement (AP) exams by high-school students. We exploit the fact that AP exam dates change from year to year, so that students who take two subject exams in one year may have a different number of days between the exams than students who take the same two exams in a different year. We find strong evidence that a shorter amount of time between exams is associated with lower scores, particularly on the second exam. Our estimates suggest that students who take exams with 10 days of separation are 8% more likely to pass both exams than students who take the same two exams with only 1 day of separation.
Handle: RePEc:nbr:nberwo:18436
Template-Type: ReDIF-Paper 1.0
Title: The White/Black Educational Gap, Stalled Progress, and the Long Term Consequences of the Emergence of Crack Cocaine Markets
Classification-JEL: I0; I2; I21; I28; J0; J01; J1
Author-Name: William N. Evans
Author-Person: pev28
Author-Name: Craig Garthwaite
Author-Name: Timothy J. Moore
Author-Person: pmo435
Note: ED LS PE
Number: 18437
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18437
File-URL: http://www.nber.org/papers/w18437.pdf
File-Format: application/pdf
Publication-Status: published as William N. Evans & Craig Garthwaite & Timothy J. Moore, 2016. "The White/Black Educational Gap, Stalled Progress, and the Long-Term Consequences of the Emergence of Crack Cocaine Markets," Review of Economics and Statistics, vol 98(5), pages 832-847.
Abstract: We propose the rise of crack cocaine markets as an explanation for the end to the convergence in black-white educational outcomes beginning in the mid-1980s. After constructing a measure to date the arrival of crack markets in cities and states, we show large increases in murder and incarceration rates after these dates. Black high school graduation rates also decline, and we estimate that crack markets accounts for between 40 and 73 percent of the fall in black male high school graduation rates. We argue that the primary mechanism is reduced educational investments in response to decreased returns to schooling.
Handle: RePEc:nbr:nberwo:18437
Template-Type: ReDIF-Paper 1.0
Title: Trade and Geography in the Origins and Spread of Islam
Classification-JEL: N0; N27; N3; O1; O43; Z0; Z1
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Author-Name: Alireza Naghavi
Author-Person: pna108
Author-Name: Giovanni Prarolo
Author-Person: ppr102
Note: DEV EFG POL
Number: 18438
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18438
File-URL: http://www.nber.org/papers/w18438.pdf
File-Format: application/pdf
Abstract: In this study we explore the historical determinants of contemporary Muslim representation. Motivated by a plethora of case studies and historical accounts among Islamicists stressing the role of trade for the adoption of Islam, we construct detailed data on pre-Islamic trade routes, harbors, and ports to determine the empirical regularity of this argument. Our analysis—conducted across countries and across ethnic groups within countries—establishes that proximity to the pre-600 CE trade network is a robust predictor of today's Muslim adherence in the Old World. We also show that Islam spread successfully in regions that are ecologically similar to the birthplace of the religion, the Arabian Peninsula. Namely, territories characterized by a large share of arid and semi- arid regions dotted with few pockets of fertile land are more likely to host Muslim communities. We discuss the various mechanisms that may give rise to the observed pattern.
Handle: RePEc:nbr:nberwo:18438
Template-Type: ReDIF-Paper 1.0
Title: Incentive Strength and Teacher Productivity: Evidence from a Group-Based Teacher Incentive Pay System
Classification-JEL: H41; I21; J33; J38
Author-Name: Scott A. Imberman
Author-Person: pim24
Author-Name: Michael F. Lovenheim
Author-Person: plo162
Note: CH ED LS PE
Number: 18439
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18439
File-URL: http://www.nber.org/papers/w18439.pdf
File-Format: application/pdf
Publication-Status: published as Scott A. Imberman & Michael F. Lovenheim, 2015. "Incentive Strength and Teacher Productivity: Evidence from a Group-Based Teacher Incentive Pay System," The Review of Economics and Statistics, MIT Press, vol. 2(97), pages 364-386, May.
Abstract: Using data from a group incentive program that provides cash bonuses to teachers whose students perform well on standardized tests, we estimate the impact of incentive strength on student achievement. These awards are based on the performances of students within a grade, school and subject, providing substantial variation in group size. We use the share of students in a grade-subject enrolled in a teacher's classes as a proxy for incentive strength since, as the teacher share increases, a teacher's impact on the probability of award receipt rises. We find that student achievement improves when a teacher becomes responsible for more students post program implementation: mean effects are between 0.01 and 0.02 standard deviations for a 10 percentage point increase in share for math, English and social studies, although mean science estimates are small and are not statistically significant. As predicted in our theoretical model, we also find larger effects at smaller shares that fall towards zero as share increases. For all four subjects studied, effect sizes start at 0.05 to 0.09 standard deviations for a 10 percentage point increase in share when share is initially close to zero and fade out as share increases. These findings suggest that small groups provide productivity gains over large groups. Further, they suggest that the lack of effects found in US teacher incentive pay experiments probably are in some part due to specific aspects of program design rather than failure of teachers to respond to incentives more generally.
Handle: RePEc:nbr:nberwo:18439
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Tax Rates and Tax Bases on Corporate Tax Revenues: Estimates with New Measures of the Corporate Tax Base
Classification-JEL: H25
Author-Name: Laura Kawano
Author-Person: pka679
Author-Name: Joel Slemrod
Author-Person: psl10
Note: PE
Number: 18440
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18440
File-URL: http://www.nber.org/papers/w18440.pdf
File-Format: application/pdf
Publication-Status: published as The Effect of Tax Rates and Tax Bases on Corporate Tax Revenues: Estimates with New Measures of the Corporate Tax Base, Laura Kawano, Joel Slemrod. in Business Taxation (Trans-Atlantic Public Economics Seminar), Devereux and Gordon. 2014
Abstract: Several recent analyses have suggested that the revenue-maximizing corporate tax rate resides in the low-30's. We challenge this result by re-examining this relationship using a new compilation of changes in corporate tax base definitions for OECD countries between 1980 and 2004. By considering tax base changes in addition to tax rate changes, we can address the estimation bias that applies to tax rates absent their consideration. We find that the relationship between corporate tax rates and corporate tax revenues is tenuous. The large behavioral response to corporate tax rates implied in the literature does not obtain when accounting for persistent differences in tax policy and business environments across countries.
Handle: RePEc:nbr:nberwo:18440
Template-Type: ReDIF-Paper 1.0
Title: Can't We All Be More Like Scandinavians? Asymmetric Growth and Institutions in an Interdependent World
Classification-JEL: O33; O40; P10; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Thierry Verdier
Author-Person: pve75
Note: IFM ITI POL
Number: 18441
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18441
File-URL: http://www.nber.org/papers/w18441.pdf
File-Format: application/pdf
Abstract: Because of their more limited inequality and more comprehensive social welfare systems, many perceive average welfare to be higher in Scandinavian societies than in the United States. Why then does the United States not adopt Scandinavian-style institutions? More generally, in an interdependent world, would we expect all countries to adopt the same institutions? To provide theoretical answers to this question, we develop a simple model of economic growth in a world in which all countries benefit and potentially contribute to advances in the world technology frontier. A greater gap of incomes between successful and unsuccessful entrepreneurs (thus greater inequality) increases entrepreneurial effort and hence a country's contribution to the world technology frontier. We show that, under plausible assumptions, the world equilibrium is asymmetric: some countries will opt for a type of "cutthroat capitalism" that generates greater inequality and more innovation and will become the technology leaders, while others will free- ride on the cutthroat incentives of the leaders and choose a more "cuddly" form of capitalism. Paradoxically, those with cuddly reward structures, though poorer, may have higher welfare than cutthroat capitalists; but in the world equilibrium, it is not a best response for the cutthroat capitalists to switch to a more cuddly form of capitalism. We also show that domestic constraints from social democratic parties or unions may be beneficial for a country because they prevent cutthroat capitalism domestically, instead inducing other countries to play this role.
Handle: RePEc:nbr:nberwo:18441
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Tax Incentives on the Economic Activity of Entrepreneurs
Classification-JEL: H22; H24; H25
Author-Name: Jarkko Harju
Author-Person: pha871
Author-Name: Tuomas Kosonen
Author-Person: pko496
Note: PE
Number: 18442
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18442
File-URL: http://www.nber.org/papers/w18442.pdf
File-Format: application/pdf
Abstract: Based on existing evidence, we know little about how the taxation of small business owners affects their economic activity. This paper studies the effect of two Finnish tax reforms, in 1997 and 1998, on the effort decisions of the owners of small businesses utilizing both theoretical model and empirical data. The reforms reduced the income tax rates of small business owners and applied only to unincorporated firms, leaving corporations out. We use a difference-in-differences strategy to estimate the causal impact of tax incentives on the economic activity of small businesses. The results imply that lighter taxation leads to an increase in the turnover of firms that we interpret as an increase in effort exerted by their owners.
Handle: RePEc:nbr:nberwo:18442
Template-Type: ReDIF-Paper 1.0
Title: Cross Country Fairness Considerations and Country Implications of Alternative Approaches to a Global Emission Reduction Regime
Classification-JEL: F00; Q54; Q56
Author-Name: Huifang Tian
Author-Name: Xiaojun Shi
Author-Name: John Whalley
Author-Person: pwh8
Note: EEE
Number: 18443
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18443
File-URL: http://www.nber.org/papers/w18443.pdf
File-Format: application/pdf
Abstract: The UNFCCC process of negotiating multilateral carbon emissions reductions thus far has focused on approximately equiproportional cuts in annual carbon emissions by country along the lines of the Kyoto Protocol agreement. But now, with the objective of involving large developing countries such as China and India in a post 2012 regime, broader considerations imply alternative approaches to emissions reduction arrangements by countries be considered. Here we consider the implications of alternative cross country fairness considerations entering the global negotiation process using a numerical simulation model which captures the potential impacts of alternative emission reductions across major economies which in turn reflect different fairness arguments. We put other fairness considerations, such as intergenerational equity, on one side. We use a global equilibrium emissions and trade model with transfers which are calibrated to a 2005-2050 BAU scenario and treats damage from climate change as utility damage. It thus captures the benefit side of emissions reduction agreements as well as the implications of such considerations for financial transfers agreed as a part of the process. Our analyses consider four alternative justices formulations. One is equal per capita allocation of absorptive capacity of the atmosphere given a temperature change target for global emissions. Yet another is where cuts by countries yield equal benefits per capita to other countries. A third is where there are equal costs per capita to countries making cuts. Finally, we also consider financial transfers to developing countries to compensate them for the costs of meeting emission restraints. The impacts of alternative emissions reductions differ sharply from the equi-proportional cuts of annual emissions implied by a continuation of the Kyoto process. These impacts emphasize the large and ill defined bargaining set for a post Kyoto Process involving large developing countries in a significant way.
Handle: RePEc:nbr:nberwo:18443
Template-Type: ReDIF-Paper 1.0
Title: The Problem of the Uninsured
Classification-JEL: G22; H42; I13; I28
Author-Name: Isaac Ehrlich
Author-Person: peh1
Author-Name: Yong Yin
Author-Person: pyi17
Note: EH AG
Number: 18444
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18444
File-URL: http://www.nber.org/papers/w18444.pdf
File-Format: application/pdf
Publication-Status: published as Isaac Ehrlich & Yong Yin, 2017. "The Problem of the Uninsured," Research in Economics.
Abstract: The problem of the uninsured cannot be fully understood without considering the role of non-market alternatives to 'market insurance' called 'self-insurance' and 'self-protection' (SISP), including the public 'health care safety-net' system. We tackle the problem by formulating a 'full-insurance' paradigm that accounts for all four interacting insurance measures. We apply two versions of the full-insurance model to estimate, via calibrated simulations, the impacts of SISP on the fraction of uninsured, health spending, and health levels, and to assess how the mandated Affordable Care Act might affect these outcomes in comparison with the CBO projections in 2010. The results indicate that policy analyses which overlook the role of the real price of market insurance relative to the shadow prices of SISP in determining the decision to insure can grossly distort the capacity of mandated reforms like the ACA to insure the uninsured, contain overall health care costs, and improve health and welfare outcomes.
Handle: RePEc:nbr:nberwo:18444
Template-Type: ReDIF-Paper 1.0
Title: Consumption Inequality and Family Labor Supply
Classification-JEL: E21; J22
Author-Name: Richard Blundell
Author-Person: pbl81
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Author-Name: Itay Saporta-Eksten
Author-Person: psa1164
Note: LS ME
Number: 18445
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18445
File-URL: http://www.nber.org/papers/w18445.pdf
File-Format: application/pdf
Publication-Status: published as Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2016. "Consumption Inequality and Family Labor Supply," American Economic Review, American Economic Association, vol. 106(2), pages 387-435, February.
Abstract: In this paper we examine the link between wage inequality and consumption inequality using a life cycle model that incorporates household consumption and family labor supply decisions. We derive analytical expressions based on approximations for the dynamics of consumption, hours, and earnings of two earners in the presence of correlated wage shocks, non-separability and asset accumulation decisions. We show how the model can be estimated and identified using panel data for hours, earnings, assets and consumption. We focus on the importance of family labour supply as an insurance mechanism to wage shocks and find strong evidence of smoothing of males and females permanent shocks to wages. Once family labor supply, assets and taxes are properly accounted for their is little evidence of additional insurance.
Handle: RePEc:nbr:nberwo:18445
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Aspects of Family Transfers
Classification-JEL: H0; H31; J0; J1; J14
Author-Name: Kathleen McGarry
Author-Person: pmc264
Note: AG LS PE
Number: 18446
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18446
File-URL: http://www.nber.org/papers/w18446.pdf
File-Format: application/pdf
Publication-Status: published as Kathleen McGarry, 2016. "Dynamic aspects of family transfers," Journal of Public Economics, vol 137, pages 1-13.
Abstract: Each year parents transfer a great deal of money to their adult children. While intuition might suggest that these transfers are altruistic and made out of concern for the well-being of the children, empirical tests of the model have consistently yielded negative results. However, an important limitation in these sorts of studies and of our understanding of transfers in general has stemmed our inability to observe transfers over time. Estimates of patterns in a single cross section necessarily miss important aspects of behavior. In this paper I expand on the static altruistic model and posit a dynamic model in which parents use current observations on the incomes of their children to update their expectations regarding future incomes and desired future transfers. I then draw on data spanning a 17 year period to examine the dynamic aspects of transfer behavior. I find substantial change across periods in recipiency, large differences across children within the family, and a strong negative correlation between inter vivos transfers and the transitory incomes of the recipients. This evidence suggests that dynamic models can provide insights into transfer behavior that are impossible to obtain in a static context.
Handle: RePEc:nbr:nberwo:18446
Template-Type: ReDIF-Paper 1.0
Title: The Geography of the Great Recession
Classification-JEL: E32; R12
Author-Name: Alessandra Fogli
Author-Person: pfo48
Author-Name: Enoch Hill
Author-Person: phi190
Author-Name: Fabrizio Perri
Author-Person: ppe52
Note: EFG
Number: 18447
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18447
File-URL: http://www.nber.org/papers/w18447.pdf
File-Format: application/pdf
Publication-Status: published as Alessandra Fogli & Enoch Hill & Fabrizio Perri, 2013. "The Geography of the Great Recession," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 305 - 331.
Publication-Status: published as The Geography of the Great Recession, Alessandra Fogli, Enoch Hill, Fabrizio Perri. in NBER International Seminar on Macroeconomics 2012, Giavazzi and West. 2013
Abstract: This paper documents, using county level data, some geographical features of the US business cycle over the past 30 years, with particular focus on the Great Recession. It shows that county level unemployment rates are spatially dispersed and spatially correlated, and documents how these characteristics evolve during recessions. It then shows that some of these features of county data can be generated by a model which includes simple channels of transmission of economic conditions from a county to its neighbors. The model suggests that these local channels are quantitatively important for the amplification/muting of aggregate shocks.
Handle: RePEc:nbr:nberwo:18447
Template-Type: ReDIF-Paper 1.0
Title: Public Plans and Short-Term Employees
Classification-JEL: H75
Author-Name: Alicia Munnell
Author-Name: Jean-Pierre Aubry
Author-Name: Joshua Hurwitz
Author-Name: Laura Quinby
Note: LS PE
Number: 18448
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18448
File-URL: http://www.nber.org/papers/w18448.pdf
File-Format: application/pdf
Publication-Status: published as Public Plans and Short-Term Employees, Alicia H. Munnell, Jean-Pierre Aubry, Joshua Hurwitz, Laura Quinby. in Retirement Benefits for State and Local Employees: Designing Pension Plans for the Twenty-First Century, Clark, Rauh, and Duggan. 2014
Abstract: Public sector defined benefit pension plans are based on final earnings. As such, these plans are back-loaded; those with long careers receive substantial benefits and those who leave early receive little. The analysis consists of three parts. The first section discusses the design of state and local defined benefit plans, documents the extent to which traditional public sector final earnings plans are back-loaded, and explores the extent to which the incentives may reflect the preferences of employers. The second section shows how participation in final earnings plans affects the lifetime resources of state and local workers of various tenures compared to private sector workers. The third section presents plan-level data on the flows of participants out of the plan by age and tenure and explores the extent to which plan design - specifically, vesting periods, mandatory participation in a defined contribution plan, and Social Security coverage - affects the probability of vesting and the probability of remaining to the earliest full retirement age once vested. The findings suggest that complete reliance on delayed vesting and final earnings plans results in minimal benefits for most short-service public employees. Hence, the recent trend towards hybrid arrangements is a positive development not only for risk sharing between taxpayers and participants but also for a more equitable distribution of benefits between short-term and career employees.
Handle: RePEc:nbr:nberwo:18448
Template-Type: ReDIF-Paper 1.0
Title: Estimation of Dynamic Discrete Choice Models in Continuous Time with an Application to Retail Competition
Classification-JEL: C13; C35; L11; L13
Author-Name: Peter Arcidiacono
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Jason R. Blevins
Author-Name: Paul B. Ellickson
Author-Person: pel140
Note: IO TWP
Number: 18449
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18449
File-URL: http://www.nber.org/papers/w18449.pdf
File-Format: application/pdf
Publication-Status: published as Peter Arcidiacono & Patrick Bayer & Jason R. Blevins & Paul B. Ellickson, 2016. "Estimation of Dynamic Discrete Choice Models in Continuous Time with an Application to Retail Competition," The Review of Economic Studies, vol 83(3), pages 889-931.
Abstract: This paper develops a dynamic model of retail competition and uses it to study the impact of the expansion of a new national competitor on the structure of urban markets. In order to accommodate substantial heterogeneity (both observed and unobserved) across agents and markets, the paper first develops a general framework for estimating and solving dynamic discrete choice models in continuous time that is computationally light and readily applicable to dynamic games. In the proposed framework, players face a standard dynamic discrete choice problem at decision times that occur stochastically. The resulting stochastic-sequential structure naturally admits the use of CCP methods for estimation and makes it possible to compute counterfactual simulations for relatively high-dimensional games. The model and method are applied to the retail grocery industry, into which Wal-Mart began rapidly expanding in the early 1990s, eventually attaining a dominant position. We find that Wal-Mart’s expansion into groceries came mostly at the expense of the large incumbent supermarket chains, rather than the single-store outlets that bore the brunt of its earlier conquest of the broader general merchandise sector. Instead, we find that independent grocers actually thrive when Wal-Mart enters, leading to an overall reduction in market concentration. These competitive effects are strongest in larger markets and those into which Wal-Mart expanded most rapidly, suggesting a diminishing role of scale and a greater emphasis on differentiation in this previously mature industry.
Handle: RePEc:nbr:nberwo:18449
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Dividend Dynamics and the Term Structure of Dividend Strips
Classification-JEL: G0; G00; G1; G10; G12
Author-Name: Frederico Belo
Author-Name: Pierre Collin-Dufresne
Author-Name: Robert S. Goldstein
Note: AP CF EFG
Number: 18450
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18450
File-URL: http://www.nber.org/papers/w18450.pdf
File-Format: application/pdf
Publication-Status: published as Dividend Dynamics and the Term Structure of Dividend Strips FREDERICO BELO, PIERRE COLLIN-DUFRESNE andROBERT S. GOLDSTEIN† Article first published online: 11 MAY 2015 DOI: 10.1111/jofi.12242 The Journal of Finance Volume 70, Issue 3, pages 1115–1160, June 2015
Abstract: Many leading asset pricing models predict that the term structures of expected returns and volatilities on dividend strips are strongly upward sloping. Yet the empirical evidence suggests otherwise. This discrepancy can be reconciled if these models replace their exogenously specified dividend dynamics with processes that are derived endogenously from capital structure policies that generate stationary leverage ratios. Under this policy, shareholders are being forced to divest (invest) when leverage is low (high), which shifts risk from long-horizon to short-horizon dividend strips. This framework also generates stock volatility that is higher than long-horizon dividend volatility, even with constant market prices of risk.
Handle: RePEc:nbr:nberwo:18450
Template-Type: ReDIF-Paper 1.0
Title: Insider Trading, Stochastic Liquidity and Equilibrium Prices
Classification-JEL: D4; D8; D80; D82; D83; D84; G0; G00; G1; G10; G12; G14
Author-Name: Pierre Collin-Dufresne
Author-Name: Vyacheslav Fos
Note: AP CF EFG
Number: 18451
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18451
File-URL: http://www.nber.org/papers/w18451.pdf
File-Format: application/pdf
Abstract: We extend Kyle's (1985) model of insider trading to the case where liquidity provided by noise traders follows a general stochastic process. Even though the level of noise trading volatility is observable, in equilibrium, measured price impact is stochastic. If noise trading volatility is mean-reverting, then the equilibrium price follows a multivariate 'stochastic bridge' process, which displays stochastic volatility. This is because insiders choose to optimally wait to trade more aggressively when noise trading activity is higher. In equilibrium, market makers anticipate this, and adjust prices accordingly. More private information is revealed when volatility is higher. In time series, insiders trade more aggressively, when measured price impact is lower. Therefore, execution costs to uninformed traders can be higher when price impact is lower.
Handle: RePEc:nbr:nberwo:18451
Template-Type: ReDIF-Paper 1.0
Title: Do prices reveal the presence of informed trading?
Classification-JEL: G0; G00; G1; G10; G12; G14; G3; G34
Author-Name: Pierre Collin-Dufresne
Author-Name: Vyacheslav Fos
Note: AP CF LE
Number: 18452
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18452
File-URL: http://www.nber.org/papers/w18452.pdf
File-Format: application/pdf
Publication-Status: published as Do Prices Reveal the Presence of Informed Trading? PIERRE COLLIN-DUFRESNE andVYACHESLAV FOS† Article first published online: 23 JUL 2015 DOI: 10.1111/jofi.12260 The Journal of Finance Volume 70, Issue 4, pages 1555–1582, August 2015
Abstract: Using a comprehensive sample of trades by Schedule 13D filers, who possess valuable private information when they accumulate stocks of targeted companies, this paper studies whether several liquidity measures reveal the presence of informed trading. The evidence suggests that when Schedule 13D filers trade aggressively, both high-frequency and low-frequency measures of stock liquidity indicate a higher stock liquidity. Importantly, measures that have been used as direct proxies for adverse selection, such the Kyle (1985) lambda, the Easley et al. (1996) pin measure, and the Amihud (2002) illiquidity measure, suggest that the adverse selection is lower when informed trading takes place. The evidence is consistent with informed traders being more aggressive when measured stock liquidity is high.
Handle: RePEc:nbr:nberwo:18452
Template-Type: ReDIF-Paper 1.0
Title: Carrots that Look Like Sticks: Toward an Understanding of Multitasking Incentive Schemes
Classification-JEL: C93; D01
Author-Name: Omar Al-Ubaydli
Author-Person: pal295
Author-Name: Steffen Andersen
Author-Person: pan114
Author-Name: Uri Gneezy
Author-Person: pgn18
Author-Name: John A. List
Author-Person: pli176
Note: LS
Number: 18453
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18453
File-URL: http://www.nber.org/papers/w18453.pdf
File-Format: application/pdf
Publication-Status: published as Omar Al-Ubaydli & Steffen Andersen & Uri Gneezy & John A. List, 2015. "Carrots That Look Like Sticks: Toward an Understanding of Multitasking Incentive Schemes," Southern Economic Journal, Southern Economic Association, vol. 81(3), pages 538-561, January.
Abstract: Constructing compensation schemes for effort in multi-dimensional tasks is complex, particularly when some dimensions are not easily observable. When incentive schemes contractually reward workers for easily observed measures, such as quantity produced, the standard model predicts that unrewarded dimensions, such as quality, will be neglected. Yet, there remains mixed empirical evidence in favor of this standard principal-agent model prediction. This paper reconciles the literature by using both theory and empirical evidence. The theory outlines conditions under which principals can use a piece rate scheme to induce higher quantity and quality levels than analogous fixed wage schemes. Making use of a series of complementary laboratory and field experiments we show that this effect occurs because the agent is uncertain about the principal's monitoring ability and the principal's choice of a piece rate signals to the agent that she is efficient at monitoring.
Handle: RePEc:nbr:nberwo:18453
Template-Type: ReDIF-Paper 1.0
Title: Financial Reforms and Capital Flows: Insights from General Equilibrium
Classification-JEL: F34; F36; G15; O19; O43
Author-Name: Alberto Martin
Author-Person: pma513
Author-Name: Jaume Ventura
Author-Person: pve110
Note: IFM
Number: 18454
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18454
File-URL: http://www.nber.org/papers/w18454.pdf
File-Format: application/pdf
Abstract: As a result of debt enforcement problems, many high-productivity firms in emerging economies are unable to pledge enough future profits to their creditors and this constrains the financing they can raise. Many have argued that, by relaxing these credit constraints, reforms that strengthen enforcement institutions would increase capital flows to emerging economies. This argument is based on a partial equilibrium intuition though, which does not take into account the origin of any additional resources that flow to high-productivity firms after the reforms. We show that some of these resources do not come from abroad, but instead from domestic low-productivity firms that are driven out of business as a result of the reforms. Indeed, the resources released by these low-productivity firms could exceed those absorbed by high-productivity ones so that capital flows to emerging economies might actually decrease following successful reforms. This result provides a new perspective on some recent patterns of capital flows in industrial and emerging economies.
Handle: RePEc:nbr:nberwo:18454
Template-Type: ReDIF-Paper 1.0
Title: Who Ran on Repo?
Classification-JEL: G01; G23
Author-Name: Gary B. Gorton
Author-Person: pgo458
Author-Name: Andrew Metrick
Author-Person: pme99
Note: AP CF ME
Number: 18455
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18455
File-URL: http://www.nber.org/papers/w18455.pdf
File-Format: application/pdf
Publication-Status: published as Gary B. Gorton & Andrew Metrick & Chase P. Ross, 2020. "Who Ran on Repo?," AEA Papers and Proceedings, vol 110, pages 487-492.
Abstract: The sale and repurchase (repo) market played a central role in the recent financial crisis. From the second quarter of 2007 to the first quarter of 2009, net repo financing provided to U.S. banks and broker-dealers fell by about $1.3 trillion - more than half of its pre-crisis total. Significant details of this "run on repo" remain shrouded, however, because many of the providers of repo finance are lightly regulated or unregulated cash pools. In this paper we supplement the best available official data sources with a unique market survey to provide an updated picture of the dynamics of the repo run. We provide evidence that the run was predominantly driven by the flight of foreign financial institutions, domestic and offshore hedge funds, and other unregulated cash pools. Our analysis highlights the danger of relying exclusively on data from regulated institutions, which would miss the most important parts of the run.
Handle: RePEc:nbr:nberwo:18455
Template-Type: ReDIF-Paper 1.0
Title: Energy-Saving Technical Change
Classification-JEL: E0; O30; Q32
Author-Name: John Hassler
Author-Name: Per Krusell
Author-Person: pkr102
Author-Name: Conny Olovsson
Note: EEE EFG
Number: 18456
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18456
File-URL: http://www.nber.org/papers/w18456.pdf
File-Format: application/pdf
Abstract: We estimate an aggregate production function with constant elasticity of substitution between energy and a capital/labor composite using U.S. data. The implied measure of energy-saving technical change appears to respond strongly to the oil-price shocks in the 1970s and has a negative medium-run correlation with capital/labor-saving technical change. Our findings are suggestive of a model of directed technical change, with low short-run substitutability between energy and capital/labor but significant substitutability over longer periods through technical change. We construct such a model, calibrate it based on the historical data, and use it to discuss possibilities for the future.
Handle: RePEc:nbr:nberwo:18456
Template-Type: ReDIF-Paper 1.0
Title: Improving the Targeting of Treatment: Evidence from College Remediation
Classification-JEL: H75; I23; J24
Author-Name: Judith Scott-Clayton
Author-Name: Peter M. Crosta
Author-Name: Clive R. Belfield
Note: ED
Number: 18457
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18457
File-URL: http://www.nber.org/papers/w18457.pdf
File-Format: application/pdf
Publication-Status: published as Improving the Targeting of Treatment Evidence From College Remediation Judith Scott-Clayton Peter M. Crosta Teachers College, Columbia University Clive R. Belfield The City University of New York Published online before print January 28, 2014, doi: 10.3102/0162373713517935 EDUCATIONAL EVALUATION AND POLICY ANALYSIS September 2014 vol. 36 no. 3 371-393
Abstract: At an annual cost of roughly $7 billion nationally, remedial coursework is one of the single largest interventions intended to improve outcomes for underprepared college students. But like a costly medical treatment with non-trivial side effects, the value of remediation overall depends upon whether those most likely to benefit can be identified in advance. Our analysis uses administrative data and a rich predictive model to examine the accuracy of remedial screening tests, either instead of or in addition to using high school transcript data to determine remedial assignment. We find that roughly one in four test-takers in math and one in three test-takers in English are severely mis-assigned under current test-based policies, with mis-assignments to remediation much more common than mis-assignments to college-level coursework. We find that using high school transcript information--either instead of or in addition to test scores--could significantly reduce the prevalence of assignment errors. Further, we find that the choice of screening device has significant implications for the racial and gender composition of both remedial and college-level courses. Finally, we find that if institutions took account of students' high school performance, they could remediate substantially fewer students without lowering success rates in college-level courses.
Handle: RePEc:nbr:nberwo:18457
Template-Type: ReDIF-Paper 1.0
Title: Punishment and Cooperation in Stochastic Social Dilemmas
Classification-JEL: C72; C73; C91; D02; D03
Author-Name: Erte Xiao
Author-Name: Howard Kunreuther
Note: TWP
Number: 18458
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18458
File-URL: http://www.nber.org/papers/w18458.pdf
File-Format: application/pdf
Publication-Status: published as E. Xiao & H. Kunreuther, 2016. "Punishment and Cooperation in Stochastic Social Dilemmas," Journal of Conflict Resolution, vol 60(4), pages 670-693.
Abstract: Previous findings on punishment have focused on environments in which the outcomes are known with certainty. In this paper, we conduct experiments to investigate how punishment affects cooperation in a two-person stochastic prisoner's dilemma environment where each person can decide whether or not to cooperate, and the outcomes of alternative strategies are specified probabilistically under a transparent information condition. In particular, we study two types of punishment mechanisms: 1) an unrestricted punishment mechanism: both persons can punish; and 2) a restricted punishment mechanism: only cooperators can punish non-cooperators. We show that the restricted punishment mechanism is more effective in promoting cooperative behavior than the unrestricted one in a deterministic social dilemma. More importantly, the restricted type is less effective in an environment where the outcomes are stochastic than when they are known with certainty. Our data suggest that one explanation is that non-cooperative behavior is less likely to be punished when there is outcome uncertainty. Our findings provide useful information for designing efficient incentive mechanisms to induce cooperation in a stochastic social dilemma environment.
Handle: RePEc:nbr:nberwo:18458
Template-Type: ReDIF-Paper 1.0
Title: Mobilizing Social Capital Through Employee Spinoffs
Classification-JEL: D83; J63; L26
Author-Name: Marc-Andreas Muendler
Author-Person: pmu63
Author-Name: James E. Rauch
Author-Person: pra166
Note: PR
Number: 18459
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18459
File-URL: http://www.nber.org/papers/w18459.pdf
File-Format: application/pdf
Abstract: Many founding teams of new firms form at a common employer. We model team formation and the entry of employee spinoffs by extending the Jovanovic (1979) theory of job matching and employer learning. In our social-capital model employees learn about their colleagues' characteristics at a faster rate than the employer and recruit suitable colleagues to join the spinoff firm. For spinoff firms, our model predicts that the separation hazard is lower among founding team members than among workers hired from outside at founding, and that this difference shrinks with worker tenure at the firm. For parent firms, our model predicts that a worker's departure hazard to join a spinoff initially increases with worker tenure at the parent, whereas the separation hazard for conventional quits and layoffs decreases with worker tenure as in Jovanovic (1979). All these predictions are clearly supported in Brazilian data for the period 1995-2001. Calibration of our dynamic model indicates that employee spinoffs raise the share of workers in Brazil's private sector known to be of high match quality by 3.2 percent.
Handle: RePEc:nbr:nberwo:18459
Template-Type: ReDIF-Paper 1.0
Title: Trust, Values and False Consensus
Classification-JEL: A1; A12; D01; Z1
Author-Name: Jeffrey Butler
Author-Person: pbu213
Author-Name: Paola Giuliano
Author-Person: pgi66
Author-Name: Luigi Guiso
Author-Person: pgu58
Note: POL
Number: 18460
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18460
File-URL: http://www.nber.org/papers/w18460.pdf
File-Format: application/pdf
Publication-Status: published as TRUST, VALUES, AND FALSE CONSENSUS Jeffrey V. Butler1, Paola Giuliano2 andLuigi Guiso3,† Article first published online: 30 JUL 2015 DOI: 10.1111/iere.12125 International Economic Review Volume 56, Issue 3, pages 889–915, August 2015
Abstract: Trust beliefs are heterogeneous across individuals and, at the same time, persistent across generations. We investigate one mechanism yielding these dual patterns: false consensus. In the context of a trust game experiment, we show that individuals extrapolate from their own type when forming trust beliefs about the same pool of potential partners - i.e., more (less) trustworthy individuals form more optimistic (pessimistic) trust beliefs - and that this tendency continues to color trust beliefs after several rounds of game-play. Moreover, we show that one's own type/trustworthiness can be traced back to the values parents transmit to their children during their upbringing. In a second closely-related experiment, we show the economic impact of mis-calibrated trust beliefs stemming from false consensus. Miscalibrated beliefs lower participants' experimental trust game earnings by about 20 percent on average.
Handle: RePEc:nbr:nberwo:18460
Template-Type: ReDIF-Paper 1.0
Title: Health, Human Capital Formation and Knowledge Production: Two Centuries of International Evidence
Classification-JEL: O1; O2; O4
Author-Name: Jakob Madsen
Author-Person: pma412
Note: EH
Number: 18461
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18461
File-URL: http://www.nber.org/papers/w18461.pdf
File-Format: application/pdf
Publication-Status: published as Jakob B. Madsen, 2016. "HEALTH, HUMAN CAPITAL FORMATION AND KNOWLEDGE PRODUCTION: TWO CENTURIES OF INTERNATIONAL EVIDENCE," Macroeconomic Dynamics, vol 20(04), pages 909-953.
Abstract: Recent medical research shows that health is highly influential for learning and the ability to think laterally; however, past economic studies have failed to empirically examine the influence of health on learning, schooling, and ideas production; the main drivers of growth in endogenous growth models. This paper constructs a measure of health-adjusted educational attainment among the working age population based on their health status during the time they did their education. Using annual data for 21 OECD countries over the past two centuries it is shown that health has been highly influential for the quantity and quality of schooling, innovations and growth.
Handle: RePEc:nbr:nberwo:18461
Template-Type: ReDIF-Paper 1.0
Title: Spatial and Temporal Heterogeneity of Marginal Emissions: Implications for Electric Cars and Other Electricity-Shifting Policies
Classification-JEL: H23; L94; Q5
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Matthew Kotchen
Author-Person: pko326
Author-Name: Erin T. Mansur
Author-Person: pma874
Note: EEE
Number: 18462
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18462
File-URL: http://www.nber.org/papers/w18462.pdf
File-Format: application/pdf
Publication-Status: published as Graff Zivin, Joshua S. & Kotchen, Matthew J. & Mansur, Erin T., 2014. "Spatial and temporal heterogeneity of marginal emissions: Implications for electric cars and other electricity-shifting policies," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 248-268.
Abstract: In this paper, we develop a methodology for estimating marginal emissions of electricity demand that vary by location and time of day across the United States. The approach takes account of the generation mix within interconnected electricity markets and shifting load profiles throughout the day. Using data available for 2007 through 2009, with a focus on carbon dioxide (CO2), we find substantial variation among locations and times of day. Marginal emission rates are more than three times as large in the upper Midwest compared to the western United States, and within regions, rates for some hours of the day are more than twice those for others. We apply our results to an evaluation of plug-in electric vehicles (PEVs). The CO2 emissions per mile from driving PEVs are less than those from driving a hybrid car in the western United States and Texas. In the upper Midwest, however, charging during the recommended hours at night implies that PEVs generate more emissions per mile than the average car currently on the road. Underlying many of our results is a fundamental tension between electricity load management and environmental goals: the hours when electricity is the least expensive to produce tend to be the hours with the greatest emissions. In addition to PEVs, we show how our estimates are useful for evaluating the heterogeneous effects of other policies and initiatives, such as distributed solar and real-time pricing.
Handle: RePEc:nbr:nberwo:18462
Template-Type: ReDIF-Paper 1.0
Title: Agricultural Decisions after Relaxing Credit and Risk Constraints
Classification-JEL: C93; D24; D92; G22; O12; O13; O16; Q12; Q14
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Robert Darko Osei
Author-Name: Isaac Osei-Akoto
Author-Name: Christopher Udry
Author-Person: pud2
Note: CF LS DEV
Number: 18463
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18463
File-URL: http://www.nber.org/papers/w18463.pdf
File-Format: application/pdf
Publication-Status: published as Dean Karlan & Robert Osei & Isaac Osei-Akoto & Christopher Udry, 2014. "Agricultural Decisions after Relaxing Credit and Risk Constraints," The Quarterly Journal of Economics, Oxford University Press, vol. 129(2), pages 597-652.
Abstract: The investment decisions of small‐scale farmers in developing countries are conditioned by their financial environment. Binding credit market constraints and incomplete insurance can reduce investment in activities with high expected profits. We conducted several experiments in northern Ghana in which farmers were randomly assigned to receive cash grants, grants of or opportunities to purchase rainfall index insurance, or a combination of the two. Demand for index insurance is strong, and insurance leads to significantly larger agricultural investment and riskier production choices in agriculture. The binding constraint to farmer investment is uninsured risk: when provided with insurance against the primary catastrophic risk they face, farmers are able to find resources to increase expenditure on their farms. Demand for insurance in subsequent years is strongly increasing with farmer's own receipt of insurance payouts, with the receipt of payouts by others in the farmer's social network, as well as with recent poor rain in their village. Both investment patterns and the demand for index insurance are consistent with the presence of important basis risk associated with the index insurance, with imperfect trust that promised payouts will be delivered, as well as with overweighting recent events.
Handle: RePEc:nbr:nberwo:18463
Template-Type: ReDIF-Paper 1.0
Title: The Gender Gap in Mathematics: Evidence from Low- and Middle-Income Countries
Classification-JEL: I23; O15
Author-Name: Prashant Bharadwaj
Author-Name: Giacomo De Giorgi
Author-Person: pde483
Author-Name: David Hansen
Author-Name: Christopher Neilson
Author-Person: pne96
Note: CH DEV ED LS
Number: 18464
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18464
File-URL: http://www.nber.org/papers/w18464.pdf
File-Format: application/pdf
Abstract: We establish the presence of a gender gap in mathematics across many low- and middle-income countries using detailed, comparable test score data. Examining micro level data on school performance linked to household demographics we note that first, the gender gap appears to increase with age. Indeed, the gap nearly doubles when comparing 4th grade and 8th grade test scores. Second, we test whether commonly proposed explanations such as parental background and investments, unobserved ability, and classroom environment (including teacher gender) explain a substantial portion of the gap. While none of these explanations help in substantially explaining the gender gap we observe, we show that boys and girls differ significantly in perceptions about their own ability in math, conditional on math test scores. Girls are much more likely to state that they dislike math, or find math difficult compared to boys. We highlight differences in self-assessed ability as areas for future research that might lead to a better understanding of the gender gap in math.
Handle: RePEc:nbr:nberwo:18464
Template-Type: ReDIF-Paper 1.0
Title: The "Big C": Identifying Contagion
Classification-JEL: F0; F1; F15; F2; F3; F6; G01; G15; G2
Author-Name: Kristin Forbes
Author-Person: pfo1
Note: CF IFM ITI
Number: 18465
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18465
File-URL: http://www.nber.org/papers/w18465.pdf
File-Format: application/pdf
Abstract: This paper surveys and assesses the academic literature on defining, measuring, and identifying financial contagion and the various channels by which it can occur. It also includes new empirical analysis of recent trends and causes of contagion, highlighting contagion risks in the euro area. The paper defines "interdependence" as high correlations across markets during all states of the world and "contagion" as the spillovers from extreme negative events. Interdependence has increased dramatically over time, especially within the euro area, even after controlling for global shocks and changes in volatility. Not surprisingly, negative events in one country also quickly affect others. Regression analysis shows that a country is more vulnerable to contagion if it has a more levered banking system, greater trade exposure, weaker macroeconomic fundamentals, and larger international portfolio investment liabilities. Countries are less vulnerable, however, if they have larger international portfolio investment assets (which can provide a buffer against shocks) and are less reliant on debt (versus equity) for international financing. These results have important implications for understanding contagion and for analyzing policies designed to mitigate contagion, especially for the current crisis in the euro area.
Handle: RePEc:nbr:nberwo:18465
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Child Well-Being
Classification-JEL: D03; D04; I21; J13
Author-Name: Gabriella Conti
Author-Person: pco273
Author-Name: James J. Heckman
Note: CH PE
Number: 18466
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18466
File-URL: http://www.nber.org/papers/w18466.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of Child Well-Being 2014, pp 363-401 Economics of Child Well-Being Gabriella Conti, Dr. James J. Heckman
Abstract: This paper presents an integrated economic approach that organizes and interprets the evidence on child development. It also discusses the indicators of child well-being that are used in international comparisons. Recent evidence on child development is summarized, and policies to promote child well-being are discussed. The paper concludes with some open questions and suggestions for future research.
Handle: RePEc:nbr:nberwo:18466
Template-Type: ReDIF-Paper 1.0
Title: Prior Selection for Vector Autoregressions
Classification-JEL: C11; C32; C53; E37; E47
Author-Name: Domenico Giannone
Author-Person: pgi49
Author-Name: Michele Lenza
Author-Person: ple337
Author-Name: Giorgio E. Primiceri
Author-Person: ppr18
Note: EFG ME TWP
Number: 18467
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18467
File-URL: http://www.nber.org/papers/w18467.pdf
File-Format: application/pdf
Publication-Status: published as Domenico Giannone & Michele Lenza & Giorgio E. Primiceri, 2015. "Prior Selection for Vector Autoregressions," The Review of Economics and Statistics, MIT Press, vol. 2(97), pages 436-451, May.
Abstract: Vector autoregressions (VARs) are flexible time series models that can capture complex dynamic interrelationships among macroeconomic variables. However, their dense parameterization leads to unstable inference and inaccurate out-of-sample forecasts, particularly for models with many variables. A solution to this problem is to use informative priors, in order to shrink the richly parameterized unrestricted model towards a parsimonious naïve benchmark, and thus reduce estimation uncertainty. This paper studies the optimal choice of the informativeness of these priors, which we treat as additional parameters, in the spirit of hierarchical modeling. This approach is theoretically grounded, easy to implement, and greatly reduces the number and importance of subjective choices in the setting of the prior. Moreover, it performs very well both in terms of out-of-sample forecasting--as well as factor models--and accuracy in the estimation of impulse response functions.
Handle: RePEc:nbr:nberwo:18467
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Hazard in Health Insurance
Classification-JEL: D01; D03; D8; I13
Author-Name: Katherine Baicker
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Author-Name: Joshua Schwartzstein
Author-Person: psc473
Note: EH PE
Number: 18468
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18468
File-URL: http://www.nber.org/papers/w18468.pdf
File-Format: application/pdf
Publication-Status: published as Behavioral Hazard in Health Insurance* Katherine Baicker Harvard University Sendhil Mullainathan Harvard University Joshua Schwartzstein The Quarterly Journal of Economics (2015) doi: 10.1093/qje/qjv029 First published online: July 15, 2015
Abstract: This paper develops a model of health insurance that incorporates behavioral biases. In the traditional model, people who are insured overuse low value medical care because of moral hazard. There is ample evidence, though, of a different inefficiency: people underuse high value medical care because they make mistakes. Such "behavioral hazard" changes the fundamental tradeoff between insurance and incentives. With only moral hazard, raising copays increases the efficiency of demand by ameliorating overuse. With the addition of behavioral hazard, raising copays may reduce efficiency by exaggerating underuse. This means that estimating the demand response is no longer enough for setting optimal copays; the health response needs to be considered as well. This provides a theoretical foundation for value-based insurance design: for some high value treatments, for example, copays should be zero (or even negative). Empirically, this reinterpretation of demand proves important, since high value care is often as elastic as low value care. For example, calibration using data from a field experiment suggests that omitting behavioral hazard leads to welfare estimates that can be both wrong in sign and off by an order of magnitude. Optimally designed insurance can thus increase health care efficiency as well as provide financial protection, suggesting the potential for market failure when private insurers are not fully incentivized to counteract behavioral biases.
Handle: RePEc:nbr:nberwo:18468
Template-Type: ReDIF-Paper 1.0
Title: Is Psychological Well-being Linked to the Consumption of Fruit and Vegetables?
Classification-JEL: I1
Author-Name: David G. Blanchflower
Author-Person: pbl22
Author-Name: Andrew J. Oswald
Author-Name: Sarah Stewart-Brown
Note: EH LS
Number: 18469
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18469
File-URL: http://www.nber.org/papers/w18469.pdf
File-Format: application/pdf
Publication-Status: published as David Blanchflower & Andrew Oswald & Sarah Stewart-Brown, 2013. "Is Psychological Well-Being Linked to the Consumption of Fruit and Vegetables?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 114(3), pages 785-801, December.
Abstract: Humans run on a fuel called food. Yet economists and other social scientists rarely study what people eat. We provide simple evidence consistent with the existence of a link between the consumption of fruit and vegetables and high well-being. In cross-sectional data, happiness and mental health rise in an approximately dose-response way with the number of daily portions of fruit and vegetables. The pattern is remarkably robust to adjustment for a large number of other demographic, social and economic variables. Well-being peaks at approximately 7 portions per day. We document this relationship in three data sets, covering approximately 80,000 randomly selected British individuals, and for seven measures of well-being (life satisfaction, WEMWBS mental well-being, GHQ mental disorders, self-reported health, happiness, nervousness, and feeling low). Reverse causality and problems of confounding remain possible. We discuss the strengths and weaknesses of our analysis, how government policy-makers might wish to react to it, and what kinds of further research -- especially randomized trials -- would be valuable.
Handle: RePEc:nbr:nberwo:18469
Template-Type: ReDIF-Paper 1.0
Title: Germs, Social Networks and Growth
Classification-JEL: E02; O1; O33
Author-Name: Alessandra Fogli
Author-Person: pfo48
Author-Name: Laura Veldkamp
Author-Person: pve40
Note: DEV EFG
Number: 18470
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18470
File-URL: http://www.nber.org/papers/w18470.pdf
File-Format: application/pdf
Publication-Status: published as Alessandra Fogli & Laura Veldkamp, 2021. "Germs, Social Networks, and Growth," The Review of Economic Studies, vol 88(3), pages 1074-1100.
Abstract: Does the pattern of social connections between individuals matter for macroeconomic outcomes? If so, where do these differences come from and how large are their effects? Using network analysis tools, we explore how different social network structures affect technology diffusion and thereby a country's rate of growth. The model also explains how different social networks may emerge endogenously in response to the prevalence of infectious disease. Initial differences in disease prevalence can produce different network structures, leading to divergent levels of income. We compare calibrated model predictions with data. The model and data agree that a one-standard-deviation increase in our index of network diffusion speed results in output growth that is 1/2% higher per year.
Handle: RePEc:nbr:nberwo:18470
Template-Type: ReDIF-Paper 1.0
Title: A Game Theoretic Foundation of Competitive Equilibria with Adverse Selection
Classification-JEL: C73; D02; D82; D86; G22; H1; L1
Author-Name: Nick Netzer
Author-Person: pne89
Author-Name: Florian Scheuer
Author-Person: psc147
Note: EFG IO PE
Number: 18471
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18471
File-URL: http://www.nber.org/papers/w18471.pdf
File-Format: application/pdf
Publication-Status: published as Nick Netzer & Florian Scheuer, 2014. "A Game Theoretic Foundation Of Competitive Equilibria With Adverse Selection," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 399-422, 05.
Abstract: We construct a fully specified extensive form game that captures competitive markets with adverse selection. In particular, it allows firms to offer any finite set of contracts, so that cross-subsidization is not ruled out. Moreover, firms can withdraw from the market after initial contract offers have been observed. We show that a subgame perfect equilibrium always exists and that, in fact, when withdrawal is costless, the set of subgame perfect equilibrium outcomes may correspond to the entire set of feasible contracts. We then focus on robust equilibria that exist both when withdrawal costs are zero and when they are arbitrarily small but strictly positive. We show that the Miyazaki-Wilson contracts are the unique robust equilibrium outcome of our game. This outcome is always constrained efficient and involves cross-subsidization from low to high risk agents that is increasing in the share of low risks in the population under weak conditions on risk preferences.
Handle: RePEc:nbr:nberwo:18471
Template-Type: ReDIF-Paper 1.0
Title: Investment, Accounting, and the Salience of the Corporate Income Tax
Classification-JEL: G31; H25; H32; M41
Author-Name: Jesse Edgerton
Note: CF PE
Number: 18472
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18472
File-URL: http://www.nber.org/papers/w18472.pdf
File-Format: application/pdf
Publication-Status: published as Investment, Accounting, and the Salience of the Corporate Income Tax, Jesse Edgerton. in Business Taxation (Trans-Atlantic Public Economics Seminar), Devereux and Gordon. 2014
Abstract: This paper develops and tests the hypothesis that accounting rules mitigate the effect of tax policy on firm investment decisions by obscuring the timing of tax payments. I model a firm that maximizes a discounted weighted average of after-tax cash flows and accounting profits. I estimate the weight placed on accounting profits by comparing the effectiveness of tax incentives that do and do not affect them. Investment tax credits, which do affect accounting profits, have larger effects on investment than accelerated depreciation, which does not. This difference in estimated effects is not obviously driven by discounting, cash flow effects, or measurement error. Results thus suggest that accelerated depreciation provisions are less effective than they otherwise would be and that the corporate income tax could create smaller distortions to investment decisions than we would otherwise estimate.
Handle: RePEc:nbr:nberwo:18472
Template-Type: ReDIF-Paper 1.0
Title: Non-linear Effects of Taxation on Growth
Classification-JEL: H2; O4
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Sergio Rebelo
Note: EFG
Number: 18473
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18473
File-URL: http://www.nber.org/papers/w18473.pdf
File-Format: application/pdf
Abstract: We propose a model consistent with two observations. First, the tax rates adopted by different countries are generally uncorrelated with their growth performance. Second, countries that drastically reduce private incentives to invest, severely hurt their growth performance. In our model, the effects of taxation on growth are highly non-linear. Low or moderate tax rates have a very small impact on long-run growth rates. But as tax rates rise, their negative impact on growth rises dramatically. The median voter chooses tax rates that have a small impact on growth prospects, making the relation between tax rates and economic growth difficult to measure empirically.
Handle: RePEc:nbr:nberwo:18473
Template-Type: ReDIF-Paper 1.0
Title: Diasporas and Outsourcing: Evidence from oDesk and India
Classification-JEL: F15; F22; J15; J31; J44; L14; L24; L26; L84; M55; O32
Author-Name: Ejaz Ghani
Author-Person: pgh75
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Christopher T. Stanton
Note: DEV LS PR
Number: 18474
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18474
File-URL: http://www.nber.org/papers/w18474.pdf
File-Format: application/pdf
Publication-Status: published as Ghani, Ejaz, William R. Kerr, and Christopher Stanton. "Diasporas and Outsourcing: Evidence from oDesk and India." Management Science 60, no. 7 (July 2014): 1677–1697.
Abstract: This study examines the role of the Indian diaspora in the outsourcing of work to India. Our data are taken from oDesk, the world's largest online platform for outsourced contracts, where India is the largest country in terms of contract volume. We use an ethnic name procedure to identify ethnic Indian users of oDesk in other countries around the world. We find very clear evidence that diaspora-based links matter on oDesk, with ethnic Indians in other countries 32% (9 percentage points) more likely to choose a worker in India. Yet, the size of the Indian diaspora on oDesk and the timing of its effects make clear that the Indian diaspora was not a very important factor in India becoming the leading country on oDesk for fulfilling work. In fact, multiple pieces of evidence suggest that diaspora use of oDesk increases with familiarity of the platform, rather than a scenario where diaspora connections serve to navigate uncertain environments. We further show that diaspora-based contracts mainly serve to lower costs for the company contacts outsourcing the work, as the workers in India are paid about the market wage for their work. These results and other observations lead to the conclusion that diaspora connections continue to be important even as online platforms provide many of the features that diaspora networks historically provided (e.g., information about potential workers, monitoring and reputation foundations).
Handle: RePEc:nbr:nberwo:18474
Template-Type: ReDIF-Paper 1.0
Title: Popularity
Classification-JEL: A14; I21; J31
Author-Name: Gabriella Conti
Author-Person: pco273
Author-Name: Andrea Galeotti
Author-Person: pga17
Author-Name: Gerrit Mueller
Author-Name: Stephen Pudney
Note: AG CH ED LS
Number: 18475
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18475
File-URL: http://www.nber.org/papers/w18475.pdf
File-Format: application/pdf
Publication-Status: published as Gabriella Conti & Andrea Galeotti & Gerrit Müller & Stephen Pudney, 2013. "Popularity," Journal of Human Resources, University of Wisconsin Press, vol. 48(4), pages 1072-1094.
Abstract: What makes you popular at school? And what are the labor market returns to popularity? We investigate these questions using an objective measure of popularity derived from sociometric theory: the number of friendship nominations received from schoolmates, interpreted as a measure of early accumulation of personal social capital. We develop an econometric model of friendship formation and labor market outcomes allowing for partial observation of networks, and provide new evidence on the impact of early family environment on popularity. We estimate that moving from the 20th to 80th percentile of the high-school popularity distribution yields a 10% wage premium nearly 40 years later.
Handle: RePEc:nbr:nberwo:18475
Template-Type: ReDIF-Paper 1.0
Title: Financial Constraints on Corporate Goodness
Classification-JEL: G30; G32; G39
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: Jeffrey D. Kubik
Author-Name: Jose A. Scheinkman
Author-Person: psc26
Note: CF
Number: 18476
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18476
File-URL: http://www.nber.org/papers/w18476.pdf
File-Format: application/pdf
Abstract: An influential thesis, dubbed "Doing well by doing good," argues that corporate social responsibility is profitable. But heterogeneity in firm financial constraints can induce a spurious correlation between profits and goodness even if the motives for goodness are non-profit in nature. We use two identification strategies to show that financial constraints are indeed an important driver of corporate goodness. First, during the Internet bubble, previously constrained firms experienced a temporary relaxation of their constraints and their goodness temporarily increased relative to their previously unconstrained peers. Second, a constrained firm's sustainability score increases more with its idiosyncratic equity valuation and lower cost of capital than a less-constrained counterpart. In sum, firms are more likely to do good when they do well.
Handle: RePEc:nbr:nberwo:18476
Template-Type: ReDIF-Paper 1.0
Title: Do Schooling Laws Matter? Evidence from the Introduction of Compulsory Attendance Laws in the United States
Classification-JEL: J24; N21; N22
Author-Name: Karen Clay
Author-Person: pcl25
Author-Name: Jeff Lingwall
Author-Name: Melvin Stephens, Jr.
Author-Person: pst400
Note: DAE LS
Number: 18477
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18477
File-URL: http://www.nber.org/papers/w18477.pdf
File-Format: application/pdf
Abstract: This paper examines the effects of introducing compulsory attendance laws on the schooling of U.S. children for three overlapping time periods: 1880-1927, 1890-1927, and 1898-1927. The previous literature finds little effect of the laws, which is somewhat surprising given that the passage of these laws coincided with rising attendance. Using administrative panel data, this paper finds that laws passed after 1880 had significant effects on enrollment and attendance. Laws passed after 1890, for which both administrative and retrospective census data are available, had significant effects on enrollment, attendance, and educational outcomes. In both cases, the timing of increases in enrollment and attendance is consistent with a causal effect of the laws. For men in the 1898-1927 period who reported positive wage income in the 1940 census, compulsory attendance laws increased schooling and wage income. The OLS estimates of the return to a year of schooling are 8 percent and the IV estimates are 11 to 14 percent.
Handle: RePEc:nbr:nberwo:18477
Template-Type: ReDIF-Paper 1.0
Title: Robust Standard Errors in Small Samples: Some Practical Advice
Classification-JEL: C01
Author-Name: Guido W. Imbens
Author-Person: pim4
Author-Name: Michal Kolesar
Note: LS PE TWP
Number: 18478
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18478
File-URL: http://www.nber.org/papers/w18478.pdf
File-Format: application/pdf
Publication-Status: published as Guido W. Imbens & Michal Kolesár, 2016. "Robust Standard Errors in Small Samples: Some Practical Advice," Review of Economics and Statistics, vol 98(4), pages 701-712.
Abstract: In this paper we discuss the properties of confidence intervals for regression parameters based on robust standard errors. We discuss the motivation for a modification suggested by Bell and McCaffrey (2002) to improve the finite sample properties of the confidence intervals based on the conventional robust standard errors. We show that the Bell-McCaffrey modification is the natural extension of a principled approach to the Behrens-Fisher problem, and suggest a further improvement for the case with clustering. We show that these standard errors can lead to substantial improvements in coverage rates even for sample sizes of fifty and more. We recommend researchers calculate the Bell-McCaffrey degrees-of-freedom adjustment to assess potential problems with conventional robust standard errors and use the modification as a matter of routine.
Handle: RePEc:nbr:nberwo:18478
Template-Type: ReDIF-Paper 1.0
Title: Reform of Ill-health Retirement Benefits for Police in England and Wales: The roles of National Policy and Local Finance
Classification-JEL: H75; J26; J45
Author-Name: Rowena Crawford
Author-Person: pcr216
Author-Name: Richard Disney
Note: PE
Number: 18479
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18479
File-URL: http://www.nber.org/papers/w18479.pdf
File-Format: application/pdf
Publication-Status: published as Reform of Police Pensions in England and Wales, Rowena Crawford, Richard Disney. in Retirement Benefits for State and Local Employees: Designing Pension Plans for the Twenty-First Century, Clark, Rauh, and Duggan. 2014
Abstract: We examine the ill-health retirement of police officers in the forces of England and Wales between 2002-03 and 2009-10. Differences in ill-health retirement rates across forces are statistically related to area-specific stresses of policing and force-specific differences in human resources policies. Reforms to police pension plans - in particular a shift in the incidence of financing ill-health retirement from central government to local police authorities - occurred in the mid-2000s. We show these measures impacted on the level of ill-health retirement, especially on forces with above-average rates of retirement. We find that residual differences in post-2006 ill-health retirement rates across forces are related to their differential capacities to raise revenue from local property taxes.
Handle: RePEc:nbr:nberwo:18479
Template-Type: ReDIF-Paper 1.0
Title: Labor Market, Financial Crises and Inflation: Jobless and Wageless Recoveries
Classification-JEL: E2; E31; E44; F3; F32
Author-Name: Guillermo A. Calvo
Author-Person: pca694
Author-Name: Fabrizio Coricelli
Author-Name: Pablo Ottonello
Author-Person: pot62
Note: IFM
Number: 18480
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18480
File-URL: http://www.nber.org/papers/w18480.pdf
File-Format: application/pdf
Abstract: This paper uses a sample of 116 recession episodes in developed and emerging market economies to compare the labor-market recovery during financial crises with that of other recession episodes. It documents two new stylized facts. First, labor-market recovery from financial crises is characterized by either higher unemployment ("jobless recovery") or a lower real wage ("wageless recovery"). Second, inflation determines the type of recovery: low inflation (below 30 percent annual rate) is associated with jobless recovery, while high inflation is associated with wageless recovery. The paper shows that this pattern of labor recovery from financial crises is consistent with a simple model in which collateral requirements are higher (lower) when a larger share of labor costs (physical capital expenditure) is involved in a loan contract.
Handle: RePEc:nbr:nberwo:18480
Template-Type: ReDIF-Paper 1.0
Title: Cost Effectiveness Analysis and the Design of Cost-Sharing in Insurance: Solving a Puzzle
Classification-JEL: I11; I13
Author-Name: Mark Pauly
Note: EH
Number: 18481
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18481
File-URL: http://www.nber.org/papers/w18481.pdf
File-Format: application/pdf
Publication-Status: published as Cost-effectiveness Analysis and Insurance Coverage: Solving a Puzzle Mark Pauly* Article first published online: 26 MAR 2014 DOI: 10.1002/hec.3044 Health Economics Volume 24, Issue 5, pages 506–515, May 2015
Abstract: The conventional model for the use of cost effectiveness analysis for health programs involves determining whether the cost per unit of effectiveness of the program is better than some socially determined maximum acceptable cost per unit of effectiveness. If a program is better, the policy implication is that it should be implemented by full coverage of its cost by insurance; if not, no coverage should be provided and the program should not be implemented. This paper examines the unanswered question of how cost effectiveness analysis should be performed and interpreted when insurance coverage can involve non-negligible cost sharing. It explores both the question of how cost effectiveness is affected by the presence of cost sharing, and the more fundamental question of cost effectiveness when cost sharing is itself set at the cost effective level. Both a benchmark model where only "societal" preferences (embodied in a threshold value of dollars per unit of health) matter and a model where individual willingness to pay can be combined with societal values are considered. A common view that cost sharing should vary inversely with program cost effectiveness is shown to be incorrect. A key issue in correct analysis is whether there is heterogeneity either in marginal effectiveness of care or marginal values of care that cannot be perceived by the social planner but is known by the demander. The cost effectiveness of a program is shown to depend upon the level of cost sharing; it is possible that some programs that would fail the social test at both zero coverage and full coverage will be acceptable with positive cost sharing. Combining individual and social preferences affects both the choice of programs and the extent of cost sharing.
Handle: RePEc:nbr:nberwo:18481
Template-Type: ReDIF-Paper 1.0
Title: Long Horizon Uncovered Interest Parity Re-Assessed
Classification-JEL: F3
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Saad Quayyum
Note: IFM
Number: 18482
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18482
File-URL: http://www.nber.org/papers/w18482.pdf
File-Format: application/pdf
Abstract: We review the evidence for both short and long horizon uncovered interest parity (UIP) and rational expectations over the period up to 2011, extending the sample examined in Chinn and Meredith (2004) by nearly a decade. We find that the joint hypothesis of UIP and rational expectations (known as the unbiasedness hypothesis) holds better at long horizons than at short, although the effect is somewhat weaker than documented in Chinn and Meredith (2004). Using the formula for the slope coefficient, we identify potential sources for the difference in slope coefficients at different horizons. We attribute our weaker findings for long horizon unbiasedness for certain currencies partly to the advent of extraordinarily low interest rates associated with the zero interest bound in Japan and Switzerland.
Handle: RePEc:nbr:nberwo:18482
Template-Type: ReDIF-Paper 1.0
Title: International Taxation and Cross-Border Banking
Classification-JEL: F23; G21; H25
Author-Name: Harry Huizinga
Author-Name: Johannes Voget
Author-Name: Wolf Wagner
Author-Person: pwa82
Note: PE
Number: 18483
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18483
File-URL: http://www.nber.org/papers/w18483.pdf
File-Format: application/pdf
Publication-Status: published as Harry Huizinga & Johannes Voget & Wolf Wagner, 2014. "International Taxation and Cross-Border Banking," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 94-125, May.
Publication-Status: published as International Taxation and Cross-Border Banking, Harry Huizinga, Johannes Voget, Wolf Wagner. in Business Taxation (Trans-Atlantic Public Economics Seminar), Devereux and Gordon. 2014
Abstract: This paper examines empirically how international taxation affects the volume and pricing of cross-border banking activities for a sample of banks in 38 countries over the 1998-2008 period. International double taxation of foreign-source bank income is found to reduce banking-sector FDI. Furthermore, such taxation is almost fully passed on into higher interest margins charged abroad. These results imply that international double taxation distorts the activities of international banks, and that the incidence of international double taxation of banks is on bank customers in the foreign subsidiary country. Our analysis informs the debate about additional taxation of the financial sector that has emerged in the wake of the recent financial crisis.
Handle: RePEc:nbr:nberwo:18483
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Schooling on Cognitive Skills
Classification-JEL: I20; J24
Author-Name: Magnus Carlsson
Author-Person: pca1050
Author-Name: Gordon B. Dahl
Author-Person: pda455
Author-Name: Dan-Olof Rooth
Author-Person: pro875
Note: CH ED LS PE
Number: 18484
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18484
File-URL: http://www.nber.org/papers/w18484.pdf
File-Format: application/pdf
Publication-Status: published as Magnus Carlsson & Gordon B. Dahl & Björn Öckert & Dan-Olof Rooth, 2015. "The Effect of Schooling on Cognitive Skills," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 533-547, July.
Abstract: How schooling affects cognitive skills is a fundamental question for studies of human capital and labor markets. While scores on cognitive ability tests are positively associated with schooling, it has proven difficult to ascertain whether this relationship is causal. Moreover, the effect of schooling is difficult to separate from the confounding factors of age at test date, relative age within a classroom, season of birth, and cohort effects. In this paper, we exploit conditionally random variation in the assigned test date for a battery of cognitive tests which almost all 18 year-old males were required to take in preparation for military service in Sweden. Both age at test date and number of days spent in school vary randomly across individuals after flexibly controlling for date of birth, parish, and expected graduation date (the three variables the military conditioned on when assigning test date). We find an extra 10 days of school instruction raises cognitive scores on crystallized intelligence tests (synonym and technical comprehension tests) by approximately one percent of a standard deviation, whereas extra nonschool days have almost no effect. The benefit of additional school days is homogeneous, with similar effect sizes based on past grades in school, parental education, and father's earnings. In contrast, test scores on fluid intelligence tests (spatial and logic tests) do not increase with additional days of schooling, but do increase modestly with age. These findings have important implications for questions about the malleability of cognitive skills in young adults, schooling models of signaling versus human capital, the interpretation of test scores in wage regressions, and policies related to the length of the school year.
Handle: RePEc:nbr:nberwo:18484
Template-Type: ReDIF-Paper 1.0
Title: Parental Investments in College and Later Cash Transfers
Classification-JEL: H31; H4; I22
Author-Name: Steven J. Haider
Author-Person: pha224
Author-Name: Kathleen M. McGarry
Author-Person: pmc264
Note: AG CH ED LS PE
Number: 18485
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18485
File-URL: http://www.nber.org/papers/w18485.pdf
File-Format: application/pdf
Publication-Status: published as Steven J. Haider & Kathleen McGarry, 2018. "Parental Investments in College and Later Cash Transfers," Demography, vol 55(5), pages 1705-1725.
Abstract: The rising cost of college tuition and the accompanying investment parents often make have received considerable attention recently. While classic models in economics make important predictions about the magnitudes of these investments, their distribution across children, and their relationship with later cash transfers, there has been little empirical work examining these predictions, especially with regards to the differential treatment of siblings. Using unique data from a supplement to the Health and Retirement Study, we find that parents typically invest differentially in the schooling of siblings, but we find no evidence that these investments are offset by later cash transfers.
Handle: RePEc:nbr:nberwo:18485
Template-Type: ReDIF-Paper 1.0
Title: Understanding and Improving the Social Context of Well-Being
Classification-JEL: D6; I28; N30
Author-Name: John F. Helliwell
Author-Person: phe368
Note: DEV PE
Number: 18486
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18486
File-URL: http://www.nber.org/papers/w18486.pdf
File-Format: application/pdf
Abstract: The paper first attempts to demonstrate the fundamental importance of the social context. The related evidence is drawn from recent theoretical and empirical advances in the study of subjective well-being. Treating people's self-assessments of the quality of their lives as valid measures of well-being exposes the importance of the social context and suggests new ways to design better policies. The paper starts with demonstrations of the unexpectedly great well-being consequences of social and pro-social behavior. In addition, evidence is advanced to show an evolutionary fitness for social and pro-social behaviors above and beyond those flowing through their direct consequences for subjective well-being. This is followed by discussion of specific measures of the social context, of the fundamental importance of trust as social glue, and of several experiments designed to improve subjective well-being.
Handle: RePEc:nbr:nberwo:18486
Template-Type: ReDIF-Paper 1.0
Title: School Segregation, Educational Attainment and Crime: Evidence from the end of busing in Charlotte-Mecklenburg
Classification-JEL: I20; I21; I24
Author-Name: Stephen B. Billings
Author-Name: David J. Deming
Author-Person: pde497
Author-Name: Jonah E. Rockoff
Note: CH DAE ED
Number: 18487
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18487
File-URL: http://www.nber.org/papers/w18487.pdf
File-Format: application/pdf
Publication-Status: published as School Segregation, Educational Attainment, and Crime: Evidence from the End of Busing in Charlotte-Mecklenburg* Stephen B. Billings, David J. Deming and Jonah Rockoff The Quarterly Journal of Economics (2014) 129 (1): 435-476. doi: 10.1093/qje/qjt026 First published online: September 17, 2013
Abstract: We study the impact of the end of race-based busing in Charlotte-Mecklenburg schools ("CMS") on academic achievement, educational attainment, and young adult crime. In 2001, CMS was prohibited from using race in assigning students to schools. School boundaries were redrawn dramatically to reflect the surrounding neighborhoods, and half of its students received a new assignment. Using addresses measured prior to the policy change, we compare students in the same neighborhood that lived on opposite sides of a newly drawn boundary. We find that both white and minority students score lower on high school exams when they are assigned to schools with more minority students. We also find decreases in high school graduation and four-year college attendance for whites, and large increases in crime for minority males. The impacts on achievement and attainment are smaller in younger cohorts, while the impact on crime remains large and persistent for at least nine years after the re-zoning. We show that compensatory resource allocation policies in CMS likely played an important role in mitigating the impact of segregation on achievement and attainment, but had no impact on crime. We conclude that the end of busing widened racial inequality, despite efforts by CMS to mitigate the impact of increases in segregation.
Handle: RePEc:nbr:nberwo:18487
Template-Type: ReDIF-Paper 1.0
Title: Defined Benefit Pension Plan Distribution Decisions by Public Sector Employees
Classification-JEL: H75; J45
Author-Name: Robert L. Clark
Author-Name: Melinda S. Morrill
Author-Person: pmo1044
Author-Name: David Vanderweide
Note: AG LS PE
Number: 18488
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18488
File-URL: http://www.nber.org/papers/w18488.pdf
File-Format: application/pdf
Publication-Status: published as Defined Benefit Pension Plan Distribution Decisions by Public Sector Employees, Robert L. Clark, Melinda Sandler Morrill, David Vanderweide. in Retirement Benefits for State and Local Employees: Designing Pension Plans for the Twenty-First Century, Clark, Rauh, and Duggan. 2014
Publication-Status: published as Robert L. Clark & Melinda Sandler Morrill & David Vanderweide, 2014. "Defined benefit pension plan distribution decisions by public sector employees," Journal of Public Economics, vol 116, pages 73-88.
Abstract: Studies examining pension distribution choices have found that the tendency of private-sector workers is to select lump sum distributions instead of life annuities. In the public sector, defined benefit pensions usually offer lump sum distributions equal to employee contributions, not the present value of the annuity. Using administrative data from the North Carolina state and local government retirement systems, we find that over two-thirds of public sector workers under age 50 separating prior to retirement from public plans in North Carolina left their accounts open and did not request a cash distribution from the pension system within one year of separation. Furthermore, the evidence suggests many separating workers, particularly those with short tenure, may be forgoing important benefits due to lack of knowledge, understanding, or accessibility of benefits. In contrast to prior research in the private sector, we find no evidence of a bias toward cash distributions for public employees in North Carolina.
Handle: RePEc:nbr:nberwo:18488
Template-Type: ReDIF-Paper 1.0
Title: The Revenue Demands of Public Employee Pension Promises
Classification-JEL: E62; H31; H55; H62; H70; H74
Author-Name: Robert Novy-Marx
Author-Name: Joshua D. Rauh
Note: AG PE
Number: 18489
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18489
File-URL: http://www.nber.org/papers/w18489.pdf
File-Format: application/pdf
Publication-Status: published as Novy-Marx, Robert, and Joshua Rauh. 2014. "The Revenue Demands of Public Employee Pension Promises." American Economic Journal: Economic Policy, 6(1): 193-229. DOI: 10.1257/pol.6.1.193
Abstract: We calculate increases in contributions required to achieve full funding of state and local pension systems in the U.S. over 30 years. Without policy changes, contributions would have to increase by 2.5 times, reaching 14.1% of the total own-revenue generated by state and local governments. This represents a tax increase of $1,385 per household per year, around half of which goes to pay down legacy liabilities while half funds the cost of new promises. We examine sensitivity to asset return assumptions, wage correlations, the treatment of workers not currently in Social Security, and endogenous geographical shifts in the tax base.
Handle: RePEc:nbr:nberwo:18489
Template-Type: ReDIF-Paper 1.0
Title: The African Growth Miracle
Classification-JEL: O47
Author-Name: Alwyn Young
Note: EFG
Number: 18490
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18490
File-URL: http://www.nber.org/papers/w18490.pdf
File-Format: application/pdf
Publication-Status: published as Alwyn Young, 2012. "The African Growth Miracle," Journal of Political Economy, vol 120(4), pages 696-739.
Abstract: Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing about 3.4 to 3.7 percent per annum, i.e. three and a half to four times the rate indicated in international data sets.
Handle: RePEc:nbr:nberwo:18490
Template-Type: ReDIF-Paper 1.0
Title: Linking Benefits to Investment Performance in US Public Pension Systems
Classification-JEL: G11; G18; H31; H55; H70; H74
Author-Name: Robert Novy-Marx
Author-Name: Joshua D. Rauh
Note: AG AP PE
Number: 18491
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18491
File-URL: http://www.nber.org/papers/w18491.pdf
File-Format: application/pdf
Publication-Status: published as Linking Benefits to Investment Performance in US Public Pension Systems, Robert Novy-Marx, Joshua D. Rauh. in Retirement Benefits for State and Local Employees: Designing Pension Plans for the Twenty-First Century, Clark, Rauh, and Duggan. 2014
Publication-Status: published as Robert Novy-Marx & Joshua D. Rauh, 2014. "Linking benefits to investment performance in US public pension systems," Journal of Public Economics, vol 116, pages 47-61.
Abstract: This paper calculates the effect that introducing risk-sharing during either retirement or the working life would have on public sector pension liabilities. We begin by considering the introduction of a variable annuity for the retirement phase, modeled on the Wisconsin Retirement System, in which positive benefit adjustments are granted only if asset returns surpass 5% but benefits cannot fall below their initial levels. This change would reduce unfunded accrued liabilities by around 25%, and would lower the annual contribution increases required to target full funding in 30 years by 11%. If there is no minimum benefit guarantee, the impact of introducing variable annuities is substantially larger: the unfunded liability would fall by over half and required annual contribution increases would fall by 44%. Alternative measures that have similar effects on costs include increasing employee contributions by 10.3% of pay while keeping benefits unchanged; or giving employees a collective DC plan with an employer contribution of 10% of pay for future service. We discuss these results in the context of models of lifecycle portfolio choice, which suggest that employees should generally prefer to take risk earlier in their lives rather than later.
Handle: RePEc:nbr:nberwo:18491
Template-Type: ReDIF-Paper 1.0
Title: The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation
Classification-JEL: D03; D11; L97; Q41
Author-Name: Hunt Allcott
Author-Person: pal171
Author-Name: Todd Rogers
Note: EEE
Number: 18492
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18492
File-URL: http://www.nber.org/papers/w18492.pdf
File-Format: application/pdf
Publication-Status: published as Allcott, Hunt, and Todd Rogers. 2014. "The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation." American Economic Review, 104(10): 3003-37. DOI: 10.1257/aer.104.10.3003
Abstract: We document three remarkable features of the Opower program, in which social comparison- based home energy reports are repeatedly mailed to more than six million households nationwide. First, initial reports cause high-frequency "action and backsliding," but these cycles attenuate over time. Second, if reports are discontinued after two years, effects are relatively persistent, decaying at 10-20 percent per year. Third, consumers are slow to habituate: they continue to respond to repeated treatment even after two years. We show that the previous conservative assumptions about post-intervention persistence had dramatically understated cost effectiveness and illustrate how empirical estimates can optimize program design.
Handle: RePEc:nbr:nberwo:18492
Template-Type: ReDIF-Paper 1.0
Title: Early and Late Human Capital Investments, Borrowing Constraints, and the Family
Classification-JEL: D14; E24; H52; I22; I24; J24
Author-Name: Elizabeth M. Caucutt
Author-Person: pca73
Author-Name: Lance Lochner
Author-Person: plo31
Note: CH ED EFG LS PE
Number: 18493
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18493
File-URL: http://www.nber.org/papers/w18493.pdf
File-Format: application/pdf
Publication-Status: published as Elizabeth M. Caucutt & Lance Lochner, 2020. "Early and Late Human Capital Investments, Borrowing Constraints, and the Family," Journal of Political Economy, vol 128(3), pages 1065-1147.
Abstract: This paper investigates the importance of family borrowing constraints in determining human capital investments in children at early and late ages. We begin by providing new evidence from the Children of the NLSY (CNLSY) which suggests that borrowing constraints bind for at least some families with young children. Next, we develop an intergenerational model of lifecycle human capital accumulation to study the role of early versus late investments in children when credit markets are imperfect. We analytically establish the importance of dynamic complementarity in investment for the qualitative nature of investment responses to income and policy changes. We extend the framework to incorporate dynasties and use data from the CNLSY to calibrate the model. Our benchmark steady state suggests that roughly half of young parents and 12% of old parents are borrowing constrained, while older children are unconstrained. We also identify strong complementarity between early and late investments, suggesting that policies targeted to one stage of development tend to have similar effects on investment in both stages. We use this calibrated model to study the effects of education subsidies, loans and transfers offered at different ages on early and late human capital investments and subsequent earnings in the short-run and long-run. A key lesson is that the interaction between dynamic complementarity and early borrowing constraints means that early interventions tend to be more successful than later interventions at improving human capital outcomes.
Handle: RePEc:nbr:nberwo:18493
Template-Type: ReDIF-Paper 1.0
Title: Words in Patents: Research Inputs and the Value of Innovativeness in Invention
Classification-JEL: I1; O31; O32; O33
Author-Name: Mikko Packalen
Author-Person: ppa648
Author-Name: Jay Bhattacharya
Note: EH PR
Number: 18494
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18494
File-URL: http://www.nber.org/papers/w18494.pdf
File-Format: application/pdf
Abstract: Intelligently allocating research effort and funds requires deciding whether to build on recent advances or on more established knowledge. When recent advances create superior opportunities for invention, their adoption as research inputs in the invention process promotes technological progress. The gains from pursuing such innovative research paths may, however, be very limited, due to the undeveloped nature of new knowledge, quick obsolescence of fast-improving knowledge, and the vast scope of the existing knowledge base. In this paper, we first develop a new approach to identifying research inputs in invention. Next, we estimate the value of pursuing innovative research paths that are created by the arrival of new research inputs. We identify research inputs based on a natural language analysis of 10 billion word and word sequence patent pairs in 6 million patents granted during 1920-2010. This novel textual analysis empirically reveals which single and general purpose technologies and scientific discoveries have been popular as research inputs in invention. We estimate the value of innovative research by comparing patents that mention these research inputs early against the value of other patents. For this comparison, we develop also a new measure of patent value. The measure distinguishes between citations that reflect the cumulative nature of invention and citations that may merely reflect similarity.
Handle: RePEc:nbr:nberwo:18494
Template-Type: ReDIF-Paper 1.0
Title: A Theory of the Firm based on Partner Displacement
Classification-JEL: D23; D82; D86; L22; M20
Author-Name: Thomas F. Hellmann
Author-Person: phe157
Author-Name: Veikko Thiele
Author-Person: pth48
Note: IO PR
Number: 18495
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18495
File-URL: http://www.nber.org/papers/w18495.pdf
File-Format: application/pdf
Abstract: We develop a new theory of the firm where asset owners sometimes want to change partners ex-post. The model identifies a fundamental trade-off between (i) a "displacement externality" under non-integration, where a partner leaves a relationship even though the benefit is worth less than the loss to the displaced partner, and (ii), a "retention externality" under integration, where a partner inefficiently retains the other. Renegotiation cannot eliminate these inefficiencies when agents are wealth constrained. When there is more asset specificity, displacement externalities matter more and retention externality less, so that integration becomes more attractive. Our model also predicts that integration always provides stronger incentives for specific investments, and that wealthy owners actually want to commit to ex-post wealth constraints. Our analysis differs from the received theories of the firm because of our emphasis on dynamic partner changes.
Handle: RePEc:nbr:nberwo:18495
Template-Type: ReDIF-Paper 1.0
Title: Rare Disasters, Tail-Hedged Investments, and Risk-Adjusted Discount Rates
Classification-JEL: E43; G11; G12; Q54
Author-Name: Martin L. Weitzman
Note: EEE
Number: 18496
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18496
File-URL: http://www.nber.org/papers/w18496.pdf
File-Format: application/pdf
Abstract: What is the best way to incorporate a risk premium into the discount rate schedule for a real investment project with uncertain payoffs? The standard CAPM formula suggests a beta-weighted average of the return on a safe investment and the mean return on an economy-wide representative risky investment. Suppose, though, that the project constitutes a tail-hedged investment, meaning that it is expected to yield positive payoffs in catastrophic states of nature. Then the model of this paper suggests that what should be combined in a weighted average are not the two discount rates, but rather the corresponding two discount factors. This implies an effective discount rate schedule that declines over time from the standard CAPM formula down to the riskfree rate alone. Some simple numerical examples are given. Implications are noted for discounting long-term public investments and calculating the social cost of carbon in climate change.
Handle: RePEc:nbr:nberwo:18496
Template-Type: ReDIF-Paper 1.0
Title: Tax Multipliers: Pitfalls in Measurement and Identification
Classification-JEL: E32; E62; F3; H20
Author-Name: Daniel Riera-Crichton
Author-Person: pri120
Author-Name: Carlos A. Vegh
Author-Person: pve34
Author-Name: Guillermo Vuletin
Author-Person: pvu7
Note: IFM
Number: 18497
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18497
File-URL: http://www.nber.org/papers/w18497.pdf
File-Format: application/pdf
Publication-Status: published as Daniel Riera-Crichton & Carlos A. Vegh & Guillermo Vuletin, 2016. "Tax multipliers: Pitfalls in measurement and identification," Journal of Monetary Economics, vol 79, pages 30-48.
Abstract: We contribute to the literature on tax multipliers by analyzing the pitfalls in identification and measurement of tax shocks. Our main focus is on disentangling the discussion regarding the identification of exogenous tax policy shocks (i.e., changes in tax policy that are not the result of policymakers responding to output fluctuations) from the discussion related to the measurement of tax policy (i.e., finding a tax policy variable under the direct control of the policymaker). For this purpose, we build a novel value-added tax rate dataset and the corresponding cyclically- adjusted revenue measure at a quarterly frequency for 14 industrial countries for the period 1980-2009. On the identification front, our findings favor the use of narratives à la Romer and Romer (2010) to identify exogenous fiscal shocks as opposed to the identification via SVAR. On the (much less explored) measurement front, our results strongly support the use of tax rates as a true measure of the tax policy instrument as opposed to widely-used, revenue-based measures, such as cyclically-adjusted revenues. While tax multipliers tend to be very small (in absolute value) or even positive when using cyclically-adjusted revenues, they are significantly negative (i.e., tax policy is contractionary) when using tax rates.
Handle: RePEc:nbr:nberwo:18497
Template-Type: ReDIF-Paper 1.0
Title: Value-Added Exchange Rates
Classification-JEL: F1; F3; F4
Author-Name: Rudolfs Bems
Author-Person: pbe208
Author-Name: Robert C. Johnson
Author-Person: pjo146
Note: IFM ITI
Number: 18498
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18498
File-URL: http://www.nber.org/papers/w18498.pdf
File-Format: application/pdf
Abstract: This paper updates the conceptual foundations for measuring real effective exchange rates (REERs) to allow for vertical specialization in trade. We derive a value-added REER describing how demand for the value added that a country produces changes as the price of its value added changes relative to competitors. We then compute this index for 42 countries from 1970-2009 using trade measured in value added terms and GDP deflators. There are substantial differences between value-added and conventional REERs. For example, China's value-added REER appreciated by 20 percentage points more than the conventional REER from 2000-2009. These differences are driven mainly by the theory-motivated shift in prices used to construct the value-added REER, not changes in bilateral weights.
Handle: RePEc:nbr:nberwo:18498
Template-Type: ReDIF-Paper 1.0
Title: Retractions
Classification-JEL: O33
Author-Name: Pierre Azoulay
Author-Name: Jeffrey L. Furman
Author-Name: Joshua L. Krieger
Author-Name: Fiona E. Murray
Note: PR
Number: 18499
Creation-Date: 2012-10
Order-URL: http://www.nber.org/papers/w18499
File-URL: http://www.nber.org/papers/w18499.pdf
File-Format: application/pdf
Publication-Status: published as Pierre Azoulay & Jeffrey L. Furman & Krieger & Fiona Murray, 2015. "Retractions," Review of Economics and Statistics, vol 97(5), pages 1118-1136.
Abstract: To what extent does "false science" impact the rate and direction of scientific change? We examine the impact of more than 1,100 scientific retractions on the citation trajectories of articles that are related to retracted papers in intellectual space but were published prior to the retraction event. Our results indicate that following retraction and relative to carefully selected controls, related articles experience a lasting five to ten percent decline in the rate of citations received. This citation penalty is more severe when the associated retracted article involves fraud or misconduct, relative to cases where the retraction occurs because of honest mistakes. In addition, we find that the arrival rate of new articles and funding flows into these fields decrease after a retraction. We probe the mechanisms that might underlie these negative spillovers. The evidence is consistent with the view that scientists avoid retraction-afflicted fields lest their own reputation suffer through mere association, but we cannot rule out the possibility that our estimates also reflect scientists' learning about these fields' shaky intellectual foundations.
Handle: RePEc:nbr:nberwo:18499
Template-Type: ReDIF-Paper 1.0
Title: Did the New Deal Solidify the 1932 Democratic Realignment?
Classification-JEL: H5; N42
Author-Name: Shawn Kantor
Author-Person: pka54
Author-Name: Price V. Fishback
Author-Person: pfi13
Author-Name: John Joseph Wallis
Note: DAE POL
Number: 18500
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18500
File-URL: http://www.nber.org/papers/w18500.pdf
File-Format: application/pdf
Publication-Status: published as Kantor, Shawn & Fishback, Price V. & Wallis, John Joseph, 2013. "Did the New Deal solidify the 1932 Democratic realignment?," Explorations in Economic History, Elsevier, vol. 50(4), pages 620-633.
Publication-Status: published as Did the New Deal Solidify the 1932 Democratic Realignment?, Shawn Kantor, Price V. Fishback, John J. Wallis. in The Microeconomics of New Deal Policy, Fishback. 2013
Abstract: The critical election of 1932 represented a turning point in the future electoral successes of the Democrats and Republicans for over three decades. This paper seeks to measure the importance of the New Deal in facilitating the Democrats' control of the federal government well into the 1960s. We test whether long-differences in the county-level electoral support for Democratic presidential candidates after the 1930s can be attributed to New Deal interventions into local economies. We also investigate more narrowly whether voters rewarded Roosevelt from 1932 to 1936 and from 1936 to 1940 for his efforts to stimulate depressed local economies. Our instrumental variables estimates indicate that increasing a county's per capita New Deal relief and public works spending from nothing to the sample mean ($277) would have increased the long-run support for the Democratic party by 10 percentage points. We further find that the long-run shift toward the Democratic party after 1928 was not a function of the Roosevelt landslide victory in 1932. Roosevelt's ability to win over voters during the 1936 and 1940 elections, however, did matter for the long-term.
Handle: RePEc:nbr:nberwo:18500
Template-Type: ReDIF-Paper 1.0
Title: Merging Simulation and Projection Approaches to Solve High-Dimensional Problems
Classification-JEL: C61; C63
Author-Name: Kenneth L. Judd
Author-Person: pju19
Author-Name: Lilia Maliar
Author-Name: Serguei Maliar
Note: EFG PE TWP
Number: 18501
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18501
File-URL: http://www.nber.org/papers/w18501.pdf
File-Format: application/pdf
Publication-Status: published as Merging simulation and projection approaches to solve high-dimensional problems with an application to a new Keynesian model Lilia Maliar1 andSerguei Maliar2,† Article first published online: 27 MAR 2015 DOI: 10.3982/QE364 Quantitative Economics Volume 6, Issue 1, pages 1–47, March 2015
Abstract: We introduce an algorithm for solving dynamic economic models that merges stochastic simulation and projection approaches: we use simulation to approximate the ergodic measure of the solution, we construct a fixed grid covering the support of the constructed ergodic measure, and we use projection techniques to accurately solve the model on that grid. The grid construction is the key novel piece of our analysis: we select an ε-distinguishable subset of simulated points that covers the support of the ergodic measure roughly uniformly. The proposed algorithm is tractable in problems with high dimensionality (hundreds of state variables) on a desktop computer. As an illustration, we solve one- and multicountry neoclassical growth models and a large-scale new Keynesian model with a zero lower bound on nominal interest rates.
Handle: RePEc:nbr:nberwo:18501
Template-Type: ReDIF-Paper 1.0
Title: Retirement Pay and Officer Retention
Classification-JEL: H3; H55
Author-Name: Jeffrey S. Smith
Author-Name: James E. West
Author-Person: pwe191
Note: LS
Number: 18502
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18502
File-URL: http://www.nber.org/papers/w18502.pdf
File-Format: application/pdf
Abstract: We use data from a natural experiment in which retirement benefits were reduced by congressional legislation and later restored to estimate the effect of future retirement benefit eligibility upon the decision of whether to remain in the U.S. military. We find that the generosity of retirement benefits is significantly correlated with the decision to remain in service until members qualify for benefits. The estimated effect of a 20 percent reduction in the generosity of retirement benefits upon the probability of remaining on active duty is equivalent to the effect of a 0.27 percentage point reduction in the unemployment rate, or approximately a 2 percent increase in the GDP growth rate.
Handle: RePEc:nbr:nberwo:18502
Template-Type: ReDIF-Paper 1.0
Title: Trade Policy and Wage Inequality: A Structural Analysis with Occupational and Sectoral Mobility
Classification-JEL: E24; F13; F16
Author-Name: Erhan Artuç
Author-Person: par221
Author-Name: John McLaren
Author-Person: pmc174
Note: ITI
Number: 18503
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18503
File-URL: http://www.nber.org/papers/w18503.pdf
File-Format: application/pdf
Publication-Status: published as Journal of International Economics Available online 23 June 2015 In Press, Accepted Manuscript — Note to users Cover image Trade Policy and Wage Inequality: A Structural Analysis with Occupational and Sectoral Mobility ☆ ☆☆ Erhan Artuça, , John McLarenb,
Abstract: A number of authors have argued that a worker's occupation of employment is at least as important as the worker's industry of employment in determining whether the worker will be hurt or helped by international trade. We investigate the role of occupational mobility on the effects of trade shocks on wage inequality in a dynamic, structural econometric model of worker adjustment. Each worker in our specification can switch either industry, occupation, or both, paying a time-varying cost to do so in a rational-expectations optimizing environment. We find that the costs of switching industry and occupation are both high, and of similar magnitude, but in simulations we find that a worker's industry of employment is much more important than either the worker's occupation or skill class in determining whether or not she is harmed by a trade shock.
Handle: RePEc:nbr:nberwo:18503
Template-Type: ReDIF-Paper 1.0
Title: Carbon Markets: Past, Present, and Future
Classification-JEL: Q48; Q54; Q58
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: William A. Pizer
Author-Person: ppi108
Author-Name: Daniel Raimi
Author-Person: pra970
Note: EEE
Number: 18504
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18504
File-URL: http://www.nber.org/papers/w18504.pdf
File-Format: application/pdf
Publication-Status: published as Richard G. Newell & William A. Pizer & Daniel Raimi, 2014. "Carbon Markets: Past, Present, and Future," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 191-215, October.
Abstract: Carbon markets are substantial and they are expanding. There are many lessons from experiences over the past eight years: fewer free allowances, better management of market-sensitive information, and a recognition that trading systems require adjustments that have consequences for market participants and market confidence. Moreover, the emerging international architecture features separate emissions trading systems serving distinct jurisdictions. These programs are complemented by a variety of other types of policies alongside the carbon markets. This sits in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol and raises a suite of new questions. In this new architecture, jurisdictions with emissions trading have to decide how, whether, and when to link with one another, and policymakers overseeing carbon markets must confront how to measure the comparability of efforts among markets and relative to a variety of other policy approaches.
Handle: RePEc:nbr:nberwo:18504
Template-Type: ReDIF-Paper 1.0
Title: Challenges in Identifying and Measuring Systemic Risk
Classification-JEL: E44
Author-Name: Lars Peter Hansen
Author-Person: pha303
Note: CF
Number: 18505
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18505
File-URL: http://www.nber.org/papers/w18505.pdf
File-Format: application/pdf
Publication-Status: published as Challenges in Identifying and Measuring Systemic Risk, Lars Peter Hansen. in Risk Topography: Systemic Risk and Macro Modeling, Brunnermeier and Krishnamurthy. 2014
Abstract: Sparked by the recent "great recession" and the role of financial markets, considerable interest exists among researchers within both the academic community and the public sector in modeling and measuring systemic risk. In this essay I draw on experiences with other measurement agendas to place in perspective the challenge of quantifying systemic risk, or more generally, of providing empirical constructs that can enhance our understanding of linkages between financial markets and the macroeconomy.
Handle: RePEc:nbr:nberwo:18505
Template-Type: ReDIF-Paper 1.0
Title: The Role of Technological Change in Green Growth
Classification-JEL: Q55; Q56
Author-Name: David Popp
Note: EEE PR
Number: 18506
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18506
File-URL: http://www.nber.org/papers/w18506.pdf
File-Format: application/pdf
Abstract: By reducing the costs of environmental protection, technological change is important for promoting green growth. This entails both the creation of new technologies and more widespread deployment of existing green technologies. This paper reviews the literature on environmentally friendly technological change, with a focus on lessons relevant to developing countries. I begin with a discussion of data available for measuring the various steps of technological change. I continue with a discussion of sources of environmental innovation. Given that most innovation is concentrated in a few rich countries, this leads to a discussion of the remaining role for lower-income countries, followed by a discussion of technology transfer. Because of the importance of market failures, I then discuss the role of both technology policy and environmental policy for promoting environmentally friendly technological change. The review concludes with a discussion of what environmental economists can learn from other fields.
Handle: RePEc:nbr:nberwo:18506
Template-Type: ReDIF-Paper 1.0
Title: Understanding the Long-Run Decline in Interstate Migration
Classification-JEL: D83; J11; J24; J61; R12; R23
Author-Name: Greg Kaplan
Author-Person: pka660
Author-Name: Sam Schulhofer-Wohl
Note: EFG LS
Number: 18507
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18507
File-URL: http://www.nber.org/papers/w18507.pdf
File-Format: application/pdf
Publication-Status: published as Greg Kaplan & Sam Schulhofer-Wohl, 2017. "UNDERSTANDING THE LONG-RUN DECLINE IN INTERSTATE MIGRATION," International Economic Review, vol 58(1), pages 57-94.
Abstract: We analyze the secular decline in interstate migration in the United States between 1991 and 2011. Gross flows of people across states are about 10 times larger than net flows, yet have declined by around 50 percent over the past 20 years. We argue that the fall in migration is due to a decline in the geographic specificity of returns to occupations, together with an increase in workers' ability to learn about other locations before moving there, through information technology and inexpensive travel. These explanations find support in micro data on the distribution of earnings and occupations across space and on rates of repeat migration. Other explanations, including compositional changes, regional changes, and the rise in real incomes, do not fit the data. We develop a model to formalize the geographic-specificity and information mechanisms and show that a calibrated version is consistent with cross-sectional and time-series patterns of migration, occupations, and incomes. Our mechanisms can explain at least one-third and possibly all of the decline in gross migration since 1991.
Handle: RePEc:nbr:nberwo:18507
Template-Type: ReDIF-Paper 1.0
Title: Estimates of the Trade and Welfare Effects of NAFTA
Classification-JEL: F10; F11; F13; F14; F17
Author-Name: Lorenzo Caliendo
Author-Person: pca537
Author-Name: Fernando Parro
Author-Person: ppa683
Note: ITI
Number: 18508
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18508
File-URL: http://www.nber.org/papers/w18508.pdf
File-Format: application/pdf
Publication-Status: published as “Estimates of the Trade and Welfare Effects of NAFTA” (with F. Parro) NBER Working Paper No. 18508, 2012 The Review of Economic Studies (2015) 82(1): 1-44
Abstract: We build into a Ricardian model sectoral linkages, trade in intermediate goods, and sectoral heterogeneity in production to quantify the trade and welfare effects from tariff changes. We also propose a new method to estimate sectoral trade elasticities consistent with any trade model that delivers a multiplicative gravity equation. We apply our model and use our estimated elasticities to identify the impact of NAFTA's tariff reductions. We find that Mexico's welfare increases by 1.31%, U.S.'s welfare increases by 0.08%, and Canada's welfare declines by 0.06%. We find that intra-bloc trade increases by 118% for Mexico, 11% for Canada and 41% for the U.S. We show that welfare effects from tariff reductions are reduced when the structure of production does not take into account intermediate goods or input-output linkages. Our results highlight the importance of sectoral heterogeneity, intermediate goods and sectoral linkages for the quantification of the welfare gains from tariffs reductions.
Handle: RePEc:nbr:nberwo:18508
Template-Type: ReDIF-Paper 1.0
Title: Trust and Cheating
Classification-JEL: A1; A12; D01; Z1
Author-Name: Jeffrey V. Butler
Author-Person: pbu213
Author-Name: Paola Giuliano
Author-Person: pgi66
Author-Name: Luigi Guiso
Author-Person: pgu58
Note: POL
Number: 18509
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18509
File-URL: http://www.nber.org/papers/w18509.pdf
File-Format: application/pdf
Publication-Status: published as Jeff Butler & Paola Giuliano & Luigi Guiso, 2016. "Trust and Cheating," The Economic Journal, vol 126(595), pages 1703-1738.
Abstract: When we take a cab we may feel cheated if the driver takes an unnecessarily long route despite the lack of a contract or promise to take the shortest possible path. Is our decision to take the cab affected by our belief that we may end up feeling cheated? Is the behavior of the driver affected by his beliefs about what we consider cheating? We address these questions in the context of a trust game by asking participants directly about their notions of cheating. We find that: i) both parties to a trust exchange have implicit notions of what constitutes cheating even in a context without promises or messages; ii) these notions are not unique - the vast majority of senders would feel cheated by a negative return on their trust/investment, whereas a sizable minority defines cheating according to an equal split rule; iii) these implicit notions affect the behavior of both sides to the exchange in terms of whether to trust or cheat and to what extent. Finally, we show that individual's notions of what constitutes cheating can be traced back to two classes of values instilled by parents: cooperative and competitive. The first class of values tends to soften the notion while the other tightens it.
Handle: RePEc:nbr:nberwo:18509
Template-Type: ReDIF-Paper 1.0
Title: LEADS on Macroeconomic Risks to and from the Household Sector
Classification-JEL: E44; G01; G18
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Note: AP EFG ME
Number: 18510
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18510
File-URL: http://www.nber.org/papers/w18510.pdf
File-Format: application/pdf
Publication-Status: published as LEADS on Macroeconomic Risks to and from the Household Sector, Jonathan A. Parker. in Risk Topography: Systemic Risk and Macro Modeling, Brunnermeier and Krishnamurthy. 2014
Abstract: This chapter describes a system, called the LEADS system, for providing market participants, regulators, and households with information on the reallocation of resources within, from, and to the household sector in response to macroeconomic events. The household sector is both a propagator of shocks to the economy, as wealth is redistributed across households with differing propensities to consume, and an originator of risky claims held in systemically important places, as losses are shifted from households to creditors such as financial institutions. Information about these exposures, like information generally, is conveyed by prices and so is under-produced by markets. The LEADS system - collection, analysis, and distribution of information on household exposures to macroeconomic risk factors - can potentially lead to better macroeconomic performance through better informed public policy and private decision- making
Handle: RePEc:nbr:nberwo:18510
Template-Type: ReDIF-Paper 1.0
Title: Do Women Avoid Salary Negotiations? Evidence from a Large Scale Natural Field Experiment
Classification-JEL: C93; J0
Author-Name: Andreas Leibbrandt
Author-Name: John A. List
Author-Person: pli176
Note: LS
Number: 18511
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18511
File-URL: http://www.nber.org/papers/w18511.pdf
File-Format: application/pdf
Publication-Status: published as Andreas Leibbrandt & John A. List, 2015. "Do Women Avoid Salary Negotiations? Evidence from a Large-Scale Natural Field Experiment," Management Science, vol 61(9), pages 2016-2024.
Abstract: One explanation advanced for the persistent gender pay differences in labor markets is that women avoid salary negotiations. By using a natural field experiment that randomizes nearly 2,500 job-seekers into jobs that vary important details of the labor contract, we are able to observe both the nature of sorting and the extent of salary negotiations. We observe interesting data patterns. For example, we find that when there is no explicit statement that wages are negotiable, men are more likely to negotiate than women. However, when we explicitly mention the possibility that wages are negotiable, this difference disappears, and even tends to reverse. In terms of sorting, we find that men in contrast to women prefer job environments where the 'rules of wage determination' are ambiguous. This leads to the gender gap being much more pronounced in jobs that leave negotiation of wage ambiguous.
Handle: RePEc:nbr:nberwo:18511
Template-Type: ReDIF-Paper 1.0
Title: Ethnic Inequality
Classification-JEL: D63; O10; O40; O43; R12
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Author-Name: Elias Papaioannou
Author-Person: ppa701
Note: DEV EFG POL
Number: 18512
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18512
File-URL: http://www.nber.org/papers/w18512.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Stelios Michalopoulos & Elias Papaioannou, 2016. "Ethnic Inequality," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 000 - 000.
Abstract: This study explores the consequences and origins of between-ethnicity economic inequality both across and within countries. First, combining satellite images of nighttime luminosity with the historical homelands of ethnolinguistic groups we construct measures of ethnic inequality for a large sample of countries and show that the latter is strongly inversely related to comparative development. Second, differences in geographic endowments across ethnic homelands explain a sizable portion of ethnic inequality contributing to its persistence over time. Third, exploiting across-district within-African countries variation using individual-level data on ethnic identification and well-being from the Afrobarometer Surveys we find that between ethnic-group inequality is systematically linked to regional under-development. In this sample we also explore the channels linking ethnic inequality to (under) development, finding that ethnic inequality maps to political inequality, heightened perceptions of discrimination and undersupply of public goods.
Handle: RePEc:nbr:nberwo:18512
Template-Type: ReDIF-Paper 1.0
Title: Information Acquisition in Rumor Based Bank Runs
Classification-JEL: E61; G01; G21
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Asaf Manela
Note: CF ME
Number: 18513
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18513
File-URL: http://www.nber.org/papers/w18513.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Finance, Volume 71, Issue 3 June 2016 Pages 1113–1158
Abstract: We study information acquisition and dynamic withdrawal decisions when a spreading rumor exposes a solvent bank to a run. Uncertainty about the bank's liquidity and potential failure motivates depositors who hear the rumor to acquire additional noisy signals. Depositors with less informative signals may wait before gradually running on the bank, leading to an endogenous aggregate withdrawal speed and bank survival time. Private information acquisition about liquidity can subject solvent-but-illiquid banks to runs, and shorten the survival time of failing banks. Public provision of solvency information can mitigate runs by indirectly crowding-out individual depositors' effort to acquire liquidity information.
Handle: RePEc:nbr:nberwo:18513
Template-Type: ReDIF-Paper 1.0
Title: The Hated Property Tax: Salience, Tax Rates, and Tax Revolts
Classification-JEL: B12; H2; H24; H3; H71; P16
Author-Name: Marika Cabral
Author-Name: Caroline Hoxby
Author-Person: pho46
Note: ED PE POL
Number: 18514
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18514
File-URL: http://www.nber.org/papers/w18514.pdf
File-Format: application/pdf
Abstract: Because of the obtrusive manner in which they are normally paid, property taxes are likely the most salient taxes in the U.S. However, they are much less salient to homeowners with tax escrow. Exploiting geographical variation in tax escrow, we test how salience affects property tax rates and limits. We instrument for tax escrow using bank holding companies' national mortgage servicing assets, focusing on companies that have local branches but do most of their business outside the area. We find that a one standard deviation increase in tax escrow produces about a one standard deviation decrease in property tax rates.
Handle: RePEc:nbr:nberwo:18514
Template-Type: ReDIF-Paper 1.0
Title: Immigration and the Distribution of Incomes
Classification-JEL: D33; J3; J61
Author-Name: Francine D. Blau
Author-Person: pbl16
Author-Name: Lawrence M. Kahn
Author-Person: pka63
Note: LS
Number: 18515
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18515
File-URL: http://www.nber.org/papers/w18515.pdf
File-Format: application/pdf
Publication-Status: published as Francine Blau, Lawrence Kahn. 2015. Immigration and the Distribution of Incomes. in Handbook of the Economics of International Migration. Amsterdam: Elsevier, 2015. Barry R. Chiswick and Paul W. Miller. (793-843)
Abstract: We review research on the impact of immigration on income distribution. We discuss routes through which immigration can affect income distribution in the host and source countries, including compositional effects and effects on native incomes. Immigration may affect the composition of skills among the residents of a country. Moreover, immigrants can, by changing relative factor supplies, affect native wage and employment rates and the return to capital. We then provide evidence on the level and recent increases in immigration to OECD countries and on the distribution of native and immigrant educational attainment. We next provide a decomposition of 1979-2009 changes in US wage inequality, highlighting the effects of immigration on workforce composition. We then consider the economic theory of the impact of immigration on income distribution, emphasizing labor market substitution and complementarity between natives and immigrants. Further, by changing job opportunities or child care availability, immigrants can affect family, as well as individual, income distribution. We review research methodologies used to estimate the impact of immigration on the native income distribution. These include the structural approach (estimating substitution and complementarity among factors of production, including capital and labor force groups) as well as the natural experiment approach (seeking exogenous sources of variation in immigration) to studying the labor market. We then discuss evidence on these questions for Austria, Britain, France, Germany, Hong Kong, Israel, Portugal, Spain and the United States, as well as the impact of emigration on source country income distribution.
Handle: RePEc:nbr:nberwo:18515
Template-Type: ReDIF-Paper 1.0
Title: Wrongful Discharge Laws and Innovation
Classification-JEL: G3; J5; J8; K31
Author-Name: Viral V. Acharya
Author-Person: pac33
Author-Name: Ramin P. Baghai
Author-Name: Krishnamurthy V. Subramanian
Note: CF LE
Number: 18516
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18516
File-URL: http://www.nber.org/papers/w18516.pdf
File-Format: application/pdf
Publication-Status: published as Viral V. Acharya & Ramin P. Baghai & Krishnamurthy V. Subramanian, 2014. "Wrongful Discharge Laws and Innovation," Review of Financial Studies, Society for Financial Studies, vol. 27(1), pages 301-346, January.
Abstract: We show that wrongful discharge laws - laws that protect employees against unjust dismissal - spur innovation and new firm creation. Wrongful discharge laws, particularly those that prohibit employers from acting in bad faith ex post, limit employers' ability to hold up innovating employees after the innovation is successful. By reducing the possibility of hold-up, these laws enhance employees' innovative efforts and encourage firms to invest in risky, but potentially mould-breaking, projects. We develop a model and provide supporting empirical evidence of this effect using the staggered adoption of wrongful discharge laws across the U.S. states.
Handle: RePEc:nbr:nberwo:18516
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Pension Design on Employer Costs and Employee Retirement Choices: Evidence from Oregon
Classification-JEL: D83; H55; J26
Author-Name: John Chalmers
Author-Name: Woodrow T. Johnson
Author-Person: pjo263
Author-Name: Jonathan Reuter
Author-Person: pre328
Note: AG PE
Number: 18517
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18517
File-URL: http://www.nber.org/papers/w18517.pdf
File-Format: application/pdf
Publication-Status: published as Chalmers, John, Woodrow Johnson, and Jonathan Reuter, 2014, “The Effect of Pension Design on Employer Costs and Employee Retirement Choices: Evidence from Oregon,” Journal of Public Economics 116 (August): 17-34.
Publication-Status: published as The Effect of Pension Design on Employer Costs and Employee Retirement Choices: Evidence from Oregon, John Chalmers, Woodrow T. Johnson, Jonathan Reuter. in Retirement Benefits for State and Local Employees: Designing Pension Plans for the Twenty-First Century, Clark, Rauh, and Duggan. 2014
Abstract: Oregon's Public Employees Retirement System (PERS) is a rich setting in which to study the effect of pension design on employer costs and employee retirement-timing decisions. PERS pays retirees the maximum benefit calculated using three formulas that can be characterized as defined benefit (DB), defined contribution (DC), and a combination of DB and DC. From the employer's perspective, we show that this "maximum benefit" calculation is costly. Average ex post retirement benefits are 54% higher than they if had been calculated using only the DB formula. Monte Carlo simulations verify that the higher cost could have been predicted at the start of our sample period. From the employee's perspective, we show that plan design distorts the retirement-timing decision: employees receiving DC benefits are significantly more likely to retire before the normal retirement age than employees receiving DB benefits. Exploiting two sources of exogenous variation in the level of the DC benefit, we show that employees respond to within-year variation in their retirement incentives and, consistent with peer effects, that they respond more strongly to these incentives when more of their coworkers face similar incentives. Finally, consistent with the emerging literature on financial mistakes by households, we show that a small but significant fraction of retirees would benefit from shifting their retirements by as little as one month.
Handle: RePEc:nbr:nberwo:18517
Template-Type: ReDIF-Paper 1.0
Title: Does Mandatory Diversion to Drug Treatment Eliminate Racial Disparities in the Incarceration of Drug Offenders? An Examination of California's Proposition 36
Classification-JEL: I18; K42
Author-Name: Nancy Nicosia
Author-Name: John M. MacDonald
Author-Name: Rosalie Liccardo Pacula
Author-Person: ppa1299
Note: EH LE
Number: 18518
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18518
File-URL: http://www.nber.org/papers/w18518.pdf
File-Format: application/pdf
Publication-Status: published as Nancy Nicosia & John M. MacDonald & Rosalie Liccardo Pacula, 2017. "Does Mandatory Diversion to Drug Treatment Eliminate Racial Disparities in the Incarceration of Drug Offenders? An Examination of California’s Proposition 36," Journal of Quantitative Criminology, vol 33(1), pages 179-205.
Abstract: Like other states, minorities are disproportionately represented in the California's state prison system, particularly for drug offenses. Unlike other states, California has had a policy of mandatory diversion to drug treatment for non-violent drug offenders since mid-2001 (Proposition 36). Using a rich dataset including current and prior criminal charges from 1995 through 2005 in California, we examine whether disparities in court dispositions to prison and drug treatment between White and Blacks male drug offenders are explained by observable case and criminal justice characteristics. We estimate the extent to which remaining observable disparities are affected by Proposition 36. We find that Black and White male drug offenders differ considerably on covariates, but by weighting on the inverse of a nonparametric estimate of the propensity score, we can compare Blacks to Whites that are on average equivalent on covariates. Unadjusted disparities in the likelihood of being sentenced to prison are substantially reduced by propensity score weighting. Proposition 36 reduces the likelihood of prison overall, but not differentially for Blacks. By contrast, racial disparity in diversion to drug treatment is not reduced by propensity score weighting. There is some evidence that Proposition 36 increased diversion for Blacks.
Handle: RePEc:nbr:nberwo:18518
Template-Type: ReDIF-Paper 1.0
Title: Games and Resources
Classification-JEL: C7; H7; Q0
Author-Name: Bård Harstad
Author-Person: pha247
Author-Name: Matti Liski
Author-Person: pli73
Note: EEE PE POL
Number: 18519
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18519
File-URL: http://www.nber.org/papers/w18519.pdf
File-Format: application/pdf
Publication-Status: published as Harstad B., and Liski M. (2013) Games and Resources. In: Shogren, J.F., (ed.) “Encyclopedia of Energy, Natural Resource, and Environmental Economics”, Vol. 2, pp. 299-308 Amsterdam: Elsevier.
Abstract: This article presents a sequence of simple and related models to analyze the strategic use of natural resources. Game theory is the natural tool for such an analysis, whether the resource is private or publicly owned, whether it is renewable or exhaustible, whether the game is static or dynamic, and whether or not the users can strategically invest in technologies. Equilibrium extraction is too large and comes too early for public resources, but the opposite is true for private resources. The effects add up nicely when the resource has both private and public-good aspects.
Handle: RePEc:nbr:nberwo:18519
Template-Type: ReDIF-Paper 1.0
Title: The U.S. Employment-Population Reversal in the 2000s: Facts and Explanations
Classification-JEL: J2; J22
Author-Name: Robert A. Moffitt
Author-Person: pmo48
Note: EFG LS PE
Number: 18520
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18520
File-URL: http://www.nber.org/papers/w18520.pdf
File-Format: application/pdf
Abstract: The decline in the employment-population ratios for men and women over the period 2000-2007 prior to the Great Recession represents an historic turnaround in the evolution of U.S. employment. The decline is disproportionately concentrated among the less educated and younger groups within the male and female populations and, for women, disproportionately concentrated among the unmarried and those without children. About half of men's decline can be explained by declines in wage rates and by changes in nonlabor income and family structure influences, but the decline among women is more difficult to explain and requires distinguishing between married and unmarried women and those with and without children, who have each experienced quite different wage and employment trends. Neither taxes nor transfers appear likely to explain the employment declines, with the possible exception of the Supplemental Nutrition Assistance Program. Other influences such as the minimum wage or health factors do not appear to play a role, but increases in incarceration could have contributed to the decline among men.
Handle: RePEc:nbr:nberwo:18520
Template-Type: ReDIF-Paper 1.0
Title: Optimal Labor Income Taxation
Classification-JEL: H21
Author-Name: Thomas Piketty
Author-Person: ppi17
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: PE
Number: 18521
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18521
File-URL: http://www.nber.org/papers/w18521.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of Public Economics Volume 5, 2013, Pages 391–474 handbook of public economics, vol. 5 Cover image Chapter 7 – Optimal Labor Income Taxation Thomas Piketty*, , Emmanuel Saez†, ‡,
Abstract: This paper reviews recent developments in the theory of optimal labor income taxation. We emphasize connections between theory and empirical work that were initially lacking from optimal income tax theory. First, we provide historical and international background on labor income taxation and means-tested transfers. Second, we present the simple model of optimal linear taxation. Third, we consider optimal nonlinear income taxation with particular emphasis on the optimal top tax rate and the optimal profile of means-tested transfers. Fourth, we consider various extensions of the standard model including tax avoidance and income shifting, international migration, models with rent-seeking, relative income concerns, the treatment of couples and children, and non-cash transfers. Finally, we discuss limitations of the standard utilitarian approach and briefly review alternatives. In all cases, we use the simplest possible models and show how optimal tax formulas can be derived and expressed in terms of sufficient statistics that include social marginal welfare weights capturing society's value for redistribution, behavioral elasticities capturing the efficiency costs of taxation, as well as parameters of the earnings distribution. We also emphasize connections between actual practice and the predictions from theory, and in particular the limitations of both theory and empirical work in settling the political debate on optimal labor income taxation and transfers.
Handle: RePEc:nbr:nberwo:18521
Template-Type: ReDIF-Paper 1.0
Title: Workplace Heterogeneity and the Rise of West German Wage Inequality
Classification-JEL: J01; J3; J4
Author-Name: David Card
Author-Person: pca271
Author-Name: Jörg Heining
Author-Name: Patrick Kline
Note: EFG ITI LS PE PR
Number: 18522
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18522
File-URL: http://www.nber.org/papers/w18522.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 967-1015.
Abstract: We study the role of establishment-specific wage premiums in generating recent increases in West German wage inequality. Models with additive fixed effects for workers and establishments are fit in four distinct time intervals spanning the period 1985-2009. Unlike standard wage models, specifications with both worker and plant-level heterogeneity components can explain the vast majority of the rise in wage inequality. Our estimates suggest that the increasing variability of West German wages results from a combination of rising heterogeneity between workers, rising variability in the wage premiums at different establishments, and increasing assortativeness in the matching of workers to plants. We use the models to decompose changes in wage gaps between different education levels, occupations, and industries, and in all three cases find a growing contribution of plant heterogeneity and rising assortativeness between workers and establishments.
Handle: RePEc:nbr:nberwo:18522
Template-Type: ReDIF-Paper 1.0
Title: Affirmative Action and University Fit: Evidence from Proposition 209
Classification-JEL: I23; I28; J15
Author-Name: Peter Arcidiacono
Author-Name: Esteban Aucejo
Author-Person: pau80
Author-Name: Patrick Coate
Author-Name: V. Joseph Hotz
Author-Person: pho4
Note: ED
Number: 18523
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18523
File-URL: http://www.nber.org/papers/w18523.pdf
File-Format: application/pdf
Publication-Status: published as Affirmative action and university fit: evidence from Proposition 209 Peter Arcidiacono12*, Esteban Aucejo3, Patrick Coate4 and V Joseph Hotz125 * Corresponding author: Peter Arcidiacono peter.arcidiacono@duke.edu Author Affiliations For all author emails, please log on. IZA Journal of Labor Economics 2014, 3:7 doi:10.1186/2193-8997-3-7 Published: 15 September 2014
Abstract: Proposition 209 banned the use of racial preferences in admissions at public colleges in California. We analyze unique data for all applicants and enrollees within the University of California (UC) system before and after Prop 209. After Prop 209, graduation rates increased by 4.4%. We present evidence that certain institutions are better at graduating more-prepared students while other institutions are better at graduating less-prepared students and that these matching effects are particularly important for the bottom tail of the qualification distribution. We find that Prop 209 led to a more efficient sorting of minority students, explaining 18% of the graduation rate increase in our preferred specification. Further, universities appear to have responded to Prop 209 by investing more in their students, explaining between 23-64% of the graduation rate increase.
Handle: RePEc:nbr:nberwo:18523
Template-Type: ReDIF-Paper 1.0
Title: Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing
Classification-JEL: L10; L25; L26; L60; L90; L91; L92; M13; O10; R00; R10; R11; R14
Author-Name: Ejaz Ghani
Author-Person: pgh75
Author-Name: Arti Grover Goswami
Author-Person: pgr182
Author-Name: William R. Kerr
Author-Person: pke127
Note: PE PR
Number: 18524
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18524
File-URL: http://www.nber.org/papers/w18524.pdf
File-Format: application/pdf
Publication-Status: published as Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing† Ejaz Ghani1, Arti Grover Goswami1 andWilliam R. Kerr2,* Article first published online: 20 APR 2015 DOI: 10.1111/ecoj.12207 © 2014 Royal Economic Society Issue Cover image for Vol. 125 Feature Issue The Economic Journal Early View (Online Version of Record published before inclusion in an issue)
Abstract: We investigate the impact of the Golden Quadrilateral (GQ) highway project on the Indian organized manufacturing sector using enterprise data. The GQ project upgraded the quality and width of 5,846 km of roads in India. We use a difference-in-difference estimation strategy to compare non-nodal districts based upon their distance from the highway system. We find several positive effects for non-nodal districts located 0-10 km from GQ that are not present in districts 10-50 km away, most notably higher entry rates and increases in plant productivity. These results are not present for districts located on another major highway system, the North-South East-West corridor (NS-EW). Improvements for portions of the NS-EW system were planned to occur at the same time as GQ but were subsequently delayed. Additional tests show that the GQ project's effect operates in part through a stronger sorting of land-intensive industries from nodal districts to non-nodal districts located on the GQ network. The GQ upgrades further helped spread economic activity to moderate-density districts and intermediate cities.
Handle: RePEc:nbr:nberwo:18524
Template-Type: ReDIF-Paper 1.0
Title: Donating the Voucher: An Alternative Tax Treatment of Private School Enrollment
Classification-JEL: H24; I22
Author-Name: Andrew A. Samwick
Author-Person: psa395
Note: ED PE
Number: 18525
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18525
File-URL: http://www.nber.org/papers/w18525.pdf
File-Format: application/pdf
Publication-Status: published as Andrew A. Samwick, 2013. "Donating the Voucher: An Alternative Tax Treatment of Private School Enrollment," Tax Policy and the Economy, University of Chicago Press, vol. 27(1), pages 125 - 160.
Publication-Status: published as Donating the Voucher: An Alternative Tax Treatment of Private School Enrollment, Andrew A. Samwick. in Tax Policy and the Economy, Volume 27, Brown. 2013
Abstract: Approximately 10 percent of school-age children in the United States are enrolled in private schools, relieving the financial burden on public school systems, and the taxpayers who support them, of the cost of their education. At present, the tax code does not allow families who provide this financial relief an income tax deduction, even though such relief is a gift to governments for exclusively public purposes and thus analogous to a charitable donation. Using the Public Use Microdata Sample of the American Community Survey and the NBER Internet Taxsim calculator, this paper estimates that granting families who enroll their children in private schools an income tax deduction equal to the per-pupil expenditures in their public school district would cost the federal government an average of $7.75 billion per year over the 2006 - 2010 period. This amount is less than one percent of federal income tax revenues. Because private school enrollment, public school expenditures, the likelihood of itemization, and marginal tax rates increase with taxpayer income, the dollar benefits of this change are positively related to income. At the margin, high-income taxpayers would receive about 35 cents in federal and state tax relief for each dollar of per-pupil expenditures foregone.
Handle: RePEc:nbr:nberwo:18525
Template-Type: ReDIF-Paper 1.0
Title: Capital Controls: Gates versus Walls
Classification-JEL: F3; F33; F36
Author-Name: Michael W. Klein
Author-Person: pkl9
Note: IFM
Number: 18526
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18526
File-URL: http://www.nber.org/papers/w18526.pdf
File-Format: application/pdf
Publication-Status: published as Michael W. Klein, 2012. "Capital Controls: Gates versus Walls," Brookings Papers on Economic Activity, vol 2012(1), pages 317-367.
Abstract: This paper examines the pattern of controls on capital inflows, and the association of these controls on financial variables, GDP, and exchange rates. A key point of the paper is the distinction between long-standing controls on a broad range of assets (walls) and episodic controls that are imposed and removed, and tend to be on a narrower set of assets (gates). The paper presents a new data set that differentiates between controls on different categories of assets for a set of 44 advanced and emerging market economies over the 1995 to 2010 period. The imposition of episodic controls is found to not follow the prescriptions of theories that suggest first imposing controls on international asset inflows that are most likely to contribute to financial vulnerability. Estimates show significant differences in the partial correlations of long-standing and episodic controls with the growth of financial variables and with GDP growth, but these differences seem to arise because countries with long-standing controls are poorer than the other countries in the sample. With a few exceptions, there is little evidence of the efficacy of capital controls on the growth of financial variables, the real exchange rate, or GDP growth at an annual frequency. These preliminary results raise doubts about assumptions behind recent calls for a greater use of episodic controls on capital inflows.
Handle: RePEc:nbr:nberwo:18526
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Adjustment and the History of Crises in Open Economies
Classification-JEL: E2; E4; F3; F36; F41
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Ilan Noy
Author-Person: pno49
Note: IFM
Number: 18527
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18527
File-URL: http://www.nber.org/papers/w18527.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Noy, Ilan, 2013. "Macroeconomic adjustment and the history of crises in open economies," Journal of International Money and Finance, Elsevier, vol. 38(C), pages 41-58.
Abstract: This paper investigates the impact of the history of crises on macroeconomic performance. We first study the impact of past banking crises on the probability of a future banking crisis. Applying data for 1980‐2010 for all countries for which the required information is available, controlling for conventional macro variables and the history of banking crises occurring after 1970, we do not detect a learning process from past banking crises. Countries that have already experienced one banking crisis generally have a higher likelihood of experiencing another crisis; and the depth of the present crisis does not appear to be affected by the previous historical experience with crisis events. Evidence also suggests that, in middle-income countries, higher de jure capital account openness is associated with lower likelihood of a banking crisis, a lower ratio of non‐performing loans during the crisis, and higher levels of forgone output in the crisis' aftermath. In contrast, we find that past crisis experience has a significant impact on savings. When facing considerable political risk, the past does seem to matter - countries with more people who were exposed, over their lifetime, to larger disasters will tend to save more. This association, however, does not hold for countries with more stable political systems. We interpret these results as consistent with a differential sectoral adjustment to a crisis hypothesis. The private sector, by virtue of its harder budget constraints, adjusts faster, whereas the government adjusts at a slower pace following a crisis. The financial sector may find itself in between the two. The "too big to fail" doctrine associated with large banks provides them with a softer budget constraint, delaying the day of adjustment; for some, delaying bankruptcy. Occasionally, the separation between banks and the public sector is murky, further delaying necessary adjustments of the financial sector.
Handle: RePEc:nbr:nberwo:18527
Template-Type: ReDIF-Paper 1.0
Title: Dollar Funding and the Lending Behavior of Global Banks
Classification-JEL: F36; F44; F6; G01; G21
Author-Name: Victoria Ivashina
Author-Name: David S. Scharfstein
Author-Person: psc177
Author-Name: Jeremy C. Stein
Author-Person: pst43
Note: CF
Number: 18528
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18528
File-URL: http://www.nber.org/papers/w18528.pdf
File-Format: application/pdf
Publication-Status: published as Dollar Funding and the Lending Behavior of Global Banks Victoria Ivashina, David S. Scharfstein and Jeremy C. Stein The Quarterly Journal of Economics (2015) doi: 10.1093/qje/qjv017 First published online: April 2, 2015
Abstract: A large share of dollar-denominated lending is done by non-U.S. banks, particularly European banks. We present a model in which such banks cut dollar lending more than euro lending in response to a shock to their credit quality. Because these banks rely on wholesale dollar funding, while raising more of their euro funding through insured retail deposits, the shock leads to a greater withdrawal of dollar funding. Banks can borrow in euros and swap into dollars to make up for the dollar shortfall, but this may lead to violations of covered interest parity (CIP) when there is limited capital to take the other side of the swap trade. In this case, synthetic dollar borrowing becomes expensive, which causes cuts in dollar lending. We test the model in the context of the Eurozone sovereign crisis, which escalated in the second half of 2011 and resulted in U.S. money-market funds sharply reducing the funding provided to European banks. Coincident with the contraction in dollar funding, there were significant violations of euro-dollar CIP. Moreover, dollar lending by Eurozone banks fell relative to their euro lending in both the U.S. and Europe; this was not the case for U.S. global banks. Finally, European banks that were more reliant on money funds experienced bigger declines in dollar lending.
Handle: RePEc:nbr:nberwo:18528
Template-Type: ReDIF-Paper 1.0
Title: Health Insurance Reform: The Impact of a Medicare Buy-In
Classification-JEL: E6; H51; I13
Author-Name: Gary D. Hansen
Author-Person: pha52
Author-Name: Minchung Hsu
Author-Person: phs16
Author-Name: Junsang Lee
Author-Person: ple264
Note: EFG EH PE
Number: 18529
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18529
File-URL: http://www.nber.org/papers/w18529.pdf
File-Format: application/pdf
Publication-Status: published as Hansen, Gary D. & Hsu, Minchung & Lee, Junsang, 2014. "Health insurance reform: The impact of a Medicare buy-in," Journal of Economic Dynamics and Control, Elsevier, vol. 45(C), pages 315-329.
Abstract: The steady state general equilibrium and welfare consequences of health insurance reform are evaluated in a calibrated life-cycle economy with incomplete markets and endogenous labor supply. Individuals face uncertainty each period about their future health status, medical expenditures, labor productivity, access to employer provided group health insurance, and the length of their life. In this environment, incomplete markets and adverse selection, which restricts the type of insurance contracts available in equilibrium, creates a potential role for health insurance reform. In particular, we consider a policy reform that would allow older workers (aged 55-64) to purchase insurance similar to Medicare coverage. We find that adverse selection eliminates any market for a Medicare buy-in if it is offered as an unsubsidized option to individual private health insurance. Hence, we compare the equilibrium properties of the current insurance system with those that obtain with an optional buy-in subsidized by the government, as well as with several types of health insurance mandates.
Handle: RePEc:nbr:nberwo:18529
Template-Type: ReDIF-Paper 1.0
Title: Higher Education, Merit-Based Scholarships and Post-Baccalaureate Migration
Classification-JEL: H7; I2; R23
Author-Name: Maria D. Fitzpatrick
Author-Person: pfi211
Author-Name: Damon Jones
Author-Person: pjo350
Note: ED PE
Number: 18530
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18530
File-URL: http://www.nber.org/papers/w18530.pdf
File-Format: application/pdf
Abstract: We present new evidence on the effects of merit aid scholarship programs on residential migration and educational attainment using Census data on 24 to 32 year olds in the U.S. from 1990 to 2010. Eligibility for merit aid programs slightly increases the propensity of state natives to live in-state, while also extending in-state enrollment into the late twenties. These patterns notwithstanding, the magnitude of merit aid effects is of an order of magnitude smaller than the population treated, suggesting that nearly all of the spending on these programs is transferred to individuals who do not alter educational or migration behavior.
Handle: RePEc:nbr:nberwo:18530
Template-Type: ReDIF-Paper 1.0
Title: Systemic Risks in Global Banking: What Available Data can tell us and What More Data are Needed?
Classification-JEL: F21; F34; G15; G18; Y1
Author-Name: Eugenio Cerutti
Author-Person: pce135
Author-Name: Stijn Claessens
Author-Person: pcl16
Author-Name: Patrick McGuire
Author-Person: pmc216
Note: IFM
Number: 18531
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18531
File-URL: http://www.nber.org/papers/w18531.pdf
File-Format: application/pdf
Publication-Status: published as Systemic Risks in Global Banking: What Available Data Can Tell Us and What More Data Are Needed?, Eugenio Cerutti, Stijn Claessens, Patrick McGuire. in Risk Topography: Systemic Risk and Macro Modeling, Brunnermeier and Krishnamurthy. 2014
Publication-Status: published as Eugenio Cerutti & Patrick McGuire & Stijn Claessens, 2011. "Systemic Risks in Global Banking: What Available Data can tell us and What More Data are Needed?," IMF Working Papers, vol 11(222).
Abstract: The recent financial crisis has shown how interconnected the financial world has become. Shocks in one location or asset class can have a sizable impact on the stability of institutions and markets around the world. But systemic risk analysis is severely hampered by the lack of consistent data that capture the international dimensions of finance. While currently available data can be used more effectively, supervisors and other agencies need more and better data to construct even rudimentary measures of risks in the international financial system. Similarly, market participants need better information on aggregate positions and linkages to appropriately monitor and price risks. Ongoing initiatives that will help in closing data gaps include the G20 Data Gaps Initiative, which recommends the collection of consistent bank-level data for joint analyses and enhancements to existing sets of aggregate statistics, and the enhancement to the BIS international banking statistics.
Handle: RePEc:nbr:nberwo:18531
Template-Type: ReDIF-Paper 1.0
Title: Trade, Domestic Frictions, and Scale Effects
Classification-JEL: F0; F43; O1; O40
Author-Name: Natalia Ramondo
Author-Person: pra566
Author-Name: Andrés Rodríguez-Clare
Author-Person: pro372
Author-Name: Milagro Saborío-Rodríguez
Note: EFG ITI
Number: 18532
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18532
File-URL: http://www.nber.org/papers/w18532.pdf
File-Format: application/pdf
Publication-Status: published as Natalia Ramondo & Andrés Rodríguez-Clare & Milagro Saborío-Rodríguez, 2016. "Trade, Domestic Frictions, and Scale Effects," American Economic Review, vol 106(10), pages 3159-3184.
Abstract: Because of scale effects, idea-based growth models have the counterfactual implication that larger countries should be much richer than smaller ones. New trade models share this same problematic feature: although small countries gain more from trade than large ones, this is not strong enough to offset the underlying scale effects. In fact, new trade models exhibit other counterfactual implications associated with scale effects – in particular, domestic trade shares and relative income levels increase too steeply with country size. We argue that these implications are largely a result of the standard assumption that countries are fully integrated domestically, as if they were a single dot in space. We depart from this assumption by treating countries as collections of regions that face positive costs to trade amongst themselves. The resulting model is largely consistent with the data. For example, for a small and rich country like Denmark, our calibrated model implies a real per-capita income of 81 percent the United States’s, much closer to the data (94 percent) than the trade model with no domestic frictions (40 percent).
Handle: RePEc:nbr:nberwo:18532
Template-Type: ReDIF-Paper 1.0
Title: Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing
Classification-JEL: L11; L51; L94; L98; Q41; Q48; Q58
Author-Name: Koichiro Ito
Author-Person: pit23
Note: EEE
Number: 18533
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18533
File-URL: http://www.nber.org/papers/w18533.pdf
File-Format: application/pdf
Publication-Status: published as Koichiro Ito, 2014. "Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing," American Economic Review, American Economic Association, vol. 104(2), pages 537-63, February.
Abstract: Nonlinear pricing and taxation complicate economic decisions by creating multiple marginal prices for the same good. This paper provides a framework to uncover consumers' perceived price of nonlinear price schedules. I exploit price variation at spatial discontinuities in electricity service areas, where households in the same city experience substantially different nonlinear pricing. Using household-level panel data from administrative records, I find strong evidence that consumers respond to average price rather than marginal or expected marginal price. This sub-optimizing behavior makes nonlinear pricing unsuccessful in achieving its policy goal of energy conservation and critically changes the welfare implications of nonlinear pricing.
Handle: RePEc:nbr:nberwo:18533
Template-Type: ReDIF-Paper 1.0
Title: The Spatial Diffusion of Technology
Classification-JEL: O3; R0
Author-Name: Diego A. Comin
Author-Person: pco55
Author-Name: Mikhail Dmitriev
Author-Person: pdm9
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: DAE DEV EFG ITI PR
Number: 18534
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18534
File-URL: http://www.nber.org/papers/w18534.pdf
File-Format: application/pdf
Abstract: We study empirically technology diffusion across countries and over time. We find significant evidence that technology diffuses slower to locations that are farther away from adoption leaders. This effect is stronger across rich countries and also when measuring distance along the south-north dimension. A simple theory of human interactions can account for these empirical findings. The theory suggests that the effect of distance should vanish over time, a hypothesis that we confirm in the data, and that distinguishes technology from other flows like goods or investments. We then structurally estimate the model. The parameter governing the frequency of interactions is larger for newer and network-based technologies and for the median technology the frequency of interactions decays by 73% every 1000 Kms. Overall, we document the significant role that geography plays in determining technology diffusion across countries.
Handle: RePEc:nbr:nberwo:18534
Template-Type: ReDIF-Paper 1.0
Title: Long Run Impacts of Childhood Access to the Safety Net
Classification-JEL: H53; I14
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Author-Name: Douglas Almond
Author-Person: pal938
Note: CH DAE ED EH LS PE
Number: 18535
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18535
File-URL: http://www.nber.org/papers/w18535.pdf
File-Format: application/pdf
Publication-Status: published as Hilary Hoynes & Diane Whitmore Schanzenbach & Douglas Almond, 2016. "Long-Run Impacts of Childhood Access to the Safety Net," American Economic Review, vol 106(4), pages 903-934.
Abstract: A growing economics literature establishes a causal link between in utero shocks and health and human capital in adulthood. Most studies rely on extreme negative shocks such as famine and pandemics. We are the first to examine the impact of a positive and policy-driven change in economic resources available in utero and during childhood. In particular, we focus on the introduction of a key element of the U.S. safety net, the Food Stamp Program, which was rolled out across counties in the U.S. between 1961 and 1975. We use the Panel Study of Income Dynamics to assemble unique data linking family background and county of residence in early childhood to adult health and economic outcomes. The identification comes from variation across counties and over birth cohorts in exposure to the food stamp program. Our findings indicate that the food stamp program has effects decades after initial exposure. Specifically, access to food stamps in childhood leads to a significant reduction in the incidence of "metabolic syndrome" (obesity, high blood pressure, and diabetes) and, for women, an increase in economic self-sufficiency. Overall, our results suggest substantial internal and external benefits of the safety net that have not previously been quantified.
Handle: RePEc:nbr:nberwo:18535
Template-Type: ReDIF-Paper 1.0
Title: Monetary Rules for Commodity Traders
Classification-JEL: E52; F41
Author-Name: Luis Catão
Author-Person: pca144
Author-Name: Roberto Chang
Author-Person: pch80
Note: IFM
Number: 18536
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18536
File-URL: http://www.nber.org/papers/w18536.pdf
File-Format: application/pdf
Publication-Status: published as Luis Cat�o & Roberto Chang, 2013. "Monetary Rules for Commodity Traders," IMF Economic Review, Palgrave Macmillan, vol. 61(1), pages 52-91, April.
Abstract: We develop a dynamic model of a small open economy that trades commodities whose world prices are subject to realistic random fluctuations, and study the implications of monetary policy alternatives. The model is much more flexible than those of previous studies, especially in allowing to compare perfect risk sharing against financial autarky. In each case we show how to derive analytically optimal Ramsey allocations and flexible price allocations, and hence to examine the crucial role of behavioral elasticities, production structure, and capital mobility in determining the welfare properties of different monetary choices. Applying these insights to a calibrated example, we find that the impulse responses associated with PPI targeting track flexible price allocations closely, but can diverge greatly from the Ramsey allocations, especially when risk sharing is perfect and the elasticity of demand for exports of a home aggregate is high. In those cases, policies that stabilize the real exchange rate more than PPI targeting, such as targeting expected inflation, deliver higher welfare. But PPI targeting is the clear winner under portfolio autarky.
Handle: RePEc:nbr:nberwo:18536
Template-Type: ReDIF-Paper 1.0
Title: Vulnerable Banks
Classification-JEL: G01; G21; G38
Author-Name: Robin Greenwood
Author-Name: Augustin Landier
Author-Person: pla423
Author-Name: David Thesmar
Author-Person: pth258
Note: CF
Number: 18537
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18537
File-URL: http://www.nber.org/papers/w18537.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics Volume 115, Issue 3, March 2015, Pages 471–485 Cover image Vulnerable banks ☆ Robin Greenwooda, b, Augustin Landierc, , David Thesmard, e
Abstract: When a bank experiences a negative shock to its equity, one way to return to target leverage is to sell assets. If asset sales occur at depressed prices, then one bank's sales may impact other banks with common exposures, resulting in contagion. We propose a simple framework that accounts for how this effect adds up across the banking sector. Our framework explains how the distribution of bank leverage and risk exposures contributes to a form of systemic risk. We compute bank exposures to system-wide deleveraging, as well as the spillover of a single bank's deleveraging onto other banks. We show how our model can be used to evaluate a variety of crisis interventions, such as mergers of good and bad banks and equity injections. We apply the framework to European banks vulnerable to sovereign risk in 2010 and 2011.
Handle: RePEc:nbr:nberwo:18537
Template-Type: ReDIF-Paper 1.0
Title: The Impacts of Microcredit: Evidence from Bosnia and Herzegovina
Classification-JEL: D1; D12; D14; G21; H52; H53; J22; J24; O16
Author-Name: Britta Augsburg
Author-Person: pau77
Author-Name: Ralph De Haas
Author-Name: Heike Harmgart
Author-Person: pha329
Author-Name: Costas Meghir
Author-Person: pme144
Note: DEV ED LS
Number: 18538
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18538
File-URL: http://www.nber.org/papers/w18538.pdf
File-Format: application/pdf
Publication-Status: published as Britta Augsburg & Ralph De Haas & Heike Harmgart & Costas Meghir, 2015. "The Impacts of Microcredit: Evidence from Bosnia and Herzegovina," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 183-203, January.
Abstract: We use an RCT to analyze the impacts of microcredit. The study population consists of loan applicants who were marginally rejected by an MFI in Bosnia. A random subset of these were offered a loan. We provide evidence of higher self-employment, increases in inventory, a reduction in the incidence of wage work and an increase in the labor supply of 16-19 year olds in the household's business. We also present some evidence of increases in profits and a reduction in consumption and savings. There is no evidence that the program increased overall household income.
Handle: RePEc:nbr:nberwo:18538
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of Government Revenues in Post-Conflict Resource-Rich Africa: Liberia and Sierra Leone
Classification-JEL: O11
Author-Name: Victor A.B. Davies
Author-Person: pda385
Author-Name: Sylvain Dessy
Note: POL
Number: 18539
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18539
File-URL: http://www.nber.org/papers/w18539.pdf
File-Format: application/pdf
Publication-Status: published as The Political Economy of Government Revenues in Postconflict Resource-Rich Africa: Liberia and Sierra Leone, Victor A. B. Davies, Sylvain Dessy. in African Successes, Volume I: Government and Institutions, Edwards, Johnson, and Weil. 2016
Abstract: This paper examines the post-war strategies of Liberia and Sierra Leone to generate revenues from their natural resources. We document the challenges faced by the government of the two countries, contrasting measures taken to address these challenges as well as the outcomes. We complement the analysis with an analytical model which explores the implications of exploiting natural resources in the aftermath of a civil conflict before public management institutions are developed, as observed in Liberia and Sierra Leone. The key lesson is that resource-rich countries emerging from conflict face a difficult trade-off between relatively large longer-term gains which accrue when institutional capacity is developed prior to exploiting the resources, and smaller short-term revenues that come with immediate exploitation of the resources. The findings call attention to the potential role of the international community in developing post-conflict countries' natural resource and revenue institutional capacity, as well as transparent corporate and government institutions for resource management.
Handle: RePEc:nbr:nberwo:18539
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Programming with Hermite Approximation
Classification-JEL: C61; C63
Author-Name: Yongyang Cai
Author-Person: pca961
Author-Name: Kenneth L. Judd
Author-Person: pju19
Note: TWP
Number: 18540
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18540
File-URL: http://www.nber.org/papers/w18540.pdf
File-Format: application/pdf
Publication-Status: published as Mathematical Methods of Operations Research June 2015, Volume 81, Issue 3, pp 245-267 Date: 13 Feb 2015 Dynamic programming with Hermite approximation Yongyang Cai, Kenneth L. Judd
Abstract: Numerical dynamic programming algorithms typically use Lagrange data to approximate value functions over continuous states. Hermite data is easily obtained from solving the Bellman equation and can be used to approximate value functions. We illustrate this method with one-, three-, and six-dimensional examples. We find that value function iteration with Hermite approximation improves accuracy by one to three digits using little extra computing time. Moreover, Hermite approximation is significantly faster than Lagrange for the same accuracy, and this advantage increases with dimension.
Handle: RePEc:nbr:nberwo:18540
Template-Type: ReDIF-Paper 1.0
Title: Free Lunch! Arbitrage Opportunities in the Foreign Exchange Markets
Classification-JEL: F31; G12; G14; G15; G23; G24
Author-Name: Takatoshi Ito
Author-Name: Kenta Yamada
Author-Name: Misako Takayasu
Author-Name: Hideki Takayasu
Note: AP IFM
Number: 18541
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18541
File-URL: http://www.nber.org/papers/w18541.pdf
File-Format: application/pdf
Abstract: Using the "firm" quotes obtained from the tick-by-tick EBS (electronic broking system that is a major trading platform for foreign exchanges) data, it is found that risk-free arbitrage opportunities--free lunch--do occur in the foreign exchange markets, but it typically last only a few seconds. "Free lunch" is in the form of (a) negative spreads in a currency pair and (b) triangular arbitrage relationship involving three currency pairs. The latter occur much more often than the former. Such arbitrage opportunities tend to occur when the markets are active and volatile. Over the 12-year, tick-data samples, the number of free lunch opportunities has dramatically declined and the probability of the opportunities disappearing within one second has steadily increased. The size of expected profits is higher than transaction costs; trades that simultaneously take place on both sides of ask and bid (or three currency trades in case of triangular arbitrage) occur more often when free lunch appeared one second earlier than otherwise, suggesting that free lunch opportunities are actively taken. The probability of its disappearance within one second was less than 50% in 1999, but increased to about 90% by 2009. Less frequent occurrence and quicker disappearance in recent years are attributable to changes in trading microstructure: an introduction and proliferation of the Primary Customer system (weaker banks can use stronger banks' credit lines) and of direct connection of traders' programmed computers to the EBS computer.
Handle: RePEc:nbr:nberwo:18541
Template-Type: ReDIF-Paper 1.0
Title: Mismeasurement of Pensions Before and After Retirement: The Mystery of the Disappearing Pensions with Implications for the Importance of Social Security as a Source of Retirement Support
Classification-JEL: D31; E21; H55; I3; J14; J26; J32
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Author-Name: Nahid Tabatabai
Note: AG LS PE
Number: 18542
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18542
File-URL: http://www.nber.org/papers/w18542.pdf
File-Format: application/pdf
Publication-Status: Published as: "Mismeasurement of Pensions Before and After Retirement: The Mystery of the Disappearing Pensions with Implications for the Importance of Social Security as a Source of Retirement Support". Journal of Pension Economics and Finance 13(1), January, 2014: 1-26.
Abstract: A review of the literature suggests that when pension values are measured by the wealth equivalent of promised DB pension benefits and DC balances for those approaching retirement, pensions account for more support in retirement than is suggested when their contribution is measured by incomes received directly from pension plans by those who have already retired. Estimates from the Health and Retirement Study (HRS) for respondents in their early fifties suggest that pension wealth is about 86 percent as valuable as Social Security wealth. In data from the Current Population Survey (CPS), for members of the same cohort, measured when they are 65 to 69, pension incomes are about 56 percent as valuable as incomes from Social Security. Our empirical analysis uses data from the Health and Retirement Study to examine the reasons for these differences in the contributions of pensions as measured in income and wealth data. A number of factors cause the contribution of pensions to be understated in retirement income data, especially data from the CPS. One factor is a difference in methodology between surveys affecting what is included in pension income, especially in the CPS, which ignores irregular payments from pensions. In CPS data on incomes of those ages 64 to 69 in 2006, pension values are 59 percent of the value of Social Security. For the same cohort, in HRS data, the pension value is 67 percent of the value of Social Security benefits. Some pension wealth "disappears" at retirement because respondents change their pension into other forms that are not counted as pension income in surveys of income. Altogether, 16 percent of pension wealth is transformed into some other form at the time of disposition. For those who had a defined benefit pension just before termination, the dominant plan type for current retirees, at termination 12 percent of the benefit was transformed into a state that would not count as pension income after retirement. For those who receive benefits soon after termination, there is a 3.5 percent reduction in DB pension value at termination compared to the year before termination. One reason may be the form of annuitization that is chosen. A series of caveats notwithstanding, the bottom line is that CPS data on pension incomes received in retirement understates the full contribution pensions make to supporting retirees.
Handle: RePEc:nbr:nberwo:18542
Template-Type: ReDIF-Paper 1.0
Title: You Owe Me
Classification-JEL: C91; D62; D73; I11
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Author-Name: Klaus Schmidt
Author-Person: psc136
Note: EH LS
Number: 18543
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18543
File-URL: http://www.nber.org/papers/w18543.pdf
File-Format: application/pdf
Publication-Status: published as Ulrike Malmendier & Klaus M. Schmidt, 2017. "You Owe Me," American Economic Review, vol 107(2), pages 493-526.
Abstract: In many cultures and industries gifts are given in order to influence the recipient, often at the expense of a third party. Examples include business gifts of firms and lobbyists. In a series of experiments, we show that, even without incentive or informational effects, small gifts strongly influence the recipient's behavior in favor of the gift giver, in particular when a third party bears the cost. Subjects are well aware that the gift is given to influence their behavior but reciprocate nevertheless. Withholding the gift triggers a strong negative response. These findings are inconsistent with the most prominent models of social preferences. We propose an extension of existing theories to capture the observed behavior by endogenizing the "reference group" to whom social preferences are applied. We also show that disclosure and size limits are not effective in reducing the effect of gifts, consistent with our model. Financial incentives ameliorate the effect of the gift but backfire when available but not provided.
Handle: RePEc:nbr:nberwo:18543
Template-Type: ReDIF-Paper 1.0
Title: The Making Of A Great Contraction With A Liquidity Trap and A Jobless Recovery
Classification-JEL: E24; E31; E32; E52
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martín Uribe
Note: EFG ME
Number: 18544
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18544
File-URL: http://www.nber.org/papers/w18544.pdf
File-Format: application/pdf
Abstract: The great contraction of 2008 pushed the U.S. economy into a protracted liquidity trap (i.e., a long period with zero nominal interest rates and inflationary expectations below target). In addition, the recovery was jobless (i.e., output growth recovered but unemployment lingered). This paper presents a model that captures these three facts. The key elements of the model are downward nominal wage rigidity, a Taylor-type interest-rate feedback rule, the zero bound on nominal rates, and a confidence shock. Lack-of-confidence shocks play a central role in generating jobless recoveries, for fundamental shocks, such as disturbances to the natural rate, are shown to generate recessions featuring recoveries with job growth. The paper considers a monetary policy that can lift the economy out of the slump. Specifically, it shows that raising the nominal interest rate to its intended target for an extended period of time, rather than exacerbating the recession as conventional wisdom would have it, can boost inflationary expectations and thereby foster employment.
Handle: RePEc:nbr:nberwo:18544
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Rules and Discretion under Persistent Shocks
Classification-JEL: D02; D82; E6; H1; P16
Author-Name: Marina Halac
Author-Person: pha1103
Author-Name: Pierre Yared
Author-Person: pya107
Note: EFG POL
Number: 18545
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18545
File-URL: http://www.nber.org/papers/w18545.pdf
File-Format: application/pdf
Publication-Status: published as Fiscal Rules and Discretion Under Persistent Shocks Marina Halac1,2 andPierre Yared1,3,† Article first published online: 3 OCT 2014 DOI: 10.3982/ECTA11207 © 2014 The Econometric Society Issue Econometrica Econometrica Volume 82, Issue 5, pages 1557–1614, September 2014
Abstract: This paper studies the optimal level of discretion in policymaking. We consider a fiscal policy model where the government has time-inconsistent preferences with a present-bias towards public spending. The government chooses a fiscal rule to trade off its desire to commit to not overspend against its desire to have flexibility to react to privately observed shocks to the value of spending. We analyze the optimal fiscal rule when the shocks are persistent. Unlike under i.i.d. shocks, we show that the ex-ante optimal rule is not sequentially optimal, as it provides dynamic incentives. The ex-ante optimal rule exhibits history dependence, with high shocks leading to an erosion of future fiscal discipline compared to low shocks, which lead to the reinstatement of discipline. The implied policy distortions oscillate over time given a sequence of high shocks, and can force the government to accumulate maximal debt and become immiserated in the long run.
Handle: RePEc:nbr:nberwo:18545
Template-Type: ReDIF-Paper 1.0
Title: On the Spatial Economic Impact of Global Warming
Classification-JEL: E00; F10; R00
Author-Name: Klaus Desmet
Author-Person: pde116
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EEE EFG ITI
Number: 18546
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18546
File-URL: http://www.nber.org/papers/w18546.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Urban Economics Volume 88, July 2015, Pages 16–37 Cover image On the spatial economic impact of global warming ☆ Klaus Desmeta, , , Esteban Rossi-Hansbergb,
Abstract: We propose a dynamic spatial theory to analyze the geographic impact of climate change. Agricultural and manufacturing firms locate on a hemisphere. Trade across locations is costly, firms innovate, and technology diffuses over space. Energy used in production leads to emissions that contribute to the global stock of carbon in the atmosphere, which affects temperature. The rise in temperature differs across latitudes and sectors. We calibrate the model to analyze how climate change affects the spatial distribution of economic activity, trade, migration, growth, and welfare. We assess quantitatively the impact of migration and trade restrictions, energy taxes, and innovation subsidies.
Handle: RePEc:nbr:nberwo:18546
Template-Type: ReDIF-Paper 1.0
Title: Quiet Bubbles
Classification-JEL: G02; G12
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: David Sraer
Author-Person: psr34
Note: AP CF
Number: 18547
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18547
File-URL: http://www.nber.org/papers/w18547.pdf
File-Format: application/pdf
Publication-Status: published as Hong, Harrison & Sraer, David, 2013. "Quiet bubbles," Journal of Financial Economics, Elsevier, vol. 110(3), pages 596-606.
Abstract: Commentaries on the credit bubble of 2003-2007 routinely equate it with earlier episodes like the Internet boom. While credits were over-priced like Internet stocks a decade before, we show, using a model based on disagreement and short-sales constraints, that this is where the similarity ends. Equity bubbles are loud: price and volume go together as investors speculate on capital gains from reselling to more optimistic investors. But this resale option is limited for debt since its upside payoff is bounded. Debt bubbles then require an optimism bias among investors. But greater optimism leads to less speculative trading as investors view the debt as safe and having limited upside. Debt bubbles are hence quiet--high price comes with low volume. We find the predicted price-volume relationship of credits over the 2003-2007 credit boom.
Handle: RePEc:nbr:nberwo:18547
Template-Type: ReDIF-Paper 1.0
Title: Speculative Betas
Classification-JEL: G02; G11; G12
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: David Sraer
Author-Person: psr34
Note: AP CF
Number: 18548
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18548
File-URL: http://www.nber.org/papers/w18548.pdf
File-Format: application/pdf
Publication-Status: published as Harrison Hong & David A. Sraer, 2016. "Speculative Betas," Journal of Finance, American Finance Association, vol. 71(5), pages 2095-2144, October.
Abstract: We provide a model for why high beta assets are more prone to speculative overpricing than low beta ones. When investors disagree about the common factor of cash-flows, high beta assets are more sensitive to this macro-disagreement and experience a greater divergence-of-opinion about their payoffs. Short-sales constraints for some investors such as retail mutual funds result in high beta assets being over-priced. When aggregate disagreement is low, expected return increases with beta due to risk-sharing. But when it is large, expected return initially increases but then decreases with beta. High beta assets have greater shorting from unconstrained arbitrageurs and more share turnover. Using measures of disagreement about stock earnings and economic uncertainty, we verify these predictions. A calibration exercise yields reasonable parameter values.
Handle: RePEc:nbr:nberwo:18548
Template-Type: ReDIF-Paper 1.0
Title: Repo and Securities Lending
Classification-JEL: G18; G23; G28; G38
Author-Name: Tobias Adrian
Author-Person: pad61
Author-Name: Brian Begalle
Author-Name: Adam Copeland
Author-Name: Antoine Martin
Author-Person: pma119
Note: AP CF
Number: 18549
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18549
File-URL: http://www.nber.org/papers/w18549.pdf
File-Format: application/pdf
Publication-Status: published as Repo and Securities Lending, Tobias Adrian, Brian Begalle, Adam Copeland, Antoine Martin. in Risk Topography: Systemic Risk and Macro Modeling, Brunnermeier and Krishnamurthy. 2014
Abstract: We provide an overview of the data required to monitor repo and securities lending markets for the purposes of informing policymakers and researchers about firm-level and systemic risk. We start by explaining the functioning of these markets and argue that it is crucial to understand the institutional arrangements. Data collection is currently incomplete. A comprehensive collection would include, at a minimum, six characteristics of repo and securities lending trades at the firm level: principal amount, interest rate, collateral type, haircut, tenor, and counterparty.
Handle: RePEc:nbr:nberwo:18549
Template-Type: ReDIF-Paper 1.0
Title: Misallocation and Financial Frictions: Some Direct Evidence From the Dispersion in Borrowing Costs
Classification-JEL: D92; O16; O40
Author-Name: Simon Gilchrist
Author-Person: pgi28
Author-Name: Jae W. Sim
Author-Person: psi231
Author-Name: Egon Zakrajšek
Author-Person: pza207
Note: EFG
Number: 18550
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18550
File-URL: http://www.nber.org/papers/w18550.pdf
File-Format: application/pdf
Publication-Status: published as Review of Economic Dynamics Volume 16, Issue 1, January 2013, Pages 159–176 Special issue: Misallocation and Productivity Cover image Misallocation and financial market frictions: Some direct evidence from the dispersion in borrowing costs ☆ Simon Gilchrista, b, , Jae W. Simc, , Egon Zakrajšekd
Abstract: Financial frictions distort the allocation of resources among productive units--all else equal, firms whose financing choices are affected by such frictions face higher borrowing costs than firms with ready access to capital markets. As a result, input choices may differ systematically across firms in ways that are unrelated to their productive efficiency. We propose an accounting framework that allows us to assess empirically the magnitude of the loss in aggregate resources due to such misallocation. To a second-order approximation, the framework requires only information on the dispersion in borrowing costs across firms, which we measure--for a subset of U.S. manufacturing firms--directly from the interest rate spreads on their outstanding publicly-traded debt. Given the observed dispersion in borrowing costs, our approximation method implies a relatively modest loss in efficiency due to resource misallocation--on the order of 1 to 2 percent of measured total factor productivity (TFP). In our framework, the correlation between firm size and borrowing costs has no bearing on TFP losses under the assumption that financial distortions and firm-level efficiency are jointly log-normally distributed. To take into account the effect of covariation between firm size and borrowing costs, we consider a more general framework, which dispenses with the assumption of log-normality and which implies somewhat higher estimates of the resource losses--about 3.5 percent of measured TFP. Counterfactual experiments indicate that dispersion in borrowing costs must be an order of magnitude higher than that observed in the U.S. financial data, in order for misallocation--arising from financial distortions--to account for a significant fraction of measured TFP differentials across countries.
Handle: RePEc:nbr:nberwo:18550
Template-Type: ReDIF-Paper 1.0
Title: Information and College Access: Evidence from a Randomized Field Experiment
Classification-JEL: I2; J24
Author-Name: Philip Oreopoulos
Author-Person: por38
Author-Name: Ryan Dunn
Note: CH ED LS
Number: 18551
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18551
File-URL: http://www.nber.org/papers/w18551.pdf
File-Format: application/pdf
Publication-Status: published as Philip Oreopoulos & Ryan Dunn, 2013. "Information and College Access: Evidence from a Randomized Field Experiment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(1), pages 3-26, 01.
Abstract: High school students from disadvantaged high schools in Toronto were invited to take two surveys, about three weeks apart. Half of the students taking the first survey were also shown a 3 minute video about the benefits of post secondary education (PSE) and invited to try out a financial-aid calculator. Most students' perceived returns to PSE were high, even among those not expecting to continue. Those exposed to the video, especially those initially unsure about their own educational attainment, reported significantly higher expected returns, lower concerns about costs, and expressed greater likelihood of PSE attainment.
Handle: RePEc:nbr:nberwo:18551
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Pharmaceutical Innovation on Longevity: Patient-Level Evidence from the 1996-2002 Medical Expenditure Panel Survey and Linked Mortality Public-Use Files
Classification-JEL: I12; J11; O33
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: AG EH PR
Number: 18552
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18552
File-URL: http://www.nber.org/papers/w18552.pdf
File-Format: application/pdf
Publication-Status: published as Lichtenberg Frank R., 2013. "The Effect of Pharmaceutical Innovation on Longevity: Patient Level Evidence from the 1996â2002 Medical Expenditure Panel Survey and Linked Mortality Public-use Files," Forum for Health Economics & Policy, De Gruyter, vol. 16(1), pages 1-33, January.
Abstract: We investigate the effect of the vintage (year of FDA approval) of the prescription drugs used by an individual on his or her survival and medical expenditure. When we only control for age, sex, and interview year, we estimate that a one-year increase in drug vintage increases life expectancy by 0.52%. Controlling for other variables including activity limitations, race, education, family income as a percent of the poverty line, insurance coverage, Census region, BMI, smoking and over 100 medical conditions has virtually no effect on the estimate of the effect of drug vintage on life expectancy. Between 1996 and 2003, the mean vintage of prescription drugs increased by 6.6 years. This is estimated to have increased life expectancy of elderly Americans by 0.41-0.47 years. This suggests that not less than two-thirds of the 0.6-year increase in the life expectancy of elderly Americans during 1996-2003 was due to the increase in drug vintage. The 1996-2003 increase in drug vintage is also estimated to have increased annual drug expenditure per elderly American by $207, and annual total medical expenditure per elderly American by $218. This implies that the incremental cost-effectiveness ratio (cost per life-year gained) of pharmaceutical innovation was about $12,900.
Handle: RePEc:nbr:nberwo:18552
Template-Type: ReDIF-Paper 1.0
Title: How Important Are Perpetual Tax Savings?
Classification-JEL: H24; K11; K34
Author-Name: James R. Hines Jr.
Author-Person: phi111
Note: PE
Number: 18553
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18553
File-URL: http://www.nber.org/papers/w18553.pdf
File-Format: application/pdf
Publication-Status: published as How Important Are Perpetual Tax Savings?, James R. Hines Jr.. in Tax Policy and the Economy, Volume 27, Brown. 2013
Abstract: Federal estate taxes give very wealthy families incentives to transfer resources directly to distant generations in order to avoid taxes on successive rounds of transfers. Until recently such transfers were impeded by the rule against perpetuities, which prevented transfers to most potential not-yet-born beneficiaries. Many American states have recently repealed the rule against perpetuities, raising concerns that the combination of tax incentives and new legal rights encourages the devotion of vast wealth to perpetual trusts designed to benefit distant generations, avoid taxes, and maintain a degree of control over the financial affairs of descendants in perpetuity. This paper analyzes the incentives created by federal transfer taxes, finding the tax benefits from establishing perpetual trusts to be quite modest, in representative cases ranging from 9-25 percent of just one component of the cost. Contrary to popular claims, tax benefits decline as investment returns rise. While U.S. states that have repealed the rule against perpetuities and adopted other policies to encourage trusts host substantial trust assets, evidence from tax returns suggests that perpetual trusts are unlikely to account for a significant portion of this business. Consequently, tax incentives may not be responsible for an important shift of assets into perpetual trusts.
Handle: RePEc:nbr:nberwo:18553
Template-Type: ReDIF-Paper 1.0
Title: Empirical Cross-Sectional Asset Pricing
Classification-JEL: G02; G12; G14
Author-Name: Stefan Nagel
Author-Person: pna176
Note: AP
Number: 18554
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18554
File-URL: http://www.nber.org/papers/w18554.pdf
File-Format: application/pdf
Publication-Status: published as Stefan Nagel, 2013. "Empirical Cross-Sectional Asset Pricing," Annual Review of Financial Economics, Annual Reviews, vol. 5(1), pages 167-199, November.
Abstract: I review recent research efforts in the area of empirical cross-sectional asset pricing. I start by summarizing the evidence on cross-sectional return predictability and the failure of standard (consumption) CAPM models and their conditional versions to explain these predictability patterns. One response in part of the recent literature is to focus on ad-hoc factor models, which summarize the cross-section of expected returns in parsimonious form, or on production-based approaches, which suggest links between firm characteristics and expected returns. Without imposing restrictions on investor preferences and beliefs, neither one of these two approaches can answer the question why investors price assets the way they do. Within the rational expectations paradigm, recent research that imposes such restrictions has focused on the ICAPM, long-run risks models, as well as frictions and liquidity risk. Approaches based on investor sentiment have focused on the development of empirical proxies for sentiment and for the limits to arbitrage that allow sentiment to affect prices. Empirical work that considers learning and adaptation of investors has worked with out-of-sample tests of cross-sectional predictability.
Handle: RePEc:nbr:nberwo:18554
Template-Type: ReDIF-Paper 1.0
Title: Building Castles in the Air: Evidence from Industry IPO Waves
Classification-JEL: G02; G10; G12; G14; G17
Author-Name: Zhi Da
Author-Name: Ravi Jagannathan
Author-Person: pja91
Author-Name: Jianfeng Shen
Author-Person: psh477
Note: AP
Number: 18555
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18555
File-URL: http://www.nber.org/papers/w18555.pdf
File-Format: application/pdf
Abstract: We provide empirical support for the conventional wisdom that there are times when optimistic investors tend to build their hopes into castles in the air, and pay a large premium over intrinsic value for stocks of firms in the early stages of their life cycles with perceived growth opportunities. We use industry IPO waves containing a set of firms in the same industry that went public at about the same time in a cluster to identify those time periods and firms that are relatively homogenous and in the same early growth stages of their life cycles. We find that three years after an industry IPO wave ends, among the firms in the wave with relatively high historical sales growth rates, those with low gross margins are over-valued relative to firms with high gross margins. They under-perform their industry IPO wave peers by 0.92% per month, or about 12% per year, during the subsequent four-year period after adjusting for risk and firm characteristics differentials. Further, the average future returns on these firms are even below the corresponding risk-free returns. Our findings contribute to the literature on inefficient capital markets by identifying situations when prices of some stocks are likely to be affected by bounded rationality or biases in the way investors make decisions, and agency issues limit the ability of more sophisticated arbitrageurs who have to rely on other people's money from exploiting any resultant profit opportunities.
Handle: RePEc:nbr:nberwo:18555
Template-Type: ReDIF-Paper 1.0
Title: On the Link Between the Volatility and Skewness of Growth
Classification-JEL: E32; G10; O10
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Alexander Popov
Note: EFG
Number: 18556
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18556
File-URL: http://www.nber.org/papers/w18556.pdf
File-Format: application/pdf
Publication-Status: published as Geert Bekaert & Alexander Popov, 2019. "On the Link Between the Volatility and Skewness of Growth," IMF Economic Review, vol 67(4), pages 746-790.
Abstract: In a sample of 110 countries over the period 1960-2009, we document a positive relation between the volatility and skewness of growth in the cross-section. The relation holds regardless of initial level of economic development and of subsequent long-run growth rate. We argue that this novel stylized fact is related to two distinct phenomena: sudden growth spurts in mostly emerging markets, and rare and abrupt crises in mostly developed economies. The former phenomenon is driven by industrialization, macroeconomic stabilization, and the exploitation of natural resources. The latter is consistent with recent theories of financial frictions. The positive relation between volatility and skewness in the cross-section is in sharp contrast with a negative relation between the two in panel data with country fixed effects which is fully driven by business cycle variation in rich countries.
Handle: RePEc:nbr:nberwo:18556
Template-Type: ReDIF-Paper 1.0
Title: The Federal Reserve, Emerging Markets, and Capital Controls: A High Frequency Empirical Investigation
Classification-JEL: F30; F32
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: DEV IFM ME
Number: 18557
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18557
File-URL: http://www.nber.org/papers/w18557.pdf
File-Format: application/pdf
Publication-Status: published as The Federal Reserve, the Emerging Markets, and Capital Controls: A High-Frequency Empirical Investigation SEBASTIAN EDWARDS Article first published online: 18 DEC 2012 DOI: 10.1111/j.1538-4616.2012.00556.x © 2012 The Ohio State University Issue Journal of Money, Credit and Banking Journal of Money, Credit and Banking Volume 44, Issue Supplement s2, pages 151–184, December 2012
Abstract: In this paper I use weekly data from seven emerging nations - four in Latin America and three in Asia - to investigate the extent to which changes in Fed policy interest rates have been transmitted into domestic short term interest rates during the 2000s. The results suggest that there is indeed an interest rates "pass through" from the Fed to emerging markets. However, the extent of transmission of interest rate shocks is different - in terms of impact, steady state effect, and dynamics - in Latin America and Asia. The results also indicate that capital controls are not an effective tool for isolating emerging countries from global interest rate disturbances. Changes in the slope of the U.S. yield curve, including changes generated by a "twist" policy, affect domestic interest rates in emerging countries. I also provide a detailed case study for Chile.
Handle: RePEc:nbr:nberwo:18557
Template-Type: ReDIF-Paper 1.0
Title: Embedded Leverage
Classification-JEL: G0; G1; G12; G13
Author-Name: Andrea Frazzini
Author-Person: pfr54
Author-Name: Lasse H. Pedersen
Author-Person: ppe174
Note: AP
Number: 18558
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18558
File-URL: http://www.nber.org/papers/w18558.pdf
File-Format: application/pdf
Publication-Status: published as Andrea Frazzini & Lasse Heje Pedersen & Jeffrey Pontiff, 2022. "Embedded Leverage," The Review of Asset Pricing Studies, vol 12(1), pages 1-52.
Abstract: Many financial instruments are designed with embedded leverage such as options and leveraged exchange traded funds (ETFs). Embedded leverage alleviates investors' leverage constraints and, therefore, we hypothesize that embedded leverage lowers required returns. Consistent with this hypothesis, we find that asset classes with embedded leverage offer low risk-adjusted returns and, in the cross-section, higher embedded leverage is associated with lower returns. A portfolio which is long low-embedded-leverage securities and short high-embedded-leverage securities earns large abnormal returns, with t-statistics of 8.6 for equity options, 6.3 for index options, and 2.5 for ETFs. We provide extensive robustness tests and discuss the broader implications of embedded leverage for financial economics.
Handle: RePEc:nbr:nberwo:18558
Template-Type: ReDIF-Paper 1.0
Title: The Asset Price Meltdown and the Wealth of the Middle Class
Classification-JEL: D31; J15
Author-Name: Edward N. Wolff
Note: AG LS PR
Number: 18559
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18559
File-URL: http://www.nber.org/papers/w18559.pdf
File-Format: application/pdf
Abstract: I find that median wealth plummeted over the years 2007 to 2010, and by 2010 was at its lowest level since 1969. The inequality of net worth, after almost two decades of little movement, was up sharply from 2007 to 2010. Relative indebtedness continued to expand from 2007 to 2010, particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness. In fact, the average debt of the middle class actually fell in real terms by 25 percent. The sharp fall in median wealth and the rise in inequality in the late 2000s are traceable to the high leverage of middle class families in 2007 and the high share of homes in their portfolio. The racial and ethnic disparity in wealth holdings, after remaining more or less stable from 1983 to 2007, widened considerably between 2007 and 2010. Hispanics, in particular, got hammered by the Great Recession in terms of net worth and net equity in their homes. Households under age 45 also got pummeled by the Great Recession, as their relative and absolute wealth declined sharply from 2007 to 2010.
Handle: RePEc:nbr:nberwo:18559
Template-Type: ReDIF-Paper 1.0
Title: Arbitrage Asymmetry and the Idiosyncratic Volatility Puzzle
Classification-JEL: G02; G12; G14
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Author-Name: Jianfeng Yu
Author-Name: Yu Yuan
Author-Person: pyu149
Note: AP
Number: 18560
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18560
File-URL: http://www.nber.org/papers/w18560.pdf
File-Format: application/pdf
Publication-Status: published as Robert F. Stambaugh & Jianfeng Yu & Yu Yuan, 2015. "Arbitrage Asymmetry and the Idiosyncratic Volatility Puzzle," Journal of Finance, American Finance Association, vol. 70(5), pages 1903-1948, October.
Abstract: Short selling, as compared to purchasing, faces greater risks and other potential impediments. This arbitrage asymmetry explains the negative relation between idiosyncratic volatility (IVOL) and average return. The IVOL effect is negative among overpriced stocks but positive among underpriced stocks, with mispricing determined by combining 11 return anomalies. The negative effect is stronger, consistent with asymmetry in risks and other impediments inhibiting arbitrageurs in exploiting overpricing. Aggregating across all stocks therefore yields a negative relation, explaining the IVOL puzzle. Further supporting our explanation is a negative relation over time between the IVOL effect and investor sentiment, especially among overpriced stocks.
Handle: RePEc:nbr:nberwo:18560
Template-Type: ReDIF-Paper 1.0
Title: How Firms Export: Processing vs. Ordinary Trade with Financial Frictions
Classification-JEL: F10; F13; F14; F23; F34; F60; G32; O19
Author-Name: Kalina Manova
Author-Person: pma2520
Author-Name: Zhihong Yu
Author-Person: pyu123
Note: CF DEV ITI PR
Number: 18561
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18561
File-URL: http://www.nber.org/papers/w18561.pdf
File-Format: application/pdf
Publication-Status: published as Manova, Kalina & Yu, Zhihong, 2016. "How firms export: Processing vs. ordinary trade with financial frictions," Journal of International Economics, Elsevier, vol. 100(C), pages 120-137.
Abstract: The fragmentation of production across borders allows firms to make and export final goods, or to perform only intermediate stages of production by processing imported inputs for re-exporting. We examine how financial frictions affect companies’ choice between processing and ordinary trade – implicitly a choice of production technology and position in global supply chains – and how this decision affects performance. We exploit matched customs and balance-sheet data from China, where exports are classified as ordinary trade, import-and-assembly processing trade (processing firm sources and pays for imported inputs), and pure-assembly processing trade (processing firm receives foreign inputs for free). Value added, profits and profitability rise from pure assembly to processing with imports to ordinary trade. However, more profitable trade regimes require more working capital because they entail higher up-front costs. As a result, credit constraints induce firms to conduct more processing trade and pure assembly in particular, and preclude them from pursuing higher value-added, more profitable activities. Financial market imperfections thus impact the organization of production across firms and countries, and inform optimal trade and development policy in the presence of global production networks.
Handle: RePEc:nbr:nberwo:18561
Template-Type: ReDIF-Paper 1.0
Title: Using Neural Data to Test a Theory of Investor Behavior: An Application to Realization Utility
Classification-JEL: G02; G11
Author-Name: Cary Frydman
Author-Name: Nicholas Barberis
Author-Name: Colin Camerer
Author-Person: pca47
Author-Name: Peter Bossaerts
Author-Person: pbo132
Author-Name: Antonio Rangel
Author-Person: pra69
Note: AP
Number: 18562
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18562
File-URL: http://www.nber.org/papers/w18562.pdf
File-Format: application/pdf
Publication-Status: published as Using Neural Data to Test a Theory of Investor Behavior: An Application to Realization Utility CARY FRYDMAN, NICHOLAS BARBERIS, COLIN CAMERER, PETER BOSSAERTS andANTONIO RANGEL† Article first published online: 17 MAR 2014 DOI: 10.1111/jofi.12126 © 2014 the American Finance Association Issue The Journal of Finance The Journal of Finance Volume 69, Issue 2, pages 907–946, April 2014
Abstract: We use measures of neural activity provided by functional magnetic resonance imaging (fMRI) to test the "realization utility" theory of investor behavior, which posits that people derive utility directly from the act of realizing gains and losses. Subjects traded stocks in an experimental market while we measured their brain activity. We find that all subjects exhibit a strong disposition effect in their trading, even though it is suboptimal. Consistent with the realization utility explanation for this behavior, we find that activity in the ventromedial prefrontal cortex, an area known to encode the value of options during choices, correlates with the capital gains of potential trades; that the neural measures of realization utility correlate across subjects with their individual tendency to exhibit a disposition effect; and that activity in the ventral striatum, an area known to encode information about changes in the present value of experienced utility, exhibits a positive response when subjects realize capital gains. These results provide support for the realization utility model and, more generally, demonstrate how neural data can be helpful in testing models of investor behavior.
Handle: RePEc:nbr:nberwo:18562
Template-Type: ReDIF-Paper 1.0
Title: Currency Unions, Product Introductions, and the Real Exchange Rate
Classification-JEL: E3; F3; F4
Author-Name: Alberto Cavallo
Author-Person: pca605
Author-Name: Brent Neiman
Author-Person: pne85
Author-Name: Roberto Rigobon
Author-Person: pri12
Note: EFG IFM ITI ME
Number: 18563
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18563
File-URL: http://www.nber.org/papers/w18563.pdf
File-Format: application/pdf
Publication-Status: published as Currency Unions, Product Introductions, and the Real Exchange Rate* Alberto Cavallo Brent Neiman Roberto Rigobon The Quarterly Journal of Economics (2014) 129 (2): 529-595. doi: 10.1093/qje/qju008 First published online: March 18, 2014
Abstract: We use a novel dataset of online prices of identical goods sold by four large global retailers in dozens of countries to study good-level real exchange rates and their aggregated behavior. First, in contrast to the prior literature, we demonstrate that the law of one price holds very well within currency unions for tens of thousands of goods sold by each of the retailers, implying good-level real exchange rates often equal to one. Prices of these same goods exhibit large deviations from the law of one price outside of currency unions, even when the nominal exchange rate is pegged. This clarifies that the common currency per se, and not simply the lack of nominal volatility, is important in reducing cross-country price dispersion. Second, we derive a new decomposition that shows that good-level real exchange rates in our data predominantly reflect differences in prices at the time products are first introduced, as opposed to the component emerging from heterogeneous passthrough or from nominal rigidities during the life of the good. Further, these international relative prices measured at the time of introduction move together with the nominal exchange rate. This stands in sharp contrast to pricing behavior in models where all price rigidity for any given good is due simply to costly price adjustment for that good.
Handle: RePEc:nbr:nberwo:18563
Template-Type: ReDIF-Paper 1.0
Title: Nonlinear Policy Rules and the Identification and Estimation of Causal Effects in a Generalized Regression Kink Design
Classification-JEL: C13; C14; C31
Author-Name: David Card
Author-Person: pca271
Author-Name: David Lee
Author-Name: Zhuan Pei
Author-Name: Andrea Weber
Author-Person: pwe32
Note: LS
Number: 18564
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18564
File-URL: http://www.nber.org/papers/w18564.pdf
File-Format: application/pdf
Abstract: We consider nonparametric identification and estimation in a nonseparable model where a continuous regressor of interest is a known, deterministic, but kinked function of an observed assignment variable. This design arises in many institutional settings where a policy variable (such as weekly unemployment benefits) is determined by an observed but potentially endogenous assignment variable (like previous earnings). We provide new results on identification and estimation for these settings, and apply our results to obtain estimates of the elasticity of joblessness with respect to UI benefit rates. We characterize a broad class of models in which a "Regression Kink Design" (RKD, or RK Design) provides valid inferences for the treatment-on-the-treated parameter (Florens et al. (2008)) that would be identified in an ideal randomized experiment. We show that the smooth density condition that is sufficient for identification rules out extreme sorting around the kink, but is compatible with less severe forms of endogeneity. It also places testable restrictions on the distribution of predetermined covariates around the kink point. We introduce a generalization of the RKD - the "fuzzy regression kink design" - that allows for omitted variables in the assignment rule, as well as certain types of measurement errors in the observed values of the assignment variable and the policy variable. We also show how standard local polynomial regression techniques can be adapted to obtain nonparametric estimates for the sharp and fuzzy RKD. We then use a fuzzy RKD approach to study the effect of unemployment insurance benefits on the duration of joblessness in Austria, where the benefit schedule has kinks at the minimum and maximum benefit level. Our estimates suggest that the elasticity of joblessness with respect to the benefit rate is on the order of 1.5.
Handle: RePEc:nbr:nberwo:18564
Template-Type: ReDIF-Paper 1.0
Title: Active vs. Passive Decisions and Crowdout in Retirement Savings Accounts: Evidence from Denmark
Classification-JEL: E21; H3
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: John N. Friedman
Author-Name: Soren Leth-Petersen
Author-Person: ple913
Author-Name: Torben Nielsen
Author-Name: Tore Olsen
Note: AG EFG LS PE
Number: 18565
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18565
File-URL: http://www.nber.org/papers/w18565.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & John N. Friedman & Søren Leth-Petersen & Torben Heien Nielsen & Tore Olsen, 2014. "Active vs. Passive Decisions and Crowd-Out in Retirement Savings Accounts: Evidence from Denmark," The Quarterly Journal of Economics, Oxford University Press, vol. 129(3), pages 1141-1219.
Abstract: Using 41 million observations on savings for the population of Denmark, we show that the impacts of retirement savings policies on wealth accumulation depend on whether they change savings rates by active or passive choice. Subsidies for retirement accounts, which rely upon individuals to take an action to raise savings, primarily induce individuals to shift assets from taxable accounts to retirement accounts. We estimate that each $1 of government expenditure on subsidies increases total saving by only 1 cent. In contrast, policies that raise retirement contributions if individuals take no action - such as automatic employer contributions to retirement accounts - increase wealth accumulation substantially. We estimate that approximately 15% of individuals are "active savers" who respond to tax subsidies primarily by shifting assets across accounts. 85% of individuals are "passive savers" who are unresponsive to subsidies but are instead heavily influenced by automatic contributions made on their behalf. Active savers tend to be wealthier and more financially sophisticated. We conclude that automatic contributions are more effective at increasing savings rates than subsidies for three reasons: (1) subsidies induce relatively few individuals to respond, (2) they generate substantial crowd-out conditional on response, and (3) they do not increase the savings of passive individuals, who are least prepared for retirement.
Handle: RePEc:nbr:nberwo:18565
Template-Type: ReDIF-Paper 1.0
Title: Colonialism and Economic Development in Africa
Classification-JEL: N37; N47; O55
Author-Name: Leander Heldring
Author-Name: James A. Robinson
Author-Person: pro179
Note: DAE
Number: 18566
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18566
File-URL: http://www.nber.org/papers/w18566.pdf
File-Format: application/pdf
Publication-Status: published as Leander Heldring and James Robinson. 2018. "Colonialism and Economic Development in Africa," in Carol Lancaster and Nicolas Van de Walle (eds.), The Oxford Handbook of the Politics of Development, Oxford, UK: Oxford University Press, Part III, 295-327.
Abstract: In this paper we evaluate the impact of colonialism on development in Sub-Saharan Africa. In the world context, colonialism had very heterogeneous effects, operating through many mechanisms, sometimes encouraging development sometimes retarding it. In the African case, however, this heterogeneity is muted, making an assessment of the average effect more interesting. We emphasize that to draw conclusions it is necessary not just to know what actually happened to development during the colonial period, but also to take a view on what might have happened without colonialism and also to take into account the legacy of colonialism. We argue that in the light of plausible counter-factuals, colonialism probably had a uniformly negative effect on development in Africa. To develop this claim we distinguish between three sorts of colonies: (1) those which coincided with a pre-colonial centralized state, (2) those of white settlement, (3) the rest. Each have distinct performance within the colonial period, different counter-factuals and varied legacies.
Handle: RePEc:nbr:nberwo:18566
Template-Type: ReDIF-Paper 1.0
Title: Aggregation of Consumer Ratings: An Application to Yelp.com
Classification-JEL: D8; L15; L86
Author-Name: Weijia Dai
Author-Name: Ginger Z. Jin
Author-Name: Jungmin Lee
Author-Person: ple117
Author-Name: Michael Luca
Note: IO
Number: 18567
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18567
File-URL: http://www.nber.org/papers/w18567.pdf
File-Format: application/pdf
Publication-Status: published as Weijia (Daisy) Dai & Ginger Jin & Jungmin Lee & Michael Luca, 2018. "Aggregation of consumer ratings: an application to Yelp.com," Quantitative Marketing and Economics (QME), Springer, vol. 16(3), pages 289-339, September.
Abstract: Because consumer reviews leverage the wisdom of the crowd, the way in which they are aggregated is a central decision faced by platforms. We explore this "rating aggregation problem" and offer a structural approach to solving it, allowing for (1) reviewers to vary in stringency and accuracy, (2) reviewers to be influenced by existing reviews, and (3) product quality to change over time. Applying this to restaurant reviews from Yelp.com, we construct an adjusted average rating and show that even a simple algorithm can lead to large information efficiency gains relative to the arithmetic average.
Handle: RePEc:nbr:nberwo:18567
Template-Type: ReDIF-Paper 1.0
Title: Using Student Test Scores to Measure Principal Performance
Classification-JEL: I21
Author-Name: Jason A. Grissom
Author-Name: Demetra Kalogrides
Author-Name: Susanna Loeb
Note: ED
Number: 18568
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18568
File-URL: http://www.nber.org/papers/w18568.pdf
File-Format: application/pdf
Publication-Status: published as J. A. Grissom & D. Kalogrides & S. Loeb, 2015. "Using Student Test Scores to Measure Principal Performance," Educational Evaluation and Policy Analysis, vol 37(1), pages 3-28.
Abstract: Expansion of the use of student test score data to measure teacher performance has fueled recent policy interest in using those data to measure the effects of school administrators as well. However, little research has considered the capacity of student performance data to uncover principal effects. Filling this gap, this article identifies multiple conceptual approaches for capturing the contributions of principals to student test score growth, develops empirical models to reflect these approaches, examines the properties of these models, and compares the results of the models empirically using data from a large urban school district. The paper then assesses the degree to which the estimates from each model are consistent with measures of principal performance that come from sources other than student test scores, such as school district evaluations. The results show that choice of model is substantively important for assessment. While some models identify principal effects as large as 0.15 standard deviations in math and 0.11 in reading, others find effects as low as 0.02 in both subjects for the same principals. We also find that the most conceptually unappealing models, which over-attribute school effects to principals, align more closely with non-test measures than do approaches that more convincingly separate the effect of the principal from the effects of other school inputs.
Handle: RePEc:nbr:nberwo:18568
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Performance During Commodity Price Booms and Busts
Classification-JEL: E52; E58; F31; F32; F36; F41
Author-Name: Luis Felipe Céspedes
Author-Person: pce53
Author-Name: Andrés Velasco
Note: IFM ME
Number: 18569
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18569
File-URL: http://www.nber.org/papers/w18569.pdf
File-Format: application/pdf
Publication-Status: published as Luis Felipe C�spedes & Andr�s Velasco, 2012. "Macroeconomic Performance During Commodity Price Booms and Busts," IMF Economic Review, Palgrave Macmillan, vol. 60(4), pages 570-599, December.
Abstract: Fluctuations in commodity prices are often associated with macroeconomic volatility. But not all nations are created equal in this regard. The macro response to commodity booms and busts depends both on the structural characteristics of the economy and on the policy framework that is in place. In this paper we investigate the macro response of a group of commodity-producing nations in episodes of large commodity prices shocks. First we provide a theoretical framework to analyze how shocks to commodity prices affect the domestic economy. For this we use a simple open-economy model with nominal rigidities and financial frictions. Then we provide empirical evidence (using commodity price boom and bust episodes) that commodity price shocks have a significant impact on output and investment dynamics. Economies with more flexible exchange rate regimes exhibit less pronounced responses of output during these episodes. We also provide evidence that the impact of those shocks on investment tends to be larger for economies with less developed financial markets. Moreover, we find that international reserve accumulation, more stable political systems, and less open capital accounts tend to reduce the real exchange rate appreciation (depreciation) in episodes of commodity price booms (busts).
Handle: RePEc:nbr:nberwo:18569
Template-Type: ReDIF-Paper 1.0
Title: Is Inflation Targeting Still On Target?
Classification-JEL: E52; E58; F41
Author-Name: Luis Felipe Céspedes
Author-Person: pce53
Author-Name: Roberto Chang
Author-Person: pch80
Author-Name: Andrés Velasco
Note: IFM
Number: 18570
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18570
File-URL: http://www.nber.org/papers/w18570.pdf
File-Format: application/pdf
Publication-Status: published as Is Inflation Targeting Still on Target? The Recent Experience of Latin America† Luis Felipe Céspedes1,*, Roberto Chang2 andAndrés Velasco3 Article first published online: 27 AUG 2014 DOI: 10.1111/infi.12047 International Finance Volume 17, Issue 2, pages 185–208, Summer 2014
Abstract: This paper reviews the recent experience of a half-dozen Latin American inflation-targeting (IT) nations. We document repeated and large deviations from the standard IT framework: exchange market interventions have been lasting and widespread; the real exchange rate has often become a target of policy, though this target is seldom made explicit; a range of other non-conventional policy tools, especially changes in reserve requirements but occasionally also taxes or restrictions on international capital movements, also came into common use. As in developed nations, during the 2008-2009 crisis issues of liquidity provision took center stage. We also attempt a first evaluation of the emerging modified framework of monetary policy. In general terms, the new approach seems to have been effective, at the very least since the region weathered the crisis reasonably well. But also, and perhaps more importantly, many questions remain about the desirability of non-conventional monetary policies in Latin America.
Handle: RePEc:nbr:nberwo:18570
Template-Type: ReDIF-Paper 1.0
Title: Public Liabilities and Health Care Policy
Classification-JEL: I1; I11; I13; I18
Author-Name: Kristopher J. Hult
Author-Person: phu401
Author-Name: Tomas J. Philipson
Author-Person: pph37
Note: EH
Number: 18571
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18571
File-URL: http://www.nber.org/papers/w18571.pdf
File-Format: application/pdf
Abstract: Many countries have large future public liabilities attributable to health care programs. However, little explicit analysis exists about how health care policies affect these program liabilities. We analyze how reimbursement and approval policies affect public liabilities through their impact on the returns to medical innovation, a central factor driving spending growth. We consider how policies impact innovative returns through expected earnings, their risk-adjustment, and their timing and defaults through the approval process. Our analysis implies that cutbacks in government programs may raise government liabilities and expansions may lower them. We quantitatively calibrate these non-standard effects for the US Medicare program.
Handle: RePEc:nbr:nberwo:18571
Template-Type: ReDIF-Paper 1.0
Title: Analyzing the Effects of Insuring Health Risks: On the Trade-off between Short Run Insurance Benefits vs. Long Run Incentive Costs
Classification-JEL: E61; H31; I18
Author-Name: Harold L. Cole
Author-Person: pco70
Author-Name: Soojin Kim
Author-Person: pki619
Author-Name: Dirk Krueger
Author-Person: pkr7
Note: EFG EH PE
Number: 18572
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18572
File-URL: http://www.nber.org/papers/w18572.pdf
File-Format: application/pdf
Publication-Status: published as Cole, Harold, Soojin Kim, and Dirk Krueger, 2019. "Analysing the Effects of Insuring Health Risks: On the Trade-off between Short-Run Insurance Benefits versus Long-Run Incentive Costs." Review of Economic Studies, 86(3): 1123-1169.
Abstract: This paper constructs a dynamic model of health insurance to evaluate the short- and long run effects of policies that prevent firms from conditioning wages on health conditions of their workers, and that prevent health insurance companies from charging individuals with adverse health conditions higher insurance premia. Our study is motivated by recent US legislation that has tightened regulations on wage discrimination against workers with poorer health status (Americans with Disability Act of 2009, ADA, and ADA Amendments Act of 2008, ADAAA) and that will prohibit health insurance companies from charging different premiums for workers of different health status starting in 2014 (Patient Protection and Affordable Care Act, PPACA). In the model, a trade-off arises between the static gains from better insurance against poor health induced by these policies and their adverse dynamic incentive effects on household efforts to lead a healthy life. Using household panel data from the PSID we estimate and calibrate the model and then use it to evaluate the static and dynamic consequences of no-wage discrimination and no-prior conditions laws for the evolution of the cross-sectional health and consumption distribution of a cohort of households, as well as ex-ante lifetime utility of a typical member of this cohort. In our quantitative analysis we find that although a combination of both policies is effective in providing full consumption insurance period by period, it is suboptimal to introduce both policies jointly since such policy innovation induces a more rapid deterioration of the cohort health distribution over time. This is due to the fact that combination of both laws severely undermines the incentives to lead healthier lives. The resulting negative effects on health outcomes in society more than offset the static gains from better consumption insurance so that expected discounted lifetime utility is lower under both policies, relative to only implementing wage nondiscrimination legislation.
Handle: RePEc:nbr:nberwo:18572
Template-Type: ReDIF-Paper 1.0
Title: Democracy Undone. Systematic Minority Advantage in Competitive Vote Markets
Classification-JEL: C62; D70; D72; P16
Author-Name: Alessandra Casella
Author-Person: pca496
Author-Name: Sébastien Turban
Note: POL
Number: 18573
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18573
File-URL: http://www.nber.org/papers/w18573.pdf
File-Format: application/pdf
Publication-Status: published as Casella, Alessandra & Turban, Sébastien, 2014. "Democracy undone. Systematic minority advantage in competitive vote markets," Games and Economic Behavior, Elsevier, vol. 88(C), pages 47-70.
Abstract: We study the competitive equilibrium of a market for votes where voters can trade votes for a numeraire before making a decision via majority rule. The choice is binary and the number of supporters of either alternative is known. We identify a sufficient condition guaranteeing the existence of an ex ante equilibrium. In equilibrium, only the most intense voter on each side demands votes and each demands enough votes to alone control a majority. The probability of a minority victory is independent of the size of the minority and converges to one half, for any minority size, when the electorate is arbitrarily large. In a large electorate, the numerical advantage of the majority becomes irrelevant: democracy is undone by the market.
Handle: RePEc:nbr:nberwo:18573
Template-Type: ReDIF-Paper 1.0
Title: Free to Choose? Reform and Demand Response in the English National Health Service
Classification-JEL: D12; I11; I18; L13; L30
Author-Name: Martin Gaynor
Author-Person: pga1
Author-Name: Carol Propper
Author-Person: ppr36
Author-Name: Stephan Seiler
Note: EH
Number: 18574
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18574
File-URL: http://www.nber.org/papers/w18574.pdf
File-Format: application/pdf
Abstract: The impacts of choice in public services are controversial. We exploit a reform in the English National Health Service to assess the impact of relaxing constraints on patient choice. We estimate a demand model to evaluate whether increased choice increased demand elasticity faced by hospitals with regard to clinical quality and waiting time for an important surgical procedure. We find substantial impacts of the removal of restrictions. Patients became more responsive to clinical quality. Sicker patients and better informed patients were more affected. We leverage our model to calculate potential benefits. We find increased demand responsiveness led to a significant reduction in mortality and an increase in patient welfare. The elasticity of demand faced by hospitals increased post-reform, giving hospitals potentially large incentives to improve their quality of care and find suggestive evidence that hospitals responded strongly to the enhanced incentives due to increased demand elasticity. The results suggests greater choice can enhance quality.
Handle: RePEc:nbr:nberwo:18574
Template-Type: ReDIF-Paper 1.0
Title: What Makes Annuitization More Appealing?
Classification-JEL: D03; D14; G11; J14; J32
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: Stephen P. Zeldes
Note: AG
Number: 18575
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18575
File-URL: http://www.nber.org/papers/w18575.pdf
File-Format: application/pdf
Publication-Status: published as What Makes Annuitization More Appealing?, John Beshears, James Choi, David Laibson, Brigitte C. Madrian, Stephen P. Zeldes. in Retirement Benefits for State and Local Employees: Designing Pension Plans for the Twenty-First Century, Clark, Rauh, and Duggan. 2014
Publication-Status: published as Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C. & Zeldes, Stephen P., 2014. "What makes annuitization more appealing?," Journal of Public Economics, Elsevier, vol. 116(C), pages 2-16.
Abstract: We conduct and analyze two large surveys of hypothetical annuitization choices. We find that allowing individuals to annuitize a fraction of their wealth increases annuitization relative to a situation where annuitization is an "all or nothing" decision. Very few respondents choose declining real payout streams over flat or increasing real payout streams of equivalent expected present value. Highlighting the effects of inflation increases demand for cost of living adjustments. Frames that highlight flexibility, control, and investment significantly reduce annuitization. A majority of respondents prefer to receive an extra "bonus" payment during one month of the year that is funded by slightly lower payments in the remaining months. Concerns about later-life income, spending flexibility, and counterparty risk are the most important self-reported motives that influence the annuitization decision.
Handle: RePEc:nbr:nberwo:18575
Template-Type: ReDIF-Paper 1.0
Title: Gender, Competitiveness and Career Choices
Classification-JEL: C9; I20; J16; J24
Author-Name: Thomas Buser
Author-Person: pbu198
Author-Name: Muriel Niederle
Author-Person: pni95
Author-Name: Hessel Oosterbeek
Author-Person: poo5
Note: CH ED LS
Number: 18576
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18576
File-URL: http://www.nber.org/papers/w18576.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Buser & Muriel Niederle & Hessel Oosterbeek, 2014. "Gender, Competitiveness, and Career Choices," The Quarterly Journal of Economics, Oxford University Press, vol. 129(3), pages 1409-1447.
Abstract: Gender differences in competitiveness are often discussed as a potential explanation for gender differences in education and labor market outcomes. We correlate an incentivized measure of competitiveness with an important career choice of secondary school students in the Netherlands. At the age of 15, these students have to pick one out of four study profiles, which vary in how prestigious they are. While boys and girls have very similar levels of academic ability, boys are substantially more likely than girls to choose more prestigious profiles. We find that competitiveness is as important a predictor of profile choice as gender. More importantly, up to 23 percent of the gender difference in profile choice can be attributed to gender differences in competitiveness. This lends support to the extrapolation of laboratory findings on competitiveness to labor market settings.
Handle: RePEc:nbr:nberwo:18576
Template-Type: ReDIF-Paper 1.0
Title: The Mover's Advantage: Scientific Performance of Mobile Academics
Classification-JEL: F22; J24; J61; O30
Author-Name: Chiara Franzoni
Author-Person: pfr158
Author-Name: Giuseppe Scellato
Author-Name: Paula Stephan
Author-Person: pst458
Note: LS
Number: 18577
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18577
File-URL: http://www.nber.org/papers/w18577.pdf
File-Format: application/pdf
Abstract: We investigate performance differentials associated with mobility for research active scientists residing in a broad spectrum of countries and working in a broad spectrum of fields using data from the GlobSci survey. We distinguish between two categories of mobile scientists: (1) those studying or working in a country other than that of origin and (2) those who have returned to their native country after a spell of study or work abroad. We compare the performance of these mobile scientists to natives who have never experienced a spell of mobility and are studying or working in their country of origin. We find evidence that mobile scientists perform better than those who have not experienced mobility. Among the mobile, we find some evidence that those who return perform better than the foreign born save in the United States, suggesting that positive selection is not at work in determining who remains outside the country. This is supported by the finding that for most countries the performance of returnees is no different than that of compatriots who remain abroad after controlling for other effects.
Handle: RePEc:nbr:nberwo:18577
Template-Type: ReDIF-Paper 1.0
Title: Output Spillovers from Fiscal Policy
Classification-JEL: E32; E62
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG PE
Number: 18578
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18578
File-URL: http://www.nber.org/papers/w18578.pdf
File-Format: application/pdf
Publication-Status: published as Alan J. Auerbach & Yuriy Gorodnichenko, 2013. "Output Spillovers from Fiscal Policy," American Economic Review, American Economic Association, vol. 103(3), pages 141-46, May.
Abstract: In this paper, we estimate the cross-country spillover effects of government purchases on output for a large number of OECD countries. Following the methodology in Auerbach and Gorodnichenko (2012a, b), we allow these multipliers to vary smoothly according to the state of the economy and use real-time forecast data to purge policy innovations of their predictable components. We also consider the responses of other key macroeconomic variables. Our findings suggest that cross-country spillovers have an important impact, and also confirm those of our earlier papers that fiscal shocks have a larger impact when the affected country is in recession.
Handle: RePEc:nbr:nberwo:18578
Template-Type: ReDIF-Paper 1.0
Title: Tracing Value-added and Double Counting in Gross Exports
Classification-JEL: F10
Author-Name: Robert Koopman
Author-Name: Zhi Wang
Author-Person: pwa898
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: ITI
Number: 18579
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18579
File-URL: http://www.nber.org/papers/w18579.pdf
File-Format: application/pdf
Publication-Status: forthcoming in the American Economic Review
Abstract: This paper proposes a framework for gross exports accounting that breaks up a country's gross exports into various value-added components by source and additional double counted terms. By identifying which parts of the official trade data are double counted and the sources of the double counting, it bridges official trade (in gross value terms) and national accounts statistics (in value added terms). Our parsimonious framework integrates all previous measures of vertical specialization and value-added trade in the literature into a unified framework. To illustrate the potential of such a method, we present a number of applications including re-computing revealed comparative advantages and the magnifying impact of multi-stage production on trade costs.
Handle: RePEc:nbr:nberwo:18579
Template-Type: ReDIF-Paper 1.0
Title: Incentives, Commitments and Habit Formation in Exercise: Evidence from a Field Experiment with Workers at a Fortune-500 Company
Classification-JEL: D03; D9; I1
Author-Name: Heather Royer
Author-Person: pro423
Author-Name: Mark F. Stehr
Author-Person: pst259
Author-Name: Justin R. Sydnor
Note: EH
Number: 18580
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18580
File-URL: http://www.nber.org/papers/w18580.pdf
File-Format: application/pdf
Publication-Status: published as Royer, Heather, Mark Stehr, and Justin Sydnor. 2015. "Incentives, Commitments, and Habit Formation in Exercise: Evidence from a Field Experiment with Workers at a Fortune-500 Company." American Economic Journal: Applied Economics, 7(3): 51-84. DOI: 10.1257/app.20130327
Abstract: Financial incentives have been shown to have strong positive short‐run effects for problematic health behaviors, but the effects often disappear once incentive programs end. This paper analyzes the results of a large‐scale workplace field experiment to examine whether self‐funded commitment contracts improve the long‐run effects of incentive programs. Consistent with existing findings, workers responded strongly to an incentive targeting use of the company gym, but long‐run effects were modest, at best. However, workers in the treatment arm that combined the incentive program with a commitment contract option showed long‐lasting behavioral changes, persisting even 1 year after the incentive ended.
Handle: RePEc:nbr:nberwo:18580
Template-Type: ReDIF-Paper 1.0
Title: Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes
Classification-JEL: I21; I28; I29; J13; J15; J16; J24; O15
Author-Name: James J. Heckman
Author-Name: Rodrigo Pinto
Author-Person: ppi451
Author-Name: Peter A. Savelyev
Author-Person: psa796
Note: CH DEV ED
Number: 18581
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18581
File-URL: http://www.nber.org/papers/w18581.pdf
File-Format: application/pdf
Publication-Status: published as James Heckman & Rodrigo Pinto & Peter Savelyev, 2013. "Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes," American Economic Review, American Economic Association, vol. 103(6), pages 2052-86, October.
Abstract: A growing literature establishes that high quality early childhood interventions targeted toward disadvantaged children have substantial impacts on later life outcomes. Little is known about the mechanisms producing these impacts. This paper uses longitudinal data on cognitive and personality traits from an experimental evaluation of the influential Perry Preschool program to analyze the channels through which the program boosted both male and female participant outcomes. Experimentally induced changes in personality traits explain a sizable portion of adult treatment effects.
Handle: RePEc:nbr:nberwo:18581
Template-Type: ReDIF-Paper 1.0
Title: Fettered Consumers and Sophisticated Firms: Evidence from Mexico's Privatized Social Security Market
Classification-JEL: D14; D18; G11; G23; L20; L21; L51
Author-Name: Fabian Duarte
Author-Name: Justine S. Hastings
Author-Person: pha804
Note: AG IO PE
Number: 18582
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18582
File-URL: http://www.nber.org/papers/w18582.pdf
File-Format: application/pdf
Abstract: This paper brings new evidence from the privatized social security system in Mexico, offering insight into investment behavior and the efficacy of government "nudges" in the context of profit maximizing firms. We use administrative data from the social security system surrounding the government adoption of a new official fee index aimed at simplifying fees and increasing price sensitivity of investors. The fee index combined load and management fees in a particular way, implying that choosing a lower index firm could lead many workers to choose a higher-cost fund for them. We find that before the index, investors of all backgrounds paid little attention to fees when choosing fund managers. Post-policy intervention, investors heavily weighted the fee index regardless of whether doing so caused them to choose a higher-cost fund. In contrast to investors, we find that firms responded optimally to the changes in demand induced by government policy, restructuring rather than lowering their fees to minimize the index. The strategic response erased gains to consumers from increased price sensitivity and redistributed management fees from high-income to low-income segments of the market. We conclude that regulations and policies aimed at aiding consumer decision-making also need to incorporate firm incentives to be effective.
Handle: RePEc:nbr:nberwo:18582
Template-Type: ReDIF-Paper 1.0
Title: Gasoline Prices, Fuel Economy, and the Energy Paradox
Classification-JEL: D03; D12; L62; Q41
Author-Name: Hunt Allcott
Author-Person: pal171
Author-Name: Nathan Wozny
Author-Person: pwo279
Note: EEE IO PE
Number: 18583
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18583
File-URL: http://www.nber.org/papers/w18583.pdf
File-Format: application/pdf
Publication-Status: published as Hunt Allcott & Nathan Wozny, 2014. "Gasoline Prices, Fuel Economy, and the Energy Paradox," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 779-795, December.
Abstract: It is often asserted that consumers undervalue future gasoline costs relative to purchase prices when they choose between automobiles, or equivalently that they have high "implied discount rates" for these future energy costs. We show how this can be tested by measuring whether relative prices of vehicles with different fuel economy ratings fully adjust to time series variation in gasoline price forecasts. We then test the model using a detailed dataset based on 86 million transactions at auto dealerships and wholesale auctions between 1999 and 2008. Over our base sample, vehicle prices move as if consumers are indifferent between one dollar in discounted future gas costs and only 76 cents in vehicle purchase price. We document how endogenous market shares and utilization, measurement error, and different gasoline price forecasts can affect the results, and we show how to address these issues empirically. We also provide unique empirical evidence of sticky information: vehicle markets respond to changes in gasoline prices with up to a six month delay.
Handle: RePEc:nbr:nberwo:18583
Template-Type: ReDIF-Paper 1.0
Title: Taxation of Intergenerational Transfers and Wealth
Classification-JEL: D31; E21; H2
Author-Name: Wojciech Kopczuk
Author-Person: pko20
Note: EFG PE POL
Number: 18584
Creation-Date: 2012-11
Order-URL: http://www.nber.org/papers/w18584
File-URL: http://www.nber.org/papers/w18584.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of Public Economics Volume 5, 2013, Pages 329–390 handbook of public economics, vol. 5 Cover image Chapter 6 – Taxation of Intergenerational Transfers and Wealth Wojciech Kopczuk
Abstract: In this chapter, I review empirical and theoretical literature on taxation of intergenerational transfers (estates, bequests, inheritances, inter vivos gifts) and wealth. The main message may be summarized as follows. Empirical evidence on bequest motivations and responses to estate taxation is spotty and much remains be done, but what we know points in the direction of (1) mixed motives (2) heterogeneity of preferences and (3) importance of retaining control over wealth. These patterns are important for normative analysis of taxation toward the top of the distribution. Theoretical work should further focus on understanding implications of inequality of inherited wealth: the topic that has been neglected in the past, even though it is closely related to -- more carefully studied, but arguably much less important in practice -- externalities from giving. Potential externalities from wealth accumulation and concentration are yet to be seriously addressed.
Handle: RePEc:nbr:nberwo:18584
Template-Type: ReDIF-Paper 1.0
Title: Participation and Duration of Environmental Agreements
Classification-JEL: D86; F53; H87; Q54
Author-Name: Marco Battaglini
Author-Person: pba170
Author-Name: Bård Harstad
Author-Person: pha247
Note: EEE LE PE POL
Number: 18585
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18585
File-URL: http://www.nber.org/papers/w18585.pdf
File-Format: application/pdf
Publication-Status: published as Marco Battaglini & B�rd Harstad, 2016. "Participation and Duration of Environmental Agreements," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 000 - 000.
Abstract: We analyze participation in international environmental agreements (IEAs) in a dynamic game where countries pollute and invest in green technologies. If complete contracts are feasible, participants eliminate the hold-up problem associated with their investments; however, most countries prefer to free-ride rather than participate. If investments are non-contractible, countries face a hold-up problem every time they negotiate; but the free-rider problem can be mitigated and significant participation is feasible. Participation becomes attractive because only large coalitions commit to long-term agreements that circumvent the hold-up problem. Under well-specified conditions even the first-best outcome is possible when the contract is incomplete. Since real-world IEAs fit in the incomplete contracting environment, our theory may help explaining the rising importance of IEAs and how they should be designed.
Handle: RePEc:nbr:nberwo:18585
Template-Type: ReDIF-Paper 1.0
Title: The Missing "One-Offs": The Hidden Supply of High-Achieving, Low Income Students
Classification-JEL: I21; I23; I24
Author-Name: Caroline M. Hoxby
Author-Person: pho46
Author-Name: Christopher Avery
Author-Person: pav7
Note: ED LS PE
Number: 18586
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18586
File-URL: http://www.nber.org/papers/w18586.pdf
File-Format: application/pdf
Publication-Status: published as Caroline Hoxby & Christopher Avery, 2013. "The Missing "One-Offs": The Hidden Supply of High-Achieving, Low-Income Students," Brookings Papers on Economic Activity, vol 2013(1), pages 1-65.
Abstract: We show that the vast majority of very high-achieving students who are low-income do not apply to any selective college or university. This is despite the fact that selective institutions would often cost them less, owing to generous financial aid, than the resource-poor two-year and non-selective four-year institutions to which they actually apply. Moreover, high-achieving, low-income students who do apply to selective institutions are admitted and graduate at high rates. We demonstrate that these low-income students' application behavior differs greatly from that of their high-income counterparts who have similar achievement. The latter group generally follows the advice to apply to a few "par" colleges, a few "reach" colleges, and a couple of "safety" schools. We separate the low-income, high-achieving students into those whose application behavior is similar to that of their high-income counterparts ("achievement-typical" behavior) and those whose apply to no selective institutions ("income-typical" behavior). We show that income-typical students do not come from families or neighborhoods that are more disadvantaged than those of achievement-typical students. However, in contrast to the achievement-typical students, the income-typical students come from districts too small to support selective public high schools, are not in a critical mass of fellow high achievers, and are unlikely to encounter a teacher or schoolmate from an older cohort who attended a selective college. We demonstrate that widely-used policies-college admissions staff recruiting, college campus visits, college access programs-are likely to be ineffective with income-typical students, and we suggest policies that will be effective must depend less on geographic concentration of high achievers.
Handle: RePEc:nbr:nberwo:18586
Template-Type: ReDIF-Paper 1.0
Title: Efficient Bailouts?
Classification-JEL: E2; E20; E3; E32; E44; E6; F40
Author-Name: Javier Bianchi
Author-Person: pbi159
Note: IFM
Number: 18587
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18587
File-URL: http://www.nber.org/papers/w18587.pdf
File-Format: application/pdf
Publication-Status: published as Javier Bianchi, 2016. "Efficient Bailouts?," American Economic Review, vol 106(12), pages 3607-3659.
Abstract: We develop a quantitative equilibrium model of financial crises to assess the interaction between ex-post interventions in credit markets and the buildup of risk ex ante. During a systemic crisis, bailouts relax balance sheet constraints and mitigate the severity of the recession. Ex ante, the anticipation of such bailouts leads to an increase in risk-taking, making the economy more vulnerable to a financial crisis. We find that moral hazard effects are limited if bailouts are systemic and broad-based. If bailouts are idiosyncratic and targeted, however, this makes the economy significantly more exposed to financial crises.
Handle: RePEc:nbr:nberwo:18587
Template-Type: ReDIF-Paper 1.0
Title: Changing Social Contracts: Beliefs and Dissipative Inclusion in Brazil
Classification-JEL: O10; O43; P51
Author-Name: Lee J. Alston
Author-Person: pal162
Author-Name: Marcus Melo
Author-Name: Bernardo Mueller
Author-Person: pmu296
Author-Name: Carlos Pereira
Author-Person: ppe388
Note: DAE DEV POL
Number: 18588
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18588
File-URL: http://www.nber.org/papers/w18588.pdf
File-Format: application/pdf
Publication-Status: published as Alston, Lee J. & Melo, Marcus Andre & Mueller, Bernardo & Pereira, Carlos, 2013. "Changing social contracts: Beliefs and dissipative inclusion in Brazil," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 48-65.
Abstract: Social contracts about inequality and redistribution are country-specific. We rely on a model of inequality and redistribution where multiple steady states can emerge in given country. We link the model to the recent literature on beliefs and argue that beliefs are a major determinant of which equilibrium results. We show that changes in beliefs may shift the equilibrium in a country over time. We present evidence that beliefs are typically very stable over time, yet argue that Brazil has recently undergone a dramatic shift in beliefs which we show is associated with a change in the country's social contract in the past thirty years. The transition from one social contract to another has taken place through a process which we call 'dissipative inclusion', where redistribution and social inclusion are effectively achieved but accompanied by distortions, inefficiencies and rent dissipation.
Handle: RePEc:nbr:nberwo:18588
Template-Type: ReDIF-Paper 1.0
Title: The Gorbachev Anti-Alcohol Campaign and Russia's Mortality Crisis
Classification-JEL: I12; I18; N34
Author-Name: Jay Bhattacharya
Author-Name: Christina Gathmann
Author-Person: pga85
Author-Name: Grant Miller
Note: AG DEV EH
Number: 18589
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18589
File-URL: http://www.nber.org/papers/w18589.pdf
File-Format: application/pdf
Publication-Status: published as Christina Gathmann & Marijke Welisch, 2012. "The Gorbachev Anti-Alcohol Campaign and Russia's Mortality Crisis," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 10(4), pages 62-68, December.
Publication-Status: published as Jay Bhattacharya & Christina Gathmann & Grant Miller, 2013. "The Gorbachev Anti-alcohol Campaign and Russia's Mortality Crisis," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 232-60, April.
Abstract: Political and economic transition is often blamed for Russia's 40% surge in deaths between 1990 and 1994. Highlighting that increases in mortality occurred primarily among alcohol-related causes and among working-age men (the heaviest drinkers), this paper investigates an alternative explanation: the demise of the 1985-1988 Gorbachev Anti-Alcohol Campaign. Using archival sources to build a new oblast-year data set spanning 1978-2000, we find a variety of evidence suggesting that the campaign's end explains a large share of the mortality crisis - implying that Russia's transition to capitalism and democracy was not as lethal as commonly suggested.
Handle: RePEc:nbr:nberwo:18589
Template-Type: ReDIF-Paper 1.0
Title: Buy-it-now or Take-a-chance: Price Discrimination through Randomized Auctions
Classification-JEL: D4; D44; D47; D82
Author-Name: L. Elisa Celis
Author-Name: Gregory Lewis
Author-Name: Markus M. Mobius
Author-Person: pmo367
Author-Name: Hamid Nazerzadeh
Note: IO
Number: 18590
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18590
File-URL: http://www.nber.org/papers/w18590.pdf
File-Format: application/pdf
Publication-Status: published as L. Elisa Celis & Gregory Lewis & Markus Mobius & Hamid Nazerzadeh, 2014. "Buy-It-Now or Take-a-Chance: Price Discrimination Through Randomized Auctions," Management Science, INFORMS, vol. 60(12), pages 2927-2948, December.
Abstract: Increasingly detailed consumer information makes sophisticated price discrimination possible. At fine levels of aggregation, demand may not obey standard regularity conditions. We propose a new randomized sales mechanism for such environments. Bidders can "buy-it-now" at a posted price, or "take-a-chance" in an auction where the top d > 1 bidders are equally likely to win. The randomized allocation incentivizes high valuation bidders to buy-it-now. We analyze equilibrium behavior, and apply our analysis to advertiser bidding data from Microsoft Advertising Exchange. In counterfactual simulations, our mechanism increases revenue by 4.4% and consumer surplus by 14.5% compared to an optimal second-price auction.
Handle: RePEc:nbr:nberwo:18590
Template-Type: ReDIF-Paper 1.0
Title: The ARRA: Some Unpleasant Welfare Arithmetic
Classification-JEL: E24; H31; I38
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: LS PE
Number: 18591
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18591
File-URL: http://www.nber.org/papers/w18591.pdf
File-Format: application/pdf
Abstract: Distributions of tax rates on job acceptance and layoff margins are estimated for unemployed household heads and spouses under three benefit and tax rule scenarios: actual rules under the American Reinvestment and Recovery Act, rules as they would have been if they had not been changed since 2007, and rules as they might have been with a bigger fiscal stimulus. Two or three million unemployed household heads and spouses, with a variety of tax situations, had as much disposable income while unemployed as they would have by accepting a job that paid 80-100 percent of their previous one. The number would have been less than one million under 2007 rules, and about nine million under a bigger stimulus. Tax obligations and foregone unemployment insurance about equally erode the rewards from retaining a job, or starting a new one.
Handle: RePEc:nbr:nberwo:18591
Template-Type: ReDIF-Paper 1.0
Title: Capital and Labor Reallocation Inside Firms
Classification-JEL: D24; G3; J63
Author-Name: Xavier Giroud
Author-Name: Holger M. Mueller
Note: CF
Number: 18592
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18592
File-URL: http://www.nber.org/papers/w18592.pdf
File-Format: application/pdf
Publication-Status: published as Capital and Labor Reallocation within Firms XAVIER GIROUD andHOLGER M. MUELLER† Article first published online: 23 JUL 2015 DOI: 10.1111/jofi.12254 © 2015 the American Finance Association Issue The Journal of Finance The Journal of Finance Volume 70, Issue 4, pages 1767–1804, August 2015
Abstract: We document how a plant-specific shock to investment opportunities at one plant of a firm ("treated plant") spills over to other plants of the same firm--but only if the firm is financially constrained. While the shock triggers an increase in investment and employment at the treated plant, this increase is offset by a decrease at other plants of the same magnitude, consistent with headquarters channeling scarce resources away from other plants and toward the treated plant. As a result of the resource reallocation, aggregate firm-wide productivity increases, suggesting that the reallocation is beneficial for the firm as a whole. We also show that--in order to provide the treated plant with scarce resources--headquarters does not uniformly "tax" all of the firm's other plants in the same way: It is more likely to take away resources from plants that are less productive, are not part of the firm's core industries, and are located far away from headquarters. We do not find any evidence of investment or employment spillovers at financially unconstrained firms.
Handle: RePEc:nbr:nberwo:18592
Template-Type: ReDIF-Paper 1.0
Title: Value-Based Differential Pricing: Efficient Prices for Drugs in a Global Context
Classification-JEL: I13; I18
Author-Name: Patricia M. Danzon
Author-Person: pda291
Author-Name: Adrian K. Towse
Author-Person: pto443
Author-Name: Jorge Mestre-Ferrandiz
Note: EH
Number: 18593
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18593
File-URL: http://www.nber.org/papers/w18593.pdf
File-Format: application/pdf
Publication-Status: published as Patricia Danzon & Adrian Towse & Jorge Mestre‐Ferrandiz, 2015. "Value‐Based Differential Pricing: Efficient Prices for Drugs in a Global Context," Health Economics, John Wiley & Sons, Ltd., vol. 24(3), pages 294-301, 03.
Abstract: This paper analyzes pharmaceutical pricing between and within countries to achieve second best static and dynamic efficiency. We distinguish countries with and without universal insurance, because insurance undermines patients' price sensitivity, potentially leading to prices above second-best efficient levels. In countries with universal insurance, if each payer unilaterally sets an incremental cost effectiveness ratio (ICER) threshold based on its citizens' willingness to pay for health; manufacturers price to that ICER threshold; and payers limit reimbursement to patients for whom a drug is cost-effective at that price and ICER, then the resulting price levels and use within each country and price differentials across countries are roughly consistent with second best static and dynamic efficiency. These value-based prices are expected to differ cross-nationally with per capita income and be broadly consistent with Ramsey Optimal Prices. Countries without comprehensive insurance avoid its distorting effects on prices but also lack financial protection and affordability for the poor. Conditions for efficient pricing in these self-pay countries include that consumers are well-informed about product quality and firms can price discriminate between rich and poor subgroups within and between countries.
Handle: RePEc:nbr:nberwo:18593
Template-Type: ReDIF-Paper 1.0
Title: Costly Litigation and Optimal Damages
Classification-JEL: K13; K41
Author-Name: A. Mitchell Polinsky
Author-Person: ppo94
Author-Name: Steven Shavell
Author-Person: psh42
Note: LE
Number: 18594
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18594
File-URL: http://www.nber.org/papers/w18594.pdf
File-Format: application/pdf
Publication-Status: published as International Review of Law and Economics Volume 37, March 2014, Pages 86–89 Cover image Costly litigation and optimal damages A. Mitchell Polinskya, 1, Steven Shavellb, 1,
Abstract: A basic principle of law is that damages paid by a liable party should equal the harm caused by that party. However, this principle is not correct when account is taken of litigation costs, because they too are part of the social costs associated with an injury. In this article we examine the influence of litigation costs on the optimal level of damages, assuming that litigation costs rise with the level of damages.
Handle: RePEc:nbr:nberwo:18594
Template-Type: ReDIF-Paper 1.0
Title: Offshoring and Directed Technical Change
Classification-JEL: F43; O31; O33
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Gino Gancia
Author-Person: pga165
Author-Name: Fabrizio Zilibotti
Author-Person: pzi3
Note: ITI POL
Number: 18595
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18595
File-URL: http://www.nber.org/papers/w18595.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2015. "Offshoring and Directed Technical Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 84-122, July.
Abstract: To study the short-run and long-run implications on wage inequality, we introduce directed technical change into a Ricardian model of offshoring. A unique final good is produced by combining a skilled and an unskilled product, each produced from a continuum of intermediates (tasks). Some of these tasks can be transferred from a skill-abundant West to a skill-scarce East. Profit maximization determines both the extent of offshoring and technological progress. Offshoring induces skill-biased technical change because it increases the relative price of skill intensive products and induces technical change favoring unskilled workers because it expands the market size for technologies complementing unskilled labor. In the empirically more relevant case, starting from low levels, an increase in offshoring opportunities triggers a transition with falling real wages for unskilled workers in the West, skill-biased technical change and rising skill premia worldwide. However, when the extent of offshoring becomes sufficiently large, further increases in offshoring induce technical change now biased in favor of unskilled labor because offshoring closes the gap between unskilled wages in the West and the East, thus limiting the power of the price effect fueling skill-biased technical change. The unequalizing impact of offshoring is thus greatest at the beginning. Transitional dynamics reveal that offshoring and technical change are substitutes in the short run but complements in the long run. Finally, though offshoring improves the welfare of workers in the East, it may benefit or harm unskilled workers in the West depending on elasticities and the equilibrium growth rate.
Handle: RePEc:nbr:nberwo:18595
Template-Type: ReDIF-Paper 1.0
Title: Carbon Taxes, Path Dependency and Directed Technical Change: Evidence from the Auto Industry
Classification-JEL: L62; O13; O3
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Antoine Dechezleprêtre
Author-Person: pde570
Author-Name: David Hemous
Author-Person: phe470
Author-Name: Ralf Martin
Author-Person: pma225
Author-Name: John Van Reenen
Author-Person: pva45
Note: EEE
Number: 18596
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18596
File-URL: http://www.nber.org/papers/w18596.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & Antoine Dechezlepr�tre & David H�mous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 000 - 000.
Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between "dirty" (internal combustion engine) and "clean" (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies.
Handle: RePEc:nbr:nberwo:18596
Template-Type: ReDIF-Paper 1.0
Title: Do Labor Market Policies Have Displacement Effects? Evidence from a Clustered Randomized Experiment
Classification-JEL: C93; J64; J68
Author-Name: Bruno Crépon
Author-Person: pcr135
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Marc Gurgand
Author-Person: pgu99
Author-Name: Roland Rathelot
Author-Name: Philippe Zamora
Author-Person: pza161
Note: LS
Number: 18597
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18597
File-URL: http://www.nber.org/papers/w18597.pdf
File-Format: application/pdf
Publication-Status: published as Bruno Crépon & Esther Duflo & Marc Gurgand & Roland Rathelot & Philippe Zamora, 2013. "Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 531-580.
Abstract: This paper reports the results from a randomized experiment designed to evaluate the direct and indirect (displacement) impacts of job placement assistance on the labor market outcomes of young, educated job seekers in France. We use a two-step design. In the first step, the proportions of job seekers to be assigned to treatment (0%, 25%, 50%, 75% or100%) were randomly drawn for each of the 235 labor markets (e.g. cities) participating in the experiment. Then, in each labor market, eligible job seekers were randomly assigned to the treatment, following this proportion. After eight months, eligible, unemployed youths who were assigned to the program were significantly more likely to have found a stable job than those who were not. But these gains are transitory, and they appear to have come partly at the expense of eligible workers who did not benefit from the program, particularly in labor markets where they compete mainly with other educated workers, and in weak labor markets. Overall, the program seems to have had very little net benefits.
Handle: RePEc:nbr:nberwo:18597
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Texas's Targeted Pre-Kindergarten Program on Academic Performance
Classification-JEL: H52; I20; I21; I28; J38
Author-Name: Rodney J. Andrews
Author-Name: Paul Jargowsky
Author-Name: Kristin Kuhne
Note: LS
Number: 18598
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18598
File-URL: http://www.nber.org/papers/w18598.pdf
File-Format: application/pdf
Abstract: There has been a resurgence in research that investigates the efficacy of early investments as a means of reducing gaps in academic performance. However, the strongest evidence for these effects comes from experimental evaluations of small, highly enriched programs. We add to this literature by assessing the extent to which a large-scale public program, Texas's targeted pre-Kindergarten (pre-K), affects scores on math and reading achievement tests, the likelihood of being retained in grade, and the probability that a student receives special education services. We find that having participated in Texas's targeted pre-K program is associated with increased scores on the math and reading sections of the Texas Assessment of Academic Skills (TAAS), reductions in the likelihood of being retained in grade, and reductions in the probability of receiving special education services. We also find that participating pre-K increases mathematics scores for students who take the Spanish version of the TAAS tests. These results show that even modest, public pre-K program implemented at scale can have important effects on students educational achievement
Handle: RePEc:nbr:nberwo:18598
Template-Type: ReDIF-Paper 1.0
Title: The Promise of Positive Optimal Taxation: Normative Diversity and a role for Equal Sacrifice
Classification-JEL: D6; D63; H2; H21
Author-Name: Matthew Weinzierl
Author-Person: pwe206
Note: PE
Number: 18599
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18599
File-URL: http://www.nber.org/papers/w18599.pdf
File-Format: application/pdf
Publication-Status: published as Weinzierl, Matthew, 2014. "The promise of positive optimal taxation: normative diversity and a role for equal sacrifice," Journal of Public Economics, Elsevier, vol. 118(C), pages 128-142.
Abstract: A prominent assumption in modern optimal tax research is that the objective of taxation is Utilitarian. I present new survey evidence that most people reject this assumptionʼs implications for several prominent features of tax policy, instead preferring tax policies based at least in part on a classic alternative objective: the principle of Equal Sacrifice. I generalize the standard model to accommodate this preference for a mixed objective, proposing a method by which to make disparate criteria commensurable while respecting Pareto efficiency. Then, I show that optimal policy in this generalized model, calibrated to the survey evidence and U.S. microdata, is capable of quantitatively matching several features of existing tax policy that are incompatible in the conventional model but widely endorsed in the survey and reality, including the coexistence of substantial redistribution and limited tagging. Together, these findings demonstrate the potential of a positive theory of optimal taxation.
Handle: RePEc:nbr:nberwo:18599
Template-Type: ReDIF-Paper 1.0
Title: When Is There a Strong Transfer Risk from the Sovereigns to the Corporates? Property Rights Gaps and CDS Spreads
Classification-JEL: F3; G1; G3; O43
Author-Name: Jennie Bai
Author-Person: pba357
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: CF DEV IFM
Number: 18600
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18600
File-URL: http://www.nber.org/papers/w18600.pdf
File-Format: application/pdf
Abstract: When a sovereign faces the risk of debt default, it may be tempted to expropriate the private sector. This may be one reason for why international investment in private companies has to take into account the sovereign risk. But the likelihood of a transfer from the sovereign risk to corporate default risks may be mitigated by legal institutions that provide strong property rights protection. Using a novel credit default swaps (CDS) dataset covering both government and corporate entities across 30 countries, this paper studies both the average strength of the transfer risks and the role of institutions in mitigating such risks. We find that (1) sovereign risk on average has a statistically and economically significant influence on corporate credit risks. All else equal, a 100 basis points increase in the sovereign CDS spread leads to an increase in corporate CDS spreads by 71 basis points. (2) The sovereign-corporate relation varies across corporations, with state-owned companies exhibiting a stronger relation. (3) However, strong property rights institutions tend to weaken the connection. In contrast, contracting institutions (protection of creditor rights or minority shareholder rights) do not appear to matter much in this context
Handle: RePEc:nbr:nberwo:18600
Template-Type: ReDIF-Paper 1.0
Title: Narrow Framing and Life Insurance
Classification-JEL: D03; G02; G22
Author-Name: Daniel Gottlieb
Author-Person: pgo110
Author-Name: Kent Smetters
Author-Person: psm21
Note: AG IO
Number: 18601
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18601
File-URL: http://www.nber.org/papers/w18601.pdf
File-Format: application/pdf
Abstract: Life insurance is a large yet poorly understood industry. A final death benefit is not paid for a majority of policies. Insurers make money on customers that lapse their policies and lose money on customers that keep their coverage. Policy loads are inverted relative to the dynamic pattern consistent with reclassification risk insurance. As an industry, insurers lobby to ban secondary markets despite the liquidity provided. These (and other) stylized facts cannot easily be explained by information problems alone. We demonstrate that a simple model of narrow framing, where consumers do not fully account for their need for future liquidity when purchasing insurance, offers a simple and unified explanation.
Handle: RePEc:nbr:nberwo:18601
Template-Type: ReDIF-Paper 1.0
Title: Experience Matters: Human Capital and Development Accounting
Classification-JEL: O11; O4; O57
Author-Name: David Lagakos
Author-Name: Benjamin Moll
Author-Person: pmo661
Author-Name: Tommaso Porzio
Author-Person: ppo623
Author-Name: Nancy Qian
Author-Person: pqi25
Author-Name: Todd Schoellman
Author-Person: psc264
Note: DEV EFG LS
Number: 18602
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18602
File-URL: http://www.nber.org/papers/w18602.pdf
File-Format: application/pdf
Abstract: We use international household-survey data to document that experience-wage profiles are flatter in poorer countries than in richer countries. We find a quantitatively similar pattern when we estimate returns to foreign experience by country of origin among U.S. immigrants. The most likely explanation for both findings is that workers accumulate less human capital from experience in poorer countries. Taking this into consideration in development accounting substantially increases the role of human capital in accounting for cross-country income differences.
Handle: RePEc:nbr:nberwo:18602
Template-Type: ReDIF-Paper 1.0
Title: Cyclical Variation in Labor Hours and Productivity Using the ATUS
Classification-JEL: E23; J22
Author-Name: Michael C. Burda
Author-Person: pbu123
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Author-Name: Jay Stewart
Author-Person: pst472
Note: EFG LS
Number: 18603
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18603
File-URL: http://www.nber.org/papers/w18603.pdf
File-Format: application/pdf
Publication-Status: published as Michael C. Burda & Daniel S. Hamermesh & Jay Stewart, 2013. "Cyclical Variation in Labor Hours and Productivity Using the ATUS," American Economic Review, American Economic Association, vol. 103(3), pages 99-104, May.
Abstract: We examine monthly variation in weekly work hours using data for 2003-10 from the Current Population Survey (CPS) on hours/worker, from the Current Employment Survey (CES) on hours/job, and from the American Time Use Survey (ATUS) on both. The ATUS data minimize recall difficulties and constrain hours of work to accord with total available time. The ATUS hours/worker are less cyclical than the CPS series, but the hours/job are more cyclical than the CES series. We present alternative estimates of productivity based on ATUS data and find that it is more pro-cyclical than other productivity measures.
Handle: RePEc:nbr:nberwo:18603
Template-Type: ReDIF-Paper 1.0
Title: Concording EU Trade and Production Data over Time
Classification-JEL: C81; F1; L2
Author-Name: Ilke Van Beveren
Author-Person: pva292
Author-Name: Andrew B. Bernard
Author-Name: Hylke Vandenbussche
Author-Person: pva87
Note: ITI
Number: 18604
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18604
File-URL: http://www.nber.org/papers/w18604.pdf
File-Format: application/pdf
Abstract: This paper provides concordance procedures for product-level trade and production data in the EU and examines the implications of changing product classifications on measured product adding and dropping at Belgian firms. Using the algorithms developed by Pierce and Schott (2012a,b), the paper develops concordance procedures that allow researchers to trace changes in coding systems over time and to translate product-level production and trade data into a common classification that is consistent both within a single year and over time. Separate procedures are created for the eight-digit Combined Nomenclature system used to classify international trade activities at the product level within the European Union as well as for the eight-digit Prodcom categories used to classify products in European domestic production data. The paper further highlights important differences in coverage between the Prodcom and Combined Nomenclature classifications which need to be taken into account when generating combined domestic production and international trade data at the product level. The use of consistent product codes over time results in less product adding and dropping at continuing firms in the Belgian export and production data.
Handle: RePEc:nbr:nberwo:18604
Template-Type: ReDIF-Paper 1.0
Title: Does State Preschool Crowd-Out Private Provision? The Impact of Universal Preschool on the Childcare Sector in Oklahoma and Georgia
Classification-JEL: I21
Author-Name: Daphna Bassok
Author-Person: pba1240
Author-Name: Maria Fitzpatrick
Author-Person: pfi211
Author-Name: Susanna Loeb
Note: ED
Number: 18605
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18605
File-URL: http://www.nber.org/papers/w18605.pdf
File-Format: application/pdf
Publication-Status: published as Bassok, Daphna & Fitzpatrick, Maria & Loeb, Susanna, 2014. "Does state preschool crowd-out private provision? The impact of universal preschool on the childcare sector in Oklahoma and Georgia," Journal of Urban Economics, Elsevier, vol. 83(C), pages 18-33.
Abstract: The success of any governmental subsidy depends on whether it increases or crowds out existing consumption. Yet to date there has been little empirical evidence, particularly in the education sector, on whether government intervention crowds out private provision. Universal preschool policies introduced in Georgia and Oklahoma offer an opportunity to investigate the impact of government provision and government funding on provision of childcare. Using synthetic control group difference-in-difference and interrupted time series estimation frameworks, we examine the effects of universal preschool on childcare providers. In both states there is an increase in the amount of formal childcare. While there is no crowd-out in Oklahoma, some of the government subsidized preschool in Georgia replaces childcare that would have occurred otherwise. We find the largest positive effects on provision in the most rural areas, a finding that may help direct policymaking efforts aimed at expanding childcare.
Handle: RePEc:nbr:nberwo:18605
Template-Type: ReDIF-Paper 1.0
Title: External Imbalances and Financial Crises
Classification-JEL: E3; E4; E5; F3; F4; N1
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE IFM
Number: 18606
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18606
File-URL: http://www.nber.org/papers/w18606.pdf
File-Format: application/pdf
Publication-Status: published as 6. External Imbalances and Financial Crises Alan M. Taylor Financial Crises: Causes, Consequences, and Policy Responses Author/Editor: Stijn Claessens, M Ayhan Kose, Luc Laeven, Fabian Valencia Release Date: © February, 2014 ISBN : 978-1-47554-340-7
Publication-Status: published as Alan Taylor, 2013. "External Imbalances and Financial Crises," IMF Working Papers, vol 13(260).
Abstract: In broad perspective, there have been essentially two competing views of the global financial crisis, albeit there are some complementarities among them. One view looks across the border: it mainly blames external imbalances, the large-scale mix of unprecedented pattern current account deficits and surpluses which entailed massive and growing net and gross international financial flows in the last decade. The alternative view looks within the border: it finds more fault in the domestic arena of the afflicted countries, attributing the problems to financial systems where risks originated in excessive credit booms in local banks. This paper uses the lens of macroeconomic and financial history to confront these dueling hypotheses with evidence. Of the two, the credit boom explanation stands out as the most plausible predictor of financial crises since the dawn of modern finance capitalism in the late nineteenth century. Historically, we find that global imbalances are not as important as a factor in financial crises as is often perceived, and they have much less correlation with subsequent episodes of financial distress compared to direct indicators like credit drawn from the financial system itself.
Handle: RePEc:nbr:nberwo:18606
Template-Type: ReDIF-Paper 1.0
Title: Risk Management and Climate Change
Classification-JEL: C02; Q54
Author-Name: Howard Kunreuther
Author-Name: Geoffrey Heal
Author-Person: phe40
Author-Name: Myles Allen
Author-Name: Ottmar Edenhofer
Author-Person: ped63
Author-Name: Christopher B. Field
Author-Name: Gary Yohe
Author-Person: pyo127
Note: EEE
Number: 18607
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18607
File-URL: http://www.nber.org/papers/w18607.pdf
File-Format: application/pdf
Publication-Status: published as Nature Climate Change | Perspective Print Share/bookmark Risk management and climate change Howard Kunreuther, Geoffrey Heal, Myles Allen, Ottmar Edenhofer, Christopher B. Field & Gary Yohe Affiliations Contributions Corresponding author Nature Climate Change 3, 447–450 (2013) doi:10.1038/nclimate1740 Received 29 June 2012 Accepted 09 October 2012 Published online 24 March 2013
Abstract: The selection of climate policies should be an exercise in risk management reflecting the many relevant sources of uncertainty. Studies of climate change and its impacts rarely yield consensus on the distribution of exposure, vulnerability, or possible outcomes. Hence policy analysis cannot effectively evaluate alternatives using standard approaches such as expected utility theory and benefit-cost analysis. This Perspective highlights the value of robust decision-making tools designed for situations, such as evaluating climate policies, where generally agreed-upon probability distributions are not available and stakeholders differ in their degree of risk tolerance. This broader risk management approach enables one to examine a range of possible outcomes and the uncertainty surrounding their likelihoods.
Handle: RePEc:nbr:nberwo:18607
Template-Type: ReDIF-Paper 1.0
Title: Misconduct in Credence Good Markets
Classification-JEL: D8; G2; L15; M5
Author-Name: Jennifer Brown
Author-Person: pbr796
Author-Name: Dylan B. Minor
Note: IO
Number: 18608
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18608
File-URL: http://www.nber.org/papers/w18608.pdf
File-Format: application/pdf
Abstract: We examine misconduct in credence good markets with price taking experts. We propose a market-level model in which price-taking experts extract surplus based on the value of their firm's brand and their own skill. We test the predictions of the model using sales complaint data for exclusive and independent insurance agents. We find that exclusive insurance agents working for large branded firms are more likely to be the subject of a justified sales complaint, relative to independent experts, despite doing substantially less business. In addition, more experienced experts attract more complaints per year.
Handle: RePEc:nbr:nberwo:18608
Template-Type: ReDIF-Paper 1.0
Title: Did the Community Reinvestment Act (CRA) Lead to Risky Lending?
Classification-JEL: G01; G21; G38; H24; H31
Author-Name: Sumit Agarwal
Author-Person: pag47
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Nittai Bergman
Author-Name: Amit Seru
Author-Person: pse308
Note: AP CF
Number: 18609
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18609
File-URL: http://www.nber.org/papers/w18609.pdf
File-Format: application/pdf
Abstract: Yes, it did. We use exogenous variation in banks' incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming.
Handle: RePEc:nbr:nberwo:18609
Template-Type: ReDIF-Paper 1.0
Title: Who is Exposed to Gas Prices? How Gasoline Prices Affect Automobile Manufacturers and Dealerships
Classification-JEL: L1; L2; L9; Q4
Author-Name: Meghan R. Busse
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Florian Zettelmeyer
Note: EEE IO
Number: 18610
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18610
File-URL: http://www.nber.org/papers/w18610.pdf
File-Format: application/pdf
Publication-Status: published as Meghan R. Busse & Christopher R. Knittel & Jorge Silva-Risso & Florian Zettelmeyer, 2016. "Who is exposed to gas prices? How gasoline prices affect automobile manufacturers and dealerships," Quantitative Marketing and Economics, Springer, vol. 14(1), pages 41-95, March.
Abstract: Many consumers are keenly aware of gasoline prices, and consumer responses to gasoline prices have been well studied. In this paper, by contrast, we investigate how gasoline prices affect the automobile industry: manufacturers and dealerships. We estimate how changes in gasoline prices affect equilibrium prices and sales of both new and used vehicles of different fuel economies. We investigate the implications of these effects for individual auto manufacturers, taking into account differences in manufacturers' vehicle portfolios. We also investigate effects on manufacturers' affiliated dealership networks, including effects implied by the changes in used vehicle market outcomes.
Handle: RePEc:nbr:nberwo:18610
Template-Type: ReDIF-Paper 1.0
Title: Securitization
Classification-JEL: E0; G0; G2
Author-Name: Gary Gorton
Author-Person: pgo458
Author-Name: Andrew Metrick
Author-Person: pme99
Note: AP CF EFG ME
Number: 18611
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18611
File-URL: http://www.nber.org/papers/w18611.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of the Economics of Finance Volume 2, Part A, 2013, Pages 1–70 Cover image Chapter 1 – Securitization * Gary Gortona, Andrew Metrickb
Abstract: We survey the literature on securitization and lay out a research program for its open questions. Securitization is the process by which loans, previously held to maturity on the balance sheets of financial intermediaries, are sold in capital markets. Securitization has grown from a small amount in 1990 to a pre-crisis issuance amount that makes it one of the largest capital markets. In 2005 the amount of non-mortgage asset-backed securities issued in U.S. capital markets exceeded the amount of U.S. corporate debt issued, and these securitized bonds - even those unrelated to subprime mortgages -- were at center of the recent financial crisis. Nevertheless, despite the transformative effect of securitization on financial intermediation, the literature is still relatively small and many fundamental questions remain open.
Handle: RePEc:nbr:nberwo:18611
Template-Type: ReDIF-Paper 1.0
Title: A Poll Tax by any Other Name: The Political Economy of Disenfranchisement
Classification-JEL: H0; J15; N11
Author-Name: Daniel B. Jones
Author-Person: pjo297
Author-Name: Werner Troesken
Author-Person: ptr352
Author-Name: Randall Walsh
Author-Person: pwa222
Note: DAE PE POL
Number: 18612
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18612
File-URL: http://www.nber.org/papers/w18612.pdf
File-Format: application/pdf
Abstract: In this paper, we examine the political economy of voting rights in the American South. We begin by measuring the impact of both formal laws and informal modes of voter suppression on African-American political participation. In contrast to prior research, we find evidence that both formal and informal modes of voter suppression were important and mutually reinforcing. Part of our analysis includes explicitly identifying the magnitude and causal effects of lynching on black voter participation. We then turn to analyzing to the relatively unexplored question of how disenfranchisement-and the accompanying shifts in political power-affected policy outcomes, congressional voting, and partisan control of state and federal legislatures.
Handle: RePEc:nbr:nberwo:18612
Template-Type: ReDIF-Paper 1.0
Title: Mobile Scientists and International Networks
Classification-JEL: F22; J24; J61; O30
Author-Name: Giuseppe Scellato
Author-Name: Chiara Franzoni
Author-Person: pfr158
Author-Name: Paula Stephan
Author-Person: pst458
Note: LS
Number: 18613
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18613
File-URL: http://www.nber.org/papers/w18613.pdf
File-Format: application/pdf
Abstract: This paper explores the link between mobility and the presence of international research networks. Data come from the GlobSci survey of authors of articles published in 2009 in four fields of science working in sixteen countries. Summary evidence suggests that migration plays an important role in the formation of international networks. Approximately 40 percent of the foreign-born researchers report having kept research links with colleagues in their country of origin. Non-mobile researchers are less likely to collaborate with someone outside their country than are either the foreign born or returnees. When the non-mobile collaborate, their networks span fewer countries. Econometric results are consistent with the hypothesis that internationally mobile researchers contribute significantly to extending the international scope and quality of the research network in destination countries at no detriment to the quality of the research performed. Results also suggest that the "foreign premium" on collaboration propensity is driven in large part by mobile researchers who either trained or worked outside the destination country where they were surveyed in 2011. With but one exception, the mobility findings persist when we estimate models separately for the US, Europe, and other countries.
Handle: RePEc:nbr:nberwo:18613
Template-Type: ReDIF-Paper 1.0
Title: Cognitive Mobility: Labor Market Responses to Supply Shocks in the Space of Ideas
Classification-JEL: J6; O31
Author-Name: George J. Borjas
Author-Person: pbo44
Author-Name: Kirk B. Doran
Author-Person: pdo228
Note: LS
Number: 18614
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18614
File-URL: http://www.nber.org/papers/w18614.pdf
File-Format: application/pdf
Publication-Status: published as George J. Borjas & Kirk B. Doran, 2015. "Cognitive Mobility: Labor Market Responses to Supply Shocks in the Space of Ideas," Journal of Labor Economics, University of Chicago Press, vol. 33(S1), pages S109 - S145.
Publication-Status: published as Cognitive Mobility: Labor Market Responses to Supply Shocks in the Space of Ideas, George J. Borjas, Kirk B. Doran. in US High-Skilled Immigration in the Global Economy, Turner and Kerr. 2015
Abstract: Knowledge producers conducting research on a particular set of questions may respond to supply and demand shocks by shifting resources to a different set of questions. Cognitive mobility measures the transition from one location to another in idea space. We examine the cognitive mobility flows unleashed by the influx of Soviet mathematicians into the United States after the collapse of the Soviet Union. The data reveal that American mathematicians moved away from fields that received large numbers of Soviet émigrés. Diminishing returns in specific research areas, rather than beneficial human capital spillovers, dominated the cognitive mobility decisions of knowledge producers.
Handle: RePEc:nbr:nberwo:18614
Template-Type: ReDIF-Paper 1.0
Title: Importers, Exporters, and Exchange Rate Disconnect
Classification-JEL: F14; F31; F41
Author-Name: Mary Amiti
Author-Person: pam39
Author-Name: Oleg Itskhoki
Author-Person: pit14
Author-Name: Jozef Konings
Author-Person: pko61
Note: IFM ITI
Number: 18615
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18615
File-URL: http://www.nber.org/papers/w18615.pdf
File-Format: application/pdf
Publication-Status: published as Mary Amiti & Oleg Itskhoki & Jozef Konings, 2014. "Importers, Exporters, and Exchange Rate Disconnect," American Economic Review, American Economic Association, vol. 104(7), pages 1942-78, July.
Abstract: Large exporters are simultaneously large importers. In this paper, we show that this pattern is key to understanding low aggregate exchange rate pass-through as well as the variation in pass-through across exporters. First, we develop a theoretical framework that combines variable markups due to strategic complementarities and endogenous choice to import intermediate inputs. The model predicts that firms with high import shares and high market shares have low exchange rate pass-through. Second, we test and quantify the theoretical mechanisms using Belgian firm-product-level data with information on exports by destination and imports by source country. We confirm that import intensity and market share are the prime determinants of pass-through in the cross-section of firms. A small exporter with no imported inputs has a nearly complete pass-through, while a firm at the 95th percentile of both import intensity and market share distributions has a pass-through of just above 50%, with the marginal cost and markup channels playing roughly equal roles. The largest exporters are simultaneously high-market-share and high-import-intensity firms, which helps explain the low aggregate pass-through and exchange rate disconnect observed in the data.
Handle: RePEc:nbr:nberwo:18615
Template-Type: ReDIF-Paper 1.0
Title: Harvests and Financial Crises in Gold-Standard America
Classification-JEL: E32; E4; N11
Author-Name: Christopher Hanes
Author-Person: pha665
Author-Name: Paul W. Rhode
Author-Person: prh14
Note: DAE
Number: 18616
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18616
File-URL: http://www.nber.org/papers/w18616.pdf
File-Format: application/pdf
Publication-Status: published as Hanes, Christopher & Rhode, Paul W., 2013. "Harvests and Financial Crises in Gold Standard America," The Journal of Economic History, Cambridge University Press, vol. 73(01), pages 201-246, March.
Abstract: Most American financial crises of the postbellum gold-standard era were caused by fluctuations in the cotton harvest due to exogenous factors such as weather. The transmission channel ran through export revenues and financial markets under the pre-1914 monetary regime. A poor cotton harvest depressed export revenues and reduced international demand for American assets, which depressed American stock prices, drained deposits from money-center banks and precipitated a business-cycle downturn - conditions that bred financial crises. The crises caused by cotton harvests could have been prevented by an American central bank, even under gold-standard constraints.
Handle: RePEc:nbr:nberwo:18616
Template-Type: ReDIF-Paper 1.0
Title: Valuation Risk and Asset Pricing
Classification-JEL: G12
Author-Name: Rui Albuquerque
Author-Person: pal94
Author-Name: Martin S. Eichenbaum
Author-Person: pei4
Author-Name: Sergio Rebelo
Note: AP
Number: 18617
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18617
File-URL: http://www.nber.org/papers/w18617.pdf
File-Format: application/pdf
Publication-Status: published as RUI ALBUQUERQUE & MARTIN EICHENBAUM & VICTOR XI LUO & SERGIO REBELO, 2016. "Valuation Risk and Asset Pricing," The Journal of Finance, vol 71(6), pages 2861-2904.
Abstract: Standard representative-agent models fail to account for the weak correlation between stock returns and measurable fundamentals, such as consumption and output growth. This failing, which underlies virtually all modern asset-pricing puzzles, arises because these models load all uncertainty onto the supply side of the economy. We propose a simple theory of asset pricing in which demand shocks play a central role. These shocks give rise to valuation risk that allows the model to account for key asset pricing moments, such as the equity premium, the bond term premium, and the weak correlation between stock returns and fundamentals.
Handle: RePEc:nbr:nberwo:18617
Template-Type: ReDIF-Paper 1.0
Title: Consolidating the Evidence on Income Mobility in the Western States of Germany and the U.S. from 1984-2006
Classification-JEL: J1; J6
Author-Name: Gulgun Bayaz-Ozturk
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Kenneth A. Couch
Author-Person: pco89
Note: LS
Number: 18618
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18618
File-URL: http://www.nber.org/papers/w18618.pdf
File-Format: application/pdf
Publication-Status: published as CONSOLIDATING THE EVIDENCE ON INCOME MOBILITY IN THE WESTERN STATES OF GERMANY AND THE UNITED STATES FROM 1984 TO 2006 GULGUN BAYAZ-OZTURK1, RICHARD V. BURKHAUSER2 andKENNETH A. COUCH3 Article first published online: 7 JUN 2013 DOI: 10.1111/ecin.12025 © 2013 Western Economic Association International Issue Economic Inquiry Economic Inquiry Volume 52, Issue 1, pages 431–443, January 2014
Abstract: The cross-national intragenerational income mobility literature assumes within-country mobility is invariant over the period measured. We argue that a great social transformation--German reunification-- abruptly and permanently altered economic mobility. Using standard measures of mobility (with panel data for the western states of Germany and the U.S.) over the entire period 1984-2006, we find the conventional result that income mobility is greater in Germany. But when we cut the data into moving five-year windows and compare mobility before and after reunification, income mobility declines significantly over the years immediately following reunification in Germany but not in the U.S.
Handle: RePEc:nbr:nberwo:18618
Template-Type: ReDIF-Paper 1.0
Title: Disagreement and Asset Prices
Classification-JEL: G12; G14
Author-Name: Bruce I. Carlin
Author-Name: Francis A. Longstaff
Author-Person: plo283
Author-Name: Kyle Matoba
Note: AP
Number: 18619
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18619
File-URL: http://www.nber.org/papers/w18619.pdf
File-Format: application/pdf
Publication-Status: published as Bruce I. Carlin & Francis A. Longstaff & Kyle Matoba, 2014. "Disagreement and asset prices," Journal of Financial Economics, vol 114(2), pages 226-238.
Abstract: How do differences of opinion affect asset prices? Do investors earn a risk premium when disagreement arises in the market? Despite their fundamental importance, these questions are among the most controversial issues in finance. In this paper, we use a novel data set that allows us to directly measure the level of disagreement among Wall Street mortgage dealers about prepayment speeds. We examine how disagreement evolves over time and study its effects on expected returns, return volatility, and trading volume in the mortgage-backed security market. We find that increased disagreement is associated with higher expected returns, higher return volatility, and larger trading volume. These results imply that there is a positive risk premium for disagreement in asset prices. We also show that volatility in and of itself does not lead to higher trading volume. Rather, it is only when disagreement arises in the market that higher uncertainty is associated with more trading. Finally, we are able to distinguish empirically between two competing hypotheses regarding how information in markets gets incorporated into asset prices. We find that sophisticated investors appear to update their beliefs through a rational expectations mechanism when disagreement arises.
Handle: RePEc:nbr:nberwo:18619
Template-Type: ReDIF-Paper 1.0
Title: Firm/Employee Matching: An Industry Study of American Lawyers
Classification-JEL: J44; K00; M51
Author-Name: Paul Oyer
Author-Person: poy2
Author-Name: Scott Schaefer
Note: IO LE LS
Number: 18620
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18620
File-URL: http://www.nber.org/papers/w18620.pdf
File-Format: application/pdf
Publication-Status: published as Paul Oyer & Scott Schaefer, 2016. "Firm/Employee Matching," ILR Review, vol 69(2), pages 378-404.
Abstract: We study the sources of match-specific value at large American law firms by analyzing how graduates of law schools group into law firms. We measure the degree to which lawyers from certain schools concentrate within firms and then analyze how this agglomeration can be explained by "natural advantage" factors (such as geographic proximity) and by productive spillovers across graduates of a given school. We show that large law firms tend to be concentrated with regard to the law schools they hire from and that individual offices within these firms are substantially more concentrated. The degree of concentration is highly variable, as there is substantial variation in firms' hiring strategies. There are two main drivers of variation in law school concentration within law offices. First, geography drives a large amount of concentration, as most firms hire largely from local schools. Second, we show that school-based networks (and possibly productive spillovers) are important because partners' law schools drive associates' law school composition even controlling for firm, school, and firm/school match characteristics and when we instrument for partners' law schools.
Handle: RePEc:nbr:nberwo:18620
Template-Type: ReDIF-Paper 1.0
Title: Thirty Years of Prospect Theory in Economics: A Review and Assessment
Classification-JEL: D03; D81; G02
Author-Name: Nicholas C. Barberis
Note: AP
Number: 18621
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18621
File-URL: http://www.nber.org/papers/w18621.pdf
File-Format: application/pdf
Publication-Status: published as Barberis, Nicholas C. 2013. "Thirty Years of Prospect Theory in Economics: A Review and Assessment." Journal of Economic Perspectives, 27(1): 173-96. DOI: 10.1257/jep.27.1.173
Abstract: Prospect theory, first described in a 1979 paper by Daniel Kahneman and Amos Tversky, is widely viewed as the best available description of how people evaluate risk in experimental settings. While the theory contains many remarkable insights, economists have found it challenging to apply these insights, and it is only recently that there has been real progress in doing so. In this paper, after first reviewing prospect theory and the difficulties inherent in applying it, I discuss some of this recent work. While it is too early to declare this research effort an unqualified success, the rapid progress of the last decade makes me optimistic that at least some of the insights of prospect theory will eventually find a permanent and significant place in mainstream economic analysis.
Handle: RePEc:nbr:nberwo:18621
Template-Type: ReDIF-Paper 1.0
Title: A Voting Architecture for the Governance of Free-Driver Externalities, with Application to Geoengineering
Classification-JEL: Q5; Q54
Author-Name: Martin Weitzman
Note: EEE
Number: 18622
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18622
File-URL: http://www.nber.org/papers/w18622.pdf
File-Format: application/pdf
Publication-Status: published as A Voting Architecture for the Governance of Free-Driver Externalities, with Application to Geoengineering† Martin L. Weitzman Article first published online: 14 JUL 2015 DOI: 10.1111/sjoe.12120 © The editors of The Scandinavian Journal of Economics 2015. Issue Cover image for Vol. 117 Issue 3 The Scandinavian Journal of Economics Early View (Online Version of Record published before inclusion in an issue)
Abstract: Climate change is a global "free rider" problem because significant abatement of greenhouse gases is an expensive public good requiring international cooperation to apportion compliance among states. But it is also a global "free driver" problem because geoengineering the stratosphere with reflective particles to block incoming solar radiation is so cheap that it could essentially be undertaken unilaterally by one state perceiving itself to be in peril. This paper develops the main features of a "free driver" externality in a simple model based on the asymmetric consequences of type-I and type-II errors. I propose a social-choice decision architecture based on the solution concept of a supermajority voting rule and derive its basic properties. In the model this supermajority voting rule attains the socially optimal cooperative solution, which is a new theoretical result around which the paper is built.
Handle: RePEc:nbr:nberwo:18622
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Minimum Age of Employment Regulation on Child Labor and Schooling: Evidence from UNICEF MICS Countries
Classification-JEL: J08; J22; J24; J80
Author-Name: Eric V. Edmonds
Author-Person: ped27
Author-Name: Maheshwor Shrestha
Note: CH DEV LS
Number: 18623
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18623
File-URL: http://www.nber.org/papers/w18623.pdf
File-Format: application/pdf
Publication-Status: published as IZA Journal of Labor Policy December 2012, 1:14, Open Access Date: 31 Dec 2012 The impact of minimum age of employment regulation on child labor and schooling * Eric V Edmonds, Maheshwor Shrestha
Abstract: Promoting minimum age of employment regulation has been a centerpiece in child labor policy for the last 15 years. If enforced, minimum age regulation would change the age profile of paid child employment. Using micro-data from 59 mostly low-income countries, we observe that age can explain less than 1 percent of the variation in child participation in paid employment. In contrast, child-invariant household attributes account for 63 percent of the variation in participation in paid employment. While age may explain little of the variation in paid employment, minimum age of employment regulation could simultaneously impact time allocation. We do not observe evidence consistent with enforcement of minimum age regulation in any country examined, although light work regulation appears to have been enforced in one country.
Handle: RePEc:nbr:nberwo:18623
Template-Type: ReDIF-Paper 1.0
Title: Non-Cognitive Ability, Test Scores, and Teacher Quality: Evidence from 9th Grade Teachers in North Carolina
Classification-JEL: H0; I2; J0
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Note: CH ED LS PE
Number: 18624
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18624
File-URL: http://www.nber.org/papers/w18624.pdf
File-Format: application/pdf
Abstract: This paper presents a model where teacher effects on long-run outcomes reflect effects on both cognitive skills (measured by test-scores) and non-cognitive skills (measured by non-test-score outcomes). Consistent with the model, results from administrative data show that teachers have causal effects on skills not measured by testing, but reflected in absences, suspensions, grades, and on-time grade progression. Teacher effects on these non-test-score outcomes in 9th grade predict longer-run effects on high-school completion and proxies for college-going—above and beyond their effects on test scores. Effects on non-test-score outcomes are particularly important for English teachers for whom including effects on the non-test-score outcomes triples the predicable variability of teacher effects on longer-run outcomes.
Handle: RePEc:nbr:nberwo:18624
Template-Type: ReDIF-Paper 1.0
Title: Matthew: Effect or Fable?
Classification-JEL: O31; O33
Author-Name: Pierre Azoulay
Author-Name: Toby Stuart
Author-Name: Yanbo Wang
Note: PR
Number: 18625
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18625
File-URL: http://www.nber.org/papers/w18625.pdf
File-Format: application/pdf
Publication-Status: published as Pierre Azoulay & Toby Stuart & Yanbo Wang, 2014. "Matthew: Effect or Fable?," Management Science, vol 60(1), pages 92-109.
Abstract: In a market context, a status effect occurs when actors are accorded differential recognition for their efforts depending on their location in a status ordering, holding constant the quality of these efforts. In practice, because it is very difficult to measure quality, this ceteris paribus proviso often precludes convincing empirical assessments of the magnitude of status effects. We address this problem by examining the impact of a major status-conferring prize that shifts actors' positions in a prestige ordering. Specifically, using a precisely constructed matched sample, we estimate the effect of a scientist becoming a Howard Hughes Medical Investigator (HHMI) on citations to articles the scientist published before the prize was awarded. We do find evidence of a post-appointment citation boost, but the effect is small and limited to a short window of time. Consistent with theories of status, however, the effect of the prize is significantly larger when there is uncertainty about article quality, and when prize-winners are of (relatively) low status at the time of election to HHMI.
Handle: RePEc:nbr:nberwo:18625
Template-Type: ReDIF-Paper 1.0
Title: Endowment Management Based on a Positive Model of the University
Classification-JEL: G11; I22; I23
Author-Name: Caroline M. Hoxby
Author-Person: pho46
Note: ED LS PE
Number: 18626
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18626
File-URL: http://www.nber.org/papers/w18626.pdf
File-Format: application/pdf
Publication-Status: published as Endowment Management Based on a Positive Model of the University, Caroline M. Hoxby. in How the Financial Crisis and Great Recession Affected Higher Education, Brown and Hoxby. 2015
Abstract: I propose a positive model of the university that generates many apparently peculiar features of universities such as endowments and tuition subsidies. The model proposes a specific objective function: a university maximizes its contribution to the intellectual capital of society, valued at social returns. The objective function is enforced within the model-that is, it leads to actions that reinforce the initial selection of the objective function. Endowments also arise naturally within the model: they are a necessary feature of certain universities, not an accident. The model has important implications for the decisions that universities should make on many fronts, but I focus on the implications for financial decisions, especially universities' endowment spending rules and portfolio allocations. The model is designed to explain America's great private research universities and very selective liberal arts colleges and-with modest adaptations-institutions like America's and Britain's great public research universities. Indeed, a ancillary benefit of the model is that it provides a justification for existence of the aforementioned institutions by assigning them a unique role in the creation of the world's intellectual capital.
Handle: RePEc:nbr:nberwo:18626
Template-Type: ReDIF-Paper 1.0
Title: Are the Gains from Foreign Diversification Diminishing? Assessing the Impact with Cross-listed Stocks
Classification-JEL: C32; F36; G15
Author-Name: Karen K. Lewis
Author-Person: ple1119
Author-Name: Sandy Lai
Note: AP IFM
Number: 18627
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18627
File-URL: http://www.nber.org/papers/w18627.pdf
File-Format: application/pdf
Abstract: How important is foreign diversification? In this paper, we re-examine this question motivated by findings from the literature about foreign companies that are listed on US exchanges. Specifically, domestic portfolios including cross-listed stocks can provide the same diversification as foreign market returns without the need for US investors to go abroad. At the same time, the betas of these foreign stock returns against the US market increase after cross-listing, suggesting diversification worsens over time. In this paper, we assess the impact of these changes on foreign diversification for a US investor. We test for and estimate breaks in the sensitivity of individual foreign stocks listed on US exchanges. We find that roughly half of the changes in betas arise from greater integration between the U.S. and the companies' home markets, not in the companies betas themselves. Moreover, the gains from diversifying into these stocks has declined over time.
Handle: RePEc:nbr:nberwo:18627
Template-Type: ReDIF-Paper 1.0
Title: International Reserves and Rollover Risk
Classification-JEL: F41; F42; F44
Author-Name: Javier Bianchi
Author-Person: pbi159
Author-Name: Juan Carlos Hatchondo
Author-Name: Leonardo Martinez
Author-Person: pma1579
Note: EFG IFM
Number: 18628
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18628
File-URL: http://www.nber.org/papers/w18628.pdf
File-Format: application/pdf
Publication-Status: published as Javier Bianchi & Juan Carlos Hatchondo & Leonardo Martinez, 2013. "International Reserves and Rollover Risk," IMF Working Papers, vol 13(33).
Publication-Status: published as Javier Bianchi & Juan Carlos Hatchondo & Leonardo Martinez, 2018. "International Reserves and Rollover Risk," American Economic Review, American Economic Association, vol. 108(9), pages 2629-2670, September.
Publication-Status: published as Javier Bianchi & Juan Carlos Hatchondo & Leonardo Martinez, 2018. "International Reserves and Rollover Risk," American Economic Review, vol 108(9), pages 2629-2670.
Abstract: We study the optimal accumulation of international reserves in a quantitative model of sovereign default with long-term debt and a risk-free asset. Keeping higher levels of reserves provides a hedge against rollover risk, but this is costly because using reserves to pay down debt allows the government to reduce sovereign spreads. Our model, parameterized to mimic salient features of a typical emerging economy, can account for significant holdings of international reserves, and the larger accumulation of both debt and reserves in periods of low spreads and high income. We also show that income windfalls, improved policy frameworks, and an increase in the importance of rollover risk imply increases in the optimal holdings of reserves that are consistent with the upward trend in reserves in emerging economies. It is essential for our results that debt maturity exceeds one period.
Handle: RePEc:nbr:nberwo:18628
Template-Type: ReDIF-Paper 1.0
Title: Smart Machines and Long-Term Misery
Classification-JEL: D30; D60; D9; F60; H10; H21
Author-Name: Jeffrey D. Sachs
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Note: PE
Number: 18629
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18629
File-URL: http://www.nber.org/papers/w18629.pdf
File-Format: application/pdf
Abstract: Are smarter machines our children's friends? Or can they bring about a transfer from our relatively unskilled children to ourselves that leaves our children and, indeed, all our descendants - worse off? This, indeed, is the dire message of the model presented here in which smart machines substitute directly for young unskilled labor, but complement older skilled labor. The depression in the wages of the young then limits their ability to save and invest in their own skill acquisition and physical capital. This, in turn, means the next generation of young, initially unskilled workers, encounter an economy with less human and physical capital, which further drives down their wages. This process stabilizes through time, but potentially entails each newborn generation being worse off than its predecessor. We illustrate the potential for smart machines to engender long-term misery in a highly stylized two-period model. We also show that appropriate generational policy can be used to transform win-lose into win-win for all generations.
Handle: RePEc:nbr:nberwo:18629
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Information, Social and Economic Incentives on Voluntary Undirected Blood Donations: Evidence from a Randomized Controlled Trial in Argentina
Classification-JEL: C93; D03; H41; I15
Author-Name: Victor Iajya
Author-Person: pia31
Author-Name: Nicola Lacetera
Author-Person: pla61
Author-Name: Mario Macis
Author-Person: pma869
Author-Name: Robert Slonim
Author-Person: psl53
Note: DEV EH
Number: 18630
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18630
File-URL: http://www.nber.org/papers/w18630.pdf
File-Format: application/pdf
Publication-Status: published as Social Science & Medicine Volume 98, December 2013, Pages 214–223 Cover image The effects of information, social and financial incentives on voluntary undirected blood donations: Evidence from a field experiment in Argentina Victor Iajyaa, 1, , Nicola Laceterab, 2, , Mario Macisc, , , Robert Slonimd, 3,
Abstract: In many low- and middle-income countries blood donations per capita are substantially lower than in advanced economies. In these countries blood supply is mostly collected through donations by relatives and friends of individuals needing transfusions or to replace blood used in emergencies. The World Health Organization considers this method of blood supply inefficient compared to undirected voluntary donations. To examine methods to motivate undirected voluntary donations, we ran a large-scale, natural field experiment in Argentina testing the effectiveness of information, social and economic incentives. We find that only higher-valued economic incentives generated more donations, increasing in the value of the incentive. These incentives did not create adverse selection in the safety and usability of the donated blood. We discuss the implications of our findings for researchers interested in understanding motivations for pro-social behavior and for health agencies and policymakers concerned with the current and growing shortages in blood supply in low- and middle-income countries.
Handle: RePEc:nbr:nberwo:18630
Template-Type: ReDIF-Paper 1.0
Title: Patent Laws and Innovation: Evidence from Economic History
Classification-JEL: K0; L24; L4; N0; O3; O31; O33; O34; Q16; Q55
Author-Name: Petra Moser
Author-Person: pmo257
Note: DAE IO LE PR
Number: 18631
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18631
File-URL: http://www.nber.org/papers/w18631.pdf
File-Format: application/pdf
Publication-Status: published as Moser, Petra. 2013. "Patents and Innovation: Evidence from Economic History." Journal of Economic Perspectives, 27(1): 23-44.
Abstract: What is the optimal system of intellectual property rights to encourage innovation? Empirical evidence from economic history can help to inform important policy questions that have been difficult to answer with modern data: 1) Does the existence of strong patent laws encourage innovation? And 2) May patent laws influence the direction - as opposed to the rate - of technical change? Economic history can also help to shed light on the effectiveness of policy tools that are intended to address problems with the current patent system: 3) How do patent pools, as a mechanism to mitigate litigation risks, influence the creation of new technologies? 4) Will compulsory licensing, as a mechanism to improve access to essential innovations in developing countries, discourage innovation in the developing countries? This essay summarizes results of existing research and highlights promising areas for future research.
Handle: RePEc:nbr:nberwo:18631
Template-Type: ReDIF-Paper 1.0
Title: The Great Trade Collapse
Classification-JEL: F1; F14; F17; F4
Author-Name: Rudolfs Bems
Author-Person: pbe208
Author-Name: Robert C. Johnson
Author-Person: pjo146
Author-Name: Kei-Mu Yi
Author-Person: pyi44
Note: IFM ITI
Number: 18632
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18632
File-URL: http://www.nber.org/papers/w18632.pdf
File-Format: application/pdf
Publication-Status: published as Rudolfs Bems & Robert C. Johnson & Kei-Mu Yi, 2013. "The Great Trade Collapse," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 375-400, 05.
Abstract: We survey recent literature on the causes of the collapse in international trade during the 2008-2009 global recession. We argue that the evidence points to the collapse in aggregate expenditure, concentrated on trade-intensive durable goods, as the main driver of the trade collapse. Inventory adjustment likely amplified the impact of these expenditure changes on trade. In addition, shocks to credit supply constrained export supply further exacerbating the decline in trade. Most evidence suggests that changes in trade policy did not play a large role. We conclude that one benefit of the trade collapse is that it has stimulated research in neglected areas at the intersection of trade and macroeconomics.
Handle: RePEc:nbr:nberwo:18632
Template-Type: ReDIF-Paper 1.0
Title: Social Fragmentation, Public Goods and Elections: Evidence from China
Classification-JEL: O38; O43; P16; P35
Author-Name: Gerard Padro i Miquel
Author-Name: Nancy Qian
Author-Person: pqi25
Author-Name: Yang Yao
Note: DEV PE POL
Number: 18633
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18633
File-URL: http://www.nber.org/papers/w18633.pdf
File-Format: application/pdf
Abstract: This study examines how the economic effects of elections in rural China depend on voter heterogeneity, for which we proxy with religious fractionalization. We first document religious composition and the introduction of village-level elections for a nearly nationally representative sample of over two hundred villages. Then, we examine the interaction effect of heterogeneity and the introduction of elections on village-government provision of public goods. The interaction effect is negative. We interpret this as evidence that voter heterogeneity constrains the potential benefits of elections for public goods provision.
Handle: RePEc:nbr:nberwo:18633
Template-Type: ReDIF-Paper 1.0
Title: Solomonic Separation: Risk Decisions as Productivity Indicators
Classification-JEL: D82; G31; H12
Author-Name: Nolan Miller
Author-Name: Alexander F. Wagner
Author-Person: pwa151
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: CF
Number: 18634
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18634
File-URL: http://www.nber.org/papers/w18634.pdf
File-Format: application/pdf
Publication-Status: published as Nolan Miller & Alexander Wagner & Richard Zeckhauser, 2013. "Solomonic separation: Risk decisions as productivity indicators," Journal of Risk and Uncertainty, Springer, vol. 46(3), pages 265-297, June.
Abstract: A principal provides budgets to agents (e.g., divisions of a firm or the principal's children) whose expenditures provide her benefits, either materially or because of altruism. Only agents know their potential to generate benefits. We prove that if the more "productive" agents are also more risk-tolerant (as holds in the sample of individuals we surveyed), the principal can screen agents and bolster target efficiency by offering a choice between a nonrandom budget and a two-outcome risky budget. When, at very low allocations, the ratio of the more risk-averse type's marginal utility to that of the other type is unbounded above (e.g., as with CRRA), the first-best is approached. -- A biblical opening enlivens the analysis.
Handle: RePEc:nbr:nberwo:18634
Template-Type: ReDIF-Paper 1.0
Title: Six Decades of Top Economics Publishing: Who and How?
Classification-JEL: B20; J24
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: LS
Number: 18635
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18635
File-URL: http://www.nber.org/papers/w18635.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Economic Literature, 51(1): 162-72.
Abstract: Presenting data on all full-length articles published in the three top general economics journals for one year in each of the 1960s through 2010s, I analyze how patterns of co-authorship, age structure and methodology have changed, and what the possible causes of these changes may have been. The entire distribution of number of authors has shifted steadily rightward. In the last two decades the fraction of older authors has almost quadrupled. The top journals are now publishing many fewer papers that represent pure theory, regardless of sub-field, somewhat less empirical work based on publicly available data sets, and many more empirical studies based on data assembled for the study by the author(s) or on laboratory or field experiments.
Handle: RePEc:nbr:nberwo:18635
Template-Type: ReDIF-Paper 1.0
Title: Third-Party Opportunism and the Nature of Public Contracts
Classification-JEL: D23; D72; D73; D78; H57
Author-Name: Marian W. Moszoro
Author-Person: pmo1093
Author-Name: Pablo T. Spiller
Author-Person: psp34
Note: LE
Number: 18636
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18636
File-URL: http://www.nber.org/papers/w18636.pdf
File-Format: application/pdf
Publication-Status: published as 11. Third-party opportunism and the theory of public contracts: operationalization and applications Marian W. Moszoro and Pablo T. Spiller The Manufacturing of Markets Legal, Political and Economic Dynamics Editors: Eric Brousseau, Université de Paris IX (Paris-Dauphine) Jean-Michel Glachant, European University Institute, Florence View all contributors Date Published: May 2014 availability: Available format: Hardback isbn: 9781107053717
Abstract: The lack of flexibility in public procurement design and implementation reflects public agents' political risk adaptation to limit hazards from opportunistic third parties - political opponents, competitors, interest groups - while externalizing the associated adaptation costs to the public at large. Reduced flexibility limits the likelihood of opportunistic challenge lowering third parties' expected gains and increasing litigation costs. We provide a comprehensible theoretical framework with empirically testable predictions.
Handle: RePEc:nbr:nberwo:18636
Template-Type: ReDIF-Paper 1.0
Title: Multi-Product Firms and Product Quality
Classification-JEL: D22; F10; F12; F14; L10; L11; L15
Author-Name: Kalina Manova
Author-Person: pma2520
Author-Name: Zhiwei Zhang
Note: IFM ITI
Number: 18637
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18637
File-URL: http://www.nber.org/papers/w18637.pdf
File-Format: application/pdf
Publication-Status: published as Kalina Manova & Zhihong Yu, 2017. "Multi-product firms and product quality," Journal of International Economics, vol 109, pages 116-137.
Abstract: We examine the global operations of multi-product firms. We present a flexible heterogeneous-firm trade model with either limited or strong scope for quality differentiation. Using customs data for China during 2002-2006, we empirically establish that firms allocate activity across products in line with a product hierarchy based on quality. Firms vary output quality across their products by using inputs of different quality levels. Their core competence is in varieties of superior quality that command higher prices but nevertheless generate higher sales. In markets where they offer fewer products, firms concentrate on their core varieties by dropping low-quality peripheral goods on the extensive margin and by shifting sales towards top-quality products on the intensive margin. The product quality ladder also governs firms ’ export dynamics, both in general and in response to the exogenous removal of MFA quotas on textiles and apparel. Our results inform the drivers and measurement of firm performance, the effects of trade reforms, and the design of development policies.
Handle: RePEc:nbr:nberwo:18637
Template-Type: ReDIF-Paper 1.0
Title: Prominent Job Advertisements, Group Learning and Wage Dispersion
Classification-JEL: D83; J31; J64
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: EFG LS
Number: 18638
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18638
File-URL: http://www.nber.org/papers/w18638.pdf
File-Format: application/pdf
Abstract: A model is presented in which people base their labor search strategy on the average wage and the average unemployment duration of people who belong to their peer group. It is shown that, if the distribution of wage offers is not stationary so lower wage offers tend to arrive before higher wage ones, such learning can induce a great deal of wage inequality. An equilibrium model is developed in which firms can choose either to advertise their job openings prominently or not. Prominent ads are assumed to have more influence on more inexperienced job searchers who are less able to identify a multiplicity of viable jobs. Equilibria can then feature groups that learn naively from the experience of their members and accept low wage offers from prominent ads while other groups do not find these offers acceptable. A new test statistic is proposed that measures whether, as predicted by the model, the gains from increasing one's reservation wage are larger than either those that people expect or those predicted by models in which job offers are stationary.
Handle: RePEc:nbr:nberwo:18638
Template-Type: ReDIF-Paper 1.0
Title: Increasing Our Understanding of the Health-Income Gradient in Children
Classification-JEL: I1; I12; I14; I3
Author-Name: Jason Fletcher
Author-Name: Barbara L. Wolfe
Author-Person: pwo47
Note: CH EH
Number: 18639
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18639
File-URL: http://www.nber.org/papers/w18639.pdf
File-Format: application/pdf
Publication-Status: published as Jason Fletcher & Barbara Wolfe, 2014. "Increasing Our Understanding Of The Health‐Income Gradient In Children," Health Economics, John Wiley & Sons, Ltd., vol. 23(4), pages 473-486, 04.
Abstract: There have been numerous attempts to both document the income-health gradient in children and to understand the nature of the tie. In this paper we review and summarize existing studies and then use a unique school based panel data set from the US to attempt to further our understanding of the relationship. The long duration (5 observations, 9 years) allows us to add to the understanding of the pattern of the tie, through our ability to test for changes in health status and multiple measures of income, and the school-based nature of the data allow us to add community SES to the model. Increasing understanding of the income-health gradient may allow more effective targeting of interventions to decrease the gradient and hence decrease health disparities among children.
Handle: RePEc:nbr:nberwo:18639
Template-Type: ReDIF-Paper 1.0
Title: Fast-Food Restaurant Advertising on Television and Its Influence on Youth Body Composition
Classification-JEL: I10; I18
Author-Name: Michael Grossman
Author-Person: pgr107
Author-Name: Erdal Tekin
Author-Person: pte12
Author-Name: Roy Wada
Author-Person: pwa408
Note: EH
Number: 18640
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18640
File-URL: http://www.nber.org/papers/w18640.pdf
File-Format: application/pdf
Abstract: We examine the effects of fast-food restaurant advertising on television on the body composition of adolescents as measured by percentage body fat (PBF) and to assess the sensitivity of these effects to using conventional measures of youth obesity based on body-mass index (BMI). We merge measures of body composition from bioelectrical-impedance analysis (BIA) and dual-energy x-ray absorptiometry (DXA) from the National Health and Nutrition Examination Survey with individual level data from the National Longitudinal Survey of Youth 1997 and data on local fast-food restaurant advertising on television from Competitive Media Reporting. Exposure to fast-food restaurant advertising on television causes statistically significant increases in PBF in adolescents. These results are consistent with those obtained by using BMI-based measures of obesity. The responsiveness to fast-food advertising is greater for PBF than for BMI. Males are more responsive to advertising than females regardless of the measure. A complete advertising ban on fast-food restaurants on television would reduce BMI by 2 percent and PBF by 3 percent. The elimination of the tax deductibility of food advertising costs would still leave a considerable number of youth exposed to fast-food advertising on television but would still result in non-trivial reductions in obesity.
Handle: RePEc:nbr:nberwo:18640
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Faith: Using an Apocalyptic Prophecy to Elicit Religious Beliefs in the Field
Classification-JEL: D8; D91; Z1; Z12
Author-Name: Ned Augenblick
Author-Name: Jesse M. Cunha
Author-Name: Ernesto Dal Bó
Author-Person: pda416
Author-Name: Justin M. Rao
Note: POL
Number: 18641
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18641
File-URL: http://www.nber.org/papers/w18641.pdf
File-Format: application/pdf
Publication-Status: published as Ned Augenblick & Jesse M. Cunha & Ernesto Dal Bó & Justin M. Rao, 2016. "The economics of faith: using an apocalyptic prophecy to elicit religious beliefs in the field," Journal of Public Economics, vol 141, pages 38-49.
Abstract: We model religious faith as a "demand for beliefs," following the logic of the Pascalian wager. We then demonstrate how an experimental intervention can exploit standard elicitation techniques to measure religious belief by varying prizes associated with making choices contrary to one's belief in a, crucially, falsifiable religious proposition. We implemented this approach with a group that expected the "End of the World" to happen on May 21, 2011 by offering prizes payable before and after May 21st. The results suggest the existence of a demand for extreme, sincere beliefs that was unresponsive to experimental manipulations in price.
Handle: RePEc:nbr:nberwo:18641
Template-Type: ReDIF-Paper 1.0
Title: The RAND Health Insurance Experiment, Three Decades Later
Classification-JEL: I13
Author-Name: Aviva Aron-Dine
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Note: AG EH PE IO
Number: 18642
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18642
File-URL: http://www.nber.org/papers/w18642.pdf
File-Format: application/pdf
Publication-Status: published as Aviva Aron-Dine & Liran Einav & Amy Finkelstein, 2013. "The RAND Health Insurance Experiment, Three Decades Later," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 197-222, Winter.
Abstract: We re-present and re-examine the analysis from the famous RAND Health Insurance Experiment from the 1970s on the impact of consumer cost sharing in health insurance on medical spending. We begin by summarizing the experiment and its core findings in a manner that would be standard in the current age. We then examine potential threats to the validity of a causal interpretation of the experimental treatment effects stemming from different study participation and differential reporting of outcomes across treatment arms. Finally, we re-consider the famous RAND estimate that the elasticity of medical spending with respect to its out-of-pocket price is -0.2, emphasizing the challenges associated with summarizing the experimental treatment effects from non-linear health insurance contracts using a single price elasticity.
Handle: RePEc:nbr:nberwo:18642
Template-Type: ReDIF-Paper 1.0
Title: A Gift of Time
Classification-JEL: D13; E21; J22; J23
Author-Name: Daiji Kawaguchi
Author-Person: pka57
Author-Name: Jungmin Lee
Author-Person: ple117
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: EFG LS
Number: 18643
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18643
File-URL: http://www.nber.org/papers/w18643.pdf
File-Format: application/pdf
Publication-Status: published as Labour Economics. Volume 24, October 2013, Pages 205–216
Abstract: How would people spend time if confronted by permanent declines in market work? We identify preferences off exogenous cuts in legislated standard hours that raised employers' overtime costs in Japan around 1990 and Korea in the early 2000s. We estimate the probability that an individual was affected by the reform and relate it to changes in time use based on time diaries. Reduced-form estimates show that the direct effect on a newly-constrained worker was a substantial reduction in market time, with the freed-up time in Japan reallocated to leisure, but in Korea also showing some impact on household production. Simulations using GMM estimates of a Stone-Geary utility function defined over time use suggest no effect on household production in either country. Estimation of a household model shows only slight evidence that spouses shared the time gift, nor that one spouse's allocation of non-market time changed when the other spouse's market work was permanently and exogenously reduced.
Handle: RePEc:nbr:nberwo:18643
Template-Type: ReDIF-Paper 1.0
Title: Carry Trade and Systemic Risk: Why are FX Options so Cheap?
Classification-JEL: F31; G01; G15
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Author-Name: Joseph B. Doyle
Note: ME
Number: 18644
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18644
File-URL: http://www.nber.org/papers/w18644.pdf
File-Format: application/pdf
Abstract: In this paper we document first that, in contrast with their widely perceived excess returns, popular carry trade strategies yield low systemic-risk-adjusted returns. In particular, we show that carry trade returns are highly correlated with the return of a VIX rolldown strategy --i.e., the strategy of shorting VIX futures and rolling down its term structure-- and that the latter strategy performs at least as well as beta-adjusted carry trades, for individual currencies and diversified portfolios. In contrast, hedging the carry with exchange rate options produces large returns that are not a compensation for systemic risk. We show that this result stems from the fact that the corresponding portfolio of exchange rate options provides a cheap form of systemic insurance.
Handle: RePEc:nbr:nberwo:18644
Template-Type: ReDIF-Paper 1.0
Title: Market-Based Emissions Regulation and Industry Dynamics
Classification-JEL: L5; Q5
Author-Name: Meredith Fowlie
Author-Name: Mar Reguant
Author-Person: pre360
Author-Name: Stephen P. Ryan
Author-Person: pry32
Note: EEE IO
Number: 18645
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18645
File-URL: http://www.nber.org/papers/w18645.pdf
File-Format: application/pdf
Publication-Status: published as Meredith Fowlie & Mar Reguant & Stephen P. Ryan, 2016. "Market-Based Emissions Regulation and Industry Dynamics," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 000 - 000.
Abstract: We assess the long-run dynamic implications of market-based regulation of carbon dioxide emissions in the US Portland cement industry. We consider several alternative policy designs, including mechanisms that use production subsidies to partially offset compliance costs and border tax adjustments to penalize emissions associated with foreign imports. Our results highlight two general countervailing market distortions. First, following Buchanan (1969), reductions in product market surplus and allocative inefficiencies due to market power in the domestic cement market counteract the social benefits of carbon abatement. Second, trade exposure to unregulated foreign competitors leads to emissions "leakage" which offsets domestic emissions reductions. Taken together, these forces result in social welfare losses under policy regimes that fully internalize the emissions externality. In contrast, market-based policies that incorporate design features to mitigate the exercise of market power and emissions leakage can deliver welfare gains.
Handle: RePEc:nbr:nberwo:18645
Template-Type: ReDIF-Paper 1.0
Title: On the Asset Market View of Exchange Rates
Classification-JEL: F31; G15
Author-Name: A. Craig Burnside
Author-Person: pbu20
Author-Name: Jeremy J. Graveline
Note: AP EFG IFM
Number: 18646
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18646
File-URL: http://www.nber.org/papers/w18646.pdf
File-Format: application/pdf
Publication-Status: published as accepted at the Review of Financial Studies
Abstract: If the asset market is complete then the difference between foreign and domestic agents' log intertemporal marginal rates of substitution (IMRSs) equals the log change in the real exchange rate. This equation is frequently used to argue that changes in real exchange rates reflect differences between agents' required compensation for exposure to asset return uncertainty. We show that the relative returns on frictionlessly traded assets are only reflected in the common component of agents' IMRSs, not differences. Instead, when this equation does offer insights, frictions in the goods market are the source of economic distinction between agents.
Handle: RePEc:nbr:nberwo:18646
Template-Type: ReDIF-Paper 1.0
Title: The Inefficient Markets Hypothesis: Why Financial Markets Do Not Work Well in the Real World
Classification-JEL: E44; G01; G12; G14
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Author-Name: Carine Nourry
Author-Person: pno98
Author-Name: Alain Venditti
Author-Person: pve104
Note: AP EFG IFM
Number: 18647
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18647
File-URL: http://www.nber.org/papers/w18647.pdf
File-Format: application/pdf
Abstract: Existing literature continues to be unable to offer a convincing explanation for the volatility of the stochastic discount factor in real world data. Our work provides such an explanation. We do not rely on frictions, market in completeness or transactions costs of any kind. Instead, we modify a simple stochastic representative agent model by allowing for birth and death and by allowing for heterogeneity in agents' discount factors. We show that these two minor and realistic changes to the timeless Arrow-Debreu paradigm are sufficient to invalidate the implication that competitive financial markets efficiently allocate risk. Our work demonstrates that financial markets, by their very nature, cannot be Pareto efficient except by chance. Although individuals in our model are rational; markets are not.
Handle: RePEc:nbr:nberwo:18647
Template-Type: ReDIF-Paper 1.0
Title: Do Classmate Effects Fade Out?
Classification-JEL: I21; I24
Author-Name: Robert Bifulco
Author-Name: Jason M. Fletcher
Author-Name: Sun Jung Oh
Author-Name: Stephen L. Ross
Author-Person: pro69
Note: CH ED
Number: 18648
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18648
File-URL: http://www.nber.org/papers/w18648.pdf
File-Format: application/pdf
Publication-Status: published as Labour Economics Volume 29, August 2014, Pages 83–90 Cover image Do high school peers have persistent effects on college attainment and other life outcomes? Robert Bifulcoa, , , Jason M. Fletcherb, 1, , Sun Jung Oha, 2, , Stephen L. Rossc, 3,
Abstract: Using data from the National Longitudinal Study of Adolescent Health, this study examines the impact of high school cohort composition on the educational and labor market outcomes of individuals during their early 20s and again during their late 20s and early 30s. We find that the positive effects of having more high school classmates with a college educated mother on college attendance in the years immediately following high school fade out as students reach their later 20s and early 30s, and are not followed by comparable effects on college completion and labor market outcomes.
Handle: RePEc:nbr:nberwo:18648
Template-Type: ReDIF-Paper 1.0
Title: Algebra for 8th Graders: Evidence on its Effects from 10 North Carolina Districts
Classification-JEL: H75; I21
Author-Name: Charles T. Clotfelter
Author-Person: pcl34
Author-Name: Helen F. Ladd
Author-Person: pla158
Author-Name: Jacob L. Vigdor
Author-Person: pvi23
Note: ED PE
Number: 18649
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18649
File-URL: http://www.nber.org/papers/w18649.pdf
File-Format: application/pdf
Abstract: This paper examines the effects of policies that increase the number of students who take the first course in algebra in 8th grade, rather than waiting until 9th grade. Extending previous research that focused on the Charlotte-Mecklenberg school system, we use data for the 10 largest districts in North Carolina. We identify the effects of accelerating the timetable for taking algebra by using data on multiple cohorts grouped by decile of prior achievement and exploiting the fact that policy-induced shifts in the timing of algebra occur at different times in different districts to different deciles of students. The expanded data make it possible to examine heterogeneity across students in the effect of taking algebra early. We find negative effects among students in the bottom 60% of the prior achievement distribution. In addition, we find other sources of heterogeneity in effects.
Handle: RePEc:nbr:nberwo:18649
Template-Type: ReDIF-Paper 1.0
Title: Deregulation, Misallocation, and Size: Evidence from India
Classification-JEL: F43; G31; G38; L10; O12; O14
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Anusha Chari
Author-Person: pch288
Note: EFG IFM PR
Number: 18650
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18650
File-URL: http://www.nber.org/papers/w18650.pdf
File-Format: application/pdf
Publication-Status: published as Laura Alfaro & Anusha Chari, 2014. "Deregulation, Misallocation, and Size: Evidence from India," Journal of Law and Economics, University of Chicago Press, vol. 57(4), pages 897 - 936.
Abstract: This paper examines the impact of the deregulation of compulsory industrial licensing in India on firm-size dynamics and the reallocation of resources within industries over time. Following deregulation, we find that the extent of resource misallocation declines and a considerable thickening of the left-hand tail of the firm-size distribution suggesting a significant increase in the number of small firms. However, the dominance and growth of large incumbents remains unchallenged. Quantile regressions reveal that the distributional effects of deregulation on firm size are significantly non-linear. The size distribution we observe--namely, a large number of small firms and a small number of large firms--can be characterized as the "missing middle" in Indian manufacturing and suggests that small firms may continue to face constraints in their attempts to grow.
Handle: RePEc:nbr:nberwo:18650
Template-Type: ReDIF-Paper 1.0
Title: Notes for a New Guide to Keynes (I): Wages, Aggregate Demand, and Employment
Classification-JEL: E24; E32; E58
Author-Name: Jordi Galí
Author-Person: pga43
Note: EFG ME
Number: 18651
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18651
File-URL: http://www.nber.org/papers/w18651.pdf
File-Format: application/pdf
Publication-Status: published as NOTES FOR A NEW GUIDE TO KEYNES (I): WAGES, AGGREGATE DEMAND, AND EMPLOYMENT Jordi Gali Article first published online: 12 SEP 2013 DOI: 10.1111/jeea.12032 © 2013 by the European Economic Association Issue Journal of the European Economic Association Journal of the European Economic Association Volume 11, Issue 5, pages 973–1003, October 2013
Abstract: I revisit the General Theory's discussion of the role of wages in employment determination through the lens of the New Keynesian model. The analysis points to the key role played by the monetary policy rule in shaping the link between wages and employment, and in determining the welfare impact of enhanced wage flexibility. I show that the latter is not always welfare improving.
Handle: RePEc:nbr:nberwo:18651
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneous Firms and Trade
Classification-JEL: F10; F12; F14
Author-Name: Marc J. Melitz
Author-Person: pme260
Author-Name: Stephen J. Redding
Author-Person: pre64
Note: ITI
Number: 18652
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18652
File-URL: http://www.nber.org/papers/w18652.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of International Economics Volume 4, 2014, Pages 1–54 Handbook of International Economics Cover image Chapter 1 – Heterogeneous Firms and Trade ☆ Marc J. Melitza, b, c, Stephen J. Reddingb, c, d
Abstract: This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product markets. This approach explains a variety of features exhibited in disaggregated trade data, including the higher productivity of exporters relative to non-exporters, within-industry reallocations of resources following trade liberalization, and patterns of trade participation across firms and destination markets. Accounting for these empirical patterns reveals new mechanisms through which the aggregate economy is affected by trade liberalization, including endogenous increases in average industry and firm productivity.
Handle: RePEc:nbr:nberwo:18652
Template-Type: ReDIF-Paper 1.0
Title: Trade Reforms and Current Account Imbalances
Classification-JEL: F2; F3
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: 18653
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18653
File-URL: http://www.nber.org/papers/w18653.pdf
File-Format: application/pdf
Publication-Status: published as Ju, Jiandong & Shi, Kang & Wei, Shang-Jin, 2021. "Trade reforms and current account imbalances," Journal of International Economics, Elsevier, vol. 131(C).
Abstract: This paper studies the effects of trade liberalization on capital flows in a dynamic Heckscher-Ohlin model, and makes four contributions. First, we identify an interest rate over-determination problem in such a model, and solve it with an endogenous discount factor. Second, we show that a trade liberalization in a developing country generally leads to a greater current account surplus, which is the exact opposite of a common but partial equilibrium intuition. Third, factor market reforms reinforce the effect of the trade liberalization on capital outflows. Finally, our calibrations suggest that China’s accession to the WTO is likely an important factor driving the rise of its current account surplus.
Handle: RePEc:nbr:nberwo:18653
Template-Type: ReDIF-Paper 1.0
Title: Catching Up and Falling Behind
Classification-JEL: O38; O40
Author-Name: Nancy L. Stokey
Note: EFG
Number: 18654
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18654
File-URL: http://www.nber.org/papers/w18654.pdf
File-Format: application/pdf
Publication-Status: published as Nancy L. Stokey, 2015. "Catching up and falling behind," Journal of Economic Growth, vol 20(1), pages 1-36.
Abstract: This paper studies the interaction between technology, a publicly available input that flows in from abroad, and human capital, a private input that is accumulated domestically, as the twin engines of growth in a developing economy. The model displays two types of long run behavior, depending on policies and initial conditions. One is sustained growth, where the economy keeps pace with the technology frontier. The other is stagnation, where the economy converges to a minimal technology level that is independent of the world frontier. In a calibrated version of the model, transition paths after a policy change can display rapid growth, as in modern growth 'miracles.' In these economies policies that promote technology inflows are much more effective than subsidies to human capital accumulation in accelerating growth. A policy reversal produces a 'lost decade,' a period of slow growth that permanently reduces the level of income and consumption.
Handle: RePEc:nbr:nberwo:18654
Template-Type: ReDIF-Paper 1.0
Title: The Surprisingly Swift Decline of U.S. Manufacturing Employment
Classification-JEL: E0; F1; J0
Author-Name: Justin R. Pierce
Author-Person: ppi197
Author-Name: Peter K. Schott
Author-Person: psc98
Note: ITI
Number: 18655
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18655
File-URL: http://www.nber.org/papers/w18655.pdf
File-Format: application/pdf
Publication-Status: published as Justin R. Pierce & Peter K. Schott, 2016. "The Surprisingly Swift Decline of US Manufacturing Employment," American Economic Review, American Economic Association, vol. 106(7), pages 1632-62, July.
Abstract: This paper finds a link between the sharp drop in U.S. manufacturing employment beginning in 2001 and a change in U.S. trade policy that eliminated potential tariff increases on Chinese imports. Industries where the threat of tariff hikes declines the most experience more severe employment losses along with larger increases in the value of imports from China and the number of firms engaged in China-U.S. trade. These results are robust to other potential explanations of the employment loss, and we show that the U.S. employment trends differ from those in the EU, where there was no change in policy.
Handle: RePEc:nbr:nberwo:18655
Template-Type: ReDIF-Paper 1.0
Title: Youth Depression and Future Criminal Behavior
Classification-JEL: I10; K42
Author-Name: D. Mark Anderson
Author-Name: Resul Cesur
Author-Name: Erdal Tekin
Author-Person: pte12
Note: CH EH
Number: 18656
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18656
File-URL: http://www.nber.org/papers/w18656.pdf
File-Format: application/pdf
Publication-Status: published as D. Mark Anderson & Resul Cesur & Erdal Tekin, 2015. "Youth Depression And Future Criminal Behavior," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 294-317, 01.
Abstract: While the contemporaneous association between mental health problems and criminal behavior has been explored in the literature, the long-term consequences of such problems, depression in particular, have received much less attention. Using data from the National Longitudinal Study of Adolescent Health, we examine the effect of depression during adolescence on the probability of engaging in a number of criminal behaviors later in life. In our analysis, we control for a rich set of individual, family, and neighborhood level factors to account for conditions that may be correlated with both childhood depression and adult criminality. One novelty in our approach is the estimation of school and sibling fixed effects models to account for unobserved heterogeneity at the neighborhood and family levels. Furthermore, we exploit the longitudinal nature of our data set to account for baseline differences in criminal behavior. We find little evidence that adolescent depression predicts the likelihood of engaging in violent crime or the selling of illicit drugs. However, our empirical estimates show that adolescents who suffer from depression face an increased probability of engaging in property crime. Our estimates imply that the lower-bound economic cost of property crime associated with adolescent depression is about 219 million dollars annually.
Handle: RePEc:nbr:nberwo:18656
Template-Type: ReDIF-Paper 1.0
Title: Size-Dependent Regulations, Firm Size Distribution, and Reallocation
Classification-JEL: E23; L11; L25; O1
Author-Name: François Gourio
Author-Person: pgo158
Author-Name: Nicolas A. Roys
Author-Person: pro324
Note: DEV LS PE PR
Number: 18657
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18657
File-URL: http://www.nber.org/papers/w18657.pdf
File-Format: application/pdf
Publication-Status: published as François Gourio & Nicolas Roys, 2014. "Size‐dependent regulations, firm size distribution, and reallocation," Quantitative Economics, Econometric Society, vol. 5, pages 377-416, 07.
Abstract: In France, firms with 50 employees or more face substantially more regulation than firms with less than 50. As a result, the size distribution of firms is visibly distorted: there are many firms with exactly 49 employees. We model the regulation as the combination of a sunk cost that must be paid the first time the firm reaches 50 employees, and a payroll tax that is paid each period thereafter when the firm operates with more than 50 employees. We estimate the model using indirect inference by fitting the discontinuity of the size distribution. The key finding is that the regulation is equivalent to a combination of a sunk cost approximately equal to about one year of an average employee salary, and a small payroll tax of 0.04%. Our structural model fits well the discontinuity in the size distribution. Removing the regulation improves labor allocation across firms, leading in steady-state to an increase in output per worker slightly less than 0.3%, holding the number of firms fixed. However, if firm entry is elastic, the steady-state gains are an order of magnitude smaller.
Handle: RePEc:nbr:nberwo:18657
Template-Type: ReDIF-Paper 1.0
Title: The Nexus of Social Security Benefits, Health, and Wealth at Death
Classification-JEL: H55; I14
Author-Name: James M. Poterba
Author-Person: ppo19
Author-Name: Steven F. Venti
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG EH
Number: 18658
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18658
File-URL: http://www.nber.org/papers/w18658.pdf
File-Format: application/pdf
Publication-Status: published as The Nexus of Social Security Benefits, Health, and Wealth at Death, James M. Poterba, Steven F. Venti, David A. Wise. in Discoveries in the Economics of Aging, Wise. 2014
Abstract: Social Security benefits are the most important component of the income of a large fraction of older Americans. A significant fraction of persons approach the end of life with few financial assets and no home equity, relying almost entirely on Social Security benefits for support. Whether persons reach late-life with positive non-annuity wealth depends importantly on health, which is quite persistent over the life-time. Persons in poor health in old age have a higher-than-average probability of having experienced low earnings while in the labor force, which puts them at greater risk of having low Social Security benefits in retirement. While the progressivity of the Social Security benefit formula provides a safety net to support low-wage workers in retirement, a noticeable fraction of persons, especially those in single-person households, still have income below the poverty level in their last years of life. Many of these individuals have few assets to draw on to supplement their income, and are in poor health. In general, low assets and low income in old age are strongly related to poor health. We explore this nexus and describe the relationship between Social Security benefits and the exhaustion of non-annuity assets near the end of life. We examine the relationship between the drawdown of assets between the first year an individual is observed in the AHEAD data (1995) and the last year that individual is observed before death, and that individual's health, Social Security benefits, and other annuity benefits. We conclude that Social Security and defined benefit pension benefits are strongly "protective" of non-annuity assets, with a negative relationship between these income flows and the likelihood of exhausting non-annuity assets. We note that this result may in part reflect population heterogeneity in saving propensities. We also find that poor health is an important determinant of the drawdown of non-annuity wealth.
Handle: RePEc:nbr:nberwo:18658
Template-Type: ReDIF-Paper 1.0
Title: Corn Production Shocks in 2012 and Beyond: Implications for Food Price Volatility
Classification-JEL: Q11; Q5
Author-Name: Steven T. Berry
Author-Person: pbe18
Author-Name: Michael J. Roberts
Author-Person: pro207
Author-Name: Wolfram Schlenker
Author-Person: psc210
Note: EEE
Number: 18659
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18659
File-URL: http://www.nber.org/papers/w18659.pdf
File-Format: application/pdf
Publication-Status: published as Corn Production Shocks in 2012 and Beyond: Implications for Harvest Volatility, Steven T. Berry, Michael J. Roberts, Wolfram Schlenker. in The Economics of Food Price Volatility, Chavas, Hummels, and Wright. 2014
Abstract: Corn prices increased sharply in the summer of 2012 due to expected production shortfalls in the United States, which produces roughly 40% of the world's corn. A heat wave in July adversely affected corn production. We extend earlier statistical models of county-level corn yields in the Eastern United States by allowing the effect of various weather measures to vary in a flexible manner over the growing season: Extreme heat is especially harmful around a third into the growing season. This is the time when the 2012 heat wave hit the Corn Belt. Our model predicts 2012 corn yields will be 23% below trend. While extreme heat was significantly above normal, climate change scenarios suggest that the 2012 outcomes will soon be the new normal.
Handle: RePEc:nbr:nberwo:18659
Template-Type: ReDIF-Paper 1.0
Title: Losing Heart? The Effect of Job Displacement on Health
Classification-JEL: I10; J63
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Kjell G. Salvanes
Author-Person: psa3
Note: EH LS
Number: 18660
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18660
File-URL: http://www.nber.org/papers/w18660.pdf
File-Format: application/pdf
Publication-Status: published as Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2015. "Losing Heart? The Effect of Job Displacement on Health," ILR Review, Cornell University, ILR School, vol. 68(4), pages 833-861, August.
Abstract: Job reallocation is considered to be a key characteristic of well-functioning labor markets, as more productive firms grow and less productive ones contract or close. However, despite its potential benefits for the economy, there are significant costs that are borne by displaced workers. We study how job displacement in Norway affects cardiovascular health using a sample of men and women who are predominantly aged in their early forties. To do so we merge survey data on health and health behaviors with register data on person and firm characteristics. We track the health of displaced and non-displaced workers from 5 years before to 7 years after displacement. We find that job displacement has a negative effect on the health of both men and women. Importantly, much of this effect is driven by an increase in smoking behavior. These results are robust to a variety of specification checks.
Handle: RePEc:nbr:nberwo:18660
Template-Type: ReDIF-Paper 1.0
Title: Identifying Equilibrium Models of Labor Market Sorting
Classification-JEL: C63; C78; E24; J31
Author-Name: Marcus Hagedorn
Author-Person: pha949
Author-Name: Tzuo Hann Law
Author-Person: pla540
Author-Name: Iourii Manovskii
Author-Person: pma158
Note: EFG
Number: 18661
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18661
File-URL: http://www.nber.org/papers/w18661.pdf
File-Format: application/pdf
Publication-Status: published as Marcus Hagedorn & Tzuo Hann Law & Iourii Manovskii, 2017. "Identifying Equilibrium Models of Labor Market Sorting," Econometrica, Econometric Society, vol. 85, pages 29-65, January.
Abstract: Does the market allocate the right workers to the right jobs? Since observable (to economists) variables account for only a small fraction of the wage variance in the data, to answer this question it is essential to study assortative matching between employers and employees based on their unobserved characteristics. This paper enables this line of research. We show theoretically that all parameters of the classic model of sorting based on absolute advantage in Becker (1973) with search frictions can be identified using only matched employer-employee data on wages and labor market transitions. In particular, these data are sufficient to assess whether matching between workers and firms is assortative, whether sorting is positive or negative, and to measure the potential effect on output from moving any given worker to any given employer in the economy. We provide computational algorithms that implement our identification strategy given the limitations of the available data sets. Finally, we extend our identification and implementation strategies to the commonly used class of models of sorting based on comparative advantage and provide a test that discriminates between these models.
Handle: RePEc:nbr:nberwo:18661
Template-Type: ReDIF-Paper 1.0
Title: Wanna Get Away? RD Identification Away from the Cutoff
Classification-JEL: C26; C31; C36; I21; I24; I28; J24
Author-Name: Joshua Angrist
Author-Person: pan29
Author-Name: Miikka Rokkanen
Author-Person: pro946
Note: CH ED EH LS PE
Number: 18662
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18662
File-URL: http://www.nber.org/papers/w18662.pdf
File-Format: application/pdf
Abstract: In the canonical regression discontinuity (RD) design for applicants who face an award or admissions cutoff, causal effects are nonparametrically identified for those near the cutoff. The impact of treatment on inframarginal applicants is also of interest, but identification of such effects requires stronger assumptions than are required for identification at the cutoff. This paper discusses RD identification away from the cutoff. Our identification strategy exploits the availability of dependent variable predictors other than the running variable. Conditional on these predictors, the running variable is assumed to be ignorable. This identification strategy is illustrated with data on applicants to Boston exam schools. Functional-form-based extrapolation generates unsatisfying results in this context, either noisy or not very robust. By contrast, identification based on RD-specific conditional independence assumptions produces reasonably precise and surprisingly robust estimates of the effects of exam school attendance on inframarginal applicants. These estimates suggest that the causal effects of exam school attendance for 9th grade applicants with running variable values well away from admissions cutoffs differ little from those for applicants with values that put them on the margin of acceptance. An extension to fuzzy designs is shown to identify causal effects for compliers away from the cutoff.
Handle: RePEc:nbr:nberwo:18662
Template-Type: ReDIF-Paper 1.0
Title: Revealed Preferences for Journals: Evidence from Page Limits
Classification-JEL: A1
Author-Name: David Card
Author-Person: pca271
Author-Name: Stefano DellaVigna
Author-Person: pde710
Note: ED IO LS PE PR
Number: 18663
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18663
File-URL: http://www.nber.org/papers/w18663.pdf
File-Format: application/pdf
Publication-Status: published as Page Limits on Economics Articles: Evidence from Two Journals (pp. 149-68) David Card and Stefano DellaVigna Journal of Economic Perspectives: Vol. 28 No. 3 (Summer 2014)
Abstract: Academic journals set a variety of policies that affect the supply of new manuscripts. We study the impact of page limit policies adopted by the American Economic Review (AER) in 2008 and the Journal of the European Economic Association (JEEA) in 2009 in response to a substantial increase in the length of articles in economics. We focus the analysis on the decision by potential authors to either shorten a longer manuscript in response to the page limit, or submit to another journal. For the AER we find little indication of a loss of longer papers - instead, authors responded by shortening the text and reformatting their papers. For JEEA, in contrast, we estimate that the page length policy led to nearly complete loss of longer manuscripts. These findings provide a revealed-preference measure of competition between journals and indicate that a top-5 journal has substantial monopoly power over submissions, unlike a journal one notch below. At both journals we find that longer papers were more likely to receive a revise and resubmit verdict prior to page limits, suggesting that the loss of longer papers may have had a detrimental effect on quality at JEEA. Despite a modest impact of the AER's policy on the average length of submissions (-5%), the policy had little or no effect on the length of final accepted manuscripts. Our results highlight the importance of evaluating editorial policies.
Handle: RePEc:nbr:nberwo:18663
Template-Type: ReDIF-Paper 1.0
Title: The Developmental Approach to Child and Adult Health
Classification-JEL: I12; I18
Author-Name: Gabriella Conti
Author-Person: pco273
Author-Name: James J. Heckman
Note: CH EH
Number: 18664
Creation-Date: 2012-12
Order-URL: http://www.nber.org/papers/w18664
File-URL: http://www.nber.org/papers/w18664.pdf
File-Format: application/pdf
Publication-Status: published as G. Conti & J. J. Heckman, 2013. "The Developmental Approach to Child and Adult Health," PEDIATRICS, vol 131(Supplement), pages S133-S141.
Abstract: Pediatricians should consider the costs and benefits of preventing rather than treating childhood diseases. We present an integrated developmental approach to child and adult health that considers the costs and benefits of interventions over the life cycle. We suggest policies to promote child health which are currently outside the boundaries of conventional pediatrics. We discuss current challenges to the field and suggest avenues for future research.
Handle: RePEc:nbr:nberwo:18664