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Template-Type: ReDIF-Paper 1.0
Title: Non-Contributory Pensions
Classification-JEL: H2; H3; I0
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Paul Gertler
Author-Person: pge194
Author-Name: Rosangela Bando
Note: DEV
Number: 19775
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19775
File-URL: http://www.nber.org/papers/w19775.pdf
File-Format: application/pdf
Publication-Status: published as Galiani, Sebastian & Gertler, Paul & Bando, Rosangela, 2016. "Non-contributory pensions," Labour Economics, Elsevier, vol. 38(C), pages 47-58.
Abstract: The creation of non-contributory pension schemes is becoming increasingly common as countries struggle to reduce poverty. Drawing on data from Mexico's Adultos Mayores Program (Older Adults Program) - a cash transfer scheme aimed at rural adults over 70 years of age - we evaluate the effects of this program on the well-being of the beneficiary population. Exploiting a quasi-experimental design whereby the program relies on exogenous geographical and age cutoffs to identify its target group, we find that the mental health of elderly adults in the program is significantly improved, as their score on the Geriatric Depression Scale decreases by 12%. We also find that the proportion of treated individuals doing paid work is reduced by 20%, with most of these people switching from their former activities to work in family businesses; treated households show higher levels of consumption expenditures (on average, an increase of 23%). Very importantly, we also rule out significant anticipation effects that might have been associated with the program transfers. Thus, overall, we find that non-contributory pension schemes target to the poor in developing countries can improve the well-being of poor older adults without having any indirect impact (through potential anticipation effects) on the earnings or savings of future program participants.
Handle: RePEc:nbr:nberwo:19775
Template-Type: ReDIF-Paper 1.0
Title: Aiding Decision-Making to Reduce the Impacts of Climate Change
Classification-JEL: D03; Q41; Q42; Q54
Author-Name: Howard Kunreuther
Author-Name: Elke U. Weber
Note: EEE
Number: 19776
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19776
File-URL: http://www.nber.org/papers/w19776.pdf
File-Format: application/pdf
Publication-Status: published as Howard Kunreuther & Elke U. Weber, 2014. "Aiding Decision Making to Reduce the Impacts of Climate Change," Journal of Consumer Policy, vol 37(3), pages 397-411.
Abstract: Utilizing theory and empirical insights from psychology and behavioral economics, this paper examines individuals' cognitive and motivational barriers to adopting climate change adaptation and mitigation measures that increase consumer welfare. We explore various strategies that take into account the simplified decision-making processes used by individuals and resulting biases. We make these points by working through two examples: (1) investments in energy efficiency products and new technology and (2) adaptation measures to reduce property damage from future floods and hurricanes. In both cases there is a reluctance to undertake these measures due to high and certain upfront costs, delayed and probabilistic benefits and behavioral biases related to this asymmetry. The use of choice architecture through framing and the use of default options coupled with short-term incentives and long-term contracts can encourage greater investment in these measures.
Handle: RePEc:nbr:nberwo:19776
Template-Type: ReDIF-Paper 1.0
Title: An Economical Business-Cycle Model
Classification-JEL: E12; E13; E24; E41; E52
Author-Name: Pascal Michaillat
Author-Person: pmi1005
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: EFG ME
Number: 19777
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19777
File-URL: http://www.nber.org/papers/w19777.pdf
File-Format: application/pdf
Publication-Status: published as Pascal Michaillat & Emmanuel Saez, 2022. "An economical business-cycle model," Oxford Economic Papers, vol 74(2), pages 382-411.
Abstract: In recent decades, advanced economies have experienced low and stable inflation and long periods of liquidity trap. We construct an alternative business-cycle model capturing these two features by adding two assumptions to a money-in-the-utility-function model: the labor market is subject to matching frictions, and real wealth enters the utility function. These assumptions modify the two core equations of the standard New Keynesian model. With matching frictions, we can analyze equilibria in which inflation is fixed and not determined by a forward-looking Phillips curve. With wealth in the utility, the Euler equation is modified and we can obtain steady-state equilibria with a liquidity trap, positive inflation, and labor market slack. The model is simple enough to inspect the mechanisms behind cyclical fluctuations and to study the effects of conventional and unconventional monetary and fiscal policies. As a byproduct, the model provides microfoundations for the classical IS-LM model. Finally, we show how directed search can be combined with costly price adjustments to generate a forward-looking Phillips curve and recover some insights from the New Keynesian model.
Handle: RePEc:nbr:nberwo:19777
Template-Type: ReDIF-Paper 1.0
Title: Is Sell-Side Research More Valuable in Bad Times?
Classification-JEL: F14; F20; F24
Author-Name: Roger K. Loh
Author-Name: René M. Stulz
Note: AP CF
Number: 19778
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19778
File-URL: http://www.nber.org/papers/w19778.pdf
File-Format: application/pdf
Publication-Status: published as LOH, Roger and STULZ, René. Is sell-side research more valuable in bad times?. (2017). Journal of Finance, forthcoming.
Abstract: Because uncertainty is high in bad times, investors find it harder to assess firm prospects and, hence, should value analyst output more. However, higher uncertainty makes analysts’ tasks harder so it is unclear if analyst output is more valuable in bad times. We find that, in bad times, analyst revisions have a larger stock-price impact, earnings forecast errors per unit of uncertainty fall, reports are more frequent and longer, and the impact of analyst output increases more for harder-to-value firms. These results are consistent with analysts working harder and investors relying more on analysts in bad times.
Handle: RePEc:nbr:nberwo:19778
Template-Type: ReDIF-Paper 1.0
Title: The Fiscal Stress Arising from State and Local Retiree Health Obligations
Classification-JEL: H0; H53; H72; H75
Author-Name: Byron Lutz
Author-Name: Louise Sheiner
Note: AG EH PE
Number: 19779
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19779
File-URL: http://www.nber.org/papers/w19779.pdf
File-Format: application/pdf
Publication-Status: published as The Fiscal Stress Arising from State and Local Retiree Health Obligations, Byron Lutz, Louise Sheiner. in State and Local Health Plans for Active and Retired Public Employees, Clark and Newhouse. 2014
Publication-Status: published as Byron Lutz & Louise Sheiner, 2014. "The fiscal stress arising from state and local retiree health obligations," Journal of Health Economics, vol 38, pages 130-146.
Abstract: A major factor weighing down the long-term finances of state and local governments is the obligation to fund retiree benefits. While state and local government pension obligations have been analyzed in great detail, much less attention has been paid to the costs of the other major retiree benefit provided by these governments: retiree health insurance. The first portion of the paper uses the information contained in the annual actuarial reports for public retiree health plans to reverse engineer the cash flows underlying the liabilities given in the report. Obtaining the cash flows allows us to construct liability estimates which are consistent across governments in terms of the discount rate, actuarial method and assumptions concerning medical cost inflation and mortality. We find that the total unfunded accrued liability of state and local governments for the provision of retiree health care exceeds $1 trillion, or about ⅓ of total state and local government revenue. Relative to pension obligations discounted at the same rate, we find that unfunded retiree health care liabilities are ½ the size of unfunded pension obligations. We also find that using assumptions concerning the growth in health care costs that are arguably more realistic than those employed by most states actually reduces the size of the liability in most cases. Pushing in the opposite direction, we find that using plausibly more realistic mortality assumptions increases the size of liability. The second portion of the paper places retiree health care obligations into context by examining the budget pressures associated with retiree health on a continuing, largely pay-as-you go basis. We find that much of the projected increase in retiree health obligations as a share of revenue is the result of health care cost growth. On average, states could put their retiree health obligations into long-run fiscal balance by contributing an additional ¾ percent of total revenue toward the benefit each year. There is, however, wide variation across the states, with the majority of states requiring little in the way of additional financing, but some states requiring a significantly larger increase.
Handle: RePEc:nbr:nberwo:19779
Template-Type: ReDIF-Paper 1.0
Title: Optimal Trading Ratios for Pollution Permit Markets
Classification-JEL: D82; H23; Q53
Author-Name: Stephen Holland
Author-Person: pho374
Author-Name: Andrew J. Yates
Author-Person: pya124
Note: EEE
Number: 19780
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19780
File-URL: http://www.nber.org/papers/w19780.pdf
File-Format: application/pdf
Publication-Status: published as Holland, Stephen P. & Yates, Andrew J., 2015. "Optimal trading ratios for pollution permit markets," Journal of Public Economics, Elsevier, vol. 125(C), pages 16-27.
Abstract: We analyze a novel method for improving the efficiency of pollution permit markets by optimizing the way in which emissions are exchanged through trade. Under full-information, it is optimal for emissions to exchange according to the ratio of marginal damages. However, under a canonical model with asymmetric information between the regulator and the sources of pollution, we show that these marginal damage trading ratios are generally not optimal, and we show how to modify them to improve efficiency. We calculate the optimal trading ratios for a global carbon market and for a regional nitrogen market. In these examples, the gains from using optimal trading ratios rather than marginal damage trading ratios range from substantial to trivial, which suggests the need for careful consideration of the structure of asymmetric information when designing permit markets.
Handle: RePEc:nbr:nberwo:19780
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Prices on Nutrition: Comparing the Impact of Product- and Nutrient-Specific Taxes
Classification-JEL: C33; H2; I12; I19
Author-Name: Matthew Harding
Author-Person: pha1166
Author-Name: Michael Lovenheim
Author-Person: plo162
Note: EH PE
Number: 19781
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19781
File-URL: http://www.nber.org/papers/w19781.pdf
File-Format: application/pdf
Publication-Status: published as Harding, Matthew & Lovenheim, Michael, 2017. "The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes," Journal of Health Economics, Elsevier, vol. 53(C), pages 53-71.
Abstract: This paper provides an analysis of the role of prices in determining food purchases and nutrition using very detailed transaction-level observations for a large, nationally-representative sample of US consumers over the period 2002-2007. Using product- specific nutritional information, we develop a new method of partitioning the product space into relevant nutritional clusters that define a set of nutritionally-bundled goods, which parsimoniously characterize consumer choice sets. We then estimate a large utility-derived demand system over this joint product-nutrient space that allows us to calculate price and expenditure elasticities. Using our structural demand estimates, we simulate the role of product taxes on soda, sugar-sweetened beverages, packaged meals, and snacks, and nutrient taxes on fat, salt, and sugar. We find that a 20% nutrient tax has a significantly larger impact on nutrition than an equivalent product tax, due to the fact that these are broader-based taxes. However, the costs of these taxes in terms of consumer utility are not higher. A sugar tax in particular is a powerful tool to induce healthier nutritive bundles among consumers.
Handle: RePEc:nbr:nberwo:19781
Template-Type: ReDIF-Paper 1.0
Title: Military CEOs
Classification-JEL: D23; G3; G31; G32
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Carola Frydman
Author-Person: pfr240
Note: CF LS
Number: 19782
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19782
File-URL: http://www.nber.org/papers/w19782.pdf
File-Format: application/pdf
Publication-Status: published as Benmelech, Efraim & Frydman, Carola, 2015. "Military CEOs," Journal of Financial Economics, Elsevier, vol. 117(1), pages 43-59.
Abstract: There is mounting evidence of the influence of personal characteristics of CEOs on corporate outcomes. In this paper we analyze the relation between military service of CEOs and managerial decisions, financial policies, and corporate outcomes. Exploiting exogenous variation in the propensity to serve in the military, we show that military service is associated with conservative corporate policies and ethical behavior. Military CEOs pursue lower corporate investment, are less likely to be involved in corporate fraudulent activity, and perform better during industry downturns. Taken together, our results show that military service has significant explanatory power for managerial decisions and firm outcomes.
Handle: RePEc:nbr:nberwo:19782
Template-Type: ReDIF-Paper 1.0
Title: Disentangling Financial Constraints, Precautionary Savings, and Myopia: Household Behavior Surrounding Federal Tax Returns
Classification-JEL: D10; D11; D12
Author-Name: Brian Baugh
Author-Name: Itzhak Ben-David
Author-Name: Hoonsuk Park
Note: CF
Number: 19783
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19783
File-URL: http://www.nber.org/papers/w19783.pdf
File-Format: application/pdf
Abstract: We explore household consumption surrounding federal tax returns filings and refunds receipt to test various theories of consumption. Because uncertainty regarding the refund is resolved at filing, precautionary savings theory predicts an increase in consumption at this date. Contrary to this prediction, we find that households generally do not increase consumption at filing. Following the receipt of the refunds, consumption of both durables and nondurables increases dramatically and then decays quickly. Our results show that households, on average, are financially constrained, exhibit myopic behavior, and do not respond to precautionary savings motives.
Handle: RePEc:nbr:nberwo:19783
Template-Type: ReDIF-Paper 1.0
Title: A Note on Variance Estimation for the Oaxaca Estimator of Average Treatment Effects
Classification-JEL: C01; J31; J7
Author-Name: Patrick M. Kline
Note: LS TWP
Number: 19784
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19784
File-URL: http://www.nber.org/papers/w19784.pdf
File-Format: application/pdf
Publication-Status: published as Kline, Patrick, 2014. "A note on variance estimation for the Oaxaca estimator of average treatment effects," Economics Letters, Elsevier, vol. 122(3), pages 428-431.
Abstract: We derive the limiting distribution of the Oaxaca estimator of average treatment effects studied by Kline (2011). A consistent estimator of the asymptotic variance is proposed that makes use of standard regression routines. It is shown that ignoring uncertainty in group means will tend to lead to an overstatement of the asymptotic standard errors. Monte Carlo experiments examine the finite sample performance of competing approaches to inference.
Handle: RePEc:nbr:nberwo:19784
Template-Type: ReDIF-Paper 1.0
Title: Do In-Work Tax Credits Serve as a Safety Net?
Classification-JEL: H2; I28; I3
Author-Name: Marianne Bitler
Author-Person: pbi12
Author-Name: Hilary Hoynes
Author-Person: pho278
Author-Name: Elira Kuka
Author-Person: pku394
Note: CH LS PE
Number: 19785
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19785
File-URL: http://www.nber.org/papers/w19785.pdf
File-Format: application/pdf
Publication-Status: published as Marianne Bitler & Hilary Hoynes & Elira Kuka, 2017. "Do In-Work Tax Credits Serve as a Safety Net?," Journal of Human Resources, University of Wisconsin Press, vol. 52(2), pages 319-350.
Abstract: The cash and near cash safety net in the U.S. has undergone a dramatic transformation in the past fifteen years. Federal welfare reform has led to the "elimination of welfare as we know it" and several tax reforms have substantially increased the role of "in-work"' assistance. In 2010, we spent more than 5 dollars on the Earned Income Tax Credit (EITC) for every dollar spent on cash benefits through Temporary Assistance for Needy Families (TANF), whereas in 1994 on the eve of federal welfare reform these programs were about equal in size. In this paper, we evaluate and test whether the EITC satisfies a defining feature of a safety net program--that it responds to economic need. In particular, we explore how EITC participation and expenditures change with the business cycle. The fact that the EITC requires earned income leads to a theoretical ambiguity in the cyclical responsiveness of the credit. We use administrative IRS data to examine the relationship between business cycles and the EITC program. Our empirical strategy relies on exploiting differences in the timing and severity of economic cycles across states. The results show that higher unemployment rates lead to higher EITC recipients and total dollar amounts of credits for married couples. On the other hand, the effect of business cycles on the EITC is insignificant for single individuals, whether measured by recipients or expenditures. In sum, our results show that the EITC serves as an automatic stabilizer for married couples with children but not for the majority of recipients--single parents with children. The patterns we identify are consistent with the predictions of static labor supply theory, and with expectations about how economic shocks are likely to affect one versus two-earner households.
Handle: RePEc:nbr:nberwo:19785
Template-Type: ReDIF-Paper 1.0
Title: Political Risk Spreads
Classification-JEL: F21; F23; F36; G15; G31; H25; K33; M21; O16; O19
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Campbell R. Harvey
Author-Person: pha102
Author-Name: Christian T. Lundblad
Author-Person: plu185
Author-Name: Stephan Siegel
Author-Person: psi489
Note: AP CF DEV IFM POL
Number: 19786
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19786
File-URL: http://www.nber.org/papers/w19786.pdf
File-Format: application/pdf
Publication-Status: published as Geert Bekaert & Campbell R Harvey & Christian T Lundblad & Stephan Siegel, 2014. "Political risk spreads," Journal of International Business Studies, Palgrave Macmillan, vol. 45(4), pages 471-493, May.
Abstract: We introduce a new, market-based and forward looking measure of political risk derived from the yield spread between a country's U.S. dollar debt and an equivalent U.S. Treasury bond. We explain the variation in these sovereign spreads with four factors: global economic conditions, country-specific economic factors, liquidity of the country's bond, and political risk. We then extract the part of the sovereign spread that is due to political risk, making use of political risk ratings. In addition, we provide new evidence that these political risk ratings are predictive, on average, of future risk realizations using data on political risk claims as well as a novel textual-based database of risk realizations. Our political risk spread measure does not make the mistake of double counting systematic risk in the evaluation of international investments as some conventional measures do. Furthermore, we show how to construct political risk spreads for countries that do not have sovereign bond data. Finally, we link our political risk spreads to foreign direct investment. We show that a one percent point reduction in the political risk spread is associated with a 12 percent increase in net-inflows of foreign direct investment.
Handle: RePEc:nbr:nberwo:19786
Template-Type: ReDIF-Paper 1.0
Title: Externalities and Taxation of Supplemental Insurance: A Study of Medicare and Medigap
Classification-JEL: H2; I13
Author-Name: Marika Cabral
Author-Name: Neale Mahoney
Note: AG EH PE
Number: 19787
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19787
File-URL: http://www.nber.org/papers/w19787.pdf
File-Format: application/pdf
Publication-Status: published as Marika Cabral & Neale Mahoney, 2019. "Externalities and Taxation of Supplemental Insurance: A Study of Medicare and Medigap," American Economic Journal: Applied Economics, vol 11(2), pages 37-73.
Abstract: Most health insurance uses cost-sharing to reduce excess utilization. Supplemental insurance can blunt the impact of this cost-sharing, increasing utilization and exerting a negative externality on the primary insurer. This paper estimates the effect of private Medigap supplemental insurance on public Medicare spending using Medigap premium discontinuities in local medical markets that span state boundaries. Using administrative data on the universe of Medicare beneficiaries, we estimate that Medigap increases an individual’s Medicare spending by 22.2%. We calculate that a 15% tax on Medigap premiums generates savings of $12.9 billion annually, with a standard error of $4.9 billion.
Handle: RePEc:nbr:nberwo:19787
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Dispersed Information and the Credit Spread Puzzle
Classification-JEL: G12
Author-Name: Elias Albagli
Author-Name: Christian Hellwig
Author-Person: phe110
Author-Name: Aleh Tsyvinski
Note: AP EFG
Number: 19788
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19788
File-URL: http://www.nber.org/papers/w19788.pdf
File-Format: application/pdf
Abstract: We develop a dynamic nonlinear, noisy REE model of credit risk pricing under dispersed information that can theoretically and quantitatively account for the credit spread puzzle. The first contribution is a sharp analytical characterization of the dynamic REE equilibrium and its comparative statics. Second, we show that the nonlinearity of the bond payoff in the environment with dispersed information and limits to arbitrage leads to underpricing of corporate debt and to spreads that over-state the probability of default. This underpricing is most pronounced for high investment grade, short maturity bonds. Third, we calibrate to the empirical data on the belief dispersion and show that the model generates spreads that explain between 16 to 42% of the empirical values for 4-year high investment grade, and 35 to 46% for 10-year, high investment grade bonds. These magnitudes are in line with empirical estimates linking bond spreads to empirical measures of investor disagreement, and substantially higher than most structural models of credit risk. The primary contribution of our paper in moving NREE models towards a more realistic asset pricing environment -- dynamic, nonlinear, and quantitative -- that holds significant promise for explaining empirical asset pricing puzzles.
Handle: RePEc:nbr:nberwo:19788
Template-Type: ReDIF-Paper 1.0
Title: Waging War on Poverty: Historical Trends in Poverty Using the Supplemental Poverty Measure
Classification-JEL: I32
Author-Name: Liana Fox
Author-Name: Irwin Garfinkel
Author-Name: Neeraj Kaushal
Author-Person: pka320
Author-Name: Jane Waldfogel
Author-Name: Christopher Wimer
Note: AG CH EFG PE
Number: 19789
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19789
File-URL: http://www.nber.org/papers/w19789.pdf
File-Format: application/pdf
Publication-Status: published as Liana Fox & Christopher Wimer & Irwin Garfinkel & Neeraj Kaushal & Jane Waldfogel, 2015. "Waging War on Poverty: Poverty Trends Using a Historical Supplemental Poverty Measure," Journal of Policy Analysis and Management, vol 34(3), pages 567-592.
Abstract: Using data from the Consumer Expenditure Survey and the March Current Population Survey, we calculate historical poverty estimates based on the new Supplemental Poverty Measure (SPM) from 1967 to 2012. During this period, poverty as officially measured has stagnated. However, the official poverty measure (OPM) does not account for the effect of near-cash transfers on the financial resources available to families, an important omission since such transfers have become an increasingly important part of government anti-poverty policy. Applying the SPM, which does count such transfers, we find that historical trends in poverty have been more favorable than the OPM suggests and that government policies have played an important and growing role in reducing poverty --- a role that is not evident when the OPM is used to assess poverty. We also find that government programs have played a particularly important role in alleviating child poverty and deep poverty, especially during economic downturns.
Handle: RePEc:nbr:nberwo:19789
Template-Type: ReDIF-Paper 1.0
Title: Time-Varying Phillips Curves
Classification-JEL: E10; E30; E31; E50
Author-Name: Joseph S. Vavra
Author-Person: pva480
Note: EFG ME
Number: 19790
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19790
File-URL: http://www.nber.org/papers/w19790.pdf
File-Format: application/pdf
Abstract: A growing theoretical literature argues that aggregate price flexibility and the inflation-output tradeoff faced by central banks should rise with microeconomic price change dispersion. However, there is little empirical work testing this prediction. I fill this gap by estimating time-varying forward looking New-Keynesian Phillips Curves (NKPC). I reject a NKPC with constant inflation-output tradeoff in favor of a slope that increases with microeconomic volatility. In contrast, there is no evidence that the inflation-output tradeoff varies with aggregate volatility or the business cycle more generally. Furthermore, I show that greater volatility does not affect price flexibility purely through increases in frequency.
Handle: RePEc:nbr:nberwo:19790
Template-Type: ReDIF-Paper 1.0
Title: For a Few Dollars More: Reserves and Growth in Times of Crises
Classification-JEL: F31; G01
Author-Name: Matthieu Bussière
Author-Person: pbu118
Author-Name: Gong Cheng
Author-Person: pch1181
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Noëmie Lisack
Note: IFM
Number: 19791
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19791
File-URL: http://www.nber.org/papers/w19791.pdf
File-Format: application/pdf
Publication-Status: published as Bussière, Matthieu & Cheng, Gong & Chinn, Menzie D. & Lisack, Noëmie, 2015. "For a few dollars more: Reserves and growth in times of crises," Journal of International Money and Finance, Elsevier, vol. 52(C), pages 127-145.
Abstract: Based on a dataset of 112 emerging economies and developing countries, this paper addresses two key questions regarding the accumulation of international reserves: first, has the accumulation of reserves effectively protected countries during the 2008-09 financial crisis? And second, what explains the pattern of reserve accumulation observed during and after the crisis? More specifically, the paper investigates the relation between international reserves and the existence of capital controls. We find that the level of reserves matters: countries with high reserves relative to short-term debt suffered less from the crisis, particularly if associated with a less open capital account. In the immediate aftermath of the crisis, countries that depleted foreign reserves during the crisis quickly rebuilt their stocks. This rapid rebuilding has, however, been followed by a deceleration in the pace of accumulation. The timing of this deceleration roughly coincides with the point when reserves reached their pre-crisis level and may be related to the fact that short-term debt accumulation has also decelerated in most countries over this period.
Handle: RePEc:nbr:nberwo:19791
Template-Type: ReDIF-Paper 1.0
Title: Shrinkage Estimation of High-Dimensional Factor Models with Structural Instabilities
Classification-JEL: C13; C33; C52
Author-Name: Xu Cheng
Author-Name: Zhipeng Liao
Author-Person: pli1071
Author-Name: Frank Schorfheide
Author-Person: psc19
Note: EFG ME
Number: 19792
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19792
File-URL: http://www.nber.org/papers/w19792.pdf
File-Format: application/pdf
Publication-Status: published as Xu Cheng & Zhipeng Liao & Frank Schorfheide, 2016. "Shrinkage Estimation of High-Dimensional Factor Models with Structural Instabilities," Review of Economic Studies, Oxford University Press, vol. 83(4), pages 1511-1543.
Abstract: In high-dimensional factor models, both the factor loadings and the number of factors may change over time. This paper proposes a shrinkage estimator that detects and disentangles these instabilities. The new method simultaneously and consistently estimates the number of pre- and post-break factors, which liberates researchers from sequential testing and achieves uniform control of the family-wise model selection errors over an increasing number of variables. The shrinkage estimator only requires the calculation of principal components and the solution of a convex optimization problem, which makes its computation efficient and accurate. The finite sample performance of the new method is investigated in Monte Carlo simulations. In an empirical application, we study the change in factor loadings and emergence of new factors during the Great Recession.
Handle: RePEc:nbr:nberwo:19792
Template-Type: ReDIF-Paper 1.0
Title: The Employment Effect of Terminating Disability Benefits
Classification-JEL: H53; H55; J14
Author-Name: Timothy J. Moore
Author-Person: pmo435
Note: AG EH LS PE
Number: 19793
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19793
File-URL: http://www.nber.org/papers/w19793.pdf
File-Format: application/pdf
Publication-Status: published as Moore, Timothy J., 2015. "The employment effects of terminating disability benefits," Journal of Public Economics, Elsevier, vol. 124(C), pages 30-43.
Abstract: While time out of work normally decreases subsequent employment, Social Security Disability Insurance (DI) may improve the health of disabled individuals and increase their ability to work. In this paper, I examine the employment of individuals who lost DI eligibility after the 1996 removal of drug and alcohol addictions as qualifying conditions. Approximately one-fifth started earning at levels that would have disqualified them for DI, an employment response that is large relative to their work histories. This response is largest for those who had received DI for 2.5-3 years, when it is 50% larger than for those who had received DI for less than one year and 30% larger than for those who had received DI for six years. A similar relationship between time on DI and the employment response is found among those whose primary disability was an addiction, mental disorder, or musculoskeletal condition, but not those with chronic conditions like heart or liver disease. The results suggest that a period of public assistance can maximize the employment of some disabled individuals.
Handle: RePEc:nbr:nberwo:19793
Template-Type: ReDIF-Paper 1.0
Title: Direct to Consumer Advertising of Pharmaceutical Drugs: Information and Persuasion
Classification-JEL: I18; L15; L65; M37
Author-Name: Talia Bar
Author-Name: Dean R. Lillard
Note: EH IO
Number: 19794
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19794
File-URL: http://www.nber.org/papers/w19794.pdf
File-Format: application/pdf
Abstract: We formally model direct to consumer advertising (DTCA) of prescription drugs and examine factors that determine a pharmaceutical firm's DTCA strategy. We highlight how the profitability of DTCA varies with the characteristics of the condition that the advertised drug treats, the incidence of the condition, and the signal value of symptoms, and risk factors. We account for the potential information benefits from DTCA as well as its potential to persuade consumers. From a welfare perspective there can be too much or too little private investment in advertising. Welfare is more likely to increase when the population is uninsured.
Handle: RePEc:nbr:nberwo:19794
Template-Type: ReDIF-Paper 1.0
Title: Media Influences on Social Outcomes: The Impact of MTV's 16 and Pregnant on Teen Childbearing
Classification-JEL: J13; L82
Author-Name: Melissa S. Kearney
Author-Name: Phillip B. Levine
Author-Person: ple553
Note: CH EH LS
Number: 19795
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19795
File-URL: http://www.nber.org/papers/w19795.pdf
File-Format: application/pdf
Publication-Status: published as Melissa S. Kearney & Phillip B. Levine, 2015. "Media Influences on Social Outcomes: The Impact of MTV's 16 and Pregnant on Teen Childbearing," American Economic Review, American Economic Association, vol. 105(12), pages 3597-3632, December.
Abstract: This paper explores the impact of the introduction of the widely viewed MTV show 16 and Pregnant on teen childbearing. The reality TV show follows the lives of pregnant teenagers during the final months of their pregnancy and early months of motherhood. We match Vital Statistics birth data to Nielson television ratings data to investigate whether exposure to the show had an impact on teen childbearing rates. We implement an instrumental variables (IV) strategy using local area MTV ratings data from a pre-period to predict local area 16 and Pregnant ratings. We also introduce event study methods, utilizing the specific timing of the show’s introduction to identify a causal effect. The results of this analysis imply that the introduction of this MTV show led to a 4.3 percent reduction in teen births in the 18 months following its initial airing. This accounts for 24 percent of the overall decline in teen births in the United States during that period. We supplement these findings with an examination of data from Google Trends and Twitter, which suggest that this show led to increased interest in contraceptive use and abortion, as captured by internet search and tweeting behavior.
Handle: RePEc:nbr:nberwo:19795
Template-Type: ReDIF-Paper 1.0
Title: The Housing Market Impacts of Shale Gas Development
Classification-JEL: Q32; Q33; Q50; Q53
Author-Name: Lucija Muehlenbachs
Author-Person: pmu561
Author-Name: Elisheba Spiller
Author-Person: psp209
Author-Name: Christopher Timmins
Note: EEE
Number: 19796
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19796
File-URL: http://www.nber.org/papers/w19796.pdf
File-Format: application/pdf
Publication-Status: published as Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2015. "The Housing Market Impacts of Shale Gas Development," American Economic Review, American Economic Association, vol. 105(12), pages 3633-3659, December.
Abstract: Using data from Pennsylvania and New York and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from shale gas development that vary with geographic scale, water source, well productivity, and visibility. Results indicate large negative impacts on nearby groundwater-dependent homes, while piped-water-dependent homes exhibit smaller positive impacts, suggesting benefits from lease payments. At a broader geographic scale, we find that new wellbores increase property values, but these effects diminish over time. Undrilled permits cause property values to decrease. Results have implications for the debate over regulation of shale gas development.
Handle: RePEc:nbr:nberwo:19796
Template-Type: ReDIF-Paper 1.0
Title: Does Planning Regulation Protect Independent Retailers?
Classification-JEL: K2; L10; L51; L81
Author-Name: Raffaella Sadun
Author-Person: psa385
Note: PR
Number: 19797
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19797
File-URL: http://www.nber.org/papers/w19797.pdf
File-Format: application/pdf
Publication-Status: published as Raffaella Sadun, 2015. "Does Planning Regulation Protect Independent Retailers?," Review of Economics and Statistics, vol 97(5), pages 983-1001.
Abstract: Regulations aimed at curbing the entry of large retail stores have been introduced in many countries to protect independent retailers. Analyzing a planning reform launched in the United Kingdom in the 1990s, I show that independent retailers were actually harmed by the creation of entry barriers against large stores. Instead of simply reducing the number of new large stores entering a market, the entry barriers created the incentive for large retail chains to invest in smaller and more centrally located formats, which competed more directly with independents and accelerated their decline. Overall, these findings suggest that restricting the entry of large stores does not necessarily lead to a world with fewer stores, but one with different stores, with uncertain competitive effects on independent retailers.
Handle: RePEc:nbr:nberwo:19797
Template-Type: ReDIF-Paper 1.0
Title: When Real Estate is the Only Game in Town
Classification-JEL: G02; G11; G12; R21; R3
Author-Name: Hyun-Soo Choi
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: Jeffrey Kubik
Author-Name: Jeffrey P. Thompson
Author-Person: pth342
Note: AP
Number: 19798
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19798
File-URL: http://www.nber.org/papers/w19798.pdf
File-Format: application/pdf
Abstract: Using data on household portfolios and mortgage originations, we find that households residing in a city with few publicly traded firms headquartered there are more likely to own an investment home nearby. Households in these areas are also less likely to own stocks. This only-game-in-town effect is more pronounced for households living in high credit quality areas, who can access financing to afford a second home. This effect also becomes pronounced for households living in low credit quality areas after 2002 when securitization made it easier for these households to buy second homes. Cities with few local stocks have in equilibrium higher price-to-rent ratios, making it more attractive to rent, and lower (primary residence) homeownership rates.
Handle: RePEc:nbr:nberwo:19798
Template-Type: ReDIF-Paper 1.0
Title: Governing Misvalued Firms
Classification-JEL: G30; G32; G34
Author-Name: Dalida Kadyrzhanova
Author-Person: pka310
Author-Name: Matthew Rhodes-Kropf
Author-Person: prh19
Note: CF LE
Number: 19799
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19799
File-URL: http://www.nber.org/papers/w19799.pdf
File-Format: application/pdf
Abstract: Equity overvaluation is thought to create the potential for managerial misbehavior, while monitoring and corporate governance curb misbehavior. We combine these two insights from the literatures on misvaluation and governance to ask 'when does governance matter?' Examining firms with standard long-run measures of corporate governance as they are shocked by plausible misvaluation, we provide consistent evidence that firm performance is impacted by governance when firms become overvalued - overvaluation causes weaker performance in poorly governed firms. Our findings imply that firm oversight is important during market booms, just when stock prices suggest all is well.
Handle: RePEc:nbr:nberwo:19799
Template-Type: ReDIF-Paper 1.0
Title: The Industrial Organization of Health Care Markets
Classification-JEL: I11; L1; L10
Author-Name: Martin Gaynor
Author-Person: pga1
Author-Name: Kate Ho
Author-Person: pho493
Author-Name: Robert Town
Author-Person: pto430
Note: EH IO
Number: 19800
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19800
File-URL: http://www.nber.org/papers/w19800.pdf
File-Format: application/pdf
Publication-Status: published as Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-84, June.
Abstract: The US health care sector is large and growing - health care spending in 2011 amounted to $2.7 trillion and 18% of GDP. Approximately half of health care output is allocated via markets. In this paper, we analyze the industrial organization literature on health care markets focusing on the impact of competition on price, quality and treatment decisions for health care providers and health insurers. We conclude with a discussion of research opportunities for industrial organization economists, including opportunities created by the US Patient Protection and Affordable Care Act.
Handle: RePEc:nbr:nberwo:19800
Template-Type: ReDIF-Paper 1.0
Title: Cross Border Effects of State Health Technology Regulation
Classification-JEL: H70; I11; I18; K32; L1; L52
Author-Name: Jill R. Horwitz
Author-Name: Daniel Polsky
Note: EH LE
Number: 19801
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19801
File-URL: http://www.nber.org/papers/w19801.pdf
File-Format: application/pdf
Publication-Status: published as Jill R. Horwitz & Daniel Polsky, 2015. "Cross Border Effects of State Health Technology Regulation," American Journal of Health Economics, vol 1(1), pages 101-123.
Abstract: Certificate of Need Laws (CON), state laws requiring providers to obtain licenses before adopting healthcare technology, have been controversial. The effect of CON on technology supply has not been well established. In part this is because analyses have focused on state-level supply effects, which may reflect either the consequence of CON regulation on supply or the cause for its adoption or retention. Instead, we focus on the cross-border effects of CON. We compare the number and location of magnetic resonance imaging providers in counties that border states with a different regulatory regime to: 1) counties in the interior of states, 2) counties on state borders with the same regulatory regime on both sides, and 3) counties on borders with different regulatory regimes, but with a large river on the border. We find there are 6.4 fewer MRIs per million people in regulated counties that border counties in unregulated states than in unregulated counties that border regulated counties. This statistically significant finding that regulatory spillover can be sizable should be accounted for in future research on state-based health technology regulation. In addition, it suggests state experiences may not accurately predict the effects of CON if it were implemented nationally.
Handle: RePEc:nbr:nberwo:19801
Template-Type: ReDIF-Paper 1.0
Title: Coal and the European Industrial Revolution
Classification-JEL: J10; N13; N53; O13; O14
Author-Name: Alan Fernihough
Author-Person: pfe287
Author-Name: Kevin Hjortshøj O'Rourke
Author-Person: por7
Note: DAE EFG
Number: 19802
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19802
File-URL: http://www.nber.org/papers/w19802.pdf
File-Format: application/pdf
Publication-Status: published as Alan Fernihough & Kevin Hjortshøj O'Rourke, 2021. "Coal and the European Industrial Revolution," The Economic Journal, vol 131(635), pages 1135-1149.
Abstract: We examine the importance of geographical proximity to coal as a factor underpinning comparative European economic development during the Industrial Revolution. Our analysis exploits geographical variation in city and coalfield locations, alongside temporal variation in the availability of coal-powered technologies, to quantify the effect of coal availability on historical city population sizes. Since we suspect that our coal measure could be endogenous, we use a geologically derived measure as an instrumental variable: proximity to rock strata from the Carboniferous era. Consistent with traditional historical accounts of the Industrial Revolution, we find that coal had a strong influence on city population size from 1800 onward. Counterfactual estimates of city population sizes indicate that our estimated coal effect explains around 60% of the growth in European city populations from 1750 to 1900. This result is robust to a number of alternative modelling assumptions.
Handle: RePEc:nbr:nberwo:19802
Template-Type: ReDIF-Paper 1.0
Title: Using School Choice Lotteries to Test Measures of School Effectiveness
Classification-JEL: I2; I21; I24; J24
Author-Name: David J. Deming
Author-Person: pde497
Note: CH ED LS
Number: 19803
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19803
File-URL: http://www.nber.org/papers/w19803.pdf
File-Format: application/pdf
Publication-Status: published as David J. Deming, 2014. "Using School Choice Lotteries to Test Measures of School Effectiveness," American Economic Review, American Economic Association, vol. 104(5), pages 406-11, May.
Abstract: Value-added models (VAMs) are increasingly used to measure school effectiveness. Yet random variation in school attendance is necessary to test the validity of VAMs, and to guide the selection of models for measuring causal effects of schools. In this paper, I use random assignment from a public school choice lottery to test the predictive power of VAM specifications. In VAMs with minimal controls and two or more years of prior data, I fail to reject the hypothesis that school effects are unbiased. Overall, many commonly used VAMs are accurate predictors of student achievement gains.
Handle: RePEc:nbr:nberwo:19803
Template-Type: ReDIF-Paper 1.0
Title: Public Goods, Hidden Income, and Tax Evasion: Some Nonstandard Results from the Warm-Glow Model
Classification-JEL: H26; H41; O17
Author-Name: Daniel M. Hungerman
Author-Person: phu114
Note: DEV PE
Number: 19804
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19804
File-URL: http://www.nber.org/papers/w19804.pdf
File-Format: application/pdf
Publication-Status: published as Hungerman, Daniel M., 2014. "Public goods, hidden income, and tax evasion: Some nonstandard results from the warm-glow model," Journal of Development Economics, Elsevier, vol. 109(C), pages 188-202.
Abstract: A large literature explores crowd out in situations where public goods are jointly provided; work in this area typically depicts a tax system where individuals take taxes as given. But in some settings, such as those in developing economies, efforts to evade or avoid taxes may be widespread. Using the canonical warm-glow model, this paper considers joint pubic-good provision in a setting where individuals can evade taxes by hiding their income. The model's implications change significantly in this setting: with hidden income, stronger warm glow will lead to greater crowd out, not less. Using research on crowd out and inter-family transfers, I present suggestive evidence that the model's results may help to reconcile divergent estimates of crowd out in the literature.
Handle: RePEc:nbr:nberwo:19804
Template-Type: ReDIF-Paper 1.0
Title: Motivating Migrants: A Field Experiment on Financial Decision-Making in Transnational Households
Classification-JEL: C93; F24; O12; O16
Author-Name: Ganesh Seshan
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV
Number: 19805
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19805
File-URL: http://www.nber.org/papers/w19805.pdf
File-Format: application/pdf
Publication-Status: published as Seshan, Ganesh & Yang, Dean, 2014. "Motivating migrants: A field experiment on financial decision-making in transnational households," Journal of Development Economics, Elsevier, vol. 108(C), pages 119-127.
Abstract: We randomly assigned male migrant workers in Qatar invitations to a motivational workshop aimed at improving financial habits and encouraging joint decision-making with spouses back home in India. 13-17 months later, we surveyed migrants and wives to estimate intent-to-treat impacts in their transnational households. Wives of treated migrants changed their financial practices, and became more likely to seek out financial education themselves. Treated migrants and their wives became more likely to make joint decisions on money matters. Treatment effects on financial outcomes show potential heterogeneity, with those with lower prior savings saving differentially more than those with higher prior savings.
Handle: RePEc:nbr:nberwo:19805
Template-Type: ReDIF-Paper 1.0
Title: Corporate Governance and Risk Management at Unprotected Banks: National Banks in the 1890s
Classification-JEL: G21; G32; N21
Author-Name: Charles W. Calomiris
Author-Person: pca421
Author-Name: Mark Carlson
Author-Person: pca881
Note: CF DAE
Number: 19806
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19806
File-URL: http://www.nber.org/papers/w19806.pdf
File-Format: application/pdf
Publication-Status: published as Calomiris, Charles W. & Carlson, Mark, 2016. "Corporate governance and risk management at unprotected banks: National banks in the 1890s," Journal of Financial Economics, Elsevier, vol. 119(3), pages 512-532.
Abstract: Managers' incentives may conflict with those of shareholders or creditors, particularly at leveraged, opaque banks. Bankers may abuse their control rights to give themselves excessive salaries, favored access to credit, or to take excessive risks that benefit themselves at the expense of depositors. Banks must design contracting and governance structures that sufficiently resolve agency problems so that they can attract funding from outside shareholders and depositors. We examine banks from the 1890s, a period when there were no distortions from deposit insurance or government interventions to assist banks. We use national banks' Examination Reports to link differences in managerial ownership to different corporate governance policies, risk, and methods of risk management. Formal corporate governance is lower when manager ownership shares are higher. Managerial rent seeking via salaries and insider lending is greater when managerial ownership is higher, and lower when formal governance controls are employed. Banks with higher managerial ownership target lower default risk. Higher managerial ownership and less-formal governance are associated with a greater reliance on cash rather than capital as a means of limiting risk, which we show is consistent both with higher adverse-selection costs of raising outside equity and with greater moral-hazard with respect to risk shifting.
Handle: RePEc:nbr:nberwo:19806
Template-Type: ReDIF-Paper 1.0
Title: Special Interests and the Media: Theory and an Application to Climate Change
Classification-JEL: D72; D83; Q54
Author-Name: Jesse M. Shapiro
Author-Person: psh70
Note: EEE PE POL
Number: 19807
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19807
File-URL: http://www.nber.org/papers/w19807.pdf
File-Format: application/pdf
Publication-Status: published as Jesse M. Shapiro, 2016. "Special Interests and the Media: Theory and an Application to Climate Change," Journal of Public Economics, .
Abstract: A journalist reports to a voter on an unknown, policy-relevant state. Competing special interests can make claims that contradict the facts but seem credible to the voter. A reputational incentive to avoid taking sides leads the journalist to report special interests’ claims to the voter. In equilibrium, the voter can remain uninformed even when the journalist is perfectly informed. Communication is improved if the journalist discloses her partisan leanings. The model provides an account of persistent public ignorance on climate change that is consistent with narrative and quantitative evidence.
Handle: RePEc:nbr:nberwo:19807
Template-Type: ReDIF-Paper 1.0
Title: Rainfall Forecasts, Weather and Wages over the Agricultural Production Cycle
Classification-JEL: J2; J31; J43; O1; O13; Q12
Author-Name: Mark R. Rosenzweig
Author-Person: pro558
Author-Name: Christopher Udry
Author-Person: pud2
Note: DEV
Number: 19808
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19808
File-URL: http://www.nber.org/papers/w19808.pdf
File-Format: application/pdf
Publication-Status: published as Mark R. Rosenzweig & Christopher Udry, 2014. "Rainfall Forecasts, Weather, and Wages over the Agricultural Production Cycle," American Economic Review, American Economic Association, vol. 104(5), pages 278-83, May.
Abstract: We look at the effects of rainfall forecasts and realized rainfall on equilibrium agricultural wages over the course of the agricultural production cycle. We show theoretically that a forecast of good weather can lower wages in the planting stage, by lowering ex ante out-migration, and can exacerbate the negative impact of adverse weather on harvest-stage wages. Using Indian household panel data describing early-season migration and district-level planting- and harvest-stage wages over the period 2005-2010, we find results consistent with the model, indicating that rainfall forecasts improve labor allocations on average but exacerbate wage volatility because they are imperfect.
Handle: RePEc:nbr:nberwo:19808
Template-Type: ReDIF-Paper 1.0
Title: Powerful Independent Directors
Classification-JEL: D85; G02; G3; G34; G38; K22; L2; Z13
Author-Name: Kathy Fogel
Author-Name: Liping Ma
Author-Name: Randall Morck
Author-Person: pmo146
Note: CF
Number: 19809
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19809
File-URL: http://www.nber.org/papers/w19809.pdf
File-Format: application/pdf
Publication-Status: published as Kathy Fogel & Liping Ma & Randall Morck, 2021. "Powerful independent directors," Financial Management, vol 50(4), pages 935-983.
Abstract: Shareholder valuations are economically and statistically positively correlated with independent director power, gauged by a composite of social network power centrality measures. Powerful independent directors’ sudden deaths reduce shareholder value significantly; other independent directors’ deaths do not, consistent with powerful independent directors increasing firm valuations. Further tests associate more powerful independent directors with less value-destroying M&A, less free cash flow retention, more CEO accountability, and less earnings management. We interpret these findings as more powerful independent directors better detecting and countering CEO missteps because of better access to information, greater credibility in challenging errant top managers, or both.
Handle: RePEc:nbr:nberwo:19809
Template-Type: ReDIF-Paper 1.0
Title: Missing Gains from Trade?
Classification-JEL: F10; F11; F15
Author-Name: Marc J. Melitz
Author-Person: pme260
Author-Name: Stephen J. Redding
Author-Person: pre64
Note: ITI
Number: 19810
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19810
File-URL: http://www.nber.org/papers/w19810.pdf
File-Format: application/pdf
Publication-Status: published as Marc J. Melitz & Stephen J. Redding, 2014. "Missing Gains from Trade?," American Economic Review, American Economic Association, vol. 104(5), pages 317-21, May.
Abstract: The theoretical result that there are welfare gains from trade is a central tenet of international economics. In a class of trade models that satisfy a "gravity equation," the welfare gains from trade can be computed using only the open economy domestic trade share and the elasticity of trade with respect to variable trade costs. The measured welfare gains from trade from this quantitative approach are typically relatively modest. In this paper, we suggest a channel for welfare gains that this quantitative approach typically abstracts from: trade-induced changes in domestic productivity. Using a model of sequential production, in which trade induces a reorganization of production that raises domestic productivity, we show that the welfare gains from trade can become arbitrarily large.
Handle: RePEc:nbr:nberwo:19810
Template-Type: ReDIF-Paper 1.0
Title: Risk, Insurance and Wages in General Equilibrium
Classification-JEL: J2; O13; O16; O17; Q12
Author-Name: Ahmed Mushfiq Mobarak
Author-Person: pmo232
Author-Name: Mark Rosenzweig
Author-Person: pro558
Note: DEV
Number: 19811
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19811
File-URL: http://www.nber.org/papers/w19811.pdf
File-Format: application/pdf
Abstract: We estimate the general-equilibrium labor market effects of a large-scale randomized intervention in which we designed and marketed a rainfall index insurance product across three states in India. Marketing agricultural insurance to both cultivators and to agricultural wage laborers allows us to test a general-equilibrium model of wage determination in settings where households supplying labor and households hiring labor face weather risk. Consistent with theoretical predictions, we find that both labor demand and equilibrium wages become more rainfall sensitive when cultivators are offered rainfall insurance, because insurance induces cultivators to switch to riskier, higher-yield production methods. The same insurance contract offered to agricultural laborers smoothes wages across rainfall states by inducing changes in labor supply. Policy simulations based on our estimates suggest that selling insurance only to land-owning cultivators and precluding the landless from the insurance market (which is the current regulatory practice in India and other developing countries), makes wage laborers worse off relative to a situation where insurance does not exist at all.
Handle: RePEc:nbr:nberwo:19811
Template-Type: ReDIF-Paper 1.0
Title: The Price of Political Uncertainty: Theory and Evidence from the Option Market
Classification-JEL: G12; G15; G18
Author-Name: Bryan Kelly
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Pietro Veronesi
Note: AP CF EFG POL
Number: 19812
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19812
File-URL: http://www.nber.org/papers/w19812.pdf
File-Format: application/pdf
Publication-Status: published as Bryan Kelly & Ľuboš Pástor & Pietro Veronesi, 2016. "The Price of Political Uncertainty: Theory and Evidence from the Option Market," Journal of Finance, American Finance Association, vol. 71(5), pages 2417-2480, October.
Abstract: We empirically analyze the pricing of political uncertainty, guided by a theoretical model of government policy choice. To isolate political uncertainty, we exploit its variation around national elections and global summits. We find that political uncertainty is priced in the equity option market as predicted by theory. Options whose lives span political events tend to be more expensive. Such options provide valuable protection against the price, variance, and tail risks associated with political events. This protection is more valuable in a weaker economy and amid higher political uncertainty. The effects of political uncertainty spill over across countries.
Handle: RePEc:nbr:nberwo:19812
Template-Type: ReDIF-Paper 1.0
Title: State Capacity and Economic Development: A Network Approach
Classification-JEL: H4; H7; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Camilo García-Jimeno
Author-Name: James A. Robinson
Author-Person: pro179
Note: POL
Number: 19813
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19813
File-URL: http://www.nber.org/papers/w19813.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Camilo García-Jimeno & James A. Robinson, 2015. "State Capacity and Economic Development: A Network Approach," American Economic Review, American Economic Association, vol. 105(8), pages 2364-2409, August.
Abstract: We study the direct and spillover effects of local state capacity using the network of Colombian municipalities. We model the determination of local and national state capacity as a network game in which each municipality, anticipating the choices and spillovers created by other municipalities and the decisions of the national government, invests in local state capacity and the national government chooses the presence of the national state across municipalities to maximize its own payoff. We then estimate the parameters of this model using reduced-form instrumental variables techniques and structurally (using GMM, simulated GMM or maximum likelihood). To do so we exploit both the structure of the network of municipalities, which determines which municipalities create spillovers on others, and the historical roots of local state capacity as the source of exogenous variation. These historical instruments are related to the presence of colonial royal roads and local presence of the colonial state in the 18th century, factors which we argue are unrelated to current provision of public goods and prosperity except through their impact on their own and neighbors' local state capacity. Our estimates of the effects of state presence on prosperity are large and also indicate that state capacity decisions are strategic complements across municipalities. As a result, we find that bringing all municipalities below median state capacity to the median, without taking into account equilibrium responses of other municipalities, would increase the median fraction of the population above poverty from 57% to 60%. Approximately 57% of this is due to direct effects and 43% to spillovers. However, if we take the equilibrium response of other municipalities into account, the median would instead increase to 68%, a sizable change driven by equilibrium network effects.
Handle: RePEc:nbr:nberwo:19813
Template-Type: ReDIF-Paper 1.0
Title: Market Set-Up in Advance of Federal Reserve Policy Decisions
Classification-JEL: E43; E44; E58; G18
Author-Name: Dick van Dijk
Author-Person: pva27
Author-Name: Robin L. Lumsdaine
Author-Name: Michel van der Wel
Author-Person: pva361
Note: ME
Number: 19814
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19814
File-URL: http://www.nber.org/papers/w19814.pdf
File-Format: application/pdf
Publication-Status: published as Market Set-up in Advance of Federal Reserve Policy Rate Decisions Authors Dick van Dijk, Robin L. Lumsdaine, Michel van der Wel Economic Journal Volume 126, Issue 592 May 2016 Pages 618–653
Abstract: This paper considers the uncertainty associated with upcoming Federal Open Market Committee (FOMC) announcements and the extent to which the market begins to set up for such announcements well before they actually occur. We demonstrate that markets set up well in advance of known announcement days; as a result, there is often less uncertainty in the period immediately preceding an FOMC announcement, despite greater volume of activity, as the market has already incorporated anticipated signals. We consider the relative importance of both macro announcements and central bank officials' speeches and congressional testimony in shaping market expectations. We find substantial evidence of anticipatory effects; these results are particularly relevant as the Fed develops its communication strategy to achieve an orderly exit from its program of quantitative easing.
Handle: RePEc:nbr:nberwo:19814
Template-Type: ReDIF-Paper 1.0
Title: Tax Benefits to Housing and Inefficiencies in Location and Consumption
Classification-JEL: H24; H77; R13; R21; R31
Author-Name: David Albouy
Author-Person: pal128
Author-Name: Andrew Hanson
Author-Person: pha973
Note: PE
Number: 19815
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19815
File-URL: http://www.nber.org/papers/w19815.pdf
File-Format: application/pdf
Publication-Status: published as Are Houses Too Big or In the Wrong Place? Tax Benefits to Housing and Inefficiencies in Location and Consumption, David Albouy, Andrew Hanson. in Tax Policy and the Economy, Volume 28, Brown. 2014
Abstract: Tax benefits to owner-occupied housing provide incentives for housing consumption, offsetting weaker disincentives of the property tax. These benefits also help counter the penalty federal taxes impose on households who work in productive high-wage areas, but reinforce incentives to consume local amenities. We simulate the effects of these benefits in a parameterized model, and determine the consequences of various tax reforms. Reductions in housing tax benefits generally reduce inefficiency in consumption, but increase inefficiency in location decisions, unless they are accompanied by tax-rate reductions. The most efficient policy would eliminate most tax benefits to housing and index taxes to local wage levels.
Handle: RePEc:nbr:nberwo:19815
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Online Postsecondary Education: MOOCs, Nonselective Education, and Highly Selective Education
Classification-JEL: A2; I2; L33; L86
Author-Name: Caroline M. Hoxby
Author-Person: pho46
Note: ED LS PE
Number: 19816
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19816
File-URL: http://www.nber.org/papers/w19816.pdf
File-Format: application/pdf
Publication-Status: published as Caroline M. Hoxby, 2014. "The Economics of Online Postsecondary Education: MOOCs, Nonselective Education, and Highly Selective Education," American Economic Review, American Economic Association, vol. 104(5), pages 528-33, May.
Abstract: I consider how online postsecondary education, including massive open online courses (MOOCs), might fit into economically sustainable models of postsecondary education. I contrast nonselective postsecondary education (NSPE)in which institutions sell fairly standardized educational services in return for up-front payments and highly selective postsecondary education (HSPE) in which institutions invest in students in return for repayments much later in life. The analysis suggests that MOOCs will be financially sustainable substitutes for some NSPE, but there are risks even in these situations. The analysis suggests that MOOCs will be financially sustainable substitutes for only a small share of HSPE and are likely to collapse the economic model that allows HSPE institutions to invest in advanced education and research. I outline a non-MOOC model of online education that may allow HSPE institutions both to sustain their distinctive activities and to reach a larger number of students.
Handle: RePEc:nbr:nberwo:19816
Template-Type: ReDIF-Paper 1.0
Title: Misinformed Speculators and Mispricing in the Housing Market
Classification-JEL: G14; R3
Author-Name: Alex Chinco
Author-Name: Christopher Mayer
Author-Person: pma212
Note: AP
Number: 19817
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19817
File-URL: http://www.nber.org/papers/w19817.pdf
File-Format: application/pdf
Publication-Status: published as Alex Chinco & Christopher Mayer, 2016. "Misinformed Speculators and Mispricing in the Housing Market," Review of Financial Studies, vol 29(2), pages 486-522.
Abstract: This paper uses transactions-level deeds records to examine how out-of-town second house buyers contributed to mispricing in the housing market. We document that out-of-town second house buyers behaved like misinformed speculators and drove up both house price and implied-to-actual rent ratio (IAR) appreciation rates in cities like Phoenix, Las Vegas, and Miami in the mid 2000s. Our analysis has 3 parts. First, we give evidence that out-of-town second house buyers behaved like misinformed speculators. Compared to local second house buyers, out- of-town second house buyers had worse exit timing (i.e., were likely misinformed) and were also less able to consume the dividend from their purchase (i.e., were likely speculators). Second, we show that increases in out-of-town second house buyer demand predict increases in future house price appreciation rates and IAR appreciation rates. A 10%pt increase in the fraction of sales made to out-of-town second house buyers is associated with a 6%pt increase in house price appreciation rates and a 9%pt increase in IAR appreciation rates over the course of the next year in that city. Third, we address the issue of reverse causality using a novel econometric strategy. The key insight is that an increase in the fundamental value of owning a second house in Phoenix is a common shock to the investment opportunity set of all potential second house buyers. If changes to fundamentals were driving both price dynamics as well as out-of-town second house buyer demand, we would expect to see large jumps in house price and IAR appreciation rates preceded by increases in out-of-town second house buyer demand from across the country. The data do not display this symmetric response, and are thus inconsistent with reverse causality. We conclude by discussing both the economic magnitudes of out-of-town second house buyer flows and the broader applicability of our econometric approach.
Handle: RePEc:nbr:nberwo:19817
Template-Type: ReDIF-Paper 1.0
Title: Origins of Stock Market Fluctuations
Classification-JEL: G0; G12
Author-Name: Daniel L. Greenwald
Author-Person: pgr706
Author-Name: Martin Lettau
Author-Person: ple572
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Note: AP EFG
Number: 19818
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19818
File-URL: http://www.nber.org/papers/w19818.pdf
File-Format: application/pdf
Abstract: Three mutually uncorrelated economic disturbances that we measure empirically explain 85% of the quarterly variation in real stock market wealth since 1952. A model is employed to interpret these disturbances in terms of three latent primitive shocks. In the short run, shocks that affect the willingness to bear risk independently of macroeconomic fundamentals explain most of the variation in the market. In the long run, the market is profoundly affected by shocks that reallocate the rewards of a given level of production between workers and shareholders. Productivity shocks play a small role in historical stock market fluctuations at all horizons.
Handle: RePEc:nbr:nberwo:19818
Template-Type: ReDIF-Paper 1.0
Title: Why and Wherefore of Increased Scientific Collaboration
Classification-JEL: J01; J2; J24; J4; J44; J61; J68; O31; O32; O33
Author-Name: Richard B. Freeman
Author-Person: pfr23
Author-Name: Ina Ganguli
Author-Person: pga330
Author-Name: Raviv Murciano-Goroff
Author-Person: pmu490
Note: LS
Number: 19819
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19819
File-URL: http://www.nber.org/papers/w19819.pdf
File-Format: application/pdf
Publication-Status: published as Why and Wherefore of Increased Scientific Collaboration, Richard B. Freeman, Ina Ganguli, Raviv Murciano-Goroff. in The Changing Frontier: Rethinking Science and Innovation Policy, Jaffe and Jones. 2015
Abstract: This paper examines international and domestic collaborations using data from an original survey of corresponding authors and Web of Science data of articles that had at least one US coauthor in the fields of Particle and Field Physics, Nanoscience and Nanotechnology, and Biotechnology and Applied Microbiology. The data allow us to investigate the connections among coauthors and the views of corresponding authors about the collaboration. We have four main findings. First, we find that US collaborations have increased across US cities as well as across international borders, with the nature of collaborations across cities resembling that across countries. Second, face-to-face meetings are important in collaborations: most collaborators first met working in the same institution and communicate often through meetings with coauthors from distant locations. Third, the main reason for most collaborations is to combine the specialized knowledge and skills of coauthors, but there are substantial differences in the mode of collaborations between small lab-based science and big science, where international collaborations are more prevalent. Fourth, for biotech, we find that citations to international papers are higher compared to papers with domestic collaborators only, but not for the other two fields. Moreover, in all three fields, papers with the same number of coauthors had lower citations if they were international collaborations. Overall, our findings suggest that all collaborations are best viewed from a framework of collaborations across space broadly, rather than in terms of international as opposed to domestic collaborative activity.
Handle: RePEc:nbr:nberwo:19819
Template-Type: ReDIF-Paper 1.0
Title: The Information Value of Online Social Networks: Lessons from Peer-to-Peer Lending
Classification-JEL: D53; D82; L81
Author-Name: Seth Freedman
Author-Person: pfr305
Author-Name: Ginger Zhe Jin
Note: IO
Number: 19820
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19820
File-URL: http://www.nber.org/papers/w19820.pdf
File-Format: application/pdf
Publication-Status: published as Seth Freedman & Ginger Zhe Jin, 2017. "The information value of online social networks: Lessons from peer-to-peer lending," International Journal of Industrial Organization, vol 51, pages 185-222.
Abstract: We examine whether social networks facilitate online markets using data from a leading peer-to-peer lending website. We find that borrowers with social ties are consistently more likely to have their loans funded and receive lower interest rates; however, most borrowers with social ties are more likely to pay late or default. We provide evidence that these findings are driven by lenders not fully understanding the relationship between social ties and unobserved borrower quality. Overall, our findings suggest caution for using online social networks as a signal of quality in anonymous transactions.
Handle: RePEc:nbr:nberwo:19820
Template-Type: ReDIF-Paper 1.0
Title: How Sticky Wages in Existing Jobs Can Affect Hiring
Classification-JEL: E24; E32; J22; J23
Author-Name: Mark Bils
Author-Person: pbi148
Author-Name: Yongsung Chang
Author-Person: pch20
Author-Name: Sun-Bin Kim
Author-Person: pki155
Note: EFG
Number: 19821
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19821
File-URL: http://www.nber.org/papers/w19821.pdf
File-Format: application/pdf
Publication-Status: published as Mark Bils & Yongsung Chang & Sun-Bin Kim, 2022. "How Sticky Wages in Existing Jobs Can Affect Hiring," American Economic Journal: Macroeconomics, vol 14(1), pages 1-37.
Abstract: We consider a matching model of employment with wages that are flexible for new hires, but sticky within matches. We depart from standard treatments of sticky wages by allowing effort to respond to the wage being too high or low. Shimer (2004) and others have illustrated that employment in the Mortensen-Pissarides model does not depend on the degree of wage flexibility in existing matches. But this is not true in our model. If wages of matched workers are stuck too high in a recession, then firms will require more effort, lowering the value of additional labor and reducing new hiring.
Handle: RePEc:nbr:nberwo:19821
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Income Taxation under Multidimensional Skill Heterogeneity
Classification-JEL: D5; D6; D8; E2; H2; J3
Author-Name: Casey Rothschild
Author-Person: pro404
Author-Name: Florian Scheuer
Author-Person: psc147
Note: EFG LS PE
Number: 19822
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19822
File-URL: http://www.nber.org/papers/w19822.pdf
File-Format: application/pdf
Abstract: We develop a unifying framework for optimal income taxation in multi-sector economies with general patterns of externalities. Agents in this model are characterized by an N-dimensional skill vector corresponding to intrinsic abilities in N potentially externality-causing activities. The private return to each activity depends on individual skill and an aggregate activity-specific return, which is a fully general function of the economy-wide distribution of activity-specific efforts. We show that the N-dimensional heterogeneity can be collapsed to a one-dimensional, endogenous statistic sufficient for screening. The optimal tax schedule features a multiplicative income-specific correction to an otherwise standard tax formula. Because externalities change the relative returns to different activities, corrective taxes induce changes in the across-activity allocation of effort. These relative return effects cause the optimal correction to diverge, in general, from the Pigouvian tax that would align private and social returns. We characterize this divergence and its implications for the shape of the tax schedule both generally and in a number of applications, including externality-free economies, increasing and decreasing returns to scale, zero-sum activities such as bargaining or rent extraction, and positive or negative spillovers.
Handle: RePEc:nbr:nberwo:19822
Template-Type: ReDIF-Paper 1.0
Title: Recovery from Financial Crises: Evidence from 100 Episodes
Classification-JEL: E32; E44; F44; G01; N10; N20
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: IFM
Number: 19823
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19823
File-URL: http://www.nber.org/papers/w19823.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "Recovery from Financial Crises: Evidence from 100 Episodes," American Economic Review, American Economic Association, vol. 104(5), pages 50-55, May.
Abstract: We examine the evolution of real per capita GDP around 100 systemic banking crises. Part of the costs of these crises owes to the protracted nature of recovery. On average, it takes about eight years to reach the pre-crisis level of income; the median is about 6 ½ years. Five to six years after the onset of crisis, only Germany and the US (out of 12 systemic cases) have reached their 2007-2008 peaks in real income. Forty-five percent of the episodes recorded double dips. Postwar business cycles are not the relevant comparator for the recent crises in advanced economies.
Handle: RePEc:nbr:nberwo:19823
Template-Type: ReDIF-Paper 1.0
Title: Linkage of Greenhouse Gas Emissions Trading Systems: Learning from Experience
Classification-JEL: Q28
Author-Name: Matthew Ranson
Author-Name: Robert Stavins
Author-Person: pst167
Note: EEE
Number: 19824
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19824
File-URL: http://www.nber.org/papers/w19824.pdf
File-Format: application/pdf
Publication-Status: published as in Climate Policy (DOI: 10.1080/14693062.2014.997658).
Abstract: The last ten years have seen the growth of linkages between many of the world's cap-and-trade systems for greenhouse gases (GHGs), both directly between systems, and indirectly via connections to credit systems such as the Clean Development Mechanism. If nations have tried to act in their own self-interest, this proliferation of linkages implies that for many nations, the expected benefits of linkage outweighed expected costs. In this paper, we draw on the past decade of experience with carbon markets to test a series of hypotheses about why systems have demonstrated this revealed preference for linking. Linkage is a multi-faceted policy decision that can be used by political jurisdictions to achieve a variety of objectives, and we find evidence that many economic, political, and strategic factors - ranging from geographic proximity to integrity of emissions reductions - influence the decision to link. We also identify some potentially important effects of linkage, such as loss of control over domestic carbon policies, which do not appear to have deterred real-world decisions to link. These findings have implications for the future role that decentralized linkages may play in international climate policy architecture. The Kyoto Protocol has entered what is probably its final commitment period, covering only a small fraction of global GHG emissions. Under the Durban Platform for Enhanced Action, negotiators may now gravitate toward a hybrid system, combining top-down elements for establishing targets with bottom-up elements of pledge-and-review tied to national policies and actions. The incentives for linking these national policies are likely to continue to produce direct connections among regional, national, and sub-national cap-and-trade systems. The growing network of decentralized, direct linkages among these systems may turn out to be a key part of a future hybrid climate policy architecture.
Handle: RePEc:nbr:nberwo:19824
Template-Type: ReDIF-Paper 1.0
Title: Incentives, Selection and Productivity in Labor Markets: Evidence from Rural Malawi
Classification-JEL: C93; J22; J24; J33; O12
Author-Name: Raymond P. Guiteras
Author-Person: pgu357
Author-Name: B. Kelsey Jack
Author-Person: pja401
Note: DEV LS
Number: 19825
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19825
File-URL: http://www.nber.org/papers/w19825.pdf
File-Format: application/pdf
Abstract: An observed positive relationship between compensation and productivity cannot distinguish between two channels: (1) an incentive effect and (2) worker selection. We use a simplified Becker-DeGroot-Marschak mechanism, which provides random variation in piece rates conditional on revealed reservation rates, to separately identify the two channels in the context of casual labor markets in rural Malawi. A higher piece rate increases output in our setting, but does not attract more productive workers. Among men, the average worker recruited at higher piece rates is actually less productive. Local labor market imperfections appear to undermine the worker sorting observed in well-functioning labor markets.
Handle: RePEc:nbr:nberwo:19825
Template-Type: ReDIF-Paper 1.0
Title: Why Has U.S. Policy Uncertainty Risen Since 1960?
Classification-JEL: D7; E02; E6; H11
Author-Name: Scott R. Baker
Author-Person: pba1441
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Brandice Canes-Wrone
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: Jonathan A. Rodden
Note: EFG PE POL
Number: 19826
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19826
File-URL: http://www.nber.org/papers/w19826.pdf
File-Format: application/pdf
Publication-Status: published as Scott R. Baker & Nicholas Bloom & Brandice Canes-Wrone & Steven J. Davis & Jonathan Rodden, 2014. "Why Has US Policy Uncertainty Risen since 1960?," American Economic Review, American Economic Association, vol. 104(5), pages 56-60, May.
Abstract: There appears to be a strong upward drift in policy-related economic uncertainty after 1960. We consider two classes of explanations for this rise. The first stresses growth in government spending, taxes, and regulation. A second stresses increased political polarization and its implications for the policy-making process and policy choices. While the evidence is inconclusive, it suggests that both factors play a role in driving the secular increase in policy uncertainty over the last half century.
Handle: RePEc:nbr:nberwo:19826
Template-Type: ReDIF-Paper 1.0
Title: Microcredit Impacts: Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco
Classification-JEL: D12; D22; G21; O12
Author-Name: Manuela Angelucci
Author-Person: pan79
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: DEV LE LS
Number: 19827
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19827
File-URL: http://www.nber.org/papers/w19827.pdf
File-Format: application/pdf
Publication-Status: published as Manuela Angelucci & Dean Karlan & Jonathan Zinman, 2015. "Microcredit Impacts: Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 151-82, January.
Abstract: Theory and evidence have raised concerns that microcredit does more harm than good, particularly when offered at high interest rates. We use a clustered randomized trial, and household surveys of eligible borrowers and their businesses, to estimate impacts from an expansion of group lending at 110% APR by the largest microlender in Mexico. Average effects on a rich set of outcomes measured 18-34 months postexpansion suggest no transformative impacts.
Handle: RePEc:nbr:nberwo:19827
Template-Type: ReDIF-Paper 1.0
Title: Social Implications of Fiscal Policy Responses During Crises
Classification-JEL: E62; F41
Author-Name: Carlos A. Vegh
Author-Person: pve34
Author-Name: Guillermo Vuletin
Author-Person: pvu7
Note: IFM
Number: 19828
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19828
File-URL: http://www.nber.org/papers/w19828.pdf
File-Format: application/pdf
Abstract: This paper studies the social implications of fiscal policy responses to crises in Latin America over the last 40 years and in the Eurozone during the aftermath of the global financial crisis. We focus on the behavior of four social indicators: the poverty rate, income inequality, unemployment rate, and domestic conflict. We find a causal link from counteryclical (procyclical) fiscal policy responses to reductions (increases) in all four social indicators. These results call into question recent claims on "expansionary fiscal austerity."
Handle: RePEc:nbr:nberwo:19828
Template-Type: ReDIF-Paper 1.0
Title: Marry Your Like: Assortative Mating and Income Inequality
Classification-JEL: D31; J11; J12; J22
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: 19829
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19829
File-URL: http://www.nber.org/papers/w19829.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy Greenwood & Nezih Guner & Georgi Kocharkov & Cezar Santos, 2014. "Marry Your Like: Assortative Mating and Income Inequality," American Economic Review, American Economic Association, vol. 104(5), pages 348-53, May.
Abstract: Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating affects household income inequality. In particular, if matching in 2005 between husbands and wives had been random, instead of the pattern observed in the data, then the Gini coefficient would have fallen from the observed 0.43 to 0.34, so that income inequality would be smaller. Thus, assortative mating is important for income inequality. The high level of married female labor-force participation in 2005 is important for this result.
Handle: RePEc:nbr:nberwo:19829
Template-Type: ReDIF-Paper 1.0
Title: The Future of U.S. Economic Growth
Classification-JEL: O4
Author-Name: John G. Fernald
Author-Person: pfe43
Author-Name: Charles I. Jones
Author-Person: pjo24
Note: EFG
Number: 19830
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19830
File-URL: http://www.nber.org/papers/w19830.pdf
File-Format: application/pdf
Publication-Status: published as John G. Fernald & Charles I. Jones, 2014. "The Future of US Economic Growth," American Economic Review, American Economic Association, vol. 104(5), pages 44-49, May.
Abstract: Modern growth theory suggests that more than 3/4 of growth since 1950 reflects rising educational attainment and research intensity. As these transition dynamics fade, U.S. economic growth is likely to slow at some point. However, the rise of China, India, and other emerging economies may allow another few decades of rapid growth in world researchers. Finally, and more speculatively, the shape of the idea production function introduces a fundamental uncertainty into the future of growth. For example, the possibility that artificial intelligence will allow machines to replace workers to some extent could lead to higher growth in the future.
Handle: RePEc:nbr:nberwo:19830
Template-Type: ReDIF-Paper 1.0
Title: Lights, Camera,... Income!: Estimating Poverty Using National Accounts, Survey Means, and Lights
Classification-JEL: D31; E01; O1; O4
Author-Name: Maxim Pinkovskiy
Author-Person: ppi345
Author-Name: Xavier Sala-i-Martin
Author-Person: psa510
Note: DEV EFG
Number: 19831
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19831
File-URL: http://www.nber.org/papers/w19831.pdf
File-Format: application/pdf
Publication-Status: published as Lights, Camera, … Income! Illuminating the National Accounts-Household Surveys Debate With Xavier Sala-i-Martin The Quarterly Journal of Economics, 131 (2): 579-631, May 2016
Abstract: In this paper we try to understand whether national accounts GDP per capita or survey mean income or consumption better proxy for true income per capita. We propose a data-driven method to assess the relative quality of GDP per capita versus survey means by comparing the evolution of each series to the evolution of satellite-recorded nighttime lights. Our main assumption, which is robust to a variety of specification checks, is that the measurement error in nighttime lights is unrelated to the measurement errors in either national accounts or survey means. We obtain estimates of weights on national accounts and survey means in an optimal proxy for true income; these weights are very large for national accounts and very modest for survey means. We conclusively reject the null hypothesis that the optimal weight on surveys is greater than the optimal weight on national accounts, and we generally fail to reject the null hypothesis that the optimal weight on surveys is zero. Using the estimated optimal weights, we compute estimates of true income per capita and $1/day poverty rates for the developing world and its regions. We get poverty estimates that are substantially lower and fall substantially faster than those of Chen and Ravallion (2010) or of the survey-based poverty literature more generally.
Handle: RePEc:nbr:nberwo:19831
Template-Type: ReDIF-Paper 1.0
Title: Voting to Tell Others
Classification-JEL: C93; P48
Author-Name: Stefano DellaVigna
Author-Person: pde710
Author-Name: John A. List
Author-Person: pli176
Author-Name: Ulrike Malmendier
Author-Person: pma1397
Author-Name: Gautam Rao
Note: IO LS PE POL
Number: 19832
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19832
File-URL: http://www.nber.org/papers/w19832.pdf
File-Format: application/pdf
Publication-Status: published as Stefano Dellavigna & John A. List & Ulrike Malmendier & Gautam Rao, 2017. "Voting to Tell Others," The Review of Economic Studies, vol 84(1), pages 143-181.
Abstract: Why do people vote? We argue that social image plays a significant role in explaining turnout: people vote because others will ask. The expectation of being asked motivates turnout if individuals derive pride from telling others that they voted, or feel shame from admitting that they did not vote, provided that lying is costly. We design a field experiment to estimate the effect of social image concerns on voting. In a door-to-door survey about election turnout, we experimentally vary (i) the informational content and use of a flyer pre-announcing the survey, (ii) the duration and payment for the survey, and (iii) the incentives to lie about past voting. Our estimates suggest significant social image concerns. For a plausible range of lying costs, we estimate the monetary value of voting `because others will ask' to be in the range of $5-$15 for the 2010 Congressional election. In a complementary get-out-the-vote experiment, we inform potential voters before the election that we will ask them later whether they voted. We find suggestive evidence that the treatment increases turnout.
Handle: RePEc:nbr:nberwo:19832
Template-Type: ReDIF-Paper 1.0
Title: Restoring the Product Variety and Pro-competitive Gains from Trade with Heterogeneous Firms and Bounded Productivity
Classification-JEL: F12
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Note: ITI
Number: 19833
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19833
File-URL: http://www.nber.org/papers/w19833.pdf
File-Format: application/pdf
Publication-Status: published as Robert C. Feenstra, 2017. "Restoring the Product Variety and Pro-competitive Gains from Trade with Heterogeneous Firms and Bounded Productivity," Journal of International Economics, .
Abstract: The monopolistic competition model in international trade offers three sources of gains from trade that do not arise in competitive models: expansion in product variety; a pro-competitive reduction in the markups charged by firms; and the self-selection of more efficient firms into exporting. Recent literature on trade with heterogeneous firms has emphasized the third of these effects, and the first two effects are ruled out when using a Pareto distribution for productivity with a support that is unbounded above. The goal of this paper is to restore a role for product variety and pro-competitive gains from trade by using a bounded Pareto distribution for productivity.
Handle: RePEc:nbr:nberwo:19833
Template-Type: ReDIF-Paper 1.0
Title: How Constraining Are Limits to Arbitrage? Evidence from a Recent Financial Innovation
Classification-JEL: G02; G12; G14; G23
Author-Name: Alexander Ljungqvist
Author-Person: plj2
Author-Name: Wenlan Qian
Note: AP CF
Number: 19834
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19834
File-URL: http://www.nber.org/papers/w19834.pdf
File-Format: application/pdf
Abstract: Limits to arbitrage play a central role in behavioral finance. They are thought to interfere with arbitrage processes so that security prices can deviate from true values for extended periods of time. We describe a recent financial innovation that allows limits to arbitrage to be sidestepped, and overvaluation thereby to be corrected, even in settings characterized by extreme costs of information discovery and severe short-sale constraints. We report evidence of shallow-pocketed "arbitrageurs" expending considerable resources to identify overvalued companies and profitably correcting overpricing. The innovation that allows the arbitrageurs to sidestep limits to arbitrage involves credibly revealing their information to the market, in an effort to induce long investors to sell so that prices fall. This simple but apparently effective way around the limits suggests that limits to arbitrage may not always be as constraining as sometimes assumed.
Handle: RePEc:nbr:nberwo:19834
Template-Type: ReDIF-Paper 1.0
Title: Could a Website Really Have Doomed the Health Exchanges? Multiple Equilibria, Initial Conditions and the Construction of the Fine
Classification-JEL: D4; D8; H3; I1
Author-Name: Florian Scheuer
Author-Person: psc147
Author-Name: Kent Smetters
Author-Person: psm21
Note: AG EH IO PE
Number: 19835
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19835
File-URL: http://www.nber.org/papers/w19835.pdf
File-Format: application/pdf
Abstract: Public attention has focused on how the launch of the national health exchanges could impact the types of risks who initially enroll and thereby affect future premiums and enrollment. We introduce simple dynamics into a standard model of insurance under adverse selection to show that such "initial conditions" can indeed matter. When firms are price-takers, the market can converge to a Pareto-inferior "bad" equilibrium if there are at least three equilibria, which we suggest has empirical support. Strategic pricing eliminates Pareto dominated equilibria but requires common knowledge of preference and risk distributions. Changing the fine on non-participants from a fixed amount to a fraction of equilibrium prices increases the range of initial conditions consistent with reaching the "good" equilibrium while reducing the "badness" of the bad equilibrium -- all without increasing the fine value in the good equilibrium. Allowing insurers to quickly change prices can encourage them to experiment with strategic pricing if market fundamentals are not perfectly known, increasing the chance of reaching the good equilibrium independently from initial conditions.
Handle: RePEc:nbr:nberwo:19835
Template-Type: ReDIF-Paper 1.0
Title: Cash-on-Hand & College Enrollment: Evidence from Population Tax Data and Policy Nonlinearities
Classification-JEL: H24; I23; I28
Author-Name: Dayanand S. Manoli
Author-Person: pma1770
Author-Name: Nicholas Turner
Note: CH ED LS PE
Number: 19836
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19836
File-URL: http://www.nber.org/papers/w19836.pdf
File-Format: application/pdf
Abstract: We estimate causal effects of cash-on-hand on college enrollment decisions of students from low-income families. Using population-level, administrative data from United States income tax returns, we exploit variation in tax refunds received in the spring of the high school senior year. The variation in tax refunds results from the kink point between the phase-in and maximum credit portions of the Earned Income Tax Credit schedule. The results suggest tax refunds received in the spring of the high school senior year have meaningful effects on college enrollment.
Handle: RePEc:nbr:nberwo:19836
Template-Type: ReDIF-Paper 1.0
Title: Return of the Solow Paradox? IT, Productivity, and Employment in U.S. Manufacturing
Classification-JEL: J2; L60; O3
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: David Autor
Author-Person: pau9
Author-Name: David Dorn
Author-Person: pdo78
Author-Name: Gordon H. Hanson
Author-Person: pha80
Author-Name: Brendan Price
Note: EFG LS PR
Number: 19837
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19837
File-URL: http://www.nber.org/papers/w19837.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & David Autor & David Dorn & Gordon H. Hanson & Brendan Price, 2014. "Return of the Solow Paradox? IT, Productivity, and Employment in US Manufacturing," American Economic Review, American Economic Association, vol. 104(5), pages 394-99, May.
Abstract: An increasingly influential "technological-discontinuity" paradigm suggests that IT-induced technological changes are rapidly raising productivity while making workers redundant. This paper explores the evidence for this view among the IT-using U.S. manufacturing industries. There is some limited support for more rapid productivity growth in IT-intensive industries depending on the exact measures, though not since the late 1990s. Most challenging to this paradigm, and our expectations, is that output contracts in IT-intensive industries relative to the rest of manufacturing. Productivity increases, when detectable, result from the even faster declines in employment.
Handle: RePEc:nbr:nberwo:19837
Template-Type: ReDIF-Paper 1.0
Title: Advertising and Environmental Stewardship: Evidence from the BP Oil Spill
Classification-JEL: H0; H23; L0; M3; M38; Q5
Author-Name: Lint Barrage
Author-Person: pba1457
Author-Name: Eric Chyn
Author-Name: Justine Hastings
Author-Person: pha804
Note: EEE IO PE
Number: 19838
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19838
File-URL: http://www.nber.org/papers/w19838.pdf
File-Format: application/pdf
Publication-Status: published as Lint Barrage & Eric Chyn & Justine Hastings, 2020. "Advertising and Environmental Stewardship: Evidence from the BP Oil Spill," American Economic Journal: Economic Policy, vol 12(1), pages 33-61.
Abstract: This paper explores whether private markets can incentivize environmental stewardship. We examine the consumer response to the 2010 BP oil spill and test how BP's investment in the 2000-2008 “Beyond Petroleum” green advertising campaign affected this response. We find evidence consistent with consumer punishment: BP station margins and volumes declined by 2.9 cents per gallon and 4.2 percent, respectively, in the month after the spill. However, pre-spill advertising significantly dampened the price response, and may have reduced brand switching by BP stations. These results indicate that firms may have incentives to engage in green advertising without investments in environmental stewardship.
Handle: RePEc:nbr:nberwo:19838
Template-Type: ReDIF-Paper 1.0
Title: Alcohol Exposure In Utero and Child Academic Achievement
Classification-JEL: I12; J24
Author-Name: Stephanie von Hinke Kessler Scholder
Author-Name: George L. Wehby
Author-Name: Sarah Lewis
Author-Name: Luisa Zuccolo
Note: CH DEV ED EH PE
Number: 19839
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19839
File-URL: http://www.nber.org/papers/w19839.pdf
File-Format: application/pdf
Publication-Status: published as Stephanie Hinke Kessler Scholder & George L. Wehby & Sarah Lewis & Luisa Zuccolo, 2014. "Alcohol Exposure In Utero and Child Academic Achievement," Economic Journal, Royal Economic Society, vol. 0(576), pages 634-667, 05.
Abstract: We examine the effect of alcohol exposure in utero on child academic achievement. As well as studying the effect of any alcohol exposure, we investigate the effect of the dose, pattern, and duration of exposure. We use a genetic variant in the maternal alcohol-metabolism gene ADH1B as an instrument for alcohol exposure, whilst controlling for the child's genotype on the same variant. We show that the instrument is unrelated to an extensive range of maternal and paternal characteristics and behaviours. OLS regressions suggest an ambiguous association between alcohol exposure in utero and children's academic attainment, but there is a strong social gradient in maternal drinking, with mothers in higher socio-economic groups more likely to drink. In stark contrast to the OLS, the IV estimates show negative effects of prenatal alcohol exposure on child educational attainment. These results are very robust to an extensive set of model specifications. In addition, we show that that the effects are solely driven by the maternal genotype, with no impact of the child's genotype.
Handle: RePEc:nbr:nberwo:19839
Template-Type: ReDIF-Paper 1.0
Title: Two Tales of Adjustment: East Asian Lessons for European Growth
Classification-JEL: E62; E65; F4; F43; F68; O11; O57
Author-Name: Anusha Chari
Author-Person: pch288
Author-Name: Peter Blair Henry
Author-Person: phe166
Note: DEV EFG IFM
Number: 19840
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19840
File-URL: http://www.nber.org/papers/w19840.pdf
File-Format: application/pdf
Publication-Status: published as Two Tales of Adjustment: East Asian Lessons for European Growth Anusha Chari and Peter Blair Henry IMF Economic Review, 2015, vol. 63, issue 1, pages 164-196
Abstract: Paths into the Asian Crisis of 1997-98 and the recent global financial crisis were similar, but the roads out could not be more different. Common wisdom has it that on impact Asia endured fiscal austerity imposed by the IMF whereas the IMF recommended stimulus in the case of the advanced nations at the epicenter of the crisis in 2008-09. While the IMF did recommend different policies to begin with, the fiscal adjustment in Asia was far more modest than is commonly known and the switch from stimulus to austerity in Europe was quite abrupt. The difference in fiscal stance helps explain the difference in the post-crisis paths of output and employment in the two regions.
Handle: RePEc:nbr:nberwo:19840
Template-Type: ReDIF-Paper 1.0
Title: Does Medical Malpractice Law Improve Health Care Quality?
Classification-JEL: I18; K13
Author-Name: Michael Frakes
Author-Name: Anupam B. Jena
Author-Person: pje47
Note: EH LE
Number: 19841
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19841
File-URL: http://www.nber.org/papers/w19841.pdf
File-Format: application/pdf
Publication-Status: published as Michael Frakes & Anupam B. Jena, 2016. "Does medical malpractice law improve health care quality?," Journal of Public Economics, vol 143, pages 142-158.
Abstract: Despite the fundamental role of deterrence in justifying a system of medical malpractice law, surprisingly little evidence has been put forth to date bearing on the relationship between medical liability forces on the one hand and medical errors and health care quality on the other. In this paper, we estimate this relationship using clinically validated measures of health care treatment quality constructed with data from the 1979 to 2005 National Hospital Discharge Surveys and the 1987 to 2008 Behavioral Risk Factor Surveillance System records. Drawing upon traditional, remedy-centric tort reforms--e.g., damage caps--we estimate that the current liability system plays at most a modest role in inducing higher levels of health care quality. We contend that this limited independent role for medical liability may be a reflection upon the structural nature of the present system of liability rules, which largely hold physicians to standards determined according to industry customs. We find evidence suggesting, however, that physician practices may respond more significantly upon a substantive alteration of this system altogether--i.e., upon a change in the clinical standards to which physicians are held in the first instance. The literature to date has largely failed to appreciate the substantive nature of liability rules and may thus be drawing limited inferences based solely on our experiences to date with damage-caps and related reforms.
Handle: RePEc:nbr:nberwo:19841
Template-Type: ReDIF-Paper 1.0
Title: Can You Leave High School Behind?
Classification-JEL: I2; I20; I21; I23; I24
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Jane Arnold Lincove
Author-Name: Jenna Cullinane
Author-Name: Rachel Veron
Note: ED LS
Number: 19842
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19842
File-URL: http://www.nber.org/papers/w19842.pdf
File-Format: application/pdf
Publication-Status: published as Black, Sandra E. & Lincove, Jane & Cullinane, Jennifer & Veron, Rachel, 2015. "Can you leave high school behind?," Economics of Education Review, Elsevier, vol. 46(C), pages 52-63.
Abstract: In recent years, many states, including California, Texas, and Oregon, have changed admissions policies to increase access to public universities for students from lower socioeconomic backgrounds. A key concern, however, is how these students will perform. This paper examines the relationship between high school quality and student success at college. Using newly available administrative data from the University of Texas at Austin, we take advantage of the unique policy environment provided by Texas's Top Ten Percent automatic admissions law, which has not only increased the diversity of high schools in the state that send students to the university, but also provides an admission criteria based on a sole observable characteristic: high school class rank. We find that high school characteristics do affect student performance, and these effects seem more pronounced for women and low-income students. In addition, there is little evidence that the effects of high school characteristics decay over time.
Handle: RePEc:nbr:nberwo:19842
Template-Type: ReDIF-Paper 1.0
Title: Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States
Classification-JEL: H0; J0
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: Nathaniel Hendren
Author-Name: Patrick Kline
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: CH ED EFG LS PE
Number: 19843
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19843
File-URL: http://www.nber.org/papers/w19843.pdf
File-Format: application/pdf
Publication-Status: published as The Quarterly Journal of Economics (2014) 129 (4): 1553-1623.
Abstract: We use administrative records on the incomes of more than 40 million children and their parents to describe three features of intergenerational mobility in the United States. First, we characterize the joint distribution of parent and child income at the national level. The conditional expectation of child income given parent income is linear in percentile ranks. On average, a 10 percentile increase in parent income is associated with a 3.4 percentile increase in a child's income. Second, intergenerational mobility varies substantially across areas within the U.S. For example, the probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 4.4% in Charlotte but 12.9% in San Jose. Third, we explore the factors correlated with upward mobility. High mobility areas have (1) less residential segregation, (2) less income inequality, (3) better primary schools, (4) greater social capital, and (5) greater family stability. While our descriptive analysis does not identify the causal mechanisms that determine upward mobility, the publicly available statistics on intergenerational mobility developed here can facilitate future research on such mechanisms.
Handle: RePEc:nbr:nberwo:19843
Template-Type: ReDIF-Paper 1.0
Title: Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility
Classification-JEL: H0; J0
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: Nathaniel Hendren
Author-Name: Patrick Kline
Author-Name: Emmanuel Saez
Author-Person: psa117
Author-Name: Nicholas Turner
Note: CH DAE EFG LS PE ED
Number: 19844
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19844
File-URL: http://www.nber.org/papers/w19844.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez & Nicholas Turner, 2014. "Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility," American Economic Review, American Economic Association, vol. 104(5), pages 141-47, May.
Abstract: We present new evidence on trends in intergenerational mobility in the U.S. using administrative earnings records. We find that percentile rank-based measures of intergenerational mobility have remained extremely stable for the 1971-1993 birth cohorts. For children born between 1971 and 1986, we measure intergenerational mobility based on the correlation between parent and child income percentile ranks. For more recent cohorts, we measure mobility as the correlation between a child's probability of attending college and her parents' income rank. We also calculate transition probabilities, such as a child's chances of reaching the top quintile of the income distribution starting from the bottom quintile. Based on all of these measures, we find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. However, because inequality has risen, the consequences of the "birth lottery" - the parents to whom a child is born - are larger today than in the past.
Handle: RePEc:nbr:nberwo:19844
Template-Type: ReDIF-Paper 1.0
Title: Firm Age, Investment Opportunities, and Job Creation
Classification-JEL: G21; G3; J2; J21; J23; J63
Author-Name: Manuel Adelino
Author-Name: Song Ma
Author-Name: David T. Robinson
Author-Person: pro347
Note: CF PR
Number: 19845
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19845
File-URL: http://www.nber.org/papers/w19845.pdf
File-Format: application/pdf
Publication-Status: published as MANUEL ADELINO & SONG MA & DAVID ROBINSON, 2017. "Firm Age, Investment Opportunities, and Job Creation," The Journal of Finance, vol 72(3), pages 999-1038.
Abstract: This paper asks whether startups react more to changing investment opportunities than more mature firms do. We use the fact that a region's pre-existing industrial structure creates exogenous variation in the severity of its exposure to nation-wide manufacturing shocks to develop an instrument for changing investment opportunities, and examine employment creation in the non-tradable sector as a response to those opportunities. Startups are much more responsive to changing local economic conditions than older firms. Moreover, their responsiveness doubles in areas with better access to small business finance, suggesting that financing constraints are an important brake on job creation in the startup sector. Although we focus mostly on the non-tradable sector for empirical identification, our results extend to other sectors of the economy, indicating that the mechanisms we uncover are economically pervasive. This suggests that factors like organizational flexibility and innovativeness may be important drivers of job creation among startups.
Handle: RePEc:nbr:nberwo:19845
Template-Type: ReDIF-Paper 1.0
Title: Using the Pareto Distribution to Improve Estimates of Topcoded Earnings
Classification-JEL: C81; D31; J01; J31
Author-Name: Philip Armour
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Jeff Larrimore
Author-Person: pla377
Note: LS PE TWP
Number: 19846
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19846
File-URL: http://www.nber.org/papers/w19846.pdf
File-Format: application/pdf
Publication-Status: published as Armour, Philip, Richard V. Burkhauser, and Jeff Larrimore. 2016. “Using the Pareto Distribution to Improve Estimates of Topcoded Earnings.” Economic Inquiry, 54(2) (April): 1263-1273.
Abstract: Inconsistent censoring in the public-use March CPS limits its usefulness in measuring labor earnings trends, as previous approaches for imputing topcoded earnings systematically understate top earnings. Using Pareto estimation methods with less-censored internal data, we create an enhanced cell-mean series to capture top earnings in the public-use data. Annual earnings inequality trends since 1963 using our series largely mirror those found by Kopczuk, Saez, and Song (2010) using Social Security Administration data for Commerce and Industry workers. When we extend our analysis to 2013 and consider all workers, earnings inequality levels are higher but its growth is more modest.
Handle: RePEc:nbr:nberwo:19846
Template-Type: ReDIF-Paper 1.0
Title: General Equilibrium Impacts of a Federal Clean Energy Standard
Classification-JEL: H23; Q54; Q58
Author-Name: Lawrence H. Goulder
Author-Name: Marc A. C. Hafstead
Author-Person: pha1244
Author-Name: Roberton C. Williams III
Author-Person: pwi38
Note: EEE PE
Number: 19847
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19847
File-URL: http://www.nber.org/papers/w19847.pdf
File-Format: application/pdf
Publication-Status: published as Lawrence H. Goulder & Marc A. C. Hafstead & Roberton C. Williams III, 2016. "General Equilibrium Impacts of a Federal Clean Energy Standard," American Economic Journal: Economic Policy, American Economic Association, vol. 8(2), pages 186-218, May.
Abstract: Economists have tended to view cap and trade (or, more generally, emissions pricing) as more cost-effective than a clean energy standard (CES) for the purpose of reducing greenhouse gas emissions associated with electricity generation. This stems in part from the finding that, in terms of cost-effectiveness, a CES relies too much on emissions abatement through the channel of fuel-switching and too little on the channel of reduced electricity demand. Recent research reveals, however, that the CES has an advantage over cap and trade in a different dimension. In a realistic economy with prior taxes on factors of production, the adverse "tax-interaction effect" is smaller under the CES than under the equivalent cap-and-trade program. This raises the possibility that the CES might not suffer an overall disadvantage relative to cap and trade on cost-effectiveness grounds. This paper employs analytical and numerical general equilibrium models to assess the relative cost-effectiveness of the CES and an electricity-sector cap-and-trade program. These models reveal that a well-designed CES can be more cost-effective than cap and trade when relatively minor reductions in emissions are called for. Numerical simulations indicate that the cost-effectiveness of the CES is sensitive to what is deemed "clean" electricity. To achieve maximal cost-effectiveness, the CES must offer significant credit to electricity generated from natural gas.
Handle: RePEc:nbr:nberwo:19847
Template-Type: ReDIF-Paper 1.0
Title: Under the Thumb of History? Political Institutions and the Scope for Action
Classification-JEL: N30; O1
Author-Name: Abhijit Banerjee
Author-Name: Esther Duflo
Author-Person: pdu166
Note: POL
Number: 19848
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19848
File-URL: http://www.nber.org/papers/w19848.pdf
File-Format: application/pdf
Publication-Status: published as Abhijit V. Banerjee & Esther Duflo, 2014. "Under the Thumb of History? Political Institutions and the Scope for Action," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 951-971, 08.
Abstract: This paper discusses the two leading views of history and political institutions. For some scholars, institutions are mainly products of historical logic, while for others, accidents, leaders, and decisions have a significant impact. We argue that while there is clear evidence that history matters and has long-term effects, there is not enough data to help us distinguish between the two views. Faced with this uncertainty, what is a social scientist to do? We argue that given the possibility that policy decisions indeed make a difference, it makes sense to assume they do and to try to improve policymaking.
Handle: RePEc:nbr:nberwo:19848
Template-Type: ReDIF-Paper 1.0
Title: Anatomy of a Contract Change
Classification-JEL: J43; L14; O13
Author-Name: Rajshri Jayaraman
Author-Name: Debraj Ray
Author-Person: pra6
Author-Name: Francis de Vericourt
Note: DEV
Number: 19849
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19849
File-URL: http://www.nber.org/papers/w19849.pdf
File-Format: application/pdf
Publication-Status: published as American Economic Review, vol. 106, no. 2, February 2016 (pp. 316-58)
Abstract: We study a contract change for tea pluckers on an Indian plantation, with a higher government-stipulated baseline wage. Incentive piece rates were lowered or kept unchanged. Yet, in the following month, output increased by 20–80%. This response contradicts the standard model and several variants, is only partly explicable by greater supervision, and appears to be “behavioral.” But in subsequent months, the increase is comprehensively reversed. Though not an unequivocal indictment of “behavioral” models, these findings suggest that non-standard responses may be ephemeral, and should ideally be tracked over an extended period of time.
Handle: RePEc:nbr:nberwo:19849
Template-Type: ReDIF-Paper 1.0
Title: Does Greater Inequality Lead to More Household Borrowing? New Evidence from Household Data
Classification-JEL: D14; E21; E51; G21
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Marianna Kudlyak
Author-Person: pku210
Author-Name: John Mondragon
Note: EFG ME
Number: 19850
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19850
File-URL: http://www.nber.org/papers/w19850.pdf
File-Format: application/pdf
Abstract: One suggested hypothesis for the dramatic rise in household borrowing that preceded the financial crisis is that low-income households increased their demand for credit to finance higher consumption expenditures in order to "keep up" with higher-income households. Using household level data on debt accumulation during 2001-2012, we show that low-income households in high-inequality regions accumulated less debt relative to income than their counterparts in lower-inequality regions, which negates the hypothesis. We argue instead that these patterns are consistent with supply-side interpretations of debt accumulation patterns during the 2000s. We present a model in which banks use applicants' incomes, combined with local income inequality, to infer the underlying type of the applicant, so that banks ultimately channel more credit toward lower-income applicants in low-inequality regions than high-inequality regions. We confirm the predictions of the model using data on individual mortgage applications in high- and low-inequality regions over this time period.
Handle: RePEc:nbr:nberwo:19850
Template-Type: ReDIF-Paper 1.0
Title: Equalizing Superstars: The Internet and the Democratization of Education
Classification-JEL: A20; I20; I24; O33
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: David Laibson
Author-Person: pla164
Author-Name: John A. List
Author-Person: pli176
Note: ED
Number: 19851
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19851
File-URL: http://www.nber.org/papers/w19851.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & David Laibson & John A. List, 2014. "Equalizing Superstars: The Internet and the Democratization of Education," American Economic Review, American Economic Association, vol. 104(5), pages 523-27, May.
Abstract: Internet-based educational resources are proliferating rapidly. One concern associated with these (potentially transformative) technological changes is that they will be disequalizing - as many technologies of the last several decades have been - creating superstar teachers and a winner-take-all education system. These important concerns notwithstanding, we contend that a major impact of web-based educational technologies will be the democratization of education: educational resources will be more equally distributed, and lower-skilled teachers will benefit. At the root of our results is the observation that skilled lecturers can only exploit their comparative advantage if other teachers complement those lectures with face-to-face instruction. This complementarity will increase the quantity and quality of face-to-face teaching services, potentially increasing the marginal product and wages of lower-skill teachers.
Handle: RePEc:nbr:nberwo:19851
Template-Type: ReDIF-Paper 1.0
Title: Managing Innovation in a Crowd
Classification-JEL: D20; D83; L22
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Mohamed Mostagir
Author-Name: Asuman Ozdaglar
Note: PR
Number: 19852
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19852
File-URL: http://www.nber.org/papers/w19852.pdf
File-Format: application/pdf
Abstract: Crowdsourcing is an emerging technology where innovation and production are sourced out to the public through an open call. At the center of crowdsourcing is a resource allocation problem: there is an abundance of workers but a scarcity of high skills, and an easy task assigned to a high-skill worker is a waste of resources. This problem is complicated by the fact that the exact difficulties of innovation tasks may not be known in advance, so tasks that require high-skill labor cannot be identified and allocated ahead of time. We show that the solution to this problem takes the form of a skill hierarchy, where tasks are first attempted by low-skill labor, and high-skill workers only engage with a task if less skilled workers are unable to finish it. This hierarchy can be constructed and implemented in a decentralized manner even though neither the difficulties of the tasks nor the skills of the candidate workers are known. We provide a dynamic pricing mechanism that achieves this implementation by inducing workers to self select into different layers. The mechanism is simple: each time a task is attempted and not finished, its price (reward upon completion) goes up.
Handle: RePEc:nbr:nberwo:19852
Template-Type: ReDIF-Paper 1.0
Title: China's Regional and Bilateral Trade Agreements
Classification-JEL: F15; F60
Author-Name: Chunding Li
Author-Name: Jing Wang
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 19853
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19853
File-URL: http://www.nber.org/papers/w19853.pdf
File-Format: application/pdf
Abstract: China has been increasingly active on the regional trade agreement front over since WTO Accession occurred in 2001. These agreements, unlike the US and EU cases, follow no template form of agreement but vary substantially one among the others and are in part an attempt to customize agreements to partner prior agreements. There are presently 12 concluded agreements, 6 under negotiation, and four others under consideration. These concluded are in the main with smaller countries. Those in prospect are with major trading areas (US, Japan, Korea, and India). All are driven in part by China's needs for export access to fuel continuing export lead growth, but other elements enter including using regional agreements to offset unwelcome elements of multilateral arrangements (such as the non-market economy labelling), and attempting to put in place via RTA building blocks an Asian trading hub. Outstanding issues not centrally addressed by these agreements include anti-dumping duties, and investment and competition issues.
Handle: RePEc:nbr:nberwo:19853
Template-Type: ReDIF-Paper 1.0
Title: International Liquidity and Exchange Rate Dynamics
Classification-JEL: E2; E42; E44; F31; F32; F41; F42; G11; G15; G20
Author-Name: Xavier Gabaix
Author-Person: pga174
Author-Name: Matteo Maggiori
Author-Person: pma2176
Note: AP CF EFG IFM ME
Number: 19854
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19854
File-URL: http://www.nber.org/papers/w19854.pdf
File-Format: application/pdf
Publication-Status: published as Xavier Gabaix & Matteo Maggiori, 2015. "International Liquidity and Exchange Rate Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 130(3), pages 1369-1420.
Abstract: We provide a theory of the determination of exchange rates based on capital flows in imperfect financial markets. Capital flows drive exchange rates by altering the balance sheets of financiers that bear the risks resulting from international imbalances in the demand for financial assets. Such alterations to their balance sheets cause financiers to change their required compensation for holding currency risk, thus impacting both the level and volatility of exchange rates. Our theory of exchange rate determination in imperfect financial markets not only helps rationalize the empirical disconnect between exchange rates and traditional macroeconomic fundamentals, but also has real consequences for output and risk sharing. Exchange rates are sensitive to imbalances in financial markets and seldom perform the shock absorption role that is central to traditional theoretical macroeconomic analysis. Our framework is flexible; it accommodates a number of important modeling features within an imperfect financial market model, such as non-tradables, production, money, sticky prices or wages, various forms of international pricing-to-market, and unemployment.
Handle: RePEc:nbr:nberwo:19854
Template-Type: ReDIF-Paper 1.0
Title: How Durable are Social Norms? Immigrant Trust and Generosity in 132 Countries
Classification-JEL: J15; P51; Z13
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Shun Wang
Author-Name: Jinwen Xu
Note: DEV PE POL
Number: 19855
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19855
File-URL: http://www.nber.org/papers/w19855.pdf
File-Format: application/pdf
Publication-Status: published as John F. Helliwell & Shun Wang & Jinwen Xu, 2016. "How Durable are Social Norms? Immigrant Trust and Generosity in 132 Countries," Social Indicators Research- An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(1), pages 201-219, August.
Abstract: This paper estimates the global prevalence of social trust and generosity among immigrants. We combine individual and national level data from immigrants and native-born respondents in more than 130 countries, using seven waves of the Gallup World Poll (2005–2012). We find that migrants tend to make social trust assessments that mainly reflect conditions in the country where they now live, but they also reveal a significant influence from their countries of origin. The latter effect is one-third as important as the effect of local conditions. We also find that the altruistic behavior of migrants, as measured by the frequency of their donations in their new countries, is strongly determined by social norms in their new countries, while also retaining some effect of the levels of generosity found in their birth countries. To show that the durability of social norms is not simply due to a failure to recognize new circumstances, we demonstrate that there are no footprint effects for immigrants’ confidence in political institutions. Taken together, these findings support the notion that social norms are deeply rooted in long-standing cultures, yet are nonetheless subject to adaptation when there are major changes in the surrounding circumstances and environment.
Handle: RePEc:nbr:nberwo:19855
Template-Type: ReDIF-Paper 1.0
Title: Equilibrium Health Spending and Population Aging in a Model of Endogenous Growth - Will the GDP Share of Health Spending Keep Rising?
Classification-JEL: I1; I15; J11; J17; J24; O4
Author-Name: Isaac Ehrlich
Author-Person: peh1
Author-Name: Yong Yin
Author-Person: pyi17
Note: AG EFG EH PE
Number: 19856
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19856
File-URL: http://www.nber.org/papers/w19856.pdf
File-Format: application/pdf
Publication-Status: published as Isaac Ehrlich & Yong Yin, 2013. "Equilibrium Health Spending and Population Aging in a Model of Endogenous Growth: Will the GDP Share of Health Spending Keep Rising?," Journal of Human Capital, University of Chicago Press, vol. 7(4), pages 411 - 447.
Abstract: The apparently unrelenting growth in the GDP-share of health spending (SHS) has been a perennial issue of policy concern. Does an equilibrium limit exist? The issue has been left open in recent dynamic models which take income growth and population aging as given. We view these variables as endogenously determined within an overlapping-generations, human-capital-based endogenous-growth model, where a representative parent makes all life-cycle consumption and investment decisions and life and health protection are subject to diminishing returns. Our prototype model, allowing for both quantity and quality of life as desired goods, yields equilibrium upper bounds for SHS. Our calibrated simulations also account for observed trends in reproductive choices, population aging, life expectancy, and economic growth. The analysis offers new insights about factors that drive long-term trends in aging and health spending and establishes a direct relation between health investments at young age and the equilibrium, steady-state rate of economic growth.
Handle: RePEc:nbr:nberwo:19856
Template-Type: ReDIF-Paper 1.0
Title: Breaking the Link Between Legal Access to Alcohol and Motor Vehicle Accidents: Evidence from New South Wales
Classification-JEL: I18; K32
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: Peter Siminski
Author-Person: psi343
Author-Name: Oleg Yerokhin
Note: EH LE PE
Number: 19857
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19857
File-URL: http://www.nber.org/papers/w19857.pdf
File-Format: application/pdf
Publication-Status: published as Jason M. Lindo & Peter Siminski & Oleg Yerokhin, 2015. "BREAKING THE LINK BETWEEN LEGAL ACCESS TO ALCOHOL AND MOTOR VEHICLE ACCIDENTS: EVIDENCE FROM NEW SOUTH WALES," Health Economics, , pages n/a-n/a.
Abstract: A large literature has documented significant public health benefits associated with the minimum legal drinking age in the United States, particularly because of the resulting effects on motor vehicle accidents. These benefits form the primary basis for continued efforts to restrict youth access to alcohol. It is important to keep in mind, though, that policymakers have a wide variety of alcohol-control options available to them, and understanding how these policies may complement or substitute for one another can improve policy making moving forward. Towards this end, we propose that investigating the causal effects of the minimum legal drinking age in New South Wales, Australia provides a particularly informative case study, because Australian states are among the world leaders in their efforts against drunk driving. Using an age-based regression-discontinuity design applied to restricted-use data from several sources, we find no evidence that legal access to alcohol has effects on motor vehicle accidents of any type in New South Wales, despite having large effects on drinking and on hospitalizations due to alcohol abuse.
Handle: RePEc:nbr:nberwo:19857
Template-Type: ReDIF-Paper 1.0
Title: Every Breath You Take - Every Dollar You'll Make: The Long-Term Consequences of the Clean Air Act of 1970
Classification-JEL: H40; H51; I12; I14; J17; J18; J31; Q51; Q53; Q58
Author-Name: Adam Isen
Author-Name: Maya Rossin-Slater
Author-Name: W. Reed Walker
Author-Person: pwa410
Note: CH EEE LS
Number: 19858
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19858
File-URL: http://www.nber.org/papers/w19858.pdf
File-Format: application/pdf
Publication-Status: published as Adam Isen & Maya Rossin-Slater & W. Reed Walker, 2017. "Every Breath You Take—Every Dollar You’ll Make: The Long-Term Consequences of the Clean Air Act of 1970," Journal of Political Economy, University of Chicago Press, vol. 125(3), pages 848-902.
Abstract: This paper examines the long-term impacts of early childhood exposure to air pollution on adult outcomes using U.S. administrative data. We exploit changes in air pollution driven by the 1970 Clean Air Act to analyze the difference in outcomes between cohorts born in counties before and after large improvements in air pollution relative to those same cohorts born in counties that had no improvements. We find a significant relationship between pollution exposure in the year of birth and later life outcomes. A higher pollution level in the year of birth is associated with lower labor force participation and lower earnings at age 30.
Handle: RePEc:nbr:nberwo:19858
Template-Type: ReDIF-Paper 1.0
Title: Demand Modeling, Forecasting, and Counterfactuals, Part I
Classification-JEL: H52; I21
Author-Name: Parag A. Pathak
Author-Name: Peng Shi
Note: ED IO PE
Number: 19859
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19859
File-URL: http://www.nber.org/papers/w19859.pdf
File-Format: application/pdf
Abstract: There are relatively few systematic comparisons of the ex ante counterfactual predictions from structural models to what occurs ex post. This paper uses a large-scale policy change in Boston in 2014 to investigate the performance of discrete choice models of demand compared to simpler alternatives. In 2013, Boston Public Schools (BPS) proposed alternative zone configurations in their school choice plan, each of which alters the set of schools participants are allowed to rank. Pathak and Shi (2013) estimated discrete choice models of demand using families' historical choices and these demand models were used to forecast the outcomes under alternative plans. BPS, the school committee, and the public used these forecasts to compare alternatives and eventually adopt a new plan for Spring 2014. This paper updates the forecasts using the most recently available historical data on participants' submitted preferences and also makes forecasts based on an alternative statistical model not based a random utility foundation. We describe our analysis plan, the methodology, and the target forecast outcomes. Our ex ante forecasts eliminate any scope for post-analysis bias because they are made before new preferences are submitted. Part II will use newly submitted preference data to evaluate these forecasts and assess the strengths and limitations of discrete choice models of demand in our context.
Handle: RePEc:nbr:nberwo:19859
Template-Type: ReDIF-Paper 1.0
Title: How Johnson Fought the War on Poverty: The Economics and Politics of Funding at the Office of Economic Opportunity
Classification-JEL: H50; J08; N12
Author-Name: Martha J. Bailey
Author-Person: pba669
Author-Name: Nicolas J. Duquette
Note: DAE LS PE
Number: 19860
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19860
File-URL: http://www.nber.org/papers/w19860.pdf
File-Format: application/pdf
Publication-Status: published as Bailey, Martha J. & Duquette, Nicolas J., 2014. "How Johnson Fought the War on Poverty: The Economics and Politics of Funding at the Office of Economic Opportunity," The Journal of Economic History, Cambridge University Press, vol. 74(02), pages 351-388, June.
Abstract: This paper presents a quantitative analysis of the geographic distribution of spending through the 1964 Economic Opportunity Act (EOA). Using newly assembled state- and county-level data, the results show that the Johnson administration directed funding in ways consistent with the War on Poverty's rhetoric of fighting poverty and racial discrimination: poorer areas and those with a greater share of nonwhite residents received systematically more funding. In contrast to New Deal spending, political variables explain very little of the variation in EOA funding. The smaller role of politics may help explain the strong backlash against the War on Poverty's programs.
Handle: RePEc:nbr:nberwo:19860
Template-Type: ReDIF-Paper 1.0
Title: American Colonial Incomes, 1650-1774
Classification-JEL: N11; N31; O47; O51
Author-Name: Peter H. Lindert
Author-Person: pli466
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE
Number: 19861
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19861
File-URL: http://www.nber.org/papers/w19861.pdf
File-Format: application/pdf
Publication-Status: published as Peter H. Lindert & Jeffrey G. Williamson, 2016. "American colonial incomes, 1650-1774," The Economic History Review, vol 69(1), pages 54-77.
Abstract: New data now allow conjectures on the levels of real and nominal incomes in the thirteen American colonies. New England was the poorest region, and the South was the richest. Colonial per capita incomes rose only very slowly, and slowly for five reasons: productivity growth was slow; population in the low-income (but subsistence-plus) frontier grew much faster than that in the high-income coastal settlements; child dependency rates were high and probably even rising; the terms of trade was extremely volatile, presumably suppressing investment in export sectors; and the terms of trade rose very slowly, if at all, in the North, although faster in the South. All of this checked the growth of colony-wide per capita income after a 17th century boom. The American colonies led Great Britain in purchasing power per capita from 1700, and possibly from 1650, until 1774, even counting slaves in the population. That is, average purchasing power in America led Britain early, when Americans were British. The common view that American per capita income did not overtake that of Britain until the start of the 20th century appears to be off the mark by two centuries or longer.
Handle: RePEc:nbr:nberwo:19861
Template-Type: ReDIF-Paper 1.0
Title: The (Surprising) Efficacy of Academic and Behavioral Intervention with Disadvantaged Youth: Results from a Randomized Experiment in Chicago
Classification-JEL: I0; I20; I24; I3; J24; Z18
Author-Name: Philip J. Cook
Author-Person: pco30
Author-Name: Kenneth Dodge
Author-Name: George Farkas
Author-Name: Roland G. Fryer, Jr
Author-Person: pfr43
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: Jens Ludwig
Author-Name: Susan Mayer
Author-Name: Harold Pollack
Author-Name: Laurence Steinberg
Note: CH DAE DEV ED EFG EH LE LS PE
Number: 19862
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19862
File-URL: http://www.nber.org/papers/w19862.pdf
File-Format: application/pdf
Abstract: There is growing concern that improving the academic skills of disadvantaged youth is too difficult and costly, so policymakers should instead focus either on vocationally oriented instruction for teens or else on early childhood education. Yet this conclusion may be premature given that so few previous interventions have targeted a potential fundamental barrier to school success: "mismatch" between what schools deliver and the needs of disadvantaged youth who have fallen behind in their academic or non-academic development. This paper reports on a randomized controlled trial of a two-pronged intervention that provides disadvantaged youth with non-academic supports that try to teach youth social-cognitive skills based on the principles of cognitive behavioral therapy (CBT), and intensive individualized academic remediation. The study sample consists of 106 male 9th and 10th graders in a public high school on the south side of Chicago, of whom 95% are black and 99% are free or reduced price lunch eligible. Participation increased math test scores by 0.65 of a control group standard deviation (SD) and 0.48 SD in the national distribution, increased math grades by 0.67 SD, and seems to have increased expected graduation rates by 14 percentage points (46%). While some questions remain about the intervention, given these effects and a cost per participant of around $4,400 (with a range of $3,000 to $6,000), this intervention seems to yield larger gains in adolescent outcomes per dollar spent than many other intervention strategies.
Handle: RePEc:nbr:nberwo:19862
Template-Type: ReDIF-Paper 1.0
Title: Loose Knots: Strong versus Weak Commitments to Save for Education in Uganda
Classification-JEL: D12; D91; I21; O12
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Leigh L. Linden
Author-Person: pli719
Note: DEV LE LS
Number: 19863
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19863
File-URL: http://www.nber.org/papers/w19863.pdf
File-Format: application/pdf
Abstract: Commitment devices offer an opportunity to restrict future choices. However, strict commitments may deter participation. Using a school-based commitment savings program for children to save for educational expenses in Uganda, we compare an account fully-committed to school expenses to an account with a weaker commitment (funds withdrawn in cash, rather than a voucher). Children save more in the weaker commitment treatment arm, and when combined with parental outreach spend more on educational supplies and score 0.11 standard deviations higher on math and language test scores. The fully-committed account yields no such educational improvements, and neither account finds impacts on secondary or downstream outcomes such as attendance, enrollment, or non-cognitive skills.
Handle: RePEc:nbr:nberwo:19863
Template-Type: ReDIF-Paper 1.0
Title: How Risky Are Recessions for Top Earners?
Classification-JEL: E2; G12; J31
Author-Name: Fatih Guvenen
Author-Person: pgu24
Author-Name: Greg Kaplan
Author-Person: pka660
Author-Name: Jae Song
Author-Person: pso277
Note: AP EFG IFM ME
Number: 19864
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19864
File-URL: http://www.nber.org/papers/w19864.pdf
File-Format: application/pdf
Publication-Status: published as Fatih Guvenen & Greg Kaplan & Jae Song, 2014. "How Risky Are Recessions for Top Earners?," American Economic Review, American Economic Association, vol. 104(5), pages 148-53, May.
Abstract: How sensitive are the earnings of top earners to business cycles? And, how does the business cycle sensitivity of top earners vary by industry? We use a confidential dataset on earnings histories of US males from the Social Security Administration. On average, individuals in the top 1% of the earnings distribution are slightly more cyclical than the population average. But there are large differences across sectors: Top earners in Finance, Insurance, and Real Estate (FIRE) and Construction face substantial business cycle volatility, whereas those in Services (who make up 40% of individuals in the top 1 percent) have earnings that are less cyclical than the average worker.
Handle: RePEc:nbr:nberwo:19864
Template-Type: ReDIF-Paper 1.0
Title: Exporter Dynamics, Firm Size and Growth, and Partial Year Effects
Classification-JEL: C81; D22; F14; L11
Author-Name: Andrew B. Bernard
Author-Name: Renzo Massari
Author-Name: Jose-Daniel Reyes
Author-Name: Daria Taglioni
Author-Person: pta176
Note: IO ITI
Number: 19865
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19865
File-URL: http://www.nber.org/papers/w19865.pdf
File-Format: application/pdf
Publication-Status: published as Bernard, Andrew B., Esther Ann Boler, Renzo Massari, Jose-Daniel Reyes, and Daria Taglioni. 2017. "Exporter Dynamics and Partial-Year Effects." American Economic Review, 107 (10): 3211-28.
Abstract: Two otherwise identical firms that enter the same market in different months, one in January and one in December, will report dramatically different annual sales for the first calendar year of operations. This partial year effect in annual data leads to downward biased observations of the level of activity upon entry and upward biased growth rates between the year of entry and the following year. This paper examines the implications of partial year effects using Peruvian export data. The partial year bias is very large: the average level of first-year exports of new exporters is understated by 65 percent and the average growth rate between the first and second year of exporting is overstated by 112 percentage points. This paper re-examines a number of stylized facts about firm size and growth that have motivated rapidly expanding theoretical and empirical literatures on firm export dynamics. Correcting the partial year effect eliminates unusually high growth rates in the first year of exporting, raises initial export levels, and shifts 10 percent of market entrants from below to above the median size. Revisiting an older set of facts on firm size and growth, the paper finds that correcting for partial year biases reduces the number of small firms in the firm size distribution and weakens the negative relationship between firm growth and firm size.
Handle: RePEc:nbr:nberwo:19865
Template-Type: ReDIF-Paper 1.0
Title: Age and Scientific Genius
Classification-JEL: J11; O31
Author-Name: Benjamin Jones
Author-Person: pjo400
Author-Name: E.J. Reedy
Author-Name: Bruce A. Weinberg
Author-Person: pwe74
Note: LS
Number: 19866
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19866
File-URL: http://www.nber.org/papers/w19866.pdf
File-Format: application/pdf
Abstract: Great scientific output typically peaks in middle age. A classic literature has emphasized comparisons across fields in the age of peak performance. More recent work highlights large underlying variation in age and creativity patterns, where the average age of great scientific contributions has risen substantially since the early 20th Century and some scientists make pioneering contributions much earlier or later in their life-cycle than others. We review these literatures and show how the nexus between age and great scientific insight can inform the nature of creativity, the mechanisms of scientific progress, and the design of institutions that support scientists, while providing further insights about the implications of aging populations, education policies, and economic growth.
Handle: RePEc:nbr:nberwo:19866
Template-Type: ReDIF-Paper 1.0
Title: Management Practices, Relational Contracts, and the Decline of General Motors
Classification-JEL: J24; L2; L21; L23
Author-Name: Susan Helper
Author-Person: phe243
Author-Name: Rebecca Henderson
Note: IO PR
Number: 19867
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19867
File-URL: http://www.nber.org/papers/w19867.pdf
File-Format: application/pdf
Publication-Status: published as Susan Helper & Rebecca Henderson, 2014. "Management Practices, Relational Contracts, and the Decline of General Motors," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 49-72, Winter.
Abstract: General Motors was once regarded as one of the best managed and most successful firms in the world, but between 1980 and 2009 its share of the US market fell from 62.6 to 19.8 percent, and in 2009 the firm went bankrupt. In this paper we argue that the conventional explanation for this decline - namely high legacy labor and health care costs - is seriously incomplete, and that GM's share collapsed for many of the same reasons that many of the other highly successful American firms of the 50s, 60s and 70s were forced from the market, including a failure to understand the nature of the competition they faced and an inability to respond effectively once they did. We focus particularly on the problems GM encountered in developing the relational contracts essential to modern design and manufacturing. We discuss a number of possible causes for these difficulties: including GM's historical practice of treating both its suppliers and its blue collar workforce as homogeneous, interchangeable entities, and its view that expertise could be partitioned so that there was minimal overlap of knowledge amongst functions or levels in the organizational hierarchy and decisions could be made using well-defined financial criteria. We suggest that this dynamic may have important implications for our understanding of the role of management in the modern, knowledge based firm, and for the potential revival of manufacturing in the United States.
Handle: RePEc:nbr:nberwo:19867
Template-Type: ReDIF-Paper 1.0
Title: Political Reservations and Women's Entrepreneurship in India
Classification-JEL: D22; E26; H11; J16; L10; L26; L60; M13; O10; R00; R10; R12
Author-Name: Ejaz Ghani
Author-Person: pgh75
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Stephen D. O'Connell
Author-Person: poc22
Note: DEV LS PE POL PR
Number: 19868
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19868
File-URL: http://www.nber.org/papers/w19868.pdf
File-Format: application/pdf
Publication-Status: published as Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2014. "Political reservations and women's entrepreneurship in India," Journal of Development Economics, Elsevier, vol. 108(C), pages 138-153.
Abstract: We quantify the link between the timing of state-level implementations of political reservations for women in India with the role of women in India's manufacturing sector. While overall employment of women in manufacturing does not increase after the reforms, we find significant evidence that more women-owned establishments were created in the unorganized/informal sector. These new establishments were concentrated in industries where women entrepreneurs have been traditionally active and the entry was mainly found among household-based establishments. We measure and discuss the extent to which this heightened entrepreneurship is due to channels like greater finance access or heightened inspiration for women entrepreneurs.
Handle: RePEc:nbr:nberwo:19868
Template-Type: ReDIF-Paper 1.0
Title: Divorce Risk, Wages, and Working Wives: A Quantitative Life-Cycle Analysis of Female Labor Force Participation
Classification-JEL: I3; J12; J13; J16; K36
Author-Name: Raquel Fernández
Author-Person: pfe17
Author-Name: Joyce C. Wong
Note: EFG LS PE POL
Number: 19869
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19869
File-URL: http://www.nber.org/papers/w19869.pdf
File-Format: application/pdf
Publication-Status: published as Raquel Fernández & Joyce Cheng Wong, 2014. "Divorce Risk, Wages and Working Wives: A Quantitative Life-Cycle Analysis of Female Labour Force Participation," The Economic Journal, vol 124(576), pages 319-358.
Abstract: This paper develops a quantitative life-cycle model to study the increase in married women's labor force participation (LFP). We calibrate the model to match key life-cycle statistics for the 1935 cohort and use it to assess the changed environment faced by the 1955 cohort. We find that a higher divorce probability and changes in wage structure are each able to explain a large proportion of the LFP increase. Higher divorce risk increases LFP not because the latter contributes to higher marital assets or greater labor market experience, however. Instead, it is the result of conflicting spousal preferences towards the adjustment of marital consumption in the face of increased divorce risk.
Handle: RePEc:nbr:nberwo:19869
Template-Type: ReDIF-Paper 1.0
Title: A Contribution to the Empirics of Reservation Wages
Classification-JEL: E0; H0
Author-Name: Alan B. Krueger
Author-Person: pkr63
Author-Name: Andreas I. Mueller
Author-Person: pmu176
Note: LS PE
Number: 19870
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19870
File-URL: http://www.nber.org/papers/w19870.pdf
File-Format: application/pdf
Publication-Status: published as Alan B. Krueger & Andreas I. Mueller, 2016. "A Contribution to the Empirics of Reservation Wages," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 142-79, February.
Abstract: This paper provides evidence on the behavior of reservation wages over the spell of unemployment using high‐frequency longitudinal data. Using data from our survey of unemployed workers in New Jersey, where workers were interviewed each week for up to 24 weeks, we find that self‐reported reservation wages decline at a modest rate over the spell of unemployment, with point estimates ranging from 0.05 to 0.14 percent per week of unemployment. The decline in reservation wages is driven primarily by older individuals and those with personal savings at the start of the survey. The longitudinal nature of the data also allows us to test the relationship between job acceptance and the reservation wage and offered wage, where the reservation wage is measured from a previous interview to avoid bias due to cognitive dissonance. Job offers are more likely to be accepted if the offered wage exceeds the reservation wage, and the reservation wage has more predictive power in this regard than the pre-displacement wage, suggesting the reservation wage contains useful information about workers' future decisions. In addition, there is a discrete rise in job acceptance when the offered wage exceeds the reservation wage. In comparison to a calibrated job search model, the reservation wage starts out too high and declines too slowly, on average, suggesting that many workers persistently misjudge their prospects or anchor their reservation wage on their previous wage.
Handle: RePEc:nbr:nberwo:19870
Template-Type: ReDIF-Paper 1.0
Title: High Discounts and High Unemployment
Classification-JEL: E24; E32; G12
Author-Name: Robert E. Hall
Note: AP EFG LS ME
Number: 19871
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19871
File-URL: http://www.nber.org/papers/w19871.pdf
File-Format: application/pdf
Publication-Status: published as Robert E. Hall, 2017. "High Discounts and High Unemployment," American Economic Review, vol 107(2), pages 305-330.
Abstract: In recessions, all types of investment fall, including employers' investment in job creation. The stock market falls more than in proportion to corporate profit. The discount rate implicit in the stock market rises, and discounts for other claims on business income also rise. According to the leading view of unemployment-the Diamond-Mortensen-Pissarides model-when the incentive for job creation falls, the labor market slackens and unemployment rises. Employers recover their investments in job creation by collecting a share of the surplus from the employment relationship. The value of that flow falls when the discount rate rises. Thus high discount rates imply high unemployment. This paper does not explain why the discount rate rises so much in recessions. Rather, it shows that the rise in unemployment makes perfect economic sense in an economy where, for some reason, the discount rises substantially in recessions.
Handle: RePEc:nbr:nberwo:19871
Template-Type: ReDIF-Paper 1.0
Title: Intra-national Trade Costs: Measurement and Aggregation
Classification-JEL: F1; R1
Author-Name: Delina E. Agnosteva
Author-Person: pag136
Author-Name: James E. Anderson
Author-Person: pan2
Author-Name: Yoto V. Yotov
Author-Person: pyo93
Note: ITI
Number: 19872
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19872
File-URL: http://www.nber.org/papers/w19872.pdf
File-Format: application/pdf
Publication-Status: published as Agnosteva, Delina E., James E. Anderson, and Yoto V. Yotov, "Intra-National Trade Costs: Assaying Regional Frictions," European Economic Review, 2019, 112 (February), 32-50.
Abstract: We develop and apply a procedure to flexibly estimate intra-national border barriers and intra-regional trade costs. Bilateral border barriers very significantly depress Canadian inter-provincial trade for some pairs, though the overall effect is rather small. Bilateral distance imposes much larger inter-provincial trade costs. Contiguity between provinces accounts for little. Intra-regional trade cost variation affects relative bilateral costs and trade flows, and alters comparative statics except in a neutral case rejected by the data. Consistent trade cost aggregation procedures are developed and applied for groups of regions and/or sectors.
Handle: RePEc:nbr:nberwo:19872
Template-Type: ReDIF-Paper 1.0
Title: Trial and Settlement: A Study of High-Low Agreements
Classification-JEL: D86; K41
Author-Name: J.J. Prescott
Author-Name: Kathryn E. Spier
Author-Name: Albert Yoon
Note: LE
Number: 19873
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19873
File-URL: http://www.nber.org/papers/w19873.pdf
File-Format: application/pdf
Publication-Status: published as J.J. Prescott & Kathryn E. Spier & Albert Yoon, 2014. "Trial and Settlement: A Study of High-Low Agreements," The Journal of Law and Economics, vol 57(3), pages 699-746.
Abstract: This paper presents the first systematic theoretical and empirical study of high-low agreements in civil litigation. A high-low agreement is a private contract that, if signed by litigants before the conclusion of a trial, constrains any plaintiff recovery to a specified range. Whereas existing work describes litigation as a choice between trial and settlement, our examination of high-low agreements--an increasingly popular phenomenon in civil litigation--introduces partial or incomplete settlements. In our theoretical model, trial is both costly and risky. When litigants have divergent subjective beliefs and are mutually optimistic about their trial prospects, cases may fail to settle. In these cases, high-low agreements can be in litigants' mutual interest because they limit the risk of outlier awards while still allowing an optimal degree of speculation. Using claims data from a national insurance company, we describe the features of these agreements and empirically investigate the factors that may influence whether litigants discuss or enter into them. Our empirical findings are consistent with the predictions of the theoretical model. We also explore extensions and alternative explanations for high-low agreements, including their use to mitigate excessive, offsetting trial expenditures and the role that negotiation costs might play. Other applications include the use of collars in mergers and acquisitions.
Handle: RePEc:nbr:nberwo:19873
Template-Type: ReDIF-Paper 1.0
Title: Present-Bias, Procrastination and Deadlines in a Field Experiment
Classification-JEL: D03
Author-Name: Alberto Bisin
Author-Person: pbi10
Author-Name: Kyle Hyndman
Author-Person: phy5
Note: CH ED
Number: 19874
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19874
File-URL: http://www.nber.org/papers/w19874.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Bisin & Kyle Hyndman, 2019. "Present-bias, procrastination and deadlines in a field experiment," Games and Economic Behavior, .
Abstract: We study procrastination in the context of a field experiment involving students who must exert costly effort to complete certain tasks by a fixed deadline. Descriptively, we document a strong demand for commitment, in the form of self-imposed deadlines, which appear to be associated with students' self-reported psychological characteristics and cost of time. We structurally estimate students' present-bias and cost of time by fitting the experimental data to a stylized stopping time choice model. We find that present-bias is relatively widespread but that having multiple repeated tasks appears to activate effective internal self-control mechanisms. Finally, we also document an important form of partial naïveté on the part of students in anticipating their ability to self-control when setting deadlines.
Handle: RePEc:nbr:nberwo:19874
Template-Type: ReDIF-Paper 1.0
Title: Testing for Information Asymmetries in Real Estate Markets
Classification-JEL: D53; D82; G14; R21; R31
Author-Name: Pablo Kurlat
Author-Name: Johannes Stroebel
Note: AP
Number: 19875
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19875
File-URL: http://www.nber.org/papers/w19875.pdf
File-Format: application/pdf
Publication-Status: published as Pablo Kurlat & Johannes Stroebel, 2015. "Testing for Information Asymmetries in Real Estate Markets," Review of Financial Studies, Society for Financial Studies, vol. 28(8), pages 2429-2461.
Abstract: We study equilibrium outcomes in markets with asymmetric information about asset values among both buyers and sellers. In residential real estate markets hard-to-observe neighborhood characteristics are a key source of information heterogeneity: sellers are usually better informed about neighborhood values than buyers, but there are some sellers and some buyers that are better informed than their peers. We propose a new theoretical framework for analyzing such markets with many heterogeneous assets and differentially informed agents. Consistent with the predictions from this framework, we find that changes in the seller composition towards (i) more informed sellers and (ii) sellers with a larger supply elasticity predict subsequent house-price declines and demographic changes in that neighborhood. This effect is larger for houses whose value depends more on neighborhood characteristics, and smaller for houses bought by more informed buyers. Our findings suggest that home owners have superior information about important neighborhood characteristics, and exploit this information to time local market movements.
Handle: RePEc:nbr:nberwo:19875
Template-Type: ReDIF-Paper 1.0
Title: Revealed Preference, Rational Inattention, and Costly Information Acquisition
Classification-JEL: D80
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: Mark Dean
Author-Person: pde557
Note: TWP
Number: 19876
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19876
File-URL: http://www.nber.org/papers/w19876.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Caplin & Mark Dean, 2015. "Revealed Preference, Rational Inattention, and Costly Information Acquisition," American Economic Review, vol 105(7), pages 2183-2203.
Abstract: We develop a revealed preference test for optimal acquisition of costly information. The test encompasses models of rational inattention, sequential signal processing, and search. We provide limits on the extent to which attention costs can be recovered from choice data. We experimentally elicit state dependent stochastic choice data of the form the tests require. In simple cases, tests confirm that subjects adjust their attention in response to incentives as the theory dictates.
Handle: RePEc:nbr:nberwo:19876
Template-Type: ReDIF-Paper 1.0
Title: The Morphology of Price Dispersion
Classification-JEL: D2; D4; E3; L1
Author-Name: Greg Kaplan
Author-Person: pka660
Author-Name: Guido Menzio
Author-Person: pme246
Note: EFG IO ME
Number: 19877
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19877
File-URL: http://www.nber.org/papers/w19877.pdf
File-Format: application/pdf
Publication-Status: published as Greg Kaplan & Guido Menzio, 2015. "The Morphology Of Price Dispersion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 1165-1206, November.
Abstract: This paper is a study of the shape and structure of the distribution of prices at which an identical good is sold in a given market and time period. We find that the typical price distribution is symmetric and leptokurtic, with a standard deviation between 19% and 36%. Only 10% of the variance of prices is due to variation in the expensiveness of the stores at which a good is sold, while the remaining 90% is due, in approximately equal parts, to differences in the average price of a good across equally expensive stores and to differences in the price of a good across transactions at the same store. We show that the distribution of prices that households pay for the same bundle of goods is approximately Normal, with a standard deviation between 9% and 14%. Half of this dispersion is due to differences in the expensiveness of the stores where households shop, while the other half is mostly due to differences in households' choices of which goods to purchase at which stores. We find that households with fewer employed members pay lower prices, and do so by visiting a larger number of stores, rather than by shopping more frequently.
Handle: RePEc:nbr:nberwo:19877
Template-Type: ReDIF-Paper 1.0
Title: Tobacco Control Campaign in Uruguay: Impact on Smoking Cessation during Pregnancy
Classification-JEL: D12; I12; I18
Author-Name: Jeffrey E. Harris
Author-Name: Ana Inés Balsa
Author-Person: pba1005
Author-Name: Patricia Triunfo
Author-Person: ptr341
Note: DEV EH PE
Number: 19878
Creation-Date: 2014-01
Order-URL: http://www.nber.org/papers/w19878
File-URL: http://www.nber.org/papers/w19878.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey E. Harris & Ana Inés Balsa & Patricia Triunfo, 2015. "Tobacco control campaign in Uruguay: Impact on smoking cessation during pregnancy and birth weight," Journal of Health Economics, vol 42, pages 186-196.
Abstract: Background. In 2005, Uruguay instituted a nationwide tobacco control campaign that has resulted in a substantial decline in nationwide smoking rates. We sought to determine the quantitative contributions of each of the major tobacco control measures adopted by the Uruguayan government. We focused sharply on smoking cessation by pregnant women and on the effect of quitting smoking during pregnancy on birth weight. Data. We analyzed a nationwide registry of all pregnancies in Uruguay during 2007-2012, supplemented by data on cigarette prices and various governmental policies. Methods. We estimated linear probability models of quitting smoking in the third trimester as well as linear models of the effect of quitting on birth weight. Our explanatory variables included maternal characteristics, provider-level and national-level policy interventions, and real price. In our models of quitting smoking, we used taxes as an instrument to address price endogeneity. In our models of birth weight, we used tobacco control policies as instruments to address the endogeneity of smoking cessation. Results. During 2007-2012, the proportion of pregnant women who had quit smoking by their third trimester increased markedly from 15 to 42 percent. Each of the major non-price tobacco control measures - including programs to treat nicotine dependence at health centers, banning of advertising nationwide, rotating warnings with pictograms on each pack, restriction of brands to a single presentation, and an increase in the size of pictograms to 80% of the front and back of each pack - was separately associated with a significant increase in the rate of quitting. During 2007-2009, tobacco manufacturers responded to tax increases and non-price policies by moderating their pretax prices. Quitting smoking by the third trimester increased birth weight by an estimated 163 grams. Conclusion. Uruguay's nationwide tobacco control campaign led to a substantial increase in the likelihood that a pregnant smoker would quit by her third trimester. Each of the major tobacco control measures adopted by the government had a measurable impact on the rate of quitting and thus on neonatal health.
Handle: RePEc:nbr:nberwo:19878
Template-Type: ReDIF-Paper 1.0
Title: Risk Aversion and the Desirability of Attenuated Legal Change
Classification-JEL: H8; K10; K20
Author-Name: Steven Shavell
Author-Person: psh42
Note: LE
Number: 19879
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19879
File-URL: http://www.nber.org/papers/w19879.pdf
File-Format: application/pdf
Publication-Status: published as S. Shavell, 2014. "Risk Aversion and the Desirability of Attenuated Legal Change," American Law and Economics Review, vol 16(2), pages 366-402.
Abstract: This article develops two points. First, insurance against the risk of legal change is largely unavailable, primarily because of the correlated nature of the losses that legal change generates. Second, given the absence of insurance against legal change, it is generally desirable for legal change to be attenuated. Specifically, in a model of uncertainty about two different types of legal change--in regulatory standards, and in payments for harm caused--it is demonstrated that the optimal new regulatory standard is less than the conventionally efficient standard, and that the optimal new payment for harm is less than the harm.
Handle: RePEc:nbr:nberwo:19879
Template-Type: ReDIF-Paper 1.0
Title: Media Bias in the Marketplace: Theory
Classification-JEL: D21
Author-Name: Matthew Gentzkow
Author-Person: pge43
Author-Name: Jesse M. Shapiro
Author-Person: psh70
Author-Name: Daniel F. Stone
Author-Person: pst512
Note: IO POL
Number: 19880
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19880
File-URL: http://www.nber.org/papers/w19880.pdf
File-Format: application/pdf
Abstract: We review the theoretical literature on market determinants of media bias. We present a theoretical framework that organizes many key themes in the literature, and discuss substantive lessons.
Handle: RePEc:nbr:nberwo:19880
Template-Type: ReDIF-Paper 1.0
Title: Coal, Smoke, and Death: Bituminous Coal and American Home Heating
Classification-JEL: I18; N32; N52; Q53
Author-Name: Alan Barreca
Author-Person: pba1012
Author-Name: Karen Clay
Author-Person: pcl25
Author-Name: Joel Tarr
Note: CH DAE EEE
Number: 19881
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19881
File-URL: http://www.nber.org/papers/w19881.pdf
File-Format: application/pdf
Abstract: Air pollution was severe in many urban areas of the United States in the first half of the twentieth century, in part due to the burning of bituminous coal for heat. We estimate the effects of this bituminous coal consumption on mortality rates in the U.S. during the mid 20th century. Coal consumption varied considerably during the 20th century due to coal-labor strikes, wartime oil and gas restrictions, and the expansion of gas pipelines, among other reasons. To mitigate the influence of confounding factors, we use a triple-differences identification strategy that relies on variation in coal consumption at the state-year-season level. It exploits the fact that coal consumption for heating was highest in the winter and uses within-state changes in mortality in non-winter months as an additional control group. Our estimates suggest that reductions in the use of bituminous coal for heating between 1945 and 1960 decreased winter all-age mortality by 1.25 percent and winter infant mortality by 3.27 percent, saving 1,923 all age lives per winter month and 310 infant lives per winter month. Our estimates are likely to be a lower bound, since they primarily capture short-run relationships between coal and mortality.
Handle: RePEc:nbr:nberwo:19881
Template-Type: ReDIF-Paper 1.0
Title: Default and Repayment Among Baccalaureate Degree Earners
Classification-JEL: H52; I21; I23; I28
Author-Name: Lance J. Lochner
Author-Person: plo31
Author-Name: Alexander Monge-Naranjo
Author-Person: pmo730
Note: ED LS PE
Number: 19882
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19882
File-URL: http://www.nber.org/papers/w19882.pdf
File-Format: application/pdf
Abstract: More than low default rates, lenders are interested in the expected return on their loans. In this paper, we consider a number of other measures of repayment and nonpayment that are likely to be of direct interest to lenders. Using data from the Baccalaureate and Beyond Longitudinal Study, we document repayment and nonpayment outcomes 10 years after graduation for American students receiving BA/BS degrees in 1993. We estimate differences in these outcomes across individual/family background characteristics, college major, type of institution, the amount borrowed, and post-graduation income. A key contribution is our analysis of the following outcomes in addition to student loan default rates: the fraction of the original undergraduate loan amount repaid as of 2003, nonpayment rates (including deferment and forbearance as well as default), and the fraction of original undergraduate loan amounts on which borrowers defaulted or are currently not repaying.
Handle: RePEc:nbr:nberwo:19882
Template-Type: ReDIF-Paper 1.0
Title: Search Frictions and Market Power in Negotiated Price Markets
Classification-JEL: L13; L41; L81
Author-Name: Jason Allen
Author-Person: pal145
Author-Name: Robert Clark
Author-Person: pcl142
Author-Name: Jean-François Houde
Note: IO
Number: 19883
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19883
File-URL: http://www.nber.org/papers/w19883.pdf
File-Format: application/pdf
Publication-Status: published as Jason Allen & Robert Clark & Jean-François Houde, 2019. "Search Frictions and Market Power in Negotiated-Price Markets," Journal of Political Economy, vol 127(4), pages 1550-1598.
Abstract: This paper develops and estimates a search and bargaining model designed to measure the welfare loss associated with frictions in oligopoly markets with negotiated prices. We use the model to quantify the consumer surplus loss induced by the presence of search frictions in the Canadian mortgage market, and evaluate the relative importance of market power, inefficient allocation, and direct search costs in explaining the loss. Our results suggest that search frictions reduce consumer surplus by almost $20 per month per consumer, and that 17% of this reduction can be associated with discrimination, 30% with inefficient matching, and the remainder with the search cost.
Handle: RePEc:nbr:nberwo:19883
Template-Type: ReDIF-Paper 1.0
Title: Short-run Effects of Job Loss on Health Conditions, Health Insurance, and Health Care Utilization
Classification-JEL: I1; J63
Author-Name: Jessamyn Schaller
Author-Person: psc907
Author-Name: Ann Huff Stevens
Author-Person: pst180
Note: EH LS
Number: 19884
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19884
File-URL: http://www.nber.org/papers/w19884.pdf
File-Format: application/pdf
Publication-Status: published as Schaller, Jessamyn & Stevens, Ann Huff, 2015. "Short-run effects of job loss on health conditions, health insurance, and health care utilization," Journal of Health Economics, Elsevier, vol. 43(C), pages 190-203.
Abstract: Job loss in the United States is associated with long-term reductions in income and long-term increases in mortality rates. This paper examines the short- to medium-term changes in health, health care access, and health care utilization after job loss that lead to these long-term effects. Using a sample with more than 9800 individual job losses and longitudinal data on a wide variety of health-related measures and outcomes, we show that job loss results in worse self-reported health, including mental health, but is not associated with statistically significant increases in a variety of specific chronic conditions. Among the full sample of workers, we see reductions in insurance coverage, but little evidence of reductions in health care utilization after job loss. Among the subset of displaced workers for whom the lost job was their primary source of insurance we do see reductions in doctor's visits and prescription drug usage. These results suggest that access to health insurance and care may be an important part of the health effects of job loss for some workers. The pattern of results is also consistent with a significant role for stress in generating long-term health consequences after job loss.
Handle: RePEc:nbr:nberwo:19884
Template-Type: ReDIF-Paper 1.0
Title: A Macroeconomic Framework for Quantifying Systemic Risk
Classification-JEL: E44; G01; G2
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Arvind Krishnamurthy
Author-Person: pkr393
Note: AG EFG ME
Number: 19885
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19885
File-URL: http://www.nber.org/papers/w19885.pdf
File-Format: application/pdf
Publication-Status: published as Zhiguo He & Arvind Krishnamurthy, 2019. "A Macroeconomic Framework for Quantifying Systemic Risk," American Economic Journal: Macroeconomics, vol 11(4), pages 1-37.
Abstract: Systemic risk arises when shocks lead to states where a disruption in financial intermediation adversely affects the economy and feeds back into further disrupting financial intermediation. We present a macroeconomic model with a financial intermediary sector subject to an equity capital constraint. The novel aspect of our analysis is that the model produces a stochastic steady state distribution for the economy, in which only some of the states correspond to systemic risk states. The model allows us to examine the transition from "normal" states to systemic risk states. We calibrate our model and use it to match the systemic risk apparent during the 2007/2008 financial crisis. We also use the model to compute the conditional probabilities of arriving at a systemic risk state, such as 2007/2008. Finally, we show how the model can be used to conduct a macroeconomic "stress test" linking a stress scenario to the probability of systemic risk states.
Handle: RePEc:nbr:nberwo:19885
Template-Type: ReDIF-Paper 1.0
Title: Is Increased Price Flexibility Stabilizing? Redux
Classification-JEL: E31; E32; E52
Author-Name: Saroj Bhattarai
Author-Person: pbh111
Author-Name: Gauti Eggertsson
Author-Person: peg7
Author-Name: Raphael Schoenle
Author-Person: psc432
Note: ME
Number: 19886
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19886
File-URL: http://www.nber.org/papers/w19886.pdf
File-Format: application/pdf
Publication-Status: published as Saroj Bhattarai & Gauti B. Eggertsson & Raphael Schoenle, 2018. "Is Increased Price Flexibility Stabilizing? Redux," Journal of Monetary Economics, .
Abstract: We study the implications of increased price flexibility on output volatility. In a simple DSGE model, we show analytically that more flexible prices always amplify output volatility for supply shocks and also amplify output volatility for demand shocks if monetary policy does not respond strongly to inflation. More flexible prices often reduce welfare, even under optimal monetary policy if full efficiency cannot be attained. We estimate a medium-scale DSGE model using post-WWII U.S. data. In a counterfactual experiment we find that if prices and wages are fully flexible, the standard deviation of annualized output growth more than doubles.
Handle: RePEc:nbr:nberwo:19886
Template-Type: ReDIF-Paper 1.0
Title: Measuring the ''World'' Real Interest Rate
Classification-JEL: E4; E43; G12
Author-Name: Mervyn King
Author-Name: David Low
Note: AP ME
Number: 19887
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19887
File-URL: http://www.nber.org/papers/w19887.pdf
File-Format: application/pdf
Abstract: Over the past couple of decades, and especially since the financial crisis in 2008-09, real interest rates have collapsed. For much of the past two years they have been negative, but they have been trending down for some while. But how far have real rates fallen? This note computes a measure of the "world" real interest rate and, where possible, a measure of the implied future real rate. It also makes public our estimates of the "world" real interest rate so they can be used by other researchers.
Handle: RePEc:nbr:nberwo:19887
Template-Type: ReDIF-Paper 1.0
Title: Does Female Empowerment Promote Economic Development?
Classification-JEL: D13; J16; O10
Author-Name: Matthias Doepke
Author-Person: pdo8
Author-Name: Michèle Tertilt
Author-Person: pte114
Note: DEV EFG
Number: 19888
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19888
File-URL: http://www.nber.org/papers/w19888.pdf
File-Format: application/pdf
Publication-Status: published as Matthias Doepke & Michèle Tertilt, 2019. "Does female empowerment promote economic development?," Journal of Economic Growth, vol 24(4), pages 309-343.
Abstract: Empirical evidence suggests that money in the hands of mothers (as opposed to fathers) increases expenditures on children. Does this imply that targeting transfers to women promotes economic development? Not necessarily. We consider a noncooperative model of the household where a gender wage gap leads to endogenous household specialization. As a result, women indeed spend more on children and invest more in human capital. Yet, depending on the nature of the production function, targeting transfers to womenmay be beneficial or harmful to growth. Transfers to women are more likely to be beneficial when human capital, rather than physical capital or land, is the most important factor of production. We provide empirical evidence supportive of our mechanism: In Mexican PROGRESA data, transfers to women lead to an increase in spending on children, but a decline in the savings rate.
Handle: RePEc:nbr:nberwo:19888
Template-Type: ReDIF-Paper 1.0
Title: Health, Financial Incentives, and Early Retirement: Micro-Simulation Evidence for Germany
Classification-JEL: H55; J14; J26
Author-Name: Hendrik Juerges
Author-Person: pju13
Author-Name: Lars Thiel
Author-Name: Tabea Bucher-Koenen
Author-Name: Johannes Rausch
Author-Name: Morten Schuth
Author-Name: Axel Boersch-Supan
Note: AG
Number: 19889
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19889
File-URL: http://www.nber.org/papers/w19889.pdf
File-Format: application/pdf
Publication-Status: published as Health, Financial Incentives, and Early Retirement: Microsimulation Evidence for Germany, Hendrik Jürges, Lars Thiel, Tabea Bucher-Koenen, Johannes Rausch, Morten Schuth, Axel Börsch-Supan. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: About 20% of German workers retire on disability pensions. Disability pensions provide fairly generous benefits for those who are not already age-eligible for an old-age pension and who are deemed unable to work for health reasons. In this paper, we use two sets of individual survey data to study the role of health and financial incentives in early retirement decisions in Germany, in particular disability benefit uptake. We show that financial incentives to retire do affect sick individuals at least as much as healthy individuals. Based on 25 years of individual survey data and empirical models of retirement behavior, we then simulate changes in the generosity of disability pensions to understand how these changes would affect retirement behavior. Our results show that making the disability benefit award process more stringent without closing other early retirement routes would not greatly increase labor force participation in old age.
Handle: RePEc:nbr:nberwo:19889
Template-Type: ReDIF-Paper 1.0
Title: Central Clearing and Collateral Demand
Classification-JEL: G15; G20; G28
Author-Name: Darrell Duffie
Author-Person: pdu341
Author-Name: Martin Scheicher
Author-Name: Guillaume Vuillemey
Author-Person: pvu29
Note: AP
Number: 19890
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19890
File-URL: http://www.nber.org/papers/w19890.pdf
File-Format: application/pdf
Publication-Status: published as Duffie, Darrell & Scheicher, Martin & Vuillemey, Guillaume, 2015. "Central clearing and collateral demand," Journal of Financial Economics, Elsevier, vol. 116(2), pages 237-256.
Abstract: We use an extensive data set of bilateral exposures on credit default swap (CDS) to estimate the impact on collateral demand of new margin and clearing practices and regulations. We decompose collateral demand for both customers and dealers into several key components, including the "velocity drag" associated with variation margin movements. We demonstrate the impact on collateral demand of more widespread initial margin requirements, increased novation of CDS to central clearing parties (CCPs), an increase in the number of clearing members, the proliferation of CCPs of both specialized and non-specialized types, and client clearing. Among other results, we show that system-wide collateral demand is increased significantly by the application of initial margin requirements for dealers, whether or not the CDS are cleared. Given these dealer-to-dealer initial margin requirements, however, mandatory central clearing is shown to lower, not raise, system-wide collateral demand, provided there is no significant proliferation of CCPs. Central clearing does, however, have significant distributional consequences for collateral requirements across various types of market participants.
Handle: RePEc:nbr:nberwo:19890
Template-Type: ReDIF-Paper 1.0
Title: Scale and Skill in Active Management
Classification-JEL: G10; G23; J24
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Author-Name: Lucian A. Taylor
Note: AP CF LS
Number: 19891
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19891
File-URL: http://www.nber.org/papers/w19891.pdf
File-Format: application/pdf
Publication-Status: published as Pástor, Ľuboš & Stambaugh, Robert F. & Taylor, Lucian A., 2015. "Scale and skill in active management," Journal of Financial Economics, Elsevier, vol. 116(1), pages 23-45.
Abstract: We empirically analyze the nature of returns to scale in active mutual fund management. We find strong evidence of decreasing returns at the industry level: As the size of the active mutual fund industry increases, a fund's ability to outperform passive benchmarks declines. At the fund level, all methods considered indicate decreasing returns, but estimates that avoid econometric biases are insignificant. We also find that the active management industry has become more skilled over time. This upward trend in skill coincides with industry growth, which precludes the skill improvement from boosting fund performance. Finally, we find that performance deteriorates over a typical fund's lifetime. This result can also be explained by industry-level decreasing returns to scale.
Handle: RePEc:nbr:nberwo:19891
Template-Type: ReDIF-Paper 1.0
Title: Effects of Index-Fund Investing on Commodity Futures Prices
Classification-JEL: G13; Q13; Q41
Author-Name: James D. Hamilton
Author-Person: pha60
Author-Name: Jing Cynthia Wu
Author-Person: pwu111
Note: AP EEE ME
Number: 19892
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19892
File-URL: http://www.nber.org/papers/w19892.pdf
File-Format: application/pdf
Publication-Status: published as James D. Hamilton & Jing Cynthia Wu, 2015. "Effects Of Index‐Fund Investing On Commodity Futures Prices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 187-205, 02.
Abstract: The last decade brought substantial increased participation in commodity markets by index funds that maintain long positions in the near futures contracts. Policy makers and academic studies have reached sharply different conclusions about the effects of these funds on commodity futures prices. This paper proposes a unifying framework for examining this question, noting that according to a simple model of futures arbitrage, if index-fund buying influences prices by changing the risk premium, then the notional positions of the index investors should help predict excess returns in these contracts. We find no evidence that the positions of traders in agricultural contracts identified by the CFTC as following an index strategy can help predict returns on the near futures contracts. We review evidence that these positions might help predict changes in oil futures prices, and find that while there is some support for this in the earlier data, this appears to be driven by some of the dramatic features of the 2007-2009 recession, with the relation breaking down out of sample.
Handle: RePEc:nbr:nberwo:19892
Template-Type: ReDIF-Paper 1.0
Title: Are Chinese Growth and Inflation Too Smooth? Evidence from Engel Curves
Classification-JEL: D12; E21; E31; O11
Author-Name: Emi Nakamura
Author-Person: pna121
Author-Name: Jón Steinsson
Author-Person: pst155
Author-Name: Miao Liu
Note: DEV EFG IFM ME
Number: 19893
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19893
File-URL: http://www.nber.org/papers/w19893.pdf
File-Format: application/pdf
Publication-Status: published as Emi Nakamura & Jón Steinsson & Miao Liu, 2016. "Are Chinese Growth and Inflation Too Smooth? Evidence from Engel Curves," American Economic Journal: Macroeconomics, vol 8(3), pages 113-144.
Abstract: China has experienced remarkably stable growth and inflation in recent years according to official statistics. We construct alternative estimates using detailed information on Chinese household purchasing patterns. As households become richer, a smaller fraction of total expenditures are spent on necessities such as grain and a larger fraction on luxuries such as eating out. We use systematic discrepancies between cross-sectional and time-series Engel curves to construct alternative estimates of Chinese growth and inflation. Our estimates suggest that official statistics present a smoothed version of reality. Official inflation rose in the 2000's, but our estimates indicate that true inflation was still higher and consumption growth was overstated over this period. In contrast, inflation was overstated and growth understated during the low-inflation 1990's. Similar patterns emerge from the data whether we base our estimates on major categories such as food or clothing as a fraction of total expenditures or subcategories such as grain as a fraction of food expenditures or garments as a fraction of clothing expenditures.
Handle: RePEc:nbr:nberwo:19893
Template-Type: ReDIF-Paper 1.0
Title: Young, Restless and Creative: Openness to Disruption and Creative Innovations
Classification-JEL: O33; O40; O43; P10; P16; Z1
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Ufuk Akcigit
Author-Person: pak203
Author-Name: Murat Alp Celik
Author-Person: pce187
Note: EFG PR
Number: 19894
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19894
File-URL: http://www.nber.org/papers/w19894.pdf
File-Format: application/pdf
Abstract: This paper argues that openness to new, unconventional and disruptive ideas has a first-order impact on creative innovations—innovations that break new ground in terms of knowledge creation. After presenting a motivating model focusing on the choice between incremental and radical innovation, and on how managers of different ages and human capital are sorted across different firms with different degrees of openness to disruption, we provide firm-level, patent level and cross-country evidence consistent with this pattern. Our measures of creative innovations proxy for innovation quality (average number of citations per patent) and creativity (fraction of superstar innovators, the likelihood of a very high number of citations, and generality of patents). Our main proxy for openness to disruption is the age of the manager - based on the idea that only companies or societies open to such disruption will allow the young to rise up within the hierarchy. Using this proxy at the firm, patent and country level, we present robust evidence that openness to disruption is associated with more creative innovations, but we also show that once the effect of the sorting of young managers to firms that are more open to disruption is factored in, the (causal) impact of manager age on creative innovations is small.
Handle: RePEc:nbr:nberwo:19894
Template-Type: ReDIF-Paper 1.0
Title: The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections
Classification-JEL: D24; E02; E66; J11; J15; O11; O31; Q43
Author-Name: Robert J. Gordon
Author-Person: pgo50
Note: DAE EFG PR
Number: 19895
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19895
File-URL: http://www.nber.org/papers/w19895.pdf
File-Format: application/pdf
Abstract: The United States achieved a 2.0 percent average annual growth rate of real GDP per capita between 1891 and 2007. This paper predicts that growth in the 25 to 40 years after 2007 will be much slower, particularly for the great majority of the population. Future growth will be 1.3 percent per annum for labor productivity in the total economy, 0.9 percent for output per capita, 0.4 percent for real income per capita of the bottom 99 percent of the income distribution, and 0.2 percent for the real disposable income of that group. The primary cause of this growth slowdown is a set of four headwinds, all of them widely recognized and uncontroversial. Demographic shifts will reduce hours worked per capita, due not just to the retirement of the baby boom generation but also as a result of an exit from the labor force both of youth and prime-age adults. Educational attainment, a central driver of growth over the past century, stagnates at a plateau as the U.S. sinks lower in the world league tables of high school and college completion rates. Inequality continues to increase, resulting in real income growth for the bottom 99 percent of the income distribution that is fully half a point per year below the average growth of all incomes. A projected long-term increase in the ratio of debt to GDP at all levels of government will inevitably lead to more rapid growth in tax revenues and/or slower growth in transfer payments at some point within the next several decades. There is no need to forecast any slowdown in the pace of future innovation for this gloomy forecast to come true, because that slowdown already occurred four decades ago. In the eight decades before 1972 labor productivity grew at an average rate 0.8 percent per year faster than in the four decades since 1972. While no forecast of a future slowdown of innovation is needed, skepticism is offered here, particularly about the techno-optimists who currently believe that we are at a point of inflection leading to faster technological change. The paper offers several historical examples showing that the future of technology can be forecast 50 or even 100 years in advance and assesses widely discussed innovations anticipated to occur over the next few decades, including medical research, small robots, 3-D printing, big data, driverless vehicles, and oil-gas fracking.
Handle: RePEc:nbr:nberwo:19895
Template-Type: ReDIF-Paper 1.0
Title: Efficiency versus Equity in the Allocation of Medical Specialty Training Positions in Spain: A Health Policy Simulation Based on a Discrete Choice Model
Classification-JEL: C25; C78; D82; I11; I18
Author-Name: Jeffrey E. Harris
Author-Name: Beatriz G. López-Valcárcel
Author-Name: Patricia Barber
Author-Name: Vicente Ortún
Author-Person: por65
Note: EH PE
Number: 19896
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19896
File-URL: http://www.nber.org/papers/w19896.pdf
File-Format: application/pdf
Abstract: Background. In Spain's "MIR" system of allocating residency training positions, medical school graduates are ranked according to their performance on a national exam and then sequentially choose from the remaining available training slots. We studied how changes in the MIR system might address the inadequate supply of practitioners of family and community medicine in that country. Data. Our data included: a registry of the actual residency positions chosen by medical school graduates in the 2012 MIR cycle; a 2012 post-MIR survey in which graduates made counterfactual choices as to what they would have chosen but for their position in the national rankings; and a 2011 survey of the relative importance of specialty attributes among final-year medical students in the same cohort. Methods. We modeled the MIR system as a one-sided matching mechanism based priority rankings, also called "serial dictatorship." Within this model, we developed a framework for evaluating the tradeoff between the efficiency gains from increasing the supply of practitioners of family and community medicine and the equity-related benefits of permitting the most talented medical students to make their specialty choices first. We then applied our framework to real data on medical school graduates' specialty choices during 2012 MIR cycle. Our empirical analysis, based on the multinomial logit model with random coefficients, took account of the endogeneity of choice sets induced by the MIR scheme. We then used the parameter estimates to simulate various alternative public policies, including random ranking of candidates, restrictions on the supply of training positions, and policies designed to upgrade medical school graduates' valuations of a career in family and community medicine. Results: Both random ranking and restrictions in supply resulted in a relatively small efficiency gains from training more productive medical school graduates in family and community medicine, but at the same time a substantial equity losses. Improvements in two key attributes of family and community medicine - professional prestige and the proportion of income from private practice - resulted in substantial gains in both equity and efficiency. Conclusions: Policies designed to increase the prestige and remuneration of practitioners of family and community medicine have the potential to be more efficient and equitable than other alternatives.
Handle: RePEc:nbr:nberwo:19896
Template-Type: ReDIF-Paper 1.0
Title: An Optimizing Neuroeconomic Model of Discrete Choice
Classification-JEL: C25; C91; D87
Author-Name: Michael Woodford
Author-Person: pwo3
Note: EFG
Number: 19897
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19897
File-URL: http://www.nber.org/papers/w19897.pdf
File-Format: application/pdf
Abstract: A model is proposed in which stochastic choice results from noise in cognitive processing rather than random variation in preferences. The mental process used to make a choice is nonetheless optimal, subject to a constraint on available information-processing capacity that is partially motivated by neurophysiological evidence. The optimal information-constrained model is found to offer a better fit to experimental data on choice frequencies and reaction times than either a purely mechanical process model of choice (the drift-diffusion model) or an optimizing model with fewer constraints on feasible choice processes (the rational inattention model).
Handle: RePEc:nbr:nberwo:19897
Template-Type: ReDIF-Paper 1.0
Title: Are Chinese Markets for Manufactured Products More Competitive than in the US?: A Comparison of China -US Industrial Concentration Ratios
Classification-JEL: L16
Author-Name: Jun Wang
Author-Name: John Whalley
Author-Person: pwh8
Note: DEV IO
Number: 19898
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19898
File-URL: http://www.nber.org/papers/w19898.pdf
File-Format: application/pdf
Abstract: We present estimates of 4 and 8 firm concentration ratios by industry and in weighted aggregate form for the manufacturing sector for Chinese enterprises for 2002 and 2007. These are then compared to available estimates for the same years and industrial classification for the US. These comparisons clearly point in the direction of China having sharply lower concentration ratios, in the order of one half of the US for 4 firm ratios. One possible implication is that markets for Chinese manufactured products are considerably more competitive than in the US.
Handle: RePEc:nbr:nberwo:19898
Template-Type: ReDIF-Paper 1.0
Title: Optimal Tax Progressivity: An Analytical Framework
Classification-JEL: E20; H20; H40; J22; J24
Author-Name: Jonathan Heathcote
Author-Person: phe1
Author-Name: Kjetil Storesletten
Author-Person: pst4
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Note: EFG PE POL
Number: 19899
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19899
File-URL: http://www.nber.org/papers/w19899.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2017. "Optimal Tax Progressivity: An Analytical Framework*," The Quarterly Journal of Economics, vol 132(4), pages 1693-1754.
Abstract: What shapes the optimal degree of progressivity of the tax and transfer system? On the one hand, a progressive tax system can counteract inequality in initial conditions and substitute for imperfect private insurance against idiosyncratic earnings risk. At the same time, progressivity reduces incentives to work and to invest in skills, and aggravates the externality associated with valued public expenditures. We develop a tractable equilibrium model that features all of these trade-offs. The analytical expressions we derive for social welfare deliver a transparent understanding of how preferences, technology, and market structure parameters influence the optimal degree of progressivity. A calibration for the U.S. economy indicates that endogenous skill investment, flexible labor supply, and the externality linked to valued government purchases play quantitatively similar roles in limiting desired progressivity.
Handle: RePEc:nbr:nberwo:19899
Template-Type: ReDIF-Paper 1.0
Title: Can Intangible Capital Explain Cyclical Movements in the Labor Wedge?
Classification-JEL: E13; E32
Author-Name: Francois Gourio
Author-Person: pgo158
Author-Name: Leena Rudanko
Author-Person: pru114
Note: EFG ME
Number: 19900
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19900
File-URL: http://www.nber.org/papers/w19900.pdf
File-Format: application/pdf
Publication-Status: published as Fran?ois Gourio & Leena Rudanko, 2014. "Can Intangible Capital Explain Cyclical Movements in the Labor Wedge?," American Economic Review, American Economic Association, vol. 104(5), pages 183-88, May.
Abstract: Intangible capital is an important factor of production in modern economies that is generally neglected in business cycle analyses. We demonstrate that intangible capital can have a substantial impact on business cycle dynamics, especially if the intangible is complementary with production capacity. We focus on customer capital: the capital embodied in the relationships a firm has with its customers. Introducing customer capital into a standard real business cycle model generates a volatile and countercyclical labor wedge, due to a mismeasured marginal product of labor. We also provide new evidence on cyclical variation in selling effort to discipline the exercise.
Handle: RePEc:nbr:nberwo:19900
Template-Type: ReDIF-Paper 1.0
Title: Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry
Classification-JEL: D2; G3; L2; L6; O3
Author-Name: Serguey Braguinsky
Author-Person: pbr60
Author-Name: Atsushi Ohyama
Author-Person: poh8
Author-Name: Tetsuji Okazaki
Author-Person: pok12
Author-Name: Chad Syverson
Author-Person: psy13
Note: CF DEV IO PR
Number: 19901
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19901
File-URL: http://www.nber.org/papers/w19901.pdf
File-Format: application/pdf
Publication-Status: published as Serguey Braguinsky & Atsushi Ohyama & Tetsuji Okazaki & Chad Syverson, 2015. "Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry," American Economic Review, American Economic Association, vol. 105(7), pages 2086-2119, July.
Abstract: We explore how changes in ownership and managerial control affect the productivity and profitability of producers. Using detailed operational, financial, and ownership data from the Japanese cotton spinning industry at the turn of the last century, we find a more nuanced picture than the straightforward "higher productivity buys lower productivity" story commonly appealed to in the literature. Acquired firms' production facilities were not on average less physically productive than the plants of the acquiring firms before acquisition, conditional on operating. They were much less profitable, however, due to consistently higher inventory levels and lower capacity utilization--differences which reflected problems in managing the uncertainties of demand. When purchased by more profitable firms, these less profitable acquired plants saw drops in inventories and gains in capacity utilization that raised both their productivity and profitability levels, consistent with acquiring owner/managers spreading their better demand management abilities across the acquired capital.
Handle: RePEc:nbr:nberwo:19901
Template-Type: ReDIF-Paper 1.0
Title: The Role of Health in Retirement
Classification-JEL: D31; D91; E21; H55; I1; I3; J14; J18; J26; J3; J32
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Note: AG EH LS PE
Number: 19902
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19902
File-URL: http://www.nber.org/papers/w19902.pdf
File-Format: application/pdf
Publication-Status: published as Alan L. Gustman and Thomas L. Steinmeier, "The Role of Health in Retirement". Research in Labor Economics. 2018 (46): 229-297.
Abstract: This paper constructs and estimates a dynamic model of the evolution of health for those over the age of 50 and then embeds that model of health dynamics in a structural, econometric model of retirement and saving. The health model traces the effects of smoking, obesity, alcohol consumption, depression and other proclivities on medical conditions, including hypertension, diabetes, cancer, lung disease, heart problems, stroke, psychiatric problems and arthritis. These in turn influence an overall index of health status based on self-reported health, work limitations and ADLs, which is used to classify the population into good, fair, poor or terrible health. Compared to a situation where the entire population is in good health, the current health status of the population reduces the retirement age of the entire population by an average of about one year. While poor health or terrible health have a great impact on the disutility of work and thus on retirement, fair health as opposed to good health has a relatively minor effect. Smoking depresses full-time work effort by up to 3.5 percentage points by those in the early sixties, reducing the average retirement age by four to five months. Effects of trends in health care and health policies on retirement are also analyzed. Including detailed measurement of health dynamics in a retirement model improves understanding of the effects of health on retirement. It does not, however, influence estimates of the marginal effects of economic incentives on retirement.
Handle: RePEc:nbr:nberwo:19902
Template-Type: ReDIF-Paper 1.0
Title: A New Approach to Solving the Colonial Monetary Puzzle: Evidence from New Jersey, 1709-1775
Classification-JEL: E31; E42; E51; N11; N21; N41
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE ME
Number: 19903
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19903
File-URL: http://www.nber.org/papers/w19903.pdf
File-Format: application/pdf
Publication-Status: published as Farley Grubb, "Colonial New Jersey Paper Money, 1709-1775: Value Decomposition and Performance," Journal of Economic History, 76, no. 4 (Dec. 2016), pp. 1216-1232.
Abstract: The market value of colonial New Jersey's paper money is decomposed into its real asset present value and its liquidity premium. Its real asset present value accounted for over 80 percent, whereas its value as money per se accounted for under 20, percent of its market value. Colonial paper money was not a fiat currency. Its liquidity premium was driven by the quantity of paper money in circulation and the method of injection. The quantity theory of money performs poorly when using prices and exchange rates, but performs well when using real asset present values, to measure paper money's expected value.
Handle: RePEc:nbr:nberwo:19903
Template-Type: ReDIF-Paper 1.0
Title: Regulatory Redistribution in the Market for Health Insurance
Classification-JEL: H51; H53; I13; I18
Author-Name: Jeffrey Clemens
Note: EH PE
Number: 19904
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19904
File-URL: http://www.nber.org/papers/w19904.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey Clemens, 2015. "Regulatory Redistribution in the Market for Health Insurance," American Economic Journal: Applied Economics, American Economic Association, vol. 7(2), pages 109-34, April.
Abstract: Community rating regulations equalize the insurance premiums faced by the healthy and the unhealthy. Intended reductions in the unhealthy's premiums can be undone, however, if the healthy forgo coverage. The severity of this adverse selection problem hinges largely on how health care costs are distributed across market participants. Theoretically, I show that Medicaid expansions can combat adverse selection by removing high cost individuals from the relevant risk pool. Empirically, I find that private coverage rates improved significantly in community rated markets when states expanded Medicaid's coverage of relatively unhealthy adults. The effects of Medicaid expansions and community rating regulations are fundamentally linked.
Handle: RePEc:nbr:nberwo:19904
Template-Type: ReDIF-Paper 1.0
Title: Collaborating With People Like Me: Ethnic co-authorship within the US
Classification-JEL: J01; J1; J15
Author-Name: Richard B. Freeman
Author-Person: pfr23
Author-Name: Wei Huang
Author-Person: phu346
Note: LS
Number: 19905
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19905
File-URL: http://www.nber.org/papers/w19905.pdf
File-Format: application/pdf
Publication-Status: published as Collaborating with People Like Me: Ethnic Coauthorship within the United States, Richard B. Freeman, Wei Huang. in US High-Skilled Immigration in the Global Economy, Turner and Kerr. 2015
Abstract: This study examines the ethnic identity of authors in over 2.5 million scientific papers written by US-based authors from 1985 to 2008, a period in which the frequency of English and European names among authors fell relative to the frequency of names from China and other developing countries. We find that persons of similar ethnicity co-author together more frequently than predicted by their proportion among authors. Using a measure of homophily for individual papers, we find that greater homophily is associated with publication in lower impact journals and with fewer citations, even holding fixed the authors' previous publishing performance. By contrast, papers with authors in more locations and with longer reference lists get published in higher impact journals and receive more citations than others. These findings suggest that diversity in inputs by author ethnicity, location, and references leads to greater contributions to science as measured by impact factors and citations.
Handle: RePEc:nbr:nberwo:19905
Template-Type: ReDIF-Paper 1.0
Title: Relaxing Occupational Licensing Requirements: Analyzing Wages and Prices for a Medical Service
Classification-JEL: D02; D42; D47; H7; I1; I12; I18; I28; J0; J18
Author-Name: Morris M. Kleiner
Author-Name: Allison Marier
Author-Name: Kyoung Won Park
Author-Person: ppa809
Author-Name: Coady Wing
Author-Person: pwi499
Note: IO LE LS
Number: 19906
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19906
File-URL: http://www.nber.org/papers/w19906.pdf
File-Format: application/pdf
Publication-Status: published as Morris M. Kleiner & Allison Marier & Kyoung Won Park & Coady Wing, 2016. "Relaxing Occupational Licensing Requirements: Analyzing Wages and Prices for a Medical Service," The Journal of Law and Economics, vol 59(2), pages 261-291.
Abstract: Occupational licensing laws have been relaxed in a large number of U.S. states to give nurse practitioners the ability to perform more tasks without the supervision of medical doctors. We investigate how these regulations may affect wages, employment, costs, and quality of providing certain types of medical services. We find that when only physicians are allowed to prescribe controlled substances that this is associated with a reduction in nurse practitioner wages, and increases in physician wages suggesting some substitution among these occupations. Furthermore, our estimates show that prescription restrictions lead to a reduction in hours worked by nurse practitioners and are associated with increases in physician hours worked. Our analysis of insurance claims data shows that the more rigid regulations increase the price of a well-child medical exam by 3 to 16 %. However, our analysis finds no evidence that the changes in regulatory policy are reflected in outcomes such as infant mortality rates or malpractice premiums. Overall, our results suggest that these more restrictive state licensing practices are associated with changes in wages and employment patterns, and also increase the costs of routine medical care, but do not seem to influence health care quality.
Handle: RePEc:nbr:nberwo:19906
Template-Type: ReDIF-Paper 1.0
Title: Effect of Pensions and Disability Benefits on Retirement in the UK
Classification-JEL: H55; J21; J26
Author-Name: James Banks
Author-Person: pba509
Author-Name: Carl Emmerson
Author-Name: Gemma C. Tetlow
Author-Person: pte169
Note: AG
Number: 19907
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19907
File-URL: http://www.nber.org/papers/w19907.pdf
File-Format: application/pdf
Publication-Status: published as Effect of Pensions and Disability Benefits on Retirement in the United Kingdom, James Banks, Carl Emmerson, Gemma Tetlow. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: This paper examines to what extent differences in employment rates across those in better and worse health in the UK can be explained by the availability of publicly-funded disability insurance and the financial incentives provided by other retirement income schemes. Using an option value approach, we find that individuals' labor force participation is affected by financial incentives. A one standard deviation change in the option value is estimated to reduce the likelihood of an individual leaving the labor market in the next year by between 2.7 and 3.1 percentage points, relative to an average exit probability of 9.4%. This suggests the variation in financial incentives across different individuals could explain a significant proportion of retirements. However, we find no evidence that individuals with different levels of health respond to our measure of financial incentives differently. We also conclude that it would require a very large change in the stringency of the disability insurance program on its own to generate an economically significant change in overall employment rates of older workers in the UK. This reflects the fact that - for many individuals in the UK - the level of disability benefits they might be able to receive is low relative to the amount they could earn and, therefore, large changes in rates of eligibility would not induce large changes in overall employment rates.
Handle: RePEc:nbr:nberwo:19907
Template-Type: ReDIF-Paper 1.0
Title: Union Organizing Decisions in a Deteriorating Environment: The Composition of Representation Elections and the Decline in Turnout
Classification-JEL: J5; J50
Author-Name: Henry S. Farber
Note: LS
Number: 19908
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19908
File-URL: http://www.nber.org/papers/w19908.pdf
File-Format: application/pdf
Publication-Status: published as H. Farber, 2015. "Union Organizing Decisions in a Deteriorating Environment: The Composition of Representation Elections and the Decline in Turnout," ILR Review, vol 68(5), pages 1126-1156.
Abstract: It is well known that the organizing environment for labor unions in the U.S. has deteriorated dramatically over a long period of time, contributing to the sharp decline in the private sector union membership rate and resulting in many fewer representation elections being held. What is less well known is that, since the late 1990s, average turnout in the representation elections that are held has dropped substantially. These facts are related. I develop a model of union decision making regarding selection of targets for organizing through the NLRB election process with the clear implication that a deteriorating organizing environment will lead to systematic change in the composition of elections held. The model implies that a deteriorating environment will lead unions not only to contest fewer elections but also to focus on larger potential bargaining units and on elections where they have a larger probability of winning. A standard rational-voter model implies that these changes in composition will lead to lower turnout. I investigate the implications of these models empirically using data on turnout in over 140,000 NLRB certification elections held between 1973 and 2009. The results are consistent with the model and suggest that changes in composition account for about one-fifth of the decline in turnout between 1999 and 2009.
Handle: RePEc:nbr:nberwo:19908
Template-Type: ReDIF-Paper 1.0
Title: Is It Too Late to Bail Out the Troubled Countries in the Eurozone?
Classification-JEL: F34; F53; G01
Author-Name: Juan Carlos Conesa
Author-Person: pco15
Author-Name: Timothy J. Kehoe
Author-Person: pke16
Note: EFG IFM
Number: 19909
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19909
File-URL: http://www.nber.org/papers/w19909.pdf
File-Format: application/pdf
Publication-Status: published as Juan Carlos Conesa & Timothy J. Kehoe, 2014. "Is It Too Late to Bail Out the Troubled Countries in the Eurozone?," American Economic Review, American Economic Association, vol. 104(5), pages 88-93, May.
Abstract: In January 1995, U.S. President Bill Clinton organized a bailout for Mexico that imposed penalty interest rates and induced the Mexican government to reduce its debt, ending the debt crisis. Can the Troika (European Commission, European Central Bank, and International Monetary Fund) organize similar bailouts for the troubled countries in the Eurozone? Our analysis suggests that debt levels are so high that bailouts with penalty interest rates could induce the Eurozone governments to default rather than reduce their debt. A resumption of economic growth is one of the few ways that the Eurozone crises can end.
Handle: RePEc:nbr:nberwo:19909
Template-Type: ReDIF-Paper 1.0
Title: A Century of Capital Structure: The Leveraging of Corporate America
Classification-JEL: E44; E62; G32
Author-Name: John Graham
Author-Name: Mark T. Leary
Author-Name: Michael R. Roberts
Author-Person: pro361
Note: CF
Number: 19910
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19910
File-URL: http://www.nber.org/papers/w19910.pdf
File-Format: application/pdf
Publication-Status: published as A Century of Capital Structure: The Leveraging of Corporate America, John R. Graham, Mark T. Leary, Michael R. Roberts. in New Perspectives on Corporate Capital Structure, Acharya, Almeida, and Baker. 2015
Publication-Status: published as John R. Graham & Mark T. Leary & Michael R. Roberts, 2015. "A century of capital structure: The leveraging of corporate America," Journal of Financial Economics, vol 118(3), pages 658-683.
Abstract: Unregulated U.S. corporations dramatically increased their debt usage over the past century. Aggregate leverage - low and stable before 1945 - more than tripled between 1945 and 1970 from 11% to 35%, eventually reaching 47% by the early 1990s. The median firm in 1946 had no debt, but by 1970 had a leverage ratio of 31%. This increase occurred in all unregulated industries and affected firms of all sizes. Changing firm characteristics are unable to account for this increase. Rather, changes in government borrowing, macroeconomic uncertainty, and financial sector development play a more prominent role. Despite this increase among unregulated firms, a combination of stable debt usage among regulated firms and a decrease in the fraction of aggregate assets held by regulated firms over this period resulted in a relatively stable economy-wide leverage ratio during the 20th century.
Handle: RePEc:nbr:nberwo:19910
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Multipliers in Japan
Classification-JEL: E62
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG PE
Number: 19911
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19911
File-URL: http://www.nber.org/papers/w19911.pdf
File-Format: application/pdf
Publication-Status: published as Alan J. Auerbach & Yuriy Gorodnichenko, 2017. "Fiscal multipliers in Japan," Research in Economics, vol 71(3), pages 411-421.
Abstract: In this paper, we estimate government purchase multipliers for Japan, following the approach used previously for a panel of OECD countries (Auerbach and Gorodnichenko, 2013). This approach allows multipliers to vary smoothly according to the state of the economy and uses real-time forecast data to purge policy innovations of their predictable components. For a sample period extending from 1960 to 2012, estimates for Japan are quite consistent with those previously estimated for the OECD as well as those estimated using a slightly different methodology for the United States (Auerbach and Gorodnichenko, 2012). However, estimates based only on more recent observations are less stable and provide weaker support for the effectiveness of government purchases at stimulating economic activity, particularly in recession, although cyclical patterns in Japan make the dating of recessions a challenge.
Handle: RePEc:nbr:nberwo:19911
Template-Type: ReDIF-Paper 1.0
Title: Big-Box Retailers and Urban Carbon Emissions: The Case of Wal-Mart
Classification-JEL: Q41; Q54
Author-Name: Matthew E. Kahn
Author-Person: pka41
Author-Name: Nils Kok
Author-Person: pko380
Note: EEE PE PR
Number: 19912
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19912
File-URL: http://www.nber.org/papers/w19912.pdf
File-Format: application/pdf
Abstract: The commercial real estate sector is responsible for a large share of a city's overall carbon footprint. An ongoing trend in this sector has been the entry of big-box stores such as Wal-Mart. Using a unique monthly panel data set for every Wal-Mart store in California from 2006 through 2011, we document three main findings about the environmental performance of big-box retailers. First, Wal-Mart's stores exhibit very little store-to-store variation in electricity consumption relative to a control group of similar size and vintage retail stores. Second, Wal-Mart's store's electricity consumption is lower in higher priced utilities and is independent of the store's ownership versus leased status. Third, unlike other commercial businesses, Wal-Mart's newer buildings consume less electricity. Together, these results highlight the key roles that corporate size and centralization of management play in determining a key indicator of a firm's overall environmental performance.
Handle: RePEc:nbr:nberwo:19912
Template-Type: ReDIF-Paper 1.0
Title: Financial Incentives, Health and Retirement in Spain
Classification-JEL: H55; I18; J11
Author-Name: Pilar García-Gómez
Author-Person: pga593
Author-Name: Sergi Jiménez-Martín
Author-Person: pji20
Author-Name: Judit Vall Castelló
Author-Person: pva533
Note: AG EH PE
Number: 19913
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19913
File-URL: http://www.nber.org/papers/w19913.pdf
File-Format: application/pdf
Publication-Status: published as Financial Incentives, Health, and Retirement in Spain, Pilar García-Gómez, Sergi Jiménez-Martín, Judit Vall Castelló. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: In this work we combine wage data from Social Security working histories and health information available in the Survey of Health and Retirement in Europe to explore the link between health, financial incentives and retirement in Spain. Our results show that individuals in worse health quintiles are, indeed, the more responsive to financial incentives as they prove to be less likely to retire when incentives to continue working increase.
Handle: RePEc:nbr:nberwo:19913
Template-Type: ReDIF-Paper 1.0
Title: Debt Crises and Risk Sharing: The Role of Markets versus Sovereigns
Classification-JEL: E2; E6; F15
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Emiliano E. Luttini
Author-Person: plu319
Author-Name: Bent Sorensen
Author-Person: pso113
Note: IFM
Number: 19914
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19914
File-URL: http://www.nber.org/papers/w19914.pdf
File-Format: application/pdf
Publication-Status: published as Sebnem Kalemli-Ozcan & Emiliano Luttini & Bent Sørensen, 2014. "Debt Crises and Risk-Sharing: The Role of Markets versus Sovereigns," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(1), pages 253-276, 01.
Abstract: Using a variance decomposition of shocks to GDP, we quantify the role of international factor income, international transfers, and saving in achieving risk sharing during the recent European crisis. We focus on the sub-periods 1990-2007, 2008-2009, and 2010 and consider separately the European countries hit by the sovereign debt crisis in 2010. We decompose risk sharing from saving into contributions from government and private saving and show that fiscal austerity programs played an important role in hindering risk sharing during the sovereign debt crisis.
Handle: RePEc:nbr:nberwo:19914
Template-Type: ReDIF-Paper 1.0
Title: The Dynamic Effects of Educational Accountability
Classification-JEL: D82; I21; J33; M52
Author-Name: Hugh Macartney
Note: CH ED LS PE
Number: 19915
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19915
File-URL: http://www.nber.org/papers/w19915.pdf
File-Format: application/pdf
Publication-Status: published as Hugh Macartney, 2016. "The Dynamic Effects of Educational Accountability," Journal of Labor Economics, vol 34(1), pages 1-28.
Abstract: This paper provides the first evidence that value-added education accountability schemes induce dynamic distortions. Extending earlier dynamic moral hazard models, I propose a new test for ratchet effects, showing that classroom inputs are distorted less when schools face a shorter horizon over which they can influence student performance. I then exploit grade span variation using rich educational data to credibly identify the extent of dynamic gaming, finding compelling evidence of ratchet effects based on a triple-differences approach. Further analysis indicates that these effects are driven primarily by effort distortions, with teacher reallocations playing a secondary role.
Handle: RePEc:nbr:nberwo:19915
Template-Type: ReDIF-Paper 1.0
Title: Gravity and Extended Gravity: Using Moment Inequalities to Estimate a Model of Export Entry
Classification-JEL: F14; L65
Author-Name: Eduardo Morales
Author-Name: Gloria Sheu
Author-Name: Andrés Zahler
Note: ITI
Number: 19916
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19916
File-URL: http://www.nber.org/papers/w19916.pdf
File-Format: application/pdf
Abstract: Exporting firms often enter foreign markets that are similar to previous export destinations. We develop a dynamic model in which a firm's exports in a market may depend on how similar the market is to the firm's home country (gravity) and to its previous export destinations (extended gravity). Given the large number of export paths from which forward-looking firms may choose, we use a moment inequality approach to structurally estimate our model. Using data from Chilean exporters, we estimate that having similarities with a prior export destination in geographic location, language, and income per capita jointly reduce the cost of foreign market entry by 69% to 90%. Reductions due to geographic location (25% to 38%) and language (29% to 36%) have the largest effect. Extended gravity thus has a large impact on export entry costs.
Handle: RePEc:nbr:nberwo:19916
Template-Type: ReDIF-Paper 1.0
Title: Foreign Ownership of U.S. Safe Assets: Good or Bad?
Classification-JEL: G1; G11; G12; G15
Author-Name: Jack Favilukis
Author-Person: pfa609
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: AP EFG IFM
Number: 19917
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19917
File-URL: http://www.nber.org/papers/w19917.pdf
File-Format: application/pdf
Abstract: The last 20 years have been marked by a sharp rise in international demand for U.S. reserve assets, or safe stores-of-value. What are the welfare consequences to U.S. households of these trends, or of a reversal? In a lifecycle model with aggregate and idiosyncratic risks, the young and oldest households may benefit substantially from such capital inflows, but middle-aged savers may suffer from greater exposure to systematic risk in equity and housing markets. Under the veil of ignorance, a newborn in the lowest wealth quantile is willing to forego 2.7% of lifetime consumption to avoid a large capital outflow.
Handle: RePEc:nbr:nberwo:19917
Template-Type: ReDIF-Paper 1.0
Title: Equilibrium Tax Rates and Income Redistribution: A Laboratory Study
Classification-JEL: C92; D63; D72; H23
Author-Name: Marina Agranov
Author-Name: Thomas R. Palfrey
Author-Person: ppa1164
Note: POL
Number: 19918
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19918
File-URL: http://www.nber.org/papers/w19918.pdf
File-Format: application/pdf
Publication-Status: published as Marina Agranov & Thomas R. Palfrey, 2015. "Equilibrium tax rates and income redistribution: A laboratory study," Journal of Public Economics, vol 130, pages 45-58.
Abstract: This paper reports results from a laboratory experiment that investigates the Meltzer-Richard model of equilibrium tax rates, inequality, and income redistribution. We also extend that model to incorporate social preferences in the form of altruism and inequality aversion. The experiment varies the amount of inequality and the collective choice procedure to determine tax rates. We report four main findings. First, higher wage inequality leads to higher tax rates. The effect is significant and large in magnitude. Second, the average implemented tax rates are almost exactly equal to the theoretical ideal tax rate of the median wage worker. Third, we do not observe any significant differences in labor supply or average implemented tax rates between a direct democracy institution and a representative democracy system where tax rates are determined by candidate competition. Fourth, we observe negligible deviations from labor supply behavior or voting behavior in the directions implied by altruism or inequality aversion.
Handle: RePEc:nbr:nberwo:19918
Template-Type: ReDIF-Paper 1.0
Title: Urban Population and Amenities: The Neoclassical Model of Location
Classification-JEL: H20; R12; R23; R31
Author-Name: David Albouy
Author-Person: pal128
Author-Name: Bryan Stuart
Author-Person: pst816
Note: EEE LS PE
Number: 19919
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19919
File-URL: http://www.nber.org/papers/w19919.pdf
File-Format: application/pdf
Publication-Status: published as David Albouy & Bryan A. Stuart, 2020. "URBAN POPULATION AND AMENITIES: THE NEOCLASSICAL MODEL OF LOCATION," International Economic Review, vol 61(1), pages 127-158.
Abstract: We analyze a neoclassical general-equilibrium model to explain cross-metro variation in population, density, and land supply based on three amenity types: quality-of-life, productivity in tradables, and productivity in non-tradables. We develop a new method to estimate elasticities of housing and land supply, and local-productivity estimates, from cross-sectional density and land-area data. From wage and housing-cost indices, the model explains half of U.S. density and total population variation, and finds that quality of life determines locations more than employment opportunities. We show how changing quality of life, relaxing land-use regulations, or neutralizing federal taxes can redistribute populations massively.
Handle: RePEc:nbr:nberwo:19919
Template-Type: ReDIF-Paper 1.0
Title: The Effectiveness of Mandatory Mortgage Counseling: Can One Dissuade Borrowers from Choosing Risky Mortgages?
Classification-JEL: D14; D18; L85; R21
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: Douglas Evanoff
Author-Person: pev37
Note: CF
Number: 19920
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19920
File-URL: http://www.nber.org/papers/w19920.pdf
File-Format: application/pdf
Abstract: We explore the effects of mandatory third-party review of mortgage contracts on consumer choice--including the terms and demand for mortgage credit. Our study is based on a legislative pilot carried out by the State of Illinois in a selected set of zip codes in 2006. Mortgage applicants with low FICO scores were required to attend loan reviews by financial counselors. Applicants with high FICO scores had to attend counseling only if they chose "risky mortgages." We find that low-FICO applicants for whom counselor review was mandatory did not materially change their contract choice. Conversely, applicants who could avoid counseling by choosing less risky mortgages did so. Ironically, the ultimate goals of the legislation (e.g., better loan terms for borrowers) were only achieved among the population that was not counseled. We also find significant adjustments in lender behavior as a result of the counseling program.
Handle: RePEc:nbr:nberwo:19920
Template-Type: ReDIF-Paper 1.0
Title: The Learning Process and Technological Change in Wind Power: Evidence from China's CDM Wind Projects
Classification-JEL: O33; O38; Q42; Q48; Q54; Q55
Author-Name: Tian Tang
Author-Name: David Popp
Note: EEE PR
Number: 19921
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19921
File-URL: http://www.nber.org/papers/w19921.pdf
File-Format: application/pdf
Publication-Status: published as Tian Tang & David Popp, 2016. "The Learning Process and Technological Change in Wind Power: Evidence from China's CDM Wind Projects," Journal of Policy Analysis and Management, vol 35(1), pages 195-222.
Abstract: The Clean Development Mechanism (CDM) is a project-based carbon trade mechanism that subsidizes the users of climate-friendly technologies and encourages technology transfer. The CDM has provided financial support for a large share of Chinese wind projects since 2002. Using pooled cross-sectional data of 486 registered CDM wind projects in China from 2002 to 2009, we examine the determinants of technological change in wind power from a learning perspective. We estimate the effects of different channels of learning--learning through R&D in wind turbine manufacturing, learning from previous experience of installation, and learning through the network interaction between project developer and turbine manufacturer--on technological change, measured as reductions in projected costs or as increased capacity factor across CDM wind projects. While we find that a manufacturer's R&D and previous installation experience matter, interactions between wind turbine manufacturers and wind project developer lead to the largest cost reductions. Whereas existing literature suggests that wind power firms can learn from the experience of other wind farm developers, our results indicate that wind power firms mainly learn from their own experience and that knowledge spillovers mostly occur within certain partnerships between wind project developer and foreign turbine manufacturers in China's wind power industry.
Handle: RePEc:nbr:nberwo:19921
Template-Type: ReDIF-Paper 1.0
Title: Driving to Opportunity: Local Rents, Wages, Commuting Costs and Sub-Metropolitan Quality of Life
Classification-JEL: H73; Q51; R21; R23; R41
Author-Name: David Albouy
Author-Person: pal128
Author-Name: Bert Lue
Note: EEE LS PE
Number: 19922
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19922
File-URL: http://www.nber.org/papers/w19922.pdf
File-Format: application/pdf
Publication-Status: published as David Albouy with Bert Lue, 2015 “Driving to Opportunity: Local Rents, Wages, Commuting, and Sub-Metropolitan Quality-of-Life Measures.” Published: Journal of Urban Economics, Elsevier, 89, 74–92, September
Abstract: We examine variation in local wage levels, housing costs, and commuting costs for 2071 areas covering the United States within and across metropolitan areas. In an equilibrium model of residential and workplace choice, we use these measures to construct a willingness-to-pay index for a typical household. When households are sufficiently homogeneous and mobile, this index indicates the perceived value of local household amenities, or “quality of life.” Wage levels vary little within metropolitan areas relative to across them, while individual characteristics that predict wages vary more within, suggesting patterns about sorting. Quality of life varies as much within metros as across them, and is typically high in areas that are dense, suburban, mild, safe, entertaining, and have higher school-funding.
Handle: RePEc:nbr:nberwo:19922
Template-Type: ReDIF-Paper 1.0
Title: The Link Between Manufacturing Growth and Accelerated Services Growth in India
Classification-JEL: O14; P21
Author-Name: Rajeev H. Dehejia
Author-Person: pde179
Author-Name: Arvind Panagariya
Note: ITI
Number: 19923
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19923
File-URL: http://www.nber.org/papers/w19923.pdf
File-Format: application/pdf
Publication-Status: published as Economic Development and Cultural Change, Volume 64, Numbers 2 (January 2016), pp. 221-264.
Abstract: The impact of trade liberalization on manufacturing growth has been widely studied in the literature. What has gone unappreciated is that accelerated manufacturing growth has also been accompanied by accelerated services growth. Using firm-level data from India, we find a positive spillover from manufacturing growth to gross value added, wages, employment, and worker productivity in services, especially large urban firms and in service sectors whose output is used as a manufacturing input.
Handle: RePEc:nbr:nberwo:19923
Template-Type: ReDIF-Paper 1.0
Title: The Argentina Paradox: Microexplanations and Macropuzzles
Classification-JEL: F43; N16; O11; O54; O57; P52
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE DEV EFG IFM
Number: 19924
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19924
File-URL: http://www.nber.org/papers/w19924.pdf
File-Format: application/pdf
Publication-Status: published as Alan M. Taylor, 2018. "The Argentina Paradox: microexplanations and macropuzzles," Latin American Economic Review, vol 27(1).
Abstract: The economic history of Argentina presents one of the most dramatic examples of divergence in the modern era. What happened and why? This paper reviews the wide range of competing explanations in the literature and argues that, setting aside deeper social and political determinants, the various economic mechanisms in play defy the idea of a monocausal explanation.
Handle: RePEc:nbr:nberwo:19924
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Human Development and Social Mobility
Classification-JEL: I20; I24; I28; J13
Author-Name: James J. Heckman
Author-Name: Stefano Mosso
Note: CH ED POL
Number: 19925
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19925
File-URL: http://www.nber.org/papers/w19925.pdf
File-Format: application/pdf
Publication-Status: published as James J. Heckman & Stefano Mosso, 2014. "The Economics of Human Development and Social Mobility," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 689-733, 08.
Abstract: This paper distills and extends recent research on the economics of human development and social mobility. It summarizes the evidence from diverse literatures on the importance of early life conditions in shaping multiple life skills and the evidence on critical and sensitive investment periods for shaping different skills. It presents economic models that rationalize the evidence and unify the treatment effect and family influence literatures. The evidence on the empirical and policy importance of credit constraints in forming skills is examined. There is little support for the claim that untargeted income transfer policies to poor families significantly boost child outcomes. Mentoring, parenting, and attachment are essential features of successful families and interventions to shape skills at all stages of childhood. The next wave of family studies will better capture the active role of the emerging autonomous child in learning and responding to the actions of parents, mentors and teachers.
Handle: RePEc:nbr:nberwo:19925
Template-Type: ReDIF-Paper 1.0
Title: The Growing Dependence of Britain on Trade during the Industrial Revolution
Classification-JEL: F11; F14; F43; N10; N70; O40
Author-Name: Gregory Clark
Author-Person: pcl48
Author-Name: Kevin Hjortshøj O'Rourke
Author-Person: por7
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE EFG ITI
Number: 19926
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19926
File-URL: http://www.nber.org/papers/w19926.pdf
File-Format: application/pdf
Publication-Status: published as Gregory Clark & Kevin Hjortshøj O'Rourke & Alan M. Taylor, 2014. "The growing dependence of Britain on trade during the Industrial Revolution," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 62(2), pages 109-136, June.
Abstract: Many previous studies of the role of trade during the British Industrial Revolution have found little or no role for trade in explaining British living standards or growth rates. We construct a three-region model of the world in which Britain trades with North America and the rest of the world, and calibrate the model to data from the 1760s and 1850s. We find that while trade had only a small impact on British welfare in the 1760s, it had a very large impact in the 1850s. This contrast is robust to a large range of parameter perturbations. Biased technological change and population growth were key in explaining Britain's growing dependence on trade during the Industrial Revolution.
Handle: RePEc:nbr:nberwo:19926
Template-Type: ReDIF-Paper 1.0
Title: The Safety Trap
Classification-JEL: E0; E1; E5; E52
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Note: AP ME
Number: 19927
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19927
File-URL: http://www.nber.org/papers/w19927.pdf
File-Format: application/pdf
Publication-Status: published as Ricardo J Caballero & Emmanuel Farhi, 2018. "The Safety Trap," Review of Economic Studies, Oxford University Press, vol. 85(1), pages 223-274.
Abstract: In this paper we provide a model of the macroeconomic implications of safe asset shortages. In particular, we discuss the emergence of a deflationary safety trap equilibrium with endogenous risk premia. It is an acute form of a liquidity trap, in which the shortage of a specific form of assets, safe assets, as opposed to a general shortage of assets, is the fundamental driving force. At the ZLB, our model has a Keynesian cross representation, in which net safe asset supply plays the role of an aggregate demand shifter. Essentially, safety traps correspond to liquidity traps in which the emergence of an endogenous risk premium significantly alters the connection between macroeconomic policy and economic activity. “Helicopter drops” of money, safe public debt issuances, swaps of private risky assets for safe public debt, or increases in the inflation target, stimulate aggregate demand and output, while forward guidance is less effective. The safety trap can be arbitrarily persistent, as in the secular stagnation hypothesis, despite the existence of infinitely lived assets.
Handle: RePEc:nbr:nberwo:19927
Template-Type: ReDIF-Paper 1.0
Title: Adjusting Body Mass for Measurement Error with Invalid Validation Data
Classification-JEL: C18; I1
Author-Name: Charles Courtemanche
Author-Person: pco421
Author-Name: Joshua C. Pinkston
Author-Person: ppi149
Author-Name: Jay Stewart
Author-Person: pst472
Note: EH
Number: 19928
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19928
File-URL: http://www.nber.org/papers/w19928.pdf
File-Format: application/pdf
Publication-Status: published as Courtemanche, Charles & Pinkston, Joshua C. & Stewart, Jay, 2015. "Adjusting body mass for measurement error with invalid validation data," Economics & Human Biology, Elsevier, vol. 19(C), pages 275-293.
Abstract: We propose a new method for using validation data to correct self-reported weight and height in surveys that do not measure respondents. The standard correction in prior research regresses actual measures on reported values using an external validation dataset, and then uses the estimated coefficients to predict actual measures in the primary dataset. This approach requires the strong assumption that the expectations of measured weight and height conditional on the reported values are the same in both datasets. In contrast, we use percentile ranks rather than levels of reported weight and height. Our approach requires the weaker assumption that the conditional expectations of actual measures are increasing in reported values in both samples. This makes our correction more robust to differences in measurement error across surveys as long as both surveys represent the same population. We examine three nationally representative datasets and find that misreporting appears to be sensitive to differences in survey context. When we compare predicted BMI distributions using the two validation approaches, we find that the standard correction is affected by differences in misreporting while our correction is not. Finally, we present several examples that demonstrate the potential importance of our correction for future econometric analyses and estimates of obesity rates.
Handle: RePEc:nbr:nberwo:19928
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Co-residence and Program Incidence: South Africa's Old Age Pension
Classification-JEL: C81; I38; J12; O12
Author-Name: Amar Hamoudi
Author-Name: Duncan Thomas
Author-Person: pth20
Note: DEV
Number: 19929
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19929
File-URL: http://www.nber.org/papers/w19929.pdf
File-Format: application/pdf
Publication-Status: published as "Endogenous co-residence and program incidence: South Africa's old age pension." Journal of Development Economics, 109:30-37, 2014. PMCID: 4138532
Abstract: We investigate whether living arrangements respond to an arguably exogenous shift in the distribution of power in family economic decision-making. In the early 1990s, the South African Old Age Pension was expanded to cover most black South Africans above a sex-specific age cut-off resulting in a substantial increase in the income of older South Africans and potentially their say in the economic decisions of their families. Beneficiaries of the program are more likely to coreside with adults who have less human capital as measured by height and education. Since height and education are fixed for adults, this cannot be an effect of the pension income but reflects selective changes in living arrangements resulting from the pension. The findings highlight the endogeneity of living arrangements and illustrate the potential value of moving beyond theory and data that are confined to a spatially determined definition of the household.
Handle: RePEc:nbr:nberwo:19929
Template-Type: ReDIF-Paper 1.0
Title: Retirement Security in an Aging Society
Classification-JEL: E21; G11; H55; J14
Author-Name: James M. Poterba
Author-Person: ppo19
Note: AG PE
Number: 19930
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19930
File-URL: http://www.nber.org/papers/w19930.pdf
File-Format: application/pdf
Publication-Status: published as Poterba, James M. 2014. "Retirement Security in an Aging Population." American Economic Review, 104 (5): 1-30.
Abstract: The share of the U.S. population over the age of 65 was 8.1 percent in 1950, 12.4 percent in 2000, and is projected to reach 20.9 percent by 2050. The percent over 85 is projected to more than double from current levels, reaching 4.2 percent by mid-century. The aging of the U.S. population makes issues of retirement security increasingly important. Elderly individuals exhibit wide disparities in their sources of income. For those in the bottom half of the income distribution, Social Security is the most important source of support; program changes would directly affect their well-being. Income from private pensions, assets, and earnings are relatively more important for higher-income elderly individuals, who have more diverse income sources. The trend from private sector defined benefit to defined contribution pension plans has shifted a greater share of the responsibility for retirement security to individuals, and made that security more dependent on choices they make. A significant subset of the population is unlikely to be able to sustain their standard of living in retirement without higher pre-retirement saving.
Handle: RePEc:nbr:nberwo:19930
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Risk and the Dynamics of Arbitrage Capital
Classification-JEL: D53; G01; G11; G12
Author-Name: Péter Kondor
Author-Person: pko157
Author-Name: Dimitri Vayanos
Author-Person: pva498
Note: AP
Number: 19931
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19931
File-URL: http://www.nber.org/papers/w19931.pdf
File-Format: application/pdf
Publication-Status: published as PÉTER KONDOR & DIMITRI VAYANOS, 2019. "Liquidity Risk and the Dynamics of Arbitrage Capital," The Journal of Finance, vol 74(3), pages 1139-1173.
Abstract: We develop a continuous-time model of liquidity provision, in which hedgers can trade multiple risky assets with arbitrageurs. Arbitrageurs have CRRA utility, while hedgers’ asset demand is independent of wealth. An increase in hedgers’ risk aversion can make arbitrageurs endogenously more risk-averse. Because arbitrageurs generate endogenous risk, an increase in their wealth or a reduction in their CRRA coefficient can raise risk premia despite Sharpe ratios declining. Arbitrageur wealth is a priced risk factor because assets held by arbitrageurs offer high expected returns but suffer the most when wealth drops. Aggregate illiquidity, which declines in wealth, captures that factor.
Handle: RePEc:nbr:nberwo:19931
Template-Type: ReDIF-Paper 1.0
Title: The Labor Market Effects of Reducing the Number of Illegal Immigrants
Classification-JEL: E24; J15; J64
Author-Name: Andri Chassamboulli
Author-Person: pch940
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: LS
Number: 19932
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19932
File-URL: http://www.nber.org/papers/w19932.pdf
File-Format: application/pdf
Publication-Status: published as Andri Chassambouli & Giovanni Peri, 2015. "The Labor Market Effects of Reducing the Number of Illegal Immigrants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 792-821, October.
Abstract: A controversial issue in the US is how to reduce the number of illegal immigrants and what effect this would have on the US economy. To answer this question we set up a two-country model with search in labor markets and featuring legal and illegal immigrants among the low skilled. We calibrate it to the US and Mexican economies during the period 2000-2010. As immigrants, especially illegal ones, have a worse outside option than natives their wages are lower. Hence their presence reduces the labor cost of employers who, as a consequence, create more jobs per unemployed when there are more immigrants. Because of such effect our model shows that increasing deportation rates and tightening border control weakens the low-skilled labor markets, increasing unemployment of native low skilled. Legalization, instead decreases the unemployment rate of low-skilled natives and it increases income per native.
Handle: RePEc:nbr:nberwo:19932
Template-Type: ReDIF-Paper 1.0
Title: Institutions, Human Capital and Development
Classification-JEL: I25; O10; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Francisco Gallego
Author-Name: James A. Robinson
Author-Person: pro179
Note: DEV
Number: 19933
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19933
File-URL: http://www.nber.org/papers/w19933.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Francisco A. Gallego & James A. Robinson, 2014. "Institutions, Human Capital, and Development ," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 875-912, 08.
Abstract: In this paper we revisit the relationship between institutions, human capital and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecification is at the root of the very large returns of human capital, about 4 to 5 times greater than that implied by micro (Mincerian) estimates, found in some of the previous literature. Using cross-country and cross-regional regressions, we show that when we focus on historically-determined differences in human capital and control for the effect of institutions, the impact of institutions on long-run development is robust, while the estimates of the effect of human capital are much diminished and become consistent with micro estimates. Using historical and cross-country regression evidence, we also show that there is no support for the view that differences in the human capital endowments of early European colonists have been a major factor in the subsequent institutional development of these polities.
Handle: RePEc:nbr:nberwo:19933
Template-Type: ReDIF-Paper 1.0
Title: Learning From the Doers: Developing Country Lessons for Advanced Economy Growth
Classification-JEL: E62; E65; F43; O11; O19; O57
Author-Name: Anusha Chari
Author-Person: pch288
Author-Name: Peter Blair Henry
Author-Person: phe166
Note: EFG IFM
Number: 19934
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19934
File-URL: http://www.nber.org/papers/w19934.pdf
File-Format: application/pdf
Publication-Status: published as Anusha Chari & Peter Blair Henry, 2014. "Learning from the Doers: Developing Country Lessons for Advanced Economy Growth," American Economic Review, American Economic Association, vol. 104(5), pages 260-65, May.
Abstract: From 1980 to 1992, emerging and developing countries grew by 3.4 percent per year. Their annual rate of growth increased to 5.4 percent between 1993 and 2012. No such increase occurred for advanced nations, whose average growth from 1980-2012 was roughly constant (excluding the impact of the 2008-09 Recession). Developing nations turned themselves around by embracing discipline--sustained commitment to a pragmatic and flexible growth strategy. Three illustrations of discipline through the lens of trade, fiscal, and debt reforms in the developing world offer relevant, practical lessons for recovery in advanced economies and continued catch-up growth in developing nations.
Handle: RePEc:nbr:nberwo:19934
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneous Paths Through College: Detailed Patterns and Relationships with Graduation and Earnings
Classification-JEL: I21; I23; J31
Author-Name: Rodney Andrews
Author-Name: Jing Li
Author-Name: Michael Lovenheim
Author-Person: plo162
Note: ED LS
Number: 19935
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19935
File-URL: http://www.nber.org/papers/w19935.pdf
File-Format: application/pdf
Publication-Status: published as Andrews, Rodney & Li, Jing & Lovenheim, Michael F., 2014. "Heterogeneous paths through college: Detailed patterns and relationships with graduation and earnings," Economics of Education Review, Elsevier, vol. 42(C), pages 93-108.
Abstract: A considerable fraction of college students and bachelor's degree recipients enroll in multiple postsecondary institutions. Despite this fact, there is scant research that examines the nature of the paths - both the number and types of institutions - that students take to obtain a bachelor's degree or through the higher education system more generally. We also know little about enrollment in multiple institutions of varying quality relates to postgraduate life outcomes. We use a unique panel data set from Texas that allows us to both examine in detail the paths that students take towards a bachelor's degree and estimate how multiple institution enrollment is related to degree completion and subsequent earnings. We show that the paths to a bachelor's degree are diverse and that earnings and BA receipt vary systematically with these paths. Our results call attention to the importance of developing a more complete understanding of why students transfer and what causal role transferring has on the returns to postsecondary educational investment.
Handle: RePEc:nbr:nberwo:19935
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Work Schedules under the New Hours and Employment Taxes
Classification-JEL: E24; I13; J22
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG LS PE
Number: 19936
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19936
File-URL: http://www.nber.org/papers/w19936.pdf
File-Format: application/pdf
Abstract: Hours, employment, and income taxes are economically distinct, and all three are either introduced or expanded by the Affordable Care Act beginning in 2014. The tax wedges push some workers to work more hours per week (for the weeks that they are on a payroll), and others to work less, with an average weekly hours effect that tends to be small and may be in either direction. A conservative estimate of the law's average employment rate impact is negative three percent. The ACA's tax wedges and ultimately its behavioral effects vary substantially across groups, with the elderly experiencing hardly any new disincentive and unmarried household heads experiencing tax wedges that are about twice the average. My estimates suggest that about four percent of the workforce will work less than the legislated 30-hour threshold solely to avoid the implicit and explicit full-time employment taxes.
Handle: RePEc:nbr:nberwo:19936
Template-Type: ReDIF-Paper 1.0
Title: Understanding the Role of Time-Varying Unobserved Ability Heterogeneity in Education Production
Classification-JEL: C23; I21
Author-Name: Weili Ding
Author-Person: pdi95
Author-Name: Steven F. Lehrer
Author-Person: ple208
Note: ED
Number: 19937
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19937
File-URL: http://www.nber.org/papers/w19937.pdf
File-Format: application/pdf
Publication-Status: published as Ding, Weili & Lehrer, Steven F., 2014. "Understanding the role of time-varying unobserved ability heterogeneity in education production," Economics of Education Review, Elsevier, vol. 40(C), pages 55-75.
Abstract: Unobserved ability heterogeneity has long been postulated to play a key role in human capital development. Traditional strategies to estimate education production functions do not allow for varying role or development of unobserved ability as a child ages. Such restrictions are highly inconsistent with a growing body of scientific evidence; moreover, in order to obtain unbiased parameter estimates of observed educational inputs, researchers must properly account for unobserved skills that may be correlated with other inputs to the production process. To illustrate our empirical strategy we use experimental data from Tennessee's Student/Teacher Achievement Ratio experiment, known as Project STAR. We find that unobserved ability is endogenously developed over time and its impact on cognitive achievement varies significantly between grades in all subject areas. Moreover, we present evidence that accounting for time-varying unobserved ability across individuals and a more general depreciating pattern of observed inputs are both important when estimating education production functions.
Handle: RePEc:nbr:nberwo:19937
Template-Type: ReDIF-Paper 1.0
Title: Exiting from QE
Classification-JEL: E52
Author-Name: Fumio Hayashi
Author-Person: pha83
Author-Name: Junko Koeda
Note: ME
Number: 19938
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19938
File-URL: http://www.nber.org/papers/w19938.pdf
File-Format: application/pdf
Abstract: We develop a regime-switching SVAR (structural vector autoregression) in which the monetary policy regime, chosen by the central bank responding to economic conditions, is endogenous and observable. There are two regimes, one of which is QE (quantitative easing). The model can incorporate the exit condition for terminating QE. We then apply the model to Japan, a country that has accumulated, by our count, 130 months of QE as of December 2012. Our impulse response and counter-factual analyses yield two findings about QE. First, an increase in reserves raises inflation and output. Second, terminating QE can be expansionary.
Handle: RePEc:nbr:nberwo:19938
Template-Type: ReDIF-Paper 1.0
Title: Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers
Classification-JEL: K21; L1; L4; L41
Author-Name: Orley C. Ashenfelter
Author-Person: pas9
Author-Name: Daniel Hosken
Author-Name: Matthew C. Weinberg
Author-Person: pwe301
Note: IO LE
Number: 19939
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19939
File-URL: http://www.nber.org/papers/w19939.pdf
File-Format: application/pdf
Publication-Status: published as Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages S67 - S100.
Abstract: In The Antitrust Paradox, Robert Bork viewed most mergers as either competitively neutral or efficiency enhancing. In his view, only mergers creating a dominant firm or monopoly were likely to harm consumers. Bork was especially skeptical of oligopoly concerns resulting from mergers. In this paper, we provide a critique of Bork's views on merger policy from The Antitrust Paradox. Many of Bork's recommendations have been implemented over time and have improved merger analysis. Bork's proposed horizontal merger policy, however, was too permissive. In particular, the empirical record shows that mergers in oligopolistic markets can raise consumer prices.
Handle: RePEc:nbr:nberwo:19939
Template-Type: ReDIF-Paper 1.0
Title: Breastfeeding and Child Disability: A Comparison of Siblings from the United States
Classification-JEL: I12; J13; J24
Author-Name: George Wehby
Note: CH EH
Number: 19940
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19940
File-URL: http://www.nber.org/papers/w19940.pdf
File-Format: application/pdf
Publication-Status: published as George L. Wehby, 2014. "Breastfeeding and child disability: A comparison of siblings from the United States," Economics & Human Biology, vol 15, pages 13-22.
Abstract: Little is known about whether breastfeeding may prevent disabilities throughout childhood. We evaluate the effects of breastfeeding on child disability using data from the National Survey of Family Growth merged to the National Health Interview Survey for a large nationally representative sample of children aged 1 to 18 years from the U.S. including over 3,000 siblings who are discordant on breastfeeding status/duration. We focus on a mother fixed effect model that compares siblings in order to account for family-level unobservable confounders and employ multiple specifications including a dynamic model that accounts for disability status of the prior child. Breastfeeding the child for a longer duration is associated with a lower risk of child disability, by about 0.2 percentage-points per month of breastfeeding. This effect is only observed on the intensive margin among breastfed children, as any breastfeeding has no effect on the extensive margin. We conclude that very short breastfeeding durations are unlikely to have an effect on reducing disability risk.
Handle: RePEc:nbr:nberwo:19940
Template-Type: ReDIF-Paper 1.0
Title: Trade and Uncertainty
Classification-JEL: E3; F10
Author-Name: Dennis Novy
Author-Person: pno75
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: EFG IFM ITI
Number: 19941
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19941
File-URL: http://www.nber.org/papers/w19941.pdf
File-Format: application/pdf
Publication-Status: published as Dennis Novy & Alan M. Taylor, 2020. "Trade and Uncertainty," The Review of Economics and Statistics, vol 102(4), pages 749-765.
Abstract: We offer a new explanation as to why international trade is so volatile in response to economic shocks. Our approach combines the uncertainty shock idea of Bloom (2009) with a model of international trade, extending the idea to the open economy. Firms import intermediate inputs from home or foreign suppliers, but with higher costs in the latter case. Due to fixed costs of ordering firms hold an inventory of intermediates. We show that in response to an uncertainty shock firms optimally adjust their inventory policy by cutting their orders of foreign intermediates disproportionately strongly. In the aggregate, this response leads to a bigger contraction in international trade flows than in domestic economic activity. We confront the model with newly-compiled monthly aggregate U.S. import data and industrial production data going back to 1962, and also with disaggregated data back to 1989. Our results suggest a tight link between uncertainty and the cyclical behavior of international trade.
Handle: RePEc:nbr:nberwo:19941
Template-Type: ReDIF-Paper 1.0
Title: In with the Big, Out with the Small: Removing Small-Scale Reservations in India
Classification-JEL: O12; O25; O38
Author-Name: Leslie A. Martin
Author-Person: pma2185
Author-Name: Shanthi Nataraj
Author-Person: pna467
Author-Name: Ann Harrison
Author-Person: pha441
Note: DEV ITI
Number: 19942
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w19942
File-URL: http://www.nber.org/papers/w19942.pdf
File-Format: application/pdf
Publication-Status: published as Leslie A. Martin & Shanthi Nataraj & Ann E. Harrison, 2017. "In with the Big, Out with the Small: Removing Small-Scale Reservations in India," American Economic Review, American Economic Association, vol. 107(2), pages 354-386, February.
Abstract: An ongoing debate in employment policy is whether promoting small and medium enterprises creates more employment. Do small enterprises generate more employment growth than larger firms? We use the elimination of small-scale industry (SSI) promotion in India to address this question. For 60 years, SSI promotion in India focused on reserving certain products for manufacture by small and medium establishments. We identify the consequences for employment growth, investment, output, productivity, and wages of dismantling India’s SSI reservations. We exploit variation in the timing of de-reservation across products; our identification strategy is also robust to measuring the long-run impact of national SSI policy changes using variation in pre-treatment exposure at the district level, and to conducting placebo tests using products that were never de-reserved. Districts more exposed to de-reservation experienced higher employment and wage growth. The results suggest that promoting employment growth in the Indian case was not achieved via SSI reservation policies.
Handle: RePEc:nbr:nberwo:19942
Template-Type: ReDIF-Paper 1.0
Title: The Political Coase Theorem: Experimental Evidence
Classification-JEL: C92; D72
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Gustavo Torrens
Author-Name: Maria Lucia Yanguas
Note: DEV
Number: 19943
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19943
File-URL: http://www.nber.org/papers/w19943.pdf
File-Format: application/pdf
Publication-Status: published as Galiani, Sebastian & Torrens, Gustavo & Yanguas, Maria Lucia, 2014. "The Political Coase Theorem: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 17-38.
Abstract: The Political Coase Theorem (PCT) states that, in the absence of transaction costs, agents should agree to implement efficient policies regardless of the distribution of bargaining power among them. This paper uses a laboratory experiment to explore how commitment problems undermine the validity of the PCT. Overall, the results support theoretical predictions. In particular, commitment issues matter, and the existence of more commitment possibilities leads to better social outcomes. Moreover, we find that the link is valid when commitment possibilities are asymmetrically distributed between players and even when a redistribution of political power is required to take advantage of those possibilities. However, we also find that at low levels of commitment there is more cooperation than strictly predicted by our parameterized model while the opposite is true at high levels of commitment, and only large improvements in commitment opportunities have a significant effect on the social surplus, while small changes do not.
Handle: RePEc:nbr:nberwo:19943
Template-Type: ReDIF-Paper 1.0
Title: Particulate Pollution and the Productivity of Pear Packers
Classification-JEL: J22; J24; J43; Q51; Q53
Author-Name: Tom Chang
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Tal Gross
Author-Name: Matthew J. Neidell
Author-Person: pne362
Note: EEE EH LS
Number: 19944
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19944
File-URL: http://www.nber.org/papers/w19944.pdf
File-Format: application/pdf
Publication-Status: published as Tom Chang & Joshua Graff Zivin & Tal Gross & Matthew Neidell, 2016. "Particulate Pollution and the Productivity of Pear Packers," American Economic Journal: Economic Policy, vol 8(3), pages 141-169.
Abstract: We study the effect of outdoor air pollution on the productivity of indoor workers at a pear-packing factory. We focus on fine particulate matter (PM2.5), a harmful pollutant that easily penetrates indoor settings. We find that an increase in PM2.5 outdoors leads to a statistically and economically significant decrease in packing speeds inside the factory, with effects arising at levels well below current air quality standards. In contrast, we find little effect of PM2.5 on hours worked or the decision to work, and little effect of pollutants that do not travel indoors, such as ozone. This effect of outdoor pollution on the productivity of indoor workers suggests a thus far overlooked consequence of pollution. Back-of-the-envelope calculations suggest that nationwide reductions in PM2.5 from 1999 to 2008 generated $19.5 billion in labor cost savings, which is roughly one-third of the total welfare benefits associated with this change.
Handle: RePEc:nbr:nberwo:19944
Template-Type: ReDIF-Paper 1.0
Title: Loan Prospecting and the Loss of Soft Information
Classification-JEL: G01; G21
Author-Name: Sumit Agarwal
Author-Person: pag47
Author-Name: Itzhak Ben-David
Note: CF
Number: 19945
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19945
File-URL: http://www.nber.org/papers/w19945.pdf
File-Format: application/pdf
Publication-Status: published as Sumit Agarwal & Itzhak Ben-David, 2018. "Loan Prospecting and the Loss of Soft Information," Journal of Financial Economics, .
Abstract: We study a controlled experiment in which a bank’s loan officers were incentivized based on originated loan volume to encourage prospecting for new business. While treated loan officers did attract new applications, both extensive and intensive margins of loan origination expanded (+31% new loans; loan size +15%). We find that loan officers gave greater weight to hard information in approval decisions. Despite no change in the observable characteristics of approved loans, their default rate increased (+24%). Finally, the bank’s imputed credit-default model lost its predictive power. Overall, loan-prospecting incentives led to unfavorable soft information being overlooked in the origination process.
Handle: RePEc:nbr:nberwo:19945
Template-Type: ReDIF-Paper 1.0
Title: Maturity Rationing and Collective Short-Termism
Classification-JEL: G11; G30; G31; G32
Author-Name: Konstantin Milbradt
Author-Name: Martin Oehmke
Note: CF
Number: 19946
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19946
File-URL: http://www.nber.org/papers/w19946.pdf
File-Format: application/pdf
Publication-Status: published as Maturity Rationing and Collective Short-Termism, Konstantin Milbradt, Martin Oehmke. in New Perspectives on Corporate Capital Structure, Acharya, Almeida, and Baker. 2015
Publication-Status: published as Konstantin Milbradt & Martin Oehmke, 2015. "Maturity rationing and collective short-termism," Journal of Financial Economics, vol 118(3), pages 553-570.
Abstract: Financing terms and investment decisions are jointly determined. This interdependence links firms' asset and liability sides and can lead to short-termism in investment. In our model, financing frictions increase with the investment horizon, such that financing for long-term projects is relatively expensive and potentially rationed. In response, firms whose first-best investment opportunities are long-term may change their investments towards second-best projects of shorter maturities. This worsens financing terms for firms with shorter maturity projects, inducing them to change their investments as well. In equilibrium, investment is inefficiently short-term. Equilibrium asset-side adjustments by firms can amplify shocks and, while privately optimal, can be socially undesirable.
Handle: RePEc:nbr:nberwo:19946
Template-Type: ReDIF-Paper 1.0
Title: Patents as Quality Signals? The Implications for Financing Constraints on R&D
Classification-JEL: G32; O31; O32; O38
Author-Name: Dirk Czarnitzki
Author-Person: pcz8
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Hanna Hottenrott
Author-Person: pho367
Note: CF PR
Number: 19947
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19947
File-URL: http://www.nber.org/papers/w19947.pdf
File-Format: application/pdf
Publication-Status: published as Economics of Innovation and New Technology 25 (3): 197-217.
Abstract: Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists. This study adds to previous insights by studying the effects of firms' patenting activity on the degree of financing constraints on R&D for a panel of established firms. The results show that patents do indeed attenuate financing constraints for small firms where information asymmetries may be particularly high and collateral value is low. Larger firms are not only less subject to financing constraints, but also do not seem to benefit from a patent quality signal.
Handle: RePEc:nbr:nberwo:19947
Template-Type: ReDIF-Paper 1.0
Title: Effects of Prescription Drug Insurance on Hospitalization and Mortality: Evidence from Medicare Part D
Classification-JEL: I12; I13; I18
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Cuiping Long
Author-Name: G. Caleb Alexander
Author-Person: pal505
Note: EH
Number: 19948
Creation-Date: 2014-02
Order-URL: http://www.nber.org/papers/w19948
File-URL: http://www.nber.org/papers/w19948.pdf
File-Format: application/pdf
Publication-Status: published as Robert Kaestner & Cuping Schiman & G. Caleb Alexander, 2019. "Effects of Prescription Drug Insurance on Hospitalization and Mortality: Evidence from Medicare Part D," Journal of Risk and Insurance, vol 86(3), pages 595-628.
Abstract: We examine whether obtaining prescription drug insurance through the Medicare Part D program affected hospital admissions, expenditures associated with those admissions, and mortality. We use a large, geographically diverse sample of Medicare beneficiaries and exploit the natural experiment of Medicare Part D to obtain estimates of the effect of prescription drug insurance on hospitalizations and mortality. Results indicate that obtaining prescription drug insurance through Medicare Part D was associated with an 8% decrease in the number of hospital admissions, a 7% decrease in Medicare expenditures, and a 12% decrease in total resource use. Gaining prescription drug insurance through Medicare Part D was not significantly associated with mortality.
Handle: RePEc:nbr:nberwo:19948
Template-Type: ReDIF-Paper 1.0
Title: Election Fairness and Government Legitimacy in Afghanistan
Classification-JEL: H41; O10; O17; O53; P16
Author-Name: Eli Berman
Author-Person: pbe188
Author-Name: Michael J. Callen
Author-Person: pca868
Author-Name: Clark Gibson
Author-Name: James D. Long
Note: DEV POL
Number: 19949
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19949
File-URL: http://www.nber.org/papers/w19949.pdf
File-Format: application/pdf
Publication-Status: published as Eli Berman & Michael Callen & Clark C. Gibson & James D. Long & Arman Rezaee, 2019. "Election fairness and government legitimacy in Afghanistan," Journal of Economic Behavior & Organization, .
Abstract: International development agencies invest heavily in institution building in fragile states, including expensive interventions to support democratic elections. Yet little evidence exists on whether elections enhance the domestic legitimacy of governments. Using the random assignment of an innovative election fraud-reducing intervention in Afghanistan, we find that decreasing electoral misconduct improves multiple survey measures of attitudes toward government, including: (1) whether Afghanistan is a democracy; (2) whether the police should resolve disputes; (3) whether members of parliament provide services; and (4) willingness to report insurgent behavior to security forces.
Handle: RePEc:nbr:nberwo:19949
Template-Type: ReDIF-Paper 1.0
Title: The Sad Truth About Happiness Scales
Classification-JEL: D6; I3; N3
Author-Name: Timothy N. Bond
Author-Person: pbo438
Author-Name: Kevin Lang
Author-Person: pla83
Note: DEV LS PE
Number: 19950
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19950
File-URL: http://www.nber.org/papers/w19950.pdf
File-Format: application/pdf
Publication-Status: published as Timothy N. Bond & Kevin Lang, 2019. "The Sad Truth about Happiness Scales," Journal of Political Economy, vol 127(4), pages 1629-1640.
Abstract: We show that, without strong auxiliary assumptions, it is impossible to rank groups by average happiness using survey data with a few potential responses. The categories represent intervals along some continuous distribution. The implied CDFs of these distributions will (almost) always cross when estimated using large samples. Therefore some monotonic transformation of the utility function will reverse the ranking. We provide several examples and a formal proof. Whether Moving-to-Opportunity increases happiness, men have become happier relative to women, and an Easterlin paradox exists depends on whether happiness is distributed normally or log-normally. We discuss restrictions that may permit such comparisons.
Handle: RePEc:nbr:nberwo:19950
Template-Type: ReDIF-Paper 1.0
Title: Trapped Factors and China's Impact on Global Growth
Classification-JEL: E0
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Paul M. Romer
Author-Person: pro45
Author-Name: Stephen J. Terry
Author-Name: John Van Reenen
Author-Person: pva45
Note: DEV EFG IFM ITI PR
Number: 19951
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19951
File-URL: http://www.nber.org/papers/w19951.pdf
File-Format: application/pdf
Publication-Status: published as Nicholas Bloom & Paul Romer & Stephen J Terry & John Van Reenen, 2021. "Trapped Factors and China’s Impact on Global Growth," The Economic Journal, vol 131(633), pages 156-191.
Abstract: In a general equilibrium product-cycle model, lower trade barriers increase Southern purchasing power, which lifts long-run growth by increasing the profit from innovation. In the short run, factors of production must be reallocated inside firms, which lowers the opportunity cost of innovation, generating an additional trapped factor effect. Starting from a baseline OECD growth rate of 2% we find that trade integration with low-wage countries in the decade around China's WTO accession could have increased long-run growth to 2.4%. There is an additional short-run trapped factors effect, raising growth to 2.7%. China accounts for about half of these growth increases.
Handle: RePEc:nbr:nberwo:19951
Template-Type: ReDIF-Paper 1.0
Title: Using Bankruptcy to Reduce Foreclosures: Does Strip-down of Mortgages Affect the Supply of Mortgage Credit?
Classification-JEL: G21; K2; K35
Author-Name: Wenli Li
Author-Person: pli1040
Author-Name: Ishani Tewari
Author-Name: Michelle J. White
Author-Person: pwh52
Note: LE
Number: 19952
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19952
File-URL: http://www.nber.org/papers/w19952.pdf
File-Format: application/pdf
Publication-Status: published as Li, W., Tewari, I. & White, M.J. J Financ Serv Res (2017). https://doi.org/10.1007/s10693-017-0278-1
Abstract: We assess the credit market impact of allowing mortgage "strip-down"--that is, reducing the principal of underwater residential mortgages to the current market value of the property for homeowners in Chapter 13 bankruptcy. Our identification is provided by a series of U.S. Circuit Court of Appeals decisions in the early 1990's that introduced mortgage strip-down in parts of the U.S., followed by a 1993 Supreme Court ruling that abolished it all over the U.S. We find that the Supreme Court decision led to a short-term reduction of 3% in mortgage interest rates and a short-term increase of 1% in mortgage approval rates, but only the approval rate effect persists in longer sample periods. In contrast, the circuit court decisions to allow strip-down did not have consistent effects on mortgage terms. We also show that strip-down had little effect on default rates by homeowners with existing mortgages. Taken together, these results suggest that mortgage lenders responded weakly to both the adoption and abolition of strip-down because strip-down had little effect on their profits from mortgage lending. According to these findings, re-introducing strip-down of mortgages in bankruptcy as a foreclosure-prevention program would have only small and transient effects on the supply of mortgage loans.
Handle: RePEc:nbr:nberwo:19952
Template-Type: ReDIF-Paper 1.0
Title: Opting Out of Good Governance
Classification-JEL: F21; G3; K22
Author-Name: C. Fritz Foley
Author-Name: Paul Goldsmith-Pinkham
Author-Person: pgo624
Author-Name: Jonathan Greenstein
Author-Name: Eric Zwick
Note: CF
Number: 19953
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19953
File-URL: http://www.nber.org/papers/w19953.pdf
File-Format: application/pdf
Publication-Status: published as C. Fritz Foley & Paul Goldsmith-Pinkham & Jonathan Greenstein & Eric Zwick, 2017. "Opting out of good governance," Journal of Empirical Finance, .
Abstract: Cross-listing on a U.S. exchange does not bond foreign firms to follow the corporate governance rules of that exchange. Hand-collected data show that 80% of cross-listed firms opt out of at least one exchange governance rule, instead committing to observe the rules of their home country. Relative to firms that comply, firms that opt out have weaker governance practices in that they have a smaller share of independent directors. The decision to opt out reflects the relative costs and benefits of doing so. Cross-listed firms opt out more when coming from countries with weak corporate governance rules, but if firms based in such countries are growing and have a need for external finance, they are more likely to comply. Finally, opting out affects the value of cash holdings. For cross-listed firms based in countries with weak governance rules, a dollar of cash held inside the firm is worth $1.52 if the firm fully complies with U.S. exchange rules but just $0.32 if it is non-compliant.
Handle: RePEc:nbr:nberwo:19953
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Medicare on Medical Expenditure Risk and Financial Strain
Classification-JEL: I13
Author-Name: Silvia H. Barcellos
Author-Person: pba1324
Author-Name: Mireille Jacobson
Author-Person: pja574
Note: EH
Number: 19954
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19954
File-URL: http://www.nber.org/papers/w19954.pdf
File-Format: application/pdf
Publication-Status: published as Silvia Helena Barcellos & Mireille Jacobson, 2015. "The Effects of Medicare on Medical Expenditure Risk and Financial Strain," American Economic Journal: Economic Policy, vol 7(4), pages 41-70.
Abstract: We estimate the current impact of Medicare on medical expenditure risk and financial strain. At age 65, out-of-pocket expenditures drop by 33% at the mean and 53% among the top 5% of spenders. The fraction of the population with out- of-pocket medical expenditures above income drops by more than half. Medical- related financial strain, such as problems paying bills, is dramatically reduced. Using a stylized expected utility framework, the gain from reducing out-of-pocket expenditures alone accounts for 18% of the social costs of financing Medicare. This calculation ignores the benefits of reduced financial strain and direct health improvements due to Medicare.
Handle: RePEc:nbr:nberwo:19954
Template-Type: ReDIF-Paper 1.0
Title: Caveat Lector: Sample Selection in Historical Heights and the Interpretation of Early Industrializing Economies
Classification-JEL: N01; N31
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Author-Name: Timothy Guinnane
Author-Person: pgu29
Author-Name: Thomas Mroz
Author-Person: pmr8
Note: DAE
Number: 19955
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19955
File-URL: http://www.nber.org/papers/w19955.pdf
File-Format: application/pdf
Abstract: Much of the research on height in historical populations relies on convenience samples. A crucial question with convenience samples is whether the sample accurately reflects the characteristics of the population; if not, then estimated parameters will be affected by sample selection bias. This paper applies a simple test for selection biased developed in Bodenhorn, Guinnane, and Mroz (2013) to several historical samples of prisoners, freed slaves, and college students. We reject the hypothesis of no selection bias in all cases. Using Roy's (1951) model of occupational choice, we interpret these findings as reflecting the economic forces that lead individuals to take the actions the led to inclusion in the sample. Our findings suggest that much of the evidence on the "industrialization puzzle" during the nineteenth century could reflect changing selection into the samples rather than changes in population heights.
Handle: RePEc:nbr:nberwo:19955
Template-Type: ReDIF-Paper 1.0
Title: Negative Tests and the Efficiency of Medical Care: What Determines Heterogeneity in Imaging Behavior?
Classification-JEL: I0; I12
Author-Name: Jason Abaluck
Author-Name: Leila Agha
Author-Person: pag166
Author-Name: Christopher Kabrhel
Author-Name: Ali Raja
Author-Name: Arjun Venkatesh
Note: AG EH PE
Number: 19956
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19956
File-URL: http://www.nber.org/papers/w19956.pdf
File-Format: application/pdf
Publication-Status: published as Abaluck, Jason, Leila Agha, Chris Kabrhel, Ali Raja, and Arjun Venkatesh. 2016. "The Determinants of Productivity in Medical Testing: Intensity and Allocation of Care." American Economic Review, 106 (12): 3730-64.
Abstract: We develop a model of the efficiency of medical testing based on rates of negative CT scans for pulmonary embolism. The model is estimated using a 20% sample of Medicare claims from 2000- 2009. We document enormous across-doctor heterogeneity in testing decisions conditional on patient risk and show it explains the negative relationship between physicians' testing frequencies and test yields. Physicians in high spending regions test more low-risk patients. Under calibration assumptions, 84% of doctors test even when costs exceed expected benefits. Furthermore, doctors do not apply observables to target testing to the highest risk patients, substantially reducing simulated test yields.
Handle: RePEc:nbr:nberwo:19956
Template-Type: ReDIF-Paper 1.0
Title: Leverage and Beliefs: Personal Experience and Risk Taking in Margin Lending
Classification-JEL: G01; G02; G12; G21; G32; N2
Author-Name: Peter Koudijs
Author-Name: Hans-Joachim Voth
Author-Person: pvo5
Note: AP
Number: 19957
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19957
File-URL: http://www.nber.org/papers/w19957.pdf
File-Format: application/pdf
Publication-Status: published as American Economic Review, vol. 106, no. 11, November 2016 (pp. 3367-3400)
Abstract: What determines risk-bearing capacity and the amount of leverage in financial markets? Using unique archival data on collateralized lending, we show that personal experience can affect individual risk-taking and aggregate leverage. When an investor syndicate speculating in Amsterdam in 1772 went bankrupt, many lenders were exposed. In the end, none of them actually lost money. Nonetheless, only those at risk of losing money changed their behavior markedly – they lent with much higher haircuts. The rest continued largely as before. The differential change is remarkable since the distress was public knowledge. Overall leverage in the Amsterdam stock market declined as a result.
Handle: RePEc:nbr:nberwo:19957
Template-Type: ReDIF-Paper 1.0
Title: Asset Prices in a Lifecycle Economy
Classification-JEL: G0; G12
Author-Name: Roger Farmer
Author-Person: pfa3
Note: EFG IFM
Number: 19958
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19958
File-URL: http://www.nber.org/papers/w19958.pdf
File-Format: application/pdf
Abstract: The representative agent model (RA) has dominated macroeconomics for the last thirty years. This model does a reasonably good job of explaining the co-movements of consumption, investment, GDP and employment during normal times. But it cannot easily explain movements in asset prices. Two facts are hard to understand 1) The return to equity is highly volatile and 2) The premium for holding equity, over a safe government bond, is large. The equity premium has two parts; a risk premium and a term premium. This paper constructs a lifecycle model in which agents of different generations have different savings rates and I use this model to account for a high term premium and a volatile stochastic discount factor. The fact the term premium is large, accounts for a substantial part of the observed equity premium.
Handle: RePEc:nbr:nberwo:19958
Template-Type: ReDIF-Paper 1.0
Title: Matching Methods in Practice: Three Examples
Classification-JEL: C1
Author-Name: Guido Imbens
Author-Person: pim4
Note: LS
Number: 19959
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19959
File-URL: http://www.nber.org/papers/w19959.pdf
File-Format: application/pdf
Publication-Status: published as Guido W. Imbens, 2015. "Matching Methods in Practice: Three Examples," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 373-419.
Abstract: There is a large theoretical literature on methods for estimating causal effects under unconfoundedness, exogeneity, or selection--on--observables type assumptions using matching or propensity score methods. Much of this literature is highly technical and has not made inroads into empirical practice where many researchers continue to use simple methods such as ordinary least squares regression even in settings where those methods do not have attractive properties. In this paper I discuss some of the lessons for practice from the theoretical literature, and provide detailed recommendations on what to do. I illustrate the recommendations with three detailed applications.
Handle: RePEc:nbr:nberwo:19959
Template-Type: ReDIF-Paper 1.0
Title: Managing Credit Bubbles
Classification-JEL: E32; E44; O40
Author-Name: Alberto Martin
Author-Person: pma513
Author-Name: Jaume Ventura
Author-Person: pve110
Note: EFG
Number: 19960
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19960
File-URL: http://www.nber.org/papers/w19960.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Martin & Jaume Ventura, 2016. "Managing Credit Bubbles," Journal of the European Economic Association, European Economic Association, vol. 14(3), pages 753-789, 06.
Abstract: We study a dynamic economy where credit is limited by insufficient collateral and, as a result, investment and output are too low. In this environment, changes in investor sentiment or market expectations can give rise to credit bubbles, that is, expansions in credit that are backed not by expectations of future profits (i.e. fundamental collateral), but instead by expectations of future credit (i.e. bubbly collateral). During a credit bubble, there is more credit available for entrepreneurs: this is the crowding-in effect. But entrepreneurs must also use some of this credit to cancel past credit: this is the crowding-out effect. There is an "optimal" bubble size that trades off these two effects and maximizes long-run output and consumption. The "equilibrium" bubble size depends on investor sentiment, however, and it typically does not coincide with the "optimal" bubble size. This provides a new rationale for macroprudential policy. A lender of last resort can replicate the "optimal" bubble by taxing credit when the "equilibrium" bubble is too high, and subsidizing credit when the "equilibrium" bubble is too low. This leaning-against-the-wind policy maximizes output and consumption. Moreover, the same conditions that make this policy desirable guarantee that a lender of last resort has the resources to implement it.
Handle: RePEc:nbr:nberwo:19960
Template-Type: ReDIF-Paper 1.0
Title: Empowering Women: The Effect of Schooling on Young Women's Knowledge and Use of Contraception
Classification-JEL: I10; I18; I25
Author-Name: Mabel Andalón
Author-Person: pan328
Author-Name: Jenny Williams
Author-Name: Michael Grossman
Author-Person: pgr107
Note: EH
Number: 19961
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19961
File-URL: http://www.nber.org/papers/w19961.pdf
File-Format: application/pdf
Abstract: Large differences in fertility between women with high and low levels of education suggest that schooling may have a direct impact on knowledge and use of contraception. We investigate this issue using information on women in Mexico. In order to identify the causal effect of schooling, we exploit temporal and geographic variation in the number of lower secondary schools built following the extension of compulsory education in Mexico from 6th to 9th grade in 1993. We show that raising females' schooling beyond 6th grade increases their knowledge of contraception during their reproductive years and increases their propensity to use contraception at sexual debut. This indicates that the impact of schooling on women's wellbeing extends beyond improved labor market outcomes and includes greater autonomy over their fertility.
Handle: RePEc:nbr:nberwo:19961
Template-Type: ReDIF-Paper 1.0
Title: German-Jewish Emigres and U.S. Invention
Classification-JEL: J61; N12; O3
Author-Name: Petra Moser
Author-Person: pmo257
Author-Name: Alessandra Voena
Author-Person: pvo279
Author-Name: Fabian Waldinger
Author-Person: pwa360
Note: DAE LS PR
Number: 19962
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19962
File-URL: http://www.nber.org/papers/w19962.pdf
File-Format: application/pdf
Publication-Status: published as Moser, Petra, Alessandra Voena, and Fabian Waldinger. 2014. "German Jewish Émigrés and US Invention." American Economic Review, 104 (10): 3222-55.
Abstract: Historical accounts suggest that Jewish émigrés from Nazi Germany revolutionized U.S. science. To analyze the émigrés' effects on chemical innovation in the U.S. we compare changes in patenting by U.S. inventors in research fields of émigrés with fields of other German chemists. Patenting by U.S. inventors increased by 31 percent in émigré fields. Regressions that instrument for émigré fields with pre-1933 fields of dismissed German chemists confirm a substantial increase in U.S. invention. Inventor-level data indicate that émigrés encouraged innovation by attracting new researchers to their fields, rather than by increasing the productivity of incumbent inventors.
Handle: RePEc:nbr:nberwo:19962
Template-Type: ReDIF-Paper 1.0
Title: Uncovered Equity Parity and Rebalancing in International Portfolios
Classification-JEL: F21; F31; G11
Author-Name: Stephanie E. Curcuru
Author-Name: Charles P. Thomas
Author-Person: pth302
Author-Name: Francis E. Warnock
Author-Name: Jon Wongswan
Note: IFM
Number: 19963
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19963
File-URL: http://www.nber.org/papers/w19963.pdf
File-Format: application/pdf
Publication-Status: published as Curcuru, S., C. Thomas, F. Warnock, and J. Wongswan, 2014. Uncovered Equity Parity and Rebalancing in International Portfolios. Journal of International Money and Finance 47: 86-99.
Abstract: Portfolio rebalancing is a key driver of the Uncovered Equity Parity (UEP) condition. According to UEP, when foreign equity holdings outperform domestic holdings, domestic investors are exposed to higher exchange rate exposure and hence repatriate some of the foreign equity to decrease their exchange rate risk. By doing so, foreign currency is sold, leading to foreign currency depreciation. We examine the relationship between U.S. investors' portfolio reallocations and returns and find some evidence consistent with UEP: Portfolio shifts are related to past returns in the underlying equity markets. But we argue that a motive other than reducing currency risk exposure is likely behind this rebalancing. In particular, U.S. investors may be exploiting mean reversion in underlying equity markets, rebalancing away from equity markets that recently performed well and moving into equity markets market just prior to relatively strong performance. Such behavior suggests tactical reallocations to increase returns rather than reduce risk.
Handle: RePEc:nbr:nberwo:19963
Template-Type: ReDIF-Paper 1.0
Title: Public Transit Bus Procurement: The Role of Energy Prices, Regulation and Federal Subsidies
Classification-JEL: R41; R48
Author-Name: Shanjun Li
Author-Person: pli535
Author-Name: Matthew E. Kahn
Author-Person: pka41
Author-Name: Jerry Nickelsburg
Author-Person: pni363
Note: EEE PE POL
Number: 19964
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19964
File-URL: http://www.nber.org/papers/w19964.pdf
File-Format: application/pdf
Publication-Status: published as Li, Shanjun & Kahn, Matthew E. & Nickelsburg, Jerry, 2015. "Public transit bus procurement: The role of energy prices, regulation and federal subsidies," Journal of Urban Economics, Elsevier, vol. 87(C), pages 57-71.
Abstract: The U.S. public transit system represents a multi-billion dollar industry that provides essential transit services to millions of urban residents. We study the market for new transit buses that features a set of non-profit transit agencies purchasing buses primarily from a few domestic bus makers. Unlike private vehicles, the fuel economy of public buses is irresponsive to fuel price changes. To understand this finding, we build a model of bus fleet management decisions of local transit agencies that yields testable hypotheses. Our empirical analysis of bus fleet turnover and capital investment suggests that transit agencies: (1) do not respond to energy prices in either their scrappage or purchase decisions; (2) respond to environmental regulations by scrapping diesel buses earlier and switch to natural gas buses; (3) prefer purchasing buses from manufacturers whose assembly plants are located in the same state; (4) exhibit significant brand loyalty or lock-in effects; (5) favor domestically produced buses when they have access to more federal funding.
Handle: RePEc:nbr:nberwo:19964
Template-Type: ReDIF-Paper 1.0
Title: Household Demand for Low Carbon Public Policies: Evidence from California
Classification-JEL: Q54; R41
Author-Name: Matthew J. Holian
Author-Person: pho377
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE PE POL
Number: 19965
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19965
File-URL: http://www.nber.org/papers/w19965.pdf
File-Format: application/pdf
Publication-Status: published as Household Demand for Low Carbon Policies: Evidence from California Matthew J. Holian and Matthew E. Kahn Journal of the Association of Environmental and Resource Economists 2015 2:2, 205-234
Abstract: In recent years, Californians have voted on two key pieces of low carbon regulation. The resulting voting patterns provide an opportunity to examine the demand for carbon mitigation efforts. Household voting patterns are found to mirror the voting patterns by the U.S Congress on national carbon legislation. Political liberals and more educated voters favor such regulations while suburbanites tend to oppose such initiatives. Survey responses at the individual level are shown to predict the spatial variation in actual voting patterns and hence convergent validity for results obtained with stated preference data on voting markets.
Handle: RePEc:nbr:nberwo:19965
Template-Type: ReDIF-Paper 1.0
Title: The Missing "Missing Middle"
Classification-JEL: E23; H25; O11; O47
Author-Name: Chang-Tai Hsieh
Author-Name: Benjamin A. Olken
Author-Person: pol170
Note: DEV EFG PE PR
Number: 19966
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19966
File-URL: http://www.nber.org/papers/w19966.pdf
File-Format: application/pdf
Publication-Status: published as Chang-Tai Hsieh & Benjamin A. Olken, 2014. "The Missing "Missing Middle"," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 89-108, Summer.
Abstract: Although a large literature seeks to explain the "missing middle" of mid-sized firms in developing countries, there is surprisingly little empirical backing for existence of the missing middle. Using microdata on the full distribution of both formal and informal sector manufacturing firms in India, Indonesia, and Mexico, we document three facts. First, while there are a very large number of small firms, there is no "missing middle" in the sense of a bimodal distribution: mid-sized firms are missing, but large firms are missing too, and the fraction of firms of a given size is smoothly declining in firm size. Second, we show that the distribution of average products of capital and labor is unimodal, and that large firms, not small firms, have higher average products. This is inconsistent with many models in which small firms with high returns are constrained from expanding. Third, we examine regulatory and tax notches in India, Indonesia, and Mexico of the sort often thought to discourage firm growth, and find no economically meaningful bunching of firms near the notch points. We show that existing beliefs about the missing middle are largely due to arbitrary transformations that were made to the data in previous studies.
Handle: RePEc:nbr:nberwo:19966
Template-Type: ReDIF-Paper 1.0
Title: Macroprudential Policies in a Global Perspective
Classification-JEL: F36; F41; F42
Author-Name: Olivier Jeanne
Author-Person: pje59
Note: IFM
Number: 19967
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19967
File-URL: http://www.nber.org/papers/w19967.pdf
File-Format: application/pdf
Publication-Status: published as Jeanne, Olivier, 2013. "Macroprudential policies in a global perspective," Proceedings, Federal Reserve Bank of San Francisco, issue Nov, pages 1-38.
Abstract: This paper analyzes the case for the international coordination of macroprudential policies in the context of a simple theoretical framework. Both domestic macroprudential policies and prudential capital controls have international spillovers through their impact on capital flows. The uncoordinated use of macroprudential policies may lead to a "capital war" that depresses global interest rates. International coordination of macroprudential policies is not warranted, however, unless there is unemployment in some countries. There is scope for Pareto-improving international policy coordination when one part of the world is in a liquidity trap while the rest of the world accumulates reserves for prudential reasons.
Handle: RePEc:nbr:nberwo:19967
Template-Type: ReDIF-Paper 1.0
Title: Exporters and Shocks: Dissecting the International Elasticity Puzzle
Classification-JEL: F14; F41
Author-Name: Doireann Fitzgerald
Author-Person: pfi76
Author-Name: Stefanie Haller
Author-Person: pha286
Note: IFM ITI
Number: 19968
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19968
File-URL: http://www.nber.org/papers/w19968.pdf
File-Format: application/pdf
Publication-Status: published as Doireann Fitzgerald & Stefanie Haller, 2018. "Exporters and Shocks," Journal of International Economics, .
Abstract: We use micro data for Ireland to estimate how export participation and the export revenue of incumbent exporters respond to tariffs and real exchange rates. Both participation and revenue, but especially revenue, are more responsive to tariffs than to real exchange rates. Our estimates translate into an elasticity of aggregate exports with respect to tariffs of between -3.8 and -5.4, and with respect to real exchange rates of between 0.45 and 0.6, consistent with estimates in the literature based on aggregate data. We argue that forward-looking investment in customer base combined with the fact that tariffs are much more predictable than real exchange rates can explain why export revenue responds so much more to tariffs.
Handle: RePEc:nbr:nberwo:19968
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Risk-Return Trade-off with Overlapping Data Inference
Classification-JEL: G12
Author-Name: Esben Hedegaard
Author-Name: Robert J. Hodrick
Author-Person: pho115
Note: AP
Number: 19969
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19969
File-URL: http://www.nber.org/papers/w19969.pdf
File-Format: application/pdf
Publication-Status: published as Esben Hedegaard & Robert J. Hodrick, 2016. "Estimating the risk-return trade-off with overlapping data inference," Journal of Banking & Finance, vol 67, pages 135-145.
Abstract: Asset pricing models such as the conditional CAPM are typically estimated with MLE using a monthly or quarterly horizon with data sampled to match the horizon even though daily data are available. We develop an overlapping data inference methodology (ODIN) that uses all of the data while maintaining the monthly or quarterly forecasting period, and we apply it to the conditional CAPM. Our approach recognizes that the first order conditions of MLE can be used as orthogonality conditions of GMM. Using historical data, we find considerable differences in the estimates from the non-overlapping samples that begin on different days.
Handle: RePEc:nbr:nberwo:19969
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Trap and Excessive Leverage
Classification-JEL: E32; E44
Author-Name: Anton Korinek
Author-Person: pko142
Author-Name: Alp Simsek
Note: EFG IFM ME
Number: 19970
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19970
File-URL: http://www.nber.org/papers/w19970.pdf
File-Format: application/pdf
Publication-Status: published as Anton Korinek & Alp Simsek, 2016. "Liquidity Trap and Excessive Leverage," American Economic Review, American Economic Association, vol. 106(3), pages 699-738, March.
Abstract: We investigate the role of macroprudential policies in mitigating liquidity traps driven by deleveraging, using a simple Keynesian model. When constrained agents engage in deleveraging, the interest rate needs to fall to induce unconstrained agents to pick up the decline in aggregate demand. However, if the fall in the interest rate is limited by the zero lower bound, aggregate demand is insufficient and the economy enters a liquidity trap. In such an environment, agents' ex-ante leverage and insurance decisions are associated with aggregate demand externalities. The competitive equilibrium allocation is constrained inefficient. Welfare can be improved by ex-ante macroprudential policies such as debt limits and mandatory insurance requirements. The size of the required intervention depends on the differences in marginal propensity to consume between borrowers and lenders during the deleveraging episode. In our model, contractionary monetary policy is inferior to macroprudential policy in addressing excessive leverage, and it can even have the unintended consequence of increasing leverage.
Handle: RePEc:nbr:nberwo:19970
Template-Type: ReDIF-Paper 1.0
Title: Education, Health and Wages
Classification-JEL: C32; C38; I12; I14; I21
Author-Name: James J. Heckman
Author-Name: John Eric Humphries
Author-Person: phu293
Author-Name: Greg Veramendi
Author-Person: pve239
Author-Name: Sergio S. Urzua
Note: CH ED EH LS POL TWP
Number: 19971
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19971
File-URL: http://www.nber.org/papers/w19971.pdf
File-Format: application/pdf
Abstract: This paper develops and estimates a model with multiple schooling choices that identifies the causal effect of different levels of schooling on health, health-related behaviors, and labor market outcomes. We develop an approach that is a halfway house between a reduced form treatment effect model and a fully formulated dynamic discrete choice model. It is computationally tractable and identifies the causal effects of educational choices at different margins. We estimate distributions of responses to education and find evidence for substantial heterogeneity in unobserved variables on which agents make choices. The estimated treatment effects of education are decomposed into the direct benefits of attaining a given level of schooling and indirect benefits from the option to continue on to further schooling. Continuation values are an important component of our estimated treatment effects. While the estimated causal effects of education are substantial for most outcomes, we also estimate a quantitatively important effect of unobservables on outcomes. Both cognitive and socioemotional factors contribute to shaping educational choices and labor market and health outcomes. We improve on LATE by identifying the groups affected by variations in the instruments. We find benefits of cognition on most outcomes apart from its effect on schooling attainment. The benefits of socioemotional skills on outcomes beyond their effects on schooling attainment are less precisely estimated.
Handle: RePEc:nbr:nberwo:19971
Template-Type: ReDIF-Paper 1.0
Title: Rating Agencies
Classification-JEL: G1; G24
Author-Name: Harold L. Cole
Author-Person: pco70
Author-Name: Thomas F. Cooley
Author-Person: pco35
Note: CF EFG
Number: 19972
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19972
File-URL: http://www.nber.org/papers/w19972.pdf
File-Format: application/pdf
Abstract: For decades credit rating agencies were viewed as trusted arbiters of creditworthiness and their ratings as important tools for managing risk. The common narrative is that the value of ratings was compromised by the evolution of the industry to a form where issuers pay for ratings. In this paper we show how credit ratings have value in equilibrium and how reputation insures that, in equilibrium, ratings will reflect sound assessments of credit worthiness. There will always be an information distortion because of the fact that purchasers of ratings need not reveal them. We argue that regulatory reliance on ratings and the increasing importance of risk-weighted capital in prudential regulation have more likely contributed to distorted ratings than the matter of who pays for them. In this respect, much of the regulatory obsession with the conflict created by issuers paying for ratings is a distraction.
Handle: RePEc:nbr:nberwo:19972
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty Traps
Classification-JEL: E32
Author-Name: Pablo Fajgelbaum
Author-Name: Edouard Schaal
Author-Person: psc777
Author-Name: Mathieu Taschereau-Dumouchel
Author-Person: pta593
Note: EFG
Number: 19973
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19973
File-URL: http://www.nber.org/papers/w19973.pdf
File-Format: application/pdf
Publication-Status: published as Pablo D. Fajgelbaum & Edouard Schaal & Mathieu Taschereau-Dumouchel, 2017. "Uncertainty Traps*," The Quarterly Journal of Economics, vol 132(4), pages 1641-1692.
Abstract: We develop a theory of endogenous uncertainty and business cycles in which short-lived shocks can generate long-lasting recessions. In the model, higher uncertainty about fundamentals discourages investment. Since agents learn from the actions of others, information flows slowly in times of low activity and uncertainty remains high, further discouraging investment. The economy displays uncertainty traps: self-reinforcing episodes of high uncertainty and low activity. While the economy recovers quickly after small shocks, large temporary shocks may have long-lasting effects on the level of activity. The economy is subject to an information externality but uncertainty traps may remain in the efficient allocation. Embedding the mechanism in a standard business cycle framework, we find that endogenous uncertainty increases the persistence of large recessions and improves the performance of the model in accounting for the Great Recession.
Handle: RePEc:nbr:nberwo:19973
Template-Type: ReDIF-Paper 1.0
Title: One Fundamental and Two Taxes: When Does a Tobin Tax Reduce Financial Price Volatility?
Classification-JEL: G1; G14
Author-Name: Yongheng Deng
Author-Person: pde836
Author-Name: Xin Liu
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: AP DEV IFM
Number: 19974
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19974
File-URL: http://www.nber.org/papers/w19974.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Financial Economics forthcoming
Abstract: We aim to make two contributions to the literature on the effects of transaction costs on financial price volatility. First, by using a research design with three ingredients (a common set of companies simultaneously listed on two stock exchanges; binding capital controls; different timing of changes in transaction costs), we obtain a control group that has identical corporate fundamentals as the treatment group and is therefore far cleaner than any in the existing literature. We apply the research design to Chinese stocks that are cross-listed in Hong Kong and Mainland. Second, we entertain the possibility that a given transaction cost can have different effects in immature and mature markets. In an immature market where trading is dominated by retail investors with little knowledge of accounting and finance, a Tobin tax should have the best chance of generating its intended effect. In a more mature market, higher transaction costs may also discourage sophisticated investors, hence impeding timely incorporation of fundamental information into prices. We find a significantly negative relation in the Chinese market, on average, between stamp duty increase and price volatility. However, this average effect masks some important heterogeneity. In particular, when institutional investors have become a significant part of traders' pool, we find an opposite effect. This suggests that a Tobin tax may work in an immature market but can backfire in a more developed market.
Handle: RePEc:nbr:nberwo:19974
Template-Type: ReDIF-Paper 1.0
Title: Risk, Ambiguity, and the Exercise of Employee Stock Options
Classification-JEL: G12; G13; G34; J33
Author-Name: Yehuda Izhakian
Author-Name: David Yermack
Author-Person: pye42
Note: AP CF
Number: 19975
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19975
File-URL: http://www.nber.org/papers/w19975.pdf
File-Format: application/pdf
Publication-Status: published as Yehuda Izhakian & David Yermack, 2017. "Risk, ambiguity, and the exercise of employee stock options," Journal of Financial Economics, vol 124(1), pages 65-85.
Abstract: We investigate the importance of ambiguity, or Knightian uncertainty, in executives' decisions about when to exercise stock options. We develop an empirical estimate of ambiguity and include it in regression models alongside the more traditional measure of risk, equity volatility. We show that each variable has a statistically significant effect on the timing of option exercises, with volatility causing executives to hold their options longer in order to preserve remaining option value, and ambiguity increasing the tendency for executives to exercise early in response to risk aversion. Regression estimates for the volatility and ambiguity variables imply similar magnitudes of economic impact upon the exercise decision, with the volatility variable being about 2.5 times stronger.
Handle: RePEc:nbr:nberwo:19975
Template-Type: ReDIF-Paper 1.0
Title: Aspirations and Inequality
Classification-JEL: D9; J62; O15; O40
Author-Name: Garance Genicot
Author-Person: pge26
Author-Name: Debraj Ray
Author-Person: pra6
Note: DEV
Number: 19976
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19976
File-URL: http://www.nber.org/papers/w19976.pdf
File-Format: application/pdf
Publication-Status: published as Genicot, G. and Ray, D. (2017), Aspirations and Inequality. Econometrica, 85: 489-519. doi:10.3982/ECTA13865
Abstract: This paper develops a theory of socially determined aspirations, and the interaction of those aspirations with growth and inequality. The interaction is bidirectional: economy-wide outcomes determine individual aspirations, which in turn determine investment incentives and social outcomes. Thus aspirations, income and the distribution of income evolve jointly. When capital stocks lie in some compact set, steady states distributions must exhibit inequality and are typically clustered around local poles. When sustained growth is possible, initial histories matter. Either there is convergence to an equal distribution (with growth) or there is perennial relative divergence across clusters, with within-cluster convergence. A central feature that drives these results is that aspirations that are moderately above an individual’s current standard of living tend to encourage investment, while still higher aspirations may lead to frustration.
Handle: RePEc:nbr:nberwo:19976
Template-Type: ReDIF-Paper 1.0
Title: How Do Electricity Shortages Affect Industry? Evidence from India
Classification-JEL: D04; D24; L11; L94; O12; O13; Q41
Author-Name: Hunt Allcott
Author-Person: pal171
Author-Name: Allan Collard-Wexler
Author-Name: Stephen D. O'Connell
Author-Person: poc22
Note: DEV EEE IO PR
Number: 19977
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19977
File-URL: http://www.nber.org/papers/w19977.pdf
File-Format: application/pdf
Publication-Status: published as Hunt Allcott & Allan Collard-Wexler & Stephen D. O'Connell, 2016. "How Do Electricity Shortages Affect Industry? Evidence from India," American Economic Review, vol 106(3), pages 587-624.
Abstract: We estimate the effects of electricity shortages on Indian manufacturers, instrumenting with supply shifts from hydroelectric power availability. We estimate that India’s average reported level of shortages reduces the average plant’s revenues and producer surplus by five to ten percent, but average productivity losses are significantly smaller because most inputs can be stored during outages. Shortages distort the plant size distribution, as there are significant economies of scale in generator costs and shortages more severely affect plants without generators. Simulations show that offering interruptible retail electricity contracts could substantially reduce the impact of shortages.
Handle: RePEc:nbr:nberwo:19977
Template-Type: ReDIF-Paper 1.0
Title: Suicide and Property Rights in India
Classification-JEL: D1; K36; O1
Author-Name: Siwan Anderson
Author-Person: pan256
Author-Name: Garance Genicot
Author-Person: pge26
Note: DEV
Number: 19978
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19978
File-URL: http://www.nber.org/papers/w19978.pdf
File-Format: application/pdf
Publication-Status: published as Anderson, Siwan & Genicot, Garance, 2015. "Suicide and property rights in India," Journal of Development Economics, Elsevier, vol. 114(C), pages 64-78.
Abstract: This paper studies the impact of female property rights on male and female suicide rates in India. Using state level variation in legal changes to women's property rights, we show that better property rights for women are associated with a decrease in the difference between female and male suicide rates, but an increase in both male and female suicides. We conjecture that increasing female property rights increased conflict within household and this increased conflict resulted in more suicides among both men and women in India. Using individual level data on domestic violence we find evidence that increased property rights for women did increase the incidence of wife beating in India. A model of intra-household bargaining with asymmetric information and costly conflict is consistent with these findings.
Handle: RePEc:nbr:nberwo:19978
Template-Type: ReDIF-Paper 1.0
Title: Does grief transfer across generations? In-utero deaths and child outcomes
Classification-JEL: I1; I2; J13
Author-Name: Sandra Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Kjell Salvanes
Author-Person: psa3
Note: CH ED LS
Number: 19979
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19979
File-URL: http://www.nber.org/papers/w19979.pdf
File-Format: application/pdf
Publication-Status: published as Black, Sandra E., Paul J. Devereux, and Kjell G. Salvanes. 2016. "Does Grief Transfer across Generations? Bereavements during Pregnancy and Child Outcomes." American Economic Journal: Applied Economics, 8 (1): 193-223.
Abstract: While much is now known about the effects of physical health shocks to pregnant women on the outcomes of the in-utero child, we know little about the effects of psychological stresses. One clear form of stress to the mother comes from the death of a parent. We examine the effects of the death of the mother's parent during pregnancy on both the short-run and the long-run outcomes of the infant. Our primary specification involves using mother fixed effects--comparing the outcomes of two children with the same mother but where a parent of the mother died during one of the pregnancies--augmented with a control for whether there is a death around the time of the pregnancy in order to isolate true causal effects of a bereavement during pregnancy. We find small negative effects on birth outcomes, and these effects are bigger for boys than for girls. The effects on birth outcomes seems to be driven by deaths due to cardiovascular causes suggesting that sudden deaths are more difficult to deal with. However, we find no evidence of adverse effects on adult outcomes. The results are robust to alternative specifications.
Handle: RePEc:nbr:nberwo:19979
Template-Type: ReDIF-Paper 1.0
Title: The Transmission of Federal Reserve Tapering News to Emerging Financial Markets
Classification-JEL: F3; F36; G14
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Mahir Binici
Author-Person: pbi168
Author-Name: Michael M. Hutchison
Author-Person: phu149
Note: IFM
Number: 19980
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19980
File-URL: http://www.nber.org/papers/w19980.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Mahir Binici & Michael M. Hutchison, 2016. "The Transmission of Federal Reserve Tapering News to Emerging Financial Markets," International Journal of Central Banking, International Journal of Central Banking, vol. 12(2), pages 317-356, June.
Abstract: This paper evaluates the impact of tapering “news” announcements by Fed senior policy makers on financial markets in emerging economies. We apply a panel framework using daily data, and find that emerging market asset prices respond most to statements by Fed Chairman Bernanke, and much less to other Fed officials. We group emerging markets into those with “robust” fundamentals (current account surpluses, high international reserves and low external debt) and those with “fragile” fundamentals and, intriguingly, find that the exchange rates of the robust group (and lesser extend equity prices and CDS spreads) were more adversely affected to tapering news than the fragile group. The cumulative effects of tapering announcements after a month, however, appear to be quite similar for both robust and fragile emerging markets. We also show that more financially developed economies are more impacted by tapering news and a plausible interpretation is that more financially developed economies are more exposed, at least in the short-term, to external news announcements.
Handle: RePEc:nbr:nberwo:19980
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Monetary Policy on Stock Market Bubbles: Some Evidence
Classification-JEL: E52; G12
Author-Name: Jordi Gali
Author-Person: pga43
Author-Name: Luca Gambetti
Note: AP EFG ME
Number: 19981
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19981
File-URL: http://www.nber.org/papers/w19981.pdf
File-Format: application/pdf
Publication-Status: published as Jordi Galí & Luca Gambetti, 2015. "The Effects of Monetary Policy on Stock Market Bubbles: Some Evidence," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 233-57, January.
Publication-Status: published as The Effects of Monetary Policy on Stock Market Bubbles: Some Evidence, Jordi Galí, Luca Gambetti. in Lessons from the Financial Crisis for Monetary Policy, Gertler. 2015
Abstract: We estimate the response of stock prices to exogenous monetary policy shocks using a vector-autoregressive model with time-varying parameters. Our evidence points to protracted episodes in which, after a short-run decline, stock prices increase persistently in response to an exogenous tightening of monetary policy. That response is clearly at odds with the "conventional" view on the effects of monetary policy on bubbles, as well as with the predictions of bubbleless models. We also argue that it is unlikely that such evidence be accounted for by an endogenous response of the equity premium to the monetary policy shocks.
Handle: RePEc:nbr:nberwo:19981
Template-Type: ReDIF-Paper 1.0
Title: Global Benefits of Marine Protected Areas
Classification-JEL: Q22
Author-Name: James Rising
Author-Name: Geoffrey Heal
Author-Person: phe40
Note: EEE
Number: 19982
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19982
File-URL: http://www.nber.org/papers/w19982.pdf
File-Format: application/pdf
Abstract: Case studies suggest that Marine Protected Areas (MPAs) can be effective tools for fishery management. This study uses global datasets of MPAs and stock assessments to estimate the strength and robustness of their benefits. We apply multiple models, including a treatment-control pairing, a logistic model estimated with fixed-effects, and a regression tree to identify key characteristics. We find that regions with significant MPA designations increased their yearly yield by 17e3 MT/yr while those without experienced a loss of 20e3 MT/yr. On average, a 1% increase in protected area results in an increase in the growth rate of fish populations by about 1%. Considering only IUCN classified protected areas, and only marine portions of MPAs, growth rates increase 2% per percent area protected. MPA size is a key parameter which determines their per-area effectiveness. Using these results, we produce an estimate of the economic benefits of protected areas, relative to their costs. About 60% of country regions currently have insufficient protected areas to generate economic benefits, where the average break-even point for economic benefits of MPAs is at 8.5% of marine area.
Handle: RePEc:nbr:nberwo:19982
Template-Type: ReDIF-Paper 1.0
Title: Instrumental Variables: An Econometrician's Perspective
Classification-JEL: C01
Author-Name: Guido Imbens
Author-Person: pim4
Note: LS
Number: 19983
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19983
File-URL: http://www.nber.org/papers/w19983.pdf
File-Format: application/pdf
Publication-Status: published as Guido W. Imbens, 2014. "Instrumental Variables: An Econometrician’s Perspective," Statistical Science, vol 29(3), pages 323-358.
Abstract: I review recent work in the statistics literature on instrumental variables methods from an econometrics perspective. I discuss some of the older, economic, applications including supply and demand models and relate them to the recent applications in settings of randomized experiments with noncompliance. I discuss the assumptions underlying instrumental variables methods and in what settings these may be plausible. By providing context to the current applications a better understanding of the applicability of these methods may arise.
Handle: RePEc:nbr:nberwo:19983
Template-Type: ReDIF-Paper 1.0
Title: Why Do Banks Practice Regulatory Arbitrage? Evidence from Usage of Trust Preferred Securities
Classification-JEL: G01; G21
Author-Name: Nicole Boyson
Author-Name: Rüdiger Fahlenbrach
Author-Person: pfa388
Author-Name: René M. Stulz
Note: AP CF
Number: 19984
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19984
File-URL: http://www.nber.org/papers/w19984.pdf
File-Format: application/pdf
Publication-Status: published as Nicole M. Boyson, Rüdiger Fahlenbrach, René M. Stulz; Why Don't All Banks Practice Regulatory Arbitrage? Evidence from Usage of Trust-Preferred Securities, The Review of Financial Studies, Volume 29, Issue 7, 1 July 2016, Pages 1821–1859, https://doi.org/10.1093/rfs/hhw007
Abstract: We propose a theory of regulatory arbitrage by banks and test it using trust preferred securities (TPS) issuance. From 1996 to 2007, U.S. banks in the aggregate increased their regulatory capital through issuance of TPS while their net issuance of common stock was negative due to repurchases. We assume that, in the absence of capital requirements, a bank has an optimal capital structure that depends on its business model. Capital requirements can impose constraints on bank decisions. If a bank's optimal capital structure also meets regulatory capital requirements with a sufficient buffer, the bank is unconstrained by these requirements. We expect that unconstrained banks will not issue TPS, that constrained banks will issue TPS and engage in other forms of regulatory arbitrage, and that banks with TPS will be riskier than other banks with the same amount of regulatory capital, and therefore, more adversely affected by the credit crisis. Our empirical evidence supports these predictions.
Handle: RePEc:nbr:nberwo:19984
Template-Type: ReDIF-Paper 1.0
Title: Nonlinearities in Sovereign Risk Pricing: The Role of CDS Index Contracts
Classification-JEL: C23; E44; F34; G12; H63
Author-Name: Anne-Laure Delatte
Author-Person: pba350
Author-Name: Julien Fouquau
Author-Name: Richard Portes
Author-Person: ppo132
Note: AP IFM
Number: 19985
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19985
File-URL: http://www.nber.org/papers/w19985.pdf
File-Format: application/pdf
Abstract: Is the pricing of sovereign risk linear during bearish episodes? Or can initial shocks on economic fundamentals be exacerbated by endogenous factors that create nonlinearities? We test for nonlinearities in the sovereign bond market of European peripheral countries during the debt crisis and explain them. Our estimates based on a panel smooth threshold regression model during January 2006 to September 2012 show four main findings: 1) Peripheral sovereign spreads are subject to significant nonlinear dynamics. 2) The deterioration of market conditions for financial names changes the way investors price risk of the sovereigns. 3) The spreads of European peripheral countries have been priced above their historical values, given fundamentals, because of amplification effects. 4) Two CDS indices on financial names unambiguously stand out as leading drivers of these amplification effects.
Handle: RePEc:nbr:nberwo:19985
Template-Type: ReDIF-Paper 1.0
Title: Putting integrity Into Finance: A Purely Positive Approach
Classification-JEL: G02
Author-Name: Werner Erhard
Author-Name: Michael C. Jensen
Author-Person: pje57
Note: CF
Number: 19986
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19986
File-URL: http://www.nber.org/papers/w19986.pdf
File-Format: application/pdf
Abstract: The seemingly never ending scandals in the world of finance with their damaging effects on value and human welfare (that continue unabated in spite of all the various efforts to curtail the behavior that results in those scandals) argues strongly for an addition to the current paradigm of financial economics. We summarize here our new theory of integrity that reveals integrity as a purely positive phenomenon with no normative aspects whatsoever. Adding integrity as a positive phenomenon to the paradigm of financial economics provides actionable access (rather than mere explanation with no access) to the source of the behavior that has resulted in those damaging effects on value and human welfare, thereby significantly reducing that behavior. More generally we argue that this addition to the paradigm of financial economics can create significant increases in economic efficiency and productivity.
Handle: RePEc:nbr:nberwo:19986
Template-Type: ReDIF-Paper 1.0
Title: The Causal Effects of Competition on Innovation: Experimental Evidence
Classification-JEL: C91; L10; O31
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Stefan Bechtold
Author-Name: Lea Cassar
Author-Person: pca980
Author-Name: Holger Herz
Author-Person: phe449
Note: PR
Number: 19987
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19987
File-URL: http://www.nber.org/papers/w19987.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & Stefan Bechtold & Lea Cassar & Holger Herz, 2018. "The Causal Effects of Competition on Innovation: Experimental Evidence," The Journal of Law, Economics, and Organization, vol 34(2), pages 162-195.
Abstract: In this paper, we design two laboratory experiments to analyze the causal effects of competition on step-by-step innovation. Innovations result from costly R&D investments and move technology up one step. Competition is inversely measured by the ex post rents for firms that operate at the same technological level, i.e. for neck-and-neck firms. First, we find that increased competition leads to a significant increase in R&D investments by neck-and-neck firms. Second, increased competition decreases R&D investments by firms that are lagging behind, in particular if the time horizon is short. Third, we find that increased competition affects industry composition by reducing the fraction of sectors where firms are neck-and-neck. All these results are consistent with the predictions of step-by-step innovation models.
Handle: RePEc:nbr:nberwo:19987
Template-Type: ReDIF-Paper 1.0
Title: Optimal Employment Contracts with Hidden Search
Classification-JEL: E24; J01; J24; J31; J33; J41; J6; J63; J64
Author-Name: Rasmus Lentz
Author-Person: ple474
Note: EFG
Number: 19988
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19988
File-URL: http://www.nber.org/papers/w19988.pdf
File-Format: application/pdf
Abstract: In this paper I explore optimal employment contract design in a random search framework, where workers search on and off the job for employment opportunities similar to that of Lentz (2010) and Bagger and Lentz (2013). The worker determines the frequency by which employment opportunities arrive through a costly choice of search intensity, which is unobserved by the firm and cannot be directly contracted upon. Firms differ in productivity by which they employ workers. Firms compete over workers in terms of utility promises in a fashion otherwise similar to that of Postel-Vinay and Robin (2002). As in Burdett and Coles (2003) and Burdett and Coles (2010), optimal tenure conditional contracts are shown to be back loaded to discourage the worker from generating outside competitive pressure. The analysis establishes existence, uniqueness and provides characterization of the core mechanism. The paper applies the framework to the analysis of firm provided general human capital training. It is shown that more productive firms provide more training and pay higher wages.
Handle: RePEc:nbr:nberwo:19988
Template-Type: ReDIF-Paper 1.0
Title: Who Benefits when the Government Pays More? Pass-Through in the Medicare Advantage Program
Classification-JEL: H22; I13; L1
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Amanda Starc
Author-Name: Boris Vabson
Author-Person: pva834
Note: EH PE
Number: 19989
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19989
File-URL: http://www.nber.org/papers/w19989.pdf
File-Format: application/pdf
Publication-Status: published as Mark Duggan & Amanda Starc & Boris Vabson, 2016. "Who benefits when the government pays more? Pass-through in the Medicare Advantage program," Journal of Public Economics, .
Abstract: Governments contract with private firms to provide a wide range of services. While a large body of previous work has estimated the effects of that contracting, surprisingly little has investigated how those effects vary with the generosity of the contract. In this paper we examine this issue in the Medicare Advantage (MA) program, through which the federal government contracts with private insurers to coordinate and finance health care for more than 15 million Medicare recipients. To do this, we exploit a substantial policy-induced increase in MA reimbursement in metropolitan areas with a population of 250 thousand or more relative to MSAs just below this threshold. Our results demonstrate that the additional reimbursement leads more private firms to enter this market and to an increase in the share of Medicare recipients enrolled in MA plans. Our findings also reveal that only about one-fifth of the additional reimbursement is passed through to consumers in the form of better coverage. A somewhat larger share accrues to private insurers in the form of higher profits and we find suggestive evidence of a large impact on advertising expenditures. Our results have implications for a key feature of the Affordable Care Act that will reduce reimbursement to MA plans by $156 billion from 2013 to 2022.
Handle: RePEc:nbr:nberwo:19989
Template-Type: ReDIF-Paper 1.0
Title: Large and Small Sellers: A Theory of Equilibrium Price Dispersion with Sequential Search
Classification-JEL: D21; D43
Author-Name: Guido Menzio
Author-Person: pme246
Author-Name: Nicholas Trachter
Author-Person: ptr184
Note: EFG IO
Number: 19990
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19990
File-URL: http://www.nber.org/papers/w19990.pdf
File-Format: application/pdf
Abstract: The paper studies equilibrium pricing in a product market for an indivisible good where buyers search for sellers. Buyers search sequentially for sellers, but do not meet every seller with the same probability. Specifically, a fraction of the buyers' meetings lead to one particular large seller, while the remaining meetings lead to one of a continuum of small sellers. In this environment, the small sellers would like to set a price that makes the buyers indifferent between purchasing the good and searching for another seller. The large seller would like to price the small sellers out of the market by posting a price that is low enough to induce buyers not to purchase from the small sellers. These incentives give rise to a game of cat and mouse, whose only equilibrium involves mixed strategies for both the large and the small sellers. The fact that the small sellers play mixed strategies implies that there is price dispersion. The fact that the large seller plays mixed strategies implies that prices and allocations vary over time. We show that the fraction of the gains from trade accruing to the buyers is positive and non-monotonic in the degree of market power of the large seller. As long as the large seller has some positive but incomplete market power, the fraction of the gains from trade accruing to the buyers depends in a natural way on the extent of search frictions.
Handle: RePEc:nbr:nberwo:19990
Template-Type: ReDIF-Paper 1.0
Title: Evasive Shareholder Meetings
Classification-JEL: G34; K22
Author-Name: David Yermack
Author-Person: pye42
Author-Name: Yuanzhi Li
Note: CF LE
Number: 19991
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19991
File-URL: http://www.nber.org/papers/w19991.pdf
File-Format: application/pdf
Publication-Status: published as in "Journal of Corporate Finance" Volume 38, June 2016, Pages 318-334
Abstract: We study the location and timing of annual shareholder meetings. When companies move their annual meetings a great distance from headquarters, they tend to announce disappointing earnings results and experience pronounced stock market underperformance in the months after the meeting. Companies appear to schedule meetings in remote locations when the managers have private, adverse information about future performance and wish to discourage scrutiny by shareholders, activists, and the media. However, shareholders do not appear to decode this signal, since the disclosure of meeting locations leads to little immediate stock price reaction. We find that voter participation drops when meetings are held at unusual hours, even though most voting is done electronically during a period of weeks before the meeting convenes.
Handle: RePEc:nbr:nberwo:19991
Template-Type: ReDIF-Paper 1.0
Title: Trade, Skills, and Quality Upgrading: A Theory with Evidence from Colombia
Classification-JEL: F1
Author-Name: Ana Cecília Fieler
Author-Name: Marcela Eslava
Author-Person: pes57
Author-Name: Daniel Xu
Author-Person: pxu119
Note: ITI PR
Number: 19992
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19992
File-URL: http://www.nber.org/papers/w19992.pdf
File-Format: application/pdf
Abstract: We develop a model of international trade with heterogeneous firms and endogenous quality choices. Producing higher quality involves returns to scale, it is intensive in skilled labor and high-quality inputs. Firms' quality choices are interrelated because firms sell their goods to consumers and to other firms. We estimate the model using data on manufacturing plants in Colombia before the trade liberalization, simulate a counterfactual liberalization and compare the results to post-liberalization data. Like other unilateral trade liberalizations in developing countries, the skill premium and skill intensity in manufacturing increased, and the size of firms decreased in Colombia. In the model, lower tariffs lead importers and exporters to upgrade quality, increasing the domestic demand and supply of high-quality inputs. Other firms then upgrade their own product quality, thereby amplifying these effects of domestic inputs. Relative demand for skilled labor increases in a wide range of firms, despite a contraction in sales.
Handle: RePEc:nbr:nberwo:19992
Template-Type: ReDIF-Paper 1.0
Title: Price Cutting and Business Stealing in Imperfect Cartels
Classification-JEL: D43; L41
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Author-Name: Erik Madsen
Note: IO
Number: 19993
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19993
File-URL: http://www.nber.org/papers/w19993.pdf
File-Format: application/pdf
Publication-Status: published as B. Douglas Bernheim & Erik Madsen, 2017. "Price Cutting and Business Stealing in Imperfect Cartels," American Economic Review, vol 107(2), pages 387-424.
Abstract: Though economists have made substantial progress toward formulating theories of collusion in industrial cartels that account for a variety of fact patterns, important puzzles remain. Standard models of repeated interaction formalize the observation that cartels keep participants in line through the threat of punishment, but they fail to explain two important factual observations: first, apparently deliberate cheating actually occurs; second, it frequently goes unpunished even when it is detected. We propose a theory of "equilibrium price cutting and business stealing" in cartels to bridge this gap between theory and observation.
Handle: RePEc:nbr:nberwo:19993
Template-Type: ReDIF-Paper 1.0
Title: Optimal Development Policies with Financial Frictions
Classification-JEL: E60; F40; O1
Author-Name: Oleg Itskhoki
Author-Person: pit14
Author-Name: Benjamin Moll
Author-Person: pmo661
Note: DEV EFG IFM
Number: 19994
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19994
File-URL: http://www.nber.org/papers/w19994.pdf
File-Format: application/pdf
Publication-Status: published as Oleg Itskhoki & Benjamin Moll, 2019. "Optimal Development Policies With Financial Frictions," Econometrica, Econometric Society, vol. 87(1), pages 139-173, January.
Abstract: We study optimal dynamic Ramsey policies in a standard growth model with financial frictions. For developing countries with low financial wealth, the optimal policy intervention increases labor supply and lowers wages, resulting in higher entrepreneurial profits and faster wealth accumulation. This in turn relaxes borrowing constraints in the future, leading to higher labor productivity and wages. The use of additional policy instruments, such as subsidized credit, may be optimal as well. In the long run, the optimal policy reverses sign. Taking advantage of the tractability of our framework, we extend the model to study its implications for optimal exchange rate and sectoral industrial policies.
Handle: RePEc:nbr:nberwo:19994
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Federalism and Legislative Malapportionment: Causal Evidence from Independent but Related Natural Experiments
Classification-JEL: D72; D78; H3
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Iván Torre
Author-Person: pto502
Author-Name: Gustavo Torrens
Note: DEV
Number: 19995
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19995
File-URL: http://www.nber.org/papers/w19995.pdf
File-Format: application/pdf
Publication-Status: published as Sebastian Galiani & Iván Torre & Gustavo Torrens, 2016. "Fiscal Federalism and Legislative Malapportionment: Causal Evidence from Independent but Related Natural Experiments," Economics and Politics, Wiley Blackwell, vol. 28(1), pages 133-159, 03.
Abstract: We exploit three natural experiments in Argentina in order to study the role of legislative malapportionment on the biased federal tax sharing scheme prevalent in the country. We do not find support to attribute it to legislative malapportionment during periods when democratic governments were in place; nor did we find any evidence that the tax sharing distribution pattern became less biased under centralized military governments. We argue that these results are attributable to two of Argentina's institutional characteristics: first, the predominance of the executive branch over the legislature; and, second, the lack of any significant difference in the pattern of geographic representation in the executive branch under democratic and autocratic governments. Thus, the observed biases in the distribution of tax revenues among the Argentine provinces are not caused by legislative malapportionment, but are instead the result of a more structural political equilibrium that transcends the geographic distribution of legislative representation and even the nature of the political regime. Our findings also illustrate the importance of informal institutions and the interactions between formal and informal institutions. Legislative malapportionment could have an innocuous influence in countries with a strong executive branch but could become a key factor in countries with an empowered Congress.
Handle: RePEc:nbr:nberwo:19995
Template-Type: ReDIF-Paper 1.0
Title: Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program
Classification-JEL: H53; I38; J22; K42
Author-Name: Richard Wright
Author-Name: Erdal Tekin
Author-Person: pte12
Author-Name: Volkan Topalli
Author-Name: Chandler McClellan
Author-Person: pmc194
Author-Name: Timothy Dickinson
Author-Name: Richard Rosenfeld
Note: EH LE LS PE
Number: 19996
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19996
File-URL: http://www.nber.org/papers/w19996.pdf
File-Format: application/pdf
Publication-Status: published as Richard Wright & Erdal Tekin & Volkan Topalli & Chandler McClellan & Timothy Dickinson & Richard Rosenfeld, 2017. "Less Cash, Less Crime: Evidence from the Electronic Benefit Transfer Program," The Journal of Law and Economics, vol 60(2), pages 361-383.
Abstract: It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods where street offenses are concentrated, a significant source of circulating cash stems from public assistance or welfare payments. In the 1990s, the Federal government mandated individual states to convert the delivery of their welfare benefits from paper checks to an Electronic Benefit Transfer (EBT) system, whereby recipients received and expended their funds through debit cards. In this paper, we examine whether the reduction in the circulation of cash on the streets associated with EBT implementation had an effect on crime. To address this question, we exploit the variation in the timing of the EBT implementation across Missouri counties. Our results indicate that the EBT program had a negative and significant effect on the overall crime rate as well as burglary, assault, and larceny. According to our point estimates, the overall crime rate decreased by 9.8 percent in response to the EBT program. We also find a negative effect on arrests, especially those associated with non-drug offenses. EBT implementation had no effect on rape, a crime that is unlikely to be motivated by the acquisition of cash. Interestingly, the significant drop in crime in the United States over several decades has coincided with a period of steady decline in the proportion of financial transactions involving cash. In that sense, our findings serve as a fresh contribution to the important debate surrounding the factors underpinning the great American crime decline.
Handle: RePEc:nbr:nberwo:19996
Template-Type: ReDIF-Paper 1.0
Title: Anatomy of a Credit Crunch: From Capital to Labor Markets
Classification-JEL: E24; E44; L25
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Roberto Fattal-Jaef
Author-Name: Yongseok Shin
Author-Person: psh383
Note: EFG
Number: 19997
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19997
File-URL: http://www.nber.org/papers/w19997.pdf
File-Format: application/pdf
Publication-Status: published as Francisco Buera & Roberto Fattal-Jaef & Yongseok Shin, 2015. "Anatomy of a Credit Crunch: From Capital to Labor Markets," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(1), January.
Abstract: Why are financial crises associated with a sustained rise in unemployment? We develop a tractable model with frictions in both credit and labor markets to study the aggregate and micro-level implications of a credit crunch--i.e., a tightening of collateral constraints. When we simulate a credit crunch calibrated to match the observed decline in the ratio of debt to non-financial assets of the United States business sector following the 2007-8 crisis, our model generates a sharp decline in output--explained by a drop in aggregate total factor productivity and investment--and a protracted increase in unemployment. We then explore the micro-level impact by tracking the employment dynamics for firms of different sizes and ages. The credit crunch causes a much larger reduction in the net employment growth rate of small, young establishments relative to that of large, old producers, consistent with the recent empirical findings in the literature.
Handle: RePEc:nbr:nberwo:19997
Template-Type: ReDIF-Paper 1.0
Title: Risk Adjustment of Health Plan Payments to Correct Inefficient Plan Choice from Adverse Selection
Classification-JEL: I13; I18
Author-Name: Jacob Glazer
Author-Person: pgl69
Author-Name: Thomas McGuire
Author-Name: Julie Shi
Author-Person: psh802
Note: EH
Number: 19998
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19998
File-URL: http://www.nber.org/papers/w19998.pdf
File-Format: application/pdf
Publication-Status: published as Risk Adjustment of Health Plan Payments to Correct Inefficient Plan Choice from Adverse Selection, Jacob Glazer, Thomas G. McGuire, Julie Shi. in Measuring and Modeling Health Care Costs, Aizcorbe, Baker, Berndt, and Cutler. 2018
Abstract: This paper develops and implements a statistical methodology to account for the equilibrium effects (aka adverse selection) in design of risk adjustment formula in health insurance markets. Our setting is modeled on the situation in Medicare and the new state Exchanges where individuals sort themselves between a discrete set of plan types (here, two). Our "Silver" and "Gold" plans have fixed characteristics, as in the well-known research on selection and efficiency by Einav and Finkelstein (EF). We build on the EF model in several respects, including by showing that risk adjustment can be used to achieve the premiums that will lead to efficient sorting. The target risk adjustment weights can be found by use of constrained regressions, where the constraints in the estimation are conditions on premiums that should be satisfied in equilibrium. We illustrate implementation of the method with data from seven years of the Medical Expenditure Panel Survey.
Handle: RePEc:nbr:nberwo:19998
Template-Type: ReDIF-Paper 1.0
Title: Building State Capacity: Evidence from Biometric Smartcards in India
Classification-JEL: D73; H53; I38; O30; O31
Author-Name: Karthik Muralidharan
Author-Person: pmu102
Author-Name: Paul Niehaus
Author-Person: pni384
Author-Name: Sandip Sukhtankar
Author-Person: psu261
Note: DEV PE POL
Number: 19999
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w19999
File-URL: http://www.nber.org/papers/w19999.pdf
File-Format: application/pdf
Publication-Status: published as Karthik Muralidharan & Paul Niehaus & Sandip Sukhtankar, 2016. "Building State Capacity: Evidence from Biometric Smartcards in India," American Economic Review, vol 106(10), pages 2895-2929.
Abstract: Anti-poverty programs in developing countries are often difficult to implement; in particular, many governments lack the capacity to deliver payments securely to targeted beneficiaries. We evaluate the impact of biometrically-authenticated payments infrastructure ("Smartcards") on beneficiaries of employment (NREGS) and pension (SSP) programs in the Indian state of Andhra Pradesh, using a large-scale experiment that randomized the rollout of Smartcards over 158 sub- districts and 19 million people. We find that, while incompletely implemented, the new system delivered a faster, more predictable, and less corrupt NREGS payments process without adversely affecting program access. For each of these outcomes, treatment group distributions first-order stochastically dominated those of the control group. The investment was cost-effective, as time savings to NREGS beneficiaries alone were equal to the cost of the intervention, and there was also a significant reduction in the "leakage" of funds between the government and beneficiaries in both NREGS and SSP programs. Beneficiaries overwhelmingly preferred the new system for both programs. Overall, our results suggest that investing in secure payments infrastructure can significantly enhance "state capacity" to implement welfare programs in developing countries.
Handle: RePEc:nbr:nberwo:19999
Template-Type: ReDIF-Paper 1.0
Title: Getting Better or Feeling Better? How Equity Investors Respond to Investment Experience
Classification-JEL: G11
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Tarun Ramadorai
Author-Person: pra44
Author-Name: Benjamin Ranish
Note: AP
Number: 20000
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20000
File-URL: http://www.nber.org/papers/w20000.pdf
File-Format: application/pdf
Abstract: Using a large representative sample of Indian retail equity investors, many of them new to the stock market, we show that both years of investment experience and feedback from investment returns have significant effects on investor behavior, favored stock styles, and performance. We identify two channels of feedback: performance relative to the market, and the directly experienced returns to behavior and styles of stock. Both of these vary across investors at a point in time because investors are imperfectly diversified and receive idiosyncratic returns. We find that experienced investors generally behave in a manner more consistent with the recommendations of finance theory, although this tendency is weakened by strong investment performance. High trading profits increase turnover, while high returns to equity styles have a short-term negative and a longer-term positive effect on investors' style demands, possibly reflecting the offsetting effects of disposition bias and style chasing. We document high returns on a portfolio of stocks held by experienced investors, and on individual Indian stocks with an experienced and low-turnover investor base.
Handle: RePEc:nbr:nberwo:20000
Template-Type: ReDIF-Paper 1.0
Title: Option Value of Work, Health Status, and Retirement Decisions in Japan: Evidence from the Japanese Study on Aging and Retirement (JSTAR)
Classification-JEL: H55; I14; J26
Author-Name: Satoshi Shimizutani
Author-Person: psh330
Author-Name: Takashi Oshio
Author-Name: Mayu Fujii
Note: PE
Number: 20001
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20001
File-URL: http://www.nber.org/papers/w20001.pdf
File-Format: application/pdf
Publication-Status: published as Option Value of Work, Health Status, and Retirement Decisions in Japan: Evidence from the Japanese Study on Aging and Retirement (JSTAR), Satoshi Shimizutani, Takashi Oshio, Mayu Fujii. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: This study examined the factors that affect the retirement decisions of the middle-aged and elderly in Japan, focusing especially on their earnings, public pension benefits, and health status. Using two-year panel data from the JSTAR and applying the OV model proposed by Stock and Wise (1990a, 1990b), we found that the probability of retirement has a negative and significant correlation with the OV of work, and that correlation does not depend on the health status. Our counter-factual simulation based on the OV model showed that, if the probability of being enrolled in the disability program were zero, the average years of work when individuals are in their 50s and 60s would increase. However, it should be emphasized that, in Japan--where being enrolled in the disability program is unlikely to make one a candidate for the retirement path--the result of this simulation does not indicate that satisfying the eligibility criteria for disability pension receipts will more stringently increase the labor supplied by the middle-aged and elderly.
Handle: RePEc:nbr:nberwo:20001
Template-Type: ReDIF-Paper 1.0
Title: A Global View of Cross-Border Migration
Classification-JEL: F12; F15; F22; F24
Author-Name: Julian di Giovanni
Author-Person: pdi67
Author-Name: Andrei Levchenko
Author-Person: ple223
Author-Name: Francesc Ortega
Author-Person: por100
Note: IFM ITI
Number: 20002
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20002
File-URL: http://www.nber.org/papers/w20002.pdf
File-Format: application/pdf
Publication-Status: published as Julian Giovanni & Andrei A. Levchenko & Francesc Ortega, 2015. "A Global View Of Cross-Border Migration," Journal of the European Economic Association, European Economic Association, vol. 13(1), pages 168-202, 02.
Abstract: This paper evaluates the global welfare impact of observed levels of migration using a quantitative multi-sector model of the world economy calibrated to aggregate and firm-level data. Our framework features cross-country labor productivity differences, international trade, remittances, and a heterogeneous workforce. We compare welfare under the observed levels of migration to a no-migration counterfactual. In the long run, natives in countries that received a lot of migration - such as Canada or Australia - are better off due to greater product variety available in consumption and as intermediate inputs. In the short run the impact of migration on average welfare in these countries is close to zero, while the skilled and unskilled natives tend to experience welfare changes of opposite signs. The remaining natives in countries with large emigration flows - such as Jamaica or El Salvador - are also better off due to migration, but for a different reason: remittances. The welfare impact of observed levels of migration is substantial, at about 5 to 10% for the main receiving countries and about 10% in countries with large incoming remittances. Our results are robust to accounting for imperfect transferability of skills, selection into migration, and imperfect substitution between natives and immigrants.
Handle: RePEc:nbr:nberwo:20002
Template-Type: ReDIF-Paper 1.0
Title: Commodity-Price Comovement and Global Economic Activity
Classification-JEL: E3; F4
Author-Name: Ron Alquist
Author-Person: pal453
Author-Name: Saroj Bhattarai
Author-Person: pbh111
Author-Name: Olivier Coibion
Author-Person: pco205
Note: EFG IFM ME
Number: 20003
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20003
File-URL: http://www.nber.org/papers/w20003.pdf
File-Format: application/pdf
Publication-Status: published as Ron Alquist & Saroj Bhattarai & Olivier Coibion, 2019. "Commodity-Price Comovement and Global Economic Activity," Journal of Monetary Economics, .
Abstract: Guided by a macroeconomic model in which commodity prices are endogenously determined, we apply a new factor-based identification strategy to decompose the historical sources of changes in commodity prices and global economic activity. The model yields a factor structure for commodity prices and identification conditions that provide the factors with an economic interpretation: one factor captures the combined contribution of shocks that affect commodity markets only through general-equilibrium forces. Applied to a cross-section of commodity prices since 1968, the theoretical restrictions are consistent with the data and yield structural interpretations of the common factors in commodity prices. Commodity-related shocks have contributed modestly to global economic fluctuations.
Handle: RePEc:nbr:nberwo:20003
Template-Type: ReDIF-Paper 1.0
Title: Democracy Does Cause Growth
Classification-JEL: O10; P16
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Suresh Naidu
Author-Name: Pascual Restrepo
Author-Person: pre276
Author-Name: James A. Robinson
Author-Person: pro179
Note: DEV EFG POL
Number: 20004
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20004
File-URL: http://www.nber.org/papers/w20004.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2019. "Democracy Does Cause Growth," Journal of Political Economy, vol 127(1), pages 47-100.
Abstract: We provide evidence that democracy has a significant and robust positive effect on GDP. Our empirical strategy relies on a dichotomous measure of democracy coded from several sources to reduce measurement error and controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy on economic growth. Our baseline results use a linear model for GDP dynamics estimated using either a standard within estimator or various different Generalized Method of Moments estimators, and show that democratizations increase GDP per capita by about 20% in the long run. These results are confirmed when we use a semiparametric propensity score matching estimator to control for GDP dynamics. We also obtain similar results using regional waves of democratizations and reversals to instrument for country democracy. Our results suggest that democracy increases future GDP by encouraging investment, increasing schooling, inducing economic reforms, improving public good provision, and reducing social unrest. We find little support for the view that democracy is a constraint on economic growth for less developed economies.
Handle: RePEc:nbr:nberwo:20004
Template-Type: ReDIF-Paper 1.0
Title: Unintended Consequences of Products Liability: Evidence from the Pharmaceutical Market
Classification-JEL: H7; I1; I11; K13
Author-Name: Eric Helland
Author-Person: phe24
Author-Name: Darius N. Lakdawalla
Author-Person: pla295
Author-Name: Anup Malani
Author-Person: pma903
Author-Name: Seth A. Seabury
Author-Person: pse623
Note: EH LE PE
Number: 20005
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20005
File-URL: http://www.nber.org/papers/w20005.pdf
File-Format: application/pdf
Publication-Status: published as Eric Helland & Darius Lakdawalla & Anup Malani & Seth A Seabury, 2021. "Unintended Consequences of Products Liability: Evidence from the Pharmaceutical Market*," The Journal of Law, Economics, and Organization, vol 36(3), pages 598-632.
Abstract: In a complex economy, production is vertical and crosses jurisdictional lines. Goods are often produced by a global or national firm upstream and improved or distributed by local firms downstream. In this context, heightened products liability may have unintended consequences for consumer safety. Conventional wisdom holds that an increase in tort liability on the upstream firm will encourage that firm to improve safety for consumers. However, in the real-world, policy actions in a single jurisdiction may not be significant enough to influence the behavior of an upstream firm that produces for many jurisdictions. Even worse, if liability is shared between upstream and downstream firms, higher upstream liability may decrease the liability of the downstream distributor and encourage it to behave more recklessly. In this manner, higher upstream liability may perversely increase the sales of a risky good. We demonstrate this phenomenon in the context of the pharmaceutical market. We show that higher products liability on upstream pharmaceutical manufacturers reduces the liability faced by downstream doctors, who respond by prescribing more drugs than before.
Handle: RePEc:nbr:nberwo:20005
Template-Type: ReDIF-Paper 1.0
Title: Does Classroom Time Matter? A Randomized Field Experiment of Hybrid and Traditional Lecture Formats in Economics
Classification-JEL: I20; I23
Author-Name: Theodore J. Joyce
Author-Person: pjo112
Author-Name: Sean Crockett
Author-Person: pcr145
Author-Name: David A. Jaeger
Author-Person: pja17
Author-Name: Onur Altindag
Author-Person: pal706
Author-Name: Stephen D. O'Connell
Author-Person: poc22
Note: ED
Number: 20006
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20006
File-URL: http://www.nber.org/papers/w20006.pdf
File-Format: application/pdf
Publication-Status: published as Joyce, Ted, Sean Crockett, David A. Jaeger, Onur Altindag, Stephen D. O'Connell "Does Classroom Time Matter?" Economics of Education Review, 46:64-77 (June 2015).
Abstract: We test whether students in a hybrid format of introductory microeconomics, which met once per week, performed as well as students in a traditional lecture format of the same class, which met twice per week. We randomized 725 students at a large, urban public university into the two formats, and unlike past studies, had a very high participation rate of 96 percent. Two experienced professors taught one section of each format, and students in both formats had access to the same online materials. We find that students in the traditional format scored 2.3 percentage points more on a 100-point scale on the combined midterm and final. There were no differences between formats in non-cognitive effort (attendance, time spent with online materials) nor in withdrawal from the class. Comparing our experimental estimates of the effect of attendance with non-experimental estimates using only students in the traditional format, we find that the non-experimental were 2.5 times larger, suggesting that the large effects of attending lectures found in the previous literature are likely due to selection bias. Overall our results suggest that hybrid classes may offer a cost effective alternative to traditional lectures while having a small impact on student performance.
Handle: RePEc:nbr:nberwo:20006
Template-Type: ReDIF-Paper 1.0
Title: The Behavioralist As Tax Collector: Using Natural Field Experiments to Enhance Tax Compliance
Classification-JEL: C93; H2; H26
Author-Name: Michael Hallsworth
Author-Name: John List
Author-Person: pli176
Author-Name: Robert Metcalfe
Author-Person: pme196
Author-Name: Ivo Vlaev
Note: PE
Number: 20007
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20007
File-URL: http://www.nber.org/papers/w20007.pdf
File-Format: application/pdf
Publication-Status: published as Hallsworth, Michael & List, John A. & Metcalfe, Robert D. & Vlaev, Ivo, 2017. "The behavioralist as tax collector: Using natural field experiments to enhance tax compliance," Journal of Public Economics, Elsevier, vol. 148(C), pages 14-31.
Abstract: Tax collection problems date back to the earliest recorded history of mankind. This paper begins with a simple theoretical construct of paying (rather than declaring) taxes, which we argue has been an overlooked aspect of tax compliance. This construct is then tested in two large natural field experiments. Using administrative data from more than 200,000 individuals in the UK, we show that including social norms and public goods messages in standard tax payment reminder letters considerably enhances tax compliance. The field experiments increased taxes collected by the Government in the sample period and were cost-free to implement, demonstrating the potential importance of such interventions in increasing tax compliance.
Handle: RePEc:nbr:nberwo:20007
Template-Type: ReDIF-Paper 1.0
Title: On the Role of Group Size in Tournaments: Theory and Evidence from Lab and Field Experiments
Classification-JEL: C9; C91; C93; D47; H41
Author-Name: John List
Author-Person: pli176
Author-Name: Daan Van Soest
Author-Person: pva230
Author-Name: Jan Stoop
Author-Person: pst453
Author-Name: Haiwen Zhou
Author-Person: pzh148
Note: IO PE
Number: 20008
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20008
File-URL: http://www.nber.org/papers/w20008.pdf
File-Format: application/pdf
Publication-Status: published as John A. List & Daan van Soest & Jan Stoop & Haiwen Zhou, 2020. "On the Role of Group Size in Tournaments: Theory and Evidence from Laboratory and Field Experiments," Management Science, vol 66(10), pages 4359-4377.
Abstract: Both private and public organizations constantly grapple with incentive schemes to induce maximum effort from agents. We begin with a theoretical exploration of optimal contest design, focusing on the number of competitors. Our theory reveals a critical link between the distribution of luck and the number of contestants. We find that if there is considerable (little) mass on good draws, equilibrium effort is an increasing (decreasing) function of the number of contestants. Our first test of the theory implements a laboratory experiment, where important features of the theory can be exogenously imposed. We complement our lab experiment with a field experiment, where we rely on biological models complemented by economic models to inform us of the relevant theoretical predictions. In both cases we find that the theory has a fair amount of explanatory power, allowing a deeper understanding of how to effectively design tournaments. From a methodological perspective, our study showcases the benefits of combining data from both lab and field experiments to deepen our understanding of the economic science.
Handle: RePEc:nbr:nberwo:20008
Template-Type: ReDIF-Paper 1.0
Title: Debt, Taxes, and Liquidity
Classification-JEL: E22; G32; G35; H24; H25
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Hui Chen
Author-Person: pch718
Author-Name: Neng Wang
Author-Person: pwa390
Note: AP CF PE
Number: 20009
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20009
File-URL: http://www.nber.org/papers/w20009.pdf
File-Format: application/pdf
Abstract: We analyze a model of optimal capital structure and liquidity choice based on a dynamic tradeoff theory for financially constrained firms. In addition to the classical tradeoff between the expected tax advantages of debt and bankruptcy costs, we introduce a cost of external financing for the firm, which generates a precautionary demand for liquidity and an optimal liquidity management policy for the firm. An important new cost of debt financing in this context is an endogenous debt servicing cost: debt payments drain the firm's valuable liquidity reserves and thus impose higher expected external financing costs on the firm. The precautionary demand for liquidity also means that realized earnings are separated in time from payouts to shareholders, implying that the classical Miller-formula for the net tax benefits of debt no longer holds. Our model offers a novel perspective for the "debt conservatism puzzle" by showing that financially constrained firms choose to limit debt usages in order to preserve their liquidity. In some cases, they may not even exhaust their risk-free debt capacity.
Handle: RePEc:nbr:nberwo:20009
Template-Type: ReDIF-Paper 1.0
Title: Using Social Media to Measure Labor Market Flows
Classification-JEL: C81; C82; E24; J60
Author-Name: Dolan Antenucci
Author-Name: Michael Cafarella
Author-Name: Margaret Levenstein
Author-Person: ple808
Author-Name: Christopher Ré
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Note: EFG LS ME PR
Number: 20010
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20010
File-URL: http://www.nber.org/papers/w20010.pdf
File-Format: application/pdf
Abstract: Social media enable promising new approaches to measuring economic activity and analyzing economic behavior at high frequency and in real time using information independent from standard survey and administrative sources. This paper uses data from Twitter to create indexes of job loss, job search, and job posting. Signals are derived by counting job-related phrases in Tweets such as "lost my job." The social media indexes are constructed from the principal components of these signals. The University of Michigan Social Media Job Loss Index tracks initial claims for unemployment insurance at medium and high frequencies and predicts 15 to 20 percent of the variance of the prediction error of the consensus forecast for initial claims. The social media indexes provide real-time indicators of events such as Hurricane Sandy and the 2013 government shutdown. Comparing the job loss index with the search and posting indexes indicates that the Beveridge Curve has been shifting inward since 2011. The University of Michigan Social Media Job Loss index is update weekly and is available at http://econprediction.eecs.umich.edu/.
Handle: RePEc:nbr:nberwo:20010
Template-Type: ReDIF-Paper 1.0
Title: Predictability and Power in Legislative Bargaining
Classification-JEL: D72; D78
Author-Name: S. Nageeb Ali
Author-Person: pal182
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Author-Name: Xiaochen Fan
Note: PE POL
Number: 20011
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20011
File-URL: http://www.nber.org/papers/w20011.pdf
File-Format: application/pdf
Publication-Status: published as S Nageeb Ali & B Douglas Bernheim & Xiaochen Fan, 2019. "Predictability and Power in Legislative Bargaining," The Review of Economic Studies, vol 86(2), pages 500-525.
Abstract: This paper examines the relationship between the concentration of political power in legislative bargaining and the predictability of the process governing the recognition of legislators. Our main result establishes that, for a broad class of legislative bargaining games, if the recognition procedure permits the legislators to rule out some minimum number of proposers one round in advance, then irrespective of how patient the individual legislators are, Markovian equilibria necessarily deliver all economic surplus to the first proposer. We also examine the extent to which alternative bargaining protocols can limit the concentration of power.
Handle: RePEc:nbr:nberwo:20011
Template-Type: ReDIF-Paper 1.0
Title: Why Stars Matter
Classification-JEL: I23; J24; O31
Author-Name: Ajay K. Agrawal
Author-Person: pag38
Author-Name: John McHale
Author-Person: pmc145
Author-Name: Alex Oettl
Note: LS PR
Number: 20012
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20012
File-URL: http://www.nber.org/papers/w20012.pdf
File-Format: application/pdf
Abstract: The growing peer effects literature pays particular attention to the role of stars. We decompose the causal effect of hiring a star in terms of the productivity impact on: 1) co-located incumbents and 2) new recruits. Using longitudinal university department-level data we report that hiring a star does not increase overall incumbent productivity, although this aggregate effect hides offsetting effects on related (positive) versus unrelated (negative) colleagues. However, the primary impact comes from an increase in the average quality of subsequent recruits. This is most pronounced at mid-ranked institutions, suggesting implications for the socially optimal spatial organization of talent.
Handle: RePEc:nbr:nberwo:20012
Template-Type: ReDIF-Paper 1.0
Title: Preferences, Selection, and Value Added: A Structural Approach
Classification-JEL: I20; I21
Author-Name: Saziye P. Akyol
Author-Person: pak155
Author-Name: Kala Krishna
Author-Person: pkr26
Note: ED PE
Number: 20013
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20013
File-URL: http://www.nber.org/papers/w20013.pdf
File-Format: application/pdf
Publication-Status: published as Şaziye Pelin Akyol & Kala Krishna, 2016. "Preferences, Selection, and Value Added: A Structural Approach," European Economic Review, .
Abstract: This paper investigates two main questions: i) What do applicants take into consideration when choosing a high school? ii) To what extent do schools contribute to their students' academic success? To answer these questions, we model students' preferences and derive demand for each school by taking each student's feasible set of schools into account. We obtain average valuation placed on each school from market clearing conditions. Next, we investigate what drives these valuations by carefully controlling for endogeneity using a set of creative instruments suggested by our model. Finally, controlling for mean reversion bias, we look at each school's value-added. We find that students infer the quality of a school from its selectivity and past performance on the university entrance exam. However, the evidence on the value- added by schools shows that highly valued or selective schools do not have high value- added on their students' academic outcomes.
Handle: RePEc:nbr:nberwo:20013
Template-Type: ReDIF-Paper 1.0
Title: Intellectual Property Rights, the Pool of Knowledge, and Innovation
Classification-JEL: E61; H41; O3; O31; O32; O33; O34; O38
Author-Name: Joseph E. Stiglitz
Note: PE PR
Number: 20014
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20014
File-URL: http://www.nber.org/papers/w20014.pdf
File-Format: application/pdf
Abstract: The pace of innovation is related both to the level of investment in innovation and the pool of knowledge from which innovators can draw. Both of these are endogenous: Investments in innovations are affected by the pool of knowledge and the ability of firms to appropriate the returns to their innovative activity, itself affected by the intellectual property rights (IPR) regime. But as each firm engages in research, it both contributes to the pool, and takes out from it. The strength and design of IPR affects the extent to which any innovation adds to or subtracts from the pool of ideas that are available to be commercially exploited, i.e. to the technological opportunities. We construct the simplest possible general model to explore the resulting dynamics, showing that, under plausible conditions, stronger intellectual property rights may lead to a lower pace of innovation, and more generally, that long run effects may be the opposite of the short run effects.
Handle: RePEc:nbr:nberwo:20014
Template-Type: ReDIF-Paper 1.0
Title: Holdup by Junior Claimholders: Evidence from the Mortgage Market
Classification-JEL: G21
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: Yan Zhang
Note: CF
Number: 20015
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20015
File-URL: http://www.nber.org/papers/w20015.pdf
File-Format: application/pdf
Publication-Status: published as Sumit Agarwal & Gene Amromin & Itzhak Ben-David & Souphala Chomsisengphet & Yan Zhang, 2019. "Holdup by Junior Claimholders: Evidence from the Mortgage Market," Journal of Financial and Quantitative Analysis, vol 54(01), pages 247-274.
Abstract: When borrowers are delinquent, senior debtholders prefer liquidation whereas junior debtholders prefer to maintain their option value by delaying resolution or modifying the loan. In the mortgage market, a conflict of interest (“holdup”) arises when servicers of securitized senior liens are also the owners of the junior liens on the same property. We show that holdup servicers are able to delay action on the first-lien mortgage. When they do act, servicers are more likely to choose resolutions that maintain their option value, favoring modification and soft foreclosures over outright foreclosures. Holdup behavior is more likely to result in borrower self-curing.
Handle: RePEc:nbr:nberwo:20015
Template-Type: ReDIF-Paper 1.0
Title: Specialty drug prices and utilization after loss of U.S. patent exclusivity, 2001-2007
Classification-JEL: D04; I11; I18; L11; L65
Author-Name: Rena M. Conti
Author-Name: Ernst R. Berndt
Note: EH PR
Number: 20016
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20016
File-URL: http://www.nber.org/papers/w20016.pdf
File-Format: application/pdf
Publication-Status: published as Specialty Drug Prices and Utilization after Loss of U.S. Patent Exclusivity, 2001–2007, Rena M. Conti, Ernst R. Berndt. in Measuring and Modeling Health Care Costs, Aizcorbe, Baker, Berndt, and Cutler. 2018
Abstract: We examine the impact of loss of U.S. patent exclusivity (LOE) on the prices and utilization of specialty drugs between 2001 and 2007. We limit our empirical cohort to drugs commonly used to treat cancer and base our analyses on nationally representative data from IMS Health. We begin by describing the average number of manufacturers entering specialty drugs following LOE. We observe the number of manufacturers entering the production of newly generic specialty drugs ranges between two and five per molecule in the years following LOE, which is generally less than that observed historically for non-specialty drugs. However, the existence of time-varying and unobservable contract manufacturing practices complicates the definition of "manufacturers" entering this market. We use pooled time series methods to examine whether the neoclassical relationship between price declines and volume increases upon LOE holds among these drugs. First, we examine the extent to which estimated prices of these drug undergoing LOE fall with generic entry. Second, we estimate reduced form random effects models of utilization subsequent to LOE. We observe substantial price erosion after generic entry; average monthly price declines appear to be larger among physician-administered drugs (38-46.4%) compared to oral drugs (25-26%). Additionally, we find average prices for drugs produced by branded manufacturers rise and prices for drugs produced by generic manufacturers fall upon LOE. The latter effect is particularly large among oral drugs. In pooled models, volume appears to increase following generic entry, but this result appears to be largely driven by oral drugs. We discuss second-best welfare consequences of these results.
Handle: RePEc:nbr:nberwo:20016
Template-Type: ReDIF-Paper 1.0
Title: The Nature of Surgeon Human Capital Depreciation
Classification-JEL: I10; J24
Author-Name: Jason Hockenberry
Author-Person: pho381
Author-Name: Lorens Helmchen
Note: EH
Number: 20017
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20017
File-URL: http://www.nber.org/papers/w20017.pdf
File-Format: application/pdf
Publication-Status: published as Hockenberry, Jason M. & Helmchen, Lorens A., 2014. "The nature of surgeon human capital depreciation," Journal of Health Economics, Elsevier, vol. 37(C), pages 70-80.
Abstract: To test how practice interruptions affect worker productivity, we estimate how temporal breaks affect surgeons' performance of coronary artery bypass grafting (CABG). Using a sample of 188 surgeons who performed 56,315 CABG procedures in Pennsylvania between 2006 and 2010, we find that a surgeon's additional day away from the operating room raised patients' inpatient mortality risk by up to 0.067 percentage points (2.4% relative effect) but reduced total hospitalization costs by up to 0.59 percentage points. In analyses of 93 high-volume surgeons treating 9,853 patients admitted via an emergency department, where temporal distance effects are most plausibly exogenous, an additional day away raised mortality risk by 0.398 percentage points (11.4% relative effect) but reduced cost by up to 1.396 percentage points. These estimates imply a cost per life-year saved ranging from $7,871 to $18,500, rendering additional treatment intensity within surgery cost-effective at conventional cutoffs. Our findings are consistent with the hypothesis that after returning from temporal breaks surgeons may be less likely to recognize and address life-threatening complications, in turn reducing resource use. This form of human capital loss would explain the decrease in worker productivity and the simultaneous reduction in input use.
Handle: RePEc:nbr:nberwo:20017
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Emerging Climate Risks on Urban Real Estate Price Dynamics
Classification-JEL: Q54; R3
Author-Name: Devin Michelle Bunten
Author-Person: pbu407
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: AP EEE PE
Number: 20018
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20018
File-URL: http://www.nber.org/papers/w20018.pdf
File-Format: application/pdf
Abstract: In the typical asset market, an asset featuring uninsurable idiosyncratic risk must offer a higher rate of return to compensate risk-averse investors. A home offers a standard asset's risk and return opportunities, but it also bundles access to its city's amenities|and to its climate risks. As climate change research reveals the true nature of these risks, how does the equilibrium real estate pricing gradient change when households can sort into different cities? When the population is homogeneous, the real estate pricing gradient instantly reflects the "new news". With population heterogeneity, an event study research design will underestimate the valuation of climate risk for households in low-risk cities while overestimating the valuation of households in high-risk areas.
Handle: RePEc:nbr:nberwo:20018
Template-Type: ReDIF-Paper 1.0
Title: How Consumers Respond to Environmental Certification and the Value of Energy Information
Classification-JEL: D12; D83; L15; Q41; Q50
Author-Name: Sébastien Houde
Note: EEE IO
Number: 20019
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20019
File-URL: http://www.nber.org/papers/w20019.pdf
File-Format: application/pdf
Abstract: The ENERGY STAR certification is a voluntary labeling that favors the adoption of energy efficient products. In the US appliance market, the label is a coarse summary of otherwise readily accessible information. Using micro-data of the US refrigerator market, I develop a structural demand model and find that consumers respond to certification in different ways. Some consumers have a large willingness to pay for the label, well beyond the energy savings associated with certified products; others appear to pay attention to electricity costs, but not to the certification, and still others appear to be insensitive to both electricity costs and ENERGY STAR. The findings suggest that the certification acts as a substitute for more accurate, but complex energy information. Using the structural model, I find that the opportunity cost of having imperfectly informed consumers in the refrigerator market ranges from $12 to $17 per refrigerator sold.
Handle: RePEc:nbr:nberwo:20019
Template-Type: ReDIF-Paper 1.0
Title: The ACA: Some Unpleasant Welfare Arithmetic
Classification-JEL: E24; H21; I38
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG EH LS PE
Number: 20020
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20020
File-URL: http://www.nber.org/papers/w20020.pdf
File-Format: application/pdf
Abstract: Under the Affordable Care Act, between six and eleven million workers would increase their disposable income by cutting their weekly work hours. About half of them would primarily do so by making themselves eligible for the ACA's federal assistance with health insurance premiums and out-of-pocket health costs, despite the fact that subsidized workers are not able to pay health premiums with pre-tax dollars. The remainder would do so primarily by relieving their employers from penalties, or the threat of penalties, pursuant to the ACA's employer mandate. Women, especially those who are not married, are more likely than men to have their short-term financial reward to full-time work eliminated by the ACA. Additional workers, beyond the six to eleven million, could increase their disposable income by using reduced hours to climb one of the "cliffs" that are part of the ACA's mapping from household income to federal assistance.
Handle: RePEc:nbr:nberwo:20020
Template-Type: ReDIF-Paper 1.0
Title: How Much Favorable Selection Is Left in Medicare Advantage?
Classification-JEL: I1; I13; I18
Author-Name: Joseph P. Newhouse
Author-Name: Mary Price
Author-Name: J. Michael McWilliams
Author-Name: John Hsu
Author-Name: Thomas McGuire
Note: EH
Number: 20021
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20021
File-URL: http://www.nber.org/papers/w20021.pdf
File-Format: application/pdf
Publication-Status: published as Joseph P. Newhouse & Mary Price & John Hsu & J. Michael McWilliams & Thomas G. McGuire, 2015. "How Much Favorable Selection Is Left in Medicare Advantage?," American Journal of Health Economics, MIT Press, vol. 1(1), pages 1-26, Winter.
Abstract: There are two types of selection models in the health economics literature. One focuses on choice between a fixed set of contracts. Consumers with greater demand for medical care services prefer contracts with more generous reimbursement, resulting in a suboptimal proportion of consumers in such contracts in equilibrium. In extreme cases more generous contracts may disappear (the "death spiral"). In the other model insurers tailor the contracts they offer consumers to attract profitable consumers. An equilibrium may or may not exist in such models, but if it exists it is not first best. The Medicare Advantage program offers an opportunity to study these models empirically, although unlike the models in the economics literature there is a regulator with various tools to address selection. One such tool is risk adjustment, or making budget neutral transfers among insurers using observable characteristics of enrollees that predict spending. Medicare drastically changed its risk adjustment program starting in 2004 and made a number of other changes to reduce selection as well. Previous work has argued that the changes worsened selection. We show, using a much larger data set, that this was not the case, but that some inherent selection may remain.
Handle: RePEc:nbr:nberwo:20021
Template-Type: ReDIF-Paper 1.0
Title: Behavioral and Descriptive Forms of Choice Models
Classification-JEL: B4; C51; C57
Author-Name: Ariel Pakes
Author-Person: ppa20
Note: IO PR
Number: 20022
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20022
File-URL: http://www.nber.org/papers/w20022.pdf
File-Format: application/pdf
Publication-Status: published as Pakes, A. (2014), THE 2013 LAWRENCE R. KLEIN LECTURE: BEHAVIORAL AND DESCRIPTIVE FORMS OF CHOICE MODELS. International Economic Review, 55: 603-624. doi:10.1111/iere.12078
Abstract: Empirical work on choice models, especially work on relatively new topics or data sets, often starts with descriptive, or what is often colloquially referred to as "reduced form", results. Our descriptive form formalizes this process. It is derived from the underlying behavioral model, has an interpretation in terms of fit, and can sometimes be used to quantify biases in agents' expectations. We consider estimators for the descriptive form of discrete choice models with (and without) interacting agents that take account of approximation errors as well as unobservable sources of endogeneity. We conclude with an investigation of the descriptive form of two period entry models.
Handle: RePEc:nbr:nberwo:20022
Template-Type: ReDIF-Paper 1.0
Title: Book Translations as Idea Flows: The Effects of the Collapse of Communism on the Diffusion of Knowledge
Classification-JEL: F02; F15; N0; N70; N74; P20; P30; P51; P52
Author-Name: Ran Abramitzky
Author-Person: pab108
Author-Name: Isabelle Sin
Author-Person: psi661
Note: ITI LS PE POL PR
Number: 20023
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20023
File-URL: http://www.nber.org/papers/w20023.pdf
File-Format: application/pdf
Publication-Status: published as Ran Abramitzky & Isabelle Sin, 2014. "Book Translations As Idea Flows: The Effects Of The Collapse Of Communism On The Diffusion Of Knowledge," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1453-1520, December.
Abstract: We use book translations as a new measure of international idea flows and study the effects of Communism's collapse in Eastern Europe on these flows. Using novel data on 800,000 translations and difference-in-differences approaches, we show that while translations between Communist languages decreased by two thirds with the collapse, Western-to-Communist translations increased by a factor of four and quickly converged to Western levels. Convergence was more pronounced in the fields of applied and social sciences, and was more complete in Satellite and Baltic than in Soviet countries. We discuss how these patterns help us understand how repressive institutions and preferences towards Western European ideas shaped the international diffusion of knowledge.
Handle: RePEc:nbr:nberwo:20023
Template-Type: ReDIF-Paper 1.0
Title: Savings in Transnational Households: A Field Experiment among Migrants from El Salvador
Classification-JEL: F22; O16
Author-Name: Nava Ashraf
Author-Name: Diego Aycinena
Author-Person: pay58
Author-Name: Claudia Martinez
Author-Person: pma518
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV LS
Number: 20024
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20024
File-URL: http://www.nber.org/papers/w20024.pdf
File-Format: application/pdf
Publication-Status: published as Nava Ashraf & Diego Aycinena & Claudia MartÃnez A. & Dean Yang, 2015. "Savings in Transnational Households: A Field Experiment among Migrants from El Salvador," The Review of Economics and Statistics, MIT Press, vol. 2(97), pages 332-351, May.
Abstract: We implemented a randomized field experiment that tested ways to stimulate savings by international migrants in their origin country. We find that migrants value and take advantage of opportunities to exert greater control over financial activities in their home countries. In partnership with a Salvadoran bank, we offered U.S.-based migrants bank accounts in El Salvador. We randomly varied migrant control over El Salvador-based savings by offering different types of accounts across treatment groups. Migrants offered the greatest degree of control accumulated the most savings at the partner bank, compared to others offered less or no control over savings. Impacts are likely to represent increases in total savings: there is no evidence that savings increases were simply reallocated from other savings mechanisms. Enhanced control over home-country savings does not affect remittances sent home by migrants.
Handle: RePEc:nbr:nberwo:20024
Template-Type: ReDIF-Paper 1.0
Title: Input Diffusion and the Evolution of Production Networks
Classification-JEL: C67; D57; E10; L23; O33
Author-Name: Vasco M. Carvalho
Author-Name: Nico Voigtländer
Note: EFG IO PR
Number: 20025
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20025
File-URL: http://www.nber.org/papers/w20025.pdf
File-Format: application/pdf
Abstract: The adoption and diffusion of inputs in the production network is at the heart of technological progress. What determines which inputs are initially considered and eventually adopted by innovators? We examine the evolution of input linkages from a network perspective, starting from a stylized model of network formation. Producers direct their search for new inputs along vertical linkages, screening the network neighborhood of existing suppliers to identify potentially useful inputs. A subset of these is then adopted, following a tradeoff between the benefits from input variety and the costs of customizing new inputs. Guided by this framework, we document a novel stylized fact at both the sector and the firm level: producers are more likely to adopt inputs that are already used – directly or indirectly – by their current suppliers. In particular, using disaggregated input-output data, we show that initial network proximity of a sector in 1967 significantly increases the likelihood of adoption throughout the subsequent four decades. A one-standard deviation decrease in network distance is associated with an increase in the adoption probability by one third to one half. Similarly, U.S. firms are significantly more likely to develop new input linkages among their suppliers’ network neighborhood. Our results imply that the existing production network plays a crucial role in the diffusion of inputs and the evolution of technology.
Handle: RePEc:nbr:nberwo:20025
Template-Type: ReDIF-Paper 1.0
Title: Which Peers Matter? The Relative Impacts of Collaborators, Colleagues, and Competitors
Classification-JEL: D83; J24; O31
Author-Name: George J. Borjas
Author-Person: pbo44
Author-Name: Kirk B. Doran
Author-Person: pdo228
Note: LS
Number: 20026
Creation-Date: 2014-03
Order-URL: http://www.nber.org/papers/w20026
File-URL: http://www.nber.org/papers/w20026.pdf
File-Format: application/pdf
Publication-Status: published as George J. Borjas & Kirk B. Doran, 2015. "Which Peers Matter? The Relative Impacts of Collaborators, Colleagues, and Competitors," Review of Economics and Statistics, vol 97(5), pages 1104-1117.
Abstract: Many economists believe knowledge production generates positive spillovers among knowledge producers. The available evidence, however, is mixed. We argue that spillovers can exist along three dimensions (idea, geographic, and collaboration space). To isolate the key channel through which knowledge spills over, we use a unique data set to examine the impact of a large post-1992 exodus of Soviet mathematicians on the output of the non-émigrés. Although the data reveal strong competitive effects in idea space, there is evidence of knowledge spillovers in collaboration space, when high-quality researchers directly engage with other researchers in the joint production of new knowledge.
Handle: RePEc:nbr:nberwo:20026
Template-Type: ReDIF-Paper 1.0
Title: The Flight from Maturity
Classification-JEL: E32; E42; E44; G01
Author-Name: Gary B. Gorton
Author-Person: pgo458
Author-Name: Andrew Metrick
Author-Person: pme99
Author-Name: Lei Xie
Note: AP CF EFG ME
Number: 20027
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20027
File-URL: http://www.nber.org/papers/w20027.pdf
File-Format: application/pdf
Publication-Status: published as Gary Gorton & Andrew Metrick & Lei Xie, 2020. "The flight from maturity," Journal of Financial Intermediation, .
Abstract: Why did the failure of Lehman Brothers make the financial crisis dramatically worse? The financial crisis was a process of a build-up of risk during the crisis prior to the Lehman failure. Market participants tried to preserve an option or exit by shortening maturities - the "flight from maturity". With increasingly short maturities, lenders created the possibility of fast exit. The failure of Lehman Brothers was the tipping point of this build-up of systemic fragility. We produce a chronology of the crisis which formalizes the dynamics of the crisis. A crisis is a dynamic process in which "tail risk" is endogenous.
Handle: RePEc:nbr:nberwo:20027
Template-Type: ReDIF-Paper 1.0
Title: Understanding Corporate Governance Through Learning Models of Managerial Competence
Classification-JEL: D81; D83; G34; M12
Author-Name: Benjamin E. Hermalin
Author-Person: phe59
Author-Name: Michael S. Weisbach
Note: CF LE LS
Number: 20028
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20028
File-URL: http://www.nber.org/papers/w20028.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin E. Hermalin & Michael S. Weisbach, 2019. "Understanding Corporate Governance Through Learning Models of Managerial Competence," Asia-Pacific Journal of Financial Studies, vol 48(1), pages 7-29.
Abstract: A manager's shareholders, board of directors, and potential future employers are continually assessing his ability. A rich literature has documented that this insight has profound implications for corporate governance because assessment generates incentives (good and bad), introduces assorted risks, and affects the various battles that rage among the relevant actors for corporate control. Consequently, assessment (or learning) is a key perspective from which to study, evaluate, and possibly even regulate corporate governance. Moreover, because learning is a behavior notoriously subject to systematic biases, this perspective is a natural avenue through which to introduce behavioral and psychological insights into the study of corporate governance.
Handle: RePEc:nbr:nberwo:20028
Template-Type: ReDIF-Paper 1.0
Title: Colonial Institutions, Commodity Booms, and the Diffusion of Elementary Education in Brazil, 1889-1930
Classification-JEL: H40; N46
Author-Name: Aldo Musacchio
Author-Person: pmu132
Author-Name: Andre Martinez
Author-Person: pma1207
Author-Name: Martina Viarengo
Author-Person: pvi254
Note: DAE
Number: 20029
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20029
File-URL: http://www.nber.org/papers/w20029.pdf
File-Format: application/pdf
Publication-Status: published as Musacchio, A., Fritscher, A., & Viarengo, M. (2014). Colonial Institutions, Trade Shocks, and the Diffusion of Elementary Education in Brazil, 1889–1930. The Journal of Economic History, 74(3), 730-766. doi:10.1017/S0022050714000588
Abstract: We explain how the decentralization of fiscal responsibility among Brazilian states between 1889 and 1930 promoted a unequal expansion in public schooling. We document how the variation in state export tax revenues, product of commodity booms, explains increases in expenditures on education, literacy, and schools per children. Yet we also find that such improvements did not take place in states that either had more slaves before abolition or cultivated cotton during colonial times. Beyond path-dependence, ours story emphasizes the interaction between colonial institutions and subsequent fiscal changes to explain radical changes in the ranking of states which persists until today.
Handle: RePEc:nbr:nberwo:20029
Template-Type: ReDIF-Paper 1.0
Title: Retirement, Early Retirement and Disability: Explaining Labor Force Participation after 55 in France
Classification-JEL: H55; J14; J26
Author-Name: Luc Behaghel
Author-Person: pbe252
Author-Name: Didier Blanchet
Author-Person: pbl98
Author-Name: Muriel Roger
Author-Person: pro183
Note: AG
Number: 20030
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20030
File-URL: http://www.nber.org/papers/w20030.pdf
File-Format: application/pdf
Publication-Status: published as Retirement, Early Retirement, and Disability: Explaining Labor Force Participation after Fifty-Five in France, Luc Behaghel, Didier Blanchet, Muriel Roger. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: We analyze the influence of health and financial incentives on the retirement behavior of older workers in France, building upon Stock and Wise (1990) option value approach. The model accounts for three main retirement routes: the normal retirement, disability insurance (DI) and unemployment/preretirement pathways, and is estimated with a combination of microeconomic datasets that include the French data of the European SHARE survey. The estimates confirm that a decrease in the generosity of the pension and DI schemes induces people to stay longer in the labor market, and that people with better health tend to retire later. We present extreme situations simulating what individual's retirement behavior would have been if only one retirement route had existed and in the absence of constraints on work capabilities. We show that average years of work between 55 and 64 are nearly 14% greater when regular retirement incentives are applied to the whole population than when it is DI rules that are systematically applied.
Handle: RePEc:nbr:nberwo:20030
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Model of Wage Dispersion with Sorting
Classification-JEL: J24; J33; J62; J63; J64
Author-Name: Jesper Bagger
Author-Person: pba874
Author-Name: Rasmus Lentz
Author-Person: ple474
Note: EFG LS
Number: 20031
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20031
File-URL: http://www.nber.org/papers/w20031.pdf
File-Format: application/pdf
Publication-Status: published as Jesper Bagger & Rasmus Lentz, 2019. "An Empirical Model of Wage Dispersion with Sorting," The Review of Economic Studies, vol 86(1), pages 153-190.
Abstract: This paper studies wage dispersion in an equilibrium on-the-job-search model with endogenous search intensity. Workers differ in their permanent skill level and firms differ with respect to productivity. Positive (negative) sorting results if the match production function is supermodular (submodular). The model is estimated on Danish matched employer-employee data. We find evidence of positive assortative matching. In the estimated equilibrium match distribution, the correlation between worker skill and firm productivity is 0.12. The assortative matching has a substantial impact on wage dispersion. We decompose wage variation into four sources: Worker heterogeneity, firm heterogeneity, frictions, and sorting. Worker heterogeneity contributes 51% of the variation, firm heterogeneity contributes 11%, frictions 23%, and finally sorting contributes 15%. We measure the output loss due to mismatch by asking how much greater output would be if the estimated population of matches were perfectly positively assorted. In this case, output would increase by 7.7%.
Handle: RePEc:nbr:nberwo:20031
Template-Type: ReDIF-Paper 1.0
Title: Did Railroads Make Antebellum U.S. Banks More Sound?
Classification-JEL: N21; N71
Author-Name: Jeremy Atack
Author-Person: pat28
Author-Name: Matthew S. Jaremski
Author-Person: pja349
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: DAE
Number: 20032
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20032
File-URL: http://www.nber.org/papers/w20032.pdf
File-Format: application/pdf
Publication-Status: published as Did Railroads Make Antebellum U.S. Banks More Sound?, Jeremy Atack, Matthew S. Jaremski, Peter L. Rousseau. in Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective, Collins and Margo. 2015
Abstract: We investigate the relationships of bank failures and balance sheet conditions with measures of proximity to different forms of transportation in the United States over the period from 1830-1860. A series of hazard models and bank-level regressions indicate a systematic relationship between proximity to railroads (but not to other means of transportation) and "good" banking outcomes. Although railroads improved economic conditions along their routes, we offer evidence of another channel. Specifically, railroads facilitated better information flows about banks that led to modifications in bank asset composition consistent with reductions in the incidence of moral hazard.
Handle: RePEc:nbr:nberwo:20032
Template-Type: ReDIF-Paper 1.0
Title: The Euro and The Geography of International Debt Flows
Classification-JEL: F32; F34; F36
Author-Name: Galina Hale
Author-Person: pha89
Author-Name: Maurice Obstfeld
Author-Person: pob13
Note: IFM
Number: 20033
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20033
File-URL: http://www.nber.org/papers/w20033.pdf
File-Format: application/pdf
Publication-Status: published as The Euro and the Geography of International Debt Flows, Galina Hale, Maurice Obstfeld. in Sovereign Debt and Financial Crises, Kalemli-Özcan, Reinhart, and Rogoff. 2016
Publication-Status: published as Galina Hale & Maurice Obstfeld, 2016. "THE EURO AND THE GEOGRAPHY OF INTERNATIONAL DEBT FLOWS," Journal of the European Economic Association, vol 14(1), pages 115-144.
Abstract: Greater financial integration between core and peripheral EMU members not only had an effect on both sets of countries but also spilled over beyond the euro area. Lower interest rates allowed peripheral countries to run bigger deficits, which inflated their economies by allowing credit booms. Core EMU countries took on extra foreign leverage to expose themselves to the peripherals. We present a stylized model that illustrates possible mechanisms for these developments. We then analyze the geography of international debt flows using multiple data sources and provide evidence that after the euro's introduction, core EMU countries increased their borrowing from outside of EMU and their lending to the EMU periphery. Moreover, we present evidence that large core EMU banks' lending to periphery borrowers was linked to their borrowing from outside of the euro area.
Handle: RePEc:nbr:nberwo:20033
Template-Type: ReDIF-Paper 1.0
Title: Structuring Incentives Within Organizations: The Case of Accountable Care Organizations
Classification-JEL: D23; D86; I12; L14; L24; M5
Author-Name: Brigham Frandsen
Author-Name: James B. Rebitzer
Author-Person: pre77
Note: EH IO LS
Number: 20034
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20034
File-URL: http://www.nber.org/papers/w20034.pdf
File-Format: application/pdf
Abstract: Accountable Care Organizations (ACOs) are new organizations created by the Affordable Care Act to encourage more efficient, integrated care delivery. To promote efficiency, ACOs sign contracts under which they keep a fraction of the savings from keeping costs below target provided they also maintain quality levels. To promote integration and facilitate measurement, ACOs are required to have at least 5,000 enrollees and so must coordinate across many providers. We calibrate a model of optimal ACO incentives using proprietary performance measures from a large insurer. Our key finding is that free-riding is a severe problem and causes optimal incentive payments to exceed cost savings unless ACOs simultaneously achieve extremely large efficiency gains. This implies that successful ACOs will likely rely on motivational strategies that amplify the effects of under-powered incentives. These motivational strategies raise important questions about the limits of ACOs as a policy for promoting more efficient, integrated care.
Handle: RePEc:nbr:nberwo:20034
Template-Type: ReDIF-Paper 1.0
Title: Health Status, Disability and Retirement Incentives in Belgium
Classification-JEL: H55; J21; J26
Author-Name: Alain Jousten
Author-Person: pjo61
Author-Name: Mathieu Lefebvre
Author-Person: ple277
Author-Name: Sergio Perelman
Author-Person: ppe146
Note: AG
Number: 20035
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20035
File-URL: http://www.nber.org/papers/w20035.pdf
File-Format: application/pdf
Publication-Status: published as Health Status, Disability, and Retirement Incentives in Belgium, Alain Jousten, Mathieu Lefebvre, Sergio Perelman. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: Many Belgian retire well before the statutory retirement age. Numerous exit routes from the labor force can be identified: old-age pensions, conventional early retirement, disability insurance, and unemployment insurance are the most prominent ones. We analyze the retirement decision of Belgian workers adopting an option value framework, and pay special attention to the role of health status. We estimate probit models of retirement using data from SHARE. The results show that health and incentives matter in the decision to exit from the labor market. Based on these results, we simulate the effect of potential reforms on retirement.
Handle: RePEc:nbr:nberwo:20035
Template-Type: ReDIF-Paper 1.0
Title: Information Technology and the Distribution of Inventive Activity
Classification-JEL: O31; O33; R11
Author-Name: Chris Forman
Author-Name: Avi Goldfarb
Author-Person: pgo53
Author-Name: Shane Greenstein
Author-Person: pgr134
Note: PR
Number: 20036
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20036
File-URL: http://www.nber.org/papers/w20036.pdf
File-Format: application/pdf
Publication-Status: published as Information Technology and the Distribution of Inventive Activity, Chris Forman, Avi Goldfarb, Shane Greenstein. in The Changing Frontier: Rethinking Science and Innovation Policy, Jaffe and Jones. 2015
Abstract: We examine the relationship between the diffusion of advanced internet technology and the geographic concentration of invention, as measured by patents. First, we show that patenting became more concentrated from the early 1990s to the early 2000s and, similarly, that counties that were leaders in patenting in the early 1990s produced relatively more patents by the early 2000s. Second, we compare the extent of invention in counties that were leaders in internet adoption to those that were not. We see little difference in the growth rate of patenting between leaders and laggards in internet adoption, on average. However, we find that the rate of patent growth was faster among counties who were not leaders in patenting in the early 1990s but were leaders in internet adoption by 2000, suggesting that the internet helped stem the trend towards more geographic concentration. We show that these results are largely driven by patents filed by distant collaborators rather than non-collaborative patents or patents by non-distant collaborators, suggesting low cost long-distance digital communication as a potential mechanism.
Handle: RePEc:nbr:nberwo:20036
Template-Type: ReDIF-Paper 1.0
Title: The (Changing) Knowledge Production Function: Evidence from the MIT Department of Biology for 1970-2000
Classification-JEL: D2; H41; I2; I20; I28
Author-Name: Annamaria Conti
Author-Name: Christopher C. Liu
Note: ED PE
Number: 20037
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20037
File-URL: http://www.nber.org/papers/w20037.pdf
File-Format: application/pdf
Publication-Status: published as The (Changing) Knowledge Production Function: Evidence from the MIT Department of Biology for 1970–2000, Annamaria Conti, Christopher C. Liu. in The Changing Frontier: Rethinking Science and Innovation Policy, Jaffe and Jones. 2015
Abstract: Considerable attention has been focused, in recent years, on the role that graduate and postdoc students play in the production of academic knowledge. Using data from the MIT Department of Biology for the period 1970-2000, we analyze the evolution over time of four fundamental aspects of their productivity: i) training duration; ii) time to a first publication; iii) productivity over the training period; and iv) collaboration with other scientists. We identified four main trends that are common to graduate students and postdocs. First, training periods have increased for later cohorts of graduate and postdoc students. Second, later cohorts tend to publish their initial first-author article later than the earlier cohorts. Third, they produce fewer first-author publications. Finally, collaborations with other scientists, as measured by the number of coauthors on a paper, have increased. This increase is driven by collaborations with scientists external to a trainee's laboratory. We interpret these results in light of the following two paradigms: the increased burden of knowledge that later generations of scientists face and the limited availability of permanent academic positions.
Handle: RePEc:nbr:nberwo:20037
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty, Financial Frictions, and Investment Dynamics
Classification-JEL: E22; E32; G31
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: 20038
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20038
File-URL: http://www.nber.org/papers/w20038.pdf
File-Format: application/pdf
Abstract: Micro- and macro-level evidence indicates that fluctuations in idiosyncratic uncertainty have a large effect on investment; the impact of uncertainty on investment occurs primarily through changes in credit spreads; and innovations in credit spreads have a strong effect on investment, irrespective of the level of uncertainty. These findings raise a question regarding the economic significance of the traditional "wait-and-see" effect of uncertainty shocks and point to financial distortions as the main mechanism through which fluctuations in uncertainty affect macroeconomic outcomes. The relative importance of these two mechanisms is analyzed within a quantitative general equilibrium model, featuring heterogeneous firms that face time-varying idiosyncratic uncertainty, irreversibility, nonconvex capital adjustment costs, and financial frictions. The model successfully replicates the stylized facts concerning the macroeconomic implications of uncertainty and financial shocks. By influencing the effective supply of credit, both types of shocks exert a powerful effect on investment and generate countercyclical credit spreads and procyclical leverage, dynamics consistent with the data and counter to those implied by the technology-driven real business cycle models.
Handle: RePEc:nbr:nberwo:20038
Template-Type: ReDIF-Paper 1.0
Title: Algorithms and the Changing Frontier
Classification-JEL: D30; F60; L15; O31; O32; O33
Author-Name: Hezekiah Agwara
Author-Name: Philip Auerswald
Author-Name: Brian Higginbotham
Note: PR
Number: 20039
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20039
File-URL: http://www.nber.org/papers/w20039.pdf
File-Format: application/pdf
Publication-Status: published as Algorithms and the Changing Frontier, Hezekiah Agwara, Philip Auerswald, Brian Higginbotham. in The Changing Frontier: Rethinking Science and Innovation Policy, Jaffe and Jones. 2015
Abstract: We first summarize the dominant interpretations of the "frontier" in the United States and predecessor colonies over the past 400 years: agricultural (1610s-1880s), industrial (1890s-1930s), scientific (1940s- 1980s), and algorithmic (1990s-present). We describe the difference between the algorithmic frontier and the scientific frontier. We then propose that the recent phenomenon referred to as "globalization" is actually better understood as the progression of the algorithmic frontier, as enabled by standards that in turn have facilitated the interoperability of firm-level production algorithms. We conclude by describing implications of the advance of the algorithmic frontier for scientific discovery and technological innovation.
Handle: RePEc:nbr:nberwo:20039
Template-Type: ReDIF-Paper 1.0
Title: Understanding the Great Recession
Classification-JEL: E1; E2; E3
Author-Name: Lawrence J. Christiano
Author-Person: pch45
Author-Name: Martin S. Eichenbaum
Author-Person: pei4
Author-Name: Mathias Trabandt
Author-Person: ptr71
Note: EFG ME
Number: 20040
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20040
File-URL: http://www.nber.org/papers/w20040.pdf
File-Format: application/pdf
Publication-Status: published as Understanding the Great Recession, Lawrence J. Christiano, Martin S. Eichenbaum, Mathias Trabandt. in Lessons from the Financial Crisis for Monetary Policy, Gertler. 2015
Publication-Status: published as Lawrence J. Christiano & Martin S. Eichenbaum & Mathias Trabandt, 2015. "Understanding the Great Recession," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 110-67, January.
Abstract: We argue that the vast bulk of movements in aggregate real economic activity during the Great Recession were due to financial frictions interacting with the zero lower bound. We reach this conclusion looking through the lens of a New Keynesian model in which firms face moderate degrees of price rigidities and no nominal rigidities in the wage setting process. Our model does a good job of accounting for the joint behavior of labor and goods markets, as well as inflation, during the Great Recession. According to the model the observed fall in total factor productivity and the rise in the cost of working capital played critical roles in accounting for the small size of the drop in inflation that occurred during the Great Recession.
Handle: RePEc:nbr:nberwo:20040
Template-Type: ReDIF-Paper 1.0
Title: Credit Risk in the Euro Area
Classification-JEL: E32; E44; G12
Author-Name: Simon Gilchrist
Author-Person: pgi28
Author-Name: Benoît Mojon
Author-Person: pmo43
Note: EFG ME
Number: 20041
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20041
File-URL: http://www.nber.org/papers/w20041.pdf
File-Format: application/pdf
Publication-Status: published as Simon Gilchrist & Benoit Mojon, 2018. "Credit Risk in the Euro Area," The Economic Journal, vol 128(608), pages 118-158.
Abstract: We construct credit risk indicators for euro area banks and non-financial corporations. These are the average spreads on the yield of euro area private sector bonds relative to the yield on German federal government securities of matched maturities. The indicators are also constructed at the country level for Germany, France, Italy and Spain. These indicators reveal that the financial crisis of 2008 has dramatically increased the cost of market funding for both banks and non-financial firms. In contrast, the prior recession following the 2000 U.S. dot-com bust led to widening credit spreads of non-financial firms but had no effect on the credit spreads of financial firms. The 2008 financial crisis also led to a systematic divergence in credit spreads for financial firms across national boundaries. This divergence in cross-country credit risk increased further as the European debt crisis has unfolded since 2010. Since that time, credit spreads for both non-financial and financial firms increasingly reflect national rather than euro area financial conditions. Consistent with this view, credit spreads provide substantial predictive content for a variety of real activity and lending measures for the euro area as a whole and for individual countries. VAR analysis implies that disruptions in corporate credit markets lead to sizable contractions in output, increases in unemployment, and declines in inflation across the euro area.
Handle: RePEc:nbr:nberwo:20041
Template-Type: ReDIF-Paper 1.0
Title: Systemic and Idiosyncratic Sovereign Debt Crises
Classification-JEL: F3; F34
Author-Name: Graciela L. Kaminsky
Author-Person: pka84
Author-Name: Pablo Vega-García
Note: IFM
Number: 20042
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20042
File-URL: http://www.nber.org/papers/w20042.pdf
File-Format: application/pdf
Publication-Status: published as Systemic and Idiosyncratic Sovereign Debt Crises, Graciela Laura Kaminsky, Pablo Vega-García. in Sovereign Debt and Financial Crises, Kalemli-Özcan, Reinhart, and Rogoff. 2016
Publication-Status: published as Graciela Laura Kaminsky & Pablo Vega-García, 2016. "SYSTEMIC AND IDIOSYNCRATIC SOVEREIGN DEBT CRISES," Journal of the European Economic Association, vol 14(1), pages 80-114.
Abstract: The theoretical literature on sovereign defaults has focused on adverse shocks to debtors’ economies, suggesting that defaults are of an idiosyncratic nature. Still, sovereign debt crises are also of a systemic nature, clustered around panics in the financial center such as the European Sovereign Debt Crisis in the aftermath of the U.S. Subprime Crisis in 2008. Crises in the financial centers are rare disasters and thus, their effects on the periphery can only be captured by examining long episodes. This paper examines sovereign defaults from 1820 to the Great Depression, with a focus on Latin America. We find that 63% of the crises are of a systemic nature. These crises are different. Both the international collapse of liquidity and the growth slowdown in the financial centers are at their core. These global shocks trigger longer default spells and larger investors’ losses.
Handle: RePEc:nbr:nberwo:20042
Template-Type: ReDIF-Paper 1.0
Title: Capital Taxation under Political Constraints
Classification-JEL: D31; D82; E62; H21
Author-Name: Florian Scheuer
Author-Person: psc147
Author-Name: Alexander Wolitzky
Note: EFG PE POL
Number: 20043
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20043
File-URL: http://www.nber.org/papers/w20043.pdf
File-Format: application/pdf
Publication-Status: published as Florian Scheuer & Alexander Wolitzky, 2016. "Capital Taxation under Political Constraints," American Economic Review, vol 106(8), pages 2304-2328.
Abstract: This paper studies optimal dynamic tax policy under the threat of political reform. A policy will be reformed ex post if a large enough political coalition supports reform; thus, credible policies are those that will continue to attract enough political support in the future. If the only credible reform threat is to fully equalize consumption, we find that optimal marginal capital taxes are U-shaped, so that savings are subsidized for the middle class but are taxed for the poor and rich. If ex post the government may strategically propose a reform other than full equalization in order to secure additional political support, then optimal capital taxes are instead progressive throughout the income distribution.
Handle: RePEc:nbr:nberwo:20043
Template-Type: ReDIF-Paper 1.0
Title: Private Information and Sunspots in Sequential Asset Markets
Classification-JEL: D82; D83; G12; G14
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Pengfei Wang
Author-Person: pwa169
Note: AP
Number: 20044
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20044
File-URL: http://www.nber.org/papers/w20044.pdf
File-Format: application/pdf
Publication-Status: published as Benhabib, Jess & Wang, Pengfei, 2015. "Private information and sunspots in sequential asset markets," Journal of Economic Theory, Elsevier, vol. 158(PB), pages 558-584.
Abstract: We study a model where some agents have private information about risky asset returns and trade to obtain capital gains, while others acquire the risky asset and hold it to maturity, forming expectations of returns based on market prices. We show that under such a structure, in addition to fully revealing rational expectations equilibria, there exists a continuum of equilibrium prices consistent with rational expectations, where the the asset prices are subject to sunspot shocks. Such sunspot shocks can generate persistent fluctuations in asset prices that look like a random walk in an efficient market.
Handle: RePEc:nbr:nberwo:20044
Template-Type: ReDIF-Paper 1.0
Title: Health Care in a Multipayer System: The Effects of Health Care Service Demand among Adults under 65 on Utilization and Outcomes in Medicare
Classification-JEL: I1; I11; I13
Author-Name: Sherry A. Glied
Note: EH
Number: 20045
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20045
File-URL: http://www.nber.org/papers/w20045.pdf
File-Format: application/pdf
Abstract: Doctors and hospitals in the United States serve patients covered by many types of insurance. This overlap in the supply of health care services means that changes in the prices paid or the volume of services demanded by one group of patients may affect other patient groups. This paper examines how marginal shifts in the demand for services among the adult population under 65 (specifically, factors that affect the uninsurance rate) affect use in the Medicare population. I provide a simple theoretical framework for understanding how changes in the demand for care among adults under 65 may affect Medicare spending. I then examine how two demand factors-recent coverage eligibility changes for parents and the firm size composition of employment-affect insurance coverage among adults under 65 and how these factors affect per beneficiary Medicare spending. Factors that contribute to reductions in uninsurance rates are associated with contemporaneous decreases in per beneficiary Medicare spending, particularly in high variation Medicare services. Reductions in the demand for medical services among adults below age 65 are not associated with reductions in the total quantity of physician services supplied. The increased Medicare utilization that accompanies lower demand among those under 65 has few, if any, benefits for Medicare patients.
Handle: RePEc:nbr:nberwo:20045
Template-Type: ReDIF-Paper 1.0
Title: Host-Country Financial Development and Multinational Activity
Classification-JEL: F12; F23; F36; G20
Author-Name: Kamran Bilir
Author-Name: Davin Chor
Author-Person: pch787
Author-Name: Kalina Manova
Author-Person: pma2520
Note: IFM ITI
Number: 20046
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20046
File-URL: http://www.nber.org/papers/w20046.pdf
File-Format: application/pdf
Publication-Status: published as L. Kamran Bilir & Davin Chor & Kalina Manova, 2019. "Host-Country Financial Development and Multinational Activity," European Economic Review, .
Abstract: This paper evaluates the influence of host-country financial conditions on the global operations of multinational firms. Using detailed U.S. data, we establish that financial development in a country is associated with relatively more entry by multinational affiliates, as well as with higher aggregate affiliate sales to the local market, back to the U.S. and to third destinations, with these effects being more pronounced in financially more vulnerable sectors. At the level of individual affiliates, by contrast, these forces are associated with relatively lower local sales and higher return and third-country sales. Yet at both aggregate and affiliate levels, the share of local sales in total sales is smaller, while the shares of U.S. and third-country sales are both bigger. These empirical regularities hold when using fixed effects to account for unobserved differences across country-years, sectors, and parent firms. We show theoretically that these patterns are consistent with host-country financial development affecting multinationals' incentives for horizontal, vertical and platform FDI through two channels: a financing effect that induces affiliate entry and expansion by improving their access to external finance, and a competition effect that reorients affiliate sales away from the local market due to increased entry by credit-constrained domestic firms.
Handle: RePEc:nbr:nberwo:20046
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Effectiveness: Donor Response to Aid Effectiveness in a Direct Mail Fundraising Experiment
Classification-JEL: D64; H41; L31; O12
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Daniel H. Wood
Note: DEV POL
Number: 20047
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20047
File-URL: http://www.nber.org/papers/w20047.pdf
File-Format: application/pdf
Publication-Status: published as Karlan, Dean & Wood, Daniel H., 2017. "The effect of effectiveness: Donor response to aid effectiveness in a direct mail fundraising experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 1-8.
Abstract: We test how donors respond to new information about a charity's effectiveness. Freedom from Hunger implemented a test of its direct marketing solicitations, varying letters by whether they include a discussion of their program's impact as measured by scientific research. The base script, used for both treatment and control, included a standard qualitative story about an individual beneficiary. Adding scientific impact information has no effect on whether someone donates, or how much, in the full sample. However, we find that amongst recent prior donors (those we posit more likely to open the mail and thus notice the treatment), large prior donors increase the likelihood of giving in response to information on aid effectiveness, whereas small prior donors decrease their giving. We motivate the analysis and experiment with a theoretical model that highlights two predictions. First, larger gift amounts, holding education and income constant, is a proxy for altruism giving (as it is associated with giving more to fewer charities) versus warm glow giving (giving less to more charities). Second, those motivated by altruism will respond positively to appeals based on evidence, whereas those motivated by warm glow may respond negatively to appeals based on evidence as it turns off the emotional trigger for giving, or highlights uncertainty in aid effectiveness.
Handle: RePEc:nbr:nberwo:20047
Template-Type: ReDIF-Paper 1.0
Title: The Role of Sales Agents in Information Disclosure: Evidence from a Field Experiment
Classification-JEL: D04; D12; L15; L51; L68; Q48
Author-Name: Hunt Allcott
Author-Person: pal171
Author-Name: Richard Sweeney
Author-Person: psw60
Note: EEE
Number: 20048
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20048
File-URL: http://www.nber.org/papers/w20048.pdf
File-Format: application/pdf
Publication-Status: published as Hunt Allcott & Richard L. Sweeney, 2017. "The Role of Sales Agents in Information Disclosure: Evidence from a Field Experiment," Management Science, vol 63(1), pages 21-39.
Abstract: With a large nationwide retailer, we run a natural field experiment to measure the effects of energy use information disclosure, customer rebates, and sales agent incentives on demand for energy efficient durable goods. While a combination of large rebates plus sales incentives substantially increases market share, information and sales incentives alone each have zero statistical effect and explain at most a small fraction of the low baseline market share. Sales agents strategically comply only partially with the experiment, targeting information at more interested consumers but not discussing energy efficiency with the disinterested majority. These results suggest that at current prices in this context, seller-provided information is not a major barrier to energy efficiency investments. We theoretically and empirically explore the novel policy option of combining customer subsidies with government-provided sales incentives.
Handle: RePEc:nbr:nberwo:20048
Template-Type: ReDIF-Paper 1.0
Title: Place-Based Policies
Classification-JEL: H23; H71; J23; J38; R12
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Helen Simpson
Author-Person: psi261
Note: LS PE
Number: 20049
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20049
File-URL: http://www.nber.org/papers/w20049.pdf
File-Format: application/pdf
Abstract: Place-based policies commonly target underperforming areas, such as deteriorating downtown business districts and disadvantaged regions. Principal examples include enterprise zones, European Union Structural Funds, and industrial cluster policies. Place-based policies are rationalized by various hypotheses in urban and labor economics, such as agglomeration economies and spatial mismatch - hypotheses that entail market failures and often predict overlap between poor economic performance and disadvantaged residents. The evidence on enterprise zones is very mixed. We need to know more about what features of enterprise zone policies make them more effective or less effective, who gains and who loses from these policies, and how we can reconcile the existing findings. Some evidence points to positive benefits of infrastructure expenditure, and also investment in higher education and university research - likely because of the public-goods nature of these policies. However, to better guide policy, we need to know more about what policies create self-sustaining longer-run gains.
Handle: RePEc:nbr:nberwo:20049
Template-Type: ReDIF-Paper 1.0
Title: Aggregate Fertility and Household Savings: A General Equilibrium Analysis using Micro Data
Classification-JEL: J11; J13; O11; O12; O4; O53
Author-Name: Abhijit Banerjee
Author-Name: Xin Meng
Author-Person: pme170
Author-Name: Tommaso Porzio
Author-Person: ppo623
Author-Name: Nancy Qian
Author-Person: pqi25
Note: DEV EFG
Number: 20050
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20050
File-URL: http://www.nber.org/papers/w20050.pdf
File-Format: application/pdf
Abstract: This study uses micro data and an overlapping generations (OLG) model to show that general equilibrium (GE) forces are critical for understanding the relationship between aggregate fertility and household savings. First, we document that parents perceive children as an important source of old-age support and that, in partial equilibrium (PE), increased fertility lowers household savings. Then, we construct an OLG model that parametrically matches the PE empirical evidence. Finally, we extend the model to conduct a GE analysis and show that under standard assumptions and with the parameters implied by the data, GE forces can substantially offset the PE effects. Thus, focusing only on the PE can substantially overstate the effect of aggregate fertility on household savings.
Handle: RePEc:nbr:nberwo:20050
Template-Type: ReDIF-Paper 1.0
Title: Internal versus External Growth in Industries with Scale Economies: A Computational Model of Optimal Merger Policy
Classification-JEL: L40; L41
Author-Name: Ben Mermelstein
Author-Name: Volker Nocke
Author-Person: pno17
Author-Name: Mark A. Satterthwaite
Author-Name: Michael D. Whinston
Author-Person: pwh46
Note: IO
Number: 20051
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20051
File-URL: http://www.nber.org/papers/w20051.pdf
File-Format: application/pdf
Publication-Status: published as Ben Mermelstein & Volker Nocke & Mark A. Satterthwaite & Michael D. Whinston, 2020. "Internal versus External Growth in Industries with Scale Economies: A Computational Model of Optimal Merger Policy," Journal of Political Economy, vol 128(1), pages 301-341.
Abstract: We study optimal merger policy in a dynamic model in which the presence of scale economies implies that firms can reduce costs through either internal investment in building capital or through mergers. The model, which we solve computationally, allows firms to invest or propose mergers according to the relative profitability of these strategies. An antitrust authority is able to block mergers at some cost. We examine the optimal policy when the antitrust authority can commit to a policy rule and when it cannot commit, and consider both consumer value and aggregate value as possible objectives of the antitrust authority. We find that optimal policy can differ substantially from what would be best considering only welfare in the period the merger is proposed. We also find that the ability to commit can lead to a significant welfare improvement. In general, antitrust policy can greatly affect firms' optimal investment behavior, and firms' investment behavior can in turn greatly affect the antitrust authority's optimal policy.
Handle: RePEc:nbr:nberwo:20051
Template-Type: ReDIF-Paper 1.0
Title: Can Taxes Shape an Industry? Evidence from the Implementation of the “Amazon Tax”
Classification-JEL: D12; D40; L51
Author-Name: Brian Baugh
Author-Name: Itzhak Ben-David
Author-Name: Hoonsuk Park
Note: CF IO
Number: 20052
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20052
File-URL: http://www.nber.org/papers/w20052.pdf
File-Format: application/pdf
Publication-Status: published as BRIAN BAUGH & ITZHAK BEN-DAVID & HOONSUK PARK, 2018. "Can Taxes Shape an Industry? Evidence from the Implementation of the “Amazon Tax”," The Journal of Finance, vol 73(4), pages 1819-1855.
Abstract: For years, online retailers have maintained a price advantage over brick-and-mortar retailers by not collecting sales tax at the time of sale. Recently, several states have required that online retailer Amazon collect sales tax during checkout. Using transaction-level data, we document that households living in these states reduced Amazon purchases by 9.4% after sales tax laws were implemented, implying elasticities ranging from –1.2 to –1.4. The effect is more pronounced for large purchases, for which we estimate a reduction of 29.1% in purchases, corresponding to an elasticity of –3.9. Studying competitors in the electronics field, we detect some evidence of substitution toward competing retailers.
Handle: RePEc:nbr:nberwo:20052
Template-Type: ReDIF-Paper 1.0
Title: How Do Providers Respond to Public Health Insurance Expansions? Evidence from Adult Medicaid Dental Benefits
Classification-JEL: I11; I13; I18
Author-Name: Thomas C. Buchmueller
Author-Person: pbu179
Author-Name: Sarah Miller
Author-Person: pmi744
Author-Name: Marko Vujicic
Note: EH
Number: 20053
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20053
File-URL: http://www.nber.org/papers/w20053.pdf
File-Format: application/pdf
Publication-Status: published as Buchmueller, Thomas, Sarah Miller, and Marko Vujicic. 2016. "How Do Providers Respond to Changes in Public Health Insurance Coverage? Evidence from Adult Medicaid Dental Benefits." American Economic Journal: Economic Policy, 8 (4): 70-102.
Abstract: A large and growing number of adults are covered by public insurance, and the Affordable Care Act is predicted to dramatically increase public coverage over the next several years. This study evaluates how such large increases in public coverage affect provider behavior and patient wait times by analyzing a common type of primary care: dental services. We find that when states add dental benefit to adult Medicaid coverage, dentists' participation in Medicaid increases and dentists see more publicly insured patients without decreasing the number of visits provided to privately insured patients. Dentists increase the total number of visits they supply each week while only modestly increasing the amount of time they spend working. They achieve this primarily by making greater use of dental hygienists. As a result, dentists' income increases. Wait times increase modestly, with the largest increases in wait times observed in states with restrictive scope of practice laws governing dental hygienists. These changes are most pronounced among dentists who practice in poor areas where Medicaid coverage is greatest.
Handle: RePEc:nbr:nberwo:20053
Template-Type: ReDIF-Paper 1.0
Title: The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment
Classification-JEL: D4; I3; L1
Author-Name: Matias Busso
Author-Name: Sebastian Galiani
Author-Person: pga326
Note: DEV
Number: 20054
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20054
File-URL: http://www.nber.org/papers/w20054.pdf
File-Format: application/pdf
Publication-Status: published as Matias Busso & Sebastian Galiani, 2019. "The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment," American Economic Journal: Applied Economics, vol 11(1), pages 33-56.
Abstract: This paper provides experimental evidence on the effect of increased competition on prices and quality in the retail sector. We randomized the entry of 61 firms into 72 markets serving the beneficiaries of a conditional cash transfer program in the Dominican Republic. Six months after the intervention entry into the market led to reductions in prices ranging from 2 to 6 percent and to a statistically significant improvement in self-reported service quality. Prices dropped more in areas where the number of entrants was larger. Competition seems to have driven part of the clientele away from incumbent retailers.
Handle: RePEc:nbr:nberwo:20054
Template-Type: ReDIF-Paper 1.0
Title: Inflation in the Great Recession and New Keynesian Models
Classification-JEL: C52; E31; E32; E37
Author-Name: Marco Del Negro
Author-Person: pde35
Author-Name: Marc P. Giannoni
Author-Person: pgi36
Author-Name: Frank Schorfheide
Author-Person: psc19
Note: EFG ME
Number: 20055
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20055
File-URL: http://www.nber.org/papers/w20055.pdf
File-Format: application/pdf
Publication-Status: published as Marco Del Negro & Marc P. Giannoni & Frank Schorfheide, 2015. "Inflation in the Great Recession and New Keynesian Models," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 168-96, January.
Abstract: It has been argued that existing DSGE models cannot properly account for the evolution of key macroeconomic variables during and following the recent great recession. We challenge this argument by showing that a standard DSGE model with financial frictions available prior to the recent crisis successfully predicts a sharp contraction in economic activity along with a modest and protracted decline in inflation, following the rise in financial stress in 2008Q4. The model does so even though inflation remains very dependent on the evolution of economic activity and of monetary policy.
Handle: RePEc:nbr:nberwo:20055
Template-Type: ReDIF-Paper 1.0
Title: Promise Scholarship Programs as Place-Making Policy: Evidence from School Enrollment and Housing Prices
Classification-JEL: I22; I24; R21; R31
Author-Name: Michael LeGower
Author-Name: Randall Walsh
Author-Person: pwa222
Note: ED PE
Number: 20056
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20056
File-URL: http://www.nber.org/papers/w20056.pdf
File-Format: application/pdf
Publication-Status: published as Michael LeGower & Randall Walsh, 2017. "Promise scholarship programs as place-making policy: Evidence from school enrollment and housing prices," Journal of Urban Economics, vol 101, pages 74-89.
Abstract: Following the example of the Kalamazoo Promise initiated in 2005, place-based "Promise'' scholarship programs have proliferated over the past 8 years. These programs guarantee money towards the costs of attendance at selected colleges and universities provided that a student has resided and attended school within a particular public school district continuously for at least the four years prior to graduation. While some early programs have been studied in isolation, the impact of such programs in general is not well understood. In addition, although there is substantial and controversial variation from the original program's design, there is no direct evidence on how outcomes vary along with these design choices. We use a difference-in-difference approach to compare the evolution of both school enrollments and residential real estate prices around the announcement of these programs within the affected Promise zone and in the surrounding area. Taken together, our estimates suggest that these scholarships have important distributional effects that bear further examination. In particular, while estimates indicate that public school enrollments increase in Promise zones relative to their surrounding areas following Promise announcements, schools associated with merit-based programs experience increases in white enrollment and decreases in non-white enrollment. Furthermore, housing price effects are larger in neighborhoods with high quality schools and in the upper half of the housing price distribution, suggesting higher valuation by high-income households. These patterns lead us to conclude that such scholarships are primarily affecting the behavior of households living above the median income for whom they present the greatest value and that merit-based versions disproportionately impact white households.
Handle: RePEc:nbr:nberwo:20056
Template-Type: ReDIF-Paper 1.0
Title: Co-residence, Life-Cycle Savings and Inter-generational Support in Urban China
Classification-JEL: D12; J12; O12
Author-Name: Mark Rosenzweig
Author-Person: pro558
Author-Name: Junsen Zhang
Author-Person: pzh194
Note: DEV
Number: 20057
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20057
File-URL: http://www.nber.org/papers/w20057.pdf
File-Format: application/pdf
Abstract: We use unique data characterizing individual savings for twins and non-twins in urban China to examine why the savings rates of the young are elevated relative to the middle-aged, despite rising individual life-cycle incomes. We show that inter-generational co-residence masks the true life-cycle patterns of individual savings in standard Chinese household data sets, which are aggregated at the household level. Moreover, we show that to understand life-cycle savings behavior it is necessary to take into account inter-generational co-residence, an important phenomenon in China and in many developing countries. To test a model that describes joint life-cycle savings and co-residence decisions by two generations, we use a variety of standard twins methods. The estimates provide support for the model, including that individuals born into larger families provide less financial support to parents and are more likely to co-reside with parents when young, but do not have different savings rates. We also found that inter-generational co-residence is lower the higher the incomes of the young but higher when the parents have higher incomes and that inter-generational co-residence, net of income, is associated with higher savings for the young but not higher savings for the old. Our results highlight the importance of high housing costs and the prevalence of inter-generational shared housing as key reasons for the higher savings rates for the urban young in China, but also indicate that in urban China neither old-age support by the young nor the one-child policy are major factors.
Handle: RePEc:nbr:nberwo:20057
Template-Type: ReDIF-Paper 1.0
Title: Bequests and Heterogeneity in Retirement Wealth
Classification-JEL: E21; J14
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Author-Name: Fang Yang
Author-Person: pya115
Note: EFG PE
Number: 20058
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20058
File-URL: http://www.nber.org/papers/w20058.pdf
File-Format: application/pdf
Publication-Status: published as De Nardi, Mariacristina & Yang, Fang, 2014. "Bequests and heterogeneity in retirement wealth," European Economic Review, Elsevier, vol. 72(C), pages 182-196.
Abstract: Households hold vastly heterogenous amounts of wealth when they reach retirement, and differences in lifetime earnings explain only part of this variation. This paper studies the role of intergenerational transmission of ability, voluntary bequest motives, and the recipiency of accidental and intended bequests (both in terms of timing and size), in generating wealth dispersion at retirement, in the context of a rich quantitative model. Modeling voluntary bequests, and realistically calibrating them, not only generates more wealth dispersion at retirement and reduces the correlation between retirement wealth and lifetime income, but also generates a skewed bequest distribution that is close to the one in the observed data.
Handle: RePEc:nbr:nberwo:20058
Template-Type: ReDIF-Paper 1.0
Title: Economic Well-being and Anti-Semitic, Xenophobic, and Racist Attitudes in Germany
Classification-JEL: I30; J15; Z1
Author-Name: Naci H. Mocan
Author-Person: pmo270
Author-Name: Christian Raschke
Note: EH LE LS POL
Number: 20059
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20059
File-URL: http://www.nber.org/papers/w20059.pdf
File-Format: application/pdf
Publication-Status: published as Naci Mocan & Christian Raschke, 2016. "Economic well-being and anti-Semitic, xenophobic, and racist attitudes in Germany," European Journal of Law and Economics, vol 41(1), pages 1-63.
Abstract: The fear and hatred of others who are different has economic consequences because such feelings are likely to translate into discrimination in labor, credit, housing, and other markets. The implications range from earnings inequality to intergenerational mobility. Using German data from various years between 1996 and 2010, we analyze the determinants of racist and xenophobic feelings towards foreigners in general, and against specific groups such as Italians and Turks. We also analyze racist and anti-Semitic feelings towards German citizens who differ in ethnicity (Aussiedler from Eastern Europe) or in religion (German Jews). Individuals' perceived (or actual) economic well-being is negatively related to the strength of these feelings. Education, and having contact with foreigners mitigate racist, anti-Semitic and xenophobic feelings. People who live in states which had provided above-median support of the Nazi party in the 1928 elections have stronger anti-Semitic feelings today. The results are not gender-driven. They are not an artifact of economic conditions triggering feelings about job priority for German males, and they are not fully driven by fears about foreigners taking away jobs. The results of the paper are consistent with the model of Glaeser (2005) on hate, and with that of Akerlof and Kranton (2000, 2005) on identity in the utility function.
Handle: RePEc:nbr:nberwo:20059
Template-Type: ReDIF-Paper 1.0
Title: Localized and Biased Technologies: Atkinson and Stiglitz's New View, Induced Innovations, and Directed Technological Change
Classification-JEL: E25; J31; O30; O31; O33
Author-Name: Daron Acemoglu
Author-Person: pac16
Note: DEV EFG
Number: 20060
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20060
File-URL: http://www.nber.org/papers/w20060.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu, 2015. "Localised and Biased Technologies: Atkinson and Stiglitz's New View, Induced Innovations, and Directed Technological Change," Economic Journal, Royal Economic Society, vol. 0(583), pages 443-463, 03.
Abstract: This paper revisits the important ideas proposed by Atkinson and Stiglitz's seminal 1969 paper on technological change. After linking these ideas to the induced innovation literature of the 1960s and the more recent directed technological change literature, it explains how these three complementary but different approaches are useful in the study of a range of current research areas though they may also yield different answers to important questions. It concludes by highlighting several important areas where these ideas can be fruitfully applied in future work.
Handle: RePEc:nbr:nberwo:20060
Template-Type: ReDIF-Paper 1.0
Title: Firms, Destinations, and Aggregate Fluctuations
Classification-JEL: E32; F12; F41
Author-Name: Julian di Giovanni
Author-Person: pdi67
Author-Name: Andrei Levchenko
Author-Person: ple223
Author-Name: Isabelle Mejean
Author-Person: pmj1
Note: EFG IFM ITI
Number: 20061
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20061
File-URL: http://www.nber.org/papers/w20061.pdf
File-Format: application/pdf
Publication-Status: published as Julian di Giovanni & Andrei A. Levchenko & Isabelle Mejean, 2014. "Firms, Destinations, and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 82(4), pages 1303-1340, 07.
Abstract: This paper uses a database covering the universe of French firms for the period 1990--2007 to provide a forensic account of the role of individual firms in generating aggregate fluctuations. We set up a simple multi-sector model of heterogeneous firms selling to multiple markets to motivate a theoretically-founded decomposition of firms' annual sales growth rate into different components. We find that the firm-specific component contributes substantially to aggregate sales volatility, mattering about as much as the components capturing shocks that are common across firms within a sector or country. We then decompose the firm-specific component to provide evidence on two mechanisms that generate aggregate fluctuations from microeconomic shocks highlighted in the recent literature: (i) when the firm size distribution is fat-tailed, idiosyncratic shocks to large firms directly contribute to aggregate fluctuations; and (ii) aggregate fluctuations can arise from idiosyncratic shocks due to input-output linkages across the economy. Firm linkages are approximately three times as important as the direct effect of firm shocks in driving aggregate fluctuations.
Handle: RePEc:nbr:nberwo:20061
Template-Type: ReDIF-Paper 1.0
Title: Rare Booms and Disasters in a Multi-sector Endowment Economy
Classification-JEL: G12
Author-Name: Jerry Tsai
Author-Person: pts130
Author-Name: Jessica A. Wachter
Author-Person: pwa346
Note: AP
Number: 20062
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20062
File-URL: http://www.nber.org/papers/w20062.pdf
File-Format: application/pdf
Publication-Status: published as Jerry Tsai, Jessica A. Wachter; Rare Booms and Disasters in a Multisector Endowment Economy, The Review of Financial Studies, Volume 29, Issue 5, 1 May 2016, Pages 1113–1169, https://doi.org/10.1093/rfs/hhv074
Abstract: Why do value stocks have higher average returns than growth stocks, despite having lower risk? Why do these stocks exhibit positive abnormal performance while growth stocks exhibit negative abnormal performance? This paper offers a rare-events based explanation that can also account for the high equity premium and volatility of the aggregate market. The model explains other puzzling aspects of the data such as joint patterns in time series predictablity of aggregate market and value and growth returns, long periods in which growth outperforms value, and the association between positive skewness and low realized returns.
Handle: RePEc:nbr:nberwo:20062
Template-Type: ReDIF-Paper 1.0
Title: In Search of the Armington Elasticity
Classification-JEL: F12; F14; F42
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: Philip A. Luck
Author-Person: plu339
Author-Name: Maurice Obstfeld
Author-Person: pob13
Author-Name: Katheryn N. Russ
Author-Person: pru65
Note: IFM ITI
Number: 20063
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20063
File-URL: http://www.nber.org/papers/w20063.pdf
File-Format: application/pdf
Publication-Status: published as Robert C. Feenstra & Philip Luck & Maurice Obstfeld & Katheryn N. Russ, 2018. "In Search of the Armington Elasticity," The Review of Economics and Statistics, vol 100(1), pages 135-150.
Abstract: The elasticity of substitution between goods from different countries---the Armington elasticity---is important for many questions in international economics, but its magnitude is subject to debate: the "macro" elasticity between home and import goods is often found to be smaller than the "micro" elasticity between foreign sources of imports. We investigate these two elasticities in a model using a nested CES preference structure. We explore estimation techniques for the macro and micro elasticities using both simulated data from a Melitz-style model, and highly disaggregate U.S. production data matched to Harmonized System trade data. We find that in up to one-half of goods there is no significant difference between the macro and micro elasticities, but in the other half of goods the macro elasticity is significantly lower than the micro elasticity, even when they are estimated at the same level of disaggregation.
Handle: RePEc:nbr:nberwo:20063
Template-Type: ReDIF-Paper 1.0
Title: Disease and Development: A Reply to Bloom, Canning, and Fink
Classification-JEL: I15; N40; O15
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Simon Johnson
Author-Person: pjo44
Note: DEV EFG
Number: 20064
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20064
File-URL: http://www.nber.org/papers/w20064.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Simon Johnson, 2014. "Disease and Development: A Reply to Bloom, Canning, and Fink," Journal of Political Economy, University of Chicago Press, vol. 122(6), pages 1367 - 1375.
Abstract: Bloom, Canning, and Fink (2014) argue that the results in Acemoglu and Johnson (2006, 2007) are not robust because initial level of life expectancy (in 1940) should be included in our regressions of changes in GDP per capita on changes in life expectancy. We assess their claims controlling for potential lagged effects of initial life expectancy using data from 1900, employing a nonlinear estimator suggested by their framework, and using information from microeconomic estimates on the effects of improving health. There is no evidence for a positive effect of life expectancy on GDP per capita in this important historical episode.
Handle: RePEc:nbr:nberwo:20064
Template-Type: ReDIF-Paper 1.0
Title: Declining Migration within the U.S.: The Role of the Labor Market
Classification-JEL: J0; J11; J6; N3
Author-Name: Raven Molloy
Author-Name: Christopher L. Smith
Author-Person: psm208
Author-Name: Abigail K. Wozniak
Author-Person: pwo113
Note: DAE EFG LS
Number: 20065
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20065
File-URL: http://www.nber.org/papers/w20065.pdf
File-Format: application/pdf
Abstract: Interstate migration has decreased steadily since the 1980s. We show that this trend is not primarily related to demographic and socioeconomic factors, but instead appears to be connected to a concurrent secular decline in labor market transitions. We explore a number of reasons for the declines in geographic and labor market transitions, and find the strongest support for explanations related to a decrease in the net benefit to changing employers. Our preferred interpretation is that the distribution of relevant outside offers has shifted in a way that has made labor market transitions, and thus geographic transitions, less desirable to workers.
Handle: RePEc:nbr:nberwo:20065
Template-Type: ReDIF-Paper 1.0
Title: Job Displacement and the Duration of Joblessness: The Role of Spatial Mismatch
Classification-JEL: J64; R23; R41
Author-Name: Fredrik Andersson
Author-Name: John C. Haltiwanger
Author-Person: pha231
Author-Name: Mark J. Kutzbach
Author-Person: pku187
Author-Name: Henry O. Pollakowski
Author-Name: Daniel H. Weinberg
Author-Person: pwe124
Note: EFG LS
Number: 20066
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20066
File-URL: http://www.nber.org/papers/w20066.pdf
File-Format: application/pdf
Publication-Status: published as Job Displacement and the Duration of Joblessness: The Role of Spatial Mismatch Fredrik Andersson , John C. Haltiwanger , Mark J. Kutzbach , Henry O. Pollakowski , and Daniel H. Weinberg The Review of Economics and Statistics 0 0:0
Abstract: This paper presents a new approach to the measurement of the effects of spatial mismatch that takes advantage of matched employer-employee administrative data integrated with a person-specific job accessibility measure, as well as demographic and neighborhood characteristics. The basic hypothesis is that if spatial mismatch is present, then improved accessibility to appropriate jobs should shorten the duration of unemployment. We focus on lower-income workers with strong labor force attachment searching for employment after being subject to a mass layoff - thereby focusing on a group of job searchers that are plausibly searching for exogenous reasons. We construct person-specific measures of job accessibility based upon an empirical model of transport modal choice and network travel-time data, giving variation both across neighborhoods in nine metropolitan areas, as well as across neighbors. Our results support the spatial mismatch hypothesis. We find that better job accessibility significantly decreases the duration of joblessness among lower-paid displaced workers. Blacks, females, and older workers are more sensitive to job accessibility than other subpopulations.
Handle: RePEc:nbr:nberwo:20066
Template-Type: ReDIF-Paper 1.0
Title: On the Distributive Costs of Drug-Related Homicides
Classification-JEL: I3; K4
Author-Name: Nicolás Ajzenman
Author-Person: paj35
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Enrique Seira
Note: DEV
Number: 20067
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20067
File-URL: http://www.nber.org/papers/w20067.pdf
File-Format: application/pdf
Publication-Status: published as Nicolas Ajzenman & Sebastian Galiani & Enrique Seira, 2015. "On the Distributive Costs of Drug-Related Homicides," The Journal of Law and Economics, vol 58(4), pages 779-803.
Abstract: This is the first paper to study the economic effects of drug-trafficking organization violence. We exploit the manyfold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug-related homicides on house prices. We use an unusually rich dataset that provides national coverage on house prices and homicides and exploit within-municipality variations. We find that the impact of violence on housing prices is borne entirely by the poor sectors of the population. An increase in homicides equivalent to one standard deviation leads to a 3% decrease in the price of low-income housing. In spite of this large burden on the poor, the willingness to pay in order to reverse the increase in drug-related crime is not high. We estimate it to be approximately 0.1%of Mexico's GDP.
Handle: RePEc:nbr:nberwo:20067
Template-Type: ReDIF-Paper 1.0
Title: Understanding Earnings Dynamics: Identifying and Estimating the Changing Roles of Unobserved Ability, Permanent and Transitory Shocks
Classification-JEL: C14; C23; J31
Author-Name: Lance Lochner
Author-Person: plo31
Author-Name: Youngki Shin
Author-Person: psh180
Note: ED LS
Number: 20068
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20068
File-URL: http://www.nber.org/papers/w20068.pdf
File-Format: application/pdf
Abstract: We consider a general framework to study the evolution of wage and earnings residuals that incorporates features highlighted by two influential but distinct literatures in economics: (i) unobserved skills with changing non-linear pricing functions and (ii) idiosyncratic shocks with both permanent and transitory components. We first provide nonparametric identification conditions for the distribution of unobserved skills, all unobserved skill pricing functions, and (nearly) all distributions for both permanent and MA(q) transitory shocks. We then discuss identification and estimation using a moment-based approach, restricting unobserved skill pricing functions to be polynomials. Using data on log earnings for men ages 30-59 in the PSID, we estimate the evolution of unobserved skill pricing functions and the distributions of unobserved skills, transitory, and permanent shocks from 1970 to 2008. We highlight five main findings: (i) The returns to unobserved skill rose over the 1970s and early 1980s, fell over the late 1980s and early 1990s, and then remained quite stable through the end of our sample period. Since the mid-1990s, we observe some evidence of polarization: the returns to unobserved skill declined at the bottom of the distribution while they remained relatively constant over the top half. (ii) The variance of unobserved skill changed very little across most cohorts in our sample (those born between 1925 and 1955). (iii) The variance of transitory shocks jumped up considerably in the early 1980s but shows little long-run trend otherwise over the more than thirty year period we study. (iv) The variance of permanent shocks declined very slightly over the 1970s, then rose systematically through the end of our sample by 15 to 20 log points. The increase in this variance over the 1980s and 1990s was strongest for workers with low unobserved ability. (v) In most years, the distribution of unobserved skill pricing is positively skewed, while the distributions of permanent and (especially) transitory shocks are negatively skewed.
Handle: RePEc:nbr:nberwo:20068
Template-Type: ReDIF-Paper 1.0
Title: Firms and the Economics of Skilled Immigration
Classification-JEL: F15; F22; F23; J15; J31; J44; L14; L26; O31; O32; O33
Author-Name: Sari Pekkala Kerr
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: William F. Lincoln
Author-Person: pli709
Note: LS PR
Number: 20069
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20069
File-URL: http://www.nber.org/papers/w20069.pdf
File-Format: application/pdf
Publication-Status: published as Firms and the Economics of Skilled Immigration, Sari Pekkala Kerr, William R. Kerr, William F. Lincoln. in Innovation Policy and the Economy, Volume 15, Kerr, Lerner, and Stern. 2015
Abstract: Firms play a central role in the selection, sponsorship, and employment of skilled immigrants entering the United States for work through programs like the H-1B visa. This role has not been widely recognized in the literature, and the data to better understand it have only recently become available. This chapter discusses the evidence that has been assembled to date in understanding the impact of high skilled immigration from the perspective of the firm and the open areas that call for more research. Since much of the U.S. immigration process for skilled workers rests in the hands of employer firms, a stronger understanding of these implications is essential for future policy analysis, particularly for issues relating to fostering innovation.
Handle: RePEc:nbr:nberwo:20069
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Drivers of Bond and Equity Risks
Classification-JEL: E43; E44; E52; G12
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Carolin Pflueger
Author-Person: ppf25
Author-Name: Luis M. Viceira
Author-Person: pvi31
Note: AP EFG ME
Number: 20070
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20070
File-URL: http://www.nber.org/papers/w20070.pdf
File-Format: application/pdf
Publication-Status: published as John Y. Campbell & Carolin Pflueger & Luis M. Viceira, 2020. "Macroeconomic Drivers of Bond and Equity Risks," Journal of Political Economy, vol 128(8), pages 3148-3185.
Abstract: Our new model of consumption-based habit formation preferences generates loglinear, homoskedastic macroeconomic dynamics and time-varying risk premia on bonds and stocks. Consumers' first-order condition for the real risk-free interest rate takes the form of an exactly loglinear consumption Euler equation, commonly assumed in New Keynesian models. Estimating the model separately for 1979-2001 and 2001-2011 explains why the exposure of US Treasury bonds to the stock market changed from positive to negative. A change in the comovement between inflation and the output gap explains changing bond risks, but only when risk premia change endogenously as predicted by the model.
Handle: RePEc:nbr:nberwo:20070
Template-Type: ReDIF-Paper 1.0
Title: Do ETFs Increase Volatility?
Classification-JEL: G12; G14; G15
Author-Name: Itzhak Ben-David
Author-Name: Francesco Franzoni
Author-Name: Rabih Moussawi
Note: AP CF
Number: 20071
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20071
File-URL: http://www.nber.org/papers/w20071.pdf
File-Format: application/pdf
Publication-Status: published as ITZHAK BEN-DAVID & FRANCESCO FRANZONI & RABIH MOUSSAWI, 2018. "Do ETFs Increase Volatility?," The Journal of Finance, vol 73(6), pages 2471-2535.
Abstract: We study whether exchange traded funds (ETFs)--an asset of increasing importance--impact the volatility of their underlying stocks. Using identification strategies based on the mechanical variation in ETF ownership, we present evidence that stocks owned by ETFs exhibit significantly higher intraday and daily volatility. We estimate that an increase of one standard deviation in ETF ownership is associated with an increase of 16% in daily stock volatility. The driving channel appears to be arbitrage activity between ETFs and the underlying stocks. Consistent with this view, the effects are stronger for stocks with lower bid-ask spread and lending fees. Finally, the evidence that ETF ownership increases stock turnover suggests that ETF arbitrage adds a new layer of trading to the underlying securities.
Handle: RePEc:nbr:nberwo:20071
Template-Type: ReDIF-Paper 1.0
Title: Investment Noise and Trends
Classification-JEL: G10; G11; G12; G23
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Note: AP
Number: 20072
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20072
File-URL: http://www.nber.org/papers/w20072.pdf
File-Format: application/pdf
Abstract: During the past few decades, the fraction of the equity market owned directly by individuals declined significantly. The same period witnessed investment trends that include the growth of indexing as well as shifts by active managers toward lower fees and more index-like investing. I develop an equilibrium model linking these investment trends to the decline in individual ownership, interpreting the latter as a reduction in noise trading. Active management corrects most noise-trader induced mispricing, and the fraction left uncorrected shrinks as noise traders' stake in the market declines. Less mispricing then dictates a smaller footprint for active management.
Handle: RePEc:nbr:nberwo:20072
Template-Type: ReDIF-Paper 1.0
Title: The Wealthy Hand-to-Mouth
Classification-JEL: D1; D3; D9; E2; E6
Author-Name: Greg Kaplan
Author-Person: pka660
Author-Name: Giovanni L. Violante
Author-Person: pvi7
Author-Name: Justin Weidner
Note: AP EFG IFM ME
Number: 20073
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20073
File-URL: http://www.nber.org/papers/w20073.pdf
File-Format: application/pdf
Publication-Status: published as Greg Kaplan & Giovanni L. Violante & Justin Weidner, 2014. "The Wealthy Hand-to-Mouth," Brookings Papers on Economic Activity, vol 2014(1), pages 77-138.
Abstract: The wealthy hand-to-mouth are households who hold little or no liquid wealth (cash, checking, and savings accounts), despite owning sizable amounts of illiquid assets (assets that carry a transaction cost, such as housing or retirement accounts). We use survey data on household portfolios for the U.S., Canada, Australia, the U.K., Germany, France, Italy, and Spain to document the share of such households across countries, their demographic characteristics, the composition of their balance sheets, and the persistence of hand-to-mouth status over the life cycle. The portfolio configuration of the wealthy hand-to-mouth suggests that these households may have a high marginal propensity to consume out of transitory income changes, a prediction for which we find empirical support in PSID data. We explain the implications of this group of consumers for macroeconomic modeling and fiscal policy analysis.
Handle: RePEc:nbr:nberwo:20073
Template-Type: ReDIF-Paper 1.0
Title: Market Structure, Reputation, and the Value of Quality Certification
Classification-JEL: D82; L15; L25; L86
Author-Name: Daniel Elfenbein
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Brian McManus
Note: IO
Number: 20074
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20074
File-URL: http://www.nber.org/papers/w20074.pdf
File-Format: application/pdf
Publication-Status: published as Daniel W. Elfenbein & Raymond Fisman & Brian McManus, 2015. "Market Structure, Reputation, and the Value of Quality Certification," American Economic Journal: Microeconomics, American Economic Association, vol. 7(4), pages 83-108, November.
Abstract: Quality certification programs help consumers to identify high-quality products or sellers in markets with information asymmetries. Using data from eBay UK's online marketplace, we study how certification's impact on consumer demand varies with market- and seller-level attributes, exploiting quasi-experimental variation in sellers' certification status. The positive effects of eBay's "top rated seller" certification are stronger for categories with relatively few other certified sellers, in more competitive markets, and for sellers with shorter records of past performance. These findings indicate certification provides its greatest value when certification is rare, the product space is crowded, and for sellers lacking established reputations.
Handle: RePEc:nbr:nberwo:20074
Template-Type: ReDIF-Paper 1.0
Title: Financial Health Economics
Classification-JEL: G0; I0
Author-Name: Ralph Koijen
Author-Person: pko589
Author-Name: Tomas Philipson
Author-Person: pph37
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EH EFG
Number: 20075
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20075
File-URL: http://www.nber.org/papers/w20075.pdf
File-Format: application/pdf
Publication-Status: published as Koijen, R. S., Philipson, T. J. and Uhlig, H. (2016), Financial Health Economics. Econometrica, 84: 195-242. doi:10.3982/ECTA11182
Abstract: We provide a theoretical and empirical analysis of the link between financial and real health care markets. This link is important as financial returns drive investment in medical research and development (R&D), which in turn, affects real spending growth. We document a “medical innovation premium” of 4-6% annually for equity returns of firms in the health care sector. We interpret this premium as compensating investors for government-induced profit risk, and we provide supportive evidence for this hypothesis through company filings and abnormal return patterns surrounding threats of government intervention. We quantify the implications of the premium for the growth in real health care spending by calibrating our model to match historical trends, predicting the share of GDP devoted to health care to be 32% in the long run. Policies that had removed government risk would have led to more than a doubling of medical R&D and would have increased the current share of health care spending by more than 3% of GDP.
Handle: RePEc:nbr:nberwo:20075
Template-Type: ReDIF-Paper 1.0
Title: The Common Factor in Idiosyncratic Volatility: Quantitative Asset Pricing Implications
Classification-JEL: E44; G12
Author-Name: Bernard Herskovic
Author-Person: phe598
Author-Name: Bryan T. Kelly
Author-Name: Hanno Lustig
Author-Person: plu17
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: AP
Number: 20076
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20076
File-URL: http://www.nber.org/papers/w20076.pdf
File-Format: application/pdf
Publication-Status: published as Herskovic, Bernard & Kelly, Bryan & Lustig, Hanno & Van Nieuwerburgh, Stijn, 2016. "The common factor in idiosyncratic volatility: Quantitative asset pricing implications," Journal of Financial Economics, Elsevier, vol. 119(2), pages 249-283.
Abstract: We show that firms’ idiosyncratic volatility obeys a strong factor structure and that shocks to the common factor in idiosyncratic volatility (CIV) are priced. Stocks in the lowest CIV-beta quintile earn average returns 5.4% per year higher than those in the highest quintile. The CIV factor helps to explain a number of asset pricing anomalies. We provide new evidence linking the CIV factor to income risk faced by households. These three facts are consistent with an incomplete markets heterogeneous-agent model. In the model, CIV is a priced state variable because an increase in idiosyncratic firm volatility raises the average household’s marginal utility. The calibrated model matches the high degree of comovement in idiosyncratic volatilities, the CIV-beta return spread, and several other asset price moments.
Handle: RePEc:nbr:nberwo:20076
Template-Type: ReDIF-Paper 1.0
Title: What is driving the 'African Growth Miracle'?
Classification-JEL: O13; O4; Q16
Author-Name: Margaret S. McMillan
Author-Person: pmc26
Author-Name: Kenneth Harttgen
Note: ITI
Number: 20077
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20077
File-URL: http://www.nber.org/papers/w20077.pdf
File-Format: application/pdf
Abstract: We show that much of Africa's recent growth and poverty reduction can be traced to a substantive decline in the share of the labor force engaged in agriculture. This decline has been accompanied by a systematic increase in the productivity of the labor force, as it has moved from low productivity agriculture to higher productivity manufacturing and services. These declines have been more rapid in countries where the initial share of the labor force engaged in agriculture is the highest and where commodity price increases have been accompanied by improvements in the quality of governance.
Handle: RePEc:nbr:nberwo:20077
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Bank Boards of Directors in New York, 1840-1950
Classification-JEL: G21; G30; N21
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Author-Name: Eugene N. White
Author-Person: pwh5
Note: CF DAE
Number: 20078
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20078
File-URL: http://www.nber.org/papers/w20078.pdf
File-Format: application/pdf
Publication-Status: published as The Evolution of Bank Boards of Directors in New York, 1840–1950, Howard Bodenhorn, Eugene N. White. in Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective, Collins and Margo. 2015
Abstract: Contemporary bank governance is criticized for manager-dominated (insider) boards of directors, but from the beginning of the nineteenth century, bank presidents appear also to have operated as chairmen of the boards of directors. However, the managers were constrained by a variety of rules that tended to align the interests of management, shareholders and other stakeholders until the mid-twentieth century. We trace this development through New York banking law and new data on banks chartered by the State of New York.
Handle: RePEc:nbr:nberwo:20078
Template-Type: ReDIF-Paper 1.0
Title: Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World
Classification-JEL: F0; O1; Q0; R0
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Dave Donaldson
Author-Name: Cory B. Smith
Author-Person: psm173
Note: DEV EEE EFG ITI
Number: 20079
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20079
File-URL: http://www.nber.org/papers/w20079.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot & Dave Donaldson & Cory Smith, 2016. "Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 205-248.
Abstract: A large agronomic literature models the implications of climate change for a variety of crops and locations around the world. The goal of the present paper is to quantify the macro-level consequences of these micro-level shocks. Using an extremely rich micro-level dataset that contains information about the productivity---both before and after climate change---of each of 10 crops for each of 1.7 million fields covering the surface of the Earth, we find that the impact of climate change on these agricultural markets would amount to a 0.26% reduction in global GDP when trade and production patterns are allowed to adjust.
Handle: RePEc:nbr:nberwo:20079
Template-Type: ReDIF-Paper 1.0
Title: The Role of Proximity in Foreclosure Externalities: Evidence from Condominiums
Classification-JEL: G12; R3
Author-Name: Lynn M. Fisher
Author-Person: pfi352
Author-Name: Lauren Lambie-Hanson
Author-Name: Paul S. Willen
Author-Person: pwi457
Note: EFG
Number: 20080
Creation-Date: 2014-04
Order-URL: http://www.nber.org/papers/w20080
File-URL: http://www.nber.org/papers/w20080.pdf
File-Format: application/pdf
Publication-Status: published as Lynn M. Fisher & Lauren Lambie-Hanson & Paul Willen, 2015. "The Role of Proximity in Foreclosure Externalities: Evidence from Condominiums," American Economic Journal: Economic Policy, vol 7(1), pages 119-140.
Abstract: We measure the effect of foreclosures on the sale prices of nearby properties using a dataset of condominiums in Boston. A foreclosure in the same association and at the same address depresses the sale price by 2.5 percent, but properties in the same association but located at a different address have an effect that is tightly estimated at zero. Since properties in the same association are close substitutes, we argue that the evidence points against the pecuniary externality of property coming on the market and toward a physical externality as the source of measured foreclosure externalities.
Handle: RePEc:nbr:nberwo:20080
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty Shocks, Asset Supply and Pricing over the Business Cycle
Classification-JEL: D8; E3; E4; G1; G3
Author-Name: Francesco Bianchi
Author-Person: pbi171
Author-Name: Cosmin L. Ilut
Author-Person: pil25
Author-Name: Martin Schneider
Author-Person: psc69
Note: AP CF EFG ME
Number: 20081
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20081
File-URL: http://www.nber.org/papers/w20081.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Bianchi & Cosmin L. Ilut & Martin Schneider, 2018. "Uncertainty Shocks, Asset Supply and Pricing over the Business Cycle," The Review of Economic Studies, vol 85(2), pages 810-854.
Abstract: This paper estimates a business cycle model with endogenous financial asset supply and ambiguity averse investors. Firms' shareholders choose not only production and investment, but also capital structure and payout policy subject to financial frictions. An increase in uncertainty about profits lowers stock prices and leads firms to substitute away from debt as well as reduce shareholder payout. This mechanism parsimoniously accounts for postwar comovement in investment, stock prices, leverage and payout, at both business cycle and medium term cycle frequencies. Ambiguity aversion permits a Markov-Switching VAR representation of the model, while preserving the effect of uncertainty shocks on the time variation in the equity premium.
Handle: RePEc:nbr:nberwo:20081
Template-Type: ReDIF-Paper 1.0
Title: Electoral Rules and the Quality of Politicians: Theory and Evidence from a Field Experiment in Afghanistan
Classification-JEL: D72; D78
Author-Name: Andrew Beath
Author-Name: Fotini Christia
Author-Name: Georgy Egorov
Author-Person: peg15
Author-Name: Ruben Enikolopov
Note: POL
Number: 20082
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20082
File-URL: http://www.nber.org/papers/w20082.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Beath, Fotini Christia, Georgy Egorov, Ruben Enikolopov; Electoral Rules and Political Selection: Theory and Evidence from a Field Experiment in Afghanistan, The Review of Economic Studies, Volume 83, Issue 3, 1 July 2016, Pages 932–968, https://doi.org/10.1093/restud/rdw018
Abstract: We examine the effect of electoral rules on the quality of elected officials using a unique field experiment which induced randomized variation in the method of council elections in 250 villages in Afghanistan. In particular, we compare at-large elections, with a single multi-member district, to district elections, with multiple single member districts. We propose a theoretical model where the difference in the quality of elected officials between the two electoral systems occurs because elected legislators have to bargain over policy, which induces citizens in district elections to vote strategically for candidates with more polarized policy positions even at the expense of candidates' competence. Consistent with the predictions of the model, we find that elected officials in at-large elections are more educated than those in district elections and that this effect is stronger in more heterogeneous villages. We also find evidence that elected officials in district elections have more biased preferences.
Handle: RePEc:nbr:nberwo:20082
Template-Type: ReDIF-Paper 1.0
Title: Floating a "Lifeboat": The Banque de France and the Crisis of 1889
Classification-JEL: E58; G01; N13; N23
Author-Name: Pierre-Cyrille Hautcoeur
Author-Person: pha108
Author-Name: Angelo Riva
Author-Person: pri328
Author-Name: Eugene N. White
Author-Person: pwh5
Note: CF DAE ME
Number: 20083
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20083
File-URL: http://www.nber.org/papers/w20083.pdf
File-Format: application/pdf
Publication-Status: published as Hautcoeur, Pierre-Cyrille & Riva, Angelo & White, Eugene N., 2014. "Floating a “lifeboat”: The Banque de France and the crisis of 1889," Journal of Monetary Economics, Elsevier, vol. 65(C), pages 104-119.
Abstract: When faced with a run on a "systemically important" but insolvent bank in 1889, the Banque de France pre-emptively organized a lifeboat to ensure that depositors were protected and an orderly liquidation could proceed. To protect the Banque from losses on its lifeboat loan, a guarantee syndicate was formed, penalizing those who had participated in the copper speculation that had caused the crisis bringing the bank down. Creation of the syndicate and other actions were consistent with mitigating the moral hazard from such an intervention. This episode contrasts the advice given by Bagehot to the Bank of England to counter a panic by lending freely at a high rate on good collateral, allowing insolvent institutions to fail.
Handle: RePEc:nbr:nberwo:20083
Template-Type: ReDIF-Paper 1.0
Title: Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market
Classification-JEL: H2; H7; R3
Author-Name: Wojciech Kopczuk
Author-Person: pko20
Author-Name: David J. Munroe
Note: PE
Number: 20084
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20084
File-URL: http://www.nber.org/papers/w20084.pdf
File-Format: application/pdf
Publication-Status: published as Wojciech Kopczuk & David Munroe, 2015. "Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 214-57, May.
Abstract: Houses and apartments sold in New York and New Jersey at prices above $1 million are subject to the so-called 1% "mansion tax" imposed on the full value of the transaction. This policy generates a discontinuity (a "notch") in the overall tax liability. We rely on this and other discontinuities to analyze implications of transfer taxes in the real estate market. Using administrative records of property sales, we find robust evidence of substantial bunching and show that the incidence of this tax for transactions local to the discontinuity falls on sellers, may exceed the value of the tax, and is not explained by tax evasion (although supply-side quality adjustments may play a role). Above the notch, the volume of missing transactions exceeds those bunching below the notch. Interpreting our results in the context of an equilibrium bargaining model, we conclude that the market unravels in the neighborhood of the notch: its presence provides strong incentive for buyers and sellers in the proximity of the threshold not to transact. This effect, the identification and recognition of which is novel to this paper, is above and beyond the standard extensive margin response. When present, unraveling affects interpretation and estimation of bunching estimates. Finally, we show that the presence of the tax affects how the market operates away from the threshold---taxation increases price reductions during the search process and in the bargaining stage and weakens the relationship between listing and sale prices. We interpret these results as demonstrating that taxation affects the ultimate allocation in this search market.
Handle: RePEc:nbr:nberwo:20084
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Medical Marijuana Laws on Marijuana, Alcohol, and Hard Drug Use
Classification-JEL: I18; K32
Author-Name: Hefei Wen
Author-Name: Jason Hockenberry
Author-Person: pho381
Author-Name: Janet R. Cummings
Note: EH
Number: 20085
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20085
File-URL: http://www.nber.org/papers/w20085.pdf
File-Format: application/pdf
Abstract: 21 states and the District of Columbia currently have laws that permit marijuana use for medical purposes, often termed medical marijuana laws (MMLs). We tested the effects of MMLs adopted in seven states between 2004 and 2011 on adolescent and adult marijuana, alcohol, and hard drug use. We employed a restricted-access version of the National Survey on Drug Use and Health (NSDUH) micro-level data with geographic identifiers. For those 21 and older, we found that MMLs led to a relative increase in the probability of marijuana use of 16 percent, an increase in marijuana use frequency of 12-17 percent, and an increase in the probability of marijuana abuse/dependence of 15-27 percent. For those 12-20 years old, we found a relative increase in marijuana use initiation of 5-6 percent. Among those aged 21 or above, MMLs increased the frequency of binge drinking by 6-9 percent, but MMLs did not affect drinking behavior among those 12-20 years old. MMLs had no discernible impact on hard drug use in either age group. Taken together, MML implementation increases marijuana use mainly among those over 21, where there is also a spillover effect of increased binge drinking, but there is no evidence of spillovers to other substance use.
Handle: RePEc:nbr:nberwo:20085
Template-Type: ReDIF-Paper 1.0
Title: Segregated Security Exchanges with Ex Ante Rights to Trade: A Market-Based Solution to Collateral-Constrained Externalities
Classification-JEL: D52; D53; D61; D62
Author-Name: Weerachart Kilenthong
Author-Person: pki258
Author-Name: Robert Townsend
Author-Person: pto99
Note: DEV IFM
Number: 20086
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20086
File-URL: http://www.nber.org/papers/w20086.pdf
File-Format: application/pdf
Abstract: This paper studies a competitive general equilibrium model with default and endogenous collateralized contracts. The possibility of trade in spot markets creates externalities, as spot prices and the bindingness of collateral constraints interact. We propose a market based solution which overcomes the externalities problem and obviates the needs for any government policy intervention. If agents are allowed to contract ex ante on market fundamentals determining the state-contingent spot prices used to unwind collateral, over and above contracting on true underlying states of the world, then standard existence and welfare theorems apply, that is, competitive equilibria are equivalent with Pareto optima.
Handle: RePEc:nbr:nberwo:20086
Template-Type: ReDIF-Paper 1.0
Title: Transfer Payments and the Macroeconomy: The Effects of Social Security Benefit Changes, 1952-1991
Classification-JEL: E21; E62; E63; H31; N12
Author-Name: Christina D. Romer
Author-Person: pro407
Author-Name: David H. Romer
Author-Person: pro406
Note: DAE EFG ME PE
Number: 20087
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20087
File-URL: http://www.nber.org/papers/w20087.pdf
File-Format: application/pdf
Publication-Status: published as Romer, Christina D., and David H. Romer. 2016. "Transfer Payments and the Macroeconomy: The Effects of Social Security Benefit Increases, 1952-1991." American Economic Journal: Macroeconomics, 8 (4): 1-42. DOI: 10.1257/mac.20140348
Abstract: From the early 1950s to the early 1990s, increases in Social Security benefits in the United States varied widely in size and timing, and were only rarely undertaken in response to short-run macroeconomic developments. This paper uses these benefit increases to investigate the macroeconomic effects of changes in transfer payments. It finds a large, immediate, and statistically significant response of consumption to permanent changes in transfers. The response appears to decline at longer horizons, however, and there is no clear evidence of effects on industrial production or employment. These effects differ sharply from the effects of relatively exogenous tax changes: the impact of transfers is faster, but much less persistent and dramatically smaller overall. Finally, we find strong statistical and narrative evidence of a sharply contractionary monetary policy response to permanent benefit increases that is not present for tax changes. This may account for the lower persistence of the consumption effects of transfers and their failure to spread to broader indicators of economic activity.
Handle: RePEc:nbr:nberwo:20087
Template-Type: ReDIF-Paper 1.0
Title: Banning Foreign Pharmacies from Sponsored Search: The Online Consumer Response
Classification-JEL: D83; I18; K32; L81
Author-Name: Matthew Chesnes
Author-Name: Weijia (Daisy) Dai
Author-Name: Ginger Zhe Jin
Note: IO
Number: 20088
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20088
File-URL: http://www.nber.org/papers/w20088.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Chesnes & Weijia (Daisy) Dai & Ginger Zhe Jin, 2017. "Banning Foreign Pharmacies from Sponsored Search: The Online Consumer Response," Marketing Science, vol 36(6), pages 879-907.
Abstract: Increased competition from the internet has raised concerns about the quality of prescription drugs sold online. Given the pressure from the Department of Justice, Google agreed to ban pharmacies not certified by the National Association of Boards of Pharmacy (NABP) from sponsored search listings. Using comScore click-through data originated from health-related queries, we study how the ban affects consumer search and click behavior in a difference-in-differences framework using the synthetic control method. We find that non-NABP-certified pharmacies receive fewer clicks after the ban and this effect is heterogeneous. In particular, pharmacies not certified by the NABP, but certified by other sources (other-certified websites), experience an increase in organic clicks that partially offsets the loss in paid clicks after the ban. In contrast, pharmacies not certified by any certification agencies experience much lower rates of substitution in organic clicks. These results suggest that the ban has increased the search cost for other-certified websites, but at least some consumers overcome the search cost by switching from sponsored to organic links. The lower substitution for uncertified websites may be explained by the rising consumer concerns about the quality of drugs sold on uncertified websites after the ban.
Handle: RePEc:nbr:nberwo:20088
Template-Type: ReDIF-Paper 1.0
Title: Nationalism and Economic Exchange: Evidence from Shocks to Sino-Japanese Relations
Classification-JEL: F13; F51; G14; G15
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Yasushi Hamao
Author-Person: pha719
Author-Name: Yongxiang Wang
Note: CF DEV ITI POL
Number: 20089
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20089
File-URL: http://www.nber.org/papers/w20089.pdf
File-Format: application/pdf
Publication-Status: published as Raymond Fisman & Yasushi Hamao & Yongxiang Wang, 2014. "Nationalism and Economic Exchange: Evidence from Shocks to Sino-Japanese Relations," Review of Financial Studies, Society for Financial Studies, vol. 27(9), pages 2626-2660.
Abstract: We study the impact of nationalism and interstate frictions on international economic relations by analyzing market reaction to adverse shocks to Sino-Japanese relations in 2005 and 2010. Japanese companies with high China exposure suffer relative declines during each event window; a symmetric effect is observed for Chinese companies with high Japanese exposure. The effect on Japanese companies is more pronounced for those operating in industries dominated by Chinese state-owned enterprises, while firms with high Chinese employment experience lower declines. These results emphasize the role of countries' economic and political institutions in mediating the impact of interstate frictions on firm-level outcomes.
Handle: RePEc:nbr:nberwo:20089
Template-Type: ReDIF-Paper 1.0
Title: Corruption in Chinese Privatizations
Classification-JEL: D73; G30; L33
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Yongxiang Wang
Note: CF DEV POL
Number: 20090
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20090
File-URL: http://www.nber.org/papers/w20090.pdf
File-Format: application/pdf
Publication-Status: published as R. Fisman & Y. Wang, 2015. "Corruption in Chinese Privatizations," Journal of Law, Economics, and Organization, vol 31(1), pages 1-29.
Abstract: We document evidence of corruption in Chinese state asset sales. These sales involved stakes in partially privatized firms, providing a benchmark - the price of publicly traded shares - to measure underpricing. Underpricing is correlated with deal attributes associated with misgovernance and corruption. Sales by "disguised" owners that misrepresent their state ownership to elude regulatory scrutiny are discounted 5-7 percentage points more than sales by other owners; related party transactions are similarly discounted. Analysis of subsequent operating performance provides suggestive evidence that aggregate ownership transfers improve profitability, though not in cases where the transfers themselves were corrupted.
Handle: RePEc:nbr:nberwo:20090
Template-Type: ReDIF-Paper 1.0
Title: The Market for High-Quality Medicine
Classification-JEL: I1; L15; O1
Author-Name: Daniel Bennett
Author-Name: Wesley Yin
Note: DEV EH
Number: 20091
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20091
File-URL: http://www.nber.org/papers/w20091.pdf
File-Format: application/pdf
Abstract: This study examines the effect of chain store entry on drug quality and prices in the retail pharmacy market in Hyderabad, India. In contrast to prevailing mom-and-pop pharmacies, chains exploit scale economies to offer high-quality drugs at lower cost. With a unique data set and a natural experiment methodology, we show that chain entry leads to a relative 5 percent improvement in drug quality and a 2 percent decrease in prices at incumbent retailers. These changes do not depend on the socioeconomic status of consumers, suggesting that chain entry improves consumer welfare throughout the market. Despite the likely role of asymmetric information in this market, we show that consumers partially infer these quality improvements. Our findings suggest that in markets with asymmetric information, organizational technologies such as chains may play an important role translating greater demand into higher quality.
Handle: RePEc:nbr:nberwo:20091
Template-Type: ReDIF-Paper 1.0
Title: Indirect Rule and State Weakness in Africa: Sierra Leone in Comparative Perspective
Classification-JEL: D7; H11
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Isaías N. Chaves
Author-Name: Philip Osafo-Kwaako
Author-Name: James A. Robinson
Author-Person: pro179
Note: DEV
Number: 20092
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20092
File-URL: http://www.nber.org/papers/w20092.pdf
File-Format: application/pdf
Publication-Status: published as Indirect Rule and State Weakness in Africa: Sierra Leone in Comparative Perspective, Daron Acemoglu, Isaías N. Chaves, Philip Osafo-Kwaako, James A. Robinson. in African Successes, Volume IV: Sustainable Growth, Edwards, Johnson, and Weil. 2016
Abstract: A fundamental problem for economic development is that most poor countries have 'weak state' which are incapable or unwilling to provide basic public goods such as law enforcement, order, education and infrastructure. In Africa this is often attributed to the persistence of 'indirect rule' from the colonial period. In this paper we discuss the ways in which a state constructed on the basis of indirect rule is weak and the mechanisms via which this has persisted since independence in Sierra Leone. We also present a hypothesis as to why the extent to which indirect rule has persisted varies greatly within Africa, linking it to the presence or the absence of large centralized pre-colonial polities within modern countries. Countries which had such a polity, such as Ghana and Uganda, tended to abolish indirect rule since it excessively empowered traditional rulers at the expense of post-colonial elites. Our argument provides a new mechanism which can explain the positive correlation between pre-colonial political centralization and modern public goods and development outcomes.
Handle: RePEc:nbr:nberwo:20092
Template-Type: ReDIF-Paper 1.0
Title: Foreign STEM Workers and Native Wages and Employment in U.S. Cities
Classification-JEL: F22; J61; O33; R10
Author-Name: Giovanni Peri
Author-Person: ppe210
Author-Name: Kevin Y. Shih
Author-Person: psh619
Author-Name: Chad Sparber
Author-Person: psp70
Note: LS PR
Number: 20093
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20093
File-URL: http://www.nber.org/papers/w20093.pdf
File-Format: application/pdf
Abstract: Scientists, Technology professionals, Engineers, and Mathematicians (STEM workers) are fundamental inputs in scientific innovation and technological adoption, the main drivers of productivity growth in the U.S. In this paper we identify the effect of STEM worker growth on the wages and employment of college and non-college educated native workers in 219 U.S. cities from 1990 to 2010. In order to identify a supply-driven and heterogeneous increase in STEM workers across U.S. cities, we use the distribution of foreign-born STEM workers in 1980 and exploit the introduction and variation of the H-1B visa program granting entry to foreign-born college educated (mainly STEM) workers. We find that H-1B-driven increases in STEM workers in a city were associated with significant increases in wages paid to college educated natives. Wage increases for non-college educated natives are smaller but still significant. We do not find significant effects on employment. We also find that STEM workers increased housing rents for college graduates, which eroded part of their wage gains. Together, these results imply a significant effect of foreign STEM on total factor productivity growth in the average US city between 1990 and 2010.
Handle: RePEc:nbr:nberwo:20093
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy and Real Borrowing Costs at the Zero Lower Bound
Classification-JEL: E43; E52
Author-Name: Simon Gilchrist
Author-Person: pgi28
Author-Name: David López-Salido
Author-Person: plo26
Author-Name: Egon Zakrajšek
Author-Person: pza207
Note: ME
Number: 20094
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20094
File-URL: http://www.nber.org/papers/w20094.pdf
File-Format: application/pdf
Publication-Status: published as Simon Gilchrist & David López-Salido & Egon Zakrajšek, 2015. "Monetary Policy and Real Borrowing Costs at the Zero Lower Bound," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 77-109, January.
Publication-Status: published as Monetary Policy and Real Borrowing Costs at the Zero Lower Bound, Simon Gilchrist, David López-Salido, Egon Zakrajšek. in Lessons from the Financial Crisis for Monetary Policy, Gertler. 2015
Abstract: This paper compares the effects of conventional monetary policy on real borrowing costs with those of the unconventional measures employed after the target federal funds rate hit the zero lower bound (ZLB). For the ZLB period, we identify two policy surprises: changes in the 2-year Treasury yield around policy announcements and changes in the 10-year Treasury yield that are orthogonal to those in the 2-year yield. The efficacy of unconventional policy in lowering real borrowing costs is comparable to that of conventional policy, in that it implies a complete pass-through of policy-induced movements in Treasury yields to comparable-maturity private yields.
Handle: RePEc:nbr:nberwo:20094
Template-Type: ReDIF-Paper 1.0
Title: Discrimination and the Effects of Drug Testing on Black Employment
Classification-JEL: J24; J7; J8
Author-Name: Abigail K. Wozniak
Author-Person: pwo113
Note: LS PE
Number: 20095
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20095
File-URL: http://www.nber.org/papers/w20095.pdf
File-Format: application/pdf
Publication-Status: published as Abigail Wozniak, 2015. "Discrimination and the Effects of Drug Testing on Black Employment," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 548-566, July.
Abstract: Nearly half of U.S. employers test job applicants and workers for drugs. A common assumption is that the rise of drug testing must have had negative consequences for black employment. However, the rise of employer drug testing may have benefited African-Americans by enabling non-using blacks to prove their status to employers. I use variation in the timing and nature of drug testing regulation to identify the impacts of testing on black hiring. Black employment in the testing sector is suppressed in the absence of testing, a finding which is consistent with ex ante discrimination on the basis of drug use perceptions. Adoption of pro-testing legislation increases black employment in the testing sector by 7-30% and relative wages by 1.4-13.0%, with the largest shifts among low skilled black men. Results further suggest that employers substitute white women for blacks in the absence of testing.
Handle: RePEc:nbr:nberwo:20095
Template-Type: ReDIF-Paper 1.0
Title: Corporate Governance and the Development of Manufacturing Enterprises in Nineteenth-Century Massachusetts
Classification-JEL: D23; K2; N11
Author-Name: Eric Hilt
Author-Person: phi104
Note: DAE
Number: 20096
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20096
File-URL: http://www.nber.org/papers/w20096.pdf
File-Format: application/pdf
Publication-Status: published as Corporate Governance and the Development of Manufacturing Enterprises in Nineteenth-Century Massachusetts, Eric Hilt. in Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective, Collins and Margo. 2015
Abstract: This paper analyzes the use of the corporate form among nineteenth-century manufacturing firms in Massachusetts, from newly collected data from 1875. An analysis of incorporation rates across industries reveals that corporations were formed at higher rates among industries in which firm size was larger. But conditional on firm size, the industries in which production was conducted in factories, rather than artisanal shops, saw more frequent use of the corporate form. On average, the ownership of the corporations was quite concentrated, with the directors holding 45 percent of the shares. However, the corporations whose shares were quoted on the Boston Stock Exchange were 'widely held' at rates comparable to modern American public companies. The production methods utilized in in different industries also influenced firms' ownership structures. In many early factories, steam power was combined with unskilled labor, and managers likely performed a complex supervisory role that was critical to the success of the firm. Consistent with the notion that monitoring management was especially important among such firms, corporations in industries that made greater use of steam power and unskilled labor had more concentrated ownership, higher levels of managerial ownership, and smaller boards of directors.
Handle: RePEc:nbr:nberwo:20096
Template-Type: ReDIF-Paper 1.0
Title: Is Smoking Inferior? Evidence from Variation in the Earned Income Tax Credit
Classification-JEL: H2; I1
Author-Name: Donald S. Kenkel
Author-Person: pke44
Author-Name: Maximilian D. Schmeiser
Author-Person: psc279
Author-Name: Carly J. Urban
Note: EH
Number: 20097
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20097
File-URL: http://www.nber.org/papers/w20097.pdf
File-Format: application/pdf
Publication-Status: published as Donald S. Kenkel & Maximilian D. Schmeiser & Carly Urban, 2014. "Is Smoking Inferior?: Evidence from Variation in the Earned Income Tax Credit," Journal of Human Resources, University of Wisconsin Press, vol. 49(4), pages 1094-1120.
Abstract: In this paper we estimate the causal income elasticity of smoking participation, cessation, and cigarette demand conditional upon participation. Using an instrumental variables (IV) estimation strategy we find that smoking appears to be a normal good among low-income adults: higher instrumented income is associated with an increase in the number of cigarettes consumed and a decrease in smoking cessation. The magnitude and direction of the changes in the income coefficients from our OLS to IV estimates are consistent with the hypothesis that correlational estimates between income and smoking related outcomes are biased by unobservable characteristics that differentiate higher income smokers from lower income smokers.
Handle: RePEc:nbr:nberwo:20097
Template-Type: ReDIF-Paper 1.0
Title: Communicating Uncertainty in Official Economic Statistics
Classification-JEL: C82; E01; I32
Author-Name: Charles F. Manski
Author-Person: pma111
Note: EFG PE TWP
Number: 20098
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20098
File-URL: http://www.nber.org/papers/w20098.pdf
File-Format: application/pdf
Publication-Status: published as Manski, Charles F. 2015. "Communicating Uncertainty in Official Economic Statistics: An Appraisal Fifty Years after Morgenstern." Journal of Economic Literature, 53 (3): 631-53. DOI: 10.1257/jel.53.3.631
Abstract: Federal statistical agencies in the United States and analogous agencies elsewhere commonly report official economic statistics as point estimates, without accompanying measures of error. Users of the statistics may incorrectly view them as error-free or may incorrectly conjecture error magnitudes. This paper discusses strategies to mitigate misinterpretation of official statistics by communicating uncertainty to the public. Sampling error can be measured using established statistical principles. The challenge is to satisfactorily measure the various forms of non-sampling error. I find it useful to distinguish transitory statistical uncertainty, permanent statistical uncertainty, and conceptual uncertainty. I illustrate how each arises as the Bureau of Economic Analysis periodically revises GDP estimates, the Census Bureau generates household income statistics from surveys with non-response, and the Bureau of Labor Statistics seasonally adjusts employment statistics.
Handle: RePEc:nbr:nberwo:20098
Template-Type: ReDIF-Paper 1.0
Title: Financial Frictions and Firm Dynamics
Classification-JEL: E32; E44; G32
Author-Name: Paul Bergin
Author-Person: pbe249
Author-Name: Ling Feng
Author-Name: Ching-Yi Lin
Author-Person: pli707
Note: EFG IFM ME
Number: 20099
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20099
File-URL: http://www.nber.org/papers/w20099.pdf
File-Format: application/pdf
Abstract: Firm entry dynamics are an integral part of the propagation of financial shocks to the real economy. A VAR documents that adverse financial shocks in the U.S. postwar period are associated with a fall in new firm creation and a fall in firm equity values. We propose a DSGE model with endogenous firm entry and financial frictions that is able to explain these facts. The model is novel in giving firms a choice of financing up-front entry costs through a combination of debt as well as equity, so that financial shocks directly impact the financing of firm entry. The model is also novel in making use of the asset pricing implications of the firm entry condition to explain the equity price response to a financial shock. The model indicates that free entry of new firms limits the ability of incumbent firms to respond to negative financial shocks through endogenous capital restructuring. Also, allowing the number of firms to fall after an adverse financial shock is a useful margin of macroeconomic adjustment, reducing the overall impact of the shock on aggregate output. This is because the remaining firms become financially stronger and better able to withstand a financial shock.
Handle: RePEc:nbr:nberwo:20099
Template-Type: ReDIF-Paper 1.0
Title: Evaluating Policies to Prevent another Crisis: An Economist's View
Classification-JEL: D61; D82; G21; G28
Author-Name: Paul S. Willen
Author-Person: pwi457
Note: EFG
Number: 20100
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20100
File-URL: http://www.nber.org/papers/w20100.pdf
File-Format: application/pdf
Publication-Status: published as in Cato Papers on Public Policy
Abstract: I consider four policies created to address the financial crisis: (1) the ability-to-repay requirement in mortgage underwriting; (2) reform of rating agency compensation, (3) risk retention in securitization, and (4) mandatory loan renegotiation. I show that according to standard models, policies (1)-(3) do not address the standard asymmetric information problems that afflict financial markets. Policy (4) could reduce the deadweight losses associated with asymmetric information but requires that policy makers allocate gains and losses.
Handle: RePEc:nbr:nberwo:20100
Template-Type: ReDIF-Paper 1.0
Title: Reconciling Hayek's and Keynes Views of Recessions
Classification-JEL: E32
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: Dana Galizia
Author-Person: pga818
Author-Name: Franck Portier
Author-Person: ppo12
Note: EFG
Number: 20101
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20101
File-URL: http://www.nber.org/papers/w20101.pdf
File-Format: application/pdf
Publication-Status: published as Paul Beaudry & Dana Galizia & Franck Portier, 2018. "Reconciling Hayek’s and Keynes’ Views of Recessions," Review of Economic Studies, Oxford University Press, vol. 85(1), pages 119-156.
Abstract: Recessions often happen after periods of rapid accumulation of houses, consumer durables and business capital. This observation has led some economists, most notably Friedrich Hayek, to conclude that recessions mainly reflect periods of needed liquidation resulting from past over-investment. According to the main proponents of this view, government spending should not be used to mitigate such a liquidation process, as doing so would simply result in a needed adjustment being postponed. In contrast, ever since the work of Keynes, many economists have viewed recessions as periods of deficient demand that should be countered by activist fiscal policy. In this paper we reexamine the liquidation perspective of recessions in a setup where prices are flexible but where not all trades are coordinated by centralized markets. We show why and how liquidations can produce periods where the economy functions particularly inefficiently, with many socially desirable trades between individuals remaining unexploited when the economy inherits too many capital goods. In this sense, our model illustrates how liquidations can cause recessions characterized by deficient aggregate demand and accordingly suggests that Keynes' and Hayek's views of recessions may be much more closely linked than previously recognized. In our framework, interventions aimed at stimulating aggregate demand face the trade-off emphasized by Hayek whereby current stimulus mainly postpones the adjustment process and therefore prolongs the recessions. However, when examining this trade-off, we find that some stimulative policies may nevertheless remain desirable even if they postpone a recovery.
Handle: RePEc:nbr:nberwo:20101
Template-Type: ReDIF-Paper 1.0
Title: The New Empirical Economics of Management
Classification-JEL: E23; M1; M11
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Renata Lemos
Author-Person: ple1072
Author-Name: Raffaella Sadun
Author-Person: psa385
Author-Name: Daniela Scur
Author-Person: psc449
Author-Name: John Van Reenen
Author-Person: pva45
Note: DEV EFG IO ITI LS PE PR
Number: 20102
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20102
File-URL: http://www.nber.org/papers/w20102.pdf
File-Format: application/pdf
Publication-Status: published as Bloom, N. , Lemos, R. , Sadun, R. , Scur, D. and Reenen, J. (2014), JEEA‐FBBVA LECTURE 2013: THE NEW EMPIRICAL ECONOMICS OF MANAGEMENT. Journal of the European Economic Association, 12: 835-876. doi:10.1111/jeea.12094
Abstract: Over the last decade the World Management Survey (WMS) has collected firm-level management practices data across multiple sectors and countries. We developed the survey to try to explain the large and persistent TFP differences across firms and countries. This review paper discusses what has been learned empirically and theoretically from the WMS and other recent work on management practices. Our preliminary results suggest that about a quarter of cross-country and within-country TFP gaps can be accounted for by management practices. Management seems to matter both qualitatively and quantitatively. Competition, governance, human capital and informational frictions help account for the variation in management.
Handle: RePEc:nbr:nberwo:20102
Template-Type: ReDIF-Paper 1.0
Title: The Long Term Impact of Cash Transfers to Poor Families
Classification-JEL: I12; I38; N32
Author-Name: Anna Aizer
Author-Person: pai9
Author-Name: Shari Eli
Author-Person: pel149
Author-Name: Joseph P. Ferrie
Author-Name: Adriana Lleras-Muney
Author-Person: pll45
Note: CH DAE ED EH LS PE
Number: 20103
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20103
File-URL: http://www.nber.org/papers/w20103.pdf
File-Format: application/pdf
Publication-Status: published as Aizer, Anna, Shari Eli, Joseph Ferrie, and Adriana Lleras-Muney. 2016. "The Long-Run Impact of Cash Transfers to Poor Families." American Economic Review, 106 (4): 935-71. DOI: 10.1257/aer.20140529
Abstract: We estimate the long-run impact of cash transfers to poor families on children's longevity, educational attainment, nutritional status, and income in adulthood. To do so, we collected individual-level administrative records of applicants to the Mothers' Pension program--the first government-sponsored welfare program in the US (1911-1935) --and matched them to census, WWII and death records. Male children of accepted applicants lived one year longer than those of rejected mothers. Male children of accepted mothers received one-third more years of schooling, were less likely to be underweight, and had higher income in adulthood than children of rejected mothers.
Handle: RePEc:nbr:nberwo:20103
Template-Type: ReDIF-Paper 1.0
Title: Shock Elasticities and Impulse Responses
Classification-JEL: E0
Author-Name: Jaroslav Borovička
Author-Person: pbo435
Author-Name: Lars P. Hansen
Author-Person: pha303
Author-Name: Jose A. Scheinkman
Author-Person: psc26
Note: AP
Number: 20104
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20104
File-URL: http://www.nber.org/papers/w20104.pdf
File-Format: application/pdf
Publication-Status: published as Jaroslav Borovička & Lars Peter Hansen & José A. Scheinkman, 2014. "Shock elasticities and impulse responses," Mathematics and Financial Economics, vol 8(4), pages 333-354.
Abstract: We construct shock elasticities that are pricing counterparts to impulse response functions. Recall that impulse response functions measure the importance of next-period shocks for future values of a time series. Shock elasticities measure the contributions to the price and to the expected future cash flow from changes in the exposure to a shock in the next period. They are elasticities because their measurements compute proportionate changes. We show a particularly close link between these objects in environments with Brownian information structures.
Handle: RePEc:nbr:nberwo:20104
Template-Type: ReDIF-Paper 1.0
Title: Labor Mobility Within Currency Unions
Classification-JEL: E0; F0
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Iván Werning
Author-Person: pwe141
Note: IFM PE
Number: 20105
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20105
File-URL: http://www.nber.org/papers/w20105.pdf
File-Format: application/pdf
Abstract: We study the effects of labor mobility within a currency union suffering from nominal rigidities. When the demand shortfall in depressed region is mostly internal, migration may not help regional macroeconomic adjustment. When external demand is also at the root of the problem, migration out of depressed regions may produce a positive spillover for stayers. We consider a planning problem and compare its solution to the equilibrium. We find that the equilibrium is generally constrained inefficient, although the welfare losses may be small if the economy suffers mainly from internal demand imbalances.
Handle: RePEc:nbr:nberwo:20105
Template-Type: ReDIF-Paper 1.0
Title: Stereotypes
Classification-JEL: D01; D03; D83; D84
Author-Name: Pedro Bordalo
Author-Person: pbo515
Author-Name: Nicola Gennaioli
Author-Person: pge95
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: ED POL
Number: 20106
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20106
File-URL: http://www.nber.org/papers/w20106.pdf
File-Format: application/pdf
Publication-Status: published as Pedro Bordalo & Katherine Coffman & Nicola Gennaioli & Andrei Shleifer, 2016. "Stereotypes," The Quarterly Journal of Economics, vol 131(4), pages 1753-1794.
Abstract: We present a model of stereotypes in which a decision maker assessing a group recalls only that group's most representative or distinctive types relative to other groups. Because stereotypes highlight differences between groups, and neglect likely common types, they are especially inaccurate when groups are similar. In this case, stereotypes consist of unlikely, extreme types. When stereotypes are inaccurate, they exhibit a form of base rate neglect. They also imply a form of confirmation bias in light of new information: beliefs over-react to information that confirms the stereotype and ignore information that contradicts it. However, stereotypes can change - or rather, be replaced - if new information changes the group's most distinctive trait. Applied to gender stereotypes, the model provides a unified account of disparate evidence regarding the gender gap in education and in labor markets.
Handle: RePEc:nbr:nberwo:20106
Template-Type: ReDIF-Paper 1.0
Title: Economic History and Economic Development: New Economic History in Retrospect and Prospect
Classification-JEL: N01; N10; O11; O15
Author-Name: Peter Temin
Author-Person: pte231
Note: DAE DEV
Number: 20107
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20107
File-URL: http://www.nber.org/papers/w20107.pdf
File-Format: application/pdf
Abstract: I argue in this paper for more interaction between economic history and economic development. Both subfields study economic development; the difference is that economic history focuses on high-wage countries while economic development focuses on low-wage economies. My argument is based on recent research by Robert Allen, Joachim Voth and their colleagues. Voth demonstrated that Western Europe became a high-wage economy in the 14th century, using the European Marriage Pattern stimulated by the effects of the Black Death. This created economic conditions that led eventually to the Industrial Revolution in the 18th century. Allen found that the Industrial Revolution resulted from high wages and low power costs. He showed that the technology of industrialization was adapted to these factor prices and is not profitable in low-wage economies. The cross-over to economic development suggests that demography affects destiny now as in the past, and that lessons from economic history can inform current policy decisions. This argument is framed by a description of the origins of the New Economic History, also known as Cliometrics, and a non-random survey of recent research emphasizing the emerging methodology of the New Economic History.
Handle: RePEc:nbr:nberwo:20107
Template-Type: ReDIF-Paper 1.0
Title: Race, Ethnicity, and Discriminatory Zoning
Classification-JEL: K32; N42; Q15; R52
Author-Name: Allison Shertzer
Author-Person: psh847
Author-Name: Tate Twinam
Author-Person: ptw7
Author-Name: Randall P. Walsh
Author-Person: pwa222
Note: DAE EEE LE
Number: 20108
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20108
File-URL: http://www.nber.org/papers/w20108.pdf
File-Format: application/pdf
Publication-Status: published as Allison Shertzer & Tate Twinam & Randall P. Walsh, 2016. "Race, Ethnicity, and Discriminatory Zoning," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 217-46, July.
Publication-Status: published as Allison Shertzer & Tate Twinam & Randall P. Walsh, 2016. "Race, Ethnicity, and Discriminatory Zoning," American Economic Journal: Applied Economics, vol 8(3), pages 217-246.
Abstract: Zoning has been cited as a discriminatory policy tool by critics, who argue that ordinances are used to deter the entry of minority residents into majority neighborhoods through density restrictions (exclusionary zoning) and locate manufacturing activity in minority neighborhoods (environmental racism). However, identifying discrimination in these regulations is complicated by the fact that land use and zoning have been co-evolving for nearly a century in most American cities, rendering residential sorting and inequitable treatment observationally equivalent. We employ a novel approach to overcome this challenge, studying the introduction of comprehensive zoning in Chicago. Using fine-scale spatial data on pre-existing land uses and the locations of minority neighborhoods, we find evidence of a pre-cursor to exclusionary zoning that was applied to black neighborhoods. We also find strong evidence of inequitable treatment of both southern black and immigrant neighborhoods with both appearing to have been targeted for increased levels of industrial use zoning.
Handle: RePEc:nbr:nberwo:20108
Template-Type: ReDIF-Paper 1.0
Title: When Does Regulation Distort Costs? Lessons from Fuel Procurement in U.S. Electricity Generation
Classification-JEL: D24; D72; D82; L11; L43; L51; L94; L98; Q4; Q48
Author-Name: Steve Cicala
Author-Person: pci93
Note: EEE IO POL
Number: 20109
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20109
File-URL: http://www.nber.org/papers/w20109.pdf
File-Format: application/pdf
Publication-Status: published as Steve Cicala, 2015. "When Does Regulation Distort Costs? Lessons from Fuel Procurement in US Electricity Generation," American Economic Review, American Economic Association, vol. 105(1), pages 411-44, January.
Abstract: This paper evaluates changes in fuel procurement practices by coal- and gas-fired power plants in the United States following state-level legislation that ended cost-of-service regulation of electricity generation. I find that deregulated plants substantially reduce the price paid for coal (but not gas), and tend to employ less capital-intensive sulfur abatement techniques relative to matched plants that were not subject to any regulatory change. Deregulation also led to a shift toward more productive coal mines. I show how these results lend support to theories of asymmetric information, capital bias, and regulatory capture as important sources of regulatory distortion.
Handle: RePEc:nbr:nberwo:20109
Template-Type: ReDIF-Paper 1.0
Title: Asset Pricing with Countercyclical Household Consumption Risk
Classification-JEL: D31; D52; E32; E44; G01; G12; J60
Author-Name: George M. Constantinides
Author-Person: pco144
Author-Name: Anisha Ghosh
Note: AP
Number: 20110
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20110
File-URL: http://www.nber.org/papers/w20110.pdf
File-Format: application/pdf
Publication-Status: published as GEORGE M. CONSTANTINIDES & ANISHA GHOSH, 2017. "Asset Pricing with Countercyclical Household Consumption Risk," The Journal of Finance, vol 72(1), pages 415-460.
Abstract: We show that shocks to household consumption growth are negatively skewed, persistent, countercyclical, and drive asset prices. We construct a parsimonious model where heterogeneous households have recursive preferences. A single state variable drives the conditional cross-sectional moments of household consumption growth. The estimated model fits well the unconditional cross-sectional moments of household consumption growth and the moments of the risk-free rate, equity premium, price-dividend ratio, and aggregate dividend and consumption growth. The model-implied risk-free rate and price-dividend ratio are procyclical while the market return has countercyclical mean and variance. Finally, household consumption risk explains the cross-section of excess returns.
Handle: RePEc:nbr:nberwo:20110
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Public Insurance Coverage for Childless Adults on Labor Supply
Classification-JEL: I13; J22
Author-Name: Laura Dague
Author-Person: pda897
Author-Name: Thomas DeLeire
Author-Person: pde167
Author-Name: Lindsey Leininger
Note: EH LS
Number: 20111
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20111
File-URL: http://www.nber.org/papers/w20111.pdf
File-Format: application/pdf
Publication-Status: published as Laura Dague & Thomas DeLeire & Lindsey Leininger, 2017. "The Effect of Public Insurance Coverage for Childless Adults on Labor Supply," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 124-154, May.
Abstract: This study provides plausibly causal estimates of the effect of public insurance coverage on the employment of non-elderly, non-disabled adults without dependent children ("childless adults"). We use regression discontinuity and propensity score matching difference-in-differences methods to take advantage of the sudden imposition of an enrollment cap, comparing the labor supply of enrollees to eligible applicants on a waitlist. We find enrollment into public insurance leads to sizable and statistically meaningful reductions in employment up to at least 9 quarters later, with an estimated size of from 2 to 10 percentage points depending upon the model used.
Handle: RePEc:nbr:nberwo:20111
Template-Type: ReDIF-Paper 1.0
Title: Curriculum and Ideology
Classification-JEL: I20; P00
Author-Name: Davide Cantoni
Author-Name: Yuyu Chen
Author-Person: pch138
Author-Name: David Y. Yang
Author-Person: pya659
Author-Name: Noam Yuchtman
Author-Person: pyu185
Author-Name: Y. Jane Zhang
Author-Person: pzh419
Note: DAE DEV LS POL
Number: 20112
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20112
File-URL: http://www.nber.org/papers/w20112.pdf
File-Format: application/pdf
Publication-Status: published as Davide Cantoni & Yuyu Chen & David Y. Yang & Noam Yuchtman & Y. Jane Zhang, 2017. "Curriculum and Ideology," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 338-392.
Abstract: We study the causal effect of school curricula on students' stated beliefs and attitudes. We exploit a major textbook reform in China that was rolled out between 2004 and 2010 with the explicit intention of shaping youths' ideology. To measure its effect, we present evidence from a novel survey we conducted among 2000 students at Peking University. The sharp, staggered introduction of the new curriculum across provinces allows us to identify the effects of the new educational content in a generalized difference in differences framework. We examine government documents articulating desired consequences of the reform, and identify changes in textbook content and college entrance exams that reflect the government's aims. These changes were often effective: study under the new curriculum is robustly associated with changed views on political participation and democracy in China, increased trust in government officials, and a more skeptical view of free markets.
Handle: RePEc:nbr:nberwo:20112
Template-Type: ReDIF-Paper 1.0
Title: Effects of Maternal Depression on Family Food Insecurity
Classification-JEL: H53; I1; I3
Author-Name: Kelly Noonan
Author-Name: Hope Corman
Author-Name: Nancy E. Reichman
Note: EH PE
Number: 20113
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20113
File-URL: http://www.nber.org/papers/w20113.pdf
File-Format: application/pdf
Publication-Status: published as Kelly Noonan & Hope Corman & Nancy E. Reichman, 2016. "Effects of maternal depression on family food insecurity," Economics & Human Biology, .
Abstract: Theory suggests that adverse life events--such as unemployment or health shocks--can result in food insecurity, which has increased substantially in the U.S. over the past decade alongside the obesity epidemic. We test this proposition by estimating the effects of a specific and salient mental health event--maternal depression during the postpartum year--on child and family food insecurity. Using data from the Early Childhood Longitudinal Study--Birth Cohort, we estimate the effects of maternal depression on food insecurity using both single- and two-stage models, and explore potential buffering effects of relevant public assistance programs and supports. We find that moderate to severe maternal depression increases the likelihood that children and households experience any food insecurity--by between 50 and 80%, depending on the measure of food insecurity. We also find that maternal depression increases the likelihood of reliance on the Supplemental Nutrition Assistance Program; Supplemental Nutrition Program for Women, Infants, and Children; Medicaid; and the Temporary Assistance to Needy Families program, suggesting that these programs play a buffering role.
Handle: RePEc:nbr:nberwo:20113
Template-Type: ReDIF-Paper 1.0
Title: Health, Disability Insurance and Retirement in Denmark
Classification-JEL: H55; I1; J14
Author-Name: Paul Bingley
Author-Name: Nabanita Datta Gupta
Author-Person: pda42
Author-Name: Michael Jorgensen
Author-Name: Peder Pedersen
Author-Person: ppe521
Note: AG
Number: 20114
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20114
File-URL: http://www.nber.org/papers/w20114.pdf
File-Format: application/pdf
Publication-Status: published as Health, Disability Insurance, and Retirement in Denmark, Paul Bingley, Nabanita Datta Gupta, Michael Jørgensen, Peder J. Pedersen. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: There are large differences in labor force participation rates by health status. We examine to what extent these differences are determined by the provisions of Disability Insurance and other pension programs. Using administrative data for Denmark we find that those in worse health and with less schooling are more likely to receive DI. The gradient of DI participation across health quintiles is almost twice as steep as for schooling - moving from having no high school diploma to college completion. Using an option value model that accounts for different pathways to retirement, applied to a period spanning a major pension reform, we find that pension program incentives in general are important determinants of retirement age. Individuals in poor health and with low schooling are significantly more responsive to economic incentives than those who are in better health and with more schooling. Similar gradients in outcomes and behavior by health and schooling partially reflects the less educated having poorer health on average, but also that the less educated have worse job prospects and higher replacement rates due to a progressive formula for DI and other pension benefits.
Handle: RePEc:nbr:nberwo:20114
Template-Type: ReDIF-Paper 1.0
Title: Estimation of Affine Term Structure Models with Spanned or Unspanned Stochastic Volatility
Classification-JEL: C13; E43; G12
Author-Name: Drew D. Creal
Author-Person: pcr106
Author-Name: Jing Cynthia Wu
Author-Person: pwu111
Note: AP ME
Number: 20115
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20115
File-URL: http://www.nber.org/papers/w20115.pdf
File-Format: application/pdf
Publication-Status: published as Creal, Drew D. & Wu, Jing Cynthia, 2015. "Estimation of affine term structure models with spanned or unspanned stochastic volatility," Journal of Econometrics, Elsevier, vol. 185(1), pages 60-81.
Abstract: We develop new procedures for maximum likelihood estimation of affine term structure models with spanned or unspanned stochastic volatility. Our approach uses linear regression to reduce the dimension of the numerical optimization problem yet it produces the same estimator as maximizing the likelihood. It improves the numerical behavior of estimation by eliminating parameters from the objective function that cause problems for conventional methods. We find that spanned models capture the cross-section of yields well but not volatility while unspanned models fit volatility at the expense of fitting the cross-section.
Handle: RePEc:nbr:nberwo:20115
Template-Type: ReDIF-Paper 1.0
Title: The Role of Publication Selection Bias in Estimates of the Value of a Statistical Life
Classification-JEL: I18; J17; J31; K32
Author-Name: W. Kip Viscusi
Author-Person: pvi69
Note: EH
Number: 20116
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20116
File-URL: http://www.nber.org/papers/w20116.pdf
File-Format: application/pdf
Publication-Status: published as W. Kip Viscusi, 2015. "The Role of Publication Selection Bias in Estimates of the Value of a Statistical Life," American Journal of Health Economics, MIT Press, vol. 1(1), pages 27-52, Winter.
Abstract: Meta-regression estimates of the value of a statistical life (VSL) controlling for publication selection bias yield bias-corrected estimates of VSL that are higher for labor market studies using the more recent Census of Fatal Occupational Injuries (CFOI) data. These results are borne out by the findings for four meta-analysis data sets and different formulations of the variable used to capture publication bias effects. Meta-regression estimates for a large sample of VSL estimates consisting only of results of labor market studies using the CFOI fatality data indicate publication selection bias effects that are not statistically significant in either fixed effects or random effects models with clustered standard errors. The confidence intervals of the publication bias-corrected estimates of the value of a statistical life sometimes include the sample mean estimates and always include the values that are currently used by government agencies.
Handle: RePEc:nbr:nberwo:20116
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Macroeconomic Impact of Monetary Policy at the Zero Lower Bound
Classification-JEL: E43; E44; E52; E58; G12
Author-Name: Jing Cynthia Wu
Author-Person: pwu111
Author-Name: Fan Dora Xia
Author-Person: pxi184
Note: AP EFG ME
Number: 20117
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20117
File-URL: http://www.nber.org/papers/w20117.pdf
File-Format: application/pdf
Publication-Status: published as Jing Cynthia Wu & Fan Dora Xia, 2016. "Measuring the Macroeconomic Impact of Monetary Policy at the Zero Lower Bound," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(2-3), pages 253-291, 03.
Abstract: This paper employs an approximation that makes a nonlinear term structure model extremely tractable for analysis of an economy operating near the zero lower bound for interest rates. We show that such a model offers an excellent description of the data compared to the benchmark model and can be used to summarize the macroeconomic effects of unconventional monetary policy. Our estimates imply that the efforts by the Federal Reserve to stimulate the economy since July 2009 succeeded in making the unemployment rate in December 2013 1% lower, which is 0.13% more compared to the historical behavior of the Fed.
Handle: RePEc:nbr:nberwo:20117
Template-Type: ReDIF-Paper 1.0
Title: The Effect of School Finance Reforms on the Distribution of Spending, Academic Achievement, and Adult Outcomes
Classification-JEL: H0; H52; H71; H72; I0; I24; I3; J0
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Author-Name: Rucker Johnson
Author-Name: Claudia Persico
Author-Person: ppe920
Note: CH ED LS PE
Number: 20118
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20118
File-URL: http://www.nber.org/papers/w20118.pdf
File-Format: application/pdf
Abstract: The school finance reforms (SFRs) that began in the early 1970s and accelerated in the 1980s caused some of the most dramatic changes in the structure of K-12 education spending in U.S. history. We analyze the effects of these reforms on the level and distribution of school district spending, as well as their effects on subsequent educational and economic outcomes. In Part One, using a newly compiled database of school finance reforms and a recently available long panel of annual school district data on per-pupil spending that spans 1967-2010, we present an event-study analysis of the effects of different types of school finance reforms on per-pupil spending in low- and high-income school districts. We find that SFRs have been instrumental in equalizing school spending between low- and high-income districts and many reforms do so by increasing spending for poor districts. While all reforms reduce spending inequality, there are important differences by reform type: adequacy-based court-ordered reforms increase overall school spending, while equity-based court-ordered reforms reduce the variance of spending with little effect on overall levels; reforms that entail high tax prices (the amount of taxes a district must raise to increase spending by one dollar) reduce long-run spending for all districts, and those that entail low tax prices lead to increased spending growth, particularly for low-income districts. In Part Two, we link the spending and reform data to detailed, nationally-representative data on children born between 1955 and 1985 and followed through 2011 (the Panel Study of Income Dynamics) to study the effect of the reform-induced changes in school spending on long-run adult outcomes. These birth cohorts straddle the period in which most of the major school finance reform litigation accelerated, and thus the cohorts were differentially exposed, depending on place and year of birth. We use the timing of the passage of court-mandated reforms as an exogenous shifter of school spending across cohorts within the same district. Event-study and instrumental variable models reveal that a 20 percent increase in per-pupil spending each year for all 12 years of public school for children from poor families leads to about 0.9 more completed years of education, 25 percent higher earnings, and a 20 percentage-point reduction in the annual incidence of adult poverty; we find no effects for children from non-poor families. The magnitudes of these effects are sufficiently large to eliminate between two-thirds and all of the gaps in these adult outcomes between those raised in poor families and those raised in non-poor families. We present several pieces of evidence to support a causal interpretation of the estimates.
Handle: RePEc:nbr:nberwo:20118
Template-Type: ReDIF-Paper 1.0
Title: Detection and Impact of Industrial Subsidies: The Case of World Shipbuilding
Classification-JEL: L0
Author-Name: Myrto Kalouptsidi
Note: IO
Number: 20119
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20119
File-URL: http://www.nber.org/papers/w20119.pdf
File-Format: application/pdf
Abstract: This paper provides a model-based empirical strategy to, (i) detect the presence and gauge the magnitude of government subsidies and (ii) quantify their impact on production reallocation across countries, industry prices, costs and consumer surplus. I construct and estimate an industry model that allows for dynamic agents in both demand and supply and apply my strategy to world shipbuilding, a classic target of industrial policy. I find strong evidence consistent with China having intervened and reducing shipyard costs by 13-20%, corresponding to 1:5 to 4:5 billion US dollars, between 2006 and 2012. The subsidies led to substantial reallocation of ship production across the world, with Japan, in particular, losing significant market share. They also misaligned costs and production, while leading to minor surplus gains for shippers.
Handle: RePEc:nbr:nberwo:20119
Template-Type: ReDIF-Paper 1.0
Title: Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement - Introduction and Summary
Classification-JEL: H31; H55; I19; J14; J26
Author-Name: Courtney Coile
Author-Person: pco557
Author-Name: Kevin S. Milligan
Author-Person: pmi14
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG
Number: 20120
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20120
File-URL: http://www.nber.org/papers/w20120.pdf
File-Format: application/pdf
Publication-Status: published as Introduction to "Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement", Courtney Coile, Kevin Milligan, David A. Wise. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: This is the introduction and summary to the sixth phase of an ongoing project on Social Security Programs and Retirement Around the World. The first phase described the retirement incentives inherent in plan provisions and documented the strong relationship across countries between social security incentives to retire and the proportion of older persons out of the labor force. The second phase documented the large effects that changing plan provisions would have on the labor force participation of older workers. The third phase demonstrated the consequent fiscal implications that extending labor force participation would have on net program costs--reducing government social security benefit payments and increasing government tax revenues. The fourth phase presented analyses of the relationship between the labor force participation of older persons and the labor force participation of younger persons in twelve countries. We found no evidence that increasing the employment of older persons will reduce the employment opportunities of youth and no evidence that increasing the employment of older persons will increase the unemployment of youth. The fifth phase on "Historical Trends in Mortality and Health, Employment, and Disability Insurance Participation and Reforms" was intended to set the stage for this current phase. This sixth phase of the ongoing ISS project is particularly related to the fifth phase (Wise, 2012) and the second phase (Gruber and Wise, 2004) of the project. This volume continues the focus of the previous volume on DI programs while extending the methodology to study retirement behavior used in the second phase to focus in particular on the effects of the DI programs. The key question this volume seeks to address is: given health status, to what extent are differences in labor force participation across countries determined by the provisions of disability insurance programs?
Handle: RePEc:nbr:nberwo:20120
Template-Type: ReDIF-Paper 1.0
Title: Is the Stock Market Just a Side Show? Evidence from a Structural Reform
Classification-JEL: C21; D22; F30; G31; O16
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: Rafael Perez Ribas
Author-Person: ppe124
Author-Name: Yan Wang
Note: CF DEV
Number: 20121
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20121
File-URL: http://www.nber.org/papers/w20121.pdf
File-Format: application/pdf
Publication-Status: published as Murillo Campello & Rafael P. Ribas & Albert Y. Wang, 2014. "Is the Stock Market Just a Side Show? Evidence from a Structural Reform," Review of Corporate Finance Studies, Oxford University Press, vol. 3(1-2), pages 1-38.
Abstract: The 2005 split-share reform in China mandated the conversion of nontradable stocks into tradable status. This paper examines the effects of stock markets on corporate outcomes exploiting multiple institutional features of the Chinese conversion program. Using a generalized propensity score matching approach, we identify increases in corporate profitability, investment, value, and productivity as a result of the reform. We also identify changes in firms' likelihood to issue shares and engage in mergers, as well as changes in dividend and capital structure policies. Our findings provide insights on the role of stock markets in shaping corporate activity and on the impact of regulation on economic growth.
Handle: RePEc:nbr:nberwo:20121
Template-Type: ReDIF-Paper 1.0
Title: The Economic Stimulus Payments of 2008 and the Aggregate Demand for Consumption
Classification-JEL: D12; D91; E21; E62
Author-Name: Christian Broda
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Note: EFG ME PE
Number: 20122
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20122
File-URL: http://www.nber.org/papers/w20122.pdf
File-Format: application/pdf
Publication-Status: published as Broda, Christian & Parker, Jonathan A., 2014. "The Economic Stimulus Payments of 2008 and the aggregate demand for consumption," Journal of Monetary Economics, Elsevier, vol. 68(S), pages S20-S36.
Abstract: Using a survey of households in the Nielsen Consumer Panel and the randomized timing of disbursement of the 2008 Economic Stimulus Payments, we find that a household's spending rose by ten percent the week it received a Payment and remained high cumulating to 1.5-3.8 percent of spending over three months. Our estimates imply partial-equilibrium increases in aggregate demand of 1.3 percent of consumption in the second quarter of 2008 and 0.6 percent in the third. Spending is concentrated among households with low wealth or low past income; a household's spending did not increase significantly when it learned about its Payment.
Handle: RePEc:nbr:nberwo:20122
Template-Type: ReDIF-Paper 1.0
Title: Pathways to Retirement and the Role of Financial Incentives in Sweden
Classification-JEL: J14; J26
Author-Name: Per Johansson
Author-Person: pjo10
Author-Name: Lisa Laun
Author-Person: pjn3
Author-Name: Mårten Palme
Author-Person: ppa618
Note: AG
Number: 20123
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20123
File-URL: http://www.nber.org/papers/w20123.pdf
File-Format: application/pdf
Publication-Status: published as Pathways to Retirement and the Role of Financial Incentives in Sweden, Per Johansson, Lisa Laun, Mårten Palme. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: We study how economic incentives affect labor force exit through different income security programs, old-age pensions as well as income taxes in Sweden. We use the option value for staying in the labor force as a measure of economic incentives and estimate an econometric model for the choice of leaving the labor market. Besides old-age pension, we focus on the Disability Insurance (DI), which is the most important exit path before age 65. By simulating the effect of different probabilities to be admitted DI we show how changes in the stringency of DI admittance affects labor supply among older workers through economic incentives.
Handle: RePEc:nbr:nberwo:20123
Template-Type: ReDIF-Paper 1.0
Title: Accounting and Actuarial Smoothing of Retirement Payouts in Participating Life Annuities
Classification-JEL: G22; J14; J32; M41
Author-Name: Raimond Maurer
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Ralph Rogalla
Author-Name: Ivonne Siegelin
Note: AG
Number: 20124
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20124
File-URL: http://www.nber.org/papers/w20124.pdf
File-Format: application/pdf
Publication-Status: published as Maurer, Raimond & Mitchell, Olivia S. & Rogalla, Ralph & Siegelin, Ivonne, 2016. "Accounting and actuarial smoothing of retirement payouts in participating life annuities," Insurance: Mathematics and Economics, Elsevier, vol. 71(C), pages 268-283.
Abstract: Life insurers use accounting and actuarial techniques to smooth reporting of firm assets and liabilities, seeking to transfer surpluses in good years to cover benefit payouts in bad years. Nevertheless, these techniques been criticized as they make it difficult to assess insurers' true financial status. We develop stylized and realistically-calibrated models of participating lifetime annuities, an insurance product that pays retirees guaranteed lifelong benefits along with variable non-guaranteed surplus. Our goal is to illustrate how accounting and actuarial techniques for this type of financial contract shape policyholder wellbeing, along with insurer profitability and stability. Smoothing adds value to both the annuitant and the insurer, so curtailing smoothing could undermine the market for long-term retirement payout products.
Handle: RePEc:nbr:nberwo:20124
Template-Type: ReDIF-Paper 1.0
Title: Small Victories: Creating Intrinsic Motivation in Savings and Debt Reduction
Classification-JEL: C91; D03; D14
Author-Name: Alexander L. Brown
Author-Person: pbr451
Author-Name: Joanna N. Lahey
Author-Person: pla533
Note: AG PE POL
Number: 20125
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20125
File-URL: http://www.nber.org/papers/w20125.pdf
File-Format: application/pdf
Publication-Status: published as Brown, Alexander L., and Joanna N. Lahey. "Small Victories: Creating Intrinsic Motivation in Task Completion and Debt Repayment." Journal of Marketing Research 52.6 (2015): 768-783.
Abstract: Saving when faced with the immediate option to spend is an unpleasant but not conceptually difficult task. One popular approach contradicts traditional economic theory by suggesting that people in debt should pay off their debts from smallest size to largest regardless of interest rate, to realize quick motivational gains from eliminating debts. We more broadly define this idea as "small victories" and discuss, model, and empirically examine alternative behavioral theories that might explain it. Using a laboratory computer task, we test the validity of these predictions by breaking down this approach into component parts and examining their efficacy. Consistent with the idea of small victories, we find that when a mildly unpleasant task is broken down into parts of unequal size, subjects complete these parts faster when they are arranged in ascending order (i.e, from smallest to largest) rather than descending order (i.e., from largest to smallest). Yet when subjects are given the choice over three different orderings, subjects choose the ascending ordering least often. Given the magnitude of our results, we briefly discuss the possible efficacy of these alternative methods in actual debt repayment scenarios.
Handle: RePEc:nbr:nberwo:20125
Template-Type: ReDIF-Paper 1.0
Title: Costs and Benefits to Phasing Out Paper Currency
Classification-JEL: E41; E51; E52
Author-Name: Kenneth S. Rogoff
Author-Person: pro164
Note: ME
Number: 20126
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20126
File-URL: http://www.nber.org/papers/w20126.pdf
File-Format: application/pdf
Publication-Status: published as Costs and Benefits to Phasing out Paper Currency, Kenneth Rogoff. in NBER Macroeconomics Annual 2014, Volume 29, Parker and Woodford. 2015
Abstract: Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries. For example, it constitutes roughly 10% of the US Federal Reserve's main monetary aggregate, M2. Yet, it has important drawbacks. First, it can help facilitate activity in the underground (tax-evading) and illegal economy. Second, its existence creates the artifact of the zero bound on the nominal interest rate. On the other hand, the enduring popularity of paper currency generates many benefits, including substantial seigniorage revenue. This paper explores some of the issues associated with phasing out paper currency, especially large-denomination notes.
Handle: RePEc:nbr:nberwo:20126
Template-Type: ReDIF-Paper 1.0
Title: When Consumers Do Not Make an Active Decision: Dynamic Default Rules and their Equilibrium Effects
Classification-JEL: D01; D02; D03; D04; D81; D86; H23; L1
Author-Name: Keith M. Marzilli Ericson
Note: IO LE PE
Number: 20127
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20127
File-URL: http://www.nber.org/papers/w20127.pdf
File-Format: application/pdf
Publication-Status: published as Keith M. Marzilli Ericson, 2020. "When consumers do not make an active decision: Dynamic default rules and their equilibrium effects," Games and Economic Behavior, vol 124, pages 369-385.
Abstract: Dynamic defaults for recurring purchases determine what happens to consumers enrolled in a product or service who take no action at a decision point. Consumers may face automatic renewal, automatic switching, or non-purchase defaults. Privately optimal dynamic defaults depend on the contributions of adjustment costs versus psychological factors leading to inaction: both produce inertia under renewal defaults, but differ under non-renewal defaults. Defaults have equilibrium effects on pricing by changing the elasticity of repeat demand. Socially optimal defaults depend on firms' pricing responses as well; more elastic repeat demand restrains price increases on repeat customers and can reduce inefficient switching.
Handle: RePEc:nbr:nberwo:20127
Template-Type: ReDIF-Paper 1.0
Title: Has the Financial Crisis Permanently Changed the Practice of Monetary Policy? Has It Changed the Theory of Monetary Policy?
Classification-JEL: E52; E58
Author-Name: Benjamin M. Friedman
Note: ME
Number: 20128
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20128
File-URL: http://www.nber.org/papers/w20128.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin M Friedman, 2015. "Has the Financial Crisis Permanently Changed the Practice of Monetary Policy? Has It Changed the Theory of Monetary Policy?," The Manchester School, vol 83, pages 5-19.
Abstract: I argue in this paper that one of the two forms of hitherto unconventional monetary policy that many central banks have implemented in response to the 2007 financial crisis - large-scale asset purchases, or to put the matter more generically, use of the central bank's balance sheet as a distinct tool of monetary policy - is likely to become part of the standard toolkit of monetary policymaking in normal times as well. As intended, these purchases have lowered long-term interest rates relative to short-term rates, and lowered interest rates on more-risky compared to less-risky obligations. Moreover, their introduction fills a conceptual vacuum that has long stood at the heart of monetary policy analysis and implementation. By contrast, forward guidance on the future trajectory of monetary policy has been less successful. Public statements by central banks about their actions and intentions will no doubt continue, but transparency for the sake of transparency is not the same as the deliberate attempt to shape market expectations for purposes of achieving specific monetary policy objectives. Finally, there is a conceptual component to all this as well. In contrast to the last century or more of monetary theory, which has focused on central banks' liabilities, the basis for the effectiveness of central bank asset purchases turns on the role of the asset side of the central bank's balance sheet. The implications for monetary theory are profound.
Handle: RePEc:nbr:nberwo:20128
Template-Type: ReDIF-Paper 1.0
Title: Resource Concentration and Civil Wars
Classification-JEL: D74; O12; Q34
Author-Name: Massimo Morelli
Author-Person: pmo645
Author-Name: Dominic Rohner
Author-Person: pro229
Note: DEV POL
Number: 20129
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20129
File-URL: http://www.nber.org/papers/w20129.pdf
File-Format: application/pdf
Publication-Status: published as Morelli, Massimo & Rohner, Dominic, 2015. "Resource concentration and civil wars," Journal of Development Economics, Elsevier, vol. 117(C), pages 32-47.
Abstract: This paper highlights the importance of natural resource concentration and ethnic group regional concentration for ethnic conflict. A new type of bargaining failure due to multiple types of potential conflicts (and hence multiple threat points) is identified. The theory predicts war to be more likely when resource and group concentration are high, and the empirical analysis, both at the country level and at the ethnic group level, confirms the essential role of geographic concentration variables for civil war.
Handle: RePEc:nbr:nberwo:20129
Template-Type: ReDIF-Paper 1.0
Title: A Big Data Approach to Optimal Sales Taxation
Classification-JEL: C1; H2; H21
Author-Name: Christian Baker
Author-Name: Jeremy Bejarano
Author-Name: Richard W. Evans
Author-Person: pev25
Author-Name: Kenneth L. Judd
Author-Person: pju19
Author-Name: Kerk L. Phillips
Author-Person: pph20
Note: PE
Number: 20130
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20130
File-URL: http://www.nber.org/papers/w20130.pdf
File-Format: application/pdf
Abstract: We characterize and demonstrate a solution method for an optimal commodity (sales) tax problem consisting of multiple goods, heterogeneous agents, and a nonconvex policy maker optimization problem. Our approach allows for more dimensions of heterogeneity than has been previously possible, incorporates potential model uncertainty and policy objective uncertainty, and relaxes some of the assumptions in the previous literature that were necessary to generate a convex optimization problem for the policy maker. Our solution technique involves creating a large database of optimal responses by different individuals for different policy parameters and using "Big Data" techniques to compute policy maker objective values over these individuals. We calibrate our model to the United States and test the effects of a differentiated optimal commodity tax versus a flat tax and the effect of exempting a broad class of goods (services) from commodity taxation. We find that only a potentially small amount of tax revenue is lost for a given societal welfare level by departing from an optimal differentiated sales tax schedule to a uniform flat tax and that there is only a small loss in revenue from exempting a class of goods such as services in the United States.
Handle: RePEc:nbr:nberwo:20130
Template-Type: ReDIF-Paper 1.0
Title: Immigration, Search, and Redistribution: A Quantitative Assessment of Native Welfare
Classification-JEL: F22; J31; J61; J68
Author-Name: Michele Battisti
Author-Person: pba714
Author-Name: Gabriel Felbermayr
Author-Person: pfe28
Author-Name: Giovanni Peri
Author-Person: ppe210
Author-Name: Panu Poutvaara
Author-Person: ppo31
Note: LS PE
Number: 20131
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20131
File-URL: http://www.nber.org/papers/w20131.pdf
File-Format: application/pdf
Publication-Status: published as Michele Battisti & Gabriel Felbermayr & Giovanni Peri & Panu Poutvaara, 2018. "Immigration, Search and Redistribution: A Quantitative Assessment of Native Welfare," Journal of the European Economic Association, vol 16(4), pages 1137-1188.
Abstract: We study the effects of immigration on native welfare in a general equilibrium model featuring two skill types, search frictions, wage bargaining, and a redistributive welfare state. Our quantitative analysis suggests that, in all 20 countries studied, immigration attenuates the effects of search frictions. These gains tend to outweigh the welfare costs of redistribution. Immigration has increased native welfare in almost all countries. Both high-skilled and low-skilled natives benefit in two thirds of countries, contrary to what models without search frictions predict. Median total gains from migration are 1.19% and 1.00% for high and low skilled natives, respectively.
Handle: RePEc:nbr:nberwo:20131
Template-Type: ReDIF-Paper 1.0
Title: The Behavioralist as Nutritionist: Leveraging Behavioral Economics To Improve Child Food Choice and Consumption
Classification-JEL: C93; I15
Author-Name: John A. List
Author-Person: pli176
Author-Name: Anya Savikhin Samek
Author-Person: psa1068
Note: EH
Number: 20132
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20132
File-URL: http://www.nber.org/papers/w20132.pdf
File-Format: application/pdf
Publication-Status: published as List, John A. & Samek, Anya Savikhin, 2015. "The behavioralist as nutritionist: Leveraging behavioral economics to improve child food choice and consumption," Journal of Health Economics, Elsevier, vol. 39(C), pages 135-146.
Abstract: Childhood obesity has reached epidemic proportions in the U.S., with now almost a third of children ages 2-19 deemed overweight or obese. In this study, we leverage recent findings from behavioral economics to explore new approaches to tackling one aspect of childhood obesity: food choice and consumption. Using a field experiment where we include more than 1,500 children, we report several key insights. First, we find that individual incentives can have large influences: in the control, only 17% of children prefer the healthy snack, whereas the introduction of small incentives increases take-up of the healthy snack to roughly 75%, more than a four-fold increase. There is some evidence that the effects continue after the treatment period, consistent with a model of habit formation. Second, we find little evidence that the framing of incentives (loss versus gain) matters. While incentives work, we find that educational messaging alone has little influence on food choice. Yet, we do observe an important interaction effect between messaging and incentives: together they provide an important influence on food choice. For policymakers, our findings show the power of using incentives to combat childhood obesity. For academics, our approach opens up an interesting combination of theory and experiment that can lead to a better understanding of theories that explain healthy decisions and what incentives can influence them.
Handle: RePEc:nbr:nberwo:20132
Template-Type: ReDIF-Paper 1.0
Title: Very Long-Run Discount Rates
Classification-JEL: E44; G11; G12; R30
Author-Name: Stefano Giglio
Author-Person: pgi162
Author-Name: Matteo Maggiori
Author-Person: pma2176
Author-Name: Johannes Stroebel
Note: AP CF EEE EFG ME PE POL
Number: 20133
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20133
File-URL: http://www.nber.org/papers/w20133.pdf
File-Format: application/pdf
Publication-Status: published as Stefano Giglio & Matteo Maggiori & Johannes Stroebel, 2015. "Very Long-Run Discount Rates," The Quarterly Journal of Economics, Oxford University Press, vol. 130(1), pages 1-53.
Abstract: We provide direct estimates of how agents trade off immediate costs and uncertain future benefits that occur in the very long run, 100 or more years away. We exploit a unique feature of housing markets in the U.K. and Singapore, where residential property ownership takes the form of either leaseholds or freeholds. Leaseholds are temporary, pre-paid, and tradable ownership contracts with maturities between 99 and 999 years, while freeholds are perpetual ownership contracts. The difference between leasehold and freehold prices reflects the present value of perpetual rental income starting at leasehold expiry, and is thus informative about very long-run discount rates. We estimate the price discounts for varying leasehold maturities compared to freeholds and extremely long-run leaseholds via hedonic regressions using proprietary datasets of the universe of transactions in each country. Agents discount very long-run cash flows at low rates, assigning high present values to cash flows hundreds of years in the future. For example, 100-year leaseholds are valued at more than 10% less than otherwise identical freeholds, implying discount rates below 2.6% for 100-year claims. Given the riskiness of rents, this suggests that both long-run risk-free discount rates and long-run risk premia are low. We show how the estimated very long-run discount rates are informative for climate change policy.
Handle: RePEc:nbr:nberwo:20133
Template-Type: ReDIF-Paper 1.0
Title: Interest Rates and Money in the Measurement of Monetary Policy
Classification-JEL: E51; E52; E58
Author-Name: Michael T. Belongia
Author-Name: Peter N. Ireland
Author-Person: pir1
Note: ME
Number: 20134
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20134
File-URL: http://www.nber.org/papers/w20134.pdf
File-Format: application/pdf
Publication-Status: published as Michael T. Belongia & Peter N. Ireland, 2015. "Interest Rates and Money in the Measurement of Monetary Policy," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 33(2), pages 255-269, April.
Abstract: Over the last twenty-five years, a set of influential studies has placed interest rates at the heart of analyses that interpret and evaluate monetary policies. In light of this work, the Federal Reserve's recent policy of "quantitative easing," with its goal of affecting the supply of liquid assets, appears to be a radical break from standard practice. Alternatively, one could posit that the monetary aggregates, when measured properly, never lost their ability to explain aggregate fluctuations and, for this reason, represent an important omission from standard models and policy discussions. In this context, the new policy initiatives can be characterized simply as conventional attempts to increase money growth. This view is supported by evidence that superlative (Divisia) measures of money often help in forecasting movements in key macroeconomic variables. Moreover, the statistical fit of a structural vector autoregression deteriorates significantly if such measures of money are excluded when identifying monetary policy shocks. These results cast doubt on the adequacy of conventional models that focus on interest rates alone. They also highlight that all monetary disturbances have an important "quantitative" component, which is captured by movements in a properly measured monetary aggregate.
Handle: RePEc:nbr:nberwo:20134
Template-Type: ReDIF-Paper 1.0
Title: Financial Education and Access to Savings Accounts: Complements or Substitutes? Evidence from Ugandan Youth Clubs
Classification-JEL: D12; D91; O12
Author-Name: Julian C. Jamison
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: DEV LE LS
Number: 20135
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20135
File-URL: http://www.nber.org/papers/w20135.pdf
File-Format: application/pdf
Abstract: Evidence on the effectiveness of financial education and formal savings account access is lacking, particularly for youth. We randomly assign 250 youth clubs to receive either financial education, access to a cheap group account, or both. The financial education treatments increase financial literacy; the account-only treatment does not. Administrative data shows the education plus account treatment increases bank savings relative to account-only. But survey-measured total savings shows roughly equal increases across all treatment arms. Earned income also increases in all treatment arms. We find little evidence that education and account access are strong complements, and some evidence they are substitutes.
Handle: RePEc:nbr:nberwo:20135
Template-Type: ReDIF-Paper 1.0
Title: Two-Sided Heterogeneity and Trade
Classification-JEL: F10; F12; F14
Author-Name: Andrew B. Bernard
Author-Name: Andreas Moxnes
Author-Name: Karen Helene Ulltveit-Moe
Author-Person: pul33
Note: ITI
Number: 20136
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20136
File-URL: http://www.nber.org/papers/w20136.pdf
File-Format: application/pdf
Publication-Status: published as Andrew B. Bernard & Andreas Moxnes & Karen Helene Ulltveit-Moe, 2018. "Two-Sided Heterogeneity and Trade," The Review of Economics and Statistics, vol 100(3), pages 424-439.
Abstract: Empirical studies of firms within industries consistently report substantial heterogeneity in measures of performance such as size and productivity. This paper explores the consequences of joint heterogeneity on the supply side (sellers) and the demand side (buyers) in international trade using a novel transaction-level dataset from Norway. Domestic exporters as well as foreign importers are explicitly identified in each transaction to every destination. The buyer-seller linked data reveal a number of new stylized facts on the distributions of buyers per exporter and exporters per buyer, the matching among sellers and buyers and the variation of buyer dispersion across destinations. The paper develops a model of trade with heterogeneous importers as well as heterogeneous exporters where matches are subject to a relation-specific fixed cost. The model matches the stylized facts and generates new testable predictions emphasizing the importance of importer heterogeneity in explaining trade patterns.
Handle: RePEc:nbr:nberwo:20136
Template-Type: ReDIF-Paper 1.0
Title: Financial Knowledge and 401(k) Investment Performance
Classification-JEL: D14; D91
Author-Name: Robert L. Clark
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG
Number: 20137
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20137
File-URL: http://www.nber.org/papers/w20137.pdf
File-Format: application/pdf
Abstract: Using a unique new dataset linking administrative data on investment performance and financial knowledge, we examine whether investors who are more financially knowledgeable earn more on their retirement plan investments, compared to their less sophisticated counterparts. We find that risk-adjusted annual expected returns are 130 basis points higher for the most financially knowledgeable employees, and those scoring higher on our Financial Knowledge Index have slightly more volatile portfolios while they do no better diversifying their portfolios than their peers. Overall, financial knowledge does appear to help people invest more profitably; this may provide a rationale for efforts to enhance financial knowledge in the population at large.
Handle: RePEc:nbr:nberwo:20137
Template-Type: ReDIF-Paper 1.0
Title: Matching Capital and Labor
Classification-JEL: D22; G11; G12; G2; G20; G3; G30; J01; J24; L22; L23; L25
Author-Name: Jonathan B. Berk
Author-Name: Jules H. van Binsbergen
Author-Person: pva668
Author-Name: Binying Liu
Note: AP CF IO
Number: 20138
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20138
File-URL: http://www.nber.org/papers/w20138.pdf
File-Format: application/pdf
Publication-Status: published as JONATHAN B. BERK & JULES H. van BINSBERGEN & BINYING LIU, 2017. "Matching Capital and Labor," The Journal of Finance, vol 72(6), pages 2467-2504.
Abstract: We establish an important role for the firm by studying capital reallocation decisions of mutual fund firms. At least 30% of the value mutual fund managers add can be attributed to the firm's role in efficiently allocating capital amongst its mutual fund managers. We find no evidence of a similar effect when a firm hires managers from another firm. We conclude that an important reason why firms exist is the private information that derives from the firm's ability to better assess the skill of its own employees.
Handle: RePEc:nbr:nberwo:20138
Template-Type: ReDIF-Paper 1.0
Title: Social Learning and Communication
Classification-JEL: O13; O33; Q16
Author-Name: Ariel BenYishay
Author-Person: pbe688
Author-Name: A. Mushfiq Mobarak
Author-Person: pmo232
Note: DEV
Number: 20139
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20139
File-URL: http://www.nber.org/papers/w20139.pdf
File-Format: application/pdf
Abstract: Low adoption of agricultural technologies holds large productivity consequences for developing countries. Agricultural extension services counter information failures by deploying external agents to communicate with farmers. However, social networks are recognized as the most credible source of information about new technologies. We incorporate social learning in extension policy using a large-scale field experiment in which we communicate to farmers using different members of social networks. We show that communicator effort is susceptible to small performance incentives, and the social identity of the communicator influences learning and adoption. Farmers find communicators who face agricultural conditions and constraints most comparable to themselves to be the most persuasive. Incorporating communication dynamics can take the influential social learning literature in a more policy-relevant direction.
Handle: RePEc:nbr:nberwo:20139
Template-Type: ReDIF-Paper 1.0
Title: More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces
Classification-JEL: H51; I11; I18; L1
Author-Name: Leemore Dafny
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Christopher Ody
Note: EH IO PE
Number: 20140
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20140
File-URL: http://www.nber.org/papers/w20140.pdf
File-Format: application/pdf
Publication-Status: published as Leemore Dafny & Jonathan Gruber & Christopher Ody, 2015. "More Insurers Lower Premiums," American Journal of Health Economics, vol 1(1), pages 53-81.
Abstract: First-year insurer participation in the Health Insurance Marketplaces (HIMs) established by the Affordable Care Act is limited in many areas of the country. There are 3.9 participants, on (population-weighted) average, in the 395 ratings areas spanning the 34 states with federally facilitated marketplaces (FFMs). Using data on the plans offered in the FFMs, together with predicted market shares for HIM participants (estimated using 2011 insurer-state market shares in the individual insurance market), we study the impact of competition on premiums. We exploit variation in ratings-area-level competition induced by UnitedHealthcare's decision not to participate in any of the FFMs. We estimate that the second-lowest-price silver premium (which is directly linked to federal subsidies) would have decreased by 5.4 percent, on average, had UnitedHealthcare participated. If all insurers active in each state's individual insurance market in 2011 had participated in all ratings areas in that state's HIM, we estimate this key premium would be 11.1% lower and 2014 federal subsidies would be reduced by $1.7 billion.
Handle: RePEc:nbr:nberwo:20140
Template-Type: ReDIF-Paper 1.0
Title: A Model of Monetary Policy and Risk Premia
Classification-JEL: E52; E58; G12; G21
Author-Name: Itamar Drechsler
Author-Name: Alexi Savov
Author-Person: psa1271
Author-Name: Philipp Schnabl
Author-Person: psc789
Note: AP ME
Number: 20141
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20141
File-URL: http://www.nber.org/papers/w20141.pdf
File-Format: application/pdf
Publication-Status: published as ITAMAR DRECHSLER & ALEXI SAVOV & PHILIPP SCHNABL, 2018. "A Model of Monetary Policy and Risk Premia," The Journal of Finance, vol 73(1), pages 317-373.
Abstract: We develop a dynamic asset pricing model in which monetary policy affects the risk premium component of the cost of capital. Risk-tolerant agents (banks) borrow from risk-averse agents (i.e. take deposits) to fund levered investments. Leverage exposes banks to funding risk, which they insure by holding liquidity buffers. By changing the nominal rate the central bank influences the liquidity premium in financial markets, and hence the cost of taking leverage. Lower nominal rates make liquidity cheaper and raise leverage, resulting in lower risk premia and higher asset prices, volatility, investment, and growth. We analyze forward guidance, a "Greenspan put", and the yield curve.
Handle: RePEc:nbr:nberwo:20141
Template-Type: ReDIF-Paper 1.0
Title: Can Variation in Subgroups' Average Treatment Effects Explain Treatment Effect Heterogeneity? Evidence from a Social Experiment
Classification-JEL: H75; I38; J18
Author-Name: Marianne P. Bitler
Author-Person: pbi12
Author-Name: Jonah B. Gelbach
Author-Person: pge238
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Note: CH LS PE
Number: 20142
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20142
File-URL: http://www.nber.org/papers/w20142.pdf
File-Format: application/pdf
Publication-Status: published as Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2017. "Can Variation in Subgroups' Average Treatment Effects Explain Treatment Effect Heterogeneity? Evidence from a Social Experiment," The Review of Economics and Statistics, vol 99(4), pages 683-697.
Abstract: In this paper, we assess whether welfare reform affects earnings only through mean impacts that are constant within but vary across subgroups. This is important because researchers interested in treatment effect heterogeneity typically restrict their attention to estimating mean impacts that are only allowed to vary across subgroups. Using a novel approach to simulating treatment group earnings under the constant mean-impacts within subgroup model, we find that this model does a poor job of capturing the treatment effect heterogeneity for Connecticut's Jobs First welfare reform experiment using quantile treatment effects. Notably, ignoring within-group heterogeneity would lead one to miss evidence that the Jobs First experiment's effects are consistent with central predictions of basic labor supply theory.
Handle: RePEc:nbr:nberwo:20142
Template-Type: ReDIF-Paper 1.0
Title: Export Destinations and Input Prices
Classification-JEL: F1; L1; O1
Author-Name: Paulo Bastos
Author-Person: pba521
Author-Name: Joana Silva
Author-Person: psi374
Author-Name: Eric Verhoogen
Author-Person: pve68
Note: ITI
Number: 20143
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20143
File-URL: http://www.nber.org/papers/w20143.pdf
File-Format: application/pdf
Publication-Status: published as Paulo Bastos & Joana Silva & Eric Verhoogen, 2018. "Export Destinations and Input Prices," American Economic Review, vol 108(2), pages 353-392.
Abstract: This paper examines the extent to which the destination of exports matters for the input prices paid by firms, using detailed customs and firm-product-level data from Portugal. We use exchange-rate movements as a source of variation in export destinations and find that exporting to richer countries leads firms to charge more for outputs and pay higher prices for inputs, other things equal. The results are supportive of the hypothesis that an exogenous increase in average destination income leads firms to raise the average quality of goods they produce and to purchase higher-quality inputs.
Handle: RePEc:nbr:nberwo:20143
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco
Classification-JEL: D21; G21; O16
Author-Name: Bruno Crépon
Author-Person: pcr135
Author-Name: Florencia Devoto
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: William Pariente
Author-Person: ppa604
Note: DEV
Number: 20144
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20144
File-URL: http://www.nber.org/papers/w20144.pdf
File-Format: application/pdf
Publication-Status: published as Bruno Crépon & Florencia Devoto & Esther Duflo & William Parienté, 2015. "Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 123-50, January.
Abstract: This paper reports the results from a randomized evaluation of a microcredit program introduced in rural areas of Morocco starting in 2006 by Al Amana, the country's largest microfinance institution. Al Amana was the only MFI operating in the study areas during the evaluation period. Thirteen percent of the households in treatment villages took a loan, and none in control villages. Among households identified as more likely to borrow based on ex-ante characteristics, microcredit access led to a significant rise in investment in assets used for self-employment activities (mainly animal husbandry and agriculture), and an increase in profit. But this increase in profit was offset by a reduction in income from casual labor, so overall there was no gain in measured income or consumption. We find suggestive evidence that these results are mainly driven by effects on borrowers, rather than by externalities on households that do not borrow. This implies that among those who chose to borrow, microcredit had large, albeit very heterogeneous, impacts on assets and profits from self-employment activities, but small impact on consumption: we can reject an increase in consumption of more than 10% among borrowers, two years after initial rollout.
Handle: RePEc:nbr:nberwo:20144
Template-Type: ReDIF-Paper 1.0
Title: The Distributional Preferences of Americans
Classification-JEL: C91; D64
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Pamela Jakiela
Author-Person: pja260
Author-Name: Shachar Kariv
Note: PE POL
Number: 20145
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20145
File-URL: http://www.nber.org/papers/w20145.pdf
File-Format: application/pdf
Publication-Status: published as Raymond Fisman, Pamela Jakiela, Shachar Kariv, "Distributional preferences and political behavior" Journal of Public Economics, Volume 155, November 2017, Pages 1-10
Abstract: We measure the distributional preferences of a large, diverse sample of Americans by embedding modified dictator games that vary the relative price of redistribution in the American Life Panel. Subjects' choices are generally consistent with maximizing a (social) utility function. We decompose distributional preferences into two distinct components - fair-mindedness (tradeoffs between oneself and others) and equality-efficiency tradeoffs - by estimating constant elasticity of substitution utility functions at the individual level. Approximately equal numbers of Americans have equality-focused and efficiency-focused distributional preferences. After controlling for individual characteristics, our experimental measures of equality-efficiency tradeoffs predict the political decisions of our subjects.
Handle: RePEc:nbr:nberwo:20145
Template-Type: ReDIF-Paper 1.0
Title: How Did Distributional Preferences Change During the Great Recession?
Classification-JEL: C79; C91; D63; D64
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Pamela Jakiela
Author-Person: pja260
Author-Name: Shachar Kariv
Note: PE POL
Number: 20146
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20146
File-URL: http://www.nber.org/papers/w20146.pdf
File-Format: application/pdf
Publication-Status: published as Fisman, Raymond & Jakiela, Pamela & Kariv, Shachar, 2015. "How did distributional preferences change during the Great Recession?," Journal of Public Economics, Elsevier, vol. 128(C), pages 84-95.
Abstract: We compare behavior in experiments measuring distributional preferences during the "Great Recession" to behavior in identical experiments conducted during the preceding economic boom. Subjects are drawn from a diverse pool of students whose socioeconomic composition is largely held constant by the university, mitigating concerns about differential selection across macroeconomic conditions. Subjects exposed to the recession are more selfish and more willing to sacrifice equality to enhance efficiency. Reproducing recessionary conditions inside the laboratory by confronting subjects with losses has the same impact on distributional preferences, bolstering the interpretation that economic circumstances, rather than other factors, are driving our results.
Handle: RePEc:nbr:nberwo:20146
Template-Type: ReDIF-Paper 1.0
Title: Friends or Foes: The Interrelationship between Angel and Venture Capital Markets
Classification-JEL: D53; D83; G24; L26
Author-Name: Thomas F. Hellmann
Author-Person: phe157
Author-Name: Veikko Thiele
Author-Person: pth48
Note: CF
Number: 20147
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20147
File-URL: http://www.nber.org/papers/w20147.pdf
File-Format: application/pdf
Publication-Status: published as Hellmann, Thomas & Thiele, Veikko, 2015. "Friends or foes? The interrelationship between angel and venture capital markets," Journal of Financial Economics, Elsevier, vol. 115(3), pages 639-653.
Abstract: This paper develops a theory of how angel and venture capital markets interact. Entrepreneurs first receive angel then venture capital funding. The two investor types are 'friends' in that they rely upon each other's investments. However, they are also 'foes', because at the later stage the venture capitalists no longer need the angels. Using a costly search model we derive the equilibrium deal flows across the two markets, endogenously deriving market sizes, competitive structures, valuation levels, and exit rates. We discuss how the model generates alternative testable hypotheses for the recent rise of angel investing.
Handle: RePEc:nbr:nberwo:20147
Template-Type: ReDIF-Paper 1.0
Title: Impacts of the Affordable Care Act Dependent Coverage Provision on Health-Related Outcomes of Young Adults
Classification-JEL: I12; I13; I18
Author-Name: Silvia Barbaresco
Author-Name: Charles J. Courtemanche
Author-Person: pco421
Author-Name: Yanling Qi
Note: EH
Number: 20148
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20148
File-URL: http://www.nber.org/papers/w20148.pdf
File-Format: application/pdf
Publication-Status: published as Barbaresco, Silvia & Courtemanche, Charles J. & Qi, Yanling, 2015. "Impacts of the Affordable Care Act dependent coverage provision on health-related outcomes of young adults," Journal of Health Economics, Elsevier, vol. 40(C), pages 54-68.
Abstract: The first major insurance expansion of the Affordable Care Act – a provision requiring insurers to allow dependents to remain on parents’ health insurance until turning 26 – took effect in September 2010. We estimate this mandate’s impacts on numerous outcomes related to health care access, preventive care utilization, risky behaviors, and self-assessed health. We estimate difference-in-differences models with 23-25 year olds as the treatment group and 27-29 year olds as the control group. For the full sample, the dependent coverage provision increased the probabilities of having health insurance, a primary care doctor, and excellent self-assessed health, while reducing body mass index. However, the mandate also increased risky drinking and did not lead to any significant increases in preventive care utilization. Subsample analyses reveal particularly large gains for men and college graduates.
Handle: RePEc:nbr:nberwo:20148
Template-Type: ReDIF-Paper 1.0
Title: Does Financing Spur Small Business Productivity? Evidence from a Natural Experiment
Classification-JEL: G21
Author-Name: Karthik Krishnan
Author-Name: Debarshi Nandy
Author-Person: pna85
Author-Name: Manju Puri
Author-Person: ppu153
Note: CF PR
Number: 20149
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20149
File-URL: http://www.nber.org/papers/w20149.pdf
File-Format: application/pdf
Publication-Status: published as Karthik Krishnan & Debarshi K. Nandy & Manju Puri, 2015. "Does Financing Spur Small Business Productivity? Evidence from a Natural Experiment," Review of Financial Studies, Society for Financial Studies, vol. 28(6), pages 1768-1809.
Abstract: We analyze how increased access to financing affects firm total factor productivity (TFP) by exploiting a natural experiment following interstate banking deregulations which increased access to bank financing. We find that firms' TFP increases after their states implement these deregulations. Using a regression discontinuity approach based on Small Business Administration's funding eligibility criteria, we show that TFP increases following the deregulations are significantly greater for financially constrained firms. Our results suggest that greater access to financing allows financially constrained firms to invest in productive projects that may otherwise not be taken up.
Handle: RePEc:nbr:nberwo:20149
Template-Type: ReDIF-Paper 1.0
Title: Highway to Hitler
Classification-JEL: H54; N44; N94; P16
Author-Name: Nico Voigtlaender
Author-Name: Hans-Joachim Voth
Author-Person: pvo5
Note: PE POL
Number: 20150
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20150
File-URL: http://www.nber.org/papers/w20150.pdf
File-Format: application/pdf
Abstract: Can autocracies win electoral support by showcasing economic competence? We analyze a famous case – the building of the Autobahn network in Nazi Germany. Using newly collected data, we show that highway construction was effective in boosting popular support, helping to entrench the Nazi dictatorship. Direct economic benefits such as declining unemployment near construction sites are unlikely to explain the increase in pro-Nazi votes. In addition, Nazi propaganda used the Autobahn as a powerful symbol of successful economic policy, putting an effective end to austerity – so that many Germans credited the Nazi regime for the economic recovery. In line with this interpretation, we show that support for the Nazis increased even more where highway construction coincided with greater radio availability – a major source of propaganda. The effect of highways was also significantly stronger in politically unstable states of the Weimar Republic. Our results suggest that infrastructure spending can raise support for autocracy when voters are led to associate it with visible economic progress and an end to political instability.
Handle: RePEc:nbr:nberwo:20150
Template-Type: ReDIF-Paper 1.0
Title: Who do Unions Target? Unionization over the Life-Cycle of U.S. Businesses
Classification-JEL: D24; E23; J5; J50; J51; L23; L25
Author-Name: Emin Dinlersoz
Author-Person: pdi19
Author-Name: Jeremy Greenwood
Author-Person: pgr12
Author-Name: Henry Hyatt
Note: EFG
Number: 20151
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20151
File-URL: http://www.nber.org/papers/w20151.pdf
File-Format: application/pdf
Publication-Status: published as What Businesses Attract Unions? Unionization over the Life Cycle of U.S. Establishments Emin Dinlersoz, Jeremy Greenwood, Henry Hyatt ILR Review Vol 70, Issue 3, pp. 733 - 766 First Published July 1, 2016 https://doi.org/10.1177/0019793916654926
Abstract: What type of businesses do unions target for organizing? A dynamic model of the union organizing process is constructed to answer this question. A union monitors establishments in an industry to learn about their productivity, and decides which ones to organize and when. An establishment becomes unionized if the union targets it for organizing and wins the union certification election. The model predicts two main selection effects: unions organizing occurs in larger and more productive establishments early in their life-cycles, and among the establishments targeted for organizing, unions are more likely to win elections in smaller and less productive ones. These predictions find support in union certification election data for 1977-2007 matched with data on establishment characteristics.
Handle: RePEc:nbr:nberwo:20151
Template-Type: ReDIF-Paper 1.0
Title: House Price Gains and U.S. Household Spending from 2002 to 2006
Classification-JEL: E2; E21; E3; E32; E44; E5; G02; G21
Author-Name: Atif Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Note: CF EFG ME
Number: 20152
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20152
File-URL: http://www.nber.org/papers/w20152.pdf
File-Format: application/pdf
Abstract: We examine the effect of rising U.S. house prices on borrowing and spending from 2002 to 2006. There is strong heterogeneity in the marginal propensity to borrow and spend. Households in low income zip codes aggressively liquefy home equity when house prices rise, and they increase spending substantially. In contrast, for the same rise in house prices, households living in high income zip codes are unresponsive, both in their borrowing and spending behavior. The entire effect of housing wealth on spending is through borrowing, and, under certain assumptions, this spending represents 0.8% of GDP in 2004 and 1.3% of GDP in 2005 and 2006. Households that borrow and spend out of housing gains between 2002 and 2006 experience significantly lower income and spending growth after 2006.
Handle: RePEc:nbr:nberwo:20152
Template-Type: ReDIF-Paper 1.0
Title: Identifying Ideology: Experimental Evidence on Anti-Americanism in Pakistan
Classification-JEL: C90; P16
Author-Name: Leonardo Bursztyn
Author-Person: pbu249
Author-Name: Michael Callen
Author-Person: pca868
Author-Name: Bruno Ferman
Author-Name: Saad Gulzar
Author-Name: Ali Hasanain
Author-Name: Noam Yuchtman
Author-Person: pyu185
Note: DEV POL
Number: 20153
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20153
File-URL: http://www.nber.org/papers/w20153.pdf
File-Format: application/pdf
Abstract: Identifying the role of intrinsic, ideological motivation in political behavior is confounded by agents' consequential aims and social concerns. We present results from two experiments that implement a methodology isolating Pakistani men's intrinsic motives for expressing anti-American ideology, in a context with clearly-specified financial costs, but minimal consequential or social considerations. Over one-quarter of subjects forgo around one-fifth of a day's wage to avoid anonymously checking a box indicating gratitude toward the U.S. government, thus revealing anti-Americanism. We find that ideological expression responds to financial and social incentives, and that measured ideology predicts membership in a major anti-American political party.
Handle: RePEc:nbr:nberwo:20153
Template-Type: ReDIF-Paper 1.0
Title: No-Bubble Condition: Model-free Tests in Housing Markets
Classification-JEL: E44; G02; G11; G12; R30; R31
Author-Name: Stefano Giglio
Author-Person: pgi162
Author-Name: Matteo Maggiori
Author-Person: pma2176
Author-Name: Johannes Stroebel
Note: AP CF EFG IFM ME
Number: 20154
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20154
File-URL: http://www.nber.org/papers/w20154.pdf
File-Format: application/pdf
Publication-Status: published as Stefano Giglio & Matteo Maggiori & Johannes Stroebel, 2016. "No‐Bubble Condition: Model‐Free Tests in Housing Markets," Econometrica, Econometric Society, vol. 84, pages 1047-1091, 05.
Abstract: We test for the existence of housing bubbles associated with a failure of the transversality condition that requires the present value of payments occurring infinitely far in the future to be zero. The most prominent such bubble is the classic rational bubble. We study housing markets in the U.K. and Singapore, where residential property ownership takes the form of either leaseholds or freeholds. Leaseholds are finitematurity, pre-paid, and tradable ownership contracts with maturities often exceeding 700 years. Freeholds are infinite-maturity ownership contracts. The price difference between leaseholds with extremely-long maturities and freeholds reflects the present value of a claim to the freehold after leasehold expiry, and is thus a direct empirical measure of the transversality condition. We estimate this price difference, and find no evidence for failures of the transversality condition in housing markets in the U.K. and Singapore, even during periods when a sizeable bubble was regularly thought to be present.
Handle: RePEc:nbr:nberwo:20154
Template-Type: ReDIF-Paper 1.0
Title: Small and Large Price Changes and the Propagation of Monetary Shocks
Classification-JEL: E3
Author-Name: Fernando Alvarez
Author-Name: Hervé Le Bihan
Author-Person: ple240
Author-Name: Francesco Lippi
Author-Person: pli62
Note: EFG ME
Number: 20155
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20155
File-URL: http://www.nber.org/papers/w20155.pdf
File-Format: application/pdf
Abstract: We document the presence of both small and large price changes in individual price records from the CPI in France and the US. After correcting for measurement error and cross-section heterogeneity, the size-distribution of price changes has a positive excess kurtosis. We propose an analytical menu cost model that encompasses several classic models, as Taylor (1980), Calvo (1983), Reis (2006), Golosov and Lucas (2007) and accounts for observed cross-sectional patterns. We show that the ratio of kurtosis to the frequency of price changes is a sufficient statistics for the real effects of monetary policy in a large class of models.
Handle: RePEc:nbr:nberwo:20155
Template-Type: ReDIF-Paper 1.0
Title: When Does Education Matter? The Protective Effect of Education for Cohorts Graduating in Bad Times
Classification-JEL: I12; I20; J11
Author-Name: David Cutler
Author-Person: pcu64
Author-Name: Wei Huang
Author-Person: phu346
Author-Name: Adriana Lleras-Muney
Author-Person: pll45
Note: ED EH LS
Number: 20156
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20156
File-URL: http://www.nber.org/papers/w20156.pdf
File-Format: application/pdf
Publication-Status: published as Cutler, David M. & Huang, Wei & Lleras-Muney, Adriana, 2015. "When does education matter? The protective effect of education for cohorts graduating in bad times," Social Science & Medicine, Elsevier, vol. 127(C), pages 63-73.
Abstract: Using Eurobarometer data, we document large variation across European countries in education gradients in income, self-reported health, life satisfaction, obesity, smoking and drinking. While this variation has been documented previously, the reasons why the effect of education on income, health and health behaviors varies is not well understood. We build on previous literature documenting that cohorts graduating in bad times have lower wages and poorer health for many years after graduation, compared to those graduating in good times. We investigate whether more educated individuals suffer smaller income and health losses as a result of poor labor market conditions upon labor market entry. We confirm that a higher unemployment rate at graduation is associated with lower income, lower life satisfaction, greater obesity, more smoking and drinking later in life. Further, education plays a protective role for these outcomes, especially when unemployment rates are high: the losses associated with poor labor market outcomes are substantially lower for more educated individuals. Variation in unemployment rates upon graduation can potentially explain a large fraction of the variance in gradients across different countries.
Handle: RePEc:nbr:nberwo:20156
Template-Type: ReDIF-Paper 1.0
Title: The Wealth Distribution in Bewley Models with Investment Risk
Classification-JEL: E13; E21
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Alberto Bisin
Author-Person: pbi10
Author-Name: Shenghao Zhu
Author-Person: pzh435
Note: EFG
Number: 20157
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20157
File-URL: http://www.nber.org/papers/w20157.pdf
File-Format: application/pdf
Abstract: We study the wealth distribution in Bewley economies with idiosyncratic capital income risk. We show analytically that under rather general conditions on the stochastic structure of the economy, a unique ergodic distribution of wealth displays a fat tail; more precisely, a Pareto distribution in the right tail.
Handle: RePEc:nbr:nberwo:20157
Template-Type: ReDIF-Paper 1.0
Title: Are Americans and Indians More Altruistic than the Japanese and Chinese? Evidence from a New International Survey of Bequest Plans
Classification-JEL: D12; D14; D64; D91; E21; H31; J14; P52; Z12
Author-Name: Charles Yuji Horioka
Author-Person: pho41
Note: AG EFG PE
Number: 20158
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20158
File-URL: http://www.nber.org/papers/w20158.pdf
File-Format: application/pdf
Publication-Status: published as in Review of Economics of the Household, vol. 12, issue 3 ( September 2014) (Special Issue on "Altruism and Monetary Transfers in the Household: Inter and Intra-generation Issues").
Abstract: This paper discusses three alternative assumptions concerning household preferences (altruism, self-interest, and a desire for dynasty building) and shows that these assumptions have very different implications for bequest motives and bequest division. After reviewing some of the literature on actual bequests, bequest motives, and bequest division, the paper presents data on the strength of bequest motives, stated bequest motives, and bequest division plans from a new international survey conducted in China, India, Japan, and the United States. It finds striking inter-country differences in bequest plans, with the bequest plans of Americans and Indians appearing to be much more consistent with altruistic preferences than those of the Japanese and Chinese and the bequest plans of the Japanese and Chinese appearing to be much more consistent with selfish preferences than those of Americans and Indians. These findings have important implications for the efficacy and desirability of stimulative fiscal policies, public pensions, and inheritance taxes.
Handle: RePEc:nbr:nberwo:20158
Template-Type: ReDIF-Paper 1.0
Title: Public Health Insurance Expansions and Hospital Technology Adoption
Classification-JEL: I11; I13; I18
Author-Name: Seth Freedman
Author-Person: pfr305
Author-Name: Haizhen Lin
Author-Person: pli405
Author-Name: Kosali Simon
Author-Person: psi314
Note: EH
Number: 20159
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20159
File-URL: http://www.nber.org/papers/w20159.pdf
File-Format: application/pdf
Publication-Status: published as Freedman, Seth & Lin, Haizhen & Simon, Kosali, 2015. "Public health insurance expansions and hospital technology adoption," Journal of Public Economics, Elsevier, vol. 121(C), pages 117-131.
Abstract: This paper explores the effects of public health insurance expansions on hospitals' decisions to adopt medical technology. Specifically, we test whether the expansion of Medicaid eligibility for pregnant women during the 1980s and 1990s affects hospitals' decisions to adopt neonatal intensive care units (NICUs). While the Medicaid expansion provided new insurance to a substantial number of pregnant women, prior literature also finds that some newly insured women would otherwise have been covered by more generously reimbursed private sources. This leads to a theoretically ambiguous net effect of Medicaid expansion on a hospital's incentive to invest in technology. Using American Hospital Association data, we find that on average, Medicaid expansion has no statistically significant effect on NICU adoption. However, we find that in geographic areas where more of the newly Medicaid-insured may have come from the privately insured population, Medicaid expansion slows NICU adoption. This holds true particularly when Medicaid payment rates are very low relative to private payment rates. This finding is consistent with prior evidence on reduced NICU adoption from increased managed-care penetration. We conclude by providing suggestive evidence on the health impacts of this deceleration of NICU diffusion, and by discussing the policy implications of our work for insurance expansions associated with the Affordable Care Act.
Handle: RePEc:nbr:nberwo:20159
Template-Type: ReDIF-Paper 1.0
Title: Weak Versus Strong Net Neutrality
Classification-JEL: D04; D42; D43; K2; L1; L12; L13
Author-Name: Joshua S. Gans
Author-Person: pga42
Note: IO PR
Number: 20160
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20160
File-URL: http://www.nber.org/papers/w20160.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Gans, 2015. "Weak versus strong net neutrality," Journal of Regulatory Economics, Springer, vol. 47(2), pages 183-200, April.
Abstract: This paper provides a framework to classify and evaluate the impact of net neutrality regulations on the allocation of consumer attention and the distribution of surplus between consumers, ISPs and content providers. While the model provided largely nests other contributions in the literature, here the focus is on including direct payments from consumers to content providers. With this additional price it is demonstrated that the type of net neutrality regulation (i.e., weak versus strong net neutrality) matters for such regulations to have real effects. In addition, we provide support for the notion that strong net neutrality may stimulate content provider investment while the model concludes that there is unlikely to be any negative impact from such regulation on ISP investment. Counter to many claims, it is argued here that ISP competition may not be a substitute for net neutrality regulation in bringing about these effects
Handle: RePEc:nbr:nberwo:20160
Template-Type: ReDIF-Paper 1.0
Title: Inflation Announcements and Social Dynamics
Classification-JEL: E17; E3; E58
Author-Name: Kinda Hachem
Author-Person: pha1475
Author-Name: Jing Cynthia Wu
Author-Person: pwu111
Note: EFG ME
Number: 20161
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20161
File-URL: http://www.nber.org/papers/w20161.pdf
File-Format: application/pdf
Publication-Status: published as KINDA HACHEM & JING CYNTHIA WU, 2017. "Inflation Announcements and Social Dynamics," Journal of Money, Credit and Banking, vol 49(8), pages 1673-1713.
Abstract: We propose a new framework for understanding the effectiveness of central bank announcements when firms have heterogeneous inflation expectations. Expectations are updated through social dynamics and, with heterogeneity, not all firms choose to operate, putting downward pressure on realized inflation. Our model rationalizes why countries stuck at the zero lower bound have had a hard time increasing inflation without being aggressive. The same model also predicts that announcing an abrupt target to disinflate will cause inflation to undershoot the target whereas announcing gradual targets will not. We present new empirical evidence that corroborates this prediction.
Handle: RePEc:nbr:nberwo:20161
Template-Type: ReDIF-Paper 1.0
Title: "Selling Out" and the Impact of Music Piracy on Artist Entry
Classification-JEL: D03; K11; L82
Author-Name: Joshua S. Gans
Author-Person: pga42
Note: PR
Number: 20162
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20162
File-URL: http://www.nber.org/papers/w20162.pdf
File-Format: application/pdf
Publication-Status: published as Gans, Joshua S., 2015. "“Selling Out” and the impact of music piracy on artist entry," Information Economics and Policy, Elsevier, vol. 32(C), pages 58-64.
Abstract: There is a puzzle arising from empirical analyses of the impact of music piracy that this has caused declines in music revenue without a consequential decline, and perhaps even an increase, in the entry of artists and the supply of high quality music. There have been numerous explanations posited and this paper adds a novel one: that artists are time inconsistent and hence, tend to underweight fame over fortune when making future choices; i.e., the degree to which they will 'sell out.' Regardless of whether selling out is anticipated or not, the puzzle is resolved. When selling out is not anticipated, future expectations of piracy are not a concern as these impact on monetary awards that are not driving entry. When selling out is anticipated, piracy actually constrains the degree to which artists sell out, and assured of that, raises entry returns. Implications and the role of publisher contracts are also explored.
Handle: RePEc:nbr:nberwo:20162
Template-Type: ReDIF-Paper 1.0
Title: Collusion at the Extensive Margin
Classification-JEL: C73; L41
Author-Name: Martin C. Byford
Author-Name: Joshua S. Gans
Author-Person: pga42
Note: IO
Number: 20163
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20163
File-URL: http://www.nber.org/papers/w20163.pdf
File-Format: application/pdf
Publication-Status: published as Byford, Martin C. & Gans, Joshua S., 2014. "Collusion at the extensive margin," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 75-83.
Abstract: We augment the multi-market collusion model of Bernheim and Whinston (1990) by allowing for firm entry into, and exit from, individual markets. We show that this gives rise to a new mechanism by which a cartel can sustain a collusive agreement: Collusion at the extensive margin whereby firms collude by avoiding entry into each other's markets or territories. We characterise parameter values that sustain this type of collusion and identify the assumptions where this collusion is more likely to hold than its intensive margin counterpart. Specifically, it is demonstrated that Where duopoly competition is fierce collusion at the extensive margin is always sustainable. The model predicts new forms of market sharing such as oligopolistic competition with a collusive fringe, and predatory entry. We also provide a theoretic foundation for the use of a proportional response enforcement mechanism.
Handle: RePEc:nbr:nberwo:20163
Template-Type: ReDIF-Paper 1.0
Title: Human Capital Effects of Anti-Poverty Programs: Evidence from a Randomized Housing Voucher Lottery
Classification-JEL: H53; H75; I38; J13; J24; R38
Author-Name: Brian Jacob
Author-Name: Max Kapustin
Author-Name: Jens Ludwig
Note: CH ED EH PE
Number: 20164
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20164
File-URL: http://www.nber.org/papers/w20164.pdf
File-Format: application/pdf
Abstract: Whether government transfer programs increase the human capital of low-income children is a question of first-order policy importance. Such policies might help poor children if their parents are credit constrained, and so under-invest in their human capital. But it is also possible that whatever causes parents to have low incomes might also directly influence children's development, in which case transfer programs need not improve poor children's long-term life chances. While several recent influential studies suggest anti-poverty programs have larger human capital effects per dollar spent than do even the best educational interventions, identification is a challenge because most transfer programs are entitlements. We overcome that problem by studying the effects on children of a generous transfer program that is heavily rationed--means-tested housing assistance. We take advantage of a randomized housing voucher lottery in Chicago in 1997, for which 82,607 people applied, and use administrative data on schooling, arrests, and health to track children's outcomes over 14 years. We focus on families living in unsubsidized private housing at baseline, for whom voucher receipt generates large changes in both housing and non-housing consumption. Estimated effects are mostly statistically insignificant and always much smaller than those from recent studies of cash transfers, and are smaller on a per dollar basis than the best educational interventions.
Handle: RePEc:nbr:nberwo:20164
Template-Type: ReDIF-Paper 1.0
Title: How does macroprudential regulation change bank credit supply?
Classification-JEL: E44; G01; G21; G28
Author-Name: Anil K. Kashyap
Author-Person: pka35
Author-Name: Dimitrios P. Tsomocos
Author-Person: pts27
Author-Name: Alexandros P. Vardoulakis
Note: CF EFG ME
Number: 20165
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20165
File-URL: http://www.nber.org/papers/w20165.pdf
File-Format: application/pdf
Abstract: We analyze a variant of the Diamond-Dybvig (1983) model of banking in which savers can use a bank to invest in a risky project operated by an entrepreneur. The savers can buy equity in the bank and save via deposits. The bank chooses to invest in a safe asset or to fund the entrepreneur. The bank and the entrepreneur face limited liability and there is a probability of a run which is governed by the bank's leverage and its mix of safe and risky assets. The possibility of the run reduces the incentive to lend and take risk, while limited liability pushes for excessive lending and risk-taking. We explore how capital regulation, liquidity regulation, deposit insurance, loan to value limits, and dividend taxes interact to offset these frictions. We compare agents welfare in the decentralized equilibrium absent regulation with welfare in equilibria that prevail with various regulations that are optimally chosen. In general, regulation can lead to Pareto improvements but fully correcting both distortions requires more than one regulation.
Handle: RePEc:nbr:nberwo:20165
Template-Type: ReDIF-Paper 1.0
Title: Does in utero Exposure to Illness Matter? The 1918 Influenza Epidemic in Taiwan as a Natural Experiment
Classification-JEL: I12; I19; N35
Author-Name: Ming-Jen Lin
Author-Person: pli194
Author-Name: Elaine M. Liu
Author-Person: pli459
Note: AG CH EH
Number: 20166
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20166
File-URL: http://www.nber.org/papers/w20166.pdf
File-Format: application/pdf
Publication-Status: published as Lin, Ming-Jen & Liu, Elaine M., 2014. "Does in utero exposure to Illness matter? The 1918 influenza epidemic in Taiwan as a natural experiment," Journal of Health Economics, Elsevier, vol. 37(C), pages 152-163.
Abstract: This paper tests whether in utero conditions affect long-run developmental outcomes using the 1918 influenza pandemic in Taiwan as a natural experiment. Combining several historical and current datasets, we find that cohorts in utero during the pandemic are shorter as children/adolescents and less educated compared to other birth cohorts. We also find that they are more likely to have serious health problems including kidney disease, circulatory and respiratory problems, and diabetes in old age. Despite possible positive selection on health outcomes due to high infant mortality rates during this period (18 percent), our paper finds a strong negative impact of in utero exposure to influenza.
Handle: RePEc:nbr:nberwo:20166
Template-Type: ReDIF-Paper 1.0
Title: The Career Prospects of Overeducated Americans
Classification-JEL: J24; J31; J62
Author-Name: Brian Clark
Author-Name: Clément Joubert
Author-Person: pjo377
Author-Name: Arnaud Maurel
Author-Person: pma1091
Note: ED LS PE
Number: 20167
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20167
File-URL: http://www.nber.org/papers/w20167.pdf
File-Format: application/pdf
Publication-Status: published as Brian Clark & Clément Joubert & Arnaud Maurel, 2017. "The career prospects of overeducated Americans," IZA Journal of Labor Economics, vol 6(1).
Abstract: In this paper we analyze career dynamics for the large share of U.S. workers who have more schooling than their peers in the same occupation. We use data from the NLSY79 combined with the CPS to analyze transitions into and out of overeducated employment, together with the corresponding effects on wages. Overeducation is a fairly persistent phenomenon at the aggregate and individual levels, with 66% of workers remaining overeducated after one year. Overeducation is not only more common, but also more persistent among blacks and low-AFQT individuals. Further, the hazard rate out of overeducation drops by about 60% during the first 5 years spent overeducated. However, the estimation of a mixed proportional hazard model suggests that this is attributable to selection on unobservables rather than true duration dependence. Finally, overeducation is associated with lower current as well as future wages, which points to the existence of scarring effects.
Handle: RePEc:nbr:nberwo:20167
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy
Classification-JEL: E0; F1; F16; R12; R13
Author-Name: Lorenzo Caliendo
Author-Person: pca537
Author-Name: Fernando Parro
Author-Person: ppa683
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Author-Name: Pierre-Daniel Sarte
Author-Person: psa30
Note: EFG ITI
Number: 20168
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20168
File-URL: http://www.nber.org/papers/w20168.pdf
File-Format: application/pdf
Publication-Status: published as Lorenzo Caliendo & Fernando Parro & Esteban Rossi-Hansberg & Pierre-Daniel Sarte, 2018. "The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy," The Review of Economic Studies, vol 85(4), pages 2042-2096.
Abstract: We study the impact of intersectoral and interregional trade linkages in propagating disaggregated productivity changes to the rest of the economy. Using regional and industry data we obtain the aggregate, regional and sectoral elasticities of measured TFP, GDP, and employment to regional and sectoral productivity changes. We find that the elasticities vary significantly depending on the sectors and regions affected and are importantly determined by the spatial structure of the economy. We use these elasticities to perform a variety of counterfactual exercises including a detailed study of the effects of the boom in the Computers and Electronics industry in California.
Handle: RePEc:nbr:nberwo:20168
Template-Type: ReDIF-Paper 1.0
Title: Medicaid: A Review of the Literature
Classification-JEL: I1; I13
Author-Name: Marianne P. Bitler
Author-Person: pbi12
Author-Name: Madeline Zavodny
Author-Person: pza33
Note: CH EH
Number: 20169
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20169
File-URL: http://www.nber.org/papers/w20169.pdf
File-Format: application/pdf
Abstract: We review the existing literature about the effects of the Medicaid program. We first describe the program's structure and how it has changed over time. We then discuss findings on coverage, crowd out, take-up and health. Finally, we look at effects of the program on non-health outcomes such as welfare use and labor supply, marriage and fertility, and savings.
Handle: RePEc:nbr:nberwo:20169
Template-Type: ReDIF-Paper 1.0
Title: To Charge or Not to Charge: Evidence from a Health Products Experiment in Uganda
Classification-JEL: D11; D12; D83; I11; I18; O12
Author-Name: Greg Fischer
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Margaret McConnell
Author-Name: Pia Raffler
Note: DEV EH LS
Number: 20170
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20170
File-URL: http://www.nber.org/papers/w20170.pdf
File-Format: application/pdf
Abstract: In a field experiment in Uganda, a free distribution of three health products lowers subsequent demand relative to a sale distribution. This contrasts with work on insecticide-treated bed nets, highlighting the importance of product characteristics in determining pricing policy. We put forward a model to illustrate the potential tension between two of these important factors, learning and anchoring, and then test this model with three products selected specifically for their variation in the scope for learning. We find the rank order of percentage change of shifts in demand matches theoretical predictions, although the differences are not statistically significant, and only two of three pairwise comparisons match when the reductions are specified in percent terms. These results highlight the importance of understanding pricing policy with respect to product, market, and household characteristics.
Handle: RePEc:nbr:nberwo:20170
Template-Type: ReDIF-Paper 1.0
Title: Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment
Classification-JEL: C93; D22; L10; L20; L81; M37
Author-Name: Tom Blake
Author-Person: pbl139
Author-Name: Chris Nosko
Author-Name: Steven Tadelis
Author-Person: pta314
Note: IO
Number: 20171
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20171
File-URL: http://www.nber.org/papers/w20171.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Blake & Chris Nosko & Steven Tadelis, 2015. "Consumer Heterogeneity and Paid Search Effectiveness: A Large‐Scale Field Experiment," Econometrica, Econometric Society, vol. 83, pages 155-174, 01.
Abstract: Internet advertising has been the fastest growing advertising channel in recent years with paid search ads comprising the bulk of this revenue. We present results from a series of large scale field experiments done at eBay that were designed to measure the causal effectiveness of paid search ads. Because search clicks and purchase behavior are correlated, we show that returns from paid search are a fraction of conventional non-experimental estimates. As an extreme case, we show that brand-keyword ads have no measurable short-term benefits. For non-brand keywords we find that new and infrequent users are positively influenced by ads but that more frequent users whose purchasing behavior is not influenced by ads account for most of the advertising expenses, resulting in average returns that are negative.
Handle: RePEc:nbr:nberwo:20171
Template-Type: ReDIF-Paper 1.0
Title: Under-investment in a Profitable Technology: The Case of Seasonal Migration in Bangladesh
Classification-JEL: J61; O1; O15; R23
Author-Name: Gharad Bryan
Author-Name: Shyamal Chowdhury
Author-Person: pch276
Author-Name: Ahmed Mushfiq Mobarak
Author-Person: pmo232
Note: DEV LS
Number: 20172
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20172
File-URL: http://www.nber.org/papers/w20172.pdf
File-Format: application/pdf
Publication-Status: published as Gharad Bryan & Shyamal Chowdhury & Ahmed Mushfiq Mobarak, 2014. "Underinvestment in a Profitable Technology: The Case of Seasonal Migration in Bangladesh," Econometrica, Econometric Society, vol. 82, pages 1671-1748, 09.
Abstract: Hunger during pre-harvest lean seasons is widespread in the agrarian areas of Asia and Sub-Saharan Africa. We randomly assign an $8.50 incentive to households in rural Bangladesh to temporarily out-migrate during the lean season. The incentive induces 22% of households to send a seasonal migrant, their consumption at the origin increases significantly, and treated households are 8-10 percentage points more likely to re-migrate 1 and 3 years after the incentive is removed. These facts can be explained qualitatively by a model in which migration is risky, mitigating risk requires individual-specific learning, and some migrants are sufficiently close to subsistence that failed migration is very costly. We document evidence consistent with this model using heterogeneity analysis and additional experimental variation, but calibrations with forward-looking households that can save up to migrate suggest that it is difficult for the model to quantitatively match the data. We conclude with extensions to the model that could provide a better quantitative accounting of the behavior.
Handle: RePEc:nbr:nberwo:20172
Template-Type: ReDIF-Paper 1.0
Title: In a Small Moment: Class Size and Moral Hazard in the Mezzogiorno
Classification-JEL: C26; C31; I21; I28; J24
Author-Name: Joshua D. Angrist
Author-Person: pan29
Author-Name: Erich Battistin
Author-Person: pba163
Author-Name: Daniela Vuri
Author-Person: pvu8
Note: CH DEV ED LS PE
Number: 20173
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20173
File-URL: http://www.nber.org/papers/w20173.pdf
File-Format: application/pdf
Publication-Status: published as Joshua D. Angrist & Erich Battistin & Daniela Vuri, 2017. "In a Small Moment: Class Size and Moral Hazard in the Italian Mezzogiorno," American Economic Journal: Applied Economics, vol 9(4), pages 216-249.
Abstract: An instrumental variables (IV) identification strategy that exploits statutory class size caps shows significant achievement gains in smaller classes in Italian primary schools. Gains from small classes are driven mainly by schools in Southern Italy, suggesting a substantial return to class size reductions for residents of the Mezzogiorno. In addition to high unemployment and other social problems, however, the Mezzogiorno is distinguished by pervasive manipulation of standardized test scores, a finding revealed in a natural experiment that randomly assigned school monitors. IV estimates also show that small classes increase score manipulation. Estimates of a causal model for achievement with two endogenous variables, class size and score manipulation, suggest that the effects of class size on measured achievement are driven entirely by the relationship between class size and manipulation. Dishonest scoring appears to be a consequence of teacher shirking more than teacher cheating. These findings show how consequential score manipulation can arise even in assessment systems with few NCLB-style accountability concerns.
Handle: RePEc:nbr:nberwo:20173
Template-Type: ReDIF-Paper 1.0
Title: Culture: Persistence and Evolution
Classification-JEL: A13; F22; J00; J61; Z1
Author-Name: Francesco Giavazzi
Author-Person: pgi18
Author-Name: Ivan Petkov
Author-Person: ppe761
Author-Name: Fabio Schiantarelli
Author-Person: psc8
Note: IFM POL
Number: 20174
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20174
File-URL: http://www.nber.org/papers/w20174.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Giavazzi & Ivan Petkov & Fabio Schiantarelli, 2019. "Culture: persistence and evolution," Journal of Economic Growth, vol 24(2), pages 117-154.
Abstract: This paper documents the speed of evolution (or lack thereof) of a range of values and beliefs of different generations of US immigrants, and interprets the evidence in the light of a model of socialization and identity choice. Convergence to the norm differs greatly across cultural attitudes. Moreover, results obtained studying higher generation immigrants differ from those found when the analysis is limited to the second generation and imply a lesser degree of persistence than previously thought. Persistence is also culture specific, in the sense that the country of origin of one's ancestors matters for the pattern of generational convergence.
Handle: RePEc:nbr:nberwo:20174
Template-Type: ReDIF-Paper 1.0
Title: Consumption Dynamics During Recessions
Classification-JEL: D91; E21; E32
Author-Name: David Berger
Author-Person: pbe977
Author-Name: Joseph Vavra
Author-Person: pva480
Note: EFG
Number: 20175
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20175
File-URL: http://www.nber.org/papers/w20175.pdf
File-Format: application/pdf
Publication-Status: published as David Berger & Joseph Vavra, 2015. "Consumption Dynamics During Recessions," Econometrica, Econometric Society, vol. 83, pages 101-154, 01.
Abstract: Are there times when durable spending is less responsive to economic stimulus? We argue that aggregate durable expenditures respond more sluggishly to economic shocks during recessions because microeconomic frictions lead to declines in the frequency of households' durable adjustment. We show this by first using indirect inference to estimate a heterogeneous agent incomplete markets model with fixed costs of durable adjustment to match consumption dynamics in PSID microdata. We then show that aggregating this model delivers an extremely procyclical Impulse Response Function (IRF) of durable spending to aggregate shocks. For example, the response of durable spending to an income shock in 1999 is estimated to be almost twice as large as if it occurred in 2009. This procyclical IRF holds in response to standard business cycle shocks as well as in response to various policy shocks, and it is robust to general equilibrium. After estimating this robust theoretical implication of micro frictions, we provide additional direct empirical evidence for its importance using both cross-sectional patterns in PSID data as well as time-series patterns from aggregate durable spending.
Handle: RePEc:nbr:nberwo:20175
Template-Type: ReDIF-Paper 1.0
Title: Capital Gains Lock-In and Governance Choices
Classification-JEL: G11; G23; G34; H20
Author-Name: Stephen G. Dimmock
Author-Person: pdi378
Author-Name: William C. Gerken
Author-Name: Zoran Ivković
Author-Name: Scott J. Weisbenner
Note: AP CF PE
Number: 20176
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20176
File-URL: http://www.nber.org/papers/w20176.pdf
File-Format: application/pdf
Publication-Status: published as Stephen G. Dimmock & William C. Gerken & Zoran Ivković & Scott J. Weisbenner, 2018. "Capital gains lock-in and governance choices," Journal of Financial Economics, vol 127(1), pages 113-135.
Abstract: Because of differences in accrued gains and investors' tax-sensitivity, capital gains "lock-in" varies across mutual funds even for the same stock at the same time. Using this variation, we show that tax lock-in affects funds' governance decisions. Higher tax lock-in decreases the likelihood a fund sells a stock prior to contentious votes, and increases the likelihood the fund votes against management. Consistent with tax motivations, these findings are concentrated among funds with tax-sensitive investors. High aggregate capital gains across funds holding a stock predicts a higher likelihood management loses a vote and a lower likelihood a contentious vote is proposed.
Handle: RePEc:nbr:nberwo:20176
Template-Type: ReDIF-Paper 1.0
Title: Food for Thought: Comparing Estimates of Food Availability in England and Wales, 1700-1914
Classification-JEL: N01; N33; N53; O1; O13; O52
Author-Name: Bernard Harris
Author-Person: pha130
Author-Name: Roderick Floud
Author-Name: Sok Chul Hong
Author-Person: pho346
Note: DAE
Number: 20177
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20177
File-URL: http://www.nber.org/papers/w20177.pdf
File-Format: application/pdf
Publication-Status: published as P. A. Harris, 2016. "Food for thought," Equine Veterinary Education, vol 28(3), pages 121-122.
Abstract: In The Changing Body (Cambridge University Press and NBER, 2011), the authors presented a series of estimates showing the number of calories available for human consumption in England and Wales at various points in time between 1700 and 1909/13. The current paper corrects an error in those figures but also compares the estimates of The Changing Body with those published by a range of other authors. The differences reflect disagreements over a number of issues, including the amount of land under cultivation, the extraction and wastage rates for cereals and pulses and the number of animals supplying meat and dairy products. The paper considers recent attempts to achieve a compromise between these estimates and challenges claims that there was a dramatic reduction in either food availability or the average height of birth cohorts in the late-eighteenth century.
Handle: RePEc:nbr:nberwo:20177
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Child Health Insurance Access on Schooling: Evidence from Public Insurance Expansions
Classification-JEL: H51; H52; I13; I21; I28
Author-Name: Sarah Cohodes
Author-Person: pco846
Author-Name: Daniel Grossman
Author-Name: Samuel Kleiner
Author-Person: pkl120
Author-Name: Michael F. Lovenheim
Author-Person: plo162
Note: CH ED EH PE
Number: 20178
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20178
File-URL: http://www.nber.org/papers/w20178.pdf
File-Format: application/pdf
Publication-Status: published as Sarah R. Cohodes & Daniel S. Grossman & Samuel A. Kleiner & Michael F. Lovenheim, 2016. "The Effect of Child Health Insurance Access on Schooling: Evidence from Public Insurance Expansions," Journal of Human Resources, University of Wisconsin Press, vol. 51(3), pages 727-759.
Abstract: Public health insurance programs comprise a large share of federal and state government expenditures. Although a sizable literature analyzes the effects of these programs on health care utilization and health outcomes, little prior work has examined the long-term effects and resultant health improvements on important outcomes, such as educational attainment. We contribute to filling this gap in the literature by examining the effects of the public insurance expansions among children in the 1980s and 1990s on their future educational attainment. Our findings indicate that expanding health insurance coverage for low-income children increases the rate of high school completion and college completion. These estimates are robust to only using federal Medicaid expansions, and mostly are due to expansions that occur when the children are older (i.e., not newborns). We present suggestive evidence that better health is one of the mechanisms driving our results by showing that Medicaid eligibility when young translates into better teen health. Overall, our results indicate that the long-run benefits of public health insurance are substantial.
Handle: RePEc:nbr:nberwo:20178
Template-Type: ReDIF-Paper 1.0
Title: Defense Government Spending Is Contractionary, Civilian Government Spending Is Expansionary
Classification-JEL: E62; H30; H60
Author-Name: Roberto Perotti
Author-Person: ppe66
Note: EFG PE
Number: 20179
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20179
File-URL: http://www.nber.org/papers/w20179.pdf
File-Format: application/pdf
Abstract: Impulse responses to government spending shocks in Standard Vector Autoregressions (SVARs) typically display "expansionary" features. However, SVARs can be subject to a "non-fundamentalness" problem. "Expectations - Augmented" VARs (EVARs), which use direct measures of forecasts of defense spending, typically display "contractionary" responses to a defense news shock. I show that, when properly specified, SVARs and EVARs give virtually identical results. The reason for the widespread, opposite view is that defense shocks have "contractionary" effects while civilian government spending shocks have "expansionary" effects. Existing EVARs and SVARs, however, include only total government spending. In addition, the former are typically estimated on samples that include WWII and the Korean war, when defense shocks prevailed, while the latter are estimated mostly on post-1953 samples, when civilian shocks prevailed.
Handle: RePEc:nbr:nberwo:20179
Template-Type: ReDIF-Paper 1.0
Title: A Field Experiment on Directed Giving at a Public University
Classification-JEL: C93; D64; H41
Author-Name: Catherine C. Eckel
Author-Name: David Herberich
Author-Name: Jonathan Meer
Author-Person: pme529
Note: PE
Number: 20180
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20180
File-URL: http://www.nber.org/papers/w20180.pdf
File-Format: application/pdf
Publication-Status: published as Eckel, Catherine C. & Herberich, David H. & Meer, Jonathan, 2017. "A field experiment on directed giving at a public university," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 66-71.
Abstract: The use of directed giving - allowing donors to target their gifts to specific organizations or functions - is pervasive in fundraising, yet little is known about its effectiveness. We conduct a field experiment at a public university in which prospective donors are presented with either an opportunity to donate to the unrestricted Annual Fund, or an opportunity of donating to the Annual Fund and directing some or all of their donation towards the academic college from which they graduated. While there is no effect on the probability of giving, donations are significantly larger when there is the option of directing. However, the value of the option does not come directly from use, as very few donors choose to direct their gift.
Handle: RePEc:nbr:nberwo:20180
Template-Type: ReDIF-Paper 1.0
Title: Dominated Choices and Medicare Advantage Enrollment
Classification-JEL: I13
Author-Name: Christopher Afendulis
Author-Name: Anna Sinaiko
Author-Name: Richard Frank
Note: AG EH
Number: 20181
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20181
File-URL: http://www.nber.org/papers/w20181.pdf
File-Format: application/pdf
Publication-Status: published as Christopher C. Afendulis & Anna D. Sinaiko & Richard G. Frank, 2015. "Dominated choices and Medicare Advantage enrollment," Journal of Economic Behavior & Organization, vol 119, pages 72-83.
Abstract: Research in behavioral economics suggests that certain circumstances, such as large numbers of complex options or revisiting prior choices, can lead to decision errors. This paper explores the enrollment decisions of Medicare beneficiaries in the Medicare Advantage (MA) program. During the time period we study (2007-2010), private fee-for-service (PFFS) plans offered enhanced benefits beyond those of traditional Medicare (TM) without any restrictions on physician networks or additional cost, making TM a dominated choice relative to PFFS. Yet more than three quarters of Medicare beneficiaries remained in TM during our study period. We explore two possible explanations for this behavior: status quo bias and choice overload. Our results suggest that status quo bias plays an important role; the rate of MA enrollment was significantly higher among new Medicare beneficiaries than among incumbents. Our results also provide some evidence of choice overload; while the MA enrollment rate did not decline with an increase in the number of plans, among incumbent beneficiaries it failed to increase. Our results illustrate the importance of the choice environment that is in place when enrollees first enter the Medicare program.
Handle: RePEc:nbr:nberwo:20181
Template-Type: ReDIF-Paper 1.0
Title: Social Distance and Quality Ratings in Charity Choice
Classification-JEL: C91; D64; H41
Author-Name: Alexander L. Brown
Author-Person: pbr451
Author-Name: Jonathan Meer
Author-Person: pme529
Author-Name: J. Forrest Williams
Note: PE
Number: 20182
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20182
File-URL: http://www.nber.org/papers/w20182.pdf
File-Format: application/pdf
Publication-Status: published as Brown, Alexander L. & Meer, Jonathan & Williams, J. Forrest, 2017. "Social distance and quality ratings in charity choice," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 9-15.
Abstract: We conduct a laboratory experiment to examine how third-party ratings impact charity choice and donative behavior, particularly in regards to preferences for local charities. Subjects are given a menu of ten charities, with a mix of local and non-local organizations included. We vary whether third-party ratings are displayed on this menu. Subjects perform an effort task to earn money and can choose to donate to their selected charity. We find evidence that subjects' choice of charity is impacted by third-party evaluations but, somewhat surprisingly, there are no obvious preferences for local charities. These third-party assessments have some impact on the percent of earnings that subjects allocate to their selected charity; local charities also accrue more donations, though these results are somewhat imprecise.
Handle: RePEc:nbr:nberwo:20182
Template-Type: ReDIF-Paper 1.0
Title: Quantifying the Lasting Harm to the U.S. Economy from the Financial Crisis
Classification-JEL: E22; E32; J21; J60; O4
Author-Name: Robert E. Hall
Note: EFG
Number: 20183
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20183
File-URL: http://www.nber.org/papers/w20183.pdf
File-Format: application/pdf
Publication-Status: published as Quantifying the Lasting Harm to the US Economy from the Financial Crisis, Robert E. Hall. in NBER Macroeconomics Annual 2014, Volume 29, Parker and Woodford. 2015
Abstract: The financial crisis and ensuing Great Recession left the U.S. economy in an injured state. In 2013, output was 13 percent below its trend path from 1990 through 2007. Part of this shortfall--2.2 percentage points out of the 13--was the result of lingering slackness in the labor market in the form of abnormal unemployment and substandard weekly hours of work. The single biggest contributor was a shortfall in business capital, which accounted for 3.9 percentage points. The second largest was a shortfall of 3.5 percentage points in total factor productivity. The fourth was a shortfall of 2.4 percentage points in labor-force participation. I discuss these four sources of the injury in detail, focusing on identifying state variables that may or may not return to earlier growth paths. The conclusion is optimistic about the capital stock and slackness in the labor market and pessimistic about reversing the declines in total factor productivity and the part of the participation shortfall not associated with the weak labor market.
Handle: RePEc:nbr:nberwo:20183
Template-Type: ReDIF-Paper 1.0
Title: Grading on a Curve, and other Effects of Group Size on All-Pay Auctions
Classification-JEL: C91; C92; D47; H52
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Andy Brownback
Note: PE
Number: 20184
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20184
File-URL: http://www.nber.org/papers/w20184.pdf
File-Format: application/pdf
Publication-Status: published as Andreoni, James, and Andy Brownback. "All pay auctions and group size: Grading on a curve and other applications." Journal of Economic Behavior & Organization 137 (2017): 361-373.
Abstract: We model contests with a fixed proportion of prizes, such as a grading curve, as all-pay auctions where higher effort weakly increases the likelihood of a prize. We find theoretical predictions for the effect of contest size on effort and test our predictions in a laboratory experiment that compares two-bidder auctions with one prize and 20-bidder auctions with ten prizes. Our results demonstrate that larger contests elicit lower effort by low-skilled students, but higher effort by high-skilled. Large contests also generate more accurate rankings of students and more accurate assignment of high grades to the high-skilled.
Handle: RePEc:nbr:nberwo:20184
Template-Type: ReDIF-Paper 1.0
Title: Long-Term Damage from the Great Recession in OECD Countries
Classification-JEL: E32; E65; E66
Author-Name: Laurence M. Ball
Author-Person: pba605
Note: EFG ME
Number: 20185
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20185
File-URL: http://www.nber.org/papers/w20185.pdf
File-Format: application/pdf
Publication-Status: published as Laurence Ball, 2014. "Long-term damage from the Great Recession in OECD countries," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 11(2), pages 149-160, September.
Abstract: This paper estimates the long-term effects of the global recession of 2008-2009 on output in 23 countries. I measure these effects by comparing current estimates of potential output from the OECD and IMF to the path that potential was following in 2007, according to estimates at the time. The losses in potential output range from almost nothing in Australia and Switzerland to more than 30% in Greece, Hungary, and Ireland; the average loss, weighted by economy size, is 8.4%. Most countries have experienced strong hysteresis effects: shortfalls of actual output from pre-recession trends have reduced potential output almost one-for-one. In the hardest-hit economies, the current growth rate of potential is depressed, implying that the level of lost potential is growing over time.
Handle: RePEc:nbr:nberwo:20185
Template-Type: ReDIF-Paper 1.0
Title: The Value of Transmission in Electricity Markets: Evidence from a Nuclear Power Plant Closure
Classification-JEL: L51; L94; Q41; Q54
Author-Name: Lucas Davis
Author-Person: pda367
Author-Name: Catherine Hausman
Author-Person: pha1310
Note: EEE IO
Number: 20186
Creation-Date: 2014-05
Order-URL: http://www.nber.org/papers/w20186
File-URL: http://www.nber.org/papers/w20186.pdf
File-Format: application/pdf
Publication-Status: published as Davis, Lucas, and Catherine Hausman. 2016. "Market Impacts of a Nuclear Power Plant Closure." American Economic Journal: Applied Economics, 8 (2): 92-122.
Abstract: Reliable estimates of the value of electricity transmission are critical if these heavily-regulated investments are to be made cost-effectively. In this paper, we exploit the abrupt closure of the San Onofre Nuclear Generating Station (SONGS) in February 2012. During the previous decade, SONGS had produced about 8% of the electricity generated in California, so its closure had a pronounced impact on the wholesale market, requiring large and immediate increases in generation from other sources. We find that in the months following the closure, almost all of the lost generation from SONGS was met by natural gas plants inside California at an average cost of almost $68,000 per hour. During high demand hours, we find that as much as 75% of the lost generation was met by plants located in the southern part of the state. Although lower-cost production was available elsewhere, transmission constraints and other physical limitations of the grid severely limited the ability of other producers to sell into the southern California market. These constraints also made it potentially more profitable for certain plants to exercise market power, and we find evidence consistent with one company acting non-competitively. Overall, the constraints increased generation costs by an average of $4,500 per hour, implying that the value of additional transmission capacity is about $380 million.
Handle: RePEc:nbr:nberwo:20186
Template-Type: ReDIF-Paper 1.0
Title: On the Fundamental Relation Between Equity Returns and Interest Rates
Classification-JEL: G12; G13; G32
Author-Name: Jaewon Choi
Author-Person: pch2101
Author-Name: Matthew P. Richardson
Author-Name: Robert F. Whitelaw
Note: AP
Number: 20187
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20187
File-URL: http://www.nber.org/papers/w20187.pdf
File-Format: application/pdf
Abstract: This paper uses contingent claim asset pricing and exploits capital structure priority to better understand the relation between corporate security returns and interest rate changes (i.e., duration). We show theoretically and, using a novel dataset, confirm empirically that lower priority securities in the capital structure, such as subordinated or distressed debt and equity, have low or even negative durations because these securities are effectively short higher priority, high duration fixed rate debt. This finding has important implications for interpreting existing results on (i) the time-varying correlation between the aggregate stock market and government bonds, (ii) the use of bond factors for multifactor asset pricing models and forecasting bond and stock returns, (iii) the Fisher effect and inflation, and (iv) the betas of corporate bonds.
Handle: RePEc:nbr:nberwo:20187
Template-Type: ReDIF-Paper 1.0
Title: An African Growth Miracle?
Classification-JEL: O11; O40; O55
Author-Name: Dani Rodrik
Author-Person: pro60
Note: DEV IFM ITI PR
Number: 20188
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20188
File-URL: http://www.nber.org/papers/w20188.pdf
File-Format: application/pdf
Publication-Status: published as Dani Rodrik, 2018. "An African Growth Miracle?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 27(1), pages 10-27.
Abstract: Africa's recent growth performance has raised expectations of a bright economic future for the continent after decades of decline. Yet there is a genuine question about whether Africa's growth can be sustained, and if so, at what level. The balance of the evidence suggests caution on the prospects for high growth. While the region's fundamentals have improved, the payoffs to macroeconomic stability and improved governance are mainly to foster resilience and lay the groundwork for growth, rather than to generate productivity growth on their own. The traditional engines behind rapid growth, structural change and industrialization, seem to be operating at less than full power. If African countries do achieve growth rates substantially higher, they will have to do so pursuing a growth model that is different from earlier miracles based on industrialization. This might be agriculture-led or services-led growth, but it will look quite different than what we have seen before.
Handle: RePEc:nbr:nberwo:20188
Template-Type: ReDIF-Paper 1.0
Title: Intra-household Welfare
Classification-JEL: D1; D11; D13
Author-Name: Pierre-André Chiappori
Author-Person: pch377
Author-Name: Costas Meghir
Author-Person: pme144
Note: CH LS PE
Number: 20189
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20189
File-URL: http://www.nber.org/papers/w20189.pdf
File-Format: application/pdf
Abstract: In this paper we develop an approach to measuring inequality and poverty that recognizes the fact that individuals within households may have both different preferences and differential access to resources. We argue that a measure based on estimates of the sharing rule is inadequate as an approach that seeks to understand how welfare is distributed in the population because it ignores public good and the allocation of time to market work, leisure and household production. We develop a money metric measure of welfare that accounts for public goods (by using personalized prices) household production and for the allocation of time.
Handle: RePEc:nbr:nberwo:20189
Template-Type: ReDIF-Paper 1.0
Title: Model Disagreement and Economic Outlook
Classification-JEL: G12
Author-Name: Daniel Andrei
Author-Name: Bruce Carlin
Author-Name: Michael Hasler
Note: AP
Number: 20190
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20190
File-URL: http://www.nber.org/papers/w20190.pdf
File-Format: application/pdf
Abstract: We study the impact of model disagreement on the dynamics of asset prices, return volatility, and trade in the market. In our continuous-time framework, two investors have homogeneous preferences and equal access to information, but disagree about the length of the business cycle. We show that model disagreement amplifies return volatility and trading volume by inducing agents to have different economic outlooks, which generates a term structure of disagreement. Different economic outlooks imply that investors will trade even if they do not disagree about the current value of fundamentals. Also, we find that while the absolute level of return volatility is driven by long-run risk, the variation and persistence of volatility (i.e., volatility clustering) is driven by disagreement. Compared to previous studies that consider model uncertainty with a representative agent or those that study heterogeneous beliefs with no model disagreement, our paper offers a theoretical foundation for the GARCH-like behavior of stock returns.
Handle: RePEc:nbr:nberwo:20190
Template-Type: ReDIF-Paper 1.0
Title: Intrahousehold Inequality
Classification-JEL: D1; D11; D12; D13; D31; D6; H41
Author-Name: Pierre-André Chiappori
Author-Person: pch377
Author-Name: Costas Meghir
Author-Person: pme144
Note: CH LS PE
Number: 20191
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20191
File-URL: http://www.nber.org/papers/w20191.pdf
File-Format: application/pdf
Abstract: Studies of inequality often ignore resource allocation within the household. In doing so they miss an important element of the distribution of welfare that can vary dramatically depending on overall environmental and economic factors. Thus, measures of inequality that ignore intra household allocations are both incomplete and misleading. We discuss determinants of intrahousehold allocation of resources and welfare. We show how the sharing rule, which characterizes the within household allocations, can be identified from data on household consumption and labor supply. We also argue that a measure based on estimates of the sharing rule is is inadequate as an approach that seeks to understand how welfare is distributed in the population because it ignores public goods and the allocation of time to market work, leisure and household production. We discuss a money metric alternative, that fully characterizes the utility level reached by the agent. We then review the current literature on the estimation of the sharing rule based on a number of approaches, including the use of distribution factors as well as preference restrictions.
Handle: RePEc:nbr:nberwo:20191
Template-Type: ReDIF-Paper 1.0
Title: A General Rationale for a Governmental Role in the Relief of Large Risks
Classification-JEL: D6; D8; K2
Author-Name: Steven Shavell
Author-Person: psh42
Note: LE PE
Number: 20192
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20192
File-URL: http://www.nber.org/papers/w20192.pdf
File-Format: application/pdf
Publication-Status: published as Steven Shavell, 2014. "A general rationale for a governmental role in the relief of large risks," Journal of Risk and Uncertainty, vol 49(3), pages 213-234.
Abstract: The government often provides relief against large risks, such as disasters. A simple, general rationale for this role of government is considered here that applies even when private contracting to share risks is not subject to market imperfections. Specifically, the optimal private sharing of risks will not result in complete coverage against them when they are sufficiently large. Hence, when such risks eventuate, the marginal utility to individuals of governmental relief may exceed the marginal value of public goods. Consequently, social welfare may be raised if the government reduces public goods expenditures and directs these freed resources toward individuals who have suffered losses.
Handle: RePEc:nbr:nberwo:20192
Template-Type: ReDIF-Paper 1.0
Title: Information Aggregation in a DSGE Model
Classification-JEL: C63; D83; E2; E3; E44; G11
Author-Name: Tarek A. Hassan
Author-Person: pha489
Author-Name: Thomas M. Mertens
Note: AP CF ME TWP
Number: 20193
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20193
File-URL: http://www.nber.org/papers/w20193.pdf
File-Format: application/pdf
Publication-Status: published as Information Aggregation in a Dynamic Stochastic General Equilibrium Model, Tarek A. Hassan, Thomas M. Mertens. in NBER Macroeconomics Annual 2014, Volume 29, Parker and Woodford. 2015
Abstract: We introduce the information microstructure of a canonical noisy rational expectations model (Hellwig, 1980) into the framework of a conventional real business cycle model. Each household receives a private signal about future productivity. In equilibrium, the stock price serves to aggregate and transmit this information. We find that dispersed information about future productivity affects the quantitative properties of our real business cycle model in three dimensions. First, households' ability to learn about the future affects their consumption-savings decision. The equity premium falls and the risk-free interest rate rises when the stock price perfectly reveals innovations to future productivity. Second, when noise trader demand shocks limit the stock market's capacity to aggregate information, households hold heterogeneous expectations in equilibrium. However, for a reasonable size of noise trader demand shocks the model cannot generate the kind of disagreement observed in the data. Third, even moderate heterogeneity in the equilibrium expectations held by households has a sizable effect on the level of all economic aggregates and on the correlations and standard deviations produced by the model. For example, the correlation between consumption and investment growth is 0.29 when households have no information about the future, but 0.41 when information is dispersed.
Handle: RePEc:nbr:nberwo:20193
Template-Type: ReDIF-Paper 1.0
Title: Monetary/Fiscal Policy Mix and Agents' Beliefs
Classification-JEL: C11; E31; E58
Author-Name: Francesco Bianchi
Author-Person: pbi171
Author-Name: Cosmin Ilut
Author-Person: pil25
Note: EFG ME
Number: 20194
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20194
File-URL: http://www.nber.org/papers/w20194.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Bianchi & Cosmin Ilut, 2017. "Monetary/Fiscal Policy Mix and Agent's Beliefs," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 113-139, October.
Abstract: We reinterpret post World War II US economic history using an estimated microfounded model that allows for changes in the monetary/fiscal policy mix. We find that the fiscal authority was the leading authority in the ‘60s and the ‘70s. The appointment of Volcker marked a change in the conduct of monetary policy, but inflation dropped only when fiscal policy accommodated this change two years later. In fact, a disinflationary attempt of the monetary authority leads to more inflation if not supported by the fiscal authority. If the monetary authority had always been the leading authority or if agents had been confident about the switch, the Great Inflation would not have occurred and debt would have been higher. This is because the rise in trend inflation and the decline in debt of the ‘70s were caused by a series of fiscal shocks that are inflationary only when monetary policy accommodates fiscal policy. The reversal in the debt-to-GDP ratio dynamics, the sudden drop in inflation, and the fall in output of the early ‘80s are explained by the switch in the policy mix itself. If such a switch had not occurred, inflation would have been high for another fifteen years. Regime changes account for the stickiness of inflation expectations during the ‘60s and the ‘70s and for the break in the persistence and volatility of inflation.
Handle: RePEc:nbr:nberwo:20194
Template-Type: ReDIF-Paper 1.0
Title: Income Inequality, Social Mobility, and the Decision to Drop Out of High School
Classification-JEL: D31; I24; J24
Author-Name: Melissa S. Kearney
Author-Name: Phillip B. Levine
Author-Person: ple553
Note: CH LS
Number: 20195
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20195
File-URL: http://www.nber.org/papers/w20195.pdf
File-Format: application/pdf
Publication-Status: published as Melissa S. Kearney & Phillip B. Levine, 2016. "Income Inequality, Social Mobility, and the Decision to Drop Out of High School," Brookings Papers on Economic Activity, vol 2016(1), pages 333-396.
Abstract: It is widely documented that places with higher levels of income inequality have lower rates of social mobility. But it is an open question as to whether this reflects a causal relationship. We propose that one channel by which higher rates of income inequality might lead to lower rates of upward mobility is through lower rates of human capital investment among low-income individuals. Specifically, we posit that greater levels of income inequality could lead low-income youth to perceive a lower return to investment in their own human capital. Such an effect would offset any potential “aspirational” effect coming from higher educational wage premiums. The data are consistent with this prediction: low-income youth are more likely to drop out of school if they live in a place with a greater gap between the bottom and middle of the income distribution. This finding is robust to a number of specification checks and tests for confounding factors. This analysis offers an explanation for how income inequality might lead to a perpetuation of economic disadvantage and has implications for the types of interventions and programs that would effectively promote upward mobility among low-SES youth.
Handle: RePEc:nbr:nberwo:20195
Template-Type: ReDIF-Paper 1.0
Title: Impact of Premium Subsidies on the Take-up of Health Insurance: Evidence from the 2009 American Recovery and Reinvestment Act (ARRA)
Classification-JEL: I13; J64
Author-Name: Asako S. Moriya
Author-Name: Kosali Simon
Author-Person: psi314
Note: EH
Number: 20196
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20196
File-URL: http://www.nber.org/papers/w20196.pdf
File-Format: application/pdf
Publication-Status: published as Asako S. Moriya & Kosali Simon, 2016. "Impact of Premium Subsidies on the Take-up of Health Insurance: Evidence from the 2009 American Recovery and Reinvestment Act (ARRA)," American Journal of Health Economics, vol 2(3), pages 318-343.
Abstract: We study the coverage impacts of a 65-percent health insurance premium subsidy which targeted employer-insured workers who lost their jobs between September 2008 and May 2010. Our research represents the first econometric analysis of the American Recovery and Reinvestment Act (ARRA) COBRA subsidy and contributes to a better understanding of consumer responses to government subsidized private health insurance and discussions surrounding Affordable Care Act (ACA) policies. Using data from the Survey of Income and Program Participation (SIPP) and a difference-in-differences estimation strategy, we find that the subsidy is associated with a substantial increase in own-name employer coverage among the targeted group. We estimate a -0.38 to -0.27 price elasticity of demand for health insurance, depending on the specification. This suggests that consumers are somewhat more price sensitive than previously thought, although there are caveats to generalizing from past settings to individuals affected by ACA subsidies. We also find that part of the increase in subsidized coverage was offset by a decrease in unsubsidized non-group insurance.
Handle: RePEc:nbr:nberwo:20196
Template-Type: ReDIF-Paper 1.0
Title: Market Outcomes and Dynamic Patent Buyouts
Classification-JEL: O30; O34
Author-Name: Alberto Galasso
Author-Person: pga404
Author-Name: Matthew Mitchell
Author-Person: pmi30
Author-Name: Gabor Virag
Note: PR
Number: 20197
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20197
File-URL: http://www.nber.org/papers/w20197.pdf
File-Format: application/pdf
Publication-Status: published as Galasso, Alberto & Mitchell, Matthew & Virag, Gabor, 2016. "Market outcomes and dynamic patent buyouts," International Journal of Industrial Organization, Elsevier, vol. 48(C), pages 207-243.
Abstract: Patents are a useful but imperfect reward for innovation. In sectors like pharmaceuticals, where monopoly distortions seem particularly severe, there is growing international political pressure to identify alternatives to patents that could lower prices. Innovation prizes and other non-patent rewards are becoming more prevalent in government's innovation policy, and are also widely implemented by private philanthropists. In this paper we develop a model in which a patent buyout is effective, using information from market outcomes as a guide to the payment amount. We allow for the fact that sales may be manipulable by the innovator in search of the buyout payment, and show that in a wide variety of cases the optimal policy in our model still involves some form of patent buyout. The buyout uses two key pieces of information: market outcomes observed during the patent's life, and the competitive outcome after the patent is bought out. We show that such dynamic market information can be effective at determining both marginal and total willingness to pay of consumers in many important cases, and therefore can generate the right innovation incentives in our model.
Handle: RePEc:nbr:nberwo:20197
Template-Type: ReDIF-Paper 1.0
Title: American Banking and the Transportation Revolution Before the Civil War
Classification-JEL: N11; N21; N71; N91
Author-Name: Jeremy Atack
Author-Person: pat28
Author-Name: Matthew S. Jaremski
Author-Person: pja349
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: DAE
Number: 20198
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20198
File-URL: http://www.nber.org/papers/w20198.pdf
File-Format: application/pdf
Publication-Status: published as Atack, Jeremy & Jaremski, Matthew & Rousseau, Peter L., 2014. "American Banking and the Transportation Revolution before the Civil War," The Journal of Economic History, Cambridge University Press, vol. 74(04), pages 943-986, December.
Abstract: Studies have shown a connection between finance and growth, but most do not consider how financial and real factors interact to put a virtuous cycle of economic development into motion. As the main transportation advance of the 19th century, railroads connected established commercial centers and made unsettled areas along their routes better candidates for development. We measure the strength of links between railroads and banks in seven Midwest states using an annual transportation GIS database linked to a census of banking. These data indicate that those counties that already had a bank were more likely to see their first railroad go through over the next decade, while new banks tended to enter a county a year or two after it got a railroad. The initial banking system thus helped establish the rail system, while the rapid expansion of railroads helped fill in the banking map of the American Midwest.
Handle: RePEc:nbr:nberwo:20198
Template-Type: ReDIF-Paper 1.0
Title: Testing Asset Pricing Theory on Six Hundred Years of Stock Returns: Prices and Dividends for the Bazacle Company from 1372 to 1946
Classification-JEL: G12; N13; N23
Author-Name: David le Bris
Author-Name: William N. Goetzmann
Author-Person: pgo59
Author-Name: Sébastien Pouget
Note: AP
Number: 20199
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20199
File-URL: http://www.nber.org/papers/w20199.pdf
File-Format: application/pdf
Abstract: We use the Bazacle company of Toulouse's unique historical experience as a laboratory to test asset pricing theory. The Bazacle company is the earliest documented shareholding corporation. Founded in 1372 and nationalized in 1946, it was a grain milling firm for most of its 600 year history. We collect share prices and dividends over its entire lifespan. The average dividend yield in real terms was slightly in excess of is 5% per annum, while the long-term price growth was near zero. The company's unique full-payout dividend policy allows us to estimate an asset pricing model with fundamentally persistent dividends and a time-varying risk correction. The model is not rejected by the data. Variations in expected future dividends are found to explain between one-sixth and one-third of variations in prices. Moreover, the risk correction is correlated with macroeconomic shocks, in particular with the volatility of grain prices.
Handle: RePEc:nbr:nberwo:20199
Template-Type: ReDIF-Paper 1.0
Title: Saving Europe?: The Unpleasant Arithmetic of Fiscal Austerity in Integrated Economies
Classification-JEL: E6; E62; F34; F42; H6
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Linda L. Tesar
Author-Person: pte111
Author-Name: Jing Zhang
Author-Person: pzh153
Note: IFM
Number: 20200
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20200
File-URL: http://www.nber.org/papers/w20200.pdf
File-Format: application/pdf
Abstract: What are the macroeconomic effects of tax adjustments in response to large public debt shocks in highly integrated economies? The answer from standard closed-economy models is deceptive, because they underestimate the elasticity of capital tax revenues and ignore cross-country spillovers of tax changes. Instead, we examine this issue using a two-country model that matches the observed elasticity of the capital tax base by introducing endogenous capacity utilization and a partial depreciation allowance. Tax hikes have adverse effects on macro aggregates and welfare, and trigger strong cross-country externalities. Quantitative analysis calibrated to European data shows that unilateral capital tax increases cannot restore fiscal solvency, because the dynamic Laffer curve peaks below the required revenue increase. Unilateral labor tax hikes can do it, but have negative output and welfare effects at home and raise welfare and output abroad. Large spillovers also imply that unilateral capital tax hikes are much less costly under autarky than under free trade. Allowing for one-shot Nash tax competition, the model predicts a "race to the bottom" in capital taxes and higher labor taxes. The cooperative equilibrium is preferable, but capital (labor) taxes are still lower (higher) than initially. Moreover, autarky can produce higher welfare than both Nash and Cooperative equilibria.
Handle: RePEc:nbr:nberwo:20200
Template-Type: ReDIF-Paper 1.0
Title: Women's Income and Marriage Markets in the United States: Evidence from the Civil War Pension
Classification-JEL: J1; J12; J18; N31
Author-Name: Laura Salisbury
Author-Person: psa1252
Note: DAE LS
Number: 20201
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20201
File-URL: http://www.nber.org/papers/w20201.pdf
File-Format: application/pdf
Publication-Status: published as Salisbury, Laura, 2017. "Women's Income and Marriage Markets in the United States: Evidence from the Civil War Pension," The Journal of Economic History, Cambridge University Press, vol. 77(01), pages 1-38, March.
Abstract: Under the Civil War pension act of 1862, the widow of a Union Army soldier was entitled to a pension if her husband died as a direct result of his military service; however, she lost her right to the pension if she remarried. I analyze the effect this had on the rate of remarriage among these widows. This study fits into a modern literature on the behavioral effects of marriage penalties. In addition, it offers a unique perspective on 19th century marriage markets, which are little understood. Using a new database compiled from widows' pension files, I estimate the effect of the pension on the hazard rate of remarriage using variation in pension processing times. Taking steps to account for the potential endogeneity of processing times to marital outcomes, I find that receiving a pension lowered the hazard rate of remarriage by 25 percent, which implies an increase in the median time to remarriage of 3.5 years. Among older women and women with children, this effect is substantially greater. This indicates that women were willing to substitute away from marriage if the alternatives were favorable enough, suggesting that changes in the desirability of marriage to women may account for some of the aggregate patterns of first marriage documented for this period.
Handle: RePEc:nbr:nberwo:20201
Template-Type: ReDIF-Paper 1.0
Title: Access to Health Insurance and the Use of Inpatient Medical Care: Evidence from the Affordable Care Act Young Adult Mandate
Classification-JEL: I13
Author-Name: Yaa Akosa Antwi
Author-Person: pak139
Author-Name: Asako S. Moriya
Author-Name: Kosali Simon
Author-Person: psi314
Note: EH
Number: 20202
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20202
File-URL: http://www.nber.org/papers/w20202.pdf
File-Format: application/pdf
Publication-Status: published as Akosa Antwi, Yaa & Moriya, Asako S. & Simon, Kosali I., 2015. "Access to health insurance and the use of inpatient medical care: Evidence from the Affordable Care Act young adult mandate," Journal of Health Economics, Elsevier, vol. 39(C), pages 171-187.
Abstract: The Affordable Care Act of 2010 expanded coverage to young adults by allowing them to remain on their parent's private health insurance until they turn 26 years old. While there is evidence on insurance effects, we know very little about use of general or specific forms of medical care. We study the implications of the expansion for the use of inpatient hospitalizations. Given the prevalence of mental health needs for young adults, we also specifically study mental health related inpatient care. We find evidence that compared to those aged 27-29 years, treated young adults aged 19-25 years increased their inpatient visits by 3.5 percent. Visits related to mental illness increased 9.0 percent. The prevalence of uninsurance among hospitalized young adults decreased by 12.5 percent; however, it does not appear that the intensity of inpatient treatment changed despite the change in reimbursement composition of patients.
Handle: RePEc:nbr:nberwo:20202
Template-Type: ReDIF-Paper 1.0
Title: Five Steps to Planning Success. Experimental Evidence from U.S. Households
Classification-JEL: D14; D91
Author-Name: Aileen Heinberg
Author-Name: Angela A. Hung
Author-Name: Arie Kapteyn
Author-Person: pka406
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Anya Savikhin Samek
Author-Person: psa1068
Author-Name: Joanne Yoong
Note: AG
Number: 20203
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20203
File-URL: http://www.nber.org/papers/w20203.pdf
File-Format: application/pdf
Publication-Status: published as Aileen Heinberg & Angela Hung & Arie Kapteyn & Annamaria Lusardi & Anya Savikhin Samek & Joanne Yoong, 2014. "Five steps to planning success: experimental evidence from US households," Oxford Review of Economic Policy, Oxford University Press, vol. 30(4), pages 697-724.
Abstract: While financial knowledge has been linked to improved financial behavior, there is little consensus on the value of financial education, in part because rigorous evaluation of various programs has yielded mixed results. However, given the heterogeneity of financial education programs in the literature, focusing on "generic" financial education can be inappropriate and even misleading. Lusardi (2009) and others argue that pedagogy and delivery matter significantly. In this paper, we design and field a low-cost, easily-replicable financial education program called "Five Steps," covering five basic financial planning concepts that relate to retirement. We conduct a field experiment to evaluate the overall impact of "Five Steps" on a probability sample of the American population. In different treatment arms, we quantify the relative impact of delivering the program through video and narrative formats. Our results show that short videos and narratives (each takes about three minutes) have sizable short-run effects on objective measures of respondent knowledge. Moreover, keeping informational content relatively constant, format has significant effects on other psychological levers of behavioral change: effects on motivation and self-efficacy are significantly higher when videos are used, which ultimately influences knowledge acquisition. Follow-up tests of respondents' knowledge approximately eight months after the interventions suggest that between one-quarter and one-third of the knowledge gains and about one-fifth of the self-efficacy gains persist. Thus, this simple program has effects both in the short run and medium run.
Handle: RePEc:nbr:nberwo:20203
Template-Type: ReDIF-Paper 1.0
Title: International Environmental Agreements among Heterogeneous Countries with Social Preferences
Classification-JEL: H40; H41; Q5
Author-Name: Charles D. Kolstad
Author-Person: pko133
Note: EEE PE
Number: 20204
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20204
File-URL: http://www.nber.org/papers/w20204.pdf
File-Format: application/pdf
Abstract: Achieving efficiency for many global environmental problems requires voluntary cooperation among sovereign countries due to the public good nature of pollution abatement. The theory of international environmental agreements (IEAs) in economics seeks to understand how cooperation among countries on pollution abatement can be facilitated. However, why cooperation occurs when noncooperation appears to be individually rational has been an issue in economics for at least a half century. The problem is that theory suggests fairly low (even zero) levels of contribution to a public good and high levels of free riding. Experiments and empirical evidence with individuals suggests higher levels of cooperation. This is a major reason for the emergence in the 1990's and more recently of the literature on social preferences (also known as other-regarding preferences or prosociality) where participants account for their own well-being as well as that of others. This paper bridges the literature on cooperation among countries with the literature on cooperation among individuals. In particular, we introduce social preferences into a model of international environmental agreements. Focusing on Charness-Rabin social preferences, we find these preferences enlarge the set of conditions where cooperation is individually rational though such preferences also reduce the equilibrium size of a IEA for providing abatement. Although stable coalitions are smaller, more abatement may be provided by individual countries outside of a coalition structure. In contrast to much of the literature, we treat the size of agents as heterogeneous. Size of a country does not affect the incentives for forming a coalition but it does affect the aggregate level of abatement, suggesting that coalitions of large countries are more efficient than coalitions of small countries.
Handle: RePEc:nbr:nberwo:20204
Template-Type: ReDIF-Paper 1.0
Title: Informality and Development
Classification-JEL: O17
Author-Name: Rafael La Porta
Author-Person: pla273
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: DEV EFG
Number: 20205
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20205
File-URL: http://www.nber.org/papers/w20205.pdf
File-Format: application/pdf
Publication-Status: published as Rafael La Porta & Andrei Shleifer, 2014. "Informality and Development," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 109-26, Summer.
Abstract: We establish five facts about the informal economy in developing countries. First, it is huge, reaching about half of the total in the poorest countries. Second, it has extremely low productivity compared to the formal economy: informal firms are typically small, inefficient, and run by poorly educated entrepreneurs. Third, although avoidance of taxes and regulations is an important reason for informality, the productivity of informal firms is too low for them to thrive in the formal sector. Lowering registration costs neither brings many informal firms into the formal sector, nor unleashes economic growth. Fourth, the informal economy is largely disconnected from the formal economy. Informal firms rarely transition to formality, and continue their existence, often for years or even decades, without much growth or improvement. Fifth, as countries grow and develop, the informal economy eventually shrinks, and the formal economy comes to dominate economic life. These five facts are most consistent with dual models of informality and economic development.
Handle: RePEc:nbr:nberwo:20205
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneity in the Value of Life
Classification-JEL: D91; J17; Q51
Author-Name: Joseph E. Aldy
Author-Person: pal158
Author-Name: Seamus J. Smyth
Note: EEE
Number: 20206
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20206
File-URL: http://www.nber.org/papers/w20206.pdf
File-Format: application/pdf
Abstract: We develop a numerical life-cycle model with choice over consumption and leisure, stochastic mortality and labor income processes, and calibrated to U.S. data to characterize willingness to pay (WTP) for mortality risk reduction. Our theoretical framework can explain many empirical findings in this literature, including an inverted-U life-cycle WTP and an order of magnitude difference in prime-aged adults WTP. By endogenizing leisure and employing multiple income measures, we reconcile the literature's large variation in estimated income elasticities. By accounting for gender- and race-specific stochastic mortality and income processes, we explain the literature's black-white and female-male differences.
Handle: RePEc:nbr:nberwo:20206
Template-Type: ReDIF-Paper 1.0
Title: Banks Are Where The Liquidity Is
Classification-JEL: E41; E51; G21
Author-Name: Oliver Hart
Author-Person: pha222
Author-Name: Luigi Zingales
Note: CF ME
Number: 20207
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20207
File-URL: http://www.nber.org/papers/w20207.pdf
File-Format: application/pdf
Abstract: What is so special about banks that their demise often triggers government intervention? In this paper we develop a simple model where, even ignoring interconnectedness issues, the failure of a bank causes a larger welfare loss than the failure of other institutions. The reason is that agents in need of liquidity tend to concentrate their holdings in banks. Thus, a shock to banks disproportionately affects the agents who need liquidity the most, reducing aggregate demand and the level of economic activity. In the context of our model, the optimal fiscal response to such a shock is to help people, not banks, and the size of this response should be larger if a bank, rather than a similarly-sized nonfinancial firm, fails.
Handle: RePEc:nbr:nberwo:20207
Template-Type: ReDIF-Paper 1.0
Title: Premium Transparency in the Medicare Advantage Market: Implications for Premiums, Benefits, and Efficiency
Classification-JEL: I11
Author-Name: Karen Stockley
Author-Name: Thomas McGuire
Author-Name: Christopher Afendulis
Author-Name: Michael E. Chernew
Note: EH
Number: 20208
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20208
File-URL: http://www.nber.org/papers/w20208.pdf
File-Format: application/pdf
Abstract: In the Medicare Advantage (MA) market, private health insurers compete to offer plans with the most attractive premium and benefit package. Medicare provides a subsidy, based on a "benchmark payment rate", for each Medicare beneficiary a plan enrolls. We investigate how this subsidy, the primary policy lever in the market, affects the equilibrium premiums and benefits of MA plans. We exploit variation in benchmark payment rates within plans over time, coming from rebasing years where benchmark changes differed across areas in ways that were plausibly exogenous, to determine empirically how plan premiums and benefit generosity respond to changes in benchmarks. We find that premiums do not respond to changes in the benchmark payment rate on average but that insurers do pass through a portion of the benchmark increase by increasing plan benefit generosity. We argue that the way premium information is communicated to consumers influences the way in which plans pass through subsidy dollars and can account for the empirical results. More specifically, institutional features make it difficult for consumers to observe a large component of the plan premium, leading to a lack of demand response to premium reductions below the premium charged by traditional Medicare (the fee-for-service Part B premium). When demand does not respond to lower premiums, plans have an incentive to pass-through cost subsidies to consumers via more generous benefits that consumers may not value at cost, creating an inefficiently high level of benefit generosity. Our results provide evidence that a lack of premium transparency in the MA market may distort the combination of premium levels and benefit generosity offered in equilibrium, resulting in some degree of inefficiently high benefits. We conclude by discussing changes to the choice environment that would increase premium transparency and potentially soften the premium rigidities we find.
Handle: RePEc:nbr:nberwo:20208
Template-Type: ReDIF-Paper 1.0
Title: Misspecified Recovery
Classification-JEL: D84; G0; G12
Author-Name: Jaroslav Borovička
Author-Person: pbo435
Author-Name: Lars P. Hansen
Author-Person: pha303
Author-Name: José A. Scheinkman
Author-Person: psc26
Note: AP
Number: 20209
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20209
File-URL: http://www.nber.org/papers/w20209.pdf
File-Format: application/pdf
Publication-Status: published as Jaroslav Borovička & Lars Peter Hansen & José A. Scheinkman, 2016. "Misspecified Recovery," Journal of Finance, American Finance Association, vol. 71(6), pages 2493-2544, December.
Abstract: Asset prices contain information about the probability distribution of future states and the stochastic discounting of these states. Without additional assumptions, probabilities and stochastic discounting cannot be separately identified. Ross (2013) introduced a set of assumptions that restrict the dynamics of the stochastic discount factor in a way that allows for the recovery of the underlying probabilities. We use decomposition results for stochastic discount factors from Hansen and Scheinkman (2009) to explain when this procedure leads to misspecified recovery. We also argue that the empirical evidence on asset prices indicates that the recovered measure would differ substantially from the actual probability distribution and that interpreting this measure as the true probability distribution may severely bias our inference about risk premia, investors' aversion to risk, and the welfare cost of economic fluctuations.
Handle: RePEc:nbr:nberwo:20209
Template-Type: ReDIF-Paper 1.0
Title: External Equity Financing Shocks, Financial Flows, and Asset Prices
Classification-JEL: E23; E44; G12
Author-Name: Frederico Belo
Author-Name: Xiaoji Lin
Author-Person: pli453
Author-Name: Fan Yang
Note: AP
Number: 20210
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20210
File-URL: http://www.nber.org/papers/w20210.pdf
File-Format: application/pdf
Publication-Status: published as Frederico Belo & Xiaoji Lin & Fan Yang, 2019. "External Equity Financing Shocks, Financial Flows, and Asset Prices," The Review of Financial Studies, vol 32(9), pages 3500-3543.
Abstract: The ability of corporations to raise external equity finance varies with macroeconomic conditions, suggesting that the cost of equity issuance is time-varying. Using cross sectional data on U.S. publicly traded firms, we construct an empirical proxy of an aggregate shock to the cost of equity issuance, which we interpret as a financial shock. We show that this shock captures systematic risk, and that exposure to this shock helps price the cross section of stock returns including book-to-market, investment, and size portfolios. We propose a dynamic investment-based model with stochastic equity issuance costs and a collateral constraint to interpret the empirical findings. Our central finding is that time variation in external equity financing costs is important for the model to quantitatively capture the joint dynamics of firms’ asset prices, real quantities, and financing flows. In the model, growth firms, high investment firms, and large firms, can substitute more easily debt financing for equity financing when it becomes more costly to raise external equity, hence these firms are less risky in equilibrium. The model also replicates the failure of the unconditional CAPM in pricing the cross section of stock returns.
Handle: RePEc:nbr:nberwo:20210
Template-Type: ReDIF-Paper 1.0
Title: Intensive Math Instruction and Educational Attainment: Long-Run Impacts of Double-Dose Algebra
Classification-JEL: I20; I21; I24; J15; J24
Author-Name: Kalena Cortes
Author-Name: Joshua Goodman
Author-Person: pgo281
Author-Name: Takako Nomi
Note: ED LS
Number: 20211
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20211
File-URL: http://www.nber.org/papers/w20211.pdf
File-Format: application/pdf
Publication-Status: published as Kalena E. Cortes & Joshua S. Goodman & Takako Nomi, 2015. "Intensive Math Instruction and Educational Attainment: Long-Run Impacts of Double-Dose Algebra," Journal of Human Resources, University of Wisconsin Press, vol. 50(1), pages 108-158.
Abstract: We study an intensive math instruction policy that assigned low-skilled 9th graders to an algebra course that doubled instructional time, altered peer composition and emphasized problem solving skills. A regression discontinuity design shows substantial positive impacts of double-dose algebra on credits earned, test scores, high school graduation and college enrollment rates. Test score effects under-predict attainment effects, highlighting the importance of long-run evaluation of such a policy. Perhaps because the intervention focused on verbal exposition of mathematical concepts, the impact was largest for students with below average reading skills, emphasizing the need to target interventions toward appropriately skilled students.
Handle: RePEc:nbr:nberwo:20211
Template-Type: ReDIF-Paper 1.0
Title: Pharmaceutical Profits and the Social Value of Innovation
Classification-JEL: H0; I1; I18
Author-Name: David Dranove
Author-Person: pdr111
Author-Name: Craig Garthwaite
Author-Name: Manuel Hermosilla
Note: EH IO PE
Number: 20212
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20212
File-URL: http://www.nber.org/papers/w20212.pdf
File-Format: application/pdf
Abstract: Prior research has shown that exogenous shocks to the demand for medical products spur additional product development. These studies do not distinguish between breakthrough products and those that largely duplicate the performance of existing products. In this paper, we use a novel data set to explore the impact of the introduction of Medicare Part D on the development of new biotechnology products. We find that the law spurred development of products targeting illnesses that affect the elderly, but most of this effect is concentrated among products aimed at diseases that already have multiple existing treatments. Moreover, we find no increase in products targeting orphan disease or those receiving either fast track or priority review status from the FDA. This suggests that marginal changes in demand may have little effect on the development of products with large welfare benefits.
Handle: RePEc:nbr:nberwo:20212
Template-Type: ReDIF-Paper 1.0
Title: Bases, Bullets and Ballots: the Effect of U.S. Military Aid on Political Conflict in Colombia
Classification-JEL: H56; O54
Author-Name: Oeindrila Dube
Author-Person: pdu179
Author-Name: Suresh Naidu
Note: DEV POL
Number: 20213
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20213
File-URL: http://www.nber.org/papers/w20213.pdf
File-Format: application/pdf
Publication-Status: published as Dube, Oeindrila and Suresh Naidu, 2015: "Bases, Bullets, and Ballots: The Effect of US Military Aid on Political Conflict in Colombia," The Journal of Politics, 77(1): 249-267.
Abstract: Does foreign military assistance strengthen or further weaken fragile states facing internal conflict? Aid may strengthen the state by bolstering its repressive capacity vis-à-vis armed non-state actors, or weaken it if resources are diverted to these very groups. We examine how U.S. military aid affects political violence in Colombia. We exploit the allocation of U.S. military aid to Colombian military bases, and compare how aid affects municipalities with and without bases. We use an instrument based on worldwide increases in U.S. military aid (excluding Latin America). We find that U.S. military assistance leads to differential increases in attacks by paramilitaries, but has no effect on guerrilla attacks. Aid also results in more paramilitary (but not guerrilla) homicides during election years, particularly in politically competitive municipalities. The findings suggest that foreign military assistance may strengthen armed non-state actors, undermining domestic political institutions.
Handle: RePEc:nbr:nberwo:20213
Template-Type: ReDIF-Paper 1.0
Title: Parenting with Style: Altruism and Paternalism in Intergenerational Preference Transmission
Classification-JEL: D10; J10; O10; O40
Author-Name: Matthias Doepke
Author-Person: pdo8
Author-Name: Fabrizio Zilibotti
Author-Person: pzi3
Note: CH DEV EFG
Number: 20214
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20214
File-URL: http://www.nber.org/papers/w20214.pdf
File-Format: application/pdf
Publication-Status: published as Matthias Doepke & Fabrizio Zilibotti, 2017. "Parenting With Style: Altruism and Paternalism in Intergenerational Preference Transmission," Econometrica, Econometric Society, vol. 85, pages 1331-1371, September.
Abstract: We develop a theory of parent-child relations that rationalizes the choice between alternative parenting styles (as set out in Baumrind 1967). Parents maximize an objective function that combines Beckerian altruism and paternalism towards children. They can affect their children’s choices via two channels: either by influencing children’s preferences or by imposing direct restrictions on their choice sets. Different parenting styles (authoritarian, authoritative, and permissive) emerge as equilibrium outcomes and are affected both by parental preferences and by the socioeconomic environment. Parenting style, in turn, feeds back into the children’s welfare and economic success. The theory is consistent with the decline of authoritarian parenting observed in industrialized countries and with the greater prevalence of more permissive parenting in countries characterized by low inequality.
Handle: RePEc:nbr:nberwo:20214
Template-Type: ReDIF-Paper 1.0
Title: Averting Catastrophes: The Strange Economics of Scylla and Charybdis
Classification-JEL: D81; H56; Q54
Author-Name: Ian W.R. Martin
Author-Person: pma1585
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Note: EEE EFG IO PE PR
Number: 20215
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20215
File-URL: http://www.nber.org/papers/w20215.pdf
File-Format: application/pdf
Publication-Status: published as Ian W. R. Martin & Robert S. Pindyck, 2015. "Averting Catastrophes: The Strange Economics of Scylla and Charybdis," American Economic Review, American Economic Association, vol. 105(10), pages 2947-85, October.
Abstract: How should we evaluate public policies or projects to avert, or reduce the likelihood of, a catastrophic event? Examples might include inspection and surveillance programs to avert nuclear terrorism, investments in vaccine technologies to help respond to a "mega-virus," or the construction of levees to avert major flooding. A policy to avert a particular catastrophe considered in isolation might be evaluated in a cost-benefit framework. But because society faces multiple potential catastrophes, simple cost-benefit analysis breaks down: Even if the benefit of averting each one exceeds the cost, we should not necessarily avert all of them. We explore the policy interdependence of catastrophic events, and show that considering these events in isolation can lead to policies that are far from optimal. We develop a rule for determining which events should be averted and which should not.
Handle: RePEc:nbr:nberwo:20215
Template-Type: ReDIF-Paper 1.0
Title: The Dictator's Inner Circle
Classification-JEL: H11; P16; P48
Author-Name: Patrick Francois
Author-Person: pfr24
Author-Name: Ilia Rainer
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: DEV POL
Number: 20216
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20216
File-URL: http://www.nber.org/papers/w20216.pdf
File-Format: application/pdf
Abstract: We posit the problem of an autocrat who has to allocate access to the executive positions in his inner circle and define the career profile of his own insiders. Statically, granting access to an executive post to a more experienced subordinate increases political returns to the post, but is more threatening to the leader in case of a coup. Dynamically, the leader monitors the capacity of staging a coup by his subordinates, which grows over time, and the incentives of trading a subordinate's own position for a potential shot at the leadership, which defines the incentives of staging a palace coup for each member of the inner circle. We map these theoretical elements into structurally estimable hazard functions of terminations of cabinet ministers for a panel of postcolonial Sub-Saharan African countries. The hazard functions initially increase over time, indicating that most government insiders quickly wear out their welcome, and then drop once the minister is fully entrenched in the current regime. We argue that the survival concerns of the leader in granting access to his inner circle can cover much ground in explaining the widespread lack of competence of African governments and the vast heterogeneity of political performance between and within these regimes.
Handle: RePEc:nbr:nberwo:20216
Template-Type: ReDIF-Paper 1.0
Title: Trade, Structural Transformation and Development: Evidence from Argentina 1869-1914
Classification-JEL: F11; F14; O13; O14
Author-Name: Pablo Fajgelbaum
Author-Name: Stephen J. Redding
Author-Person: pre64
Note: ITI
Number: 20217
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20217
File-URL: http://www.nber.org/papers/w20217.pdf
File-Format: application/pdf
Publication-Status: published as Pablo Fajgelbaum & Stephen J. Redding, 2022. "Trade, Structural Transformation, and Development: Evidence from Argentina 1869–1914," Journal of Political Economy, vol 130(5), pages 1249-1318.
Abstract: We provide new theory and evidence on the role of external and internal integration in structural transformation and economic development using Argentina’s integration into the world economy in the late-19th century. Our theoretical model provides microfoundations for a spatial Balassa-Samuelson effect, in which locations closer to world markets have higher population densities, urban population shares, relative prices of non-traded goods, and land prices relative to wages, and specialize in transport-cost-sensitive traded goods. We estimate the model’s parameters, provide evidence in support of this spatial Balassa-Samuelson mechanism, and find substantial effects of both external and internal integration on economic development.
Handle: RePEc:nbr:nberwo:20217
Template-Type: ReDIF-Paper 1.0
Title: Seasonal Credit Constraints and Agricultural Labor Supply: Evidence from Zambia
Classification-JEL: J22; O16; Q12
Author-Name: Günther Fink
Author-Person: pfi86
Author-Name: B. Kelsey Jack
Author-Person: pja401
Author-Name: Felix Masiye
Note: DEV LS
Number: 20218
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20218
File-URL: http://www.nber.org/papers/w20218.pdf
File-Format: application/pdf
Abstract: Small-scale farming remains the primary source of income for a majority of the population in developing countries. While most farmers primarily work on their own fields, off-farm labor is common among small-scale farmers. A growing literature suggests that off-farm labor is not the result of optimal labor allocation, but is instead driven by households' inability to cover short-term consumption needs with savings or credit. We conduct a field experiment in rural Zambia to investigate the relationship between credit availability and rural labor supply. We find that providing households with access to credit during the growing season substantially alters the allocation of household labor, with households in villages randomly selected for a loan program selling on average 25 percent less off-farm labor. We also find that increased credit availability is associated with higher consumption and increases in local farming wages. Our results suggest that a substantial fraction of rural labor supply is driven by short-term constraints, and that access to credit markets may improve the efficiency of labor allocation overall.
Handle: RePEc:nbr:nberwo:20218
Template-Type: ReDIF-Paper 1.0
Title: Human Capital and Industrialization: Evidence from the Age of Enlightenment
Classification-JEL: J24; N13; O14; O41
Author-Name: Mara P. Squicciarini
Author-Person: psq7
Author-Name: Nico Voigtländer
Note: DAE EFG
Number: 20219
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20219
File-URL: http://www.nber.org/papers/w20219.pdf
File-Format: application/pdf
Publication-Status: published as Mara P. Squicciarini & Nico Voigtländer, 2015. "Human Capital and Industrialization: Evidence from the Age of Enlightenment," The Quarterly Journal of Economics, vol 130(4), pages 1825-1883.
Abstract: While human capital is a strong predictor of economic development today, its importance for the Industrial Revolution has typically been assessed as minor. To resolve this puzzling contrast, we differentiate average human capital (literacy) from upper-tail knowledge. As a proxy for the historical presence of knowledge elites, we use city-level subscriptions to the famous Encyclopédie in mid-18th century France. We show that subscriber density is a strong predictor of city growth after the onset of French industrialization. Alternative measures of development such as soldier height, disposable income, and industrial activity confirm this pattern. Initial literacy levels, on the other hand, are associated with development in the cross-section, but they do not predict growth. Finally, by joining data on British patents with a large French firm survey from the 1840s, we shed light on the mechanism: upper-tail knowledge raised productivity in innovative industrial technology.
Handle: RePEc:nbr:nberwo:20219
Template-Type: ReDIF-Paper 1.0
Title: Capital Controls and Recovery from the Financial Crisis of the 1930s
Classification-JEL: E61; F32; F33; F41; G15; N1; N2
Author-Name: Kris James Mitchener
Author-Name: Kirsten Wandschneider
Author-Person: pwa288
Note: DAE IFM
Number: 20220
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20220
File-URL: http://www.nber.org/papers/w20220.pdf
File-Format: application/pdf
Publication-Status: published as Kris James Mitchener & Kirsten Wandschneider, 2015. "Capital controls and recovery from the financial crisis of the 1930s," Journal of International Economics, vol 95(2), pages 188-201.
Abstract: We examine the first widespread use of capital controls in response to a global or regional financial crisis. In particular, we analyze whether capital controls mitigated capital flight in the 1930s and assess their causal effects on macroeconomic recovery from the Great Depression. We find evidence that they stemmed gold outflows in the year following their imposition; however, time-shifted, difference-in- differences (DD) estimates of industrial production, prices, and exports suggest that exchange controls did not accelerate macroeconomic recovery relative to countries that went off gold and floated. Countries imposing capital controls also appear to perform similar to the gold bloc countries once the latter group of countries finally abandoned gold. Time series analysis suggests that countries imposing capital controls refrained from fully utilizing their newly acquired monetary policy autonomy.
Handle: RePEc:nbr:nberwo:20220
Template-Type: ReDIF-Paper 1.0
Title: Flaking Out: Student Absences and Snow Days as Disruptions of Instructional Time
Classification-JEL: I20; I21; I24
Author-Name: Joshua Goodman
Author-Person: pgo281
Note: ED
Number: 20221
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20221
File-URL: http://www.nber.org/papers/w20221.pdf
File-Format: application/pdf
Abstract: Despite the fact that the average American student is absent more than two weeks out of every school year, most research on the effect of instructional time has focused not on attendance but on the length of the school day or year. Student and school fixed effects models using Massachusetts data show a strong relationship between student absences and achievement but no impact of lost instructional time due to school closures. I confirm those findings in instrumental variables models exploiting the fact that moderate snowfall induces student absences while extreme snowfall induces school closures. Prior work ignoring this non-linearity may have mis-attributed the effect of absences to such snow days. Each absence induced by bad weather reduces math achievement by 0.05 standard deviations, suggesting that attendance can account for up to one-fourth of the achievement gap by income. That absences matter but closures do not is consistent with a model of instruction in which coordination of students is the central challenge, as in Lazear (2001). Teachers appear to deal well with coordinated disruptions of instructional time like snow days but deal poorly with disruptions like absences that affect different students at different times.
Handle: RePEc:nbr:nberwo:20221
Template-Type: ReDIF-Paper 1.0
Title: Will Divestment from Employment-Based Health Insurance Save Employers Money? The Case of State and Local Governments
Classification-JEL: H51; H7; I1; J45
Author-Name: Jeremy D. Goldhaber-Fiebert
Author-Name: David M. Studdert
Author-Name: Monica S. Farid
Author-Name: Jay Bhattacharya
Note: AG EH PE
Number: 20222
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20222
File-URL: http://www.nber.org/papers/w20222.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy D. Goldhaber-Fiebert & David M. Studdert & Monica S. Farid & Jay Bhattacharya, 2015. "Will Divestment from Employment-Based Health Insurance Save Employers Money? The Case of State and Local Governments," Journal of Empirical Legal Studies, vol 12(3), pages 343-394.
Abstract: Reforms introduced by the Affordable Care and Patient Protection Act (ACA) build new sources of coverage around employment-based health insurance. But what if firms find it cheaper to have their employees obtain insurance from these sources, even after accounting for penalties (for non-provision of insurance) and employee bonuses (to ensure the shift is cost neutral for them)? State and local governments (SLGs) have strong incentives to consider the economics of such “divestment”; many have large unfunded benefits liabilities. We investigated whether SLGs would save under two scenarios: (1) shifting all employees and under-65-retirees to alternative sources of coverage; (2) shifting only employees whose household incomes indicate they would be eligible for federally subsidized coverage and all under-65-retirees. Full divestment would cost SLGs more than they currently pay, due primarily to penalty costs. Selective divestment could save SLGs nearly $129 billion over 10 years at the expense of the federal government.
Handle: RePEc:nbr:nberwo:20222
Template-Type: ReDIF-Paper 1.0
Title: "Sticker Shock" in Individual Insurance under Health Reform
Classification-JEL: I11; I13
Author-Name: Mark Pauly
Author-Name: Scott Harrington
Author-Name: Adam Leive
Author-Person: ple1011
Note: EH
Number: 20223
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20223
File-URL: http://www.nber.org/papers/w20223.pdf
File-Format: application/pdf
Publication-Status: published as Mark Pauly & Scott Harrington & Adam Leive, 2015. "“Sticker Shock” in Individual Insurance under Health Reform?," American Journal of Health Economics, vol 1(4), pages 494-514.
Abstract: This paper provides estimates of the changes in premiums, average or expected out of pocket payments, and the sum of premiums and out of pocket payments (total expected price) for a sample of consumers who bought individual insurance in 2010 to 2012, comparing total expected prices before the Affordable Care Act with estimates of total expected prices if they were to purchase silver or bronze coverage after reform, before the effects of any premium subsidies. We provide comparisons for purchasers of self only coverage in California and in 23 states with minimal prior state premium regulation before the ACA now using federally managed exchanges. Using data from the Current Population Survey, we find that the average prices increased by 14 to 28 percent, with similar changes in California and the federal exchange states; we attribute the increase primarily to higher premiums in exchanges associated with insurer expectations of a higher risk population being enrolled. The increase in total expected price is similar for age-gender population subgroups except for a larger than average increases for older women. A welfare calculation of the change in risk premium associated with moving from coverage that prevailed before reform to bronze or silver coverage finds small changes.
Handle: RePEc:nbr:nberwo:20223
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy Surprises, Credit Costs and Economic Activity
Classification-JEL: E3; E4; E5
Author-Name: Mark Gertler
Author-Person: pge11
Author-Name: Peter Karadi
Author-Person: pka365
Note: AP EFG ME
Number: 20224
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20224
File-URL: http://www.nber.org/papers/w20224.pdf
File-Format: application/pdf
Publication-Status: published as Monetary Policy Surprises, Credit Costs and Economic Activity, Mark Gertler, Peter Karadi. in Lessons from the Financial Crisis for Monetary Policy, Gertler. 2015
Publication-Status: published as Mark Gertler & Peter Karadi, 2015. "Monetary Policy Surprises, Credit Costs, and Economic Activity," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 44-76, January.
Abstract: We provide evidence on the nature of the monetary transmission mechanism. To identify policy shocks in a setting with both economic and financial variables, we combine traditional monetary vector autoregression (VAR) analysis with high frequency identification (HFI) of monetary policy shocks. We first show that the shocks identified using HFI surprises as external instruments produce responses in output and inflation consistent with both textbook theory and conventional monetary VAR analysis. We also find, however, that monetary policy surprises typically produce "modest movements" in short rates that lead to "large" movements in credit costs and economic activity. The large movements in credit costs are mainly due to the reaction of both term premia and credit spreads that are typically absent from the standard model of monetary policy transmission. Finally, we show that forward guidance is important to the overall strength of the transmission mechanism.
Handle: RePEc:nbr:nberwo:20224
Template-Type: ReDIF-Paper 1.0
Title: The Price Impact of Joining a Currency Union: Evidence from Latvia
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: IFM ITI ME
Number: 20225
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20225
File-URL: http://www.nber.org/papers/w20225.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Cavallo & Brent Neiman & Roberto Rigobon, 2015. "The Price Impact of Joining a Currency Union: Evidence from Latvia," IMF Economic Review, Palgrave Macmillan, vol. 63(2), pages 281-297, September.
Abstract: Does membership in a currency union matter for a country's international relative prices? The answer to this question is critical for thinking about the implications of joining (or exiting) a common currency area. This paper is the first to use high-frequency good-level data to provide evidence that the answer is yes, at least for an important subset of consumption goods. We consider the case of Latvia, which recently dropped its pegged exchange rate and joined the euro zone. We analyze the prices of thousands of differentiated goods sold by Zara, the world's largest clothing retailer. Price dispersion between Latvia and euro zone countries collapsed swiftly following entry to the euro. The percentage of goods with nearly identical prices in Latvia and Germany increased from 6 percent to 89 percent. The median size of price differentials declined from 7 percent to zero. If a large number of firms also behave this way, these results suggest that membership in a currency union has significant implications for a country's real exchange rate.
Handle: RePEc:nbr:nberwo:20225
Template-Type: ReDIF-Paper 1.0
Title: Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments
Classification-JEL: H44; I13; I18
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Heidi Williams
Author-Person: pwi239
Note: AG EH IO LE PE PR
Number: 20226
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20226
File-URL: http://www.nber.org/papers/w20226.pdf
File-Format: application/pdf
Publication-Status: published as Liran Einav & Amy Finkelstein & Heidi Williams, 2016. "Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 52-79, February.
Abstract: We present a simple graphical framework to illustrate the potential welfare gains from a “top-up” health insurance policy requiring patients to pay the incremental price for more expensive treatment options. We apply this framework to breast cancer treatments, where lumpectomy with radiation therapy is more expensive than mastectomy but generates similar average health benefits. We estimate the relative demand for lumpectomy using variation in distance to the nearest radiation facility, and estimate that the “top-up” policy increases social welfare by $700-2,500 per patient relative to two common alternatives. We briefly discuss additional tradeoffs that arise from an ex-ante perspective.
Handle: RePEc:nbr:nberwo:20226
Template-Type: ReDIF-Paper 1.0
Title: The Choice of the Personal Income Tax Base
Classification-JEL: H21; H23
Author-Name: Roger H. Gordon
Author-Person: pgo95
Author-Name: Wojciech Kopczuk
Author-Person: pko20
Note: PE
Number: 20227
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20227
File-URL: http://www.nber.org/papers/w20227.pdf
File-Format: application/pdf
Publication-Status: published as Gordon, Roger H. & Kopczuk, Wojciech, 2014. "The choice of the personal income tax base," Journal of Public Economics, Elsevier, vol. 118(C), pages 97-110.
Abstract: Starting with Vickrey (1945) and Mirrlees (1971), the optimal tax literature has studied the design of a personal income tax. The assumed ideal would be to tax earnings ability. Earnings ability is unobservable for tax purposes, however. Past papers have focused instead on designing a tax on labor income. Existing tax bases, though, depend on a broader range of information about each individual than just labor income. In principle, this supplementary information can help in designing a tax that has more attractive distributional properties, by more closely approximating an ability tax. The objective of this paper is to lay out theoretically and estimate empirically how to make best use of available information about each individual in addition to earnings, in a setting where the first-best tax would be an ability tax. The theory lays out an equity/efficiency trade off when choosing the tax base. In the empirical work, we find the tax base that is best on equity grounds alone. We find that the choice to tax couples based on their joint income, and the inclusion of dividends, interest income, and a dependents' deduction in the tax base in roughly their current form can be rationalized simply based on their value in better approximating an ability tax, without any need for supplementary motivations for these provisions. However, the inclusion of mortgage and property tax payments in the list of itemized deductions cannot be defended on these grounds.
Handle: RePEc:nbr:nberwo:20227
Template-Type: ReDIF-Paper 1.0
Title: The Real Exchange Rate in the Long Run: Balassa-Samuelson Effects Reconsidered
Classification-JEL: F31; F41
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Ehsan U. Choudhri
Author-Person: pch482
Author-Name: Giorgio Fazio
Author-Name: Ronald MacDonald
Note: DAE IFM
Number: 20228
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20228
File-URL: http://www.nber.org/papers/w20228.pdf
File-Format: application/pdf
Publication-Status: published as Bordo, Michael D. & Choudhri, Ehsan U. & Fazio, Giorgio & MacDonald, Ronald, 2017. "The real exchange rate in the long run: Balassa-Samuelson effects reconsidered," Journal of International Money and Finance, Elsevier, vol. 75(C), pages 69-92.
Abstract: Historical data for over hundred years and 14 countries is used to estimate the long-run effect of productivity on the real exchange rate. We find large variations in the productivity effect across four distinct monetary regimes in the sample period. Although the traditional Balassa-Samuelson model is not consistent with these results, we suggest an explanation of the results in terms of contemporary variants of the model that incorporate the terms of trade mechanism. Specifically we argue that changes in trade costs over time may affect the impact of productivity on the real exchange rate over time. We undertake simulations of the modern versions of the Balassa-Samuelson model to show that plausible parameter shifts consistent with the behavior of trade costs can explain the cross-regime variation of the productivity effect.
Handle: RePEc:nbr:nberwo:20228
Template-Type: ReDIF-Paper 1.0
Title: Visual Tools and Narratives: New Ways to Improve Financial Literacy
Classification-JEL: D14; D91
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Anya Savikhin Samek
Author-Person: psa1068
Author-Name: Arie Kapteyn
Author-Person: pka406
Author-Name: Lewis Glinert
Author-Name: Angela Hung
Author-Name: Aileen Heinberg
Note: AG
Number: 20229
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20229
File-URL: http://www.nber.org/papers/w20229.pdf
File-Format: application/pdf
Publication-Status: published as Lusardi, Annamaria & Samek, Anya & Kapteyn, Arie & Glinert, Lewis & Hung, Angela & Heinberg, Aileen, 2017. "Visual tools and narratives: new ways to improve financial literacy," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(03), pages 297-323, July.
Abstract: We developed and experimentally evaluated four novel educational programs delivered online: an informational brochure, a visual interactive tool, a written narrative, and a video narrative. The programs were designed to inform people about risk diversification, an essential concept for financial decision- making. The effectiveness of these programs was evaluated using the RAND American Life Panel. Participants were exposed to one of the programs, and then asked to answer questions measuring financial literacy and self-efficacy. All of the programs were found to be effective at increasing self-efficacy, and several improved financial literacy, providing new evidence for the value of programs designed to help individuals make financial decisions. The video was more effective at improving financial literacy scores than the written narrative, highlighting the power of online media in financial education.
Handle: RePEc:nbr:nberwo:20229
Template-Type: ReDIF-Paper 1.0
Title: Effects of Unconventional Monetary Policy on Financial Institutions
Classification-JEL: E44; E52; G20
Author-Name: Gabriel Chodorow-Reich
Author-Person: pch1494
Note: ME
Number: 20230
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20230
File-URL: http://www.nber.org/papers/w20230.pdf
File-Format: application/pdf
Publication-Status: published as Gabriel Chodorow-Reich, 2014. "Effects of Unconventional Monetary Policy on Financial Institutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 155-227.
Abstract: Monetary policy affects the real economy in part through its effects on financial institutions. High frequency event studies show the introduction of unconventional monetary policy in the winter of 2008-09 had a strong, beneficial impact on banks and especially on life insurance companies. I interpret the positive effects on life insurers as expansionary policy recapitalizing the sector by raising the value of legacy assets. Expansionary policy had small positive or neutral effects on banks and life insurers through 2013. The interaction of low nominal interest rates and administrative costs forced money market funds to waive fees, producing a possible incentive to reach for yield to reduce waivers. I show money market funds with higher costs reached for higher returns in 2009-11, but not thereafter. Some private defined benefit pension funds increased their risk taking beginning in 2009, but again such behavior largely dissipated by 2012. In sum, unconventional monetary policy helped to stabilize some sectors and provoked modest additional risk taking in others. I do not find evidence that the financial institutions studied formented a tradeoff between expansionary policy and financial stability at the end of 2013.
Handle: RePEc:nbr:nberwo:20230
Template-Type: ReDIF-Paper 1.0
Title: Revisiting American Exceptionalism: Democracy and the Regulation of Corporate Governance in Nineteenth-Century Pennsylvania
Classification-JEL: K2; N41
Author-Name: Naomi R. Lamoreaux
Note: DAE
Number: 20231
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20231
File-URL: http://www.nber.org/papers/w20231.pdf
File-Format: application/pdf
Abstract: The legal rules governing businesses' organizational choices have varied across nations along two main dimensions: the number of different forms that businesses can adopt; and the extent to which businesses have the contractual freedom to modify the available forms to suit their needs. Until the late twentieth century, businesses in the U.S. had a narrower range of forms from which to choose than their counterparts in these other countries and also much less ability to modify the basic forms contractually. This article uses the case of Pennsylvania to argue that the sources of this "American exceptionalism" reside in the interplay between the early achievement of universal (white) manhood suffrage and elite efforts to safeguard property rights.
Handle: RePEc:nbr:nberwo:20231
Template-Type: ReDIF-Paper 1.0
Title: Making the Most of Capital in the 21st Century
Classification-JEL: D31; D63; E01; H20; N10; N30
Author-Name: Peter H. Lindert
Author-Person: pli466
Note: DAE
Number: 20232
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20232
File-URL: http://www.nber.org/papers/w20232.pdf
File-Format: application/pdf
Abstract: Thomas Piketty's monumental Capital in the Twenty-First Century has transported us to a higher understanding of historical movements in inequality. This essay ranks the promise of different paths that scholars can usefully follow from the point to which his book has guided us. The main path to follow is the income inequality history so well paved by Piketty and his team, supported by the book's history of twentieth-century shocks and political responses. Less promising is the book's emphasis on wealth, capital, and the rate of return. Following the income route to better inequality predictions requires merging his team's history of top income shares with the history of inequality movements within the lower 90 percent. It also invites a merger with other scholarship that has shown positive growth effects of the kind of democracy Piketty calls for.
Handle: RePEc:nbr:nberwo:20232
Template-Type: ReDIF-Paper 1.0
Title: Marital Disruption and Health Insurance
Classification-JEL: I13; J12
Author-Name: H. Elizabeth Peters
Author-Name: Kosali Simon
Author-Person: psi314
Author-Name: Jamie Rubenstein Taber
Note: EH
Number: 20233
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20233
File-URL: http://www.nber.org/papers/w20233.pdf
File-Format: application/pdf
Publication-Status: published as H. Elizabeth Peters & Kosali Simon & Jamie Rubenstein Taber, 2014. "Marital Disruption and Health Insurance," Demography, vol 51(4), pages 1397-1421.
Abstract: Despite the high levels of marital disruption in the United States, and substantial reliance on family-based health insurance, little research is available on the consequences of marital disruption for insurance coverage among men, women, and children. We address this shortfall by examining patterns of coverage surrounding marital disruption. We find large differences in coverage across marital status groups in the cross-section. In longitudinal analyses that focus on within-person change, we find small overall coverage changes but large changes in type of coverage following marital disruption. Both men and women show increases in private coverage in their own names, but offsetting decreases in dependent coverage tend to be larger. Dependent coverage for children also declines after marital dissolution, even though children are still likely to be eligible for that coverage. Children and, to a lesser extent, women show increases in public coverage around the time of divorce or separation. The most vulnerable group appears to be lower-educated women with children because the increases in private, own-name, and public insurance are not large enough to offset the large decrease in dependent coverage. As the United States implements federal health reform, it is critical that we understand the ways in which life course events--specifically, marital disruption--shape the dynamic patterns of coverage.
Handle: RePEc:nbr:nberwo:20233
Template-Type: ReDIF-Paper 1.0
Title: Ode to the sea: Workplace Organizations and Norms of Cooperation
Classification-JEL: C93; J0
Author-Name: Uri Gneezy
Author-Person: pgn18
Author-Name: Andreas Leibbrandt
Author-Name: John A. List
Author-Person: pli176
Note: EEE LS
Number: 20234
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20234
File-URL: http://www.nber.org/papers/w20234.pdf
File-Format: application/pdf
Publication-Status: published as Uri Gneezy & Andreas Leibbrandt & John A. List, 2015. "Ode to the Sea: Workplace Organizations and Norms of Cooperation," The Economic Journal, , pages n/a-n/a.
Abstract: The functioning and well-being of any society and organization critically hinges on norms of cooperation that regulate social activities. Empirical evidence on how such norms emerge and in which environments they thrive remains a clear void in the literature. To provide an initial set of insights, we overlay a set of field experiments in a natural setting. Our approach is to compare behavior in Brazilian fishermen societies that differ along one major dimension: the workplace organization. In one society (located by the sea) fishermen are forced to work in groups whereas in the adjacent society (located on a lake) fishing is inherently an individual activity. We report sharp evidence that the sea fishermen trust and cooperate more and have greater ability to coordinate group actions than their lake fishermen counterparts. These findings are consistent with the argument that people internalize social norms that emerge from specific needs and support the idea that socio-ecological factors play a decisive role in the proliferation of pro-social behaviors.
Handle: RePEc:nbr:nberwo:20234
Template-Type: ReDIF-Paper 1.0
Title: Transportation Costs and the Spatial Organization of Economic Activity
Classification-JEL: F15; R12; R40
Author-Name: Stephen J. Redding
Author-Person: pre64
Author-Name: Matthew A. Turner
Author-Person: ptu3
Note: ITI
Number: 20235
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20235
File-URL: http://www.nber.org/papers/w20235.pdf
File-Format: application/pdf
Abstract: This paper surveys the theoretical and empirical literature on the relationship between the spatial distribution of economic activity and transportation costs. We develop a multi-region model of economic geography that we use to understand the general equilibrium implications of transportation infrastructure improvements within and between locations for wages, population, trade and industry composition. Guided by the predictions of this model, we review the empirical literature on the effects of transportation infrastructure improvements on economic development, paying particular attention to the use of exogenous sources of variation in the construction of transportation infrastructure. We examine evidence from different spatial scales, between and within cities. We outline a variety of areas for further research, including distinguishing reallocation from growth and dynamics.
Handle: RePEc:nbr:nberwo:20235
Template-Type: ReDIF-Paper 1.0
Title: Global Value Chains and Effective Exchange Rates at the Country-Sector Level
Classification-JEL: F1; F3
Author-Name: Nikhil Patel
Author-Name: Zhi Wang
Author-Person: pwa898
Author-Name: Shang-Jin Wei
Author-Person: pwe20
Note: IFM ITI
Number: 20236
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20236
File-URL: http://www.nber.org/papers/w20236.pdf
File-Format: application/pdf
Publication-Status: published as NIKHIL PATEL & ZHI WANG & SHANG‐JIN WEI, 2019. "Global Value Chains and Effective Exchange Rates at the Country‐Sector Level," Journal of Money, Credit and Banking, vol 51(S1), pages 7-42.
Abstract: The real effective exchange rate (REER) is one of the most cited statistical constructs in open-economy macroeconomics. We show that the models used to compute these numbers are not rich enough to allow for the rising importance of global value chains. Moreover, because different sectors within a country participate in international production sharing at different stages, sector level variations are also important for determining competitiveness. Incorporating these features, we develop a framework to compute REER at both the sector and country level and apply it on inter-country input-output tables to study the properties of the new measures of REER for 35 sectors in 40 countries.
Handle: RePEc:nbr:nberwo:20236
Template-Type: ReDIF-Paper 1.0
Title: Optimal Taylor Rules in New Keynesian Models
Classification-JEL: E3; E31; E4; E43; E5; E52; E58
Author-Name: Christoph E. Boehm
Author-Person: pbo938
Author-Name: Christopher L. House
Author-Person: pho56
Note: EFG ME
Number: 20237
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20237
File-URL: http://www.nber.org/papers/w20237.pdf
File-Format: application/pdf
Abstract: We analyze the optimal Taylor rule in a standard New Keynesian model. If the central bank can observe the output gap and the inflation rate without error, then it is typically optimal to respond infinitely strongly to observed deviations from the central bank's targets. If it observes inflation and the output gap with error, the central bank will temper its responses to observed deviations so as not to impart unnecessary volatility to the economy. If the Taylor rule is expressed in terms of estimated output and inflation then it is optimal to respond infinitely strongly to estimated deviations from the targets. Because filtered estimates are based on current and past observations, such Taylor rules appear to have an interest smoothing component. Under such a Taylor rule, if the central bank is behaving optimally, the estimates of inflation and the output gap should be perfectly negatively correlated. In the data, inflation and the output gap are weakly correlated, suggesting that the central bank is systematically underreacting to its estimates of inflation and the output gap.
Handle: RePEc:nbr:nberwo:20237
Template-Type: ReDIF-Paper 1.0
Title: Escaping the Great Recession
Classification-JEL: D83; E31; E52; E62; E63
Author-Name: Francesco Bianchi
Author-Person: pbi171
Author-Name: Leonardo Melosi
Author-Person: pme283
Note: ME EFG
Number: 20238
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20238
File-URL: http://www.nber.org/papers/w20238.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Bianchi & Leonardo Melosi, 2017. "Escaping the Great Recession," American Economic Review, American Economic Association, vol. 107(4), pages 1030-1058, April.
Abstract: We show that policy uncertainty about how the rising public debt will be stabilized accounts for the lack of deflation in the US economy at the zero lower bound. We first estimate a Markov-switching VAR to highlight that a zero-lower-bound regime captures most of the comovements during the Great Recession: a deep recession, no deflation, and large fiscal imbalances. We then show that a micro-founded model that features policy uncertainty accounts for these stylized facts. Finally, we highlight that policy uncertainty arises at the zero lower bound because of a trade-off between mitigating the recession and preserving long-run macroeconomic stability.
Handle: RePEc:nbr:nberwo:20238
Template-Type: ReDIF-Paper 1.0
Title: Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile
Classification-JEL: D14; D91; G22; O16
Author-Name: Felipe Kast
Author-Name: Dina Pomeranz
Author-Person: ppo414
Note: DEV PE
Number: 20239
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20239
File-URL: http://www.nber.org/papers/w20239.pdf
File-Format: application/pdf
Abstract: Poverty is often characterized not only by low and unstable income, but also by heavy debt burdens. We find that reducing barriers to saving through access to free savings accounts decreases participants' short-term debt by about 20%. In addition, participants who experience an economic shock have less need to reduce consumption, and subjective well-being improves significantly. Precautionary savings and credit therefore act as substitutes in providing self-insurance, and participants prefer borrowing less when a free formal savings account is available. Take-up patterns suggest that requests by others for participants to share their resources may be a key obstacle to saving.
Handle: RePEc:nbr:nberwo:20239
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Indifference Curves
Classification-JEL: A2; D03; D11
Author-Name: John Komlos
Author-Person: pko37
Note: TWP
Number: 20240
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20240
File-URL: http://www.nber.org/papers/w20240.pdf
File-Format: application/pdf
Abstract: According to the endowment effect there is some discomfort associated with giving up a good, that is to say, we are willing to give up something only if the price is greater than the price we are willing to pay for it. This implies that the indifference curves should designate a reference point at the current level of consumption. Such indifference maps are kinked at the current level of consumption. The kinks in the curves imply that the utility function is not differentiable everywhere and the budget constraint does not always have a unique tangent with an indifference curve. Thus, price changes may not bring about changes in consumption which may be the reason for the frequent stickiness of prices, wages and interest rates. We also discuss a multiple period example in which the indifference map shifts as the reference point shifts implying that the curves cross over time even though tastes do not change.
Handle: RePEc:nbr:nberwo:20240
Template-Type: ReDIF-Paper 1.0
Title: The Revolving Door and Worker Flows in Banking Regulation
Classification-JEL: G21; G28
Author-Name: David Lucca
Author-Person: plu378
Author-Name: Amit Seru
Author-Person: pse308
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: CF POL
Number: 20241
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20241
File-URL: http://www.nber.org/papers/w20241.pdf
File-Format: application/pdf
Publication-Status: published as Lucca, David & Seru, Amit & Trebbi, Francesco, 2014. "The revolving door and worker flows in banking regulation," Journal of Monetary Economics, Elsevier, vol. 65(C), pages 17-32.
Abstract: This paper traces career transitions of federal and state U.S. banking regulators from a large sample of publicly available curricula vitae, and provides basic facts on worker flows between the regulatory and private sector resulting from the revolving door. We find strong countercyclical net worker flows into regulatory jobs, driven largely by higher gross outflows into the private sector during booms. These worker flows are also driven by state-specific banking conditions as measured by local banks' profitability, asset quality and failure rates. The regulatory sector seems to experience a retention challenge over time, with shorter regulatory spells for workers, and especially those with higher education. Evidence from cross-state enforcement actions of regulators shows gross inflows into regulation and gross outflows from regulation are both higher during periods of intense enforcement, though gross outflows are significantly smaller in magnitude. These results appear inconsistent with a "quid-pro-quo" explanation of the revolving door, but consistent with a "regulatory schooling" hypothesis.
Handle: RePEc:nbr:nberwo:20241
Template-Type: ReDIF-Paper 1.0
Title: The Eurocrisis: Muddling Through, or On the Way to a More Perfect Euro Union?
Classification-JEL: F32; F36; F41
Author-Name: Joshua Aizenman
Author-Person: pai8
Note: IFM
Number: 20242
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20242
File-URL: http://www.nber.org/papers/w20242.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman, 2015. "The Eurocrisis: Muddling through, or on the Way to a More Perfect Euro Union?," Comparative Economic Studies, vol 57(2), pages 205-221.
Abstract: This paper looks at the short history of the Eurozone through the lens of an evolutionary approach to forming new institutions. The euro has operated as a currency without a state, under the dominance of Germany. This has so far allowed the euro to achieve a number of design objectives, and this may continue, as long as Germany does not shirk its growing responsibility for the euro's future. Germany's resilience and dominant size within the EU may explain its "muddling-through" approach towards the Eurozone crisis. We review several manifestations of this muddling through process. Greater mobility of labor and lower mobility of under-regulated capital may be the costly "second best" adjustment until the arrival of more mature institutions in the Eurozone.
Handle: RePEc:nbr:nberwo:20242
Template-Type: ReDIF-Paper 1.0
Title: Punishment and Deterrence: Evidence from Drunk Driving
Classification-JEL: I18; I28; K14; K42
Author-Name: Benjamin Hansen
Author-Person: pha383
Note: EH LE PE
Number: 20243
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20243
File-URL: http://www.nber.org/papers/w20243.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin Hansen, 2015. "Punishment and Deterrence: Evidence from Drunk Driving," American Economic Review, American Economic Association, vol. 105(4), pages 1581-1617, April.
Abstract: Traditional economic models of criminal behavior have straightforward predictions: raising the expected cost of crime via apprehension probabilities or punishments decreases crime. I test the effect of harsher punishments on deterring driving under the influence (DUI). In this setting, punishments are determined by strict rules on Blood Alcohol Content (BAC) and previous offenses. Regression discontinuity derived estimates suggest that having a BAC above the DUI threshold reduces recidivism by up to 2 percentage points (17 percent). Likewise having a BAC over the aggravated DUI threshold reduces recidivism by an additional percentage point (9 percent). The results suggest that recent recommendations to lower the BAC limit to .05 would save relatively few lives, while increasing marginal punishments and sanctions monotonically along the BAC distribution would more effectively deter the drunk drivers most likely to be involved in fatal crashes.
Handle: RePEc:nbr:nberwo:20243
Template-Type: ReDIF-Paper 1.0
Title: Trying to Understand the PPPs in ICP2011: Why are the Results so Different?
Classification-JEL: E01; F00; O11; O47
Author-Name: Angus Deaton
Author-Person: pde30
Author-Name: Bettina Aten
Note: DEV EFG IFM
Number: 20244
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20244
File-URL: http://www.nber.org/papers/w20244.pdf
File-Format: application/pdf
Publication-Status: published as Angus Deaton & Bettina Aten, 2017. "Trying to Understand the PPPs in ICP 2011: Why Are the Results So Different?," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(1), pages 243-264, January.
Abstract: Purchasing power parity exchange rates, or PPPs, are price indexes that summarize prices in each country relative to a numeraire country, typically the United States. These numbers are used to compare living standards across countries, by academics in studies of economic growth, particularly through the Penn World Table, and in some cases, to allocate resources. The International Comparison Program (ICP) collects the detailed prices on which these indexes are based on an irregular basis. In 2014, the ICP published PPPs from the 2011 round that are sharply different from those that were expected from extrapolation of the previous round, ICP 2005. These discrepancies will eventually have important implications for the Penn World Table, and for international comparisons of living standards. The world according to ICP 2011 looks markedly more equal than calculated from ICP 2005. This paper investigates why this happened. We identify a likely source of the problem in the way that the regions of the ICP were linked in 2005. We use two different methods for measuring the size of the effect. Both suggest that the 2005 PPPs for consumption for countries in Asia (excluding Japan), Western Asia, and Africa were overstated relative to the US by between 18 to 26 percent.
Handle: RePEc:nbr:nberwo:20244
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Risk-Return Tradeoff with Time-Varying Conditional Covariances
Classification-JEL: G12
Author-Name: Esben Hedegaard
Author-Name: Robert J. Hodrick
Author-Person: pho115
Note: AP
Number: 20245
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20245
File-URL: http://www.nber.org/papers/w20245.pdf
File-Format: application/pdf
Abstract: We examine the prediction of Merton's intertemporal CAPM that time varying risk premiums arise from the conditional covariances of returns on assets with the return on the market and other state variables. We find a positive and significant price of risk for the covariance with the market return that is driven by the time series variation in the conditional covariances, and the risk-premium on the market remains positive and significant after controlling for additional state variables. Our method estimates the risk-return tradeoff in the ICAPM using multiple portfolios as test assets.
Handle: RePEc:nbr:nberwo:20245
Template-Type: ReDIF-Paper 1.0
Title: Investor Sophistication and Capital Income Inequality
Classification-JEL: E24; E25; E44; G11; G12; G23
Author-Name: Marcin Kacperczyk
Author-Name: Jaromir B. Nosal
Author-Name: Luminita Stevens
Note: AP EFG IFM
Number: 20246
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20246
File-URL: http://www.nber.org/papers/w20246.pdf
File-Format: application/pdf
Publication-Status: published as Marcin Kacperczyk & Jaromir Nosal & Luminita Stevens, 2018. "Investor Sophistication and Capital Income Inequality," Journal of Monetary Economics, .
Abstract: What contributes to the growing income inequality across U.S. households? We develop an information- based general equilibrium model that links capital income derived from financial assets to a level of investor sophistication. Our model implies income inequality between sophisticated and unsophisticated investors that is growing in investors' aggregate and relative sophistication in the market. We show that our model is quantitatively consistent with the data from the U.S. market. In addition, we provide supporting evidence for our mechanism using a unique set of cross-sectional and time-series predictions on asset ownership and stock turnover.
Handle: RePEc:nbr:nberwo:20246
Template-Type: ReDIF-Paper 1.0
Title: Geographic Barriers to Commodity Price Integration: Evidence from US Cities and Swedish Towns, 1732-1860
Classification-JEL: F61; N70
Author-Name: Mario J. Crucini
Author-Person: pcr3
Author-Name: Gregor W. Smith
Author-Person: psm60
Note: DAE IFM ITI
Number: 20247
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20247
File-URL: http://www.nber.org/papers/w20247.pdf
File-Format: application/pdf
Abstract: We study the role of distance and time in statistically explaining price dispersion for 14 commodities from 1732 to 1860. The prices are reported for US cities and Swedish market towns, so we can compare international and intranational dispersion. Distance and commodity-specific fixed effects explain a large share--roughly 60%--of the variability in a panel of more than 230,000 relative prices over these 128 years. There was a negative "ocean effect": international dispersion was less than would be predicted using distance, narrowing the effective ocean by more than 3000 km. The absolute effect of distance declined over time beginning in the 18th century. This process of convergence was broad- based, across commodities and locations (both national and international). But there was a major interruption in convergence in the late 18th and early 19th centuries, at the time of the Napoleonic Wars, stopping the process by two or three decades on average.
Handle: RePEc:nbr:nberwo:20247
Template-Type: ReDIF-Paper 1.0
Title: Productivity and Potential Output Before, During, and After the Great Recession
Classification-JEL: E23; E32; O41; O47
Author-Name: John Fernald
Author-Person: pfe43
Note: PR
Number: 20248
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20248
File-URL: http://www.nber.org/papers/w20248.pdf
File-Format: application/pdf
Publication-Status: published as Productivity and Potential Output before, during, and after the Great Recession, John G. Fernald. in NBER Macroeconomics Annual 2014, Volume 29, Parker and Woodford. 2015
Abstract: U.S. labor and total-factor productivity growth slowed prior to the Great Recession. The timing rules out explanations that focus on disruptions during or since the recession, and industry and state data rule out "bubble economy" stories related to housing or finance. The slowdown is located in industries that produce information technology (IT) or that use IT intensively, consistent with a return to normal productivity growth after nearly a decade of exceptional IT-fueled gains. A calibrated growth model suggests trend productivity growth has returned close to its 1973-1995 pace. Slower underlying productivity growth implies less economic slack than recently estimated by the Congressional Budget Office. As of 2013, about ¾ of the shortfall of actual output from (overly optimistic) pre-recession trends reflects a reduction in the level of potential.
Handle: RePEc:nbr:nberwo:20248
Template-Type: ReDIF-Paper 1.0
Title: Defacto and Deeded Intellectual Property: Knowledge-Driven Co-Evolution of Firm Collaboration Boundaries and IPR Strategy
Classification-JEL: J44; L25; L63; L64; L65; M13; O31; O32; O33; O34
Author-Name: Lynne G. Zucker
Author-Person: pzu2
Author-Name: Michael R. Darby
Note: PR
Number: 20249
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20249
File-URL: http://www.nber.org/papers/w20249.pdf
File-Format: application/pdf
Publication-Status: published as Lynne G. Zucker & Michael R. Darby, 2014. "Defacto and Deeded Intellectual Property: Knowledge-Driven Co-Evolution of Firm Collaboration Boundaries and IPR Stragtegy," Annals of Economics and Statistics, .
Abstract: Research on intellectual property has focused on formal legally recorded rights that we call deeded, most often measured by granted patents. Meanwhile, other "defacto" IP (mainly purposive secrecy and natural excludability) has become more important because of the increasing closeness of commercial technologies to cutting edge science. A "corporate-academic" model has developed and become institutionalized over the last three decades which emphasizes attracting the best and brightest scientists, providing them with a commensurate increase in autonomy including initiation of bench-level collaborations with top university scientists in which valuable tacit knowledge is transferred in both directions. We provide suggestive evidence that both firm and university scientists learn from these collaborations, e.g., both types of scientists experience sharply higher patenting rates once they have engage in university-firm collaborations. We propose and test two indicators of adoption of the corporate-academic model, whether or not the firm has ever: (a) co-authored an article with a university scientist and (b) applied for (an eventually granted) patent with non-patent references, where these references are used importantly to cite scientific articles and other scientific materials. Both were robustly positive and statistically significant across four measures of U.S. high-tech firm success (publishing, patenting, obtaining venture capital, and going public) for six broad S&T areas (bio/chem/med, information technology, nanotechnology, semiconductors, other science, and other engineering). Star scientists publication as or with firm employees, SBIR grants received, and citation-weighted patents and articles all played comparatively supporting roles in the empirical estimates. We concluded that the most successful high-tech firms have adopted a strategy of operating near the edge of the scientific envelope where high levels of tacit knowledge provide substantial natural excludability reducing or preventing entry of imitators.
Handle: RePEc:nbr:nberwo:20249
Template-Type: ReDIF-Paper 1.0
Title: Life Cycle Earnings, Education Premiums and Internal Rates of Return
Classification-JEL: J24; J31
Author-Name: Manudeep Bhuller
Author-Name: Magne Mogstad
Author-Person: pmo570
Author-Name: Kjell G. Salvanes
Author-Person: psa3
Note: ED LS
Number: 20250
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20250
File-URL: http://www.nber.org/papers/w20250.pdf
File-Format: application/pdf
Publication-Status: published as Manudeep Bhuller & Magne Mogstad & Kjell G. Salvanes, 2017. "Life-Cycle Earnings, Education Premiums, and Internal Rates of Return," Journal of Labor Economics, vol 35(4), pages 993-1030.
Abstract: What do the education premiums look like over the life cycle? What is the impact of schooling on lifetime earnings? How does the internal rate of return compare with opportunity cost of funds? To what extent do progressive taxes attenuate the incentives to invest in education? This paper exploits Norwegian population panel data with nearly career long earnings histories to answer these important questions. We provide a detailed picture of the causal relationship between schooling and earnings over the life cycle, following individuals over their working lifespan. To account for endogeneity of schooling, we apply three commonly used identification strategies. Our estimates show that additional schooling gives higher lifetime earnings and steeper age-earnings profile, in line with predictions from human capital theory. These estimates imply an internal rate of return of around 10 percent, after taking into account income taxes and earnings-related pension entitlements. Under standard conditions, this finding suggests it was financially profitable to take additional schooling because the rates of return were substantially higher than the market interest rates. By comparison, Mincer regressions understate substantially the rates of return. We explore the reasons for this downward bias, finding that it is driven by Mincer's assumptions of no earnings while in school and exogenous post-schooling employment.
Handle: RePEc:nbr:nberwo:20250
Template-Type: ReDIF-Paper 1.0
Title: Free to Leave? A Welfare Analysis of Divorce Regimes
Classification-JEL: J12; J16; K36
Author-Name: Raquel Fernández
Author-Person: pfe17
Author-Name: Joyce Cheng Wong
Note: EFG POL
Number: 20251
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20251
File-URL: http://www.nber.org/papers/w20251.pdf
File-Format: application/pdf
Publication-Status: published as Raquel Fernández & Joyce Cheng Wong, 2017. "Free to Leave? A Welfare Analysis of Divorce Regimes," American Economic Journal: Macroeconomics, vol 9(3), pages 72-115.
Abstract: During the 1970s the US underwent an important change in its divorce laws, switching from mutual consent to a unilateral divorce regime. Who benefitted and who lost from this change? To answer this question we develop a dynamic life-cycle model in which agents make consumption, saving, labor force participation (LFP), and marriage and divorce decisions subject to several shocks and given a particular divorce regime. We calibrate the model using statistics relevant to the life-cycle of the 1940 cohort. Conditioning solely on gender, our ex ante welfare analysis finds that women would fare better under mutual consent whereas men would prefer a unilateral system. Once we condition not only on gender but also on initial productivity, we find that men in the top three quintiles of the initial productivity distribution are made better off by a unilateral system as are the top two quintiles of women; the rest prefer mutual consent. We also find that although the change in divorce regime had only a small effect on the LFP of married women in the 1940 cohort, these effects would be considerably larger for a cohort who lived its entire life under a unilateral divorce system.
Handle: RePEc:nbr:nberwo:20251
Template-Type: ReDIF-Paper 1.0
Title: Globalisation, Pass-through and the Optimal Policy Response to Exchange Rates
Classification-JEL: F3; F41
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: James Yetman
Author-Person: pye6
Note: IFM
Number: 20252
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20252
File-URL: http://www.nber.org/papers/w20252.pdf
File-Format: application/pdf
Publication-Status: published as Devereux, Michael B. & Yetman, James, 2014. "Globalisation, pass-through and the optimal policy response to exchange rates," Journal of International Money and Finance, Elsevier, vol. 49(PA), pages 104-128.
Abstract: In this paper we examine how monetary policy should respond to nominal exchange rates in a New Keynesian open economy model that allows for a non-trivial role for sterilised intervention. The paper develops the argument against the backdrop of the evolving policy-making environment of Asian economies. Sterilised intervention can be a potent tool that offers policymakers an additional degree of freedom in maximising global welfare. We show that the gains to sterilised intervention are greater when goods market integration is low and exchange rate pass-through is high. However, increased financial internationalisation reduces the effectiveness of sterilised intervention, as the international policy trilemma becomes more relevant. Unsterilised intervention may also have a role to play, although the potential welfare gains from this are generally smaller. Most central banks in Asia have actively used sterilised foreign exchange intervention as a policy tool to smooth exchange rates. But, over time, declining exchange rate pass-through and the increasing international integration of financial and goods markets will tend to reduce the efficacy of sterilised intervention. Given the limited effectiveness of unsterilised intervention, our model implies that the role of exchange rate movements in the optimal setting of monetary policy in Asia is decreasing.
Handle: RePEc:nbr:nberwo:20252
Template-Type: ReDIF-Paper 1.0
Title: Guns and Votes
Classification-JEL: D72; I18
Author-Name: Laurent Bouton
Author-Person: pbo198
Author-Name: Paola Conconi
Author-Person: pco305
Author-Name: Francisco Pino
Author-Name: Maurizio Zanardi
Author-Person: pza18
Note: POL
Number: 20253
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20253
File-URL: http://www.nber.org/papers/w20253.pdf
File-Format: application/pdf
Abstract: Why are U.S. congressmen reluctant to support gun control regulations, despite the fact that most Americans are in favor of them? We argue that re-election motives can lead politicians to take a pro-gun stance against the interests of an apathetic majority of the electorate, but in line with the interests of an intense minority. We develop a model of gun control choices in which incumbent politicians are both office and policy motivated, and voters differ in the direction and intensity of their preferences. We derive conditions under which politicians support gun control early in their terms, but oppose them when they approach re-election. We test the predictions of the model by analyzing votes on gun-related legislation in the U.S. Senate, in which one third of the members are up for re-election every two years. We find that senators are more likely to vote pro gun when they are close to facing re-election, a result which holds comparing both across and within legislators. Only Democratic senators "flip flop'' on gun control, and only if the group of pro-gun voters in their constituency is of intermediate size.
Handle: RePEc:nbr:nberwo:20253
Template-Type: ReDIF-Paper 1.0
Title: The Agglomeration of Bankruptcy
Classification-JEL: G33; G34; R12; R32; R33
Author-Name: Efraim Benmelech
Author-Person: pbe459
Author-Name: Nittai Bergman
Author-Name: Anna Milanez
Author-Name: Vladimir Mukharlyamov
Note: AP CF EFG IO LE PE
Number: 20254
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20254
File-URL: http://www.nber.org/papers/w20254.pdf
File-Format: application/pdf
Publication-Status: published as Efraim Benmelech & Nittai Bergman & Anna Milanez & Vladimir Mukharlyamov, 2019. "The Agglomeration of Bankruptcy," The Review of Financial Studies, vol 32(7), pages 2541-2586.
Abstract: This paper identifies a new channel through which bankrupt firms impose negative externalities on non-bankrupt peers. The bankruptcy and liquidation of a retail chain weakens the economies of agglomeration in any given local area, reducing the attractiveness of retail centers for remaining stores leading to contagion of financial distress. We find that companies with greater geographic exposure to bankrupt retailers are more likely to close stores in affected areas. We further show that the effect of these externalities on non-bankrupt peers is higher when the affected stores are smaller and are operated by firms with poor financial health.
Handle: RePEc:nbr:nberwo:20254
Template-Type: ReDIF-Paper 1.0
Title: Banks as Secret Keepers
Classification-JEL: D82; E44; G11; G14; G21
Author-Name: Tri Vi Dang
Author-Name: Gary Gorton
Author-Person: pgo458
Author-Name: Bengt Holmström
Author-Person: pho488
Author-Name: Guillermo Ordonez
Author-Person: por40
Note: CF EFG ME
Number: 20255
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20255
File-URL: http://www.nber.org/papers/w20255.pdf
File-Format: application/pdf
Publication-Status: published as Tri Vi Dang & Gary Gorton & Bengt Holmström & Guillermo Ordoñez, 2017. "Banks as Secret Keepers," American Economic Review, vol 107(4), pages 1005-1029.
Abstract: Banks are optimally opaque institutions. They produce debt for use as a transaction medium (bank money), which requires that information about the backing assets - loans - not be revealed, so that bank money does not fluctuate in value, reducing the efficiency of trade. This need for opacity conflicts with the production of information about investment projects, needed for allocative efficiency. Intermediaries exist to hide such information, so banks select portfolios of information-insensitive assets. For the economy as a whole, firms endogenously separate into bank finance and capital market/stock market finance depending on the cost of producing information about their projects.
Handle: RePEc:nbr:nberwo:20255
Template-Type: ReDIF-Paper 1.0
Title: Breaking the Glass Ceiling? The Effect of Board Quotas on Female Labor Market Outcomes in Norway
Classification-JEL: J24; J3; J7; J78
Author-Name: Marianne Bertrand
Author-Person: pbe697
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Sissel Jensen
Author-Person: pje12
Author-Name: Adriana Lleras-Muney
Author-Person: pll45
Note: LS
Number: 20256
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20256
File-URL: http://www.nber.org/papers/w20256.pdf
File-Format: application/pdf
Publication-Status: published as Marianne Bertrand & Sandra E Black & Sissel Jensen & Adriana Lleras-Muney, 2019. "Breaking the Glass Ceiling? The Effect of Board Quotas on Female Labour Market Outcomes in Norway," Review of Economic Studies, Oxford University Press, vol. 86(1), pages 191-239.
Abstract: In late 2003, Norway passed a law mandating 40 percent representation of each gender on the board of public limited liability companies. The primary objective of this reform was to increase the representation of women in top positions in the corporate sector and decrease the gender disparity in earnings within that sector. We document that the women appointed to these boards post-reform were observably more qualified than their female predecessors along many dimensions, and that the gender gap in earnings within boards fell substantially. On the other hand, we see no robust evidence that the reform benefited the larger set of women employed in the companies subject to the quota. Moreover, the reform had no clear impact on highly qualified women whose qualifications mirror those of board members but who were not appointed to boards. Finally, we find mixed support for the view that the reform affected the decisions of young women: while the reform was not accompanied by any change in female enrollment in business education programs, we do see some improvements in labor market outcomes for young women with graduate business degrees in their early career stages; however, we observe similar improvements for young women with graduate science degrees, suggesting this may not be due to the reform. Overall, seven years after the board quota policy fully came into effect, we conclude that it had very little discernible impact on women in business beyond its direct effect on the women who made it into boardrooms.
Handle: RePEc:nbr:nberwo:20256
Template-Type: ReDIF-Paper 1.0
Title: Extremal Quantile Regressions for Selection Models and the Black-White Wage Gap
Classification-JEL: C21; C24; J31
Author-Name: Xavier D'Haultfoeuille
Author-Person: pdh29
Author-Name: Arnaud Maurel
Author-Person: pma1091
Author-Name: Yichong Zhang
Note: LS TWP
Number: 20257
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20257
File-URL: http://www.nber.org/papers/w20257.pdf
File-Format: application/pdf
Publication-Status: published as Xavier D’Haultfœuille & Arnaud Maurel & Yichong Zhang, 2017. "Extremal quantile regressions for selection models and the black–white wage gap," Journal of Econometrics, .
Abstract: We consider the estimation of a semiparametric location-scale model subject to endogenous selection, in the absence of an instrument or a large support regressor. Identification relies on the independence between the covariates and selection, for arbitrarily large values of the outcome. In this context, we propose a simple estimator, which combines extremal quantile regressions with minimum distance. We establish the asymptotic normality of this estimator by extending previous results on extremal quantile regressions to allow for selection. Finally, we apply our method to estimate the black-white wage gap among males from the NLSY79 and NLSY97. We find that premarket factors such as AFQT and family background characteristics play a key role in explaining the level and evolution of the black-white wage gap.
Handle: RePEc:nbr:nberwo:20257
Template-Type: ReDIF-Paper 1.0
Title: Beyond Zeroes and Ones: The Intensity and Dynamics of Civil Conflict
Classification-JEL: C23; D74; N40
Author-Name: Stephen Chaudoin
Author-Name: Zachary Peskowitz
Author-Name: Christopher Stanton
Note: DEV POL
Number: 20258
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20258
File-URL: http://www.nber.org/papers/w20258.pdf
File-Format: application/pdf
Publication-Status: published as Stephen Chaudoin & Zachary Peskowitz & Christopher Stanton, 2017. "Beyond Zeroes and Ones," Journal of Conflict Resolution, vol 61(1), pages 56-83.
Abstract: There is tremendous variation in conflict intensity both across and within civil conflict spells. Using an instrumental variables approach and a rich set of dynamic, empirical models, we find that the intensity of conflict is negatively related to per-capita income. Economic conditions also affect conflict dynamics, as higher per-capita income reduces the persistence of past conflict intensity.
Handle: RePEc:nbr:nberwo:20258
Template-Type: ReDIF-Paper 1.0
Title: Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field
Classification-JEL: D03; D14; O16; Z13
Author-Name: Arun G. Chandrasekhar
Author-Person: pch1351
Author-Name: Cynthia Kinnan
Author-Person: pki546
Author-Name: Horacio Larreguy
Author-Person: pla1013
Note: DEV POL
Number: 20259
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20259
File-URL: http://www.nber.org/papers/w20259.pdf
File-Format: application/pdf
Publication-Status: published as Arun G. Chandrasekhar & Cynthia Kinnan & Horacio Larreguy, 2018. "Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field," American Economic Journal: Applied Economics, vol 10(4), pages 43-78.
Abstract: Absence of well-functioning formal institutions leads to reliance on social networks to enforce informal contracts. Social ties may aid cooperation, but agents vary in network centrality, and this hierarchy may hinder cooperation. To assess the extent to which networks substitute for enforcement, we conducted high-stakes games across 34 Indian villages. We randomized subjects' partners and whether contracts were enforced to estimate how partners' relative network position differentially matters across contracting environments. Socially close pairs cooperate even without enforcement; distant pairs do not. Pairs with unequal importance behave less cooperatively without enforcement. Thus capacity for cooperation depends on the underlying network.
Handle: RePEc:nbr:nberwo:20259
Template-Type: ReDIF-Paper 1.0
Title: The "Business Climate" and Economic Inequality
Classification-JEL: H71; J38
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Jennifer Muz
Note: EFG LS PE
Number: 20260
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20260
File-URL: http://www.nber.org/papers/w20260.pdf
File-Format: application/pdf
Publication-Status: published as David Neumark & Jennifer Muz, 2016. "The “Business Climate” and Economic Inequality," Review of Income and Wealth, vol 62(1), pages 161-180.
Abstract: "Business climate indexes" characterize state economic policies, and are often used to try to influence economic policy debate. However, they are also useful in research as summaries of a large number of state policies that cannot be studied simultaneously. Prior research found that business climate indexes focused on productivity and quality of life do not predict economic growth, while indexes emphasizing taxes and costs of doing business indicate that low-tax, low-cost states have faster growth of employment, wages, and output. In this paper, we study the relationship between these two categories of business climate indexes and the promotion of equality or inequality. We do not find that the productivity/quality-of-life indexes predict more equitable outcomes, although some of the policies underlying them suggest they might. We do find, however, that the same tax-and-cost related indexes that are associated with higher economic growth are also associated with increases in inequality.
Handle: RePEc:nbr:nberwo:20260
Template-Type: ReDIF-Paper 1.0
Title: The Runner-Up Effect
Classification-JEL: D03; D72; O10
Author-Name: Santosh Anagol
Author-Person: pan160
Author-Name: Thomas Fujiwara
Author-Person: pfu230
Note: DEV POL
Number: 20261
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20261
File-URL: http://www.nber.org/papers/w20261.pdf
File-Format: application/pdf
Publication-Status: published as Santosh Anagol & Thomas Fujiwara, 2016. "The Runner-Up Effect," Journal of Political Economy, vol 124(4), pages 927-991.
Abstract: Exploiting regression discontinuity designs in Brazilian, Indian, and Canadian first-past-the-post elections, we document that second-place candidates are substantially more likely than close third-place candidates to run in, and win, subsequent elections. Since both candidates lost the election and had similar electoral performance, this is the effect of being labeled the runner-up. We explore the potential mechanisms for this runner-up effect, including selection into candidacy, heuristic behavior by political actors, and the runner-up obtaining an advantage from strategic coordination (being more likely to become a focal point). Selection into candidacy is unlikely to explain the effect on winning subsequent elections, and the weight of evidence suggests the effect is driven by strategic coordination. We find no effect of finishing in third-place versus fourth-place.
Handle: RePEc:nbr:nberwo:20261
Template-Type: ReDIF-Paper 1.0
Title: Channeling Remittances to Education: A Field Experiment Among Migrants from El Salvador
Classification-JEL: C93; F22; F24; H24; I22; J15; O15
Author-Name: Kate Ambler
Author-Person: pam141
Author-Name: Diego Aycinena
Author-Person: pay58
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV ED
Number: 20262
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20262
File-URL: http://www.nber.org/papers/w20262.pdf
File-Format: application/pdf
Publication-Status: published as Kate Ambler & Diego Aycinena & Dean Yang, 2015. "Channeling Remittances to Education: A Field Experiment among Migrants from El Salvador," American Economic Journal: Applied Economics, American Economic Association, vol. 7(2), pages 207-32, April.
Abstract: We implement a randomized experiment offering Salvadoran migrants matching funds for educational remittances, which are channeled directly to a beneficiary student in El Salvador chosen by the migrant. The matches lead to increased educational expenditures, higher private school attendance, and lower labor supply of youths in El Salvador households connected to migrant study participants. We find substantial "crowd-in" of educational investments: for each $1 received by beneficiaries, educational expenditures increase by $3.72. We find no shifting of expenditures away from other students, and no effect on remittances.
Handle: RePEc:nbr:nberwo:20262
Template-Type: ReDIF-Paper 1.0
Title: A Comparison of Programming Languages in Economics
Classification-JEL: C0; E0
Author-Name: S. Borağan Aruoba
Author-Person: par34
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Note: EFG
Number: 20263
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20263
File-URL: http://www.nber.org/papers/w20263.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Economic Dynamics and Control Volume 58, September 2015, Pages 265-273
Abstract: We solve the stochastic neoclassical growth model, the workhorse of modern macroeconomics, using C++11, Fortran 2008, Java, Julia, Python, Matlab, Mathematica, and R. We implement the same algorithm, value function iteration with grid search, in each of the languages. We report the execution times of the codes in a Mac and in a Windows computer and briefly comment on the strengths and weaknesses of each language.
Handle: RePEc:nbr:nberwo:20263
Template-Type: ReDIF-Paper 1.0
Title: The Acquisition and Commercialization of Invention in American Manufacturing: Incidence and Impact
Classification-JEL: L1; O3; O30; O31; O32; O34
Author-Name: Ashish Arora
Author-Person: par15
Author-Name: Wesley M. Cohen
Author-Name: John P. Walsh
Note: PR
Number: 20264
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20264
File-URL: http://www.nber.org/papers/w20264.pdf
File-Format: application/pdf
Publication-Status: published as Ashish Arora & Wesley M. Cohen & John P. Walsh, 2016. "The acquisition and commercialization of invention in American manufacturing: Incidence and impact," Research Policy, vol 45(6), pages 1113-1128.
Abstract: Recent accounts suggest the development and commercialization of invention has become more “open.” Greater division of labor between inventors and innovators can enhance social welfare through gains from trade and greater economies of specialization. Moreover, this extensive reliance upon outside sources for invention also suggests that understanding the factors that condition the extramural supply of inventions to innovators is crucial to understanding the determinants of the rate and direction of innovative activity. This paper reports on a recent survey of over 6000 American manufacturing and service sector firms on the extent to which innovators rely upon external sources of invention. Our results indicate that, between 2007 and 2009, 16% of manufacturing firms had innovated – meaning had introduced a product that was new to the industry. Of these, 49% report that their most important new product had originated from an outside source, notably customers, suppliers and technology specialists (i.e., universities, independent inventors and R&D contractors). We also estimate the contribution of each source to innovation in the US economy. Although customers are the most frequent outside source, inventions acquired from technology specialists tend to be the more economically more significant in term of their gross commercial value. As a group, external sources of invention make a significant contribution to the overall rate of innovation in the economy. Innovation policies, both public and private, should pay careful attention to external supply of invention, and the efficiency of the mechanisms mediating between inventors and innovators.
Handle: RePEc:nbr:nberwo:20264
Template-Type: ReDIF-Paper 1.0
Title: The Liquidity Premium of Near-Money Assets
Classification-JEL: E41; E43; G12
Author-Name: Stefan Nagel
Author-Person: pna176
Note: AP ME
Number: 20265
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20265
File-URL: http://www.nber.org/papers/w20265.pdf
File-Format: application/pdf
Publication-Status: published as Stefan Nagel, 2016. "The Liquidity Premium of Near-Money Assets," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1927-1971.
Abstract: Treasury bills and other near-money assets provide owners with liquidity service benefits that are reflected in prices in the form of a liquidity premium. I relate time variation in this liquidity premium to changes in the opportunity cost of money: The liquidity service benefits of near-money assets are more valuable when short-term interest rates are high and hence the opportunity cost of holding money is high. Consistent with this prediction, the liquidity premium of T-bills and other near-money assets is strongly positively correlated with the level of short-term interest rates. Once short-term interest rates are controlled for, Treasury security supply variables lose their explanatory power for the liquidity premium. I argue that an analysis of scarcity and price of near-money assets is incomplete without taking into account the substitution relationship with money and its supply by the central bank. Payment of interest on reserves (IOR) could potentially reduce liquidity premia because IOR reduces the opportunity cost of at least one type of money (reserves). In the UK and Canada, however, the introduction of IOR did not shrink liquidity premia. Apparently, the reduction in banks' opportunity cost of money did not result in a broader fall in the opportunity costs of money for non-bank market participants.
Handle: RePEc:nbr:nberwo:20265
Template-Type: ReDIF-Paper 1.0
Title: Public Goods Provision in the Presence of Heterogeneous Green Preferences
Classification-JEL: D03; D04; H41; Q48
Author-Name: Mark Jacobsen
Author-Name: Jacob LaRiviere
Author-Name: Michael Price
Author-Person: ppr89
Note: EEE
Number: 20266
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20266
File-URL: http://www.nber.org/papers/w20266.pdf
File-Format: application/pdf
Abstract: We develop a model of the private provision of public goods in a world where agents face convex costs of provision. Consonant with prior empirical evidence, we introduce preference heterogeneity by allowing a subset of agents to exhibit pro-social behavior that reflects "green" preferences. We use the model to compare different policies to promote private provision of public goods such as environmental quality or energy conservation. Counter to the standard result, we find that technology standards are frequently preferred to price-based instruments. Extending the model to allow for both benefit and cost heterogeneity, we find that policy choice depends on the correlation between the two forms of heterogeneity.
Handle: RePEc:nbr:nberwo:20266
Template-Type: ReDIF-Paper 1.0
Title: Mutual Assistance between Federal Reserve Banks, 1913-1960 as Prolegomena to the TARGET2 Debate
Classification-JEL: F30; N20
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Arnaud J. Mehl
Author-Person: pme225
Author-Name: Livia Chițu
Author-Person: pch1134
Author-Name: Gary Richardson
Author-Person: pri185
Note: DAE IFM
Number: 20267
Creation-Date: 2014-06
Order-URL: http://www.nber.org/papers/w20267
File-URL: http://www.nber.org/papers/w20267.pdf
File-Format: application/pdf
Publication-Status: published as Eichengreen, Barry & Mehl, Arnaud & Chitu, Livia & Richardson, Gary, 2015. "Mutual Assistance between Federal Reserve Banks: 1913–1960 as Prolegomena to the TARGET2 Debate," The Journal of Economic History, Cambridge University Press, vol. 75(03), pages 621-659, September.
Abstract: This paper reconstructs the forgotten history of mutual assistance among Reserve Banks in the early years of the Federal Reserve System. We use data on accommodation operations by the 12 Reserve Banks between 1913 and 1960 which enabled them to mutualise their gold reserves in emergency situations. Gold reserve sharing was especially important in response to liquidity crises and bank runs. Cooperation among reserve banks was essential for the cohesion and stability of the US monetary union. But fortunes could change quickly, with emergency recipients of gold turning into providers. Because regional imbalances did not grow endlessly, instead narrowing when region-specific liquidity shocks subsided, mutual assistance created only limited tensions. These findings speak to the current debate over TARGET2 balances in Europe.
Handle: RePEc:nbr:nberwo:20267
Template-Type: ReDIF-Paper 1.0
Title: Learning Millennial-Style
Classification-JEL: A20; G00; I21
Author-Name: Bruce I. Carlin
Author-Name: Li Jiang
Author-Name: Stephen A. Spiller
Note: AP CF ED PE
Number: 20268
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20268
File-URL: http://www.nber.org/papers/w20268.pdf
File-Format: application/pdf
Publication-Status: published as Millennial-Style Learning: Search Intensity, Decision Making, and Information Sharing Bruce I. Carlin, Li Jiang, and Stephen A. Spiller Management Science , Articles in Advance
Abstract: The growing use of on-line educational content and related video services has changed the way people access education, share knowledge, and possibly make life decisions. In this paper, we characterize how video content affects individual decision-making and willingness to share in the context of a personal financial decision. Content geared toward giving better instructions leads to better financial decisions, but less information sharing. Misleading advertising not only causes worse decisions, but makes it less likely that videos with useful content get shared in the market. This implies that the effects of deception have externalities on other peoples' literacy and decision-making. Our work has important implications for policies guiding financial literacy training, and also has broader impact for education in the information age.
Handle: RePEc:nbr:nberwo:20268
Template-Type: ReDIF-Paper 1.0
Title: Patents and Cumulative Innovation: Causal Evidence from the Courts
Classification-JEL: O33; O34
Author-Name: Alberto Galasso
Author-Person: pga404
Author-Name: Mark Schankerman
Note: IO PR
Number: 20269
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20269
File-URL: http://www.nber.org/papers/w20269.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Galasso & Mark Schankerman, 2015. "Patents and Cumulative Innovation: Causal Evidence from the Courts *," The Quarterly Journal of Economics, vol 130(1), pages 317-369.
Abstract: Cumulative innovation is central to economic growth. Do patent rights facilitate or impede follow-on innovation? We study the causal effect of removing patent rights by court invalidation on subsequent research related to the focal patent, as measured by later citations. We exploit random allocation of judges at the U.S. Court of Appeals for the Federal Circuit to control for endogeneity of patent invalidation. Patent invalidation leads to a 50 percent increase in citations to the focal patent, on average, but the impact is heterogeneous and depends on characteristics of the bargaining environment. Patent rights block downstream innovation in computers, electronics and medical instruments, but not in drugs, chemicals or mechanical technologies. Moreover, the effect is entirely driven by invalidation of patents owned by large patentees that triggers more follow-on innovation by small firms.
Handle: RePEc:nbr:nberwo:20269
Template-Type: ReDIF-Paper 1.0
Title: Tales from the Bretton Woods
Classification-JEL: N1
Author-Name: Michael D. Bordo
Author-Person: pbo243
Note: DAE
Number: 20270
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20270
File-URL: http://www.nber.org/papers/w20270.pdf
File-Format: application/pdf
Publication-Status: published as Michael D. Bordo, 2014. "Tales from the Bretton Woods," Open Economies Review, vol 25(5), pages 981-991.
Abstract: An analogy has been made between the collapse of the Bretton Woods system in 1971 and the recent Eurozone crisis. The build up of TARGET balances in the Eurosystem of Central Banks after 2007 with the GIPS (deficit countries having large liabilities) and Germany (a surplus country) with large claims is seen as similar to the rising and persistent balance of payments deficits and declining gold reserves by the United States as center country of the BWS gold dollar standard in the 1960s. This paper argues that a better Bretton Woods analogy is between the UK which ran persistent balance of payments deficits reflecting low productivity growth and overly expansionary financial policies (an analogy to the GIPS) countries with West Germany which ran persistent balance of payments surpluses reflecting high productivity and conservative financial policies (analogous to Germany today). However Bretton Woods is very different from the Eurozone in many dimensions. An even better analogy than BWS is a comparison of the clearing mechanism in the U.S.--The Gold Settlement account-- with the Target payments mechanism for the Eurozone. In the early 1930s massive gold flows from the interior, hard hit by banking panics, to New York City were similar to the payments imbalances within the Eurozone in the recent crisis. The Federal Reserve did little to accommodate the demands for liquidity leading to a collapse of the payments system in March 1933. By contrast the build up of TARGET reflected full accommodation of the liquidity demands of the member states. TARGET represented an institutional innovation that prevented a repeat of the 1930s payments crisis.
Handle: RePEc:nbr:nberwo:20270
Template-Type: ReDIF-Paper 1.0
Title: Educational Assortative Mating and Household Income Inequality
Classification-JEL: D31; I24; J12
Author-Name: Lasse Eika
Author-Name: Magne Mogstad
Author-Person: pmo570
Author-Name: Basit Zafar
Author-Person: pza107
Note: LS PE
Number: 20271
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20271
File-URL: http://www.nber.org/papers/w20271.pdf
File-Format: application/pdf
Publication-Status: published as Lasse Eika & Magne Mogstad & Basit Zafar, 2019. "Educational Assortative Mating and Household Income Inequality," Journal of Political Economy, vol 127(6), pages 2795-2835.
Abstract: We document the degree of educational assortative mating, how it evolves over time, and the extent to which it differs between countries. Our analysis focuses on the U.S. but also uses data from Denmark, Germany, the U.K., and Norway. We find evidence of positive assortative mating at all levels of education in each country. However, the time trends vary by the level of education: Among college graduates, assortative mating has been declining over time, whereas the low-educated are increasingly sorting into internally homogeneous marriages. These findings motivate and guide a decomposition analysis where we quantify the contribution of various factors to the distribution of household income. We find that educational assortative mating accounts for a non-negligible part of the cross-sectional inequality in household income in each country. However, changes in assortative mating over time barely move the time trends in household income inequality. This is because the inequality contribution from the increase in assortative mating among the low educated is offset by the equalizing effect from the decline in assortative mating among the highly educated. By comparison, increases over time in the returns to education generate a considerable rise in household income inequality, but these price effects are partly mitigated by increases in college attendance and completion rates among women.
Handle: RePEc:nbr:nberwo:20271
Template-Type: ReDIF-Paper 1.0
Title: Fertility Decline and Missing Women
Classification-JEL: J13; O12; O15
Author-Name: Seema Jayachandran
Author-Person: pja86
Note: CH DEV
Number: 20272
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20272
File-URL: http://www.nber.org/papers/w20272.pdf
File-Format: application/pdf
Publication-Status: published as Seema Jayachandran, 2017. "Fertility Decline and Missing Women," American Economic Journal: Applied Economics, American Economic Association, vol. 9(1), pages 118-139, January.
Abstract: India's male-biased sex ratio has worsened over the past several decades. In combination with the increased availability of prenatal sex-diagnostic technology, the declining fertility rate is a hypothesized factor. Suppose a couple strongly wants to have at least one son. At the natural sex ratio, they are less likely to have a son the fewer children they have, so a smaller desired family size will increase the likelihood they manipulate the sex composition of their children. This paper empirically measures the relationship between desired fertility and the sex ratio. Standard survey questions on fertility preferences ask the respondent her desired number of children of each sex, but people who want larger families have systematically stronger son preference, which generates bias. This paper instead elicits desired sex composition at specified, randomly determined, levels of total fertility. These data allow one to isolate the causal effect of family size on the desired sex ratio. I find that the desired sex ratio increases sharply as the fertility rate falls; fertility decline can explain roughly half of the increase in the sex ratio that has occurred in India over the past thirty years. In addition, factors such as female education that lead to more progressive attitudes could counterintuitively cause a more male-skewed sex ratio because while they reduce the desired sex ratio at any given family size, they also reduce desired family size.
Handle: RePEc:nbr:nberwo:20272
Template-Type: ReDIF-Paper 1.0
Title: Long-Term Unemployment and the Great Recession: The Role of Composition, Duration Dependence, and Non-Participation
Classification-JEL: E24; J64
Author-Name: Kory Kroft
Author-Person: pkr410
Author-Name: Fabian Lange
Author-Person: pla224
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Author-Name: Lawrence F. Katz
Author-Person: pka266
Note: EFG LS
Number: 20273
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20273
File-URL: http://www.nber.org/papers/w20273.pdf
File-Format: application/pdf
Publication-Status: published as Kory Kroft & Fabian Lange & Matthew J. Notowidigdo & Lawrence F. Katz, 2016. "Long-Term Unemployment and the Great Recession: The Role of Composition, Duration Dependence, and Nonparticipation," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages S7 - S54.
Abstract: We explore the extent to which composition, duration dependence, and labor force non-participation can account for the sharp increase in the incidence of long-term unemployment (LTU) during the Great Recession. We first show that compositional shifts in demographics, occupation, industry, region, and the reason for unemployment jointly account for very little of the observed increase in LTU. Next, using panel data from the Current Population Survey for 2002-2007, we calibrate a matching model that allows for duration dependence in the exit rate from unemployment and for transitions between employment (E), unemployment (U), and non-participation (N). We model the job-finding rates for the unemployed and non-participants, and we use observed vacancy rates and the transition rates from E-to-U, E-to-N, N-to-U, and U-to-N as the exogenous "forcing variables'' of the model. The calibrated model can account for almost all of the increase in the incidence of LTU and much of the observed outward shift in the Beveridge curve between 2008 and 2013. Both negative duration dependence in the job-finding rate for the unemployed and transitions to and from non-participation contribute significantly to the ability of the model to match the data after 2008.
Handle: RePEc:nbr:nberwo:20273
Template-Type: ReDIF-Paper 1.0
Title: Governance, Risk Management, and Risk-Taking in Banks
Classification-JEL: G21; G32
Author-Name: René M. Stulz
Note: CF
Number: 20274
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20274
File-URL: http://www.nber.org/papers/w20274.pdf
File-Format: application/pdf
Abstract: This paper examines how governance and risk management affect risk-taking in banks. It distinguishes between good risks, which are risks that have an ex ante private reward for the bank on a stand-alone basis, and bad risks, which do not have such a reward. A well-governed bank takes the amount of risk that maximizes shareholder wealth subject to constraints imposed by laws and regulators. In general, this involves eliminating or mitigating all bad risks to the extent that it is cost effective to do so. The role of risk management in such a bank is not to reduce the bank's total risk per se. It is to identify and measure the risks the bank is taking, aggregate these risks in a measure of the bank's total risk, enable the bank to eliminate, mitigate and avoid bad risks, and ensure that its risk level is consistent with its risk appetite. Organizing the risk management function so that it plays that role is challenging because there are limitations in measuring risk and because, while more detailed rules can prevent destructive risk-taking, they also limit the flexibility of an institution in taking advantage of opportunities that increase firm value. Limitations of risk measurement and the decentralized nature of risk-taking imply that setting appropriate incentives for risk-takers and promoting an appropriate risk culture are essential to the success of risk management in performing its function.
Handle: RePEc:nbr:nberwo:20274
Template-Type: ReDIF-Paper 1.0
Title: A Market Based Solution to Price Externalities: A Generalized Framework
Classification-JEL: D52; D53; D61; D62
Author-Name: Weerachart T. Kilenthong
Author-Person: pki258
Author-Name: Robert M. Townsend
Author-Person: pto99
Note: DEV IFM
Number: 20275
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20275
File-URL: http://www.nber.org/papers/w20275.pdf
File-Format: application/pdf
Abstract: Pecuniary externalities have regained the interest of researchers as they seek policy interventions and regulations to remedy externality-induced distortions, e.g., balance sheet effects, amplifiers and fire sales. In this paper we go back to first principles and show how to design financial contracts and markets in such a way that ex ante competition can achieve a constrained-efficient allocation. The key as in general equilibrium theory is to extend the commodity space in such a way that bundling, exclusivity and additional markets internalize these pecuniary externalities. We devise in this paper a general way of proceeding that covers as a general case the large variety of example-economies which differ from one another in the particular source of the constraint generating the externality. A key take away from our approach is that we do not need to identify and quantify some policy intervention. With the appropriate ex ante design we can let markets solve the problem.
Handle: RePEc:nbr:nberwo:20275
Template-Type: ReDIF-Paper 1.0
Title: Tractable and Consistent Random Graph Models
Classification-JEL: C01; C51; D85; Z13
Author-Name: Arun G. Chandrasekhar
Author-Person: pch1351
Author-Name: Matthew O. Jackson
Author-Person: pja7
Note: DEV LS TWP
Number: 20276
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20276
File-URL: http://www.nber.org/papers/w20276.pdf
File-Format: application/pdf
Abstract: We define a general class of network formation models, Statistical Exponential Random Graph Models (SERGMs), that nest standard exponential random graph models (ERGMs) as a special case. We provide the first general results on when these models' (including ERGMs) parameters estimated from the observation of a single network are consistent (i.e., become accurate as the number of nodes grows). Next, addressing the problem that standard techniques of estimating ERGMs have been shown to have exponentially slow mixing times for many specifications, we show that by reformulating network formation as a distribution over the space of sufficient statistics instead of the space of networks, the size of the space of estimation can be greatly reduced, making estimation practical and easy. We also develop a related, but distinct, class of models that we call subgraph generation models (SUGMs) that are useful for modeling sparse networks and whose parameter estimates are also directly and easily estimable, consistent, and asymptotically normally distributed. Finally, we show how choice-based (strategic) network formation models can be written as SERGMs and SUGMs, and apply our models and techniques to network data from rural Indian villages.
Handle: RePEc:nbr:nberwo:20276
Template-Type: ReDIF-Paper 1.0
Title: Coordination and Crisis in Monetary Unions
Classification-JEL: E0; F0
Author-Name: Mark Aguiar
Author-Person: pag57
Author-Name: Manuel Amador
Author-Person: pam50
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Gita Gopinath
Note: EFG IFM ME
Number: 20277
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20277
File-URL: http://www.nber.org/papers/w20277.pdf
File-Format: application/pdf
Publication-Status: published as Mark Aguiar & Manuel Amador & Emmanuel Farhi & Gita Gopinath, 2015. "Coordination and Crisis in Monetary Unions," The Quarterly Journal of Economics, Oxford University Press, vol. 130(4), pages 1727-1779.
Abstract: We characterize fiscal and monetary policy in a monetary union with the potential for rollover crises in sovereign debt markets. Member-country fiscal authorities lack commitment to repay their debt and choose fiscal policy independently. A common monetary authority chooses inflation for the union, also without commitment. We first describe the existence of a fiscal externality that arises in the presence of limited commitment and leads countries to over borrow; this externality rationalizes the imposition of debt ceilings in a monetary union. We then investigate the impact of the composition of debt in a monetary union, that is the fraction of high-debt versus low-debt members, on the occurrence of self-fulfilling debt crises. We demonstrate that a high-debt country may be less vulnerable to crises and have higher welfare when it belongs to a union with an intermediate mix of high- and low-debt members, than one where all other members are low-debt. This contrasts with the conventional wisdom that all countries should prefer a union with low-debt members, as such a union can credibly deliver low inflation. These findings shed new light on the criteria for an optimal currency area in the presence of rollover crises.
Handle: RePEc:nbr:nberwo:20277
Template-Type: ReDIF-Paper 1.0
Title: Deposit Insurance Database
Classification-JEL: G01; G21; G28
Author-Name: Asli Demirgüç-Kunt
Author-Person: pde226
Author-Name: Edward J. Kane
Author-Person: pka853
Author-Name: Luc Laeven
Author-Person: pla174
Note: CF
Number: 20278
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20278
File-URL: http://www.nber.org/papers/w20278.pdf
File-Format: application/pdf
Abstract: This paper provides a comprehensive, global database of deposit insurance arrangements as of 2013. We extend our earlier dataset by including recent adopters of deposit insurance and information on the use of government guarantees on banks' assets and liabilities, including during the recent global financial crisis. We also create a Safety Net Index capturing the generosity of the deposit insurance scheme and government guarantees on banks' balance sheets. The data show that deposit insurance has become more widespread and more extensive in coverage since the global financial crisis, which also triggered a temporary increase in the government protection of non-deposit liabilities and bank assets. In most cases, these guarantees have since been formally removed but coverage of deposit insurance remains above pre-crisis levels, raising concerns about implicit coverage and moral hazard going forward.
Handle: RePEc:nbr:nberwo:20278
Template-Type: ReDIF-Paper 1.0
Title: Typhoid Fever, Water Quality, and Human Capital Formation
Classification-JEL: I0; J0; N0
Author-Name: Brian Beach
Author-Person: pbe1014
Author-Name: Joseph Ferrie
Author-Name: Martin Saavedra
Author-Person: psa1473
Author-Name: Werner Troesken
Author-Person: ptr352
Note: CH DAE EH
Number: 20279
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20279
File-URL: http://www.nber.org/papers/w20279.pdf
File-Format: application/pdf
Publication-Status: published as Beach, Brian & Ferrie, Joseph & Saavedra, Martin & Troesken, Werner, 2016. "Typhoid Fever, Water Quality, and Human Capital Formation," The Journal of Economic History, Cambridge University Press, vol. 76(01), pages 41-75, March.
Abstract: Investment in water purification technologies led to large mortality declines by helping eradicate typhoid fever and other waterborne diseases. This paper seeks to understand how these technologies affected human capital formation. We use typhoid fatality rates during early life as a proxy for water quality. To carry out the analysis, city-level data are merged with a unique dataset linking individuals between the 1900 and 1940 censuses. Parametric and semi-parametric estimates suggest that eradicating early-life exposure to typhoid fever would have increased earnings in later life by 1% and increased educational attainment by one month. Instrumenting for typhoid fever using the typhoid rates from cities that lie upstream produces similar results. A simple cost-benefit analysis indicates that the increase in earnings from eradicating typhoid fever was more than sufficient to offset the costs of eradication.
Handle: RePEc:nbr:nberwo:20279
Template-Type: ReDIF-Paper 1.0
Title: Hotelling Under Pressure
Classification-JEL: E22; L71; Q3; Q4
Author-Name: Soren T. Anderson
Author-Person: pan315
Author-Name: Ryan Kellogg
Author-Name: Stephen W. Salant
Author-Person: psa604
Note: EEE IO
Number: 20280
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20280
File-URL: http://www.nber.org/papers/w20280.pdf
File-Format: application/pdf
Publication-Status: published as Soren T. Anderson & Ryan Kellogg & Stephen W. Salant, 2018. "Hotelling under Pressure," Journal of Political Economy, vol 126(3), pages 984-1026.
Abstract: We show that oil production from existing wells in Texas does not respond to price incentives. Drilling activity and costs, however, do respond strongly to prices. To explain these facts, we reformulate Hotelling's (1931) classic model of exhaustible resource extraction as a drilling problem: firms choose when to drill, but production from existing wells is constrained by reservoir pressure, which decays as oil is extracted. The model implies a modified Hotelling rule for drilling revenues net of costs and explains why production is typically constrained. It also rationalizes regional production peaks and observed patterns of price expectations following demand shocks.
Handle: RePEc:nbr:nberwo:20280
Template-Type: ReDIF-Paper 1.0
Title: Decriminalizing Indoor Prostitution: Implications for Sexual Violence and Public Health
Classification-JEL: I18; J16; K42
Author-Name: Scott Cunningham
Author-Name: Manisha Shah
Author-Person: psh195
Note: EH LS LE
Number: 20281
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20281
File-URL: http://www.nber.org/papers/w20281.pdf
File-Format: application/pdf
Publication-Status: published as Scott Cunningham & Manisha Shah, 2018. "Decriminalizing Indoor Prostitution: Implications for Sexual Violence and Public Health," The Review of Economic Studies, vol 85(3), pages 1683-1715.
Abstract: Most governments in the world including the United States prohibit prostitution. Given these types of laws rarely change and are fairly uniform across regions, our knowledge about the impact of decriminalizing sex work is largely conjectural. We exploit the fact that a Rhode Island District Court judge unexpectedly decriminalized indoor prostitution in 2003 to provide the first causal estimates of the impact of decriminalization on the composition of the sex market, rape offenses, and sexually transmitted infection outcomes. Not surprisingly, we find that decriminalization increased the size of the indoor market. However, we also find that decriminalization caused both forcible rape offenses and gonorrhea incidence to decline for the overall population. Our synthetic control model finds 824 fewer reported rape offenses (31 percent decrease) and 1,035 fewer cases of female gonorrhea (39 percent decrease) from 2004 to 2009.
Handle: RePEc:nbr:nberwo:20281
Template-Type: ReDIF-Paper 1.0
Title: The Shorting Premium and Asset Pricing Anomalies
Classification-JEL: G1; G11; G12; G14; G23
Author-Name: Itamar Drechsler
Author-Name: Qingyi Freda Drechsler
Note: AP
Number: 20282
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20282
File-URL: http://www.nber.org/papers/w20282.pdf
File-Format: application/pdf
Abstract: Short-rebate fees are a strong predictor of the cross-section of stock returns, both gross and net of fees. We document a large "shorting premium": the cheap-minus-expensive-to-short (CME) portfolio of stocks has a monthly average gross return of 1.43%, a net return of 0.91%, and a 1.53% four-factor alpha. We show that short fees interact strongly with the returns to eight of the largest and most well-known cross-sectional anomalies. The anomalies effectively disappear within the 80% of stocks that have low short fees, but are greatly amplified among those with high fees. We propose a joint explanation for these findings: the shorting premium is compensation for the concentrated short risk borne by the small fraction of investors who do most shorting. Because it is on the short side, it raises prices rather than lowers them. We proxy for this short risk using the CME portfolio return and demonstrate that a Fama-French + CME factor model largely captures the anomaly returns among both high- and low-fee stocks.
Handle: RePEc:nbr:nberwo:20282
Template-Type: ReDIF-Paper 1.0
Title: The Prison Boom and the Lack of Black Progress after Smith and Welch
Classification-JEL: J01; J31; K14
Author-Name: Derek Neal
Author-Name: Armin Rick
Note: LS
Number: 20283
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20283
File-URL: http://www.nber.org/papers/w20283.pdf
File-Format: application/pdf
Abstract: More than two decades ago, Smith and Welch (1989) used the 1940 through 1980 census files to document important relative black progress. However, recent data indicate that this progress did not continue, at least among men. The growth of incarceration rates among black men in recent decades combined with the sharp drop in black employment rates during the Great Recession have left most black men in a position relative to white men that is really no better than the position they occupied only a few years after the Civil Rights Act of 1965. A move toward more punitive treatment of arrested offenders drove prison growth in recent decades, and this trend is evident among arrested offenders in every major crime category. Changes in the severity of corrections policies have had a much larger impact on black communities than white communities because arrest rates have historically been much greater for blacks than whites.
Handle: RePEc:nbr:nberwo:20283
Template-Type: ReDIF-Paper 1.0
Title: Improving Educational Outcomes in Developing Countries: Lessons from Rigorous Impact Evaluations
Classification-JEL: I21; I24; I25; I32
Author-Name: Alejandro J. Ganimian
Author-Name: Richard J. Murnane
Author-Person: pmu87
Note: ED
Number: 20284
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20284
File-URL: http://www.nber.org/papers/w20284.pdf
File-Format: application/pdf
Abstract: This paper reviews and interprets the evidence from 223 rigorous impact evaluations of educational initiatives conducted in 56 low- and middle-income countries. We consider for inclusion in our review all studies in recent syntheses, which have reached seemingly conflicting conclusions about which interventions improve educational outcomes. We group interventions based on their theory of action. We derive four lessons from the studies we review. First, reducing the costs of going to school and expanding schooling options increase attendance and attainment, but do not consistently increase student achievement. Second, providing information about school quality, developmentally appropriate parenting practices, and the economic returns to schooling affects the actions of parents and the achievement of children and adolescents. Third, more or better resources improve student achievement only if they result in changes in children’s daily experiences at school. Finally, well-designed incentives increase teacher effort and student achievement from very low levels, but low-skilled teachers need specific guidance to reach minimally acceptable levels of instruction.
Handle: RePEc:nbr:nberwo:20284
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Risk and U.S. Bank Lending at Home and Abroad
Classification-JEL: F3; G21; G38
Author-Name: Ricardo Correa
Author-Person: pco827
Author-Name: Linda S. Goldberg
Author-Person: pgo256
Author-Name: Tara Rice
Note: IFM
Number: 20285
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20285
File-URL: http://www.nber.org/papers/w20285.pdf
File-Format: application/pdf
Abstract: While the balance sheet structure of U.S. banks influences how they respond to liquidity risks, the mechanisms for the effects on and consequences for lending vary widely across banks. We demonstrate fundamental differences across banks without foreign affiliates versus those with foreign affiliates. Among the nonglobal banks (those without a foreign affiliate), cross-sectional differences in response to liquidity risk depend on the banks' shares of core deposit funding. By contrast, differences across global banks (those with foreign affiliates) are associated with ex ante liquidity management strategies as reflected in internal borrowing across the global organization. This intra-firm borrowing by banks serves as a shock absorber and affects lending patterns to domestic and foreign customers. The use of official-sector emergency liquidity facilities by global and nonglobal banks in response to market liquidity risks tends to reduce the importance of ex ante differences in balance sheets as drivers of cross-sectional differences in lending.
Handle: RePEc:nbr:nberwo:20285
Template-Type: ReDIF-Paper 1.0
Title: International Banking and Liquidity Risk Transmission: Lessons from Across Countries
Classification-JEL: F3; F42; F6; G21; G28; G38
Author-Name: Claudia M. Buch
Author-Person: pbu78
Author-Name: Linda S. Goldberg
Author-Person: pgo256
Note: IFM
Number: 20286
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20286
File-URL: http://www.nber.org/papers/w20286.pdf
File-Format: application/pdf
Publication-Status: published as Claudia M Buch & Linda S Goldberg, 2015. "International Banking and Liquidity Risk Transmission: Lessons from Across Countries," IMF Economic Review, Palgrave Macmillan, vol. 63(3), pages 377-410, November.
Abstract: Activities of international banks have been at the core of discussions on the causes and effects of the international financial crisis. Yet we know little about the actual magnitudes and mechanisms for transmission of liquidity shocks through international banks, including the reasons for heterogeneity in transmission across banks. The International Banking Research Network, established in 2012, brings together researchers from around the world with access to micro-level data on individual banks to analyze issues pertaining to global banks. This paper summarizes the common methodology and results of empirical studies conducted in eleven countries to explore liquidity risk transmission. Among the main results is, first, that explanatory power of the empirical model is higher for domestic lending than for international lending. Second, how liquidity risk affects bank lending depends on whether the banks are drawing on official-sector liquidity facilities. Third, liquidity management across global banks can be important for liquidity risk transmission into lending. Fourth, there is substantial heterogeneity in the balance sheet characteristics that affect banks' responses to liquidity risk. Overall, balance sheet characteristics of banks matter for differentiating their lending responses, mainly in the realm of cross-border lending.
Handle: RePEc:nbr:nberwo:20286
Template-Type: ReDIF-Paper 1.0
Title: Housing, Finance and the Macroeconomy
Classification-JEL: E3; E6; G12; G18; R2; R3
Author-Name: Morris A. Davis
Author-Person: pda51
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: AP EFG PE
Number: 20287
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20287
File-URL: http://www.nber.org/papers/w20287.pdf
File-Format: application/pdf
Publication-Status: published as “Housing, Finance and the Macroeconomy” (handbook chapter) with Stijn Van Nieuwerburgh, New York University. Handbook of Urban and Regional Economics, Edited by Gilles Duranton, J. Vernon Henderson and William C. Strange, 2015, Volume 5, p. 753-811.
Abstract: In this chapter, we review and discuss the large body of research that has developed over the past 10-plus years that explores the interconnection of macroeconomics, finance, and housing. We focus on three major topics -- housing and the business cycle, housing and portfolio choice, and housing and asset returns -- and then review the recent literature that studies housing and the macroeconomy during the great housing boom and bust of 2000-2010. Our emphasis is on calibrated models that can be compared to data. In each section, we discuss the important questions, the typical set of tools used, and the insights that result from important papers. Although great progress has been made in understanding the important role that housing plays in understanding macroeconomic phenomena, work remains. For example, economists cannot fully explain all of the volatility in house prices during the unprecedented boom and bust period of 2000-2010. At the end of the chapter, we discuss a new literature that assesses the macroeconomic effects and welfare implications of housing policies.
Handle: RePEc:nbr:nberwo:20287
Template-Type: ReDIF-Paper 1.0
Title: Banks as Patient Fixed-Income Investors
Classification-JEL: G2; G21; G23
Author-Name: Samuel G. Hanson
Author-Person: pha1258
Author-Name: Andrei Shleifer
Author-Person: psh93
Author-Name: Jeremy C. Stein
Author-Person: pst43
Author-Name: Robert W. Vishny
Author-Person: pvi218
Note: CF ME
Number: 20288
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20288
File-URL: http://www.nber.org/papers/w20288.pdf
File-Format: application/pdf
Publication-Status: published as Hanson, Samuel G. & Shleifer, Andrei & Stein, Jeremy C. & Vishny, Robert W., 2015. "Banks as patient fixed-income investors," Journal of Financial Economics, Elsevier, vol. 117(3), pages 449-469.
Abstract: We examine the business model of traditional commercial banks in the context of their co-existence with shadow banks. While both types of intermediaries create safe "money-like" claims, they go about this in different ways. Traditional banks create safe claims by relying on deposit insurance, supported by costly equity capital. This structure allows bank depositors to remain "sleepy": they do not have to pay attention to transient fluctuations in the mark-to-market value of bank assets. In contrast, shadow banks create safe claims by giving their investors an early exit option that allows them to seize collateral and liquidate it at the first sign of trouble. Thus traditional banks have a stable source of funding, while shadow banks are subject to runs and fire-sale losses. These different funding models in turn influence the kinds of assets that traditional banks and shadow banks hold in equilibrium: traditional banks have a comparative advantage at holding fixed-income assets that have only modest fundamental risk, but are relatively illiquid and have substantial transitory price volatility.
Handle: RePEc:nbr:nberwo:20288
Template-Type: ReDIF-Paper 1.0
Title: Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms
Classification-JEL: F22; F23; H2; H22; H25; H32; H71; J23; J3; R23; R30; R58
Author-Name: Juan Carlos Suárez Serrato
Author-Person: psu476
Author-Name: Owen Zidar
Author-Person: pzi93
Note: LS PE PR
Number: 20289
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20289
File-URL: http://www.nber.org/papers/w20289.pdf
File-Format: application/pdf
Publication-Status: published as Juan Carlos Suárez Serrato & Owen Zidar, 2016. "Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms," American Economic Review, vol 106(9), pages 2582-2624.
Abstract: This paper estimates the incidence of state corporate taxes on the welfare of workers, landowners, and firm owners using variation in state corporate tax rates and apportionment rules. We develop a spatial equilibrium model with imperfectly mobile firms and workers. Firm owners may earn profits and be inframarginal in their location choices due to differences in location-specific productivities. We use the reduced-form effects of tax changes to identify and estimate incidence as well as the structural parameters governing these impacts. In contrast to standard open economy models, firm owners bear roughly 40% of the incidence, while workers and landowners bear 30-35% and 25-30%, respectively.
Handle: RePEc:nbr:nberwo:20289
Template-Type: ReDIF-Paper 1.0
Title: What Policies Increase Prosocial Behavior? An Experiment with Referees at the Journal of Public Economics
Classification-JEL: H23; H41
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: Emmanuel Saez
Author-Person: psa117
Author-Name: László Sándor
Author-Person: psn57
Note: LS PE
Number: 20290
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20290
File-URL: http://www.nber.org/papers/w20290.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & Emmanuel Saez & Laszlo Sandor, 2014. "What Policies Increase Prosocial Behavior? An Experiment with Referees at the Journal of Public Economics," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 28(3), pages 169-88, Summer.
Abstract: We evaluate policies to increase prosocial behavior using a field experiment with 1,500 referees at the Journal of Public Economics. We randomly assign referees to four groups: a control group with a six week deadline to submit a referee report, a group with a four week deadline, a cash incentive group rewarded with $100 for meeting the four week deadline, and a social incentive group in which referees were told that their turnaround times would be publicly posted. We obtain four sets of results. First, shorter deadlines reduce the time referees take to submit reports substantially. Second, cash incentives significantly improve speed, especially in the week before the deadline. Cash payments do not crowd out intrinsic motivation: after the cash treatment ends, referees who received cash incentives are no slower than those in the four-week deadline group. Third, social incentives have smaller but significant effects on review times and are especially effective among tenured professors, who are less sensitive to deadlines and cash incentives. Fourth, all the treatments have little or no effect on agreement rates, quality of reports, or review times at other journals. We conclude that small changes in journals' policies could substantially expedite peer review at little cost. More generally, price incentives, nudges, and social pressure are effective and complementary methods of increasing prosocial behavior.
Handle: RePEc:nbr:nberwo:20290
Template-Type: ReDIF-Paper 1.0
Title: Unhappy Cities
Classification-JEL: D00; I00; J00; R00
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Joshua D. Gottlieb
Author-Name: Oren Ziv
Note: EFG LS
Number: 20291
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20291
File-URL: http://www.nber.org/papers/w20291.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser & Joshua D. Gottlieb & Oren Ziv, 2016. "Unhappy Cities," Journal of Labor Economics, vol 34(S2), pages S129-S182.
Abstract: There are persistent differences in self-reported subjective well-being across U.S. metropolitan areas, and residents of declining cities appear less happy than other Americans. Newer residents of these cities appear to be as unhappy as longer term residents, and yet some people continue to move to these areas. While the historical data on happiness are limited, the available facts suggest that cities that are now declining were also unhappy in their more prosperous past. One interpretation of these facts is that individuals do not aim to maximize self-reported well-being, or happiness, as measured in surveys, and they willingly endure less happiness in exchange for higher incomes or lower housing costs. In this view, subjective well-being is better viewed as one of many arguments of the utility function, rather than the utility function itself, and individuals make trade-offs among competing objectives, including but not limited to happiness.
Handle: RePEc:nbr:nberwo:20291
Template-Type: ReDIF-Paper 1.0
Title: Do "Reverse Payment" Settlements of Brand-Generic Patent Disputes in the Pharmaceutical Industry Constitute an Anticompetitive Pay for Delay?
Classification-JEL: I11; L41; L65
Author-Name: Keith M. Drake
Author-Name: Martha A. Starr
Author-Person: pst100
Author-Name: Thomas McGuire
Note: EH LE
Number: 20292
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20292
File-URL: http://www.nber.org/papers/w20292.pdf
File-Format: application/pdf
Publication-Status: published as Keith M. Drake, Martha A. Starr & Thomas G. McGuire (2015) Do “Reverse Payment” Settlements Constitute an Anticompetitive Pay-for-Delay?, International Journal of the Economics of Business, 22:2, 173-200, DOI: 10.1080/13571516.2015.1045744
Abstract: Brand and generic drug manufacturers frequently settle patent litigation on terms that include a payment to the generic manufacturer along with a specified date at which the generic would enter the market. The Federal Trade Commission contends that these agreements extend the brand's market exclusivity and amount to anticompetitive divisions of the market. The parties involved defend the settlements as normal business agreements that reduce business risk associated with litigation. The anticompetitive hypothesis implies brand stock prices should rise with announcement of the settlement. We classify 68 brand-generic settlements from 1993 to the present into those with and without an indication of a "reverse payment" from the brand to the generic, and conduct an event study of the announcement of the patent settlements on the stock price of the brand. For settlements with an indication of a reverse payment, brand stock prices rise on average 6% at the announcement. A "control group" of brand-generic settlements without indication of a reverse payment had no significant effect on the brands' stock prices. Our results support the hypothesis that settlements with a reverse payment increase the expected profits of the brand manufacturer and are anticompetitive.
Handle: RePEc:nbr:nberwo:20292
Template-Type: ReDIF-Paper 1.0
Title: A Model of Dynamic Limit Pricing with an Application to the Airline Industry
Classification-JEL: D43; D82; L13; L41; L93
Author-Name: Christopher Gedge
Author-Name: James W. Roberts
Author-Name: Andrew Sweeting
Author-Person: psw53
Note: IO
Number: 20293
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20293
File-URL: http://www.nber.org/papers/w20293.pdf
File-Format: application/pdf
Abstract: The one-shot nature of most theoretical models of strategic investment, especially those based on asymmetric information, limits our ability to test whether they can fit the data. We develop a dynamic version of the classic Milgrom and Roberts (1982) model of limit pricing, where a monopolist incumbent has incentives to repeatedly signal information about its costs to a potential entrant by setting prices below monopoly levels. The model has a unique Markov Perfect Bayesian Equilibrium under a standard form of refinement, and equilibrium strategies can be computed easily, making it well suited for empirical work. We provide reduced-form evidence that our model can explain why incumbent airlines cut prices when Southwest becomes a potential entrant into airport-pair route markets, and we also calibrate our model to show that it can generate the large price declines that are observed in the data.
Handle: RePEc:nbr:nberwo:20293
Template-Type: ReDIF-Paper 1.0
Title: Forward and Spot Exchange Rates in a Multi-currency World
Classification-JEL: F31; G12; G15
Author-Name: Tarek A. Hassan
Author-Person: pha489
Author-Name: Rui C. Mano
Note: AP IFM ITI
Number: 20294
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20294
File-URL: http://www.nber.org/papers/w20294.pdf
File-Format: application/pdf
Publication-Status: published as Tarek A Hassan & Rui C Mano, 2019. "Forward and Spot Exchange Rates in a Multi-Currency World*," The Quarterly Journal of Economics, vol 134(1), pages 397-450.
Abstract: Separate literatures study violations of uncovered interest parity (UIP) using regression-based and portfolio-based methods. We propose a decomposition of these violations into a cross-currency, a between-time-and-currency, and a cross-time component that allows us to analytically relate regression-based and portfolio-based facts, and to estimate the joint restrictions they place on models of currency returns. Subject to standard assumptions on investors’ information sets, we find that the forward premium puzzle (FPP) and the “dollar trade” anomaly are intimately linked: both are driven almost exclusively by the cross-time component. By contrast, the “carry trade” anomaly is driven largely by cross-sectional violations of UIP. The simplest model the data do not reject features a cross-sectional asymmetry that makes some currencies pay permanently higher expected returns than others, and larger time series variation in expected returns on the US dollar than on other currencies. Importantly, conventional estimates of the FPP are not directly informative about expected returns, because they do not correct for uncertainty about future mean interest rates. Once we correct for this uncertainty, we never reject the null that investors expect high-interest-rate currencies to depreciate, not appreciate.
Handle: RePEc:nbr:nberwo:20294
Template-Type: ReDIF-Paper 1.0
Title: Do Pharmacists Buy Bayer? Informed Shoppers and the Brand Premium
Classification-JEL: D12; D83; L66
Author-Name: Bart J. Bronnenberg
Author-Name: Jean-Pierre Dubé
Author-Name: Matthew Gentzkow
Author-Person: pge43
Author-Name: Jesse M. Shapiro
Author-Person: psh70
Note: IO
Number: 20295
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20295
File-URL: http://www.nber.org/papers/w20295.pdf
File-Format: application/pdf
Publication-Status: published as Bart J. Bronnenberg & Jean-Pierre Dubé & Matthew Gentzkow & Jesse M. Shapiro, 2015. "Do Pharmacists Buy Bayer? Informed Shoppers and the Brand Premium," The Quarterly Journal of Economics, Oxford University Press, vol. 130(4), pages 1669-1726.
Abstract: We estimate the effect of information and expertise on consumers’ willingness to pay for national brands in physically homogeneous product categories. In a detailed case study of headache remedies we find that more informed or expert consumers are less likely to pay extra to buy national brands, with pharmacists choosing them over store brands only 9 percent of the time, compared to 26 percent of the time for the average consumer. In a similar case study of pantry staples such as salt and sugar, we show that chefs devote 12 percentage points less of their purchases to national brands than demographically similar non-chefs. We extend our analysis to cover 50 retail health categories and 241 food and drink categories. The results suggest that misinformation and related consumer mistakes explain a sizable share of the brand premium for health products, and a much smaller share for most food and drink products. We tie our estimates together using a stylized model of demand and pricing.
Handle: RePEc:nbr:nberwo:20295
Template-Type: ReDIF-Paper 1.0
Title: The Value of Brownfield Remediation
Classification-JEL: Q51; R11
Author-Name: Kevin Haninger
Author-Name: Lala Ma
Author-Person: pma2128
Author-Name: Christopher Timmins
Note: EEE
Number: 20296
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20296
File-URL: http://www.nber.org/papers/w20296.pdf
File-Format: application/pdf
Publication-Status: published as Kevin Haninger & Lala Ma & Christopher Timmins, 2017. "The Value of Brownfield Remediation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(1), pages 197-241.
Abstract: The U.S. Environmental Protection Agency Brownfields Program awards grants to redevelop contaminated lands known as brownfields. This paper estimates cleanup benefits by combining administrative records for a nationally representative sample of brownfields with high-resolution, high-frequency housing data. We find property value increases accompanying cleanup averaging from 5.0% to 11.5%; for a welfare interpretation that does not rely on the intertemporal stability of the hedonic price function, a double-difference matching estimator finds even larger effects of up to 15.2%. Our various specifications lead to the common conclusion that Brownfields Program cleanups yield positive, statistically significant, but highly-localized effects on housing prices.
Handle: RePEc:nbr:nberwo:20296
Template-Type: ReDIF-Paper 1.0
Title: Financial Literacy and Retirement Planning in Canada
Classification-JEL: D14; D91
Author-Name: David Boisclair
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Pierre-Carl Michaud
Author-Person: pmi52
Note: AG
Number: 20297
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20297
File-URL: http://www.nber.org/papers/w20297.pdf
File-Format: application/pdf
Publication-Status: published as Boisclair, David & Lusardi, Annamaria & Michaud, Pierre-Carl, 2017. "Financial literacy and retirement planning in Canada," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(03), pages 277-296, July.
Abstract: Financial literacy and Canadians' capacity to plan for retirement is of primary importance for the policy debate over pension system reform in Canada. In this paper, we draw on internationally comparable survey evidence on financial literacy and retirement planning in Canada to investigate how financially literate Canadians are and who does plan for retirement. We find that 42 percent of respondents are able to correctly answer three simple questions measuring knowledge of interest compounding, inflation, and risk diversification. This is consistent with evidence from other countries, and Canadians perform relatively well in comparison to Americans but worse than individuals in other countries, such as Germany. Among Canadian respondents, the young and the old, women, minorities, and those with lower educational attainment do worse, a pattern that has been consistently found in other countries as well. Retirement planning is strongly associated with financial literacy; those who responded correctly to all three financial literacy questions are 10 percentage points more likely to have retirement savings.
Handle: RePEc:nbr:nberwo:20297
Template-Type: ReDIF-Paper 1.0
Title: The Long-Run Effects of a Public Policy on Alcohol Tastes and Mortality
Classification-JEL: D12; E21; G02; I10
Author-Name: Lorenz Kueng
Author-Person: pku506
Author-Name: Evgeny Yakovlev
Note: AG AP EFG EH PE
Number: 20298
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20298
File-URL: http://www.nber.org/papers/w20298.pdf
File-Format: application/pdf
Publication-Status: published as Lorenz Kueng & Evgeny Yakovlev, 2021. "The Long-Run Effects of a Public Policy on Alcohol Tastes and Mortality," American Economic Journal: Economic Policy, American Economic Association, vol. 13(1), pages 294-328, February.
Abstract: We study the long-run effects of Russia's anti-alcohol campaign, which dramatically altered the relative supply of hard and light alcohol in the late 1980s. We find that this policy shifted young men's long-run preferences from hard to light alcohol decades later and we estimate the age at which consumers form their tastes. We show that the large beer market expansion in the late 1990s had similar effects on young consumers' tastes, while older consumers' tastes remained largely unchanged. We then link these long-run changes in alcohol consumption patterns to changes in male mortality. The shift from hard to light alcohol reduced incidences of binge drinking substantially, leading to fewer alcohol- related deaths. We conclude that the resulting large cohort differences in current alcohol consumption shares explain a significant part of the recent decrease in male mortality. Simulations suggest that mortality will continue to decrease by another 23% over the next twenty years due to persistent changes in consumer tastes. Program impact evaluations that focus only on contemporaneous effects can therefore severely underestimate the total effect of such public policies that change preferences for goods.
Handle: RePEc:nbr:nberwo:20298
Template-Type: ReDIF-Paper 1.0
Title: The Fiscal Cost of Weak Governance: Evidence from Teacher Absence in India
Classification-JEL: H52; I21; M54; O15
Author-Name: Karthik Muralidharan
Author-Person: pmu102
Author-Name: Jishnu Das
Author-Person: pda284
Author-Name: Alaka Holla
Author-Name: Aakash Mohpal
Note: DEV ED LS PE
Number: 20299
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20299
File-URL: http://www.nber.org/papers/w20299.pdf
File-Format: application/pdf
Publication-Status: published as Muralidharan, Karthik & Das, Jishnu & Holla, Alaka & Mohpal, Aakash, 2017. "The fiscal cost of weak governance: Evidence from teacher absence in India," Journal of Public Economics, Elsevier, vol. 145(C), pages 116-135.
Abstract: We construct a new nationally-representative panel dataset of schools across 1297 villages in India and find that the large investments in public primary education over the past decade have led to substantial improvements in input-based measures of school quality, including infrastructure, pupil-teacher ratios, and monitoring. However, teacher absence continues to be high, with 23.6 percent of teachers in public schools across rural India being absent during unannounced visits to schools. Improvements in school infrastructure and service conditions are not correlated with lower teacher absence. We find two robust correlations in the nationally-representative panel data that corroborate findings from smaller-scale experiments. First, reductions in pupil-teacher ratios are correlated with increased teacher absence. Second, increases in the frequency of inspections are strongly correlated with lower teacher absence. We estimate that the fiscal cost of teacher absence in India is around $1.5 billion per year, and that investing in better governance by hiring more inspectors to increase the frequency of monitoring could be over ten times more cost effective at increasing teacher-student contact time (net of teacher absence) than hiring more teachers.
Handle: RePEc:nbr:nberwo:20299
Template-Type: ReDIF-Paper 1.0
Title: Employee Satisfaction, Labor Market Flexibility, and Stock Returns Around The World
Classification-JEL: G12; G23; G38; J53; J81; J83; J88; K31
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Lucius Li
Author-Name: Chendi Zhang
Author-Person: pzh335
Note: CF LE LS
Number: 20300
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20300
File-URL: http://www.nber.org/papers/w20300.pdf
File-Format: application/pdf
Abstract: We study the relationship between employee satisfaction and abnormal stock returns around the world, using lists of the "Best Companies to Work For" in 14 countries. We show that employee satisfaction is associated with positive abnormal returns in countries with high labor market flexibility, such as the U.S. and U.K., but not in countries with low labor market flexibility, such as Germany. These results are consistent with high employee satisfaction being a valuable tool for recruitment, retention, and motivation in flexible labor markets, where firms face fewer constraints on hiring and firing. In contrast, in regulated labor markets, legislation already provides minimum standards for worker welfare and so additional expenditure may exhibit diminishing returns. The results have implications for the differential profitability of socially responsible investing ("SRI") strategies around the world. In particular, they emphasize the importance of taking institutional features into account when forming such strategies.
Handle: RePEc:nbr:nberwo:20300
Template-Type: ReDIF-Paper 1.0
Title: Inducing Leaders to Take Risky Decisions: Dismissal, Tenure, and Term Limits
Classification-JEL: C72; D72; D82; D86; M12
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Matthew Jackson
Author-Person: pja7
Note: POL
Number: 20301
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20301
File-URL: http://www.nber.org/papers/w20301.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & Matthew O. Jackson, 2016. "Inducing Leaders to Take Risky Decisions: Dismissal, Tenure, and Term Limits," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 1-38, August.
Abstract: In this paper we analyze the problem of whether and/or when to replace a leader (agent) when no monetary rewards are available, and it is the leader's competence rather than effort that is being evaluated. The only decisions that the leader takes over time are whether to undertake risky but potentially high payoff projects, the choice of which can reveal the leader's competency. If the value of foregone projects are observed, then the probability that a leader is replaced is bell-shaped and saw-toothed over time. If the value of foregone projects are not observed, and the leader's competency is only indirectly inferrable through the success or failure of projects that the leader undertakes, then the incentives of the leader depend on the replacement strategy. If the principal can commit to a replacement strategy in advance, then we show that (approximately) optimal mechanisms either involve a probationary period and then indefinite tenure, or else a random dismissal strategy. If instead commitment is impossible, and for instance voters regularly choose whether to replace the leader, then there are poor incentives and inefficiently low payoffs, even below that of simply replacing the leader in every period. Incentives can be improved via term limits.
Handle: RePEc:nbr:nberwo:20301
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Rainfall on Rice Output in Indonesia
Classification-JEL: O13
Author-Name: David I. Levine
Author-Person: ple80
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV
Number: 20302
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20302
File-URL: http://www.nber.org/papers/w20302.pdf
File-Format: application/pdf
Abstract: We estimate the impact of weather variation on agricultural output in Indonesia by examining the impact of local rainfall shocks on rice output at the district level. Our analysis makes use of local meteorological data on rainfall in combination with government administrative data on district-level rice output in the 1990s. We find that deviations from mean local rainfall are positively associated with district-level rice output. 10% higher rainfall leads metric tons of rice output to be 0.4% higher on average. The impact of rainfall on rice output occurs contemporaneously (in the same calendar year), rather than with a lag. These results suggest that researchers should be justified in interpreting higher rainfall as a positive contemporaneous shock to local economic conditions in Indonesia.
Handle: RePEc:nbr:nberwo:20302
Template-Type: ReDIF-Paper 1.0
Title: Identifying Long-Run Risks: A Bayesian Mixed-Frequency Approach
Classification-JEL: C11; C32; C58; E44; G12
Author-Name: Frank Schorfheide
Author-Person: psc19
Author-Name: Dongho Song
Author-Person: pso450
Author-Name: Amir Yaron
Author-Person: pya156
Note: AP EFG ME
Number: 20303
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20303
File-URL: http://www.nber.org/papers/w20303.pdf
File-Format: application/pdf
Publication-Status: published as Frank Schorfheide & Dongho Song & Amir Yaron, 2018. "Identifying Long‐Run Risks: A Bayesian Mixed‐Frequency Approach," Econometrica, Econometric Society, vol. 86(2), pages 617-654, March.
Abstract: We develop a nonlinear state-space model that captures the joint dynamics of consumption, dividend growth, and asset returns. Our model consists of an economy containing a common predictable component for consumption and dividend growth and multiple stochastic volatility processes. The estimation is based on annual consumption data from 1929 to 1959, monthly consumption data after 1959, and monthly asset return data throughout. We maximize the span of the sample to recover the predictable component and use high-frequency data, whenever available, to efficiently identify the volatility processes. Our Bayesian estimation provides strong evidence for a small predictable component in consumption growth (even if asset return data are omitted from the estimation). Three independent volatility processes capture different frequency dynamics; our measurement error specification implies that consumption is measured much more precisely at an annual than monthly frequency; and the estimated model is able to capture key asset-pricing facts of the data.
Handle: RePEc:nbr:nberwo:20303
Template-Type: ReDIF-Paper 1.0
Title: Holy Cows or Cash Cows?
Classification-JEL: O1; O12; O53
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Britta Augsburg
Author-Person: pau77
Note: DEV EFG
Number: 20304
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20304
File-URL: http://www.nber.org/papers/w20304.pdf
File-Format: application/pdf
Abstract: In a recent paper, Anagol, Etang and Karlan (2013) consider the income generated by these owning a cow or a buffalo in two districts of Uttar Pradesh, India. The net profit generated ignoring labour costs, gives rise to a small positive rate of return. Once any reasonable estimate of labour costs is added to costs, the rate of return is a large negative number. The authors conclude that households holding this type of assets do not behave according to the tenets of capitalism. A variety of explanations, typically appealing to religious or cultural factors have been invoked for such a puzzling fact. In this note, we point to a simple explanation that is fully consistent with rational behaviour on the part of Indian farmers. In computing the return on cows and buffaloes, the authors used data from a single year. Cows are assets whose return varies through time. In drought years, when fodder is scarce and expensive, milk production is lower and profits are low. In non-drought years, when fodder is abundant and cheaper, milk production is higher and profits can be considerably higher. The return on cows and buffaloes, like that of many stocks traded on Wall Street, is positive in some years and negative in others. We report evidence from three years of data on the return on cows and buffaloes in the district of Anantapur and show that in one of the three years returns are very high, while in drought years they are similar to the figures obtained by Anagol, Etang and Karlan (2013).
Handle: RePEc:nbr:nberwo:20304
Template-Type: ReDIF-Paper 1.0
Title: Firms' Sickness Costs and Workers' Sickness Absences
Classification-JEL: H51; I18
Author-Name: René Böheim
Author-Person: pbh15
Author-Name: Thomas Leoni
Note: AG
Number: 20305
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20305
File-URL: http://www.nber.org/papers/w20305.pdf
File-Format: application/pdf
Abstract: In many countries, social security insures firms against their workers' sickness absences. The insurance may create a moral hazard for firms, leading to inefficient monitoring of absences or to an underinvestment in the prevention of absences. We exploit an administrative threshold in the Austrian social security that defined whether a firm had to pay a deductible for its blue-collar workers sicknesses or not. The quasi-experimental situation around the threshold provides causal evidence on the extent of moral hazard induced by the deductible. We apply a regression discontinuity design to estimate the differences in the incidences and durations of sicknesses for firms that faced the deductible and those who did not. We find that the deductible did not lead to different sickness outcomes and conclude that relatively low deductibles have little impact on forms' management of sicknesses.
Handle: RePEc:nbr:nberwo:20305
Template-Type: ReDIF-Paper 1.0
Title: The Persistence and Heterogeneity of Health among Older Americans
Classification-JEL: I10; I19; J14
Author-Name: Florian Heiss
Author-Person: phe378
Author-Name: Steven F. Venti
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG
Number: 20306
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20306
File-URL: http://www.nber.org/papers/w20306.pdf
File-Format: application/pdf
Abstract: We consider how age-health profiles differ by demographic characteristics such as education, race, and ethnicity. A key feature of the analysis is the joint estimation of health and mortality to correct for the effect of mortality selection on observed age-health profiles. The model also allows for heterogeneity in individual health at a point in time and the persistence of the unobserved component of health over time. The observed component of health is based on a multidimensional index based on 27 indicators of health. Most of the key results are shown by simulations that illustrate the range of issues that can be addressed using the model. Differences in health by education and racial-ethnic group at age 50 persist throughout the remainder of life. Based on observed profiles, the health of whites is about 8 percentile points greater than the health of blacks at age 50 but by age 90 the gap is only 5 percentile points. However, when corrected for mortality selection, the health of blacks is actually declining more rapidly with age than the health of whites; the true gap widens with age. We also find that much of the difference in age-health profiles by racial-ethnic group is accounted for by differences in the levels of education between race-ethnic groups--from two-thirds to 85 percent for men and about half for women. We also simulate differences in survival probabilities by level of education and health and use these probabilities to calculate the expected present discounted value (EPDV) of an immediate annuity with first payout at age 66 for persons by gender, level of education, and health decile. The range of EPDVs is over two-fold for both men and women suggesting enormous potential for adverse selection.
Handle: RePEc:nbr:nberwo:20306
Template-Type: ReDIF-Paper 1.0
Title: The Micro and Macro of Disappearing Routine Jobs: A Flows Approach
Classification-JEL: E0; J0
Author-Name: Guido Matias Cortes
Author-Person: pco712
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Christopher J. Nekarda
Author-Person: pne84
Author-Name: Henry E. Siu
Author-Person: psi89
Note: EFG LS
Number: 20307
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20307
File-URL: http://www.nber.org/papers/w20307.pdf
File-Format: application/pdf
Publication-Status: published as Cortes, Guido Matias & Jaimovich, Nir & Nekarda, Christopher J. & Siu, Henry E., 2020. "The dynamics of disappearing routine jobs: A flows approach," Labour Economics, Elsevier, vol. 65(C).
Abstract: The U.S. labor market has become increasingly polarized since the 1980s, with the share of employment in middle-wage occupations shrinking over time. This job polarization process has been associated with the disappearance of per capita employment in occupations focused on routine tasks. We use matched individual-level data from the CPS to study labor market flows into and out of routine occupations and determine how this disappearance has played out at the "micro" and "macro" levels. At the macro level, we determine which changes in transition rates account for the disappearance of routine employment since the 1980s. We find that changes in three transition rate categories are of primary importance: (i) that from unemployment to employment in routine occupations, (ii) that from labor force non-participation to routine employment, and (iii) that from routine employment to non-participation. At the micro level, we study how these transition rates have changed since job polarization, and the extent to which these changes are accounted for by changes in demographic composition or changes in the behavior of individuals with particular demographic characteristics. We find that the preponderance of changes is due to the propensity of individuals to make such transitions, and relatively little due to demographics. Moreover, we find that changes in the transition propensities of the young are of primary importance in accounting for the fall in routine employment.
Handle: RePEc:nbr:nberwo:20307
Template-Type: ReDIF-Paper 1.0
Title: Expanding the School Breakfast Program: Impacts on Children's Consumption, Nutrition and Health
Classification-JEL: I12; I21
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Author-Name: Mary Zaki
Note: CH ED PE
Number: 20308
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20308
File-URL: http://www.nber.org/papers/w20308.pdf
File-Format: application/pdf
Abstract: School meals programs are the front line of defense against childhood hunger, and while the school lunch program is nearly universally available in U.S. public schools, the school breakfast program has lagged behind in terms of availability and participation. In this paper we use experimental data collected by the USDA to measure the impact of two popular policy innovations aimed at increasing access to the school breakfast program. The first, universal free school breakfast, provides a hot breakfast before school (typically served in the school's cafeteria) to all students regardless of their income eligibility for free or reduced-price meals. The second is the Breakfast in the Classroom (BIC) program that provides free school breakfast to all children to be eaten in the classroom during the first few minutes of the school day. We find both policies increase the take-up rate of school breakfast, though much of this reflects shifting breakfast consumption from home to school or consumption of multiple breakfasts and relatively little of the increase is from students gaining access to breakfast. We find little evidence of overall improvements in child 24-hour nutritional intake, health, behavior or achievement, with some evidence of health and behavior improvements among specific subpopulations.
Handle: RePEc:nbr:nberwo:20308
Template-Type: ReDIF-Paper 1.0
Title: Social Structure and Institutional Design: Evidence from a Lab Experiment in the Field
Classification-JEL: D02; L14; O17; Z13
Author-Name: Emily Breza
Author-Name: Arun G. Chandrasekhar
Author-Person: pch1351
Author-Name: Horacio Larreguy
Author-Person: pla1013
Note: DEV POL
Number: 20309
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20309
File-URL: http://www.nber.org/papers/w20309.pdf
File-Format: application/pdf
Abstract: In settings with poor formal contract enforcement, profitable investments are likely unrealized. While social closeness can mitigate contractual incompleteness, we examine how to improve the preponderance of cases where contracting parties cannot rely upon social ties. We ask if a community can enlist members to monitor transactions or punish offending parties. We conduct a laboratory experiment in 40 Indian villages, with 960 non-anonymized subjects, where we have social network data. Participants play modified sender-receiver investment games, with and without third-party monitors and punishers. We examine whether network centrality of the third party increases efficiency of interaction. Furthermore, we decompose the efficiency increase into a monitoring channel (central third parties are valuable since they may influence reputations) and an enforcement channel (central third parties may be more able to punish without fear of retaliation). Assigning a third party at the 75th percentile of the centrality distribution (as compared to the 25th) increases efficiency by 21% relative to the mean: we attribute 2/5 of the effect to monitoring and 3/5 to enforcement. The largest efficiency increase occurs when senders and receivers are socially distant, unable to maintain efficient levels autonomously. Results cannot be explained by demographics such as elite status, caste, wealth or gender. Our findings show not every member is equally well-equipped to be part of a local institution. Knowing that a central third party observes their interaction increases sender-receiver efficiency. More importantly, to be able to punish someone, the third party must be important in the community.
Handle: RePEc:nbr:nberwo:20309
Template-Type: ReDIF-Paper 1.0
Title: Loans on sale: Credit market seasonality, borrower need, and lender rents
Classification-JEL: G21; G32; L1
Author-Name: Justin Murfin
Author-Name: Mitchell Petersen
Author-Person: ppe42
Note: CF IO
Number: 20310
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20310
File-URL: http://www.nber.org/papers/w20310.pdf
File-Format: application/pdf
Publication-Status: published as Justin Murfin & Mitchell Petersen, 2016. "Loans on sale: Credit market seasonality, borrower need, and lender rents," Journal of Financial Economics, .
Abstract: The market for corporate credit is characterized by significant seasonal variation, both in interest rates and the volume of new lending. Firms borrowing from banks during seasonal "sales" in late spring and fall issue at 19 basis points cheaper than winter and summer borrowers. Issuers during cheap seasons appear to have less immediate or uncertain needs, but are enticed by low rates to engage in precautionary borrowing. High interest rate periods capture borrowers with unanticipated, non-deferrable investment needs. Consistent with models of intertemporal price discrimination, seasonality is strongly associated with market concentration among a few large banks with repeated interactions.
Handle: RePEc:nbr:nberwo:20310
Template-Type: ReDIF-Paper 1.0
Title: An Econometric Evaluation of Competing Explanations for The Midterm Gap
Classification-JEL: D7
Author-Name: Brian G. Knight
Author-Person: pkn7
Note: POL
Number: 20311
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20311
File-URL: http://www.nber.org/papers/w20311.pdf
File-Format: application/pdf
Publication-Status: published as Brian Knight, 2017. "An Econometric Evaluation of Competing Explanations for the Midterm Gap," Quarterly Journal of Political Science, vol 12(2), pages 205-239.
Abstract: This paper provides a unified theoretical and empirical analysis of three longstanding explanations for the consistent loss of support for the President’s party in midterm Congressional elections: (1) a Presidential penalty, defined as a preference for supporting the opposition during midterm years, (2) a surge and decline in voter turnout, and (3) a reversion to the mean in voter ideology. To quantify the contribution of each of these factors, we build an econometric model in which voters jointly choose whether or not to participate and which party to support in both House and Presidential elections. Estimated using ANES data from both Presidential and midterm years, the model can fully explain the observed midterm gaps, and counterfactual simulations demonstrate that each factor makes a sizable contribution towards the midterm gap, with the Presidential penalty playing the largest role.
Handle: RePEc:nbr:nberwo:20311
Template-Type: ReDIF-Paper 1.0
Title: Serial Entrepreneurship: Learning by Doing?
Classification-JEL: J00; J24; L26; L81
Author-Name: Francine Lafontaine
Author-Person: pla92
Author-Name: Kathryn Shaw
Author-Person: psh162
Note: LS PR
Number: 20312
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20312
File-URL: http://www.nber.org/papers/w20312.pdf
File-Format: application/pdf
Publication-Status: published as Francine Lafontaine & Kathryn Shaw, 2016. "Serial Entrepreneurship: Learning by Doing?," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages S000 - S000.
Abstract: Among typical entrepreneurs, is the serial entrepreneur more likely to succeed? If so, why? We answer these two questions using a comprehensive and unique data set on all establishments started at any time between 1990 and 2011 to sell taxable goods and services in the state of Texas. An entrepreneur is defined as the owner of a new business. A serial entrepreneur is one who opens repeat businesses. The success of the business is measured by the duration over which the business is in operation. The data show that serial entrepreneurship is relatively uncommon in retail trade. Of the almost 2.3 million retail businesses of small owners of new businesses in our data, only 25 percent are started by owners who have started at least one business before, and only 8 percent are started by an owner who is still operating at least one other business started earlier. However, once one becomes an entrepreneur for a second time, the probability of becoming one a third time, or fourth time, and so on, keeps rising. Moreover, we find that an owner's prior experience at starting a business increases the longevity of the next business opened, and that controlling for person fixed effects, prior experience still matters. Finally, experience at starting retail businesses in other sectors (e.g. a clothing store versus a repair shop) is beneficial as well, though not as much as same sector experience, and not in the restaurant sector. We conclude that prior experience imparts general skills that are useful in running the new business.
Handle: RePEc:nbr:nberwo:20312
Template-Type: ReDIF-Paper 1.0
Title: Do Large Modern Retailers Pay Premium Wages?
Classification-JEL: J00; J24; J3; L25; L81
Author-Name: Brianna Cardiff-Hicks
Author-Name: Francine Lafontaine
Author-Person: pla92
Author-Name: Kathryn Shaw
Author-Person: psh162
Note: LS
Number: 20313
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20313
File-URL: http://www.nber.org/papers/w20313.pdf
File-Format: application/pdf
Publication-Status: published as Brianna Cardiff-Hicks & Francine Lafontaine & Kathryn Shaw, 2015. "Do Large Modern Retailers Pay Premium Wages?," ILR Review, Cornell University, ILR School, vol. 68(3), pages 633-665, May.
Abstract: With malls, franchise strips and big-box retailers increasingly dotting the landscape, there is concern that middle-class jobs in manufacturing in the U.S. are being replaced by minimum wage jobs in retail. Retail jobs have spread, while manufacturing jobs have shrunk in number. In this paper, we characterize the wages that have accompanied the growth in retail. We show that wage rates in the retail sector rise markedly with firm size and with establishment size. These increases are halved when we control for worker fixed effects, suggesting that there is sorting of better workers into larger firms. Also, higher ability workers get promoted to the position of manager, which is associated with higher pay. We conclude that the growth in modern retail, characterized by larger chains of larger establishments with more levels of hierarchy, is raising wage rates relative to traditional mom-and-pop retail stores.
Handle: RePEc:nbr:nberwo:20313
Template-Type: ReDIF-Paper 1.0
Title: The Twin Ds: Optimal Default and Devaluation
Classification-JEL: E52; F31; F34; F38; F41
Author-Name: Seunghoon Na
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martin Uribe
Author-Name: Vivian Z. Yue
Author-Person: pyu120
Note: EFG IFM ME
Number: 20314
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20314
File-URL: http://www.nber.org/papers/w20314.pdf
File-Format: application/pdf
Publication-Status: published as Seunghoon Na & Stephanie Schmitt-Grohé & Martín Uribe & Vivian Yue, 2018. "The Twin Ds: Optimal Default and Devaluation," American Economic Review, vol 108(7), pages 1773-1819.
Abstract: A salient characteristic of sovereign defaults is that they are typically accompanied by large devaluations. This paper presents new evidence of this empirical regularity known as the Twin Ds and proposes a model that rationalizes it as an optimal policy outcome. The model combines limited enforcement of debt contracts and downward nominal wage rigidity. Under optimal policy, default is shown to occur during con- tractions. The role of default is to free up resources for domestic absorption, and the role of exchange-rate devaluation is to lower the real value of wages, thereby reducing involuntary unemployment.
Handle: RePEc:nbr:nberwo:20314
Template-Type: ReDIF-Paper 1.0
Title: Corruption, Intimidation, and Whistle-blowing: a Theory of Inference from Unverifiable Reports
Classification-JEL: D73; D82; D86
Author-Name: Sylvain Chassang
Author-Name: Gerard Padró i Miquel
Note: DEV POL
Number: 20315
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20315
File-URL: http://www.nber.org/papers/w20315.pdf
File-Format: application/pdf
Abstract: We consider a game between a principal, an agent, and a monitor in which the principal would like to rely on messages by the monitor to target intervention against a misbehaving agent. The difficulty is that the agent can credibly threaten to retaliate against likely whistleblowers in the event of an intervention. In this setting intervention policies that are very responsive to the monitor's message provide very informative signals to the agent, allowing him to shut down communication channels. Successful intervention policies must garble the information provided by monitors and cannot be fully responsive. We show that even if hard evidence is unavailable and monitors have heterogeneous incentives to (mis)report, it is possible to establish robust bounds on equilibrium corruption using only non-verifiable reports. Our analysis suggests a simple heuristic to calibrate intervention policies: first get monitors to complain, then scale up enforcement while keeping the information content of intervention constant.
Handle: RePEc:nbr:nberwo:20315
Template-Type: ReDIF-Paper 1.0
Title: A Surplus of Ambition: Can Europe Rely on Large Primary Surpluses to Solve its Debt Problem?
Classification-JEL: E0; E6; F0; F34
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Ugo Panizza
Note: IFM
Number: 20316
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20316
File-URL: http://www.nber.org/papers/w20316.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen & Ugo Panizza, 2016. "A surplus of ambition: can Europe rely on large primary surpluses to solve its debt problem?," Economic Policy, CEPR;CES;MSH, vol. 31(85), pages 5-49.
Abstract: IMF forecasts and the EU's Fiscal Compact foresee Europe's heavily indebted countries running primary budget surpluses of as much as 5 percent of GDP for as long as 10 years in order to maintain debt sustainability and bring their debt/GDP ratios down to the Compact's 60 percent target. We show that primary surpluses this large and persistent are rare. In an extensive sample of high- and middle-income countries there are just 3 (nonoverlapping) episodes where countries ran primary surpluses of at least 5 per cent of GDP for 10 years. Analyzing a less restrictive definition of persistent surplus episodes (primary surpluses averaging at least 3 percent of GDP for 5 years), we find that surplus episodes are more likely when growth is strong, when the current account of the balance of payments is in surplus (savings rates are high), when the debt-to-GDP ratio is high (heightening the urgency of fiscal adjustment), and when the governing party controls all houses of parliament or congress (its bargaining position is strong). Left wing governments, strikingly, are more likely to run large, persistent primary surpluses. In advanced countries, proportional representation electoral systems that give rise to encompassing coalitions are associated with surplus episodes. The point estimates do not provide much encouragement for the view that a country like Italy will be able to run a primary budget surplus as large and persistent as officially projected.
Handle: RePEc:nbr:nberwo:20316
Template-Type: ReDIF-Paper 1.0
Title: The Gradients of Power: Evidence from the Chinese Housing Market
Classification-JEL: D73; H1; O18
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Quanlin Gu
Author-Name: Li-An Zhou
Author-Person: pzh156
Note: PE
Number: 20317
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20317
File-URL: http://www.nber.org/papers/w20317.pdf
File-Format: application/pdf
Publication-Status: published as Hanming Fang & Quanlin Gu & Li-An Zhou, 2019. "The gradients of power: Evidence from the Chinese housing market," Journal of Public Economics, vol 176, pages 32-52.
Abstract: Using a large, unique dataset on the Chinese housing market, we propose to measure corruption using the price differences paid by bureaucrat buyers and non-bureaucrat buyers in the housing market. We find that the housing price paid by bureaucrat buyers is on average 1.05 percentage points lower than non-bureaucrat buyers, after controlling for a full set of characteristics of buyers, houses and mortgage loans. More interestingly, we find that the bureaucrat price discounts exhibit interesting gradients with respect to their hierarchical ranks, the criticality of their government agencies to real estate developers, and geography. We argue that the bureaucrat price discounts and the gradients of these discounts are unlikely to be driven by alternative explanations, thus they are evidence of corruption and measures of the market value of government power.
Handle: RePEc:nbr:nberwo:20317
Template-Type: ReDIF-Paper 1.0
Title: Applying Insights from Behavioral Economics to Policy Design
Classification-JEL: D03; D04; H2; H3
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: AG CH DEV ED EEE EH LE LS PE
Number: 20318
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20318
File-URL: http://www.nber.org/papers/w20318.pdf
File-Format: application/pdf
Publication-Status: published as Brigitte C. Madrian, 2014. "Applying Insights from Behavioral Economics to Policy Design," Annual Review of Economics, Annual Reviews, Annual Reviews, vol. 6(1), pages 663-688, 08.
Abstract: The premise of this article is that an understanding of psychology and other social science disciplines can inform the effectiveness of the economic tools traditionally deployed in carrying out the functions of government, which include remedying market failures, redistributing income, and collecting tax revenue. An understanding of psychology can also lead to the development of different policy tools that better motivate desired behavior change or that are more cost-effective than traditional policy tools. The article outlines a framework for thinking about the psychology of behavior change in the context of market failures. It then describes the research on the effects of a variety of interventions rooted in an understanding of psychology that have policy-relevant applications. The article concludes by discussing how an understanding of psychology can also inform the use and design of traditional policy tools for behavior change, such as financial incentives.
Handle: RePEc:nbr:nberwo:20318
Template-Type: ReDIF-Paper 1.0
Title: Risk and Ambiguity in Models of Business Cycles
Classification-JEL: D81; E32; G12
Author-Name: David Backus
Author-Person: pba242
Author-Name: Axelle Ferriere
Author-Person: pfe389
Author-Name: Stanley Zin
Author-Person: pzi46
Note: AP EFG
Number: 20319
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20319
File-URL: http://www.nber.org/papers/w20319.pdf
File-Format: application/pdf
Publication-Status: published as Backus, David & Ferriere, Axelle & Zin, Stanley, 2015. "Risk and ambiguity in models of business cycles," Journal of Monetary Economics, Elsevier, vol. 69(C), pages 42-63.
Abstract: We inject aggregate uncertainty - risk and ambiguity - into an otherwise standard business cycle model and describe its consequences. We find that increases in uncertainty generally reduce consumption, but they do not account, in this model, for either the magnitude or the persistence of the most recent recession. We speculate about extensions that might do better along one or both dimensions.
Handle: RePEc:nbr:nberwo:20319
Template-Type: ReDIF-Paper 1.0
Title: Time Preferences and Consumer Behavior
Classification-JEL: D14; D91; I10; Q40
Author-Name: David Bradford
Author-Person: pbr330
Author-Name: Charles Courtemanche
Author-Person: pco421
Author-Name: Garth Heutel
Author-Person: phe315
Author-Name: Patrick McAlvanah
Author-Person: pmc147
Author-Name: Christopher Ruhm
Author-Person: pru7
Note: EEE EH
Number: 20320
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20320
File-URL: http://www.nber.org/papers/w20320.pdf
File-Format: application/pdf
Publication-Status: published as David Bradford & Charles Courtemanche & Garth Heutel & Patrick McAlvanah & Christopher Ruhm, 2017. "Time preferences and consumer behavior," Journal of Risk and Uncertainty, vol 55(2-3), pages 119-145.
Abstract: We investigate the predictive power of survey-elicited time preferences using a representative sample of US residents. In regressions controlling for demographics and risk preferences, we show that the discount factor elicited from choice experiments using multiple price lists and real payments predicts various health, energy, and financial outcomes, including overall self-reported health, smoking, drinking, car fuel efficiency, and credit card balance. We allow for time-inconsistent preferences and find that the long-run and present bias discount factors (δ and β) are each significantly associated in the expected direction with several of these outcomes. Finally, we explore alternate measures of time preference. Elicited discount factors are correlated with several such measures, including self-reported willpower. A multiple proxies approach using these alternate measures shows that our estimated associations between the time-consistent discount factor and health, energy, and financial outcomes may be conservative.
Handle: RePEc:nbr:nberwo:20320
Template-Type: ReDIF-Paper 1.0
Title: When Incentives Matter Too Much: Explaining Significant Responses to Irrelevant Information
Classification-JEL: D03; I2; J33
Author-Name: Thomas Ahn
Author-Person: pah101
Author-Name: Jacob L. Vigdor
Author-Person: pvi23
Note: ED LS
Number: 20321
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20321
File-URL: http://www.nber.org/papers/w20321.pdf
File-Format: application/pdf
Publication-Status: published as Tom Ahn & Jacob L. Vigdor, 2021. "When Incentives Matter Too Much: Explaining Significant Responses to Irrelevant Information," Journal of Human Capital, vol 15(4), pages 629-664.
Abstract: When economic agents make decisions on the basis of an information set containing both a continuous variable and a discrete signal based on that variable, theory suggests that the signal should have no bearing on behavior conditional on the variable itself. Numerous empirical studies, many based on the regression discontinuity design, have contradicted this basic prediction. We propose two models of behavior capable of rationalizing this observed behavior, one based on information acquisition costs and a second on learning and imperfect information. Using data on school responses to discrete signals embedded in North Carolina's school accountability system, we find patterns of results inconsistent with the first model but consistent with the second. These results imply that rational responses to policy interventions may take time to emerge; consequently evaluations based on short-term data may understate treatment effects.
Handle: RePEc:nbr:nberwo:20321
Template-Type: ReDIF-Paper 1.0
Title: Patent Trolls: Evidence from Targeted Firms
Classification-JEL: D2; K1; O31
Author-Name: Lauren Cohen
Author-Name: Umit Gurun
Author-Person: pgu282
Author-Name: Scott Duke Kominers
Author-Person: pko394
Note: PR LE
Number: 20322
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20322
File-URL: http://www.nber.org/papers/w20322.pdf
File-Format: application/pdf
Publication-Status: published as Lauren Cohen & Umit G. Gurun & Scott Duke Kominers, 2019. "Patent Trolls: Evidence from Targeted Firms," Management Science, INFORMS, vol. 65(12), pages 5461-5486, December.
Abstract: We develop a theoretical model of, and provide the first large-sample evidence on, the behavior and impact of non-practicing entities (NPEs) in the intellectual property space. Our model shows that NPE litigation can reduce infringement and support small inventors. However, the model also shows that as NPEs become effective at bringing frivolous lawsuits, the resulting defense costs inefficiently crowd out some firms that, absent NPEs, would produce welfare-enhancing innovations without engaging in infringement. Our empirical analysis shows that on average, NPEs appear to behave as opportunistic patent trolls. NPEs sue cash-rich firms—a one standard deviation increase in cash holdings roughly doubles a firm's chance of being targeted by NPE litigation. We find moreover that NPEs target cash unrelated to the alleged infringement at essentially the same frequency as they target cash related to the alleged infringement. By contrast, cash is neither a key driver of intellectual property lawsuits by practicing entities (e.g., IBM and Intel), nor of any other type of litigation against firms. We find further suggestive evidence of NPE opportunism, such as forum shopping and targeting of firms that may have reduced ability to defend themselves against litigation. We find that NPE litigation has a real negative impact on innovation at targeted firms: firms substantially reduce their innovative activity after settling with NPEs (or losing to them in court). Moreover, we neither find any markers of significant NPE pass-through to end innovators, nor of a positive impact of NPEs on innovation in the industries in which they are most prevalent.
Handle: RePEc:nbr:nberwo:20322
Template-Type: ReDIF-Paper 1.0
Title: Trade Liberalization, Quality, and Export Prices
Classification-JEL: F0; F1; F14
Author-Name: Haichao Fan
Author-Person: pfa386
Author-Name: Yao Amber Li
Author-Person: pli361
Author-Name: Stephen R. Yeaple
Author-Person: pye37
Note: ITI
Number: 20323
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20323
File-URL: http://www.nber.org/papers/w20323.pdf
File-Format: application/pdf
Publication-Status: published as Haichao Fan & Yao Amber Li & Stephen R. Yeaple, 2015. "Trade Liberalization, Quality, and Export Prices," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 1033-1051, December.
Abstract: This paper presents theory and evidence from highly disaggregated Chinese data that tariff reductions induce a country's producers to upgrade the quality of the goods that they export. The paper first documents two stylized facts regarding the effect of trade liberalization on export prices and its relation with product differentiation. Next, the paper develops a simple analytic framework that relates a firm's choice of quality to its access to imported intermediates. The model predicts that a reduction in the import tariff induces an incumbent importer/exporter to increase the quality of its exports and to raise its export price in industries where the scope for quality differentiation is large while to lower its export price in industries where the scope for quality differentiation is small. The predictions are consistent with the stylized facts based on Chinese data and robust to various estimation specifications.
Handle: RePEc:nbr:nberwo:20323
Template-Type: ReDIF-Paper 1.0
Title: Presidents and the U.S. Economy: An Econometric Exploration
Classification-JEL: E30; E60
Author-Name: Alan S. Blinder
Author-Person: pbl41
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: EFG
Number: 20324
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20324
File-URL: http://www.nber.org/papers/w20324.pdf
File-Format: application/pdf
Publication-Status: published as Alan S. Blinder & Mark W. Watson, 2016. "Presidents and the US Economy: An Econometric Exploration," American Economic Review, American Economic Association, vol. 106(4), pages 1015-45, April.
Abstract: The U.S. economy has grown faster--and scored higher on many other macroeconomic metrics--when the President of the United States is a Democrat rather than a Republican. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 complete presidential terms. This paper asks why. The answer is not found in technical time series matters (such as differential trends or mean reversion), nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. Many other potential explanations are examined but fail to explain the partisan growth gap.
Handle: RePEc:nbr:nberwo:20324
Template-Type: ReDIF-Paper 1.0
Title: Finite Population Causal Standard Errors
Classification-JEL: C01; C18
Author-Name: Alberto Abadie
Author-Person: pab7
Author-Name: Susan Athey
Author-Person: pat6
Author-Name: Guido W. Imbens
Author-Person: pim4
Author-Name: Jeffrey M. Wooldridge
Author-Person: pwo39
Note: IO LS PE
Number: 20325
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20325
File-URL: http://www.nber.org/papers/w20325.pdf
File-Format: application/pdf
Abstract: When a researcher estimates the parameters of a regression function using information on all 50 states in the United States, or information on all visits to a website, what is the interpretation of the standard errors? Researchers typically report standard errors that are designed to capture sampling variation, based on viewing the data as a random sample drawn from a large population of interest, even in applications where it is difficult to articulate what that population of interest is and how it differs from the sample. In this paper we explore alternative interpretations for the uncertainty associated with regression estimates. As a leading example we focus on the case where some parameters of the regression function are intended to capture causal effects. We derive standard errors for causal effects using a generalization of randomization inference. Intuitively, these standard errors capture the fact that even if we observe outcomes for all units in the population of interest, there are for each unit missing potential outcomes for the treatment levels the unit was not exposed to. We show that our randomization-based standard errors in general are smaller than the conventional robust standard errors, and provide conditions under which they agree with them. More generally, correct statistical inference requires precise characterizations of the population of interest, the parameters that we aim to estimate within such population, and the sampling process. Estimation of causal parameters is one example where appropriate inferential methods may differ from conventional practice, but there are others.
Handle: RePEc:nbr:nberwo:20325
Template-Type: ReDIF-Paper 1.0
Title: Growth, Import Dependence and War
Classification-JEL: F51; F52; N70
Author-Name: Roberto Bonfatti
Author-Person: pbo405
Author-Name: Kevin Hjortshøj O'Rourke
Author-Person: por7
Note: DAE ITI
Number: 20326
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20326
File-URL: http://www.nber.org/papers/w20326.pdf
File-Format: application/pdf
Publication-Status: published as Roberto Bonfatti & Kevin Hjortshøj O'Rourke, 2018. "Growth, Import Dependence, and War," The Economic Journal, vol 128(614), pages 2222-2257.
Abstract: Existing theories of pre-emptive war typically predict that the leading country may choose to launch a war on a follower who is catching up, since the follower cannot credibly commit to not use their increased power in the future. But it was Japan who launched a war against the West in 1941, not the West that pre-emptively attacked Japan. Similarly, many have argued that trade makes war less likely, yet World War I erupted at a time of unprecedented globalization. This paper develops a theoretical model of the relationship between trade and war which can help to explain both these observations. Dependence on strategic imports can lead follower nations to launch pre-emptive wars when they are potentially subject to blockade.
Handle: RePEc:nbr:nberwo:20326
Template-Type: ReDIF-Paper 1.0
Title: Barriers to Electrification for "Under Grid" Households in Rural Kenya
Classification-JEL: O18; O55; Q01; Q41
Author-Name: Kenneth Lee
Author-Person: ple847
Author-Name: Eric Brewer
Author-Name: Carson Christiano
Author-Name: Francis Meyo
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Matthew Podolsky
Author-Name: Javier Rosa
Author-Name: Catherine Wolfram
Note: DEV EEE
Number: 20327
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20327
File-URL: http://www.nber.org/papers/w20327.pdf
File-Format: application/pdf
Abstract: In Sub-Saharan Africa, 600 million people live without electricity. Despite ambitions of governments and donors to invest in rural electrification, decisions about how to extend electricity access are being made in the absence of rigorous evidence. Using a novel dataset of 20,000 geo-tagged structures in rural Western Kenya, we provide descriptive evidence that electrification rates remain very low despite significant investments in grid infrastructure. This pattern holds across time and for both poor and relatively well-off households and businesses. We argue that if governments wish to leverage existing infrastructure and economies of scale, subsidies and new approaches to financing connections are necessary.
Handle: RePEc:nbr:nberwo:20327
Template-Type: ReDIF-Paper 1.0
Title: Implications of Heterogeneity in Preferences, Beliefs and Asset Trading Technologies for the Macroeconomy
Classification-JEL: E21; E44; G11; G12
Author-Name: YiLi Chien
Author-Person: pch650
Author-Name: Harold L. Cole
Author-Person: pco70
Author-Name: Hanno Lustig
Author-Person: plu17
Note: EFG
Number: 20328
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20328
File-URL: http://www.nber.org/papers/w20328.pdf
File-Format: application/pdf
Abstract: This paper extends the methodology developed in Chien, Cole and Lustig (2011 & 2012) (hereafter CCL2011 and CCL2012, respectively) to analyze and compute the equilibria of economies with heterogeneous agents who have different asset trading technologies and are subject to both aggregate and idiosyncratic income risk. The different asset trading technologies, which are designed to replicate the portfolio behavior seen in the data, fall into two classes. Active traders manage the composition of their portfolios among a given set of assets in addition to choosing how much to save. Passive traders take their portfolio composition as given and choose only how much to save. There can be a wide variety of different cases within each classes. For active traders, the trading technology varies depending on the set of assets that they can use, while for passive traders it varies with the specific portfolio composition rule. In CCL2011 and CCL2012, all of our agents had to have the same CRRA flow utility functions, discount rates, and beliefs. In this extension, this restriction is relaxed greatly extending the set of economies to which our method applies. This richer degree of heterogeneity allows the model to match a number of key features of the data.
Handle: RePEc:nbr:nberwo:20328
Template-Type: ReDIF-Paper 1.0
Title: Should Student Employment Be Subsidized? Conditional Counterfactuals and the Outcomes of Work-Study Participation
Classification-JEL: I22; I28; J24
Author-Name: Judith Scott-Clayton
Author-Name: Veronica Minaya
Note: ED LS
Number: 20329
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20329
File-URL: http://www.nber.org/papers/w20329.pdf
File-Format: application/pdf
Publication-Status: published as Judith Scott-Clayton & Veronica Minaya, 2015. "Should student employment be subsidized? Conditional counterfactuals and the outcomes of work-study participation," Economics of Education Review, .
Abstract: Student employment subsidies are one of the largest types of federal employment subsidies, and one of the oldest forms of student aid. Yet it is unclear whether they help or harm students' long term outcomes. We present a framework that decomposes overall effects into a weighted average of effects for marginal and inframarginal workers. We then develop an application of propensity scores, which we call conditional-counterfactual matching, in which we estimate the overall impact, and the impact under two distinct counterfactuals: working at an unsubsidized job, or not working at all. Finally, we estimate the effects of the largest student employment subsidy program--Federal Work-Study (FWS)--for a broad range of participants and outcomes. Our results suggest that about half of FWS participants are inframarginal workers, for whom FWS reduces hours worked and improves academic outcomes, but has little impact on future employment. For students who would not have worked otherwise, the pattern of effects reverses. With the exception of first-year GPA, we find scant evidence of negative effects of FWS for any outcome or subgroup. However, positive effects are largest for lower-income and lower-SAT subgroups, suggesting there may be gains to improved targeting of funds.
Handle: RePEc:nbr:nberwo:20329
Template-Type: ReDIF-Paper 1.0
Title: Health Care Adherence and Personalized Medicine
Classification-JEL: I1; I10; I18
Author-Name: Mark Egan
Author-Name: Tomas J. Philipson
Author-Person: pph37
Note: EH
Number: 20330
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20330
File-URL: http://www.nber.org/papers/w20330.pdf
File-Format: application/pdf
Abstract: Non-adherence in health care results when a patient does not initiate or continue care that a provider has recommended. Previous research identifies non-adherence as a major source of waste in US health care, totaling approximately 2.3% of GDP, and have proposed a plethora of interventions to raise adherence. However, health economics provides little explicit analyses of the important dynamic demand behavior that drives non-adherence, and it is often casually attributed to uninformed patients. We argue that whereas providers may be more informed about the population-wide effects of treatments, patients are more informed about the individual specific value of treatment. We interpret a patient’s decision to adhere to a treatment regime as an optimal stopping problem in which patients learn the value of a treatment through treatment experience. We derive strong positive and normative implications resulting from interpreting non-adherence as an optimal stopping problem. Our positive analysis derives an “adherence survival function,” depicting the share of patients still on treatment as a function of time, and predicts how various observable factors alter adherence. Our normative analysis derives the efficiency effects of non-adherence and the conditions under which adherence is too high or low. We consider the efficiency implications of this analysis for common adherence interventions. We argue that personalized medicine is intimately linked to adherence issues. It replaces the learning through treatment experience with a diagnostic test, and thereby speeds up the leaning process and cuts over-adherence and raises underadherence. We assess the quantitative implications of our analysis by calibrating the degree of over- and under-adherence for one of the largest US drug categories, cholesterol-reducing drugs. Contrary to frequent normative claims of under-adherence, our estimates suggest the efficiency loss from overadherence is over 80% larger than from under-adherence, even though only 43% of patients fully adhere.
Handle: RePEc:nbr:nberwo:20330
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Unequal Gains from Trade
Classification-JEL: D63; F10; F60
Author-Name: Pablo D. Fajgelbaum
Author-Name: Amit K. Khandelwal
Author-Person: pkh138
Note: ITI
Number: 20331
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20331
File-URL: http://www.nber.org/papers/w20331.pdf
File-Format: application/pdf
Publication-Status: published as Fajgelbaum, Pablo D. and Amit K. Khandelwal (2016), "Measuring the Unequal Gains from Trade," The Quarterly Journal of Economics, 131 (3): 1113-1180.
Abstract: Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from trade across consumers within countries. The approach requires data on aggregate expenditures and parameters estimated from a non-homothetic gravity equation. We find that trade typically favors the poor, who concentrate spending in more traded sectors.
Handle: RePEc:nbr:nberwo:20331
Template-Type: ReDIF-Paper 1.0
Title: Medical Marijuana Laws and Teen Marijuana Use
Classification-JEL: D78; I1; K4
Author-Name: D. Mark Anderson
Author-Name: Benjamin Hansen
Author-Person: pha383
Author-Name: Daniel I. Rees
Author-Person: pre268
Note: CH EH LE
Number: 20332
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20332
File-URL: http://www.nber.org/papers/w20332.pdf
File-Format: application/pdf
Publication-Status: published as D. Mark Anderson & Benjamin Hansen & Daniel I. Rees, 2015. "Medical Marijuana Laws and Teen Marijuana Use," American Law and Economics Review, Oxford University Press, vol. 17(2), pages 495-528.
Abstract: While at least a dozen state legislatures in the United States have recently considered bills to allow the consumption of marijuana for medicinal purposes, the federal government is intensifying its efforts to close medical marijuana dispensaries. Federal officials contend that the legalization of medical marijuana encourages teenagers to use marijuana and have targeted dispensaries operating within 1,000 feet of schools, parks and playgrounds. Using data from the national and state Youth Risk Behavior Surveys, the National Longitudinal Survey of Youth 1997 and the Treatment Episode Data Set, we estimate the relationship between medical marijuana laws and marijuana use. Our results are not consistent with the hypothesis that legalization leads to increased use of marijuana by teenagers.
Handle: RePEc:nbr:nberwo:20332
Template-Type: ReDIF-Paper 1.0
Title: A Model to Evaluate Vehicle Emission Incentive Policies in Japan
Classification-JEL: H23; Q52
Author-Name: Don Fullerton
Author-Person: pfu10
Author-Name: Li Gan
Author-Person: pga94
Author-Name: Miwa Hattori
Note: EEE PE
Number: 20333
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20333
File-URL: http://www.nber.org/papers/w20333.pdf
File-Format: application/pdf
Publication-Status: published as Don Fullerton & Li Gan & Miwa Hattori, 2015. "A model to evaluate vehicle emission incentive policies in Japan," Environmental Economics and Policy Studies- The Official Journal of the Society for Environmental Economics and Policy Studies / The Official Journal of the East Asian Association of Environmental and, Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(1), pages 79-108, January.
Abstract: Using three years of data from the 47 prefectures of Japan, we estimate behavior of households who simultaneously make discrete decisions about vehicle ownership and continuous decisions about driving distance. We use the estimated parameters to calculate elasticities and to simulate the effects of alternative pollution control policies such as taxes on gasoline, on distance, or on particular cars. Given choices about cars and distance, we also calculate emissions. Since we model simultaneous choices, both the chosen distance and the chosen car can be affected either by a tax on distance or by a tax on car characteristics. We find expected signs for coefficients on price and income. Car choices are relatively inelastic, however, either to taxes on cars or to taxes on gas or distance. Thus emissions are more affected by taxes on gasoline than by taxes on particular vehicles. Yet taxes on cars have lower costs on consumers and thus lower marginal cost of abatement. Given that the existing gas tax already achieves some abatement, mostly through driving reduction, this analysis suggests that further abatement from the use of distance-reducing taxes is more costly than achieving some marginal abatement from induced changes in car choices. The option with the lowest cost is to tax each car at a rate proportional to its emission rate.
Handle: RePEc:nbr:nberwo:20333
Template-Type: ReDIF-Paper 1.0
Title: Multiple Pollutants, Uncovered Sectors, and Suboptimal Environmental Policies
Classification-JEL: H23; Q48; Q53
Author-Name: Don Fullerton
Author-Person: pfu10
Author-Name: Daniel H. Karney
Note: EEE PE
Number: 20334
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20334
File-URL: http://www.nber.org/papers/w20334.pdf
File-Format: application/pdf
Abstract: In our analytical general equilibrium model where two polluting inputs can be substitutes or complements in production, we study the effects of a tax on one pollutant in two cases: one where both pollutants face taxes and the second where the other pollutant is subject to a permit policy. In each case, we solve for closed-form solutions that highlight important parameters. We demonstrate two important ways that environmental taxes and permits are not equivalent. First, the change in the pollutant facing a tax increase depends on whether the other pollutant is subject to a tax or permit policy. Second, if that other pollutant is subject to a tax, then general equilibrium effects can increase or decrease its quantity (affecting overall welfare). However, when the second pollutant is subject to a permit policy that binds, then welfare is not affected by this spillover effect. Finally, a numerical exercise helps demonstrate these two ways that taxes and permits differ. Using the example of coal-fired power plants, our numerical exercise examines the impacts of increasing a hypothetical carbon tax on the quantity of sulfur dioxide emissions.
Handle: RePEc:nbr:nberwo:20334
Template-Type: ReDIF-Paper 1.0
Title: The Macroeconomics of Shadow Banking
Classification-JEL: E44; E52; G01; G21; G23
Author-Name: Alan Moreira
Author-Name: Alexi Savov
Author-Person: psa1271
Note: AP EFG ME
Number: 20335
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20335
File-URL: http://www.nber.org/papers/w20335.pdf
File-Format: application/pdf
Publication-Status: published as ALAN MOREIRA & ALEXI SAVOV, 2017. "The Macroeconomics of Shadow Banking," The Journal of Finance, vol 72(6), pages 2381-2432.
Abstract: We build a macroeconomic model that centers on liquidity transformation in the financial sector. Intermediaries maximize liquidity creation by issuing securities that are money-like in normal times but become illiquid in a crash when collateral is scarce. We call this process shadow banking. A rise in uncertainty raises demand for crash-proof liquidity, forcing intermediaries to delever and substitute toward safe, collateral- intensive liabilities. Shadow banking shrinks, causing the liquidity supply to contract, discount rates and collateral premia spike, prices and investment fall. The model produces slow recoveries, collateral runs, and flight to quality and it provides a framework for analyzing unconventional monetary policy and regulatory reform proposals.
Handle: RePEc:nbr:nberwo:20335
Template-Type: ReDIF-Paper 1.0
Title: Capital Market Financing, Firm Growth, Firm Size Distribution
Classification-JEL: F65; G15; G30; L25
Author-Name: Tatiana Didier
Author-Person: pdi289
Author-Name: Ross Levine
Author-Person: ple61
Author-Name: Sergio L. Schmukler
Author-Person: psc64
Note: CF IFM ITI
Number: 20336
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20336
File-URL: http://www.nber.org/papers/w20336.pdf
File-Format: application/pdf
Abstract: Which firms issue equity and debt in domestic and international markets and what happens to their assets, sales, and number of employees? To answer these questions, we assemble a new dataset on firm-level capital raising activity during 1991-2011, which we match with firm attributes for 45,527 listed firms from 51 economies during 2003-2011. We find that only a few of the largest firms issue securities in the median country. Firms issuing bonds are even larger than those issuing equity. Moreover, issuers grow much faster than non-issuers, particularly (a) during the year of issuance, (b) among smaller and younger firms, and (c) in countries with market-based financial systems. Furthermore, the firm size distribution (FSD) of issuers behaves differently from that of non-issuers. Among issuers, smaller firms grow faster than larger ones, tightening their FSD; but among non-issuers, larger firms grow faster than smaller ones, widening their FSD.
Handle: RePEc:nbr:nberwo:20336
Template-Type: ReDIF-Paper 1.0
Title: Is the Time Allocated to Review Patent Applications Inducing Examiners to Grant Invalid Patents?: Evidence from Micro-Level Application Data
Classification-JEL: K0; O30; O38
Author-Name: Michael D. Frakes
Author-Name: Melissa F. Wasserman
Note: LE PR
Number: 20337
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20337
File-URL: http://www.nber.org/papers/w20337.pdf
File-Format: application/pdf
Publication-Status: published as Michael D. Frakes & Melissa F. Wasserman, 2017. "Is the Time Allocated to Review Patent Applications Inducing Examiners to Grant Invalid Patents? Evidence from Microlevel Application Data," The Review of Economics and Statistics, vol 99(3), pages 550-563.
Abstract: We explore how examiner behavior is altered by the time allocated for reviewing patent applications. Insufficient examination time may hamper examiner search and rejection efforts, leaving examiners more inclined to grant invalid applications. To test this prediction, we use application-level data to trace the behavior of individual examiners over the course of a series of promotions that carry with them reductions in examination-time allocations. We find evidence demonstrating that such promotions are associated with reductions in examination scrutiny and increases in granting tendencies, as well as evidence that those additional patents being issued on the margin are of below-average quality.
Handle: RePEc:nbr:nberwo:20337
Template-Type: ReDIF-Paper 1.0
Title: An Exploration of the International Comparison Program's New Global Economic Landscape
Classification-JEL: E31; I32; O47
Author-Name: Martin Ravallion
Author-Person: pra29
Note: DEV ME
Number: 20338
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20338
File-URL: http://www.nber.org/papers/w20338.pdf
File-Format: application/pdf
Abstract: The Purchasing Power Parity (PPP) rates from the 2011 round of the International Comparison Program (ICP) imply some dramatic revisions to price levels and real incomes across the world. The paper tries to understand these changes. Domestic inflation rates account for a share of the PPP changes, although less so for the 2011 revisions than prior ICP rounds. A marked downward drift in ICP price levels for developing countries also emerged in 2011. Conditional on domestic price changes, the co-movement of PPPs with market exchange rates suggests that that the ICP puts higher weight on more internationally comparable traded-goods than do domestic indices. There is also evidence of a Dynamic Penn Effect, whereby economic growth comes with higher prices. The drift is concentrated in the Asia regional groupings used for ICP implementation. The results are not consistent with expectations based on the only methodological change identified to date although other explanations remain to be investigated.
Handle: RePEc:nbr:nberwo:20338
Template-Type: ReDIF-Paper 1.0
Title: Inflating Away the Public Debt? An Empirical Assessment
Classification-JEL: E31; E64; G18
Author-Name: Jens Hilscher
Author-Person: phi70
Author-Name: Alon Raviv
Author-Person: pra68
Author-Name: Ricardo Reis
Author-Person: pre73
Note: AP EFG ME
Number: 20339
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20339
File-URL: http://www.nber.org/papers/w20339.pdf
File-Format: application/pdf
Publication-Status: published as Jens Hilscher & Alon Raviv & Ricardo Reis & Philip Strahan, 2022. "Inflating Away the Public Debt? An Empirical Assessment," The Review of Financial Studies, vol 35(3), pages 1553-1595.
Abstract: We propose and implement a method that provides quantitative estimates of the extent to which higher- than-expected inflation can lower the real value of outstanding government debt. Looking forward, we derive a formula for the debt burden that relies on detailed information about debt maturity and claimholders, and that uses option prices to construct risk-adjusted probability distributions for inflation at different horizons. The estimates suggest that it is unlikely that inflation will lower the US fiscal burden significantly, and that the effect of higher inflation is modest for plausible counterfactuals. If instead inflation is combined with financial repression that ex post extends the maturity of the debt, then the reduction in value can be significant.
Handle: RePEc:nbr:nberwo:20339
Template-Type: ReDIF-Paper 1.0
Title: Information, Misallocation and Aggregate Productivity
Classification-JEL: E44; O11; O16; O47
Author-Name: Joel M. David
Author-Person: pda513
Author-Name: Hugo A. Hopenhayn
Author-Person: pho217
Author-Name: Venky Venkateswaran
Author-Person: pve303
Note: DEV EFG PR
Number: 20340
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20340
File-URL: http://www.nber.org/papers/w20340.pdf
File-Format: application/pdf
Publication-Status: published as Joel M. David & Hugo A. Hopenhayn & Venky Venkateswaran, 2016. "Information, Misallocation, and Aggregate Productivity," The Quarterly Journal of Economics, vol 131(2), pages 943-1005.
Abstract: We propose a theory linking imperfect information to resource misallocation and hence to aggregate productivity and output. In our setup, firms look to a variety of noisy information sources when making input decisions. We devise a novel empirical strategy that uses a combination of firm-level production and stock market data to pin down the information structure in the economy. Even when only capital is chosen under imperfect information, applying this methodology to data from the US, China, and India reveals substantial losses in productivity and output due to the informational friction. Our estimates for these losses range from 7-10% for productivity and 10-14% for output in China and India, and are smaller, though still significant, in the US. Losses are substantially higher when labor decisions are also made under imperfect information. We find that firms turn primarily to internal sources for information; learning from financial markets contributes little, even in the US.
Handle: RePEc:nbr:nberwo:20340
Template-Type: ReDIF-Paper 1.0
Title: An econometric model of link formation with degree heterogeneity
Classification-JEL: C31; C35
Author-Name: Bryan S. Graham
Author-Person: pgr95
Note: DEV IO LS TWP
Number: 20341
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20341
File-URL: http://www.nber.org/papers/w20341.pdf
File-Format: application/pdf
Publication-Status: published as An Econometric Model of Network Formation with Degree Heterogeneity. Econometrica: Jul 2017, Volume 85, Issue 4. DOI: 10.3982/ECTA12679
Abstract: I introduce a model of undirected dyadic link formation which allows for assortative matching on observed agent characteristics (homophily) as well as unrestricted agent level heterogeneity in link surplus (degree heterogeneity). Like in fixed effects panel data analyses, the joint distribution of observed and unobserved agent-level characteristics is left unrestricted. Two estimators for the (common) homophily parameter, `beta_0`, are developed and their properties studied under an asymptotic sequence involving a single network growing large. The first, tetrad logit (TL), estimator conditions on a sufficient statistic for the degree heterogeneity. The second, joint maximum likelihood (JML), estimator treats the degree heterogeneity ` {A_(i0)}_(i=1)^N` as additional (incidental) parameters to be estimated. The TL estimate is consistent under both sparse and dense graph sequences, whereas consistency of the JML estimate is shown only under dense graph sequences.
Handle: RePEc:nbr:nberwo:20341
Template-Type: ReDIF-Paper 1.0
Title: Broken or Fixed Effects?
Classification-JEL: C18; C21
Author-Name: Charles E. Gibbons
Author-Name: Juan Carlos Suárez Serrato
Author-Person: psu476
Author-Name: Michael B. Urbancic
Note: LS PE
Number: 20342
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20342
File-URL: http://www.nber.org/papers/w20342.pdf
File-Format: application/pdf
Publication-Status: published as Gibbons Charles E. & Suárez Serrato Juan Carlos & Urbancic Michael B., 2019. "Broken or Fixed Effects?," Journal of Econometric Methods, De Gruyter, vol. 8(1), pages 1-12, January.
Abstract: We replicate eight influential papers to provide empirical evidence that, in the presence of heterogeneous treatment effects, OLS with fixed effects (FE) is generally not a consistent estimator of the average treatment effect (ATE). We propose two alternative estimators that recover the ATE in the presence of group-specific heterogeneity. We document that heterogeneous treatment effects are common and the ATE is often statistically and economically different from the FE estimate. In all but one of our replications, there is statistically significant treatment effect heterogeneity and, in six, the ATEs are either economically or statistically different from the FE estimates.
Handle: RePEc:nbr:nberwo:20342
Template-Type: ReDIF-Paper 1.0
Title: Reference-Dependent Preferences: Evidence from Marathon Runners
Classification-JEL: D03; J22
Author-Name: Eric J. Allen
Author-Name: Patricia M. Dechow
Author-Name: Devin G. Pope
Author-Name: George Wu
Author-Person: pwu111
Note: LS PE
Number: 20343
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20343
File-URL: http://www.nber.org/papers/w20343.pdf
File-Format: application/pdf
Publication-Status: published as Eric J. Allen & Patricia M. Dechow & Devin G. Pope & George Wu, 2017. "Reference-Dependent Preferences: Evidence from Marathon Runners," Management Science, vol 63(6), pages 1657-1672.
Abstract: Models of reference-dependent preferences propose that individuals evaluate outcomes as gains or losses relative to a neutral reference point. We test for reference dependence in a large dataset of marathon finishing times (n = 9,524,071). Models of reference-dependent preferences such as prospect theory predict bunching of finishing times at reference points. We provide visual and statistical evidence that round numbers (e.g., a four-hour marathon) serve as reference points in this environment and as a result produce significant bunching of performance at these round numbers. Bunching is driven by planning and adjustments in effort provision near the finish line and cannot be explained by explicit rewards (e.g., qualifying for the Boston Marathon), peer effects, or institutional features (e.g., pacesetters). We calibrate a simple model of prospect theory as well as other models of reference dependence and show that the basic qualitative shape of the empirical distribution of finishing times is consistent with parameters that have previously been estimated in the laboratory.
Handle: RePEc:nbr:nberwo:20343
Template-Type: ReDIF-Paper 1.0
Title: Can Electronic Procurement Improve Infrastructure Provision? Evidence From Public Works in India and Indonesia
Classification-JEL: H57; O12; O53
Author-Name: Sean Lewis-Faupel
Author-Name: Yusuf Neggers
Author-Name: Benjamin A. Olken
Author-Person: pol170
Author-Name: Rohini Pande
Author-Person: ppa900
Note: DEV PE
Number: 20344
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20344
File-URL: http://www.nber.org/papers/w20344.pdf
File-Format: application/pdf
Publication-Status: published as Sean Lewis-Faupel & Yusuf Neggers & Benjamin A. Olken & Rohini Pande, 2016. "Can Electronic Procurement Improve Infrastructure Provision? Evidence from Public Works in India and Indonesia," American Economic Journal: Economic Policy, vol 8(3), pages 258-283.
Abstract: Poorly functioning, and often corrupt, public procurement procedures are widely faulted for the low quality of infrastructure provision in developing countries. Can electronic procurement (e-procurement), which reduces both the cost of acquiring tender information and personal interaction between bidders and procurement officials, ameliorate these problems? In this paper we develop a unique micro-dataset on public works procurement from two fast-growing economies, India and Indonesia, and use regional and time variation in the adoption of e-procurement across both countries to examine its impact. We find no evidence that e-procurement reduces prices paid by the government, but do find that it is associated with quality improvements. In India, where we observe an independent measure of construction quality, e-procurement improves the average road quality, and in Indonesia, e-procurement reduces delays in completion of public works projects. Bidding data suggests that an important channel of influence is selection -- regions with e-procurement have a broader distribution of winners, with (better) winning bidders more likely to come from outside the region where the work takes place. On net, the results suggest that e-procurement facilitates entry from higher quality contractors.
Handle: RePEc:nbr:nberwo:20344
Template-Type: ReDIF-Paper 1.0
Title: Capital Structure and Hedging Demand with Incomplete Markets
Classification-JEL: G10; G32; G33
Author-Name: Alberto Bisin
Author-Person: pbi10
Author-Name: Gian Luca Clementi
Author-Name: Piero Gottardi
Author-Person: pgo21
Note: AP CF
Number: 20345
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20345
File-URL: http://www.nber.org/papers/w20345.pdf
File-Format: application/pdf
Abstract: In this paper we study the role played by hedging demand in shaping firms' capital structure. We develop and study a general equilibrium model with production and incomplete markets where households differ in their risk-sharing needs. Value-maximizing firms cater to these different needs when choosing their leverage, their size, and possibly the risk profile of their production technology. We find that as the demand for hedging increases, firms issue more debt and destine only part of the greater proceeds to investment—the remainder going to shareholders. How much more debt, depends on the availability of competing risk-sharing instruments, such as (government-issued) risk-free debt and derivatives. When the capital structure is jointly shaped by hedging demand and agency—in the form of an asset-substitution problem—the greater risk induced by asymmetric information has countervailing effects on debt: On the one hand, debt is reduced to nudge shareholders into choosing lower risk. This is the standard asset substitution effect. On the other hand, however, the greater risk in production affects the state prices and calls for more debt.
Handle: RePEc:nbr:nberwo:20345
Template-Type: ReDIF-Paper 1.0
Title: Political Booms, Financial Crises
Classification-JEL: D82; E44; E51; E58; G01; H12; N10; N20
Author-Name: Helios Herrera
Author-Person: phe284
Author-Name: Guillermo Ordoñez
Author-Person: por40
Author-Name: Christoph Trebesch
Author-Person: ptr108
Note: EFG IFM PE POL
Number: 20346
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20346
File-URL: http://www.nber.org/papers/w20346.pdf
File-Format: application/pdf
Publication-Status: published as Helios Herrera & Guillermo Ordoñez & Christoph Trebesch, 2020. "Political Booms, Financial Crises," Journal of Political Economy, vol 128(2), pages 507-543.
Abstract: We show that political booms, measured by the rise in governments' popularity, predict financial crises above and beyond other better-known early warning indicators, such as credit booms. This predictive power, however, only holds in emerging economies. We show that governments in emerging economies are more concerned about their reputation and tend to ride the short-term popularity benefits of weak credit booms rather than implementing politically costly corrective policies that would help prevent potential crises. We provide evidence of the relevance of this reputation mechanism.
Handle: RePEc:nbr:nberwo:20346
Template-Type: ReDIF-Paper 1.0
Title: The Geography of Financial Misconduct
Classification-JEL: G0; K42; M41; R0
Author-Name: Christopher A. Parsons
Author-Name: Johan Sulaeman
Author-Name: Sheridan Titman
Author-Person: pti51
Note: CF
Number: 20347
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20347
File-URL: http://www.nber.org/papers/w20347.pdf
File-Format: application/pdf
Publication-Status: published as CHRISTOPHER A. PARSONS & JOHAN SULAEMAN & SHERIDAN TITMAN, 2018. "The Geography of Financial Misconduct," The Journal of Finance, vol 73(5), pages 2087-2137.
Abstract: We find that a firm's tendency to engage in financial misconduct increases with the misconduct rates of neighboring firms. This appears to be caused by peer effects, rather than exogenous shocks like regional variation in enforcement. Effects are stronger among firms of comparable size, and among CEOs of similar age. Moreover, local waves of financial misconduct correspond with local waves of non-financial corruption, such as political fraud.
Handle: RePEc:nbr:nberwo:20347
Template-Type: ReDIF-Paper 1.0
Title: How Does Family Health Care Use Respond to Economic Shocks? Realized and Anticipated Effects
Classification-JEL: I12; I13; I18
Author-Name: Alan C. Monheit
Author-Name: Irina Grafova
Author-Person: pgr284
Author-Name: Rizie Kumar
Note: EH
Number: 20348
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20348
File-URL: http://www.nber.org/papers/w20348.pdf
File-Format: application/pdf
Publication-Status: published as Alan C. Monheit & Irina B. Grafova & Rizie Kumar, 2020. "How does family health care use respond to economic shocks? realized and anticipated effects," Review of Economics of the Household, vol 18(2), pages 307-334.
Abstract: Families in constrained economic circumstances resulting from economic shocks face difficult choices regarding how best to spend their diminished resources. As families strive to preserve their living standards, decisions regarding health care use and its allocation among family members may become more discretionary and complex. Using two-year panel data from the Medical Expenditure Panel Survey for 2004 to 2011, we examine how the intra-family allocation of health care spending responds to realized and anticipated changes in family economic status. We focus on the share of total family health care spending allocated to children, and measure realized economic shocks based on changes in the family's income, employment, and health insurance status. We account for anticipated economic shocks by differentiating families by whether they are observed prior to, at the onset of, or during the Great Recession, or in the post-recession period. Our findings suggest that both types of economic shocks affect the share of family health care spending allocated to children, with findings more pronounced for single-mother families. We also find that realized economic shocks have a greater impact on children's spending share than the anticipated change in economic status associated with the Great Recession and its recovery.
Handle: RePEc:nbr:nberwo:20348
Template-Type: ReDIF-Paper 1.0
Title: Cash for Corollas: When Stimulus Reduces Spending
Classification-JEL: H3; L5; Q4
Author-Name: Mark Hoekstra
Author-Person: pho613
Author-Name: Steven L. Puller
Author-Person: ppu28
Author-Name: Jeremy West
Author-Person: pwe370
Note: EEE IO PE
Number: 20349
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20349
File-URL: http://www.nber.org/papers/w20349.pdf
File-Format: application/pdf
Publication-Status: published as Mark Hoekstra & Steven L. Puller & Jeremy West, 2017. "Cash for Corollas: When Stimulus Reduces Spending," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 1-35, July.
Abstract: The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.
Handle: RePEc:nbr:nberwo:20349
Template-Type: ReDIF-Paper 1.0
Title: Urban Vibrancy and Corporate Growth
Classification-JEL: G3; G31; R10; R12
Author-Name: Casey Dougal
Author-Name: Christopher A. Parsons
Author-Name: Sheridan Titman
Author-Person: pti51
Note: CF
Number: 20350
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20350
File-URL: http://www.nber.org/papers/w20350.pdf
File-Format: application/pdf
Publication-Status: published as CASEY DOUGAL & CHRISTOPHER A. PARSONS & SHERIDAN TITMAN, 2015. "Urban Vibrancy and Corporate Growth," The Journal of Finance, vol 70(1), pages 163-210.
Abstract: We find that a firm's investment is highly sensitive to the investments of other firms headquartered nearby, even those in very different industries. It also responds to fluctuations in the cash flows and stock prices (q) of local firms outside its sector. These patterns do not appear to reflect exogenous area shocks such as local shocks to labor or real estate values, but rather suggest that local agglomeration economies are important determinants of firm investment and growth.
Handle: RePEc:nbr:nberwo:20350
Template-Type: ReDIF-Paper 1.0
Title: Measuring Economic Efficiency Using Inverse-Optimum Weights
Classification-JEL: D6; E01; H0
Author-Name: Nathaniel Hendren
Note: EFG PE
Number: 20351
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20351
File-URL: http://www.nber.org/papers/w20351.pdf
File-Format: application/pdf
Publication-Status: published as Nathaniel Hendren, 2020. "Measuring economic efficiency using inverse-optimum weights," Journal of Public Economics, vol 187.
Abstract: This paper provides a method to measure the traditional Kaldor-Hicks notion of “economic efficiency” when taxes affect behavior. In contrast to traditional unweighted surplus, measuring efficiency requires weighting individual benefits (or surplus) by the marginal cost to the government of providing a $1 transfer at each income level. These weights correspond to the solution to the “inverse-optimum” program in optimal tax: they are the social planning weights that would rationalize the status quo tax schedule as optimal. I estimate the weights using the universe of US income tax returns from 2012. The results suggest that measuring economic efficiency requires weighting surplus accruing to the poor roughly 1.5-2 times more than surplus accruing to the rich. This is because $1 of surplus to the poor can be turned into roughly $1.5-$2 of surplus to the rich by reducing the progressivity of the tax schedule. Following Kaldor and Hicks’ original applications, I compare income distributions over time in the US and across countries. The results suggest US economic growth is 15-20% lower due to increased inequality than is suggested by changes in GDP. Because of its higher inequality, the U.S. is unable to replicate the income distribution of countries like Austria and the Netherlands, despite having higher national income per capita.
Handle: RePEc:nbr:nberwo:20351
Template-Type: ReDIF-Paper 1.0
Title: The Causal Effect of Environmental Catastrophe on Long-Run Economic Growth: Evidence From 6,700 Cyclones
Classification-JEL: H87; O11; O44; Q51; Q54; R11
Author-Name: Solomon M. Hsiang
Author-Name: Amir S. Jina
Note: DEV EEE EFG IFM PE
Number: 20352
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20352
File-URL: http://www.nber.org/papers/w20352.pdf
File-Format: application/pdf
Abstract: Does the environment have a causal effect on economic development? Using meteorological data, we reconstruct every country's exposure to the universe of tropical cyclones during 1950-2008. We exploit random within-country year-to-year variation in cyclone strikes to identify the causal effect of environmental disasters on long-run growth. We compare each country's growth rate to itself in the years immediately before and after exposure, accounting for the distribution of cyclones in preceding years. The data reject hypotheses that disasters stimulate growth or that short-run losses disappear following migrations or transfers of wealth. Instead, we find robust evidence that national incomes decline, relative to their pre-disaster trend, and do not recover within twenty years. Both rich and poor countries exhibit this response, with losses magnified in countries with less historical cyclone experience. Income losses arise from a small but persistent suppression of annual growth rates spread across the fifteen years following disaster, generating large and significant cumulative effects: a 90th percentile event reduces per capita incomes by 7.4% two decades later, effectively undoing 3.7 years of average development. The gradual nature of these losses render them inconspicuous to a casual observer, however simulations indicate that they have dramatic influence over the long-run development of countries that are endowed with regular or continuous exposure to disaster. Linking these results to projections of future cyclone activity, we estimate that under conservative discounting assumptions the present discounted cost of "business as usual" climate change is roughly $9.7 trillion larger than previously thought.
Handle: RePEc:nbr:nberwo:20352
Template-Type: ReDIF-Paper 1.0
Title: Positive Externalities of Social Insurance: Unemployment Insurance and Consumer Credit
Classification-JEL: D14; G21; H31; R28
Author-Name: Joanne W. Hsu
Author-Person: phs47
Author-Name: David A. Matsa
Author-Name: Brian T. Melzer
Author-Person: pme762
Note: CF PE
Number: 20353
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20353
File-URL: http://www.nber.org/papers/w20353.pdf
File-Format: application/pdf
Abstract: This paper studies the impact of unemployment insurance (UI) on consumer credit markets. Exploiting heterogeneity in UI generosity across U.S. states and over time, we find that UI helps the unemployed avoid defaulting on their mortgage debt. We estimate that UI expansions during the Great Recession prevented about 1.4 million foreclosures. Lenders respond to this decline in default risk by expanding credit access and reducing interest rates for low-income households at risk of being laid off. Our findings call attention to two benefits of unemployment insurance not previously highlighted: reducing deadweight losses from loan default and expanding access to credit.
Handle: RePEc:nbr:nberwo:20353
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Density: Evidence from the Berlin Wall
Classification-JEL: N34; O18; R12
Author-Name: Gabriel M. Ahlfeldt
Author-Person: pah63
Author-Name: Stephen J. Redding
Author-Person: pre64
Author-Name: Daniel M. Sturm
Author-Person: pst443
Author-Name: Nikolaus Wolf
Note: ITI
Number: 20354
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20354
File-URL: http://www.nber.org/papers/w20354.pdf
File-Format: application/pdf
Publication-Status: published as Gabriel M. Ahlfeldt & Stephen J. Redding & Daniel M. Sturm & Nikolaus Wolf, 2015. "The Economics of Density: Evidence From the Berlin Wall," Econometrica, Econometric Society, vol. 83, pages 2127-2189, November.
Abstract: This paper develops a quantitative model of internal city structure that features agglomeration and dispersion forces and an arbitrary number of heterogeneous city blocks. The model remains tractable and amenable to empirical analysis because of stochastic shocks to commuting decisions, which yield a gravity equation for commuting flows. To structurally estimate agglomeration and dispersion forces, we use data on thousands of city blocks in Berlin for 1936, 1986 and 2006 and exogenous variation from the city’s division and reunification. We estimate substantial and highly localized production and residential externalities. We show that the model with the estimated agglomeration parameters can account both qualitatively and quantitatively for the observed changes in city structure. We show how our quantitative framework can be used to undertake counterfactuals for changes in the organization of economic activity within cities in response for example to changes in the transport network.
Handle: RePEc:nbr:nberwo:20354
Template-Type: ReDIF-Paper 1.0
Title: The Changing Face of World Oil Markets
Classification-JEL: Q41
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EEE
Number: 20355
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20355
File-URL: http://www.nber.org/papers/w20355.pdf
File-Format: application/pdf
Abstract: This year the oil industry celebrated its 155th birthday, continuing a rich history of booms, busts and dramatic technological changes. Many old hands in the oil patch may view recent developments as a continuation of the same old story, wondering if the high prices of the last decade will prove to be another transient cycle with which technological advances will again eventually catch up. But there have been some dramatic changes over the last decade that could mark a major turning point in the history of the world's use of this key energy source. In this article I review five of the ways in which the world of energy may have changed forever.
Handle: RePEc:nbr:nberwo:20355
Template-Type: ReDIF-Paper 1.0
Title: History of American Corporate Governance: Law, Institutions, and Politics
Classification-JEL: G3; N21; N81
Author-Name: Eric Hilt
Author-Person: phi104
Note: CF DAE LE
Number: 20356
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20356
File-URL: http://www.nber.org/papers/w20356.pdf
File-Format: application/pdf
Publication-Status: published as Eric Hilt, 2014. "History of American Corporate Governance: Law, Institutions, and Politics," Annual Review of Financial Economics, Annual Reviews, vol. 6(1), pages 1-21, December.
Abstract: This paper presents an overview of the history of corporate governance in the United States, emphasizing the period before the advent of federal securities laws and the Securities and Exchange Commission (SEC). Recent research has overturned many widely accepted beliefs about corporate governance during this period. In particular, the evolution of American corporate governance has not followed a simple, linear trajectory, beginning with small, well-governed firms and ending with large, poorly governed ones. Over time, economic and institutional changes have given rise to successive generations of corporations with their own governance problems and their own mechanisms to address those problems. When existing governance mechanisms failed, the United States experienced corporate governance crises--episodes that shattered investors' faith in corporate management and the legal institutions intended to protect their rights. The resolutions of these crises have sometimes been found in legal innovations, and in other cases, in institutional or market-based solutions.
Handle: RePEc:nbr:nberwo:20356
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Fair Trade
Classification-JEL: F1; O1
Author-Name: Raluca E. Dragusanu
Author-Name: Daniele Giovannucci
Author-Name: Nathan Nunn
Author-Person: pnu17
Note: DEV ITI POL
Number: 20357
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20357
File-URL: http://www.nber.org/papers/w20357.pdf
File-Format: application/pdf
Publication-Status: published as Raluca Dragusanu & Daniele Giovannucci & Nathan Nunn, 2014. "The Economics of Fair Trade," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 217-36, Summer.
Abstract: Fair Trade is a labeling initiative aimed at improving the lives of the poor in developing countries by offering better terms to producers and helping them to organize. In this survey, we provide a critical overview of the economic theory behind Fair Trade, describing the potential benefits and potential pitfalls. We also provide an assessment of the empirical evidence of the impacts of Fair Trade to date.
Handle: RePEc:nbr:nberwo:20357
Template-Type: ReDIF-Paper 1.0
Title: Entrepreneurship as Experimentation
Classification-JEL: G24; L26; O32
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Ramana Nanda
Author-Person: pna187
Author-Name: Matthew Rhodes-Kropf
Author-Person: prh19
Note: PR
Number: 20358
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20358
File-URL: http://www.nber.org/papers/w20358.pdf
File-Format: application/pdf
Publication-Status: published as William R. Kerr & Ramana Nanda & Matthew Rhodes-Kropf, 2014. "Entrepreneurship as Experimentation," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 25-48, Summer.
Abstract: Entrepreneurship research is on the rise but many questions about its fundamental nature still exist. We argue that entrepreneurship is about experimentation: the probabilities of success are low, extremely skewed and unknowable until an investment is made. At a macro level experimentation by new firms underlies the Schumpeterian notion of creative destruction. However, at a micro level investment and continuation decisions are not always made in a competitive Darwinian contest. Instead, a few investors make decisions that are impacted by incentive, agency and coordination problems, often before a new idea even has a chance to compete in a market. We contend that costs and constraints on the ability to experiment alter the type of organizational form surrounding innovation and influence when innovation is more likely to occur. These factors not only govern how much experimentation is undertaken in the economy, but also the trajectory of experimentation, with potentially very deep economic consequences.
Handle: RePEc:nbr:nberwo:20358
Template-Type: ReDIF-Paper 1.0
Title: Tradeoffs in the Design of Health Plan Payment Systems: Fit, Power and Balance
Classification-JEL: H42; H51; I13; I18
Author-Name: Michael Geruso
Author-Name: Thomas G. McGuire
Note: AG EH PE
Number: 20359
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20359
File-URL: http://www.nber.org/papers/w20359.pdf
File-Format: application/pdf
Publication-Status: published as Geruso, Michael & McGuire, Thomas G., 2016. "Tradeoffs in the design of health plan payment systems: Fit, power and balance," Journal of Health Economics, Elsevier, vol. 47(C), pages 1-19.
Abstract: In many markets, including the new U.S. Exchanges, health insurance plans are paid by risk-adjusted capitation, in some markets combined with reinsurance and other payment mechanisms. This paper proposes three metrics for analyzing the insurer incentives embedded in these complex payment systems. We discuss fit, power and balance, each of which addresses a distinct market failure in health insurance. We implement these metrics in a study of Exchange payment systems with data similar to that used to develop the Exchange risk adjustment scheme and quantify the empirical tradeoffs among the metrics. We show that an essential tradeoff arises between the goals of limiting costs and limiting cream skimming because risk adjustment, which is aimed at discouraging cream-skimming, is in fact tied to costs. We find that a simple reinsurance system scores better on fit, power and balance than the risk adjustment scheme in use in the Exchanges.
Handle: RePEc:nbr:nberwo:20359
Template-Type: ReDIF-Paper 1.0
Title: Riding the Bubble? Chasing Returns into Illiquid Assets
Classification-JEL: G0; H0
Author-Name: Danny Yagan
Author-Person: pya379
Note: AG PE
Number: 20360
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20360
File-URL: http://www.nber.org/papers/w20360.pdf
File-Format: application/pdf
Abstract: Household investors chase stock market returns. Surveys suggest that households intend to "ride the bubble" by buying stocks early in a boom and selling stocks early in a bust. This implies that households use only liquid assets to chase returns. I test this prediction using inflows to fixed annuities---illiquid tax-preferred assets that lock wealth out of the stock market for five to ten years. I find that fixed annuity inflows spike after poor stock market returns, inconsistent with ride-the-bubble intentions and instead indicating buy-and-hold intentions. The results are consistent with households extrapolating recent stock market returns into the long run.
Handle: RePEc:nbr:nberwo:20360
Template-Type: ReDIF-Paper 1.0
Title: Supply vs. Demand under an Affirmative Action Ban: Estimates from UC Law Schools
Classification-JEL: I0; J0; K0
Author-Name: Danny Yagan
Author-Person: pya379
Note: ED LS PE
Number: 20361
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20361
File-URL: http://www.nber.org/papers/w20361.pdf
File-Format: application/pdf
Publication-Status: published as Danny Yagan, 2016. "Supply vs. demand under an affirmative action ban: Estimates from UC law schools," Journal of Public Economics, vol 137, pages 38-50.
Abstract: Affirmative action bans can reduce black enrollment not only by reducing black admission advantages (contracting demand) but also by reducing applications (contracting supply) from black students who can still gain admission but prefer alternative schools that still practice affirmative action. When affirmative action was banned at UC law schools, Berkeley's black applications and enrollment declined by almost half even as black admission rates rose relative to whites. I ask whether black enrollment at UC law schools would have markedly declined even without the supply contraction. I find in a large sample of students applying to law schools nationwide that black supply contractions were driven mostly or entirely by students unlikely to gain admission under the ban, yielding stronger post-ban black applicant pools. Holding applicant pools constant, I estimate that the ban reduced black admission rates at both Berkeley and UCLA by half. Hence, black enrollment at these elite schools would likely have plummeted even if supply contractions had been muted---as could occur under a nationwide ban that eliminates affirmative-action-practicing alternatives.
Handle: RePEc:nbr:nberwo:20361
Template-Type: ReDIF-Paper 1.0
Title: Free to Choose: Promoting Conservation by Relaxing Outdoor Watering Restrictions
Classification-JEL: C11; C30; Q2; Q25; Q58
Author-Name: Anita Castledine
Author-Name: Klaus Moeltner
Author-Person: pmo311
Author-Name: Michael Price
Author-Person: ppr89
Author-Name: Shawn Stoddard
Note: EEE
Number: 20362
Creation-Date: 2014-07
Order-URL: http://www.nber.org/papers/w20362
File-URL: http://www.nber.org/papers/w20362.pdf
File-Format: application/pdf
Publication-Status: published as Castledine, A. & Moeltner, K. & Price, M.K. & Stoddard, S., 2014. "Free to choose: Promoting conservation by relaxing outdoor watering restrictions," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 324-343.
Abstract: Many water utilities use outdoor watering restrictions based on assigned weekly watering days to promote conservation and delay costly capacity expansions. We find that such policies can lead to unintended consequences - customers who adhere to the prescribed schedule use more water than those following a more flexible irrigation pattern. For our application to residential watering in a high-desert environment, this "rigidity penalty" is robust to an exogenous policy change that allowed an additional watering day per week. Our findings contribute to the growing literature on leakage effects of regulatory policies. In our case inefficiencies arise as policies limit the extent to which agents can temporally re-allocate actions.
Handle: RePEc:nbr:nberwo:20362
Template-Type: ReDIF-Paper 1.0
Title: Paternalism and Energy Efficiency: An Overview
Classification-JEL: D03; D12; D83; H21; L51; L94; Q41; Q48
Author-Name: Hunt Allcott
Author-Person: pal171
Note: EEE PE
Number: 20363
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20363
File-URL: http://www.nber.org/papers/w20363.pdf
File-Format: application/pdf
Publication-Status: published as Hunt Allcott, 2016. "Paternalism and Energy Efficiency: An Overview," Annual Review of Economics, vol 8(1).
Abstract: This review paper provides an overview of the application of behavioral public economics to energy efficiency. I document policymakers' arguments for “paternalistic” energy efficiency policies, formalize with a simple model of misoptimizing consumers, review and critique empirical evidence, and suggest future research directions. While empirical results suggest that policies to address imperfect information and internalities may increase welfare in some cases, some existing policies may be mistargeted or miscalibrated.
Handle: RePEc:nbr:nberwo:20363
Template-Type: ReDIF-Paper 1.0
Title: Remix Rights and Negotiations Over the Use of Copy-Protected Works
Classification-JEL: O34
Author-Name: Joshua S. Gans
Author-Person: pga42
Note: LE PR
Number: 20364
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20364
File-URL: http://www.nber.org/papers/w20364.pdf
File-Format: application/pdf
Publication-Status: published as Gans, Joshua S., 2015. "Remix rights and negotiations over the use of copy-protected works," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 76-83.
Abstract: This paper examines an environment where original content can be remixed by follow-on creators. The modelling innovation is to assume that original content creators and remixers can negotiate over the ‘amount’ of original content that is used by the follow-on creator in the shadow of various rights regimes. The following results are demonstrated. First, traditional copyright protection where the original content creators can block any use of their content provides more incentives for content creators and also more remixing than no copyright protection. This is because that regime incentivises original content creators to consider the value of remixing and permit it in negotiations. Second, fair use can improve on traditional copyright protection in some instances by mitigating potential hold-up of follow-on creators by original content providers. Finally, remix rights can significantly avoid the need for any negotiations over use by granting those rights to follow-on innovators in return for a set compensation regime. However, while these rights are sometimes optimal when the returns to remixing are relatively low, standard copyright protection can afford more opportunities to engage in remixing when remixing returns are relatively high.
Handle: RePEc:nbr:nberwo:20364
Template-Type: ReDIF-Paper 1.0
Title: Inefficiently Low Screening with Walrasian Markets
Classification-JEL: D62; D83; E44
Author-Name: Kinda Hachem
Author-Person: pha1475
Note: CF EFG ME
Number: 20365
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20365
File-URL: http://www.nber.org/papers/w20365.pdf
File-Format: application/pdf
Publication-Status: published as Kinda Hachem, 2020. "Inefficiently low screening with Walrasian markets," Journal of Monetary Economics, .
Abstract: Financial intermediaries devote resources to finding and screening borrowers before lending capital. By retaining only sufficiently good matches, informed lenders exacerbate adverse selection problems for others lending in the same market. Failure to internalize this implies that informed lenders are too selective in the matches they retain. The resulting under-use of capital pushes the cost of capital down, decreasing the benefit of being informed rather than uninformed and prompting a reallocation of resources from screening to matching. Compared to the constrained efficient allocation, the decentralized equilibrium has too little screening, too little informed credit, and too much uninformed credit.
Handle: RePEc:nbr:nberwo:20365
Template-Type: ReDIF-Paper 1.0
Title: Lead Exposure and Behavior: Effects on Antisocial and Risky Behavior among Children and Adolescents
Classification-JEL: I18; J13; K49; Q53; Q58
Author-Name: Jessica Wolpaw Reyes
Note: AG CH EEE EH
Number: 20366
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20366
File-URL: http://www.nber.org/papers/w20366.pdf
File-Format: application/pdf
Publication-Status: published as Jessica Wolpaw Reyes, 2015. "LEAD EXPOSURE AND BEHAVIOR: EFFECTS ON ANTISOCIAL AND RISKY BEHAVIOR AMONG CHILDREN AND ADOLESCENTS," Economic Inquiry, vol 53(3), pages 1580-1605.
Abstract: It is well known that exposure to lead has numerous adverse effects on behavior and development. Using data on two cohorts of children from the NLSY, this paper investigates the effect of early childhood lead exposure on behavior problems from childhood through early adulthood. I find large negative consequences of early childhood lead exposure, in the form of an unfolding series of adverse behavioral outcomes: behavior problems as a child, pregnancy and aggression as a teen, and criminal behavior as a young adult. At the levels of lead that were the norm in United States until the late 1980s, estimated elasticities of these behaviors with respect to lead range between 0.1 and 1.0.
Handle: RePEc:nbr:nberwo:20366
Template-Type: ReDIF-Paper 1.0
Title: Agglomeration and Innovation
Classification-JEL: J2; J6; L1; L2; L6; O3; O4; R1; R3
Author-Name: Gerald Carlino
Author-Person: pca459
Author-Name: William R. Kerr
Author-Person: pke127
Note: IO LS PR
Number: 20367
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20367
File-URL: http://www.nber.org/papers/w20367.pdf
File-Format: application/pdf
Publication-Status: published as Gerald Carlino, William R. Kerr, Chapter 6 - Agglomeration and Innovation, Editor(s): Gilles Duranton, J. Vernon Henderson, William C. Strange, Handbook of Regional and Urban Economics, Elsevier, Volume 5, 2015, Pages 349-404, ISSN 1574-0080, ISBN 9780444595331, https://doi.org/10.1016/B978-0-444-59517-1.00006-4.
Abstract: This chapter reviews academic research on the connections between agglomeration and innovation. We first describe the conceptual distinctions between invention and innovation. We then describe how these factors are frequently measured in the data and some resulting empirical regularities. Innovative activity tends to be more concentrated than industrial activity, and we discuss important findings from the literature about why this is so. We highlight the traits of cities (e.g., size, industrial diversity) that theoretical and empirical work link to innovation, and we discuss factors that help sustain these features (e.g., the localization of entrepreneurial finance).
Handle: RePEc:nbr:nberwo:20367
Template-Type: ReDIF-Paper 1.0
Title: The 9/11 Dust Cloud and Pregnancy Outcomes: A Reconsideration
Classification-JEL: I1
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Hannes Schwandt
Author-Person: psc768
Note: CH EH
Number: 20368
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20368
File-URL: http://www.nber.org/papers/w20368.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie & Hannes Schwandt, 2016. "The 9/11 Dust Cloud and Pregnancy Outcomes: A Reconsideration," Journal of Human Resources, University of Wisconsin Press, vol. 51(4), pages 805-805-831.
Abstract: The events of 9/11 released a million tons of toxic dust into lower Manhattan, an unparalleled environmental disaster. It is puzzling then that the literature has shown little effect of fetal exposure to the dust. However, inference is complicated by pre-existing differences between the affected mothers and other NYC mothers as well as heterogeneity in effects on boys and girls. Using all births in utero on 9/11 in NYC and comparing them to their siblings, we show that residence in the affected area increased prematurity, low birth weight, and admission to the NICU after birth, especially for boys.
Handle: RePEc:nbr:nberwo:20368
Template-Type: ReDIF-Paper 1.0
Title: Social Norms and the Enforcement of Laws
Classification-JEL: C72; C73; P16; Z1
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Matthew O. Jackson
Author-Person: pja7
Note: POL
Number: 20369
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20369
File-URL: http://www.nber.org/papers/w20369.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Matthew O. Jackson, 2017. "Social Norms and the Enforcement of Laws," Journal of the European Economic Association, European Economic Association, vol. 15(2), pages 245-295.
Abstract: We examine the interplay between social norms and the enforcement of laws. Agents choose a behavior (e.g., tax evasion, production of low-quality products, corruption, substance abuse, etc.) and then are randomly matched with another agent. An agent's payoff decreases with the mismatch between her behavior and her partner's, as well as average behavior in society. A law is an upper bound (cap) on behavior and a law-breaker, when detected, pays a fine and has her behavior forced down to the level of the law. Law-breaking depends on social norms because detection relies, at least in part, on private cooperation and whistle-blowing. Law-abiding agents have an incentive to whistle-blow because this reduces the mismatch with their partner's behavior as well as the overall negative externality. When laws are in conflict with norms so that many agents are breaking the law, each agent anticipates little whistle-blowing and is more likely to also break the law. Tighter laws (banning more behaviors) have counteracting effects, reducing behavior among law-abiding individuals but inducing more law-breaking. Greater fines for law breaking and better public enforcement reduce the number of law-breakers and behavior among law-abiding agents, but increase levels of law breaking among law-breakers (who effectively choose their behavior targeting other high-behavior law-breakers). Within a dynamic version of the model, we show that laws that are in strong conflict with prevailing social norms may backfire, while gradual tightening of laws can be more effective by changing social norms.
Handle: RePEc:nbr:nberwo:20369
Template-Type: ReDIF-Paper 1.0
Title: Changing Times, Changing Values: A Historical Analysis of Sectors within the US Stock Market 1872-2013
Classification-JEL: E37; G11; G14; G17; N20
Author-Name: Oliver D. Bunn
Author-Name: Robert J. Shiller
Author-Person: psh69
Note: EFG
Number: 20370
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20370
File-URL: http://www.nber.org/papers/w20370.pdf
File-Format: application/pdf
Abstract: We construct a price, dividend, and earnings series for the Industrials sector, the Utilities sector, and the Railroads sector from the beginning of the 1870s until the beginning of the year 2013 from primary sources. To infer about mispricings in the sector markets over more than a century, we investigate the forecasting power of the Cyclically Adjusted Price-Earnings (CAPE) ratio for these sectors. With regard to the CAPE ratio, which has originally been devised and employed by Campbell and Shiller (1988, 1998, 2001) as well as Shiller (2005), we define a methodological improvement to this ratio to not only be robust to inflationary changes, but also to changes in corporate payout policy. We then update the original evidence from Campbell and Shiller (1998, 2001) of the return predictability of the CAPE ratio for the overall stock market and furthermore extend this evidence to the three forementioned sectors individually. Whereas this part of our analysis focuses on each sector of the US economy in isolation, we subsequently construct an indicator from the CAPE ratio that enables us to perform valuation comparisons across sectors. In addition to establishing the prediction of subsequent return differences based on differences in the CAPE-based valuation indicator, we also suggest a hypothetical, historical, and simple value investment strategy that rotates between the three sectors based on the valuation signals derived from the CAPE-based indicator, generating slightly more than 1:09% annualized, inflation-adjusted excess total return over the market benchmark during a period of nearly 110 years.
Handle: RePEc:nbr:nberwo:20370
Template-Type: ReDIF-Paper 1.0
Title: Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion
Classification-JEL: H42; I13; J14; J22; J26
Author-Name: Melissa A. Boyle
Author-Person: pbo751
Author-Name: Joanna N. Lahey
Author-Person: pla533
Note: AG EH LS PE
Number: 20371
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20371
File-URL: http://www.nber.org/papers/w20371.pdf
File-Format: application/pdf
Publication-Status: published as Boyle, Melissa A. & Lahey, Joanna N., 2016. "Spousal labor market effects from government health insurance: Evidence from a veterans affairs expansion," Journal of Health Economics, Elsevier, vol. 45(C), pages 63-76.
Abstract: Measuring the overall impact of public health insurance receipt is important in an era of increased access to publicly-provided and subsidized insurance. Although government expansion of health insurance to older workers leads to labor supply reductions for recipients, there may be spillover effects on the labor supply of uncovered spouses. While theory predicts a decrease in overall household work hours, financial incentives such as credit constraints, target income levels, and the need for own health insurance suggest that spousal labor supply might increase. In contrast, complementarities of spousal leisure would predict a decrease in labor supply for both spouses. Utilizing a mid-1990s expansion of health insurance for U.S. veterans, we provide evidence on the effects of public insurance availability on the labor supply of spouses. Using data from the Current Population Survey and Health and Retirement Study, we employ a difference-in-differences strategy to compare the labor market behavior of the wives of older male veterans and non-veterans before and after the VA health benefits expansion. Our findings suggest that although household labor supply may decrease because of the income effect, wives' labor supply increases, suggesting that financial incentives dominate complementarities of spousal leisure. This effect is strongest for wives with lower education levels and lower levels of household wealth. Moreover, wives with employer-provided health insurance in the previous year remain on the job while those without increase their hours, suggesting incentives to retain or obtain health insurance. Finally, non-working wives enter the labor force, those who were working part-time increase their hours, and full-time "career" women are largely unaffected.
Handle: RePEc:nbr:nberwo:20371
Template-Type: ReDIF-Paper 1.0
Title: Corporate Taxes and Capital Structure: A Long-Term Historical Perspective
Classification-JEL: G32; G38
Author-Name: Francis A. Longstaff
Author-Person: plo283
Author-Name: Ilya A. Strebulaev
Author-Person: pst526
Note: CF
Number: 20372
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20372
File-URL: http://www.nber.org/papers/w20372.pdf
File-Format: application/pdf
Abstract: We study the relation between leverage and corporate tax rates using an extensive data set constructed from all corporate income tax returns filed with the IRS from 1926 to 2009. This data set includes financial statement data from millions of private and public corporations of all sizes. We show that corporate leverage has increased significantly over the past century. We find strong evidence that changes in corporate leverage are directly related to changes in corporate tax rates for all but the smallest firms. These results are robust to the inclusion of control variables for the costs of financial distress, corporate liquidity, and capital market and macroeconomic conditions. The adjustment of leverage to changes in corporate tax rates is slower for smaller firms facing financial constraints. We find that the capital structures of the smallest firms are driven much more by external shocks than is the case for larger firms.
Handle: RePEc:nbr:nberwo:20372
Template-Type: ReDIF-Paper 1.0
Title: Moral Hazard and Less Invasive Medical Treatment for Coronary Artery Disease: The Case of Cigarette Smoking
Classification-JEL: I10; I12
Author-Name: Jesse Margolis
Author-Name: Jason Hockenberry
Author-Person: pho381
Author-Name: Michael Grossman
Author-Person: pgr107
Author-Name: Shin-Yi Chou
Note: EH
Number: 20373
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20373
File-URL: http://www.nber.org/papers/w20373.pdf
File-Format: application/pdf
Abstract: Over the last several decades, numerous medical studies have compared the effectiveness of two common procedures for Coronary Artery Disease: Percutaneous Coronary Intervention (PCI) and Coronary Artery Bypass Graft (CABG). Most evidence indicates that CABG - the more invasive procedure - leads to superior long term outcomes for otherwise similar patients, though there is little consensus as to why. In this article, we propose a novel explanation: patient offsetting behavior. We hypothesize that patients who undergo the more invasive procedure, CABG, are more likely to improve their behavior - eating, exercise, smoking, and drinking - in a way that increases longevity. To test our hypothesis, we use Medicare records linked to the National Health Interview Survey to study one such behavior: smoking. We find that CABG patients are 12 percentage points more likely to quit smoking in the one-year period immediately surrounding their procedure than PCI patients, a result that is robust to numerous alternative specifications.
Handle: RePEc:nbr:nberwo:20373
Template-Type: ReDIF-Paper 1.0
Title: Spatial Errors in Count Data Regressions
Classification-JEL: C23; C33; O3
Author-Name: Marinho Bertanha
Author-Person: pbe1000
Author-Name: Petra Moser
Author-Person: pmo257
Note: DAE PR TWP
Number: 20374
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20374
File-URL: http://www.nber.org/papers/w20374.pdf
File-Format: application/pdf
Publication-Status: published as Bertanha Marinho & Moser Petra, 2016. "Spatial Errors in Count Data Regressions," Journal of Econometric Methods, De Gruyter, vol. 5(1), pages 49-69, January.
Abstract: Count data regressions are an important tool for empirical analyses ranging from analyses of patent counts to measures of health and unemployment. Along with negative binomial, Poisson panel regressions are a preferred method of analysis because the Poisson conditional fixed effects maximum likelihood estimator (PCFE) and its sandwich variance estimator are consistent even if the data are not Poisson-distributed, or if the data are correlated over time. Analyses of counts may be affected by correlation in the cross-section. For example, patent counts or publications may increase across related research fields in response to common shocks. This paper shows that the PCFE and its sandwich variance estimator are consistent in the presence of such dependence in the cross-section - as long as spatial dependence is time-invariant. In addition to the PCFE, this result also applies to the commonly used Logit model of panel data with fixed effects. We develop a test for time-invariant spatial dependence and provide code in STATA and MATLAB to implement the test.
Handle: RePEc:nbr:nberwo:20374
Template-Type: ReDIF-Paper 1.0
Title: Defining Clusters of Related Industries
Classification-JEL: R0; R1
Author-Name: Mercedes Delgado
Author-Person: pde923
Author-Name: Michael E. Porter
Author-Name: Scott Stern
Note: PR
Number: 20375
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20375
File-URL: http://www.nber.org/papers/w20375.pdf
File-Format: application/pdf
Publication-Status: published as Mercedes Delgado & Michael E. Porter & Scott Stern, 2016. "Defining clusters of related industries," Journal of Economic Geography, vol 16(1), pages 1-38.
Abstract: Clusters are geographic concentrations of industries related by knowledge, skills, inputs, demand, and/or other linkages. A growing body of empirical literature has shown the positive impact of clusters on regional and industry performance, including job creation, patenting, and new business formation. There is an increasing need for cluster-based data to support research, facilitate comparisons of clusters across regions, and support policymakers and practitioners in defining regional strategies. This paper develops a novel clustering algorithm that systematically generates and assesses sets of cluster definitions (i.e., groups of closely related industries). We implement the algorithm using 2009 data for U.S. industries (6-digit NAICS), and propose a new set of benchmark cluster definitions that incorporates measures of inter-industry linkages based on co-location patterns, input-output links, and similarities in labor occupations. We also illustrate the algorithm's ability to compare alternative sets of cluster definitions by evaluating our new set against existing sets in the literature. We find that our proposed set outperforms other methods in capturing a wide range of inter-industry linkages, including grouping industries within the same 3-digit NAICS.
Handle: RePEc:nbr:nberwo:20375
Template-Type: ReDIF-Paper 1.0
Title: Welfare Implications of Learning Through Solicitation versus Diversification in Health Care
Classification-JEL: C01; C9; D6; I1; I18
Author-Name: Anirban Basu
Author-Person: pba977
Note: EH TWP
Number: 20376
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20376
File-URL: http://www.nber.org/papers/w20376.pdf
File-Format: application/pdf
Publication-Status: published as Anirban Basu, 2015. "Welfare implications of learning through solicitation versus diversification in health care," Journal of Health Economics, vol 42, pages 165-173.
Abstract: This paper uses Roy's model of sorting behavior to study welfare implication of current health care data production infrastructure that relies on solicitation of research subjects. We show that due to severe adverse-selection issues, directionality of bias cannot be established and welfare may decrease due to new data. Direct diversification of treatment receipt may solve these issues but is infeasible. Unifying Manski's work diversified treatment choice under ambiguity and Heckman's work on estimating heterogeneous treatment effects, the paper proposes a new infrastructure based on temporary diversification of access that resolves the prior issues and can identify nuanced effect heterogeneity.
Handle: RePEc:nbr:nberwo:20376
Template-Type: ReDIF-Paper 1.0
Title: Discount Shock, Price-Rent Dynamics, and the Business Cycle
Classification-JEL: E22; E32; E44
Author-Name: Jianjun Miao
Author-Person: pmi103
Author-Name: Pengfei Wang
Author-Person: pwa169
Author-Name: Tao Zha
Author-Person: pzh80
Note: AP EFG ME
Number: 20377
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20377
File-URL: http://www.nber.org/papers/w20377.pdf
File-Format: application/pdf
Publication-Status: published as Jianjun Miao & Pengfei Wang & Tao Zha, 2020. "DISCOUNT SHOCK, PRICE–RENT DYNAMICS, AND THE BUSINESS CYCLE," International Economic Review, vol 61(3), pages 1229-1252.
Abstract: The price-rent ratio is highly volatile and predicts future returns for commercial real estate. Price-rent variations in commercial real estate also tend to comove with investment and output. We develop a general equilibrium model that explicitly introduces a rental market and incorporates collateral constraints on production as a key ingredient. Our estimation identifies discount-rate shocks as the most important factor in (1) driving price-rent variations, (2) producing the long-horizon predictability of real estate returns, and (3) linking the dynamics in commercial real estate to those in the production sector.
Handle: RePEc:nbr:nberwo:20377
Template-Type: ReDIF-Paper 1.0
Title: Don't Take 'No' For An Answer: An Experiment With Actual Organ Donor Registrations
Classification-JEL: D02; D04; D47
Author-Name: Judd B. Kessler
Author-Name: Alvin E. Roth
Author-Person: pro40
Note: EH
Number: 20378
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20378
File-URL: http://www.nber.org/papers/w20378.pdf
File-Format: application/pdf
Abstract: Over 10,000 people in the U.S. die each year while waiting for an organ. Attempts to increase organ transplantation have focused on changing the registration question from an opt-in frame to an active choice frame. We analyze this change in California and show it decreased registration rates. Similarly, a "field in the lab" experiment run on actual organ donor registration decisions finds no increase in registrations resulting from an active choice frame. In addition, individuals are more likely to support donating the organs of a deceased who did not opt-in than one who said "no" in an active choice frame.
Handle: RePEc:nbr:nberwo:20378
Template-Type: ReDIF-Paper 1.0
Title: Has Creative Destruction Become More Destructive?
Classification-JEL: E01; O10
Author-Name: John Komlos
Author-Person: pko37
Note: DEV EFG
Number: 20379
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20379
File-URL: http://www.nber.org/papers/w20379.pdf
File-Format: application/pdf
Publication-Status: published as Komlos John, 2016. "Has Creative Destruction become more Destructive?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(4), pages 1-12, October.
Abstract: Schumpeter's concept of creative destruction as the engine of capitalist development is well-known. However, that the destructive part of creative destruction is a social cost and therefore biases our estimate of the impact of the innovation on NNP and on welfare is hardly acknowledged, with the exception of Witt (1996). Admittedly, during the First and Second Industrial Revolutions the magnitude of the destructive component of innovation was probably small compared to the net value added to employment, NNP or to welfare. However, we conjecture that recently the new technologies are often creating products which are close substitutes for the ones they replace whose value depreciates substantially in the process of destruction. Consequently, the contribution of recent innovations to NNP is likely biased upward. This note calls for a research agenda to estimate innovations into their creative and destructive components in order to provide improved estimates of their contribution to NNP, welfare, and employment.
Handle: RePEc:nbr:nberwo:20379
Template-Type: ReDIF-Paper 1.0
Title: The Roots of Gender Inequality in Developing Countries
Classification-JEL: J16; O10; O14; O15
Author-Name: Seema Jayachandran
Author-Person: pja86
Note: CH DEV
Number: 20380
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20380
File-URL: http://www.nber.org/papers/w20380.pdf
File-Format: application/pdf
Publication-Status: published as Seema Jayachandran, 2015. "The Roots of Gender Inequality in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 63-88, 08.
Abstract: Is the high degree of gender inequality in developing countries--in education, personal autonomy, and more--explained by underdevelopment itself? Or do the societies that are poor today hold certain cultural views that lead to gender inequality? This article discusses several mechanisms through which, as countries grow, gender gaps narrow. I argue that while much of the GDP/gender-inequality relationship can be explained by the process of development, society-specific factors are also at play: Many countries that are poor today have cultural norms that exacerbate favoritism toward males. Norms such as patrilocality and concern for women's "purity" help explain the male-skewed sex ratio in India and China and low female employment in India, the Middle East, and North Africa, for example. I also discuss why the sex ratio has become more male-skewed with development. Finally, I lay out some policy approaches to address gender inequality.
Handle: RePEc:nbr:nberwo:20380
Template-Type: ReDIF-Paper 1.0
Title: On the Interaction of Memory and Procrastination: Implications for Reminders
Classification-JEL: D03; D81; D86; D9
Author-Name: Keith M. Marzilli Ericson
Note: AG
Number: 20381
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20381
File-URL: http://www.nber.org/papers/w20381.pdf
File-Format: application/pdf
Publication-Status: published as Keith Marzilli Ericson; On the Interaction of Memory and Procrastination: Implications for Reminders, Deadlines, and Empirical Estimation, Journal of the European Economic Association, Volume 15, Issue 3, 1 July 2017, Pages 692–719, https://doi.org/10.1093/jeea/jvw015
Abstract: I examine the interaction between present-bias and limited memory. Individuals in the model must choose when and whether to complete a task, but may forget or procrastinate. Present-bias expands the effect of memory: it induces delay and limits take-up of reminders. Cheap reminder technology can bound the cost of limited memory for time-consistent individuals but not for present-biased individuals, who procrastinate on setting up reminders. Moreover, while improving memory increases welfare for time-consistent individuals, it may harm present-biased individuals because limited memory can function as a commitment device. Thus, present-biased individuals may be better off with reminders that are unanticipated. Finally, I show how to optimally time the delivery of reminders to present-biased individuals.
Handle: RePEc:nbr:nberwo:20381
Template-Type: ReDIF-Paper 1.0
Title: Skill Gaps, Skill Shortages and Skill Mismatches: Evidence for the US
Classification-JEL: J08; J23; J24
Author-Name: Peter Cappelli
Note: ED LS
Number: 20382
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20382
File-URL: http://www.nber.org/papers/w20382.pdf
File-Format: application/pdf
Publication-Status: published as Peter H. Cappelli, 2015. "Skill Gaps, Skill Shortages, and Skill Mismatches," ILR Review, vol 68(2), pages 251-290.
Abstract: Concerns that there are problems with the supply of skills, especially education-related skills, in the US labor force have exploded in recent years with a series of reports from employer-associated organizations but also from independent and even government sources making similar claims. These complaints about skills are driving much of the debate around labor force and education policy, yet they have not been examined carefully. The discussion below examines the range of these charges as well as other evidence about skills in the labor force. There is very little evidence consistent with the complaints about skills and a wide range of evidence suggesting that they are not true. Indeed, a reasonable conclusion is that over-education remains the persistent and even growing situation of the US labor force with respect to skills. I consider three possible explanations for the employer complaints as well as the implications associated with those changes.
Handle: RePEc:nbr:nberwo:20382
Template-Type: ReDIF-Paper 1.0
Title: Manufacturing Growth and the Lives of Bangladeshi Women
Classification-JEL: F16; I25; J12; J23; O12
Author-Name: Rachel Heath
Author-Name: A. Mushfiq Mobarak
Author-Person: pmo232
Note: DEV ITI LS
Number: 20383
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20383
File-URL: http://www.nber.org/papers/w20383.pdf
File-Format: application/pdf
Publication-Status: published as Heath, Rachel & Mushfiq Mobarak, A., 2015. "Manufacturing growth and the lives of Bangladeshi women," Journal of Development Economics, Elsevier, vol. 115(C), pages 1-15.
Abstract: We study the effects of explosive growth in the Bangladeshi ready-made garments industry on the lives on Bangladeshi women. We compare the marriage, childbearing, school enrollment and employment decisions of women who gain greater access to garment sector jobs to women living further away from factories, to years before the factories arrive close to some villages, and to the marriage and enrollment decisions of their male siblings. Girls exposed to the garment sector delay marriage and childbirth. This stems from (a) young girls becoming more likely to be enrolled in school after garment jobs (which reward literacy and numeracy) arrive, and (b) older girls becoming more likely to be employed outside the home in garment-proximate villages. The demand for education generated through manufacturing growth appears to have a much larger effect on female educational attainment compared to a large-scale government conditional cash transfer program to encourage female schooling.
Handle: RePEc:nbr:nberwo:20383
Template-Type: ReDIF-Paper 1.0
Title: Does the Gender of Offspring Affect Parental Political Orientation?
Classification-JEL: D1; J13
Author-Name: Byungkyu Lee
Author-Name: Dalton Conley
Note: CH POL
Number: 20384
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20384
File-URL: http://www.nber.org/papers/w20384.pdf
File-Format: application/pdf
Publication-Status: published as Byungkyu Lee & Dalton Conley, 2016. "Does the Gender of Offspring Affect Parental Political Orientation?," Social Forces, vol 94(3), pages 1103-1127.
Abstract: Recently, the sex of child has been widely used as a natural experiment and shown to induce change of the allegedly stable political predisposition, however, prior results have been contradictory: in the U.K., researchers found that having daughters leads to parents favoring left-wing political parties and to holding more liberal views on family/gender roles, whereas in the U.S. scholars found that daughters were associated with more Republican (rightist) party identification and more conservative views on teen sexuality. Here, we utilize data from the General Social Survey and the European Social Survey to test the robustness of effects of offspring sex on parental political orientation while factoring out country and period differences. In analysis of 36 countries, we obtain null effects of the sex of the first child on party identification as well as on political ideology. Further, we observe no evidence of heterogeneous treatment effects. We discuss the implications of these null findings for theories of political socialization.
Handle: RePEc:nbr:nberwo:20384
Template-Type: ReDIF-Paper 1.0
Title: Fair Weather Avoidance: Unpacking Costs and Benefits in Replication of 'Avoiding the Ask'
Classification-JEL: D03; D64; H41
Author-Name: Hannah Trachtman
Author-Name: Andrew Steinkruger
Author-Name: Mackenzie Wood
Author-Name: Adam Wooster
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: James J. Murphy
Author-Person: pmu146
Author-Name: Justin M. Rao
Note: PE
Number: 20385
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20385
File-URL: http://www.nber.org/papers/w20385.pdf
File-Format: application/pdf
Publication-Status: published as Hannah Trachtman & Andrew Steinkruger & Mackenzie Wood & Adam Wooster & James Andreoni & James J. Murphy & Justin M. Rao, 2015. "Fair weather avoidance: unpacking the costs and benefits of “Avoiding the Ask”," Journal of the Economic Science Association, vol 1(1), pages 8-14.
Abstract: If being asked to give to charity stimulates an emotional response, like empathy, that makes giving difficult to resist, a natural self-control mechanism might be to avoid being asked in the first place. We replicate a result from a field experiment that points to the role of empathy in giving. We conduct an experiment in a large superstore in which we solicit donations to charity and randomly allow shoppers the opportunity to avoid solicitation by using the other door. We find the rate of avoidance by store entrants to be 4.5 percent. However, we also find that the avoidance effect disappears in very cold weather, suggesting that avoidance behavior is sensitive to its cost.
Handle: RePEc:nbr:nberwo:20385
Template-Type: ReDIF-Paper 1.0
Title: International Reserves Before and After the Global Crisis: Is There No End to Hoarding?
Classification-JEL: F3; F31; F32; F36
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yin-Wong Cheung
Author-Person: pch261
Author-Name: Hiro Ito
Author-Person: pit4
Note: IFM
Number: 20386
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20386
File-URL: http://www.nber.org/papers/w20386.pdf
File-Format: application/pdf
Publication-Status: published as Aizenman, Joshua & Cheung, Yin-Wong & Ito, Hiro, 2015. "International reserves before and after the global crisis: Is there no end to hoarding?," Journal of International Money and Finance, Elsevier, vol. 52(C), pages 102-126.
Abstract: We evaluate the impact of the global financial crisis (GFC) and recent structural changes in the patterns of hoarding international reserves (IR). We confirm that the determinants of IR hoarding evolve with developments in the global economy. During the pre-GFC period of 1999-2006, gross saving is associated with higher IR in developing and emerging markets. The negative impact of outward direct investment on IR accumulation is consistent with the recent trend of diverting international assets from the international reserve account into tangible foreign assets; the "Joneses' effect" lends support to the regional rivalry in hoarding IR as a motivation; and commodity price volatility induces precautionary buffer hoarding. During the 2007-2009 GFC period, previously significant variables become insignificant or display the opposite effect, probably reflecting the frantic market conditions driven by financial instability. Nevertheless, the propensity to import and gross saving continue to display strong and even larger positive effects on IR holding. The results from the 2010-2012 post-GFC period are dominated by factors that had been mostly overlooked in earlier decades. While the negative effect of swap agreements and the positive effect of gross saving on IR holdings are in line with our expectations, we find a change in the link between outward direct investment and IR in the pre- and post-crisis period. The macro-prudential policy tends to complement IR accumulation. Developed countries display different demand behaviors for IRs -- higher gross saving is associated with lower IR holding, possibly reflecting high-income countries' tendency to deploy their savings in the global capital markets. The presence of sovereign wealth funds motivates developed countries to hold a lower level of IR. Our predictive exercise affirms that an emerging market economy with insufficient IR holdings in 2012 tends to experience exchange rate depreciation against the U.S. dollar when many emerging markets were adjusted to the news of tapering quantitative easing (QE) in 2013.
Handle: RePEc:nbr:nberwo:20386
Template-Type: ReDIF-Paper 1.0
Title: Selection into Credit Markets: Evidence from Agriculture in Mali
Classification-JEL: D21; D92; O12; O16; Q12; Q14
Author-Name: Lori Beaman
Author-Person: pbe525
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Bram Thuysbaert
Author-Name: Christopher Udry
Author-Person: pud2
Note: DEV LE LS
Number: 20387
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20387
File-URL: http://www.nber.org/papers/w20387.pdf
File-Format: application/pdf
Publication-Status: published as Lori Beaman & Dean Karlan & Bram Thuysbaert & Christopher Udry, 2023. "Selection Into Credit Markets: Evidence From Agriculture in Mali," Econometrica, Econometric Society, vol. 91(5), pages 1595-1627, September.
Abstract: We examine whether returns to capital are higher for farmers who borrow than for those who do not, a direct implication of many credit market models. We measure the difference in returns through a two-stage loan and grant experiment. We find large positive investment responses and returns to grants for a random (representative) sample of farmers, showing that liquidity constraints bind. However, we find zero returns to grants for a sample of farmers who endogenously did not borrow. Thus we find important heterogeneity, even conditional on a wide range of observed characteristics, which has critical implications for theory and policy.
Handle: RePEc:nbr:nberwo:20387
Template-Type: ReDIF-Paper 1.0
Title: Worker Mobility in a Global Labor Market: Evidence from the United Arab Emirates
Classification-JEL: J42; J6; O15; O53
Author-Name: Suresh Naidu
Author-Name: Yaw Nyarko
Author-Person: pny18
Author-Name: Shing-Yi Wang
Author-Person: pwa494
Note: DEV LS
Number: 20388
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20388
File-URL: http://www.nber.org/papers/w20388.pdf
File-Format: application/pdf
Publication-Status: published as Monopsony Power in Migrant Labor Markets: Evidence from the United Arab Emirates Suresh Naidu, Yaw Nyarko, and Shing-Yi Wang Journal of Political Economy 2016 124:6, 1735-1792
Abstract: In 2011, a reform in the United Arab Emirates allowed any employer to renew a migrant's visa upon contract expiration without written permission from the initial employer. We find that the reform increased incumbent migrants' earnings and firm retention of these workers. This occurs despite an increase in employer transitions, and is driven by a fall in country exits. While the outcomes of workers already in the United Arab Emirates improved, our analysis suggests that the reform decreased demand for new migrant workers and lowered their earnings. These results are consistent with a model in which the reform reduces the monopsony power of firms.
Handle: RePEc:nbr:nberwo:20388
Template-Type: ReDIF-Paper 1.0
Title: Damming the Commons: An Empirical Analysis of International Cooperation and Conflict in Dam Location
Classification-JEL: F53; Q25
Author-Name: Sheila M. Olmstead
Author-Name: Hilary Sigman
Author-Person: psi55
Note: EEE PE
Number: 20389
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20389
File-URL: http://www.nber.org/papers/w20389.pdf
File-Format: application/pdf
Publication-Status: published as Sheila M. Olmstead & Hilary Sigman, 2015. "Damming the Commons: An Empirical Analysis of International Cooperation and Conflict in Dam Location," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(4), pages 497 - 526.
Abstract: This paper examines whether countries consider the welfare of other nations when they make water development decisions. We estimate econometric models of the location of major dams around the world as a function of the degree of international sharing of rivers. We find that dams are more prevalent in areas of river basins some distance upstream of foreign countries, supporting the view that countries free ride in exploiting water resources. We find some evidence that international institutions, in particular multinational financing and international water management treaties, may mitigate this free riding.
Handle: RePEc:nbr:nberwo:20389
Template-Type: ReDIF-Paper 1.0
Title: Perturbation Methods for Markov-Switching DSGE Models
Classification-JEL: C6; E3; G1
Author-Name: Andrew Foerster
Author-Person: pfo181
Author-Name: Juan Rubio-Ramírez
Author-Person: pru25
Author-Name: Daniel F. Waggoner
Author-Person: pwa463
Author-Name: Tao Zha
Author-Person: pzh80
Note: EFG ME
Number: 20390
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20390
File-URL: http://www.nber.org/papers/w20390.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Foerster & Juan F. Rubio‐Ramírez & Daniel F. Waggoner & Tao Zha, 2016. "Perturbation methods for Markov‐switching dynamic stochastic general equilibrium models," Quantitative Economics, Econometric Society, vol. 7(2), pages 637-669, 07.
Abstract: Markov-switching DSGE (MSDSGE) modeling has become a growing body of literature on economic and policy issues related to structural shifts. This paper develops a general perturbation methodology for constructing high-order approximations to the solutions of MSDSGE models. Our new method, called "the partition perturbation method,'' partitions the Markov-switching parameter space to keep a maximum number of time-varying parameters from perturbation. For this method to work in practice, we show how to reduce the potentially intractable problem of solving MSDSGE models to the manageable problem of solving a system of quadratic polynomial equations. We propose to use the theory of Gröbner bases for solving such a quadratic system. This approach allows us to first obtain all the solutions and then determine how many of them are stable. We illustrate the tractability of our methodology through two examples.
Handle: RePEc:nbr:nberwo:20390
Template-Type: ReDIF-Paper 1.0
Title: Evidence for Relational Contracts in Sovereign Bank Lending
Classification-JEL: C73; D86; F34; G12; G14; G15
Author-Name: Peter Benczur
Author-Name: Cosmin L. Ilut
Author-Person: pil25
Note: AP EFG IFM
Number: 20391
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20391
File-URL: http://www.nber.org/papers/w20391.pdf
File-Format: application/pdf
Publication-Status: published as Péter Benczúr & Cosmin L. Ilut, 2016. "EVIDENCE FOR RELATIONAL CONTRACTS IN SOVEREIGN BANK LENDING," Journal of the European Economic Association, vol 14(2), pages 375-404.
Abstract: This paper presents direct evidence for relational contracts in sovereign bank lending. Unlike the existing empirical literature, its instrumental variables method allows for distinguishing a direct influence of past repayment problems on current spreads (a "punishment" effect in prices) from an indirect effect through higher expected future default probabilities ("loss of reputation"). Such a punishment provides positive surplus to lenders after a default and decreases the borrower's present discounted value of the net benefits of future borrowing, which create dynamic incentives. Using data on bank loans to developing countries between 1973-1981 and constructing continuous variables for credit history, we find evidence that most of the influence of past repayment problems is through the direct, punishment channel.
Handle: RePEc:nbr:nberwo:20391
Template-Type: ReDIF-Paper 1.0
Title: Did Bank Distress Stifle Innovation During the Great Depression?
Classification-JEL: G21; N22; O30
Author-Name: Ramana Nanda
Author-Person: pna187
Author-Name: Tom Nicholas
Note: CF PR
Number: 20392
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20392
File-URL: http://www.nber.org/papers/w20392.pdf
File-Format: application/pdf
Publication-Status: published as Nanda, Ramana & Nicholas, Tom, 2014. "Did bank distress stifle innovation during the Great Depression?," Journal of Financial Economics, Elsevier, vol. 114(2), pages 273-292.
Abstract: We find a negative relationship between bank distress and the level, quality and trajectory of firm-level innovation during the Great Depression, particularly for R&D firms operating in capital intensive industries. However, we also show that because a sufficient number of R&D intensive firms were located in counties with lower levels of bank distress, or were operating in less capital intensive industries, the negative effects were mitigated in aggregate. Although Depression era bank distress was associated with the stifling of innovation, our results also help to explain why technological development was still robust following one of the largest shocks in the history of the U.S. banking system.
Handle: RePEc:nbr:nberwo:20392
Template-Type: ReDIF-Paper 1.0
Title: Terminating Links between Emission Trading Programs
Classification-JEL: Q54; Q58
Author-Name: William A. Pizer
Author-Person: ppi108
Author-Name: Andrew J. Yates
Author-Person: pya124
Note: EEE
Number: 20393
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20393
File-URL: http://www.nber.org/papers/w20393.pdf
File-Format: application/pdf
Publication-Status: published as Pizer, William A. & Yates, Andrew J., 2015. "Terminating links between emission trading programs," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 142-159.
Abstract: Compliance links between CO2 emission trading programs--where firms regulated under one region's tradable permit program can comply using permits from another region, and vice-versa--are beginning to arise as a vehicle to lower costs, increase liquidity, and strengthen institutions while achieving the same environmental outcome. These links are not immutable, however, as highlighted by New Jersey's decision to exit the multi-state Regional Greenhouse Gas Initiative at the end of 2011. This raises the question of how to manage a delink and, in particular, what to do with existing permits that are banked for future use--choices that can have important consequences for market behavior in advance of, or upon speculation about, a delinking event. To examine this question, we consider two delinking policies. One differentiates banked permits by origin, where banked permits originating in one region are only valid for compliance in that region after the delink occurs. The other treats all banked permits the same, with each banked permit being similarly split into two pieces, with one piece valid in one region and the other piece valid in the other region. Using a two-region, two-period model, we describe the price behavior and relative cost-effectiveness of each policy. Treating permits differently generally leads to higher costs, and may lead regional prices to diverge, even when there is only speculation about delinking. We illustrate these results with a numerical example of the EU-Australian link contemplated in 2013.
Handle: RePEc:nbr:nberwo:20393
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty Outside and Inside Economic Models
Classification-JEL: D84; G00; G12
Author-Name: Lars Peter Hansen
Author-Person: pha303
Note: AP
Number: 20394
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20394
File-URL: http://www.nber.org/papers/w20394.pdf
File-Format: application/pdf
Publication-Status: published as Nobel Lecture: Uncertainty Outside and Inside Economic Models Lars Peter Hansen Journal of Political Economy 2014 122:5, 945-987
Abstract: We must infer what the future situation would be without our interference, and what changes will be wrought by our actions. Fortunately, or unfortunately, none of these processes is infallible, or indeed ever accurate and complete. Knight (1921)
Handle: RePEc:nbr:nberwo:20394
Template-Type: ReDIF-Paper 1.0
Title: Import Competition and the Great U.S. Employment Sag of the 2000s
Classification-JEL: F16; J23
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: David Autor
Author-Person: pau9
Author-Name: David Dorn
Author-Person: pdo78
Author-Name: Gordon H. Hanson
Author-Person: pha80
Author-Name: Brendan Price
Note: ITI LS
Number: 20395
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20395
File-URL: http://www.nber.org/papers/w20395.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & David Autor & David Dorn & Gordon H. Hanson & Brendan Price, 2016. "Import Competition and the Great US Employment Sag of the 2000s," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages S141 - S198.
Abstract: Even before the Great Recession, U.S. employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable gains in employment rates it had achieved during the 1990s, with major contractions in manufacturing employment being a prime contributor to the slump. The U.S. employment "sag" of the 2000s is widely recognized but poorly understood. In this paper, we explore the contribution of the swift rise of import competition from China to sluggish U.S. employment growth. We find that the increase in U.S. imports from China, which accelerated after 2000, was a major force behind recent reductions in U.S. manufacturing employment and that, through input-output linkages and other general equilibrium effects, it appears to have significantly suppressed overall U.S. job growth. We apply industry-level and local labor market-level approaches to estimate the size of (a) employment losses in directly exposed manufacturing industries, (b) employment effects in indirectly exposed upstream and downstream industries inside and outside manufacturing, and (c) the net effects of conventional labor reallocation, which should raise employment in non-exposed sectors, and Keynesian multipliers, which should reduce employment in non-exposed sectors. Our central estimates suggest net job losses of 2.0 to 2.4 million stemming from the rise in import competition from China over the period 1999 to 2011. The estimated employment effects are larger in magnitude at the local labor market level, consistent with local general equilibrium effects that amplify the impact of import competition.
Handle: RePEc:nbr:nberwo:20395
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Rotation Group Bias: Will the Real Unemployment Rate Please Stand Up?
Classification-JEL: J01; J64
Author-Name: Alan Krueger
Author-Person: pkr63
Author-Name: Alexandre Mas
Author-Person: pma2363
Author-Name: Xiaotong Niu
Note: LS
Number: 20396
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20396
File-URL: http://www.nber.org/papers/w20396.pdf
File-Format: application/pdf
Publication-Status: published as Alan B. Krueger & Alexandre Mas & Xiaotong Niu, 2017. "The Evolution of Rotation Group Bias: Will the Real Unemployment Rate Please Stand Up?," The Review of Economics and Statistics, MIT Press, vol. 99(2), pages 258-264, May.
Abstract: This paper documents that rotation group bias -- the tendency for labor force statistics to vary systematically by month in sample in labor force surveys -- in the Current Population Survey (CPS) has worsened considerably over time. The estimated unemployment rate for earlier rotation groups has grown sharply relative to the unemployment rate for later rotation groups; both should be nationally representative samples. The rise in rotation group bias is driven by a growing tendency for respondents to report job search in earlier rotations relative to later rotations. We investigate explanations for the change in bias. We find that rotation group bias increased discretely after the 1994 CPS redesign and that rising nonresponse is likely a significant contributor. Survey nonresponse increased after the redesign, and subsequently trended upward, mirroring the time pattern of rotation group bias. Consistent with this explanation, there is only a small increase in rotation group bias for households that responded in all eight interviews. An analysis of rotation group bias in Canada and the U.K. reveal no rotation group bias in Canada and a modest and declining bias in the U.K. There is not a "Heisenberg Principle" of rotation group bias, whereby the bias is an inherent feature of repeated interviewing. We explore alternative weightings of the unemployment rate by rotation group and find that, despite the rise in rotation group bias, the official unemployment does no worse than these other measures in predicting alternative measures of economic slack or fitting key macroeconomic relationships.
Handle: RePEc:nbr:nberwo:20396
Template-Type: ReDIF-Paper 1.0
Title: Affirmative Action and Human Capital Investment: Evidence from a Randomized Field Experiment
Classification-JEL: C93; D44; D82; J15; J24
Author-Name: Christopher Cotton
Author-Person: pco210
Author-Name: Brent R. Hickman
Author-Name: Joseph P. Price
Author-Person: ppr64
Note: ED LS
Number: 20397
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20397
File-URL: http://www.nber.org/papers/w20397.pdf
File-Format: application/pdf
Publication-Status: published as
Publication-Status: published as Christopher S. Cotton & Brent R. Hickman & Joseph P. Price, 2022. "Affirmative Action and Human Capital Investment: Evidence from a Randomized Field Experiment," Journal of Labor Economics, vol 40(1), pages 157-185.
Abstract: Pre-College human capital investment occurs within a competitive environment and depends on market incentives created by Affirmative Action (AA) in college admissions. These policies affect mechanisms for rank-order allocation of college seats, and alter the relative competition between blacks and whites. We present a theory of AA in university admissions, showing how the effects of AA on human capital investment differ by student ability and demographic group. We then conduct a field experiment designed to mimic important aspects of competitive investment prior to the college market. We pay students based on relative performance on a mathematics exam in order to test the incentive effects of AA, and track study efforts on an online mathematics website. Consistent with theory, AA increases average human capital investment and exam performance for the majority of disadvantaged students targeted by the policy, by mitigating so-called "discouragement effects." The experimental evidence suggests that AA can promote greater equality of market outcomes and narrow achievement gaps at the same time.
Handle: RePEc:nbr:nberwo:20397
Template-Type: ReDIF-Paper 1.0
Title: Does Labor Legislation Benefit Workers? Well-Being after an Hours Reduction
Classification-JEL: E24; J23
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Author-Name: Daiji Kawaguchi
Author-Person: pka57
Author-Name: Jungmin Lee
Author-Person: ple117
Note: LS
Number: 20398
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20398
File-URL: http://www.nber.org/papers/w20398.pdf
File-Format: application/pdf
Publication-Status: published as Journal of the Japanese and International Economies, Volume: 44, Pages: 1-12, June 2017
Abstract: Are workers in modern economies working "too hard"--would they be better off if an equilibrium with fewer work hours were achieved? We examine changes in life satisfaction of Japanese and Koreans over a period when hours of work were cut exogenously because employers suddenly faced an overtime penalty that had become effective with fewer weekly hours per worker. Using repeated cross sections we show that life satisfaction in both countries may have increased relatively among those workers most likely to have been affected by the legislation. The same finding is produced using Korean longitudinal data. In a household model estimated over the Korean cross-section data we find some weak evidence that a reduction in the husband's work hours increased his wife's well-being. Overall these results are consistent with the claim that legislated reductions in work hours can increase workers' happiness.
Handle: RePEc:nbr:nberwo:20398
Template-Type: ReDIF-Paper 1.0
Title: A Direct Estimate of the Technique Effect: Changes in the Pollution Intensity of US Manufacturing 1990 - 2008
Classification-JEL: Q55
Author-Name: Arik Levinson
Author-Person: ple135
Note: EEE
Number: 20399
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20399
File-URL: http://www.nber.org/papers/w20399.pdf
File-Format: application/pdf
Publication-Status: published as Arik Levinson, 2015. "A Direct Estimate of the Technique Effect: Changes in the Pollution Intensity of US Manufacturing, 1990–2008," Journal of the Association of Environmental and Resource Economists, vol 2(1), pages 43-56.
Abstract: From 1990 to 2008, the real value of US manufacturing output grew by one-third while the pollution emitted from US factories fell by two-thirds. What accounts for this cleanup? Prior studies have documented that a relatively small share can be explained by changes in the composition of US manufacturing - a shift towards producing relatively more goods whose production processes involve less pollution. Those studies attribute the unexplained majority to "technique", a mix of input substitution, process changes, and end-of-pipe controls. But because that technique effect is a residual left over after other explanations, any errors or interactions in the original calculation could inflate the estimated technique. In this paper I provide the first direct estimate of the technique effect. I combine the National Emissions Inventories with the NBER-CES Manufacturing Industry Database for each of over 400 manufacturing industries. I aggregate across industries using analogs to the Laspeyres and Paasche price indexes for each of six major air pollutants. The calculations using this direct estimation of the technique effect support the research findings using indirect measures. From 1990 to 2008, production technique changes account for more than 90 percent of the overall cleanup of US manufacturing.
Handle: RePEc:nbr:nberwo:20399
Template-Type: ReDIF-Paper 1.0
Title: Within-Mother Estimates of the Effects of WIC on Birth Outcomes in New York City
Classification-JEL: I1; I12; I3
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: Ishita Rajani
Note: CH EH
Number: 20400
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20400
File-URL: http://www.nber.org/papers/w20400.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie & Ishita Rajani, 2015. "Within-Mother Estimates Of The Effects Of Wic On Birth Outcomes In New York City," Economic Inquiry, Western Economic Association International, vol. 53(4), pages 1691-1701, October.
Abstract: There is a large literature suggesting that "WIC works" to improve birth outcomes. However, methodological limitations related to selection into the WIC program have left room for doubt about this conclusion. This paper uses birth records from New York City to address the limitations of the previous literature. We estimate models with mother fixed effects to control for fixed characteristics of mothers and we directly investigate the way that time-varying characteristics of mothers affect selection into the WIC program. We find that WIC is associated with reductions in low birth weight, even among full term infants, and with reductions in the probability that a child is "small for dates." These improvements are associated with a reduction in the probability that the mother gained too little weight during pregnancy. Improvements tend to be largest for first born children. We also find that women on WIC are more likely to be diagnosed with chronic conditions, and receive more intensive medical services, a finding that may reflect improved access to medical care.
Handle: RePEc:nbr:nberwo:20400
Template-Type: ReDIF-Paper 1.0
Title: Failure to Refinance
Classification-JEL: D03; R30
Author-Name: Benjamin J. Keys
Author-Person: pke311
Author-Name: Devin G. Pope
Author-Name: Jaren C. Pope
Author-Person: ppo329
Note: LS
Number: 20401
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20401
File-URL: http://www.nber.org/papers/w20401.pdf
File-Format: application/pdf
Publication-Status: published as Keys, Benjamin J. & Pope, Devin G. & Pope, Jaren C., 2016. "Failure to refinance," Journal of Financial Economics, Elsevier, vol. 122(3), pages 482-499.
Abstract: Households that fail to refinance their mortgage when interest rates decline can lose out on substantial savings. Based on a large random sample of outstanding U.S. mortgages in December of 2010, we estimate that approximately 20% of households for whom refinancing would be optimal and who appeared unconstrained to do so, had not taken advantage of the lower rates. We estimate the present-discounted cost to the median household who fails to refinance to be approximately $11,500, making this a particularly large consumer financial mistake. To shed light on possible mechanisms and corroborate our main findings, we also provide results from a mail campaign targeted at a sample of homeowners that could benefit from refinancing.
Handle: RePEc:nbr:nberwo:20401
Template-Type: ReDIF-Paper 1.0
Title: From Assortative to Ashortative Coupling: Men's Height, Height Heterogamy, and Relationship Dynamics in the United States
Classification-JEL: J12
Author-Name: Abigail Weitzman
Author-Name: Dalton Conley
Note: EH LS
Number: 20402
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20402
File-URL: http://www.nber.org/papers/w20402.pdf
File-Format: application/pdf
Abstract: Studies of online dating suggest that physical attraction is a key factor in early relationship formation, but say little about the role of attractiveness in longer-term relationships. Meanwhile, assortative coupling and exchange models widely employed in demographic research overlook the powerful sorting function of initial and sustained physical attraction. This article observes the effects of one physical characteristic of men--height--on various relationship outcomes in longer-term relationships, including spouses' attributes, marriage entry and stability, and the division of household labor. Drawing on two different cohorts from the Panel Study of Income Dynamics, the authors show that (1) height-coupling norms have changed little over the last three decades, (2) short, average, and tall men's spouses are qualitatively different from one another (3) short men marry and divorce at lower rates than others and (4) both men's height relative to other men and their height relative to their spouse are related to the within-couple distribution of household labor and earnings. These findings depict an enduring height hierarchy among men on in the spousal marriage market. Further, they indicate that at least one physical characteristic commonly associated with physical attraction influences the formation, functioning, and stability of longer-term relationships.
Handle: RePEc:nbr:nberwo:20402
Template-Type: ReDIF-Paper 1.0
Title: A Tear in the Iron Curtain: The Impact of Western Television on Consumption Behavior
Classification-JEL: D12; E21; Z10
Author-Name: Leonardo Bursztyn
Author-Person: pbu249
Author-Name: Davide Cantoni
Note: POL
Number: 20403
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20403
File-URL: http://www.nber.org/papers/w20403.pdf
File-Format: application/pdf
Publication-Status: published as Leonardo Bursztyn & Davide Cantoni, 2016. "A Tear in the Iron Curtain: The Impact of Western Television on Consumption Behavior," Review of Economics and Statistics, vol 98(1), pages 25-41.
Abstract: This paper examines the impact of exposure to foreign media on the economic behavior of agents in a totalitarian regime. We study private consumption choices focusing on former East Germany, where differential access to Western television was determined by geographic features. Using data collected after the transition to a market economy, we find no evidence of a significant impact of previous exposure to Western television on aggregate consumption levels. However, exposure to Western broadcasts affects the composition of consumption, biasing choices in favor of categories of goods with high intensity of pre-reunification advertisement. The effects vanish by 1998.
Handle: RePEc:nbr:nberwo:20403
Template-Type: ReDIF-Paper 1.0
Title: On the Measure of Distortions
Classification-JEL: O11; O4; O47
Author-Name: Hugo A. Hopenhayn
Author-Person: pho217
Note: DEV EFG IO
Number: 20404
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20404
File-URL: http://www.nber.org/papers/w20404.pdf
File-Format: application/pdf
Abstract: Abstract The paper considers formally the mapping from distortions in the allocations of resources across firms to aggregate productivity. TFP gaps are characterized as the integral of a strictly concave function with respect to an employment-weighted measure of distortions. Size related distortions are shown to correspond to a mean preserving spread of this measure, explaining the stronger effects on TFP found in the literature. In general, the effect of correlation between distortions and productivity is shown to be ambiguous; conditions are given to determine its sign. An empirical lower bound on distortions based on size distribution of firms is derived and analyzed, revealing that substantial rank reversals in firm size are necessary for distortions to explain large TFP gaps. The effect of curvature on the impact and measurement of distortions is also considered.
Handle: RePEc:nbr:nberwo:20404
Template-Type: ReDIF-Paper 1.0
Title: Why High-order Polynomials Should not be Used in Regression Discontinuity Designs
Classification-JEL: C01; C1
Author-Name: Andrew Gelman
Author-Name: Guido Imbens
Author-Person: pim4
Note: LS
Number: 20405
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20405
File-URL: http://www.nber.org/papers/w20405.pdf
File-Format: application/pdf
Publication-Status: published as Andrew Gelman & Guido Imbens (2017) Why high-order polynomials should not be used in regression discontinuity designs, Journal of Business & Economic Statistics, DOI: 10.1080/07350015.2017.1366909
Abstract: It is common in regression discontinuity analysis to control for high order (third, fourth, or higher) polynomials of the forcing variable. We argue that estimators for causal effects based on such methods can be misleading, and we recommend researchers do not use them, and instead use estimators based on local linear or quadratic polynomials or other smooth functions.
Handle: RePEc:nbr:nberwo:20405
Template-Type: ReDIF-Paper 1.0
Title: Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-border Integration
Classification-JEL: E3; F40; F41
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Oleksandr Talavera
Author-Person: pta65
Note: EFG IFM ME
Number: 20406
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20406
File-URL: http://www.nber.org/papers/w20406.pdf
File-Format: application/pdf
Publication-Status: published as Yuriy Gorodnichenko & Oleksandr Talavera, 2017. "Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-Border Integration," American Economic Review, American Economic Association, vol. 107(1), pages 249-282, January.
Abstract: We document basic facts about prices in online markets in the U.S. and Canada, a rapidly growing segment of the retail sector. Relative to prices in regular stores, prices in online markets are more flexible as well as exhibit stronger pass-through (60-75 percent) and faster convergence (half-life less than 2 months) in response to movements of the nominal exchange rate. Multiple margins of adjustment (frequency of price changes, direction of price changes, size of price changes, exit of sellers) are active in the process of responding to nominal exchange rate shocks. Furthermore, we use the richness of our dataset to show that degree of competition, stickiness of prices, synchronization of price changes, reputation of sellers, and returns to search effort are important determinants of pass-through and speed of price adjustment for international price differentials.
Handle: RePEc:nbr:nberwo:20406
Template-Type: ReDIF-Paper 1.0
Title: Can a Summer Make a Difference? The Impact of the American Economic Association Summer Program on Minority Student Outcomes
Classification-JEL: I21; I24; J15
Author-Name: Charles M. Becker
Author-Name: Cecilia Elena Rouse
Author-Name: Mingyu Chen
Author-Person: pch1107
Note: ED LS
Number: 20407
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20407
File-URL: http://www.nber.org/papers/w20407.pdf
File-Format: application/pdf
Publication-Status: published as Charles M. Becker & Cecilia Elena Rouse & Mingyu Chen, 2016. "Can a Summer Make a Difference? The Impact of the American Economic Association Summer Program on Minority Student Outcomes," Economics of Education Review, .
Abstract: In the 1970s, the American Economic Association (AEA) was one of several professional associations to launch a summer program with the goal of increasing racial and ethnic diversity in its profession. In this paper we estimate the effectiveness of the AEA's program which, to the best of our knowledge, is the first to rigorously study such a summer program. Using a comparison group consisting of those who applied to, but did not attend, the program and controlling for an array of background characteristics, we find that program participants were over 40 percentage points more likely to apply to and attend a PhD program in economics, 26 percentage points more likely to complete a PhD, and about 15 percentage points more likely to ever work in an economics-related academic job. Using our estimates, we calculate that the program may directly account for 17-21 percent of the PhDs awarded to minorities in economics over the past 20 years.
Handle: RePEc:nbr:nberwo:20407
Template-Type: ReDIF-Paper 1.0
Title: What Calls to ARMs? International Evidence on Interest Rates and the Choice of Adjustable-Rate Mortgages
Classification-JEL: D14; E43; G21
Author-Name: Cristian Badarinza
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Tarun Ramadorai
Author-Person: pra44
Note: AP ME
Number: 20408
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20408
File-URL: http://www.nber.org/papers/w20408.pdf
File-Format: application/pdf
Publication-Status: published as Cristian Badarinza & John Y. Campbell & Tarun Ramadorai, 2018. "What Calls to ARMs? International Evidence on Interest Rates and the Choice of Adjustable-Rate Mortgages," Management Science, vol 64(5), pages 2275-2288.
Abstract: The relative popularity of adjustable-rate mortgages (ARMs) and fixed-rate mort- gages (FRMs) varies considerably both across countries and over time. We ask how movements in current and expected future interest rates affect the share of ARMs in total mortgage issuance. Using a nine-country panel and instrumental variables methods, we present evidence that near-term (one-year) rational expectations of future movements in ARM rates do affect mortgage choice, particularly in more recent data since 2001. However longer-term (three-year) rational forecasts of ARM rates have a relatively weak effect, and the current spread between FRM and ARM rates also matters, suggesting that households are concerned with current interest costs as well as with lifetime cost minimization. These conclusions are robust to alternative (adaptive and survey-based) models of household expectations.
Handle: RePEc:nbr:nberwo:20408
Template-Type: ReDIF-Paper 1.0
Title: The Labor Market Impacts of the 2010 Deepwater Horizon Oil Spill and Offshore Oil Drilling Moratorium
Classification-JEL: J30; J64; Q40
Author-Name: Joseph E. Aldy
Author-Person: pal158
Note: EEE
Number: 20409
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20409
File-URL: http://www.nber.org/papers/w20409.pdf
File-Format: application/pdf
Abstract: In 2010, the Gulf Coast experienced the largest oil spill, the greatest mobilization of spill response resources, and the first Gulf-wide deepwater drilling moratorium in U.S. history. Taking advantage of the unexpected nature of the spill and drilling moratorium, I estimate the net effects of these events on Gulf Coast employment and wages. Despite predictions of major job losses in Louisiana -- resulting from the spill and the drilling moratorium -- I find that Louisiana coastal parishes, and oil-intensive parishes in particular, experienced a net increase in employment and wages. In contrast, Gulf Coast Florida counties, especially those south of the Panhandle, experienced a decline in employment. Analysis of accommodation industry employment and wage, business establishment count, sales tax, and commercial air arrival data likewise show positive economic activity impacts in the oil-intensive coastal parishes of Louisiana and reduced economic activity along the Non-Panhandle Florida Gulf Coast.
Handle: RePEc:nbr:nberwo:20409
Template-Type: ReDIF-Paper 1.0
Title: Selling Failed Banks
Classification-JEL: E65; G18; G21
Author-Name: Joao Granja
Author-Person: pgr470
Author-Name: Gregor Matvos
Author-Name: Amit Seru
Author-Person: pse308
Note: CF IO
Number: 20410
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20410
File-URL: http://www.nber.org/papers/w20410.pdf
File-Format: application/pdf
Publication-Status: published as JOÃO GRANJA & GREGOR MATVOS & AMIT SERU, 2017. "Selling Failed Banks," The Journal of Finance, vol 72(4), pages 1723-1784.
Abstract: We study the recent episode of bank failures and provide simple facts to better understand who acquires failed banks and which forces drive the losses that the FDIC realizes from these sales. We document three distinct forces related to the allocation of failed banks to potential acquirers. First, a geographically proximate bank is significantly more likely to acquire a failed bank: only 15% of acquirers do not have branches within the state. Sales are more local in regions with more soft information. Second, a failed bank is more likely to be purchased by a bank that has a similar loan portfolio and that offers similar services, highlighting the role of failed banks' asset specificity. Third, low capitalization of potential acquirers decreases their ability to acquire a failed bank and potentially distorts failed bank allocation. The results are robust to restricting the data to actual bidders, confirming that they are not driven by auction eligibility criteria imposed by the FDIC. We relate these forces to FDIC losses from failed bank sales. We organize these facts using the fire sales framework of Shleifer and Vishny (1992). Our findings speak to recent policies that are predicated on the idea that a bank's ability to lend is embodied in its collection of assets and employees and cannot be easily replaced or sold.
Handle: RePEc:nbr:nberwo:20410
Template-Type: ReDIF-Paper 1.0
Title: Imperfect Competition in Selection Markets
Classification-JEL: D42; D43; D82; I13; L10; L41
Author-Name: Neale Mahoney
Author-Name: E. Glen Weyl
Author-Person: pwe266
Note: AG EH IO PE
Number: 20411
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20411
File-URL: http://www.nber.org/papers/w20411.pdf
File-Format: application/pdf
Publication-Status: published as Neale Mahoney & E. Glen Weyl, 2017. "Imperfect Competition in Selection Markets," The Review of Economics and Statistics, vol 99(4), pages 637-651.
Abstract: Standard policies to correct market power and selection can be misguided when these two forces co-exist. Using a calibrated model of employer-sponsored health insurance, we show that the risk adjustment commonly used by employers to offset adverse selection often reduces the amount of high-quality coverage and thus social surplus. Conversely, in a model of subprime auto lending calibrated to Einav, Jenkins and Levin (2012), realistic levels of competition among lenders generate a significant oversupply of credit, implying greater market power is desirable. We build a model of symmetric imperfect competition in selection markets that parameterizes the degree of both market power and selection and use graphical price-theoretic reasoning to provide a general analysis of the interaction between selection and imperfect competition. We use the same logic to show that in selection markets four principles of the United States Horizontal Merger Guidelines are often reversed.
Handle: RePEc:nbr:nberwo:20411
Template-Type: ReDIF-Paper 1.0
Title: Making Progress on Foreign Aid
Classification-JEL: O1
Author-Name: Nancy Qian
Author-Person: pqi25
Note: DEV POL
Number: 20412
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20412
File-URL: http://www.nber.org/papers/w20412.pdf
File-Format: application/pdf
Publication-Status: published as Nancy Qian, 2015. "Making Progress on Foreign Aid," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 277-308, 08.
Abstract: Foreign aid is one of the most important policy tools that rich countries use for helping poor countries to improve population well-being and facilitate economic and institutional development. The empirical evidence on its benefits is mixed and has generated much controversy. This paper presents descriptive statistics which show that foreign aid to very poor countries accounts for very little of total global aid; reviews the evidence that foreign aid is often determined by the objectives of donor countries rather than the needs of recipient countries; argues that the evidence on the impact of aggregate foreign aid is hindered by problems of measurement and identification, which are partly due to the heterogenous nature of aid; and discusses recent studies using natural and randomized experiments to examine narrowed definitions of aid on more disaggregated outcomes.
Handle: RePEc:nbr:nberwo:20412
Template-Type: ReDIF-Paper 1.0
Title: The Changing Benefits of Early Work Experience
Classification-JEL: J22; J38; J4
Author-Name: Charles L. Baum
Author-Person: pba503
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: CH LS PE
Number: 20413
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20413
File-URL: http://www.nber.org/papers/w20413.pdf
File-Format: application/pdf
Publication-Status: published as Charles L. Baum & Christopher J. Ruhm, 2016. "The Changing Benefits of Early Work Experience," Southern Economic Journal, .
Abstract: We examine whether the benefits of high school work experience have changed over the last 20 years by comparing effects for the 1979 and 1997 cohorts of the National Longitudinal Survey of Youth. Our main specifications suggest that the future wage benefits of working 20 hours per week in the senior year of high school have fallen from 8.3 percent for the earlier cohort, measured in 1987-1989, to 4.4 percent for the later one, in 2008-2010. Moreover, the gains of work are largely restricted to women and have diminished over time for them. We are able to explain about five-eighths of the differential between cohorts, with most of this being attributed to the way that high school employment is related to subsequent adult work experience and occupational attainment.
Handle: RePEc:nbr:nberwo:20413
Template-Type: ReDIF-Paper 1.0
Title: Methods of Identification in Social Networks
Classification-JEL: C23; C25; D85
Author-Name: Bryan S. Graham
Author-Person: pgr95
Note: DEV LS TWP
Number: 20414
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20414
File-URL: http://www.nber.org/papers/w20414.pdf
File-Format: application/pdf
Publication-Status: published as Bryan S. Graham, 2015. "Methods of Identification in Social Networks," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 465-485, 08.
Abstract: Social and economic networks are ubiquitous, serving as contexts for job search, technology diffusion, the accumulation of human capital and even the formulation of norms and values. The systematic empirical study of network formation - the process by which agents form, maintain and dissolve links - within economics is recent, is associated with extraordinarily challenging modeling and identification issues, and is an area of exciting new developments, with many open questions. This article reviews prominent research on the empirical analysis of network formation, with an emphasis on contributions made by economists.
Handle: RePEc:nbr:nberwo:20414
Template-Type: ReDIF-Paper 1.0
Title: Consumer Price Search and Platform Design in Internet Commerce
Classification-JEL: D12; D22; D47; D83; L13; L86
Author-Name: Michael Dinerstein
Author-Person: pdi555
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Jonathan Levin
Author-Person: ple318
Author-Name: Neel Sundaresan
Note: IO PR
Number: 20415
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20415
File-URL: http://www.nber.org/papers/w20415.pdf
File-Format: application/pdf
Publication-Status: published as Dinerstein, Michael, Liran Einav, Jonathan Levin, and Neel Sundaresan. 2018. "Consumer Price Search and Platform Design in Internet Commerce." American Economic Review, 108 (7): 1820-59.
Abstract: Search frictions can explain why the "law of one price" fails in retail markets and why even firms selling commodity products have pricing power. In online commerce, physical search costs are low, yet price dispersion is common. We use browsing data from eBay to estimate a model of consumer search and price competition when retailers offer homogeneous goods. We find that retail margins are on the order of 10%, and use the model to analyze the design of search rankings. Our model explains most of the effects of a major re-design of eBay's product search, and allows us to identify conditions where narrowing consumer choice sets can be pro-competitive. Finally, we examine a subsequent A/B experiment run by eBay that illustrates the greater difficulties in designing search algorithms for differentiated products, where price is only one of the relevant product attributes.
Handle: RePEc:nbr:nberwo:20415
Template-Type: ReDIF-Paper 1.0
Title: Entry and Exit in OTC Derivatives Markets
Classification-JEL: G0; G1; G2
Author-Name: Andrew G. Atkeson
Author-Person: pat52
Author-Name: Andrea L. Eisfeldt
Author-Person: pei27
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: AP CF EFG ME
Number: 20416
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20416
File-URL: http://www.nber.org/papers/w20416.pdf
File-Format: application/pdf
Publication-Status: published as Andrew G. Atkeson & Andrea L. Eisfeldt & Pierre‐Olivier Weill, 2015. "Entry and Exit in OTC Derivatives Markets," Econometrica, Econometric Society, vol. 83, pages 2231-2292, November.
Abstract: We develop a parsimonious model to study the equilibrium and socially optimal decisions of banks to enter, trade in, and possibly exit, an OTC market. Although we endow all banks with the same trading technology, banks’ optimal entry and trading decisions endogenously lead to a realistic market structure comprised of dealers and customers with distinct trading patterns. We decompose banks’ entry incentives into incentives to hedge risk and incentives to make intermediation profits. We show that dealer banks enter more than is socially optimal. In the face of large negative shocks, they may also exit more than is socially optimal when markets are not perfectly resilient.
Handle: RePEc:nbr:nberwo:20416
Template-Type: ReDIF-Paper 1.0
Title: Get Rid of Unanimity: The Superiority of Majority Rule with Veto Power
Classification-JEL: D70
Author-Name: Laurent Bouton
Author-Person: pbo198
Author-Name: Aniol Llorente-Saguer
Author-Name: Frédéric Malherbe
Author-Person: pma1210
Note: POL
Number: 20417
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20417
File-URL: http://www.nber.org/papers/w20417.pdf
File-Format: application/pdf
Publication-Status: published as Laurent Bouton & Aniol Llorente-Saguer & Frédéric Malherbe, 2018. "Get Rid of Unanimity Rule: The Superiority of Majority Rules with Veto Power," Journal of Political Economy, vol 126(1), pages 107-149.
Abstract: A group of agents wants to reform the status quo if and only if this is Pareto improving. Agents have private information and may have common or private objectives, which creates a tension between information aggregation and minority protection. We analyze a simple voting system - majority rule with veto power (Veto) - that essentially resolves this tension, for it combines the advantageous properties of both majority and unanimity rules. We argue that our results shed new light on the evolution of voting rules in the EU institutions and could help to inform debates about policy reforms in cases such as juries in the US.
Handle: RePEc:nbr:nberwo:20417
Template-Type: ReDIF-Paper 1.0
Title: The Dynamics of Housing Prices
Classification-JEL: R21; R31
Author-Name: Sheridan Titman
Author-Person: pti51
Author-Name: Ko Wang
Author-Name: Jing Yang
Note: AP
Number: 20418
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20418
File-URL: http://www.nber.org/papers/w20418.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Real Estate Research, 2014, vol. 36, issue 3, 283-317
Abstract: We analyze the prices of owner-occupied housing in 97 metropolitan areas between 1980 and 2011. Our tests indicate that price changes exhibit positive serial correlation at the one year intervals, with subsequent reversals of price changes over longer intervals. Consistent with our simple model, regional differences in observed price patterns reflect differences in the serial correlation of the demand shocks as well as the elasticity of supply responses.
Handle: RePEc:nbr:nberwo:20418
Template-Type: ReDIF-Paper 1.0
Title: Trade Dynamics in the Market for Federal Funds
Classification-JEL: E4; E43; E5; E52; E58; G21; G28
Author-Name: Gara Afonso
Author-Person: paf14
Author-Name: Ricardo Lagos
Author-Person: pla18
Note: AP ME
Number: 20419
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20419
File-URL: http://www.nber.org/papers/w20419.pdf
File-Format: application/pdf
Publication-Status: published as Gara Afonso & Ricardo Lagos, 2015. "Trade Dynamics in the Market for Federal Funds," Econometrica, Econometric Society, vol. 83, pages 263-313, 01.
Abstract: We develop a model of the market for federal funds that explicitly accounts for its two distinctive features: banks have to search for a suitable counterparty, and once they meet, both parties negotiate the size of the loan and the repayment. The theory is used to answer a number of positive and normative questions: What are the determinants of the fed funds rate? How does the market reallocate funds? Is the market able to achieve an efficient reallocation of funds? We also use the model for theoretical and quantitative analyses of policy issues facing modern central banks.
Handle: RePEc:nbr:nberwo:20419
Template-Type: ReDIF-Paper 1.0
Title: Governance and Comovement Under Common Ownership
Classification-JEL: G34
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Doron Levit
Author-Name: Devin Reilly
Note: CF LE
Number: 20420
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20420
File-URL: http://www.nber.org/papers/w20420.pdf
File-Format: application/pdf
Abstract: This paper studies the corporate governance and asset pricing implications of investors owning blocks in multiple firms. Common wisdom is that multi-firm ownership weakens governance because the blockholder is spread too thinly. We show that this need not be the case. In a single-firm benchmark, the blockholder governs through exit, selling her stake if the firm underperforms. With multiple firms, the blockholder may sell even a value-maximizing firm, to disguise her exit from another underperforming firm as being motivated by a portfolio-wide liquidity shock. This reduces the manager's effort incentives and weakens governance. On the other hand, governance can be stronger, because selling one firm and not the other is a powerful signal of underperformance. Common ownership leads to firms' stock prices being correlated, even if their fundamentals are uncorrelated. We derive empirical predictions for the direction of correlation and for whether governance is stronger or weaker with multiple firms.
Handle: RePEc:nbr:nberwo:20420
Template-Type: ReDIF-Paper 1.0
Title: Keynes, King's and Endowment Asset Management
Classification-JEL: B26; G11; G14; G23
Author-Name: David Chambers
Author-Person: pch534
Author-Name: Elroy Dimson
Author-Person: pdi298
Author-Name: Justin Foo
Note: AP ED
Number: 20421
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20421
File-URL: http://www.nber.org/papers/w20421.pdf
File-Format: application/pdf
Publication-Status: published as Keynes, King's, and Endowment Asset Management, David Chambers, Elroy Dimson, Justin Foo. in How the Financial Crisis and Great Recession Affected Higher Education, Brown and Hoxby. 2015
Abstract: Founded in 1441, King's College was one of Cambridge University's wealthiest Colleges, endowed with a vast agricultural portfolio. John Maynard Keynes was appointed bursar just after WWI and initiated a major reallocation to equities, an innovation at least as radical as the late 20th century commitment to illiquid assets by Harvard and Yale. Keynes initially pursued a market-timing approach to investment with mixed success and failed to anticipate the 1929 market crash. Thereafter, his switch to a patient buy-and-hold strategy allowed him to maintain his commitment to equities in the subsequent market slump, reflecting the natural advantages that accrue to long horizon investors. Keynes' innovations in endowment asset management, implemented over a dynamic period of capital market development and economic turbulence remain of great relevance to modern investors emerging from the Great Recession.
Handle: RePEc:nbr:nberwo:20421
Template-Type: ReDIF-Paper 1.0
Title: Gossip: Identifying Central Individuals in a Social Network
Classification-JEL: D13; D85; L14; O12; 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: DEV
Number: 20422
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20422
File-URL: http://www.nber.org/papers/w20422.pdf
File-Format: application/pdf
Abstract: Can we identify the members of a community who are best- placed to diffuse information simply by asking a random sample of individuals? We show that boundedly-rational individuals can, simply by tracking sources of gossip, identify those who are most central in a network according to "diffusion centrality," which nests other standard centrality measures. Testing this prediction with data from 35 Indian villages, we find that respondents accurately nominate those who are diffusion central (not just those with many friends). Moreover, these nominees are more central in the network than traditional village leaders and geographically central individuals.
Handle: RePEc:nbr:nberwo:20422
Template-Type: ReDIF-Paper 1.0
Title: A New Method of Estimating Potential Real GDP Growth: Implications for the Labor Market and the Debt/GDP Ratio
Classification-JEL: E00; E01; E24; E27; E32; J11; J64
Author-Name: Robert J. Gordon
Author-Person: pgo50
Note: EFG LS
Number: 20423
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20423
File-URL: http://www.nber.org/papers/w20423.pdf
File-Format: application/pdf
Abstract: Forecasts for the two or three years after mid-2014 have converged on growth rates of real GDP in the range of 3.0 to 3.5 percent, a major stepwise increase from realized growth of 2.1 percent between mid-2009 and mid-2014. However, these forecasts are based on the demand for goods and services. Less attention has been paid to how the accelerated growth of real GDP will be supplied. Will the unemployment rate, which has declined at roughly one percent per year, decline even faster from 6.1 percent in June, 2014 to 3.0 percent or below in 2017? Will the supply-side support for the demand-side optimism be provided instead by a major rebound of productivity growth from the average of 1.2 percent over the past decade and 0.6 percent for the last four years, or perhaps by a reversal of the minus 0.8 percent growth rate since 2007 of the labor-force participation rate? The paper develops a new and surprisingly simple method of calculating the growth rate of potential GDP over the next decade and concludes that projections of potential output growth for the same decade in the most recent reports of the Congressional Budget Office (CBO) are much too optimistic. If the projections in this paper are close to the mark, the level of potential GDP in 2024 will be almost 10 percent below the CBO's current forecast. Further, the new potential GDP series implies that the debt/GDP ratio in 2024 will be closer to 87 percent than the CBO's current forecast of 78 percent. This paper also has profound implications for the Federal Reserve. The unemployment rate has declined rapidly, particularly within the last year. Faster real GDP growth will accelerate the decline in the unemployment rate and soon reduce it beyond any estimate of the constant-inflation NAIRU, even if productivity growth experiences a rebound and the labor force participation rate stabilizes. The macro economy is on a collision course between demand-side optimism and supply-side pessimism.
Handle: RePEc:nbr:nberwo:20423
Template-Type: ReDIF-Paper 1.0
Title: How Close is Asia to Already Being A Trade Bloc?
Classification-JEL: D58; D61; F15
Author-Name: Chunding Li
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 20424
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20424
File-URL: http://www.nber.org/papers/w20424.pdf
File-Format: application/pdf
Publication-Status: published as Chunding Li & John Whalley, 2016. "How close is Asia already to being a trade bloc?," Journal of Comparative Economics, .
Abstract: FTA bilateral and regional negotiations in Asia have developed quickly in the past decade moving Asia ever closer to an economic union. Unlike Europe with the EU and the 1997 treaty of Rome and the 1993 NAFTA in North American, Asian economic integration does not involve a comprehensive trade treaty, but an accelerating process of building one bilateral agreement on another. For countries in Asia there is negotiation of a China-Japan-Korea agreement, a China-India agreement, a Trans-Pacific Partnership (TPP) agreement, and a Regional Comprehensive Economic Partnership (RCEP). This paper uses a fifteen-country global general equilibrium model with trade costs to numerically calculate Debreu distance measures between the present situation and potential full Asia integration in the form of a trade bloc. Our results reveal that these large Asia economies can be close to full integration if they act timely in agreements through negotiation. All Asia countries will gain from Asia trade bloc arrangements except when the Asia FTA can only eliminate tariffs. These countries' gain will increase as bilateral non-tariff elimination deepens. Larger countries will gain more than small countries. Asia FTA, Asia Union and RCEP will benefit member countries more than ASEAN+3. Global free trade will benefit all countries the most.
Handle: RePEc:nbr:nberwo:20424
Template-Type: ReDIF-Paper 1.0
Title: Numerical General Equilibrium Analysis of China's Impacts from Possible Mega Trade Deals
Classification-JEL: C68; F47; F53
Author-Name: Chunding Li
Author-Name: Jing Wang
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 20425
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20425
File-URL: http://www.nber.org/papers/w20425.pdf
File-Format: application/pdf
Publication-Status: published as C. Li, J. Wang and J. Whalley, “Numerical General Equilibrium Analysis of China’s Impacts from Possible Mega Trade Deals,” NBER Working Paper, No. 20425, August 2014, and Economic Modelling, 57, 2016, pp. 13–25 (published as “Impact of Mega Trade Deals on China: A Computational General Equilibrium Analysis.”).
Abstract: This paper explores the potential impacts on both China and other major countries of possible mega trade deals. These include the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP), and various blocked deals. We use a numerical 13-country global general equilibrium model with trade costs to investigate both tariff and non-tariff effects, and include inside money to endogenously determine imports on the trade imbalance. Trade costs are calculated using a method based on gravity equations. Simulation results reveal that all FTA participation countries will gain but all FTA non-participation countries will lose. If non-tariff barriers are reduced more, the impacts will be larger. All effects to China on welfare, trade, export and import are positive. Comparatively China-TPP and RCEP will yield the highest welfare outcomes for the US in our model, China-Japan-Korea FTA will generate the second highest welfare outcome, and China-US FTA will generate the third highest welfare outcome. For the US, China-TPP FTA will generate the highest welfare outcome. For the EU, all China involved mega deals have negative impacts except China-US FTA. For Japan, RCEP will generate the highest welfare outcome. For both Korea and India, RCEP will generate the highest welfare outcome.
Handle: RePEc:nbr:nberwo:20425
Template-Type: ReDIF-Paper 1.0
Title: Housing Bubbles
Classification-JEL: R0; R31
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Charles G. Nathanson
Note: EFG
Number: 20426
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20426
File-URL: http://www.nber.org/papers/w20426.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser, Charles G. Nathanson, Chapter 11 - Housing Bubbles, Editor(s): Gilles Duranton, J. Vernon Henderson, William C. Strange, Handbook of Regional and Urban Economics, Elsevier, Volume 5, 2015, Pages 701-751, ISSN 1574-0080, ISBN 9780444595331, https://doi.org/10.1016/B978-0-444-59531-7.00011-9.
Abstract: Housing markets experience substantial price volatility, short term price change momentum and mean reversion of prices over the long run. Together these features, particularly at their most extreme, produce the classic shape of an asset bubble. In this paper, we review the stylized facts of housing bubbles and discuss theories that can potentially explain events like the boom-bust cycles of the 2000s. One set of theories assumes rationality and uses idiosyncratic features of the housing market, such as intensive search and short selling constraints, to explain the stylized facts. Cheap credit provides a particularly common rationalization for price booms, but temporary periods of low interest rates will not explain massive price swings in simple rational models. An incorrectly under-priced default option is needed to explain the formation of rational bubbles. Many non-rational explanations for real estate bubbles exist, but the most promising theories emphasize some form of trend-chasing, which in turn reflects boundedly rational learning.
Handle: RePEc:nbr:nberwo:20426
Template-Type: ReDIF-Paper 1.0
Title: Reallocation in the Great Recession: Cleansing or Not?
Classification-JEL: E24; E32; J63; O4
Author-Name: Lucia Foster
Author-Person: pfo74
Author-Name: Cheryl Grim
Author-Person: pgr143
Author-Name: John Haltiwanger
Author-Person: pha231
Note: EFG LS PR
Number: 20427
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20427
File-URL: http://www.nber.org/papers/w20427.pdf
File-Format: application/pdf
Publication-Status: published as Reallocation in the Great Recession: Cleansing or Not?, Lucia Foster, Cheryl Grim, John Haltiwanger. in Labor Markets in the Aftermath of the Great Recession, Card and Mas. 2016
Publication-Status: published as Lucia Foster & Cheryl Grim & John Haltiwanger, 2016. "Reallocation in the Great Recession: Cleansing or Not?," Journal of Labor Economics, vol 34(S1), pages S293-S331.
Abstract: The high pace of reallocation across producers is pervasive in the U.S. economy. Evidence shows this high pace of reallocation is closely linked to productivity. While these patterns hold on average, the extent to which the reallocation dynamics in recessions are "cleansing" is an open question. We find downturns prior to the Great Recession are periods of accelerated reallocation even more productivity enhancing than reallocation in normal times. In the Great Recession, we find the intensity of reallocation fell rather than rose and the reallocation that did occur was less productivity enhancing than in prior recessions.
Handle: RePEc:nbr:nberwo:20427
Template-Type: ReDIF-Paper 1.0
Title: Immigration and the Economy of Cities and Regions
Classification-JEL: F22; J61; R23
Author-Name: Ethan Lewis
Author-Person: ple579
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: ITI LS
Number: 20428
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20428
File-URL: http://www.nber.org/papers/w20428.pdf
File-Format: application/pdf
Abstract: In this chapter we analyze immigration and its effect on urban and regional economies focusing on productivity and labor markets. While immigration policies are typically national, the effects of international migrants are often more easily identified on local economies. The reason is that their settlements are significantly concentrated across cities and regions, relative to natives. Immigrants are different from natives in several economically relevant skills. Their impact on the local economy depends on these skills. We emphasize that to evaluate correctly such impact we also need to understand and measure the local adjustments produced by the immigrant flow. Workers and firms take advantage of the opportunities brought by immigrants and respond to them trying to maximize their welfare. We present a common conceptual frame to organize our analysis of the local effects of immigration and we describe several applications. We then discuss the empirical literature that has tried to isolate and identify a causal impact of immigrants on the local economies and to estimate the different margins of response and the resulting outcomes for natives of different skill types. We finally survey promising recent avenues for advancing this research.
Handle: RePEc:nbr:nberwo:20428
Template-Type: ReDIF-Paper 1.0
Title: Risk Sorting, Portfolio Choice, and Endogenous Informal Insurance
Classification-JEL: C78; O1; O17
Author-Name: Xiao Yu Wang
Note: DEV
Number: 20429
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20429
File-URL: http://www.nber.org/papers/w20429.pdf
File-Format: application/pdf
Abstract: Heterogeneously risk-averse individuals who lack access to formal insurance build and use relationships with each other to manage risk. I study the formation of these relationships. I show that the composition of equilibrium groups under pairwise matching and when group size is endogenous is determined by a trade-off in expected return and variance of return (captured by the coefficient of variation) across differentially risky productive opportunities, even when output distributions are skewed and have infinitely-many nonzero cumulants. This has important policy implications. For example, a policy which ignores the equilibrium response of informal institutions may exacerbate inequality and hurt most those it intended to help: a reduction in aggregate risk may lead to an increase in risk borne by the most risk-averse individuals, as the least risk-averse abandon their roles as informal insurers. Understanding informal occupations as equilibrium choices as opposed to exogenous assignments generates insights into the role played by endogenous insurance relationships in shaping informal firm structure and the development of entrepreneurship.
Handle: RePEc:nbr:nberwo:20429
Template-Type: ReDIF-Paper 1.0
Title: Pathways to Education: An Integrated Approach to Helping At-Risk High School Students
Classification-JEL: I2; I3; J24
Author-Name: Philip Oreopoulos
Author-Person: por38
Author-Name: Robert S. Brown
Author-Name: Adam M. Lavecchia
Author-Person: pla823
Note: CH ED
Number: 20430
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20430
File-URL: http://www.nber.org/papers/w20430.pdf
File-Format: application/pdf
Publication-Status: published as Philip Oreopoulos & Robert S. Brown & Adam M. Lavecchia, 2017. "Pathways to Education: An Integrated Approach to Helping At-Risk High School Students," Journal of Political Economy, University of Chicago Press, vol. 125(4), pages 947-984.
Abstract: Pathways to Education is a comprehensive youth support program developed to improve academic outcomes among those entering high school from very poor social-economic backgrounds. The program includes proactive mentoring to each student, daily tutoring, group activities, career counseling, and college transition assistance, combined with immediate and long-term incentives to reinforce a minimum degree of mandatory participation. The program began in 2001 for entering Grade 9 students living in Regent Park, the largest public housing project in Toronto, and expanded in 2007 to include two additional Toronto projects. In all three locations, participation rates quickly rose, to more than 85 percent, even though parents and students were required to commit in writing to conditions and high expectations of the program. Comparing students from other housing projects before and after the introduction of the program, high school graduation and post secondary enrollment rates rose dramatically for Pathways eligible students, in some cases by more than 50 percent.
Handle: RePEc:nbr:nberwo:20430
Template-Type: ReDIF-Paper 1.0
Title: The Efficiency of Real-World Bargaining: Evidence from Wholesale Used-Auto Auctions
Classification-JEL: C57; C78; D44; D47; D82; L1
Author-Name: Bradley Larsen
Author-Person: pla525
Note: IO
Number: 20431
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20431
File-URL: http://www.nber.org/papers/w20431.pdf
File-Format: application/pdf
Publication-Status: published as Bradley J Larsen, 2021. "The Efficiency of Real-World Bargaining: Evidence from Wholesale Used-Auto Auctions," The Review of Economic Studies, vol 88(2), pages 851-882.
Abstract: This study empirically quantifies the efficiency of a real-world bargaining game with two-sided incomplete information. Myerson and Satterthwaite (1983) and Williams (1987) derived the theoretical ex-ante efficient frontier for bilateral trade under two-sided uncertainty and demonstrated that it falls short of ex-post efficiency, but little is known about how well bargaining performs in practice. Using about 265,000 sequences of a game of alternating-offer bargaining following an ascending auction in the wholesale used-car industry, this study estimates (or bounds) distributions of buyer and seller valuations and evaluates where realized bargaining outcomes lie relative to efficient outcomes. Results demonstrate that the ex-ante and ex-post efficient outcomes are close to one another, but that the real bargaining falls short of both, suggesting that the bargaining is indeed inefficient but that this inefficiency is not solely due to the information constraints highlighted in Myerson and Satterthwaite (1983). Quantitatively, findings indicate that 17–24% of negotiating pairs fail to trade even though gains from trade exist, leading an efficiency loss of 12–23% of the available gains from trade.
Handle: RePEc:nbr:nberwo:20431
Template-Type: ReDIF-Paper 1.0
Title: Vaccine Approvals and Mandates Under Uncertainty: Some Simple Analytics
Classification-JEL: H23; H51; I18
Author-Name: Charles F. Manski
Author-Person: pma111
Note: EH PE AG
Number: 20432
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20432
File-URL: http://www.nber.org/papers/w20432.pdf
File-Format: application/pdf
Abstract: Social interactions make communicable disease a core concern of public health policy. A prevalent problem is scarcity of empirical evidence that are informative about how interventions affect population behavior and illness. Randomized trials, which have been important to evaluation of treatments for non-infectious diseases, are less informative about treatment of communicable diseases because they do not shed light on population-wide disease transmission. In particular, trials do not reveal the indirect preventive (herd immunity) effect of vaccination on persons who are not vaccinated or who are unsuccessfully vaccinated. This paper studies the decision problems faced by health planners who must choose whether to approve a new vaccine or mandate an approved one, but who do not know the indirect effect of vaccination. I study vaccine approval as a choice between a zero vaccination rate (rejection of the new vaccine) and whatever vaccination rate the health-care system will yield if the vaccine is approved. I study the decision to mandate an approved vaccine as a choice between vaccinating the entire population (the mandate) and the vaccination rate that would be generated by decentralized health-care decisions. Considering decision making with partial knowledge, I show that it may be possible to determine optimal policies in some cases where the planner can only bound the indirect effect of vaccination. Considering settings where optimal policy is indeterminate, I pose several criteria for decision making--expected utility, minimax, and minimax-regret--and derive the policies they yield.
Handle: RePEc:nbr:nberwo:20432
Template-Type: ReDIF-Paper 1.0
Title: The Carry Trade: Risks and Drawdowns
Classification-JEL: F31; G12; G15
Author-Name: Kent Daniel
Author-Name: Robert J. Hodrick
Author-Person: pho115
Author-Name: Zhongjin Lu
Note: AP IFM
Number: 20433
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20433
File-URL: http://www.nber.org/papers/w20433.pdf
File-Format: application/pdf
Publication-Status: published as Kent Daniel & Robert J. Hodrick & Zhongjin Lu, 2017. "The Carry Trade: Risks and Drawdowns," Critical Finance Review, vol 6(2), pages 211-262.
Abstract: We examine carry trade returns formed from the G10 currencies. Performance attributes depend on the base currency. Dynamically spread-weighting and risk-rebalancing positions improves performance. Equity, bond, FX, volatility, and downside equity risks cannot explain profitability. Dollar-neutral carry trades exhibit insignificant abnormal returns, while the dollar exposure part of the carry trade earns significant abnormal returns with little skewness. Downside equity market betas of our carry trades are not significantly different from unconditional betas. Hedging with options reduces but does not eliminate abnormal returns. Distributions of drawdowns and maximum losses from daily data indicate the importance of time-varying autocorrelation in determining the negative skewness of longer horizon returns.
Handle: RePEc:nbr:nberwo:20433
Template-Type: ReDIF-Paper 1.0
Title: Experimental Evidence on Distributional Effects of Head Start
Classification-JEL: H52; I20; I38
Author-Name: Marianne P. Bitler
Author-Person: pbi12
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Author-Name: Thurston Domina
Note: CH ED PE
Number: 20434
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20434
File-URL: http://www.nber.org/papers/w20434.pdf
File-Format: application/pdf
Abstract: This study provides the first comprehensive analysis of the distributional effects of Head Start, using the first national randomized experiment of the Head Start program (the Head Start Impact Study). We examine program effects on cognitive and non-cognitive outcomes and explore the heterogeneous effects of the program through 1st grade by estimating quantile treatment effects under endogeneity (IV-QTE) as well as various types of subgroup mean treatment effects and two-stage least squares treatment effects. We find that (the experimentally manipulated) Head Start attendance leads to large and statistically significant gains in cognitive achievement during the pre-school period and that the gains are largest at the bottom of the distribution. Once the children enter elementary school, the cognitive gains fade out for the full population, but importantly, cognitive gains persist through 1st grade for some Spanish speakers. These results provide strong evidence in favor of a compensatory model of the educational process. Additionally, our findings of large effects at the bottom are consistent with an interpretation that the relatively large gains in the well-studied Perry Preschool Program are in part due to the low baseline skills in the Perry study population. We find no evidence that the counterfactual care setting plays a large role in explaining the differences between the HSIS and Perry findings.
Handle: RePEc:nbr:nberwo:20434
Template-Type: ReDIF-Paper 1.0
Title: Assessing Asset Pricing Models Using Revealed Preference
Classification-JEL: D14; D24; E2; E22; E44; G0; G00; G1; G10; G11; G12; G2; G20; G23
Author-Name: Jonathan B. Berk
Author-Name: Jules H. van Binsbergen
Author-Person: pva668
Note: AP CF
Number: 20435
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20435
File-URL: http://www.nber.org/papers/w20435.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan B. Berk & Jules H. van Binsbergen, 2016. "Assessing asset pricing models using revealed preference," Journal of Financial Economics, vol 119(1), pages 1-23.
Abstract: We propose a new method of testing asset pricing models that relies on using quantities rather than prices or returns. We use the capital flows into and out of mutual funds to infer which risk model investors use. We derive a simple test statistic that allows us to infer, from a set of candidate models, the model that is closest to the model that investors use in making their capital allocation decisions. Using this methodology, we find that of the models most commonly used in the literature, the Capital Asset Pricing Model is the closest. The finding that investors’ revealed preferences are most aligned with the Capital Asset Pricing Model despite the fact that the model has been shown to perform poorly relative to other models in explaining cross sectional variation in expected returns, is an important puzzle for future research. We also document that a large fraction of mutual fund flows remain unexplained.
Handle: RePEc:nbr:nberwo:20435
Template-Type: ReDIF-Paper 1.0
Title: Quantifying the Sources of Firm Heterogeneity
Classification-JEL: D24; F12; F14
Author-Name: Colin Hottman
Author-Person: pho561
Author-Name: Stephen J. Redding
Author-Person: pre64
Author-Name: David E. Weinstein
Author-Person: pwe34
Note: ITI
Number: 20436
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20436
File-URL: http://www.nber.org/papers/w20436.pdf
File-Format: application/pdf
Publication-Status: published as Colin J. Hottman & Stephen J. Redding & David E. Weinstein, 2016. "Quantifying the Sources of Firm Heterogeneity," The Quarterly Journal of Economics, Oxford University Press, vol. 131(3), pages 1291-1364.
Abstract: We develop and structurally estimate a model of heterogeneous multiproduct firms that can be used to decompose the firm-size distribution into the contributions of costs, “appeal” (quality or taste), markups, and product scope. Using Nielsen bar-code data on prices and sales, we find that variation in firm appeal and product scope explains at least four fifths of the variation in firm sales. We show that the imperfect substitutability of products within firms, and the fact that larger firms supply more products than smaller firms, implies that standard productivity measures are highly dependent on implicit demand system assumptions and probably dramatically understate the relative productivity of the largest firms. Although most firms are well approximated by the monopolistic competition benchmark of constant markups, we find that the largest firms that account for most of aggregate sales depart substantially from this benchmark, and exhibit both variable markups and substantial cannibalization effects.
Handle: RePEc:nbr:nberwo:20436
Template-Type: ReDIF-Paper 1.0
Title: Tax News: The Response of Household Spending to Changes in Expected Taxes
Classification-JEL: E21; E62; G12; H31; H74
Author-Name: Lorenz Kueng
Author-Person: pku506
Note: AP EFG PE
Number: 20437
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20437
File-URL: http://www.nber.org/papers/w20437.pdf
File-Format: application/pdf
Abstract: Although theoretical models of household behavior often emphasize fiscal foresight, empirical studies of household consumption have yet to document the role of news about tax changes. Using novel high-frequency bond data, I develop a model of the term structure of municipal yield spreads as a function of future top income tax rates and a risk premium. Testing the model using the presidential elections of 1992 and 2000 as two quasi-natural experiments shows that financial markets forecast future tax rates remarkably well in both the short and long run. Combining these market-based tax expectations with data from the Consumer Expenditure Survey, I find that spending of higher-income households increases by close to 1% in response to news of a 1% increase in expected after-tax lifetime (permanent) income. These findings imply that by ignoring anticipation effects, previous estimates of the total effect of a tax change could be substantially biased.
Handle: RePEc:nbr:nberwo:20437
Template-Type: ReDIF-Paper 1.0
Title: The Agricultural Origins of Time Preference
Classification-JEL: O1; O4; Z1
Author-Name: Oded Galor
Author-Person: pga46
Author-Name: Ömer Özak
Note: DEV EFG
Number: 20438
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20438
File-URL: http://www.nber.org/papers/w20438.pdf
File-Format: application/pdf
Publication-Status: published as Oded Galor & Ömer Özak, 2016. "The Agricultural Origins of Time Preference," American Economic Review, American Economic Association, vol. 106(10), pages 3064-3103, October.
Abstract: This research explores the origins of the distribution of time preference across regions. It advances the hypothesis, and establishes empirically, that geographical variations in natural land productivity and their impact on the return to agricultural investment have had a persistent effect on the distribution of long-term orientation across societies. In particular, exploiting a natural experiment associated with the expansion of suitable crops for cultivation in the course of the Columbian Exchange, the research establishes that agro-climatic characteristics in the pre-industrial era that were conducive to higher return to agricultural investment, triggered selection and learning processes that had a persistent positive effect on the prevalence of long-term orientation in the contemporary era.
Handle: RePEc:nbr:nberwo:20438
Template-Type: ReDIF-Paper 1.0
Title: Momentum Crashes
Classification-JEL: G11; G12
Author-Name: Kent Daniel
Author-Name: Tobias J. Moskowitz
Note: AP
Number: 20439
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20439
File-URL: http://www.nber.org/papers/w20439.pdf
File-Format: application/pdf
Publication-Status: published as Kent Daniel & Tobias J. Moskowitz, 2016. "Momentum crashes," Journal of Financial Economics, vol 122(2), pages 221-247.
Abstract: Despite their strong positive average returns across numerous asset classes, momentum strategies can experience infrequent and persistent strings of negative returns. These momentum crashes are partly forecastable. They occur in "panic" states - following market declines and when market volatility is high - and are contemporaneous with market rebounds. We show that the low ex-ante expected returns in panic states are consistent with a conditionally high premium attached to the option-like payoffs of past losers. An implementable dynamic momentum strategy based on forecasts of momentum's mean and variance approximately doubles the alpha and Sharpe Ratio of a static momentum strategy, and is not explained by other factors. These results are robust across multiple time periods, international equity markets, and other asset classes.
Handle: RePEc:nbr:nberwo:20439
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Aesthetics and Three Centuries of Art Price Records
Classification-JEL: D01; D44; G01; N00; Z1
Author-Name: William Goetzmann
Author-Person: pgo59
Author-Name: Elena Mamonova
Author-Name: Christophe Spaenjers
Author-Person: psp194
Note: AP EFG
Number: 20440
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20440
File-URL: http://www.nber.org/papers/w20440.pdf
File-Format: application/pdf
Publication-Status: published as Christophe Spaenjers, William N. Goetzmann, Elena Mamonova, The economics of aesthetics and record prices for art since 1701, Explorations in Economic History, Volume 57, 2015, Pages 79-94, ISSN 0014-4983, https://doi.org/10.1016/j.eeh.2015.03.003.
Abstract: Aggregate art price patterns mask a lot of underlying variation--both in the time series and in the cross- section. We argue that, to increase our understanding of the market for aesthetics, it is helpful to take a micro perspective on the formation of art prices, and acknowledge that each artwork gives rise to a market for trading in its private-value benefits. We discuss relevant recent literature, and illustrate the potential of this approach through a historical study of art price records between 1701 and 2014. Our newly constructed series also points to the importance of developments in the industrial organization of the art market for long-term price trends.
Handle: RePEc:nbr:nberwo:20440
Template-Type: ReDIF-Paper 1.0
Title: Positive Long Run Capital Taxation: Chamley-Judd Revisited
Classification-JEL: H2; H63
Author-Name: Ludwig Straub
Author-Name: Iván Werning
Author-Person: pwe141
Note: EFG PE
Number: 20441
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20441
File-URL: http://www.nber.org/papers/w20441.pdf
File-Format: application/pdf
Publication-Status: published as Ludwig Straub & Iván Werning, 2020. "Positive Long-Run Capital Taxation: Chamley-Judd Revisited," American Economic Review, vol 110(1), pages 86-119.
Abstract: According to the Chamley-Judd result, capital should not be taxed in the long run. In this paper, we overturn this conclusion, showing that it does not follow from the very models used to derive them. For the model in Judd (1985), we prove that the long run tax on capital is positive and significant, whenever the intertemporal elasticity of substitution is below one. For higher elasticities, the tax converges to zero but may do so at a slow rate, after centuries of high capital taxation. The model in Chamley (1986) imposes an upper bound on capital taxation and we prove that the tax rate may end up at this bound indefinitely. When, instead, the bounds do not bind forever, the long run tax is indeed zero; however, when preferences are recursive but non-additive across time, the zero-capital-tax limit comes accompanied by zero private wealth (zero tax base) or by zero labor taxes (first best). Finally, we explain why the equivalence of a positive capital tax with ever rising consumption taxes does not provide a firm rationale against capital taxation.
Handle: RePEc:nbr:nberwo:20441
Template-Type: ReDIF-Paper 1.0
Title: Aggregate External Financing and Savings Waves
Classification-JEL: E23; E32; E44; G01; G3; G32
Author-Name: Andrea L. Eisfeldt
Author-Person: pei27
Author-Name: Tyler Muir
Note: CF EFG
Number: 20442
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20442
File-URL: http://www.nber.org/papers/w20442.pdf
File-Format: application/pdf
Publication-Status: published as Andrea L. Eisfeldt & Tyler Muir, 2016. "Aggregate External Financing and Savings Waves," Journal of Monetary Economics, .
Abstract: US data display aggregate external financing and savings waves. Firms can allocate costly external finance to productive capital, or to liquid assets with low physical returns. If firms raise costly external finance and accumulate liquidity, either the cost of external finance is relatively low, or the total return to liquidity accumulation, including its shadow value as future internal funds, is particularly high. We formalize this intuition by estimating a dynamic model of firms’ financing and savings decisions, and use our model along with firm level data to construct an empirical estimate of the average cost of external finance from 1980-2014.
Handle: RePEc:nbr:nberwo:20442
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Family Composition on Educational Achievement
Classification-JEL: I20; J13; J16; J24; O10; R20
Author-Name: Stacey H. Chen
Author-Person: pch141
Author-Name: Yen-Chien Chen
Author-Name: Jin-Tan Liu
Author-Person: pli620
Note: ED
Number: 20443
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20443
File-URL: http://www.nber.org/papers/w20443.pdf
File-Format: application/pdf
Publication-Status: published as Stacey H. Chen & Yen-Chien Chen & Jin-Tan Liu, 2019. "The Impact of Family Composition on Educational Achievement," Journal of Human Resources, vol 54(1), pages 122-170.
Abstract: Parents preferring sons tend to go on to have more children until a boy is born, and to concentrate investment in boys for a given number of children (sibsize). Thus, having a brother may affect child education in two ways: an indirect effect by keeping sibsize lower and a direct rivalry effect where sibsize remains constant. We estimate the direct and indirect effects of a next brother on the first child’s education conditional on potential sibsize. We address endogenous sibsize using twins. We find new evidence of sibling rivalry and gender bias that cannot be detected by conventional methods.
Handle: RePEc:nbr:nberwo:20443
Template-Type: ReDIF-Paper 1.0
Title: Is the 'Quarter of Birth' Endogenous? Evidence From One Million Siblings in Taiwan
Classification-JEL: C10; J11; J13
Author-Name: Elliott Fan
Author-Person: pfa118
Author-Name: Jin-Tan Liu
Author-Person: pli620
Author-Name: Yen-Chien Chen
Note: EH
Number: 20444
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20444
File-URL: http://www.nber.org/papers/w20444.pdf
File-Format: application/pdf
Abstract: Recent studies based on US data have provided evidence to suggest that the 'quarter of birth' (QOB) may be endogenous and that the use of QOB as an instrumental variable will consequently produce inconsistent estimates (see Buckles and Hungerman, 2013). Such potential endogeneity is addressed in this study by estimating the effects of QOB on university attendance using a Taiwanese dataset on approximately one million siblings. Our estimations are mainly reliant upon the strength of the family fixed-effects model, a regression discontinuity design and a simulation procedure. Our results, in sharp contrast to the US findings, suggest that family background characteristics can explain very little of the relationship between QOB and the probability of university attendance at the age of 18. The disparity between the US and Taiwanese findings may be due to high-'socioeconomic status' (SES) women in the US disproportionately planning births away from the winter months, as suggested by Buckles and Hungerman (2013), whereas the seasonality of births is virtually identical for low- and high-SES mothers in Taiwan. Our findings imply that the endogeneity of QOB is of less concern in the case of Taiwan, perhaps due to the milder winter climate.
Handle: RePEc:nbr:nberwo:20444
Template-Type: ReDIF-Paper 1.0
Title: Understanding Uncertainty Shocks and the Role of Black Swans
Classification-JEL: C53; E17; E44; G01; G14
Author-Name: Anna Orlik
Author-Name: Laura Veldkamp
Author-Person: pve40
Note: AP EFG ME
Number: 20445
Creation-Date: 2014-08
Order-URL: http://www.nber.org/papers/w20445
File-URL: http://www.nber.org/papers/w20445.pdf
File-Format: application/pdf
Abstract: A fruitful emerging literature reveals that shocks to uncertainty can explain asset returns, business cycles and financial crises. The literature equates uncertainty shocks with changes in the variance of an innovation whose distribution is common knowledge. But how do such shocks arise? This paper argues that people do not know the true distribution of macroeconomic outcomes. Like Bayesian econometricians, they estimate a distribution. Using real-time GDP data, we measure uncertainty as the conditional standard deviation of GDP growth, which captures uncertainty about the distributions estimated parameters. When the forecasting model admits only normally-distributed outcomes, we find small, acyclical changes in uncertainty. But when agents can also estimate parameters that regulate skewness, uncertainty fluctuations become large and counter-cyclical. The reason is that small changes in estimated skewness whip around probabilities of unobserved tail events (black swans). The resulting forecasts resemble those of professional forecasters. Our uncertainty estimates reveal that revisions in parameter estimates, especially those that affect the risk of a black swan, explain most of the shocks to uncertainty.
Handle: RePEc:nbr:nberwo:20445
Template-Type: ReDIF-Paper 1.0
Title: Preserving History or Hindering Growth? The Heterogeneous Effects of Historic Districts on Local Housing Markets in New York City
Classification-JEL: A1; R0
Author-Name: Vicki Been
Author-Name: Ingrid Gould Ellen
Author-Name: Michael Gedal
Author-Person: pge220
Author-Name: Edward Glaeser
Author-Person: pgl9
Author-Name: Brian J. McCabe
Note: DAE
Number: 20446
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20446
File-URL: http://www.nber.org/papers/w20446.pdf
File-Format: application/pdf
Abstract: Since Brooklyn Heights was designated as New York City's first landmarked neighborhood in 1965, the Landmarks Preservation Commission has designated 120 historic neighborhoods in the city. This paper develops a theory of heterogeneous impacts across neighborhoods and exploits variation in the timing of historic district designations in New York City to identify the effects of preservation policies on residential property markets. We combine an extensive dataset of residential transactions during the 35-year period between 1974 and 2009 with data from the Landmarks Preservation Commission on the location of the city's historic districts and the timing of the designations. Designation raises property values within historic districts, but only outside of Manhattan. In areas where the value of the option to build unrestricted is higher, designation has a less positive effect on property values within the district. Consistent with theory, properties just outside the boundaries of districts increase in value after designation. There is also a modest reduction in new construction in districts after designation.
Handle: RePEc:nbr:nberwo:20446
Template-Type: ReDIF-Paper 1.0
Title: It's Where You Work: Increases in Earnings Dispersion across Establishments and Individuals in the U.S.
Classification-JEL: D3; J3; J31
Author-Name: Erling Barth
Author-Name: Alex Bryson
Author-Person: pbr105
Author-Name: James C. Davis
Author-Person: pda194
Author-Name: Richard Freeman
Author-Person: pfr23
Note: LS PR
Number: 20447
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20447
File-URL: http://www.nber.org/papers/w20447.pdf
File-Format: application/pdf
Publication-Status: published as Journal of Labor Economics, Volume 34, Number S2, Part 2, April 2016
Abstract: This paper links data on establishments and individuals to analyze the role of establishments in the increase in inequality that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of ln earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within-establishments and finds that much of the 1970s-2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. It also shows that the divergence of establishment earnings occurred within and across industries and was associated with increased variance of revenues per worker. Our results direct attention to the fundamental role of establishment-level pay setting and economic adjustments in earnings inequality.
Handle: RePEc:nbr:nberwo:20447
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Mortality on Fertility: Population Dynamics after a Natural Disaster
Classification-JEL: J11; J13; O1
Author-Name: Jenna Nobles
Author-Name: Elizabeth Frankenberg
Author-Name: Duncan Thomas
Author-Person: pth20
Note: DEV
Number: 20448
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20448
File-URL: http://www.nber.org/papers/w20448.pdf
File-Format: application/pdf
Publication-Status: published as Jenna Nobles & Elizabeth Frankenberg & Duncan Thomas, 2015. "The Effects of Mortality on Fertility: Population Dynamics After a Natural Disaster," Demography, vol 52(1), pages 15-38.
Abstract: Understanding how mortality and fertility are linked is essential to the study of population dynamics. We investigate the fertility response to an unanticipated mortality shock that resulted from the 2004 Indian Ocean tsunami, which killed large shares of the residents of some Indonesian communities but caused no deaths in neighboring communities. Using population-representative multilevel longitudinal data, we identify a behavioral fertility response to mortality exposure, both at the level of a couple and in the broader community. We observe a sustained fertility increase at the aggregate level following the tsunami, which is driven by two behavioral responses to mortality exposure. First, mothers who lost one or more children in the disaster are significantly more likely to bear additional children after the tsunami. This response explains about 13 percent of the aggregate increase in fertility. Second, women without children before the tsunami initiated family-building earlier in communities where tsunami-related mortality rates were higher, indicating that the fertility of these women is an important route to rebuilding the population in the aftermath of a mortality shock. Such community-level effects have received little attention in demographic scholarship.
Handle: RePEc:nbr:nberwo:20448
Template-Type: ReDIF-Paper 1.0
Title: Long Workweeks and Strange Hours
Classification-JEL: J08; J22
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Author-Name: Elena Stancanelli
Note: LS
Number: 20449
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20449
File-URL: http://www.nber.org/papers/w20449.pdf
File-Format: application/pdf
Publication-Status: published as Daniel S. Hamermesh & Elena Stancanelli, 2015. "Long Workweeks and Strange Hours," ILR Review, Cornell University, ILR School, vol. 68(5), pages 1007-1018, October.
Abstract: American workweeks are long compared to other rich countries'. Much less well-known is that Americans are more likely to work at night and on weekends. We examine the relationship between these two phenomena using the American Time Use Survey and time-diary data from 5 other countries. Adjusting for demographic differences, Americans' incidence of night and weekend work would drop by about 10 percent if European workweeks prevailed. Even if no Americans worked long hours, the incidence of unusual work times in the U.S. would far exceed those in continental Europe.
Handle: RePEc:nbr:nberwo:20449
Template-Type: ReDIF-Paper 1.0
Title: Migration and Welfare State: Why is America Different from Europe?
Classification-JEL: F2; H23; H87
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Efraim Sadka
Author-Person: psa492
Note: IFM
Number: 20450
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20450
File-URL: http://www.nber.org/papers/w20450.pdf
File-Format: application/pdf
Abstract: Over the years, there emerged two key policy differences between Europe and America, both welfare and migration-states. The former has more generous welfare state and more liberal migration policies than the latter. In this paper we attempt to provide a political-economy explanation for these key differences, based on the degree of coordination among member states of the economic union, and the different levels of population aging.
Handle: RePEc:nbr:nberwo:20450
Template-Type: ReDIF-Paper 1.0
Title: Turnout Across Democracies
Classification-JEL: D02; D72
Author-Name: Helios Herrera
Author-Person: phe284
Author-Name: Massimo Morelli
Author-Person: pmo645
Author-Name: Salvatore Nunnari
Author-Person: pnu47
Note: POL
Number: 20451
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20451
File-URL: http://www.nber.org/papers/w20451.pdf
File-Format: application/pdf
Publication-Status: published as Helios Herrera & Massimo Morelli & Salvatore Nunnari, 2016. "Turnout Across Democracies," American Journal of Political Science, , pages n/a-n/a.
Abstract: World democracies widely differ in electoral rules, as well as in legislative, executive or legal institutions. Different institutional environments induce different mappings from electoral outcomes to the distribution of power. We explore how these mappings affect voters' participation to an election. We show that the effect of such institutional differences on turnout depends on the distribution of voters' preferences for the competing parties. In particular, we uncover a novel contest effect: given the distribution of preferences, turnout increases and then decreases when we move from a more proportional to a less proportional system; turnout is maximized for an intermediate degree of proportionality. Moreover, we generalize the competition effect, common to models of endogenous turnout: given the institutional environment, turnout increases in the ex-ante closeness of the election and peaks when the population is evenly split between the two parties. These results are robust to a wide range of modeling approaches, including ethical voter models, voter mobilization models, and rational voter models.
Handle: RePEc:nbr:nberwo:20451
Template-Type: ReDIF-Paper 1.0
Title: Micro Data and Macro Technology
Classification-JEL: E10; E23; E25
Author-Name: Ezra Oberfield
Author-Name: Devesh Raval
Note: EFG
Number: 20452
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20452
File-URL: http://www.nber.org/papers/w20452.pdf
File-Format: application/pdf
Publication-Status: published as Ezra Oberfield & Devesh Raval, 2021. "Micro Data and Macro Technology," Econometrica, Econometric Society, vol. 89(2), pages 703-732, March.
Abstract: We develop a framework to estimate the aggregate capital-labor elasticity of substitution by aggregating the actions of individual plants, and use it to assess the decline in labor's share of income in the US manufacturing sector. The aggregate elasticity reflects substitution within plants and reallocation across plants; the extent of heterogeneity in capital intensities determines their relative importance. We use micro data on the cross-section of plants to build up to the aggregate elasticity at a point in time. Our approach places no assumptions on the evolution of technology, so we can separately identify shifts in technology and changes in response to factor prices. We find that the aggregate elasticity for the US manufacturing sector has been stable since 1970 at about 0.7. Mechanisms that work solely through factor prices cannot account for the labor share's decline. Finally, the aggregate elasticity is substantially higher in less-developed countries.
Handle: RePEc:nbr:nberwo:20452
Template-Type: ReDIF-Paper 1.0
Title: Does Gifted Education Work? For Which Students?
Classification-JEL: I21; I24
Author-Name: David Card
Author-Person: pca271
Author-Name: Laura Giuliano
Author-Person: pgi111
Note: ED LS
Number: 20453
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20453
File-URL: http://www.nber.org/papers/w20453.pdf
File-Format: application/pdf
Abstract: Education policy makers have struggled for decades with the question of how to best serve high ability K‐12 students. As in the debate over selective college admissions, a key issue is targeting. Should gifted and talented programs be allocated on the basis of cognitive ability, or a broader combination of ability and achievement? Should there be a single admission threshold, or a lower bar for disadvantaged students? We use data from a large urban school district to study the impacts of assignment to separate gifted classrooms on three distinct groups of fourth grade students: non-disadvantaged students with IQ scores ≥130; subsidized lunch participants and English language learners with IQ scores ≥116; and students who miss the IQ thresholds but scored highest among their school/grade cohort in state-wide achievement tests in the previous year. Regression discontinuity estimates based on the IQ thresholds for the first two groups show no effects on reading or math achievement at the end of fourth grade. In contrast, estimates based on test score ranks for the third group show significant gains in reading and math, concentrated among lower-income and black and Hispanic students. The math gains persist to fifth grade and are also reflected in fifth grade science scores. Our findings suggest that a separate classroom environment is more effective for students selected on past achievement - particularly disadvantaged students who are often excluded from gifted and talented programs.
Handle: RePEc:nbr:nberwo:20453
Template-Type: ReDIF-Paper 1.0
Title: The Revived Bretton Woods System's First Decade
Classification-JEL: F21; F3; F43; F63
Author-Name: Michael P. Dooley
Author-Person: pdo13
Author-Name: David Folkerts-Landau
Author-Name: Peter M. Garber
Author-Person: pga124
Note: IFM
Number: 20454
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20454
File-URL: http://www.nber.org/papers/w20454.pdf
File-Format: application/pdf
Abstract: The revived Bretton Woods framework we proposed in 2003 remains a useful way to understand the international financial system. We document that the system survived the 2008 crisis. Looking forward, we argue that the system will continue to evolve as we expected. China is likely to graduate from the periphery to the center in the next few years. This graduation process could be smooth or associated with recurrent financial crises. During this transition the magnitude of net capital outflows from the periphery will continue to depress real interest rates in industrial countries at every phase of the business cycle. Finally, recent policy initiatives suggest that India is poised to replace China as the dominant periphery country.
Handle: RePEc:nbr:nberwo:20454
Template-Type: ReDIF-Paper 1.0
Title: Export Markets and Labor Allocation in a Low-income Country
Classification-JEL: F14; F16; O17; O47
Author-Name: Brian McCaig
Author-Person: pmc113
Author-Name: Nina Pavcnik
Author-Person: ppa511
Note: DEV ITI
Number: 20455
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20455
File-URL: http://www.nber.org/papers/w20455.pdf
File-Format: application/pdf
Publication-Status: published as American Economic Review (Forthcoming)
Abstract: We study the effects of a positive export shock on labor allocation between the informal, microenterprise sector and the formal firm sector in a low-income country. The U.S.-Vietnam Bilateral Trade Agreement led to large reductions in U.S. tariffs on Vietnamese exports. We find that the share of manufacturing workers in Vietnam in the formal sector increased by 5 percentage points in response to the U.S. tariff reductions. The reallocation was greater for workers in more internationally integrated provinces and for younger cohorts. We estimate the gap in labor productivity within manufacturing across the informal and formal sectors. This gap and the aggregate labor productivity gain from the export-induced reallocation of workers across the two sectors are reduced when we account for worker heterogeneity, measurement error, and differences in labor intensity of production.
Handle: RePEc:nbr:nberwo:20455
Template-Type: ReDIF-Paper 1.0
Title: The Informativeness Principle Under Limited Liability
Classification-JEL: D86; J33
Author-Name: Pierre Chaigneau
Author-Person: pch1493
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Daniel Gottlieb
Author-Person: pgo110
Note: CF LE LS
Number: 20456
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20456
File-URL: http://www.nber.org/papers/w20456.pdf
File-Format: application/pdf
Abstract: This paper shows that the informativeness principle does not automatically extend to settings with limited liability. Even if a signal is informative about effort, it may have no value for contracting. An agent with limited liability is paid zero for certain output realizations. Thus, even if these output realizations are accompanied by an unfavorable signal, the payment cannot fall further and so the principal cannot make use of the signal. Similarly, a principal with limited liability may be unable to increase payments after a favorable signal. We derive necessary and sufficient conditions for signals to have positive value. Under bilateral limited liability and a monotone likelihood ratio, the value of information is non-monotonic in output, and the principal is willing to pay more for information at intermediate output levels.
Handle: RePEc:nbr:nberwo:20456
Template-Type: ReDIF-Paper 1.0
Title: The Price of Experience
Classification-JEL: E24; E25; J24; J31
Author-Name: Hyeok Jeong
Author-Person: pje38
Author-Name: Yong Kim
Author-Name: Iourii Manovskii
Author-Person: pma158
Note: EFG LS
Number: 20457
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20457
File-URL: http://www.nber.org/papers/w20457.pdf
File-Format: application/pdf
Publication-Status: published as Hyeok Jeong & Yong Kim & Iourii Manovskii, 2015. "The Price of Experience," American Economic Review, American Economic Association, vol. 105(2), pages 784-815, February.
Abstract: We identify a key role of factor supply, driven by demographic changes, in shaping several empirical regularities that are a focus of active research in macro and labor economics. In particular, demographic changes alone can account for the large movements of the return to experience over the last four decades, for the differential dynamics of the age premium across education groups emphasized by Katz and Murphy (1992), for the differential dynamics of the college premium across age groups emphasized by Card and Lemieux (2001), and for the changes in cross-sectional and cohort-based life-cycle profiles emphasized by Kambourov and Manovskii (2005).
Handle: RePEc:nbr:nberwo:20457
Template-Type: ReDIF-Paper 1.0
Title: Tax Morale
Classification-JEL: H26; O17
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Author-Name: Monica Singhal
Author-Person: psi159
Note: DEV PE
Number: 20458
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20458
File-URL: http://www.nber.org/papers/w20458.pdf
File-Format: application/pdf
Publication-Status: published as Erzo F. P. Luttmer & Monica Singhal, 2014. "Tax Morale," Journal of Economic Perspectives, American Economic Association, vol. 28(4), pages 149-68, Fall.
Abstract: Standard economic models of tax compliance have focused on enforcement-driven compliance. Notably, tax administrators also tend to place a great deal of emphasis on the importance of improving "tax morale" by encouraging voluntary compliance, creating a culture of compliance, and changing social norms. Tax morale does indeed appear to be an important component of compliance decisions, and there is strong evidence that tax morale operates through a variety of underlying channels. There is less evidence - to date - that indicates we know how to leverage these channels to improve compliance and revenue collection in a consistently successful way.
Handle: RePEc:nbr:nberwo:20458
Template-Type: ReDIF-Paper 1.0
Title: Counterparty Risk and the Establishment of the New York Stock Exchange Clearinghouse
Classification-JEL: G0; G01; G1; G12; G18; G2; G23; G28; N0; N2; N21
Author-Name: Asaf Bernstein
Author-Name: Eric Hughson
Author-Name: Marc D. Weidenmier
Author-Person: pwe14
Note: AP CF DAE
Number: 20459
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20459
File-URL: http://www.nber.org/papers/w20459.pdf
File-Format: application/pdf
Publication-Status: published as Asaf Bernstein & Eric Hughson & Marc Weidenmier, 2019. "Counterparty Risk and the Establishment of the New York Stock Exchange Clearinghouse," Journal of Political Economy, vol 127(2), pages 689-729.
Abstract: Heightened counterparty risk during the recent financial crisis has raised questions about the role clearinghouses play in global financial stability. Empirical identification of the effect of centralized clearing on counterparty risk is challenging because of the co-incidence of macro-economic turbulence and the introduction of clearinghouses. We overcome these concerns by examining a novel historical experiment, the establishment of a clearinghouse on the New York Stock Exchange (NYSE) in 1892. During this period the largest NYSE stocks were also listed on the Consolidated Stock Exchange (CSE), which already had a clearinghouse. Using identical securities on the CSE as a control, we find that the introduction of clearing reduced annualized volatility of NYSE returns by 90-173bps and increased asset values. Prior to clearing, shocks to overnight lending rates reduced the value of stocks on the NYSE, relative to identical stocks on the CSE, but this was no longer true after the establishment of clearing. We also show that at least ½ of the average reduction in counterparty risk on the NYSE is driven by a reduction in contagion risk - the risk of a cascade of broker defaults. Our results indicate that clearing can cause a significant improvement in market stability and value through a reduction in network contagion and counterparty risk.
Handle: RePEc:nbr:nberwo:20459
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Effects of Fuel Conservation Policies in a Dual-Fuel Car Market: Evidence from India
Classification-JEL: L9; Q48; R48
Author-Name: Randy Chugh
Author-Name: Maureen L. Cropper
Author-Person: pcr77
Note: EEE
Number: 20460
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20460
File-URL: http://www.nber.org/papers/w20460.pdf
File-Format: application/pdf
Publication-Status: published as Randy Chugh & Maureen Cropper, 2017. "The welfare effects of fuel conservation policies in a dual-fuel car market: Evidence from India," Journal of Environmental Economics and Management, .
Abstract: We estimate a model of vehicle choice and kilometers driven to analyze the long-run impacts of fuel conservation policies in the Indian car market. We simulate the effects of petrol and diesel fuel taxes and a diesel car tax, taking into account their interactions with the pre-existing petrol fuel tax and car sales taxes. At levels sufficient to reduce total fuel consumption by 7%, the increased diesel and petrol fuel taxes both yield deadweight losses (net of externalities) of about 4 (2010) Rs./L. However, at levels sufficient to reduce total fuel consumption by 2%, the increased petrol fuel tax results in a deadweight loss per liter of fuel conserved that is greater than that caused by the diesel fuel tax. This reflects both the high pre-existing tax on petrol fuel and the high own-price elasticities of fuel demand in India. A tax on diesel cars that results in the same diesel market share as the large diesel fuel tax actually has a negative deadweight loss per liter of fuel conserved. The welfare effects of all three policy instruments are positive, once the external benefits of reducing fuel consumption are added to the excess burden of taxation.
Handle: RePEc:nbr:nberwo:20460
Template-Type: ReDIF-Paper 1.0
Title: Storable Votes and Judicial Nominations in the U.S. Senate
Classification-JEL: D72; H11; K40
Author-Name: Alessandra Casella
Author-Person: pca496
Author-Name: Sébastien Turban
Author-Name: Gregory J. Wawro
Note: POL
Number: 20461
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20461
File-URL: http://www.nber.org/papers/w20461.pdf
File-Format: application/pdf
Publication-Status: published as Alessandra Casella & Sébastien Turban & Gregory Wawro, 2017. "Storable votes and judicial nominations in the US Senate," Journal of Theoretical Politics, , vol. 29(2), pages 243-272, April.
Abstract: We model a procedural reform aimed at restoring a proper role for the minority in the confirmation process of judicial nominations in the U.S. Senate. We analyze a proposal that would call for nominations to the same level court to be collected in periodic lists and voted upon individually with Storable Votes, allowing each senator to allocate freely a fixed number of total votes. Although each nomination is decided by simple majority, storable votes make it possible for the minority to win occasionally, but only when the relative importance its members assign to a nomination is higher than the relative importance assigned by the majority. Numerical simulations, motivated by a game theoretic model, show that under plausible assumptions a minority of 45 senators would be able to block between 20 and 35 percent of nominees. For most parameter values, the possibility of minority victories increases aggregate welfare.
Handle: RePEc:nbr:nberwo:20461
Template-Type: ReDIF-Paper 1.0
Title: Controlling Health Care Costs Through Limited Network Insurance Plans: Evidence from Massachusetts State Employees
Classification-JEL: I13
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Robin McKnight
Note: EH
Number: 20462
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20462
File-URL: http://www.nber.org/papers/w20462.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Gruber & Robin McKnight, 2016. "Controlling Health Care Costs through Limited Network Insurance Plans: Evidence from Massachusetts State Employees," American Economic Journal: Economic Policy, American Economic Association, vol. 8(2), pages 219-50, May.
Abstract: Recent years have seen enormous growth in limited network plans that restrict patient choice of provider, particularly through state exchanges under the ACA. Opposition to such plans is based on concerns that restrictions on provider choice will harm patient care. We explore this issue in the context of the Massachusetts GIC, the insurance plan for state employees, which recently introduced a major financial incentive to choose limited network plans for one group of enrollees and not another. We use a quasi-experimental analysis based on the universe of claims data over a three-year period for GIC enrollees. We find that enrollees are very price sensitive in their decision to enroll in limited network plans, with the state's three month "premium holiday" for limited network plans leading 10% of eligible employees to switch to such plans. We find that those who switched spent considerably less on medical care; spending fell by almost 40% for the marginal complier. This reflects both reductions in quantity of services used and prices paid per service. But spending on primary care actually rose for switchers; the reduction in spending came entirely from spending on specialists and on hospital care, including emergency rooms. We find that distance traveled falls for primary care and rises for tertiary care, although there is no evidence of a decrease in the quality of hospitals used by patients. The basic results hold even for the sickest patients, suggesting that limited network plans are saving money by directing care towards primary care and away from downstream spending. We find such savings only for those whose primary care physicians are included in limited network plans, however, suggesting that networks that are particularly restrictive on primary care access may fare less well than those that impose only stronger downstream restrictions.
Handle: RePEc:nbr:nberwo:20462
Template-Type: ReDIF-Paper 1.0
Title: Violence and the Formation of Hopelessness and Pessimistic Prospects of Upward Mobility in Colombia
Classification-JEL: D03; D84; O12
Author-Name: Andrés Moya
Author-Person: pmo442
Author-Name: Michael Carter
Author-Person: pca969
Note: DEV
Number: 20463
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20463
File-URL: http://www.nber.org/papers/w20463.pdf
File-Format: application/pdf
Abstract: We explore the impact of violence on perceived prospects of upward mobility. For a sample of victims of violence in Colombia, we bring together data on expected upward mobility, exposure to violence, and symptoms of psychological trauma. After controlling for material losses and current circumstances, we find that exposure to more severe violence leads victims’ perceived prospects of upward mobility to become increasingly hopeless. The estimated impacts are large: victims exposed to more severe violence expect that the likelihood of being in extreme poverty in the long-run is more than two times as high than those exposed to less severe violence. Additional evidence indicates that depression and psychological trauma mediate this result, identifying a channel by which these pessimistic expectations can become self-confirming. Together, these findings suggest the existence of a psychological poverty trap and the need to rethink strategies to assist the economic recovery of the victims of violence.
Handle: RePEc:nbr:nberwo:20463
Template-Type: ReDIF-Paper 1.0
Title: Do Required Minimum Distributions Matter? The Effect of the 2009 Holiday On Retirement Plan Distributions
Classification-JEL: H2; J14; J26
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: James Poterba
Author-Person: ppo19
Author-Name: David Richardson
Note: AG PE
Number: 20464
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20464
File-URL: http://www.nber.org/papers/w20464.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey R. Brown & James Poterba & David P. Richardson, 2016. "Do Required Minimum Distribution Rules Matter? The Effect of the 2009 Holiday on Retirement Plan Distributions," Journal of Public Economics, .
Publication-Status: published as Do Required Minimum Distribution Rules Matter? The Effect of the 2009 Holiday on Retirement Plan Distributions, Jeffrey Brown, James Poterba, David P. Richardson. in Personal Income Taxation and Household Behavior (TAPES), Gordon and Keuschnigg. 2016
Abstract: This paper investigates how the 2009 one-time suspension of the Required Minimum Distribution (RMD) rules associated with qualified retirement plans affected plan distributions at TIAA-CREF, a large retirement services provider. Using panel data on retirement plan participants at TIAA-CREF, we find that roughly one third of those who were affected by minimum distribution rules discontinued their distributions in 2009. The results also show relatively small differences in the suspension probability between those who had 2008 distributions equal to the RMD amount, and might be classified as facing a binding RMD constraint, and those who were taking distributions in excess of the RMD amount before the distribution holiday. The probability of suspension declines substantially with age and rises modestly with economic resources. We find that individuals taking monthly distributions are less likely to suspend distributions than those taking annual distributions, particularly at higher wealth levels. This pattern is consistent with those who choose monthly distributions being more likely to use their distributions to finance consumption. We supplement these results based on administrative record data on retirement plan participants with survey evidence on participant attitudes that affected decisions about suspending distributions. Our findings provide guidance on the revenue consequences of changing RMD rules and offer insights about the role of various behavioral considerations, such as inertia, in modeling distribution behavior.
Handle: RePEc:nbr:nberwo:20464
Template-Type: ReDIF-Paper 1.0
Title: Subsidies and the Persistence of Technology Adoption: Field Experimental Evidence from Mozambique
Classification-JEL: O13; O16; O33
Author-Name: Michael R. Carter
Author-Person: pca969
Author-Name: Rachid Laajaj
Author-Person: pla616
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV
Number: 20465
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20465
File-URL: http://www.nber.org/papers/w20465.pdf
File-Format: application/pdf
Abstract: We report the results of a randomized experiment testing impacts of subsidies for modern agricultural inputs in rural Mozambique. One-time provision of a voucher for fertilizer and improved seeds leads to substantial increases in fertilizer use, which persist through two subsequent agricultural seasons. Voucher receipt also leads to large, persistent increases in household agricultural production and market sales, per capita consumption, assets, durable good ownership, and housing improvements. Consistent with learning models of the adoption decision, we find positive treatment effects on farmers' estimated returns to the input package. We also document positive cross-household treatment spillovers: one's own fertilizer use rises in the number of social network members receiving vouchers. Our findings are consistent with theoretical models predicting persistence of impacts of temporary technology adoption subsidies, in particular due to learning effects.
Handle: RePEc:nbr:nberwo:20465
Template-Type: ReDIF-Paper 1.0
Title: Conservation Policies: Who Responds to Price and Who Responds to Prescription?
Classification-JEL: D12; H42; L51; L95; Q25
Author-Name: Casey J. Wichman
Author-Person: pwi342
Author-Name: Laura O. Taylor
Author-Person: pta310
Author-Name: Roger H. von Haefen
Author-Person: pvo149
Note: EEE
Number: 20466
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20466
File-URL: http://www.nber.org/papers/w20466.pdf
File-Format: application/pdf
Publication-Status: published as Wichman, Casey J. & Taylor, Laura O. & von Haefen, Roger H., 2016. "Conservation policies: Who responds to price and who responds to prescription?," Journal of Environmental Economics and Management, Elsevier, vol. 79(C), pages 114-134.
Abstract: The efficiency properties of price and non-price instruments for conservation in environmental policy are well understood. Yet, there is little evidence comparing the effectiveness of these instruments, especially when considering water resource management. We exploit a rich panel of residential water consumption to examine heterogeneous responses to both price and non-price conservation policies during times of drought while controlling for unobservable household characteristics. Our empirical models suggest that the burden of pricing policies fall disproportionately on low-income households and fail to reduce consumption among households who generally are large consumers of water. However, prescriptive policies such as restrictions on outdoor water use result in uniform responses across income classes while simultaneously targeting reductions from households with irrigation systems or historically high consumption.
Handle: RePEc:nbr:nberwo:20466
Template-Type: ReDIF-Paper 1.0
Title: Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872
Classification-JEL: H23; K11; N31; N91; O18; R3
Author-Name: Richard Hornbeck
Author-Name: Daniel Keniston
Note: DAE DEV EEE EFG LE PE
Number: 20467
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20467
File-URL: http://www.nber.org/papers/w20467.pdf
File-Format: application/pdf
Publication-Status: published as Richard Hornbeck & Daniel Keniston, 2017. "Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872," American Economic Review, American Economic Association, vol. 107(6), pages 1365-1398, June.
Abstract: Historical city growth, in the United States and worldwide, has required remarkable transformation of outdated durable buildings. Private land-use decisions may generate inefficiencies, however, due to externalities and various rigidities. This paper analyzes new plot-level data in the aftermath of the Great Boston Fire of 1872, estimating substantial economic gains from the created opportunity for widespread reconstruction. An important mechanism appears to be positive externalities from neighbors' reconstruction. Strikingly, gains from this opportunity for urban redevelopment were sufficiently large that increases in land values were comparable to the previous value of all buildings burned.
Handle: RePEc:nbr:nberwo:20467
Template-Type: ReDIF-Paper 1.0
Title: Incentive Pay and Bank Risk-Taking: Evidence from Austrian, German, and Swiss Banks
Classification-JEL: D22; G01; G20; G21; G38
Author-Name: Matthias Efing
Author-Name: Harald Hau
Author-Person: pha313
Author-Name: Patrick Kampkötter
Author-Person: pka1100
Author-Name: Johannes Steinbrecher
Note: IFM
Number: 20468
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20468
File-URL: http://www.nber.org/papers/w20468.pdf
File-Format: application/pdf
Publication-Status: published as Efing, Matthias & Hau, Harald & Kampkötter, Patrick & Steinbrecher, Johannes, 2015. "Incentive pay and bank risk-taking: Evidence from Austrian, German, and Swiss banks," Journal of International Economics, Elsevier, vol. 96(S1), pages S123-S140.
Publication-Status: published as Incentive Pay and Bank Risk-taking: Evidence from Austrian, German, and Swiss Banks, Matthias Efing, Harald Hau, Patrick Kampkötter, Johannes Steinbrecher. in NBER International Seminar on Macroeconomics 2014, Clarida, Frankel, Giavazzi, and Rey. 2015
Abstract: We use payroll data on 1.2 million bank employee years in the Austrian, German, and Swiss banking sector to identify incentive pay in the critical banking segments of treasury/capital market management and investment banking for 66 banks. We document an economically significant correlation of incentive pay with both the level and volatility of bank trading income-particularly for the pre-crisis period 2003--7 for which incentive pay was strongest. This result is robust if we instrument the bonus share in the capital markets divisions with the strength of incentive pay in unrelated bank divisions like retail banking. Moreover, pre-crisis incentive pay appears too strong for an optimal trade-off between trading income and risk which maximizes the NPV of trading income.
Handle: RePEc:nbr:nberwo:20468
Template-Type: ReDIF-Paper 1.0
Title: Poor Quality Drugs and Global Trade: A Pilot Study
Classification-JEL: D8; F14; F61; I1; L15
Author-Name: Roger Bate
Author-Name: Ginger Zhe Jin
Author-Name: Aparna Mathur
Author-Person: pma1162
Author-Name: Amir Attaran
Note: IO
Number: 20469
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20469
File-URL: http://www.nber.org/papers/w20469.pdf
File-Format: application/pdf
Publication-Status: published as Roger Bate & Ginger Zhe Jin & Aparna Mathur & Amir Attaran, 2016. "Poor-Quality Drugs and Global Trade: A Pilot Study," American Journal of Health Economics, vol 2(3), pages 373-398.
Abstract: Experts claim that some Indian drug manufacturers cut corners and make substandard drugs for markets with non-existent, under-developed or emerging regulatory oversight, notably Africa. This paper assesses the quality of 1470 antibiotic and tuberculosis drug samples that claim to be made in India and were sold in Africa, India, and five mid-income non-African countries. We find that 10.9% of those products fail a basic assessment of active pharmaceutical ingredients (API), and the majority of the failures are substandard (7%) as they contain some correct API but the amount of API is under-dosed. The distribution of these substandard products is not random: they are more likely to be found as unregistered products in Africa than in India or non-African countries. Since this finding is robust for manufacturer-drug fixed effects, one likely explanation is that Indian pharmaceutical firms and/or their export intermediaries do indeed differentiate drug quality according to the destination of consumption.
Handle: RePEc:nbr:nberwo:20469
Template-Type: ReDIF-Paper 1.0
Title: Do Larger Health Insurance Subsidies Benefit Patients or Producers? Evidence from Medicare Advantage
Classification-JEL: D4; H22; I11; I13; L1
Author-Name: Marika Cabral
Author-Name: Michael Geruso
Author-Name: Neale Mahoney
Note: AG EH IO PE
Number: 20470
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20470
File-URL: http://www.nber.org/papers/w20470.pdf
File-Format: application/pdf
Publication-Status: published as Marika Cabral & Michael Geruso & Neale Mahoney, 2018. "Do Larger Health Insurance Subsidies Benefit Patients or Producers? Evidence from Medicare Advantage," American Economic Review, vol 108(8), pages 2048-2087.
Abstract: A central question in the debate over privatized Medicare is whether increased government payments to private Medicare Advantage (MA) plans generate lower premiums for consumers or higher profits for producers. Using difference-in-differences variation brought about by a sharp legislative change, we find that MA insurers pass through 45% of increased payments in lower premiums and an additional 9% in more generous benefits. We show that advantageous selection into MA cannot explain this incomplete pass-through. Instead, our evidence suggests that market power is important, with premium pass-through rates of 13% in the least competitive markets and 74% in the most competitive.
Handle: RePEc:nbr:nberwo:20470
Template-Type: ReDIF-Paper 1.0
Title: Temporary Shocks and Persistent Effects in the Urban System: Evidence from British Cities after the U.S. Civil War
Classification-JEL: F14; N63; N93; R12
Author-Name: W. Walker Hanlon
Author-Person: pha1094
Note: DAE
Number: 20471
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20471
File-URL: http://www.nber.org/papers/w20471.pdf
File-Format: application/pdf
Publication-Status: published as Temporary Shocks and Persistent Effects in Urban Economies: Evidence from British Cities after the U.S. Civil War W. Walker Hanlon The Review of Economics and Statistics 2017 99:1, 67-79
Abstract: Urban economies are often heavily reliant on a small number of dominant industries, leaving them vulnerable to negative industry-specific shocks. This paper analyzes the long-run impacts of one such event: the large, temporary, and industry-specific shock to the British cotton textile industry caused by the U.S. Civil War (1861-1865), which dramatically reduced supplies of raw cotton. Because the British cotton textile industry was heavily concentrated in towns in Northwest England, I compare patterns in these cotton towns to other English cities. I find that the shock had a persistent negative effect on the level of city population lasting at least 35 years with no sign of diminishing. Decomposing the effect by industry, I show that the shock to cotton textiles was transmitted to other local firms, leading to increased bankruptcies and long-run reductions in employment. This transmission occurred primarily through the link to capital suppliers, such as machinery and metal-goods producers. Roughly half of the reduction in city-level employment growth was due to the impact on industries other than cotton textiles.
Handle: RePEc:nbr:nberwo:20471
Template-Type: ReDIF-Paper 1.0
Title: Sorting Between and Within Industries: A Testable Model of Assortative Matching
Classification-JEL: C1; E24; J24; J31
Author-Name: John M. Abowd
Author-Person: pab175
Author-Name: Francis Kramarz
Author-Person: pkr29
Author-Name: Sébastien Pérez-Duarte
Author-Person: ppe923
Author-Name: Ian M. Schmutte
Author-Person: psc351
Note: LS
Number: 20472
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20472
File-URL: http://www.nber.org/papers/w20472.pdf
File-Format: application/pdf
Publication-Status: published as John M. Abowd & Francis Kramarz & Sébastien Pérez-Duarte & Ian M. Schmutte, 2018. "Sorting Between and Within Industries: A Testable Model of Assortative Matching," Annals of Economics and Statistics, GENES, issue 129, pages 1-32.
Abstract: We test for sorting of workers between and within industrial sectors in a directed search model with coordination frictions. We fit the model to sector-specific vacancy and output data along with publicly-available statistics that characterize the distribution of worker and employer wage heterogeneity across sectors. Our empirical method is general and can be applied to a broad class of assignment models. The results indicate that industries are the loci of sorting-more productive workers are employed in more productive industries. The evidence confirms assortative matching can be present even when worker and employer components of wage heterogeneity are weakly correlated.
Handle: RePEc:nbr:nberwo:20472
Template-Type: ReDIF-Paper 1.0
Title: Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News
Classification-JEL: D2; D8; E20; J2
Author-Name: Cosmin Ilut
Author-Person: pil25
Author-Name: Matthias Kehrig
Author-Person: pke209
Author-Name: Martin Schneider
Author-Person: psc69
Note: EFG
Number: 20473
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20473
File-URL: http://www.nber.org/papers/w20473.pdf
File-Format: application/pdf
Publication-Status: published as Cosmin Ilut & Matthias Kehrig & Martin Schneider, 2018. "Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News," Journal of Political Economy, vol 126(5), pages 2011-2071.
Abstract: Concave hiring rules imply that firms respond more to bad shocks than to good shocks. They provide a unified explanation for several seemingly unrelated facts about employment growth in macro and micro data. In particular, they generate countercyclical movement in both aggregate conditional “macro” volatility and cross-sectional “micro” volatility, as well as negative skewness in the cross-section and in the time series at different levels of aggregation. Concave establishment-level responses of employment growth to TFP shocks estimated from Census data induce significant skewness, movements in volatility and amplification of bad aggregate shocks.
Handle: RePEc:nbr:nberwo:20473
Template-Type: ReDIF-Paper 1.0
Title: The Biocultural Origins of Human Capital Formation
Classification-JEL: J10; N30; O10
Author-Name: Oded Galor
Author-Person: pga46
Author-Name: Marc Klemp
Author-Person: pkl86
Note: DEV EFG
Number: 20474
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20474
File-URL: http://www.nber.org/papers/w20474.pdf
File-Format: application/pdf
Abstract: This research explores the biocultural origins of human capital formation. It presents the first evidence that moderate fecundity and thus predisposition towards investment in child quality was conducive for long-run reproductive success within the human species. Using an extensive genealogical record for nearly half a million individuals in Quebec from the sixteenth to the eighteenth centuries, the study explores the effect of fecundity on the number of descendants of early inhabitants in the subsequent four generations. The research exploits variation in the random component of the time interval between the date of first marriage and the first birth to establish that while higher fecundity is associated with a larger number of children, an intermediate level maximizes long-run reproductive success. Moreover, the observed hump-shaped effect of fecundity on long-run reproductive success reflects the negative effect of higher fecundity on the quality of each child. The finding further indicates that the optimal level of fecundity was below the population median, lending credence to the hypothesis that during the Malthusian epoch, the forces of natural selection favored individuals with lower fecundity and thus larger predisposition towards child quality, contributing to human capital formation, the onset of the demographic transition and the evolution of societies from an epoch of stagnation to sustained economic growth.
Handle: RePEc:nbr:nberwo:20474
Template-Type: ReDIF-Paper 1.0
Title: Constitutional Rights and Education: An International Comparative Study
Classification-JEL: I24; I28; K4; K49; O1; O38
Author-Name: Sebastian Edwards
Author-Person: ped3
Author-Name: Alvaro Garcia Marin
Author-Person: pga581
Note: IFM ITI
Number: 20475
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20475
File-URL: http://www.nber.org/papers/w20475.pdf
File-Format: application/pdf
Publication-Status: published as Edwards, Sebastian & Garcia Marin, Alvaro, 2015. "Constitutional rights and education: An international comparative study," Journal of Comparative Economics, Elsevier, vol. 43(4), pages 938-955.
Abstract: We investigate whether the inclusion of social rights in political constitutions affects social performance. More specifically, we analyze whether including the right to education in the constitution has been related to better "educational outcomes." We rely on data for 61 countries that participated in the 2012 PISA tests. Our results are strong and robust to the estimation technique: we find that there is no evidence that including the right to education in the constitution has been associated with higher test scores. The quality of education depends on socioeconomic, structural, and policy variables, such as expenditure per student, the teacher-pupil ratio, and families' background. When these covariates are excluded, the relation between the strength of constitutional educational rights and the quality of education is negative and statistically significant. These results are important for emerging countries that are discussing the adoption of new constitutions, such as Thailand and Chile.
Handle: RePEc:nbr:nberwo:20475
Template-Type: ReDIF-Paper 1.0
Title: Strategic News Releases in Equity Vesting Months
Classification-JEL: G14; G34
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Luis Goncalves-Pinto
Author-Name: Yanbo Wang
Author-Name: Moqi Xu
Author-Person: pgr720
Note: CF
Number: 20476
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20476
File-URL: http://www.nber.org/papers/w20476.pdf
File-Format: application/pdf
Publication-Status: published as Alex Edmans & Luis Goncalves-Pinto & Moqi Groen-Xu & Yanbo Wang, 2018. "Strategic News Releases in Equity Vesting Months," The Review of Financial Studies, vol 31(11), pages 4099-4141.
Abstract: We show that CEOs strategically time corporate news releases to coincide with months in which their equity vests. These vesting months are determined by equity grants made several years prior, and thus unlikely driven by the current information environment. CEOs reallocate news into vesting months, and away from prior and subsequent months. They release 5% more discretionary news in vesting months than prior months, but there is no difference for non-discretionary news. These news releases lead to favourable media coverage, suggesting they are positive in tone. They also generate a temporary run-up in stock prices and market liquidity, potentially resulting from increased investor attention or reduced information asymmetry. The CEO takes advantage of these effects by cashing out shortly after the news releases.
Handle: RePEc:nbr:nberwo:20476
Template-Type: ReDIF-Paper 1.0
Title: How Much do Existing Borrowers Value Microfinance? Evidence from an Experiment on Bundling Microcredit and Insurance
Classification-JEL: O12; O16; O19
Author-Name: Abhijit Banerjee
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Richard Hornbeck
Note: DEV EFG EH
Number: 20477
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20477
File-URL: http://www.nber.org/papers/w20477.pdf
File-Format: application/pdf
Publication-Status: published as Abhijit Banerjee & Esther Duflo & Richard Hornbeck, 2018. "How Much do Existing Borrowers Value Microfinance? Evidence from an Experiment on Bundling Microcredit and Insurance," Economica, vol 85(340), pages 671-700.
Abstract: Several recent randomized controlled trials have found only modest effects of microfinance on consumption and income. However, these studies by design estimate impacts on new clients, so these modest effects may only have been lower bounds on the gains for more-experienced borrowers and the longer-run potential for microfinance. We examine the causal impacts of microfinance on experienced borrowers, and these clients' valuation of their ongoing microfinance relationship. Our research design uses an episode during which a microfinance institution modestly increased their clients' fees in randomly selected villages in exchange for a mandatory health insurance policy (which turned out to be entirely useless due to administrative failures). Our first result is that this modest increase in fees led to a 22 percentage point (or 30%) decline in loan renewal in treatment villages, compared to control villages where the policy was not introduced. Using this randomly generated variation in microfinance participation among established microfinance borrowers, we find impacts of microfinance that are strikingly similar to the previous literature: neither business outcomes nor household consumption outcomes were affected, on average, for the most part. Consistent with some previous studies, there were some declines in an index of business outcomes and declines in durable goods purchases, but only for those clients who had a business before microfinance entered the village. By contrast, businesses that started after microfinance had entered the villages were unaffected in terms of business outcomes but enjoyed an increase in non-durable goods consumption. This heterogeneity in effects is consistent with a simple model in which durable goods are lumpy purchases. The high drop-out from microfinance further suggests that the net gains from microfinance are small for a substantial share of borrowers. Strikingly, those who had a business before microfinance are as likely to exit as other borrowers, despite suffering large losses in business earnings as a result, which raises the possibility of substantial unmeasured costs from running microfinance-funded businesses.
Handle: RePEc:nbr:nberwo:20477
Template-Type: ReDIF-Paper 1.0
Title: Do Star Performers Produce More Stars? Peer Effects and Learning in Elite Teams
Classification-JEL: J0; J24
Author-Name: Casey Ichniowski
Author-Name: Anne Preston
Note: LS
Number: 20478
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20478
File-URL: http://www.nber.org/papers/w20478.pdf
File-Format: application/pdf
Abstract: This study investigates the professional soccer industry to ask whether the talent of an individual's co-workers helps explain differences in the rate of human capital accumulation on the job. Data tracking national soccer team performance and the professional leagues their members play for are particularly well suited for developing convincing non-experimental evidence about these kinds of peer effects. The empirical results consistently show that performance improves more after an individual has been a member of an elite team than when he has been a member of lower level teams. The conclusion is borne out by a rich set of complementary data on: national team performance, player-level performance, performance of foreign players who joined elite teams after an exogenous shift in the number of foreign players participating on top club teams, performance of players on national teams in the year just before and the year just after they join an elite club team, and experiences of several national team players obtained through personal interviews.
Handle: RePEc:nbr:nberwo:20478
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Fluidity and Economic Performance
Classification-JEL: E24; J63; L23
Author-Name: Steven J. Davis
Author-Person: pda15
Author-Name: John Haltiwanger
Author-Person: pha231
Note: EFG LS PR
Number: 20479
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20479
File-URL: http://www.nber.org/papers/w20479.pdf
File-Format: application/pdf
Abstract: U.S. labor markets became much less fluid in recent decades. Job reallocation rates fell more than a quarter after 1990, and worker reallocation rates fell more than a quarter after 2000. The declines cut across states, industries and demographic groups defined by age, gender and education. Younger and less educated workers had especially large declines, as did the retail sector. A shift to older businesses, an aging workforce, and policy developments that suppress reallocation all contributed to fluidity declines. Drawing on previous work, we argue that reduced fluidity has harmful consequences for productivity, real wages and employment. To quantify the effects of reallocation intensity on employment, we estimate regression models that exploit low frequency variation over time within states, using state-level changes in population composition and other variables as instruments. We find large positive effects of worker reallocation rates on employment, especially for young workers and the less educated. Similar estimates obtain when dropping data from the Great Recession and its aftermath. These results suggest the U.S. economy faced serious impediments to high employment rates well before the Great Recession, and that sustained high employment is unlikely to return without restoring labor market fluidity.
Handle: RePEc:nbr:nberwo:20479
Template-Type: ReDIF-Paper 1.0
Title: Asset Management Contracts and Equilibrium Prices
Classification-JEL: D86; G12; G14; G18; G23
Author-Name: Andrea M. Buffa
Author-Person: pbu90
Author-Name: Dimitri Vayanos
Author-Person: pva498
Author-Name: Paul Woolley
Note: AP
Number: 20480
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20480
File-URL: http://www.nber.org/papers/w20480.pdf
File-Format: application/pdf
Publication-Status: published as Andrea M. Buffa & Dimitri Vayanos & Paul Woolley, 2022. "Asset Management Contracts and Equilibrium Prices," Journal of Political Economy, vol 130(12), pages 3146-3201.
Abstract: We derive equilibrium asset prices when fund managers deviate from benchmark indices to exploit noise-trader induced distortions but fund investors constrain these deviations. Because constraints force managers to buy assets that they underweight when these assets appreciate, overvalued assets have high volatility, and the risk-return relationship becomes inverted. Noise traders bias prices upward because constraints make it harder for managers to underweight overvalued assets, which have high volatility, than to overweight undervalued ones. We endogenize the constraints based on investors' uncertainty about managers' skill, and show that asset-pricing implications can be significant even for moderate numbers of unskilled managers.
Handle: RePEc:nbr:nberwo:20480
Template-Type: ReDIF-Paper 1.0
Title: Contractual Freedom and the Evolution of Corporate Control in Britain, 1862 to 1929
Classification-JEL: G3; K22; N23; N24; N43; N44
Author-Name: Timothy W. Guinnane
Author-Person: pgu29
Author-Name: Ron Harris
Author-Name: Naomi R. Lamoreaux
Note: DAE
Number: 20481
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20481
File-URL: http://www.nber.org/papers/w20481.pdf
File-Format: application/pdf
Abstract: British general incorporation law granted companies an extraordinary degree of contractual freedom to craft their own governance rules. It provided companies with a default set of articles of association, but incorporators were free to reject any part or all of the model and write their own rules instead. We study the uses to which incorporators put this flexibility by examining the articles of association filed by random samples of companies from the late nineteenth and early twentieth centuries, as well as by a sample of companies whose securities traded publicly. One might expect that companies that aimed to raise capital from external investors would adopt shareholder-friendly corporate governance rules. We find, however, that regardless of size or whether their securities traded on the market, most companies wrote articles that shifted power from shareholders to directors. We also find that there was little pressure—from the government, the financial press, shareholders, or the market—to adopt governance structures that afforded minority investors greater protection. Although there were certainly abuses, it seems that incorporators made an implicit bargain with investors that offered them the chance to earn high returns in exchange for their passivity. These findings have implications for the literature on corporate control, for the “law-and-finance” argument that corporate governance in common-law countries was more shareholder friendly than in civil-law countries, and for the debate about entrepreneurial failure in Britain during the late nineteenth and early twentieth centuries.
Handle: RePEc:nbr:nberwo:20481
Template-Type: ReDIF-Paper 1.0
Title: Deal with the Devil: The Successes and Limitations of Bureaucratic Reform in India
Classification-JEL: O1; O2; O43
Author-Name: Iqbal Dhaliwal
Author-Name: Rema Hanna
Author-Person: pha883
Note: DEV PE
Number: 20482
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20482
File-URL: http://www.nber.org/papers/w20482.pdf
File-Format: application/pdf
Publication-Status: published as Iqbal Dhaliwal, Rema Hanna, The devil is in the details: The successes and limitations of bureaucratic reform in India, Journal of Development Economics, Volume 124, 2017, Pages 1-21, ISSN 0304-3878, https://doi.org/10.1016/j.jdeveco.2016.08.008.
Abstract: Employing a technological solution to monitor the attendance of public-sector health care workers in India resulted in a 15 percent increase in the attendance of the medical staff. Health outcomes improved, with a 16 percent increase in the delivery of infants by a doctor and a 26 percent reduction in the likelihood of infants born under 2500 grams. However, women in treatment areas substituted away from the newly monitored health centers towards delivery in the (unmonitored) larger public hospitals and private hospitals. Several explanations may help explain this shift: better triage by the more present health care staff; increased patients' perception of absenteeism in the treatment health centers; and the ability of staff in treatment areas to gain additional rents by moving women to their private practices and by siphoning off the state-sponsored entitlements that women would normally receive at the health center at the time of delivery. Despite initiating the reform on their own, there was a low demand among all levels of government-state officials, local level bureaucrats, and locally-elected bodies--to use the better quality attendance data to enforce the government's human resource policies due to a fear of generating discord among the staff. These fears were not entirely unfounded: staff at the treatment health centers expressed greater dissatisfaction at their jobs and it was also harder to hire new nurses, lab technicians and pharmacists at the treatment health centers after the intervention. Thus, this illustrates the implicit deal that governments make on non-monetary dimensions--truancy, allowance of private practices--to retain staff at rural outposts in the face of limited budgets and staff shortages.
Handle: RePEc:nbr:nberwo:20482
Template-Type: ReDIF-Paper 1.0
Title: Self-regulation and Health
Classification-JEL: I1
Author-Name: Henry Saffer
Author-Person: psa935
Note: EH
Number: 20483
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20483
File-URL: http://www.nber.org/papers/w20483.pdf
File-Format: application/pdf
Abstract: The purposes of this paper are to measure self-regulation, to investigate whether self-regulation differs across different health related choices, to estimate its effect on health choices and to estimate the effect of self-regulation on health-demographic gradients. The theory and empirical approach to self-regulation employed in this paper relies on a broad literature which includes economics, psychology and experimental studies. In addition, a novel empirical approach is employed to create a single measure of self-regulation that can vary across domains. A single measure of self-regulation in place of a set of proxy variables allows for the study of how self-regulation is correlated across different health choices. The results show that there is a high correlation in self-regulation for smoking, drinking, drug use, crime and gambling, but that self-regulation for BMI (body mass index) and obesity are different than self-regulation for the other outcomes. The results show that self-regulation has a significant negative effect on all choices. The results also show that self-regulation generally reduces the effect of education on health but education retains a negative and significant relationship with all outcomes. The research presented in this paper also raises questions about the effect of omitted individual heterogeneity in measuring the effects of public policy.
Handle: RePEc:nbr:nberwo:20483
Template-Type: ReDIF-Paper 1.0
Title: The Role of Dynamic Renegotiation and Asymmetric Information in Financial Contracting
Classification-JEL: D82; G21; G23; G32; K12
Author-Name: Michael R. Roberts
Author-Person: pro361
Note: CF
Number: 20484
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20484
File-URL: http://www.nber.org/papers/w20484.pdf
File-Format: application/pdf
Publication-Status: published as Michael R. Roberts, 2015. "The role of dynamic renegotiation and asymmetric information in financial contracting," Journal of Financial Economics, vol 116(1), pages 61-81.
Abstract: Using data from SEC filings, I show that the typical bank loan is renegotiated five times, or every nine months. The pricing, maturity, amount, and covenants are all significantly modified during each renegotiation, whose timing is governed by the financial health of the contracting parties and uncertainty regarding the borrowers' credit quality. The relative importance of these factors depends on the duration of the lending relationship. I interpret these results in light of financial contracting theories and emphasize that renegotiation is an important mechanism for dynamically completing contracts and for allocating control rights ex post.
Handle: RePEc:nbr:nberwo:20484
Template-Type: ReDIF-Paper 1.0
Title: Polanyi's Paradox and the Shape of Employment Growth
Classification-JEL: J23; J24; J31; O3
Author-Name: David Autor
Author-Person: pau9
Note: LS
Number: 20485
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20485
File-URL: http://www.nber.org/papers/w20485.pdf
File-Format: application/pdf
Abstract: In 1966, the philosopher Michael Polanyi observed, "We can know more than we can tell... The skill of a driver cannot be replaced by a thorough schooling in the theory of the motorcar; the knowledge I have of my own body differs altogether from the knowledge of its physiology." Polanyi's observation largely predates the computer era, but the paradox he identified--that our tacit knowledge of how the world works often exceeds our explicit understanding--foretells much of the history of computerization over the past five decades. This paper offers a conceptual and empirical overview of this evolution. I begin by sketching the historical thinking about machine displacement of human labor, and then consider the contemporary incarnation of this displacement--labor market polarization, meaning the simultaneous growth of high-education, high-wage and low-education, low-wages jobs--a manifestation of Polanyi's paradox. I discuss both the explanatory power of the polarization phenomenon and some key puzzles that confront it. I then reflect on how recent advances in artificial intelligence and robotics should shape our thinking about the likely trajectory of occupational change and employment growth. A key observation of the paper is that journalists and expert commentators overstate the extent of machine substitution for human labor and ignore the strong complementarities. The challenges to substituting machines for workers in tasks requiring adaptability, common sense, and creativity remain immense. Contemporary computer science seeks to overcome Polanyi's paradox by building machines that learn from human examples, thus inferring the rules that we tacitly apply but do not explicitly understand.
Handle: RePEc:nbr:nberwo:20485
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Effect of the Zero Lower Bound on Medium- and Longer-Term Interest Rates
Classification-JEL: E43; E52; E62
Author-Name: Eric T. Swanson
Author-Person: psw16
Author-Name: John C. Williams
Author-Person: pwi23
Note: AP EFG ME
Number: 20486
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20486
File-URL: http://www.nber.org/papers/w20486.pdf
File-Format: application/pdf
Publication-Status: published as Eric T. Swanson & John C. Williams, 2014. "Measuring the Effect of the Zero Lower Bound on Medium- and Longer-Term Interest Rates," American Economic Review, American Economic Association, vol. 104(10), pages 3154-85, October.
Abstract: The federal funds rate has been at the zero lower bound for over four years, since December 2008. According to standard macroeconomic models, this should have greatly reduced the effectiveness of monetary policy and increased the efficacy of fiscal policy. However, these models also imply that asset prices and private-sector decisions depend on the entire path of expected future short-term interest rates, not just the current level of the overnight rate. Thus, interest rates with a year or more to maturity are arguably more relevant for asset prices and the economy, and it is unclear to what extent those yields have been affected by the zero lower bound. In this paper, we measure the effects of the zero lower bound on interest rates of any maturity by comparing the sensitivity of those interest rates to macroeconomic news when short-term interest rates were very low to that during normal times. We find that yields on Treasury securities with a year or more to maturity were surprisingly responsive to news throughout 2008-10, suggesting that monetary and fiscal policy were likely to have been about as effective as usual during this period. Only beginning in late 2011 does the sensitivity of these yields to news fall closer to zero. We offer two explanations for our findings: First, until late 2011, market participants expected the funds rate to lift off from zero within about four quarters, minimizing the effects of the zero bound on medium- and longer-term yields. Second, the Fed's unconventional policy actions seem to have helped offset the effects of the zero bound on medium- and longer-term rates.
Handle: RePEc:nbr:nberwo:20486
Template-Type: ReDIF-Paper 1.0
Title: Are Dynamic Vickrey Auctions Practical?: Properties of the Combinatorial Clock Auction
Classification-JEL: D44; D47; D82; L51; L96
Author-Name: Jonathan Levin
Author-Person: ple318
Author-Name: Andrzej Skrzypacz
Author-Person: psk11
Note: IO
Number: 20487
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20487
File-URL: http://www.nber.org/papers/w20487.pdf
File-Format: application/pdf
Abstract: The combinatorial clock auction is becoming increasingly popular for large-scale spectrum awards and other uses, replacing more traditional ascending or clock auctions. We describe some surprising properties of the auction, including a wide range of ex post equilibria with demand expansion, demand reduction and predation. These outcomes arise because of the way the auction separates allocation and pricing, so that bidders are asked to make decisions that cannot possibly affect their own auction outcome. Our results obtain in a standard homogenous good setting where bidders have well-behaved linear demand curves, and suggest some practical difficulties with dynamic implementations of the Vickrey auction.
Handle: RePEc:nbr:nberwo:20487
Template-Type: ReDIF-Paper 1.0
Title: Fixed Costs and the Product Market Treatment of Preference Minorities
Classification-JEL: L13; L82
Author-Name: Steven Berry
Author-Person: pbe18
Author-Name: Alon Eizenberg
Author-Person: pei44
Author-Name: Joel Waldfogel
Author-Person: pwa46
Note: IO LE
Number: 20488
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20488
File-URL: http://www.nber.org/papers/w20488.pdf
File-Format: application/pdf
Publication-Status: published as Steven Berry & Alon Eizenberg & Joel Waldfogel, 2016. "Fixed Costs and the Product Market Treatment of Preference Minorities," The Journal of Industrial Economics, vol 64(3), pages 466-493.
Abstract: It is well documented that, in the presence of substantial fixed costs, markets offer preference majorities more variety than preference minorities. This fact alone, however, does not demonstrate the market outcome is in any way biased against preference minorities. In this paper, we clarify the sense in which the market outcome may in fact be biased against preference minorities, and we provide some conditions for such bias to occur. We then estimate the degree of bias in a particular industry using an empirical model of entry into radio broadcasting with two types of listeners, a preference majority and a minority, and the two types of stations targeting those respective listeners. Listening model estimates are used to infer fixed costs, which can then be used to find optimal station configurations as well as the welfare weights on different groups that rationalize the current configuration. The ensuing estimates reveal welfare weights that are 2-3 times higher for whites than blacks, and 1.5-2 times higher for non-Hispanic than Hispanic, listeners. The difference between the black and Hispanic results arises from the different patterns of importing and exporting: Hispanics listen to non-Hispanic-targeted stations more than blacks listen to white-targeted stations; and whites listen to black-targeted stations more than non-Hispanics listen to Spanish-language stations. Researchers and policy makers might add product markets to labor markets and other contexts that warrant attention for disparate treatment of minorities.
Handle: RePEc:nbr:nberwo:20488
Template-Type: ReDIF-Paper 1.0
Title: Taxation and Top Incomes in Canada
Classification-JEL: D31; H21; H24
Author-Name: Kevin Milligan
Author-Person: pmi14
Author-Name: Michael Smart
Author-Person: psm6
Note: PE
Number: 20489
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20489
File-URL: http://www.nber.org/papers/w20489.pdf
File-Format: application/pdf
Publication-Status: published as Kevin Milligan & Michael Smart, 2015. "Taxation and top incomes in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 48(2), pages 655-681, May.
Publication-Status: published as Kevin Milligan & Michael Smart, 2015. "Taxation and top incomes in Canada," Canadian Journal of Economics/Revue canadienne d'économique, vol 48(2), pages 655-681.
Abstract: We estimate the elasticity of reported income with respect to tax rates for high earners using subnational variation across Canadian provinces. We argue this allows for better identification of tax elasticities than the existing literature. We find that elasticities of reported income at the provincial level are large for incomes in the top one percent, but small for lower earners. There are strong indications that the response happens both through earned and capital income. While our estimated elasticities are large, changes in tax rates cannot explain much of the overall long-run trend of higher income concentration in Canada.
Handle: RePEc:nbr:nberwo:20489
Template-Type: ReDIF-Paper 1.0
Title: Banks, Liquidity Management and Monetary Policy
Classification-JEL: E0; E4; E51; E52; G01; G1; G11; G18; G20; G21
Author-Name: Javier Bianchi
Author-Person: pbi159
Author-Name: Saki Bigio
Author-Person: pbi247
Note: EFG IFM ME
Number: 20490
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20490
File-URL: http://www.nber.org/papers/w20490.pdf
File-Format: application/pdf
Publication-Status: published as Javier Bianchi & Saki Bigio, 2022. "Banks, Liquidity Management, and Monetary Policy," Econometrica, Econometric Society, vol. 90(1), pages 391-454, January.
Abstract: We develop a tractable model of banks' liquidity management and the credit channel of monetary policy. Banks finance loans by issuing demand deposits. Loans are illiquid, and transfers of deposits across banks must be settled with reserves in a frictional over the counter market. To mitigate the risk of large withdrawals of deposits, banks hold a precautionary buffer of reserves and government bonds. We show how monetary policy affects the banking system by altering the tradeoff between profiting from lending and incurring greater liquidity risk. We consider two applications of the theory, one involving the connection between the implementation of monetary policy and pass-through to loan rates, and another considering a quantitative decomposition behind the collapse in bank lending during the 2008 financial crisis. Our analysis underscores the importance of liquidity frictions and the functioning of interbank markets for the conduct of monetary policy.
Handle: RePEc:nbr:nberwo:20490
Template-Type: ReDIF-Paper 1.0
Title: Fertility and Financial Development: Evidence from U.S. Counties in the 19th Century
Classification-JEL: N21; N31; N91; R2
Author-Name: Alberto Basso
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Author-Name: David Cuberes
Author-Person: pcu61
Note: DAE
Number: 20491
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20491
File-URL: http://www.nber.org/papers/w20491.pdf
File-Format: application/pdf
Abstract: The old-age security hypothesis establishes that one important reason why parents have a large offspring is to ensure that they will receive financial support from them in old age. In this paper we use data on fertility and financial development in 19th century U.S. to indirectly test this theory. In particular, we explore whether more developed local financial markets reduce the incentives for families to have a large offspring. After controlling for several factors likely to create cross-county variation in fertility levels and for potential spatial correlation, we find that the presence of a bank and the degree of financial development in a given county are strongly associated with lower children-to-women ratios. We find compelling evidence for the old-age security hypothesis.
Handle: RePEc:nbr:nberwo:20491
Template-Type: ReDIF-Paper 1.0
Title: Patents and the Global Diffusion of New Drugs
Classification-JEL: I15; I18; K19; L65; O31; O33; O34; O38
Author-Name: Iain M. Cockburn
Author-Person: pco166
Author-Name: Jean O. Lanjouw
Author-Name: Mark Schankerman
Note: PR
Number: 20492
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20492
File-URL: http://www.nber.org/papers/w20492.pdf
File-Format: application/pdf
Publication-Status: published as Iain M. Cockburn & Jean O. Lanjouw & Mark Schankerman, 2016. "Patents and the Global Diffusion of New Drugs," American Economic Review, American Economic Association, vol. 106(1), pages 136-64, January.
Abstract: This paper studies how patent rights and price regulation affect how fast new drugs are launched in different countries, using newly constructed data on launches of 642 new drugs in 76 countries for the period 1983-2002, and information on the duration and content of patent and price control regimes. Price regulation strongly delays launch, while longer and more extensive patent protection accelerates it. Health policy institutions, and economic and demographic factors that make markets more profitable, also speed up diffusion. The effects are robust to using instruments to control for endogeneity of policy regimes. The results point to an important role for patents and other policy choices in driving the diffusion of new innovations.
Handle: RePEc:nbr:nberwo:20492
Template-Type: ReDIF-Paper 1.0
Title: Leaders and Followers: Perspectives on the Nordic Model and the Economics of Innovation
Classification-JEL: E61; O3; O31; O32; O33; O34; O38; O51; O52
Author-Name: Joseph E. Stiglitz
Note: PR
Number: 20493
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20493
File-URL: http://www.nber.org/papers/w20493.pdf
File-Format: application/pdf
Publication-Status: published as Stiglitz, Joseph E., 2015. "Leaders and followers: Perspectives on the Nordic model and the economics of innovation," Journal of Public Economics, Elsevier, vol. 127(C), pages 3-16.
Abstract: This paper is an exercise in comparative institutional analysis, asking what kinds of arrangements most facilitate innovation. After identifying pervasive market failures in innovation, it explains why those associated with the Nordic model may be particularly conducive to innovation, and demonstrates that, in general, the optimal policies of the leader should differ from that of followers, but that both leaders and followers can benefit from active government policies (like industrial policies, public investments, and systems of social protection), not only leading to more innovation, but ensuring that more innovative activity is directed in ways that lead to the enhancement of living standards. It concludes by constructing a simple model in which knowledge flows slowly across national borders but moves easily within borders. We show there is a leadership-followership equilibrium, in which some countries are leaders, others are followers. Contrary to Solow's analysis, there need not be convergence. Focusing on technological progress that is a result of learning by doing, where learning occurs within the industrial sector but spills over to other sectors, we demonstrate the optimality of policies to expand the industrial sector beyond that which prevails in competitive equilibrium.
Handle: RePEc:nbr:nberwo:20493
Template-Type: ReDIF-Paper 1.0
Title: The Bond Market: An Inflation-Targeter's Best Friend
Classification-JEL: E52; E58
Author-Name: Andrew K. Rose
Author-Person: pro71
Note: IFM
Number: 20494
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20494
File-URL: http://www.nber.org/papers/w20494.pdf
File-Format: application/pdf
Abstract: This paper explores the relationship between inflation and the existence of a publicly-traded, long-maturity, nominal, domestic-currency bond market. Bond holders suffer from inflation and could be a potent anti-inflationary force; I ask whether their presence is apparent empirically. I use a panel data approach, examining the difference in inflation before and after the introduction of a bond market. My primary focus is on countries with inflation targeting regimes, though I also examine countries with hard fixed exchange rates and other monetary regimes. Inflation-targeting countries with a bond market experience inflation approximately three to four percentage points lower than those without a bond market. This effect is economically and statistically significant; it is also insensitive to a variety of estimation strategies, including using political and fiscal instrumental variables. The existence of a bond market has little effect on inflation in other monetary regimes, as do indexed or foreign-denominated bonds.
Handle: RePEc:nbr:nberwo:20494
Template-Type: ReDIF-Paper 1.0
Title: Trade Models, Trade Elasticities, and the Gains from Trade
Classification-JEL: F10; F11; F14; F17
Author-Name: Ina Simonovska
Author-Person: psi395
Author-Name: Michael E. Waugh
Author-Person: pwa234
Note: ITI
Number: 20495
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20495
File-URL: http://www.nber.org/papers/w20495.pdf
File-Format: application/pdf
Abstract: We argue that the welfare gains from trade in new models with micro-level margins exceed those in frameworks without these margins. Theoretically, we show that for fixed trade elasticity, different models predict identical trade flows, but different patterns of micro-level price variation. Thus, given data on trade flows and micro-level prices, different models have different implied trade elasticities and welfare gains. Empirically, models with extensive or variable mark-up margins yield significantly larger welfare gains. The results are robust to incorporating into the estimation moment conditions that use trade-flow and tariff data, which imply a common trade elasticity across models.
Handle: RePEc:nbr:nberwo:20495
Template-Type: ReDIF-Paper 1.0
Title: Household Debt: Facts, Puzzles, Theories, and Policies
Classification-JEL: D03; D14; D18; D83; D91; E21; E32; G01; G02; G11; G21; G23; G28; R31
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: AG LE
Number: 20496
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20496
File-URL: http://www.nber.org/papers/w20496.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Zinman, 2015. "Household Debt: Facts, Puzzles, Theories, and Policies," Annual Review of Economics, vol 7(1), pages 251-276.
Abstract: Borrowing decisions affect most households, with large stakes and implications for subfields as varied as macroeconomics and industrial organization. I review theoretical and empirical work on household debt: its prevalence, level, growth, and composition, as well as various measures of consumer choice and market (in)efficiency, elasticities, and prices, including new evidence on how borrowing heterogeneity affects the distribution of the opportunity cost of consumption. I also discuss opportunities and challenges in policy evaluation. A key takeaway is that puzzles outstrip stylized facts, and I highlight numerous avenues for further research.
Handle: RePEc:nbr:nberwo:20496
Template-Type: ReDIF-Paper 1.0
Title: Why Do People Give? Testing Pure and Impure Altruism
Classification-JEL: C92; H41
Author-Name: Mark Ottoni-Wilhelm
Author-Person: pwi112
Author-Name: Lise Vesterlund
Author-Person: pve25
Author-Name: Huan Xie
Author-Person: pxi56
Note: PE
Number: 20497
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20497
File-URL: http://www.nber.org/papers/w20497.pdf
File-Format: application/pdf
Publication-Status: published as Mark Ottoni-Wilhelm & Lise Vesterlund & Huan Xie, 2017. "Why Do People Give? Testing Pure and Impure Altruism," American Economic Review, vol 107(11), pages 3617-3633.
Abstract: The extant experimental design to investigate warm glow and altruism elicits a single measure of crowd-out. Not recognizing that impure altruism predicts crowd-out is a function of giving-by-others, this design's power to reject pure altruism varies with the level of giving-by-others, and it cannot identify the strength of warm glow and altruism preferences. These limitations are addressed with a new design that elicits crowd-out at a low and at a high level of giving-by-others. Consistent with impure altruism we find decreasing crowd-out as giving-by-others increases. However warm glow is weak in our experiment and altruism largely explains why people give.
Handle: RePEc:nbr:nberwo:20497
Template-Type: ReDIF-Paper 1.0
Title: International Trade and Intertemporal Substitution
Classification-JEL: E0; F0; F1; F4
Author-Name: Fernando Leibovici
Author-Person: ple692
Author-Name: Michael E. Waugh
Author-Person: pwa234
Note: EFG IFM ITI
Number: 20498
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20498
File-URL: http://www.nber.org/papers/w20498.pdf
File-Format: application/pdf
Publication-Status: published as Fernando Leibovici & Michael E. Waugh, 2017. "International Trade and Intertemporal Substitution," Federal Reserve Bank of St. Louis, Working Papers, vol 2017(004).
Publication-Status: published as Leibovici, Fernando & Waugh, Michael E., 2019. "International trade and intertemporal substitution," Journal of International Economics, Elsevier, vol. 117(C), pages 158-174.
Publication-Status: published as Fernando Leibovici & Michael E. Waugh, 2019. "International trade and intertemporal substitution," Journal of International Economics, vol 117, pages 158-174.
Abstract: This paper studies the dynamics of international trade flows at business cycle frequencies. We show that introducing dynamic considerations into an otherwise standard model of trade can account for several puzzling features of trade flows at business cycle frequencies. Our insight is that because international trade is time-intensive, variation in the rate at which agents are willing to substitute across time affects how trade volumes respond to changes in output and prices. We formalize this idea and calibrate our model to match key features of U.S. data. We find that, in contrast to standard static models of international trade, our model is quantitatively consistent with salient features of U.S. cyclical import fluctuations. We also find that our model accounts for two-thirds of the peak-to-trough decline in imports during the 2008-2009 recession.
Handle: RePEc:nbr:nberwo:20498
Template-Type: ReDIF-Paper 1.0
Title: Should Hospitals Keep Their Patients Longer? The Role of Inpatient Care in Reducing Post-Discharge Mortality
Classification-JEL: I10; I13; I18; L38
Author-Name: Ann P. Bartel
Author-Name: Carri W. Chan
Author-Name: Song-Hee (Hailey) Kim
Note: EH PE
Number: 20499
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20499
File-URL: http://www.nber.org/papers/w20499.pdf
File-Format: application/pdf
Publication-Status: published as Ann P. Bartel, Carri W. Chan, Song-Hee Kim (2019) "Should Hospitals Keep Their Patients Longer? The Role of Inpatient Care in Reducing Postdischarge Mortality." Management Science 66(6):2326-2346.
Abstract: The Centers for Medicare & Medicaid Services (CMS) and the National Quality Forum have endorsed 30-day mortality rates as important indicators of hospital quality. Concerns have been raised, however, as to whether post-discharge mortality rates are reasonable measures of hospital quality as they consider the frequency of an event that occurs after a patient is discharged and no longer under the watch and care of the hospital. Using a large dataset comprised of all hospital encounters of every Medicare patient from 2000 to 2011 and an instrumental variables methodology to address the potential endogeneity bias in hospital length-of-stay, we find evidence that 30-day mortality rates are appropriate measures of hospital quality. For patients with diagnoses of Pneumonia or Acute Myocardial Infarction, an additional day in the hospital could decrease 30-day mortality rates by up to 12.8%. Moreover, we find that, from a social planner's perspective, the gains achieved in reducing mortality rates far exceed the cost of keeping these patients in the hospital for an additional day.
Handle: RePEc:nbr:nberwo:20499
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Attribute-Based Regulation: Theory and Evidence from Fuel-Economy Standards
Classification-JEL: H23; L62; Q48
Author-Name: Koichiro Ito
Author-Person: pit23
Author-Name: James M. Sallee
Author-Person: psa1187
Note: EEE PE
Number: 20500
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20500
File-URL: http://www.nber.org/papers/w20500.pdf
File-Format: application/pdf
Publication-Status: published as Koichiro Ito & James M. Sallee, 2018. "The Economics of Attribute-Based Regulation: Theory and Evidence from Fuel Economy Standards," The Review of Economics and Statistics, vol 100(2), pages 319-336.
Abstract: This paper analyzes "attribute-based regulations," in which regulatory compliance depends upon some secondary attribute that is not the intended target of the regulation. For example, in many countries fuel-economy standards mandate that vehicles have a certain fuel economy, but heavier or larger vehicles are allowed to meet a lower standard. Such policies create perverse incentives to distort the attribute upon which compliance depends. We develop a theoretical framework to predict how actors will respond to attribute-based regulations and to characterize the welfare implications of these responses. To test our theoretical predictions, we exploit quasi-experimental variation in Japanese fuel economy regulations, under which fuel-economy targets are downward-sloping step functions of vehicle weight. Our bunching analysis reveals large distortions to vehicle weight induced by the policy. We then leverage panel data on vehicle redesigns to empirically investigate the welfare implications of attribute-basing, including both potential benefits and likely costs. This latter analysis concerns a "double notched" policy; vehicles are eligible for an incentive if they are above a step function in the two-dimensional fuel economy by weight space. We develop a procedure for analyzing the response to such policies that is new to the literature.
Handle: RePEc:nbr:nberwo:20500
Template-Type: ReDIF-Paper 1.0
Title: The Great Mortgaging: Housing Finance, Crises, and Business Cycles
Classification-JEL: C14; C38; C52; E32; E37; E44; E51; G01; G21; N10; N20
Author-Name: Òscar Jordà
Author-Person: pjo46
Author-Name: Moritz Schularick
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE EFG ME
Number: 20501
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20501
File-URL: http://www.nber.org/papers/w20501.pdf
File-Format: application/pdf
Publication-Status: published as Òscar Jordà & Moritz Schularick & Alan M. Taylor, 2016. "The great mortgaging: housing finance, crises and business cycles," Economic Policy, Volume 31, Issue 85, Pp. 107 - 152
Abstract: This paper unveils a new resource for macroeconomic research: a long-run dataset covering disaggregated bank credit for 17 advanced economies since 1870. The new data show that the share of mortgages on banks' balance sheets doubled in the course of the 20th century, driven by a sharp rise of mortgage lending to households. Household debt to asset ratios have risen substantially in many countries. Financial stability risks have been increasingly linked to real estate lending booms which are typically followed by deeper recessions and slower recoveries. Housing finance has come to play a central role in the modern macroeconomy.
Handle: RePEc:nbr:nberwo:20501
Template-Type: ReDIF-Paper 1.0
Title: Growth, Trade, and Inequality
Classification-JEL: D33; F12; F16; O41
Author-Name: Gene M. Grossman
Author-Person: pgr21
Author-Name: Elhanan Helpman
Author-Person: phe205
Note: EFG ITI
Number: 20502
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20502
File-URL: http://www.nber.org/papers/w20502.pdf
File-Format: application/pdf
Publication-Status: published as Grossman, G. M. and Helpman, E. (2018), Growth, Trade, and Inequality. Econometrica, 86: 37-83. doi:10.3982/ECTA14518
Abstract: We introduce firm and worker heterogeneity into a model of innovation-driven endogenous growth. Individuals who differ in ability sort into either a research sector or a manufacturing sector that produces differentiated goods. Each research project generates a new variety of the differentiated product and a random technology for producing it. Technologies differ in complexity and productivity, and technological sophistication is complementary to worker ability. We study the co-determination of growth and income inequality in both the closed and open economy, as well as the spillover effects of policy and conditions in one country to outcomes in others.
Handle: RePEc:nbr:nberwo:20502
Template-Type: ReDIF-Paper 1.0
Title: Cities and the Environment
Classification-JEL: Q4; Q5; R1; R3; R4
Author-Name: Matthew E. Kahn
Author-Person: pka41
Author-Name: Randall Walsh
Author-Person: pwa222
Note: EEE PE POL
Number: 20503
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20503
File-URL: http://www.nber.org/papers/w20503.pdf
File-Format: application/pdf
Abstract: This paper surveys recent literature examining the relationship between environmental amenities and urban growth. In this survey, we focus on the role of both exogenous attributes such as climate and coastal access as well as endogenous attributes such as local air pollution and green space. A city's greenness is a function of both its natural beauty and is an emergent property of the types of households and firms that locate within its borders and the types of local and national regulations enacted by voters. We explore four main issues related to sustainability and environmental quality in cities. First, we introduce a household locational choice model to highlight the role that environmental amenities play in shaping where households locate within a city. We then analyze how ongoing suburbanization affects the carbon footprint of cities. Third, we explore how the system of cities is affected by urban environmental amenity dynamics and we explore the causes of these dynamics. Fourth, we review the recent literature on the private costs and benefits of investing in "green" buildings. Throughout this survey, we pay careful attention to empirical research approaches and highlight what are open research questions. While much of the literature focuses on cities in the developed world, we anticipate that similar issues will be of increased interest in developing nation's cities.
Handle: RePEc:nbr:nberwo:20503
Template-Type: ReDIF-Paper 1.0
Title: Public Goods and Ethnic Diversity: Evidence from Deforestation in Indonesia
Classification-JEL: H0; O1
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Caterina Gennaioli
Author-Name: Stefania Lovo
Note: DEV POL
Number: 20504
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20504
File-URL: http://www.nber.org/papers/w20504.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Caterina Gennaioli & Stefania Lovo, 2019. "Public Goods and Ethnic Diversity: Evidence from Deforestation in Indonesia," Economica, vol 86(341), pages 32-66.
Abstract: This paper shows that the level of deforestation in Indonesia is positively related to the degree of ethnic fractionalization at the district level. To identify a casual relation we exploit the exogenous timing of variations in the level of ethnic heterogeneity due to the creation of new jurisdictions. We provide evidence consistent with a lower control of politicians, through electoral punishment, in more ethnically fragmented districts. Our results bring a new perspective on the political economy of deforestation. They are consistent with the literature on (under) provision of public goods and social capital in ethnically diverse societies and suggest that when the underlying communities are ethnically fractionalized decentralisation can reduce deforestation by delegating powers to more homogeneous communities.
Handle: RePEc:nbr:nberwo:20504
Template-Type: ReDIF-Paper 1.0
Title: Finishing Degrees and Finding Jobs: U.S. Higher Education and the Flow of Foreign IT Workers
Classification-JEL: I23; J24; J61
Author-Name: John Bound
Author-Person: pbo406
Author-Name: Murat Demirci
Author-Name: Gaurav Khanna
Author-Person: pkh511
Author-Name: Sarah Turner
Author-Person: ptu103
Note: ED LS
Number: 20505
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20505
File-URL: http://www.nber.org/papers/w20505.pdf
File-Format: application/pdf
Publication-Status: published as Finishing Degrees and Finding Jobs: US Higher Education and the Flow of Foreign IT Workers, John Bound, Murat Demirci, Gaurav Khanna, and Sarah Turner. in Innovation Policy and the Economy, Volume 15, Kerr, Lerner, and Stern. 2015
Abstract: The rising importance of Information Technology (IT) occupations in the U.S. economy has been accompanied by an expansion in the representation of high-skill foreign-born IT workers. To illustrate, the share of foreign born in IT occupations increased from about 15.5% to about 31.5% between 1993 and 2010, with this increased representation particularly marked among those younger than 45. This analysis focuses on understanding the role that U.S. higher education and immigration policy play in this transformation. A degree from a U.S. college/university is an important pathway to participation in the U.S. IT labor market, and the foreign-born who obtain U.S. degree credentials are particularly likely to remain in the U.S. Many workers from abroad, including countries like India and China where wages in IT fields lag those in the U.S., receive a substantial return to finding employment in the U.S., even as temporary work visa policies may limit their entry. Limits on temporary work visas, which are particularly binding for those educated abroad, likely increase the attractiveness of degree attainment from U.S. colleges and universities as a pathway to explore opportunities in the U.S labor market in IT.
Handle: RePEc:nbr:nberwo:20505
Template-Type: ReDIF-Paper 1.0
Title: Demographics and Entrepreneurship
Classification-JEL: J11; L26; M51
Author-Name: James Liang
Author-Name: Hui Wang
Author-Name: Edward P. Lazear
Author-Person: pla64
Note: IO LS
Number: 20506
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20506
File-URL: http://www.nber.org/papers/w20506.pdf
File-Format: application/pdf
Publication-Status: published as James Liang & Hui Wang & Edward P. Lazear, 2018. "Demographics and Entrepreneurship," Journal of Political Economy, vol 126(S1), pages S140-S196.
Abstract: Entrepreneurship requires energy and creativity as well as business acumen. Some factors that contribute to entrepreneurship may decline with age, but business skills increase with experience in high level positions. Having too many older workers in society slows entrepreneurship. Older workers do not possess the advantages of youth, but more significant is that when older workers occupy key positions they may block younger workers from acquiring business skills. A formal theoretical structure is presented and tested using the Global Entrepreneurship Monitor data. The results imply that a one-standard deviation decrease in the median age of a country increases the rate of new business formation by 2.5 percentage points, which is about forty percent of the mean rate. Furthermore, older societies have lower rates of entrepreneurship at every age.
Handle: RePEc:nbr:nberwo:20506
Template-Type: ReDIF-Paper 1.0
Title: The Federal Reserve's Abandonment of its 1923 Principles
Classification-JEL: E42; E58; N1
Author-Name: Julio J. Rotemberg
Author-Person: pro30
Note: DAE ME
Number: 20507
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20507
File-URL: http://www.nber.org/papers/w20507.pdf
File-Format: application/pdf
Abstract: This paper studies the persistence and some of the consequences of the eventual abandonment by the FOMC of the principles embedded in the Federal Reserve's Tenth Annual Report of 1923. The three principles I focus on are 1) the discouraging of speculative lending by commercial banks, 2) the desire to meet the credit needs of business and 3) the preference of a focus on credit over a focus on monetary aggregates. I show that the first two principles remained important in FOMC deliberations until the mid-1960's. After this, the FOMC also spent less time discussing the composition of bank loans.
Handle: RePEc:nbr:nberwo:20507
Template-Type: ReDIF-Paper 1.0
Title: Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America
Classification-JEL: J2; L6; O4; Q43; R1
Author-Name: Hunt Allcott
Author-Person: pal171
Author-Name: Daniel Keniston
Note: DAE EEE IO LS PR
Number: 20508
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20508
File-URL: http://www.nber.org/papers/w20508.pdf
File-Format: application/pdf
Publication-Status: published as Hunt Allcott & Daniel Keniston, 2018. "Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America," The Review of Economic Studies, vol 85(2), pages 695-731.
Abstract: Do natural resources benefit producer economies, or is there a “Natural Resource Curse,”0 perhaps as the crowd-out of manufacturing productivity spillovers reduces long-term growth? We combine new data on oil and gas endowments with Census of Manufactures microdata to estimate how oil and gas booms affect local economies in the United States. Local wages rise during oil and gas booms, but manufacturing is not crowded out—in fact, the sector grows overall, driven by upstream and locally-traded subsectors. Tradable manufacturing subsectors do contract during resource booms, but their productivity is unaffected, so there is no evidence of foregone local learning-by-doing effects. Over the full 1969-2014 sample, a county with one standard deviation additional oil and gas endowment averaged about one percent higher real wages. Overall, the results provide evidence against a Natural Resource Curse within the United States.
Handle: RePEc:nbr:nberwo:20508
Template-Type: ReDIF-Paper 1.0
Title: Misclassification in Binary Choice Models
Classification-JEL: C25; C81; H53
Author-Name: Bruce Meyer
Author-Person: pme273
Author-Name: Nikolas Mittag
Note: AG CH EH LS PE
Number: 20509
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20509
File-URL: http://www.nber.org/papers/w20509.pdf
File-Format: application/pdf
Publication-Status: published as Bruce D. Meyer & Nikolas Mittag, 2017. "Misclassification in binary choice models," Journal of Econometrics, vol 200(2), pages 295-311.
Abstract: While measurement error in the dependent variable does not lead to bias in some well-known cases, with a binary dependent variable the bias can be pronounced. In binary choice, Hausman, Abrevaya and Scott-Morton (1998) show that the marginal effects in the observed data differ from the true ones in proportion to the sum of the misclassification probabilities when the errors are unrelated to covariates. We provide two sets of results that extend this analysis. First, we derive the asymptotic bias in parametric models allowing for correlation of the errors with both observables and unobservables. Second, we examine the bias in a prototypical application in two different datasets, using a variety of methods that differ in the amount of knowledge that is assumed about the error process. Our application is receipt of food stamps, the largest and most widely received welfare program in the U.S. Monte Carlo results and our empirical application show that the bias formulas accurately describe the bias in finite samples. Our results indicate that the robustness of signs and relative magnitudes of coefficients implied by the earlier proportionality results does not necessarily extend to estimated Probit coefficients, and does not apply when errors are correlated with covariates. Using administrative records linked to survey data as validation data, we evaluate estimators that are consistent under misclassification. Estimators based on the assumption that misclassification is independent of the covariates are sensitive to their functional form assumptions and aggravate the bias if the conditional independence assumption is invalid in all cases we examine. On the other hand, estimators that allow misreporting to be correlated with the covariates perform well if an accurate model of misreporting or validation data are available. Estimators that incorporate more information about the errors, such as aggregate underreporting rates, tend to be more robust to misspecification of the misreporting model.
Handle: RePEc:nbr:nberwo:20509
Template-Type: ReDIF-Paper 1.0
Title: Real Exchange Rates and Sectoral Productivity in the Eurozone
Classification-JEL: F31; F41
Author-Name: Martin Berka
Author-Person: pbe194
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Charles Engel
Author-Person: pen14
Note: IFM
Number: 20510
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20510
File-URL: http://www.nber.org/papers/w20510.pdf
File-Format: application/pdf
Publication-Status: published as Martin Berka & Michael B. Devereux & Charles Engel, 2018. "Real Exchange Rates and Sectoral Productivity in the Eurozone," American Economic Review, vol 108(6), pages 1543-1581.
Abstract: We investigate the link between real exchange rates and sectoral total factor productivity measures for countries in the Eurozone. Real exchange rate patterns closely accord with an amended Balassa-Samuelson interpretation, both in cross-section and time series. We construct a sticky price dynamic general equilibrium model to generate a cross-section and time series of real exchange rates that can be directly compared to the data. Under the assumption of a common currency, estimates from simulated regressions are very similar to the empirical estimates for the Eurozone. Our findings contrast with previous studies that have found little relationship between productivity levels and the real exchange rate among high-income countries, but those studies have included country pairs which have a floating nominal exchange rate.
Handle: RePEc:nbr:nberwo:20510
Template-Type: ReDIF-Paper 1.0
Title: The Impact of No Child Left Behind's Accountability Sanctions on School Performance: Regression Discontinuity Evidence from North Carolina
Classification-JEL: I2
Author-Name: Thomas Ahn
Author-Person: pah101
Author-Name: Jacob Vigdor
Author-Person: pvi23
Note: ED
Number: 20511
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20511
File-URL: http://www.nber.org/papers/w20511.pdf
File-Format: application/pdf
Abstract: Comparisons of schools that barely meet or miss criteria for adequate yearly progress (AYP) reveal that some sanctions built into the No Child Left Behind accountability regime exert positive impacts on students. Estimates indicate that the strongest positive effects associate with the ultimate sanction: leadership and management changes associated with school restructuring. We find suggestive incentive effects in schools first entering the NCLB sanction regime, but no significant effects of intermediate sanctions. Further analysis shows that gains in sanctioned schools are concentrated among low-performing students, with the exception of gains from restructuring which are pervasive. We find no evidence that schools achieve gains among low-performing students by depriving high-performing students of resources.
Handle: RePEc:nbr:nberwo:20511
Template-Type: ReDIF-Paper 1.0
Title: Permission to Exist
Classification-JEL: L11; L22
Author-Name: Martin C. Byford
Author-Name: Joshua S. Gans
Author-Person: pga42
Note: IO PR
Number: 20512
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20512
File-URL: http://www.nber.org/papers/w20512.pdf
File-Format: application/pdf
Abstract: We provide a new model that generates persistent performance differences amongst seemingly similar enterprises. Our model provides a mechanism whereby efficient incumbent rivals can give permission for an inefficient firm to exist in the presence of efficient entrants. We demonstrate that, in a repeated game, an efficient incumbent has a unilateral incentive to establish a relational contract that softens price competition to either strengthen the inefficient firm in a war of attrition that emerges post-entry or reduce the value to the inefficient firm of selling its position to entrants. The paper provides conditions under which that equilibrium exists and derives a number of empirical predictions as implications of the model. It is demonstrated that performance differences are likely to be associated with stability in the identity of firms in the market.
Handle: RePEc:nbr:nberwo:20512
Template-Type: ReDIF-Paper 1.0
Title: On the Ethnic Origins of African Development Chiefs and Pre-colonial Political Centralization
Classification-JEL: O10; O40; O43; Z1; Z13
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Author-Name: Elias Papaioannou
Author-Person: ppa701
Note: DEV EFG POL
Number: 20513
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20513
File-URL: http://www.nber.org/papers/w20513.pdf
File-Format: application/pdf
Publication-Status: published as ACAD MANAGE PERSPECT February 1, 2015 vol. 29 no. 1 32-71
Abstract: We report on recent findings of a fruitful research agenda that explores the importance of ethnic-specific traits in shaping African development. First, using recent surveys from Sub-Saharan African countries, we document that individuals identify with their ethnic group as often as with the nation pointing to the salience of ethnicity. Second, we focus on the various historical and contemporary functions of tribal leaders (chiefs) and illustrate their influence on various aspects of the economy and the polity. Third, we elaborate on a prominent dimension of ethnicity, that of the degree of complexity of pre-colonial political organization. Building on insights from the African historiography, we review recent works showing a strong association between pre-colonial centralization and contemporary comparative development both across and within countries. We also document that the strong link between pre-colonial political centralization and regional development -as captured by satellite images of light density at night- is particularly strong in areas outside the vicinity of the capitals, where due to population mixing and the salience of national institutions ethnic traits play a lesser role. Overall, our evidence is supportive to theories and narratives on the presence of a "dual" economic and institutional environment in Africa.
Handle: RePEc:nbr:nberwo:20513
Template-Type: ReDIF-Paper 1.0
Title: Appropriability Mechanisms, Innovation and Productivity: Evidence from the UK
Classification-JEL: L25; O30; O34
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Vania Sena
Note: IO PR
Number: 20514
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20514
File-URL: http://www.nber.org/papers/w20514.pdf
File-Format: application/pdf
Publication-Status: forthcoming in Economics of Innovation and New Technology
Abstract: We use an extended version of the well-established Crepon, Duguet and Mairesse model (1998) to model the relationship between appropriability mechanisms, innovation and firm-level productivity. We enrich this model in several ways. First, we consider different types of innovation spending and study the differences in estimates when innovation spending (rather than R&D spending) is used to predict innovation in the CDM model. Second, we assume that a firm simultaneously innovates and chooses among different appropriability methods (formal or informal) to protect the innovation. Finally, in the third stage, we estimate the impact of the innovation output conditional on the choice of appropriability mechanisms on firms' productivity. We find that firms that innovate and rate formal methods for the protection of Intellectual Property (IP) highly are more productive than other firms, but that the same does not hold in the case of informal methods for the protection of a firm's IP, except possibly for large firms as opposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.
Handle: RePEc:nbr:nberwo:20514
Template-Type: ReDIF-Paper 1.0
Title: Risk Corridors and Reinsurance in Health Insurance Marketplaces: Insurance for Insurers
Classification-JEL: I11; I13
Author-Name: Timothy J. Layton
Author-Person: pla866
Author-Name: Thomas G. McGuire
Author-Name: Anna D. Sinaiko
Note: EH
Number: 20515
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20515
File-URL: http://www.nber.org/papers/w20515.pdf
File-Format: application/pdf
Publication-Status: published as Timothy J. Layton & Thomas G. McGuire & Anna D. Sinaiko, 2016. "Risk Corridors and Reinsurance in Health Insurance Marketplaces: Insurance for Insurers," American Journal of Health Economics, vol 2(1), pages 66-95.
Abstract: In order to encourage entry and lower prices, most regulated markets for health insurance include policies that seek to reduce the uncertainty faced by insurers. In addition to risk adjustment of premiums paid to plans, the Health Insurance Marketplaces established by the Affordable Care Act implement reinsurance and risk corridors. Reinsurance limits insurer costs associated with specific individuals, while risk corridors protect against aggregate losses. Both tighten the insurer's distribution of expected costs. This paper considers the economic costs and consequences of reinsurance and risk corridors. Drawing a parallel to individual insurance principles first described by Arrow (1963) and Zeckhauser (1970), we first discuss the optimal insurance policy for insurers. Then, we simulate the insurer's cost distribution under reinsurance and risk corridors using health care utilization data for a group of individuals likely to enroll in Marketplace plans from the Medical Expenditure Panel Survey. We compare reinsurance and risk corridors in terms of insurer risk reduction and incentives for cost containment, finding that one-sided risk corridors achieve more risk reduction for a given level of cost containment incentives than both reinsurance and two-sided risk corridors. We also find that the ACA policies being implemented in the Marketplaces (a mix of reinsurance and two-sided risk corridor policies) substantially limit insurer risk but that they are outperformed by a simpler one-sided risk corridor policy according to our measures of insurer risk and incentives.
Handle: RePEc:nbr:nberwo:20515
Template-Type: ReDIF-Paper 1.0
Title: Strategic Trading in Informationally Complex Environments
Classification-JEL: D53; D82; D84; G12; G14
Author-Name: Nicolas S. Lambert
Author-Name: Michael Ostrovsky
Author-Person: pos32
Author-Name: Mikhail Panov
Note: AP
Number: 20516
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20516
File-URL: http://www.nber.org/papers/w20516.pdf
File-Format: application/pdf
Publication-Status: published as Nicolas S. Lambert & Michael Ostrovsky & Mikhail Panov, 2018. "Strategic Trading in Informationally Complex Environments," Econometrica, Econometric Society, vol. 86(4), pages 1119-1157, July.
Abstract: We study trading behavior and the properties of prices in informationally complex markets. Our model is based on the single-period version of the linear-normal framework of Kyle (1985). We allow for essentially arbitrary correlations among the random variables involved in the model: the value of the traded asset, the signals of strategic traders and competitive market makers, and the demand from liquidity traders. We show that there always exists a unique linear equilibrium, characterize it analytically, and illustrate its properties in a series of examples. We then use this characterization to study the informational efficiency of prices as the number of strategic traders becomes large. If liquidity demand is positively correlated (or uncorrelated) with the asset value, then prices in large markets aggregate all available information. If liquidity demand is negatively correlated with the asset value, then prices in large markets aggregate all information except that contained in liquidity demand.
Handle: RePEc:nbr:nberwo:20516
Template-Type: ReDIF-Paper 1.0
Title: Reconstructing Macroeconomic Theory to Manage Economic Policy
Classification-JEL: E00; E12; E24; E5; G01
Author-Name: Joseph E. Stiglitz
Note: EFG ME
Number: 20517
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20517
File-URL: http://www.nber.org/papers/w20517.pdf
File-Format: application/pdf
Publication-Status: published as Fruitful Economics Papers in honor of and by Jean-Paul Fitoussi, Chapter 1
Abstract: Macroeconomics has not done well in recent years: The standard models didn't predict the Great Recession; and even said it couldn't happen. After the bubble burst, the models did not predict the full consequences. The paper traces the failures to the attempts, beginning in the 1970s, to reconcile macro and microeconomics, by making the former adopt the standard competitive micro-models that were under attack even then, from theories of imperfect and asymmetric information, game theory, and behavioral economics. The paper argues that any theory of deep downturns has to answer these questions: What is the source of the disturbances? Why do seemingly small shocks have such large effects? Why do deep downturns last so long? Why is there such persistence, when we have the same human, physical, and natural resources today as we had before the crisis? The paper presents a variety of hypotheses which provide answers to these questions, and argues that models based on these alternative assumptions have markedly different policy implications, including large multipliers. It explains why the apparent liquidity trap today is markedly different from that envisioned by Keynes in the Great Depression, and why the Zero Lower Bound is not the central impediment to the effectiveness of monetary policy in restoring the economy to full employment.
Handle: RePEc:nbr:nberwo:20517
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy Effectiveness in China: Evidence from a FAVAR Model
Classification-JEL: C38; E43; E52
Author-Name: John Fernald
Author-Person: pfe43
Author-Name: Mark M. Spiegel
Author-Person: psp18
Author-Name: Eric T. Swanson
Author-Person: psw16
Note: EFG IFM ME
Number: 20518
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20518
File-URL: http://www.nber.org/papers/w20518.pdf
File-Format: application/pdf
Publication-Status: published as Fernald, John G. & Spiegel, Mark M. & Swanson, Eric T., 2014. "Monetary policy effectiveness in China: Evidence from a FAVAR model," Journal of International Money and Finance, Elsevier, vol. 49(PA), pages 83-103.
Abstract: We use a broad set of Chinese economic indicators and a dynamic factor model framework to estimate Chinese economic activity and inflation as latent variables. We incorporate these latent variables into a factor-augmented vector autoregression (FAVAR) to estimate the effects of Chinese monetary policy on the Chinese economy. A FAVAR approach is particularly well-suited to this analysis due to concerns about Chinese data quality, a lack of a long history for many series, and the rapid institutional and structural changes that China has undergone. We find that increases in bank reserve requirements reduce economic activity and inflation, consistent with previous studies. In contrast to much of the literature, however, we find that central-bank-determined changes in Chinese interest rates also have substantial impacts on economic activity and inflation, while other measures of changes in credit conditions, such as shocks to M2 or lending levels, do not once other policy variables are taken into account. Overall, our results indicate that the monetary policy transmission channels in China have moved closer to those of Western market economies.
Handle: RePEc:nbr:nberwo:20518
Template-Type: ReDIF-Paper 1.0
Title: Incumbency Advantage in Non-Democracies
Classification-JEL: D72; D82; H00
Author-Name: Georgy Egorov
Author-Person: peg15
Author-Name: Konstantin Sonin
Author-Person: pso47
Note: POL
Number: 20519
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20519
File-URL: http://www.nber.org/papers/w20519.pdf
File-Format: application/pdf
Abstract: In elections that take place in a less-than-perfect democracy, incumbency advantages are different from those in mature democracies. The incumbent can prevent credible challengers from running, organize vote fraud, or even physically eliminate his main opponents. At the same time, formally winning the election does not guarantee staying in power. We present a unified model of elections and mass protests where the purpose of competitive elections is to reveal information about the relative popularity of the incumbent and the opposition. Citizens are heterogenous in their attitudes toward the dictator, and these individual preferences serve as private signals about the aggregate distribution of preferences; this ensures a unique equilibrium for any information the incumbent may reveal. We show that the most competent or popular dictators run in competitive elections, mediocre ones prevent credible opponents from running or cancel elections, and the least competent ones use outright repressions. A strong opposition makes competitive elections more likely but also increases the probability of repression. A totalitarian regime, where repression is cheaper, will have more repression, but even in the absence of repression, competitive elections will be rarer. A crueler, say, military, regime, where protesting is costly, makes repression less likely and, surprisingly, competitive elections more likely.
Handle: RePEc:nbr:nberwo:20519
Template-Type: ReDIF-Paper 1.0
Title: Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection
Classification-JEL: J22; K35
Author-Name: Will Dobbie
Author-Name: Jae Song
Author-Person: pso277
Note: LS LE
Number: 20520
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20520
File-URL: http://www.nber.org/papers/w20520.pdf
File-Format: application/pdf
Publication-Status: published as Will Dobbie & Jae Song, 2015. "Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection," American Economic Review, American Economic Association, vol. 105(3), pages 1272-1311, March.
Abstract: Consumer bankruptcy is one of the largest social insurance programs in the United States, but little is known about its impact on debtors. We use 500,000 bankruptcy filings matched to administrative tax and foreclosure data to estimate the impact of Chapter 13 bankruptcy protection on subsequent outcomes. Exploiting the random assignment of bankruptcy filings to judges, we find that Chapter 13 protection increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points. These results come primarily from the deterioration of outcomes among dismissed filers, not gains by granted filers.
Handle: RePEc:nbr:nberwo:20520
Template-Type: ReDIF-Paper 1.0
Title: Immigration, International Collaboration, and Innovation: Science and Technology Policy in the Global Economy
Classification-JEL: F22; I25; O15; O33
Author-Name: Richard B. Freeman
Author-Person: pfr23
Note: ED PR
Number: 20521
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20521
File-URL: http://www.nber.org/papers/w20521.pdf
File-Format: application/pdf
Publication-Status: published as Immigration, International Collaboration, and Innovation: Science and Technology Policy in the Global Economy, Richard B. Freeman. in Innovation Policy and the Economy, Volume 15, Kerr, Lerner, and Stern. 2015
Abstract: Globalization of scientific and technological knowledge has reduced the US share of world scientific activity; increased the foreign-born proportion of scientists and engineers in US universities and in the US labor market; and led to greater US scientific collaborations with other countries. China's massive investments in university education and R&D has in particular made it a special partner for the US in scientific work. These developments have substantial implications for US science and technology policy. This paper discusses several policies that U.S. policy makers might consider in responding to the changing global world of science and technology. These include aligning immigration policies more closely to the influx of international students; granting fellowships to students working on turning scientific and technological advances into commercial innovations; and requiring firms with R&D tax credits or other government R&D funding to develop "impact plans" to use their new knowledge to produce innovative products or processes.
Handle: RePEc:nbr:nberwo:20521
Template-Type: ReDIF-Paper 1.0
Title: Remittance Responses to Temporary Discounts: A Field Experiment among Central American Migrants
Classification-JEL: F24; J61; O15
Author-Name: Kate Ambler
Author-Person: pam141
Author-Name: Diego Aycinena
Author-Person: pay58
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV
Number: 20522
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20522
File-URL: http://www.nber.org/papers/w20522.pdf
File-Format: application/pdf
Abstract: We study the impacts on remittances of offering migrants temporary discounts on remittance transaction fees. We randomly assigned migrants from El Salvador and Guatemala 10-week remittance transaction fee discounts, and assess impacts using administrative transaction data and a post-experiment survey. Temporary discounts lead to substantial increases in the number of transactions and total amount remitted during the discount period. Surprisingly, these increases persist up to 20 weeks after expiration of the discount. We find no evidence that the discounts cause migrants to shift remittances from other remittance channels, or to send remittances on behalf of other migrants. These findings are consistent with naïveté on the part of migrants regarding remittance recipients' reference-dependent preferences.
Handle: RePEc:nbr:nberwo:20522
Template-Type: ReDIF-Paper 1.0
Title: The Bidder Exclusion Effect
Classification-JEL: C10; D44; L10; L13; L40
Author-Name: Dominic Coey
Author-Person: pco755
Author-Name: Bradley Larsen
Author-Person: pla525
Author-Name: Kane Sweeney
Note: IO TWP
Number: 20523
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20523
File-URL: http://www.nber.org/papers/w20523.pdf
File-Format: application/pdf
Publication-Status: published as Dominic Coey & Bradley Larsen & Kane Sweeney, 2019. "The bidder exclusion effect," The RAND Journal of Economics, vol 50(1), pages 93-120.
Abstract: We introduce a simple and robust approach to answering two key questions in empirical auction analysis: discriminating between models of entry and quantifying the revenue gains from improving auction design. The approach builds on Bulow and Klemperer (1996), connecting their theoretical results to empirical work. It applies in a broad range of information settings and auction formats without requiring instruments or estimation of a complex structural model. We demonstrate the approach using US timber and used-car auction data.
Handle: RePEc:nbr:nberwo:20523
Template-Type: ReDIF-Paper 1.0
Title: Non-Legal-Tender Paper Money: The Structure and Performance of Maryland's Bills of Credit, 1767-1775
Classification-JEL: E31; E42; E51; N11; N21; N41
Author-Name: Jim Celia
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 20524
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20524
File-URL: http://www.nber.org/papers/w20524.pdf
File-Format: application/pdf
Publication-Status: published as James Celia and Farley Grubb, "Non-Legal-Tender Paper Money: The Structure and Performance of Maryland's Bills of Credit, 1767-75," ECONOMIC HISTORY REVIEW, 69, no. 4, (Nov. 2016), pp. 1132-1156.
Abstract: Maryland's non-legal-tender paper money emissions between 1765 and 1775 are reconstructed to determine the quantities outstanding and their redemption dates, providing a substantial correction to the literature. Over 80 percent of this paper money's current market value was expected real asset present value and under 20 percent was liquidity premium. It was primarily a real barter asset and not a fiat currency. The liquidity premium was positively related to the amount of paper money per capita in circulation. This paper money traded below face value only due to time-discounting and not depreciation. Past scholars have simply confused time-discounting with depreciation.
Handle: RePEc:nbr:nberwo:20524
Template-Type: ReDIF-Paper 1.0
Title: Why is Infant Mortality Higher in the US than in Europe?
Classification-JEL: I0; I14
Author-Name: Alice Chen
Author-Name: Emily Oster
Author-Person: pos39
Author-Name: Heidi Williams
Author-Person: pwi239
Note: AG CH EH PE
Number: 20525
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20525
File-URL: http://www.nber.org/papers/w20525.pdf
File-Format: application/pdf
Publication-Status: published as Chen, Alice, Emily Oster, and Heidi Williams. 2016. "Why Is Infant Mortality Higher in the United States Than in Europe?" American Economic Journal: Economic Policy, 8 (2): 89-124.
Abstract: The US has higher infant mortality than peer countries. In this paper, we combine micro-data from the US with similar data from four European countries to investigate this US infant mortality disadvantage. The US disadvantage persists after adjusting for potential differential reporting of births near the threshold of viability. While the importance of birth weight varies across comparison countries, relative to all comparison countries the US has similar neonatal (<1 month) mortality but higher postneonatal (1-12 months) mortality. We document similar patterns across Census divisions within the US. The postneonatal mortality disadvantage is driven by poor birth outcomes among lower socioeconomic status individuals.
Handle: RePEc:nbr:nberwo:20525
Template-Type: ReDIF-Paper 1.0
Title: International Financial Integration and Crisis Contagion
Classification-JEL: D52; F36; F44; G11; G15
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Changhua Yu
Author-Person: pyu151
Note: IFM
Number: 20526
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20526
File-URL: http://www.nber.org/papers/w20526.pdf
File-Format: application/pdf
Publication-Status: published as Michael B Devereux & Changhua Yu, 2020. "International Financial Integration and Crisis Contagion," The Review of Economic Studies, vol 87(3), pages 1174-1212.
Abstract: International financial integration helps to diversify risk but also may increase the trans- mission of crises across countries. We provide a quantitative analysis of this trade-off in a two-country general equilibrium model with endogenous portfolio choice and collateral con- straints. Collateral constraints bind occasionally, depending upon the state of the economy and levels of inherited debt. The analysis allows for different degrees of financial integration, moving from financial autarky to bond market integration and equity market integration. Fi- nancial integration leads to a significant increase in global leverage, doubles the probability of balance sheet crises for any one country, and dramatically increases the degree of 'contagion' across countries. Outside of crises, the impact of financial integration on macro aggregates is relatively small. But the impact of a crisis with integrated international financial markets is much less severe than that under financial market autarky. Thus, a trade-off emerges between the probability of crises and the severity of crises. Financial integration can raise or lower welfare, depending on the scale of macroeconomic risk. In particular, in a low risk environment, the increased leverage resulting from financial integration can reduce welfare of investors.
Handle: RePEc:nbr:nberwo:20526
Template-Type: ReDIF-Paper 1.0
Title: Precautionary Saving of Chinese and U.S. Households
Classification-JEL: E21; F4
Author-Name: Horag Choi
Author-Person: pch335
Author-Name: Steven Lugauer
Author-Person: plu182
Author-Name: Nelson C. Mark
Author-Person: pma186
Note: DEV IFM ME
Number: 20527
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20527
File-URL: http://www.nber.org/papers/w20527.pdf
File-Format: application/pdf
Publication-Status: published as HORAG CHOI & STEVEN LUGAUER & NELSON C. MARK, 2017. "Precautionary Saving of Chinese and U.S. Households," Journal of Money, Credit and Banking, vol 49(4), pages 635-661.
Abstract: We employ a model of precautionary saving to study why household saving rates are so high in China and so low in the US. The use of recursive preferences gives a convenient decomposition of saving into precautionary and non precautionary components. This decomposition indicates that over 80 percent of China's saving rate and nearly all of the US saving arises from the precautionary motive. The difference in the income growth rate between China and the US is vastly more important for explaining saving rate differences than differences in income risk. We estimate the preference parameters and find that Chinese and US households are more similar in their attitude toward risk than in their intertemporal substitutability of consumption.
Handle: RePEc:nbr:nberwo:20527
Template-Type: ReDIF-Paper 1.0
Title: The Value of Postsecondary Credentials in the Labor Market: An Experimental Study
Classification-JEL: I21; J24
Author-Name: David J. Deming
Author-Person: pde497
Author-Name: Noam Yuchtman
Author-Person: pyu185
Author-Name: Amira Abulafi
Author-Name: Claudia Goldin
Author-Person: pgo601
Author-Name: Lawrence F. Katz
Author-Person: pka266
Note: DAE ED LS
Number: 20528
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20528
File-URL: http://www.nber.org/papers/w20528.pdf
File-Format: application/pdf
Publication-Status: published as David J. Deming & Noam Yuchtman & Amira Abulafi & Claudia Goldin & Lawrence F. Katz, 2016. "The Value of Postsecondary Credentials in the Labor Market: An Experimental Study," American Economic Review, American Economic Association, vol. 106(3), pages 778-806, March.
Abstract: We study employers’ perceptions of the value of postsecondary degrees using a field experiment. We randomly assign the sector and selectivity of institutions to fictitious resumes and apply to real vacancy postings for business and health jobs on a large online job board. We find that a business bachelor’s degree from a for-profit “online” institution is 22 percent less likely to receive a callback than one from a non-selective public institution. In applications to health jobs, we find that for-profit credentials receive fewer callbacks unless the job requires an external quality indicator such as an occupational license.
Handle: RePEc:nbr:nberwo:20528
Template-Type: ReDIF-Paper 1.0
Title: The Impatient Salesperson and the Delegation of Pricing Authority
Classification-JEL: D4; M5
Author-Name: Edward P. Lazear
Author-Person: pla64
Note: LS IO
Number: 20529
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20529
File-URL: http://www.nber.org/papers/w20529.pdf
File-Format: application/pdf
Publication-Status: published as Edward P. Lazear, 2015. "The impatient salesperson and the delegation of pricing authority," Research in Economics, vol 69(1), pages 63-74.
Abstract: Sales agents are impatient relative to owners. If a good fails to sell, the owner still retains possession of that good and can enjoy its services, whereas the agent receives nothing. As a consequence, sales agents prefer a lower price than does an owner. Owners are therefore reluctant to delegate pricing authority to sales agents even when the agents have superior market information. Pricing authority is more likely to be delegated to agents when the owner lacks monopoly power and sells competitively and when the good is a non-durable. Agents who are given pricing authority are less likely to be paid commissions and more likely to be on a straight salary.
Handle: RePEc:nbr:nberwo:20529
Template-Type: ReDIF-Paper 1.0
Title: In Praise of Frank Ramsey's Contribution to the Theory of Taxation
Classification-JEL: E62; H2; H21
Author-Name: Joseph E. Stiglitz
Note: PE
Number: 20530
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20530
File-URL: http://www.nber.org/papers/w20530.pdf
File-Format: application/pdf
Publication-Status: published as Joseph E. Stiglitz, 2015. "In Praise of Frank Ramsey's Contribution to the Theory of Taxation," Economic Journal, Royal Economic Society, vol. 0(583), pages 235-268, 03.
Abstract: Frank Ramsey's classic paper "A contribution to the theory of taxation" gave rise to the modern theory of optimal taxation. This paper traces the literature that grew out of Ramsey's 1927 paper and assesses which of its key insights has proven robust. Though the path breaking work of Peter Diamond and James Mirrlees showed that Ramsey's results could be generalized in some important ways, other work showed that the domain of applicability of Ramsey's original insights may be more limited: changes in assumptions about the set of feasible taxes (not allowing certain taxes, or allowing a progressive income tax or non-linear commodity taxes), and in particular about the taxation of pure rents, incorporating more explicitly distributional considerations, and/or recognizing the important ways in which our economy differs from the competitive model underlying Ramsey's analysis all change the optimal structure of commodity taxation in important ways.
Handle: RePEc:nbr:nberwo:20530
Template-Type: ReDIF-Paper 1.0
Title: Cashier or Consultant? Entry Labor Market Conditions, Field of Study, and Career Success
Classification-JEL: J24; J31
Author-Name: Joseph G. Altonji
Author-Person: pal266
Author-Name: Lisa B. Kahn
Author-Name: Jamin D. Speer
Author-Person: psp170
Note: LS
Number: 20531
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20531
File-URL: http://www.nber.org/papers/w20531.pdf
File-Format: application/pdf
Publication-Status: published as Cashier or Consultant? Entry Labor Market Conditions, Field of Study, and Career Success, Joseph G. Altonji, Lisa B. Kahn, Jamin D. Speer. in Labor Markets in the Aftermath of the Great Recession, Card and Mas. 2016
Publication-Status: published as Joseph G. Altonji & Lisa B. Kahn & Jamin D. Speer, 2016. "Cashier or Consultant? Entry Labor Market Conditions, Field of Study, and Career Success," Journal of Labor Economics, vol 34(S1), pages S361-S401.
Abstract: We analyze the early labor market outcomes of U.S. college graduates from the classes of 1974 to 2011, as a function of the economic conditions into which they graduated. We have three main findings. First, poor labor market conditions substantially disrupt early careers. A large recession at time of graduation reduces earnings by roughly 10% in the first year, for the average graduate. The losses are driven partially by a reduced ability to find employment and full-time work and partially by a roughly 4% reduction in hourly wage rates. Second, these effects differ by field of study. Those in majors with typically higher earnings experience significantly smaller declines in most labor market outcomes measured. As a result, the initial earnings and wage gaps across college majors widen by almost a third and a sixth, respectively, for those graduating into a large recession. Most of these effects fade out over the first 7 years. Those in higher paying majors are also slightly less likely to obtain an advanced degree when graduating into a recession, consistent with their relative increase in opportunity cost. Our third set of results focuses on a recent period that includes the Great Recession. Early impacts on earnings are much larger than what we would have expected given past patterns and the size of the recession, in part because of a large increase in the cyclical sensitivity of demand for college graduates. The effects also differ much less by field of study than those of prior recessions.
Handle: RePEc:nbr:nberwo:20531
Template-Type: ReDIF-Paper 1.0
Title: Generic Competition and the Incentives for Early-Stage Pharmaceutical Innovation
Classification-JEL: D2; L5; L51; L65; M2
Author-Name: Lee Branstetter
Author-Person: pbr854
Author-Name: Chirantan Chatterjee
Author-Name: Matthew J. Higgins
Author-Person: phi60
Note: EH PR
Number: 20532
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20532
File-URL: http://www.nber.org/papers/w20532.pdf
File-Format: application/pdf
Publication-Status: published as Lee Branstetter & Chirantan Chatterjee & Matthew J. Higgins, 2022. "Generic competition and the incentives for early-stage pharmaceutical innovation," Research Policy, vol 51(10).
Abstract: What impact has rising generic competition had on the nature and direction of pharmaceutical innovation? We find broad-based, strong evidence that pharmaceutical companies have diverted their new drug development efforts away from therapeutic markets already well-served by generic drugs. We also find that increasing generic competition induces firms to shift their R&D activity towards more biologic-based products and away from chemical-based products. We conclude by discussing potential implications of our results for long-run innovation policy.
Handle: RePEc:nbr:nberwo:20532
Template-Type: ReDIF-Paper 1.0
Title: Procyclical and Countercyclical Fiscal Multipliers: Evidence from OECD Countries
Classification-JEL: E62; F41
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: 20533
Creation-Date: 2014-09
Order-URL: http://www.nber.org/papers/w20533
File-URL: http://www.nber.org/papers/w20533.pdf
File-Format: application/pdf
Publication-Status: published as Riera-Crichton, Daniel & Vegh, Carlos A. & Vuletin, Guillermo, 2015. "Procyclical and countercyclical fiscal multipliers: Evidence from OECD countries," Journal of International Money and Finance, Elsevier, vol. 52(C), pages 15-31.
Abstract: Using non-linear methods, we argue that existing estimates of government spending multipliers in expansion and recession may yield biased results by ignoring whether government spending is increasing or decreasing. In the case of OECD countries, the problem originates in the fact that, contrary to one’s priors, it is not always the case that government spending is going up in recessions (i.e., acting countercyclically). In almost as many cases, government spending is actually going down (i.e., acting procyclically). Since the economy does not respond symmetrically to government spending increases or decreases, the “true” long-run multiplier for bad times (and government spending going up) turns out to be 2.3 compared to 1.3 if we just distinguish between recession and expansion. In extreme recessions, the long-run multiplier reaches 3.1.
Handle: RePEc:nbr:nberwo:20533
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Value Added of Attending Physicians on Patient Outcomes
Classification-JEL: I11; I12
Author-Name: Jason M. Fletcher
Author-Name: Leora I. Horwitz
Author-Name: Elizabeth Bradley
Note: EH
Number: 20534
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20534
File-URL: http://www.nber.org/papers/w20534.pdf
File-Format: application/pdf
Abstract: Despite increasing calls for value-based payments, existing methodologies for determining physicians' "value added" to patient health outcomes have important limitations. We incorporate methods from the value added literature in education research into a health care setting to present the first value added estimates of health care providers in the literature. Like teacher value added measures that calculate student test score gains, we estimate physician value added based on changes in health status during the course of a hospitalization. We then tie our measures of physician value added to patient outcomes, including length of hospital stay, total charges, health status at discharge, and readmission. The estimated value added varied substantially across physicians and was highly stable for individual physicians. Patients of physicians in the 75th versus 25th percentile of value added had, on average, shorter length of stay (4.76 vs 5.08 days), lower total costs ($17,811 vs $19,822) and higher discharge health status (8% of a standard deviation). Our findings provide evidence to support a new method of determining physician value added in the context of inpatient care that could have wide applicability across health care setting and in estimating value added of other health care providers (nurses, staff, etc).
Handle: RePEc:nbr:nberwo:20534
Template-Type: ReDIF-Paper 1.0
Title: Causal Inference in Urban and Regional Economics
Classification-JEL: R0
Author-Name: Nathaniel Baum-Snow
Author-Person: pba599
Author-Name: Fernando Ferreira
Author-Person: pfe163
Note: PE
Number: 20535
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20535
File-URL: http://www.nber.org/papers/w20535.pdf
File-Format: application/pdf
Abstract: Recovery of causal relationships in data is an essential part of scholarly inquiry in the social sciences. This chapter discusses strategies that have been successfully used in urban and regional economics for recovering such causal relationships. Essential to any successful empirical inquiry is careful consideration of the sources of variation in the data that identify parameters of interest. Interpretation of such parameters should take into account the potential for their heterogeneity as a function of both observables and unobservables.
Handle: RePEc:nbr:nberwo:20535
Template-Type: ReDIF-Paper 1.0
Title: Regulation and Housing Supply
Classification-JEL: H70; R10; R14; R31
Author-Name: Joseph Gyourko
Author-Person: pgy3
Author-Name: Raven Molloy
Note: PE POL
Number: 20536
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20536
File-URL: http://www.nber.org/papers/w20536.pdf
File-Format: application/pdf
Abstract: A wide array of local government regulations influences the amount, location, and shape of residential development. In this chapter, we review the literature on the causes and effects of this type of regulation. We begin with a discussion of how researchers measure regulation empirically, which highlights the variety of methods that are used to constrain development. Many theories have been developed to explain why regulation arises, including the role of homeowners in the local political process, the influence of historical density, and the fiscal and exclusionary motives for zoning. As for the effects of regulation, most studies have found substantial effects on the housing market. In particular, regulation appears to raise house prices, reduce construction, reduce the elasticity of housing supply, and alter urban form. Other research has found that regulation influences local labor markets and household sorting across communities. Finally, we discuss the welfare implications of regulation. Although some specific rules clearly mitigate negative externalities, the benefits of more general forms of regulation are very difficult to quantify. On balance, a few recent studies suggest that the overall efficiency losses from binding constraints on residential development could be quite large.
Handle: RePEc:nbr:nberwo:20536
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Substance Use Disorder Treatment Use on Crime: Evidence from Public Insurance Expansions and Health Insurance Parity Mandates
Classification-JEL: I11; I13; K14; K42
Author-Name: Hefei Wen
Author-Name: Jason M. Hockenberry
Author-Person: pho381
Author-Name: Janet R. Cummings
Note: EH LE
Number: 20537
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20537
File-URL: http://www.nber.org/papers/w20537.pdf
File-Format: application/pdf
Abstract: We examine the effect of increasing the substance use disorder (SUD) treatment rate on reducing violent and property crime rates, based on county-level panels of SUD treatment and crime data between 2001 and 2008 across the United States. To address the potential endogeneity of the SUD treatment rate with respect to crime rate, we exploit the exogenous variation in the SUD treatment rate induced by two state-level policies, namely insurance expansions under the Health Insurance Flexibility and Accountability (HIFA) waivers and parity mandates for SUD treatment. Once we address the endogeneity issue, we are able to demonstrate an economically meaningful reduction in the rates of robbery, aggravated assault and larceny theft attributable to an increased SUD treatment rate. A back-of-the-envelope calculation shows that a 10 percent relative increase in the SUD treatment rate at an average cost of $1.6 billion yields a crime reduction benefit of $2.5 billion to $4.8 billion. Our findings suggest that expanding insurance coverage and benefits for SUD treatment is an effective policy lever to improve treatment use, and the improved SUD treatment use can effectively and cost-effectively promote public safety through crime reduction.
Handle: RePEc:nbr:nberwo:20537
Template-Type: ReDIF-Paper 1.0
Title: Competitive Pressure and the Decline of the Rust Belt: A Macroeconomic Analysis
Classification-JEL: E0; O3; O4
Author-Name: Simeon Alder
Author-Name: David Lagakos
Author-Name: Lee Ohanian
Author-Person: poh1
Note: EFG
Number: 20538
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20538
File-URL: http://www.nber.org/papers/w20538.pdf
File-Format: application/pdf
Abstract: No region of the United States fared worse over the postwar period than the "Rust Belt," the heavy manufacturing region bordering the Great Lakes. This paper hypothesizes that the Rust Belt declined in large part due to a lack of competitive pressure in its labor and output markets. We formalize this thesis in a two-region dynamic general equilibrium model, in which productivity growth and regional employment shares are determined by the extent of competition. Quantitatively, the model accounts for much of the large secular decline in the Rust Belt's employment share before the 1980s, and the relative stabilization of the Rust Belt since then, as competitive pressure increased.
Handle: RePEc:nbr:nberwo:20538
Template-Type: ReDIF-Paper 1.0
Title: Early Life Environment and Racial Inequality in Education and Earnings in the United States
Classification-JEL: I12; I14; J13; J24; J31
Author-Name: Kenneth Y. Chay
Author-Person: pch800
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: Bhashkar Mazumder
Author-Person: pma1341
Note: CH EH LS
Number: 20539
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20539
File-URL: http://www.nber.org/papers/w20539.pdf
File-Format: application/pdf
Abstract: Chay, Guryan and Mazumder (2009) found substantial racial convergence in AFQT and NAEP scores across cohorts born in the 1960's and early 1970's that was concentrated among blacks in the South. We demonstrated a close tracking between variation in the test score convergence across states and racial convergence in measures of health and hospital access in the years immediately after birth. This study analyzes whether the across-cohort patterns in the black-white education and earnings gaps match those in early life health and test scores already established. It also addresses caveats in the earlier study, such as unobserved selection into taking the AFQT and potential discrepancies between state-of-birth and state-of-test taking. With Census data, we find: i) a significant narrowing across the same cohorts in education gaps driven primarily by a relative increase in the probability of blacks going to college; and ii) a similar convergence in relative earnings that is insensitive to adjustments for employment selection, as well as time and age effects that vary by race and state-of-residence. The variation in racial convergence across birth states matches the patterns in the earlier study. The magnitude of the earnings gains is greater than can be explained by only the black gains in education and test scores for reasonable estimates of the returns to human capital. This suggests that other pre-market, productivity factors also improved across successive cohorts of blacks born in the South between the early 1960's and early 1970's. Finally, our cohort-based hypothesis provides a cohesive explanation for the aggregate patterns in several, previously disconnected literatures.
Handle: RePEc:nbr:nberwo:20539
Template-Type: ReDIF-Paper 1.0
Title: Robust Benchmark Design
Classification-JEL: D82; G12; G14; G18; G23
Author-Name: Darrell Duffie
Author-Person: pdu341
Author-Name: Piotr Dworczak
Author-Person: pdw12
Note: AP
Number: 20540
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20540
File-URL: http://www.nber.org/papers/w20540.pdf
File-Format: application/pdf
Publication-Status: published as Duffie, Darrell & Dworczak, Piotr, 2021. "Robust benchmark design," Journal of Financial Economics, Elsevier, vol. 142(2), pages 775-802.
Abstract: Recent scandals over the manipulation of LIBOR, foreign exchange benchmarks, and other financial benchmarks have spurred policy discussions over their appropriate design. We characterize the optimal fixing of a benchmark as an estimator of a market value or reference rate. The fixing data are the reports or transactions of agents whose profits depend on the fixing, and who may therefore have incentives to manipulate it. If the benchmark administrator cannot detect or deter the strategic splitting of trades, we show that the best linear unbiased fixing is the commonly used volume-weighted average price (VWAP).
Handle: RePEc:nbr:nberwo:20540
Template-Type: ReDIF-Paper 1.0
Title: Belt and Suspenders and More: The Incremental Impact of Energy Efficiency Subsidies in the Presence of Existing Policy Instruments
Classification-JEL: H31; Q4; Q48; Q58
Author-Name: Sébastien Houde
Author-Name: Joseph E. Aldy
Author-Person: pal158
Note: EEE
Number: 20541
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20541
File-URL: http://www.nber.org/papers/w20541.pdf
File-Format: application/pdf
Abstract: The effectiveness of investment subsidies depends on the existing array of regulatory and information mandates, especially in the energy efficiency space. Some consumers respond to information disclosure by purchasing energy-efficient durables (and thus may increase the inframarginal take-up of a subsequent subsidy), while other consumers may locate at the lower bound of a minimum efficiency standard (and a given subsidy may be insufficient to change their investment toward a more energy-efficient option). We investigate the incremental impact of energy efficiency rebates in the context of regulatory and information mandates by evaluating the State Energy Efficient Appliance Rebate Program (SEEARP) implemented through the 2009 American Recovery and Reinvestment Act. The design of the program -- Federal funds allocated to states on a per capita basis with significant discretion in state program design and implementation -- facilitates our empirical analysis. Using transaction-level data on appliance sales, we show that most program participants were inframarginal due to important short-term intertemporal substitutions where consumers delayed their purchases by a few weeks. We find evidence that some consumers accelerated the replacement of their old appliances by a few years, but overall the impact of the program on long-term energy demand is likely to be very small. Our estimated measures of cost-effectiveness are an order of magnitude higher than estimated for other energy efficiency programs in the literature. We also show that designing subsidies that reflect, in part, underlying attribute-based regulatory mandates can result in perverse effects, such as upgrading to larger, less energy-efficient models.
Handle: RePEc:nbr:nberwo:20541
Template-Type: ReDIF-Paper 1.0
Title: The Value of Informativeness for Contracting
Classification-JEL: D86; J33
Author-Name: Pierre Chaigneau
Author-Person: pch1493
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Daniel Gottlieb
Author-Person: pgo110
Note: CF LE LS
Number: 20542
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20542
File-URL: http://www.nber.org/papers/w20542.pdf
File-Format: application/pdf
Abstract: The informativeness principle demonstrates qualitative benefits to increasing signal precision. However, it is difficult to quantify these benefits -- and compare them against the costs of precision -- since we typically cannot solve for the optimal contract and analyze how it changes with informativeness. We consider a standard agency model with risk-neutrality and limited liability, where the optimal contract is a call option. The direct effect of reducing signal volatility is a fall in the value of the option, benefiting the principal. The indirect effect is a change in the agent's effort incentives. If the original option is sufficiently out-of-the-money, the agent can only beat the strike price if he exerts effort and there is a high noise realization. Thus, a fall in volatility reduces effort incentives. As the agency problem weakens, the gains from precision fall towards zero, potentially justifying pay-for-luck.
Handle: RePEc:nbr:nberwo:20542
Template-Type: ReDIF-Paper 1.0
Title: The Direct and Indirect Effects of Small Business Administration Lending on Growth: Evidence from U.S. County-Level Data
Classification-JEL: C31; E65; H25; O47; R11
Author-Name: Andrew T. Young
Author-Name: Matthew J. Higgins
Author-Person: phi60
Author-Name: Donald J. Lacombe
Author-Name: Briana Sell
Note: PE PR
Number: 20543
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20543
File-URL: http://www.nber.org/papers/w20543.pdf
File-Format: application/pdf
Abstract: Conventional wisdom suggests that small businesses are innovative engines of Schumpetarian growth. However, as small businesses, they are likely to face credit rationing in financial markets. If true then policies that promote lending to small businesses may yield substantial economy-wide returns. We examine the relationship between Small Business Administration (SBA) lending and local economic growth using a spatial econometric framework across a sample of 3,035 U.S. counties for the years 1980 to 2009. We find evidence that a county's SBA lending per capita is associated with direct negative effects on its income growth. We also find evidence of indirect negative effects on the growth rates of neighboring counties. Overall, a 10% increase in SBA loans per capita is associated with a cumulative decrease in income growth rates of about 2%.
Handle: RePEc:nbr:nberwo:20543
Template-Type: ReDIF-Paper 1.0
Title: Investment Banks as Corporate Monitors in the Early 20th Century United States
Classification-JEL: N11; N12; N21; N22; N41; N42; N71; N72
Author-Name: Carola Frydman
Author-Person: pfr240
Author-Name: Eric Hilt
Author-Person: phi104
Note: CF DAE LE
Number: 20544
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20544
File-URL: http://www.nber.org/papers/w20544.pdf
File-Format: application/pdf
Publication-Status: published as Frydman, Carola, and Eric Hilt. 2017. "Investment Banks as Corporate Monitors in the Early Twentieth Century United States." American Economic Review, 107 (7): 1938-70. DOI: 10.1257/aer.20150143
Abstract: We use the Clayton Antitrust Act of 1914 to study the effect of bankers on corporate boards in facilitating access to external finance. In the early twentieth century, securities underwriters commonly held directorships with American corporations; this was especially true for railroads, which were the largest enterprises of the era. Section 10 of the Clayton Act prohibited investment bankers from serving on the boards of railroads for which they underwrote securities. Following the implementation of Section 10 in 1921, we find that railroads that had maintained strong affiliations with their underwriters saw declines in their valuations, investment rates and leverage ratios, and increases in their costs of external funds. We perform falsification tests using data for industrial corporations, which were not subject to the prohibitions of Section 10, and find no differential effect of relationships with underwriters on these firms following 1921. Our results are consistent with the predictions of a simple model of underwriters on corporate boards acting as delegated monitors. Our findings also highlight the potential risks of unintended consequences from financial regulations.
Handle: RePEc:nbr:nberwo:20544
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy in Open Economies: Practical Perspectives for Pragmatic Central Bankers
Classification-JEL: E52; E58; F3
Author-Name: Richard Clarida
Author-Person: pcl69
Note: IFM
Number: 20545
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20545
File-URL: http://www.nber.org/papers/w20545.pdf
File-Format: application/pdf
Publication-Status: published as Richard H. Clarida, 2014. "Monetary policy in open economies: Practical perspectives for pragmatic central bankers," Journal of Economic Dynamics and Control, vol 49, pages 21-30.
Abstract: This paper reviews and interprets some of the key policy implications that flow from a class of DSGE models for optimal monetary policy in the open economy. The framework suggests that good macroeconomic outcomes in open economies are possible by focusing inflation targeting that is implemented by a Taylor type rule, a rule that in equilibrium is reflected in the exchange rate as an asset price. Optimal monetary policy will not be able deliver a stationary ('stable') nominal exchange rate - let alone a fixed exchange rate or one that remains inside a target zone ‐ because, absent a commitment device, optimal monetary can't deliver a stationary domestic price level. Another feature in the data for inflation targeting countries that is consistent with monetary policy via Taylor type rule is that it will tend push the nominal exchange rate in the opposite direction from PPP in response to an 'inflation' shock - the 'bad news god news' result of Clarida -Waldman (2008;2014). This is so even though in the long run of these models the nominal exchange rate must in expectation obey PPP.
Handle: RePEc:nbr:nberwo:20545
Template-Type: ReDIF-Paper 1.0
Title: Distributional Effects of Means Testing Social Security: An Exploratory Analysis
Classification-JEL: D04; D31; D63; E21; H55; I3; J14; J18; J32
Author-Name: Alan Gustman
Author-Person: pgu327
Author-Name: Thomas Steinmeier
Author-Name: Nahid Tabatabai
Note: AG LS PE
Number: 20546
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20546
File-URL: http://www.nber.org/papers/w20546.pdf
File-Format: application/pdf
Abstract: This paper examines the distributional implications of introducing additional means testing of Social Security benefits where proceeds are used to help balance Social Security's finances. Benefits of the top quarter of households ranked according to the relevant measure of means are reduced using a modified version of the Social Security Windfall Elimination Provision (WEP). The replacement rate in the first bracket of the benefit formula, determining the Primary Insurance Amount (PIA), would be reduced from 90 percent to 40 percent of Average Indexed Monthly Earnings (AIME). Four measures of means are considered: total wealth; an annualized measure of AIME; the wealth value of pensions; and a measure of average indexed lifetime W2 earnings. The empirical analysis is based on data from the Health and Retirement Study. These means tests would reduce total lifetime household benefits by 7 to 9 percentage points. We find that the basis for means testing Social Security makes a substantial difference as to which households have their benefits reduced, and that different means tests may have different effects on the benefits of families in similar circumstance. We also find that the measure of means used to evaluate the effects of a means test makes a considerable difference as to how one would view the effects of the means test on the distribution of benefits.
Handle: RePEc:nbr:nberwo:20546
Template-Type: ReDIF-Paper 1.0
Title: Annuitized Wealth and Post-Retirement Saving
Classification-JEL: D91; E21; H55
Author-Name: John Laitner
Author-Person: pla447
Author-Name: Daniel Silverman
Author-Person: psi181
Author-Name: Dmitriy Stolyarov
Author-Person: pst142
Note: AG EFG PE
Number: 20547
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20547
File-URL: http://www.nber.org/papers/w20547.pdf
File-Format: application/pdf
Abstract: We introduce a tractable model of post-retirement saving behavior in which households have a precautionary motive arising from uninsured health status risks. The model distinguishes between annuitized and non-annuitized wealth, emphasizes the importance of asset composition in determining optimal household behavior, and includes an extension allowing late-in-life exchange transactions among relatives. We consider three puzzles in micro data - rising cohort average wealth of retirees, lack of demand for market annuities, and the relative scarcity of bequests - and show that our model can provide intuitive explanations for each.
Handle: RePEc:nbr:nberwo:20547
Template-Type: ReDIF-Paper 1.0
Title: The Market Impacts of Pharmaceutical Product Patents in Developing Countries: Evidence from India
Classification-JEL: I11; L1; O34
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Craig Garthwaite
Author-Name: Aparajita Goyal
Author-Person: pgo275
Note: DEV EH IO PE PR
Number: 20548
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20548
File-URL: http://www.nber.org/papers/w20548.pdf
File-Format: application/pdf
Publication-Status: published as Mark Duggan & Craig Garthwaite & Aparajita Goyal, 2016. "The Market Impacts of Pharmaceutical Product Patents in Developing Countries: Evidence from India," American Economic Review, American Economic Association, vol. 106(1), pages 99-135, January.
Abstract: In 2005, as the result of a World Trade Organization mandate, India began to implement product patents for pharmaceuticals that were compliant with the 1995 Trade-Related Aspects of Intellectual Property Rights (TRIPS). We combine pharmaceutical product sales data for India with a newly gathered dataset of molecule-linked patents issued by the Indian patent office. Exploiting variation in the timing of patent decisions, we estimate that a molecule receiving a patent experienced an average price increase of just 3-6 percent with larger increases for more recently developed molecules and for those produced by just one firm when the patent system began. Our results also show little impact on quantities sold or on the number of pharmaceutical firms operating in the market.
Handle: RePEc:nbr:nberwo:20548
Template-Type: ReDIF-Paper 1.0
Title: Insurance Markets for the Elderly
Classification-JEL: D14; G22; H51; H55; I13
Author-Name: Hanming Fang
Author-Person: pfa17
Note: AG EH PE
Number: 20549
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20549
File-URL: http://www.nber.org/papers/w20549.pdf
File-Format: application/pdf
Publication-Status: published as Insurance Markets for the Elderly, in Handbook of the Economics of Population Ageing , Volume 1A, Chapter 5, p. 237-309, edited by John Piggott and Alan Woodland, November 2016.
Abstract: We describe the risks faced by the ageing population and survey the corresponding insurance markets for these risks. We focus on income risk, health expenditure risk, long-term care expenditure risk and mortality risk. We also discuss the interactions between social insurance and private insurance markets.
Handle: RePEc:nbr:nberwo:20549
Template-Type: ReDIF-Paper 1.0
Title: Reexamining the Cyclical Behavior of the Relative Price of Investment
Classification-JEL: E3
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: Alban Moura
Author-Name: Franck Portier
Author-Person: ppo12
Note: EFG
Number: 20550
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20550
File-URL: http://www.nber.org/papers/w20550.pdf
File-Format: application/pdf
Publication-Status: published as Beaudry, Paul & Moura, Alban & Portier, Franck, 2015. "Reexamining the cyclical behavior of the relative price of investment," Economics Letters, Elsevier, vol. 135(C), pages 108-111.
Abstract: The cyclical behavior of the relative price of investment goods plays an important role in many modern macroeconomic models. In this paper we examine the behavior of several measures of the relative price of investment goods for the U.S. economy over the last fifty years. In particular, we examine whether there are robust cyclical patterns, whether results differ by sub-sample and whether the nature of the deflator matters. Our main result is that there is no robust evidence that this relative price is countercyclical in the data. In fact, for the recent (post-Volcker) period, the relative price of investment appears predominantly procyclical. When looking at more disaggregated series, most measures are procyclical, a few acyclical, and only the price of equipment is significantly countercyclical for some periods and measures. The procyclical behavior of the relative price of aggregate investment is also shown to characterize six other countries of the G7.
Handle: RePEc:nbr:nberwo:20550
Template-Type: ReDIF-Paper 1.0
Title: How Do the "GATS-Plus" and "GATS-Minus" Characteristics of Regional Service Agreements Affect Trade in Services?
Classification-JEL: F13; F15
Author-Name: Nianli Zhou
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 20551
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20551
File-URL: http://www.nber.org/papers/w20551.pdf
File-Format: application/pdf
Abstract: Preferential liberalization of trade in services is a central feature of the new regionalism. "GATS-Plus" and "GATS-Minus" have become the distinctive characteristics of the service RTAs and this paper aims to investigate and distinguish the different effect of the "GATS-Plus" and "GATS-Minus" components of RTAs on the service trade . The results of the empirical research by using the gravity equation either with time-varying exporter and importer fixed effects or with the specific exporter and importer fixed effect and year fixed effect both indicate : (1) belonging to a RTA (both "only goods" RTA and "service" RTA) can increase the bilateral service trade between the trading-pairs significantly. (2) almost all the "GATS-plus" and "GATS-neutral" commitments either on market access or on national treatment made by trading-pairs with each other under service RTAs have significantly positive effect on bilateral service export. (3) the commitments of "GATS-minus" characteristic do not have significant negative effects on bilateral service export because "GATS-minus" treatment can be neutralized to some extent by two main preferential erosion mechanisms under the RTAs: "liberal rule of origin" and "non-party MFN provision".
Handle: RePEc:nbr:nberwo:20551
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Minimalist Democracy
Classification-JEL: H11; P16; P48
Author-Name: Chris Bidner
Author-Person: pbi138
Author-Name: Patrick Francois
Author-Person: pfr24
Author-Name: Francesco Trebbi
Author-Person: ptr40
Note: DEV POL
Number: 20552
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20552
File-URL: http://www.nber.org/papers/w20552.pdf
File-Format: application/pdf
Abstract: A majority of the world democracies are far from the benchmark of representative democracy. This paper presents a model of political transitions based on a minimalist conception of the democratic state, i.e. a form of government solely characterized by competitive elections. We show that the model can produce dynamics of transition into democracy without requiring any role for redistribution or representation of voters, but solely based on interactions among the ruling elites. This allows the model to match several relevant stylized facts concerning the organization of new and consolidating democracies, weakly institutionalized countries, and hybrid regimes.
Handle: RePEc:nbr:nberwo:20552
Template-Type: ReDIF-Paper 1.0
Title: Investment Subsidies and the Adoption of Electronic Medical Records in Hospitals
Classification-JEL: H2; I1; O33
Author-Name: David Dranove
Author-Person: pdr111
Author-Name: Craig Garthwaite
Author-Name: Bingyang Li
Author-Name: Christopher Ody
Note: EH PE
Number: 20553
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20553
File-URL: http://www.nber.org/papers/w20553.pdf
File-Format: application/pdf
Publication-Status: published as David Dranove & Craig Garthwaite & Bingyang Li & Christopher Ody, 2015. "Investment subsidies and the adoption of electronic medical records in hospitals," Journal of Health Economics, vol 44, pages 309-319.
Abstract: In February 2009 the U.S. Congress unexpectedly passed the Health Information Technology for Economic and Clinical Health Act (HITECH). HITECH provides up to $27 billion to promote adoption and appropriate use of Electronic Medical Records (EMR) by hospitals. We measure the extent to which HITECH incentive payments spurred EMR adoption by independent hospitals. Adoption rates for all independent hospitals grew from 48 percent in 2008 to 77 percent by 2011. Absent HITECH incentives, we estimate that the adoption rate would have instead been 67 percent in 2011. When we consider that HITECH funds were available for all hospitals and not just marginal adopters, we estimate that the cost of generating an additional adoption was $48 million. We also estimate that in the absence of HITECH incentives, the 77 percent adoption rate would have been realized by 2013, just 2 years after the date achieved due to HITECH.
Handle: RePEc:nbr:nberwo:20553
Template-Type: ReDIF-Paper 1.0
Title: The Price of Stability: The balance sheet policy of the Banque de France and the Gold Standard (1880-1914)
Classification-JEL: E42; E43; E50; E58; N13; N23
Author-Name: Guillaume Bazot
Author-Person: pba769
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Eric Monnet
Author-Person: pmo745
Note: DAE ME
Number: 20554
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20554
File-URL: http://www.nber.org/papers/w20554.pdf
File-Format: application/pdf
Abstract: Under the classical gold standard (1880-1914), the Bank of France maintained a stable discount rate while the Bank of England changed its rate very frequently. Why did the policies of these central banks, the two pillars of the gold standard, differ so much? How did the Bank of France manage to keep a stable rate and continuously violate the "rules of the game"? This paper tackles these questions and shows that the domestic asset portfolio of the Bank of France played a crucial role in smoothing international shocks and in maintaining the stability of the discount rate. This policy provides a striking example of a central bank that uses its balance sheet to block the interest rate channel and protect the domestic economy from international constraints (Mundell's trilemma).
Handle: RePEc:nbr:nberwo:20554
Template-Type: ReDIF-Paper 1.0
Title: Resurrecting the Role of the Product Market Wedge in Recessions
Classification-JEL: E24; E32
Author-Name: Mark Bils
Author-Person: pbi148
Author-Name: Peter J. Klenow
Author-Name: Benjamin A. Malin
Author-Person: pma830
Note: EFG ME
Number: 20555
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20555
File-URL: http://www.nber.org/papers/w20555.pdf
File-Format: application/pdf
Publication-Status: published as Bils, Mark, Peter J. Klenow, and Benjamin A. Malin. 2018. "Resurrecting the Role of the Product Market Wedge in Recessions." American Economic Review, 108 (4-5): 1118-46. DOI: 10.1257/aer.20151260
Abstract: Employment and hours appear far more cyclical than dictated by the behavior of productivity and consumption. This puzzle has been called “the labor wedge” — a cyclical intratemporal wedge between the marginal product of labor and the marginal rate of substitution of consumption for leisure. The labor wedge can be broken into a price markup and a wage markup. Based on the wages of employees, the literature has attributed the labor wedge almost entirely to labor market distortions. Because employee wages may be smoothed versions of the true cyclical price of labor, we instead examine the self-employed and intermediate inputs, respectively. Any observed cyclicality in wedges calculated for these inputs cannot reflect wage markups. Looking at the past quarter century in the U.S. — including the Great Recession and its aftermath — we find that price markup movements are at least as important as wage markup movements. Thus, sticky prices and other forms of countercyclical markups deserve a central place in business cycle research, alongside sticky wages and matching frictions.
Handle: RePEc:nbr:nberwo:20555
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Debt Deleveraging and Optimal Monetary Policy
Classification-JEL: E31; E32; E52
Author-Name: Pierpaolo Benigno
Author-Person: pbe203
Author-Name: Gauti B. Eggertsson
Author-Person: peg7
Author-Name: Federica Romei
Author-Person: pro885
Note: ME
Number: 20556
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20556
File-URL: http://www.nber.org/papers/w20556.pdf
File-Format: application/pdf
Publication-Status: published as Pierpaolo Benigno & Gauti B. Eggertsson & Federica Romei, 2020. "Dynamic Debt Deleveraging and Optimal Monetary Policy," American Economic Journal: Macroeconomics, vol 12(2), pages 310-350.
Abstract: This paper studies optimal monetary policy under dynamic debt deleveraging once the zero bound is binding. Unlike the existing literature, the natural rate of interest is endogenous and depends on macroeconomic policy. Optimal monetary policy successfully raises the natural rate of interest by creating an environment that speeds up deleveraging, thus endogenously shortening the duration of the crisis and a binding zero bound. Inflation should be front loaded. Fiscal-policy multipliers can be even higher than in existing models, but depend on the way in which public spending is financed.
Handle: RePEc:nbr:nberwo:20556
Template-Type: ReDIF-Paper 1.0
Title: Compulsory Schooling Laws and Formation of Beliefs: Education, Religion and Superstition
Classification-JEL: I20; I25; K10; Z1; Z12
Author-Name: Naci Mocan
Author-Person: pmo270
Author-Name: Luiza Pogorelova
Note: CH ED EH LE LS POL
Number: 20557
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20557
File-URL: http://www.nber.org/papers/w20557.pdf
File-Format: application/pdf
Publication-Status: published as Naci Mocan & Luiza Pogorelova, 2017. "Compulsory Schooling Laws and Formation of Beliefs: Education, Religion and Superstition," Journal of Economic Behavior & Organization, .
Abstract: We exploit information on compulsory schooling reforms in 11 European countries, implemented mostly in the 1960s and 70s, to identify the impact of education on religious adherence and religious practices. Using micro data from the European Social Survey, conducted in various years between 2002 and 2013, we find consistently large negative effects of schooling on self-reported religiosity, social religious acts (attending religious services), as well as solitary religious acts (the frequency of praying). We also use data from European Values Survey to apply the same empirical design to analyze the impact of schooling on superstitious beliefs. We find that more education, due to increased mandatory years of schooling, reduces individuals' propensity to believe in the power of lucky charms and the tendency to take into account horoscopes in daily life.
Handle: RePEc:nbr:nberwo:20557
Template-Type: ReDIF-Paper 1.0
Title: Does Transparency Lead to Pay Compression?
Classification-JEL: J01; J31; J45; J63
Author-Name: Alexandre Mas
Author-Person: pma2363
Note: LS
Number: 20558
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20558
File-URL: http://www.nber.org/papers/w20558.pdf
File-Format: application/pdf
Publication-Status: published as Alexandre Mas, 2017. "Does Transparency Lead to Pay Compression?," Journal of Political Economy, vol 125(5), pages 1683-1721.
Abstract: This paper asks whether pay disclosure in the public sector changes wage setting at the top of the public sector distribution. I examine a 2010 California mandate that required municipal salaries to be posted online. Among top managers, disclosure led to approximately 7 percent average compensation declines, and a 75 percent increase in their quit rate, relative to managers in cities that had already disclosed salaries. The wage cuts were largely nominal. Wage cuts were larger in cities with higher initial compensation, but not in cities where compensation was initially out of line with (measured) fundamentals. The response is more consistent with public aversion to high compensation than the effects of increased accountability.
Handle: RePEc:nbr:nberwo:20558
Template-Type: ReDIF-Paper 1.0
Title: Negotiating for the Market
Classification-JEL: O31; O32; O34
Author-Name: Joshua S. Gans
Author-Person: pga42
Note: PR
Number: 20559
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20559
File-URL: http://www.nber.org/papers/w20559.pdf
File-Format: application/pdf
Abstract: In a dynamic environment where underlying competition is "for the market," this paper examines what happens when entrants and incumbents can instead negotiate for the market. For instance, this might arise when an entrant innovator can choose to license to or be acquired by an incumbent firm; i.e., engage in cooperative commercialization. It is demonstrated that, depending upon the level of firms' potential dynamic capabilities, there may or may not be gains to trade between incumbents and entrants in a cumulative innovation environment; that is, entrants may not be adequately compensated for losses in future innovative potential. This stands in contrast to static analyses that overwhelmingly identify positive gains to trade from such cooperation.
Handle: RePEc:nbr:nberwo:20559
Template-Type: ReDIF-Paper 1.0
Title: The Glass Ceiling and The Paper Floor: Gender Differences among Top Earners, 1981-2012
Classification-JEL: E24; E25; J31
Author-Name: Fatih Guvenen
Author-Person: pgu24
Author-Name: Greg Kaplan
Author-Person: pka660
Author-Name: Jae Song
Author-Person: pso277
Note: AP EFG LS ME PE
Number: 20560
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20560
File-URL: http://www.nber.org/papers/w20560.pdf
File-Format: application/pdf
Abstract: We analyze changes in the gender structure at the top of the earnings distribution in the United States over the last 30 years using a 10% sample of individual earnings histories from the Social Security Administration. Despite making large inroads, females still constitute a small proportion of the top percentiles: the glass ceiling, albeit a thinner one, remains. We measure the contribution of changes in labor force participation, changes in the persistence of top earnings, and changes in industry and age composition to the change in the gender composition of top earners. A large proportion of the increased share of females among top earners is accounted for by the mending of, what we refer to as, the paper floor - the phenomenon whereby female top earners were much more likely than male top earners to drop out of the top percentiles. We also provide new evidence at the top of the earnings distribution for both genders: the rising share of top earnings accruing to workers in the Finance and Insurance industry, the relative transitory status of top earners, the emergence of top earnings gender gaps over the life cycle, and gender differences among lifetime top earners.
Handle: RePEc:nbr:nberwo:20560
Template-Type: ReDIF-Paper 1.0
Title: Mortgage Rates, Household Balance Sheets, and the Real Economy
Classification-JEL: D12; E20; E21; E51; E65; G21
Author-Name: Benjamin J. Keys
Author-Person: pke311
Author-Name: Tomasz Piskorski
Author-Person: ppi49
Author-Name: Amit Seru
Author-Person: pse308
Author-Name: Vincent Yao
Author-Person: pya131
Note: CF EFG ME
Number: 20561
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20561
File-URL: http://www.nber.org/papers/w20561.pdf
File-Format: application/pdf
Abstract: This paper investigates the impact of lower mortgage rates on household balance sheets and other economic outcomes during the housing crisis. We use proprietary loan-level panel data matched to consumer credit records using borrowers' Social Security numbers, which allows for accurate measurement of the effects. Our main focus is on borrowers with agency loans, which constitute the vast majority of U.S. mortgage borrowers. Relying on variation in the timing of resets of adjustable rate mortgages, we find that a sizable decline in mortgage payments ($150 per month on average) induces a significant drop in mortgage defaults, an increase in new financing of durable consumption (auto purchases) of more than 10% in relative terms, and an overall improvement in household credit standing. New financing of durable consumption by borrowers with lower housing wealth responds more to mortgage payment reduction relative to wealthier households. Credit-constrained households initially use more than 70% of the extra liquidity generated by mortgage rate reductions to repay credit card debt-- a deleveraging response that can significantly restrict the ability of monetary policy to stimulate these households' consumption. These findings also qualitatively hold in a sample of less-prevalent borrowers with private non-agency loans. We then use regional variation in mortgage contract types to explore the impact of lower mortgage rates on broader economic outcomes. Regions more exposed to mortgage rate declines saw a relatively faster recovery in house prices, increased durable (auto) consumption, and increased employment growth, with responses concentrated in the non-tradable sector. Our findings have implications for the pass-through of monetary policy to the real economy through mortgage contracts and household balance sheets.
Handle: RePEc:nbr:nberwo:20561
Template-Type: ReDIF-Paper 1.0
Title: The Perception Of Social Security Incentives For Labor Supply And Retirement: The Median Voter Knows More Than You'd Think
Classification-JEL: D83; H55
Author-Name: Jeffrey B. Liebman
Author-Person: pli184
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Note: PE
Number: 20562
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20562
File-URL: http://www.nber.org/papers/w20562.pdf
File-Format: application/pdf
Publication-Status: published as The Perception of Social Security Incentives for Labor Supply and Retirement: The Median Voter Knows More Than You'd Think, Jeffrey B. Liebman, Erzo F. P. Luttmer. in Tax Policy and the Economy, Volume 26, Brown. 2012
Abstract: The degree to which the Social Security tax distorts labor supply depends on the extent to which individuals perceive the link between current earnings and future Social Security benefits. Some Social Security reform plans have been motivated by an assumption that workers fail to perceive this link and that increasing the salience of the link could result in significant efficiency gains. To measure the perceived linkage between labor supply and Social Security benefits, we administered a survey to a representative sample of Americans aged 50-70. We find that the majority of respondents believe that their Social Security benefits increase with labor supply. Indeed, respondents generally report a link between labor supply and future benefits that is somewhat greater than the actual incentive. We also surveyed people about their understanding of various other provisions in the Social Security benefit rules. We find that some of these provisions (e.g., effects of delayed benefit claiming and rules on widow benefits) are relatively well understood while others (e.g., rules on spousal benefits, provisions on which years of earnings are taken into account) are less well understood. In addition, our survey incorporated a framing experiment, which shows that how the incentives for delayed claiming are presented has an impact on hypothetical claiming decisions. In particular, the traditional "break-even" framing used by the Social Security Administration leads to earlier claiming than other presentations do.
Handle: RePEc:nbr:nberwo:20562
Template-Type: ReDIF-Paper 1.0
Title: Product and Labor Market Regulations, Production Prices, Wages and Productivity
Classification-JEL: C23; L16; L50; O43; O47
Author-Name: Gilbert Cette
Author-Person: pce45
Author-Name: Jimmy Lopez
Author-Name: Jacques Mairesse
Author-Person: pma712
Note: PR
Number: 20563
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20563
File-URL: http://www.nber.org/papers/w20563.pdf
File-Format: application/pdf
Publication-Status: published as Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2016. "Product and Labour Market Regulations, Production Prices, Wages and Productivity," Review of Economics and Institutions, Università di Perugia, vol. 7(2).
Abstract: This study is an attempt to evaluate the effects of product and labour market regulations on industry productivity through their various impacts on changes in production prices and wages. In a first stage, the estimation of a regression equation on an industry*country panel, with controls for country*industry and country*year fixed effects, show that multi-factor productivity is negatively and significantly influenced by both indicators of industrial prices from same industry and weighted average of industrial prices from other industries, and by indicators of country wages weighted by industry labour shares for low and high skilled workers. In a second stage, an economic policy simulation of the implications these results on the basis of their calibration by the OECD product and labour market anti-competitive regulation indicators suggests that nearly all countries could expect sizeable gains in multifactor productivity from deregulation reforms.
Handle: RePEc:nbr:nberwo:20563
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Challenges in Multilayered Unions: An Overview and Case Study
Classification-JEL: F36; F41
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Gunnar Gunnarsson
Note: IFM
Number: 20564
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20564
File-URL: http://www.nber.org/papers/w20564.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Gunnar Gunnarsson, 2015. "Fiscal Challenges in Multilayered Unions: An Overview and Case Study," Social Sciences, MDPI, Open Access Journal, vol. 4(2), pages 373-392, May.
Abstract: This paper reviews recent research dealing with fiscal discipline and revisit the issues of fiscal control in federal systems, focusing on selective case studies covering the 2000s, before and after the Global Financial Crisis (GFC). We start by contrasting the recent fiscal history of California to that of Greece, illustrating the different ways of dealing with fiscal deficiencies in a mature union, U.S., versus a young union, Eurozone. We continue with an overview of the fiscal developments in Brazil, illustrating the challenges facing federal systems in emerging markets, and possible ways to move forward in upgrading a country's fiscal institutions. We conclude with the fiscal history of Iceland before and after the financial crisis--a standalone small country, assessed favorably by rating agencies prior to the GFC, and now recovering from a deep financial crisis.
Handle: RePEc:nbr:nberwo:20564
Template-Type: ReDIF-Paper 1.0
Title: Expanding Patients' Property Rights In Their Medical Records
Classification-JEL: I1; I10; I11
Author-Name: Laurence C. Baker
Author-Name: Kate Bundorf
Author-Name: Daniel Kessler
Note: EH LE
Number: 20565
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20565
File-URL: http://www.nber.org/papers/w20565.pdf
File-Format: application/pdf
Publication-Status: published as Laurence C. Baker & M. Kate Bundorf & Daniel P. Kessler, 2015. "Expanding Patients' Property Rights in Their Medical Records," American Journal of Health Economics, vol 1(1), pages 82-100.
Abstract: Although doctors and hospitals own their patients' medical records, state and federal laws require that they provide patients with a copy at "reasonable cost." We examine the effects of state laws that cap the fees that doctors and hospitals are allowed to charge patients for a copy of their records. We test whether these laws affected patients' propensity to switch doctors and the prices of new- and existing-patient visits. We also examine the effect of laws on hospitals' adoption of electronic medical record (EMR) systems. We find that patients from states adopting caps on copy fees were significantly more likely to switch doctors, and that hospitals in states adopting caps were significantly more likely to install an EMR. We also find that laws did not have a systematic, significant effect on prices.
Handle: RePEc:nbr:nberwo:20565
Template-Type: ReDIF-Paper 1.0
Title: Constrained Discretion and Central Bank Transparency
Classification-JEL: C11; D83; E52
Author-Name: Francesco Bianchi
Author-Person: pbi171
Author-Name: Leonardo Melosi
Author-Person: pme283
Note: ME
Number: 20566
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20566
File-URL: http://www.nber.org/papers/w20566.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Bianchi & Leonardo Melosi, 2018. "Constrained Discretion and Central Bank Transparency," The Review of Economics and Statistics, vol 100(1), pages 187-202.
Abstract: We develop and estimate a general equilibrium model in which monetary policy can deviate from active inflation stabilization and agents face uncertainty about the nature of these deviations. When observing a deviation, agents conduct Bayesian learning to infer its likely duration. Under constrained discretion, only short deviations occur: Agents are confident about a prompt return to the active regime, macroeconomic uncertainty is low, welfare is high. However, if a deviation persists, agents' beliefs start drifting, uncertainty accelerates, and welfare declines. If the duration of the deviations is announced, uncertainty follows a reverse path. When estimated to match past U.S. experience, our model suggests that transparency lowers uncertainty and increases welfare.
Handle: RePEc:nbr:nberwo:20566
Template-Type: ReDIF-Paper 1.0
Title: Contagion in the European Sovereign Debt Crisis
Classification-JEL: D85; F34; F36; G01; L14
Author-Name: Brent Glover
Author-Name: Seth Richards-Shubik
Author-Person: pri342
Note: CF IFM
Number: 20567
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20567
File-URL: http://www.nber.org/papers/w20567.pdf
File-Format: application/pdf
Abstract: We use a network model of credit risk to measure market expectations of the potential spillovers from a sovereign default. Specifically, we develop an empirical model, based on the recent theoretical literature on contagion in financial networks, and estimate it with data on sovereign credit default swap spreads and the detailed structure of financial linkages among thirteen European sovereigns from 2005 to 2011. Simulations from the estimated model show that a sovereign default generates only small spillovers to other sovereigns. These results imply that credit markets do not demand a significant premium for the interconnectedness of sovereign debt in Europe.
Handle: RePEc:nbr:nberwo:20567
Template-Type: ReDIF-Paper 1.0
Title: In Search of Labor Demand
Classification-JEL: J23
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: David A. Green
Author-Person: pgr285
Author-Name: Benjamin M. Sand
Author-Person: psa1145
Note: EFG LS
Number: 20568
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20568
File-URL: http://www.nber.org/papers/w20568.pdf
File-Format: application/pdf
Publication-Status: published as Paul Beaudry & David A. Green & Ben M. Sand, 2018. "In Search of Labor Demand," American Economic Review, vol 108(9), pages 2714-2757.
Abstract: We propose and estimate a novel specification of the labor demand curve incorporating search frictions and the role of entrepreneurs in new firm creation. Using city-industry variation over four decades, we estimate the employment - wage elasticity to be -1 at the industry-city level and -0.3 at the city level. We show that the difference between these estimates likely reflects the congestion externalities predicted by the search literature. Also, holding wages constant, an increase in the local population is associated with a proportional increase in employment. These results provide indirect information about the elasticity of job creation to changes in profits.
Handle: RePEc:nbr:nberwo:20568
Template-Type: ReDIF-Paper 1.0
Title: Investment Hangover and the Great Recession
Classification-JEL: E22; E32; E4
Author-Name: Matthew Rognlie
Author-Person: pro1120
Author-Name: Andrei Shleifer
Author-Person: psh93
Author-Name: Alp Simsek
Note: EFG ME
Number: 20569
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20569
File-URL: http://www.nber.org/papers/w20569.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Rognlie & Andrei Shleifer & Alp Simsek, 2018. "Investment Hangover and the Great Recession," American Economic Journal: Macroeconomics, vol 10(2), pages 113-153.
Abstract: We present a model of investment hangover motivated by the Great Recession. In our model, overbuilding of residential capital requires a reallocation of productive resources to nonresidential sectors, which is facilitated by a reduction in the real interest rate. If the fall in the interest rate is limited by the zero lower bound and nominal rigidities, then the economy enters a liquidity trap with limited reallocation and low output. The drop in output reduces nonresidential investment through a mechanism similar to the acceleration principle of investment. The burst in nonresidential investment is followed by an even greater boom due to low interest rates during the liquidity trap. The boom in nonresidential investment induces a partial and asymmetric recovery in which the residential sector is left behind, consistent with the broad trends of the Great Recession.
Handle: RePEc:nbr:nberwo:20569
Template-Type: ReDIF-Paper 1.0
Title: Political Budget Cycles: Evidence from Italian Cities
Classification-JEL: H0
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Matteo Paradisi
Author-Person: ppa1393
Note: PE POL
Number: 20570
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20570
File-URL: http://www.nber.org/papers/w20570.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Matteo Paradisi, 2017. "Political budget cycles: Evidence from Italian cities," Economics & Politics, vol 29(2), pages 157-177.
Abstract: The introduction of a new real estate taxes in Italy in 2011 generated a natural experiment, which is useful to test political budget cycles, i.e. the strategic choice of fiscal variables in relation to elections. We do find substantial evidence of political budget cycles, with municipalities choosing lower tax rates when close to elections. We observe this budget cycle only for smaller municipalities where the tax was more likely to be the single most important issue for the local government. Cities close to elections with large deficits did not set lower rates before elections, probably because they felt the binding constraints of budget rules.
Handle: RePEc:nbr:nberwo:20570
Template-Type: ReDIF-Paper 1.0
Title: U.S. Investment in Global Bonds: As the Fed Pushes, Some EMEs Pull
Classification-JEL: F21; F31; G11
Author-Name: John D. Burger
Author-Person: pbu222
Author-Name: Rajeswari Sengupta
Author-Person: pse324
Author-Name: Francis E. Warnock
Author-Name: Veronica Cacdac Warnock
Note: IFM
Number: 20571
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20571
File-URL: http://www.nber.org/papers/w20571.pdf
File-Format: application/pdf
Publication-Status: published as Burger, J., R. Sengupta, F. Warnock, and V. Warnock, 2015. U.S. Investment in Global Bonds: As the Fed Pushes, Some EMEs Pull. Economic Policy 30 (84): 729-766.
Abstract: We analyze reallocations within the international bond portfolios of US investors. The most striking empirical observation is a steady increase in US investors' allocations toward emerging market local currency bonds, unabated by the global financial crisis and accelerating in the post-crisis period. Part of the increase in EME allocations is associated with global "push" factors such as low US long-term interest rates and unconventional monetary policy as well as subdued risk aversion/expected volatility. But also evident is investor differentiation among EMEs, with the largest reallocations going to those EMEs with strong macroeconomic fundamentals such as more positive current account balances, less volatile inflation, and stronger economic growth. We also provide a descriptive analysis of global bond markets' structure and returns.
Handle: RePEc:nbr:nberwo:20571
Template-Type: ReDIF-Paper 1.0
Title: Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone
Classification-JEL: E2; E3; E4; E6; F3; F4
Author-Name: Philippe Martin
Author-Person: pma588
Author-Name: Thomas Philippon
Author-Person: pph81
Note: EFG IFM ME
Number: 20572
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20572
File-URL: http://www.nber.org/papers/w20572.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Martin & Thomas Philippon, 2017. "Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone," American Economic Review, vol 107(7), pages 1904-1937.
Abstract: We provide a comprehensive account of the dynamics of eurozone countries from 2000 to 2012. We analyze private leverage, fiscal policy, labor costs and interest rates and we propose a strategy to separate the impact of credit cycles, excessive government spending, and sudden stops. We then ask how eurozone countries would have fared with different policies. We find that most countries could have stabilized their employment if they had followed more conservative fiscal policies during the boom. Macro-prudential policies and an early intervention by the central bank to prevent market segmentation would also have significantly reduced the recession.
Handle: RePEc:nbr:nberwo:20572
Template-Type: ReDIF-Paper 1.0
Title: Asiaphoria Meets Regression to the Mean
Classification-JEL: E0; E6; F01; O4; O53
Author-Name: Lant Pritchett
Author-Person: ppr27
Author-Name: Lawrence H. Summers
Author-Person: psu137
Note: DEV EFG IFM
Number: 20573
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20573
File-URL: http://www.nber.org/papers/w20573.pdf
File-Format: application/pdf
Publication-Status: published as Pritchett, Lant & Summers, Lawrence H., 2013. "Asia-phoria meet regression to the mean," Proceedings, Federal Reserve Bank of San Francisco, issue Nov, pages 1-35.
Abstract: Consensus forecasts for the global economy over the medium and long term predict the world's economic gravity will substantially shift towards Asia and especially towards the Asian Giants, China and India. While such forecasts may pan out, there are substantial reasons that China and India may grow much less rapidly than is currently anticipated. Most importantly, history teaches that abnormally rapid growth is rarely persistent, even though economic forecasts invariably extrapolate recent growth. Indeed, regression to the mean is the empirically most salient feature of economic growth. It is far more robust in the data than, say, the much-discussed middle-income trap. Furthermore, statistical analysis of growth reveals that in developing countries, episodes of rapid growth are frequently punctuated by discontinuous drop-offs in growth. Such discontinuities account for a large fraction of the variation in growth rates. We suggest that salient characteristics of China--high levels of state control and corruption along with high measures of authoritarian rule--make a discontinuous decline in growth even more likely than general experience would suggest. China's growth record in the past 35 years has been remarkable, and nothing in our analysis suggests that a sharp slowdown is inevitable. Still, our analysis suggests that forecasters and planners looking at China would do well to contemplate a much wider range of outcomes than are typically considered.
Handle: RePEc:nbr:nberwo:20573
Template-Type: ReDIF-Paper 1.0
Title: A Model of Secular Stagnation
Classification-JEL: E31; E32; E52
Author-Name: Gauti B. Eggertsson
Author-Person: peg7
Author-Name: Neil R. Mehrotra
Note: ME
Number: 20574
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20574
File-URL: http://www.nber.org/papers/w20574.pdf
File-Format: application/pdf
Abstract: We propose an overlapping generations New Keynesian model in which a permanent (or very persistent) slump is possible without any self-correcting force to full employment. The trigger for the slump is a deleveraging shock, which creates an oversupply of savings. Other forces that work in the same direction and can both create or exacerbate the problem include a drop in population growth, an increase in income inequality, and a fall in the relative price of investment. Our model sheds light on the long persistence of the Japanese crisis, the Great Depression, and the slow recovery out of the Great Recession. It also highlights several implications for policy.
Handle: RePEc:nbr:nberwo:20574
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Prediction Pools: An Investigation of Financial Frictions and Forecasting Performance
Classification-JEL: C53; E31; E32; E37
Author-Name: Marco Del Negro
Author-Person: pde35
Author-Name: Raiden B. Hasegawa
Author-Name: Frank Schorfheide
Author-Person: psc19
Note: EFG ME
Number: 20575
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20575
File-URL: http://www.nber.org/papers/w20575.pdf
File-Format: application/pdf
Publication-Status: published as Del Negro, Marco & Hasegawa, Raiden B. & Schorfheide, Frank, 2016. "Dynamic prediction pools: An investigation of financial frictions and forecasting performance," Journal of Econometrics, Elsevier, vol. 192(2), pages 391-405.
Abstract: We provide a novel methodology for estimating time-varying weights in linear prediction pools, which we call Dynamic Pools, and use it to investigate the relative forecasting performance of DSGE models with and without financial frictions for output growth and inflation from 1992 to 2011. We find strong evidence of time variation in the pool's weights, reflecting the fact that the DSGE model with financial frictions produces superior forecasts in periods of financial distress but does not perform as well in tranquil periods. The dynamic pool's weights react in a timely fashion to changes in the environment, leading to real-time forecast improvements relative to other methods of density forecast combination, such as Bayesian Model Averaging, optimal (static) pools, and equal weights. We show how a policymaker dealing with model uncertainty could have used a dynamic pools to perform a counterfactual exercise (responding to the gap in labor market conditions) in the immediate aftermath of the Lehman crisis.
Handle: RePEc:nbr:nberwo:20575
Template-Type: ReDIF-Paper 1.0
Title: Inflation Expectations, Learning and Supermarket Prices
Classification-JEL: C93; D83; E31; E58
Author-Name: Alberto Cavallo
Author-Person: pca605
Author-Name: Guillermo Cruces
Author-Person: pcr20
Author-Name: Ricardo Perez-Truglia
Note: IFM ME
Number: 20576
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20576
File-URL: http://www.nber.org/papers/w20576.pdf
File-Format: application/pdf
Publication-Status: published as Cavallo, Alberto, Guillermo Cruces, and Ricardo Perez-Truglia. 2017. "Inflation Expectations, Learning, and Supermarket Prices: Evidence from Survey Experiments." American Economic Journal: Macroeconomics, 9 (3): 1-35. DOI: 10.1257/mac.20150147
Abstract: Information frictions play a central role in the formation of household inflation expectations, but there is no consensus about their origins. We address this question with novel evidence from survey experiments. We document two main findings. First, individuals in lower-inflation contexts have significantly weaker priors about the inflation rate. This finding suggests that rational inattention may be an important source of information frictions. Second, cognitive limitations also appear to be a source of information frictions: even when information about inflation statistics is made readily available, individuals still place a significant weight on less accurate sources of information, such as their memories of the price changes of the supermarket products they purchase. We discuss the implications of these findings for macroeconomic models and policy-making.
Handle: RePEc:nbr:nberwo:20576
Template-Type: ReDIF-Paper 1.0
Title: A Distant Mirror of Debt, Default, and Relief
Classification-JEL: E6; F3; H6; N0
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Christoph Trebesch
Author-Person: ptr108
Note: IFM ME
Number: 20577
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20577
File-URL: http://www.nber.org/papers/w20577.pdf
File-Format: application/pdf
Publication-Status: published as Journal of the European Economic Association, Volume 14, Issue 1, pages 215–251, February 2016
Abstract: We take a first pass at quantifying the magnitudes of debt relief achieved through default and restructuring in two distinct samples: 1979-2010, focusing on credit events in emerging markets, and 1920-1939, documenting the official debt hangover in advanced economies that was created by World War I and its aftermath. We examine the economic performance of debtor countries during and after these overhang episodes, by tracing the evolution of real per capita GDP (levels and growth rates); sovereign credit ratings; debt servicing burdens relative to GDP, fiscal revenues, and exports; as well as the level of government debt (external and total). Across 45 crisis episodes for which data is available we find that debt relief averaged 21 percent of GDP for advanced economies (1932-1939) and 16 percent of GDP for emerging markets (1979-2010), respectively. The economic landscape after a final debt reduction is characterized by higher income levels and growth, lower debt servicing burdens and lower government debt. Also ratings recover markedly, albeit only in the modern period.
Handle: RePEc:nbr:nberwo:20577
Template-Type: ReDIF-Paper 1.0
Title: Financing Decisions and Product Introductions of Private and Publicly Traded Firms
Classification-JEL: G3; G31; G32; L1; L22; L25; L26
Author-Name: Gordon Phillips
Author-Person: pph31
Author-Name: Giorgo Sertsios
Author-Person: pse533
Note: CF IO
Number: 20578
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20578
File-URL: http://www.nber.org/papers/w20578.pdf
File-Format: application/pdf
Abstract: We exploit Medicare national coverage reimbursement approvals of medical devices as a quasi-natural experiment to investigate how private and publicly traded firm financing decisions and product introductions respond to exogenous changes in investment opportunities. We find that publicly traded companies increase their external financing, and their subsequent product introductions, by more than private companies in response to national coverage approvals. The primary source of the increased financing is through private financing of public firms. We also show that firms that select to go public during our sample period are ex ante more productive than similar private firms. The results are consistent with public firms bearing the costs of going public to gain financing advantages that come from being able to offer securities with better exit liquidity and lower price risk.
Handle: RePEc:nbr:nberwo:20578
Template-Type: ReDIF-Paper 1.0
Title: Outside Purchase Contracts, Human Capital and Firm Capital Structure
Classification-JEL: G31; G32; L1; L22; L23; L24
Author-Name: S. Katie Moon
Author-Name: Gordon M. Phillips
Author-Person: pph31
Note: CF IO
Number: 20579
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20579
File-URL: http://www.nber.org/papers/w20579.pdf
File-Format: application/pdf
Abstract: We examine the impact of outside purchase contracts on firm risk and firm capital structure. We find that firms with more outside purchase contracts have less risky cash flows. Despite these less risky cash flows, firms with these contracts also have less financial leverage especially when they operate in high value-added industries. Examining firm financing decisions, we document that firms with more outside contracts are more likely to issue private securities. Our results are consistent with firms with more outside purchase contracts using less leverage to decrease the expected costs of financial distress on their explicit and implicit contracting parties.
Handle: RePEc:nbr:nberwo:20579
Template-Type: ReDIF-Paper 1.0
Title: The New Full-time Employment Taxes
Classification-JEL: H24; I13; J22
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG LS PE
Number: 20580
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20580
File-URL: http://www.nber.org/papers/w20580.pdf
File-Format: application/pdf
Publication-Status: published as The New Full-Time Employment Taxes, Casey B. Mulligan. in Tax Policy and the Economy, Volume 29, Brown. 2015
Abstract: The Affordable Care Act introduces or expands taxes on incomes and full-time employment, beginning in 2014. The purpose of this paper is to characterize the new full-time employment taxes from the perspective of a household budget constraint, measure their magnitude, and assess their likely consequences for employee work schedules. When the ACA is fully implemented, full-time employment taxes will be prevalent and often as large as what workers can earn in five hours of work per week, 52 weeks per year. The economic significance of the ACA's full-time employment taxes varies by demographic group: they are non-monotonic in age, increasing with family size, and negatively correlated with schooling.
Handle: RePEc:nbr:nberwo:20580
Template-Type: ReDIF-Paper 1.0
Title: How Does Government Borrowing Affect Corporate Financing and Investment?
Classification-JEL: E22; E44; G20; G31; G32
Author-Name: John Graham
Author-Name: Mark T. Leary
Author-Name: Michael R. Roberts
Author-Person: pro361
Note: CF EFG
Number: 20581
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20581
File-URL: http://www.nber.org/papers/w20581.pdf
File-Format: application/pdf
Abstract: Using a novel dataset of accounting and market information that spans most publicly traded nonfinancial firms over the last century, we show that U.S. federal government debt issuance significantly affects corporate financial policies and balance sheets through its impact on investors' portfolio allocations and the relative pricing of different assets. Government debt is strongly negatively correlated with corporate debt and investment, but strongly positively correlated with corporate liquidity. These relations are more pronounced in larger, less risky firms whose debt is a closer substitute for Treasuries. Indeed, we find a strong negative relation between the BAA-AAA yield spread and government debt, highlighting the greater sensitivity of more highly rated credit to variation in the supply of Treasuries. The channel through which this effect operates is investors' portfolio decisions: domestic intermediaries actively substitute between lending to the federal government and the nonfinancial corporate sector. The relations between government debt and corporate policies, as well as the substitution between government and corporate debt by intermediaries, are stronger after 1970 when foreign demand increased competition for Treasury securities. In concert, our results suggest that large, financially healthy corporations act as liquidity providers by supplying relatively safe securities to investors when alternatives are in short supply, and that this financial strategy influences firms' capital structures and investment policies.
Handle: RePEc:nbr:nberwo:20581
Template-Type: ReDIF-Paper 1.0
Title: How Much Are Public School Teachers Willing to Pay for Their Retirement Benefits?
Classification-JEL: H55; H72; H75; I22; J26; J45
Author-Name: Maria Donovan Fitzpatrick
Author-Person: pfi211
Note: AG ED LS PE
Number: 20582
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20582
File-URL: http://www.nber.org/papers/w20582.pdf
File-Format: application/pdf
Publication-Status: published as Maria Donovan Fitzpatrick, 2015. "How Much Are Public School Teachers Willing to Pay for Their Retirement Benefits?," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 165-88, November.
Abstract: Public sector employees receive large fractions of their lifetime income in the form of deferred compensation. The introduction of the opportunity provided to Illinois public school employees to purchase additional pension benefits allows me to estimate employees' willingness-to-pay for benefits relative to the cost of providing them. The results show employees are willing to pay 20 cents on average for a dollar increase in the present value of expected retirement benefits. The findings suggest substantial inefficiency in compensation and cast doubt on the ability of deferred compensation schemes to attract employees.
Handle: RePEc:nbr:nberwo:20582
Template-Type: ReDIF-Paper 1.0
Title: Financing Constraints, Home Equity and Selection into Entrepreneurship
Classification-JEL: D14; D31; G21; G28; L26
Author-Name: Thais Lærkholm Jensen
Author-Name: Søren Leth-Petersen
Author-Person: ple913
Author-Name: Ramana Nanda
Author-Person: pna187
Note: CF PR
Number: 20583
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20583
File-URL: http://www.nber.org/papers/w20583.pdf
File-Format: application/pdf
Publication-Status: published as Thais Laerkholm Jensen & Søren Leth-Petersen & Ramana Nanda, 2021. "Financing constraints, home equity and selection into entrepreneurship," Journal of Financial Economics, .
Abstract: We exploit a mortgage reform that differentially unlocked home equity across the Danish population and study how this impacted selection into entrepreneurship. We find that increased entry was concentrated among entrepreneurs whose firms were founded in industries where they had no prior work experience. In addition, we find that marginal entrants benefiting from the reform had higher pre-entry earnings and that a significant share of entrants started longer-lasting firms. Our results are most consistent with the view that housing collateral enabled high ability individuals with less-well-established track records to overcome credit rationing and start new firms, rather than just leading to `frivolous entry' by those without prior industry experience.
Handle: RePEc:nbr:nberwo:20583
Template-Type: ReDIF-Paper 1.0
Title: The Great Recession, Decline and Rebound in Household Wealth for the Near Retirement Population
Classification-JEL: D31; D91; E21; H55; I3; J14; J26; J32
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Author-Name: Nahid Tabatabai
Note: AG LS PE
Number: 20584
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20584
File-URL: http://www.nber.org/papers/w20584.pdf
File-Format: application/pdf
Publication-Status: published as The Journal of Retirement, Fall, 2014, Vol. 2, No. 2, pp. 27-44
Abstract: This paper uses data from the Health and Retirement Study to examine the effects of the Great Recession on the wealth held by the near retirement age population from 2006 to 2012. For the Early Boomer cohort (ages 51 to 56 in 2004), real wealth in 2012 remained 3.6 percent below its 2006 value. This is a modest decline considering the fall in asset values during the Great Recession. Much of the decline in wealth over the 2006 to 2010 period was cushioned by wealth originating from Social Security and defined benefit pensions. For the most part, these are stable sums that ensured a major fraction of total wealth did not decline as a result of the recession. The rebound in asset values observed between 2010 and 2012 mitigated, but did not erase, the asset losses experienced in the first years of the Great Recession. Effects of the Great Recession varied with the household's initial wealth. Those who were in the highest wealth deciles typically had a larger share of their assets subject to the influence of declining markets, and were hurt most severely. Unlike those falling in lower wealth deciles, they have yet to regain all the wealth they lost during the recession. Recovering losses in assets is only part of the story. The assets held by members of the cohort nearing retirement at the onset of the recession would normally have grown over ensuing years. Members of older HRS cohorts accumulated assets rapidly in the years just before retirement. Those on the cusp of retiring at the onset of the recession would be much better off had they had enjoyed similar growth in assets as experienced by members of older cohorts. The bottom line is that the losses in assets imposed by the Great Recession were relatively modest. The recovery has helped. But much of the remaining penalty due to the Great Recession is in the failure of assets to grow beyond their initial levels.
Handle: RePEc:nbr:nberwo:20584
Template-Type: ReDIF-Paper 1.0
Title: Beyond Ricardo: Assignment Models in International Trade
Classification-JEL: F1
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Jonathan Vogel
Author-Person: pvo58
Note: ITI
Number: 20585
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20585
File-URL: http://www.nber.org/papers/w20585.pdf
File-Format: application/pdf
Publication-Status: published as Arnaud Costinot & Jonathan Vogel, 2015. "Beyond Ricardo: Assignment Models in International Trade," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 31-62, 08.
Abstract: International trade has experienced a Ricardian revival. In this article, we offer a user guide to assignment models, which we will refer to as Ricardo-Roy (R-R) models, that have contributed to this revival.
Handle: RePEc:nbr:nberwo:20585
Template-Type: ReDIF-Paper 1.0
Title: Family Planning: Program Effects
Classification-JEL: I15; J12; J13; J18; N3; O15
Author-Name: Grant Miller
Author-Name: Kimberly Singer Babiarz
Note: CH DEV EH
Number: 20586
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20586
File-URL: http://www.nber.org/papers/w20586.pdf
File-Format: application/pdf
Publication-Status: published as Miller, G. and Babiarz, K. S. (2016), Family Planning Program Effects: Evidence from Microdata. Population and Development Review, 42: 7-26. doi:10.1111/j.1728-4457.2016.00109.x
Abstract: This paper reviews empirical evidence on the micro-level consequences of family planning programs in middle- and low-income countries. In doing so, it focuses on fertility outcomes (the number and timing of births), women’s health and socio-economic outcomes (mortality, human capital, and labor force participation), and children’s health and socio-economic outcomes throughout the life cycle. Although effect sizes are heterogeneous, long-term studies imply that in practice, family planning programs may only explain a modest share of fertility decline in real-world settings (explaining 4-20% of fertility decline among studies finding significant effects). Family planning programs may also have quantitatively modest - but practically meaningful - effects on the socio-economic welfare of individuals and families.
Handle: RePEc:nbr:nberwo:20586
Template-Type: ReDIF-Paper 1.0
Title: Patent Collateral, Investor Commitment, and the Market for Venture Lending
Classification-JEL: G24; L14; L26; O16; O3
Author-Name: Yael V. Hochberg
Author-Name: Carlos J. Serrano
Author-Person: pse144
Author-Name: Rosemarie H. Ziedonis
Note: CF IO PR
Number: 20587
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20587
File-URL: http://www.nber.org/papers/w20587.pdf
File-Format: application/pdf
Publication-Status: published as YaelV. Hochberg & Carlos J. Serrano & Rosemarie H. Ziedonis, 2018. "Patent Collateral, Investor Commitment, and the Market for Venture Lending," Journal of Financial Economics, .
Abstract: The use of debt to finance risky entrepreneurial-firm projects is rife with informational and contracting problems. Nonetheless, we document widespread lending to startups in three innovation-intensive sectors and in early stages of development. At odds with claims that the secondary patent market is too illiquid to shape debt financing, we find that intensified patent trading increases the annual rate of startup lending, particularly for startups with more redeployable (less firm-specific) patent assets. Exploiting differences in venture capital (VC) fundraising cycles and a negative capital-supply shock in early 2000, we also find that the credibility of VC commitments to refinance and grow fledgling companies is vital for such lending. Our study illuminates friction-reducing mechanisms in the market for venture lending, a surprisingly active but opaque arena for innovation financing, and tests central tenets of contract theory.
Handle: RePEc:nbr:nberwo:20587
Template-Type: ReDIF-Paper 1.0
Title: Welfare and Optimal Trading Frequency in Dynamic Double Auctions
Classification-JEL: D44; D82; G14
Author-Name: Songzi Du
Author-Person: pdu334
Author-Name: Haoxiang Zhu
Author-Person: pzh997
Note: AP
Number: 20588
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20588
File-URL: http://www.nber.org/papers/w20588.pdf
File-Format: application/pdf
Abstract: This paper studies the welfare consequence of increasing trading speed in financial markets. We build and solve a dynamic trading model, in which traders receive private information of asset value over time and trade strategically with demand schedules in a sequence of double auctions. A stationary linear equilibrium and its efficiency properties are characterized explicitly in closed form. Infrequent trading (few double auctions per unit of time) leads to a larger market depth in each trading period, but frequent trading allows more immediate asset re-allocation after new information arrives. Under natural conditions, the socially optimal trading frequency coincides with information arrival frequency for scheduled information releases, but can (far) exceed information arrival frequency for stochastic information arrivals. If traders have heterogeneous trading speeds, fast traders prefer the highest feasible trading frequency, whereas slow traders tend to prefer a strictly lower frequency.
Handle: RePEc:nbr:nberwo:20588
Template-Type: ReDIF-Paper 1.0
Title: Valuing Thinly-Traded Assets
Classification-JEL: G12; G32
Author-Name: Francis Longstaff
Author-Person: plo283
Note: AP
Number: 20589
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20589
File-URL: http://www.nber.org/papers/w20589.pdf
File-Format: application/pdf
Publication-Status: published as Valuing Thinly Traded Assets Francis A. Longstaff Management Science , Articles in Advance
Abstract: We model illiquidity as a restriction on the stopping rules investors can follow in selling assets, and apply this framework to the valuation of thinly-traded investments. We find that discounts for illiquidity can be surprisingly large, approaching 30 to 50 percent in some cases. Immediacy plays a unique role and is valued much more than ongoing liquidity. We show that investors in illiquid enterprises have strong incentives to increase dividends and other cash payouts, thereby introducing potential agency conflicts. We also find that illiquidity and volatility are fundamentally entangled in their effects on asset prices. This aspect may help explain why some assets are viewed as inherently more liquid than others and why liquidity concerns are heightened during financial crises.
Handle: RePEc:nbr:nberwo:20589
Template-Type: ReDIF-Paper 1.0
Title: The Value of Regulatory Discretion: Estimates from Environmental Inspections in India
Classification-JEL: D22; L51; Q56
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: Rohini Pande
Author-Person: ppa900
Author-Name: Nicholas Ryan
Note: EEE
Number: 20590
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20590
File-URL: http://www.nber.org/papers/w20590.pdf
File-Format: application/pdf
Publication-Status: published as Esther Duflo & Michael Greenstone & Rohini Pande & Nicholas Ryan, 2018. "The Value of Regulatory Discretion: Estimates From Environmental Inspections in India," Econometrica, Econometric Society, vol. 86(6), pages 2123-2160, November.
Abstract: In collaboration with a state environmental regulator in India, we conducted a field experiment to raise the frequency of environmental inspections to the prescribed minimum for a random set of industrial plants. The treatment was successful when judged by process measures, as treatment plants, relative to the control group, were more than twice as likely to be inspected and to be cited for violating pollution standards. Yet the treatment was weaker for more consequential outcomes: the regulator was no more likely to identify extreme polluters (i.e., plants with emissions five times the regulatory standard or more) or to impose costly penalties in the treatment group. In response to the added scrutiny, treatment plants only marginally increased compliance with standards and did not significantly reduce mean pollution emissions. To explain these results and recover the full costs of environmental regulation, we model the regulatory process as a dynamic discrete game where the regulator chooses whether to penalize and plants choose whether to abate to avoid future sanctions. We estimate this model using original data on 10,000 interactions between plants and the regulator. Our estimates imply that the costs of environmental regulation are largely reserved for extremely polluting plants. Applying the cost estimates to the experimental data, we find the average treatment inspection imposes about half the cost on plants that the average control inspection does, because the randomly assigned inspections in the treatment are less likely than normal discretionary inspections to target such extreme polluters.
Handle: RePEc:nbr:nberwo:20590
Template-Type: ReDIF-Paper 1.0
Title: Understanding Defensive Equity
Classification-JEL: G12
Author-Name: Robert Novy-Marx
Note: AP
Number: 20591
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20591
File-URL: http://www.nber.org/papers/w20591.pdf
File-Format: application/pdf
Abstract: High volatility and high beta stocks tilt strongly to small, unprofitable, and growth firms. These tilts explain the poor absolute performance of the most aggressive stocks. In conjunction with the well documented inability of the Fama and French three-factor model to price small growth stocks, especially unprofitable small growth stocks, these tilts also drive the abnormal performance of defensive equity (i.e., low volatility and/or low beta strategies). While defensive strategy performance is explained by controlling for size, profitability, and relative valuations, the converse is false--the performance of value and profitability strategies cannot by explained using defensive equity performance.
Handle: RePEc:nbr:nberwo:20591
Template-Type: ReDIF-Paper 1.0
Title: . . . and the Cross-Section of Expected Returns
Classification-JEL: C01; C58; G0; G1; G12; G3
Author-Name: Campbell R. Harvey
Author-Person: pha102
Author-Name: Yan Liu
Author-Name: Heqing Zhu
Note: AP
Number: 20592
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20592
File-URL: http://www.nber.org/papers/w20592.pdf
File-Format: application/pdf
Publication-Status: published as Campbell R. Harvey & Yan Liu & Heqing Zhu, 2016. "… and the Cross-Section of Expected Returns," Review of Financial Studies, vol 29(1), pages 5-68.
Abstract: Hundreds of papers and hundreds of factors attempt to explain the cross-section of expected returns. Given this extensive data mining, it does not make any economic or statistical sense to use the usual significance criteria for a newly discovered factor, e.g., a t-ratio greater than 2.0. However, what hurdle should be used for current research? Our paper introduces a multiple testing framework and provides a time series of historical significance cutoffs from the first empirical tests in 1967 to today. Our new method allows for correlation among the tests as well as missing data. We also project forward 20 years assuming the rate of factor production remains similar to the experience of the last few years. The estimation of our model suggests that a newly discovered factor needs to clear a much higher hurdle, with a t-ratio greater than 3.0. Echoing a recent disturbing conclusion in the medical literature, we argue that most claimed research findings in financial economics are likely false.
Handle: RePEc:nbr:nberwo:20592
Template-Type: ReDIF-Paper 1.0
Title: Foreclosure, Vacancy and Crime
Classification-JEL: J18; R14; R3
Author-Name: Lin Cui
Author-Name: Randall Walsh
Author-Person: pwa222
Note: PE
Number: 20593
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20593
File-URL: http://www.nber.org/papers/w20593.pdf
File-Format: application/pdf
Publication-Status: published as Cui, Lin & Walsh, Randall, 2015. "Foreclosure, vacancy and crime," Journal of Urban Economics, Elsevier, vol. 87(C), pages 72-84.
Abstract: This paper examines the impact of residential foreclosures and vacancies on violent and property crime. To overcome confounding factors, a difference-in-difference research design is applied to a unique data set containing geocoded foreclosure and crime data from Pittsburgh, Pennsylvania. Results indicate that while foreclosure alone has no effect on crime, violent crime rates increase by roughly 19% once the foreclosed home becomes vacant -an effect that increases with length of vacancy. We find weak evidence suggesting a potential vacancy effect for property crime that is much lower in magnitude.
Handle: RePEc:nbr:nberwo:20593
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy Uncertainty and Economic Fluctuations
Classification-JEL: C5; E4
Author-Name: Drew D. Creal
Author-Person: pcr106
Author-Name: Jing Cynthia Wu
Author-Person: pwu111
Note: ME
Number: 20594
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20594
File-URL: http://www.nber.org/papers/w20594.pdf
File-Format: application/pdf
Publication-Status: published as Drew D. Creal & Jing Cynthia Wu, 2017. "MONETARY POLICY UNCERTAINTY AND ECONOMIC FLUCTUATIONS," International Economic Review, vol 58(4), pages 1317-1354.
Abstract: We investigate the relationship between uncertainty about monetary policy and its transmission mechanism, and economic fluctuations. We propose a new term structure model where the second moments of macroeconomic variables and yields can have a first-order effect on their dynamics. The data favors a model with two unspanned volatility factors that capture uncertainty about monetary policy and the term premium. Uncertainty contributes negatively to economic activity. Two dimensions of uncertainty react in opposite directions to a shock to the real economy, and the response of inflation to uncertainty shocks vary across different historical episodes.
Handle: RePEc:nbr:nberwo:20594
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Research & Development Funding On Scientific Productivity: Academic Chemistry, 1990-2009
Classification-JEL: H50; I23; O31; O32; O38
Author-Name: Joshua L. Rosenbloom
Author-Person: pro664
Author-Name: Donna K. Ginther
Author-Person: pgi410
Author-Name: Ted Juhl
Author-Name: Joseph Heppert
Note: DAE PR
Number: 20595
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20595
File-URL: http://www.nber.org/papers/w20595.pdf
File-Format: application/pdf
Publication-Status: published as The Effects of Research & Development Funding on Scientific Productivity: Academic Chemistry, 1990-2009 Joshua L. Rosenbloom , Donna K. Ginther, Ted Juhl, Joseph A. Heppert PLOS Published: September 15, 2015 https://doi.org/10.1371/journal.pone.0138176
Abstract: This article examines the relationship between Research & Development (R&D) funding and the production of knowledge by academic chemists. Using articles published, either raw counts or adjusted for quality, we find a strong, positive causal effect of funding on knowledge production. This effect is similar across subsets of universities, suggesting a relatively efficient allocation of R&D funds. Finally, we document a rapid acceleration in the rate at which chemical knowledge was produced in the late 1990s and early 2000s relative to the financial and human resources devoted to its production.
Handle: RePEc:nbr:nberwo:20595
Template-Type: ReDIF-Paper 1.0
Title: A Tale of Repetition: Lessons from Florida Restaurant Inspections
Classification-JEL: D02; D81; D82; K32; L51
Author-Name: Ginger Zhe Jin
Author-Name: Jungmin Lee
Author-Person: ple117
Note: IO
Number: 20596
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20596
File-URL: http://www.nber.org/papers/w20596.pdf
File-Format: application/pdf
Publication-Status: published as Ginger Zhe Jin & Jungmin Lee, 2018. "A Tale of Repetition: Lessons from Florida Restaurant Inspections," The Journal of Law and Economics, vol 61(1), pages 159-188.
Abstract: This paper examines the role of repetition in government regulation using Florida restaurant inspection data from 2003 to 2010. In the raw data, inspectors new to inspected restaurants tend to report 27% more violations than repeat inspectors. After ruling out regulatory capture and endogenous inspector rotation as potential explanations, we find that the new-repeat gap is best explained by the following two effects: first, restaurants target compliance in response to heterogenous stringency and tastes of different inspectors; second, inspectors pay greater attention in their first visit than in subsequent visits. After controlling for heterogenous inspector criteria, we find that a new inspector reports 13-18% more violations than the second visit of the previous inspector, likely due to a higher level of attention. Counterfactual simulations highlight the importance of inspector training and rotation in regulatory outcomes.
Handle: RePEc:nbr:nberwo:20596
Template-Type: ReDIF-Paper 1.0
Title: The Early Impact of the Affordable Care Act State-By-State
Classification-JEL: H75; I13
Author-Name: Amanda E. Kowalski
Note: AG EH PE
Number: 20597
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20597
File-URL: http://www.nber.org/papers/w20597.pdf
File-Format: application/pdf
Publication-Status: published as Amanda Kowalski, 2014. "The Early Impact of the Affordable Care Act, State by State," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(2 (Fall)), pages 277-355.
Abstract: I examine the impact of state policy decisions on the early impact of the ACA using data through the first half of 2014. I focus on the individual health insurance market, which includes plans purchased through exchanges as well as plans purchased directly from insurers. In this market, at least 13.2 million people were covered in the second quarter of 2014, representing an increase of at least 4.2 million beyond pre-ACA state-level trends. I use data on coverage, premiums, and costs and a model developed by Hackmann, Kolstad, and Kowalski (2013) to calculate changes in selection and markups, which allow me to estimate the welfare impact of the ACA on participants in the individual health insurance market in each state. I then focus on comparisons across groups of states. The estimates from my model imply that market participants in the five "direct enforcement" states that ceded all enforcement of the ACA to the federal government are experiencing welfare losses of approximately $245 per participant on an annualized basis, relative to participants in all other states. They also imply that the impact of setting up a state exchange depends meaningfully on how well it functions. Market participants in the six states that had severe exchange glitches are experiencing welfare losses of approximately $750 per participant on an annualized basis, relative to participants in other states with their own exchanges. Although the national impact of the ACA is likely to change over the course of 2014 as coverage, costs, and premiums evolve, I expect that the differential impacts that we observe across states will persist through the rest of 2014.
Handle: RePEc:nbr:nberwo:20597
Template-Type: ReDIF-Paper 1.0
Title: Climate and Conflict
Classification-JEL: I3; O1; P48; Q51; Q54
Author-Name: Marshall Burke
Author-Name: Solomon M. Hsiang
Author-Name: Edward Miguel
Author-Person: pmi499
Note: DEV EEE POL
Number: 20598
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20598
File-URL: http://www.nber.org/papers/w20598.pdf
File-Format: application/pdf
Publication-Status: published as Marshall Burke & Solomon M. Hsiang & Edward Miguel, 2015. "Climate and Conflict," Annual Review of Economics, vol 7(1), pages 577-617.
Abstract: Until recently, neither climate nor conflict have been core areas of inquiry within economics, but there has been an explosion of research on both topics in the past decade, with a particularly large body of research emerging at their intersection. In this review, we survey this literature on the interlinkages between climate and conflict, by necessity drawing from both economics and other disciplines given the inherent interdisciplinarity of research in this field. We consider many types of human conflict in the review, including both interpersonal conflict -- such as domestic violence, road rage, assault, murder, and rape -- and intergroup conflict -- including riots, ethnic violence, land invasions, gang violence, civil war and other forms of political instability, such as coups. We discuss the key methodological issues in estimating causal relationships in this area, and largely focus on "natural experiments" that exploit variation in climate variables over time, helping to address omitted variable bias concerns. After harmonizing statistical specifications and standardizing estimated effect sizes within each conflict category, we carry out a hierarchical meta-analysis that allows us to estimate the mean effect of climate variation on conflict outcomes as well as to quantify the degree of variability in this effect size across studies. Looking across 55 studies, we find that deviations from moderate temperatures and precipitation patterns systematically increase the risk of conflict, often substantially, with average effects that are highly statistically significant. We find that contemporaneous temperature has the largest average effect by far, with each 1σ increase toward warmer temperatures increasing the frequency of contemporaneous interpersonal conflict by 2.4% and of intergroup conflict by 11.3%, but that the 2-period cumulative effect of rainfall on intergroup conflict is also substantial (3.5%/σ). We also quantify heterogeneity in these effect estimates across settings that is likely important. We conclude by highlighting remaining challenges in this field and the approaches we expect will be most effective at solving them, including identifying mechanisms that link climate to conflict, measuring the ability of societies to adapt to climate changes, and understanding the likely impacts of future global warming.
Handle: RePEc:nbr:nberwo:20598
Template-Type: ReDIF-Paper 1.0
Title: Second Trimester Sunlight and Asthma: Evidence from Two Independent Studies
Classification-JEL: I12; I18; J13
Author-Name: Nils Wernerfelt
Author-Name: David Slusky
Author-Person: psl81
Author-Name: Richard Zeckhauser
Author-Person: pze7
Note: CH EH PE
Number: 20599
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20599
File-URL: http://www.nber.org/papers/w20599.pdf
File-Format: application/pdf
Publication-Status: published as Nils Wernerfelt & David J. G. Slusky & Richard Zeckhauser, 2017. "Second Trimester Sunlight and Asthma: Evidence from Two Independent Studies," American Journal of Health Economics, vol 3(2), pages 227-253.
Abstract: One in twelve Americans suffers from asthma and its annual costs are estimated to exceed $50 billion. Simultaneously, the root causes of the disease remain unknown. A recent hypothesis speculates that maternal vitamin D levels during pregnancy affect the probability the fetus later develops asthma. In two large-scale studies, we test this hypothesis using a natural experiment afforded by historical variation in sunlight, a major source of vitamin D. Specifically, holding the birth location and month fixed, we see how exogenous within-location variation in sunlight across birth years affects the probability of asthma onset. We show that this measurement of sunlight correlates with actual exposure, and consistent with pre-existing results from the fetal development literature, we find substantial and highly significant evidence in both datasets that increased sunlight during the second trimester lowers the subsequent probability of asthma. Our results suggest policies designed to augment vitamin D levels in pregnant women, the large majority of whom are vitamin D insufficient, could be very cost-effective.
Handle: RePEc:nbr:nberwo:20599
Template-Type: ReDIF-Paper 1.0
Title: Saving for a (not so) Rainy Day: A Randomized Evaluation of Savings Groups in Mali
Classification-JEL: D12; D91; O12
Author-Name: Lori Beaman
Author-Person: pbe525
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Bram Thuysbaert
Note: DEV LS
Number: 20600
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20600
File-URL: http://www.nber.org/papers/w20600.pdf
File-Format: application/pdf
Abstract: High transaction and contracting costs are often thought to create credit and savings market failures in developing countries. The microfinance movement grew largely out of business process innovations and subsidies that reduced these costs. We examine an alternative approach, one that infuses no external capital and introduces no change to formal contracts: an improved "technology" for managing informal, collaborative village-based savings groups. Such groups allow, in theory, for more efficient and lower- cost loans and informal savings, and in practice have been scaled up by international non-profit organizations to millions of members. Individuals save together and then lend the accumulated funds back out to themselves. In a randomized evaluation in Mali, we find improvements in food security, consumption smoothing, and buffer stock savings. Although we do find suggestive evidence of higher agricultural output, we do not find overall higher income or expenditure. We also do not find downstream impacts on health, education, social capital, and female decision-making power. Could this have happened before, without any external intervention? Yes. That is what makes the result striking, that indeed there were no resources provided nor legal institutional changes, yet the NGO-guided, improved informal processes led to important changes for households.
Handle: RePEc:nbr:nberwo:20600
Template-Type: ReDIF-Paper 1.0
Title: High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk
Classification-JEL: E62; H21; H24
Author-Name: Fabian Kindermann
Author-Person: pki190
Author-Name: Dirk Krueger
Author-Person: pkr7
Note: EFG PE POL
Number: 20601
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20601
File-URL: http://www.nber.org/papers/w20601.pdf
File-Format: application/pdf
Publication-Status: published as Fabian Kindermann & Dirk Krueger, 2022. "High Marginal Tax Rates on the Top 1 Percent? Lessons from a Life-Cycle Model with Idiosyncratic Income Risk," American Economic Journal: Macroeconomics, vol 14(2), pages 319-366.
Abstract: In this paper we argue that very high marginal labor income tax rates are an effective tool for social insurance even when households have preferences with high labor supply elasticity, make dynamic savings decisions, and policies have general equilibrium effects. To make this point we construct a large scale Overlapping Generations Model with uninsurable labor productivity risk, show that it has a wealth distribution that matches the data well, and then use it to characterize fiscal policies that achieve a desired degree of redistribution in society. We find that marginal tax rates on the top 1% of the earnings distribution of close to 90% are optimal. We document that this result is robust to plausible variation in the labor supply elasticity and holds regardless of whether social welfare is measured at the steady state only or includes transitional generations.
Handle: RePEc:nbr:nberwo:20601
Template-Type: ReDIF-Paper 1.0
Title: The Comparative Advantage of Cities
Classification-JEL: F11; F14; R12; R13
Author-Name: Donald R. Davis
Author-Person: pda33
Author-Name: Jonathan I. Dingel
Author-Person: pdi319
Note: ITI LS
Number: 20602
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20602
File-URL: http://www.nber.org/papers/w20602.pdf
File-Format: application/pdf
Publication-Status: published as Donald R. Davis & Jonathan I. Dingel, 2020. "The comparative advantage of cities," Journal of International Economics, .
Abstract: What determines the distributions of skills, occupations, and industries across cities? We develop a theory to jointly address these fundamental questions about the spatial organization of economies. Our model incorporates a system of cities, their internal urban structures, and a high-dimensional theory of factor-driven comparative advantage. It predicts that larger cities will be skill-abundant and specialize in skill-intensive activities according to the monotone likelihood ratio property. We test the model using data on 270 US metropolitan areas, 3 to 9 educational categories, 22 occupations, and 21 manufacturing industries. The results provide support for our theory's predictions.
Handle: RePEc:nbr:nberwo:20602
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Bank Supervision: Evidence from U.S. States
Classification-JEL: E44; G28; N11
Author-Name: Kris James Mitchener
Author-Name: Matthew Jaremski
Author-Person: pja349
Note: DAE
Number: 20603
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20603
File-URL: http://www.nber.org/papers/w20603.pdf
File-Format: application/pdf
Publication-Status: published as Mitchener, K., & Jaremski, M. (2015). The Evolution of Bank Supervisory Institutions: Evidence from American States. The Journal of Economic History, 75(3), 819-859. doi:10.1017/S0022050715001126
Abstract: We use a novel data set spanning 1820-1910 to examine the origins of bank supervision and assess factors leading to the creation of formal bank supervision across U.S. states. We show that it took more than a century for the widespread adoption of independent supervisory institutions tasked with maintaining the safety and soundness of banks. State legislatures initially pursued cheaper regulatory alternatives, such as double liability laws; however, banking distress at the state level as well as the structural shift from note-issuing to deposit-taking commercial banks and competition with national banks propelled policymakers to adopt costly and permanent supervisory institutions.
Handle: RePEc:nbr:nberwo:20603
Template-Type: ReDIF-Paper 1.0
Title: Why You Can't Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers
Classification-JEL: D01; D03; J22
Author-Name: Henry S. Farber
Note: LS
Number: 20604
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20604
File-URL: http://www.nber.org/papers/w20604.pdf
File-Format: application/pdf
Publication-Status: published as Henry S. Farber, 2015. "Why you Can’t Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers," The Quarterly Journal of Economics, vol 130(4), pages 1975-2026.
Abstract: In a seminal paper, Camerer, Babcock, Loewenstein, and Thaler (1997) find that the wage elasticity of daily hours of work New York City (NYC) taxi drivers is negative and conclude that their labor supply behavior is consistent with target earning (having reference dependent preferences). I replicate and extend the CBLT analysis using data from all trips taken in all taxi cabs in NYC for the five years from 2009-2013. The overall pattern in my data is clear: drivers tend to respond positively to unanticipated as well as anticipated increases in earnings opportunities. This is consistent with the neoclassical optimizing model of labor supply and does not support the reference dependent preferences model. I explore heterogeneity across drivers in their labor supply elasticities and consider whether new drivers differ from more experienced drivers in their behavior. I find substantial heterogeneity across drivers in their elasticities, but the estimated elasticities are generally positive and only rarely substantially negative. I also find that new drivers with smaller elasticities are more likely to exit the industry while drivers who remain learn quickly to be better optimizers (have positive labor supply elasticities that grow with experience).
Handle: RePEc:nbr:nberwo:20604
Template-Type: ReDIF-Paper 1.0
Title: Directed Giving: Evidence from an Inter-Household Transfer Experiment
Classification-JEL: C92; C93; D01; D03; D64; O17
Author-Name: Catia Batista
Author-Person: pba327
Author-Name: Dan Silverman
Author-Person: psi181
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV
Number: 20605
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20605
File-URL: http://www.nber.org/papers/w20605.pdf
File-Format: application/pdf
Publication-Status: published as Batista, Catia & Silverman, Dan & Yang, Dean, 2015. "Directed giving: Evidence from an inter-household transfer experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 2-21.
Abstract: We investigate the determinants of giving in a lab-in-the-field experiment with large stakes. Study participants in urban Mozambique play dictator games where their counterpart is the closest person to them outside their household. When given the option, dictators do a large fraction of giving in kind (in the form of goods) rather than cash. In addition, they share more in total when they have the option of giving in kind, compared to giving that can only be in cash. Qualitative post-experiment responses suggest that this effect is driven by a desire to control how recipients use gifted resources. Standard economic determinants such as the rate of return to giving and the size of the endowment also affect giving, but the effects of even large changes in these determinants are significantly smaller than the effect of the in-kind option. Our results support theories of giving where the utility of givers depends on the composition (not just the level) of gift-recipient expenditures, and givers thus seek control over transferred resources.
Handle: RePEc:nbr:nberwo:20605
Template-Type: ReDIF-Paper 1.0
Title: Capital Depreciation and Labor Shares Around the World: Measurement and Implications
Classification-JEL: E21; E22; E23; E25
Author-Name: Loukas Karabarbounis
Author-Person: pka357
Author-Name: Brent Neiman
Author-Person: pne85
Note: EFG IFM PR
Number: 20606
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20606
File-URL: http://www.nber.org/papers/w20606.pdf
File-Format: application/pdf
Abstract: The labor share is typically measured as compensation to labor relative to gross value added ("gross labor share"), in part because gross value added is more directly measured than net value added. Labor compensation relative to net value added ("net labor share") may be more important in some settings, however, because depreciation is not consumed. In this paper we make three contributions. First, we document that gross and net labor shares generally declined together in most countries around the world over the past four decades. Second, we use a simple economic environment to show that declines in the price of capital necessarily cause gross and net labor shares to move in the same direction, whereas other shocks such as a decline in the real interest rate may cause the net labor share to rise when the gross labor share falls. Third, we illustrate that whether the gross or the net labor share is a more useful proxy for inequality during an economy's transition depends sensitively on the nature of the underlying shocks that hit the economy.
Handle: RePEc:nbr:nberwo:20606
Template-Type: ReDIF-Paper 1.0
Title: Knowledge-based Hierarchies: Using Organizations to Understand the Economy
Classification-JEL: D2; E24; F6; J3; L2; O4
Author-Name: Luis Garicano
Author-Person: pga77
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EFG IO ITI LS PR
Number: 20607
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20607
File-URL: http://www.nber.org/papers/w20607.pdf
File-Format: application/pdf
Publication-Status: published as Luis Garicano & Esteban Rossi-Hansberg, 2015. "Knowledge-Based Hierarchies: Using Organizations to Understand the Economy," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 1-30, 08.
Abstract: We argue that incorporating the decision of how to organize the acquisition, use, and communication of knowledge into economic models is essential to understand a wide variety of economic phenomena. We survey the literature that has used knowledge-based hierarchies to study issues like the evolution of wage inequality, the growth and productivity of firms, economic development, the gains from international trade, as well as offshoring and the formation of international production teams, among many others. We also review the nascent empirical literature that has, so far, confirmed the importance of organizational decisions and many of its more salient implications.
Handle: RePEc:nbr:nberwo:20607
Template-Type: ReDIF-Paper 1.0
Title: Competing for Order Flow in OTC Markets
Classification-JEL: D53; D83; G1; G12
Author-Name: Benjamin Lester
Author-Person: ple283
Author-Name: Guillaume Rocheteau
Author-Person: pro264
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: AP EFG
Number: 20608
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20608
File-URL: http://www.nber.org/papers/w20608.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin Lester & Guillaume Rocheteau & Pierre‐Olivier Weill, 2015. "Competing for Order Flow in OTC Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(S2), pages 77-126, 06.
Abstract: We develop a model of a two-sided asset market in which trades are intermediated by dealers and are bilateral. Dealers compete to attract order flow by posting the terms at which they execute trades-- which can include prices, quantities, and execution speed--and investors direct their orders toward dealers that offer the most attractive terms. We characterize the equilibrium in a general setting, and illustrate how the model can account for several important trading patterns in over-the-counter markets which do not emerge from existing models. We then study two special cases which allow us to highlight the differences between these existing models, which assume investors engage in random search for dealers and then use ex post bargaining to determine prices, and our model, which utilizes the concept of competitive search in which dealers post terms of trade. Finally, we calibrate our model, illustrate that it generates reasonable quantitative outcomes, and use it to study how trading frictions affect the per-unit trading costs that investors pay in equilibrium.
Handle: RePEc:nbr:nberwo:20608
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Economics of Education: Progress and Possibilities
Classification-JEL: D03; D87; I2; J24
Author-Name: Adam M. Lavecchia
Author-Person: pla823
Author-Name: Heidi Liu
Author-Name: Philip Oreopoulos
Author-Person: por38
Note: CH ED LS
Number: 20609
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20609
File-URL: http://www.nber.org/papers/w20609.pdf
File-Format: application/pdf
Abstract: Behavioral economics attempts to integrate insights from psychology, neuroscience, and sociology in order to better predict individual outcomes and develop more effective policy. While the field has been successfully applied to many areas, education has, so far, received less attention - a surprising oversight, given the field's key interest in long-run decision-making and the propensity of youth to make poor long-run decisions. In this chapter, we review the emerging literature on the behavioral economics of education. We first develop a general framework for thinking about why youth and their parents might not always take full advantage of education opportunities. We then discuss how these behavioral barriers may be preventing some students from improving their long-run welfare. We evaluate the recent but rapidly growing efforts to develop policies that mitigate these barriers, many of which have been examined in experimental settings. Finally, we discuss future prospects for research in this emerging field.
Handle: RePEc:nbr:nberwo:20609
Template-Type: ReDIF-Paper 1.0
Title: Investment under Uncertainty with Financial Constraints
Classification-JEL: E22; G31; G32
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Neng Wang
Author-Person: pwa390
Author-Name: Jinqiang Yang
Note: AP CF EFG
Number: 20610
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20610
File-URL: http://www.nber.org/papers/w20610.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Bolton & Neng Wang & Jinqiang Yang, 2019. "Investment under uncertainty with financial constraints," Journal of Economic Theory, .
Abstract: We develop an integrated theory of investment, seasoned equity offerings (SEOs), liquidation, and corporate savings under uncertainty for a financially constrained firm, which features endogenous growth options, abandonment options, and payout policies. Facing costly external financing, the firm prefers to fund its investment internally, so that its optimal policies and value depend on both its earnings fundamentals and liquidity holdings. The firm values not only real flexibility but also financial flexibility. The interaction of real and financial flexibility generates novel real options results: (1) Limited financial slack significantly erodes the value of growth & abandonment options; (2) Firms prefer projects with front-loaded cash-flows; (3) The firm's incentive to forgo costly external financing and to accumulate internal funds may cause substantial delay in investment; (4) A financially constrained firm over-invests in early stages of its life-cycle in an effort to quickly build up its cash-flow generating capacity; (5) SEOs are driven by both firm survival and growth motives. A firm in the mature phase may find itself in three mutually exclusive regions: payout, inaction, and liquidation. A firm in its growth phase may find itself in two additional regions: a region where investment is partly financed with an SEO and a region where investment is solely financed with internal funds. These regions depend on both firm savings and earnings fundamentals.
Handle: RePEc:nbr:nberwo:20610
Template-Type: ReDIF-Paper 1.0
Title: Effective Monetary Policy Strategies in New Keynesian Models: A Re-examination
Classification-JEL: E31; E37; E52
Author-Name: Hess Chung
Author-Person: pch957
Author-Name: Edward Herbst
Author-Person: phe363
Author-Name: Michael T. Kiley
Note: EFG ME
Number: 20611
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20611
File-URL: http://www.nber.org/papers/w20611.pdf
File-Format: application/pdf
Publication-Status: published as Hess Chung & Edward Herbst & Michael T. Kiley, 2015. "Effective Monetary Policy Strategies in New Keynesian Models: A Reexamination," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 289 - 344.
Abstract: We explore the importance of the nature of nominal price and wage adjustment for the design of effective monetary policy strategies, especially at the zero lower bound. Our analysis suggests that sticky-price and sticky-information models fit standard macroeconomic time series comparably well. However, the model with information rigidity responds differently to anticipated shocks and persistent zero-lower bound episodes - to a degree important for monetary policy and for understanding the effects of fundamental disturbances when monetary policy cannot adjust. These differences may be important for understanding other policy issues as well, such as fiscal multipliers. Despite these differences, many aspects of effective policy strategy are common across the two models: In particular, highly inertial interest rate rules that respond to nominal income or the price level perform well, even when hit by adverse supply shocks or large demand shocks that induce the zero-lower bound. Rules that respond to the level or change in the output gap can perform poorly under those conditions.
Handle: RePEc:nbr:nberwo:20611
Template-Type: ReDIF-Paper 1.0
Title: Reserve Requirement Policy over the Business Cycle
Classification-JEL: E52; F41
Author-Name: Pablo Federico
Author-Name: Carlos A. Vegh
Author-Person: pve34
Author-Name: Guillermo Vuletin
Author-Person: pvu7
Note: IFM
Number: 20612
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20612
File-URL: http://www.nber.org/papers/w20612.pdf
File-Format: application/pdf
Abstract: Based on a novel quarterly dataset for 52 countries for the period 1970-2011, we analyze the use and cyclical properties of reserve requirements (RR) as a macroeconomic stabilization tool and whether RR policy substitutes or complements monetary policy. We find that (i) around two thirds of developing countries have used RR policy as a macroeconomic stabilization tool compared to just one third of industrial countries (and no industrial country since 2004); (ii) most developing countries that rely on RR use them countercyclically; and (iii) in many developing countries, monetary policy is procyclical and hence RR policy has substituted monetary policy as a countercyclical tool. We interpret the latter finding as reflecting the need of many emerging markets to raise interest rates in bad times to defend the currency and not raise or lower the interest rate in good times to prevent further currency appreciation. Under these circumstances, RR policy provides a second instrument that substitutes for monetary policy. Evidence from expanded Taylor rules (i.e., Taylor rules that include a nominal exchange rate target) supports these mechanisms.
Handle: RePEc:nbr:nberwo:20612
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy with Interest on Reserves
Classification-JEL: E5; E52; E58; E61; E62
Author-Name: John H. Cochrane
Author-Person: pco57
Note: AP EFG ME
Number: 20613
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20613
File-URL: http://www.nber.org/papers/w20613.pdf
File-Format: application/pdf
Publication-Status: published as Cochrane, John H., 2014. "Monetary policy with interest on reserves," Journal of Economic Dynamics and Control, Elsevier, vol. 49(C), pages 74-108.
Abstract: I analyze monetary policy with interest on reserves and a large balance sheet. I show that conventional theories do not determine inflation in this regime, so I base the analysis on the fiscal theory of the price level. I find that monetary policy can peg the nominal rate, and determine expected inflation. With sticky prices, monetary policy can also affect real interest rates and output, though higher interest rates raise output and then inflation. The conventional sign requires a coordinated fiscal-monetary policy contraction. I show how conventional new-Keynesian models also imply strong monetary-fiscal policy coordination to obtain the usual signs. I address theoretical controversies. A concluding section places our current regime in a broader historical context, and opines on how optimal fiscal and monetary policy will evolve in the new regime.
Handle: RePEc:nbr:nberwo:20613
Template-Type: ReDIF-Paper 1.0
Title: Will They Take the Money and Work? An Empirical Analysis of People's Willingness to Delay Claiming Social Security Benefits for a Lump Sum
Classification-JEL: D04; D1; D12; D14; G22; H55
Author-Name: Raimond Maurer
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Ralph Rogalla
Author-Name: Tatjana Schimetschek
Note: AG LS PE
Number: 20614
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20614
File-URL: http://www.nber.org/papers/w20614.pdf
File-Format: application/pdf
Abstract: This paper investigates whether exchanging the Social Security delayed retirement credit (currently paid as an increase in lifetime annuity benefits) for a lump sum would induce later claiming and additional work. We show that people would voluntarily claim about half a year later if the lump sum were paid for claiming any time after the Early Retirement Age, and about two-thirds of a year later if the lump sum were paid only for those claiming after their Full Retirement Age. Overall, people will work one-third to one-half of the additional months, compared to the status quo. Those who would currently claim at the youngest ages are likely to be most responsive to the offer of a lump sum benefit.
Handle: RePEc:nbr:nberwo:20614
Template-Type: ReDIF-Paper 1.0
Title: Tax Credits and Small Firm R&D Spending
Classification-JEL: H2; H71; O25; O31; O38
Author-Name: Ajay Agrawal
Author-Person: pag38
Author-Name: Carlos Rosell
Author-Name: Timothy S. Simcoe
Note: PE PR
Number: 20615
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20615
File-URL: http://www.nber.org/papers/w20615.pdf
File-Format: application/pdf
Publication-Status: published as Ajay Agrawal & Carlos Rosell & Timothy Simcoe, 2020. "Tax Credits and Small Firm R&D Spending," American Economic Journal: Economic Policy, vol 12(2), pages 1-21.
Abstract: In 2004, Canada changed the eligibility rules for its Scientific Research and Experimental Development (SRED) tax credit, which provides tax incentives for R&D conducted by small private firms. Difference in difference estimates show a seventeen percent increase in total R&D among eligible firms. The impact was larger for firms that took the tax credits as refunds because they had no current tax liability. Contract R&D expenditures were more elastic than the R&D wage bill. The response was also greater for firms that invested in R&D capital before the policy change.
Handle: RePEc:nbr:nberwo:20615
Template-Type: ReDIF-Paper 1.0
Title: Microeconomic Uncertainty, International Trade, and Aggregate Fluctuations
Classification-JEL: E31; F12
Author-Name: George Alessandria
Author-Person: pal70
Author-Name: Horag Choi
Author-Person: pch335
Author-Name: Joseph P. Kaboski
Author-Person: pka175
Author-Name: Virgiliu Midrigan
Author-Person: pmi156
Note: AP EFG IFM ITI
Number: 20616
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20616
File-URL: http://www.nber.org/papers/w20616.pdf
File-Format: application/pdf
Publication-Status: published as Alessandria, George & Choi, Horag & Kaboski, Joseph P. & Midrigan, Virgiliu, 2015. "Microeconomic uncertainty, international trade, and aggregate fluctuations," Journal of Monetary Economics, Elsevier, vol. 69(C), pages 20-38.
Abstract: The extent and direction of causation between micro volatility and business cycles are debated. We examine, empirically and theoretically, the source and effects of fluctuations in the dispersion of producer- level sales and production over the business cycle. On the theoretical side, we study the effect of exogenous first- and second-moment shocks to producer-level productivity in a two-country DSGE model with heterogenous producers and an endogenous dynamic export participation decision. First-moment shocks cause endogenous fluctuations in producer-level dispersion by reallocating production internationally, while second-moment shocks lead to increases in trade relative to GDP in recessions. Empirically, using detailed product-level data in the motor vehicle industry and industry-level data of U.S. manufacturers, we find evidence that international reallocation is indeed important for understanding cross-industry variation in cyclical patterns of measured dispersion.
Handle: RePEc:nbr:nberwo:20616
Template-Type: ReDIF-Paper 1.0
Title: Credit, Bankruptcy, and Aggregate Fluctuations
Classification-JEL: D91; E21; E32; E44; K35
Author-Name: Makoto Nakajima
Author-Person: pna79
Author-Name: José-Víctor Ríos-Rull
Author-Person: pri8
Note: EFG
Number: 20617
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20617
File-URL: http://www.nber.org/papers/w20617.pdf
File-Format: application/pdf
Abstract: We ask two questions related to how access to credit affects the nature of business cycles. First, does the standard theory of unsecured credit account for the high volatility and procyclicality of credit and the high volatility and countercyclicality of bankruptcy filings found in U.S. data? Yes, it does, but only if we explicitly model recessions as displaying countercyclical earnings risk (i.e., rather than having all households fare slightly worse than normal during recessions, we ensure that more households than normal fare very poorly). Second, does access to credit smooth aggregate consumption or aggregate hours worked, and if so, does it matter with respect to the nature of business cycles? No, it does not; in fact, consumption is 20 percent more volatile when credit is available. The interest rate premia increase in recessions because of higher bankruptcy risk discouraging households from using credit. This finding contradicts the intuition that access to credit helps households to smooth their consumption.
Handle: RePEc:nbr:nberwo:20617
Template-Type: ReDIF-Paper 1.0
Title: Evaluating Deliberative Competence: A Simple Method with an Application to Financial Choice
Classification-JEL: D14; D91; I21
Author-Name: Sandro Ambuehl
Author-Name: B. Douglas Bernheim
Author-Person: pbe81
Author-Name: Annamaria Lusardi
Author-Person: plu347
Note: PE
Number: 20618
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20618
File-URL: http://www.nber.org/papers/w20618.pdf
File-Format: application/pdf
Publication-Status: published as Sandro Ambuehl & B. Douglas Bernheim & Annamaria Lusardi, 2022. "Evaluating Deliberative Competence: A Simple Method with an Application to Financial Choice," American Economic Review, vol 112(11), pages 3584-3626.
Abstract: We examine methods for evaluating opportunity-neutral interventions designed to improve the quality of decision making in settings where people imperfectly comprehend consequences. In an experiment involving financial education, conventional outcome metrics (financial literacy and directional changes in behavior) imply that two interventions, one with practice and feedback, one without, are equally beneficial even though only the first reduces average bias. We trace these evaluative failures to violations of implicit assumptions. We propose a simple intuitive outcome metric that properly differentiates between the interventions, and that is robustly interpretable as a measure of welfare loss even when consumers suffer from other biases.
Handle: RePEc:nbr:nberwo:20618
Template-Type: ReDIF-Paper 1.0
Title: More on Recent Evidence on the Effects of Minimum Wages in the United States
Classification-JEL: J23; J38; J88
Author-Name: David Neumark
Author-Person: pne16
Author-Name: J.M. Ian Salas
Author-Name: William Wascher
Note: LS
Number: 20619
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20619
File-URL: http://www.nber.org/papers/w20619.pdf
File-Format: application/pdf
Publication-Status: published as David Neumark & JM Salas & William Wascher, 2014. "More on recent evidence on the effects of minimum wages in the United States," IZA Journal of Labor Policy, Springer, vol. 3(1), pages 1-26, December.
Abstract: A central issue in estimating the employment effects of minimum wages is the appropriate comparison group for states (or other regions) that adopt or increase the minimum wage. In recent research, Dube et al. (2010) and Allegretto et al. (2011) argue that past U.S. research is flawed because it does not restrict comparison areas to those that are geographically proximate and fails to control for changes in low-skill labor markets that are correlated with minimum wage increases. They argue that using "local controls" establishes that higher minimum wages do not reduce employment of less-skilled workers. In Neumark et al. (2014), we present evidence that their methods fail to isolate more reliable identifying information and lead to incorrect conclusions. Moreover, for subsets of treatment groups where the identifying variation they use is supported by the data, the evidence is consistent with past findings of disemployment effects. Allegretto et al. (2013) have challenged our conclusions, continuing the debate regarding some key issues regarding choosing comparison groups for estimating minimum wage effects. We explain these issues and evaluate the evidence. In general, we find little basis for their analyses and conclusions, and argue that the best evidence still points to job loss from minimum wages for very low-skilled workers - in particular, for teens.
Handle: RePEc:nbr:nberwo:20619
Template-Type: ReDIF-Paper 1.0
Title: Benchmarks in Search Markets
Classification-JEL: D43; D47; D83; G12; G14; G18; G21; G23
Author-Name: Darrell Duffie
Author-Person: pdu341
Author-Name: Piotr Dworczak
Author-Person: pdw12
Author-Name: Haoxiang Zhu
Author-Person: pzh997
Note: AP
Number: 20620
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20620
File-URL: http://www.nber.org/papers/w20620.pdf
File-Format: application/pdf
Publication-Status: published as DARRELL DUFFIE & PIOTR DWORCZAK & HAOXIANG ZHU, 2017. "Benchmarks in Search Markets," The Journal of Finance, vol 72(5), pages 1983-2044.
Abstract: We characterize the price-transparency role of benchmarks in over-the-counter markets. A benchmark can, under conditions, raise social surplus by increasing the volume of beneficial trade, facilitating more efficient matching between dealers and customers, and reducing search costs. Although the market transparency promoted by benchmarks reduces dealers' profit margins, dealers may nonetheless introduce a benchmark to encourage greater market participation by investors. Low-cost dealers may also introduce a benchmark to increase their market share relative to high-cost dealers. We construct a revelation mechanism that maximizes welfare subject to search frictions, and show conditions under which it coincides with announcing the benchmark.
Handle: RePEc:nbr:nberwo:20620
Template-Type: ReDIF-Paper 1.0
Title: Sources of Firm Life-Cycle Dynamics: Differentiating Size vs. Age Effects
Classification-JEL: D2; D22; D23; D24; D9; D92; E20; E24; E32; F23; G3; G32; M1; M5; O3; O4; O47; O51
Author-Name: Lorenz Kueng
Author-Person: pku506
Author-Name: Mu-Jeung Yang
Author-Name: Bryan Hong
Note: CF EFG PR
Number: 20621
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20621
File-URL: http://www.nber.org/papers/w20621.pdf
File-Format: application/pdf
Abstract: What determines firm growth over the life-cycle? Exploiting unique firm panel data on internal organization, balance sheets and innovation, representative of the entire Canadian economy, we study recent theories that examine life-cycle patterns for firm growth. These theories include organizational capital accumulation and management practices, financial frictions, learning about demand, and recent endogenous growth models with incumbent innovation. We emphasize the importance of differentiating between pure age effects of these theories and effects on size conditional on age. Our stylized facts highlight both empirical successes and shortcomings of current theory. First, models of organizational capital and innovation are broadly consistent with firm size correlations conditional on age but have difficulties matching the life-cycle dynamics of firm organization and innovation. Second, among theories we analyze, organizational capital and management practices are the most important determinants to explain intensive margin firm growth over the life-cycle. Third, although less important to explain intensive margin firm growth, financial frictions are an important determinant of firm exit, conditional on firm age.
Handle: RePEc:nbr:nberwo:20621
Template-Type: ReDIF-Paper 1.0
Title: Estimation of Dynamic Discrete Choice Models by Maximum Likelihood and the Simulated Method of Moments
Classification-JEL: C13; C15; C35; I21
Author-Name: Phillipp Eisenhauer
Author-Name: James J. Heckman
Author-Name: Stefano Mosso
Note: ED TWP
Number: 20622
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20622
File-URL: http://www.nber.org/papers/w20622.pdf
File-Format: application/pdf
Publication-Status: published as Philipp Eisenhauer & James J. Heckman & Stefano Mosso, 2015. "Estimation Of Dynamic Discrete Choice Models By Maximum Likelihood And The Simulated Method Of Moments," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 331-357, 05.
Abstract: We compare the performance of maximum likelihood (ML) and simulated method of moments (SMM) estimation for dynamic discrete choice models. We construct and estimate a simplified dynamic structural model of education that captures some basic features of educational choices in the United States in the 1980s and early 1990s. We use estimates from our model to simulate a synthetic dataset and assess the ability of ML and SMM to recover the model parameters on this sample. We investigate the performance of alternative tuning parameters for SMM.
Handle: RePEc:nbr:nberwo:20622
Template-Type: ReDIF-Paper 1.0
Title: Markets with Multidimensional Private Information
Classification-JEL: D82; G12
Author-Name: Veronica Guerrieri
Author-Person: pgu220
Author-Name: Robert Shimer
Author-Person: psh9
Note: AP EFG
Number: 20623
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20623
File-URL: http://www.nber.org/papers/w20623.pdf
File-Format: application/pdf
Publication-Status: published as Veronica Guerrieri & Robert Shimer, 2018. "Markets with Multidimensional Private Information," American Economic Journal: Microeconomics, vol 10(2), pages 250-274.
Abstract: This paper explores price formation when sellers are privately informed about their preferences and the quality of their asset. There are many equilibria, including a semi- separating one in which each seller's price depends on a one-dimensional index of her preferences and asset quality. This multiplicity does not rely on off-the-equilibrium path beliefs and so is not amenable to standard signaling game refinements. The semi- separating equilibrium may be not Pareto efficient, even if it is not Pareto dominated by any other equilibrium. Instead, efficient allocations may require transfers across uninformed buyers, inconsistent with any equilibrium.
Handle: RePEc:nbr:nberwo:20623
Template-Type: ReDIF-Paper 1.0
Title: Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement
Classification-JEL: H25; H26; O23; O38
Author-Name: Paul Carrillo
Author-Person: pca734
Author-Name: Dina Pomeranz
Author-Person: ppo414
Author-Name: Monica Singhal
Author-Person: psi159
Note: DEV PE
Number: 20624
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20624
File-URL: http://www.nber.org/papers/w20624.pdf
File-Format: application/pdf
Publication-Status: published as Paul Carrillo & Dina Pomeranz & Monica Singhal, 2017. "Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement," American Economic Journal: Applied Economics, American Economic Association, vol. 9(2), pages 144-164, April.
Abstract: Reducing tax evasion is a key priority for many governments, particularly in developing countries. A growing literature has argued that the ability to verify taxpayer self-reports against reports from third parties is critical for modern tax enforcement and the growth of state capacity. However, there may be limits to the effectiveness of third-party information if taxpayers can make offsetting adjustments on less verifiable margins. We present a simple framework to demonstrate the conditions under which this will occur and provide strong empirical evidence for such behavior by exploiting a natural experiment in Ecuador. We find that when firms are notified by the tax authority about detected revenue discrepancies on previously filed corporate income tax returns, they increase reported revenues, matching the third-party estimate when provided. Firms also increase reported costs by 96 cents for every dollar of revenue adjustment, resulting in minor increases in total tax collection.
Handle: RePEc:nbr:nberwo:20624
Template-Type: ReDIF-Paper 1.0
Title: Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data
Classification-JEL: H2; N32
Author-Name: Emmanuel Saez
Author-Person: psa117
Author-Name: Gabriel Zucman
Author-Person: pzu32
Note: AG DAE PE
Number: 20625
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20625
File-URL: http://www.nber.org/papers/w20625.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Saez & Gabriel Zucman, 2016. "Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, vol 131(2), pages 519-578.
Abstract: This paper combines income tax returns with Flow of Funds data to estimate the distribution of household wealth in the United States since 1913. We estimate wealth by capitalizing the incomes reported by individual taxpayers, accounting for assets that do not generate taxable income. We successfully test our capitalization method in three micro datasets where we can observe both income and wealth: the Survey of Consumer Finance, linked estate and income tax returns, and foundations' tax records. Wealth concentration has followed a U-shaped evolution over the last 100 years: It was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The rise of wealth inequality is almost entirely due to the rise of the top 0.1% wealth share, from 7% in 1979 to 22% in 2012--a level almost as high as in 1929. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth concentration is due to the surge of top incomes combined with an increase in saving rate inequality. Top wealth-holders are younger today than in the 1960s and earn a higher fraction of total labor income in the economy. We explain how our findings can be reconciled with Survey of Consumer Finances and estate tax data.
Handle: RePEc:nbr:nberwo:20625
Template-Type: ReDIF-Paper 1.0
Title: Recovering Ex Ante Returns and Preferences for Occupations using Subjective Expectations Data
Classification-JEL: C31; I23; J24
Author-Name: Peter Arcidiacono
Author-Name: V. Joseph Hotz
Author-Person: pho4
Author-Name: Arnaud Maurel
Author-Person: pma1091
Author-Name: Teresa Romano
Note: ED LS PE TWP
Number: 20626
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20626
File-URL: http://www.nber.org/papers/w20626.pdf
File-Format: application/pdf
Abstract: We show that data on subjective expectations, especially on outcomes from counterfactual choices and choice probabilities, are a powerful tool in recovering ex ante treatment effects as well as preferences for different treatments. In this paper we focus on the choice of occupation, and use elicited beliefs from a sample of male undergraduates at Duke University. By asking individuals about potential earnings associated with counterfactual choices of college majors and occupations, we can recover the distribution of the ex ante monetary returns to particular occupations, and how these returns vary across majors. We then propose a model of occupational choice which allows us to link subjective data on earnings and choice probabilities with the non-pecuniary preferences for each occupation. We find large differences in expected earnings across occupations, and substantial heterogeneity across individuals in the corresponding ex ante returns. However, while sorting across occupations is partly driven by the ex ante monetary returns, non-monetary factors play a key role in this decision. Finally, our results point to the existence of sizable complementarities between college major and occupations, both in terms of earnings and non-monetary benefits.
Handle: RePEc:nbr:nberwo:20626
Template-Type: ReDIF-Paper 1.0
Title: Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors
Classification-JEL: D73; H26
Author-Name: Adnan Q. Khan
Author-Name: Asim I. Khwaja
Author-Person: pkh256
Author-Name: Benjamin A. Olken
Author-Person: pol170
Note: DEV LS PE
Number: 20627
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20627
File-URL: http://www.nber.org/papers/w20627.pdf
File-Format: application/pdf
Publication-Status: published as Adnan Q. Khan & Asim I. Khwaja & Benjamin A. Olken, 2016. "Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors," The Quarterly Journal of Economics, vol 131(1), pages 219-271.
Abstract: Performance pay for tax collectors has the potential to raise revenues, but might come at a cost if taxpayers face undue pressure from collectors. We report the first large-scale field experiment on these issues, where we experimentally allocated 482 property tax units in Punjab, Pakistan into one of three performance-pay schemes or a control. After two years, incentivized units had 9.3 log points higher revenue than controls, which translates to a 46 percent higher growth rate. The scheme that rewarded purely on revenue did best, increasing revenue by 12.8 log points (62 percent higher growth rate), with little penalty for customer satisfaction and assessment accuracy compared to the two other schemes that explicitly also rewarded these dimensions. Further analysis reveals that these revenue gains accrue from a small number of properties becoming taxed at their true value, which is substantially more than they had been taxed at previously. The majority of properties in incentivized areas in fact pay no more taxes, but do report higher bribes. The results are consistent with a collusive setting in which performance pay increases collector's bargaining power over taxpayers, who either have to pay higher bribes to avoid being reassessed, or pay substantially higher taxes if collusion breaks down.
Handle: RePEc:nbr:nberwo:20627
Template-Type: ReDIF-Paper 1.0
Title: What Should I Be When I Grow Up? Occupations and Unemployment over the Life Cycle
Classification-JEL: E0; J0
Author-Name: Martin Gervais
Author-Person: pge6
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Henry E. Siu
Author-Person: psi89
Author-Name: Yaniv Yedid-Levi
Author-Person: pye106
Note: EFG
Number: 20628
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20628
File-URL: http://www.nber.org/papers/w20628.pdf
File-Format: application/pdf
Publication-Status: published as Martin Gervais & Nir Jaimovich & Henry E. Siu & Yaniv Yedid-Levi, 2016. "What Should I Be When I Grow Up? Occupations and Unemployment over the Life Cycle," Journal of Monetary Economics, .
Abstract: Why is unemployment higher for younger individuals? We address this question in a frictional model of the labor market that features learning about occupational fit. In order to learn the occupation in which they are most productive, workers sample occupations over their careers. Because young workers are more likely to be in matches that represent a poor occupational fit, they spend more time in transition between occupations. Through this mechanism, our model can replicate the observed age differences in unemployment which, as in the data, are due to differences in job separation rates.
Handle: RePEc:nbr:nberwo:20628
Template-Type: ReDIF-Paper 1.0
Title: Affirmative Action and Stereotypes in Higher Education Admissions
Classification-JEL: D0; D3; D63; D82; I23; I24; K00
Author-Name: Prasad Krishnamurthy
Author-Person: pkr275
Author-Name: Aaron Edlin
Author-Person: ped12
Note: ED LE
Number: 20629
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20629
File-URL: http://www.nber.org/papers/w20629.pdf
File-Format: application/pdf
Abstract: We analyze how admission policies affect stereotypes against students from disadvantaged groups. Many critics of affirmative action argue that lower admission standards cause such stereotypes and suggest group-blind admissions as a remedy. We show that when stereotypes result from social inequality, they can persist under group-blind admissions. In such cases, eliminating stereotypes perversely requires a higher admission standard for disadvantaged students. If a school seeks both to treat students equally and limit stereotypes, the optimal admission policy would still impose a higher standard on disadvantaged students. A third goal, such as equal representation, is required to justify group-blind admissions. Even when there is such a third goal, group-blind admissions are optimal only when the conflicting goals of equal representation and limiting stereotypes exactly balance. This is an implausible justification for group-blind admission because it implies that some schools desire higher standards for disadvantaged students. Schools that do not desire such higher standards will typically find some amount of affirmative action to be optimal.
Handle: RePEc:nbr:nberwo:20629
Template-Type: ReDIF-Paper 1.0
Title: Wheat or Strawberries? Intermediated Trade with Limited Contracting.
Classification-JEL: O12
Author-Name: Kala Krishna
Author-Person: pkr26
Author-Name: Lena Sheveleva
Note: DEV
Number: 20630
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20630
File-URL: http://www.nber.org/papers/w20630.pdf
File-Format: application/pdf
Publication-Status: published as Kala Krishna & Yelena Sheveleva, 2017. "Wheat or Strawberries? Intermediated Trade with Limited Contracting," American Economic Journal: Microeconomics, vol 9(3), pages 28-62.
Abstract: Why do developing countries fail to specialize in products in which they appear to have a comparative advantage? We propose a model of agricultural trade with intermediation that explains how hold-up resulting from poor contracting environments can produce such an outcome. We use the model to explore the role of production subsidies, support prices, easing sanitary and phyto-sanitary (SPS) requirements, and the creation of local markets in resolving the hold-up problem. The model highlights the importance of infrastructure in aligning production with comparative advantage and sheds light on the pass-through of the world price to the producer.
Handle: RePEc:nbr:nberwo:20630
Template-Type: ReDIF-Paper 1.0
Title: The Contribution of Behavior Change and Public Health to Improved U.S. Population Health
Classification-JEL: I1; I10; I12; I18
Author-Name: Susan T. Stewart
Author-Name: David M. Cutler
Author-Person: pcu64
Note: AG EH
Number: 20631
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20631
File-URL: http://www.nber.org/papers/w20631.pdf
File-Format: application/pdf
Abstract: Adverse behavioral risk factors contribute to a large share of deaths. We examine the effects on life expectancy (LE) and quality-adjusted life expectancy (QALE) of changes in six major behavioral risk factors over the 1960-2010 period: smoking, obesity, heavy alcohol use, and unsafe use of motor vehicles, firearms, and poisonous substances. These risk factors have moved in opposite directions. Reduced smoking, safer driving and cars, and reduced heavy alcohol use have led to health improvements, which we estimate at 1.82 years of quality-adjusted life. However, these were roughly offset by increased obesity, greater firearm deaths, and increased deaths from poisonous substances, which together reduced quality-adjusted life expectancy by 1.77 years. We model the hypothetical effects of a 50% decline in morbid obesity and in poisoning deaths, and a 10% decline in firearm fatalities, roughly matching favorable trends in smoking and increased seat belt use. These changes would lead to a 0.92 year improvement in LE and a 1.09 year improvement in QALE. Thus, substantial improvements in health by way of behavioral improvements and public health are possible.
Handle: RePEc:nbr:nberwo:20631
Template-Type: ReDIF-Paper 1.0
Title: Optimal Time-Consistent Government Debt Maturity
Classification-JEL: E62; H21; H63
Author-Name: Davide Debortoli
Author-Person: pde294
Author-Name: Ricardo Nunes
Author-Name: Pierre Yared
Author-Person: pya107
Note: EFG PE POL
Number: 20632
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20632
File-URL: http://www.nber.org/papers/w20632.pdf
File-Format: application/pdf
Publication-Status: published as Davide Debortoli & Ricardo Nunes & Pierre Yared, 2017. "Optimal Time-Consistent Government Debt Maturity," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 55-102.
Publication-Status: published as Davide Debortoli & Ricardo Nunes & Pierre Yared, 2016. "Optimal Time-Consistent Government Debt Maturity," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 55-102.
Abstract: This paper develops a model of optimal government debt maturity in which the government cannot issue state-contingent bonds and cannot commit to fiscal policy. If the government can perfectly commit, it fully insulates the economy against government spending shocks by purchasing short-term assets and issuing long-term debt. These positions are quantitatively very large relative to GDP and do not need to be actively managed by the government. Our main result is that these conclusions are not robust to the introduction of lack of commitment. Under lack of commitment, large and tilted positions are very expensive to finance ex-ante since they exacerbate the problem of lack of commitment ex-post. In contrast, a flat maturity structure minimizes the cost of lack of commitment, though it also limits insurance and increases the volatility of fiscal policy distortions. We show that the optimal time-consistent maturity structure is nearly flat because reducing average borrowing costs is quantitatively more important for welfare than reducing fiscal policy volatility. Thus, under lack of commitment, the government actively manages its debt positions and can approximate optimal policy by confining its debt instruments to consols.
Handle: RePEc:nbr:nberwo:20632
Template-Type: ReDIF-Paper 1.0
Title: Social Insurance, Information Revelation, and Lack of Commitment
Classification-JEL: D82; D86; E61; H3
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Luigi Iovino
Author-Person: pio51
Note: EFG PE POL
Number: 20633
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20633
File-URL: http://www.nber.org/papers/w20633.pdf
File-Format: application/pdf
Publication-Status: published as Mikhail Golosov & Luigi Iovino, 2021. "Social Insurance, Information Revelation, and Lack of Commitment," Journal of Political Economy, vol 129(9), pages 2629-2665.
Abstract: We study the optimal provision of insurance against unobservable idiosyncratic shocks in a setting in which a benevolent government cannot commit. A continuum of agents and the government play an infinitely repeated game. Actions of the government are constrained only by the threat of reverting to the worst perfect Bayesian equilibrium (PBE). We construct a recursive problem that characterizes the resource allocation and information revelation on the Pareto frontier of the set of PBE. We prove a version of the Revelation Principle and find an upper bound on the maximum number of messages that are needed to achieve the optimal allocation. Agents play mixed strategies over that message set to limit the amount of information transmitted to the government. The central feature of the optimal contract is that agents who enter the period with low implicitly-promised lifetime utilities reveal no information to the government and receive no insurance against current period shock, while agents with high promised utilities reveal precise information about their current shock and receive insurance as in economies with full commitment by the government.
Handle: RePEc:nbr:nberwo:20633
Template-Type: ReDIF-Paper 1.0
Title: International Trade, Multinational Activity, and Corporate Finance
Classification-JEL: F10; F20; F23; F36; G3
Author-Name: C. Fritz Foley
Author-Name: Kalina Manova
Author-Person: pma2520
Note: CF ITI
Number: 20634
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20634
File-URL: http://www.nber.org/papers/w20634.pdf
File-Format: application/pdf
Publication-Status: published as C. Fritz Foley & Kalina Manova, 2015. "International Trade, Multinational Activity, and Corporate Finance," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 119-146, 08.
Abstract: An emerging new literature brings unique ideas from corporate finance to the study of international trade and investment. Insights about differences in the development of financial institutions across countries, the role of financial constraints, and the use of internal capital markets are proving central in understanding international economics. The ability to access financial capital to pay fixed and variable costs affects choices firms make regarding export entry and operations, and, as a consequence, influence aggregate trade patterns. Financial frictions and the use of internal capital markets shape decisions that multinationals make regarding production locations, integration, and corporate governance. This article surveys this recent research with the goal of highlighting the main themes it explores, the key results it establishes, and the leading open questions it raises.
Handle: RePEc:nbr:nberwo:20634
Template-Type: ReDIF-Paper 1.0
Title: Tariff Incidence: Evidence from U.S. Sugar Duties, 1890-1930
Classification-JEL: F13; F14; N11; N12
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: DAE ITI
Number: 20635
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20635
File-URL: http://www.nber.org/papers/w20635.pdf
File-Format: application/pdf
Abstract: Direct empirical evidence on whether domestic consumers or foreign exporters bear the burden of a country's import duties is scarce. This paper examines the incidence of U.S. sugar duties using a unique set of high-frequency (weekly, and sometimes daily) data on the landed and the duty-inclusive price of raw sugar in New York City from 1890 to 1930, a time when the United States consumed more than 20 percent of world sugar production and was therefore plausibly a "large" country. The results reveal a striking asymmetry: a tariff reduction is immediately passed through to consumer prices with no impact on the import price, whereas about 40 percent of a tariff increase is passed through to consumer prices and 60 percent borne by foreign exporters. The apparent explanation for the asymmetric response is the asymmetric response of demand: imports collapse upon a tariff increase, but do not surge after a tariff reduction.
Handle: RePEc:nbr:nberwo:20635
Template-Type: ReDIF-Paper 1.0
Title: Adam Smith's "Tolerable Administration of Justice" and the Wealth of Nations
Classification-JEL: B12; B25; B31; K2; O43; P14; P16; P48
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: DAE DEV LE POL
Number: 20636
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20636
File-URL: http://www.nber.org/papers/w20636.pdf
File-Format: application/pdf
Publication-Status: published as Douglas A. Irwin, 2020. "Adam Smith's “tolerable administration of justice” and the Wealth of Nations," Scottish Journal of Political Economy, vol 67(3), pages 231-247.
Abstract: In the Wealth of Nations, Adam Smith argues that a country's national income depends on its labor productivity, which in turn hinges on the division of labor. But why are some countries able to take advantage of the division of labor and become rich, while others fail to do so and remain poor? Smith's answer, in an important but neglected theme of his work, is the security of property rights that enable individuals to "secure the fruits of their own labor" and allow the division of labor to occur. Countries that can establish a "tolerable administration of justice" to secure property rights and allow investment and exchange to take place will see economic progress take place. Smith's emphasis on a country's "institutions" in determining its relative income has been supported by recent empirical work on economic development.
Handle: RePEc:nbr:nberwo:20636
Template-Type: ReDIF-Paper 1.0
Title: A Schumpeterian Model of Top Income Inequality
Classification-JEL: E2; J3; O4
Author-Name: Charles I. Jones
Author-Person: pjo24
Author-Name: Jihee Kim
Author-Person: pki431
Note: EFG LS PE
Number: 20637
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20637
File-URL: http://www.nber.org/papers/w20637.pdf
File-Format: application/pdf
Publication-Status: published as Charles I. Jones & Jihee Kim, 2018. "A Schumpeterian Model of Top Income Inequality," Journal of Political Economy, vol 126(5), pages 1785-1826.
Abstract: Top income inequality rose sharply in the United States over the last 35 years but increased only slightly in economies like France and Japan. Why? This paper explores a model in which heterogeneous entrepreneurs, broadly interpreted, exert effort to generate exponential growth in their incomes. On its own, this force leads to rising inequality. Creative destruction by outside innovators restrains this expansion and induces top incomes to obey a Pareto distribution. The development of the world wide web and a reduction in top tax rates are examples of changes that raise the growth rate of entrepreneurial incomes and therefore increase Pareto inequality. In contrast, policies that stimulate creative destruction reduce top inequality. Examples include research subsidies or a decline in the extent to which incumbent firms can block new innovation. Differences in these considerations across countries and over time, perhaps associated with globalization, may explain the varied patterns of top income inequality that we see in the data.
Handle: RePEc:nbr:nberwo:20637
Template-Type: ReDIF-Paper 1.0
Title: Quantifying Liquidity and Default Risks of Corporate Bonds over the Business Cycle
Classification-JEL: G00; G1; G12; G20
Author-Name: Hui Chen
Author-Person: pch718
Author-Name: Rui Cui
Author-Name: Zhiguo He
Author-Person: phe657
Author-Name: Konstantin Milbradt
Note: AP CF
Number: 20638
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20638
File-URL: http://www.nber.org/papers/w20638.pdf
File-Format: application/pdf
Publication-Status: published as Hui Chen & Rui Cui & Zhiguo He & Konstantin Milbradt, 2018. "Quantifying Liquidity and Default Risks of Corporate Bonds over the Business Cycle," The Review of Financial Studies, vol 31(3), pages 852-897.
Abstract: We develop a structural credit risk model to examine how the interactions of liquidity and default risk affect corporate bond pricing. By explicitly modeling debt rollover and by endogenizing the holding costs via collateralized financing, our model generates rich links between liquidity risk and default risk. The introduction of macroeconomic risks helps the model capture realistic time variation in default risk premia and the default-liquidity spiral over the business cycle. Across different credit ratings, our calibrated model can simultaneously match the average default probabilities, credit spreads, and bond liquidity measures including Bond-CDS spreads and bid-ask spreads in the data. Through a structural decomposition, we show that the interactions between liquidity and default risk account for 25∼40% of the observed credit spreads and up to 55% of the credit spread changes over the business cycle. As an application, we use this framework to quantitatively evaluate the effects of liquidity-provision policies for the corporate bond market.
Handle: RePEc:nbr:nberwo:20638
Template-Type: ReDIF-Paper 1.0
Title: Inputs in the Production of Early Childhood Human Capital: Evidence from Head Start
Classification-JEL: I21; J24
Author-Name: Christopher Walters
Note: ED LS
Number: 20639
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20639
File-URL: http://www.nber.org/papers/w20639.pdf
File-Format: application/pdf
Publication-Status: published as Christopher R. Walters, 2015. "Inputs in the Production of Early Childhood Human Capital: Evidence from Head Start," American Economic Journal: Applied Economics, vol 7(4), pages 76-102.
Abstract: Studies of small-scale "model" early-childhood programs show that high-quality preschool can have transformative effects on human capital and economic outcomes. Evidence on the Head Start program is more mixed. Inputs and practices vary widely across Head Start centers, however, and little is known about variation in effectiveness within Head Start. This paper uses data from a multi-site randomized evaluation to quantify and explain variation in effectiveness across Head Start childcare centers. I answer two questions: (1) How much do short-run effects vary across Head Start centers? and (2) To what extent do inputs, practices, and child characteristics explain this variation? To answer the first question, I use a selection model with random coefficients to quantify heterogeneity in Head Start effects, accounting for non-compliance with experimental assignments. Estimates of the model show that the cross-center standard deviation of cognitive effects is 0.18 test score standard deviations, which is larger than typical estimates of variation in teacher or school effectiveness. Next, I assess the role of observed inputs, practices and child characteristics in generating this variation, focusing on inputs commonly cited as central to the success of model programs. My results show that Head Start centers offering full-day service boost cognitive skills more than other centers, while Head Start centers offering frequent home visiting are especially effective at raising non-cognitive skills. Head Start is also more effective for children with less-educated mothers. Centers that draw more children from center-based preschool have smaller effects, suggesting that cross-center differences in effects may be partially due to differences in counterfactual preschool options. Other key inputs, including the High/Scope curriculum, teacher education, and class size, are not associated with increased effectiveness in Head Start. Together, observed inputs explain about one-third of the variation in Head Start effectiveness across experimental sites.
Handle: RePEc:nbr:nberwo:20639
Template-Type: ReDIF-Paper 1.0
Title: The Demand for Effective Charter Schools
Classification-JEL: C25; I21; J2; J24
Author-Name: Christopher R. Walters
Note: ED LS
Number: 20640
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20640
File-URL: http://www.nber.org/papers/w20640.pdf
File-Format: application/pdf
Publication-Status: published as Christopher R. Walters, 2018. "The Demand for Effective Charter Schools," Journal of Political Economy, vol 126(6), pages 2179-2223.
Abstract: This paper studies the demand for charter schools in Boston, Massachusetts, with an emphasis on comparative advantage in school choice. I model charter school application and attendance decisions in a generalized Roy selection framework that links students’ preferences to the achievement gains generated by charter attendance. I estimate the model using instruments based on randomized admission lotteries and distance to charter schools. The estimates show that students do not sort into charter schools on the basis of comparative advantage in academic achievement. Charter schools generate larger test score gains for disadvantaged, low-achieving students, but demand for charters is stronger among richer students and high achievers. Similarly, achievement benefits are larger for students with weaker unobserved preferences for charter schools. As a result, counterfactual simulations indicate that charter expansion is likely to be most effective when accompanied by efforts to target students who are currently unlikely to apply.
Handle: RePEc:nbr:nberwo:20640
Template-Type: ReDIF-Paper 1.0
Title: “Nash-in-Nash” Bargaining: A Microfoundation for Applied Work
Classification-JEL: C78; D43; L13
Author-Name: Allan Collard-Wexler
Author-Name: Gautam Gowrisankaran
Author-Name: Robin S. Lee
Author-Person: ple409
Note: IO
Number: 20641
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20641
File-URL: http://www.nber.org/papers/w20641.pdf
File-Format: application/pdf
Publication-Status: published as Allan Collard-Wexler & Gautam Gowrisankaran & Robin S. Lee, 2019. "“Nash-in-Nash” Bargaining: A Microfoundation for Applied Work," Journal of Political Economy, vol 127(1), pages 163-195.
Abstract: A “Nash equilibrium in Nash bargains” has become a workhorse bargaining model in applied analyses of bilateral oligopoly. This paper proposes a non-cooperative foundation for “Nash-in-Nash” bargaining that extends the Rubinstein (1982) alternating offers model to multiple upstream and downstream firms. We provide conditions on firms’ marginal contributions under which there exists, for sufficiently short time between offers, an equilibrium with agreement among all firms at prices arbitrarily close to “Nash-in-Nash prices”—i.e., each pair's Nash bargaining solution given agreement by all other pairs. Conditioning on equilibria without delayed agreement, limiting prices are unique. Unconditionally, they are unique under stronger assumptions.
Handle: RePEc:nbr:nberwo:20641
Template-Type: ReDIF-Paper 1.0
Title: Adverse Selection and Self-fulfilling Business Cycles
Classification-JEL: E32; E44; G01
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Feng Dong
Author-Person: pdo311
Author-Name: Pengfei Wang
Author-Person: pwa169
Note: EFG
Number: 20642
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20642
File-URL: http://www.nber.org/papers/w20642.pdf
File-Format: application/pdf
Publication-Status: published as Jess Benhabib & Feng Dong & Pengfei Wang, 2018. "Adverse Selection and Self-fulfilling Business Cycles," Journal of Monetary Economics, .
Abstract: We introduce a simple adverse selection problem arising in credit markets into a standard textbook real business cycle model. There is a continuum of households and a continuum of anonymous producers who produce the final goods from intermediate goods. These producers do not have the resources to make up-front payments to purchase inputs and must do so by borrowing from competitive financial intermediates. However, lending to these producers is risky: honest borrowers will always pay off their debt, but dishonest borrowers will always default. This gives rise to an adverse selection problem for financial intermediaries. In a continuous-time real business cycle setting we show that such adverse selection generates multiple steady states and both local and global indeterminacy, and can give rise to equilibria with probabilistic jumps in credit, consumption, investment and employment driven by Markov sunspots under calibrated parameterizations and fully rational expectations. Introducing reputational effects eliminates defaults and results in a unique but still indeterminate steady state. Finally we generalize the model to firms with heterogeneous and stochastic productivity, and show that indeterminacies and sunspots persist.
Handle: RePEc:nbr:nberwo:20642
Template-Type: ReDIF-Paper 1.0
Title: Optimal Fiscal Limits
Classification-JEL: H72
Author-Name: Stephen Coate
Author-Person: pco66
Note: PE POL
Number: 20643
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20643
File-URL: http://www.nber.org/papers/w20643.pdf
File-Format: application/pdf
Abstract: This paper studies the optimal design of fiscal limits in the context of a simple political economy model. The model features a single politician and a representative voter. The politician is responsible for choosing the level of public spending for the voter but may be biased in favor of spending. The voter sets a spending limit and requires that the politician have voter approval to exceed it. This limit must be set before the voter's preferences for public spending are fully known. The paper first solves for the optimal limit and explains how it depends upon the degree of politician bias and the nature of the uncertainty concerning the voter's preferred spending level. A dynamic version of the model is then analyzed and policies which limit the rate of growth of spending are shown to dominate those that cap spending to be below some fixed fraction of community income.
Handle: RePEc:nbr:nberwo:20643
Template-Type: ReDIF-Paper 1.0
Title: W.U.I. on Fire: Risk, Salience & Housing Demand
Classification-JEL: H23; Q5; R31
Author-Name: Shawn J. McCoy
Author-Name: Randall P. Walsh
Author-Person: pwa222
Note: EEE PE
Number: 20644
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20644
File-URL: http://www.nber.org/papers/w20644.pdf
File-Format: application/pdf
Abstract: We investigate the effects of wildfires on risk perceptions by quantifying the impact of severe wildfires on housing price and transaction dynamics. Our empirical results are interpreted through the lens of a parsimonious model of sorting between locations that vary in their perceived level of fire risk. The model allows us to infer the evolution of risk perceptions among potential sellers and buyers of properties located in the proximity of large wildfire events. Our empirical analysis is based on a multi-dimensional characterization of the potential linkages between fire events and risk perceptions which incorporates measures of both proximity and burn scar views as well as a properties latent wildfire risk. Our analysis provides a connection between changes in underlying risk perceptions and the observed differences in housing price and quantity dynamics across properties that differ in both their spatial relationship to wild fire events (views vs. proximity) and their latent risk for wildfire.
Handle: RePEc:nbr:nberwo:20644
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Charter School Quality
Classification-JEL: I21; I24; I28
Author-Name: Patrick L. Baude
Author-Name: Marcus Casey
Author-Person: pca1334
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Steven G. Rivkin
Author-Person: pri265
Note: ED LS PE
Number: 20645
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20645
File-URL: http://www.nber.org/papers/w20645.pdf
File-Format: application/pdf
Publication-Status: published as Patrick L. Baude & Marcus Casey & Eric A. Hanushek & Gregory R. Phelan & Steven G. Rivkin, 2020. "The Evolution of Charter School Quality," Economica, vol 87(345), pages 158-189.
Abstract: Studies of the charter school sector typically focus on head-to-head comparisons of charter and traditional schools at a point in time, but the expansion of parental choice and relaxation of constraints on school operations is unlikely to raise school quality overnight. Rather, the success of the reform depends in large part on whether parental choices induce improvements in the charter sector. We study quality changes among Texas charter schools between 2001 and 2011. Our results suggest that the charter sector was initially characterized by schools whose quality was highly variable and, on average, less effective than traditional public schools. However, exits from the sector, improvement of existing charter schools, and positive selection of charter management organizations that open additional schools raised average charter school effectiveness over time relative to traditional public schools. Moreover, the evidence is consistent with the belief that a reduction in student turnover as the sector matures, expansion of the share of charters that adhere to a No Excuses philosophy, and increasingly positive student selection at the times of both entry and reenrollment all contribute to the improvement of the charter sector.
Handle: RePEc:nbr:nberwo:20645
Template-Type: ReDIF-Paper 1.0
Title: Liquidity and Foreign Asset Management Challenges for Latin American Countries
Classification-JEL: F15; F31; F32; F36; O13
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Daniel Riera-Crichton
Author-Person: pri120
Note: IFM
Number: 20646
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20646
File-URL: http://www.nber.org/papers/w20646.pdf
File-Format: application/pdf
Abstract: We analyze the degree to which the growing importance of sovereign wealth funds [SWFs] and the diffusion of inflation targeting and augmented Taylor rules have impacted the post crisis adjustment of Latin American Countries (LATAM) to the challenges associated with terms of trade and financial shocks. We confirm that active international reserves management reduces the effects of transitory Commodity Terms of Trade (CTOT) shocks to the real exchange rate [REER] and the real GDP in LATAM economies. These buffer effects work more against the risks of real appreciation than against depreciations, under relatively high levels of external debt and in economies that are less open to trade. Fixed exchange regimes act as a substitute policy to reserve accumulation. In contrast to reserves, SWFs buffers the REER from CTOT shocks with fixed exchange rate regimes and in relatively closed economies. The buffer effect of reserve accumulation appears to be strongest during the 1980-2007 period. While the stock of reserves fails to smooth the transmission of CTOT shocks to REER during the Global Financial Crisis (2008-2009), SWFs stepped up as substitutes to traditional reserve assets. The international reserve buffering role resumes during the post-great recession period (2010-2013), but not at the levels observed prior to the crisis. We observe a "substitution" between reserves and SWFs, where SWFs take over the buffering role of the REER and the real GDP during the Great Recession and the post-Great Recession period. Inflation targeting (IT) policy matters: IT countries give up the use of reserves to buffer against CTOT shocks, relegating this role to the SWFs. In LATAM countries that follow augmented Taylor rules, their monetary authorities place large weights on output gaps; while inflation gains importance for IT countries. Countries switch from REER stabilization targets to inflation targets when committing to a formal IT rule. SWFs may provide IT countries with an alternative form of liquidity management against foreign shocks when traditional reserves are committed to other macroeconomic goals. This is true for both REER and output growth stabilization.
Handle: RePEc:nbr:nberwo:20646
Template-Type: ReDIF-Paper 1.0
Title: The Long Run Human Capital and Economic Consequences of High-Stakes Examinations
Classification-JEL: I21; I26; J24
Author-Name: Victor Lavy
Author-Person: pla111
Author-Name: Avraham Ebenstein
Author-Person: peb32
Author-Name: Sefi Roth
Note: CH ED LS
Number: 20647
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20647
File-URL: http://www.nber.org/papers/w20647.pdf
File-Format: application/pdf
Publication-Status: published as Ebenstein, Avraham, Victor Lavy, and Sefi Roth. 2016. "The Long-Run Economic Consequences of High-Stakes Examinations: Evidence from Transitory Variation in Pollution." American Economic Journal: Applied Economics, 8 (4): 36-65. DOI: 10.1257/app.20150213
Abstract: Cognitive performance during high-stakes exams can be affected by random disturbances that, even if transitory, may have permanent consequences for long-term schooling attainment and labor market outcomes. We evaluate this hypothesis among Israeli high school students who took a series of high stakes matriculation exams between 2000 and 2002. As a source of random (transitory) shocks to high- stakes matriculation test scores, we use exposure to ambient air pollution during the day of the exam. First, we document a significant and negative relationship between average PM2.5 exposure during exams and student composite scores, post-secondary educational attainment, and earnings during adulthood. Second, using PM2.5 as an instrument, we estimate a large economic return to each point on the exam and each additional year of post-secondary education. Third, we examine the return to exam scores and schooling across sub-populations, and find the largest effects among boys, better students, and children from higher socio-economic backgrounds. The results suggest that random disturbances during high-stakes examinations can have long-term consequences for schooling and labor market outcomes, while also highlighting the drawbacks of using high-stakes examinations in university admissions.
Handle: RePEc:nbr:nberwo:20647
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Short Term Exposure to Ambient Air Pollution on Cognitive Performance and Human Capital Formation
Classification-JEL: I21; J24
Author-Name: Victor Lavy
Author-Person: pla111
Author-Name: Avraham Ebenstein
Author-Person: peb32
Author-Name: Sefi Roth
Note: CH ED EEE LS
Number: 20648
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20648
File-URL: http://www.nber.org/papers/w20648.pdf
File-Format: application/pdf
Abstract: Cognitive performance is critical to productivity in many occupations and potentially linked to pollution exposure. We evaluate this potentially important relationship by estimating the effect of pollution exposure on standardized test scores among Israeli high school high-stakes tests (2000-2002). Since students take multiple exams on multiple days in the same location after each grade, we can adopt a fixed effects strategy estimating models with city, school, and student fixed effects. We focus on fine particulate matter (PM2.5) and carbon monoxide (CO), which are considered to be two of the most dangerous forms of air pollution. We find that while PM2.5 and CO levels are only weakly correlated with each other, both exhibit a robust negative relationship with test scores. We also find that PM2.5, which is thought to be particularly damaging for asthmatics, has a larger negative impact on groups with higher rates of asthma. For CO, which affects neurological functioning, the effect is more homogenous across demographic groups. Furthermore, we find that exposure to either pollutant is associated with a significant decline in the probability of not receiving a Bagrut certificate, which is required for college entrance in Israel. The results suggest that the gain from improving air quality may be underestimated by a narrow focus on health impacts. Insofar as air pollution may lead to reduced cognitive performance, the consequences of pollution may be relevant for a variety of everyday activities that require mental acuity. Moreover, by temporarily lowering the productivity of human capital, high pollution levels lead to allocative inefficiency as students with lower human capital are assigned a higher rank than their more qualified peers. This may lead to inefficient allocation of workers across occupations, and possibly a less productive workforce.
Handle: RePEc:nbr:nberwo:20648
Template-Type: ReDIF-Paper 1.0
Title: Do Beliefs Justify Actions or Do Actions Justify Beliefs? An Experiment on Stated Beliefs, Revealed Beliefs, and Social-Image Manipulation
Classification-JEL: C9; D03; D83
Author-Name: James Andreoni
Author-Person: pan31
Author-Name: Alison Sanchez
Note: PE
Number: 20649
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20649
File-URL: http://www.nber.org/papers/w20649.pdf
File-Format: application/pdf
Abstract: We study whether actions are justified by beliefs, as is usually assumed, or whether beliefs are justified by actions. In our experiment, subjects participate in a trust game, after which they have an opportunity to state their beliefs about their opponent's actions. Subsequently, subjects participate in a task designed to "reveal" their true beliefs. We find that subjects who make selfish choices and show strategic sophistication falsely state their beliefs in order to project a more favorable social image. By contrast, their "revealed" beliefs were significantly more accurate, which betrayed these subjects as knowing that their selfishness was not justifiable by their opponent's behavior.
Handle: RePEc:nbr:nberwo:20649
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy and Debt Fragility
Classification-JEL: E42; E58; E63; F33
Author-Name: Antoine Camous
Author-Name: Russell Cooper
Note: EFG
Number: 20650
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20650
File-URL: http://www.nber.org/papers/w20650.pdf
File-Format: application/pdf
Publication-Status: published as Antoine Camous & Russell Cooper, 2019. "'Whatever It Takes' Is All You Need: Monetary Policy and Debt Fragility," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(4), pages 38-81, October.
Abstract: The valuation of government debt is subject to strategic uncertainty, stemming from investors' sentiments. Pessimistic lenders, fearing default, bid down the price of debt. This leaves a government with a higher debt burden, increasing the likelihood of default and thus confirming the pessimism of lenders. This paper studies the interaction of monetary policy and debt fragility. It asks: do monetary interventions mitigate debt fragility? The answer depends in part on the nature of monetary policy, particularly the ability of the monetary authority to commit to future state contingent actions. With commitment to a state contingent policy, the monetary authority can indeed overcome strategic uncertainty. Under discretion, debt fragility remains unless reputation effects are sufficiently strong.
Handle: RePEc:nbr:nberwo:20650
Template-Type: ReDIF-Paper 1.0
Title: Growth Expectations, Dividend Yields, and Future Stock Returns
Classification-JEL: G0; G1; G10; G11; G12; G17
Author-Name: Zhi Da
Author-Name: Ravi Jagannathan
Author-Person: pja91
Author-Name: Jianfeng Shen
Author-Person: psh477
Note: AP
Number: 20651
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20651
File-URL: http://www.nber.org/papers/w20651.pdf
File-Format: application/pdf
Abstract: According to the dynamic version of the Gordon growth model, the long-run expected return on stocks, stock yield, is the sum of the dividend yield on stocks plus some weighted average of expected future growth rates in dividends. We construct a measure of stock yield based on sell-side analysts' near-term earnings forecasts that predicts US stock index returns well, with an out-of-sample R-squared that is consistently above 2% at monthly frequency over our sample period. Stock yield also predicts future stock index returns in the US and other G7 countries and returns of US stock portfolios formed by sorting stocks based on firm characteristics, at various horizons. The findings are consistent with a single dominant factor driving expected returns on stocks over different holding periods. That single factor extracted from the cross section of stock yields using the Kelly and Pruitt (2013) partial regressions method predicts stock index returns better. The performance of the Binsbergen and Koijen (2010) latent factor model for forecasting stock returns improves significantly when stock yield is included as an imperfect observation of expected return on stocks. Consistent with folk wisdom, stock returns are more predictable coming out of a recession. Our measure performs as well in predicting stock returns as the implied cost of capital, another common stock yield measure that uses additional information.
Handle: RePEc:nbr:nberwo:20651
Template-Type: ReDIF-Paper 1.0
Title: Safe Assets
Classification-JEL: G1; E0; E2
Author-Name: Robert J. Barro
Author-Person: pba251
Author-Name: Jesús Fernández-Villaverde
Author-Person: pfe14
Author-Name: Oren Levintal
Author-Person: ple708
Author-Name: Andrew Mollerus
Note: AP ME
Number: 20652
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20652
File-URL: http://www.nber.org/papers/w20652.pdf
File-Format: application/pdf
Publication-Status: published as Robert J Barro & Jesús Fernández-Villaverde & Oren Levintal & Andrew Mollerus, 2022. "Safe Assets," The Economic Journal, vol 132(646), pages 2075-2100.
Abstract: A safe asset’s real value is insulated from shocks, including declines in GDP from rare macroeconomic disasters. However, in a Lucas-tree world, the aggregate risk is given by the process for GDP and cannot be altered by the creation of safe assets. Therefore, in the equilibrium of a representative-agent version of this economy, the quantity of safe assets will be nil. With heterogeneity in coefficients of relative risk aversion, safe assets can take the form of private bond issues from low-risk-aversion to high-risk-aversion agents. The model assumes Epstein-Zin/Weil preferences with common values of the intertemporal elasticity of substitution and the rate of time preference. The model achieves stationarity by allowing for random shifts in coefficients of relative risk aversion. We derive the equilibrium values of the ratio of safe to total assets, the shares of each agent in equity ownership and wealth, and the rates of return on safe and risky assets. In a baseline case, the steady-state risk-free rate is 1.0% per year, the unlevered equity premium is 4.2%, and the quantity of safe assets ranges up to 15% of economy-wide assets (comprising the capitalized value of GDP). A disaster shock leads to an extended period in which the share of wealth held by the low-risk-averse agent and the risk-free rate are low but rising, and the ratio of safe to total assets is high but falling. In the baseline model, Ricardian Equivalence holds in that added government bonds have no effect on rates of return and the net quantity of safe assets. Surprisingly, the crowding-out coefficient for private bonds with respect to public bonds is not 0 or -1 but around -0.5, a value found in some existing empirical studies.
Handle: RePEc:nbr:nberwo:20652
Template-Type: ReDIF-Paper 1.0
Title: The War on Poverty's Experiment in Public Medicine: Community Health Centers and the Mortality of Older Americans
Classification-JEL: I28; I3; J14; J18
Author-Name: Martha J. Bailey
Author-Person: pba669
Author-Name: Andrew Goodman-Bacon
Note: AG DAE DEV EH PE
Number: 20653
Creation-Date: 2014-10
Order-URL: http://www.nber.org/papers/w20653
File-URL: http://www.nber.org/papers/w20653.pdf
File-Format: application/pdf
Publication-Status: published as Martha J. Bailey & Andrew Goodman-Bacon, 2015. "The War on Poverty's Experiment in Public Medicine: Community Health Centers and the Mortality of Older Americans," American Economic Review, American Economic Association, vol. 105(3), pages 1067-1104, March.
Abstract: This paper uses the rollout of the first Community Health Centers (CHCs) to study the longer-term health effects of increasing access to primary care. Within ten years, CHCs are associated with a reduction in age-adjusted mortality rates of 2 percent among those 50 and older. The implied 7 to 13 percent decrease in one-year mortality risk among beneficiaries amounts to 20 to 40 percent of the 1966 poor/non-poor mortality gap for this age group. Large effects for those 65 and older suggest that increased access to primary care has longer-term benefits, even for populations with near universal health insurance.
Handle: RePEc:nbr:nberwo:20653
Template-Type: ReDIF-Paper 1.0
Title: Is it all worth it? The experiences of new PhDs on the job market, 2007-2010
Classification-JEL: J24; J4
Author-Name: Brooke Helppie McFall
Author-Name: Marta Murray-Close
Author-Name: Robert J. Willis
Author-Person: pwi192
Author-Name: Uniko Chen
Note: LS
Number: 20654
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20654
File-URL: http://www.nber.org/papers/w20654.pdf
File-Format: application/pdf
Publication-Status: published as The Journal of Economic Education Volume 46, Issue 1, 2015
Abstract: This paper describes the job market experiences of new PhD economists, 2007-10. Using information from PhD programs' job candidate websites and original surveys, the authors present information about job candidates' characteristics, preferences and expectations; how job candidates fared at each stage of the market; and predictors of outcomes at each stage. Some information presented in this paper updates findings of prior studies. However, design features of the data used in this paper may result in more generalizable findings. This paper is unique in comparing pre-market expectations and preferences with post-market outcomes on the new PhD job market. It shows that outcomes tend to align with pre-market preferences, and candidates' expectations are somewhat predictive of their outcomes. Several analyses also shed light on sub-group differences.
Handle: RePEc:nbr:nberwo:20654
Template-Type: ReDIF-Paper 1.0
Title: Political Polarization, Anticipated Health Insurance Uptake and Individual Mandate: A view from the Washington State
Classification-JEL: H51; I1; I13
Author-Name: Anirban Basu
Author-Person: pba977
Author-Name: Norma B. Coe
Author-Person: pco329
Author-Name: David E. Grembowski
Author-Name: Larry Kessler
Note: EH
Number: 20655
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20655
File-URL: http://www.nber.org/papers/w20655.pdf
File-Format: application/pdf
Abstract: The politicization of the Affordable Care Act (ACA) was extreme, with the popular moniker of "Obamacare" and 54 House attempts to repeal the law in the four years after passage. Our study set out to understand Washington state public's preferences about enrolling into ACA driven health insurance programs, the role that political polarization may play on the chances that the uninsured would enroll and the extent to which individual mandate may influence these choices. A representative mail survey among the registered voters of Washington State. We find that 27% have not ruled out purchasing insurance through the Exchange, but their ambiguity is most likely driven by conflicts between health care needs and financial worries on one hand and their political views on the other. Overall, compared to the insured population in 2013, uninsured are significantly more likely (OR = 2.0, 95%CI: 1.1, 3.4) to enroll through the Exchange even after all adjustments including medical needs and financial worries. This highlights that the individual mandate may have an independent effect on enrollment for the uninsured. However, the individual mandate effect is found to be negligible (OR: 1.1, 95%CI: 0.50, 2.8) for the uninsured who blamed the Democrats and/or President Obama for the 2013 governmental shutdown. Political polarization appears to have a trickle down affect at the individual choices even beyond medical needs and financial worries. Alternative strategies, for example bipartisan outreach, may be necessary to convince certain groups of eligible beneficiaries to consider enrollment through the Exchange.
Handle: RePEc:nbr:nberwo:20655
Template-Type: ReDIF-Paper 1.0
Title: Federal Reserve Policy and Bretton Woods
Classification-JEL: E5; N1
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Owen F. Humpage
Author-Person: phu403
Note: DAE ME
Number: 20656
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20656
File-URL: http://www.nber.org/papers/w20656.pdf
File-Format: application/pdf
Abstract: During the Bretton Woods era, balance-of-payments developments, gold losses, and exchange-rate concerns had little influence on Federal Reserve monetary policy, even after 1958 when such issues became critical. The Federal Reserve could largely disregard international considerations because the U.S. Treasury instituted a number of stopgap devices—the gold pool, the general agreement to borrow, capital restraints, sterilized foreign-exchange operations—to shore up the dollar and Bretton Woods. These, however, gave Federal Reserve policymakers the latitude to focus on the domestic objectives and shifted responsibility for international developments to the Treasury. Removing the pressure of international considerations from Federal Reserve policy decisions made it easier for the Federal Reserve to pursue the inflationary policies of the late 1960s and 1970s that ultimate destroyed Bretton Woods. In the end, the Treasury’s stopgap devices, which were intended to support Bretton Woods, contributed to its demise.
Handle: RePEc:nbr:nberwo:20656
Template-Type: ReDIF-Paper 1.0
Title: Validating Teacher Effect Estimates Using Changes in Teacher Assignments in Los Angeles
Classification-JEL: I21; J45
Author-Name: Andrew Bacher-Hicks
Author-Name: Thomas J. Kane
Author-Name: Douglas O. Staiger
Author-Person: pst466
Note: CH ED LS PE
Number: 20657
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20657
File-URL: http://www.nber.org/papers/w20657.pdf
File-Format: application/pdf
Abstract: In a widely cited study, Chetty, Friedman, and Rockoff (2014a; hereafter CFR) evaluate the degree of bias in teacher value-added estimates using a novel "teacher switching" research design with data from New York City. They conclude that there is little to no bias in their estimates. Using the same model with data from North Carolina, Rothstein (2014) argued that the CFR research design is invalid, given a relationship between student baseline test scores and teachers' value-added. In this paper, we replicated the CFR analysis using data from the Los Angeles Unified School District and similarly found that teacher value-added estimates were valid predictors of student achievement. We also demonstrate that Rothstein's test does not invalidate the CFR design and instead reflects a mechanical relationship, given that teacher value-added scores from prior years and baseline test scores can be based on the same data. In addition, we explore the (1) predictive validity of value-added estimates drawn from the same, similar, and different schools, (2) an alternative way of estimating differences in access to effective teaching by taking teacher experience into account, and (3) the implications of alternative ways of imputing value-added when it cannot be estimated directly.
Handle: RePEc:nbr:nberwo:20657
Template-Type: ReDIF-Paper 1.0
Title: The Cambridge History of "Capitalism"
Classification-JEL: N14; O57; P12
Author-Name: Peter Temin
Author-Person: pte231
Note: DAE
Number: 20658
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20658
File-URL: http://www.nber.org/papers/w20658.pdf
File-Format: application/pdf
Publication-Status: published as Peter Temin, 2015. "The Cambridge History of “Capitalism”," Journal of Economic Literature, vol 53(4), pages 996-1016.
Abstract: This review essay of the two-volume Cambridge History of Capitalism (2014), edited by Larry Neal and Jeffrey G. Williamson, is divided into three parts. First, I describe three chapters from the second volume that I recommend for all economists to add depth to their understanding of the world economy today. Robert C. Allen analyzes the world distribution of income; Randall Morck and Bernard Yeung discuss the history of business groups; and Peter Lindert surveys private and public programs to help the poor. In each case, they analyze historical backgrounds that illuminate current issues. Second, I criticize the definition of capitalism used in these volumes as too expansive to be useful. I argue that this definition mars the essays in first volume by stimulating a fruitless search for capitalism in the millennium before the Industrial Revolution. Third, I describe the essays in this reference work starting from the most recent and ending with those about antiquity.
Handle: RePEc:nbr:nberwo:20658
Template-Type: ReDIF-Paper 1.0
Title: One Step at a Time: The Effects of an Early Literacy Text Messaging Program for Parents of Preschoolers
Classification-JEL: I1; I10; I12; I2; I20; I25
Author-Name: Benjamin N. York
Author-Name: Susanna Loeb
Note: CH EH ED
Number: 20659
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20659
File-URL: http://www.nber.org/papers/w20659.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin N. York & Susanna Loeb & Christopher Doss, 2019. "One Step at a Time," Journal of Human Resources, vol 54(3), pages 537-566.
Abstract: Large systematic differences in young children’s home learning experiences have long-term economic consequences. Many parenting programs place significant demands on parents’ time and inundate parents with information. This study evaluates the effects of READY4K!, an eight-month-long text-messaging intervention for parents of preschoolers that targets the behavioral barriers to engaged parenting. We find that READY4K! increased parental involvement at home and school by 0.15 to 0.29 standard deviations, leading to child gains in early literacy of about 0.11 standard deviations. The results point to the salience of behavioral barriers to parenting and the potential for low-cost interventions to reduce these barriers.
Handle: RePEc:nbr:nberwo:20659
Template-Type: ReDIF-Paper 1.0
Title: Momentum Trading, Return Chasing, and Predictable Crashes
Classification-JEL: G0; G00; G01; G02; G1; G11; G12; G14; G15
Author-Name: Benjamin Chabot
Author-Person: pch1553
Author-Name: Eric Ghysels
Author-Person: pgh7
Author-Name: Ravi Jagannathan
Author-Person: pja91
Note: AP
Number: 20660
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20660
File-URL: http://www.nber.org/papers/w20660.pdf
File-Format: application/pdf
Abstract: We combine self-collected historical data from 1867 to 1907 with CRSP data from 1926 to 2012, to examine the risk and return over the past 140 years of one of the most popular mechanical trading strategies — momentum. We find that momentum has earned abnormally high risk-adjusted returns — a three factor alpha of 1 percent per month between 1927 and 2012 and 0.5 percent per month between 1867 and 1907 — both statistically significantly different from zero. However, the momentum strategy also exposed investors to large losses (crashes) during both periods. Momentum crashes were predictable — more likely when momentum recently performed well (both eras), interest rates were relatively low (1867–1907), or momentum had recently outperformed the stock market (CRSP era) — times when borrowing or attracting return chasing “blind capital” would have been easier. Based on a stylized model and simulated outcomes from a richer model, we argue that a money manager has an incentive to remain invested in momentum even when the crash risk is known to be high when (1) he competes for funds from return-chasing investors and (2) he is compensated via fees that are convex in the amount of money managed and the return on that money.
Handle: RePEc:nbr:nberwo:20660
Template-Type: ReDIF-Paper 1.0
Title: Does Conflict of Interest Lead to Biased Coverage? Evidence from Movie Reviews
Classification-JEL: D72; L41
Author-Name: Stefano DellaVigna
Author-Person: pde710
Author-Name: Johannes Hermle
Note: CF IO LE LS PE POL
Number: 20661
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20661
File-URL: http://www.nber.org/papers/w20661.pdf
File-Format: application/pdf
Publication-Status: published as Stefano Dellavigna & Johannes Hermle, 2017. "Does Conflict of Interest Lead to Biased Coverage? Evidence from Movie Reviews," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1510-1550.
Abstract: Media outlets are increasingly owned by conglomerates, inducing a conflict of interest: a media outlet can bias its coverage to benefit companies in the same group. We test for bias by examining movie reviews by media outlets owned by News Corp.—such as the Wall Street Journal—and by Time Warner— such as Time. We use a matching procedure based on reported preferences to disentangle bias due to conflict of interest from correlated tastes. We find no evidence of bias in the reviews for 20th Century Fox movies in the News Corp. outlets, nor for the reviews of Warner Bros. movies in the Time Warner outlets. We can reject even small effects, such as biasing the review by one extra star (out of four) every 13 movies. We test for differential bias when the return to bias is plausibly higher, examine bias by media outlet and by journalist, as well as editorial bias. We also consider bias by omission: whether the media at conflict of interest are more likely to review highly-rated movies by affiliated studios. In none of these dimensions do we find systematic evidence of bias. Lastly, we document that conflict of interest within a movie aggregator does not lead to bias either. We conclude that media reputation in this competitive industry acts as a powerful disciplining force.
Handle: RePEc:nbr:nberwo:20661
Template-Type: ReDIF-Paper 1.0
Title: Gray Matters: Fetal Pollution Exposure and Human Capital Formation
Classification-JEL: I10; Q53
Author-Name: Prashant Bharadwaj
Author-Name: Matthew Gibson
Author-Person: pgi275
Author-Name: Joshua Graff Zivin
Author-Person: pgr314
Author-Name: Christopher A. Neilson
Author-Person: pne96
Note: CH EEE EH
Number: 20662
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20662
File-URL: http://www.nber.org/papers/w20662.pdf
File-Format: application/pdf
Publication-Status: published as Prashant Bharadwaj & Matthew Gibson & Joshua Graff Zivin & Christopher Neilson, 2017. "Gray Matters: Fetal Pollution Exposure and Human Capital Formation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 505-542.
Abstract: This paper examines the impact of fetal exposure to air pollution on 4th grade test scores in Santiago, Chile. We rely on comparisons across siblings which address concerns about locational sorting and all other time-invariant family characteristics that can lead to endogenous exposure to poor environmental quality. We also exploit data on air quality alerts to help address concerns related to short-run time-varying avoidance behavior, which has been shown to be important in a number of other contexts. We find a strong negative effect from fetal exposure to carbon monoxide (CO) on math and language skills measured in 4th grade. These effects are economically significant and our back of the envelope calculations suggest that the 50% reduction in CO in Santiago between 1990 and 2005 increased lifetime earnings by approximately 100 million USD per birth cohort.
Handle: RePEc:nbr:nberwo:20662
Template-Type: ReDIF-Paper 1.0
Title: Trade Adjustment Dynamics and the Welfare Gains from Trade
Classification-JEL: E22; F12
Author-Name: George Alessandria
Author-Person: pal70
Author-Name: Horag Choi
Author-Person: pch335
Author-Name: Kim Ruhl
Author-Person: pru22
Note: IFM ITI
Number: 20663
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20663
File-URL: http://www.nber.org/papers/w20663.pdf
File-Format: application/pdf
Publication-Status: published as Alessandria, George & Choi, Horag & Ruhl, Kim J., 2021. "Trade adjustment dynamics and the welfare gains from trade," Journal of International Economics, Elsevier, vol. 131(C).
Abstract: We study how the transitions following a trade reform are shaped by the time it takes for new exporters to grow in the export market. We introduce time and risk into the fixed-variable cost tradeoff central to general equilibrium heterogeneous firm trade models: Investing in exporting gradually and stochastically lowers the costs of exporting. The model captures the tendency of new exporters to export on a small scale, to have low survival rates, and to take time to grow into large exporters. In the model, aggregate trade dynamics arise from producer-level decisions to invest in lowering their future variable export costs, and tariff reforms generate time-varying trade elasticities. We show that the gains from reducing tariffs arise from substituting away from firm creation and towards export capacity. This is in stark contrast to the static models that dominate the literature. The strength of this substitution is determined largely by the size of new exporters and their ability to grow into successful exporters. We calibrate the model and estimate the welfare gains from reducing tariffs, which differ substantially from the long-run changes in consumption or trade. We show that the welfare gain cannot be recovered from a static trade model or from formulas based on those models. Because aggregate trade grows slowly, the long-run effects are strongly discounted and, thus, are not the key determinants of the welfare gains from a change in trade policy. We also find that policy prescriptions based on static models can predict a loss from trade reform when our dynamic model predicts a gain.
Handle: RePEc:nbr:nberwo:20663
Template-Type: ReDIF-Paper 1.0
Title: Intrinsic Motivation in Public Service: Theory and Evidence from State Supreme Courts
Classification-JEL: J3; J33; J44; J45
Author-Name: Elliott Ash
Author-Person: pas226
Author-Name: W. Bentley MacLeod
Author-Person: pma156
Note: LE LS
Number: 20664
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20664
File-URL: http://www.nber.org/papers/w20664.pdf
File-Format: application/pdf
Publication-Status: published as Elliott Ash & W. Bentley MacLeod, 2015. "Intrinsic Motivation in Public Service: Theory and Evidence from State Supreme Courts," The Journal of Law and Economics, vol 58(4), pages 863-913.
Abstract: This paper provides a theoretical and empirical analysis of the intrinsic preferences of state appellate court judges. We construct a panel data set using published decisions from state supreme court cases merged with institutional and biographical information on all (1,636) state supreme court judges for the 50 states of the United States from 1947 to 1994. We estimate the effects of changes in judge employment conditions on a number of measures of judicial performance. The results are consistent with the hypothesis that judges are intrinsically motivated to provide high-quality decisions, and that at the margin they prefer quality over quantity. When judges face less time pressure, they write more well-researched opinions that are cited more often by later judges. When judges are up for election then performance falls, suggesting that election politics take time away from judging work – rather than providing an incentive for good performance. These effects are strongest when judges have more discretion to select their case portfolio, consistent with psychological theories that posit a negative effect of contingency on motivation (e.g. Deci, 1971).
Handle: RePEc:nbr:nberwo:20664
Template-Type: ReDIF-Paper 1.0
Title: The Power of the Street: Evidence from Egypt's Arab Spring
Classification-JEL: E02; G12; G3; O11; O43; O53
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Tarek A. Hassan
Author-Person: pha489
Author-Name: Ahmed Tahoun
Note: AP CF DAE DEV EFG POL
Number: 20665
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20665
File-URL: http://www.nber.org/papers/w20665.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Tarek A. Hassan & Ahmed Tahoun, 2018. "The Power of the Street: Evidence from Egypt’s Arab Spring," The Review of Financial Studies, vol 31(1), pages 1-42.
Abstract: During Egypt's Arab Spring, unprecedented popular mobilization and protests brought down Hosni Mubarak's government and ushered in an era of competition between three groups: elites associated with Mubarak's National Democratic Party (NDP), the military, and the Islamist Muslim Brotherhood. Street protests continued to play an important role during this power struggle. We show that these protests are associated with differential stock market returns for firms connected to the three groups. Using daily variation in the number of protesters, we document that more intense protests in Tahrir Square are associated with lower stock market valuations for firms connected to the group currently in power relative to non-connected firms, but have no impact on the relative valuations of firms connected to other powerful groups. We further show that activity on social media may have played an important role in mobilizing protesters, but had no direct effect on relative valuations. According to our preferred interpretation, these events provide evidence that, under weak institutions, popular mobilization and protests have a role in restricting the ability of connected firms to capture excess rents.
Handle: RePEc:nbr:nberwo:20665
Template-Type: ReDIF-Paper 1.0
Title: Whither News Shocks?
Classification-JEL: E32; E37; O40
Author-Name: Robert B. Barsky
Author-Person: pba670
Author-Name: Susanto Basu
Author-Person: pba274
Author-Name: Keyoung Lee
Note: EFG ME
Number: 20666
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20666
File-URL: http://www.nber.org/papers/w20666.pdf
File-Format: application/pdf
Publication-Status: published as Whither News Shocks?, Robert B. Barsky, Susanto Basu, Keyoung Lee. in NBER Macroeconomics Annual 2014, Volume 29, Parker and Woodford. 2015
Abstract: Does news about future productivity cause business-cycle fluctuations? What other effects might it have? We explore the answer to this question using semi-structural VARs, where “news” is defined as the innovation in the expectation of TFP at a fixed horizon in the future. We find that systems incorporating a number of forward-looking variables, including stock prices, consumption, consumer confidence and inflation, robustly predict three outcomes. First, following a news shock, TFP rises for several years. Second, inflation falls immediately and substantially, and stays low, often for 10 quarters or more. Third, there is a sharp increase in a forward-looking measure of consumer confidence. Consumption typically rises following good news, but investment, consumer durables purchases and hours worked typically fall on impact. All the quantity variables subsequently rise, as does TFP. Depending on the specification of the reduced form VAR, the activity variables may lead TFP to some extent – possibly lending some support to the hypothesis of news-driven business cycles – or they may move in lockstep with productivity. For the most part, the quantity and inflation responses are quite consistent with the predictions of a standard New Keynesian model augmented with real wage inertia.
Handle: RePEc:nbr:nberwo:20666
Template-Type: ReDIF-Paper 1.0
Title: Does Management Matter in Schools
Classification-JEL: L2
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Renata Lemos
Author-Person: ple1072
Author-Name: Raffaella Sadun
Author-Person: psa385
Author-Name: John Van Reenen
Author-Person: pva45
Note: DEV ED LS PR
Number: 20667
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20667
File-URL: http://www.nber.org/papers/w20667.pdf
File-Format: application/pdf
Publication-Status: published as Nicholas Bloom & Renata Lemos & Raffaella Sadun & John Van Reenen, 2015. "Does Management Matter in schools?," Economic Journal, Royal Economic Society, vol. 0(584), pages 647-674, 05.
Abstract: We collect data on operations, targets and human resources management practices in over 1,800 schools educating 15-year-olds in eight countries. Overall, we show that higher management quality is strongly associated with better educational outcomes. The UK, Sweden, Canada and the US obtain the highest management scores closely followed by Germany, with a gap to Italy, Brazil and then finally India. We also show that autonomous government schools (i.e. government funded but with substantial independence like UK academies and US charters) have significantly higher management scores than regular government schools and private schools. Almost half of the difference between the management scores of autonomous government schools and regular government schools is accounted for by differences in leadership of the principal and better governance.
Handle: RePEc:nbr:nberwo:20667
Template-Type: ReDIF-Paper 1.0
Title: The Effects of High-Skilled Immigration Policy on Firms: Evidence from Visa Lotteries
Classification-JEL: J18; J21; J23; J24; J44; J48; J61; O3; O32; O34; O38
Author-Name: Kirk Doran
Author-Person: pdo228
Author-Name: Alexander Gelber
Author-Name: Adam Isen
Note: LS PE PR
Number: 20668
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20668
File-URL: http://www.nber.org/papers/w20668.pdf
File-Format: application/pdf
Publication-Status: published as Kirk Doran & Alexander Gelber & Adam Isen, 2022. "The Effects of High-Skilled Immigration Policy on Firms: Evidence from Visa Lotteries," Journal of Political Economy, vol 130(10), pages 2501-2533.
Abstract: We compare winning and losing firms in lotteries for H-1B visas, matching administrative data on these lotteries to administrative tax data on U.S. firms and to approved U.S. patents. Winning one additional H-1B visa crowds out about 1.5 other workers at the firm. Additional H-1Bs have insignificant and at most modest effects on firm innovation. More general evidence from the universe of U.S. firms and the universe of H-1B visas using alternative estimation strategies is consistent with these results. Firms that hire H-1Bs grow faster and innovate more because they are different in other ways from firms that do not.
Handle: RePEc:nbr:nberwo:20668
Template-Type: ReDIF-Paper 1.0
Title: Social Investments, Informal Risk Sharing, and Inequality
Classification-JEL: C78; D31; D61; D86; L14; Z13
Author-Name: Attila Ambrus
Author-Name: Arun G. Chandrasekhar
Author-Person: pch1351
Author-Name: Matt Elliott
Note: DEV POL
Number: 20669
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20669
File-URL: http://www.nber.org/papers/w20669.pdf
File-Format: application/pdf
Abstract: This paper studies costly network formation in the context of risk sharing. Neighboring agents negotiate agreements as in Stole and Zwiebel (1996), which results in the social surplus being allocated according to the Myerson value. We uncover two types of inefficiency: overinvestment in social relationships within group (e.g., caste, ethnicity), but underinvestment across group. We find a novel tradeoff between efficiency and equality. Both within and across groups, inefficiencies are minimized by increasing social inequality, which results in financial inequality and increasing the centrality of the most central agents. Evidence from 75 Indian village networks is congruent with our model.
Handle: RePEc:nbr:nberwo:20669
Template-Type: ReDIF-Paper 1.0
Title: Unemployment and Innovation
Classification-JEL: E24; O30; O31; O33
Author-Name: Joseph E. Stiglitz
Note: PR
Number: 20670
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20670
File-URL: http://www.nber.org/papers/w20670.pdf
File-Format: application/pdf
Abstract: This paper analyzes equilibrium, dynamics, and optimal decisions on the factor bias of innovation in a model of induced innovation. In a model with full employment, we show that (a) if the elasticity of substitution is always less than or greater than unity, there is a unique steady state equilibrium; (b) if the elasticity of substitution is less than unity, the steady state is stable, but convergence is oscillatory; (c) if the elasticity of substitution is greater than unity, the steady state is a saddle point; and (d) if the elasticity of substitution is less than unity for both high and low effective capital labor ratios but greater than unity for intermediate values, then there can be multiple steady states. In a model where efficiency wages lead to equilibrium unemployment, we show that if the elasticity of substitution is less than unity, there will be a bias towards excessive labor augmenting innovation, resulting in too high unemployment, with convergence to the unique steady state being oscillatory, rather than monotonic. Similarly, if the elasticity of substitution between skilled and unskilled labor is less than unity, and there is efficiency wage unemployment for unskilled labor only, there is will be excessively skill-biased innovation. This paper provides an alternative resolution to the Harrod-Domar conundrum of the disparity between the natural and warranted rate of growth to that of Solow, with strong policy implications, for instance, concerning the effects of income distribution and monetary policy both in the short run and the long.
Handle: RePEc:nbr:nberwo:20670
Template-Type: ReDIF-Paper 1.0
Title: Seesaws and Social Security Benefits Indexing
Classification-JEL: E31; H55
Author-Name: Matthew Weinzierl
Author-Person: pwe206
Note: PE
Number: 20671
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20671
File-URL: http://www.nber.org/papers/w20671.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Weinzierl, 2014. "Seesaws and Social Security Benefits Indexing," Brookings Papers on Economic Activity, Fall: 137-182.
Abstract: The price indexation of Social Security benefit payments has emerged in recent years as a flashpoint of debate in the United States. I characterize the direct effects that changes in that price index would have on retirees who differ in their initial wealth at retirement and mortality rates after retirement. I propose a simple but flexible theoretical framework that converts benefits reform first into changes to retirees' consumption paths and then into a net effect on social welfare. I calibrate that framework using recently-produced data on Social Security beneficiaries by lifetime income decile and both existing and new survey evidence on the normative priorities Americans have for Social Security. The results suggest that the value retirees place on protection against longevity risk is an important caveat to the widespread enthusiasm for a switch to a slower-growing price index such as the chained CPI-U.
Handle: RePEc:nbr:nberwo:20671
Template-Type: ReDIF-Paper 1.0
Title: Raising Revenue by Limiting Tax Expenditures
Classification-JEL: H2
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: PE
Number: 20672
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20672
File-URL: http://www.nber.org/papers/w20672.pdf
File-Format: application/pdf
Publication-Status: published as Raising Revenue by Limiting Tax Expenditures, Martin Feldstein. in Tax Policy and the Economy, Volume 29, Brown. 2015
Abstract: Limiting tax expenditures can raise revenue without increasing marginal tax rates. Such a policy is equivalent to reducing government spending now done as subsidies through the tax code for a wide range of household spending and income. This paper explores one way of limiting tax expenditures: a cap on the total reduction in tax liabilities that each individual can achieve by the use of deductions and exclusions. The analysis describes the revenue effects and the distributional consequences of such a cap, and examines the sensitivity of these results to various design features.
Handle: RePEc:nbr:nberwo:20672
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Sensitivity of Parameter Estimates to Estimation Moments
Classification-JEL: C1; C52
Author-Name: Isaiah Andrews
Author-Name: Matthew Gentzkow
Author-Person: pge43
Author-Name: Jesse M. Shapiro
Author-Person: psh70
Note: CF IO ME PE TWP
Number: 20673
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20673
File-URL: http://www.nber.org/papers/w20673.pdf
File-Format: application/pdf
Publication-Status: published as Isaiah Andrews & Matthew Gentzkow & Jesse M. Shapiro, 2017. "Measuring the Sensitivity of Parameter Estimates to Estimation Moments*," The Quarterly Journal of Economics, vol 132(4), pages 1553-1592.
Abstract: We propose a local measure of the relationship between parameter estimates and the moments of the data they depend on. Our measure can be computed at negligible cost even for complex structural models. We argue that reporting this measure can increase the transparency of structural estimates, making it easier for readers to predict the way violations of identifying assumptions would affect the results. When the key assumptions are orthogonality between error terms and excluded instruments, we show that our measure provides a natural extension of the omitted variables bias formula for nonlinear models. We illustrate with applications to published articles in several fields of economics.
Handle: RePEc:nbr:nberwo:20673
Template-Type: ReDIF-Paper 1.0
Title: Does Uncertainty about Management Affect Firms’ Costs of Borrowing?
Classification-JEL: G32; G34; M12; M51
Author-Name: Yihui Pan
Author-Person: ppa1364
Author-Name: Tracy Yue Wang
Author-Name: Michael S. Weisbach
Note: AP CF
Number: 20674
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20674
File-URL: http://www.nber.org/papers/w20674.pdf
File-Format: application/pdf
Abstract: Uncertainty about management appears to affect firms’ cost of borrowing and financial policies. In a sample of S&P 1500 firms between 1987 and 2010, CDS spreads, loan spreads and bond yield spreads all decline over the first three years of CEO tenure, holding other macroeconomic, firm, and security level factors constant. This decline occurs regardless of the reason for the prior CEO’s departure. Similar but smaller declines occur following turnovers of CFOs. The spreads are more sensitive to CEO tenure when the prior uncertainty about the CEO’s ability is likely to be higher: when he is not an heir apparent, is an outsider, is younger, and when he does not have a prior relationship with the lender. The spread- tenure sensitivity is also higher when the firm has a higher default risk and when the debt claim is riskier. These patterns are consistent with the view that the decline in spreads in a manager’s first three years of tenure reflects the resolution of uncertainty about management. Firms adjust their propensities to issue external debt, precautionary cash holding, and reliance on internal funds in response to these short-term increases in borrowing costs early in their CEOs’ tenure.
Handle: RePEc:nbr:nberwo:20674
Template-Type: ReDIF-Paper 1.0
Title: The Road to Redemption: Policy Response to Crises in Latin America
Classification-JEL: E52; E62; F41
Author-Name: Carlos A. Vegh
Author-Person: pve34
Author-Name: Guillermo Vuletin
Author-Person: pvu7
Note: IFM
Number: 20675
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20675
File-URL: http://www.nber.org/papers/w20675.pdf
File-Format: application/pdf
Publication-Status: published as Carlos A Vegh & Guillermo Vuletin, 2014. "The Road to Redemption: Policy Response to Crises in Latin America," IMF Economic Review, Palgrave Macmillan, vol. 62(4), pages 526-568, November.
Abstract: This paper analyzes the fiscal and monetary policy responses to crises in Latin America over the last 40 years. We argue that, on average, Latin American countries have "graduated" in terms of their policy responses in the sense that they have been able to switch from procyclical to counteryclical policy responses. This average response, however, masks a great deal of heterogeneity with some countries (such as Chile, Brazil, and Mexico) leading the graduation process and others (like Argentina and Venezuela) still showing procyclical policy responses. We further show that countercyclical policy responses have been effective in reducing the duration and intensity of crises. Finally, we relate our analysis to the current crisis in the Eurozone and argue that, like in many instances in Latin America, procyclical fiscal policy has increased the duration and intensity of the crisis.
Handle: RePEc:nbr:nberwo:20675
Template-Type: ReDIF-Paper 1.0
Title: Financing Innovation
Classification-JEL: G21; G24; L26; M13; O31; O32
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Ramana Nanda
Author-Person: pna187
Note: CF PR
Number: 20676
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20676
File-URL: http://www.nber.org/papers/w20676.pdf
File-Format: application/pdf
Publication-Status: published as Ramana Nanda & William R. Kerr, 2015. "Financing Innovation," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 445-462, December.
Abstract: We review the recent literature on the financing of innovation, inclusive of large companies and new startups. This research strand has been very active over the past five years, generating important new findings, questioning some long-held beliefs, and creating its own puzzles. Our review outlines the growing body of work that documents a role for debt financing related to innovation. We highlight the new literature on learning and experimentation across multi-stage innovation projects and how this impacts optimal financing design. We further highlight the strong interaction between financing choices for innovation and changing external conditions, especially reduced experimentation costs.
Handle: RePEc:nbr:nberwo:20676
Template-Type: ReDIF-Paper 1.0
Title: Markets for Scientific Attribution
Classification-JEL: O31; O34
Author-Name: Joshua Gans
Author-Person: pga42
Author-Name: Fiona Murray
Note: PR
Number: 20677
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20677
File-URL: http://www.nber.org/papers/w20677.pdf
File-Format: application/pdf
Publication-Status: published as Joshua S Gans & Fiona Murray, 2023. "Markets for Scientific Attribution," The Journal of Law, Economics, and Organization, vol 39(3), pages 828-846.
Abstract: Formal attribution provides a means of recognizing scientific contributions as well as allocating scientific credit. This paper examines the processes by which attribution arises and its interaction with market assessments of the relative contributions of members of scientific teams and communities – a topic of interest organizational economics of science and in understanding scientific labor markets. We demonstrate that a pioneer or senior scientist’s decision to co-author with a follower or junior scientist depends critically on market attributions as well as the timing of the co-authoring decision. This results in multiple equilibrium outcomes each with different implications for expected quality of research projects. However, we demonstrate that the Pareto efficient organisational regime is for the follower researcher to be granted co-authorship contingent on their own performance without any earlier pre-commitment to formal attribution. We then compare this with the alternative for the pioneer of publishing their contribution and being rewarded through citations to back to it. While in some equilibria (especially where co-authoring commitments are possible) there is no advantage to interim publication, in others this can increase expected research quality.
Handle: RePEc:nbr:nberwo:20677
Template-Type: ReDIF-Paper 1.0
Title: Prices, Consumption, and Dividends Over the Business Cycle: A Tale of Two Regimes
Classification-JEL: D03; E44; G12; G14; G3
Author-Name: Anisha Ghosh
Author-Name: George M. Constantinides
Author-Person: pco144
Note: AP
Number: 20678
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20678
File-URL: http://www.nber.org/papers/w20678.pdf
File-Format: application/pdf
Abstract: An economy in which investors know the true model and its parameters and filter the regime probability from aggregate consumption history has been empirically rejected. Hypothesizing that prices partly reflect investorsʼ belief about the regime, we infer beliefs from prices. The model fits well the moments of the market return, risk free rate, and price-dividend ratio. Consistent with the data, it implies higher mean and lower volatility of consumption and dividend growth rates, lower mean and volatility of the market return and equity premium, and higher mean of the price-dividend ratio in the first regime compared with the second one. The probability of recession in a year is 62:5% (23:7%) if the probability of being in the first regime at the beginning of the year is lower (higher) than 50%. The results support the hypothesis that investors employ a broader information set than just aggregate consumption history in forming their beliefs.
Handle: RePEc:nbr:nberwo:20678
Template-Type: ReDIF-Paper 1.0
Title: Does Private Information Influence Automobile Insurance Purchase Decisions?
Classification-JEL: D82; I12; R41
Author-Name: Frank A. Sloan
Author-Person: psl34
Author-Name: Patricia A. Robinson
Author-Name: Lindsey M. Eldred
Note: EH LE
Number: 20679
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20679
File-URL: http://www.nber.org/papers/w20679.pdf
File-Format: application/pdf
Abstract: This study quantifies the importance of private information, separates the extent to which the positive correlation between the accident probability and insurance coverage reflects adverse selection and moral hazard, and analyzes market segmentation on objective accident risk. We use data we collected to examine the importance of potential sources of private information in individualsʼ third- and first-party insurance choices. Individuals with higher subjective accident probabilities have less liability exposure post insurance purchase and more often experience an accident, conditional on factors insurers use for risk classification. This evidence is consistent with the positive correlation between accident occurrence and liability insurance coverage. We find that the positive correlation almost completely reflects adverse selection. In analysis of insurer sorting, we find that accident-free drivers obtain coverage from insurers with higher independent agency quality ratings. High-quality insurers eschew low-quality drivers on measured dimensions because these drivers are more likely to possess private information about their driving ability and proclivities that affect expected loss. Drivers with a higher risk on factors observable to insurers tend to have private information about their accident risk. This sorting process reflects an institutional response to asymmetric information, and assures a continuous supply of private insurance to unsafe drivers.
Handle: RePEc:nbr:nberwo:20679
Template-Type: ReDIF-Paper 1.0
Title: Subjective Beliefs, Deterrence, and the Propensity to Drive While Intoxicated
Classification-JEL: D04; D84; I12; I18
Author-Name: Yiqun Chen
Author-Name: Frank Sloan
Author-Person: psl34
Note: EH
Number: 20680
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20680
File-URL: http://www.nber.org/papers/w20680.pdf
File-Format: application/pdf
Abstract: This study investigates causal effects of changes in subjective probabilities of being pulled over and involved in accidents if driving while intoxicated on individuals’ drinking and driving choices. We also examine how hypothetical changes in perceptions of sanction severity affect drunk driving by experiments randomizing the harshness of punishments. We find that higher perceived risks of being pulled over and involved in accidents deter drinking and driving. However, deterrence is limited to persons who are alcohol addicted, lack of self-control over drinking, and are more impulsive. No deterrent effect of harsher legal punishments is found on individuals’ drunk driving choices.
Handle: RePEc:nbr:nberwo:20680
Template-Type: ReDIF-Paper 1.0
Title: Homophily, Group Size, and the Diffusion of Political Information in Social Networks: Evidence from Twitter
Classification-JEL: D7; D8
Author-Name: Yosh Halberstam
Author-Person: pha674
Author-Name: Brian Knight
Author-Person: pkn7
Note: PE POL
Number: 20681
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20681
File-URL: http://www.nber.org/papers/w20681.pdf
File-Format: application/pdf
Publication-Status: published as Yosh Halberstam & Brian Knight, 2016. "Homophily, group size, and the diffusion of political information in social networks: Evidence from Twitter," Journal of Public Economics, .
Abstract: In this paper, we investigate political communications in social networks characterized both by homophily–a tendency to associate with similar individuals–and group size. To generate testable hypotheses, we develop a simple theory of information diffusion in social networks with homophily and two groups: conservatives and liberals. The model predicts that, with homophily, members of the majority group have more network connections and are exposed to more information than the minority group. We also use the model to show that, with homophily and a tendency to produce like-minded information, groups are disproportionately exposed to like-minded information and the information reaches like-minded individuals more quickly than it reaches individuals of opposing ideologies. To test the hypotheses of our model, we analyze nearly 500,000 communications during the 2012 US elections in a social network of 2.2 million politically-engaged Twitter users. Consistent with the model, we find that members of the majority group in each state-level network have more connections and are exposed to more tweets than members of the minority group. Likewise, we find that groups are disproportionately exposed to like-minded information and that information reaches like-minded users more quickly than users of the opposing ideology.
Handle: RePEc:nbr:nberwo:20681
Template-Type: ReDIF-Paper 1.0
Title: Which Factors?
Classification-JEL: E22; E44; G11; G12; G14
Author-Name: Kewei Hou
Author-Person: pho571
Author-Name: Haitao Mo
Author-Name: Chen Xue
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP CF EFG IFM
Number: 20682
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20682
File-URL: http://www.nber.org/papers/w20682.pdf
File-Format: application/pdf
Publication-Status: published as Kewei Hou & Haitao Mo & Chen Xue & Lu Zhang, 2019. "Which Factors?*," Review of Finance, vol 23(1), pages 1-35.
Abstract: Many recently proposed, seemingly different factor models are closely related. In spanning tests, the q-factor model largely subsumes the Fama-French (2015, 2018) 5-and 6-factor models, and the q⁵ model captures the Stambaugh-Yuan (2017) model. The Stambaugh-Yuan factors are sensitive to their construction, and once replicated via the standard approach, are close to the q-factors, with correlations of 0.8 and 0.84. Finally, it seems difficult to motivate the Fama-French 5-factor model from valuation theory, which predicts a positive relation between the expected investment and the expected return.
Handle: RePEc:nbr:nberwo:20682
Template-Type: ReDIF-Paper 1.0
Title: New Linked Data on Research Investments: Scientific Workforce, Productivity, and Public Value
Classification-JEL: D85; J0; O3
Author-Name: Julia Lane
Author-Person: pla36
Author-Name: Jason Owen-Smith
Author-Name: Rebecca Rosen
Author-Name: Bruce Weinberg
Author-Person: pwe74
Note: LS PR
Number: 20683
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20683
File-URL: http://www.nber.org/papers/w20683.pdf
File-Format: application/pdf
Publication-Status: published as Lane, Julia I. & Owen-Smith, Jason & Rosen, Rebecca F. & Weinberg, Bruce A., 2015. "New linked data on research investments: Scientific workforce, productivity, and public value," Research Policy, Elsevier, vol. 44(9), pages 1659-1671.
Abstract: Longitudinal micro-data derived from transaction level information about wage and vendor payments made by federal grants on multiple U.S. campuses are being developed in a partnership involving researchers, university administrators, representatives of federal agencies, and others. This paper describes the UMETRICS data initiative that has been implemented under the auspices of the Committee on Institutional Cooperation. The resulting data set reflects an emerging conceptual framework for analyzing the process, products, and impact of research. It grows from and engages the work of a diverse and vibrant community. This paper situates the UMETRICS effort in the context of research evaluation and ongoing data infrastructure efforts in order to highlight its novel and valuable features. Refocusing data construction in this field around individuals, networks, and teams offers dramatic possibilities for data linkage, the evaluation of research investments, and the development of rigorous conceptual and empirical models. Two preliminary analyses of the scientific workforce and network approaches to characterizing scientific teams ground a discussion of future directions and a call for increased community engagement.
Handle: RePEc:nbr:nberwo:20683
Template-Type: ReDIF-Paper 1.0
Title: Household Finance over the Life-Cycle: What does Education Contribute?
Classification-JEL: E21; G11
Author-Name: Russell Cooper
Author-Name: Guozhong Zhu
Author-Person: pzh352
Note: EFG
Number: 20684
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20684
File-URL: http://www.nber.org/papers/w20684.pdf
File-Format: application/pdf
Publication-Status: published as Russell Cooper & Guozhong Zhu, 2016. "Household Finance over the Life-Cycle: What does Education Contribute?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 20, pages 63-89, April.
Abstract: This paper studies household financial choices: why are these decisions dependent on the education level of the household? A life-cycle model is constructed to understand a rich set of facts about decisions of households with different levels of educational attainment regarding stock market participation, the stock share in wealth, the stock adjustment rate and the wealth-income ratio. Model parameters, including preferences, the cost of stock market participation and portfolio adjustment costs, are estimated to match the financial decisions of different education groups. Based on the estimated model, education affects household finance mainly through increased average income. The estimation also finds evidence that higher educational attainment is associated with a lower stock market entry cost and a larger discount factor. Education specific differences in income risks, medical expenses, mortality risks and the life-cycle pattern of income explain relatively little of the observed differences in household financial choices.
Handle: RePEc:nbr:nberwo:20684
Template-Type: ReDIF-Paper 1.0
Title: Economic Development and the Effectiveness of Foreign Aid: A Historical Perspective
Classification-JEL: B20; F31; F62; O10; O13; O19; O40; O43
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM
Number: 20685
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20685
File-URL: http://www.nber.org/papers/w20685.pdf
File-Format: application/pdf
Publication-Status: published as Sebastian Edwards, 2015. "Economic Development and the Effectiveness of Foreign Aid: A Historical Perspective," Kyklos, vol 68(3), pages 277-316.
Abstract: In this paper I discuss the effectiveness of foreign aid from a historical perspective. I show that foreign aid is a relatively new concept in economics, and I emphasize the role of exchange rate policies in the foreign aid controversies of the 1970s through 1990s. I show that in the early 1980s there were major changes in views regarding aid and agriculture. I emphasize the role of “ownership” of aid programs by the recipient countries as a way of increasing effectiveness. I argue that there is little hope of making progress in these debates if the economics profession continues to rely, almost exclusively, on cross section regressions. In order to move forward, these analyses need to be supplemented by in depth case studies that follow a country’s history for many decades.
Handle: RePEc:nbr:nberwo:20685
Template-Type: ReDIF-Paper 1.0
Title: Empirical Linkages between Good Government and National Well-being
Classification-JEL: H11; I31; P52
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Haifang Huang
Author-Person: phu198
Author-Name: Shawn Grover
Author-Name: Shun Wang
Note: DEV PE POL
Number: 20686
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20686
File-URL: http://www.nber.org/papers/w20686.pdf
File-Format: application/pdf
Abstract: This paper first reviews existing studies of the links between good governance and subjective well-being. It then brings together the largest available sets of national-level measures of the quality of governance to assess the extent to which they contribute to explaining the levels and changes in life evaluations in 157 countries over the years 2005-2012, using data from the Gallup World Poll. The results show not just that people are more satisfied with their lives in countries with better governance quality, but also that actual changes in governance quality since 2005 have led to large changes in the quality of life. For example, the ten-most-improved countries, in terms of delivery quality changes between 2005 and 2012, when compared to the ten countries with most worsened delivery quality, are estimated to have thereby increased average life evaluations by as much as would be produced by a 40% increase in per capita incomes. The results also confirm earlier findings that the delivery quality of government services generally dominates democratic quality in supporting better lives. The situation changes as development proceeds, with democratic quality having a positive influence among countries that have already achieved higher quality of service delivery.
Handle: RePEc:nbr:nberwo:20686
Template-Type: ReDIF-Paper 1.0
Title: Is Government Spending at the Zero Lower Bound Desirable?
Classification-JEL: D91; E21; E62
Author-Name: Florin O. Bilbiie
Author-Person: pbi78
Author-Name: Tommaso Monacelli
Author-Person: pmo32
Author-Name: Roberto Perotti
Author-Person: ppe66
Note: ME PE
Number: 20687
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20687
File-URL: http://www.nber.org/papers/w20687.pdf
File-Format: application/pdf
Publication-Status: published as Florin O. Bilbiie & Tommaso Monacelli & Roberto Perotti, 2019. "Is Government Spending at the Zero Lower Bound Desirable?," American Economic Journal: Macroeconomics, vol 11(3), pages 147-173.
Abstract: Government spending at the zero lower bound (ZLB) is not necessarily welfare enhancing, even when its output multiplier is large. We illustrate this point in the context of a standard New Keynesian model. In that model, when government spending provides direct utility to the household, its optimal level is at most 0.5-1 percent of GDP for recessions of -4 percent; the numbers are higher for deeper recessions. When spending does not provide direct utility, it is generically welfare-detrimental: it should be kept unchanged at a long run-optimal value.
Handle: RePEc:nbr:nberwo:20687
Template-Type: ReDIF-Paper 1.0
Title: How Does Tax Progressivity and Household Heterogeneity Affect Laffer Curves?
Classification-JEL: E62; H20; H60
Author-Name: Hans A. Holter
Author-Person: pho465
Author-Name: Dirk Krueger
Author-Person: pkr7
Author-Name: Serhiy Stepanchuk
Note: EFG PE
Number: 20688
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20688
File-URL: http://www.nber.org/papers/w20688.pdf
File-Format: application/pdf
Publication-Status: published as Hans A. Holter & Dirk Krueger & Serhiy Stepanchuk, 2019. "How do tax progressivity and household heterogeneity affect Laffer curves?," Quantitative Economics, Econometric Society, vol. 10(4), pages 1317-1356, November.
Abstract: How much additional tax revenue can the government generate by increasing labor income taxes? In this paper we provide a quantitative answer to this question, and study the importance of the progressivity of the tax schedule for the ability of the government to generate tax revenues. We develop a rich overlapping generations model featuring an explicit family structure, extensive and intensive margins of labor supply, endogenous accumulation of labor market experience as well as standard intertemporal consumption-savings choices in the presence of uninsurable idiosyncratic labor productivity risk. We calibrate the model to US macro, micro and tax data and characterize the labor income tax Laffer curve under the current choice of the progressivity of the labor income tax code as well as when varying progressivity. We find that more progressive labor income taxes significantly reduce tax revenues. For the US, converting to a flat tax code raises the peak of the Laffer curve by 6%, whereas converting to a tax system with progressivity similar to Denmark would lower the peak by 7%. We also show that, relative to a representative agent economy tax revenues are less sensitive to the progressivity of the tax code in our economy. This finding is due to the fact that labor supply of two earner households is less elastic (along the intensive margin) and the endogenous accumulation of labor market experience makes labor supply of females less elastic (around the extensive margin) to changes in tax progressivity.
Handle: RePEc:nbr:nberwo:20688
Template-Type: ReDIF-Paper 1.0
Title: Does Reading During the Summer Build Reading Skills? Evidence from a Randomized Experiment in 463 Classrooms
Classification-JEL: I24; J24
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: James S. Kim
Author-Name: David M. Quinn
Note: CH ED LS PE
Number: 20689
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20689
File-URL: http://www.nber.org/papers/w20689.pdf
File-Format: application/pdf
Abstract: There are large gaps in reading skills by family income among school-aged children in the United States. Correlational evidence suggests that reading skills are strongly related to the amount of reading students do outside of school. Experimental evidence testing whether this relationship is causal is lacking. We report the results from a randomized evaluation of a summer reading program called Project READS, which induces students to read more during the summer by mailing ten books to them, one per week. Simple intent-to-treat estimates show that the program increased reading during the summer, and show significant effects on reading comprehension test scores in the fall for third grade girls but not for third grade boys or second graders of either gender. Analyses that take advantage of within-classroom random assignment and cross-classroom variation in treatment effects show evidence that reading more books generates increases in reading comprehension skills, particularly when students read carefully enough to be able to answer basic questions about the books they read, and particularly for girls.
Handle: RePEc:nbr:nberwo:20689
Template-Type: ReDIF-Paper 1.0
Title: Exporting and Firm Performance: Evidence from a Randomized Trial
Classification-JEL: F10
Author-Name: David Atkin
Author-Name: Amit K. Khandelwal
Author-Person: pkh138
Author-Name: Adam Osman
Note: DEV ITI
Number: 20690
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20690
File-URL: http://www.nber.org/papers/w20690.pdf
File-Format: application/pdf
Abstract: We conduct a randomized experiment that generates exogenous variation in the access to foreign markets for rug producers in Egypt. Combined with detailed survey data, we causally identify the impact of exporting on firm performance. Treatment firms report 16-26 percent higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms. These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce. Instead, we find evidence of learning-by-exporting whereby exporting improves technical efficiency. First, treatment firms have higher productivity and quality after controlling for rug specifications. Second, when asked to produce an identical domestic rug using the same inputs and same capital equipment, treatment firms produce higher quality rugs despite no difference in production time. Third, treatment firms exhibit learning curves over time. Finally, we document knowledge transfers with quality increasing most along the specific dimensions that the knowledge pertained to.
Handle: RePEc:nbr:nberwo:20690
Template-Type: ReDIF-Paper 1.0
Title: A Welfare Criterion for Models with Distorted Beliefs
Classification-JEL: D61; D62; D84; G12; G14
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Author-Name: Alp Simsek
Author-Name: Wei Xiong
Author-Person: pxi88
Note: AP CF EFG PE
Number: 20691
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20691
File-URL: http://www.nber.org/papers/w20691.pdf
File-Format: application/pdf
Publication-Status: published as Markus K. Brunnermeier & Alp Simsek & Wei Xiong, 2014. "A Welfare Criterion For Models With Distorted Beliefs," The Quarterly Journal of Economics, Oxford University Press, vol. 129(4), pages 1753-1797.
Abstract: This paper proposes a welfare criterion for economies in which agents have heterogeneously distorted beliefs. Instead of taking a stand on whose belief is correct, our criterion asserts that an allocation is belief-neutral efficient (inefficient) if it is efficient (inefficient) under any convex combination of agents' beliefs. While this criterion gives an incomplete ranking of social allocations, it can identify positive- and negative-sum speculation driven by conflicting beliefs in a broad range of economic environments.
Handle: RePEc:nbr:nberwo:20691
Template-Type: ReDIF-Paper 1.0
Title: Are Public Sector Jobs Recession-Proof? Were They Ever?
Classification-JEL: H11; J45
Author-Name: Jason L. Kopelman
Author-Name: Harvey S. Rosen
Author-Person: pro55
Note: PE
Number: 20692
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20692
File-URL: http://www.nber.org/papers/w20692.pdf
File-Format: application/pdf
Publication-Status: published as J. L. Kopelman & H. S. Rosen, 2016. "Are Public Sector Jobs Recession-proof? Were They Ever?," Public Finance Review, vol 44(3), pages 370-396.
Abstract: We use data from the Displaced Worker Survey supplements of the Current Population Survey from 1984 to 2012 to investigate the differences in job loss rates between workers in the public and private sectors. Our focus is on the extent to which recessions affect the differential between job loss rates in the two sectors. Our main findings include the following: First, taking into account differences in characteristics among workers does not eliminate sectoral differences in the likelihood of losing one’s job. After accounting for worker characteristics, during both recessionary and non-recessionary periods, the probability of job loss is higher for private sector workers than for public sector workers at all levels of government. Second, the probability of displacement for private sector workers increased during both the Great Recession and earlier recessions during our sample period. Third, it is less straightforward to characterize the experience of public sector workers during recessions. Job loss rates sometimes increased and sometimes decreased, depending on whether the employer was the federal, state, or local government. The impact of the Great Recession on displacement rates for public sector employees was somewhat different from that in previous recessions. Fourth, the advantage of public sector employment in terms of job loss rates generally increased during recessions for all groups of public sector workers. Thus, the answer to the question posed in the title is that public sector jobs, while not generally recession-proof, do offer more security than private sector jobs, and the advantage widens during recessions. These patterns are present across genders, races, and educational groups.
Handle: RePEc:nbr:nberwo:20692
Template-Type: ReDIF-Paper 1.0
Title: Central Bank Credibility, Reputation and Inflation Targeting in Historical Perspective
Classification-JEL: C32; C36; E31; E58; N10
Author-Name: Michael Bordo
Author-Person: pbo243
Author-Name: Pierre Siklos
Author-Person: psi78
Note: DAE ME
Number: 20693
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20693
File-URL: http://www.nber.org/papers/w20693.pdf
File-Format: application/pdf
Abstract: This paper examines the historical evolution of central bank credibility using both historical narrative and empirics for a group of 16 countries, both advanced and emerging. It shows how the evolution of credibility has gone through a pendulum where credibility was high under the classical gold standard before 1914 before being lost and not fully regained until the 1980s. This characterization does not, however, seem to apply to the monetary history in the emerging markets examined in the paper. Nevertheless, credibility in all the economies examined has been enhanced in recent decades thanks to the adoption of inflation targeting. However, the recent financial crisis and the call for central banks to focus more on financial stability relying on macro prudential regulation may pose significant challenges for central bank credibility.
Handle: RePEc:nbr:nberwo:20693
Template-Type: ReDIF-Paper 1.0
Title: Unemployment in the Great Recession: A Comparison of Germany, Canada and the United States
Classification-JEL: J21; J64
Author-Name: Florian Hoffmann
Author-Name: Thomas Lemieux
Author-Person: ple92
Note: LS
Number: 20694
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20694
File-URL: http://www.nber.org/papers/w20694.pdf
File-Format: application/pdf
Publication-Status: published as Unemployment in the Great Recession: A Comparison of Germany, Canada, and the United States, Florian Hoffmann, Thomas Lemieux. in Labor Markets in the Aftermath of the Great Recession, Card and Mas. 2016
Publication-Status: published as Florian Hoffmann & Thomas Lemieux, 2016. "Unemployment in the Great Recession: A Comparison of Germany, Canada, and the United States," Journal of Labor Economics, vol 34(S1), pages S95-S139.
Abstract: This paper investigates the potential reasons for the surprisingly different labor market performance of the United States, Canada, Germany, and several other OECD countries during and after the Great Recession of 2008-09. Unemployment rates did not change substantially in Germany, increased and remained at relatively high levels in the United States, and increased moderately in Canada. More recent data also show that, unlike Germany and Canada, the U.S. unemployment rate remains largely above its pre-recession level. We find two main explanations for these differences. First, the large employment swings in the construction sector linked to the boom and bust in U.S. housing markets can account for a large fraction of the cross-country differences in aggregate labor market outcomes for the three countries. Second, cross-country differences are consistent with a conventional Okun relationship linking GDP growth to employment performance. In particular, relative to pre-recession trends there has been a much larger drop in GDP in the United States than Germany between 2008 and 2012. In light of these facts, the strong performance of the German labor market is consistent with other aggregate outcomes of the economy.
Handle: RePEc:nbr:nberwo:20694
Template-Type: ReDIF-Paper 1.0
Title: Toward an Understanding of Reference-Dependent Labor Supply: Theory and Evidence from a Field Experiment
Classification-JEL: C93; D01
Author-Name: Steffen Andersen
Author-Person: pan114
Author-Name: Alec Brandon
Author-Name: Uri Gneezy
Author-Person: pgn18
Author-Name: John A. List
Author-Person: pli176
Note: LS
Number: 20695
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20695
File-URL: http://www.nber.org/papers/w20695.pdf
File-Format: application/pdf
Abstract: Perhaps the most powerful form of framing arises through reference dependence, wherein choices are made recognizing the starting point or a goal. In labor economics, for example, a form of reference dependence, income targeting, has been argued to represent a serious challenge to traditional economic models. We design a field experiment linked tightly to three popular economic models of labor supply—two behavioral variants and one simple neoclassical model—to deepen our understanding of the positive implications of our major theories. Consistent with neoclassical theory and reference-dependent preferences with endogenous reference points, workers (vendors in open air markets) supply more hours when presented with an expected transitory increase in hourly wages. In contrast with the prediction of behavioral models, however, when vendors earn an unexpected windfall early in the day, their labor supply does not respond. A key feature of our market in terms of parsing the theories is that vendors do not post prices rather they haggle with customers. In this way, our data also speak to the possibility of reference-dependent preferences over other dimensions. Our investigation again yields results that are in line with neoclassical theory, as bargaining patterns are unaffected by the unexpected windfall.
Handle: RePEc:nbr:nberwo:20695
Template-Type: ReDIF-Paper 1.0
Title: The Emotional Consequences of Donation Opportunities
Classification-JEL: C91; D60; D64; H3
Author-Name: Lara B. Aknin
Author-Name: Guy Mayraz
Author-Person: pma1124
Author-Name: John F. Helliwell
Author-Person: phe368
Note: PE
Number: 20696
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20696
File-URL: http://www.nber.org/papers/w20696.pdf
File-Format: application/pdf
Publication-Status: published as Lara B. Aknin & Guy Mayraz & John F. Helliwell, 2017. "The emotional consequences of donation opportunities," The Journal of Positive Psychology, vol 12(2), pages 169-177.
Abstract: Charities often circulate widespread donation appeals to garner support for campaigns, but what impact do these campaigns have on the well-being of individuals who choose to donate, those who choose not to donate, and the entire group exposed to the campaign? Here we investigate these questions by exploring the changes in affect reported by individuals who donate in response to a charitable request and those who do not. We also look at the change in affect reported by the entire sample to measure the net impact of the donation request. Results reveal that large donors experience hedonic boosts from their charitable actions, and the substantial fraction of large donors translates to a net positive influence on the well-being of the entire sample. Thus, under certain conditions, donation opportunities can enable people to help others while also increasing the overall well-being of the population of potential donors.
Handle: RePEc:nbr:nberwo:20696
Template-Type: ReDIF-Paper 1.0
Title: Revealing Malfeasance: How Local Media Facilitates Electoral Sanctioning of Mayors in Mexico
Classification-JEL: D72; D78; H41; H76; O17
Author-Name: Horacio A. Larreguy
Author-Person: pla1013
Author-Name: John Marshall
Author-Name: James M. Snyder, Jr.
Author-Person: psn39
Note: DEV PE POL
Number: 20697
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20697
File-URL: http://www.nber.org/papers/w20697.pdf
File-Format: application/pdf
Abstract: We estimate the effect of local media outlets on political accountability in Mexico, focusing on malfeasance by municipal mayors. We study federal grants earmarked for infrastructure projects targeting the poor, and leverage two sources of plausibly exogenous variation. First, we exploit variation in the timing of the release of municipal audit reports. Second, and moving beyond existing studies, we exploit variation in media exposure at the electoral precinct level. In particular, we compare neighboring precincts on the boundaries of media stations’ coverage areas to isolate the effects of an additional media station. We find that voters punish the party of malfeasant mayors, but only in electoral precincts covered by local media stations (which emit from within the precinct’s municipality). An additional local radio or television station reduces the vote share of an incumbent political party revealed to be corrupt by 1 percentage point, and reduces the vote share of an incumbent political party revealed to have diverted funds to projects not benefiting the poor by around 2 percentage points. We also show that these electoral sanctions persist: at the next election, the vote share of the current incumbent’s party continues to be reduced by a similar magnitude. The electoral costs of diverting resources away from the poor are especially large for the populist Institutional Revolutionary Party (PRI) party. However, we find no effect of media stations based in other municipalities.
Handle: RePEc:nbr:nberwo:20697
Template-Type: ReDIF-Paper 1.0
Title: Employment Cyclicality and Firm Quality
Classification-JEL: E24; E32; J23; J3; J63
Author-Name: Lisa B. Kahn
Author-Name: Erika McEntarfer
Author-Person: pmc155
Note: EFG LS
Number: 20698
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20698
File-URL: http://www.nber.org/papers/w20698.pdf
File-Format: application/pdf
Abstract: Who fares worse in an economic downturn, low- or high-paying firms? Different answers to this question imply very different consequences for the costs of recessions. Using U.S. employer-employee data, we find that employment growth at low-paying firms is less cyclically sensitive. High-paying firms grow more quickly in booms and shrink more quickly in busts. We show that while during recessions separations fall in both high-paying and low- paying firms, the decline is stronger among low-paying firms. This is particularly true for separations that are likely voluntary. Our findings thus suggest that downturns hinder upward progression of workers toward higher paying firms - the job ladder partially collapses. Workers at the lowest paying firms are 20% less likely to advance in firm quality (as measured by average pay in a firm) in a bust compared to a boom. Furthermore, workers that join firms in busts compared to booms will on average advance only half as far up the job ladder within the first year, due to both an increased likelihood of matching to a lower paying firm and a reduced probability of moving up once matched. Thus our findings can account for some of the lasting negative impacts on workers forced to search for a job in a downturn, such as displaced workers and recent college graduates. For example, differential sorting and lack of upward mobility can account for roughly a third of the initial earnings impacts of graduating into a large downturn.
Handle: RePEc:nbr:nberwo:20698
Template-Type: ReDIF-Paper 1.0
Title: Farms, Families, and Markets: New Evidence on Completeness of Markets in Agricultural Settings
Classification-JEL: J1; J43; O12; Q12
Author-Name: Daniel LaFave
Author-Person: pla609
Author-Name: Duncan Thomas
Author-Person: pth20
Note: DEV
Number: 20699
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20699
File-URL: http://www.nber.org/papers/w20699.pdf
File-Format: application/pdf
Publication-Status: published as Daniel LaFave & Duncan Thomas, 2016. "Farms, Families, and Markets: New Evidence on Completeness of Markets in Agricultural Settings," Econometrica, Econometric Society, vol. 84, pages 1917-1960, 09.
Abstract: The farm household model has played a central role in improving the understanding of small-scale agricultural households and non-farm enterprises. Under the assumptions that all current and future markets exist and that farmers treat all prices as given, the model simplifies households’ simultaneous production and consumption decisions into a recursive form in which production can be treated as independent of preferences of household members. These assumptions, which are the foundation of a large literature in labor and development, have been tested and not rejected in several important studies, including, for example, Benjamin (1992). Using multiple waves of longitudinal survey data from Central Java, Indonesia, this paper tests a key prediction of the recursive model: demand for farm labor is unrelated to the demographic composition of the farm household. The prediction is unambiguously rejected. The rejection cannot be explained by contamination due to unobserved heterogeneity that is fixed at the farm level, local area shocks or farm-specific shocks that affect changes in household composition and farm labor demand. We conclude that the recursive form of the farm household model is not consistent with the data. Developing empirically tractable models of farm households when markets are incomplete remains an important challenge.
Handle: RePEc:nbr:nberwo:20699
Template-Type: ReDIF-Paper 1.0
Title: Do Funds Make More When They Trade More?
Classification-JEL: G10; G20; J24
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Author-Name: Lucian A. Taylor
Note: AP CF
Number: 20700
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20700
File-URL: http://www.nber.org/papers/w20700.pdf
File-Format: application/pdf
Publication-Status: published as Ľuboš Pástor & Robert F. Stambaugh & Lucian A. Taylor, 2017. "Do Funds Make More When They Trade More?," Journal of Finance, American Finance Association, vol. 72(4), pages 1483-1528, August.
Abstract: We model optimal fund turnover in the presence of time-varying profit opportunities. Our model predicts a positive relation between an active fund’s turnover and its subsequent benchmark-adjusted return. We find such a relation for equity mutual funds. This time-series relation between turnover and performance is stronger than the cross-sectional relation, as the model predicts. Also as predicted, the turnover-performance relation is stronger for funds trading less-liquid stocks, such as small-cap funds. Turnover has a common component that is positively correlated with proxies for stock mispricing, consistent with funds exploiting time-varying opportunities. Turnover’s common component helps predict fund returns.
Handle: RePEc:nbr:nberwo:20700
Template-Type: ReDIF-Paper 1.0
Title: Public School Choice: An Economic Analysis
Classification-JEL: D02; H4; I2
Author-Name: Levon Barseghyan
Author-Person: pba303
Author-Name: Damon Clark
Author-Person: pcl136
Author-Name: Stephen Coate
Author-Person: pco66
Note: ED PE
Number: 20701
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20701
File-URL: http://www.nber.org/papers/w20701.pdf
File-Format: application/pdf
Abstract: Public school choice programs give households a free choice of public school and provide schools incentives to compete for students. Proponents of these programs argue that by the usual market logic, choice and competition will improve the quality of the education that schools provide. Critics counter that the usual market logic does not translate easily to schools, since households’ perceptions of school quality depend not only on the efforts of school personnel but also on the composition of the student body (i.e., households have peer preferences). This paper advances this debate by developing and analyzing an economic model of public school choice. To capture the pro-choice argument, the model assumes that a neighborhood enrollment policy that provides schools with no incentives to exert effort is replaced by a prototypical public school choice policy in which households have a free choice of school and schools have incentives to compete for students. To capture the anti-choice argument the model assumes that households have peer preferences. The analysis of the equilibrium of this model generates three findings that highlight potential limitations of choice programs.
Handle: RePEc:nbr:nberwo:20701
Template-Type: ReDIF-Paper 1.0
Title: Extended Families and Child Well-being
Classification-JEL: D1; I0; J13
Author-Name: Daniel LaFave
Author-Person: pla609
Author-Name: Duncan Thomas
Author-Person: pth20
Note: DEV
Number: 20702
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20702
File-URL: http://www.nber.org/papers/w20702.pdf
File-Format: application/pdf
Publication-Status: published as "Extended families and child development" Journal of Development Economics, 126:52-65, 2017
Abstract: Whereas studies have established the intra-household distribution of resources affects allocation decisions, little is known about how these decisions are affected by the distribution of resources among co-resident and non co-resident extended family members. Drawing on theoretical models of collective decision-making, we use extremely rich data from Indonesia to establish that child health- and education-related human capital outcomes are affected by resources of extended family members who co-reside with the child and those who are not co-resident. Extended family members are not completely altruistic but their allocation decisions are apparently co-ordinated in a way that is consistent with Pareto efficiency.
Handle: RePEc:nbr:nberwo:20702
Template-Type: ReDIF-Paper 1.0
Title: The Collateral Trap
Classification-JEL: E44; E51; G21; G23
Author-Name: Frédéric Boissay
Author-Name: Russell Cooper
Note: EFG
Number: 20703
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20703
File-URL: http://www.nber.org/papers/w20703.pdf
File-Format: application/pdf
Publication-Status: published as Frederic Boissay & Russell Cooper, 2016. "The Collateral Trap," BIS Working Papers 565, Bank for International Settlements.
Abstract: Active wholesale financial markets help reallocate deposits across heterogeneous banks. Because of incentive problems these flows are constrained and collateral is needed. The composition of collateral matters. The use of inside assets (loans) creates a “collateral pyramid” in that cash flows from one loan can be pledged to secure another. Through collateral pyramids the financial sector creates safe assets, but at the cost of exposing the economy to systemic panics. Outside collateral (treasuries) serves as foundation of, and stabilises, the pyramid. There is a threshold for the volume of treasuries, below which investors panic and the pyramid collapses.
Handle: RePEc:nbr:nberwo:20703
Template-Type: ReDIF-Paper 1.0
Title: Do Credit Market Shocks affect the Real Economy? Quasi-Experimental Evidence from the Great Recession and ‘Normal’ Economic Times
Classification-JEL: D22; D53; G01; G1; G21; J01; J23
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: Alexandre Mas
Author-Person: pma2363
Author-Name: Hoai-Luu Nguyen
Note: CF EFG LS ME
Number: 20704
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20704
File-URL: http://www.nber.org/papers/w20704.pdf
File-Format: application/pdf
Publication-Status: published as Michael Greenstone & Alexandre Mas & Hoai-Luu Nguyen, 2020. "Do Credit Market Shocks Affect the Real Economy? Quasi-experimental Evidence from the Great Recession and “Normal” Economic Times," American Economic Journal: Economic Policy, vol 12(1), pages 200-225.
Abstract: We estimate the effect of the reduction in credit supply that followed the 2008 financial crisis on the real economy. We predict county lending shocks using variation in pre-crisis bank market shares and estimated bank supply-shifts. Counties with negative predicted shocks experienced declines in small business loan originations, indicating that it is costly for these businesses to find new lenders. Using confidential microdata from the Longitudinal Business Database, we find that the 2007-2009 lending shocks accounted for statistically significant, but economically small, declines in both small firm and overall employment. Predicted lending shocks affected lending but not employment from 1997-2007.
Handle: RePEc:nbr:nberwo:20704
Template-Type: ReDIF-Paper 1.0
Title: Resolving Intertemporal Conflicts: Economics vs Politics
Classification-JEL: D9; H43; Q2
Author-Name: Antony Millner
Author-Name: Geoffrey Heal
Author-Person: phe40
Note: EEE PE POL
Number: 20705
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20705
File-URL: http://www.nber.org/papers/w20705.pdf
File-Format: application/pdf
Abstract: Intertemporal conflicts occur when a group of agents with heterogeneous time preferences must make a collective decision about how to manage a common asset. How should this be done? We examine two methods: an 'Economics' approach that seeks to implement efficient allocations, and a 'Politics' approach in which agents vote over consumption plans. We compare these methods by varying two characteristics of the problem: are agents' preferences known or are they hidden information, and can they commit to intertemporal collective plans or not? We show that if commitment is possible the Economics approach always Pareto dominates the Politics approach, in both full and hidden information scenarios. By contrast, without commitment the group may be better off if the Politics approach is adopted. We investigate when Politics trumps Economics analytically, and then apply our model to a survey of economists' views on the appropriate pure rate of time preference for project appraisal. For a wide range of model parameters, and under both full and hidden information, the Politics approach is supported by a majority of agents, and leads to higher group welfare.
Handle: RePEc:nbr:nberwo:20705
Template-Type: ReDIF-Paper 1.0
Title: The Perverse Impact of Calling for Energy Conservation
Classification-JEL: D04; Q4; Q5
Author-Name: J. Scott Holladay
Author-Person: pho482
Author-Name: Michael K. Price
Author-Person: ppr89
Author-Name: Marianne Wanamaker
Author-Person: pwa584
Note: EEE
Number: 20706
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20706
File-URL: http://www.nber.org/papers/w20706.pdf
File-Format: application/pdf
Publication-Status: published as Holladay, J. Scott & Price, Michael K. & Wanamaker, Marianne, 2015. "The perverse impact of calling for energy conservation," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 1-18.
Abstract: In periods of high energy demand, utilities frequently issue "emergency" appeals for conservation over peak hours to reduce brownout risk. We estimate the impact of such appeals using high-frequency data on actual and forecasted electricity generation, pollutant emission measures, and real-time prices. Our results suggest a perverse impact; while there is no significant reduction in grid stress over superpeak hours, such calls lead to increased off-peak generation, CO2 emissions, and price volatility. We postulate that consumer attempts at load shifting lead to this result.
Handle: RePEc:nbr:nberwo:20706
Template-Type: ReDIF-Paper 1.0
Title: Accounting for Post-Crisis Inflation and Employment: A Retro Analysis
Classification-JEL: E31; E32; E52
Author-Name: Chiara Fratto
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG ME
Number: 20707
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20707
File-URL: http://www.nber.org/papers/w20707.pdf
File-Format: application/pdf
Abstract: What accounts for inflation after 2008? We use the prominent pre-crisis Smets-Wouters (2007) model to address this question. We find that due to price markup shocks alone inflation would have been 1% higher than observed and 0.5% higher that the long-run average. Their standard deviation is similar to its pre-crisis level. Price markup shocks were also responsible for the slow recovery of employment, though not for the initial drop. Monetary policy shocks predict an inflation rate 0.5% below average. Government expenditure innovations do not contribute much either to inflation or to employment dynamics.
Handle: RePEc:nbr:nberwo:20707
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Health Insurance Expansion on Physician Treatment Choice: Medicare Part D and Physician Prescribing
Classification-JEL: I13; I18; I31
Author-Name: Tianyan Hu
Author-Name: Sandra L. Decker
Author-Name: Shin-Yi Chou
Note: EH
Number: 20708
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20708
File-URL: http://www.nber.org/papers/w20708.pdf
File-Format: application/pdf
Publication-Status: published as Tianyan Hu & Sandra L. Decker & Shin-Yi Chou, 2017. "The impact of health insurance expansion on physician treatment choice: Medicare Part D and physician prescribing," International Journal of Health Economics and Management, vol 17(3), pages 333-358.
Abstract: We test the effect of the introduction of Medicare Part D on physician prescribing behavior by using data on physician visits from the National Ambulatory Medical Care Survey (NAMCS) 2002-2004 and 2006-2009 for patients aged 60-69. We use a combined DD-RD specification that is an improvement over either the difference-in-difference (DD) or regression discontinuity (RD) designs. Comparing the discrete jump in outcomes at age 65 before and after 2006, we find a 35% increase in the number of prescription drugs prescribed or continued per visit and a 55% increase in the number of generic drugs prescribed or continued, providing evidence of physician response to changes in patient out-of-pocket costs.
Handle: RePEc:nbr:nberwo:20708
Template-Type: ReDIF-Paper 1.0
Title: Financing Smallholder Agriculture: An Experiment with Agent-Intermediated Microloans in India
Classification-JEL: O16; O17; Q14
Author-Name: Pushkar Maitra
Author-Person: pma216
Author-Name: Sandip Mitra
Author-Name: Dilip Mookherjee
Author-Person: pmo51
Author-Name: Alberto Motta
Author-Person: pmo373
Author-Name: Sujata Visaria
Author-Person: pvi388
Note: DEV
Number: 20709
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20709
File-URL: http://www.nber.org/papers/w20709.pdf
File-Format: application/pdf
Publication-Status: published as Maitra, Pushkar & Mitra, Sandip & Mookherjee, Dilip & Motta, Alberto & Visaria, Sujata, 2017. "Financing smallholder agriculture: An experiment with agent-intermediated microloans in India," Journal of Development Economics, Elsevier, vol. 127(C), pages 306-337.
Publication-Status: published as Pushkar Maitra & Sandip Mitra & Dilip Mookherjee & Alberto Motta & Sujata Visaria, 2017. "Financing smallholder agriculture: An experiment with agent-intermediated microloans in India," Journal of Development Economics, vol 127, pages 306-337.
Abstract: Recent evaluations of traditional microfinance loans have found no significant impacts on borrower incomes or productive activities. We examine whether this can be remedied by (a) modifying loan features to facilitate financing of working capital needs of farmers, and (b) delegating selection of borrowers for individual liability loans to local trader-lender agents incentivized by repayment-based commissions. We conduct a field experiment in West Bengal where this design (called TRAIL) was offered in randomly selected villages. In remaining villages a more traditional design (called GBL) was offered, wherein five-member groups applied for joint liability loans with terms otherwise similar to TRAIL loans. TRAIL loans increased cultivation of potatoes (the major cash crop in the region) and farm incomes by 17–21%, whereas GBL loans had insignificant and highly dispersed effects. We argue this was because TRAIL agents selected borrowers that were low-risk and highly productive, whereas the GBL scheme attracted farmers that were riskier on average and highly heterogeneous in terms of productivity. TRAIL loans also achieved higher repayment and take-up rates, and lower administrative costs.
Handle: RePEc:nbr:nberwo:20709
Template-Type: ReDIF-Paper 1.0
Title: House Prices, Local Demand, and Retail Prices
Classification-JEL: D14; D22; E31; E32; E5; L16; L66; R3
Author-Name: Johannes Stroebel
Author-Name: Joseph Vavra
Author-Person: pva480
Note: CF EFG IO LS ME
Number: 20710
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20710
File-URL: http://www.nber.org/papers/w20710.pdf
File-Format: application/pdf
Publication-Status: published as Johannes Stroebel & Joseph Vavra, 2019. "House Prices, Local Demand, and Retail Prices," Journal of Political Economy, vol 127(3), pages 1391-1436.
Abstract: We use detailed micro data to document a causal response of local retail prices to changes in local house prices, with elasticities of 15%-20% across housing booms and busts. Notably, these price responses are largest in zip codes with many homeowners, and non-existent in zip codes with mostly renters. We provide evidence that these retail price responses are driven by changes in markups rather than by changes in local costs. We then argue that markups rise with house prices, particularly in high homeownership locations, because greater housing wealth reduces homeowners' demand elasticity, and firms raise markups in response. Consistent with this explanation, shopping data confirms that house price changes affect the price sensitivity of homeowners, but not that of renters. Our evidence suggests a new source of markup variation in business cycle models.
Handle: RePEc:nbr:nberwo:20710
Template-Type: ReDIF-Paper 1.0
Title: Jumps in Bond Yields at Known Times
Classification-JEL: C32; E43; G12
Author-Name: Don H. Kim
Author-Name: Jonathan H. Wright
Author-Person: pwr25
Note: TWP
Number: 20711
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20711
File-URL: http://www.nber.org/papers/w20711.pdf
File-Format: application/pdf
Abstract: We construct a no-arbitrage term structure model with jumps in the entire state vector at deterministic times but of random magnitudes. Jump risk premia are allowed for. We show that the model implies a closed-form representation of yields as a time-inhomogenous affine function of the state vector. We apply the model to the term structure of US Treasury rates, estimated at the daily frequency, allowing for jumps on days of employment report announcements. Our model can match the empirical fact that the term structure of interest rate volatility has a hump-shaped pattern on employment report days (but not on other days). The model also produces patterns in bond risk premia that are consistent with the empirical finding that much of the time-variation in excess bond returns accrues at times of important macroeconomic data releases.
Handle: RePEc:nbr:nberwo:20711
Template-Type: ReDIF-Paper 1.0
Title: Retail Financial Advice: Does One Size Fit All?
Classification-JEL: D14; G11; G20
Author-Name: Stephen Foerster
Author-Name: Juhani T. Linnainmaa
Author-Name: Brian T. Melzer
Author-Person: pme762
Author-Name: Alessandro Previtero
Note: AP
Number: 20712
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20712
File-URL: http://www.nber.org/papers/w20712.pdf
File-Format: application/pdf
Publication-Status: published as STEPHEN FOERSTER & JUHANI T. LINNAINMAA & BRIAN T. MELZER & ALESSANDRO PREVITERO, 2017. "Retail Financial Advice: Does One Size Fit All?," The Journal of Finance, vol 72(4), pages 1441-1482.
Abstract: Using unique data on Canadian households, we assess the impact of financial advisors on their clients' portfolios. We find that advisors induce their clients to take more risk, thereby raising expected returns. On the other hand, we find limited evidence of customization: advisors direct clients into similar portfolios independent of their clients' risk preferences and stage in the life cycle. An advisor's own portfolio is a good predictor of the client's portfolio even after controlling for the client's characteristics. This one-size-fits-all advice does not come cheap. The average client pays more than 2.7% each year in fees and thus gives up all of the equity premium gained through increased risk-taking.
Handle: RePEc:nbr:nberwo:20712
Template-Type: ReDIF-Paper 1.0
Title: The Economic Impact of Hurricane Katrina on its Victims: Evidence from Individual Tax Returns
Classification-JEL: Q54
Author-Name: Tatyana Deryugina
Author-Person: pde887
Author-Name: Laura Kawano
Author-Person: pka679
Author-Name: Steven Levitt
Author-Person: ple59
Note: EEE PE
Number: 20713
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20713
File-URL: http://www.nber.org/papers/w20713.pdf
File-Format: application/pdf
Publication-Status: published as Deryugina, Tatyana, Laura Kawano, and Steven Levitt. 2018. "The Economic Impact of Hurricane Katrina on Its Victims: Evidence from Individual Tax Returns." American Economic Journal: Applied Economics, 10 (2): 202-33. DOI: 10.1257/app.20160307
Abstract: Hurricane Katrina destroyed more than 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane’s long-term economic impact on its victims. Katrina had large and persistent impacts on where people live; small and mostly transitory impacts on wage income, employment, total income, and marriage; and no impact on divorce or fertility. Within just a few years, Katrina victims’ incomes fully recover and even surpass that of controls from similar cities that were unaffected by the storm. The strong economic performance of Katrina victims is particularly remarkable given that the hurricane struck with essentially no warning. Our results suggest that, at least in this particular disaster, aid to cover destroyed assets and short-run income declines was sufficient to make victims financially whole. Our results provide some optimism regarding the costs of climate-change driven dislocation, especially when adverse events can be anticipated well in advance.
Handle: RePEc:nbr:nberwo:20713
Template-Type: ReDIF-Paper 1.0
Title: How Does Peer Pressure Affect Educational Investments?
Classification-JEL: I21
Author-Name: Leonardo Bursztyn
Author-Person: pbu249
Author-Name: Robert Jensen
Note: CH ED LS PE
Number: 20714
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20714
File-URL: http://www.nber.org/papers/w20714.pdf
File-Format: application/pdf
Publication-Status: published as Leonardo Bursztyn & Robert Jensen, 2015. "How Does Peer Pressure Affect Educational Investments?," The Quarterly Journal of Economics, vol 130(3), pages 1329-1367.
Abstract: When effort is observable to peers, students may act to avoid social penalties by conforming to prevailing norms. To test for such behavior, we conducted an experiment in which 11th grade students were offered complimentary access to an online SAT preparatory course. Signup sheets differed randomly across students (within classrooms) only in the extent to which they emphasized that the decision to enroll would be kept private from classmates. In non-honors classes, the signup rate was 11 percentage points lower when decisions to enroll were public rather than private. Sign up in honors classes was unaffected. To further isolate the role of peer pressure we examine students taking the same number of honors classes. The timing of our visits to each school will find some of these students in one of their honors classes and others in one of their non-honors classes; which they happen to be sitting in when we arrive to conduct our experiment should be (and, empirically, is) uncorrelated with student characteristics. When offered the course in a non-honors class, these students were 25 percentage points less likely to sign up if the decision was public rather than private. But if they were offered the course in one of their honors classes, they were 25 percentage points more likely to sign up when the decision was public. Thus, students are highly responsive to who their peers are and what the prevailing norm is when they make decisions.
Handle: RePEc:nbr:nberwo:20714
Template-Type: ReDIF-Paper 1.0
Title: A Phillips Curve with Anchored Expectations and Short-Term Unemployment
Classification-JEL: E31
Author-Name: Laurence Ball
Author-Person: pba605
Author-Name: Sandeep Mazumder
Author-Person: pma1103
Note: EFG ME
Number: 20715
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20715
File-URL: http://www.nber.org/papers/w20715.pdf
File-Format: application/pdf
Publication-Status: published as Laurence Ball & Sandeep Mazumder, 2015. "A Phillips Curve with Anchored Expectations and Short-Term Unemployment," IMF Working Papers, vol 15(39).
Publication-Status: published as Laurence Ball & Sandeep Mazumder, 2019. "A Phillips Curve with Anchored Expectations and Short‐Term Unemployment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(1), pages 111-137, February.
Publication-Status: published as LAURENCE BALL & SANDEEP MAZUMDER, 2019. "A Phillips Curve with Anchored Expectations and Short-Term Unemployment," Journal of Money, Credit and Banking, vol 51(1), pages 111-137.
Abstract: This paper examines the recent behavior of core inflation in the United States. We specify a simple Phillips curve based on the assumptions that inflation expectations are fully anchored at the Federal Reserve’s target, and that labor-market slack is captured by the level of short-term unemployment. This equation explains inflation behavior since 2000, including the failure of high total unemployment since 2008 to reduce inflation greatly. The fit of our equation is especially good when we measure core inflation with the Cleveland Fed’s series on weighted median inflation. We also propose a more general Phillips curve in which core inflation depends on short-term unemployment and on expected inflation as measured by the Survey of Professional Forecasters. This specification fits U.S. inflation since 1985, including both the anchored-expectations period of the 2000s and the preceding period when expectations were determined by past levels of inflation.
Handle: RePEc:nbr:nberwo:20715
Template-Type: ReDIF-Paper 1.0
Title: Climate Change Adaptation: Lessons from Urban Economics
Classification-JEL: H41; Q5; R23; R3
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: EEE PE
Number: 20716
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20716
File-URL: http://www.nber.org/papers/w20716.pdf
File-Format: application/pdf
Publication-Status: published as Kahn, Matthew E., 2015. "Climate Change Adaptation: Lessons from Urban Economics," Strategic Behavior and the Environment, now publishers, vol. 5(1), pages 1-30, June.
Abstract: In an urbanizing world economy featuring thousands of cities, households and firms have strong incentives to make locational investments and self protection choices to reduce their exposure to new climate change induced risks. This pursuit of self interest reduces the costs imposed by climate change. This paper develops a dynamic compensating differentials model to explore how the “menu” offered by a system of cities insures us against emerging risks. Insights from urban economics offer a series of testable hypotheses concerning the economic incidence of spatially tied climate change risk.
Handle: RePEc:nbr:nberwo:20716
Template-Type: ReDIF-Paper 1.0
Title: Can Unemployment Insurance Spur Entrepreneurial Activity?
Classification-JEL: G3; H25; J65
Author-Name: Johan Hombert
Author-Name: Antoinette Schoar
Author-Person: psc180
Author-Name: David Sraer
Author-Person: psr34
Author-Name: David Thesmar
Author-Person: pth258
Note: CF
Number: 20717
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20717
File-URL: http://www.nber.org/papers/w20717.pdf
File-Format: application/pdf
Abstract: We study a large-scale French reform that provided generous downside insurance for unemployed individuals starting a business. We study whether this reform affects the composition of people who are drawn into entrepreneurship. New firms started in response to the reform are, on average, smaller, but have similar growth expectations and education levels compared to start-ups before the reform. They are also as likely to survive or to hire. In aggregate, the effect of the reform on employment is largely offset by large crowd-out effects. However, because new firms are more productive, the reform has the impact of raising aggregate productivity. These results suggest that the dispersion of entrepreneurial abilities is small in the data, so that the facilitation of entry leads to sizable Schumpeterian dynamics at the firm-level.
Handle: RePEc:nbr:nberwo:20717
Template-Type: ReDIF-Paper 1.0
Title: Nudges and Learning: Evidence from Informational Interventions for Low-Income Taxpayers
Classification-JEL: H24; H31
Author-Name: Dayanand S. Manoli
Author-Person: pma1770
Author-Name: Nicholas Turner
Note: PE
Number: 20718
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20718
File-URL: http://www.nber.org/papers/w20718.pdf
File-Format: application/pdf
Abstract: Can one-time informational interventions cause permanent changes in benefit take-up? In the context the Earned Income Tax Credit, we find evidence that reminding individuals of their eligibility has meaningful effects. Reminder notices have the largest effect among taxpayers without kids, persuading nearly 80 percent of taxpayers in the notice year to claim the credit. The effect of the notice quickly attenuates to roughly 22 percent only one year later. We find that this pattern holds across two experimental settings, one that tests the effect of being sent a notice and one that tests variations in the content of the notices.
Handle: RePEc:nbr:nberwo:20718
Template-Type: ReDIF-Paper 1.0
Title: Government Spending Multipliers in Good Times and in Bad: Evidence from U.S. Historical Data
Classification-JEL: E52; E62; N12
Author-Name: Valerie A. Ramey
Author-Person: pra154
Author-Name: Sarah Zubairy
Author-Person: pzu31
Note: EFG ME
Number: 20719
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20719
File-URL: http://www.nber.org/papers/w20719.pdf
File-Format: application/pdf
Publication-Status: published as Government Spending Multipliers in Good Times and in Bad: Evidence from US Historical Data Valerie A. Ramey and Sarah Zubairy Journal of Political Economy 2018 126:2, 850-901
Abstract: This paper investigates whether U.S. government spending multipliers differ according to two potentially important features of the economy: (1) the amount of slack and (2) whether interest rates are near the zero lower bound. We shed light on these questions by analyzing new quarterly historical U.S. data covering multiple large wars and deep recessions. We estimate a state-dependent model in which impulse responses and multipliers depend on the average dynamics of the economy in each state. We find no evidence that multipliers differ by the amount of slack in the economy. These results are robust to many alternative specifications. The results are less clear for the zero lower bound. For the entire sample, there is no evidence of elevated multipliers near the zero lower bound. When World War II is excluded, some point estimates suggest higher multipliers during the zero lower bound state, but they are not statistically different from the normal state. Our results imply that, contrary to recent conjecture, government spending multipliers were not necessarily higher than average during the Great Recession.
Handle: RePEc:nbr:nberwo:20719
Template-Type: ReDIF-Paper 1.0
Title: Does Better Information Lead to Better Choices? Evidence from Energy-Efficiency Labels
Classification-JEL: D12; H49; Q41; Q48
Author-Name: Lucas W. Davis
Author-Person: pda367
Author-Name: Gilbert E. Metcalf
Note: EEE
Number: 20720
Creation-Date: 2014-11
Order-URL: http://www.nber.org/papers/w20720
File-URL: http://www.nber.org/papers/w20720.pdf
File-Format: application/pdf
Publication-Status: published as Lucas W. Davis & Gilbert E. Metcalf, 2016. "Does Better Information Lead to Better Choices? Evidence from Energy-Efficiency Labels," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(3), pages 589 - 625.
Abstract: Information provision is a key element of government energy-efficiency policy, but the information that is provided is often too coarse to allow consumers to make efficient decisions. An important example is the ubiquitous yellow “EnergyGuide” label, which is required by law to be displayed on all major appliances sold in the United States. These labels report energy cost information based on average national usage and energy prices. We conduct an online randomized controlled trial to measure the potential benefits from providing more accurate information. We find that state-specific labels lead to significantly better choices. Consumers invest about the same amount overall in energy-efficiency, but the allocation is much better with more investment in high-usage high-price states and less investment in low-usage low-price states. The implied aggregate cost savings are larger than any reasonable estimate of the cost of implementing state-specific labels.
Handle: RePEc:nbr:nberwo:20720
Template-Type: ReDIF-Paper 1.0
Title: A Taxonomy of Anomalies and their Trading Costs
Classification-JEL: G12; G14
Author-Name: Robert Novy-Marx
Author-Name: Mihail Velikov
Note: AP
Number: 20721
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20721
File-URL: http://www.nber.org/papers/w20721.pdf
File-Format: application/pdf
Publication-Status: published as Robert Novy-Marx & Mihail Velikov, 2016. "A Taxonomy of Anomalies and Their Trading Costs," Review of Financial Studies, vol 29(1), pages 104-147.
Abstract: This paper studies the performance of a large number of anomalies after accounting for transaction costs, and the effectiveness of several transaction cost mitigation strategies. It finds that introducing a buy/hold spread, which allows investors to continue to hold stocks that they would not actively trade into, is the single most effective simple cost mitigation strategy. Most of the anomalies that we consider with one-sided monthly turnover lower than 50% continue to generate statistically significant net spreads, at least when designed to mitigate transaction costs. Few of the strategies with higher turnover do. In all cases transaction costs reduce the strategies’ profitability and its associated statistical significance, increasing concerns related to data snooping.
Handle: RePEc:nbr:nberwo:20721
Template-Type: ReDIF-Paper 1.0
Title: All or Nothing? The Impact of School and Classroom Gender Composition on Effort and Academic Achievement
Classification-JEL: I20; I21; J24
Author-Name: Soohyung Lee
Author-Name: Lesley J. Turner
Author-Person: ptu137
Author-Name: Seokjin Woo
Author-Name: Kyunghee Kim
Note: CH ED LS PE
Number: 20722
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20722
File-URL: http://www.nber.org/papers/w20722.pdf
File-Format: application/pdf
Abstract: We estimate the causal impact of school and classroom gender composition on achievement. We take advantage of the random assignment of Korean middle school students to single-sex schools, co-educational (coed) schools with single-sex classes, and coed schools with mixed-gender classes. Male students attending single-sex classes within coed schools score 0.10 of a standard deviation below male students in mixed-gender classes, and this achievement gap is entirely accounted for by classroom gender composition. Conversely, male students attending single-sex schools outperform their counterparts in mixed-gender classes by 0.15 of a standard deviation. The significant impact of single-sex schools on male students' achievement are not driven by classroom gender composition, but largely accounted for by increases in student effort and study-time. We find little evidence that classroom or school gender composition affect the outcomes of female students.
Handle: RePEc:nbr:nberwo:20722
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Effects of Intrauterine Exposure to Nutritional Deficiency: Evidence from Administrative Data on Muslim Immigrants in Denmark
Classification-JEL: I1; I12; J1; J13; J21; J24; J3
Author-Name: Marie Louise Schultz-Nielsen
Author-Person: psc345
Author-Name: Erdal Tekin
Author-Person: pte12
Author-Name: Jane Greve
Author-Person: pgr294
Note: CH EH LS
Number: 20723
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20723
File-URL: http://www.nber.org/papers/w20723.pdf
File-Format: application/pdf
Publication-Status: published as Marie Louise Schultz-Nielsen & Erdal Tekin & Jane Greve, 2016. "Labor market effects of intrauterine exposure to nutritional deficiency: Evidence from administrative data on Muslim immigrants in Denmark," Economics & Human Biology, vol 21, pages 196-209.
Abstract: This paper examines whether nutritional disruptions experienced during the stage of fetal development impair an individual’s labor market productivity later in life. We consider intrauterine exposure to the month of Ramadan as a natural experiment that might cause shocks to the inflow of nutrients essential for fetal development. Specifically, we use administrative data from Denmark to investigate the impact of exposure to Ramadan in utero on labor market outcomes of adult Muslim males, including employment status, annual salary, hourly wage rate, and hours of work. Our findings indicate that potential exposure to nutritional disruptions during a critical stage of fetal development has scarring effects on the fetus expressed as poor labor market outcomes later in life. Specifically, exposure to Ramadan in the 7th month of gestation results in a lower likelihood of employment, a lower salary, and reduced labor supply, but not necessarily a lower wage rate. We also document suggestive evidence that these results may partially be driven by increased disability and to a lesser extent by poor educational attainment among those who were exposed to Ramadan during this particular period in utero.
Handle: RePEc:nbr:nberwo:20723
Template-Type: ReDIF-Paper 1.0
Title: The Minimum Wage and the Great Recession: Evidence of Effects on the Employment and Income Trajectories of Low-Skilled Workers
Classification-JEL: I38; J08; J21; J38
Author-Name: Jeffrey Clemens
Author-Name: Michael Wither
Note: LS PE
Number: 20724
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20724
File-URL: http://www.nber.org/papers/w20724.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey Clemens & Michael Wither, 2019. "The minimum wage and the Great Recession: Evidence of effects on the employment and income trajectories of low-skilled workers," Journal of Public Economics, .
Abstract: We estimate the minimum wage's effects on low-skilled workers' employment and income trajectories. Our approach exploits two dimensions of the data we analyze. First, we compare workers in states that were bound by recent increases in the federal minimum wage to workers in states that were not. Second, we use 12 months of baseline data to divide low-skilled workers into a "target" group, whose baseline wage rates were directly affected, and a "within-state control" group with slightly higher baseline wage rates. Over three subsequent years, we find that binding minimum wage increases had significant, negative effects on the employment and income growth of targeted workers. Lost income reflects contributions from employment declines, increased probabilities of working without pay (i.e., an "internship" effect), and lost wage growth associated with reductions in experience accumulation. Methodologically, we show that our approach identifies targeted workers more precisely than the demographic and industrial proxies used regularly in the literature. Additionally, because we identify targeted workers on a population-wide basis, our approach is relatively well suited for extrapolating to estimates of the minimum wage's effects on aggregate employment. Over the late 2000s, the average effective minimum wage rose by 30 percent across the United States. We estimate that these minimum wage increases reduced the national employment-to-population ratio by 0.7 percentage point.
Handle: RePEc:nbr:nberwo:20724
Template-Type: ReDIF-Paper 1.0
Title: Growth, Slowdowns, and Recoveries
Classification-JEL: C11; E3; O4
Author-Name: Francesco Bianchi
Author-Person: pbi171
Author-Name: Howard Kung
Author-Name: Gonzalo Morales
Note: EFG ME
Number: 20725
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20725
File-URL: http://www.nber.org/papers/w20725.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Bianchi & Howard Kung & Gonzalo Morales, 2018. "Growth, Slowdowns, and Recoveries," Journal of Monetary Economics, .
Abstract: We construct and estimate an endogenous growth model with debt and equity financing frictions to understand the relation between business cycle fluctuations and long-term growth. The presence of spillover effects from R&D imply an endogenous relation between productivity growth and the state of the economy. A large contractionary shock to equity financing in the 2001 recession led to a persistent growth slowdown that was more severe than in the 2008 recession. Equity (debt) financing shocks are more important for explaining R&D (physical) investment. Therefore, these two financing shocks affect the economy over different horizons.
Handle: RePEc:nbr:nberwo:20725
Template-Type: ReDIF-Paper 1.0
Title: The Real Effects of Capital Controls: Firm-Level Evidence from a Policy Experiment
Classification-JEL: F3; F4; G11; G15; L2
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Anusha Chari
Author-Person: pch288
Author-Name: Fabio Kanczuk
Author-Person: pka78
Note: AP CF IFM ITI
Number: 20726
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20726
File-URL: http://www.nber.org/papers/w20726.pdf
File-Format: application/pdf
Publication-Status: published as Laura Alfaro & Anusha Chari & Fabio Kanczuk, 2017. "The real effects of capital controls: Firm-level evidence from a policy experiment," Journal of International Economics, vol 108, pages 191-210.
Abstract: This paper evaluates the effects of capital controls on firm-level stock returns and real investment using data from Brazil. On average, there is a statistically significant drop in cumulative abnormal returns consistent with an increase in the cost of capital for Brazilian firms following capital control announcements. Large firms and the largest exporting firms appear less negatively affected compared to external-finance-dependent firms, and capital controls on equity inflows have a more negative announcement effect on equity returns than those on debt inflows. Overall, the findings have implications for macro-finance models that abstract from heterogeneity at the firm level to examine the optimality of capital control taxation.
Handle: RePEc:nbr:nberwo:20726
Template-Type: ReDIF-Paper 1.0
Title: The Value of Smarter Teachers: International Evidence on Teacher Cognitive Skills and Student Performance
Classification-JEL: H4; I2; J2
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Marc Piopiunik
Author-Person: ppi223
Author-Name: Simon Wiederhold
Author-Person: pwi133
Note: CH ED LS
Number: 20727
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20727
File-URL: http://www.nber.org/papers/w20727.pdf
File-Format: application/pdf
Publication-Status: published as Eric A. Hanushek & Marc Piopiunik & Simon Wiederhold, 2019. "The Value of Smarter Teachers," Journal of Human Resources, vol 54(4), pages 857-899.
Abstract: International differences in teacher quality are commonly hypothesized to be a key determinant of the large international student performance gaps, but lack of consistent quality measures has precluded testing this. We construct country-level measures of teacher cognitive skills using unique assessment data for 31 countries. We find substantial differences in teacher cognitive skills across countries that are strongly related to student performance. Results are supported by fixed-effects estimation exploiting within-country between-subject variation in teacher skills. A series of robustness and placebo tests indicate a systematic influence of teacher skills as distinct from overall differences among countries in the level of cognitive skills. Moreover, observed country variations in teacher cognitive skills are significantly related to differences in women’s access to high-skill occupations outside teaching and to salary premiums for teachers.
Handle: RePEc:nbr:nberwo:20727
Template-Type: ReDIF-Paper 1.0
Title: Agglomeration: A Dynamic Approach
Classification-JEL: N9; R11; R12
Author-Name: Walker Hanlon
Author-Person: pha1094
Author-Name: Antonio Miscio
Note: DAE
Number: 20728
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20728
File-URL: http://www.nber.org/papers/w20728.pdf
File-Format: application/pdf
Publication-Status: published as W. Walker Hanlon, Antonio Miscio, Agglomeration: A long-run panel data approach, Journal of Urban Economics, Volume 99, 2017, Pages 1-14, ISSN 0094-1190, https://doi.org/10.1016/j.jue.2017.01.001.
Abstract: This paper studies the sources of agglomeration economies in cities. We begin by introducing a simple dynamic spatial equilibrium model that incorporates spillovers within and across industries, as well as city-size effects. The model generates a dynamic panel-data estimation equation. We implement the approach using detailed new data describing the industry composition of 31 English cities from 1851-1911. We find that industries grow faster in cities where they have more local suppliers or other occupationally-similar industries. Industries do not grow more rapidly in locations in which they are already large, though there can be exceptions. Thus, dynamic agglomeration appears to be driven by cross-industry effects. Once we control for these cross-industry agglomeration effects, we find a strong negative relationship between city size and city-industry growth. This allows us to construct the first estimate of the aggregate strength of the cross-industry agglomeration forces. Our results suggest a lower bound estimate of the overall strength of agglomeration forces equivalent to a city-size divergence rate of 2.1-3.3 % per decade.
Handle: RePEc:nbr:nberwo:20728
Template-Type: ReDIF-Paper 1.0
Title: The Generalized Informativeness Principle
Classification-JEL: D86; J33
Author-Name: Pierre Chaigneau
Author-Person: pch1493
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Daniel Gottlieb
Author-Person: pgo110
Note: CF LE LS
Number: 20729
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20729
File-URL: http://www.nber.org/papers/w20729.pdf
File-Format: application/pdf
Abstract: This paper shows that the informativeness principle, as originally formulated by Holmstrom (1979), does not hold if the first-order approach is invalid. We introduce a "generalized informativeness principle" that takes into account non-local incentive constraints and holds generically, even without the first-order approach. Our result holds for both separable and non-separable utility functions.
Handle: RePEc:nbr:nberwo:20729
Template-Type: ReDIF-Paper 1.0
Title: Corporate Debt Structure and the Financial Crisis
Classification-JEL: E22; E32; E44; E5
Author-Name: Fiorella De Fiore
Author-Person: pde37
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG
Number: 20730
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20730
Publication-Status: published as Fiorella De Fiore & Harald Uhlig, 2015. "Corporate Debt Structure and the Financial Crisis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(8), pages 1571-1598, December.
Abstract: We present a DSGE model where firms optimally choose among alternative instruments of external finance. The model is used to explain the evolving composition of corporate debt during the financial crisis of 2008-09, namely the observed shift from bank finance to bond finance, at a time when the cost of market debt rose above the cost of bank loans. We show that the flexibility offered by banks on the terms of their loans and firm's ability to substitute among alternative instruments of debt finance are important to shield the economy from adverse real effects of a financial crisis.
Handle: RePEc:nbr:nberwo:20730
Template-Type: ReDIF-Paper 1.0
Title: Inventing in the Shadow of the Patent System: Evidence from 19th-Century Patents and Prizes for Technological Innovations
Classification-JEL: K11; N11; O31; O34
Author-Name: B. Zorina Khan
Note: DAE PR
Number: 20731
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20731
File-URL: http://www.nber.org/papers/w20731.pdf
File-Format: application/pdf
Abstract: Such institutions as patent systems cannot be well understood without an assessment of technological creativity in other contexts. Some have argued that prizes might offer superior alternatives to the award of property rights in inventions. Accordingly, this paper offers an empirical comparison of patents in relation to the award of prizes for technological innovation. The data set comprises a sample of patents, as well as exhibits and prizes at annual industrial fairs in Massachusetts over the course of the nineteenth century. The patterns shed light on the factors that influenced how specific inventions and inventors attempted to appropriate returns. Prizes in general provided valuable prospects for advertisements and commercialization, rather than inventive activity per se. Prize winners typically belonged to more privileged classes than the general population of patentees, as gauged by their wealth and occupational status. Moreover, the award of prizes tended to largely unpredictable, and was unrelated to such proxies for the productivity of the innovation as inventive capital or the commercial success of the invention. Prize-oriented institutions thus appear to be less systematic and not as market-oriented as patent systems. If inventors respond to expected returns, prizes may be less effective at inducing technological creativity.
Handle: RePEc:nbr:nberwo:20731
Template-Type: ReDIF-Paper 1.0
Title: Of Time and Space: Technological Spillovers among Patents and Unpatented Innovations during Early U.S. Industrialization
Classification-JEL: N11; O31; O33; O34
Author-Name: B. Zorina Khan
Note: DAE IO PR
Number: 20732
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20732
File-URL: http://www.nber.org/papers/w20732.pdf
File-Format: application/pdf
Abstract: The paper explores the role of institutional mechanisms in generating technological knowledge spillovers. The estimation is over panel datasets of patent grants, and unpatented innovations that were submitted for prizes at the annual industrial fairs of the American Institute of New York, during the era of early industrial expansion. The first section tests the hypothesis of spatial autocorrelation in patenting and in the exhibited innovations. In keeping with the contract theory of patents, the procedure identifies high and statistically significant spatial autocorrelation in the sample of inventions that were patented, indicating the prevalence of geographical spillovers. By contrast, prize innovations were much less likely to be spatially dependent. The second part of the paper investigates whether unpatented innovations in a county were affected by patenting in contiguous or adjacent counties, and the analysis indicates that such spatial effects were large and significant. These results are consistent with the argument that patents enhance the diffusion of information for both patented and unpatented innovations, whereas prizes are less effective in generating external benefits from knowledge spillovers. I hypothesize that the difference partly owes to the design of patent institutions, which explicitly incorporate mechanisms for systematic recording, access, and dispersion of technical information.
Handle: RePEc:nbr:nberwo:20732
Template-Type: ReDIF-Paper 1.0
Title: Household Wealth Trends in the United States, 1962-2013: What Happened over the Great Recession?
Classification-JEL: D31; J15
Author-Name: Edward N. Wolff
Note: LS PR
Number: 20733
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20733
File-URL: http://www.nber.org/papers/w20733.pdf
File-Format: application/pdf
Publication-Status: published as Household Wealth Trends in the United States, 1962 to 2013: What Happened over the Great Recession? Edward N. Wolff RSF 2016 2:6, 24-43
Abstract: Asset prices plunged between 2007 and 2010 but then rebounded from 2010 to 2013. The most telling finding is that median wealth plummeted by 44 percent over years 2007 to 2010, almost double the drop in housing prices. The inequality of net worth, after almost two decades of little movement, was also up sharply. Relative indebtedness expanded, particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness. The sharp fall in median net worth and the rise in overall wealth inequality over these years are traceable primarily to the high leverage of middle class families and the high share of homes in their portfolio. The racial and ethnic disparity in wealth also widened considerably. Households under age 45 saw their relative and absolute wealth declined sharply. Rather remarkably, there was virtually no change in median wealth from 2010 to 2013 despite the rebound in asset prices. The proximate cause was the high dissavings of the middle class, though their debt continued to fall. Wealth inequality and the racial and ethnic wealth gap also remained largely unchanged, though there was some recovery of net worth for young households.
Handle: RePEc:nbr:nberwo:20733
Template-Type: ReDIF-Paper 1.0
Title: What Do We Know About Evolution of Top Wealth Shares in the United States?
Classification-JEL: D31
Author-Name: Wojciech Kopczuk
Author-Person: pko20
Note: AG DAE LS PE
Number: 20734
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20734
File-URL: http://www.nber.org/papers/w20734.pdf
File-Format: application/pdf
Publication-Status: published as Wojciech Kopczuk, 2015. "What Do We Know about the Evolution of Top Wealth Shares in the United States?," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 47-66, Winter.
Abstract: I discuss available evidence about the evolution of top wealth shares in the United States over the last one hundred years. The three main approaches – Survey of Consumer Finances, estate tax multiplier techniques and capitalization method – generate generally consistent findings until mid-1980s but diverge since then, with capitalization method showing a dramatic increase in wealth concentration and the other two methods showing at best a small increase. I discuss strengths and weaknesses of different approaches. The increase in capitalization estimates since 2000 is driven by a dramatic and surprising increase in fixed income assets. There is evidence that estate tax estimates may not be sufficiently accounting for mortality improvements over time. The non-response and coverage issues in the SCF are a concern. I conclude that changing nature of top incomes and the increased importance of self-made wealth may explain difficulties in implementing each of the methods and account for why the results diverge.
Handle: RePEc:nbr:nberwo:20734
Template-Type: ReDIF-Paper 1.0
Title: Revisiting the Classical View of Benefit-Based Taxation
Classification-JEL: D63; H21; H41
Author-Name: Matthew Weinzierl
Author-Person: pwe206
Note: PE
Number: 20735
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20735
File-URL: http://www.nber.org/papers/w20735.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Weinzierl, 2018. "Revisiting the Classical View of Benefit-based Taxation," The Economic Journal, vol 128(612), pages F37-F64.
Abstract: This paper explores how the persistently popular "classical" logic of benefit-based taxation, in which an individual's benefit from public goods is tied to his or her income-earning ability, can be incorporated into modern optimal tax theory. If Lindahl's methods are applied to that view of benefits, first-best optimal policy can be characterized analytically as depending on a few potentially estimable statistics, in particular the coefficient of complementarity between public goods and innate talent. Constrained optimal policy with a Pareto-efficient objective that strikes a balance–controlled by a single parameter–between this principle and the familiar utilitarian criterion can be simulated using conventional constraints and methods. A wide range of optimal policy outcomes can result, including those that match well several features of existing policies. To the extent that such an objective reflects the mixed normative reasoning behind prevailing policies, this model may offer a useful approach to a positive optimal tax theory.
Handle: RePEc:nbr:nberwo:20735
Template-Type: ReDIF-Paper 1.0
Title: What are the Headwaters of Formal Savings? Experimental Evidence from Sri Lanka
Classification-JEL: D14; G21; O16
Author-Name: Michael Callen
Author-Person: pca868
Author-Name: Suresh De Mel
Author-Name: Craig McIntosh
Author-Name: Christopher Woodruff
Author-Person: pwo165
Note: DEV
Number: 20736
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20736
File-URL: http://www.nber.org/papers/w20736.pdf
File-Format: application/pdf
Publication-Status: published as Michael Callen & Suresh de Mel & Craig McIntosh & Christopher Woodruff, 2019. "What Are the Headwaters of Formal Savings? Experimental Evidence from Sri Lanka," The Review of Economic Studies, vol 86(6), pages 2491-2529.
Abstract: The world’s poor are seeing a rapid expansion in access to formal savings accounts. What is the source of savings when households are connected to a formal account? We combine a high-frequency panel survey spanning two and a half years with an experiment in which a Sri Lankan bank used mobile Point-of-Service (POS) terminals to collect deposits directly from households each week. We find that the headwaters of formal savings lie in sacrificed leisure time: households work more, and improved savings options generate an increase in labor effort in both self-employment and in the wage market. The results suggest that the labor allocation channel is an important mechanism linking savings opportunities to income.
Handle: RePEc:nbr:nberwo:20736
Template-Type: ReDIF-Paper 1.0
Title: Unprecedented Actions: The Federal Reserve’s Response to the Global Financial Crisis in Historical Perspective
Classification-JEL: E58; G01; N10; N20
Author-Name: Frederic S. Mishkin
Author-Person: pmi37
Author-Name: Eugene N. White
Author-Person: pwh5
Note: DAE EFG ME
Number: 20737
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20737
File-URL: http://www.nber.org/papers/w20737.pdf
File-Format: application/pdf
Abstract: Interventions by the Federal Reserve during the financial crisis of 2007-2009 were generally viewed as unprecedented and in violation of the rules—notably Bagehot’s rule—that a central bank should follow to avoid the time-inconsistency problem and moral hazard. Reviewing the evidence for central banks’ crisis management in the U.S., the U.K. and France from the late nineteenth century to the end of the twentieth century, we find that there were precedents for all of the unusual actions taken by the Fed. When these were successful interventions, they followed contingent and target rules that permitted pre-emptive actions to forestall worse crises but were combined with measures to mitigate moral hazard.
Handle: RePEc:nbr:nberwo:20737
Template-Type: ReDIF-Paper 1.0
Title: Does Front-Loading Taxation Increase Savings? Evidence from Roth 401(k) Introductions
Classification-JEL: D03; D14; G02; H2; H3
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: AG
Number: 20738
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20738
File-URL: http://www.nber.org/papers/w20738.pdf
File-Format: application/pdf
Publication-Status: published as John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2015. "Does front-loading taxation increase savings? Evidence from Roth 401(k) introductions," Journal of Public Economics, .
Publication-Status: published as Does Front-Loading Taxation Increase Savings? Evidence from Roth 401(k) Introductions, John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian. in Personal Income Taxation and Household Behavior (TAPES), Gordon and Keuschnigg. 2016
Abstract: Can governments increase private savings by taxing savings up front instead of in retirement? Roth 401(k) contributions are not tax-deductible in the contribution year, but withdrawals in retirement are untaxed. The more common before-tax 401(k) contribution is tax-deductible in the contribution year, but both principal and investment earnings are taxed upon withdrawal. Using administrative data from eleven companies that added a Roth contribution option to their existing 401(k) plan between 2006 and 2010, we find no evidence that total 401(k) contribution rates differ between employees hired before versus after Roth introduction, which implies that take-home pay declines and the amount of retirement consumption being purchased by 401(k) contributions increases after Roth introduction. We reject several neoclassical explanations for our null finding. Results from a survey experiment suggest two behavioral explanations: (1) employee confusion about and neglect of the tax properties of Roth balances and (2) partition dependence.
Handle: RePEc:nbr:nberwo:20738
Template-Type: ReDIF-Paper 1.0
Title: Trade and Tasks: An Exploration over Three Decades in Germany
Classification-JEL: F14; F16; J23; J24
Author-Name: Sascha O. Becker
Author-Person: pbe98
Author-Name: Marc-Andreas Muendler
Author-Person: pmu63
Note: ITI LS
Number: 20739
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20739
File-URL: http://www.nber.org/papers/w20739.pdf
File-Format: application/pdf
Publication-Status: published as Sascha O. Becker & Marc-Andreas Muendler, 2015. "Trade and tasks: an exploration over three decades in Germany," Economic Policy, Volume 30, Issue 84, Pp. 589 - 641
Abstract: This paper combines representative worker-level data that cover time-varying job-level task characteristics of an economy over a long time span with sector-level bilateral trade data for merchandize and services. We carefully create longitudinally consistent workplace characteristics from the German Qualification and Career Survey 1979-2006 and prepare trade flow statistics from varying sources. Four main facts emerge: (i) intermediate inputs constitute a major share of imports, and their relevance grows especially in the early decade; (ii) the German workforce increasingly specializes in workplace activities and job requirements that are typically considered non-offshorable, mainly within and not between sectors and occupations; (iii) the imputed activity and job requirement content of German imports grows relatively more intensive in work characteristics typically considered offshorable; and (iv) labour-market institutions at German trade partners are largely unrelated to the changing task content of German imports but German sector-level outcomes exhibit some covariation consistent with faster task offshoring in sectors exposed to lower labour-market tightness. We discuss policy implications of these findings.
Handle: RePEc:nbr:nberwo:20739
Template-Type: ReDIF-Paper 1.0
Title: The Long Reach of Education: Early Retirement
Classification-JEL: H52; I21; J26
Author-Name: Steven Venti
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG
Number: 20740
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20740
File-URL: http://www.nber.org/papers/w20740.pdf
File-Format: application/pdf
Publication-Status: published as Steven Venti & David A. Wise, 2015. "The long reach of education: Early retirement," The Journal of the Economics of Ageing, vol 6, pages 133-148.
Abstract: The goal of this paper is to draw attention to the long lasting effect of education on economic outcomes. We use the relationship between education and two routes to early retirement – the receipt of Social Security Disability Insurance (DI) and the early claiming of Social Security retirement benefits – to illustrate the long-lasting influence of education. We find that for both men and women with less than a high school degree the median DI participation rate is 6.6 times the participation rate for those with a college degree or more. Similarly, men and women with less than a high school education are over 25 percentage points more likely to claim Social Security benefits early than those with a college degree or more. We focus on four critical “pathways” through which education may indirectly influence early retirement – health, employment, earnings, and the accumulation of assets. We find that for women health is the dominant pathway through which education influences DI participation. For men, the health, earnings, and wealth pathways are of roughly equal magnitude. For both men and women the principal channel through which education influences early Social Security claiming decisions is the earnings pathway. We also consider the direct effect of education that does not operate through these pathways. The direct effect of education is much greater for early claiming of Social Security benefits than for DI participation, accounting for 72 percent of the effect of education for men and 67 percent for women. For women the direct effect of education on DI participation is not statistically significant, suggesting that the total effect may be through the four pathways.
Handle: RePEc:nbr:nberwo:20740
Template-Type: ReDIF-Paper 1.0
Title: Sign Restrictions, Structural Vector Autoregressions, and Useful Prior Information
Classification-JEL: C11; C32; E24
Author-Name: Christiane Baumeister
Author-Name: James D. Hamilton
Author-Person: pha60
Note: EFG ME
Number: 20741
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20741
File-URL: http://www.nber.org/papers/w20741.pdf
File-Format: application/pdf
Publication-Status: published as Christiane Baumeister & James D. Hamilton, 2015. "Sign Restrictions, Structural Vector Autoregressions, and Useful Prior Information," Econometrica, Econometric Society, vol. 83(5), pages 1963-1999, 09.
Abstract: This paper makes the following original contributions to the literature. (1) We develop a simpler analytical characterization and numerical algorithm for Bayesian inference in structural vector autoregressions that can be used for models that are overidentified, just-identified, or underidentified. (2) We analyze the asymptotic properties of Bayesian inference and show that in the underidentified case, the asymptotic posterior distribution of contemporaneous coefficients in an n-variable VAR is confined to the set of values that orthogonalize the population variance-covariance matrix of OLS residuals, with the height of the posterior proportional to the height of the prior at any point within that set. For example, in a bivariate VAR for supply and demand identified solely by sign restrictions, if the population correlation between the VAR residuals is positive, then even if one has available an infinite sample of data, any inference about the demand elasticity is coming exclusively from the prior distribution. (3) We provide analytical characterizations of the informative prior distributions for impulse-response functions that are implicit in the traditional sign-restriction approach to VARs, and note, as a special case of result (2), that the influence of these priors does not vanish asymptotically. (4) We illustrate how Bayesian inference with informative priors can be both a strict generalization and an unambiguous improvement over frequentist inference in just-identified models. (5) We propose that researchers need to explicitly acknowledge and defend the role of prior beliefs in influencing structural conclusions and illustrate how this could be done using a simple model of the U.S. labor market.
Handle: RePEc:nbr:nberwo:20741
Template-Type: ReDIF-Paper 1.0
Title: Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality
Classification-JEL: E0
Author-Name: Charles I. Jones
Author-Person: pjo24
Note: EFG LS PE
Number: 20742
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20742
File-URL: http://www.nber.org/papers/w20742.pdf
File-Format: application/pdf
Publication-Status: published as Charles I. Jones, 2015. "Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality," Journal of Economic Perspectives, vol 29(1), pages 29-46.
Abstract: Since the early 2000s, research by Thomas Piketty, Emmanuel Saez, and their coathors has revolutionized our understanding of income and wealth inequality. In this paper, I highlight some of the key empirical facts from this research and comment on how they relate to macroeconomics and to economic theory more generally. One of the key links between data and theory is the Pareto distribution. The paper describes simple mechanisms that give rise to Pareto distributions for income and wealth and considers the economic forces that influence top inequality over time and across countries. For example, it is in this context that the role of the famous r-g expression is best understood.
Handle: RePEc:nbr:nberwo:20742
Template-Type: ReDIF-Paper 1.0
Title: Transition to Clean Technology
Classification-JEL: C65; O30
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Ufuk Akcigit
Author-Person: pak203
Author-Name: Douglas Hanley
Author-Person: pha1048
Author-Name: William Kerr
Author-Person: pke127
Note: EEE EFG IO PR
Number: 20743
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20743
File-URL: http://www.nber.org/papers/w20743.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 000 - 000.
Abstract: We develop a microeconomic model of endogenous growth where clean and dirty technologies compete in production and innovation—in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several rungs to catch up with dirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model's quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.
Handle: RePEc:nbr:nberwo:20743
Template-Type: ReDIF-Paper 1.0
Title: Capital Share Risk in U.S. Asset Pricing
Classification-JEL: E25; G11; G12
Author-Name: Martin Lettau
Author-Person: ple572
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Author-Name: Sai Ma
Author-Person: pma2173
Note: AP CF EFG
Number: 20744
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20744
File-URL: http://www.nber.org/papers/w20744.pdf
File-Format: application/pdf
Publication-Status: published as MARTIN LETTAU & SYDNEY C. LUDVIGSON & SAI MA, 2019. "Capital Share Risk in U.S. Asset Pricing," The Journal of Finance, vol 74(4), pages 1753-1792.
Abstract: A single macroeconomic factor based on growth in the capital share of aggregate income exhibits significant explanatory power for expected returns across a range of equity characteristic portfolios and non-equity asset classes, with risk price estimates that are of the same sign and similar in magnitude. Positive exposure to capital share risk earns a positive risk premium, commensurate with recent asset pricing models in which redistributive shocks shift the share of income between the wealthy, who finance consumption primarily out of asset ownership, and workers, who finance consumption primarily out of wages and salaries.
Handle: RePEc:nbr:nberwo:20744
Template-Type: ReDIF-Paper 1.0
Title: Incidental Bequests and the Choice to Self-Insure Late-Life Risks
Classification-JEL: D91; E21; H55
Author-Name: Lee M. Lockwood
Author-Person: plo281
Note: AG PE
Number: 20745
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20745
File-URL: http://www.nber.org/papers/w20745.pdf
File-Format: application/pdf
Publication-Status: published as Lee M. Lockwood, 2018. "Incidental Bequests and the Choice to Self-Insure Late-Life Risks," American Economic Review, vol 108(9), pages 2513-2550.
Abstract: Despite facing significant uncertainty about their lifespans and health care costs, most retirees do not buy annuities or long-term care insurance. In this paper, I find that retirees' saving and insurance choices are highly inconsistent with standard life cycle models in which people care only about their own consumption but match well models in which bequests are luxury goods. Bequest motives tend to reduce the value of insurance by reducing the opportunity cost of precautionary saving. The results suggest that bequest motives significantly increase saving and significantly decrease purchases of long-term care insurance and annuities.
Handle: RePEc:nbr:nberwo:20745
Template-Type: ReDIF-Paper 1.0
Title: Heterogeneity in Decentralized Asset Markets
Classification-JEL: D0; D53; D83; G0; G12
Author-Name: Julien Hugonnier
Author-Person: phu645
Author-Name: Benjamin Lester
Author-Person: ple283
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Note: AP EFG ME
Number: 20746
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20746
File-URL: http://www.nber.org/papers/w20746.pdf
File-Format: application/pdf
Abstract: We study a search and bargaining model of an asset market, where investors' heterogeneous valuations for the asset are drawn from an arbitrary distribution. Our solution technique makes the model fully tractable and allows us to provide a full characterization of the unique equilibrium, in closed-form, both in and out of steady-state. Using this characterization, we first establish that the model generates aggregate trading patterns that are consistent with those observed in many over-the-counter asset markets. Then, we show that the model can replicate empirical regularities reported from micro-level data sets, including the relationships between the length of the intermediation chains through which assets are reallocated, the network centrality of the dealers involved in these chains, and the markup charged on the asset being passed along the chain. Finally, we show that heterogeneity magnifies the price impact of search frictions, and that this impact is more pronounced on price levels than on price dispersion. Hence, using observed price dispersion to quantify the effect of search frictions on price discounts or premia can be misleading.
Handle: RePEc:nbr:nberwo:20746
Template-Type: ReDIF-Paper 1.0
Title: A Simple Model of Optimal Deterrence and Incapacitation
Classification-JEL: K14; K42
Author-Name: Steven Shavell
Author-Person: psh42
Note: LE
Number: 20747
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20747
File-URL: http://www.nber.org/papers/w20747.pdf
File-Format: application/pdf
Publication-Status: published as Steven Shavell, 2015. "A simple model of optimal deterrence and incapacitation," International Review of Law and Economics, vol 42, pages 13-19.
Abstract: The deterrence of crime and its reduction through incapacitation are studied in a simple multiperiod model of crime and law enforcement. Optimal imprisonment sanctions and the optimal probability of sanctions are determined. A point of emphasis is that the incapacitation of individuals is often socially desirable even when they are potentially deterrable. The reason is that successful deterrence may require a relatively high probability of sanctions and thus a relatively high enforcement expense. In contrast, incapacitation may yield benefits no matter how low the probability of sanctions is—implying that incapacitation may be superior to deterrence.
Handle: RePEc:nbr:nberwo:20747
Template-Type: ReDIF-Paper 1.0
Title: Unemployment and Health Behaviors Over the Business Cycle: a Longitudinal View
Classification-JEL: E32; I12; J22
Author-Name: Gregory Colman
Author-Person: pco455
Author-Name: Dhaval Dave
Author-Person: pda245
Note: EFG EH LS
Number: 20748
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20748
File-URL: http://www.nber.org/papers/w20748.pdf
File-Format: application/pdf
Publication-Status: published as Gregory Colman & Dhaval Dave, 2018. "Unemployment and Health Behaviors over the Business Cycle: A Longitudinal View," Southern Economic Journal, vol 85(1), pages 93-120.
Abstract: We examine the first-order internal effects of unemployment on a range of health behaviors during the most recent recession using longitudinal data from the Panel Study of Income Dynamics (PSID) and the National Longitudinal Survey of Youth 1979 (NLSY79). Consistent with prior studies based on cross-sectional data, we find that becoming unemployed is associated with a small increase in leisure-time exercise and in body weight, a moderate decrease in smoking, and a substantial decline in total physical activity. We also find that unemployment is associated with a decline in purchases of fast food. Together, these results imply that both energy consumption and expenditure decline in the U.S. during recessions, the net result being a slight increase in body weight. There is generally considerable heterogeneity in these effects across specific health behaviors, across the intensive and extensive margins, across the outcome distribution, and across gender.
Handle: RePEc:nbr:nberwo:20748
Template-Type: ReDIF-Paper 1.0
Title: Fostering and Measuring Skills: Improving Cognitive and Non-Cognitive Skills to Promote Lifetime Success
Classification-JEL: D01; I20; J24
Author-Name: Tim Kautz
Author-Name: James J. Heckman
Author-Name: Ron Diris
Author-Name: Bas ter Weel
Author-Person: pte14
Author-Name: Lex Borghans
Author-Person: pbo190
Note: CH ED
Number: 20749
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20749
File-URL: http://www.nber.org/papers/w20749.pdf
File-Format: application/pdf
Abstract: This paper reviews the recent literature on measuring and boosting cognitive and noncognitive skills. The literature establishes that achievement tests do not adequately capture character skills|personality traits, goals, motivations, and preferences that are valued in the labor market, in school, and in many other domains. Their predictive power rivals that of cognitive skills. Reliable measures of character have been developed. All measures of character and cognition are measures of performance on some task. In order to reliably estimate skills from tasks, it is necessary to standardize for incentives, effort, and other skills when measuring any particular skill. Character is a skill, not a trait. At any age, character skills are stable across different tasks, but skills can change over the life cycle. Character is shaped by families, schools, and social environments. Skill development is a dynamic process, in which the early years lay the foundation for successful investment in later years. High-quality early childhood and elementary school programs improve character skills in a lasting and cost-effective way. Many of them beneficially affect later-life outcomes without improving cognition. There are fewer long-term evaluations of adolescent interventions, but workplace-based programs that teach character skills are promising. The common feature of successful interventions across all stages of the life cycle through adulthood is that they promote attachment and provide a secure base for exploration and learning for the child. Successful interventions emulate the mentoring environments offered by successful families.
Handle: RePEc:nbr:nberwo:20749
Template-Type: ReDIF-Paper 1.0
Title: Does the Environment Still Matter? Daily Temperature and Income in the United States
Classification-JEL: N52; O1; O4; Q51; Q54; R11
Author-Name: Tatyana Deryugina
Author-Person: pde887
Author-Name: Solomon M. Hsiang
Note: DAE DEV EEE EFG
Number: 20750
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20750
File-URL: http://www.nber.org/papers/w20750.pdf
File-Format: application/pdf
Abstract: It is widely hypothesized that incomes in wealthy countries are insulated from environmental conditions because individuals have the resources needed to adapt to their environment. We test this idea in the wealthiest economy in human history. Using within-county variation in weather, we estimate the effect of daily temperature on annual income in United States counties over a 40-year period. We find that this single environmental parameter continues to play a large role in overall economic performance: productivity of individual days declines roughly 1.7% for each 1°C (1.8°F) increase in daily average temperature above 15°C (59°F). A weekday above 30°C (86°F) costs an average county $20 per person. Hot weekends have little effect. These estimates are net of many forms of adaptation, such as factor reallocation, defensive investments, transfers, and price changes. Because the effect of temperature has not changed since 1969, we infer that recent uptake or innovation in adaptation measures have been limited. The non-linearity of the effect on different components of income suggest that temperature matters because it reduces the productivity of the economy's basic elements, such as workers and crops. If counties could choose daily temperatures to maximize output, rather than accepting their geographically- determined endowment, we estimate that annual income growth would rise by 1.7 percentage points. Applying our estimates to a distribution of "business as usual" climate change projections indicates that warmer daily temperatures will lower annual growth by 0.06-0.16 percentage points in the United States unless populations engage in new forms of adaptation.
Handle: RePEc:nbr:nberwo:20750
Template-Type: ReDIF-Paper 1.0
Title: Regional Transfers
Classification-JEL: E32; E62
Author-Name: Raphael Corbi
Author-Name: Elias Papaioannou
Author-Person: ppa701
Author-Name: Paolo Surico
Author-Person: psu32
Note: EFG IFM POL
Number: 20751
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20751
File-URL: http://www.nber.org/papers/w20751.pdf
File-Format: application/pdf
Abstract: We exploit a series of discontinuities, at several population thresholds, in the allocation mechanism of federal transfers to municipal governments in Brazil to identify the causal effect of municipal spending on local labor markets, using a ‘fuzzy’ regression discontinuity design. Our estimates imply a cost per job of about 8; 000 US dollars per year, mostly driven by employment in services, and a local income multiplier of around two. A currency union model with nominal rigidities and liquidity constraints implies that the stimulative effects would have been substantially smaller if local government spending was financed by local tax revenues rather than regional transfers.
Handle: RePEc:nbr:nberwo:20751
Template-Type: ReDIF-Paper 1.0
Title: One Size does not Fit All: Multiple Dimensions of Ability, College Attendance and Wages
Classification-JEL: C38; J24
Author-Name: María F. Prada
Author-Person: ppr270
Author-Name: Sergio S. Urzúa
Note: ED LS
Number: 20752
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20752
File-URL: http://www.nber.org/papers/w20752.pdf
File-Format: application/pdf
Publication-Status: published as María F. Prada & Sergio Urzúa, 2017. "One Size Does Not Fit All: Multiple Dimensions of Ability, College Attendance, and Earnings," Journal of Labor Economics, vol 35(4), pages 953-991.
Abstract: We investigate the role of mechanical ability as another dimension that, jointly with cognitive and socio-emotional, affects schooling decisions and labor market outcomes. Using a Roy model with a factor structure and data from the NLSY79, we show that the labor market positively rewards mechanical ability. However, in contrast to the other dimensions, mechanical ability reduces the likelihood of attending four-year college. We find that, on average, for individuals with high levels of mechanical and low levels of cognitive and socio-emotional ability, not attending four-year college is the alternative associated with the highest hourly wage (ages 25-30).
Handle: RePEc:nbr:nberwo:20752
Template-Type: ReDIF-Paper 1.0
Title: To Cut or Not to Cut? On the Impact of Corporate Taxes on Employment and Income
Classification-JEL: E3; E62; H2; H25; H31; H32; H71
Author-Name: Alexander Ljungqvist
Author-Person: plj2
Author-Name: Michael Smolyansky
Note: EFG PE
Number: 20753
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20753
File-URL: http://www.nber.org/papers/w20753.pdf
File-Format: application/pdf
Abstract: Do corporate tax increases destroy jobs? And do corporate tax cuts boost employment? Answering these questions has proved empirically challenging. We propose an identification strategy that exploits variation in corporate income tax rates across U.S. states. Comparing contiguous counties straddling state borders over the period 1970 to 2010, we find that increases in corporate tax rates lead to significant reductions in employment and wage income, while corporate tax cuts only boost economic activity if implemented during recessions. Our spatial-discontinuity approach permits a causal interpretation of these findings by both establishing a plausible counterfactual and overcoming biases resulting from the fact that tax changes are often prompted by changes in economic conditions.
Handle: RePEc:nbr:nberwo:20753
Template-Type: ReDIF-Paper 1.0
Title: Accidental Environmentalists? Californian Demand for Teslas and Solar Panels
Classification-JEL: Q42; Q5; Q54; R4
Author-Name: Magali A. Delmas
Author-Name: Matthew E. Kahn
Author-Person: pka41
Author-Name: Stephen Locke
Note: EEE PE
Number: 20754
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20754
File-URL: http://www.nber.org/papers/w20754.pdf
File-Format: application/pdf
Abstract: In the absence of a national carbon tax, household driving and electricity consumption impose social costs. Suburbanites drive more and consume more electricity than center city residents. If more suburbanites purchase electric vehicles (EV) and install solar panels, then their greenhouse gas emissions would sharply decrease. Using several data sets from California, we study the demand for electric vehicles and solar panels. We focus on the Tesla given its status as the highest quality EV. We investigate the joint distribution of the stock returns of Tesla and leading solar panel sellers to test for whether investors anticipate a complementarity in sales between these products. Finally, we use current and past vehicle quality and price data to explore trends in EV quality improvements due to industry competition between brands.
Handle: RePEc:nbr:nberwo:20754
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of the Federal Reserve Swap Lines since 1962
Classification-JEL: F3; N2
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Owen F. Humpage
Author-Person: phu403
Author-Name: Anna J. Schwartz
Note: DAE ME
Number: 20755
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20755
File-URL: http://www.nber.org/papers/w20755.pdf
File-Format: application/pdf
Publication-Status: published as Michael D Bordo & Owen F Humpage & Anna J Schwartz, 2015. "The Evolution of the Federal Reserve Swap Lines since 1962," IMF Economic Review, Palgrave Macmillan, vol. 63(2), pages 353-372, September.
Abstract: In this paper, we describe the evolution of the Federal Reserve’s swap lines from their inception in 1962 as a mechanism to forestall claims on U.S gold reserves under Bretton Woods to a means of extending emergency dollar liquidity during the Great Recession. We describe a number of consequences associated with swap operations. We argue, for example, that swaps calm crisis situations by both supplementing foreign countries’ dollar reserves and by signaling central-bank cooperation. We show how swaps exposed the Federal Reserve to conditionality and raised fears that they bypassed the Congressional appropriations process.
Handle: RePEc:nbr:nberwo:20755
Template-Type: ReDIF-Paper 1.0
Title: Retirement Timing of Women and the Role of Care Responsibilities for Grandchildren
Classification-JEL: J12; J13; J14; J22; J26
Author-Name: Robin L. Lumsdaine
Author-Name: Stephanie J.C. Vermeer
Note: AG CH LS
Number: 20756
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20756
File-URL: http://www.nber.org/papers/w20756.pdf
File-Format: application/pdf
Publication-Status: published as Robin L. Lumsdaine & Stephanie J. C. Vermeer, 2015. "Retirement Timing of Women and the Role of Care Responsibilities for Grandchildren," Demography, vol 52(2), pages 433-454.
Abstract: This paper considers the potential relationship between providing care for grandchildren and retirement, among women nearing retirement age. Using 47,400 person-wave observations from the Health and Retirement Study (HRS), we find the arrival of a new grandchild is associated with a more than eight percent increase in the retirement hazard despite little overall evidence of a care/retirement interaction. We document that while family characteristics seem to be the most important factors driving the care decision, they are also important determinants of retirement. In contrast, while financial incentives such as pensions and retiree health insurance have the largest influence on retirement, the opportunity cost associated with outside income seems to have little effect on whether or not a grandmother provides care. There is little evidence of substitution between caring for grandchildren versus providing care for elderly parents or engaging in volunteer activities; grandchild care is instead taken on as an additional responsibility. Our findings suggest that policies aimed at prolonging worklife may need to consider grandchild care responsibilities as a countervailing factor while those policies focused on grandchild care may also affect elderly labor force composition.
Handle: RePEc:nbr:nberwo:20756
Template-Type: ReDIF-Paper 1.0
Title: Early Health Shocks, Intrahousehold Resource Allocation, and Child Outcomes
Classification-JEL: C23; D13; I12; J13
Author-Name: Junjian Yi
Author-Person: pyi76
Author-Name: James J. Heckman
Author-Name: Junsen Zhang
Author-Person: pzh194
Author-Name: Gabriella Conti
Author-Person: pco273
Note: CH EH
Number: 20757
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20757
File-URL: http://www.nber.org/papers/w20757.pdf
File-Format: application/pdf
Abstract: An open question in the literature is whether families compensate or reinforce the impact of child health shocks. Discussions usually focus on one dimension of child investment. This paper examines multiple dimensions using household survey data on Chinese child twins whose average age is 11. We find that, compared with a twin sibling who did not suffer from negative early health shocks at ages 0-3, the other twin sibling who did suffer negative health shocks received RMB 305 more in terms of health investments, but received RMB 182 less in terms of educational investments in the 12 months prior to the survey. In terms of financial transfers over all dimensions of investment, the family acts as a net equalizer in response to early health shocks for children. We estimate a human capital production function and establish that, for this sample, early health shocks negatively affect child human capital, including health, education, and socioemotional skills. Compensating investments in health as measured by BMI reduce the adverse effects of health shocks by 50%, but exacerbate the adverse impact of shocks on educational attainment by 30%.
Handle: RePEc:nbr:nberwo:20757
Template-Type: ReDIF-Paper 1.0
Title: Does the Geographic Expansion of Bank Assets Reduce Risk?
Classification-JEL: G11; G21; G28
Author-Name: Martin Goetz
Author-Name: Luc Laeven
Author-Person: pla174
Author-Name: Ross Levine
Author-Person: ple61
Note: CF EFG IFM
Number: 20758
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20758
File-URL: http://www.nber.org/papers/w20758.pdf
File-Format: application/pdf
Abstract: We develop a new identification strategy to evaluate the impact of the geographic expansion of bank holding company (BHC) assets across U.S. metropolitan statistical areas (MSAs) on BHC risk. We find that the geographic expansion of bank assets reduces risk. Moreover, geographic expansion reduces risk more when BHCs expand into economically dissimilar MSAs, i.e., MSAs with different industrial structures and business cycles. We do not find that geographic diversification improves loan quality. Our results are consistent with arguments that geographic expansion lowers risk by reducing exposure to idiosyncratic local risks and inconsistent with arguments that geographic expansion, on net, increases risk by reducing the ability of BHCs to monitor loans and manage risks.
Handle: RePEc:nbr:nberwo:20758
Template-Type: ReDIF-Paper 1.0
Title: Unilateral Facilitation Does Not Raise International Labor Migration from the Philippines
Classification-JEL: C93; F22; O15
Author-Name: Emily Beam
Author-Person: pbe818
Author-Name: David McKenzie
Author-Person: pmc29
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV
Number: 20759
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20759
File-URL: http://www.nber.org/papers/w20759.pdf
File-Format: application/pdf
Publication-Status: published as Emily A. Beam & David McKenzie & Dean Yang, 2016. "Unilateral Facilitation Does Not Raise International Labor Migration from the Philippines," Economic Development and Cultural Change, University of Chicago Press, vol. 64(2), pages 323 - 368.
Abstract: Significant income gains from migrating from poorer to richer countries have motivated unilateral (source-country) policies facilitating labor emigration. However, their effectiveness is unknown. We conducted a large-scale randomized experiment in the Philippines testing the impact of unilaterally facilitating international labor migration. Our most intensive treatment doubled the rate of job offers but had no identifiable effect on international labor migration. Even the highest overseas job-search rate we induced (22%) falls far short of the share initially expressing interest in migrating (34%). We conclude that unilateral migration facilitation will at most induce a trickle, not a flood, of additional emigration.
Handle: RePEc:nbr:nberwo:20759
Template-Type: ReDIF-Paper 1.0
Title: Competition and Bank Opacity
Classification-JEL: D22; D4; G21; G28; G38
Author-Name: Liangliang Jiang
Author-Name: Ross Levine
Author-Person: ple61
Author-Name: Chen Lin
Author-Person: pli551
Note: CF
Number: 20760
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20760
File-URL: http://www.nber.org/papers/w20760.pdf
File-Format: application/pdf
Publication-Status: published as Liangliang Jiang & Ross Levine & Chen Lin, 2016. "Competition and Bank Opacity," Review of Financial Studies, Society for Financial Studies, vol. 29(7), pages 1911-1942.
Abstract: Did regulatory reforms that lowered barriers to competition among U.S. banks increase or decrease the quality of information that banks disclose to the public and regulators? We find that an intensification of competition reduced abnormal accruals of loan loss provisions and the frequency with which banks restate financial statements. The results indicate that competition reduces bank opacity, enhancing the ability of markets and regulators to monitor banks.
Handle: RePEc:nbr:nberwo:20760
Template-Type: ReDIF-Paper 1.0
Title: Women Helping Women? Evidence from Private Sector Data on Workplace Hierarchies
Classification-JEL: J13; J31; J62; J7; K31; M14; M51
Author-Name: Astrid Kunze
Author-Person: pku213
Author-Name: Amalia R. Miller
Author-Person: pmi419
Note: LE LS
Number: 20761
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20761
File-URL: http://www.nber.org/papers/w20761.pdf
File-Format: application/pdf
Publication-Status: published as Astrid Kunze & Amalia R. Miller, 2017. "Women Helping Women? Evidence from Private Sector Data on Workplace Hierarchies," The Review of Economics and Statistics, vol 99(5), pages 769-775.
Abstract: This paper studies gender spillovers in career advancement using 11 years of employer-employee matched data on the population of white-collar workers at over 4,000 private-sector establishments in Norway. Our data include unusually detailed job information for each worker, which enables us to define seven hierarchical ranks that are consistent across establishments and over time in order to measure promotions (defined as year-to-year rank increases) even for individuals who change employers. We first find that women have significantly lower promotion rates than men across all ranks of the corporate hierarchy, even after controlling for a range of individual characteristics (age, education, tenure, experience) and including fixed effects for current rank, year, industry, and even work establishment. In measuring the effects of female coworkers, we find positive gender spillovers across ranks (flowing from higher-ranking to lower-ranking women) but negative spillovers within ranks. The finding that greater female representation at higher ranks narrows the gender gap in promotion rates at lower ranks suggests that policies that increase female representation in corporate leadership can have spillover benefits to women in lowers ranks.
Handle: RePEc:nbr:nberwo:20761
Template-Type: ReDIF-Paper 1.0
Title: Race, Ethnicity and High-Cost Mortgage Lending
Classification-JEL: G0; G21; R21; R3
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Stephen L. Ross
Author-Person: pro69
Note: AP PE
Number: 20762
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20762
File-URL: http://www.nber.org/papers/w20762.pdf
File-Format: application/pdf
Publication-Status: published as What Drives Racial and Ethnic Differences in High-Cost Mortgages? The Role of High-Risk Lenders Patrick Bayer Fernando Ferreira Stephen L. Ross The Review of Financial Studies, Volume 31, Issue 1, 1 January 2018, Pages 175–205, https://doi.org/10.1093/rfs/hhx035
Abstract: This paper examines how high cost mortgage lending varies by race and ethnicity. It uses a unique panel data that matches a representative sample of mortgages in seven large metropolitan markets between 2004 and 2008 to public records of housing transactions and proprietary credit reporting data. The results reveal a significantly higher incidence of high costs loans for African-American and Hispanic borrowers even after controlling for key mortgage risk factors: they have a 7.7 and 6.2 percentage point higher likelihood of a high cost loan, respectively, in the home purchase market relative to an overall incidence of 14.8 percent among all home purchase mortgages. Significant racial and ethnic differences are widespread throughout the market – they are present (i) in each metro area, (ii) across high and low risk borrowers, and (iii) regardless of the age of the borrower. These differences are reduced by 60 percent with the inclusion of lender fixed effects, implying that a significant portion of the estimated market-wide racial differences can be attributed to differential access to (or sorting across) mortgage lenders.
Handle: RePEc:nbr:nberwo:20762
Template-Type: ReDIF-Paper 1.0
Title: Medium-Term Health Impacts of Shocks Experienced In Utero and After Birth: Evidence from Detailed Geographic Information on War Exposure
Classification-JEL: I12; J13; O12; O15
Author-Name: Richard Akresh
Author-Person: pak31
Author-Name: German Daniel Caruso
Author-Name: Harsha Thirumurthy
Author-Person: pth85
Note: CH DEV EH
Number: 20763
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20763
File-URL: http://www.nber.org/papers/w20763.pdf
File-Format: application/pdf
Abstract: This paper estimates the impact of armed conflict on subsequent health outcomes using detailed geographic information on households’ distance from conflict sites—a more accurate measure of conflict exposure— and compares the impact on children exposed in utero versus after birth. The identification strategy relies on exogenous variation in the conflict’s geographic extent and timing as well as the exposure of different birth cohorts while in utero or after birth. Results show that war-exposed children subsequently have lower height-for-age Z-scores, and impacts using GPS information are 87-188% larger than if exposure is measured at the imprecise regional level. Effects of in utero and after birth exposure are comparable in magnitude, and children in the war instigating and losing country (Eritrea) suffer more than the winning nation (Ethiopia). Results are robust to including region-specific time trends, alternative conflict exposure measures, and addressing potential bias due to selective migration.
Handle: RePEc:nbr:nberwo:20763
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Education on Health and Health Behavior in a Middle-Income, Low-Education Country
Classification-JEL: I1; I12; I15; I21; I25; I26
Author-Name: Resul Cesur
Author-Name: Bahadir Dursun
Author-Person: pdu430
Author-Name: Naci Mocan
Author-Person: pmo270
Note: CH DEV ED EH PE
Number: 20764
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20764
File-URL: http://www.nber.org/papers/w20764.pdf
File-Format: application/pdf
Abstract: Although the impact of education on health is important for economic policy in developing countries, the overwhelming majority of research to identify the health returns to education has been done using data from developed countries. We use data from three waves of a nationally-representative health survey, conducted between 2008 and 2012 in Turkey, and exploit an education reform that increased the mandatory years of schooling from 5 to 8 years in 1997. Using exposure to the reform as an instrument for education, we find that for women ages 18-30, education has no impact on self-reported health, BMI, overweight, obesity, or on the propensity or intensity of smoking. Education does not influence women’s daily consumption of fruits, vegetables, or their propensity to get a flu shot either. The same results are obtained for men of the same age group with one exception: education increases men’s BMI and the propensity to be overweight and obese. Potential explanations for these findings are provided.
Handle: RePEc:nbr:nberwo:20764
Template-Type: ReDIF-Paper 1.0
Title: Racial Differences in Health in Long-Run Perspective: A Brief Introduction
Classification-JEL: I14; J15; N11; N12
Author-Name: Leah Boustan
Author-Person: pbo332
Author-Name: Robert A. Margo
Author-Person: pma319
Note: DAE
Number: 20765
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20765
File-URL: http://www.nber.org/papers/w20765.pdf
File-Format: application/pdf
Abstract: The United States has a long and ongoing history of racial inequality. This paper surveys the literature on one aspect of that history: long-run trends in racial differences in health. We focus on standard measures such as infant mortality and life expectancy but also consider the available data on specific diseases and chronic conditions. Our basic conclusion is that large improvements have occurred in the average health of African Americans over the twentieth century, both in absolute terms and relative to Whites. These health advancements occurred steadily throughout the twentieth century, with the peak period of improvement between 1920 and 1945 (for infant mortality) and 1940 and 1960 (for overall life expectancy). We attribute the improvements to successful efforts to fight specific diseases, improvements in public health, and narrowing racial gaps in education and income. Although racial inequality in health outcomes has fallen in the long term, significant disparities remain today.
Handle: RePEc:nbr:nberwo:20765
Template-Type: ReDIF-Paper 1.0
Title: The Rise and Decline of General Laws of Capitalism
Classification-JEL: O20; P16; P48
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: James A. Robinson
Author-Person: pro179
Note: EFG LS PE POL
Number: 20766
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20766
File-URL: http://www.nber.org/papers/w20766.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & James A. Robinson, 2015. "The Rise and Decline of General Laws of Capitalism," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 3-28, Winter.
Abstract: Thomas Piketty's (2014) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understand the past or predict the future, because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality.
Handle: RePEc:nbr:nberwo:20766
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Model of the Medical Match
Classification-JEL: C51; C78; D47; J41; J44; L44
Author-Name: Nikhil Agarwal
Author-Person: pag128
Note: EH IO LS
Number: 20767
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20767
File-URL: http://www.nber.org/papers/w20767.pdf
File-Format: application/pdf
Publication-Status: published as Nikhil Agarwal, 2015. "An Empirical Model of the Medical Match," American Economic Review, American Economic Association, vol. 105(7), pages 1939-78, July.
Abstract: This paper develops a framework for estimating preferences in two-sided matching markets with non-transferable utility using only data on observed matches. Unlike single-agent choices, matches depend on the preferences of other agents in the market. I use pairwise stability together with a vertical preference restriction on one side of the market to identify preference parameters for both sides of the market. Recovering the distribution of preferences is only possible in an environment with many-to-one matching. These methods allow me to investigate two issues concerning the centralized market for medical residents. First, I examine the antitrust allegation that the clearinghouse restrains competition, resulting in salaries below the marginal product of labor. Counterfactual simulations of a competitive wage equilibrium show that residents’ willingness to pay for desirable programs results in estimated salary markdowns ranging from $23,000 to $43,000 below the marginal product of labor, with larger markdowns at more desirable programs. Therefore, a limited number of positions at high quality programs, not the design of the match, is the likely cause of low salaries. Second, I analyze wage and supply policies aimed at increasing the number of residents training in rural areas while accounting for general equilibrium effects from the matching market. I find that financial incentives increase the quality, but not the number of rural residents. Quantity regulations increase the number of rural trainees, but the impact on resident quality depends on the design of the intervention.
Handle: RePEc:nbr:nberwo:20767
Template-Type: ReDIF-Paper 1.0
Title: Best Prices: Price Discrimination and Consumer Substitution
Classification-JEL: C43; D11; D12; D4; L81
Author-Name: Judith A. Chevalier
Author-Person: pch151
Author-Name: Anil K. Kashyap
Author-Person: pka35
Note: IO ME PR
Number: 20768
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20768
File-URL: http://www.nber.org/papers/w20768.pdf
File-Format: application/pdf
Publication-Status: published as Judith A. Chevalier & Anil K Kashyap, 2019. "Best Prices: Price Discrimination and Consumer Substitution," American Economic Journal: Economic Policy, vol 11(1), pages 126-159.
Abstract: We propose a method for aggregating prices when retailers use periodic sales to price-discriminate amongst heterogeneous customers. To do so, we introduce a model in which Loyal customers buy one brand and do not strategically time purchases, while Bargain Hunters always pay the lowest price available, the “best price”. We derive the exact price index and demonstrate empirically that accounting for our best price construct substantially improves the match between conventional price aggregation strategies and actual prices paid by consumers. We demonstrate that our methodology improves inflation measurement without imposing an unrealistically large burden on the data-collection agency.
Handle: RePEc:nbr:nberwo:20768
Template-Type: ReDIF-Paper 1.0
Title: The Risky Capital of Emerging Markets
Classification-JEL: E22; F21; G12; O4
Author-Name: Joel M. David
Author-Person: pda513
Author-Name: Espen Henriksen
Author-Name: Ina Simonovska
Author-Person: psi395
Note: AP DEV EFG IFM ITI PR
Number: 20769
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20769
File-URL: http://www.nber.org/papers/w20769.pdf
File-Format: application/pdf
Abstract: We use macroeconomic data to build a panel of international capital returns over a long horizon across both developed and developing countries. We document two facts: poor and emerging markets exhibit (1) high average returns to capital and (2) high betas on US returns. We quantitatively explore whether consumption-based risk faced by a US investor can reconcile these patterns. Long-run risks lead to return disparities at least 55% as large as those in the data. Fact (2), although not a sufficient statistic, is informative about the extent of long-run risk in foreign capital, and so about fact (1).
Handle: RePEc:nbr:nberwo:20769
Template-Type: ReDIF-Paper 1.0
Title: Nominal Wage Rigidity in Village Labor Markets
Classification-JEL: E24; J31; O10; O12
Author-Name: Supreet Kaur
Note: DEV EFG LS ME
Number: 20770
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20770
File-URL: http://www.nber.org/papers/w20770.pdf
File-Format: application/pdf
Publication-Status: published as Supreet Kaur, 2019. "Nominal Wage Rigidity in Village Labor Markets," American Economic Review, vol 109(9), pages 3585-3616.
Abstract: This paper tests for downward nominal wage rigidity by examining transitory shifts in labor demand, generated by rainfall shocks, in 600 Indian districts from 1956-2009. Nominal wages rise in response to positive shocks but do not fall during droughts. In addition, transitory positive shocks generate ratcheting: after they have dissipated, nominal wages do not adjust back down. This ratcheting effect generates a 9% reduction in employment levels. Inflation enables downward real wage adjustments both during droughts and after positive shocks. Survey evidence suggests that workers and employers believe that nominal wage cuts are unfair and lead to effort reductions.
Handle: RePEc:nbr:nberwo:20770
Template-Type: ReDIF-Paper 1.0
Title: Betting the House
Classification-JEL: C14; C38; E32; E37; E42; E44; E51; E52; F41; G01; G21; N10; N20
Author-Name: Òscar Jordà
Author-Person: pjo46
Author-Name: Moritz HP. Schularick
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: AP DAE IFM ME
Number: 20771
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20771
File-URL: http://www.nber.org/papers/w20771.pdf
File-Format: application/pdf
Publication-Status: published as Betting the House, Òscar Jordà, Moritz Schularick, Alan M. Taylor. in NBER International Seminar on Macroeconomics 2014, Clarida, Frankel, Giavazzi, and Rey. 2015
Publication-Status: published as Jordà, Òscar & Schularick, Moritz & Taylor, Alan M., 2015. "Betting the house," Journal of International Economics, Elsevier, vol. 96(S1), pages S2-S18.
Abstract: Is there a link between loose monetary conditions, credit growth, house price booms, and financial instability? This paper analyzes the role of interest rates and credit in driving house price booms and busts with data spanning 140 years of modern economic history in the advanced economies. We exploit the implications of the macroeconomic policy trilemma to identify exogenous variation in monetary conditions: countries with fixed exchange regimes often see fluctuations in short-term interest rates unrelated to home economic conditions. We use novel instrumental variable local projection methods to demonstrate that loose monetary conditions lead to booms in real estate lending and house prices bubbles; these, in turn, materially heighten the risk of financial crises. Both effects have become stronger in the postwar era.
Handle: RePEc:nbr:nberwo:20771
Template-Type: ReDIF-Paper 1.0
Title: The Margins of Global Sourcing: Theory and Evidence from U.S. Firms
Classification-JEL: C63; D21; D22; F12; F23; F61; L11; L16; L23
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: Teresa C. Fort
Author-Person: pfo216
Author-Name: Felix Tintelnot
Author-Person: pti73
Note: IO ITI
Number: 20772
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20772
File-URL: http://www.nber.org/papers/w20772.pdf
File-Format: application/pdf
Publication-Status: published as Pol Antràs & Teresa C. Fort & Felix Tintelnot, 2017. "The Margins of Global Sourcing: Theory and Evidence from US Firms," American Economic Review, vol 107(9), pages 2514-2564.
Abstract: We develop a quantifiable multi-country sourcing model in which firms self-select into importing based on their productivity and country-specific variables. In contrast to canonical export models where firm profits are additively separable across destination markets, global sourcing decisions naturally interact through the firm's cost function. We show that, under an empirically relevant condition, selection into importing exhibits complementarities across source markets. We exploit these complementarities to solve the firm's problem and estimate the model. Comparing counterfactual predictions to reduced-form evidence highlights the importance of interdependencies in firms' sourcing decisions across markets, which generate heterogeneous domestic sourcing responses to trade shocks.
Handle: RePEc:nbr:nberwo:20772
Template-Type: ReDIF-Paper 1.0
Title: External Validity in Fuzzy Regression Discontinuity Designs
Classification-JEL: C14
Author-Name: Marinho Bertanha
Author-Person: pbe1000
Author-Name: Guido W. Imbens
Author-Person: pim4
Note: CH DEV ED EH IO LS PE
Number: 20773
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20773
File-URL: http://www.nber.org/papers/w20773.pdf
File-Format: application/pdf
Publication-Status: published as Marinho Bertanha & Guido W. Imbens, 2020. "External Validity in Fuzzy Regression Discontinuity Designs," Journal of Business & Economic Statistics, vol 38(3), pages 593-612.
Abstract: Many empirical studies use Fuzzy Regression Discontinuity (FRD) designs to identify treatment effects when the receipt of treatment is potentially correlated to outcomes. Existing FRD methods identify the local average treatment effect (LATE) on the subpopulation of compliers with values of the forcing variable that are equal to the threshold. We develop methods that assess the plausibility of generalizing LATE to subpopulations other than compliers, and to subpopulations other than those with forcing variable equal to the threshold. Specifically, we focus on testing the equality of the distributions of potential outcomes for treated compliers and always-takers, and for non-treated compliers and never-takers. We show that equality of these pairs of distributions implies that the expected outcome conditional on the forcing variable and the treatment status is continuous in the forcing variable at the threshold, for each of the two treatment regimes. As a matter of routine, we recommend that researchers present graphs with estimates of these two conditional expectations in addition to graphs with estimates of the expected outcome conditional on the forcing variable alone. We illustrate our methods using data on the academic performance of students attending the summer school program in two large school districts in the US.
Handle: RePEc:nbr:nberwo:20773
Template-Type: ReDIF-Paper 1.0
Title: College Admissions as Non-Price Competition: The Case of South Korea
Classification-JEL: C78; I23
Author-Name: Christopher Avery
Author-Person: pav7
Author-Name: Soohyung Lee
Author-Name: Alvin E. Roth
Author-Person: pro40
Note: ED
Number: 20774
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20774
File-URL: http://www.nber.org/papers/w20774.pdf
File-Format: application/pdf
Abstract: This paper examines non-price competition among colleges to attract highly qualified students, exploiting the South Korean setting where the national government sets rules governing applications. We identify some basic facts about the behavior of colleges before and after a 1994 policy change that changed the timing of the national college entrance exam and introduced early admissions, and propose a game-theoretic model that matches those facts. When applications reveal information about students that is of common interest to all colleges, lower-ranked colleges can gain in competition with higher-ranked colleges by limiting the number of possible applications.
Handle: RePEc:nbr:nberwo:20774
Template-Type: ReDIF-Paper 1.0
Title: Demand Analysis using Strategic Reports: An application to a school choice mechanism
Classification-JEL: C50; D47; I20
Author-Name: Nikhil Agarwal
Author-Person: pag128
Author-Name: Paulo Somaini
Note: ED IO
Number: 20775
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20775
File-URL: http://www.nber.org/papers/w20775.pdf
File-Format: application/pdf
Publication-Status: published as Nikhil Agarwal & Paulo Somaini, 2018. "Demand Analysis Using Strategic Reports: An Application to a School Choice Mechanism," Econometrica, Econometric Society, vol. 86(2), pages 391-444, March.
Abstract: Several school districts use assignment systems that give students an incentive to misrepresent their preferences. We find evidence consistent with strategic behavior in Cambridge. Such strategizing can complicate preference analysis. This paper develops empirical methods for studying random utility models in a new and large class of school choice mechanisms. We show that preferences are non-parametrically identified under either sufficient variation in choice environments or a preference shifter. We then develop a tractable estimation procedure and apply it to Cambridge. Estimates suggest that while 82% of students are assigned to their stated first choice, only 72% are assigned to their true first choice because students avoid ranking competitive schools. Assuming that students behave optimally, the Immediate Acceptance mechanism is preferred by the average student to the Deferred Acceptance mechanism by an equivalent of 0.08 miles. The estimated difference is smaller if beliefs are biased, and reversed if students report truthfully.
Handle: RePEc:nbr:nberwo:20775
Template-Type: ReDIF-Paper 1.0
Title: Option-Based Credit Spreads
Classification-JEL: G0; G12; G13; G21; G24; G3
Author-Name: Christopher L. Culp
Author-Name: Yoshio Nozawa
Author-Name: Pietro Veronesi
Note: AP CF
Number: 20776
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20776
File-URL: http://www.nber.org/papers/w20776.pdf
File-Format: application/pdf
Publication-Status: published as Christopher L. Culp & Yoshio Nozawa & Pietro Veronesi, 2018. "Option-Based Credit Spreads," American Economic Review, vol 108(2), pages 454-488.
Abstract: We present a novel empirical benchmark for analyzing credit risk using “pseudo firms” that purchase traded assets financed with equity and zero-coupon bonds. By no-arbitrage, pseudo bonds are equivalent to Treasuries minus put options on pseudo-firm assets. Empirically, like corporate spreads, pseudo-bond spreads are large, countercyclical, and predict lower economic growth. Using this framework, we find that bond market illiquidity, investors’ over-estimation of default risks, and corporate frictions do not seem to explain excessive observed credit spreads, but, instead, a risk premium for tail and idiosyncratic asset risks is the primary determinant of corporate spreads.
Handle: RePEc:nbr:nberwo:20776
Template-Type: ReDIF-Paper 1.0
Title: The Rise and Fall of Demand for Securitizations
Classification-JEL: G01; G12; G22; G23
Author-Name: Sergey Chernenko
Author-Name: Samuel G. Hanson
Author-Person: pha1258
Author-Name: Adi Sunderam
Note: AP CF
Number: 20777
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20777
File-URL: http://www.nber.org/papers/w20777.pdf
File-Format: application/pdf
Abstract: Collateralized debt obligations (CDOs) and private-label mortgage-backed securities (MBS) backed by nonprime loans played a central role in the recent financial crisis. Little is known, however, about the underlying forces that drove investor demand for these securitizations. Using micro-data on insurers’ and mutual funds’ bond holdings, we find considerable heterogeneity in investor demand for securitizations in the pre-crisis period. We argue that both investor beliefs and incentives help to explain this variation in demand. By contrast, our data paints a more uniform picture of investor behavior in the crisis. Consistent with theories of optimal liquidation, investors largely traded in more liquid securities such as government-guaranteed MBS to meet their liquidity needs during the crisis.
Handle: RePEc:nbr:nberwo:20777
Template-Type: ReDIF-Paper 1.0
Title: Reservation Prices: An Economic Analysis of Cigarette Purchases on Indian Reservations
Classification-JEL: H26; I18
Author-Name: Philip DeCicca
Author-Person: pde303
Author-Name: Donald S. Kenkel
Author-Person: pke44
Author-Name: Feng Liu
Author-Person: pli590
Note: EH
Number: 20778
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20778
File-URL: http://www.nber.org/papers/w20778.pdf
File-Format: application/pdf
Publication-Status: published as Philip DeCicca & Donald Kenkel & Feng Liu, 2015. "Reservation Prices: An Economic Analysis of Cigarette Purchases on Indian Reservations," National Tax Journal, vol 68(1), pages 93-118.
Abstract: The special legal status of Indian tribes in the U.S. means that state excise taxes are not necessarily collected on cigarette purchases on Indian reservations. We focus on two under-studied but basic empirical economic questions this raises. Using novel data from New York surveys that asked directly about cigarette prices and purchases from reservations, we first ask: What is the economic incidence of the tax break? In data from New York over a period when the state did not attempt to collect taxes on reservation purchases, our estimates suggest that the tax break is usually fully shifted to the consumer. The notable exception is on one reservation where a tribal monopoly captures almost half of the tax break. Second, we ask: Has the tax break increased consumer demand for low-quality cigarettes relative to high-quality cigarettes? New York's cigarette tax is a fixed amount per pack, providing an opportunity to test the Alchian and Allen substitution theorem. We find some support for the prediction that the tax break increases consumer demand for lower-quality cigarettes.
Handle: RePEc:nbr:nberwo:20778
Template-Type: ReDIF-Paper 1.0
Title: Marginal Pricing and Student Investment in Higher Education
Classification-JEL: I2; J24
Author-Name: Steven W. Hemelt
Author-Name: Kevin M. Stange
Author-Person: pst739
Note: ED LS PE
Number: 20779
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20779
File-URL: http://www.nber.org/papers/w20779.pdf
File-Format: application/pdf
Publication-Status: published as Steven W. Hemelt & Kevin M. Stange, 2016. "Marginal Pricing and Student Investment in Higher Education," Journal of Policy Analysis and Management, vol 35(2), pages 441-471.
Abstract: This paper examines the effect of marginal price on students’ educational investments using rich administrative data on students at Michigan public universities. Students facing zero marginal price for credits above the full-time minimum (i.e., 12 credits) attempt and complete about the same average number of credits as those whose institutions charge per credit. Zero marginal price induces a modest share of students (i.e., 7 percent) to attempt up to one additional class (i.e., 3 credits) but also increases withdrawals, resulting in little impact on earned credits or the likelihood of meeting “on-time” benchmarks toward college completion. Consistent with theory, the moderate impact on attempted credits is largest among students who would otherwise locate at the full-time minimum, which include lower-achieving and socio-economically disadvantaged students.
Handle: RePEc:nbr:nberwo:20779
Template-Type: ReDIF-Paper 1.0
Title: A Variational Approach to the Analysis of Tax Systems
Classification-JEL: H21; H23
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Aleh Tsyvinski
Author-Name: Nicolas Werquin
Author-Person: pwe384
Note: EFG PE
Number: 20780
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20780
File-URL: http://www.nber.org/papers/w20780.pdf
File-Format: application/pdf
Abstract: We develop a general method to study the effects of non-linear taxation in dynamic settings using variational arguments. We first derive general theoretical formulas that characterize the welfare effects of local tax reforms and, in particular, the optimal tax system, potentially restricted within certain classes (e.g., age-independent, linear, separable). These formulas are expressed in terms of intuitive parameters, such as the labor and capital income elasticities and the hazard rates of the income distributions. Second, we apply these formulas to various specific settings. In particular, we decompose the gains arising from each element of tax reform, starting from a simple baseline system, as the available tax instruments becomes more sophisticated. We further show that the design of tax systems obeys a common general principle, namely that more sophisticated tax instruments (e.g., age-dependent, non-linear, non-separable) allow the government to fine-tune the tax rates by targeting higher distortions to the segments of the population whose behavior responds relatively little to those taxes.
Handle: RePEc:nbr:nberwo:20780
Template-Type: ReDIF-Paper 1.0
Title: Group-Average Observables as Controls for Sorting on Unobservables When Estimating Group Treatment Effects: the Case of School and Neighborhood Effects
Classification-JEL: C20; I20; I24; I26; R20
Author-Name: Joseph G. Altonji
Author-Person: pal266
Author-Name: Richard K. Mansfield
Note: CH ED LS
Number: 20781
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20781
File-URL: http://www.nber.org/papers/w20781.pdf
File-Format: application/pdf
Publication-Status: published as American Economic Review. Vol. 108, No. 10, October 2018 (pp. 2902-46)
Abstract: We consider the classic problem of estimating group treatment effects when individuals sort based on observed and unobserved characteristics that affect the outcome. Using a standard choice model, we show that controlling for group averages of observed individual characteristics potentially absorbs all the across-group variation in unobservable individual characteristics. We use this insight to bound the treatment effect variance of school systems and associated neighborhoods for various outcomes. Across four datasets, our most conservative estimates indicate that a 90th versus 10th percentile school system increases the high school graduation probability by between 0.047 and 0.085 and increases the college enrollment probability by between 0.11 and 0.13. We also find large effects on adult earnings. We discuss a number of other applications of our methodology, including measurement of teacher value-added.
Handle: RePEc:nbr:nberwo:20781
Template-Type: ReDIF-Paper 1.0
Title: Sequential Markets, Market Power and Arbitrage
Classification-JEL: D43; L13; L94; Q40
Author-Name: Koichiro Ito
Author-Person: pit23
Author-Name: Mar Reguant
Author-Person: pre360
Note: EEE IO
Number: 20782
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20782
File-URL: http://www.nber.org/papers/w20782.pdf
File-Format: application/pdf
Publication-Status: published as Koichiro Ito & Mar Reguant, 2016. "Sequential Markets, Market Power, and Arbitrage," American Economic Review, American Economic Association, vol. 106(7), pages 1921-57, July.
Publication-Status: published as Koichiro Ito & Mar Reguant, 2016. "Sequential Markets, Market Power, and Arbitrage," American Economic Review, vol 106(7), pages 1921-1957.
Abstract: We develop a theoretical framework to characterize strategic behavior in sequential markets under imperfect competition and limited arbitrage. Our theory predicts that these two elements can generate a systematic price premium. We test the model predictions using micro-data from the Iberian electricity market. We show that the observed price differences and firm behavior are consistent with the model. Finally, we quantify the welfare effects of arbitrage using a structural model. In our setting, we show that full arbitrage is not necessarily welfare-enhancing in the presence of market power, reducing consumer costs but decreasing productive efficiency.
Handle: RePEc:nbr:nberwo:20782
Template-Type: ReDIF-Paper 1.0
Title: Inter-temporal R&D and Capital Investment Portfolios for the Electricity Industry’s Low Carbon Future
Classification-JEL: Q40; Q42; Q55
Author-Name: Nidhi R. Santen
Author-Name: Mort D. Webster
Author-Name: David Popp
Author-Name: Ignacio Pérez-Arriaga
Note: EEE
Number: 20783
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20783
File-URL: http://www.nber.org/papers/w20783.pdf
File-Format: application/pdf
Publication-Status: published as Nidhi R. Santen & Mort D. Webster & David Popp & Ignacio Pérez-Arriaga, 2017. "Inter-temporal R&D and Capital Investment Portfolios for the Electricity Industry’s Low Carbon Future," The Energy Journal, vol 38(6), pages 1-24.
Abstract: This paper explores cost-effective low-carbon R&D and capital investment portfolios for the electricity generation sector through 2060. We present a novel method for long-term planning by combining an economic model of endogenous non-linear technical change and a generation capacity planning model with key features of the electricity system. The model captures the complementary nature of technologies in the power sector; physical integration constraints; and the opportunity to build new knowledge capital as a non-linear function of R&D and accumulated knowledge, which reflects the diminishing marginal returns to research characteristic of the energy innovation process. We show portfolios for future scenarios with and without carbon emission limits, and demonstrate the importance of including various features by comparing results from a reference version of the model to results from alternative versions that omit these features. Our results caution that using economic frameworks that do not incorporate critical electricity and innovation system features may over- or under-estimate the value of emerging technologies, and therefore the cost-effectiveness of R&D opportunities.
Handle: RePEc:nbr:nberwo:20783
Template-Type: ReDIF-Paper 1.0
Title: Education, HIV, and Early Fertility: Experimental Evidence from Kenya
Classification-JEL: I12; I25; I38; O12
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: Michael Kremer
Author-Person: pkr20
Note: CH DEV ED
Number: 20784
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20784
File-URL: http://www.nber.org/papers/w20784.pdf
File-Format: application/pdf
Publication-Status: published as Esther Duflo & Pascaline Dupas & Michael Kremer, 2015. "Education, HIV, and Early Fertility: Experimental Evidence from Kenya," American Economic Review, American Economic Association, vol. 105(9), pages 2757-97, September.
Abstract: A seven-year randomized evaluation suggests education subsidies reduce adolescent girls' dropout, pregnancy, and marriage but not sexually transmitted infection (STI). The government's HIV curriculum, which stresses abstinence until marriage, does not reduce pregnancy or STI. Both programs combined reduce STI more, but cut dropout and pregnancy less, than education subsidies alone. These results are inconsistent with a model of schooling and sexual behavior in which both pregnancy and STI are determined by one factor (unprotected sex), but consistent with a two-factor model in which choices between committed and casual relationships also affect these outcomes.
Handle: RePEc:nbr:nberwo:20784
Template-Type: ReDIF-Paper 1.0
Title: Are Patent Fees Effective at Weeding out Low-quality Patents?
Classification-JEL: K2; O31; O34; O38
Author-Name: Gaétan de Rassenfosse
Author-Person: pde369
Author-Name: Adam B. Jaffe
Author-Person: pja49
Note: PR
Number: 20785
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20785
File-URL: http://www.nber.org/papers/w20785.pdf
File-Format: application/pdf
Publication-Status: published as Gaétan de Rassenfosse & Adam B. Jaffe, 2018. "Are patent fees effective at weeding out low-quality patents?," Journal of Economics & Management Strategy, vol 27(1), pages 134-148.
Abstract: The paper investigates whether patent fees are an effective mechanism to deter the filing of low-quality patent applications. The study analyzes the effect on patent quality of the Patent Law Amendment Act of 1982, which resulted in a substantial increase in patenting fees at the U.S. Patent and Trademark Office. Results from a series of difference-in-differences regressions suggest that the increase in fees led to a weeding out of low-quality patents. About 14 per cent of patents in the lowest quality decile were filtered out, and the effect was especially visible for companies with a large patent portfolio. The study has strong policy implications in the current context of concerns about declines in patent quality.
Handle: RePEc:nbr:nberwo:20785
Template-Type: ReDIF-Paper 1.0
Title: The Long and the Short of It: Sovereign Debt Crises and Debt Maturity
Classification-JEL: F33; F34; F36
Author-Name: Raquel Fernández
Author-Person: pfe17
Author-Name: Alberto Martin
Author-Person: pma513
Note: EFG IFM
Number: 20786
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20786
File-URL: http://www.nber.org/papers/w20786.pdf
File-Format: application/pdf
Abstract: We present a simple model of sovereign debt crises in which a country chooses its optimal mix of short and long-term bonds subject to standard contracting frictions: the country cannot commit to repay its debts nor to a specific path of future debt issues, and contracts cannot be made state contingent nor renegotiated. We show that, in order to reduce incentives to engage in debt dilution, the country must issue short-term debt. This exposes it to roll-over crises and inefficient repayments. We examine the effects of alternative restructuring regimes, which either write-down debt or extend its maturity in the event of crises, and show that both necessarily improve ex ante welfare if they do not decrease expected payments to creditors during crises. In particular, we show that the way in which these regimes redistribute payments between short- and long-term creditors, which has been a central point in recent policy debates, is inconsequential.
Handle: RePEc:nbr:nberwo:20786
Template-Type: ReDIF-Paper 1.0
Title: Universal Gravity
Classification-JEL: F1
Author-Name: Treb Allen
Author-Name: Costas Arkolakis
Author-Person: par274
Author-Name: Yuta Takahashi
Note: ITI
Number: 20787
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20787
File-URL: http://www.nber.org/papers/w20787.pdf
File-Format: application/pdf
Publication-Status: published as Treb Allen & Costas Arkolakis & Yuta Takahashi, 2020. "Universal Gravity," Journal of Political Economy, vol 128(2), pages 393-433.
Abstract: What is the best way to reduce trade frictions when resources are scarce? To answer this question, we develop a framework that nests previous general equilibrium gravity models and show that the macro-economic implications of these various models depend crucially on two key model parameters, which we term the “gravity constants.” Based only on the value of the gravity constants, we derive sufficient conditions for the existence and uniqueness of the trade equilibrium and, given observed trade flows, completely characterize all comparative statics for any change in bilateral trade frictions. We then develop a methodology for estimating these gravity constants without needing to assume a particular micro-foundation of the gravity trade model. Finally, we use these results to derive the set of trade friction reductions that (to a first-order) maximize welfare gains given an arbitrary constraint.
Handle: RePEc:nbr:nberwo:20787
Template-Type: ReDIF-Paper 1.0
Title: Gender
Classification-JEL: C9; J0
Author-Name: Muriel Niederle
Author-Person: pni95
Note: CH ED LS
Number: 20788
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20788
File-URL: http://www.nber.org/papers/w20788.pdf
File-Format: application/pdf
Publication-Status: published as Niederle, Muriel, “Gender” Handbook of Experimental Economics, second edition, Eds. John Kagel and Alvin E. Roth, Princeton University Press, 2016, pp 481-553.
Abstract: This paper summarizes research on gender differences in economic settings. I discuss gender differences in attitudes toward competition, altruism and the closely related issue of cooperation, and risk preferences. While gender differences in competition are large and robust, the results are much more mixed and more nuanced concerning altruism or cooperative tendencies. Surprisingly, the results are also quite mixed when concerning gender differences in risk attitudes. I discuss the external validity of laboratory results in the field. More importantly, however, I emphasize research investigating the external relevance of laboratory findings. That is, to what extent can gender differences in the aforementioned psychological attributes account for observed gender differences in economic outcomes including education and labor market outcomes as well as voting behavior.
Handle: RePEc:nbr:nberwo:20788
Template-Type: ReDIF-Paper 1.0
Title: Sources of Geographic Variation in Health Care: Evidence from Patient Migration
Classification-JEL: H51; I1; I11
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Matthew Gentzkow
Author-Person: pge43
Author-Name: Heidi Williams
Author-Person: pwi239
Note: AG EH IO LS PE PR
Number: 20789
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20789
File-URL: http://www.nber.org/papers/w20789.pdf
File-Format: application/pdf
Publication-Status: published as Amy Finkelstein & Matthew Gentzkow & Heidi Williams, 2016. "Sources of Geographic Variation in Health Care: Evidence From Patient Migration," The Quarterly Journal of Economics, vol 131(4), pages 1681-1726.
Abstract: We study the drivers of geographic variation in US health care utilization, using an empirical strategy that exploits migration of Medicare patients to separate the role of demand and supply factors. Our approach allows us to account for demand differences driven by both observable and unobservable patient characteristics. We find that 40-50 percent of geographic variation in utilization is attributable to patient demand, with the remainder due to place-specific supply factors. Demand variation does not appear to result from differences in past experiences, and is explained to a significant degree by differences in patient health.
Handle: RePEc:nbr:nberwo:20789
Template-Type: ReDIF-Paper 1.0
Title: Geography, Policy, or Productivity? Regional Trade in five South American Countries, 1910-1950
Classification-JEL: F02; F15; N16; N76
Author-Name: Marc Badia-Miró
Author-Person: pba484
Author-Name: Anna Carreras-Marín
Author-Name: Christopher M. Meissner
Author-Person: pme45
Note: DAE
Number: 20790
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20790
File-URL: http://www.nber.org/papers/w20790.pdf
File-Format: application/pdf
Abstract: Regional trade in South America since independence has long been much smaller than would be expected if geography were the only constraint on trade. Several potential explanations exist: low technological and demand complementarities; low productivity; high natural and policy barriers to trade. Focusing on the latter explanations, policy makers have long advocated a South American/Southern Cone Free Trade Area–proposed as early as 1889. Would reductions in trade costs have been sufficient to significantly raise trade, or was trade low for other reasons? We study bilateral trade between 1910 and 1950, when large external shocks altered global supply and demand. These shocks help us show that intra-regional trade could have been boosted with reductions in trade costs. South American regional trade could have benefitted from more benign trade policy or better infrastructure. Regional trade in textiles, which took off from the 1930s, supports our argument that trade improved when trade costs fell.
Handle: RePEc:nbr:nberwo:20790
Template-Type: ReDIF-Paper 1.0
Title: Are the World’s Poorest Being Left Behind?
Classification-JEL: I32; I38; O15
Author-Name: Martin Ravallion
Author-Person: pra29
Note: DEV
Number: 20791
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20791
File-URL: http://www.nber.org/papers/w20791.pdf
File-Format: application/pdf
Publication-Status: published as Martin Ravallion, 2016. "Are the world’s poorest being left behind?," Journal of Economic Growth, vol 21(2), pages 139-164.
Abstract: The traditional approach to poverty measurement puts no explicit weight on success at increasing the typical level of living of the poorest—raising the consumption floor. To address this deficiency, the paper defines and measures the expected value of the floor, allowing for transient effects and measurement errors in survey data. On using all suitable and available surveys for the developing world over 1981-2011, the expected value of the floor is about half the $1.25 a day poverty line. There has been only modest progress in raising the floor, despite much progress in reducing the number living near the floor.
Handle: RePEc:nbr:nberwo:20791
Template-Type: ReDIF-Paper 1.0
Title: Charters Without Lotteries: Testing Takeovers in New Orleans and Boston
Classification-JEL: C21; C26; C31; I21; I22; I28; J24
Author-Name: Atila Abdulkadiroğlu
Author-Name: Joshua D. Angrist
Author-Person: pan29
Author-Name: Peter D. Hull
Author-Person: phu366
Author-Name: Parag A. Pathak
Note: CH ED LS PE
Number: 20792
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20792
File-URL: http://www.nber.org/papers/w20792.pdf
File-Format: application/pdf
Publication-Status: published as Atila Abdulkadiroğlu & Joshua D. Angrist & Peter D. Hull & Parag A. Pathak, 2016. "Charters without Lotteries: Testing Takeovers in New Orleans and Boston," American Economic Review, American Economic Association, vol. 106(7), pages 1878-1920, July.
Publication-Status: published as Atila Abdulkadiroğlu & Joshua D. Angrist & Peter D. Hull & Parag A. Pathak, 2016. "Charters without Lotteries: Testing Takeovers in New Orleans and Boston," American Economic Review, vol 106(7), pages 1878-1920.
Abstract: Lottery estimates suggest oversubscribed urban charter schools boost student achievement markedly. But these estimates needn’t capture treatment effects for students who haven’t applied to charter schools or for students attending charters for which demand is weak. This paper reports estimates of the effect of charter school attendance on middle-schoolers in charter takeovers in New Orleans and Boston. Takeovers are traditional public schools that close and then re-open as charter schools. Students enrolled in the schools designated for closure are eligible for “grandfathering” into the new schools; that is, they are guaranteed seats. We use this fact to construct instrumental variables estimates of the effects of passive charter attendance: the grandfathering instrument compares students at schools designated for takeover with students who appear similar at baseline and who were attending similar schools not yet closed, while adjusting for possible violations of the exclusion restriction in such comparisons. Estimates for a large sample of takeover schools in the New Orleans Recovery School District show substantial gains from takeover enrollment. In Boston, where we can compare grandfathering and lottery estimates for a middle school, grandfathered students see achievement gains at least as large as the gains for students assigned seats in lotteries. Larger reading gains for grandfathering compliers are explained by a worse non-charter fallback.
Handle: RePEc:nbr:nberwo:20792
Template-Type: ReDIF-Paper 1.0
Title: How financially literate are women? An overview and new insights
Classification-JEL: D14; D91
Author-Name: Tabea Bucher-Koenen
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Rob Alessie
Author-Person: pal293
Author-Name: Maarten van Rooij
Author-Person: pva83
Note: AG
Number: 20793
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20793
File-URL: http://www.nber.org/papers/w20793.pdf
File-Format: application/pdf
Publication-Status: published as Tabea Bucher-Koenen & Annamaria Lusardi & Rob Alessie & Maarten van Rooij, 2017. "How Financially Literate Are Women? An Overview and New Insights," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(2), pages 255-283, July.
Abstract: We document strikingly similar gender differences in financial literacy across countries. When asked to answer questions that measure knowledge of basic financial concepts, women are less likely than men to answer correctly and more likely to indicate that they do not know the answer. In addition, women give themselves lower scores on financial literacy self-assessments than men. Both young and old women show low levels of financial literacy. Moreover, women for whom financial knowledge is likely to be very important—for example widows or single women—know little about concepts relevant for day-to-day financial decisions. Even women in favorable economic conditions are less financially knowledgeable than men. This is important because financial literacy has been linked to economic behavior, including retirement planning and wealth accumulation. Women live longer than men and are likely to spend time in widowhood. As a result, improving women’s financial literacy is key to helping them prepare for retirement and promoting their financial security.
Handle: RePEc:nbr:nberwo:20793
Template-Type: ReDIF-Paper 1.0
Title: How's Life at Home? New Evidence on Marriage and the Set Point for Happiness
Classification-JEL: I31; J12; J16
Author-Name: Shawn Grover
Author-Name: John F. Helliwell
Author-Person: phe368
Note: AG PE
Number: 20794
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20794
File-URL: http://www.nber.org/papers/w20794.pdf
File-Format: application/pdf
Publication-Status: published as Shawn Grover & John F. Helliwell, 2019. "How’s Life at Home? New Evidence on Marriage and the Set Point for Happiness," Journal of Happiness Studies, vol 20(2), pages 373-390.
Abstract: Subjective well-being research has often found that marriage is positively correlated with well-being. Some have argued that this correlation may be result of happier people being more likely to marry. Others have presented evidence suggesting that the well-being benefits of marriage are short-lasting. Using data from the British Household Panel Survey, we control individual pre-marital well-being levels and find that the married are still more satisfied, suggesting a causal effect, even after full allowance is made for selection effects. Using new data from the United Kingdom's Annual Population Survey, we find that the married have a less deep U-shape in life satisfaction across age groups than do the unmarried, indicating that marriage may help ease the causes of the mid-life dip in life satisfaction and that the benefits of marriage are unlikely to be short-lived. We explore friendship as a mechanism which could help explain a causal relationship between marriage and life satisfaction, and find that well-being effects of marriage are about twice as large for those whose spouse is also their best friend. Finally, we use the Gallup World Poll to show that although the overall well-being effects of marriage appear to vary across cultural contexts, marriage eases the middle-age dip in life evaluations for all regions except Sub-Saharan Africa.
Handle: RePEc:nbr:nberwo:20794
Template-Type: ReDIF-Paper 1.0
Title: Inferring Carbon Abatement Costs in Electricity Markets: A Revealed Preference Approach using the Shale Revolution
Classification-JEL: Q4; Q5
Author-Name: Joseph A. Cullen
Author-Name: Erin T. Mansur
Author-Person: pma874
Note: EEE
Number: 20795
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20795
File-URL: http://www.nber.org/papers/w20795.pdf
File-Format: application/pdf
Publication-Status: published as Joseph A. Cullen & Erin T. Mansur, 2017. "Inferring Carbon Abatement Costs in Electricity Markets: A Revealed Preference Approach Using the Shale Revolution," American Economic Journal: Economic Policy, vol 9(3), pages 106-133.
Abstract: This paper examines how much carbon emissions from the electricity industry would decrease in response to a carbon price. We show how both carbon prices and cheap natural gas reduce, in a nearly identical manner, the historic cost advantage of coal-fired power plants. The shale revolution has resulted in unprecedented variation in natural gas prices that we use to estimate the short-run price elasticity of abatement. Our estimates imply that a price of $10 ($60) per ton of carbon dioxide would reduce emissions by 4% (10%). Furthermore, carbon prices are much more effective at reducing emissions when natural gas prices are low. In contrast, modest carbon prices have negligible effects when gas prices are at levels seen prior to the shale revolution.
Handle: RePEc:nbr:nberwo:20795
Template-Type: ReDIF-Paper 1.0
Title: Forward Guidance
Classification-JEL: E52; E58; G14
Author-Name: Lars E.O. Svensson
Author-Person: psv2
Note: EFG IFM ME
Number: 20796
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20796
File-URL: http://www.nber.org/papers/w20796.pdf
File-Format: application/pdf
Publication-Status: published as Lars E.O. Svensson, 2015. "Day One Keynote Address: Forward Guidance," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 19-64, September.
Abstract: Forward guidance about future policy settings, in the form of a published policy-rate path, has for many years been a natural part of normal monetary policy for several central banks, including the Reserve Bank of New Zealand and the Swedish Riksbank. More recently, the Federal Reserve has started to publish FOMC participants’ policy-rate projections. The Swedish, New Zealand, and U.S. experience of a published policy-rate path is examined, especially to what extent the market has anticipated the path (the predictability of the path) and to what extent market expectations line up with the path after publication (the credibility of the path). The recent Swedish experience is quite dramatic. In particular, it shows a case with a large discrepancy between a high and rising Riksbank path and a low and falling market path, with the market path providing a good forecast of the future policy rate. The discrepancy is explained by the Riksbank’s leaning against the wind in recent years and related circumstances. The New Zealand experience is less dramatic, but shows cases where the market implements either a substantially tighter or easier policy than intended by the RBNZ. There are also cases of the market being ahead of the RBNZ and the RBNZ later following the market. The U.S. experience includes a recent case of the market expecting and implementing substantially easier policy consistent with the FOMC projections, the possible explanation of which has been much discussed.
Handle: RePEc:nbr:nberwo:20796
Template-Type: ReDIF-Paper 1.0
Title: How Much Energy Do Building Energy Codes Really Save? Evidence from California
Classification-JEL: Q48
Author-Name: Arik Levinson
Author-Person: ple135
Note: EEE
Number: 20797
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20797
File-URL: http://www.nber.org/papers/w20797.pdf
File-Format: application/pdf
Publication-Status: published as Levinson, Arik. 2016. "How Much Energy Do Building Energy Codes Save? Evidence from California Houses." American Economic Review, 106 (10): 2867-94. DOI: 10.1257/aer.20150102
Abstract: Construction codes that regulate the energy efficiency of new buildings have been a centerpiece of US environmental policy for 40 years. California enacted the nation’s first energy building codes in 1978, and they were projected to reduce residential energy use—and associated pollution—by 80 percent. How effective have the building codes been? I take three approaches to answering that question. First, I compare current electricity use by California homes of different vintages constructed under different standards, controlling for home size, local weather, and tenant characteristics. Second, I examine how electricity in California homes varies with outdoor temperatures for buildings of different vintages. And third, I compare electricity use for buildings of different vintages in California, which has stringent building energy codes, to electricity use for buildings of different vintages in other states. All three approaches yield the same answer: there is no evidence that homes constructed since California instituted its building energy codes use less electricity today than homes built before the codes came into effect.
Handle: RePEc:nbr:nberwo:20797
Template-Type: ReDIF-Paper 1.0
Title: Bias in Cable News: Persuasion and Polarization
Classification-JEL: D72; D83; L82
Author-Name: Gregory J. Martin
Author-Name: Ali Yurukoglu
Author-Person: pyu85
Note: IO POL
Number: 20798
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20798
File-URL: http://www.nber.org/papers/w20798.pdf
File-Format: application/pdf
Publication-Status: published as Gregory J. Martin & Ali Yurukoglu, 2017. "Bias in Cable News: Persuasion and Polarization," American Economic Review, vol 107(9), pages 2565-2599.
Abstract: We measure the persuasive effects of slanted news and tastes for like-minded news, exploiting cable channel positions as exogenous shifters of cable news viewership. Channel positions do not correlate with demographics that predict viewership and voting, nor with local satellite viewership. We estimate that Fox News increases Republican vote shares by 0.3 points among viewers induced into watching 2.5 additional minutes per week by variation in position. We then estimate a model of voters who select into watching slanted news, and whose ideologies evolve as a result. We quantitatively assess media-driven polarization, and simulate alternative ideological slanting of news channels.
Handle: RePEc:nbr:nberwo:20798
Template-Type: ReDIF-Paper 1.0
Title: Intellectual Property Rights and Access to Innovation: Evidence from TRIPS
Classification-JEL: I10; O34
Author-Name: Margaret Kyle
Author-Person: pky20
Author-Name: Yi Qian
Note: PR
Number: 20799
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20799
File-URL: http://www.nber.org/papers/w20799.pdf
File-Format: application/pdf
Abstract: We examine the effect of pharmaceutical patent protection on the speed of drug launch, price, and quantity in 60 countries from 2000-2013. The World Trade Organization required its member countries to implement a minimum level of patent protection within a specified time period as part of the TRIPS Agreement. However, members retained the right to impose price controls and to issue compulsory licenses under certain conditions. These countervailing policies were intended to reduce the potential static losses that result from reduced competition during the patent term. We take advantage of the fact that at the product level, selection into TRIPS "treatment" is exogenously determined by compliance deadlines that vary across countries. We find that patents have important consequences for access to new drugs: in the absence of a patent, launch is unlikely. That is, even when no patent barrier exists, generic entry may not occur. Conditional on launch, patented drugs have higher prices but higher sales as well. The price premium associated with patents is smaller in poorer countries. Price discrimination across countries has increased for drugs patented post-TRIPS and prices are negatively related to the burden of disease, suggesting that countervailing policies to offset expected price increases may have had the intended effects.
Handle: RePEc:nbr:nberwo:20799
Template-Type: ReDIF-Paper 1.0
Title: Leveling Up: Early Results from a Randomized Evaluation of Post-Secondary Aid
Classification-JEL: H52; I21; I22; I23; I28; J24
Author-Name: Joshua Angrist
Author-Person: pan29
Author-Name: David Autor
Author-Person: pau9
Author-Name: Sally Hudson
Author-Name: Amanda Pallais
Note: CH ED LS PE
Number: 20800
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20800
File-URL: http://www.nber.org/papers/w20800.pdf
File-Format: application/pdf
Abstract: Does financial aid increase college attendance and completion? Selection bias and the high implicit tax rates imposed by overlapping aid programs make this question difficult to answer. This paper reports initial findings from a randomized evaluation of a large privately-funded scholarship program for applicants to Nebraska’s public colleges and universities. Our research design answers the challenges of aid evaluation with random assignment of aid offers and a strong first stage for aid received: randomly assigned aid offers increased aid received markedly. This in turn appears to have boosted enrollment and persistence, while also shifting many applicants from two- to four-year schools. Awards offered to nonwhite applicants, to those with relatively low academic achievement, and to applicants who targeted less-selective four-year programs (as measured by admissions rates) generated the largest gains in enrollment and persistence, while effects were much smaller for applicants predicted to have stronger post-secondary outcomes in the absence of treatment. Thus, awards enabled groups with historically-low college attendance to ‘level up,’ largely equalizing enrollment and persistence rates with traditionally college-bound peers, particularly at four-year programs. Awards offered to prospective community college students had little effect on college enrollment or the type of college attended.
Handle: RePEc:nbr:nberwo:20800
Template-Type: ReDIF-Paper 1.0
Title: Illegal Immigration, State Law, and Deterrence
Classification-JEL: J6; K37
Author-Name: Mark Hoekstra
Author-Person: pho613
Author-Name: Sandra Orozco-Aleman
Note: LE LS
Number: 20801
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20801
File-URL: http://www.nber.org/papers/w20801.pdf
File-Format: application/pdf
Publication-Status: published as Mark Hoekstra & Sandra Orozco-Aleman, 2017. "Illegal Immigration, State Law, and Deterrence," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 228-252, May.
Abstract: A critical immigration policy question is whether state and federal policy can deter undocumented workers from entering the U.S. We examine whether Arizona SB 1070, arguably the most restrictive and controversial state immigration law ever passed, deterred entry into Arizona. We do so by exploiting a unique data set from a survey of undocumented workers passing through Mexican border towns on their way to the U.S. Results indicate the bill’s passage reduced the flow of undocumented immigrants into Arizona by 30 to 70 percent, suggesting that undocumented workers from Mexico are responsive to changes in state immigration policy. In contrast, we find no evidence that the law induced undocumented immigrants already in Arizona to return to Mexico.
Handle: RePEc:nbr:nberwo:20801
Template-Type: ReDIF-Paper 1.0
Title: Income-based Inequality in Educational Outcomes: Learning from State Longitudinal Data Systems
Classification-JEL: I2; I21; I24; I28
Author-Name: John P. Papay
Author-Name: Richard J. Murnane
Author-Person: pmu87
Author-Name: John B. Willett
Note: CH ED
Number: 20802
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20802
File-URL: http://www.nber.org/papers/w20802.pdf
File-Format: application/pdf
Publication-Status: published as J. P. Papay & R. J. Murnane & J. B. Willett, 2015. "Income-Based Inequality in Educational Outcomes: Learning From State Longitudinal Data Systems," Educational Evaluation and Policy Analysis, vol 37(1 Suppl), pages 29S-52S.
Abstract: We report results from our long-standing research partnership with the Massachusetts Department of Elementary and Secondary Education. We make two primary contributions. First, we illustrate the wide range of informative analyses that can be conducted using a state longitudinal data system and the advantages of examining evidence from multiple cohorts of students. Second, we document large income-based gaps in educational attainments, including high-school graduation rates and college-going. Importantly, we show that income-related gaps in both educational credentials and academic skill have narrowed substantially over the past several years in Massachusetts.
Handle: RePEc:nbr:nberwo:20802
Template-Type: ReDIF-Paper 1.0
Title: International Credit Flows and Pecuniary Externalities
Classification-JEL: F32; F43; G15; O41
Author-Name: Markus K. Brunnermeier
Author-Person: pbr31
Author-Name: Yuliy Sannikov
Note: AP EFG IFM ITI
Number: 20803
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20803
File-URL: http://www.nber.org/papers/w20803.pdf
File-Format: application/pdf
Publication-Status: published as Markus K. Brunnermeier & Yuliy Sannikov, 2015. "International Credit Flows and Pecuniary Externalities," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 297-338, January.
Publication-Status: published as International Credit Flows and Pecuniary Externalities, Markus K. Brunnermeier, Yuliy Sannikov. in Lessons from the Financial Crisis for Monetary Policy, Gertler. 2015
Abstract: This paper develops a dynamic two-country neoclassical stochastic growth model with incomplete markets. Short-term credit flows can be excessive and reverse suddenly. The equilibrium outcome is constrained inefficient due to pecuniary externalities. First, an undercapitalized country borrows too much since each firm does not internalize that an increase in production capacity undermines their output price, worsening their terms of trade. From an ex-ante perspective each firm undermines the natural “terms of trade hedge.” Second, sudden stops and fire sales lead to sharp price drops of illiquid capital. Capital controls or domestic macro-prudential measures that limit short-term borrowing can improve welfare.
Handle: RePEc:nbr:nberwo:20803
Template-Type: ReDIF-Paper 1.0
Title: Efficacy vs. Equity: What Happens When States Tinker with College Admissions in a Race-Blind Era?
Classification-JEL: I21; I23; I24; J15; J18
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Kalena E. Cortes
Author-Name: Jane Arnold Lincove
Note: ED
Number: 20804
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20804
File-URL: http://www.nber.org/papers/w20804.pdf
File-Format: application/pdf
Publication-Status: published as Efficacy Versus Equity: What Happens When States Tinker With College Admissions in a Race-Blind Era? Sandra E. Black, Kalena E. Cortes, Jane Arnold Lincove Educational Evaluation and Policy Analysis Vol 38, Issue 2, pp. 336 - 363 First Published June 1, 2016 https://doi.org/10.3102/0162373716629006
Abstract: College admissions officers face a rapidly changing policy environment where court decisions have limited the use of affirmative action. At the same time, there is mounting evidence that commonly used signals of college readiness, such as the SAT/ACTs, are subject to race and socioeconomic bias. Our study investigates the efficacy and equity of college admissions criteria by estimating the effect of multiple measures of college readiness on freshman college grade point average and four-year graduation. Importantly, we take advantage of a unique institutional feature of the Texas higher education system to control for selection into admissions and enrollment. We find that SAT/ACT scores, high school exit exams, and advanced coursework are predictors of student success in college. However, when we simulate changes in college enrollment and college outcomes with additional admissions criteria, we find that adding SAT/ACT or high school exit exam criteria to a rank-based admissions policy significantly decreases enrollment among minorities and other groups, with the most negative effects generated by the SAT/ACT, while inducing only minimal gains in college GPA and four-year graduation rates.
Handle: RePEc:nbr:nberwo:20804
Template-Type: ReDIF-Paper 1.0
Title: Capital Controls or Macroprudential Regulation?
Classification-JEL: E44; F34; F41
Author-Name: Anton Korinek
Author-Person: pko142
Author-Name: Damiano Sandri
Note: EFG IFM
Number: 20805
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20805
File-URL: http://www.nber.org/papers/w20805.pdf
File-Format: application/pdf
Publication-Status: published as Capital Controls or Macroprudential Regulation?, Anton Korinek, Damiano Sandri. in NBER International Seminar on Macroeconomics 2015, Devereux, Giavazzi, and West. 2016
Publication-Status: published as Korinek, Anton & Sandri, Damiano, 2016. "Capital controls or macroprudential regulation?," Journal of International Economics, Elsevier, vol. 99(S1), pages S27-S42.
Abstract: We examine the effectiveness of capital controls versus macroprudential regulation in reducing financial fragility in a small open economy model in which there is excessive borrowing because of externalities associated with financial crises and contractionary exchange rate depreciations. We find that both types of instruments play distinct roles: macroprudential regulation reduces the indebtedness of leveraged borrowers whereas capital controls induce more precautionary behavior for the economy as a whole, including for savers. This reduces crisis risk by shoring up aggregate net worth and mitigating the transfer problem that occurs during crises. In advanced countries where the risk of large contractionary depreciations is more limited, the role for capital controls subsides. However, macroprudential regulation remains essential in our model to mitigate booms and busts in asset prices.
Handle: RePEc:nbr:nberwo:20805
Template-Type: ReDIF-Paper 1.0
Title: The Welfare State and Migration: A Dynamic Analysis of Political Coalitions
Classification-JEL: F22; H0
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Efraim Sadka
Author-Person: psa492
Author-Name: Benjarong Suwankiri
Note: IFM
Number: 20806
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20806
File-URL: http://www.nber.org/papers/w20806.pdf
File-Format: application/pdf
Publication-Status: published as Suwankiri, Benjarong & Razin, Assaf & Sadka, Efraim, 2016. "The welfare state and migration: A dynamic analysis of political coalitions," Research in Economics, Elsevier, vol. 70(1), pages 122-142.
Abstract: We develop a dynamic political-economic theory of welfare state and immigration policies, featuring three distinct voting groups: skilled workers, unskilled workers, and old retirees. The essence of inter- and intra-generational redistribution of a typical welfare system is captured with a proportional tax on labor income to finance a transfer in a balanced-budget manner. We characterize political-economic equilibrium policy rules consisting of the tax rate, the skill composition of migrants, and the total number of migrants. When none of these groups enjoy a majority (50 percent of the voters or more), political coalitions will form. With overlapping generations and policy-determined influx of immigrants, the formation of the political coalitions changes over time. These future changes are taken into account when policies are shaped. The paper characterizes the evolution of the political coalitions that implement welfare state and migration policies.
Handle: RePEc:nbr:nberwo:20806
Template-Type: ReDIF-Paper 1.0
Title: Quantifying Confidence
Classification-JEL: E0
Author-Name: George-Marios Angeletos
Author-Person: pan143
Author-Name: Fabrice Collard
Author-Person: pco44
Author-Name: Harris Dellas
Author-Person: pde139
Note: EFG ME
Number: 20807
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20807
File-URL: http://www.nber.org/papers/w20807.pdf
File-Format: application/pdf
Publication-Status: published as George‐Marios Angeletos & Fabrice Collard & Harris Dellas, 2018. "Quantifying Confidence," Econometrica, Econometric Society, vol. 86(5), pages 1689-1726, September.
Abstract: We develop a tractable method for augmenting macroeconomic models with autonomous variation in higher-order beliefs. We use this to accommodate a certain type of waves of optimism and pessimism that can be interpreted as the product of frictional coordination and, unlike the one featured in the news literature, regards the short-term economic outlook rather than the medium- to long-run prospects. We show that this enrichment provides a parsimonious explanation of salient features of the data; it accounts for a significant fraction of the business-cycle volatility in estimated models that allow for various competing structural shocks; and it captures a type of fluctuations that have a Keynesian flavor but do not rely on nominal rigidities.
Handle: RePEc:nbr:nberwo:20807
Template-Type: ReDIF-Paper 1.0
Title: Who Loses Under Power Plant Cap-and-Trade Programs?
Classification-JEL: Q28; Q38; Q5
Author-Name: E. Mark Curtis
Author-Person: pcu176
Note: EEE
Number: 20808
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20808
File-URL: http://www.nber.org/papers/w20808.pdf
File-Format: application/pdf
Publication-Status: published as Who Loses under Cap-and-Trade Programs? The Labor Market Effects of the NOx Budget Trading Program E. Mark Curtis Posted Online March 02, 2018 https://doi.org/10.1162/REST_a_00680
Abstract: This paper tests how a major cap-and-trade program, known as the NOx Budget Trading Program (NBP), impacted labor markets in the regions where it was implemented. The cap-and-trade program dramatically decreased levels of NOx emissions and added substantial costs to energy producers. Using a triple-differences approach that takes advantage of the geographic and time variation of the program as well as variation in industry energy-intensity levels, I examine how employment dynamics changed in manufacturing industries whose production process requires high levels of energy. After accounting for a variety of flexible state, county and industry trends, I find that employment in the manufacturing sector dropped by 1.3% as a result of the NBP. Young workers experienced the largest employment declines and earnings of newly hired workers fell after the regulation began. Employment declines are shown to have occurred primarily through decreased hiring rates rather than increased separation rates, thus mitigating the impact on incumbent workers.
Handle: RePEc:nbr:nberwo:20808
Template-Type: ReDIF-Paper 1.0
Title: Does Information Feedback from In-Home Devices Reduce Electricity Use? Evidence from a Field Experiment
Classification-JEL: D03; D12; L94; Q30; Q40; Q54
Author-Name: Shahzeen Z. Attari
Author-Name: Gautam Gowrisankaran
Author-Name: Troy Simpson
Author-Name: Sabine M. Marx
Note: EEE IO
Number: 20809
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20809
File-URL: http://www.nber.org/papers/w20809.pdf
File-Format: application/pdf
Abstract: There is limited evidence of behavioral changes resulting from electricity information feedback. Using a randomized control trial from a New York apartment building, we study long-term effects of information feedback from “Modlet” in-home devices, which provide near-real-time plug-level information. We find a 12–23% decrease in electricity use for treatment apartments, concentrated among individuals reporting higher willingness-to-pay for an energy monitoring system. Decrease in overall electricity use is similar among treatment apartments which received Modlets and those which declined Modlets, and does not specifically occur for outlets with Modlets. This decrease may be due to a Hawthorne or salience effect.
Handle: RePEc:nbr:nberwo:20809
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Youth Employment: Evidence from New York City Summer Youth Employment Program Lotteries
Classification-JEL: J08; J13; J18; J21; J24; J45; J48
Author-Name: Alexander Gelber
Author-Name: Adam Isen
Author-Name: Judd B. Kessler
Note: CH LS PE EH
Number: 20810
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20810
File-URL: http://www.nber.org/papers/w20810.pdf
File-Format: application/pdf
Publication-Status: published as Alexander Gelber, Adam Isen, Judd B. Kessler; The Effects of Youth Employment: Evidence from New York City Lotteries , The Quarterly Journal of Economics, Volume 131, Issue 1, 1 February 2016, Pages 423–460, https://doi.org/10.1093/qje/qjv034
Abstract: Programs to encourage labor market activity among youth, including public employment programs and wage subsidies like the Work Opportunity Tax Credit, can be supported by three broad rationales. They may: (1) provide contemporaneous income support to participants; (2) encourage work experience that improves future employment and/or educational outcomes of participants; and/or (3) keep participants “out of trouble.” We study randomized lotteries for access to New York City's Summer Youth Employment Program (SYEP), the largest summer youth employment program in the U.S., by merging SYEP administrative data on 294,580 lottery participants to IRS data on the universe of U.S. tax records and to New York State administrative incarceration data. In assessing the three rationales, we find that: (1) SYEP participation causes average earnings and the probability of employment to increase in the year of program participation, with modest contemporaneous crowdout of other earnings and employment; (2) SYEP participation causes a moderate decrease in average earnings for three years following the program and has no impact on college enrollment; and (3) SYEP participation decreases the probability of incarceration and decreases the probability of mortality, which has important and potentially pivotal implications for analyzing the net benefits of the program.
Handle: RePEc:nbr:nberwo:20810
Template-Type: ReDIF-Paper 1.0
Title: The Roles of Cognitive and Non-Cognitive Skills in Moderating the Effects of Mixed-Ability Schools on Long-Term Health
Classification-JEL: C21; C26; I12; I28
Author-Name: Anirban Basu
Author-Person: pba977
Author-Name: Andrew M. Jones
Author-Person: pjo98
Author-Name: Pedro Rosa Dias
Author-Person: pro760
Note: CH ED EH
Number: 20811
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20811
File-URL: http://www.nber.org/papers/w20811.pdf
File-Format: application/pdf
Abstract: We examine heterogeneity in the impacts of exposure to mixed-ability ‘comprehensive’ schools in adolescence on long-term health and smoking behaviour. We explore the roles that cognitive and non-cognitive skills may play in moderating these impacts. We use data from the 1958 National Child Development Study (NCDS) cohort, whose secondary schooling years lay within the transition years of a major reform that transformed secondary education in England and Wales from a selective system of schooling to mixed-ability comprehensive schools. We adopt a local instrumental variables approach to estimate person-centred treatment (PeT) effects of comprehensive over selective schooling system. Our results indicate that the newer comprehensive schooling system produced significant negative effects on long-term health and increased smoking behavior among a small fraction of individuals, for whom the effects were persistent over time. The ATE and TT were quantitatively similar and statistically insignificant indicating that cognitive abilities, the major driver for selection in to comprehensive schools, did not moderate the effects. The PeT effects indicate that individuals with lower non-cognitive skills were most likely to be negatively affected by exposure to mixed-ability schools. Our results also show that cigarette smoking could be a leading transmission channel of the long-term impact on health outcomes.
Handle: RePEc:nbr:nberwo:20811
Template-Type: ReDIF-Paper 1.0
Title: Measuring Consumer Valuation of Limited Provider Networks
Classification-JEL: I10; I11; I13; L14
Author-Name: Keith Marzilli Ericson
Author-Name: Amanda Starc
Note: AG EH IO
Number: 20812
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20812
File-URL: http://www.nber.org/papers/w20812.pdf
File-Format: application/pdf
Publication-Status: published as Keith Marzilli Ericson & Amanda Starc, 2015. "Measuring Consumer Valuation of Limited Provider Networks," American Economic Review, American Economic Association, vol. 105(5), pages 115-19, May.
Abstract: We measure provider coverage networks for plans on the Massachusetts health insurance exchange using a two measures: consumer surplus from a hospital demand system and the fraction of population hospital admissions that would be covered by the network. The two measures are highly correlated, and show a wide range of networks available to consumers. We then estimate consumer willingness-to-pay for network breadth, which varies by age. 60-year-olds value the broadest network approximately $1200-1400/year more than the narrowest network, while 30-year-olds value it about half as much. Consumers place additional value on star hospitals, and there is significant geographic heterogeneity in the value of network breadth.
Handle: RePEc:nbr:nberwo:20812
Template-Type: ReDIF-Paper 1.0
Title: Trading on Sunspots
Classification-JEL: E32; G1
Author-Name: Boyan Jovanovic
Author-Name: Viktor Tsyrennikov
Author-Person: pts34
Note: AP EFG
Number: 20813
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20813
File-URL: http://www.nber.org/papers/w20813.pdf
File-Format: application/pdf
Publication-Status: published as Boyan Jovanovic & Viktor Tsyrennikov, 2022. "Trading on Sunspots," American Economic Review, vol 112(12), pages 3970-3994.
Abstract: In a model with multiple Pareto-ranked equilibria we add trade in assets that pay based on the realization of a sunspot. Asset trading restricts the equilibrium set in a way that raises welfare by eliminating equilibria with a high likelihood of disasters. When the probability of a disaster is high enough, the coordination game becomes like a prisoner’s dilemma situation in which the high-output equilibrium disappears because the portfolios that agents choose induce them to produce less. We derive an upper bound on the disaster probability, we derive asset pricing implications including the disaster premium, and we study the effect on stock prices of news shocks to beliefs.
Handle: RePEc:nbr:nberwo:20813
Template-Type: ReDIF-Paper 1.0
Title: Four Centuries of Return Predictability
Classification-JEL: G12; G17; N2
Author-Name: Benjamin Golez
Author-Name: Peter Koudijs
Note: AP
Number: 20814
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20814
File-URL: http://www.nber.org/papers/w20814.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin Golez & Peter Koudijs, 2017. "Four centuries of return predictability," Journal of Financial Economics, .
Abstract: We combine annual stock market data for the most important equity markets of the last four centuries: the Netherlands/U.K. (1629-1812), U.K. (1813-1870) and U.S. (1871-2015). We show that dividend yields are stationary and consistently forecast returns. The documented predictability holds for annual and multi-annual horizons and works both in and out-of-sample, providing strong evidence that expected returns in stock markets are time-varying. Much of this variation is related to the business cycle, with expected returns increasing in recessions. We also find that, except for the period after 1945, dividend yields predict dividend growth rates.
Handle: RePEc:nbr:nberwo:20814
Template-Type: ReDIF-Paper 1.0
Title: Common Factors in Return Seasonalities
Classification-JEL: G12
Author-Name: Matti Keloharju
Author-Person: pke264
Author-Name: Juhani T. Linnainmaa
Author-Name: Peter Nyberg
Note: AP
Number: 20815
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20815
File-URL: http://www.nber.org/papers/w20815.pdf
File-Format: application/pdf
Abstract: A strategy that selects stocks based on their historical same-calendar-month returns earns an average return of 13% per year. We document similar return seasonalities in anomalies, commodities, international stock market indices, and at the daily frequency. The seasonalities overwhelm unconditional differences in expected returns. The correlations between different seasonality strategies are modest, suggesting that they emanate from different common factors. Our results suggest that seasonalities are not a distinct class of anomalies that requires an explanation of its own---rather, they are intertwined with other return anomalies through shared common factors. A theory that is able to explain the risks behind any common factor is thus likely able to explain a part of the seasonalities.
Handle: RePEc:nbr:nberwo:20815
Template-Type: ReDIF-Paper 1.0
Title: Field of Study, Earnings, and Self-Selection
Classification-JEL: C31; J24; J31
Author-Name: Lars Kirkebøen
Author-Person: pki408
Author-Name: Edwin Leuven
Author-Person: ple65
Author-Name: Magne Mogstad
Author-Person: pmo570
Note: LS
Number: 20816
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20816
File-URL: http://www.nber.org/papers/w20816.pdf
File-Format: application/pdf
Publication-Status: published as Lars J. Kirkeboen & Edwin Leuven & Magne Mogstad, 2016. "Field of Study, Earnings, and Self-Selection," The Quarterly Journal of Economics, vol 131(3), pages 1057-1111.
Abstract: Why do individuals choose different types of post-secondary education, and what are the labor market consequences of those choices? We show that answering these questions is difficult because individuals choose between several unordered alternatives. Even with a valid instrument for every type of education, instrumental variables estimation of the payoffs require information about individuals’ ranking of education types or strong additional assumptions, like constant effects or restrictive preferences. These identification results motivate and guide our empirical analysis of the choice of and payoff to field of study. Our context is Norway’s post-secondary education system where a centralized admission process covers almost all universities and colleges. This process creates credible instruments from discontinuities which effectively randomize applicants near unpredictable admission cutoffs into different fields of study. At the same time, it provides us with strategy-proof measures of individuals’ ranking of fields. Taken together, this allows us to estimate the payoffs to different fields while correcting for selection bias and keeping the next-best alternatives as measured at the time of application fixed. We find that different fields have widely different payoffs, even after accounting for institutional differences and quality of peer groups. For many fields the payoffs rival the college wage premiums, suggesting the choice of field is potentially as important as the decision to enroll in college. The estimated payoffs are consistent with individuals choosing fields in which they have comparative advantage. We also test and reject assumptions of constant effects or restrictive preferences, suggesting that information on next-best alternatives is essential to identify payoffs to field of study.
Handle: RePEc:nbr:nberwo:20816
Template-Type: ReDIF-Paper 1.0
Title: Monetary Shocks in Models with Inattentive Producers
Classification-JEL: E12; E5
Author-Name: Fernando Alvarez
Author-Name: Francesco Lippi
Author-Person: pli62
Author-Name: Luigi Paciello
Author-Person: ppa391
Note: EFG ME
Number: 20817
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20817
File-URL: http://www.nber.org/papers/w20817.pdf
File-Format: application/pdf
Publication-Status: published as Fernando E. Alvarez & Francesco Lippi & Luigi Paciello, 2016. "Monetary Shocks in Models with Inattentive Producers," The Review of Economic Studies, vol 83(2), pages 421-459.
Abstract: We study models where prices respond slowly to shocks because firms are rationally inattentive. Producers must pay a cost to observe the determinants of the current profit maximizing price, and hence observe them infrequently. To generate large real effects of monetary shocks in such a model the time between observations must be long and/or highly volatile. Previous work on rational inattentiveness has allowed for observation intervals which are either constant-but-long (e.g. Caballero (1989) or Reis (2006)) or volatile-but-short (e.g. Reis’s (2006) example where observation costs are negligible), but not both. In these models, the real effects of monetary policy are small for realistic values of the average time between observations. We show that non- negligible observation costs produce both these effects: intervals between observations are both infrequent and volatile. This generates large real effects of monetary policy for realistic values of the average time between observations.
Handle: RePEc:nbr:nberwo:20817
Template-Type: ReDIF-Paper 1.0
Title: Can Health Insurance Competition Work? Evidence from Medicare Advantage
Classification-JEL: D43; I11; I13; L13; L33; L51
Author-Name: Vilsa Curto
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Jonathan Levin
Author-Person: ple318
Author-Name: Jay Bhattacharya
Note: EH IO PE
Number: 20818
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20818
File-URL: http://www.nber.org/papers/w20818.pdf
File-Format: application/pdf
Publication-Status: published as Vilsa Curto & Liran Einav & Jonathan Levin & Jay Bhattacharya, 2021. "Can Health Insurance Competition Work? Evidence from Medicare Advantage," Journal of Political Economy, vol 129(2), pages 570-606.
Abstract: We estimate the economic surplus created by Medicare Advantage under its reformed competitive bidding rules. We use data on the universe of Medicare beneficiaries, and develop a model of plan bidding that accounts for both market power and risk selection. We find that private plans have costs around 12% below fee-for-service costs, and generate around $50 dollars in surplus on average per enrollee-month, after accounting for the disutility due to enrollees having more limited choice of providers. Taxpayers provide a large additional subsidy, and insurers capture most of the private gains. We use the model to evaluate possible program changes.
Handle: RePEc:nbr:nberwo:20818
Template-Type: ReDIF-Paper 1.0
Title: Price Setting in Online Markets: Does IT Click?
Classification-JEL: E3
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Viacheslav Sheremirov
Author-Name: Oleksandr Talavera
Author-Person: pta65
Note: EFG IFM ME
Number: 20819
Creation-Date: 2014-12
Order-URL: http://www.nber.org/papers/w20819
File-URL: http://www.nber.org/papers/w20819.pdf
File-Format: application/pdf
Publication-Status: published as Yuriy Gorodnichenko & Viacheslav Sheremirov & Oleksandr Talavera, 2018. "Price Setting in Online Markets: Does IT Click?," Journal of the European Economic Association, vol 16(6), pages 1764-1811.
Abstract: Using a unique dataset of daily U.S. and U.K. price listings and the associated number of clicks for precisely defined goods from a major shopping platform, we shed new light on how prices are set in online markets, which have a number of special properties such as low search costs, low costs of monitoring competitors' prices, and low costs of nominal price adjustment. We document that although online prices are more flexible than offline prices, they continue to exhibit relatively long spells of fixed prices, large size and low synchronization of price changes, considerable cross-sectional dispersion, and low sensitivity to predictable or unanticipated changes in demand conditions. Qualitatively these patterns are similar to those observed for offline prices, which calls for more research on the sources of price rigidities and dispersion.
Handle: RePEc:nbr:nberwo:20819