TY - JOUR
AU - Kazianga,Harounan
AU - Levy,Dan
AU - Linden,Leigh L.
AU - Sloan,Matt
TI - The Effects of “Girl-Friendly” Schools: Evidence from the BRIGHT School Construction Program in Burkina Faso
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18115
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18115
L1 - http://www.nber.org/papers/w18115.pdf
N1 - Author contact info:
Harounan Kazianga
Department of Economics
Oklahoma State University
Business 324
Stillwater, OK 74078
Tel: (405) 744-5110
E-Mail: harounan.kazianga@okstate.edu
Dan Levy
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
E-Mail: dan_levy@harvard.edu
Leigh L. Linden
Department of Economics
The Univesrity of Texas at Austin
2225 Speedway
BRB 1.116, C3100
Austin, Texas 78712
Tel: (512) 475-8556
E-Mail: leigh.linden@austin.utexas.edu
Matthew Sloan
Mathematica Policy Research
1100 1st Street, NE, 12th Floor
Washington, DC 20002-4221
E-Mail: MSloan@Mathematica-Mpr.com
AB - We evaluate the causal effects of a program that constructed high quality “girl-friendly” primary schools in Burkina Faso, using a regression discontinuity design 2.5 years after the program started. We find that the program increased enrollment of all children between the ages of 5 and 12 by 20 percentage points and increased their test scores by 0.45 standard deviations. The change in test scores for those children caused to attend school by the program is 2.2 standard deviations. We also find that the program was particularly effective for girls, increasing their enrollment rate by 5 percentage points more than boys’, although this did not translate into a differential effect on test scores. Disentangling the effects of school access from the unique characteristics of the new schools, we find that the unique characteristics were responsible for a 13 percentage point increase in enrollment and 0.35 standard deviations in test scores, while simply providing a school increased enrollment by 26.5 percentage points and test scores by 0.323 standard deviations. The unique characteristics of the school account for the entire difference in the treatment effect by gender.
ER -
TY - JOUR
AU - Benhabib,Jess
AU - Evans,George W.
AU - Honkapohja,Seppo
TI - Liquidity Traps and Expectation Dynamics: Fiscal Stimulus or Fiscal Austerity?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18114
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18114
L1 - http://www.nber.org/papers/w18114.pdf
N1 - Author contact info:
Jess Benhabib
Department of Economics
New York University
19 West 4th Street, 6th Floor
New York, NY 10012
Tel: 212/998-8971
Fax: 212/995-4186
E-Mail: jess.benhabib@nyu.edu
George Evans
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4662
Fax: 541/346-1243
E-Mail: gevans@uoregon.edu
Seppo Honkapohja
Bank of Finland
Finland
E-Mail: Seppo.Honkapohja@bof.fi
AB - We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), the intended steady state is locally but not globally stable. Unstable deflationary paths emerge after large pessimistic shocks to expectations. For large expectation shocks that push interest rates to the zero bound, a temporary fiscal stimulus or a policy of fiscal austerity, appropriately tailored in magnitude and duration, will insulate the economy from deflation traps. However "fiscal switching rules" that automatically kick in without discretionary fine tuning can be equally effective.
ER -
TY - JOUR
AU - Ossa,Ralph
TI - Why Trade Matters After All
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18113
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18113
L1 - http://www.nber.org/papers/w18113.pdf
N1 - Author contact info:
Ralph Ossa
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-8907
E-Mail: ralph.ossa@chicagobooth.edu
AB - I show that accounting for cross-industry variation in trade elasticities greatly magnifies the estimated gains from trade. The main idea is as simple as it is general: While imports in the average industry do not matter too much, imports in some industries are critical to the functioning of the economy, so that a complete shutdown of international trade is very costly overall.
ER -
TY - JOUR
AU - Glaeser,Edward L.
TI - The Political Risks of Fighting Market Failures: Subversion, Populism and the Government Sponsored Enterprises
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18112
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18112
L1 - http://www.nber.org/papers/w18112.pdf
N1 - Author contact info:
Edward L. Glaeser
Department of Economics
315A Littauer Center
Harvard University
Cambridge, MA 02138
Tel: 617/495-0575
Fax: 617/495-7730
E-Mail: eglaeser@harvard.edu
AB - There are many possible ways of reforming the Government-Sponsored Enterprises that insure mortgages against default, including a purely public option, complete privatization or a hybrid model with private firms and public catastrophic insurance. If the government is sufficiently capable and benign, either public intervention can yield desirable outcomes; the key risks of any reform come from the political process. This paper examines the political risks, related to corruption and populism, of differing approaches to the problems of monopoly, externalities and market breakdowns in asset insurance. If there is a high probability that political leadership will be induced to pursue policies that maximize the profitability of private entities at the expense of taxpayers, then purely public options create lower social losses. If there is a high probability that leaders will pursue a populist agenda of lowering prices or borrowing costs, then catastrophic risk insurance can lead to lower social losses than either complete laissez-faire of a pure public option.
ER -
TY - JOUR
AU - Pope,Devin G.
AU - Pope,Jaren C.
TI - When Walmart Comes to Town: Always Low Housing Prices? Always?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18111
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18111
L1 - http://www.nber.org/papers/w18111.pdf
N1 - Author contact info:
Devin G. Pope
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-2297
Fax: 773/702-0458
E-Mail: devin.pope@chicagobooth.edu
Jaren Pope
Brigham Young University
Department of Economics
E-Mail: jaren_pope@byu.edu
AB - Walmart often faces strong local opposition when trying to build a new store. Opponents often claim that Walmart lowers nearby housing prices. In this study we use over one million housing transactions located near 159 Walmarts that opened between 2000 and 2006 to test if the opening of a Walmart does indeed lower housing prices. Using a difference-in-differences specification, our estimates suggest that a new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within 0.5 miles of the store and by 1 to 2 percent for houses located between 0.5 and 1 mile.
ER -
TY - JOUR
AU - Albouy,David
AU - Ehrlich,Gabriel
TI - Metropolitan Land Values and Housing Productivity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18110
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18110
L1 - http://www.nber.org/papers/w18110.pdf
N1 - Author contact info:
David Albouy
Department of Economics
University of Michigan
611 Tappan Street
351C Lorch Hall
Ann Arbor, MI 48109-1220
Tel: 734/763-9619
E-Mail: albouy@umich.edu
Gabriel Ehrlich
Department of Economics
University of Michigan
611 Tappan St
Ann Arbor, MI 48109-1220
E-Mail: gehrlich@umich.edu
AB - We present the first nationwide index of directly-measured land values by metropolitan area and investigate their relationship with housing prices. Construction prices and geographic and regulatory constraints are shown to increase the cost of housing relative to land. On average, approximately one-third of housing costs are due to land, with an increasing share in higher-value areas, implying an elasticity of substitution between land and other inputs of about one-half. Conditional on land and construction prices, housing productivity is relatively low in larger cities. The increase in housing costs associated with greater regulation appears to outweigh any benefits from improved quality-of-life.
ER -
TY - JOUR
AU - Kowalski,Amanda E.
TI - Estimating the Tradeoff Between Risk Protection and Moral Hazard with a Nonlinear Budget Set Model of Health Insurance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18108
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18108
L1 - http://www.nber.org/papers/w18108.pdf
N1 - Author contact info:
Amanda E. Kowalski
Department of Economics
Yale University
37 Hillhouse Avenue
Box 208264
New Haven, CT 06520
Tel: 203/432-3521
E-Mail: amanda.kowalski@yale.edu
AB - Insurance induces a well-known tradeoff between the welfare gains from risk protection and the welfare losses from moral hazard. Empirical work traditionally estimates each side of the tradeoff separately, potentially yielding mutually inconsistent results. I develop a nonlinear budget set model of health insurance that allows for the calculation of both sides of the tradeoff simultaneously, allowing for a relationship between moral hazard and risk protection. An important feature of this model is that it considers nonlinearities in the consumer budget set that arise from deductibles, coinsurance rates, and stoplosses that alter moral hazard as well as risk protection relative to no insurance. I illustrate the properties of my model by estimating it using data on employer sponsored health insurance from a large firm. Within my empirical context, the average deadweight losses from moral hazard substantially outweigh the average welfare gains from risk protection. However, the welfare impact of moral hazard and risk protection are both small relative to transfers from the government through the tax preference for employer sponsored health insurance and transfers from some agents to other agents through a common premium.
ER -
TY - JOUR
AU - Desai,Mihir A.
AU - Foley,C. Fritz
AU - Hines,James R.,Jr.
TI - Trade Credit and Taxes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18107
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18107
L1 - http://www.nber.org/papers/w18107.pdf
N1 - Author contact info:
Mihir A. Desai
Graduate School of Business Administration
Harvard University
Soldiers Field
Boston, MA 02163
Tel: 617/495-6693
Fax: 617/496-6592
E-Mail: mdesai@hbs.edu
C. Fritz Foley
Graduate School of Business Administration
Harvard University
Soldiers Field
Boston, MA 02163
Tel: 617/495-6375
Fax: 617/496-8443
E-Mail: ffoley@hbs.edu
James R. Hines
Department of Economics
University of Michigan
343 Lorch Hall
611 Tappan Street
Ann Arbor, MI 48109-1220
Tel: 734/764-2320
Fax: 734/764-2769
E-Mail: jrhines@umich.edu
AB - This paper analyzes the extent to which firms use trade credit to reallocate capital in response to tax incentives. Tax-induced differences in pretax returns encourage the use of trade credit to reallocate capital from firms facing low tax rates to those facing high tax rates. Evidence from the worldwide operations of U.S. multinational firms indicates that affiliates in low-tax jurisdictions use trade credit to lend, whereas those in high-tax jurisdictions use trade credit to borrow: ten percent lower local tax rates are associated with net trade credit positions that are 1.4 percent higher as a fraction of sales. The use of trade credit to get capital out of low-tax, low-return environments is also illustrated by reactions of U.S. firms to the temporary repatriation tax holiday in 2005, when affiliates with positive net trade credit positions were significantly more likely than others to repatriate dividends to parent companies in the United States.
ER -
TY - JOUR
AU - Juhn,Chinhui
AU - Ujhelyi,Gergely
AU - Villegas-Sanchez,Carolina
TI - Men, Women, and Machines: How Trade Impacts Gender Inequality
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18106
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18106
L1 - http://www.nber.org/papers/w18106.pdf
N1 - Author contact info:
Chinhui Juhn
Department of Economics
University of Houston
Houston, TX 77204-5882
Tel: 713/743-3823
Fax: 713/743-3798
E-Mail: cjuhn@uh.edu
Gergely Ujhelyi
University of Houston
Economics Department
Houston, TX 77204
E-Mail: gujhelyi@uh.edu
Carolina Villegas-Sanchez
ESADE-Universitat Ramon Llul
Av.Pedralbes, 60-62
E-08034 Barcelona, Spain
E-Mail: carolina.villegas@esade.edu
AB - This paper studies the effect of trade liberalization on an under-explored aspect of wage inequality – gender inequality. We consider a model where firms differ in their productivity and workers are differentiated by skill as well as gender. A reduction in tariffs induces more productive firms to modernize their technology and enter the export market. New technologies involve computerized production processes and lower the need for physically demanding skills. As a result, the relative wage and employment of women improves in blue-collar tasks, but not in white-collar tasks. We test our model using a panel of establishment level data from Mexico exploiting tariff reductions associated with the North American Free Trade Agreement (NAFTA). Consistent with our theory we find that tariff reductions caused new firms to enter the export market, update their technology and replace male blue-collar workers with female blue-collar workers.
ER -
TY - JOUR
AU - Mahoney,Neale
TI - Bankruptcy as Implicit Health Insurance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18105
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18105
L1 - http://www.nber.org/papers/w18105.pdf
N1 - Author contact info:
Neale Mahoney
RWJF Scholar in Health Policy Research
1730 Cambridge Street, S410
Cambridge, MA 02138
Tel: 617/495-5366
E-Mail: neale.mahoney@gmail.com
AB - This paper examines the implicit health insurance households receive from the ability to declare bankruptcy. Exploiting cross-state and within-state variation in asset exemption law, I show that uninsured households with greater seizable assets make higher out-of-pocket medical payments, conditional on the amount of care received. In turn, I find that households with greater wealth-at-risk are more likely to hold health insurance. The implicit insurance from bankruptcy distorts the insurance coverage decision. Using a microsimulation model, I calculate that the optimal Pigovian penalties are similar on average to the penalties under the Affordable Care Act (ACA).
ER -
TY - JOUR
AU - Bansal,Ravi
AU - Kiku,Dana
AU - Shaliastovich,Ivan
AU - Yaron,Amir
TI - Volatility, the Macroeconomy and Asset Prices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18104
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18104
L1 - http://www.nber.org/papers/w18104.pdf
N1 - Author contact info:
Ravi Bansal
Fuqua School of Business
Duke University
1 Towerview Drive
Durham, NC 27708
Tel: 919/660-7758
Fax: 919/660-8038
E-Mail: ravi.bansal@duke.edu
Dana Kiku
Finance Department
Wharton School
University of Pennsylvania
3620 Locust Walk
Philadelphia, PA 19104-6367
Tel: 215/898-1118
Fax: 215/898-6200
E-Mail: kiku@wharton.upenn.edu
Ivan Shaliastovich
The Wharton School
University of Pennsylvania
2423 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 25-746-0005
E-Mail: ishal@wharton.upenn.edu
Amir Yaron
The Wharton School
University of Pennsylvania
2256 Steinberg-Dietrich Hall
Philadelphia, PA 19104-6367
Tel: 215/898-1241
Fax: 215/898-6200
E-Mail: yaron@wharton.upenn.edu
AB - We show that volatility movements have first-order implications for consumption dynamics and asset prices. Volatility news affects the stochastic discount factor and carries a separate risk premium. In the data, volatility risks are persistent and are strongly correlated with discount-rate news. This evidence has important implications for the return on aggregate wealth and the cross-sectional differences in risk premia. Estimation of our volatility risks based model yields an economically plausible positive correlation between the return to human capital and equity, while this correlation is implausibly negative when volatility risk is ignored. Our model setup implies a dynamics capital asset pricing model (DCAPM) which underscores the importance of volatility risk in addition to cash-flow and discount-rate risks. We show that our DCAPM accounts for the level and dispersion of risk premia across book-to-market and size sorted portfolios, and that equity portfolios carry positive volatility-risk premia.
ER -
TY - JOUR
AU - Albouy,David
AU - Leibovici,Fernando
AU - Warman,Casey
TI - Quality of Life, Firm Productivity, and the Value of Amenities across Canadian Cities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18103
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18103
L1 - http://www.nber.org/papers/w18103.pdf
N1 - Author contact info:
David Albouy
Department of Economics
University of Michigan
611 Tappan Street
351C Lorch Hall
Ann Arbor, MI 48109-1220
Tel: 734/763-9619
E-Mail: albouy@umich.edu
Fernando Leibovici
Economics Department
New York University
19 W. 4th Street, 6FL
New York, NY 10012
E-Mail: fml234@nyu.edu
Casey Warman
Department of Economics
Dunning Hall, Room 209
94 University Avenue
Queen's University
Kingston, Ontario, K7L 3N6
E-Mail: warmanc@econ.queensu.ca
AB - We present hedonic general-equilibrium estimates of quality-of-life and productivity differences across Canada’s metropolitan areas. These are based off of the estimated willingness-to-pay of heterogeneous households and firms to locate in various cities, which differ in their wage levels, housing costs, and land values. Using 2006 Canadian Census data, our metropolitan quality-of-life estimates are somewhat consistent with popular rankings, but find Canadians care more about climate and culture. Quality-of-life is highest in Victoria for Anglophones, Montreal for Francophones, and Vancouver for Allophones, and lowest in more remote cities. Toronto is Canada’s most productive city; Vancouver is the overall most valuable city.
ER -
TY - JOUR
AU - Martinez-Bravo,Monica
AU - Miquel,Gerard Padró i
AU - Qian,Nancy
AU - Yao,Yang
TI - The Effects of Democratization on Public Goods and Redistribution: Evidence from China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18101
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18101
L1 - http://www.nber.org/papers/w18101.pdf
N1 - Author contact info:
Monica Martinez-Bravo
Johns Hopkins University
1717 Massachusetts Ave, NW
Washington D.C., 20036
E-Mail: mmb@jhu.edu
Gerard Padro i Miquel
STICERD
London School of Economics
Houghton Street
London, WC2A 2AE
UNITED KINGDOM
Tel: (44) (0) 2078523554
E-Mail: g.padro@lse.ac.uk
Nancy Qian
Department of Economics
Yale University
27 Hillhouse Avenue
New Haven, CT 06520-8269
E-Mail: nancy.qian@yale.edu
Yang Yao
China Center for Economic Research
Peking University
Peking, China
E-Mail: yyao@ccer.pku.edu.cn
AB - This study investigates the effects of introducing elections on public goods and redistribution in rural China. We collect a large and unique survey to document the history of political reforms and economic policies and exploit the staggered timing of the introduction of elections for causal identification. We find that elections significantly increase public goods expenditure, the increase corresponds to demand and is paralleled by an increase in public goods provision and local taxes. We also find that elections cause significant income redistribution within villages. The results support the basic assumptions of recent theories of democratization (Acemoglu and Robinson, 2000; Lizzeri and Persico, 2004). In addition, we show that the main mechanism underlying the effect of elections is increased leader incentives.
ER -
TY - JOUR
AU - Heckman,James J.
AU - Yi,Junjian
TI - Human Capital, Economic Growth, and Inequality in China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18100
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18100
L1 - http://www.nber.org/papers/w18100.pdf
N1 - Author contact info:
James J. Heckman
Department of Economics
The University of Chicago
1126 E. 59th Street
Chicago, IL 60637
Tel: 773/702-0634
Fax: 773/702-8490
E-Mail: jjh@uchicago.edu
Junjian Yi
Department of Economics
1126 E. 59th Street
Chicago IL 60637
E-Mail: junjian@uchicago.edu
AB - China’s rapid growth was fueled by substantial physical capital investments applied to a large stock of medium skilled labor acquired before economic reforms began. As development proceeded, the demand for high skilled labor has grown, and, in the past decade, China has made substantial investments in producing it. The egalitarian access to medium skilled education characteristic of the pre-reform era has given rise to substantial inequality in access to higher levels of education. China’s growth will be fostered by expanding access to all levels of education, reducing impediments to labor mobility, and expanding the private sector.
ER -
TY - JOUR
AU - Grubb,Farley
TI - Chronic Specie Scarcity and Efficient Barter: The Problem of Maintaining an Outside Money Supply in British Colonial America
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18099
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18099
L1 - http://www.nber.org/papers/w18099.pdf
N1 - Author contact info:
Farley Grubb
University of Delaware
Economics Department
Newark, DE 19716
Tel: 302/831-1905
Fax: 302/831-6968
E-Mail: grubbf@udel.edu
AB - Colonial Americans complained that gold and silver coins (specie) were chronically scarce. These coins could be acquired only through importation. Given unrestricted trade in specie, market arbitrage should have eliminated chronic scarcity. A model of efficient barter and local inside money is developed to show how chronic specie scarcity in colonial America could prevail despite unrestricted specie-market arbitrage, thus justifying colonial complaints. The creation of inside fiat paper monies by colonial governments was a welfare-enhancing response to preexisting chronic specie scarcity, not the cause of that scarcity.
ER -
TY - JOUR
AU - Holland,Stephen P.
AU - Moore,Michael R.
TI - Market Design in Cap and Trade Programs: Permit Validity and Compliance Timing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18098
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18098
L1 - http://www.nber.org/papers/w18098.pdf
N1 - Author contact info:
Stephen P. Holland
Bryan School of Business and Economics
University of North Carolina, Greensboro
P.O. Box 26165
Greensboro, NC 27402-6165
Tel: 336/334-4925
Fax: 336/334-4089
E-Mail: sphollan@uncg.edu
Michael Moore
School of Natural Resources & Environment
University of Michigan
Ann Arbor, MI 48109-1041
E-Mail: micmoore@umich.edu
AB - Cap and trade programs have considerable heterogeneity in permit validity and compliance timing. For example, permits have different validity across time (e.g., banking, borrowing, and seasons) and space (e.g., zonal restrictions), and compliance timing can be annual, in overlapping cycles, or in multi-year periods. We compare and contrast nine prominent cap and trade programs along these dimensions and construct a general model of permit validity and compliance timing. We derive sufficient conditions under which abatement is invariant to compliance timing, i.e., compliance timing cannot smooth abatement cost shocks. Under these conditions, i) expected compliance costs are invariant, ii) the variance of compliance costs increases with delayed compliance, iii) equilibrium prices may not be unique, and iv) the delayed compliance equilibrium may rely upon non-unique, “degenerate” prices not determined by marginal abatement costs. Degenerate prices are unlikely to be discovered by market forces. We then present two examples which are not invariant to compliance timing. If permit allocation is delayed or if a price cap is implemented with a reserve fund, abatement may depend on compliance timing. We demonstrate the model’s broad applicability by illustrating different types of temporal and spatial permit validity.
ER -
TY - JOUR
AU - Chitu,Livia
AU - Eichengreen,Barry
AU - Mehl,Arnaud J.
TI - When did the dollar overtake sterling as the leading international currency? Evidence from the bond markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18097
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18097
L1 - http://www.nber.org/papers/w18097.pdf
N1 - Author contact info:
Livia Chitu
European Central Bank
Kaiserstrasse 29
60311 Frankfurt am Main
Germany
E-Mail: livia.chitu@ecb.europa.eu
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
Arnaud J. Mehl
European Central Bank
Kaiserstrasse 29
60311 Frankfurt
Germany
E-Mail: Arnaud.Mehl@ecb.int
AB - This paper offers new evidence on the emergence of the dollar as the leading international currency, focusing on its role as currency of denomination in global bond markets. We show that the dollar overtook sterling much earlier than commonly supposed, as early as in 1929. Financial market development appears to have been the main factor helping the dollar to surmount sterling’s head start. The finding that a shift from a unipolar to a multipolar international monetary and financial system has happened before suggests that it can happen again. That the shift occurred earlier than commonly believed suggests that the advantages of incumbency are not all they are cracked up to be. And that financial deepening was a key determinant of the dollar’s emergence points to the challenges facing currencies aspiring to international status.
ER -
TY - JOUR
AU - Fisman,Raymond
AU - Paravisini,Daniel
AU - Vig,Vikrant
TI - Cultural Proximity and Loan Outcomes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18096
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18096
L1 - http://www.nber.org/papers/w18096.pdf
N1 - Author contact info:
Raymond Fisman
School of Business
Columbia University
622 Uris Hall
3022 Broadway
New York, NY 10027
Tel: 212/854-9157
Fax: 212-316-9219
E-Mail: rf250@columbia.edu
Daniel Paravisini
Columbia University
Graduate School of Business
3022 Broadway, Uris Hall 416
New York, NY 10027
Tel: 212/854-4489
Fax: 212/316-9180
E-Mail: dp2239@columbia.edu
Vikrant Vig
London Business School
Regent's Park
London NW1 4S, UK
Tel: 44 0 20 7000 8274
Fax: 44 0 20 7000 8201
E-Mail: vvig@london.edu
AB - We present evidence that shared codes, religious beliefs, ethnicity - cultural proximity - between lenders and borrowers improves the efficiency of credit allocation. We identify in-group preferential treatment using dyadic data on the religion and caste of bank officers and borrowers from a bank in India, and a rotation policy that induces exogenous matching between officers and borrowers. Cultural proximity increases lending on both intensive and extensive margins and improves repayment performance, even after the in-group officer is replaced by an out-group one. Further, cultural proximity increases loan dispersion and reduces loan to collateral ratios. Our results imply that cultural proximity mitigates informational problems that adversely affect lending, which in turn relaxes financial constraints and improves access to finance.
ER -
TY - JOUR
AU - Fisman,Raymond
AU - Schulz,Florian
AU - Vig,Vikrant
TI - Private Returns to Public Office
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18095
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18095
L1 - http://www.nber.org/papers/w18095.pdf
N1 - Author contact info:
Raymond Fisman
School of Business
Columbia University
622 Uris Hall
3022 Broadway
New York, NY 10027
Tel: 212/854-9157
Fax: 212-316-9219
E-Mail: rf250@columbia.edu
Florian Schulz
UCLA Anderson School of Management
Box 951481
Los Angeles, CA 90095-1481
E-Mail: florian.schulz.2013@anderson.ucla.edu
Vikrant Vig
London Business School
Regent's Park
London NW1 4S, UK
Tel: 44 0 20 7000 8274
Fax: 44 0 20 7000 8201
E-Mail: vvig@london.edu
AB - We study the wealth accumulation of Indian parliamentarians using public disclosures required of all candidates since 2003. Annual asset growth of winners is on average 3 to 6 percentage points higher than runners-up. By performing a within-constituency comparison where both runner-up and winner run in consecutive elections, and by looking at the subsample of very close elections, we rule out a range of alternative explanations for differential earnings of politicians and a relevant control group. The ``winner's premium" comes from parliamentarians holding positions in the Council of Ministers, with asset returns 13 to 29 percentage points higher than non-winners. The benefit of winning is also concentrated among incumbents, because of low asset growth for incumbent non-winners.
ER -
TY - JOUR
AU - Stock,James H.
AU - Watson,Mark W.
TI - Disentangling the Channels of the 2007-2009 Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18094
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18094
L1 - http://www.nber.org/papers/w18094.pdf
N1 - Author contact info:
James H. Stock
Department of Economics
Harvard University
Littauer Center M27
Cambridge, MA 02138
Tel: 617/496-0502
Fax: 617/495-7730
E-Mail: James_Stock@harvard.edu
Mark W. Watson
Department of Economics
Princeton University
Princeton, NJ 08544-1013
Tel: 609/258-4811
Fax: 609/258-5533
E-Mail: mwatson@princeton.edu
AB - This paper examines the macroeconomic dynamics of the 2007-09 recession in the United States and the subsequent slow recovery. Using a dynamic factor model with 200 variables, we reach three main conclusions. First, although many of the events of the 2007-2009 collapse were unprecedented, their net effect was to produce macro shocks that were larger versions of shocks previously experienced, to which the economy responded in an historically predictable way. Second, the shocks that produced the recession primarily were associated with financial disruptions and heightened uncertainty, although oil shocks played a role in the initial slowdown and subsequent drag was added by effectively tight conventional monetary policy arising from the zero lower bound. Third, while the slow nature of the recovery is partly due to the shocks of this recession, most of the slow recovery in employment, and nearly all of the slow recovery in output, is due to a secular slowdown in trend labor force growth.
ER -
TY - JOUR
AU - Castillo,Marco
AU - Petrie,Ragan
AU - Torero,Máximo
AU - Vesterlund,Lise
TI - Gender Differences in Bargaining Outcomes: A Field Experiment on Discrimination
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18093
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18093
L1 - http://www.nber.org/papers/w18093.pdf
N1 - Author contact info:
Marco Castillo
George Mason University
E-Mail: mcastil8@gmu.edu
Ragan Petrie
Interdisciplinary Center for Economic Science
George Mason University
3300 University Dr, MSN 1B2
Fairfax, VA 22030
Tel: 703-993-4842
E-Mail: rpetrie1@gmu.edu
Máximo Torero
International Food Policy
Research Institute - IFPRI
2033 K St. NW
Washington DC 20006
Tel: +1 202 862-5662
Fax: 1 202 467-4439
E-Mail: m.torero@cgiar.org
Lise Vesterlund
Department of Economics
University of Pittsburgh
4916 Posvar Hall
Pittsburgh, PA 15260
Tel: 412/648-1794
Fax: 412/648-1793
E-Mail: vester@pitt.edu
AB - We examine gender differences in bargaining outcomes in a highly competitive and commonly used market: the taxi market in Lima, Peru. Examining the entire path of negotiation we find that men face higher initial prices and rejection rates. These differentials are consistent with both statistical and taste-based discrimination. To identify the source of the inferior treatment of men we conduct an experiment where passengers send a signal on valuation before negotiating. The signal eliminates gender differences and the response is shown only to be consistent with statistical discrimination. Our study secures identification within the market of interest and demonstrates that there are environments where sophisticated statistical inference is the sole source of differential gender outcomes.
ER -
TY - JOUR
AU - Schmitt-Grohé,Stephanie
AU - Uribe,Martín
TI - Managing Currency Pegs
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18092
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18092
L1 - http://www.nber.org/papers/w18092.pdf
N1 - Author contact info:
Stephanie Schmitt-Grohe
Department of Economics
Columbia University
New York, NY 10027
Tel: 212/854-8059
Fax: 212/854-4010
E-Mail: stephanie.schmittgrohe@columbia.edu
Martin Uribe
Department of Economics
Columbia University
International Affairs Building
New York, NY 10027
Tel: 212 851 4008
Fax: 212 854 8059
E-Mail: martin.uribe@columbia.edu
AB - The combination of a fixed exchange rate and downward nominal wage rigidity creates a real rigidity. In turn, this real rigidity makes the economy prone to involuntary unemployment during external crises. This paper presents a graphical analysis of alternative policy strategies aimed at mitigating this source of inefficiency. First- and second-best monetary and fiscal solutions are analyzed. Second-best solutions are found to be prudential, whereas first-best solutions are not.
ER -
TY - JOUR
AU - Benhabib,Jess
AU - Perla,Jesse
AU - Tonetti,Christopher
TI - Catch-up and Fall-back through Innovation and Imitation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18091
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18091
L1 - http://www.nber.org/papers/w18091.pdf
N1 - Author contact info:
Jess Benhabib
Department of Economics
New York University
19 West 4th Street, 6th Floor
New York, NY 10012
Tel: 212/998-8971
Fax: 212/995-4186
E-Mail: jess.benhabib@nyu.edu
Jesse Perla
New York University
Department of Economics
19 W 4th St, 6th Floor
NY, NY 10012
E-Mail: jesse.perla@nyu.edu
Christopher Tonetti
New York University
Department of Economics
19 W. 4th Street, 6 Floor
New York, NY 10012-1119
Tel: 212.992.9775
E-Mail: chris.tonetti@nyu.edu
AB - Will fast growing emerging economies sustain rapid growth rates until they “catch-up” to the technology frontier? Are there incentives for some developed countries to free-ride off of innovators and optimally “fallback” relative to the frontier? This paper models agents growing as a result of investments in innovation and imitation. Imitation facilitates technology diffusion, with the productivity of imitation modeled by a catch-up function that increases with distance to the frontier. The resulting equilibrium is an endogenous segmentation between innovators and imitators, where imitating agents optimally choose to “catch-up” or “fall-back” to a productivity ratio below the frontier.
ER -
TY - JOUR
AU - Li,Chunding
AU - Whalley,John
TI - China and the TPP: A Numerical Simulation Assessment of the Effects Involved
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18090
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18090
L1 - http://www.nber.org/papers/w18090.pdf
N1 - Author contact info:
Chunding Li
Institute of World Economics and Politics
Chinese Academy of Social Sciences
No.5 Jianguomenneidajie
Beijing, PRC
Postcode: 100732
E-Mail: cli428@uwo.ca
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB - The Trans-Pacific Partnership (TPP) is a new negotiation on cross border liberalization of goods and service flows going beyond WTO disciplines and focused on issues such as regulation and border controls. Though the US, Australia and other pacific countries are included, China is notable for its exclusion from the process thus far. This paper uses numerical simulation methods to assess the potential effects of a TPP agreement on China and the other participating countries. We use a numerical five-country global general equilibrium model with trade costs and monetary structure incorporating inside money to allow for impacts on trade imbalances. Trade costs are calculated using a method based on gravity equations. Simulation results reveal that China will be hurt by TPP initiatives, but the negative effects are relatively small given the geographical and commodity composition of China’s trade. Other non-TPP countries will be hurt but member countries will all gain. Japan’s joining TPP would be beneficial to both herself and all other TPP countries, but negative effects on China and other non-TPP countries will increase further. If China takes part in TPP, it will increase China’s and other TPP countries’ gain, but non-TPP countries will be hurt more. As a regional free trade arrangement, TPP effects are different from global free trade effects which will benefit all countries (not just member countries) in the world, and the positive effects of global free trade are stronger than TPP effects.
ER -
TY - JOUR
AU - Ericson,Keith M. Marzilli
AU - Starc,Amanda
TI - Age-Based Heterogeneity and Pricing Regulation on the Massachusetts Health Insurance Exchange
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18089
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18089
L1 - http://www.nber.org/papers/w18089.pdf
N1 - Author contact info:
Keith Marzilli Ericson
Boston University School of Management
595 Commonwealth Avenue
Boston, MA 02115
Tel: 617/353-4553
E-Mail: kericson@bu.edu
Amanda Starc
University of Pennsylvania
E-Mail: astarc@wharton.upenn.edu
AB - Little is known about consumer behavior or insurer incentives in health insurance exchanges. We analyze choice on the Massachusetts exchange, using coarse insurer pricing strategies to identify price sensitivity. We find substantial age-based heterogeneity: younger individuals are more than twice as price sensitive as older individuals. Modified community rating regulations interact with price discrimination, as our results imply higher markups on older consumers. Age-based pricing regulations would bind even conditional on perfect risk adjustment, highlighting the importance of considering insurer incentives when regulating insurance markets. Changes in age-based pricing regulation can result in transfers of 8% of the purchase price.
ER -
TY - JOUR
AU - Mulligan,Casey B.
TI - Do Welfare Policies Matter for Labor Market Aggregates? Quantifying Safety Net Work Incentives since 2007
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18088
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18088
L1 - http://www.nber.org/papers/w18088.pdf
N1 - Author contact info:
Casey B. Mulligan
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-9017
Fax: 773/702-8490
E-Mail: c-mulligan@uchicago.edu
AB - Inflation-adjusted spending on means-tested subsidies has increased sharply since 2007, and most of the growth was due to changes in eligibility rules, and increases in subsidies per eligible person, rather than increases in the number of people who would have been eligible under pre-recession subsidy rules. In 2007, the non-elderly parts of the safety net paid about $10,000 in benefits per person-year that non-elderly heads of household or spouses were unemployed. By the end of 2009, the annual subsidy rate per person-year unemployed was up to $16,000. As a result, the average private returns to employment are substantially less than they were in 2007. One result of the paper is a monthly time series for the overall safety net’s marginal income tax rate from the point of view of the average marginal worker.
ER -
TY - JOUR
AU - Wehby,George
AU - Courtemanche,Charles J.
TI - The Heterogeneity of the Cigarette Price Effect on Body Mass Index
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18087
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18087
L1 - http://www.nber.org/papers/w18087.pdf
N1 - Author contact info:
George Wehby
Assistant Professor
Dept. of Health Management and Policy
College of Public Health
University of Iowa
105 River Street, N248 CPHB
Iowa City, IA 52242
E-Mail: george-wehby@uiowa.edu
Charles J. Courtemanche
University of Louisville
College of Business
Department of Economics
Louisville, KY 40292
Tel: 502-852-4854
Fax: 502-852-7672
E-Mail: cjcour02@louisville.edu
AB - Previous studies estimate the average effect of cigarette price on body mass index (BMI), with recent research showing that their different methodologies all point to a negative effect after several years. This literature, however, ignores the possibility that the effect could vary throughout the BMI distribution or across socioeconomic and demographic groups due to differences in underlying preferences for health or risks for obesity. We evaluate heterogeneity in the long-run impact of cigarette price on BMI by performing quantile regressions and stratifying the sample by race, education, age, and sex. Cigarette price has a highly heterogeneous negative effect that is more than three times as strong at high BMI levels – where weight loss is most beneficial for health – than at low levels. The effects are also strongest for blacks, college graduates, middle-aged adults, and women. We also assess the implications for disparities, conduct robustness checks, and evaluate potential mechanisms.
ER -
TY - JOUR
AU - Black,Sandra E.
AU - Devereux,Paul J.
AU - Løken,Katrine V.
AU - Salvanes,Kjell G.
TI - Care or Cash? The Effect of Child Care Subsidies on Student Performance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18086
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18086
L1 - http://www.nber.org/papers/w18086.pdf
N1 - Author contact info:
Sandra Black
Department of Economics
University of Texas
Austin, TX 78712
Tel: 512-475-8519
E-Mail: sblack@austin.utexas.edu
Paul J. Devereux
School of Economics
and Geary Institute
University College Dublin
Belfield, Dublin 4
Ireland
E-Mail: devereux@ucd.ie
Katrine V. Løken
Department of Economics
University of Bergen
Postboks 5802
5020 Bergen, Norway
E-Mail: katrine.loken@econ.uib.no
Kjell Salvanes
Department of Economics
Norwegian School of Economics
Hellev. 30, N-5035 Bergen
Norway
E-Mail: kjell.salvanes@nhh.no
AB - Given the wide use of childcare subsidies across countries, it is surprising how little we know about the effect of these subsidies on children’s longer run outcomes. Using a sharp discontinuity in the price of childcare in Norway, we are able to isolate the effects of childcare subsidies on both parental and student outcomes. We find very small and statistically insignificant effects of childcare subsidies on childcare utilization and parental labor force participation. Despite this, we find significant positive effect of the subsidies on children’s academic performance in junior high school, suggesting the positive shock to disposable income provided by the subsidies may be helping to improve children’s scholastic aptitude.
ER -
TY - JOUR
AU - Galí,Jordi
AU - Smets,Frank
AU - Wouters,Rafael
TI - Slow Recoveries: A Structural Interpretation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18085
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18085
L1 - http://www.nber.org/papers/w18085.pdf
N1 - Author contact info:
Jordi Gali
Centre de Recerca en Economia Internacional (CREI)
Ramon Trias Fargas 25
08005 Barcelona
SPAIN
Tel: 011-34-93-5422754
Fax: 011-34-93-5421860
E-Mail: jgali@crei.cat
Frank Smets
European Central Bank
Postfach 16 03 19
D-60311 Frankfurt
GERMANY
E-Mail: frank.smets@ecb.int
Rafael Wouters
National Bank of Belgium
B-1000 Brussels
BELGIUM
E-Mail: rafael.wouters@nbb.be
AB - An analysis of the performance of GDP, employment and other labor market variables following the troughs in postwar U.S. business cycles points to much slower recoveries in the three most recent episodes, but does not reveal any significant change over time in the relation between GDP and employment. This leads us to characterize the last three episodes as slow recoveries, as opposed to jobless recoveries. We use the estimated New Keynesian model in Galí-Smets-Wouters (2011) to provide a structural interpretation for the slower recoveries since the early nineties.
ER -
TY - JOUR
AU - Andersen,Torben G.
AU - Bollerslev,Tim
AU - Christoffersen,Peter F.
AU - Diebold,Francis X.
TI - Financial Risk Measurement for Financial Risk Management
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18084
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18084
L1 - http://www.nber.org/papers/w18084.pdf
N1 - Author contact info:
Torben G. Andersen
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/467-1285
Fax: 847/491-5719
E-Mail: t-andersen@kellogg.northwestern.edu
Tim Bollerslev
Department of Economics
Duke University
Box 90097
Durham, NC 27708-0097
Tel: 919/660-1846
Fax: 919/684-8974
E-Mail: boller@econ.duke.edu
Peter Christoffersen
Professor of Finance
Rotman School of Management
University of Toronto
105 St. George Street 447
Toronto, ON, M5S 3E6, Canada
Tel: 416-946-5511
E-Mail: peter.christoffersen@rotman.utoronto.ca
Francis X. Diebold
Department of Economics
University of Pennsylvania
3718 Locust Walk
Philadelphia, PA 19104-6297
Tel: 215/898-1507
Fax: 212/573-4217
E-Mail: fdiebold@sas.upenn.edu
AB - Current practice largely follows restrictive approaches to market risk measurement, such as historical simulation or RiskMetrics. In contrast, we propose flexible methods that exploit recent developments in financial econometrics and are likely to produce more accurate risk assessments, treating both portfolio-level and asset-level analysis. Asset-level analysis is particularly challenging because the demands of real-world risk management in financial institutions – in particular, real-time risk tracking in very high-dimensional situations – impose strict limits on model complexity. Hence we stress powerful yet parsimonious models that are easily estimated. In addition, we emphasize the need for deeper understanding of the links between market risk and macroeconomic fundamentals, focusing primarily on links among equity return volatilities, real growth, and real growth volatilities. Throughout, we strive not only to deepen our scientific understanding of market risk, but also cross-fertilize the academic and practitioner communities, promoting improved market risk measurement technologies that draw on the best of both.
ER -
TY - JOUR
AU - Baldwin,Richard
AU - Okubo,Toshihiro
TI - Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18083
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18083
L1 - http://www.nber.org/papers/w18083.pdf
N1 - Author contact info:
Richard Baldwin
Cigale 2
1010 Lausanne
SWITZERLAND
Tel: 41-22-908-5900
E-Mail: rbaldwin@cepr.org
Toshihiro Okubo
Keio University
2-15-45 Mita Minato-ku
Tokyo Japan
okubo@econ.keio.ac.jp
E-Mail: okubo@econ.keio.ac.jp
AB - Using firm-level data on the sales and sourcing patterns of Japanese affiliates, this paper suggests that very little FDI falls neatly into the standard bins of horizontal, vertical and export-platform FDI. Most affiliates import some intermediates and export some output suggesting a pattern that might be called ‘networked FDI’. This suggests that that the nature of FDI is influenced by ‘regional comparative advantage’ i.e. the proximity of markets and suppliers. The paper also suggests an empirical strategy for testing and classifying the nature of FDI based on firms’ sales and sourcing patterns rather than standard macro-level variables such as market size and income differences.
ER -
TY - JOUR
AU - Foote,Christopher L.
AU - Gerardi,Kristopher S.
AU - Willen,Paul S.
TI - Why Did So Many People Make So Many Ex Post Bad Decisions? The Causes of the Foreclosure Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18082
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18082
L1 - http://www.nber.org/papers/w18082.pdf
N1 - Author contact info:
Christopher Foote
Federal Reserve Bank of Boston
Research Department, T-8
600 Atlantic Avenue
Boston, MA 02210
Tel: 617-973-3077
E-Mail: chris.foote@bos.frb.org
Kristopher Gerardi
Federal Reserve Bank of Atlanta
1000 Peachtree St. NE
Atlanta, GA 30309
E-Mail: kristopher.gerardi@atl.frb.org
Paul S. Willen
Federal Reserve Bank of Boston
600 Atlantic Avenue
Boston, MA 02210-2204
Tel: 617/973-3149
Fax: 617/973-2123
E-Mail: willen968@gmail.com
AB - We present 12 facts about the mortgage crisis. We argue that the facts refute the popular story that the crisis resulted from finance industry insiders deceiving uninformed mortgage borrowers and investors. Instead, we argue that borrowers and investors made decisions that were rational and logical given their ex post overly optimistic beliefs about house prices. We then show that neither institutional features of the mortgage market nor financial innovations are any more likely to explain those distorted beliefs than they are to explain the Dutch tulip bubble 400 years ago. Economists should acknowledge the limits of our understanding of asset price bubbles and design policies accordingly.
ER -
TY - JOUR
AU - Lemley,Mark A.
TI - Fixing the Patent Office
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18081
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18081
L1 - http://www.nber.org/papers/w18081.pdf
N1 - Author contact info:
Mark Lemley
Stanford University
E-Mail: mlemley@law.stanford.edu
M3 - presented at "Innovation Policy and the Economy 2012", April 17, 2012
AB - How can we allow patent examiners to effectively distinguish between patentable and unpatentable inventions, without slowing the process to a crawl or wasting a bunch of money? This essay reviews the recent literature and considers a number of proposals and their limitations. It concludes that the system can be improved, but that we are unlikely to solve the problem of bad patents altogether. The focus in reform discussions should be on understanding and changing applicant and examiner incentives rather than simply spending money.
ER -
TY - JOUR
AU - Kutsoati,Edward
AU - Morck,Randall
TI - Family Ties, Inheritance Rights, and Successful Poverty Alleviation: Evidence from Ghana
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18080
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18080
L1 - http://www.nber.org/papers/w18080.pdf
N1 - Author contact info:
Edward Kutsoati
Department of Economics
Tufts University
Medford, MA 02155
E-Mail: edward.kutsoati@tufts.edu
Randall Morck
Faculty of Business
University of Alberta
Edmonton, AB T6G 2R6
CANADA
Tel: 780/492-5683
Fax: 780/492-3325
E-Mail: randall.morck@ualberta.ca
M3 - presented at "African Development Successes", August 3-5, 2011
AB - Ghanaian custom views children as members of either their mother’s or father’s lineage (extended family), but not both. Patrilineal custom charges a man’s lineage with caring for his widow and children, while matrilineal custom places this burden on the widows’ lineage – her father, brothers, and uncles. Deeming custom inadequate, and to promote the nuclear family, Ghana enacted the Intestate Succession (PNDC) Law 111, 1985 and 1998 Children’s Act 560 to force men to provide for their widows and children, as in Western cultures. Our survey shows that, although most people die intestate and many profess to know Law 111, it is rarely implemented. Knowledge of the law correlates with couples accumulating assets jointly and with inter-vivos husband to wife transfers, controlling for education. These effects are least evident for widows of matrilineal lineage men, suggesting a persistence of traditional norms. Widows with closer ties with their own or their spouse’s lineage report greater financial support, as do those very few who benefit from legal wills or access Law 111 and, importantly, widows of matrilineal lineage. Some evidence also supports Act 560 benefiting nuclear families, especially if the decedent’s lineage is matrilineal. Overall, our study confirms African traditional institutions’ persistent importance, and the limited effects of formal law.
ER -
TY - JOUR
AU - Dinlersoz,Emin M.
AU - Greenwood,Jeremy
TI - The Rise and Fall of Unions in the U.S.
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18079
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18079
L1 - http://www.nber.org/papers/w18079.pdf
N1 - Author contact info:
Emin M. Dinlersoz
Center for Economic Studies
U.S. Census Bureau
4600 Silver Hill Road
Washington, DC 20233
E-Mail: emin.m.dinlersoz@census.gov
Jeremy Greenwood
Department of Economics
University of Pennsylvania
3718 Locust Walk
McNeil Building, Rm 160
Philadelphia, PA 19104-6297
Tel: 215/898-1505
Fax: 215/746-2947
E-Mail: do-not-use@jeremygreenwood.net
AB - Union membership displayed a ∩-shaped pattern over the 20th century, while the distribution of income sketched a ∪. A model of unions is developed to analyze these phenomena. There is a distribution of firms in the economy. Firms hire capital, plus skilled and unskilled labor. Unionization is a costly process. A union decides how many firms to organize and its members' wage rate. Simulation of the developed model establishes that skilled-biased technological change, which affects the productivity of skilled labor relative to unskilled labor, can potentially explain the above facts. Statistical analysis suggests that skill-biased technological change is an important factor in de-unionization.
ER -
TY - JOUR
AU - Chen,Fei
AU - Diebold,Francis X.
AU - Schorfheide,Frank
TI - A Markov-Switching Multi-Fractal Inter-Trade Duration Model, with Application to U.S. Equities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18078
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18078
L1 - http://www.nber.org/papers/w18078.pdf
N1 - Author contact info:
Fei Chen
School of Economics, HUST
No 1037 Luoyu Road, Hongshan District
Wuhan, 430074 CHINA
E-Mail: chenf@econ.upenn.edu
Francis X. Diebold
Department of Economics
University of Pennsylvania
3718 Locust Walk
Philadelphia, PA 19104-6297
Tel: 215/898-1507
Fax: 212/573-4217
E-Mail: fdiebold@sas.upenn.edu
Frank Schorfheide
University of Pennsylvania
Department of Economics
3718 Locust Walk
McNeil 525
Philadelphia, PA 19104-6297
Tel: 215/898-8486
Fax: 215/573-2057
E-Mail: schorf@ssc.upenn.edu
AB - We propose and illustrate a Markov-switching multi-fractal duration (MSMD) model for analysis of inter-trade durations in financial markets. We establish several of its key properties with emphasis on high persistence (indeed long memory). Empirical exploration suggests MSMD's superiority relative to leading competitors.
ER -
TY - JOUR
AU - Philippon,Thomas
TI - Has the U.S. Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18077
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18077
L1 - http://www.nber.org/papers/w18077.pdf
N1 - Author contact info:
Thomas Philippon
New York University
Stern School of Business
44 West 4th Street, Suite 9-190
New York, NY 10012-1126
Tel: 212/998-0490
Fax: 212/995-4233
E-Mail: tphilipp@stern.nyu.edu
AB - I provide a quantitative interpretation of financial intermediation in the U.S. over the past 130 years. Measuring separately the cost of intermediation and the production of financial services, I find that: (i) the quantity of intermediation varies a lot over time; (ii) intermediation is produced under constant returns to scale; (iii) the annual cost of intermediation is around 2% of outstanding assets; (iv) adjustments for borrowers' quality are quantitatively important; and (v) the unit cost of intermediation has increased over the past 30 years.
ER -
TY - JOUR
AU - Hummel,Patrick
AU - Knight,Brian
TI - Sequential or Simultaneous Elections? A Welfare Analysis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18076
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18076
L1 - http://www.nber.org/papers/w18076.pdf
N1 - Author contact info:
Patrick Hummel
Yahoo! Research
E-Mail: phummel@alumni.gsb.stanford.edu
Brian G. Knight
Brown University
Department of Economics, Box B
64 Waterman Street
Providence, RI 02912
Tel: 401/863-1584
Fax: 401/863-1970
E-Mail: Brian_Knight@brown.edu
AB - This paper addresses a key question on the design of electoral systems. Should all voters vote on the same day or should elections be staggered, with late voters observing early returns before making their decisions? Using a model of voting and social learning, we illustrate that sequential elections place too much weight on the preferences and information of early states but also provide late voters with valuable information. Under simultaneous elections, voters equally weigh the available information but place too much weight on their priors, providing an inappropriate advantage to front-runners. Given these trade-offs, simultaneous elections are welfare-preferred if the front-runner initially has a small advantage, but sequential elections are welfare-preferred if the front-runner initially has a large advantage. We then quantitatively evaluate this trade-off using data based on the 2004 presidential primary. The results suggest that simultaneous systems outperform sequential systems although the difference in welfare is relatively small.
ER -
TY - JOUR
AU - Lovenheim,Michael F.
AU - Reynolds,C. Lockwood
TI - The Effect of Housing Wealth on College Choice: Evidence from the Housing Boom
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18075
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18075
L1 - http://www.nber.org/papers/w18075.pdf
N1 - Author contact info:
Michael Lovenheim
Department of Policy Analysis and Management
Cornell University
135 Martha Van Rensselaer Hall
Ithaca, NY 14853
Tel: 607/255-0705
Fax: 607/255-4071
E-Mail: mfl55@cornell.edu
C. Lockwood Reynolds
Department of Economics
Kent State University
P.O. Box 5190
Kent, OH 44242
E-Mail: creynol9@kent.edu
AB - The higher education system in the United States is characterized by a large degree of quality heterogeneity, and there is a growing literature suggesting students attending higher quality universities have better educational and labor market outcomes. In this paper, we use NLSY97 data combined with the difference in the timing and strength of the housing boom across cities to examine how short-run home price growth affects the quality of postsecondary schools chosen by students. Our findings indicate a $10,000 increase in a family’s housing wealth in the four years prior to a student becoming of college-age increases the likelihood she attends a flagship public university relative to a non-flagship public university by 2.0 percent and decreases the relative probability of attending a community college by 1.6 percent. These effects are driven by relatively lower and middle-income families. We show that these changes are due to the effect of housing wealth on where students apply, not on whether they are admitted. We also find that short-run increases in home prices lead to increases in direct quality measures of the institutions students attend. Finally, for the lower-income sample, we find home price increases reduce student labor supply and that each $10,000 increase in home prices is associated with a 1.8% increase in the likelihood of completing college.
ER -
TY - JOUR
AU - Benhabib,Jess
AU - Wang,Pengfei
TI - Financial Constraints, Endogenous Markups, and Self-fulfilling Equilibria
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18074
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18074
L1 - http://www.nber.org/papers/w18074.pdf
N1 - Author contact info:
Jess Benhabib
Department of Economics
New York University
19 West 4th Street, 6th Floor
New York, NY 10012
Tel: 212/998-8971
Fax: 212/995-4186
E-Mail: jess.benhabib@nyu.edu
Pengfei Wang
Department of Economics
Business School
Hong Kong University of Science & Technology
E-Mail: pfwanghkust@gmail.com
AB - We show that self-fulfilling equilibria and indeterminacy can easily arise in a simple financial accelerator model with reasonable parameter calibrations and without increasing returns in production. A key feature for generating indeterminacy in our model is the countercyclical markup due to the procyclical loan to output ratio. We illustrate, via simulations, that our financial accelerator model can generate rich business cycle dynamics, including hump-shaped output in response to demand shocks as well as serial autocorrelation in output growth rates.
ER -
TY - JOUR
AU - Bate,Roger
AU - Jin,Ginger Zhe
AU - Mathur,Aparna
TI - Counterfeit or Substandard? The Role of Regulation and Distribution Channel in Drug Safety
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18073
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18073
L1 - http://www.nber.org/papers/w18073.pdf
N1 - Author contact info:
Roger Bate
American Enterprise Institute
1150 Seventeenth Street, NW
Washington DC 20036
E-Mail: rbate@aei.org
Ginger Z. Jin
University of Maryland
Department of Economics
3105 Tydings Hall
College Park, MD 20742-7211
Tel: 301/405-3484
Fax: 301/405-3542
E-Mail: jin@econ.umd.edu
Aparna Mathur
American Enterprise Institute
1150 Seventeenth Street, N.W.
Washington, DC 20036
E-Mail: amathur@aei.org
AB - Using 1437 samples of Ciprofloxacin from 18 low-to-middle-income countries, we aim to understand the role that regulation and distribution channel have played in signaling and ensuring drug safety. According to the World Health Organization, some poor quality drugs are deliberately and fraudulently mislabeled with respect to identity or source while others can have incorrect quantities of active ingredient as a result of manufacturing error or poor storage. Given the difficulty to prove “intent to deceive”, we classify poor quality drugs as counterfeit if they fail a visual check or contain zero correct active ingredient, and as substandard if they pass the visual check and contain some but less than 80% of the correct active ingredient.
Following the Global Pharma Health Fund e.V. Minilab® protocol, we find 9.88% of samples are poor quality and 41.5% of the failures are counterfeits. Both product registration and chain affiliation of retailers are strong indicators of higher probability to pass in the Minilab test and higher retail price. Conditional on quality failures, chain affiliation is more likely to indicate substandard while product registration with local government is more likely to indicate counterfeit. In other words, registered products are more likely to be targeted by counterfeiters. Furthermore, substandard drugs are priced much lower than comparable generics in the same city but counterfeits offer almost no discount from the targeted genuine version. These findings have important implications for both consumers and policy makers.
ER -
TY - JOUR
AU - Aghion,Philippe
AU - Farhi,Emmanuel
AU - Kharroubi,Enisse
TI - Monetary Policy, Liquidity, and Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18072
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18072
L1 - http://www.nber.org/papers/w18072.pdf
N1 - Author contact info:
Philippe Aghion
Department of Economics
Harvard University
1805 Cambridge St
Cambridge, MA 02138
Tel: 617/495-6675
Fax: 617/495-4341
E-Mail: paghion@fas.harvard.edu
Emmanuel Farhi
Harvard University
Department of Economics
Littauer Center
Cambridge, MA 02138
Tel: 617/496-1835
Fax: 617/495-8570
E-Mail: efarhi@harvard.edu
Enisse Kharroubi
Monetary and Economic Department
Bank for International Settlements
Centralbahnplatz 2
CH-4002 Basel
E-Mail: enisse.kharroubi@bis.org
AB - In this paper, we use cross-industry, cross-country panel data to test whether industry growth is positively affected by the interaction between the reactivity of real short term interest rates to the business cycle and industry-level measures of financial constraints. Financial constraints are measured, either by the extent to which an industry is prone to being "credit constrained", or by the extent to which it is prone to being "liquidity constrained". Our main findings are that: (i) the interaction between credit or liquidity constraints and monetary policy countercyclicality, has a positive, significant, and robust impact on the average annual rate of labor productivity in the domestic industry; (ii) these interaction effects tend to be more significant in downturns than in upturns.
ER -
TY - JOUR
AU - Allcott,Hunt
TI - The Smart Grid, Entry, and Imperfect Competition in Electricity Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18071
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18071
L1 - http://www.nber.org/papers/w18071.pdf
N1 - Author contact info:
Hunt Allcott
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
E-Mail: hunt.allcott@nyu.edu
AB - Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. The Smart Grid is a set of emerging technologies that, among other effects, will facilitate "real-time pricing" for electricity and increase price elasticity of demand. This paper simulates the effects of this increased demand elasticity using counterfactual simulations in a structural model of the Pennsylvania-Jersey-Maryland electricity market. The model includes a different approach to the problem of multiple equilibria in multi-unit auctions: I non-parametrically estimate unobservables that rationalize past bidding behavior and use learning algorithms to move from the observed equilibrium counterfactual bid functions. This routine is nested as the second stage of a static entry game that models the Capacity Market, an important element of market design in some restructured electricity markets.
There are three central results. First, I find that an increase in demand elasticity could actually increase wholesale electricity prices in peak hours, contrary to predictions from short run models, while decreasing Capacity Market prices and total entry. Second, although the increased demand elasticity from the Smart Grid reduces producers' market power, in practice this would be a small channel of efficiency gains relative to forestalled entry. Third, I find that the gross welfare gains from moving a typical consumer to the Smart Grid, under the assumed demand parameters and before subtracting out the initial infrastructure costs, are about 10 percent of the consumer's total wholesale electricity costs.
ER -
TY - JOUR
AU - Currie,Janet
AU - Rossin-Slater,Maya
TI - Weathering the Storm: Hurricanes and Birth Outcomes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18070
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18070
L1 - http://www.nber.org/papers/w18070.pdf
N1 - Author contact info:
Janet Currie
Princeton University
316 Wallace Hall
Princeton, NJ 08544
Tel: 609-258-7393
Fax: 609-258-5974
E-Mail: jcurrie@princeton.edu
Maya Rossin-Slater
Columbia University, Department of Economics
1022 International Affairs Building
420 West 118th Street
New York City, NY 10027
E-Mail: mr2856@columbia.edu
AB - A growing literature suggests that stressful events in pregnancy can have negative effects on birth outcomes. Some of the estimates in this literature may be affected by small samples, omitted variables, endogenous mobility in response to disasters, and errors in the measurement of gestation, as well as by a mechanical correlation between longer gestation and the probability of having been exposed. We use millions of individual birth records to examine the effects of exposure to hurricanes during pregnancy. The data allow us to measure outcomes precisely and to follow the same mother over time; we also suggest estimation methods that correct for omitted unobserved fixed characteristics of the mother, endogenous moving in response to storms, and the above mentioned correlation between gestation length and exposure. We find that exposure to a hurricane during pregnancy increases the probability of complications of labor and delivery, and of abnormal conditions of the newborn such as being on a ventilator more than 30 minutes and meconium aspiration syndrome. Although we do not directly measure stress, our results are supportive of the idea that stressful events in pregnancy can damage the health of the fetus. However our results suggest that the effects may be subtle and not readily apparent in terms of widely-used metrics such as birth weight and gestation.
ER -
TY - JOUR
AU - Bayer,Patrick
AU - Casey,Marcus D.
AU - Ferreira,Fernando
AU - McMillan,Robert
TI - Price Discrimination in the Housing Market
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18069
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18069
L1 - http://www.nber.org/papers/w18069.pdf
N1 - Author contact info:
Patrick Bayer
Department of Economics
Duke University
213 Social Sciences
Durham, NC 27708
Tel: 919/660-1832
E-Mail: patrick.bayer@duke.edu
Marcus D. Casey
Department of Economics
University of Illinois at Chicago
601 South Morgan UH725 M/C144
Chicago, IL 60607
E-Mail: mcasey@uic.edu
Fernando Ferreira
The Wharton School
University of Pennsylvania
1461 Steinberg - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
Tel: 215/898-7181
Fax: 215/573-2220
E-Mail: fferreir@wharton.upenn.edu
Robert McMillan
University of Toronto
Department of Economics
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/978-4190
Fax: 416/978-6713
E-Mail: mcmillan@chass.utoronto.ca
AB - This paper sets out a new research design to test for price discrimination by sellers in the housing market. The design controls carefully for unobserved differences in the quality of neighborhoods and homes purchased by buyers of each race, using novel panel data from over two million repeat-sales housing transactions in four metropolitan areas. The results indicate that black and Hispanic homebuyers pay premiums of around 3 percent on average across the four cities – differences that are not explained by variation in buyer income, wealth or access to credit. The estimated premiums do not vary significantly with the racial composition of the neighborhood or, most strikingly, the race of the seller. This latter result rules out racial prejudice or animosity on the part of sellers as the primary explanation for the estimated premiums.
ER -
TY - JOUR
AU - Andrews,Rodney J.
AU - Li,Jing
AU - Lovenheim,Michael F.
TI - Quantile Treatment Effects of College Quality on Earnings: Evidence from Administrative Data in Texas
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18068
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18068
L1 - http://www.nber.org/papers/w18068.pdf
N1 - Author contact info:
Rodney Andrews
The University of Texas at Dallas
800 West Campbell Road
MS WT21
Richardson, TX 75080
Tel: 972/883-2548
Fax: 972/883-2551
E-Mail: rodney.j.andrews@utdallas.edu
Jing Li
The University of Tulsa
800 South Tucker Drive
Chapman Hall Room 235
Tulsa, OK 74104
E-Mail: jing-li@utulsa.edu
Michael Lovenheim
Department of Policy Analysis and Management
Cornell University
135 Martha Van Rensselaer Hall
Ithaca, NY 14853
Tel: 607/255-0705
Fax: 607/255-4071
E-Mail: mfl55@cornell.edu
AB - This paper uses administrative data on schooling and earnings from Texas to estimate the effect of college quality on the distribution of earnings. We proxy college quality using the college sector from which students graduate and focus on identifying how graduating from UT-Austin, Texas A\&M or a community college affects the distribution of earnings relative to graduating from a non-flagship university in Texas. Our methodological approach uses the rich set of observable student academic ability and background characteristics in the data to adjust the earnings distributions across college sectors for the fact that college sector quality is correlated with factors that also affect earnings. Although our mean earnings estimates are similar to previous work in this area, we find evidence of substantial heterogeneity in the returns to college quality. At UT-Austin, the returns increase across the earnings distribution, while at Texas A\&M they tend to decline with one's place in the distribution. For community college graduates, the returns relative to non-flagship four-year graduates are negative across most of the distribution of earnings, but they approach zero and become positive for higher earners. Our data also allow us to estimate effects separately by race and ethnicity, and we find that historically under-represented minorities experience the highest returns in the upper tails of the earnings distribution, particularly among UT-Austin and community college graduates. While we focus on graduates, we also show our estimates are robust to examining college attendees as well as to many other changes in the sample and to the estimation strategy. Overall, these estimates provide the first direct evidence of the extent of heterogeneity in the effect of college quality on subsequent earnings, and our estimates point to the need to consider such heterogeneity in human capital models that incorporate college quality.
ER -
TY - JOUR
AU - Franzoni,Chiara
AU - Scellato,Giuseppe
AU - Stephan,Paula
TI - Foreign Born Scientists: Mobility Patterns for Sixteen Countries
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18067
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18067
L1 - http://www.nber.org/papers/w18067.pdf
N1 - Author contact info:
Chiara Franzoni
Politecnico di Milano
Dipartimento di Ingegneria Gestionale (DIG)
Piazza Leonardo da Vinci, 32
Milano ITALY 20133
Tel: +39.02.2399.4823
Fax: +39.02.2399.2730
E-Mail: chiara.franzoni@polimi.it
Giuseppe Scellato
Department of Production Systems
and Business Economics
Politecnico di Torino
10129 Turin, Italy
E-Mail: giuseppe.scellato@polito.it
Paula Stephan
Department of Economics
Andrew Young School of Policy Studies
Georgia State University
Box 3992
Atlanta, GA 30302-3992
Tel: 404/413-0160
Fax: 404/413-0145
E-Mail: pstephan@gsu.edu
AB - We report results from the first systematic study of the mobility of scientists engaged in research in a large number of countries. Data were collected from 17,182 respondents using a web-based survey of corresponding authors in 16 countries in four fields during 2011. We find considerable variation across countries, both in terms of immigration and emigration patterns. Switzerland has the largest percent of immigrant scientists working in country (56.7); Canada, and Australia trail by nine or more percent; the U.S. and Sweden by approximately eighteen percent. India has the lowest (0.8), followed closely by Italy and Japan. The most likely reason to come to a country for postdoctoral study or work is professional. Our survey methodology also allows us to study emigration patterns of individuals who were living in one of the 16 countries at age 18. Again, considerable variation exists by country. India heads the list with three in eight of those living in country when they were 18 out of country in 2011. The country with the lowest diaspora is Japan. Return rates also vary by country, with emigrants from Spain being most likely to return and those from India being least like to return. Regardless of country, the most likely reason respondents report for returning to one’s home country is family or personal.
ER -
TY - JOUR
AU - Huggett,Mark
AU - Kaplan,Greg
TI - The Money Value of a Man
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18066
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18066
L1 - http://www.nber.org/papers/w18066.pdf
N1 - Author contact info:
Mark Huggett
Georgetown University
E-Mail: mh5@georgetown.edu
Greg Kaplan
Department of Economics
University of Pennsylvania
160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-1875
E-Mail: gkaplan@sas.upenn.edu
AB - This paper posits a notion of the value of an individual’s human capital and the associated return on human capital. These concepts are examined using U.S. data on male earnings and financial asset returns. We decompose the value of human capital into a bond, a stock and a residual value component. We find that (1) the bond component of human capital is larger than the stock component at all ages, (2) the value of human capital is far below the value implied by discounting earnings at the risk-free rate, (3) mean human capital returns exceed stock returns early in life and decline with age and (4) human capital returns and stock returns have a small positive correlation over the working lifetime.
ER -
TY - JOUR
AU - Giné,Xavier
AU - Goldberg,Jessica
AU - Silverman,Dan
AU - Yang,Dean
TI - Revising Commitments: Field Evidence on the Adjustment of Prior Choices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18065
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18065
L1 - http://www.nber.org/papers/w18065.pdf
N1 - Author contact info:
Xavier Gine
The World Bank
1818 H Street N.W.
Mail Stop MC 3-307
Washington, D.C. 20433
Tel: (202) 473-0451
Fax: (202) 522-1155
E-Mail: xgine@worldbank.org
Jessica Goldberg
University of Maryland
Department of Economics
3115G Tydings Hall
College Park, MD 20742
Tel: (301) 405-3559
E-Mail: goldberg@econ.umd.edu
Dan Silverman
Department of Economics
University of Michigan
Ann Arbor MI 48109-1220
Tel: 734/764-2447
Fax: 734/764-2769
E-Mail: dansilv@umich.edu
Dean Yang
University of Michigan
Gerald R. Ford School of Public Policy
and Department of Economics
735 S. State Street, Room 3316
Ann Arbor, MI 48109
Tel: 734/764-6158
Fax: 734/763-9181
E-Mail: deanyang@umich.edu
AB - The very poor in developing countries often make intertemporal choices that seem at odds with their individual self-interest. There are many possible reasons why. We investigate several of these reasons with a lab-in-the-field experiment in rural Malawi involving large stakes. We make two contributions. First, we construct a new dependent variable: revisions of prior choices regarding the allocation of future income. This allows us to directly examine intertemporal choice revision and its determinants. In particular, this dependent variable permits a novel test for the existence of self-control problems: we find that revisions of money allocations toward the present are positively associated with measures of present-bias from an earlier baseline survey, as well as the (randomly assigned) closeness in time to the first possible date of money disbursement. Second, we investigate other potential determinants of revision, aside from self-control problems. We find little evidence that revisions of money allocations toward the present are associated with spousal preferences for such revision, household shocks or the financial sophistication of respondents.
ER -
TY - JOUR
AU - Andrews,Rodney J.
AU - Logan,Trevon D.
AU - Sinkey,Michael J.
TI - Identifying Confirmatory Bias in the Field: Evidence from a Poll of Experts
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18064
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18064
L1 - http://www.nber.org/papers/w18064.pdf
N1 - Author contact info:
Rodney Andrews
The University of Texas at Dallas
800 West Campbell Road
MS WT21
Richardson, TX 75080
Tel: 972/883-2548
Fax: 972/883-2551
E-Mail: rodney.j.andrews@utdallas.edu
Trevon Logan
The Ohio State University
410 Arps Hall
1945 N. High Street
Columbus, OH 43210
Tel: 614-292-0762
Fax: 614-292-3906
E-Mail: logan.155@osu.edu
Michael J. Sinkey
University of West Georgia
Richards College of Business
Carrollton, GA 30118
E-Mail: msinkey@westga.edu
AB - Laboratory experiments have established the existence of cognitive biases, but their explanatory power in real-world economic settings has been difficult to measure. We estimate the extent of a cognitive bias, confirmatory bias, among experts in a real-world environment. In the Associated Press Top 25 College Football Poll expert pollsters are tasked with assessing team quality, and their beliefs are treated week-to-week with game results that serve as signals about an individual team's quality. We exploit the variation provided by actual game results relative to market expectations to develop a novel regression-discontinuity approach to identify confirmatory bias in this real-world setting. We construct a unique personally-assembled dataset that matches more than twenty years of individual game characteristics to poll results and betting market information, and show that teams that slightly exceed and barely miss market expectations are exchangeable. The likelihood of winning the game, the average number of points scored by teams and their opponents, and even the average week of the season are no different between teams that slightly exceed and barely miss market expectations. Pollsters, however, significantly upgrade their beliefs about a team's quality when a team slightly exceeds market expectations. The effects are sizeable-- nearly half of the voters in the poll rank a team one slot higher when they slightly exceed market expectations; one-fifth of the standard deviation in poll points in a given week can be attributed to confirmatory bias. This type of updating suggests that even when informed agents make repeated decisions they may act in a manner which is consistent with confirmatory bias.
ER -
TY - JOUR
AU - Novy-Marx,Robert
TI - Pseudo-Predictability in Conditional Asset Pricing Tests: Explaining Anomaly Performance with Politics, the Weather, Global Warming, Sunspots, and the Stars
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18063
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18063
L1 - http://www.nber.org/papers/w18063.pdf
N1 - Author contact info:
Robert Novy-Marx
Simon Graduate School of Business
University of Rochester
305 Schlegel Hall
Rochester, NY 14627
Tel: 773/834-7123
E-Mail: Robert.Novy-Marx@Simon.Rochester.edu
AB - Ferson, Sarkissian and Simin (2003) warn that persistence in expected returns generates spurious regression bias in predictive regressions of stock returns, even though stock returns are themselves only weakly autocorrelated. Despite this fact a growing literature attempts to explain the performance of stock market anomalies with highly persistent investor sentiment. The data suggest, however, that the potential misspecification bias may be large. Predictive regressions of real returns on simulated regressors are too likely to reject the null of independence, and it is far too easy to find real variables that have “significant power” predicting returns. Standard OLS predictive regressions find that the party of the U.S. President, cold weather in Manhattan, global warming, the El Niño phenomenon, atmospheric pressure in the Arctic, the conjunctions of the planets, and sunspots, all have “significant power” predicting the performance of anomalies. These issues appear particularly acute for anomalies prominent in the sentiment literature, including those formed on the basis of size, distress, asset growth, investment, profitability, and idiosyncratic volatility.
ER -
TY - JOUR
AU - Rose,Andrew K.
TI - Protectionism Isn’t Counter‐Cyclic (anymore)
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18062
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18062
L1 - http://www.nber.org/papers/w18062.pdf
N1 - Author contact info:
Andrew K. Rose
Haas School of Business Administration
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-6609
Fax: 510/642-4700
E-Mail: arose@haas.berkeley.edu
AB - Conventional wisdom holds that protectionism is counter-cyclic; tariffs, quotas and the like grow during recessions. While that may have been a valid description of the data before the Second World War, it is now inaccurate. In the post-war era, protectionism has not actually moved counter-cyclically. Tariffs and non-tariff barriers simply do not rise systematically during cyclic downturns. I document this new stylized fact with a panel of data covering over 60 countries and 30 years, using eighteen measures of protectionism and seven of business cycles. I also provide some hints as to why protectionism is no longer counter-cyclic.
ER -
TY - JOUR
AU - Levchenko,Andrei A.
AU - Zhang,Jing
TI - Comparative Advantage and the Welfare Impact of European Integration
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18061
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18061
L1 - http://www.nber.org/papers/w18061.pdf
N1 - Author contact info:
Andrei Levchenko
Department of Economics
University of Michigan
611 Tappan Street
Ann Arbor, MI 48109
Tel: 734/764-3296
E-Mail: alev@umich.edu
Jing Zhang
University of Michigan
Department of Economics
611 Tappan Street
Ann Arbor, MI 48109-1220
E-Mail: jzhang@umich.edu
AB - This paper investigates the welfare gains from European trade integration, and the role of comparative advantage in determining the magnitude of those gains. We use a multisector Ricardian model implemented on 79 countries, and compare welfare in the 2000s to a counterfactual scenario in which East European countries are closed to trade. For West European countries, the mean welfare gain from trade integration with Eastern Europe is 0.16%, rang- ing from zero for Portugal to 0.4% for Austria. For East European countries, gains from trade are 9.23% at the mean, ranging from 2.85% for Russia to 20% for Estonia. For Eastern Europe, comparative advantage is a key determinant of the variation in the welfare gains: countries whose comparative advantage is most similar to Western Europe tend to gain less, while countries with technology most different from Western Europe gain the most.
ER -
TY - JOUR
AU - Bradley,Cathy J.
AU - Neumark,David
AU - Barkowski,Scott
TI - Does Employer-Provided Health Insurance Constrain Labor Supply Adjustments to Health Shocks? New Evidence on Women Diagnosed with Breast Cancer
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18060
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18060
L1 - http://www.nber.org/papers/w18060.pdf
N1 - Author contact info:
Cathy J. Bradley
Department of Healthcare Policy and Research
Virginia Commonwealth University
830 E. Main Street
Richmond, VA 23219
E-Mail: cjbradley@vcu.edu
David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA 92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu
Scott Barkowski
Department of Economics
3151 Social Science Plaza
Irvine, CA 92697
E-Mail: scott.barkowski@uci.edu
AB - Employment-contingent health insurance creates incentives for ill workers to remain employed at a sufficient level (usually full-time) to maintain access to health insurance coverage. We study employed married women, newly diagnosed with breast cancer, comparing labor supply responses to breast cancer diagnoses between women dependent on their own employment for health insurance and women with access to health insurance through their spouse’s employer. We find evidence that women more dependent on their own job for health insurance reduce their labor supply by less after a diagnosis of breast cancer – the estimate difference is about 5.5 to 7 percent. Women’s subjective responses to questions about working more to maintain health insurance are consistent with the conclusions from observed behavior.
ER -
TY - JOUR
AU - Sinai,Todd M.
TI - House Price Moments in Boom-Bust Cycles
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18059
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18059
L1 - http://www.nber.org/papers/w18059.pdf
N1 - Author contact info:
Todd M. Sinai
University of Pennsylvania, Wharton School
1465 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
Tel: 215/898-5390
Fax: 215/573-2220
E-Mail: sinai@wharton.upenn.edu
M3 - presented at "Housing and the Financial Crisis", November 17-18, 2011
AB - This paper describes six stylized patterns among housing markets in the United States that potential explanations of the housing boom and bust should seek to explain. First, individual housing markets in the U.S. experienced considerable heterogeneity in the amplitudes of their cycles. Second, the areas with the biggest boom-bust cycles in the 2000s also had the largest boom-busts in the 1980s and 1990s, with a few telling exceptions. Third, the timing of the cycles differed across housing markets. Fourth, the largest booms and busts, and their timing, seem to be clustered geographically. Fifth, the cross sectional variance of annual house price changes rises in booms and declines in busts. Finally, these stylized facts are robust to controlling for housing demand fundamentals – namely, rents, incomes, or employment – although changes in fundamentals are correlated with changes in prices.
ER -
TY - JOUR
AU - Fernández-Villaverde,Jesús
AU - Gordon,Grey
AU - Guerrón-Quintana,Pablo A.
AU - Rubio-Ramírez,Juan
TI - Nonlinear Adventures at the Zero Lower Bound
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18058
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18058
L1 - http://www.nber.org/papers/w18058.pdf
N1 - Author contact info:
Jesus Fernandez-Villaverde
University of Pennsylvania
160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
Tel: 267/307-1068
E-Mail: jesusfv@econ.upenn.edu
Grey Gordon
University of Pennsylvania
160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
E-Mail: greygordon@gmail.com
Pablo A. Guerrón-Quintana
Federal Reserve Bank of Philadelphia
Tel: 9195132869
E-Mail: pablo.guerron@phil.frb.org
Juan Rubio-Ramírez
Duke University
P.O. Box 90097
Durham, NC 27708
Tel: 9196601865
E-Mail: juan.rubio-ramirez@duke.edu
AB - Motivated by the recent experience of the U.S. and the Eurozone, we describe the quantitative properties of a New Keynesian model with a zero lower bound (ZLB) on nominal interest rates, explicitly accounting for the nonlinearities that the bound brings. Besides showing how such a model can be efficiently computed, we find that the behavior of the economy is substantially affected by the presence of the ZLB. In particular, we document 1) the unconditional and conditional probabilities of hitting the ZLB; 2) the unconditional and conditional probabilty distributions of the duration of a spell at the ZLB; 3) the responses of output to government expenditure shocks at the ZLB, 4) the distribution of shocks that send the economy to the ZLB; and 5) the distribution of shocks that keep the economy at the ZLB.
ER -
TY - JOUR
AU - Hassan,Tarek Alexander
TI - Country Size, Currency Unions, and International Asset Returns
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18057
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18057
L1 - http://www.nber.org/papers/w18057.pdf
N1 - Author contact info:
Tarek Alexander Hassan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-3291
Fax: 773/753-0851
E-Mail: tarek.hassan@chicagobooth.edu
AB - Differences in real interest rates across developed economies are puzzlingly large and persistent. I propose a simple explanation: Bonds issued in the currencies of larger economies are expensive because they insure against shocks that affect a larger fraction of the world economy. I show that differences in the size of economies indeed explain a large fraction of the cross-sectional variation in currency returns. The data also support a number of additional implications of the model: The introduction of a currency union lowers interest rates in participating countries and stocks in the non-traded sector of larger economies pay lower expected returns.
ER -
TY - JOUR
AU - Basu,Anirban
TI - Estimating Person-Centered Treatment (PeT) Effects Using Instrumental Variables
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18056
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18056
L1 - http://www.nber.org/papers/w18056.pdf
N1 - Author contact info:
Anirban Basu
Department of Health Services
School of Public Health
University of Washington
1959 NE Pacific St
Box - 357660
Seattle WA 98195
Tel: 206) 616-2986
Fax: (206) 543-3964
E-Mail: basua@uw.edu
AB - This paper builds on the methods of local instrumental variables developed by Heckman and Vytlacil (1999, 2001, 2005) to estimate person-centered treatment (PeT) effects that are conditioned on the person’s observed characteristics and averaged over the potential conditional distribution of unobserved characteristics that lead them to their observed treatment choices. PeT effects are more individualized than conditional treatment effects from a randomized setting with the same observed characteristics. PeT effects can be easily aggregated to construct any of the mean treatment effect parameters and, more importantly, are well-suited to comprehend individual-level treatment effect heterogeneity. The paper presents the theory behind PeT effects, studies their finite-sample properties using simulations and presents a novel analysis of treatment evaluation in health care.
ER -
TY - JOUR
AU - Neumark,David
AU - Thompson,Matthew
AU - Brindisi,Francesco
AU - Koyle,Leslie
AU - Reck,Clayton
TI - Estimating the Economic Impacts of Living Wage Mandates Using Ex Ante Simulations, Longitudinal Estimates, and New Public and Administrative Data: Evidence for New York City
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18055
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18055
L1 - http://www.nber.org/papers/w18055.pdf
N1 - Author contact info:
David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA 92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu
Matthew Thompson
Charles Rivers Associates
1545 Raymond Diehl Road
Suite 260
Tallahassee, FL 32308
E-Mail: mthompson@crai.com
Francesco Brindisi
New York City
Office of Management and Budget
75 Park Place
New York, NY 10007
E-Mail: fb2012@columbia.edu
Leslie Koyle
Charles Rivers Associates
170 S. Main St., Suite 1050
Salt Lake City, UT 84101
E-Mail: LKoyle@crai.com
Clayton Reck
Charles Rivers Associates
1545 Raymond Diehl Road
Suite 260
Tallahassee, FL 32308
E-Mail: creck@crai.com
AB - Policy researchers often have to estimate the future effect of imposing a policy in a particular location. There is often historical information on the effects of similar policies in other jurisdictions, but no information on the effects of the policy in the jurisdiction in question, and the policy may have specific features not reflected in the experiences of other areas. It is then necessary to combine the historical evidence from other locations with information and data specific to the jurisdiction in question. In this paper, we illustrate and use this approach in estimating the impact of a proposed living wage mandate for New York City. We explain how we combined elements of “ex ante” evaluations of living wage laws with before-and-after (longitudinal) estimates of the effects of living wage laws. We also incorporate detailed location-specific information on workers, families, and employers using administrative data and other new public data sources.
ER -
TY - JOUR
AU - Autor,David H.
AU - Dorn,David
AU - Hanson,Gordon H.
TI - The China Syndrome: Local Labor Market Effects of Import Competition in the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18054
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18054
L1 - http://www.nber.org/papers/w18054.pdf
N1 - Author contact info:
David Autor
Department of Economics
MIT, E52-371
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/258-7698
Fax: 617/253-1330
E-Mail: dautor@mit.edu
David Dorn
David Dorn
CEMFI
Casado del Alisal 5
28014 Madrid
Spain
Tel: +34 914290551
Fax: +34 914291056
E-Mail: dorn@cemfi.es
Gordon H. Hanson
IR/PS 0519
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0519
Tel: 858/822-5087
Fax: 858/534-3939
E-Mail: gohanson@ucsd.edu
AB - We analyze the effect of rising Chinese import competition between 1990 and 2007 on local U.S. labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization while instrumenting for imports using changes in Chinese imports by industry to other high-income countries. Rising exposure increases unemployment, lowers labor force participation, and reduces wages in local labor markets. Conservatively, it explains one-quarter of the contemporaneous aggregate decline in U.S. manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in exposed labor markets.
ER -
TY - JOUR
AU - Hall,Bronwyn H.
AU - Lotti,Francesca
AU - Mairesse,Jacques
TI - Evidence on the Impact of R&D and ICT Investment on Innovation and Productivity in Italian Firms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18053
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18053
L1 - http://www.nber.org/papers/w18053.pdf
N1 - Author contact info:
Bronwyn H. Hall
Dept. of Economics
549 Evans Hall
UC Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-3878
Fax: 510/548-5561
E-Mail: bhhall@nber.org
Francesca Lotti
Structural Economic Analysis Department
Bank of Italy
via Nazionale 91, 00184 Rome (IT)
E-Mail: francesca.lotti@gmail.com
Jacques Mairesse
CREST-INSEE
15, Boulevard Gabriel PERI
92245 MALAKOFF CEDEX
FRANCE
Tel: 33-1-41-17-35-50
Fax: 33-1-41-17-76-34
E-Mail: mairesse@ensae.fr
AB - Both Research and Development (R&D) and Information and Communication Technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the United States. In this paper we investigate R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, together with a version of the CDM model (Crepon et al., 1998) that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities.
ER -
TY - JOUR
AU - Forbes,Kristin
AU - Fratzscher,Marcel
AU - Kostka,Thomas
AU - Straub,Roland
TI - Bubble Thy Neighbor: Portfolio Effects and Externalities from Capital Controls
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18052
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18052
L1 - http://www.nber.org/papers/w18052.pdf
N1 - Author contact info:
Kristin Forbes
MIT Sloan School of Management
100 Main Street, E62-416
Cambridge, MA 02142
Tel: 617/253-8996
Fax: 617/258-6855
E-Mail: kjforbes@mit.edu
Marcel Fratzscher
European Central Bank
Kaiserstrasse 29
D-60311 Frankfurt/Main GERMANY
Tel: +49 - 69 1344 6871
E-Mail: marcel.fratzscher@ecb.int
Thomas Kostka
European Central Bank
Frankfurt
Germany
E-Mail: thomas.kostka@ecb.int
Roland Straub
European Central Bank
E-Mail: Roland.Straub@ecb.int
AB - We use changes in Brazil’s tax on capital inflows from 2006 to 2011 to test for direct portfolio effects and externalities from capital controls on investor portfolios. The analysis is structured based on information from investor interviews. We find that an increase in Brazil’s tax on foreign investment in bonds causes investors to significantly decrease their portfolio allocations to Brazil in both bonds and equities. Investors simultaneously increase allocations to other countries that have substantial exposure to China and decrease allocations to countries viewed as more likely to use capital controls. Much of the effect of capital controls on portfolio flows appears to occur through signalling —i.e. changes in investor expectations about future policies— rather than the direct cost of the controls. This evidence of significant externalities from capital controls suggests that any assessment of controls should consider their effects on portfolio flows to other countries.
ER -
TY - JOUR
AU - Milligan,Kevin S.
TI - How is Economic Hardship Avoided by Those Retiring Before the Social Security Entitlement Age?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18051
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18051
L1 - http://www.nber.org/papers/w18051.pdf
N1 - Author contact info:
Kevin S. Milligan
Department of Economics
University of British Columbia
#997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-6747
Fax: 604/822-5915
E-Mail: kevin.milligan@ubc.ca
AB - Governments around the world are reacting to extended lifespans and troubled pension finances by increasing the age of retirement benefit entitlement. One concern that arises is how those who are not working before reaching entitlement age are able to bridge their consumption to the age of entitlement. This paper studies those who retire before the age of full pension entitlement in the United States using data drawn from the Health and Retirement Study. The major finding is that four out of five people who have zero earnings at pre-entitlement ages are able to find a way to lift their incomes over the poverty line. For men, pension and annuity income is important while for women, spousal income helps most to get them over the line. Reaching the early retirement entitlement age at 62 also has a significant impact on poverty avoidance.
ER -
TY - JOUR
AU - Cremers,Martijn
AU - Petajisto,Antti
AU - Zitzewitz,Eric
TI - Should Benchmark Indices Have Alpha? Revisiting Performance Evaluation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18050
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18050
L1 - http://www.nber.org/papers/w18050.pdf
N1 - Author contact info:
Martijn Cremers
Yale School of Management
135 Prospect Street
New Haven, CT 06520-8200
Tel: 203/436-0649
Fax: 203/436-0630
E-Mail: martijn.cremers@yale.edu
Antti Petajisto
New York University
Stern School of Business
44 W 4th St., Suite 9-190
New York, NY 10012-1126
E-Mail: antti.petajisto@stern.nyu.edu
Eric Zitzewitz
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2891
Fax: 603/646-2122
E-Mail: eric.zitzewitz@dartmouth.edu
AB - Standard Fama-French and Carhart models produce economically and statistically significant nonzero alphas, even for passive benchmark indices such as the S&P 500 and Russell 2000. We find that these alphas arise primarily from the disproportionate weight the Fama-French factors place on small value stocks, which have performed well, and from the CRSP value-weighted market index, which is historically a downward-biased benchmark for U.S. stocks. We propose small methodological changes to the Fama-French factors to eliminate the nonzero alphas, and we also propose factor models based on common and tradable benchmark indices. Both kinds of alternative models improve performance evaluation of actively managed portfolios, with the index-based models exhibiting the best performance.
ER -
TY - JOUR
AU - Aghion,Philippe
AU - Persson,Torsten
AU - Rouzet,Dorothee
TI - Education and Military Rivalry
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18049
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18049
L1 - http://www.nber.org/papers/w18049.pdf
N1 - Author contact info:
Philippe Aghion
Department of Economics
Harvard University
1805 Cambridge St
Cambridge, MA 02138
Tel: 617/495-6675
Fax: 617/495-4341
E-Mail: paghion@fas.harvard.edu
Torsten Persson
Torsten and Ragnar Soderberg Chair in Economic Sci
Institute for International Economic Studies
Stockholm University
SE-106 91 Stockholm
SWEDEN
Tel: +46 8 163066
Fax: +46 8 6747801
E-Mail: Torsten.Persson@iies.su.se
Dorothee Rouzet
Department of Economics
Harvard University
1805 Cambridge St
Cambridge, MA 02138
E-Mail: drouzet@fas.harvard.edu
AB - Using data from the last 150 years in a small set of countries, and from the postwar period in a large set of countries, we show that large investments in state primary education systems tend to occur when countries face military rivals or threats from their neighbors. By contrast, we find that democratic transitions are negatively associated with education investments, while the presence of democratic political institutions magnifies the positive effect of military rivalries. These empirical results are robust to a number of statistical concerns and continue to hold when we instrument military rivalries with commodity prices or rivalries in a certain country’s immediate neighborhood. We also present historical case studies, as well as a simple model, that are consistent with the econometric evidence.
ER -
TY - JOUR
AU - Aghion,Philippe
AU - Dewatripont,Mathias
AU - Du,Luosha
AU - Harrison,Ann
AU - Legros,Patrick
TI - Industrial Policy and Competition
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18048
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18048
L1 - http://www.nber.org/papers/w18048.pdf
N1 - Author contact info:
Philippe Aghion
Department of Economics
Harvard University
1805 Cambridge St
Cambridge, MA 02138
Tel: 617/495-6675
Fax: 617/495-4341
E-Mail: paghion@fas.harvard.edu
Mathias Dewatripont
Universite Libre de Bruxelles
E-Mail: mathias.dewatripont@ulb.ac.be
Luosha Du
Department of Agricultural
and Resource Economics
UC Berkeley
Giannini Hall
Berkeley, California 94720
E-Mail: luosha@berkeley.edu
Ann Harrison
The Wharton School
University of Pennsylvania
2016 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6370
Tel: 215 746 3132
E-Mail: annh@wharton.upenn.edu
Patrick Legros
ECARES, Universite Libre de Bruxelles
CP114
50 avenue Franklin Roosevelt
1050 Brussels BELGIUM
E-Mail: plegros@ulb.ac.be
AB - This paper argues that sectoral policy aimed at targeting production activities to one particular sector, can enhance growth and efficiency if it made competition-friendly. First, we develop a model in which two firms can operate either in the same (higher growth) sector or in different sectors. To escape competition, firms can either innovate vertically or differentiate by chosing a different sector from its competitor. By forcing firms to operate in the same sector, sectoral policy induces them to innovate "vertically" rather than differentiate in order to escape competition with the other firm. The model predicts that sectoral targeting enhances average growth and productivity more when competition is more intense within a sector and when competition is preserved by the policy. In the second part of the paper, we test these predictions using a panel of medium and large Chinese enterprises for the period 1998 through 2007. Our empirical results suggest that if subsidies are allocated to competitive sectors (as measured by the Lerner index) and allocated in such a way as to preserve or increase competition, then the net impacts of subsidies, tax holidays, and tariffs on total factor productivity levels or growth become positive and significant. We address the potential endogeneity of targeting and competition by using variations in targeting across Chinese cities that are exogenous to the individual firm.
ER -
TY - JOUR
AU - Hunt,Jennifer
TI - The Impact of Immigration on the Educational Attainment of Natives
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18047
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18047
L1 - http://www.nber.org/papers/w18047.pdf
N1 - Author contact info:
Jennifer Hunt
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick
NJ, 08901-1248
Tel: (732) 932-7363
E-Mail: jennifer.hunt@rutgers.edu
AB - Using a state panel based on census data from 1940-2010, I examine the impact of immigration on the high school completion of natives in the United States. Immigrant children could compete for schooling resources with native children, lowering the return to native education and discouraging native high school completion. Conversely, native children might be encouraged to complete high school in order to avoid competing with immigrant high-school dropouts in the labor market. I find evidence that both channels are operative and that the net effect is positive, particularly for native-born blacks, though not for native-born Hispanics. An increase of one percentage point in the share of immigrants in the population aged 11-64 increases the probability that natives aged 11-17 eventually complete 12 years of schooling by 0.3 percentage points, and increases the probability for native-born blacks by 0.4 percentage points. I account for the endogeneity of immigrant flows by using instruments based on 1940 settlement patterns.
ER -
TY - JOUR
AU - Andersen,Torben G.
AU - Fusari,Nicola
AU - Todorov,Viktor
TI - Parametric Inference and Dynamic State Recovery from Option Panels
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18046
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18046
L1 - http://www.nber.org/papers/w18046.pdf
N1 - Author contact info:
Torben G. Andersen
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/467-1285
Fax: 847/491-5719
E-Mail: t-andersen@kellogg.northwestern.edu
Nicola Fusari
Department of Finance
Kellogg School, Northwestern University
Evanston, IL 60208
E-Mail: n-fusari@northwestern.edu
Viktor Todorov
Department of Finance
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL
Tel: 847-467-0694
E-Mail: v-todorov@kellogg.northwestern.edu
AB - We develop a new parametric estimation procedure for option panels observed with error which relies on asymptotic approximations assuming an ever increasing set of observed option prices in the moneyness- maturity (cross-sectional) dimension, but with a fixed time span. We develop consistent estimators of the parameter vector and the dynamic realization of the state vector that governs the option price dynamics. The estimators converge stably to a mixed-Gaussian law and we develop feasible estimators for the limiting variance. We provide semiparametric tests for the option price dynamics based on the distance between the spot volatility extracted from the options and the one obtained nonparametrically from high-frequency data on the underlying asset. We further construct new formal tests of the model fit for specific regions of the volatility surface and for the stability of the risk-neutral dynamics over a given period of time. A large-scale Monte Carlo study indicates the inference procedures work well for empirically realistic specifications and sample sizes. In an empirical application to S&P 500 index options we extend the popular double-jump stochastic volatility model to allow for time-varying jump risk premia and a flexible relation between risk premia and the level of risk. Both extensions lead to an improved characterization of observed option prices.
ER -
TY - JOUR
AU - Weinzierl,Matthew C.
TI - Why do we Redistribute so Much but Tag so Little? The principle of equal sacrifice and optimal taxation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18045
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18045
L1 - http://www.nber.org/papers/w18045.pdf
N1 - Author contact info:
Matthew C. Weinzierl
Harvard Business School
277 Morgan
Soldiers Field
Boston, MA 02163
Tel: 617/495-6697
Fax: 617/496-5994
E-Mail: mweinzierl@hbs.edu
AB - Tagging is a free lunch in conventional optimal tax theory because it eases the classic tradeoff between efficiency and equality. But tagging is used in only limited ways in tax policy. I propose one explanation: conventional optimal tax theory has yet to capture the diversity of normative principles with which society evaluates taxes. I generalize the conventional model to incorporate multiple normative frameworks. I then show that if the principle of equal sacrifice--a classic, comprehensive criterion of fair taxation proposed by John Stuart Mill and associated with the Libertarian normative framework--is given some weight in the social objective function, tagging generates costs that must be weighed against the benefits it generates through conventional channels. Only tags that are sufficiently predictive of ability, such as disability status, will be used. Calibrated simulations using micro data from the United States show that optimal policy may simultaneously include substantial redistribution across income-earning abilities, as in the standard model, and reject three prominently-proposed tags--gender, race, and height--as in actual policy. This explanation for limited tagging also implies that optimal marginal tax rates at high incomes are lower than in standard analysis and closer to those observed in policy.
ER -
TY - JOUR
AU - Davis,Lucas W.
AU - Fuchs,Alan
AU - Gertler,Paul J.
TI - Cash for Coolers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18044
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18044
L1 - http://www.nber.org/papers/w18044.pdf
N1 - Author contact info:
Lucas W. Davis
Haas School of Business
University of California
Berkeley, CA 94720-1900
E-Mail: ldavis@haas.berkeley.edu
Alan Fuchs
United Nations Development Programme
304 East 45th Street, FF-1272
New York, New York 10017
E-Mail: alan.fuchs@undp.org
Paul J. Gertler
Haas School of Business
545 Student Services Building
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-1418
Fax: 510/642-4700
E-Mail: gertler@haas.berkeley.edu
AB - This paper examines a large-scale appliance replacement program in Mexico that since 2009 has helped 1.5 million households replace their old refrigerators and air-conditioners with energy-efficient models. Using household-level electric billing records from the population of Mexican residential customers we find that refrigerator replacement reduces electricity consumption by an average of 11 kilowatt hours per month, about a 7% decrease. We find that air conditioning replacement, in contrast, increases electricity consumption by an average of 6 kilowatt hours per month, with larger increases during the summer. To put these results in context we present a simple conceptual framework in which energy-efficient durable goods cost less to operate, so households use them more. This behavioral response, sometimes called the “rebound” effect, is important for air-conditioners, but not important for refrigerators.
ER -
TY - JOUR
AU - Hovakimian,Armen
AU - Kane,Edward J.
AU - Laeven,Luc
TI - Variation in Systemic Risk at US Banks During 1974-2010
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18043
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18043
L1 - http://www.nber.org/papers/w18043.pdf
N1 - Author contact info:
Armen Hovakimian
Department of Economics and Finance
Baruch College Zicklin School of Business
1 Bernard Baruch Way
New York, NY 10010
Tel: 646-312-3490
Fax: 646-312-3451
E-Mail: Armen_Hovakimian@baruch.cuny.edu
Edward J. Kane
2325 E Calle Los Altos
Tucson, AZ 85718
Tel: 520-299-5066
E-Mail: edward.kane@bc.edu
Luc Laeven
Deputy Division Chief
International Monetary Fund
700 19th Avenue, NW
Washington, DC 20431
Tel: 202/623-9020
Fax: 202/623-4740
E-Mail: Llaeven@imf.org
AB - This paper proposes a theoretically sound and easy-to-implement way to measure the systemic risk of financial institutions using publicly available accounting and stock market data. The measure models credit risk of banks as a put option on bank assets, a tradition that originated with Merton (1974). We extend his contribution by expressing the value of banking-sector losses from systemic default risk as the value of a put option written on a portfolio of aggregate bank assets whose exercise price equals the face value of aggregate bank debt. We conceive of an individual bank’s systemic risk as its contribution to the value of this potential sector-wide put on the financial safety net. To track the interaction of private and governmental sources of systemic risk during and in advance of successive business-cycle contractions, we apply our model to quarterly data over the period 1974-2010. Results indicate that systemic risk reached unprecedented highs during the years 2008-2010, and that bank size, leverage, and asset risk are key drivers of systemic risk.
ER -
TY - JOUR
AU - Leduc,Sylvain
AU - Wilson,Daniel
TI - Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18042
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18042
L1 - http://www.nber.org/papers/w18042.pdf
N1 - Author contact info:
Sylvain Leduc
Federal Reserve Bank of San Francisco
E-Mail: sylvain.leduc@sf.frb.org
Daniel Wilson
Federal Reserve Bank of San Francisco
101 Market St.
Mail Stop 1130
San Francisco, CA 94105-1530
Tel: 415-974-3423
Fax: 415-974-2168
E-Mail: Daniel.Wilson@sf.frb.org
M3 - presented at "27th Annual Conference on Macroeconomics", April 20-21, 2012
AB - We examine the dynamic macroeconomic effects of public infrastructure investment both theoretically and empirically, using a novel data set we compiled on various highway spending measures. Relying on the institutional design of federal grant distributions among states, we construct a measure of government highway spending shocks that captures revisions in expectations about future government investment. We find that shocks to federal highway funding has a positive effect on local GDP both on impact and after 6 to 8 years, with the impact effect coming from shocks during (local) recessions. However, we find no permanent effect (as of 10 years after the shock). Similar impulse responses are found in a number of other macroeconomic variables. The transmission channel for these responses appears to be through initial funding leading to building, over several years, of public highway capital which then temporarily boosts private sector productivity and local demand. To help interpret these findings, we develop an open economy New Keynesian model with productive public capital in which regions are part of a monetary and fiscal union. We show that the presence of productive public capital in this model can yield impulse responses with the same qualitative pattern that we find empirically.
ER -
TY - JOUR
AU - Edmond,Chris
AU - Midrigan,Virgiliu
AU - Xu,Daniel Yi
TI - Competition, Markups, and the Gains from International Trade
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18041
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18041
L1 - http://www.nber.org/papers/w18041.pdf
N1 - Author contact info:
Chris Edmond
Department of Economics
University of Melbourne
Parkville VIC 3010
AUSTRALIA
Tel: +61-3-8344-9733
Fax: +61-3-8344-6899
E-Mail: chris.edmond@gmail.com
Virgiliu Midrigan
Department of Economics
New York University
19 W. 4th St.
New York, NY 10012
Tel: 212/992-8081
Fax: 212/995-4186
E-Mail: virgiliu.midrigan@nyu.edu
Daniel Xu
Department of Economics
Duke University
213 Social Science Bldg
419 Chapel Drive
Box 90097
Durham, NC 27708-0097
Tel: 919-660-1824
E-Mail: daniel.xu@duke.edu
AB - We study the gains from trade in a model with endogenously variable markups. We show that the pro-competitive gains from trade are large if the economy is characterized by (i) extensive misallocation, i.e., large inefficiencies associated with markups, and (ii) a weak pattern of cross-country comparative advantage in individual sectors. We find strong evidence for both of these ingredients using producer-level data for Taiwanese manufacturing establishments. Parameterizations of the model consistent with this data thus predict large pro-competitive gains from trade, much larger than those in standard Ricardian models. In stark contrast to standard Ricardian models, data on changes in trade volume are not sufficient for determining the gains from trade.
ER -
TY - JOUR
AU - Banzhaf,H. Spencer
AU - Oates,Wallace E.
TI - On Fiscal Illusion and Ricardian Equivalence in Local Public Finance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18040
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18040
L1 - http://www.nber.org/papers/w18040.pdf
N1 - Author contact info:
H. Spencer Banzhaf
Department of Economics
Andrew Young School of Policy Studies
Georgia State University
P.O. Box 3992
Atlanta, GA 30302
Tel: 404/413-0252
Fax: 404/413-0248
E-Mail: hsbanzhaf@gsu.edu
Wallace Oates
Dept. of Economics
University of Maryland
College Park, MD 20742
E-Mail: oates@econ.umd.edu
AB - We re-evaluate two forms of fiscal illusion in local public finance: debt illusion and renter illusion. The Ricardian Equivalence Theorem for local governments suggests the form of finance of a public program (tax or debt finance) has no effects on substantive outcomes. For the local case, this results from the capitalization of local fiscal differentials into property values. We show that this version of the model is quite restrictive. In particular, in the U.S, context, where state and local interest is exempt from federal taxation, rational behavior may be inconsistent with Ricardian equivalence if local governments can borrow on more favorable terms than individuals. We also suggest a new test for renter illusion (or the renter effect). In particular, whether or not renters are more likely to support public investments in general, the renter effect suggests that renters are more likely to support them when financed with property taxes than with sales taxes. Using data from hundreds of open space referenda in the U.S. using a variety of finance mechanisms, we find evidence that households do prefer debt financing to tax financing, but find no evidence of the renter effect.
ER -
TY - JOUR
AU - Burde,Dana
AU - Linden,Leigh L.
TI - The Effect of Village-Based Schools: Evidence from a Randomized Controlled Trial in Afghanistan
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18039
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18039
L1 - http://www.nber.org/papers/w18039.pdf
N1 - Author contact info:
Dana Burde
Steinhardt School of Culture, Education,
and Human Development
New York University
246 Greene Street
New York, NY 10003
E-Mail: dana.burde@nyu.edu
Leigh L. Linden
Department of Economics
The Univesrity of Texas at Austin
2225 Speedway
BRB 1.116, C3100
Austin, Texas 78712
Tel: (512) 475-8556
E-Mail: leigh.linden@austin.utexas.edu
AB - We conduct a randomized evaluation of the effect of village-based schools on children’s academic performance using a sample of 31 villages and 1,490 children in rural northwestern Afghanistan. The program significantly increases enrollment and test scores among all children, eliminates the 21 percentage point gender disparity in enrollment, and dramatically reduces the disparity in test scores. The intervention increases formal school enrollment by 42 percentage points among all children and increases test scores by 0.51 standard deviations (1.2 standard deviations for children that enroll in school). While all students benefit, the effects accrue disproportionately to girls. Evidence suggests that the village-based schools provide a comparable education to traditional schools. Estimating the effects of distance on academic outcomes, children prove very sensitive: enrollment and test scores fall by 16 percentage points and 0.19 standard deviations per mile. Distance affects girls more than boys—girls’ enrollment falls by 6 percentage points more per mile (19 percentage points total per mile) and their test scores fall by an additional 0.09 standard deviations (0.24 standard deviations total per mile).
ER -
TY - JOUR
AU - Cascio,Elizabeth U.
AU - Staiger,Douglas O.
TI - Knowledge, Tests, and Fadeout in Educational Interventions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18038
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18038
L1 - http://www.nber.org/papers/w18038.pdf
N1 - Author contact info:
Elizabeth U. Cascio
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: (603) 646-4096
Fax: (603) 646-2122
E-Mail: elizabeth.u.cascio@dartmouth.edu
Douglas O. Staiger
Dartmouth College
Department of Economics
HB6106, 301 Rockefeller Hall
Hanover, NH 03755-3514
Tel: 603/646-2979
Fax: 603/646-2122
E-Mail: douglas.staiger@dartmouth.edu
AB - Educational interventions are often evaluated and compared on the basis of their impacts on test scores. Decades of research have produced two empirical regularities: interventions in later grades tend to have smaller effects than the same interventions in earlier grades, and the test score impacts of early educational interventions almost universally “fade out” over time. This paper explores whether these empirical regularities are an artifact of the common practice of rescaling test scores in terms of a student’s position in a widening distribution of knowledge. If a standard deviation in test scores in later grades translates into a larger difference in knowledge, an intervention’s effect on normalized test scores may fall even as its effect on knowledge does not. We evaluate this hypothesis by fitting a model of education production to correlations in test scores across grades and with college-going using both administrative and survey data. Our results imply that the variance in knowledge does indeed rise as children progress through school, but not enough for test score normalization to fully explain these empirical regularities.
ER -
TY - JOUR
AU - Borenstein,Severin
TI - Effective and Equitable Adoption of Opt-In Residential Dynamic Electricity Pricing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18037
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18037
L1 - http://www.nber.org/papers/w18037.pdf
N1 - Author contact info:
Severin Borenstein
Haas School of Business
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-3689
E-Mail: borenste@haas.berkeley.edu
AB - While time-varying retail electricity pricing is very popular with economists, that support is not matched among regulators and consumers. Many papers have been written estimating and extolling the societal benefits of time-varying rates -- especially dynamic rates that change on a day's notice or less. Yet, such tariffs have been almost completely absent in the residential sector. In this paper, I present a potential approach to implementing an opt-in dynamic pricing plan that would be equitable to both customers who choose the rate and to those who choose to remain on a default flat-rate tariff. The approach bases the dynamic and the flat rate on the same underlying cost structure, and minimizes cross-subsidies between the two groups. I study the potential distributional impact of such a tariff structure using hourly consumption data for stratified random samples of customers from California's two largest utilities. I find that low-income households would, on average, see almost no change in their bills, while low-consumption households would see their bills decline somewhat and high-consumption households would see their bills rise. I also show that the opt-in approach is unlikely to increase the flat rate charged to other customers by more than a few percentage points. I then discuss the most common approach to implementing dynamic electricity pricing -- critical-peak pricing -- and suggest how it might be designed to more accurately match retail price spikes with periods of true supply shortages. Finally, I study the incentive problems created by an alternative program in growing use that pays customers to reduce their consumption on peak usage days.
ER -
TY - JOUR
AU - Bianchi,Javier
AU - Boz,Emine
AU - Mendoza,Enrique G.
TI - Macro-Prudential Policy in a Fisherian model of Financial Innovation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18036
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18036
L1 - http://www.nber.org/papers/w18036.pdf
N1 - Author contact info:
Javier Bianchi
Department of Economics
New York University
19 West Fourth Street
New York, NY 10012
Tel: 646/370-9871
E-Mail: javier.bianchi@nyu.edu
Emine Boz
International Monetary Fund
700 19th Street, N.W.
Washington, DC 20431
Tel: (240)423-6325
E-Mail: eboz@imf.org
Enrique G. Mendoza
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3845
Fax: 301/405-7835
E-Mail: mendozae@econ.umd.edu
AB - The interaction between credit frictions, financial innovation, and a switch from optimistic to pessimistic beliefs played a central role in the 2008 financial crisis. This paper develops a quantitative general equilibrium framework in which this interaction drives the financial amplification mechanism to study the effects of macro-prudential policy. Financial innovation enhances the ability of agents to collateralize assets into debt, but the riskiness of this new regime can only be learned over time. Beliefs about transition probabilities across states with high and low ability to borrow change as agents learn from observed realizations of financial conditions. At the same time, the collateral constraint introduces a pecuniary externality, because agents fail to internalize the effect of their borrowing decisions on asset prices. Quantitative analysis shows that the effectiveness of macro-prudential policy in this environment depends on the government's information set, the tightness of credit constraints and the pace at which optimism surges in the early stages of financial innovation. The policy is least effective when the government is as uninformed as private agents, credit constraints are tight, and optimism builds quickly.
ER -
TY - JOUR
AU - Guvenen,Fatih
AU - Ozkan,Serdar
AU - Song,Jae
TI - The Nature of Countercyclical Income Risk
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18035
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18035
L1 - http://www.nber.org/papers/w18035.pdf
N1 - Author contact info:
Fatih Guvenen
Department of Economics
University of Minnesota
4-151 Hanson Hall
1925 Fourth Street South
Minneapolis, MN, 55455
Tel: 612-6250767
E-Mail: guvenen@umn.edu
Serdar Ozkan
Federal Reserve Board
20th and C Streets, NW
Washington, DC 20551
Tel: 202-721-4558
E-Mail: serdar.ozkan@frb.gov
Jae Song
Social Security Administration
Office of Quality Performance
2121 Crystal Drive, Suite 825
Arlington, VA 22202
E-Mail: jae.song@ssa.gov
AB - This paper studies the cyclical nature of individual income risk using a confidential dataset from the U.S. Social Security Administration, which contains (uncapped) earnings histories for millions of individuals. The base sample is a nationally representative panel containing 10 percent of all U.S. males from 1978 to 2010. We use these data to decompose individual income growth during recessions into “between-group” and “within-group” components. To study the former, we group individuals along several observable characteristics at the time a recession hits. We find two variables to be excellent predictors of fortunes during a recession. First, prime-age workers that enter a recession with high average earnings suffer substantially less compared with those who enter with low average earnings. Second, we estimate “individual betas” (analogous to “stock betas” in finance) and examine their out-of-sample predictive power. We find that the earnings of high-beta individuals (those that exhibited higher sensitivity to prior recessions and expansions) fall significantly more during subsequent recessions. Next, we turn to within-group differences. Contrary to past research, we do not find the variance of idiosyncratic income shocks to be countercyclical. Instead, it is the left-skewness of shocks that is strongly countercyclical. That is, during recessions, the upper end of the shock distribution collapses—large upward income movements become less likely—whereas the bottom end expands—large drops in income become more likely. Thus, while the dispersion of shocks does not increase, shocks become more left skewed and, hence, risky during recessions. Finally, we find that the cyclical nature of income risk is dramatically different for the top 1 percent compared with all other individuals—even relative to those in the top 2 to 5 percent.
ER -
TY - JOUR
AU - Bond,Eric W.
AU - Crucini,Mario J.
AU - Potter,Tristan
AU - Rodrigue,Joel
TI - Misallocation and Productivity Effects of the Smoot-Hawley Tariff
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18034
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18034
L1 - http://www.nber.org/papers/w18034.pdf
N1 - Author contact info:
Eric Bond
Vanderbilt University
Department of Economics
VU Station B #351819
2301 Vanderbilt Place
Nashville, TN 37235-1819
E-Mail: eric.bond@vanderbilt.edu
Mario J. Crucini
Department of Economics
Vanderbilt University
Box 1819 Station B
Nashville, TN 37235-1819
Tel: 615/322-7357
Fax: 615/343-8459
E-Mail: mario.j.crucini@vanderbilt.edu
Tristan Potter
Department of Economics
Boston College
E-Mail: potter.tristan@gmail.com
Joel Rodrigue
Vanderbilt University
E-Mail: joel.b.rodrigue@vanderbilt.edu
AB - Using a newly created microeconomic archive of U.S. imports at the tariff-line level for 1930-33, we construct industry-level tariff wedges incorporating the input-output structure of U.S. economy and the heterogenous role of imports across sectors of the economy. We use these wedges to show that the average tariff rate of 46% in 1933 substantially understated the true impact of the Smoot-Hawley (SH) tariff structure, which we estimate to be equivalent to a uniform tariff rate of 70%. We use these wedges to calculate the impact of the Smoot Hawley tariffs on total factor productivity and welfare. In our benchmark parameterization, we find that tariff protection reduced TFP by 1.2% relative to free trade prior to the Smoot Hawley legislation. TFP fell by an additional 0.5% between 1930 and 1933 due to Smoot Hawley. We also conduct counterfactual policy exercises and examine the sensitivity of our results to changes in the elasticity of substitution and the import share. A doubling of the substitution elasticities yields a TFP decline of almost 5% relative to free trade, with an additional reduction due to SH of 0.4%.
ER -
TY - JOUR
AU - Hanna,Rema
AU - Duflo,Esther
AU - Greenstone,Michael
TI - Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18033
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18033
L1 - http://www.nber.org/papers/w18033.pdf
N1 - Author contact info:
Rema Hanna
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-1140
Fax: 617/496-5747
E-Mail: Rema_Hanna@hks.harvard.edu
Esther Duflo
Department of Economics
MIT, E52-252G
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/258-7013
Fax: 617/253-6915
E-Mail: eduflo@mit.edu
Michael Greenstone
MIT Department of Economics
50 Memorial Drive, E52-359
Cambridge, MA 02142-1347
Tel: 617/452-4127
Fax: 617/253-1330
E-Mail: mgreenst@mit.edu
AB - It is conventional wisdom that it is possible to reduce exposure to indoor air pollution, improve health outcomes, and decrease greenhouse gas emissions in the rural areas of developing countries through the adoption of improved cooking stoves. This belief is largely supported by observational field studies and engineering or laboratory experiments. However, we provide new evidence, from a randomized control trial conducted in rural Orissa, India (one of the poorest places in India), on the benefits of a commonly used improved stove that laboratory tests showed to reduce indoor air pollution and require less fuel. We track households for up to four years after they received the stove. While we find a meaningful reduction in smoke inhalation in the first year, there is no effect over longer time horizons. We find no evidence of improvements in lung functioning or health and there is no change in fuel consumption (and presumably greenhouse gas emissions). The difference between the laboratory and field findings appear to result from households’ revealed low valuation of the stoves. Households failed to use the stoves regularly or appropriately, did not make the necessary investments to maintain them properly, and usage rates ultimately declined further over time. More broadly, this study underscores the need to test environmental and health technologies in real-world settings where behavior may temper impacts, and to test them over a long enough horizon to understand how this behavioral effect evolves over time.
ER -
TY - JOUR
AU - Blonigen,Bruce A.
AU - Piger,Jeremy
AU - Sly,Nicholas
TI - Comovement in GDP Trends and Cycles Among Trading Partners
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18032
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18032
L1 - http://www.nber.org/papers/w18032.pdf
N1 - Author contact info:
Bruce Blonigen
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4680
Fax: 541/346-1243
E-Mail: bruceb@uoregon.edu
Jeremy Piger
Depart. of Economics
University of Oregon
Eugene, OR 97403-1285
E-Mail: jpiger@uoregon.edu
Nicholas Sly
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
E-Mail: sly@uoregon.edu
AB - It has long been recognized that business cycle comovement is greater between countries that trade intensively with one another. Surprisingly, no one has previously examined the relationship between trade intensity and comovement of shocks to the trend level of output. Contrary to the result for cyclical fluctuations, we find that comovement of shocks to trend levels of real GDP is significantly weaker among countries that trade intensively with one another. We also find that the influence of trade on comovement between shocks to trends has remained stable, or become stronger in recent decades, while the role of trade in generating cyclical comovement has diminished steadily over time. In short, we find that international trade relationships have a substantial impact on comovement of shocks to output trends across countries, and these effects stand in stark contrast to the conventional wisdom regarding cyclical comovement.
ER -
TY - JOUR
AU - Schmitt-Grohe,Stephanie
AU - Uribe,Martin
TI - Prudential Policy for Peggers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18031
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18031
L1 - http://www.nber.org/papers/w18031.pdf
N1 - Author contact info:
Stephanie Schmitt-Grohe
Department of Economics
Columbia University
New York, NY 10027
Tel: 212/854-8059
Fax: 212/854-4010
E-Mail: stephanie.schmittgrohe@columbia.edu
Martin Uribe
Department of Economics
Columbia University
International Affairs Building
New York, NY 10027
Tel: 212 851 4008
Fax: 212 854 8059
E-Mail: martin.uribe@columbia.edu
AB - This paper shows that in a small open economy model with downward nominal wage rigidity pegging the nominal exchange rate creates a negative pecuniary externality. This peg-induced externality is shown to cause unemployment, overborrowing, and depressed levels of consumption. The paper characterizes the optimal capital control policy in this model and shows that it is prudential in nature. For it restricts capital inflows in good times and subsidizes external borrowing in bad times. Under plausible calibrations of the model, this type of macro prudential policy is shown to lower the average unemployment rate by 10 percentage points, reduce average external debt by more than 50 percent, and increase welfare by over 7 percent of consumption per period.
ER -
TY - JOUR
AU - Kalemli-Ozcan,Sebnem
AU - Sorensen,Bent E.
TI - Misallocation, Property Rights, and Access to Finance: Evidence from Within and Across Africa
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18030
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18030
L1 - http://www.nber.org/papers/w18030.pdf
N1 - Author contact info:
Sebnem Kalemli-Ozcan
John F. Kennedy School of Government
Harvard University
79 JFK Street, Mailbox 28
Cambridge, MA 02138
E-Mail: sebnem.kalemli-ozcan@mail.uh.edu
Bent Sorensen
Department of Economics
University of Houston
204 McElhinney Hall
Houston, TX 77204
Tel: 713-743-3841
Fax: 713-743-3798
E-Mail: bent.sorensen@mail.uh.edu
M3 - presented at "African Development Successes", August 3-5, 2011
AB - We study capital misallocation within and across 10 African countries using the World Bank Enterprise Surveys. First, we compare the extent of misallocation among firms within countries. We document high variation in firms' marginal product of capital (MPK), implying that countries could produce significantly more with the same aggregate capital stock if capital were allocated optimally. Such variation differs from country to country with some African countries (success stories) closer to developed country benchmarks. Small firms and non-exporters have less access to finance and have higher returns to capital in general. Self reported measures of obstacles to firms' operations suggest access to finance is the most important obstacle: A firm with the worst access to finance has MPK 45 percent higher than a firm with the worst access to finance as a result of low capital per worker. We compare average levels of the MPK across countries, finding evidence that the strength of property rights and the quality of the legal system help explain country-level differences in capital misallocation.
ER -
TY - JOUR
AU - Deb,Rahul
AU - Gazzale,Robert S.
AU - Kotchen,Matthew J.
TI - Testing Motives for Charitable Giving: A Revealed-Preference Methodology with Experimental Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18029
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18029
L1 - http://www.nber.org/papers/w18029.pdf
N1 - Author contact info:
Rahul Deb
Department of Economics
University of Toronto
150 St George St, Toronto, ON, Canada
E-Mail: rahul.deb@utoronto.ca
Robert S. Gazzale
Department of Economics
Williams College
24 Hopkins Hall Dr
Williamstown, MA 01267
E-Mail: rgazzale@williams.edu
Matthew Kotchen
School of Forestry & Environmental Studies,
School of Management,
and Department of Economics
Yale University
195 Prospect Street
New Haven, CT 06511
Tel: 203/432-9533
Fax: 203/436-9150
E-Mail: matthew.kotchen@yale.edu
AB - A large economics literature seeks to understand the reasons why individuals make charitable contributions. Fundamental features of most models of charitable giving are the inclusion of externalities induced by other agents and the Lancasterian characteristics approach to specifying utility functions. This paper develops a general, revealed-preference methodology for testing a variety of preference structures that allow for both externalities and characteristics. The tests are simple linear programs that are transparent, computationally efficient, and straightforward to implement. We show how the technique applies to standard models of privately provided public goods and novel models that account for social comparisons based on relative consumption and donations among individuals. We also conduct an original experiment that enables nonparametric tests of many models on a single data set. The results provide the first revealed-preference evidence on the importance of social comparisons when individuals make charitable contributions. Models that include preferences for either relative consumption or donations yield greater explanatory power than the standard model of impure altruism.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Jinjarak,Yothin
AU - Lee,Minsoo
AU - Park,Donghyun
TI - Developing countries’ financial vulnerability to the euro crisis: An event study of equity and bond markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18028
PY - 2012
Y2 - May 2012
UR - http://www.nber.org/papers/w18028
L1 - http://www.nber.org/papers/w18028.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Yothin Jinjarak
University of London
College Buildings, 534
London
UK, WC1H 0XG
E-Mail: yothin.jinjarak@gmail.com
Minsoo Lee
Economics and Research Department,
Asian Development Bank,
Manila, PHILIPPINES
E-Mail: mlee@adb.org
Donghyun Park
Economics and Research Department
Asian Development Bank
Manila, Philippines
Tel: (632) 632-5825/6385
Fax: (632) 636-2342
E-Mail: dpark@adb.org
AB - The global crisis highlights the continued vulnerability of developing countries to shocks from advanced economies. Just a few years after the global crisis, the eurozone sovereign debt crisis has emerged as the single biggest threat to the global outlook. In this paper, we apply the event study methodology to gauge the scope for financial contagion from the EU to developing countries. More specifically, we estimate the responsiveness of equity and bond markets in developing countries to global crisis news and euro crisis news. Overall, we find that whereas global crisis news had a consistently negative effect on returns of equity and bond markets in developing countries, the effect of euro crisis news was more mixed and limited.
ER -
TY - JOUR
AU - Rajan,Raghuram
AU - Ramcharan,Rodney
TI - The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s.
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18027
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18027
L1 - http://www.nber.org/papers/w18027.pdf
N1 - Author contact info:
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu
Rodney Ramcharan
Federal Reserve Board
Washington DC
Tel: 202-912-7851
Fax: 202-452-5295
E-Mail: rodney.ramcharan@frb.gov
AB - Does credit availability exacerbate asset price inflation? What channels could it work through? What are the long run consequences? In this paper we address these questions by examining the farm land price boom (and bust) in the United States that preceded the Great Depression. We find that credit availability likely had a direct effect on inflating land prices. Credit availability may have also amplified the relationship between the perceived improvement in fundamentals and land prices. When the perceived fundamentals soured, however, areas with higher ex ante credit availability suffered a greater fall in land prices, and experienced higher bank failure rates. Land prices stayed low for a number of decades after the bust in areas that had higher credit availability, suggesting that the effects of booms and busts induced by credit availability might be persistent. We draw lessons for regulatory policy.
ER -
TY - JOUR
AU - Huang,Jidong
AU - Chaloupka,Frank J., IV
TI - The Impact of the 2009 Federal Tobacco Excise Tax Increase on Youth Tobacco Use
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18026
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18026
L1 - http://www.nber.org/papers/w18026.pdf
N1 - Author contact info:
Jidong Huang
Health Policy Center
Institute for Health Research and Policy
University of Illinois at Chicago
1747 West Roosevelt Rd.
Chicago, IL 60608
Tel: (Tel) 312-355-0195
E-Mail: jhuang12@uic.edu
Frank J. Chaloupka, IV
University of Illinois at Chicago
Department of Economics (m/c 144)
College of Liberal Arts and Sciences
601 S. Morgan Street, Room 713
Chicago, IL 60607-7121
Tel: 312/413-2287
Fax: 312/996-3344;630/801-8870
E-Mail: fjc@uic.edu
AB - This study examined the impact of the 2009 federal tobacco excise tax increase on the use of cigarettes and smokeless tobacco products among youth using the Monitoring the Future survey, a nationally representative survey of 8th, 10th, and 12th grade students. The results of this analysis showed that this tax increase had a substantial short-term impact. The percentage of students who reported smoking in the past 30 days dropped between 9.7% and 13.3% immediately following the tax increase, depending on model specifications, and the percentage of students who reported using smokeless tobacco products dropped between 16% and 24%. It is estimated that there would have been approximately 220,000 – 287,000 more current smokers and 135,000 – 203,000 more smokeless tobacco users among middle school and high school students (age 14 – 18) in the United States in May 2009 had the federal tax not increased in April 2009. The long-term projected number of youth prevented from smoking or using smokeless tobacco that resulted from the 2009 federal tax increase could be much larger given the resulting higher tobacco prices would deter more and more children from initiating smoking and smokeless tobacco use over time.
ER -
TY - JOUR
AU - Lee,Jinhyung
AU - McCullough,Jeffery S.
AU - Town,Robert J.
TI - The Impact of Health Information Technology on Hospital Productivity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18025
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18025
L1 - http://www.nber.org/papers/w18025.pdf
N1 - Author contact info:
Jinhyung Lee
University of Texas - Galveston
301 University Boulevard
Galveston, Texas 77555-0133
E-Mail: jinlee@utmb.edu
Jeffery S. McCullough
University of Minnesota
MMC 729
420 Delaware St., SE
Minneapolis, MN 55455
E-Mail: mccu0056@umn.edu
Robert Town
Health Care Management Department
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
E-Mail: rtown@wharton.upenn.edu
AB - The US health care sector is, by most accounts, extraordinarily inefficient. Health information technology (IT) has been championed as a tool that can transform health care delivery. Recently, the federal government has taken an active role in promoting health IT diffusion. There is little systematic analysis of the causal impact of health IT on productivity or whether private and public returns to health IT diverge thereby justifying government intervention. We estimate the parameters of a value-added hospital production function correcting for endogenous input choices in order to assess the private returns hospitals earn from health IT. Despite high marginal products, the potential benefits from expanded IT adoption are modest. Over the span of our data, health IT inputs increased by more than 210% and contributed about 6% to the increase in value-added. Virtually all the increase in value-added is attributable to the increased use of inputs{there was little change in hospital multi-factor productivity. Not-for-profits invested more heavily and differently in IT than for-profit hospitals. Finally, we find no evidence of labor complementarities or network externalities from health IT.
ER -
TY - JOUR
AU - Malmendier,Ulrike
AU - Moretti,Enrico
AU - Peters,Florian S.
TI - Winning by Losing: Evidence on the Long-Run Effects of Mergers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18024
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18024
L1 - http://www.nber.org/papers/w18024.pdf
N1 - Author contact info:
Ulrike Malmendier
Department of Economics
549 Evans Hall # 3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510-642-5038
E-Mail: ulrike@econ.berkeley.edu
Enrico Moretti
University of California, Berkeley
Department of Economics
549 Evans Hall
Berkeley, CA 94720-3880
Tel: 510/642 6649
Fax: 510/643 7042
E-Mail: moretti@econ.berkeley.edu
Florian S. Peters
Finance Group
University of Amsterdam
Roetersstraat 11, 1018 WB Amsterdam
The Netherlands
Tel: +31 6 44264683
E-Mail: f.s.peters@uva.nl
AB - Do acquirors profit from acquisitions, or do acquiring CEOs overbid and destroy shareholder value? We present a novel approach to estimating the long-run abnormal returns to mergers exploiting detailed data on merger contests. In the sample of close bidding contests, we use the loser's post-merger performance to construct the counterfactual performance of the winner had he not won the contest. We find that bidder returns are closely aligned in the years before the contest, but diverge afterwards: Winners underperform losers by 50 percent over the following three years. Existing methodologies, including announcement effects, fail to capture the acquirors' underperformance.
ER -
TY - JOUR
AU - Chandra,Amitabh
AU - Gruber,Jonathan
AU - McKnight,Robin
TI - The Impact of Patient Cost-Sharing on the Poor: Evidence from Massachusetts
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18023
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18023
L1 - http://www.nber.org/papers/w18023.pdf
N1 - Author contact info:
Amitabh Chandra
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-7356
E-Mail: amitabh_chandra@harvard.edu
Jonathan Gruber
MIT Department of Economics
E52-355
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8892
Fax: 617/253-1330
E-Mail: gruberj@mit.edu
Robin McKnight
Department of Economics
Wellesley College
106 Central Street
Wellesley, MA 02481
Tel: 781/283-2153
E-Mail: rmcknigh@wellesley.edu
AB - Greater patient cost-sharing could help reduce the fiscal pressures associated with insurance expansion by reducing the scope for moral hazard. But it is possible that low-income recipients are unable to cut back on utilization wisely and that, as a result, higher cost-sharing will lead to worse health and higher downstream costs through hospitalizations. We use exogenous variation in the copayments faced by low-income enrollees in the Massachusetts’ Commonwealth Care program to study these effects. We estimate separate price elasticities of demand by type of service (hospital care, drugs, outpatient care). Overall, we find price elasticities of about -0.15 for this low-income population — fairly similar to elasticities calculated for higher-income populations in other settings. These elasticities are somewhat larger for the chronically sick and older enrollees. A substantial portion of the decline in utilization comes from some patients cutting back on use completely, but we find no (detectable) evidence of offsetting increases in hospitalizations or emergency department visits in response to the higher copayments, either overall or for the chronically ill in particular.
ER -
TY - JOUR
AU - Coles,Melvyn G.
AU - Mortensen,Dale T.
TI - Equilibrium Labor Turnover, Firm Growth and Unemployment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18022
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18022
L1 - http://www.nber.org/papers/w18022.pdf
N1 - Author contact info:
Melvyn Coles
Department of Economics
University of Essex
Colchester CO435Q
ENGLAND
E-Mail: mcole@essex.ac.uk
Dale T. Mortensen
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL 60208-2600
Tel: 847/491-8230
Fax: 847/491-7001
E-Mail: d-mortensen@northwestern.edu
AB - This paper considers a dynamic, non-steady state environment in which wage dispersion exists and evolves in response to shocks. Workers do not observe firm productivity and firms do not commit to future wages, but there is on-the-job search for higher paying jobs. The model allows for firm turnover (new start-up firms are created, some existing firms die) and firm specific productivity shocks. In a separating equilibrium, more productive firms signal their type by paying strictly higher wages in every state of the market. Consequently, workers always quit to firms paying a higher wage and so move efficiently from less to more productive firms. As a further implication of the cost structure assumed, endogenous firm size growth is consistent with Gibrat's law. The paper provides a complete characterization and establishes existence and uniqueness of the separating (non-steady state) equilibrium in the limiting case of equally productive firms. The existence of equilibrium with any finite number of firm types is also established. Finally, the model provides a coherent explanation of Danish manufacturing data on firm wage and labor productivity dispersion as well as the cross firm relationship between them.
ER -
TY - JOUR
AU - Jaremski,Matthew
AU - Rousseau,Peter L.
TI - Banks, Free Banks, and U.S. Economic Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18021
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18021
L1 - http://www.nber.org/papers/w18021.pdf
N1 - Author contact info:
Matthew S. Jaremski
Colgate University
Department of Economics
13 Oak Drive
Hamilton, NY 13346
Tel: 315/228-7524
Fax: 315/228-7033
E-Mail: mjaremski@colgate.edu
Peter L. Rousseau
Department of Economics
Vanderbilt University
VU Station B #351819
2301 Vanderbilt Place
Nashville, TN 37235-1819
Tel: 615/343-2466
E-Mail: peter.l.rousseau@vanderbilt.edu
AB - The “Federalist financial revolution” may have jump-started the U.S. economy into modern growth, but the Free Banking System (1837-1862) did not play a direct role in sustaining it. Despite lowering entry barriers and extending banking into developing regions, we find in county-level data that free banks had little or no effect on growth. The result is not just a symptom of the era, as state-chartered banks seem to have strong and positive effects on manufacturing and urbanization.
ER -
TY - JOUR
AU - Atalay,Enghin
AU - Hortacsu,Ali
AU - Syverson,Chad
TI - Why Do Firms Own Production Chains?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18020
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18020
L1 - http://www.nber.org/papers/w18020.pdf
N1 - Author contact info:
Enghin Atalay
University of Chicago
1126 E 59th Street
Chicago, IL 60637
E-Mail: atalay@uchicago.edu
Ali Hortacsu
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-5841
E-Mail: hortacsu@uchicago.edu
Chad Syverson
University of Chicago
Booth School of Business
5807 S. Woodlawn Ave.
Chicago, IL 60637
Tel: 773/702-7815
Fax: 773/702-8490
E-Mail: chad.syverson@chicagobooth.edu
AB - We use broad-based yet detailed data from the economy’s goods-producing sectors to investigate firms’ ownership of production chains. It does not appear that vertical ownership is primarily used to facilitate transfers of goods along the production chain, as is often presumed: Roughly one-half of upstream plants report no shipments to their firms’ downstream units. We propose an alternative explanation for vertical ownership, namely that it promotes efficient intra-firm transfers of intangible inputs. We show evidence consistent with this hypothesis, including the fact that upon a change of ownership, an acquired plant begins to resemble the acquiring firm along multiple dimensions.
ER -
TY - JOUR
AU - Mel,Suresh De
AU - McKenzie,David
AU - Woodruff,Christopher
TI - The demand for, and consequences of, formalization among informal firms in Sri Lanka
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18019
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18019
L1 - http://www.nber.org/papers/w18019.pdf
N1 - Author contact info:
Suresh De Mel
University of Peradeniya
E-Mail: sdemel@pdn.ac.lk
David McKenzie
The World Bank, MSN MC3-307
1818 H Street N.W.
Washington, DC 20433
Tel: 202-458-9332
E-Mail: dmckenzie@worldbank.org
Christopher Woodruff
Department of Economics
University of Warwick
Coventry CV4 7AL
UK
Tel: 44 787 258 2800
Fax: 44 024 7652 3032
E-Mail: c.woodruff@warwick.ac.uk
AB - We conduct a field experiment in Sri Lanka providing informal firms incentives to formalize. Information about the registration process and reimbursement of direct costs has no effect. Payments equivalent to one-half to one month (alternatively, 2 months) of the median firm’s profits leads to registration of around one-fifth (alternatively, one-half) of firms. Land ownership issues are the most common reason for not registering. Follow-up surveys 15 to 31 months later show higher mean profits, but largely in a few firms which grew rapidly. We find little evidence for other changes in behavior, but formalized firms express more trust in the state.
ER -
TY - JOUR
AU - Einav,Liran
AU - Knoepfle,Dan
AU - Levin,Jonathan D.
AU - Sundaresan,Neel
TI - Sales Taxes and Internet Commerce
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18018
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18018
L1 - http://www.nber.org/papers/w18018.pdf
N1 - Author contact info:
Liran Einav
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/723-3704
Fax: 650/725-5702
E-Mail: leinav@stanford.edu
Dan Knoepfle
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
E-Mail: knoepfle@stanford.edu
Jonathan D. Levin
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/723-5962
E-Mail: jdlevin@stanford.edu
Neel Sundaresan
eBay Research Labs
2065 Hamilton Avenue
San Jose, CA 95125
E-Mail: nsundaresan@ebay.com
AB - We estimate the sensitivity of Internet retail purchasing to sales taxes using data from the eBay marketplace. Our first approach exploits the fact that seller locations are revealed only after buyers have expressed interest in an item by clicking on its listing. We use millions of location "surprises" to estimate price elasticities with respect to the effective sales tax. We then use aggregated data to estimate cross-state substitution parameters, and substitution between offline and online purchases, relying on the variation in state and local sales taxes, and on changes in these rates over time. We find substantial sensitivity to sales taxes. Using our item-level approach, we find a price elasticity of around -2 for interested buyers. Using our aggregate approach, we find that a one percentage point increase in a state's sales tax increases online purchases by state residents by just under two percent, but decreases their online purchases from home-state retailers by 3-4 percent.
ER -
TY - JOUR
AU - Levitt,Steven D.
AU - List,John A.
AU - Syverson,Chad
TI - Toward an Understanding of Learning by Doing: Evidence from an Automobile Assembly Plant
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18017
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18017
L1 - http://www.nber.org/papers/w18017.pdf
N1 - Author contact info:
Steven D. Levitt
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/834-1862
Fax: 773/702-8490
E-Mail: slevitt@midway.uchicago.edu
John List
Department of Economics
University of Chicago
1126 East 59th
Chicago, IL 60637
Tel: 301/405-1288
Fax: 301/314-9091
E-Mail: jlist@uchicago.edu
Chad Syverson
University of Chicago
Booth School of Business
5807 S. Woodlawn Ave.
Chicago, IL 60637
Tel: 773/702-7815
Fax: 773/702-8490
E-Mail: chad.syverson@chicagobooth.edu
AB - Productivity improvements within establishments (e.g., factories, mines, or retail stores) are an important source of aggregate productivity growth. Past research has documented that learning by doing–productivity improvements that occur in concert with production increases–is one source of such improvements. Yet little is known about the specific mechanisms through which such learning occurs. We address this question using extremely detailed data from an assembly plant of a major auto producer. Beyond showing that there is rapid learning by doing at the plant, we are able to pinpoint the processes by which these improvements have occurred.
ER -
TY - JOUR
AU - Mocan,Naci H.
AU - Cannonier,Colin
TI - Empowering Women Through Education: Evidence from Sierra Leone
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18016
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18016
L1 - http://www.nber.org/papers/w18016.pdf
N1 - Author contact info:
Naci H. Mocan
Department of Economics
Louisiana State University
2119 Patrick F. Taylor Hall
Baton Rouge, LA 70803-6306
Tel: 225/578-4570
E-Mail: mocan@lsu.edu
Colin Cannonier
College of Business Administration
Belmont University
1900 Belmont Boulevard
Nashville, TN 37212-3757
USA
Tel: 615-460-6333
E-Mail: colin.cannonier@belmont.edu
AB - We use data from Sierra Leone where a substantial education program provided increased access to education for primary-school age children but did not benefit children who were older. We exploit the variation in access to the program generated by date of birth and the variation in resources between various districts of the country. We find that the program has increased educational attainment and that an increase in education has changed women’s preferences. An increase in schooling, triggered by the program, had an impact on women’s attitudes towards matters that impact women’s health and on attitudes regarding violence against women. An increase in education has also reduced the number of desired children by women and increased their propensity to use modern contraception and to be tested for AIDS. While education makes women more intolerant of practices that conflict with their well-being, increased education has no impact on men’s attitudes towards women’s well-being.
ER -
TY - JOUR
AU - Reinhart,Carmen M.
AU - Reinhart,Vincent R.
AU - Rogoff,Kenneth S.
TI - Debt Overhangs: Past and Present
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18015
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18015
L1 - http://www.nber.org/papers/w18015.pdf
N1 - Author contact info:
Carmen M. Reinhart
Peterson Institute for International Economics
1750 Massachusetts Avenue, NW
Washington, DC 20036-1903
Tel: 202-454-1325
Fax: 202-659-3225
E-Mail: creinhart@piie.com
Vincent Reinhart
Morgan Stanley
New York, NY
E-Mail: vincent.reinhart@morganstanley.com
Kenneth S. Rogoff
Thomas D Cabot Professor of Public Policy
Economics Department
Harvard University
Littauer Center 216
Cambridge, MA 02138-3001
Tel: 617-495-4022
Fax: 617/495-7730
E-Mail: krogoff@harvard.edu
AB - We identify the major public debt overhang episodes in the advanced economies since the early 1800s, characterized by public debt to GDP levels exceeding 90% for at least five years. Consistent with Reinhart and Rogoff (2010) and other more recent research, we find that public debt overhang episodes are associated with growth over one percent lower than during other periods. Perhaps the most striking new finding here is the duration of the average debt overhang episode. Among the 26 episodes we identify, 20 lasted more than a decade. Five of the six shorter episodes were immediately after World Wars I and II. Across all 26 cases, the average duration in years is about 23 years. The long duration belies the view that the correlation is caused mainly by debt buildups during business cycle recessions. The long duration also implies that cumulative shortfall in output from debt overhang is potentially massive. We find that growth effects are significant even in the many episodes where debtor countries were able to secure continual access to capital markets at relatively low real interest rates. That is, growth-reducing effects of high public debt are apparently not transmitted exclusively through high real interest rates.
ER -
TY - JOUR
AU - Börsch-Supan,Axel H.
AU - Coppola,Michela
AU - Reil-Held,Anette
TI - Riester Pensions in Germany: Design, Dynamics, Targetting Success and Crowding-In
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18014
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18014
L1 - http://www.nber.org/papers/w18014.pdf
N1 - Author contact info:
Axel H. Boersch-Supan
Munich Center for the Economics of Aging
Max Planck Institute
for Social Law and Social Policy
Amalienstrasse 33
80779 Munich
GERMANY
Tel: +49 (89) 3860-2355
Fax: 49 (89) 3860-2390
E-Mail: axel@boersch-supan.de
Michela Coppola
Munich Center for the Economics of Aging
Max Planck Institute
for Social Law and Social Policy
Amalienstrasse 33
80779 Munich
GERMANY
E-Mail: coppola@mea.mpisoc.mpg.de
Anette Reil-Held
Munich Center for the Economics of Aging
Max-Planck-Institute
for Social Law and Social Policy
Amalienstrasse 33
80799 Munich
Germany
E-Mail: reil-held@arcor.de
AB - Riester pensions are voluntary, but heavily subsidized private pension schemes in Germany. They were designed as a matching defined contribution scheme to fill the emerging “pension gap” that is being generated by the gradually declining generosity of the public pay-as-you-go pensions in response to population aging. This paper investigates how the uptake of the recently introduced “Riester pensions” depends on the state-provided saving incentives and how well the targeting to families and low-income households has worked in practice. It documents the costs of the scheme, and collects circumstantial evidence on displacement effects between saving for old-age provision and other purposes.
After a slow start and several design changes, Riester pension plans took off very quickly. While saving incentives were effective in reaching parents, they were somewhat less successful in attracting low-income earners, although Riester pensions exhibit a more equal pattern by income than occupational pensions and unsubsidized private pension plans. Riester pension savings totaled €9.4bn in 2010 with an associated cost of €3.5bn. One average one Euro of subsidies is thus associated with 2 Euros of households’ own Riester saving.
There is no evidence that Riester pensions have crowded out other saving. While households who plan to purchase housing and who attach high importance to a bequest motive are less likely to have a Riester pension, several regression results show that occupational pensions and other forms of private pensions act as complements rather than as substitutes. Aggregate national saving has increased since the introduction of Riester pensions.
ER -
TY - JOUR
AU - Allen,Franklin
AU - Carletti,Elena
AU - Cull,Robert
AU - Qian,Jun
AU - Senbet,Lemma
AU - Valenzuela,Patricio
TI - Resolving the African Financial Development Gap: Cross-Country Comparisons and a Within-Country Study of Kenya
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18013
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18013
L1 - http://www.nber.org/papers/w18013.pdf
N1 - Author contact info:
Franklin Allen
Wharton Finance Dept.
University of Pennsylvania
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-3629
Fax: 215/573-2207
E-Mail: allenf@wharton.upenn.edu
Elena Carletti
European University Institute
E-Mail: Elena.Carletti@EUI.eu
Robert Cull
World Bank
E-Mail: rcull@worldbank.org
Jun Qian
Boston College
140 Commonwealth Ave
Chestnut Hill, MA 02467
E-Mail: qianju@bc.edu
Lemma Senbet
University of Maryland
Robert H Smith School of Business
College Park, MD 20742
Tel: 301-405-2242
E-Mail: lsenbet@rhsmith.umd.edu
Patricio Valenzuela
European University Institute
E-Mail: patricio.valenzuela@eui.eu
M3 - presented at "African Development Successes", August 3-5, 2011
AB - With extensive country- and firm-level data sets we first document that the financial sectors of most sub-Saharan African countries remain significantly underdeveloped by the standards of other developing countries. We also find that population density appears to be considerably more important for banking sector development in Africa than elsewhere. To better understand how countries can overcome the high costs of developing viable banking sectors outside large metropolitan areas, we focus on Kenya, which has made significant strides in financial inclusion and development in recent years. We find a positive and significant impact of Equity Bank, a leading private commercial bank on financial access, especially for under-privileged households. Equity Bank’s business model—providing financial services to population segments typically ignored by traditional commercial banks and generating sustainable profits in the process—can be a potential solution to the financial access problem that has hindered the development of inclusive financial sectors in many other African countries.
ER -
TY - JOUR
AU - Conti,Gabriella
AU - Hansman,Christopher
AU - Heckman,James J.
AU - Novak,Matthew F. X.
AU - Ruggiero,Angela
AU - Suomi,Stephen J.
TI - Primate Evidence on the Late Health Effects of Early Life Adversity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18002
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18002
L1 - http://www.nber.org/papers/w18002.pdf
N1 - Author contact info:
Gabriella Conti
Harris School of Public Policy
University of Chicago
1155 East 60th Street
Chicago, IL 60637
Tel: 773/702-7052
E-Mail: gconti@uchicago.edu
Christopher Hansman
Department of Economics
Columbia University
1022 International Affairs
420 West 118th Street
New York, NY 10027
E-Mail: cjh2182@columbia.edu
James J. Heckman
Department of Economics
The University of Chicago
1126 E. 59th Street
Chicago, IL 60637
Tel: 773/702-0634
Fax: 773/702-8490
E-Mail: jjh@uchicago.edu
Matthew F. X. Novak
Department of Psychology
Central Oregon Community College
Modoc 212
2600 N.W. College Way
Bend OR 97701
E-Mail: mnovak@cocc.edu
Angela Ruggiero
NICHD
Section on Comparative Behavioral Genetics
Elmer School Rd Room 205
Poolesville MD 20837
E-Mail: ar327u@nih.gov
Stephen J. Suomi
NICHD
Section on Comparative Behavioral Genetics
Elmer School Rd Room 205
Poolesville MD 20837
E-Mail: suomis@mail.nih.gov
AB - This paper exploits a unique ongoing experiment to analyze the effects of early rearing conditions on physical and mental health in a sample of rhesus monkeys (Macaca mulatta). We analyze the health records of 231 monkeys which were randomly allocated at birth across three rearing conditions: Mother Rearing, Peer Rearing, and Surrogate Peer Rearing. We show that the lack of a secure attachment relationship in the early years engendered by adverse rearing conditions has detrimental long-term effects on health which are not compensated by a normal social environment later in life.
ER -
TY - JOUR
AU - Jacobsen,Mark R.
TI - Fuel Economy and Safety: The Influences of Vehicle Class and Driver Behavior
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18012
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18012
L1 - http://www.nber.org/papers/w18012.pdf
N1 - Author contact info:
Mark R. Jacobsen
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093
Tel: 858/822-7767
Fax: 858/534-7040
E-Mail: m3jacobs@ucsd.edu
AB - Fuel economy standards change the composition of the vehicle fleet, potentially influencing accident safety. I introduce a model of the fleet that captures risks across interactions between vehicle types while simultaneously recovering estimates of unobserved driving safety behavior. The model importantly includes the ability to consider the selection of driver types across vehicles. I apply the model to the present structure of U.S. fuel economy standards and find an adverse effect on safety: Each MPG increment to the standard results in an additional 149 fatalities per year in expectation. I next show how two alternative regulatory provisions, including one slated to enter effect next year, can fully offset the negative safety consequences; minor changes in the regulation produce a robust, near-zero change in accident fatalities while conserving the same quantity of gasoline.
ER -
TY - JOUR
AU - Abramitzky,Ran
AU - Boustan,Leah Platt
AU - Eriksson,Katherine
TI - A Nation of Immigrants: Assimilation and Economic Outcomes in the Age of Mass Migration
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18011
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18011
L1 - http://www.nber.org/papers/w18011.pdf
N1 - Author contact info:
Ran Abramitzky
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305
Tel: 650/723-9276
Fax: 650/725-5702
E-Mail: ranabr@stanford.edu
Leah Platt Boustan
Department of Economics
8283 Bunche Hall
UCLA
Los Angeles, CA 90095-1477
Tel: 310/794-4263
Fax: 310/825-9528
E-Mail: lboustan@econ.ucla.edu
Katherine Eriksson
Department of Economics
8283 Bunche Hall
UCLA
Los Angeles, CA 90095-1477
E-Mail: kath722@ucla.edu
AB - During the Age of Mass Migration, the US maintained open borders and absorbed 30 million European immigrants. Using cross-sectional data, prior work on this era finds that immigrants held lower-paid occupations than natives upon first arrival but experienced rapid convergence. In newly-assembled panel data following immigrants over time, the initial immigrant earnings penalty disappears almost entirely, and immigrants experience occupational upgrading at the same rate as natives. Cross-sectional patterns are driven by declines over time in arrival cohort quality and the departure of negatively-selected return migrants. We show that these findings vary substantially across sending countries and explore potential mechanisms.
ER -
TY - JOUR
AU - Boyd,Donald
AU - Lankford,Hamilton
AU - Loeb,Susanna
AU - Wyckoff,James
TI - Measuring Test Measurement Error: A General Approach
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18010
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18010
L1 - http://www.nber.org/papers/w18010.pdf
N1 - Author contact info:
Donald Boyd
The Center for Policy Research
University of Albany
135 Western Ave.
Albany, NY 12222
E-Mail: donboyd5@gmail.com
Hamilton Lankford
School of Education, ED 317
University at Albany
State University of New York
Albany, NY 12222
E-Mail: hamp@albany.edu
Susanna Loeb
524 CERAS, 520 Galvez Mall
Stanford University
Stanford, CA 94305
Tel: 650/725-4262
E-Mail: sloeb@stanford.edu
James Wyckoff
Curry School of Education
University of Virginia
P.O. Box 400277
Charlottesville, VA 22904-4277
E-Mail: wyckoff@virginia.edu
AB - Test-based accountability including value-added assessments and experimental and quasi-experimental research in education rely on achievement tests to measure student skills and knowledge. Yet we know little regarding important properties of these tests, an important example being the extent of test measurement error and its implications for educational policy and practice. While test vendors provide estimates of split-test reliability, these measures do not account for potentially important day-to-day differences in student performance.
We show there is a credible, low-cost approach for estimating the total test measurement error that can be applied when one or more cohorts of students take three or more tests in the subject of interest (e.g., state assessments in three consecutive grades). Our method generalizes the test-retest framework allowing for either growth or decay in knowledge and skills between tests as well as variation in the degree of measurement error across tests. The approach maintains relatively unrestrictive, testable assumptions regarding the structure of student achievement growth. Estimation only requires descriptive statistics (e.g., correlations) for the tests. When student-level test-score data are available, the extent and pattern of measurement error heteroskedasticity also can be estimated. Utilizing math and ELA test data from New York City, we estimate the overall extent of test measurement error is more than twice as large as that reported by the test vendor and demonstrate how using estimates of the total measurement error and the degree of heteroskedasticity along with observed scores can yield meaningful improvements in the precision of student achievement and achievement-gain estimates.
ER -
TY - JOUR
AU - Börsch-Supan,Axel H.
TI - Entitlement Reforms in Europe: Policy Mixes in the Current Pension Reform Process
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18009
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18009
L1 - http://www.nber.org/papers/w18009.pdf
N1 - Author contact info:
Axel H. Boersch-Supan
Munich Center for the Economics of Aging
Max Planck Institute
for Social Law and Social Policy
Amalienstrasse 33
80779 Munich
GERMANY
Tel: +49 (89) 3860-2355
Fax: 49 (89) 3860-2390
E-Mail: axel@boersch-supan.de
M3 - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB - Many European countries have begun (or have announced) programs intended to reduce the growth of entitlement programs, in particular of public pensions.
Current costs are high, and the pressures will increase due to population aging and negative incentive effects. This paper focuses on the pension reform process in Europe. It links the causes for current problems to the cures required to make the pay-as-you-go entitlement programs in Continental Europe sustainable above and beyond the financial crisis. It discusses examples which appear, from a current point of view, to be the most viable and effective options to bring entitlement systems closer to fiscal balance and still achieve their key aims.
There is no single policy prescription that can solve all problems at once. Reform elements include a freeze in the contribution and tax rates, an indexation of benefits to the dependency ratio, measures to stop the current trend towards early retirement, an adaptation of the normal retirement age to increased life expectancy, and more reliance on private savings – elements of a sustainable but complex multipillar system of pensions and similar entitlement programs.
ER -
TY - JOUR
AU - Redding,Stephen J.
TI - Goods Trade, Factor Mobility and Welfare
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18008
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18008
L1 - http://www.nber.org/papers/w18008.pdf
N1 - Author contact info:
Stephen J. Redding
Department of Economics
and Woodrow Wilson School
Princeton University
Fisher Hall
Princeton, NJ 08544
Tel: 609/258-4016
Fax: 609/258-6419
E-Mail: reddings@princeton.edu
AB - This paper extends a recent class of quantitative models of international trade to incorporate factor mobility within countries. We present a model-based decomposition of the variance of economic activity into the contributions of locational fundamentals, market access and their covariance. We show how the standard framework for undertaking model-based counterfactuals in trade can be augmented to obtain predictions for endogenous changes in the distribution of economic activity across regions within countries. A region's trade share with itself is no longer a sufficient statistic for the welfare gains from trade, which also depend on endogenous changes in the distribution of mobile factors.
ER -
TY - JOUR
AU - Farmer,Roger E.A.
TI - The Effect of Conventional and Unconventional Monetary Policy Rules on Inflation Expectations: Theory and Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18007
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18007
L1 - http://www.nber.org/papers/w18007.pdf
N1 - Author contact info:
Roger Farmer
UCLA
Department of Economics
Box 951477
Los Angeles, CA 90095-1477
Tel: 310/825-6547
Fax: 310/825-9528
E-Mail: rfarmer@econ.ucla.edu
AB - This paper has three parts. First, I provide a theoretical framework to explain how rational expectations models, where the central bank follows a conventional monetary policy rule, can be used to understand the history of interest rates and inflation in the period between 1951 and the Great Recession of 2008. Second, I use the framework developed in the first part of the paper to illustrate how the purchase of assets other than treasuries, for example, mortgage backed securities and long bonds, can influence inflation expectations when the interest rate is zero. Third, I show that the beginning of unconventional monetary policy in 2008 coincided with a significant increase in inflation expectations. I extend existing models of monetary policy by adding explicit markets for financial securities. Using this extended framework, I show that the purchase of assets, other than short term treasury bills, has a differential impact on the prices of risky securities. Unconventional monetary policy is an important tool in a central bank’s arsenal that can be used to help prevent deflation in the wake of a financial crisis.
ER -
TY - JOUR
AU - Ashenfelter,Orley C.
TI - Comparing Real Wages
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18006
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18006
L1 - http://www.nber.org/papers/w18006.pdf
N1 - Author contact info:
Orley C. Ashenfelter
Industrial Relations Section
Firestone Library
Princeton University
Princeton, NJ 08544
Tel: 609/258-4040
Fax: 609/258-2907
E-Mail: c6789@princeton.edu
AB - A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of workers. In this paper I set out the conceptual basis for such measures, provide some historical examples, and then provide my own preliminary analysis of a decade long project designed to measure the wages of workers doing the same job in over 60 countries—workers at McDonald’s restaurants. The results demonstrate that the wage rates of workers using the same skills and doing the same jobs differ by as much as 10 to 1, and that these gaps declined over the period 2000-2007, but with much less progress since the Great Recession.
ER -
TY - JOUR
AU - Lacetera,Nicola
AU - Sydnor,Justin R.
TI - Would You Buy a Honda Made in the U.S.? The Impact of Production Location on Manufacturing Quality
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18005
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18005
L1 - http://www.nber.org/papers/w18005.pdf
N1 - Author contact info:
Nicola Lacetera
University of Toronto
105 St. George Street
Toronto, ON M5S 2E9
Canada
Tel: 416/946-0287
E-Mail: nicola.lacetera@utoronto.ca
Justin R. Sydnor
University of Wisconsin - Madison
975 University Avenue
Madison, WI 53706
E-Mail: jsydnor@bus.wisc.edu
AB - Are location-specific factors—such as the education and attitude of the local workforce, supplier networks, institutional infrastructure, and local “culture”—important for understanding persistent heterogeneities among firms? We address this question in the context of the automobile industry. Using a unique data set of over 565,000 used-car transactions at wholesale auctions, we test whether the long-run value and quality of otherwise identical cars depends on the country of assembly. We exploit the natural experiment provided by the establishment of assembly plants in the U.S. by Japanese auto manufacturers, and the fact that some of the most popular Japanese car models are assembled both in Japan and the U.S. We find evidence that the Japan-assembled cars on average sell for more than those built in the U.S., but the estimated difference is only $62. The average differences are driven almost entirely by older-model Toyotas, for which we find a more meaningful difference between the Japanese and U.S. built cars. For Hondas and more recent models of Toyotas, the Japan-built cars are no more valuable than those built in the U.S. These results suggest that Japanese automakers have been successful, though perhaps with some lag, at transferring their high-quality practices to their U.S. transplants. Our findings also suggest that there is not an inherent limitation to the U.S. manufacturing environment that prevents the production of high-quality cars in America.
ER -
TY - JOUR
AU - Demirguc-Kunt,Asli
AU - Feyen,Erik
AU - Levine,Ross
TI - The Evolving Importance of Banks and Securities Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18004
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18004
L1 - http://www.nber.org/papers/w18004.pdf
N1 - Author contact info:
Asli Demirguc-Kunt
World Bank
1818 H Street
Washington, DC 20433
E-Mail: ademirguckunt@worldbank.org
Erik Feyen
World Bank
1818 H Street, NW
Washington, DC 20433
E-Mail: efeijen@worldbank.org
Ross Levine
Department of Economics
Brown University
64 Waterman Street
Providence, RI 02912
Tel: 401/863-2170
E-Mail: ross_levine@brown.edu
AB - This paper examines the evolving importance of banks and securities markets during the process of economic development. We find that as countries develop economically, (1) the size of both banks and securities markets increases relative to the size of the economy, (2) the association between an increase in economic output and an increase in bank development becomes smaller, and (3) the association between an increase in economic output and an increase in securities market development becomes larger. The results are consistent with theories predicting that as economies develop, the services provided by securities markets become more important for economic activity, while those provided by banks become less important.
ER -
TY - JOUR
AU - Dave,Dhaval M.
AU - Saffer,Henry
TI - Demand for Smokeless Tobacco: Role of Magazine Advertising
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18003
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18003
L1 - http://www.nber.org/papers/w18003.pdf
N1 - Author contact info:
Dhaval M. Dave
Bentley University
Department of Economics
175 Forest Street, AAC 195
Waltham, MA 02452-4705
Tel: 212/817-7955
Fax: 212/817-1597
E-Mail: ddave@bentley.edu
Henry Saffer
NBER
365 Fifth Avenue, 5th Floor
New York, NY 10016-4309
Tel: 212/817-7956
Fax: 212/817-1597
E-Mail: hsaffer@gc.cuny.edu
AB - While the prevalence of smokeless tobacco (ST) is low relative to smoking, the distribution of ST use is highly skewed with consumption concentrated among certain segments of the population (rural residents, males, whites, low-educated individuals). Furthermore, there is suggestive evidence that use has trended upwards recently for groups that have traditionally been at low risk of using ST, and thus started to diffuse across demographics. This study provides the first estimates, at the national level, of the effects of magazine advertising on ST use. The focus on magazine advertising is significant given that ST manufacturers have been banned from using other conventional media since the 1986 Comprehensive ST Act and the 1998 ST Master Settlement Agreement. This study is based on the 2003-2009 waves of the National Consumer Survey (NCS), a unique data source that contains extensive information on the reading habits of individuals, matched with magazine-specific advertising information over the sample period. This allows detailed and salient measures of advertising exposure at the individual level and addresses potential bias due to endogeneity and selective targeting. We find consistent and robust evidence that exposure to ST ads in magazines raises ST use, especially among males, with an estimated elasticity of 0.11. Estimates further indicate that both ST taxes and cigarette taxes reduce ST use, suggesting complementarity between these tobacco products. Sub-analyses point to some differences in the advertising and tax response across segments of the population. The advertising effects from this study inform the debate in the literature with respect to whether, and the extent to which, tobacco advertising affects primary demand at the market level versus brand-shifting.
ER -
TY - JOUR
AU - Davidson,Robert
AU - Dey,Aiyesha
AU - Smith,Abbie J.
TI - Executives' "Off-The-Job" Behavior, Corporate Culture, and Financial Reporting Risk
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18001
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18001
L1 - http://www.nber.org/papers/w18001.pdf
N1 - Author contact info:
Robert Davidson
Georgetown University
McDonough School of Business
Rafik Hariri Building
37th and O Streets, NW
Washington, DC 20057
E-Mail: rhd22@georgetown.edu
Aiyesha Dey
University of Minnesota
Carlson School of Management
321 - 19th Avenue South
Minneapolis, MN 55455
E-Mail: deya@umn.edu
Abbie Smith
University of Chicago Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
E-Mail: abbie.smith@chicagobooth.edu
M3 - presented at "Causes and Consequences of Corporate Culture", December 8-9, 2011
AB - We examine how executives’ behavior outside the workplace, as measured by their ownership of luxury goods (low “frugality”) and prior legal infractions, is related to financial reporting risk. We predict and find that CEOs and CFOs with a legal record are more likely to perpetrate fraud. In contrast, we do not find a relation between executives’ frugality and the propensity to perpetrate fraud. However, as predicted, we find that unfrugal CEOs oversee a relatively loose control environment characterized by relatively high probabilities of other insiders perpetrating fraud and unintentional material reporting errors. Further, cultural changes associated with an increase in fraud risk are more likely during unfrugal (vs. frugal) CEOs’ reign, including the appointment of an unfrugal CFO, an increase in executives’ equity-based incentives to misreport, and a decline in measures of board monitoring intensity.
ER -
TY - JOUR
AU - Wei,Shang-Jin
AU - Zhang,Xiaobo
AU - Liu,Yin
TI - Status Competition and Housing Prices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 18000
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w18000
L1 - http://www.nber.org/papers/w18000.pdf
N1 - Author contact info:
Shang-Jin Wei
Graduate School of Business
Columbia University
Uris Hall 619
3022 Broadway
New York, NY 10027-6902
Tel: 212/854-9139
E-Mail: shangjin.wei@columbia.edu
Xiaobo Zhang
International Food Policy Research Institute
2033 K Street, NW
Washington, DC 20006
Tel: 202-862-8149
Fax: 202-467-4439
E-Mail: x.zhang@cgiar.org
Yin Liu
School of Economics and Management
Tsinghua University
Beijing, China
E-Mail: reggieliu08@gmail.com
AB - While in standard housing economics housing is regarded as an asset and a consumption good, we study in this paper the consequences for housing prices if housing is also a status good. More concretely, if a family’s housing wealth relative to others is an important marker for relative status in the marriage market, then competition for marriage partners might motivate people to pursue a bigger and more expensive house/apartment beyond its direct consumption (and financial investment) value. To test the empirical validity of the hypothesis, we have to overcome the usual difficulty of not being able to observe the intensity of status competition. Our innovation is to explore regional variations in the sex ratio for the pre-marital age cohort across China, which likely has triggered variations in the intensity of competition in the marriage market. The empirical evidence appears to support this hypothesis. We estimate that due to the status good feature of housing, a rise in the sex ratio accounts for 30-48% of the rise in real urban housing prices in China during 2003-2009.
ER -
TY - JOUR
AU - Ganglmair,Bernhard
AU - Tarantino,Emanuele
TI - Patent Disclosure in Standard Setting
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17999
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17999
L1 - http://www.nber.org/papers/w17999.pdf
N1 - Author contact info:
Bernhard Ganglmair
University of Texas at Dallas
Naveen Jindal School of Management
800 W. Campbell Rd (SM31)
Richardson, TX 75080
E-Mail: ganglmair@utdallas.edu
Emanuele Tarantino
Department of Economics - University of Bologna
Piazza Scaravilli, 1
40126 Bologna Italy
E-Mail: emanuele.tarantino@unibo.it
M3 - presented at "Patents, Standards and Innovation Conference", January 20-21, 2012
AB - In a model of industry standard setting with private information about firms' intellectual property, we analyze (a) firms' incentives to contribute to the development and improvement of a standard, and (b) firms' decision to disclose the existence of relevant intellectual property to other participants of the standard-setting process. If participants can disclose after the end of the process and fully exploit their bargaining leverage, then patent holders aspire to disclose always after the end of the process. However, if a patent holder cannot rely on the other participants to always contribute to the process, then it may be inclined to disclose before the end of the process. We also analyze under which conditions firms enter cross-licensing agreements that eliminate the strategic aspect of patent disclosure, and show that, in an institutional setting that implies a waiver of intellectual property rights if patents are not disclosed timely, firms aspire to disclose before the end of the process. Finally, we study the effect of product-market competition on patent disclosure.
ER -
TY - JOUR
AU - Ferraro,Domenico
AU - Rogoff,Kenneth S.
AU - Rossi,Barbara
TI - Can Oil Prices Forecast Exchange Rates?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17998
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17998
L1 - http://www.nber.org/papers/w17998.pdf
N1 - Author contact info:
Domenico Ferraro
Department of Economics
Duke University
PO Box 90097
213 Social Sciences Building
Durham, NC 27708
E-Mail: domenico.ferraro@duke.edu
Kenneth S. Rogoff
Thomas D Cabot Professor of Public Policy
Economics Department
Harvard University
Littauer Center 216
Cambridge, MA 02138-3001
Tel: 617-495-4022
Fax: 617/495-7730
E-Mail: krogoff@harvard.edu
Barbara Rossi
ICREA, UPF, CREI, Duke and BGSE
213 Social Sciences
Duke University
Durham NC 27708
E-Mail: barbara.rossi@upf.edu
AB - This paper investigates whether oil prices have a reliable and stable out-of-sample relationship with the Canadian/U.S dollar nominal exchange rate. Despite state-of-the-art methodologies, we find little systematic relation between oil prices and the exchange rate at the monthly and quarterly frequencies. In contrast, the main contribution is to show the existence of a very short-term relationship at the daily frequency, which is rather robust and holds no matter whether we use contemporaneous (realized) or lagged oil prices in our regression. However, in the latter case the predictive ability is ephemeral, mostly appearing after instabilities have been appropriately taken into account
ER -
TY - JOUR
AU - Grubb,Farley
TI - Is Paper Money Just Paper Money? Experimentation and Local Variation in the Fiat Paper Monies Issued by the Colonial Governments of British North America, 1690-1775: Part I
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17997
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17997
L1 - http://www.nber.org/papers/w17997.pdf
N1 - Author contact info:
Farley Grubb
University of Delaware
Economics Department
Newark, DE 19716
Tel: 302/831-1905
Fax: 302/831-6968
E-Mail: grubbf@udel.edu
AB - The British North American colonies were the first western economies to rely on legislative-issued fiat paper monies as their principal internal media of exchange. This system arose piecemeal. It was monetary experimentation on a grand scale. In the absence of banks and treasuries that exchanged local fiat monies at fixed rates for specie monies (outside monies) on demand, colonial governments experimented with other ways to anchor their fiat monies to real values in the economy. These mechanisms included tax-redemption, interest-bearing notes, land-backed mortgage loans, sinking funds, and legal tender laws. The structure and performance of these mechanisms are explained.
"[The colonies] cannot keep Gold and Silver among them sufficient for the Purposes of their internal Commerce... Paper Bills called Bills of Credit or Paper Money have therefore in the colonies long been substituted for real Money. Various Ways of issuing these and on different Foundations, have at different Times been thought of and practised.... On the whole no Method has been found to give any Degree of fixed, steady, uniform Value to Bills of Credit in America,..." (Benjamin Franklin, 13 Feb. 1767)
ER -
TY - JOUR
AU - Moehling,Carolyn M.
AU - Thomasson,Melissa A.
TI - Saving Babies: The Contribution of Sheppard-Towner to the Decline in Infant Mortality in the 1920s
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17996
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17996
L1 - http://www.nber.org/papers/w17996.pdf
N1 - Author contact info:
Carolyn Moehling
Department of Economics
Rutgers University
75 Hamilton Street
New Brunswick, NJ 08901-1248
Tel: 732/932-7188
Fax: NA
E-Mail: cmoehling@econ.rutgers.edu
Melissa A. Thomasson
Miami University/FSB
Department of Economics MSC 1035
800 E. High Street, Rm. #2054
Oxford, OH 45056
Tel: 513/529-2858
Fax: 513/529-8047
E-Mail: thomasma@muohio.edu
AB - From 1922 to 1929, the Sheppard-Towner Act provided matching grants to states to fund maternal and infant care education initiatives. We examine the effects of this public health program on infant mortality. States engaged in different types of activities, allowing us to examine whether different interventions had differential effects on mortality. Interventions that provided one-on-one contact and opportunities for follow-up care, such as home visits by public health nurses, reduced infant deaths more than classes and conferences. Overall, we estimate that Sheppard-Towner activities can account for 9 to 21 percent of the decline in infant mortality over the period.
ER -
TY - JOUR
AU - Milkman,Katherine L.
AU - Beshears,John
AU - Choi,James J.
AU - Laibson,David
AU - Madrian,Brigitte C.
TI - Following Through on Good Intentions: The Power of Planning Prompts
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17995
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17995
L1 - http://www.nber.org/papers/w17995.pdf
N1 - Author contact info:
Katherine L. Milkman
University of Pennsylvania
3730 Walnut Street
561 Jon M. Huntsman Hall
Philadelphia, PA19104
E-Mail: kmilkman@wharton.upenn.edu
John Beshears
Stanford Graduate School of Business
655 Knight Way
Stanford, CA 94305-7298
Tel: 650/723-6792
E-Mail: beshears@stanford.edu
James J. Choi
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
E-Mail: james.choi@yale.edu
David Laibson
Department of Economics
Littauer M-12
Harvard University
Cambridge, MA 02138
Tel: 617/496-3402
Fax: 617/495-8570
E-Mail: dlaibson@gmail.com
Brigitte C. Madrian
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-495-8917
Fax: 617-496-5960
E-Mail: Brigitte_Madrian@Harvard.edu
AB - We study whether prompts to form and recall a plan can increase individuals’ responsiveness to reminders to make and attend beneficial appointments. At four companies, all employees due for a colonoscopy were randomly assigned to receive either a control mailing or a treatment mailing. The mailings were identical except that the control mailing included a blank sticky note while the treatment mailing included a sticky note that prompted the recipient to write down the appointment date for a colonoscopy and the name of the doctor who would conduct the procedure. During the seven-month follow-up period, 7.2% of treatment employees received a colonoscopy compared to 6.2% of control employees, a statistically significant difference that is roughly equal to the variation in compliance associated with a 10 percent increase in the fraction of the procedure’s cost covered by insurance. The treatment effect was largest for demographic groups judged to be at the highest risk of failing to receive a colonoscopy due to forgetfulness.
ER -
TY - JOUR
AU - Acemoglu,Daron
TI - The World our Grandchildren Will Inherit: The Rights Revolution and Beyond
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17994
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17994
L1 - http://www.nber.org/papers/w17994.pdf
N1 - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu
AB - Following on Keynes’s Economic Possibilities for Our Grandchildren, this paper develops conjectures about the world we will leave to our grandchildren. It starts by outlining the 10 most important trends that have defined our economic, social, and political lives over the last 100 years. It then provides a framework for interpreting these trends, emphasizing the role of the expansion of political and civil rights and institutional changes in this process. It then uses this framework for extrapolating these 10 trends into the next 100 years.
ER -
TY - JOUR
AU - Blau,Francine D.
AU - Brummund,Peter
AU - Liu,Albert Yung-Hsu
TI - Trends in Occupational Segregation by Gender 1970-2009: Adjusting for the Impact of Changes in the Occupational Coding System
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17993
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17993
L1 - http://www.nber.org/papers/w17993.pdf
N1 - Author contact info:
Francine D. Blau
ILR School
Cornell University
268 Ives Hall
Ithaca, New York 14853-3901
Tel: 607/255-4381
Fax: 607/255-4496
E-Mail: fdb4@cornell.edu
Peter Brummund
Uris Hall
Cornell University
Ithaca, NY 14853
Tel: 607-592-8422
E-Mail: pwb9@cornell.edu
Albert Yung-Hsu Liu
Mathematica Policy Research, Inc.
505 14th St., Suite 800
Oakland, CA 94612-1475
E-Mail: aliu@mathematica-mpr.com
AB - In this paper, we develop a gender-specific crosswalk based on dual-coded Current Population Survey data to bridge the change in the Census occupational coding system that occurred in 2000 and use it to provide the first analysis of the trends in occupational segregation by sex for the 1970-2009 period based on a consistent set of occupational codes and data sources. We show that our gender-specific crosswalk more accurately captures the trends in occupational segregation that are masked using the aggregate crosswalk (based on combined male and female employment) provided by the U.S. Census Bureau. Using the 2000 occupational codes, we find that segregation by sex declined over the period but at a diminished pace over the decades, falling by 6.1 percentage points over the 1970s, 4.3 percentage points over the 1980s, 2.1 percentage points over the 1990s, and only 1.1 percentage points (on a decadal basis) over the 2000s. A primary mechanism by which occupational segregation was reduced over the 1970-2009 period was through the entry of new cohorts of women, presumably better prepared than their predecessors and/or encountering less labor market discrimination; during the 1970s and 1980s, however, there were also decreases in occupational segregation within cohorts. Reductions in segregation were correlated with education, with the largest decrease among college graduates and very little change in segregation among high school dropouts.
ER -
TY - JOUR
AU - Ghani,Ejaz
AU - Goswami,Arti Grover
AU - Kerr,William R.
TI - Is India's Manufacturing Sector Moving Away From Cities?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17992
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17992
L1 - http://www.nber.org/papers/w17992.pdf
N1 - Author contact info:
Ejaz Ghani
South Asia PREM
The World Bank
Washington D.C.
E-Mail: Eghani@worldbank.org
Arti Grover Goswami
World Bank
Washington, DC
E-Mail: agrover1@worldbank.org
William R. Kerr
Harvard Business School
Rock Center 212
Soldiers Field
Boston, MA 02163
Tel: 617/496-7021
E-Mail: wkerr@hbs.edu
AB - This paper investigates the urbanization of the Indian manufacturing sector by combining enterprise data from formal and informal sectors. We find that plants in the formal sector are moving away from urban and into rural locations, while the informal sector is moving from rural to urban locations. While the secular trend for India’s manufacturing urbanization has slowed down, the localized importance of education and infrastructure have not. Our results suggest that districts with better education and infrastructure have experienced a faster pace of urbanization, although higher urban-rural cost ratios cause movement out of urban areas. This process is associated with improvements in the spatial allocation of plants across urban and rural locations. Spatial location of plants has implications for policy on investments in education, infrastructure, and the livability of cities. The high share of urbanization occurring in the informal sector suggests that urbanization policies that contain inclusionary approaches may be more successful in promoting local development and managing its strains than those focused only on the formal sector.
ER -
TY - JOUR
AU - Helpman,Elhanan
AU - Itskhoki,Oleg
AU - Muendler,Marc-Andreas
AU - Redding,Stephen J.
TI - Trade and Inequality: From Theory to Estimation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17991
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17991
L1 - http://www.nber.org/papers/w17991.pdf
N1 - Author contact info:
Elhanan Helpman
Department of Economics
Harvard University
1875 Cambridge Street
Cambridge, MA 02138
Tel: 617-495-4690
Fax: 617-495-7730
E-Mail: ehelpman@harvard.edu
Oleg Itskhoki
Department of Economics
Princeton University
Fisher Hall 306
Princeton, NJ 08544-1021
Tel: 609/258-5493
Fax: 609/258-6419
E-Mail: itskhoki@princeton.edu
Marc-Andreas Muendler
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-4799
Fax: 858/534-7040
E-Mail: muendler@ucsd.edu
Stephen J. Redding
Department of Economics
and Woodrow Wilson School
Princeton University
Fisher Hall
Princeton, NJ 08544
Tel: 609/258-4016
Fax: 609/258-6419
E-Mail: reddings@princeton.edu
AB - While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and sectors. Using linked employer-employee data for Brazil, we show that much of overall wage inequality arises within sector-occupations and for workers with similar observable characteristics; this within component is driven by wage dispersion between firms; and wage dispersion between firms is related to firm employment size and trade participation. We then extend the heterogenous-firm model of trade and inequality from Helpman, Itskhoki and Redding (2010) and structurally estimate it with Brazilian data. We show that the estimated model fits the data well, both in terms of key moments as well as in terms of the overall distributions of wages and employment, and find that international trade is important for this fit. In the estimated model, reductions in trade costs have a sizeable effect on wage inequality.
ER -
TY - JOUR
AU - Dee,Thomas
TI - School Turnarounds: Evidence from the 2009 Stimulus
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17990
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17990
L1 - http://www.nber.org/papers/w17990.pdf
N1 - Author contact info:
Thomas Dee
Frank Batten School of Leadership & Public Policy
and Department of Economics
University of Virginia
235 McCormick Road
P.O. Box 400893
Charlottesville, VA 22903
Tel: 434/243-3731
Fax: 434/243-6858
E-Mail: dee@virginia.edu
AB - The American Recovery and Reinvestment Act of 2009 (ARRA) targeted substantial School Improvement Grants (SIGs) to the nation’s “persistently lowest achieving” public schools (i.e., up to $2 million per school annually over 3 years) but required schools accepting these awards to implement a federally prescribed school-reform model. Schools that met the “lowest-achieving” and “lack of progress” thresholds within their state had prioritized eligibility for these SIG-funded interventions. Using data from California, this study leverages these two discontinuous eligibility rules to identify the effects of SIG-funded whole-school reforms. The results based on these “fuzzy” regression-discontinuity designs indicate that there were significant improvements in the test-based performance of schools on the “lowest-achieving” margin but not among schools on the “lack of progress” margin. Complementary panel-based estimates suggest that these improvements were largely concentrated among schools adopting the federal “turnaround” model, which compels more dramatic staff turnover.
ER -
TY - JOUR
AU - Piketty,Thomas
AU - Saez,Emmanuel
TI - A Theory of Optimal Capital Taxation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17989
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17989
L1 - http://www.nber.org/papers/w17989.pdf
N1 - Author contact info:
Thomas Piketty
Paris School of Economics
48 Boulevard Jourdan
75014 Paris, France
E-Mail: piketty@ens.fr
Emmanuel Saez
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720
Tel: 510/642-4631
Fax: 510/642-6615
E-Mail: saez@econ.berkeley.edu
AB - This paper develops a realistic, tractable theoretical model that can be used to investigate socially-optimal capital taxation. We present a dynamic model of savings and bequests with heterogeneous random tastes for bequests to children and for wealth per se. We derive formulas for optimal tax rates on capitalized inheritance expressed in terms of estimable parameters and social preferences. Under our model assumptions, the long-run optimal tax rate increases with the aggregate steady-state flow of inheritances to output, decreases with the elasticity of bequests to the net-of-tax rate, and decreases with the strength of preferences for leaving bequests. For realistic parameters of our model, the optimal tax rate on capitalized inheritance would be as high as 50%-60%–or even higher for top wealth holders–if the social objective is meritocratic (i.e., the social planner puts higher welfare weights on those receiving little inheritance) and if capital is highly concentrated (as it is in the real world). In contrast to the Atkinson-Stiglitz result, the optimal tax on bequest remains positive in our model even with optimal labor taxation because inequality is two-dimensional: with inheritances, labor income is no longer the unique determinant of lifetime resources. In contrast to Chamley-Judd, the optimal tax on capital is positive in our model because we have finite long run elasticities of inheritance to tax rates. Finally, we discuss how adding capital market imperfections and uninsurable shocks to rates of return to our optimal tax model leads to shifting one-off inheritance taxation toward lifetime capital taxation, and can account for the actual structure and mix of inheritance and capital taxation.
ER -
TY - JOUR
AU - Caplin,Andrew
AU - Martin,Daniel J.
TI - Defaults and Attention: The Drop Out Effect
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17988
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17988
L1 - http://www.nber.org/papers/w17988.pdf
N1 - Author contact info:
Andrew Caplin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
Tel: 212/998-8950
Fax: 212/995-3932
E-Mail: andrew.caplin@nyu.edu
Daniel J. Martin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
E-Mail: daniel.martin@nyu.edu
AB - When choice options are complex, policy makers may seek to reduce decision making errors by making a high quality option the default. We show that this positive effect is at risk because such a policy creates incentives for decision makers to "drop out" by paying no attention to the decision and accepting the default sight unseen. Using decision time as a proxy for attention, we confirm the importance of this effect in an experimental setting. A key challenge for policy makers is to measure, and if possible mitigate, such drop out behavior in the field.
ER -
TY - JOUR
AU - Yurukoglu,Ali
TI - Medicare Reimbursements and Shortages of Sterile Injectable Pharmaceuticals
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17987
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17987
L1 - http://www.nber.org/papers/w17987.pdf
N1 - Author contact info:
Ali Yurukoglu
Graduate School of Business
Stanford University
Stanford, CA 94305
Tel: 650/721-1293
E-Mail: yurukoglu_ali@gsb.stanford.edu
AB - This paper investigates the rise in shortages of sterile injectable pharmaceutical drugs in the United States. I focus on a policy change that occurred in 2005 that reduced Medicare Part B payments for sterile injectable drugs. The policy change affected different drugs by different amounts. I find that drugs that were more affected by the policy change, either because they serve older patient populations or had a large number of producers pre-policy change, have had quantitatively and statistically significantly greater increases in shortages and greater decreases in numbers of manufacturers post-regulation. Drugs whose average payments fell by more due to the policy change had greater increases in shortages. I interpret these results using a model of capacity choice with supply uncertainty. Total installed capacity is higher and the probability of a shortage is lower when margins are higher. I conclude that Medicare’s generous payments before the policy change provided manufacturers with incentives to take actions to avoid shortages either by investing in additional maintenance or capacity, or by inducing more entry into production of the drug. The effect on total welfare of removing those payments is theoretically ambiguous, and would require more detailed data to credibly estimate.
ER -
TY - JOUR
AU - Epple,Dennis N.
AU - Romano,Richard
TI - On The Political Economy Of Educational Vouchers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17986
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17986
L1 - http://www.nber.org/papers/w17986.pdf
N1 - Author contact info:
Dennis N. Epple
Tepper School of Business
Carnegie Mellon University
Posner Hall, Room 257B
Pittsburgh, PA 15213
Tel: 412/268-1536
Fax: 412/268-7357
E-Mail: epple@cmu.edu
Richard Romano
University of Florida
E-Mail: richard.romano@cba.ufl.edu
AB - Two significant challenges hamper analyses of collective choice of educational vouchers. One is the multi-dimensional choice set arising from the interdependence of the voucher, public education spending, and taxation. The other is that household preferences between public and private schooling vary with the policy chosen. Even absent a voucher, preferences over public spending are not single-peaked; a middling level of public school spending may be less attractive to a household than either high public school spending or private education coupled with low public spending. We show that Besley and Coate’s (1997) representative democracy provides a viable approach to overcome these hurdles. We provide a complete characterization of equilibrium with an endogenous voucher. We undertake a parallel quantitative analysis. For income distributions exhibiting substantial heterogeneity, such as the U.S. distribution, we find that no voucher arises in equilibrium. For tighter income distributions, however, a voucher arises. For example, with the income distribution of Douglas County, Colorado, where a voucher was recently adopted, our model predicts a positive voucher. Public support for a not-to-large voucher arises because the cross subsidy to public school expenditure from those switching to private schools outweighs the subsidy to those that attend private school without a voucher.
ER -
TY - JOUR
AU - Altonji,Joseph G.
AU - Blom,Erica
AU - Meghir,Costas
TI - Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17985
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17985
L1 - http://www.nber.org/papers/w17985.pdf
N1 - Author contact info:
Joseph G. Altonji
Department of Economics
Yale University
Box 208264
New Haven, CT 06520-8264
Tel: 203/432-6285
Fax: 203/432-5591
E-Mail: joseph.altonji@yale.edu
Erica Blom
Department of Economics
Yale University
Box 208264
New Haven, CT 06520-8264
E-Mail: erica.blom@yale.edu
Costas Meghir
Department of Economics
Yale University
37 Hillhouse Avenue
New Haven, CT 06511
Tel: 203/432-3558
E-Mail: c.meghir@yale.edu
AB - Motivated by the large differences in labor market outcomes across college majors, we survey the literature on the demand for and return to high school and post-secondary education by field of study. We combine elements from several papers to provide a dynamic model of education and occupation choice that stresses the roles of specificity of human capital and uncertainty about preferences, ability, education outcomes, and labor market returns. The model implies an important distinction between the ex ante and ex post returns to education decisions. We also discuss some of the econometric difficulties in estimating the causal effects of field of study on wages in the context of a sequential choice model with learning. Finally, we review the empirical literature on choice of curriculum and the effects of high school courses and college major on labor market outcomes.
ER -
TY - JOUR
AU - Bordo,Michael D.
AU - Humpage,Owen
AU - Schwartz,Anna J.
TI - Epilogue: Foreign-Exchange-Market Operations in the Twenty-First Century
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17984
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17984
L1 - http://www.nber.org/papers/w17984.pdf
N1 - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu
Owen Humpage
Federal Reserve Bank of Cleveland
P.O. Box 6387
Cleveland, OH 44101-1387
Tel: 216 579 2019
Fax: 216 579 3050
E-Mail: owen.f.humpage@clev.frb.org
Anna J. Schwartz
NBER
365 Fifth Ave, 5th Floor
New York, NY 10016
Tel: 212/817-7957
Fax: 212/817-1597
E-Mail: aschwartz@gc.cuny.edu
AB - Foreign-exchange operations did not end after the United States stopped its activist approach to intervention. Japan persisted in such operations, but avoided overt conflict with its monetary policy. With the on-set of the Great Recession, Switzerland has transacted in foreign exchange both for monetary and exchange-rate purposes, and key central banks have used swap facilities to extended their lender-of-last-resort functions. Developing and emerging market economies continue to intervene, but their actions may hamper the development of their own foreign-exchange markets. China’s undervalued exchange rate is producing inflation and real appreciation, despite China’s efforts to sterilize its reserve accumulation.
ER -
TY - JOUR
AU - Hall,Bronwyn H.
AU - Helmers,Christian
AU - Rogers,Mark
AU - Sena,Vania
TI - The Choice between Formal and Informal Intellectual Property: A Literature Review
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17983
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17983
L1 - http://www.nber.org/papers/w17983.pdf
N1 - Author contact info:
Bronwyn H. Hall
Dept. of Economics
549 Evans Hall
UC Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-3878
Fax: 510/548-5561
E-Mail: bhhall@nber.org
Christian Helmers
Universidad Carlos III de Madrid
c/. Madrid, 126
28903 Getafe, Spain
E-Mail: christian.helmers@uc3m.es
Mark Rogers
deceased
E-Mail: news.bhh@gmail.com
Vania Sena
Southend Campus Elmer Approach
Southend-on-Sea SS1 1LW
UK
E-Mail: vsena@essex.ac.uk
AB - We survey the economic literature, both theoretical and empirical, on the choice of intellectual property protection by firms. Our focus is on the tradeoffs between using patents and disclosing versus the use of secrecy, although we also look briefly at the use of other means of formal intellectual property protection.
ER -
TY - JOUR
AU - Attanasio,Orazio
AU - Hurst,Erik
AU - Pistaferri,Luigi
TI - The Evolution of Income, Consumption, and Leisure Inequality in The US, 1980-2010
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17982
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17982
L1 - http://www.nber.org/papers/w17982.pdf
N1 - Author contact info:
Orazio Attanasio
Department of Economics
University College London
Gower Street
London WC1E 6BT
UNITED KINGDOM
Tel: 44/20-76795880
Fax: 44/20-79162775
E-Mail: o.attanasio@ucl.ac.uk
Erik Hurst
Booth School of Business
University of Chicago
Harper Center
Chicago, IL 60637
Tel: 773/834-4073
Fax: 773/702-0458
E-Mail: erik.hurst@chicagobooth.edu
Luigi Pistaferri
Department of Economics
579 Serra Mall
Stanford University
Stanford, CA 94305-6072
Tel: 650/724-4904
Fax: 650/725-5702
E-Mail: pista@stanford.edu
AB - Recent research has documented that income inequality in the United States has increased dramatically over the prior three decades. There has been less of a consensus, however, on whether the increase in income inequality was matched by an equally large increase in consumption inequality. Most researchers have studied this question using data from the Consumer Expenditure Survey (CE) and some studies have suggested that the increase in consumption inequality has been modest. Unfortunately ,there is now mounting evidence that the CE is plagued by serious non-classical measurement error, which hinders the extent to which definitive conclusions can be made about the extent to which consumption inequality has evolved over the last three decades.
In this paper, we use a variety of different techniques to overcome the measurement error problems with the CE. First, we use data from the diary component of the CE, focusing on categories where measurement error has been found to be less of an issue. Second, we explore inequality measures within the CE using the value of vehicles owned, a consumption component that is considered to be measured well. Third, we try to account directly for the non-classical measurement error of the CE by comparing the spending on luxuries (entertainment) relative to necessities (food). This is similar to the recent approach taken by Browning and Crossley (2009) and Aguiar and Bils (2011). Finally, we use expenditure data from the Panel Study of Income Dynamics to explore the dynamics of alternative measures of consumption inequality. All of our different methods yield similar results. We find that consumption inequality within the U.S. between 1980 and 2010 has increased by nearly the same amount as income inequality.
ER -
TY - JOUR
AU - Cheung,Yan Leung
AU - Rau,P. Raghavendra
AU - Stouraitis,Aris
TI - How much do firms pay as bribes and what benefits do they get? Evidence from corruption cases worldwide
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17981
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17981
L1 - http://www.nber.org/papers/w17981.pdf
N1 - Author contact info:
Yan Leung Cheung
Hong Kong Baptist University
Wing Lung Bank Building
Department of Finance and Decision Sciences
Renfrew Road, Kowloon Tong, Hong Kong
E-Mail: scheung@hkbu.edu.hk
Raghavendra Rau
Cambridge Judge Business School,
Trumpington Street,
University of Cambridge,
Cambridgeshire, CB2 1AG
United Kingdom
E-Mail: r.rau@jbs.cam.ac.uk
Aris Stouraitis
Hong Kong Baptist University
Rm 812, Wing Lung Bank Building
Department of Finance and Decision Sciences
Renfrew Road, Kowloon Tong, Hong Kong
E-Mail: stoura@hkbu.edu.hk
M3 - presented at "Causes and Consequences of Corporate Culture", December 8-9, 2011
AB - We analyze a hand-collected sample of 166 prominent bribery cases, involving 107 publicly listed firms from 20 stock markets that have been reported to have bribed government officials in 52 countries worldwide during 1971-2007. We focus on the initial date of award of the contract for which the bribe was paid (rather than of the revelation of the bribery). Our data enable us to describe in detail the mechanisms through which bribes affect firm value. We find that firm performance, the rank of the politicians bribed, as well as bribe-paying and bribe-taking country characteristics affect the magnitude of the bribes and the benefits that firms derive from them.
ER -
TY - JOUR
AU - Damsgaard,Erika Farnstrand
AU - Thursby,Marie C.
TI - University Entrepreneurship and Professor Privilege
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17980
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17980
L1 - http://www.nber.org/papers/w17980.pdf
N1 - Author contact info:
Erika Farnstrand Damsgaard
Research Institute of Industrial Economics
Box 55665
SE-102 15 Stockholm, Sweden
E-Mail: erika.farnstrand.damsgaard@ifn.se
Marie C. Thursby
College of Management
Georgia Institute of Technology
800 West Peachtree Street, NW
Atlanta, GA 30308-1149
Tel: 404/894-6249
Fax: 404/385-4894
E-Mail: marie.thursby@mgt.gatech.edu
AB - This paper analyzes how institutional differences affect university entrepreneurship. We focus on ownership of faculty inventions, and compare two institutional regimes; the US and Sweden. In the US, the Bayh Dole Act gives universities the right to own inventions from publicly funded research, whereas in Sweden, the professor privilege gives the university faculty this right. We develop a theoretical model and examine the effects of institutional differences on modes of commercialization; entrepreneurship or licenses to established firms, as well as on probabilities of successful commercialization. We find that the US system is less conducive to entrepreneurship than the Swedish system if established firms have some advantage over faculty startups, and that on average the probability of successful commercialization is somewhat higher in the US. We also use the model to perform four policy experiments as suggested by recent policy debates in both countries.
ER -
TY - JOUR
AU - Cantoni,Davide
AU - Yuchtman,Noam
TI - Medieval Universities, Legal Institutions, and the Commercial Revolution
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17979
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17979
L1 - http://www.nber.org/papers/w17979.pdf
N1 - Author contact info:
Davide Cantoni
Seminar für Wirtschaftsgeschichte
University of Munich
80539 Munich
Germany
E-Mail: cantoni@lmu.de
Noam Yuchtman
Haas School of Business
University of California, Berkeley
Berkeley, CA 94720
Tel: 510/642-4632
E-Mail: yuchtman@haas.berkeley.edu
AB - We present new data documenting medieval Europe's "Commercial Revolution'' using information on the establishment of markets in Germany. We use these data to test whether medieval universities played a causal role in expanding economic activity, examining the foundation of Germany's first universities after 1386 following the Papal Schism. We find that the trend rate of market establishment breaks upward in 1386 and that this break is greatest where the distance to a university shrank most. There is no differential pre-1386 trend associated with the reduction in distance to a university, and there is no break in trend in 1386 where university proximity did not change. These results are not affected by excluding cities close to universities or cities belonging to territories that included universities. Universities provided training in newly-rediscovered Roman and Canon law; students with legal training served in positions that reduced the uncertainty of trade in medieval Europe. We argue that training in the law, and the consequent development of legal and administrative institutions, was an important channel linking universities and greater economic activity.
ER -
TY - JOUR
AU - Crucini,Mario J.
AU - Telmer,Christopher I.
TI - Microeconomic Sources of Real Exchange Rate Variability
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17978
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17978
L1 - http://www.nber.org/papers/w17978.pdf
N1 - Author contact info:
Mario J. Crucini
Department of Economics
Vanderbilt University
Box 1819 Station B
Nashville, TN 37235-1819
Tel: 615/322-7357
Fax: 615/343-8459
E-Mail: mario.j.crucini@vanderbilt.edu
Christopher Telmer
Tepper School of Business
Frew and Tech Streets
Carnegie-Mellon University
Pittsburgh, PA 15213
E-Mail: chris.telmer@cmu.edu
AB - We provide three sets of variance decompositions on microeconomic international relative price data. The first shows that the overall distribution of absolute deviations from the Law of One Price (LOP) is dominated by cross-sectional variation in long-term averages, not by time-series variation around the long-term averages. The second shows that time-series variation in changes in LOP deviations is dominated by idiosyncratic, goods-specific variation, not by aggregate variation such as that arising from nominal exchange rates. The third shows that time-series and cross-sectional variance are connected across goods. Goods that exhibit high cross-sectional variance also exhibit high time-series variance. Moreover, when this connection is made conditional on the tradeability of a goods, a two-factor structure for the goods-specific cross-section is revealed. We argue that this factor structure, in addition to our other variance decompositions, is informative for the construction of models that can synthesize the micro and macroeconomic behavior of relative prices.
ER -
TY - JOUR
AU - Allcott,Hunt
AU - Mullainathan,Sendhil
AU - Taubinsky,Dmitry
TI - Externalities, Internalities, and the Targeting of Energy Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17977
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17977
L1 - http://www.nber.org/papers/w17977.pdf
N1 - Author contact info:
Hunt Allcott
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
E-Mail: hunt.allcott@nyu.edu
Sendhil Mullainathan
Department of Economics
Littauer M-18
Harvard University
Cambridge, MA 02138
Tel: 617/496-2720
Fax: 617/495-7730
E-Mail: mullain@fas.harvard.edu
Dmitry Taubinsky
Harvard University
E-Mail: taubinsk@fas.harvard.edu
AB - We show how the traditional logic of Pigouvian externality taxes changes if consumers under-value energy costs when buying energy-using durables such as cars and air conditioners. First, with undervaluation, there is an "Internality Dividend" from externality taxes: aside from reducing the provision of public bads, they also reduce allocative inefficiencies caused by consumers' underinvestment in energy efficient durables. Second, although Pigouvian taxes are clearly the preferred policy mechanism when externalities are the only market failure, undervaluation provides an "Internality Rationale" for alternative policies such as product subsidies that reduce the relative price of energy efficient durables. However, when some consumers misoptimize and others do not, a crucial quantity for policy analysis is the average marginal internality: the extent to which a policy preferentially targets misoptimizing consumers. As an example of the importance of the average marginal internality, we carry out a randomized field experiment to provide rebates for energy efficient lightbulbs and illustrate how the welfare effects of the rebate depend significantly on whether consumers that undervalue energy costs are more or less elastic.
ER -
TY - JOUR
AU - Costinot,Arnaud
AU - Vogel,Jonathan
AU - Wang,Su
TI - Global Supply Chains and Wage Inequality
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17976
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17976
L1 - http://www.nber.org/papers/w17976.pdf
N1 - Author contact info:
Arnaud Costinot
Department of Economics
MIT, E52-243B
50 Memorial Drive
Cambridge MA 02142-1347
Tel: 617/324-1712
Fax: 617/253-1330
E-Mail: costinot@mit.edu
Jonathan Vogel
Department of Economics
Columbia University
420 West 118th Street
New York, NY 10027
Tel: 212/854-9925
Fax: 212/854-8059
E-Mail: jvogel@columbia.edu
Su Wang
MIT
E-Mail: su_wang@mit.edu
AB - A salient feature of globalization in recent decades is the emergence of "global supply chains" in which different countries specialize in different stages of a sequential production process. In Arnaud Costinot, Jonathan Vogel and Su Wang (2011), CVW hereafter, we have developed a simple theory of trade with sequential production to shed light on how global supply chains affect the interdependence of nations. In this paper we develop a multi-factor extension of CVW to explore how the emergence of global supply chains may affect wage inequality within countries. Our main theoretical prediction is that the emergence of global supply chains has opposite effects on wage inequality among workers employed at the bottom and the top of these chains. This suggests that the consequences of globalization on wage inequality may be very different in primary sectors like agriculture or mining than in manufacturing sectors.
ER -
TY - JOUR
AU - Kogan,Leonid
AU - Papanikolaou,Dimitris
TI - A Theory of Firm Characteristics and Stock Returns: The Role of Investment-Specific Shocks
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17975
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17975
L1 - http://www.nber.org/papers/w17975.pdf
N1 - Author contact info:
Leonid Kogan
MIT Sloan School of Management
100 Main Street, E62-636
Cambridge, MA 02142
Tel: 617/504-9728
Fax: 617/258-6855
E-Mail: lkogan@mit.edu
Dimitris Papanikolaou
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-7704
E-Mail: d-papanikolaou@kellogg.northwestern.edu
AB - We provide a theoretical model linking firm characteristics and expected returns. The key ingredient of our model is technological shocks embodied in new capital (IST shocks), which affect the profitability of new investments. Firms' exposure to IST shocks is endogenously determined by the fraction of firm value due to growth opportunities. In our structural model, several firm characteristics - Tobin's Q, past investment, earnings-price ratios, market betas, and idiosyncratic volatility of stock returns – help predict the share of growth opportunities in the firm's market value, and are therefore correlated with the firm's exposure to IST shocks and risk premia. Our calibrated model replicates: i) the predictability of returns by firm characteristics; ii) the comovement of stock returns on firms with similar characteristics; iii) the failure of the CAPM to price portfolio returns of firms sorted on characteristics; iv) the time-series predictability of market portfolio returns by aggregate investment and valuation ratios; and v) a downward sloping term structure of risk premia for dividend strips. Our model delivers testable predictions about the behavior of firm-level real variables – investment and output growth – that are supported by the data.
ER -
TY - JOUR
AU - Hurd,Michael D.
AU - Rohwedder,Susann
TI - Measuring Total Household Spending in a Monthly Internet Survey: Evidence from the American Life Panel
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17974
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17974
L1 - http://www.nber.org/papers/w17974.pdf
N1 - Author contact info:
Michael D. Hurd
RAND Corporation
1776 Main Street
Santa Monica, CA 90407
Tel: 310/451-6945
Fax: 310/451-6923
E-Mail: mhurd@rand.org
Susann Rohwedder
RAND
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407
Tel: 310-393 0411,ext. 7885
Fax: 310-451-6923
E-Mail: Susann_Rohwedder@rand.org
AB - Beginning in May 2009 we fielded a monthly Internet survey designed to measure total household spending as the aggregate of about 40 spending components. This paper reports on a number of outcomes from 30 waves of data collection. These outcomes include sample attrition, indicators of data quality such as item nonresponse and the variance in total spending, and substantive results such as the trajectory of total spending and the trajectories of some components of spending. We conclude that high-frequency surveying for total spending is feasible and that the resulting data show expected patterns of levels and change.
ER -
TY - JOUR
AU - Hurd,Michael D.
AU - Rohwedder,Susann
TI - Stock Price Expectations and Stock Trading
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17973
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17973
L1 - http://www.nber.org/papers/w17973.pdf
N1 - Author contact info:
Michael D. Hurd
RAND Corporation
1776 Main Street
Santa Monica, CA 90407
Tel: 310/451-6945
Fax: 310/451-6923
E-Mail: mhurd@rand.org
Susann Rohwedder
RAND
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407
Tel: 310-393 0411,ext. 7885
Fax: 310-451-6923
E-Mail: Susann_Rohwedder@rand.org
AB - Background: The fact that many individuals inexplicably fail to buy stocks, despite the historical evidence for a good return on investment has been referred to as the stock market puzzle. However, measurements of the subjective probability of a gain show that people are more pessimistic than historical outcomes would suggest. Further, expectations of future stock price increases apparently depend on old information, which would seem to be at odds with rational expectations in the context of efficient markets. To shed light on these apparent paradoxes, we analyzed the relationships between actual stock market price changes and the subjective probability of price changes, and between the subjective probability of price changes and the likelihood of engaging in stock trading.
Approach: Drawing on 31 waves of longitudinal data on investment behavior from the American Life Panel surveys from November 2008 to the present, we tracked high frequency changes in expectations at the individual level and related them to high frequency changes in stock market prices. We analyzed both individuals who held stock in retirement accounts and those who held stocks outside of these accounts.
Results: Changes in the subjective probability for one-year and 10-year gains in stock prices correlated with the Standard and Poor 500 Index with lags ranging from changes during the most recent week to changes more than a month before. This relationship was stronger among those who professed to follow the stock market and to have good knowledge than among those whose understanding is poor. Among individuals who held stock outside of retirement accounts, the likelihood of buying and selling stock was more strongly associated with recent stock behavior than among those who held stocks only within retirement accounts.
Conclusions: On average, subjective expectations of stock market behavior depend on stock price changes. Furthermore, stock trading responds to changes in expectations even when the change in expectations was several weeks before the trade. These results suggest that expectations and trading are related to stock price changes in an intertemporally complex manner. Our findings also confirm that expectations about stock market gains are pessimistic, which would imply that many people simply view savings accounts as a better investment. We conclude that we need a better understanding of expectation formation and how those expectations are translated into choice.
ER -
TY - JOUR
AU - Autor,David H.
AU - Houseman,Susan N.
AU - Kerr,Sari Pekkala
TI - The Effect of Work First Job Placements on the Distribution of Earnings: An Instrumental Variable Quantile Regression Approach
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17972
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17972
L1 - http://www.nber.org/papers/w17972.pdf
N1 - Author contact info:
David Autor
Department of Economics
MIT, E52-371
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/258-7698
Fax: 617/253-1330
E-Mail: dautor@mit.edu
Susan Houseman
W.E. Upjohn Institute
300 S. Westnedge Av.
Kalamazoo, MI 49007
E-Mail: houseman@upjohn.org
Sari Pekkala Kerr
Wellesley College (WCW)
106 Central Street
Wellesley, MA 02481
E-Mail: sari.pekkala@gmail.com
AB - Federal and state employment programs for low-skilled workers typically emphasize rapid placement of participants into jobs and often place a large fraction of participants into temporary-help agency jobs. Using unique administrative data from Detroit's welfare-to-work program, we apply the Chernozhukov-Hansen instrumental variables quantile regression (IVQR) method to estimate the causal effects of welfare-to-work job placements on the distribution of participants' earnings. We find that neither direct-hire nor temporary-help job placements significantly affect the lower tail of the earnings distribution. Direct-hire placements, however, substantially raise the upper tail, yielding sizable earnings increases for more than fifty percent of participants over the medium-term (one to two years following placement). Conversely, temporary-help placements have zero or negative earnings impacts at all quantiles, and these effects are economically large and significant at higher quantiles. In net, we find that the widespread practice of placing disadvantaged workers into temporary-help jobs is an ineffective tool for improving earnings and, moreover, that programs focused solely on job placement fail to improve earnings among those who are hardest to serve. Methodologically, one surprising result is that a reduced-form quantile IV approach, akin to two-step instrumental variables, produces near-identical point estimates to the structural IVQR approach, which is based on much stronger assumptions.
ER -
TY - JOUR
AU - Basu,Susanto
AU - Pascali,Luigi
AU - Schiantarelli,Fabio
AU - Serven,Luis
TI - Productivity and the Welfare of Nations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17971
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17971
L1 - http://www.nber.org/papers/w17971.pdf
N1 - Author contact info:
Susanto Basu
Department of Economics
Boston College
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-2182
Fax: 617/552-2308
E-Mail: susanto.basu@bc.edu
Luigi Pascali
Department of Economics
Universitat Pompeu Fabra
Ramon Trias Fargas, 25-27
08005-Barcelona
E-Mail: luigi.pascali@upf.edu
Fabio Schiantarelli
Department of Economics
Boston College
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617-5524512
Fax: 617-5522308
E-Mail: schianta@bc.edu
Luis Serven
The World Bank
1818 H St NW
Washington DC 20433
Tel: 202 473 7451
E-Mail: lserven@worldbank.org
AB - We show how to relate the welfare of a country's infinitely-lived representative consumer to observable aggregate data. To a first order, welfare is summarized by total factor productivity and by the capital stock per capita. These variables suffice to calculate welfare changes within a country, as well as welfare differences across countries. The result holds regardless of the type of production technology and the degree of market competition. It applies to open economies as well, if total factor productivity is constructed using domestic absorption, instead of gross domestic product, as the measure of output. It also requires that total factor productivity be constructed with prices and quantities as perceived by consumers, not firms. Thus, factor shares need to be calculated using after-tax wages and rental rates and they will typically sum to less than one. These results are used to calculate welfare gaps and growth rates in a sample of developed countries with high-quality total factor productivity and capital data. Under realistic scenarios, the U.K. and Spain had the highest growth rates of welfare during the sample period 1985-2005, but the U.S. had the highest level of welfare.
ER -
TY - JOUR
AU - Fosgerau,Mogens
AU - McFadden,Daniel L.
AU - Bierlaire,Michel
TI - Choice Probability Generating Functions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17970
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17970
L1 - http://www.nber.org/papers/w17970.pdf
N1 - Author contact info:
Mogens Fosgerau
Technical University of Denmark
Bygningstorvet 116B
Building , room 115C
2800 Kgs. Lyngby
Denmark
E-Mail: mf@transport.dtu.dk
Daniel L. McFadden
University of California, Berkeley
Department of Economics
549 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-8428
Fax: 510/642-0638
E-Mail: mcfadden@econ.berkeley.edu
Michel Bierlaire
EPFL ENAC INTER TRANSP-OR
GC B3 454 (Bâtiment GC) Station 18
CH-1015 Lausanne Switzerland
E-Mail: michel.bierlaire@epfl.ch
AB - This paper considers discrete choice, with choice probabilities coming from maximization of preferences from a random utility field perturbed by additive location shifters (ARUM). Any ARUM can be characterized by a choice-probability generating function (CPGF) whose gradient gives the choice probabilities, and every CPGF is consistent with an ARUM. We relate CPGF to multivariate extreme value distributions, and review and extend methods for constructing CPGF for applications.
ER -
TY - JOUR
AU - Costinot,Arnaud
AU - Donaldson,Dave
TI - Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17969
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17969
L1 - http://www.nber.org/papers/w17969.pdf
N1 - Author contact info:
Arnaud Costinot
Department of Economics
MIT, E52-243B
50 Memorial Drive
Cambridge MA 02142-1347
Tel: 617/324-1712
Fax: 617/253-1330
E-Mail: costinot@mit.edu
Dave Donaldson
MIT Department of Economics
50 Memorial Drive, E52-243G
Cambridge, MA 02142-1347
Tel: 617/253-4790
Fax: 617/253-1330
E-Mail: ddonald@mit.edu
AB - When asked to name one proposition in the social sciences that is both true and non-trivial, Paul Samuelson famously replied: 'Ricardo's theory of comparative advantage'. Truth, however, in Samuelson's reply refers to the fact that Ricardo's theory of comparative advantage is mathematically correct, not that it is empirically valid. The goal of this paper is to assess the empirical performance of Ricardo's ideas. We use novel agricultural data that describe the productivity in 17 crops of 1.6 million parcels of land in 55 countries around the world. Crucially, this dataset contains information about the productivity of each parcel of land in all crops, not just those that are currently being grown. This direct information about relative productivity differences across economic activities allows us to compute, for the first time, the output predicted by Ricardo's theory of comparative advantage. Despite all of the real-world considerations from which this theory abstracts, we find that Ricardo's theory of comparative advantage has significant explanatory power in the data, at least within the scope of our analysis.
ER -
TY - JOUR
AU - Banerjee,Abhijit
AU - Mullainathan,Sendhil
AU - Hanna,Rema
TI - Corruption
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17968
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17968
L1 - http://www.nber.org/papers/w17968.pdf
N1 - Author contact info:
Abhijit Banerjee
MIT
Department of Economics
E52-252d
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8855
Fax: 617/253-1330
E-Mail: banerjee@mit.edu
Sendhil Mullainathan
Department of Economics
Littauer M-18
Harvard University
Cambridge, MA 02138
Tel: 617/496-2720
Fax: 617/495-7730
E-Mail: mullain@fas.harvard.edu
Rema Hanna
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-1140
Fax: 617/496-5747
E-Mail: Rema_Hanna@hks.harvard.edu
AB - In this paper, we provide a new framework for analyzing corruption in public bureaucracies. The standard way to model corruption is as an example of moral hazard, which then leads to a focus on better monitoring and stricter penalties with the eradication of corruption as the final goal. We propose an alternative approach which emphasizes why corruption arises in the first place. Corruption is modeled as a consequence of the interaction between the underlying task being performed by bureaucrat, the bureaucrat's private incentives and what the principal can observe and control. This allows us to study not just corruption but also other distortions that arise simultaneously with corruption, such as red-tape and ultimately, the quality and efficiency of the public services provided, and how these outcomes vary depending on the specific features of this task. We then review the growing empirical literature on corruption through this perspective and provide guidance for future empirical research.
ER -
TY - JOUR
AU - Woodford,Michael
TI - Inflation Targeting and Financial Stability
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17967
PY - 2012
Y2 - April 2012
UR - http://www.nber.org/papers/w17967
L1 - http://www.nber.org/papers/w17967.pdf
N1 - Author contact info:
Michael Woodford
Department of Economics
Columbia University
420 W. 118th Street
New York, NY 10027
Tel: 212/854-1094
Fax: 212-854-8059
E-Mail: mw2230@columbia.edu
AB - A number of commentators have argued that the desirability of inflation targeting as a framework for monetary policy analysis should be reconsidered in light of the global financial crisis, on the ground that it requires neglect of the implications of monetary policy for financial stability. This paper argues that monetary policy may indeed affect the severity of risks to financial stability, but that it is possible to generalize an inflation targeting framework to take account of financial stability concerns alongside traditional stabilization objectives. The resulting framework can still be viewed as a form of flexible inflation targeting; in particular, the paper proposes a target criterion that would still imply an invariant long-run price level, despite fluctuations over time in risks to financial stability or even the occurrence of occasional financial crises.
ER -
TY - JOUR
AU - Rothstein,Jesse
TI - The Labor Market Four Years Into the Crisis: Assessing Structural Explanations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17966
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17966
L1 - http://www.nber.org/papers/w17966.pdf
N1 - Author contact info:
Jesse Rothstein
Goldman School of Public Policy
University of California, Berkeley
2607 Hearst Avenue
Berkeley, CA 94720-7320
Tel: 510/643-8561
Fax: 510/643-9657
E-Mail: rothstein@berkeley.edu
AB - Four years after the beginning of the Great Recession, the labor market remains historically weak. Many observers have concluded that "structural" impediments to recovery bear some of the blame. This paper reviews such structural explanations. I find that there is little evidence supporting these hypotheses, and that the bulk of the evidence is more consistent with the hypothesis that continued poor performance is primarily attributable to shortfalls in the aggregate demand for labor.
ER -
TY - JOUR
AU - Kearney,Melissa Schettini
AU - Levine,Phillip B.
TI - Why is the Teen Birth Rate in the United States so High and Why Does it Matter?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17965
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17965
L1 - http://www.nber.org/papers/w17965.pdf
N1 - Author contact info:
Melissa Schettini Kearney
Department of Economics
University of Maryland
3105 Tydings Hall
College Park, MD 20742
Tel: 301/405-6202
E-Mail: kearney@econ.umd.edu
Phillip B. Levine
Department of Economics
Wellesley College
106 Central Street
Wellesley, MA 02481
Tel: 781/283-2162
Fax: 781/283-2177
E-Mail: plevine@wellesley.edu
AB - This paper examines two aspects of teen childbearing in the United States. First, it reviews and synthesizes the evidence on the reasons why teen birth rates are so uniquely high in the United States and especially in some states. Second, it considers why and how it matters. We argue that economists' typical explanations are unable to account for any sizable share of the geographic variation. We describe some recent analysis indicating that the combination of being poor and living in a more unequal (and less mobile) location, like the United States, leads young women to choose early, non-marital childbearing at elevated rates, potentially because of their lower expectations of future economic success. Consistent with this view, the most rigorous studies on the topic find that teen childbearing has very little, if any, direct negative economic consequence. If it is explained by the low economic trajectory that some young women face, then it makes sense that having a child as a teen would not be an additional cause of poor economic outcomes. These findings lead us to conclude that the high rate of teen childbearing in the United States matters mostly because it is a marker of larger, underlying social problems.
ER -
TY - JOUR
AU - Kearney,Melissa Schettini
AU - Levine,Phillip B.
TI - Explaining Recent Trends in the U.S. Teen Birth Rate
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17964
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17964
L1 - http://www.nber.org/papers/w17964.pdf
N1 - Author contact info:
Melissa Schettini Kearney
Department of Economics
University of Maryland
3105 Tydings Hall
College Park, MD 20742
Tel: 301/405-6202
E-Mail: kearney@econ.umd.edu
Phillip B. Levine
Department of Economics
Wellesley College
106 Central Street
Wellesley, MA 02481
Tel: 781/283-2162
Fax: 781/283-2177
E-Mail: plevine@wellesley.edu
AB - We investigate possible explanations for the large decline in U.S. teen childbearing that occurred in the twenty years following the 1991 peak. Our review of previous evidence and the results of new analyses presented here leads to the following main set of observations. First, the observed decline in teen childbearing is even more surprising given the increasing share of Hispanic teens, who have higher birth rates. Second, we find that a reduction in sexual activity and an increase in contraceptive use contributed to the decline roughly equally. Third, we are able to identify a statistically discernible impact of declining welfare benefits and expanded access to family planning services through Medicaid, but combined they can only account for 12 percent of the observed decline in teen childbearing between 1991 and 2008. We are unable to find any impact of other policies (including abstinence only or mandatory sex education) or labor market conditions. In the end we conclude that the standard factors which are claimed to be related to the rate at which teens give birth appear to explain little of the recent trend.
ER -
TY - JOUR
AU - Bo,Chen
AU - Jacks,David S.
TI - Trade, Variety, and Immigration
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17963
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17963
L1 - http://www.nber.org/papers/w17963.pdf
N1 - Author contact info:
Bo Chen
Trade Division, SIBA
777 Guo Ding Road
Shanghai 200433
P.R. China
E-Mail: chenbo1947@gmail.com
David S. Jacks
Department of Economics
Simon Fraser University
8888 University Drive
Burnaby, BC V5A 1S6
CANADA
Tel: 778/782-5392
Fax: 778/782-5944
E-Mail: dsjacks@gmail.com
AB - What are the gains from international trade? And how do immigrants influence this process? While economists have considered these questions before, particularly in the context of aggregate trade flows, there has been no work assessing the relation between immigration and international trade in varieties—that is, the trade of particular goods from particular geographic areas. We consider the case of Canada, document its impressive experience with import variety growth in the period from 1988 to 2007, and relate this variety growth to the process of immigration. We find that import varieties grew 76%, that this growth is associated with a welfare gain to Canadian consumers as large as 28%, and that enhanced immigration flows may be responsible for 25% of this variety growth and its attendant welfare gains for native-born Canadians.
ER -
TY - JOUR
AU - House,Christopher L.
AU - Zhang,Jing
TI - Layoffs, Lemons and Temps
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17962
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17962
L1 - http://www.nber.org/papers/w17962.pdf
N1 - Author contact info:
Christopher House
University of Michigan
Department of Economics
238 Lorch Hall
Ann Arbor, MI 48109-1220
Tel: 734/764-2364
Fax: 734/764-2769
E-Mail: chouse@umich.edu
Jing Zhang
University of Michigan
Department of Economics
611 Tappan Street
Ann Arbor, MI 48109-1220
E-Mail: jzhang@umich.edu
AB - We develop a dynamic equilibrium model of labor demand with adverse selection. Firms learn the quality of newly hired workers after a period of employment. Adverse selection makes it costly to hire new workers and to release productive workers. As a result, firms hoard labor and under-react to labor demand shocks. The adverse selection problem also creates a market for temporary workers. In equilibrium, firms hire a buffer stock of permanent workers and respond to changing business conditions by varying their temp workers. A hiring subsidy or tax can improve welfare by discouraging firms from hoarding too many productive workers.
ER -
TY - JOUR
AU - Hanson,Gordon H.
TI - The Rise of Middle Kingdoms: Emerging Economies in Global Trade
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17961
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17961
L1 - http://www.nber.org/papers/w17961.pdf
N1 - Author contact info:
Gordon H. Hanson
IR/PS 0519
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0519
Tel: 858/822-5087
Fax: 858/534-3939
E-Mail: gohanson@ucsd.edu
AB - In this paper, I examine changes in international trade associated with the integration of low- and middle-income countries into the global economy. Led by China and India, the share of developing economies in global exports more than doubled between 1994 and 2008. One feature of new trade patterns is greater South-South trade. China and India have booming demand for imported raw materials, which they use to build cities and factories. Industrialization throughout the South has deepened global production networks, contributing to greater trade in intermediate inputs. A second feature of new trade patterns is the return of comparative advantage as a driver of global commerce. Growth in low- and middle-income nations makes specialization according to comparative advantage more important for the global composition of trade, as North-South and South-South commerce overtakes North-North flows. China’s export specialization evolves rapidly over time, revealing a capacity to speed up product ladders. Most developing countries hyper-specialize in handful of export products. The emergence of low- and middle-income countries in trade reveals significant gaps in knowledge about the deep empirical determinants of export specialization, the dynamics of specialization patterns, and why South-South and North-North trade differ.
ER -
TY - JOUR
AU - Bond,Timothy N.
AU - Lang,Kevin
TI - The Evolution of the Black-White Test Score Gap in Grades K-3: The Fragility of Results
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17960
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17960
L1 - http://www.nber.org/papers/w17960.pdf
N1 - Author contact info:
Timothy N. Bond
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
E-Mail: timbond@bu.edu
Kevin Lang
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-5694
Fax: 617/353-4001
E-Mail: lang@bu.edu
AB - Although both economists and psychometricians typically treat them as interval scales, test scores are reported using ordinal scales. Using the Early Childhood Longitudinal Study and the Children of the National Longitudinal Survey, we examine the effect of order-preserving scale transformations on the evolution of the black-white reading test score gap from kindergarten entry through third grade. Plausible transformations reverse the growth of the gap in the CNLSY and greatly mitigate it in the ECLS-K during early school years. All growth from entry through first grade and a nontrivial proportion from first to third grade probably reflects scaling decisions.
ER -
TY - JOUR
AU - Jin,Ginger Zhe
AU - Rysman,Marc
TI - Platform Pricing at Sports Card Conventions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17959
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17959
L1 - http://www.nber.org/papers/w17959.pdf
N1 - Author contact info:
Ginger Z. Jin
University of Maryland
Department of Economics
3105 Tydings Hall
College Park, MD 20742-7211
Tel: 301/405-3484
Fax: 301/405-3542
E-Mail: jin@econ.umd.edu
Marc Rysman
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617-353-3086
Fax: 617-353-4449
E-Mail: mrysman@bu.edu
AB - We study a new data set of US sports card conventions in order to evaluate the pricing theory of two-sided markets. Conventions are two-sided because organizers must set fees to attract both consumers and dealers. We have detailed information on consumer price, dealer price and, since most conventions are local, the market structure for conventions. We present several findings: first, consumer pricing decreases with competition at any reasonable distance, but pricing to dealers is insensitive to competition and in longer distances even increases with competition. Second, when consumer price is zero (and thus constrained), dealer price decreases more strongly with competition. These results are compatible with existing models of two-sided markets, but are difficult to explain without such models.
ER -
TY - JOUR
AU - Bachmann,Rüdiger
AU - Berg,Tim O.
AU - Sims,Eric R.
TI - Inflation Expectations and Readiness to Spend: Cross-Sectional Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17958
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17958
L1 - http://www.nber.org/papers/w17958.pdf
N1 - Author contact info:
Ruediger Bachmann
Department of Economics
University of Michigan
Lorch Hall 335 A
Ann Arbor, MI 48109-1220
Tel: +1 (734) 764-0241
E-Mail: rudib@umich.edu
Tim Berg
Ifo Institute
Poschingerstr. 5
81679 Munich
Germany
E-Mail: berg@ifo.de
Eric R. Sims
Department of Economics
University of Notre Dame
723 Flanner Hall
South Bend, IN 46556
Tel: 574/631-6309
Fax: 574/631-4783
E-Mail: esims1@nd.edu
AB - There have recently been suggestions for monetary policy to engineer higher inflation expectations so as to stimulate current spending. But what is the empirical relationship between inflation expectations and spending? We use the underlying micro data from the Michigan Survey of Consumers to test whether increased inflation expectations are indeed associated with greater reported readiness to spend. Cross-sectional data deliver the necessary variation to test whether the relationship between inflation expectations and spending changes in the recent zero lower bound regime compared to normal times, as suggested by many standard models. We find that the impact of inflation expectations on the reported readiness to spend on durable goods is statistically insignificant and small in absolute value when compared to other variables, such as household income or expected business conditions. Moreover, it appears that higher expected price changes have an adverse impact on the reported readiness to spend. A one percent increase in expected inflation reduces the probability that households have a positive attitude towards spending by about 0.1 percentage points. At the zero lower bound this small adverse effect remains, and is, if anything, slightly stronger. We also extend our analysis to the reported readiness to spend on cars and houses and obtain similar results. Altogether our results tell a cautionary tale for monetary (or fiscal) policy designed to engineer inflation expectations in order to generate greater current spending.
ER -
TY - JOUR
AU - Al-Ubaydli,Omar
AU - List,John A.
TI - On the Generalizability of Experimental Results in Economics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17957
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17957
L1 - http://www.nber.org/papers/w17957.pdf
N1 - Author contact info:
Omar Al-Ubaydli
Department of Economics and Mercatus Center
George Mason University
E-Mail: omar@omar.ec
John List
Department of Economics
University of Chicago
1126 East 59th
Chicago, IL 60637
Tel: 301/405-1288
Fax: 301/314-9091
E-Mail: jlist@uchicago.edu
AB - Economists are increasingly turning to the experimental method as a means to estimate causal effects. By using randomization to identify key treatment effects, theories previously viewed as untestable are now scrutinized, efficacy of public policies are now more easily verified, and stakeholders can swiftly add empirical evidence to aid their decision-making. This study provides an overview of experimental methods in economics, with a special focus on developing an economic theory of generalizability. Given that field experiments are in their infancy, our secondary focus pertains to a discussion of the various parameters that they identify, and how they add to scientific knowledge. We conclude that until we conduct more field experiments that build a bridge between the lab and the naturally-occurring settings of interest we cannot begin to make strong conclusions empirically on the crucial question of generalizability from the lab to the field.
ER -
TY - JOUR
AU - Eichenbaum,Martin S.
AU - Jaimovich,Nir
AU - Rebelo,Sergio
AU - Smith,Josephine
TI - How Frequent Are Small Price Changes?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17956
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17956
L1 - http://www.nber.org/papers/w17956.pdf
N1 - Author contact info:
Martin S. Eichenbaum
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL 60208
Tel: 847/491-8232
Fax: 847/491-7001
E-Mail: eich@northwestern.edu
Nir Jaimovich
Department of Economics
Duke University
213 Social Services Building
Durham, NC 27708
Tel: 919/660-1864
E-Mail: njaimo@gmail.com
Sergio Rebelo
Northwestern University
Kellogg School of Management
Department of Finance
Leverone Hall
Evanston, IL 60208-2001
Tel: 847/467-2329
Fax: 847/491-5719
E-Mail: s-rebelo@northwestern.edu
Josephine Smith
NYU Stern School of Business
Department of Finance
44 West 4th Street, Suite 9-86
New York, NY 10012
Tel: 212-998-0171
E-Mail: jsmith@stern.nyu.edu
AB - Recent empirical work suggests that small price changes are relatively common. These findings have been used to evaluate competing theories of nominal price rigidities. In this paper we use micro data from the consumer price index and a scanner data set from a national supermarket chain to reassess the importance of small price changes. We argue that the vast majority of these changes are due to measurement error. We conclude that small price changes are too small a phenomenon for macro modelers to be concerned with.
ER -
TY - JOUR
AU - Bate,Roger
AU - Jin,Ginger Zhe
AU - Mathur,Aparna
TI - Unveiling the Mystery of Online Pharmacies: an Audit Study
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17955
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17955
L1 - http://www.nber.org/papers/w17955.pdf
N1 - Author contact info:
Roger Bate
American Enterprise Institute
1150 Seventeenth Street, NW
Washington DC 20036
E-Mail: rbate@aei.org
Ginger Z. Jin
University of Maryland
Department of Economics
3105 Tydings Hall
College Park, MD 20742-7211
Tel: 301/405-3484
Fax: 301/405-3542
E-Mail: jin@econ.umd.edu
Aparna Mathur
American Enterprise Institute
1150 Seventeenth Street, N.W.
Washington, DC 20036
E-Mail: amathur@aei.org
AB - This study assesses the trade-off between drug safety and price savings in online drug purchases. Focusing on five brand-name prescription drugs, we acquire 370 drug samples from 41 online pharmacies and test their authenticity. Of the 41 websites, 8 are clearly US-based and verified by the National Association of Boards of Pharmacy (NABP) or LegitScript.com. We refer to them as tier 1. Another 23 websites – referred to as tier 2 – are not verified by NABP or LegitScript but verified by PharmacyChecker.com or the Canadian International Pharmacy Association (CIPA). The remaining 10 websites are not verified by any of the four verification agencies and therefore classified as tier 3. Most tier 2 and tier 3 websites are foreign.
We have two main findings. First, according to our Raman spectrometry test, no failure of authenticity is found in drugs that came from verified websites, the only failures are Viagra from non-verified websites in tier 3. Second, within verified websites, tier 1 websites on average charge 52.5% more than tier 2 websites in final price (including shipping and handling) for the same drug and dosage except for Viagra. On Viagra, tier 1 and tier 2 websites show no difference in drug safety and price, but if one aims to get authentic Viagra, verified websites are both safer and cheaper than non-verified websites in tier 3. These findings confirm the FDA warning against rogue websites but suggest that a blanket warning against any foreign website may deny consumers substantial price savings from verified tier 2 websites.
ER -
TY - JOUR
AU - Karlan,Dean
AU - List,John A.
TI - How Can Bill and Melinda Gates Increase Other People’s Donations to Fund Public Goods?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17954
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17954
L1 - http://www.nber.org/papers/w17954.pdf
N1 - Author contact info:
Dean Karlan
Department of Economics
Yale University
P.O. Box 208269
New Haven, CT 06520-8629
Tel: 203/432-4479
Fax: 203/432-5591
E-Mail: dean.karlan@yale.edu
John List
Department of Economics
University of Chicago
1126 East 59th
Chicago, IL 60637
Tel: 301/405-1288
Fax: 301/314-9091
E-Mail: jlist@uchicago.edu
AB - We develop a simple theory which formally describes how charities can resolve the information asymmetry problems faced by small donors by working with large donors to generate quality signals. To test the model, we conducted two large-scale natural field experiments. In the first experiment, a charity focusing on poverty reduction solicited donations from prior donors and either announced a matching grant from the Bill and Melinda Gates Foundation, or made no mention of a match. In the second field experiment, the same charity sent direct mail solicitations to individuals who had not previously donated to the charity, and tested whether naming the Bill and Melinda Gates Foundation as the matching donor was more effective than not identifying the name of the matching donor. The first experiment demonstrates that the matching grant condition generates more and larger donations relative to no match. The second experiment shows that providing a credible quality signal by identifying the matching donor generates even more and larger donations than not naming the matching donor. Importantly, the treatment effects persist long after the matching period, and the quality signal is quite heterogeneous—the Gates’ effect is much larger for prospective donors who had a record of giving to “poverty-oriented” charities. These two pieces of evidence support our model of quality signals as a key mechanism through which matching gifts inspire donors to give.
ER -
TY - JOUR
AU - McFadden,Daniel L.
AU - Fosgerau,Mogens
TI - A theory of the perturbed consumer with general budgets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17953
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17953
L1 - http://www.nber.org/papers/w17953.pdf
N1 - Author contact info:
Daniel L. McFadden
University of California, Berkeley
Department of Economics
549 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-8428
Fax: 510/642-0638
E-Mail: mcfadden@econ.berkeley.edu
Mogens Fosgerau
Technical University of Denmark
Bygningstorvet 116B
Building , room 115C
2800 Kgs. Lyngby
Denmark
E-Mail: mf@transport.dtu.dk
AB - We consider demand systems for utility-maximizing consumers facing general budget constraints whose utilities are perturbed by additive linear shifts in marginal utilities. Budgets are required to be compact but are not required to be convex. We define demand generating functions (DGF) whose subgradients with respect to these perturbations are convex hulls of the utility-maximizing demands. We give necessary as well as sufficient conditions for DGF to be consistent with utility maximization, and establish under quite general conditions that utility-maximizing demands are almost everywhere single-valued and smooth in their arguments. We also give sufficient conditions for integrability of perturbed demand. Our analysis provides a foundation for applications of consumer theory to problems with nonlinear budget constraints.
ER -
TY - JOUR
AU - Karlan,Dean
AU - Morten,Melanie
AU - Zinman,Jonathan
TI - A Personal Touch: Text Messaging for Loan Repayment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17952
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17952
L1 - http://www.nber.org/papers/w17952.pdf
N1 - Author contact info:
Dean Karlan
Department of Economics
Yale University
P.O. Box 208269
New Haven, CT 06520-8629
Tel: 203/432-4479
Fax: 203/432-5591
E-Mail: dean.karlan@yale.edu
Melanie Morten
Yale University
27 Hillhouse Avenue
New Haven, CT 06511
E-Mail: melanie.morten@yale.edu
Jonathan Zinman
Department of Economics
Dartmouth College
314 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-0075
Fax: 603/646-2122
E-Mail: jzinman@dartmouth.edu
AB - We worked with two microlenders to test impacts of randomly assigned reminders for loan repayments in the “text messaging capital of the world”. We do not find strong evidence that loss versus gain framing or messaging timing matter. Messages only robustly improve repayment when they include the loan officer’s name. This effect holds for clients serviced by the loan officer previously but not for first-time borrowers. Taken together, the results highlight the potential and limits of communications technology for mitigating moral hazard, and suggest that personal obligation/reciprocity between borrowers and bank employees can be harnessed to help overcome market failures.
ER -
TY - JOUR
AU - Hoynes,Hilary W.
AU - Miller,Douglas L.
AU - Schaller,Jessamyn
TI - Who Suffers During Recessions?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17951
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17951
L1 - http://www.nber.org/papers/w17951.pdf
N1 - Author contact info:
Hilary W. Hoynes
Department of Economics
University of California, Davis
One Shields Ave.
Davis, CA 95616-8578
Tel: 530/564-0505
Fax: 530/752-9382
E-Mail: hwhoynes@ucdavis.edu
Douglas L. Miller
University of California, Davis
Department of Economics
One Shields Avenue
Davis, CA 95616-8578
Tel: 530/752-8490
E-Mail: dlmiller@ucdavis.edu
Jessamyn Schaller
University of California, Davis
Department of Economics
One Shields Avenue
Davis, CA 95616-8578
E-Mail: jschaller@ucdavis.edu
AB - In this paper we examine how business cycles affect labor market outcomes in the United States. We conduct a detailed analysis of how cycles affect outcomes differentially across persons of differing age, education, race, and gender, and we compare the cyclical sensitivity during the Great Recession to that in the early 1980s recession. We present raw tabulations and estimate a state panel data model that leverages variation across US states in the timing and severity of business cycles. We find that the impacts of the Great Recession are not uniform across demographic groups and have been felt most strongly for men, black and Hispanic workers, youth, and low education workers. These dramatic differences in the cyclicality across demographic groups are remarkably stable across three decades of time and throughout recessionary periods and expansionary periods. For the 2007 recession, these differences are largely explained by differences in exposure to cycles across industry-occupation employment.
ER -
TY - JOUR
AU - Eccles,Robert G.
AU - Ioannou,Ioannis
AU - Serafeim,George
TI - The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17950
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17950
L1 - http://www.nber.org/papers/w17950.pdf
N1 - Author contact info:
Robert G. Eccles
Harvard Business School
E-Mail: reccles@hbs.edu
Ioannis Ioannou
London Business School
E-Mail: iioannou@london.edu
George Serafeim
381 Morgan Hall
Harvard Business School
Boston
MA 02163
Tel: 6174956548
Fax: 6174967387
E-Mail: gserafeim@hbs.edu
M3 - presented at "Causes and Consequences of Corporate Culture", December 8-9, 2011
AB - We investigate the effect of a corporate culture of sustainability on multiple facets of corporate behavior and performance outcomes. Using a matched sample of 180 companies, we find that corporations that voluntarily adopted environmental and social policies by 1993 – termed as High Sustainability companies – exhibit fundamentally different characteristics from a matched sample of firms that adopted almost none of these policies – termed as Low Sustainability companies. In particular, we find that the boards of directors of these companies are more likely to be responsible for sustainability and top executive incentives are more likely to be a function of sustainability metrics. Moreover, they are more likely to have organized procedures for stakeholder engagement, to be more long-term oriented, and to exhibit more measurement and disclosure of nonfinancial information. Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The outperformance is stronger in sectors where the customers are individual consumers, companies compete on the basis of brands and reputation, and in sectors where companies’ products significantly depend upon extracting large amounts of natural resources.
ER -
TY - JOUR
AU - Mocan,Naci H.
AU - Altindag,Duha Tore
TI - Education, Cognition, Health Knowledge, and Health Behavior
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17949
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17949
L1 - http://www.nber.org/papers/w17949.pdf
N1 - Author contact info:
Naci H. Mocan
Department of Economics
Louisiana State University
2119 Patrick F. Taylor Hall
Baton Rouge, LA 70803-6306
Tel: 225/578-4570
E-Mail: mocan@lsu.edu
Duha Tore Altindag
Auburn University
Department of Economics
0334 Haley Center
Auburn AL, 36849
Tel: 334-844-2929
E-Mail: altindag@auburn.edu
AB - Using data from the NLSY97 we analyze the impact of education on health behaviors, measured by smoking and heavy drinking. Controlling for health knowledge does not influence the impact of education on health behaviors, supporting the productive efficiency hypothesis. Although cognition, as measured by test scores, appears to have an effect on the relationship between education and health behaviors, this effect disappears once the models control for family fixed effects. Similarly, the impact of education on smoking and heavy drinking is the same between those with and without a learning disability, suggesting that cognition is not likely to be a significant factor in explaining the impact of education on health behaviors.
ER -
TY - JOUR
AU - Cooper,Russell
AU - Gong,Guan
AU - Yan,Ping
TI - Costly Labor Adjustment: Effects of China's Employment Regulations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17948
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17948
L1 - http://www.nber.org/papers/w17948.pdf
N1 - Author contact info:
Russell Cooper
Department of Economics
European University Institute
via della Piazzola, 43
Firenze, 50133
ITALY
E-Mail: russellcoop@gmail.com
Guan Gong
School of Economics
Shanghai University of Finance and Economics
777 Guoding RD, Shanghai
CHINA
E-Mail: ggong@mail.shufe.edu.cn
Ping Yan
National School of Development
China Center for Economic Research
Peking University
E-Mail: pyan@ccer.edu.cn
AB - This paper studies the employment and productivity implications of new labor regulations in China. These new restrictions are intended to protect workers' employment conditions by, among other things, increasing firing costs and increasing compensation. We estimate a model of costly labor adjustment from data prior to the policy. We use the estimated model to simulate the effects of the policy. We find that increases in severance payments lead to sizable job creation, a significant reduction in labor reallocation and an increase in the exit rate. A policy of credit market liberalization will reduce employment, slightly increase labor reallocation and reduce exit. The estimated elasticity of labor demand is about unity so that an increase in the base wage leads to sizable job losses.
ER -
TY - JOUR
AU - Bordalo,Pedro
AU - Gennaioli,Nicola
AU - Shleifer,Andrei
TI - Salience and Consumer Choice
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17947
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17947
L1 - http://www.nber.org/papers/w17947.pdf
N1 - Author contact info:
Pedro Bordalo
Department of Economics
Royal Holloway
University of London
Egham Hill, Egham, TW20 0EX
United Kingdom
E-Mail: pedro.bordalo@rhul.ac.uk
Nicola Gennaioli
CREI
Universitat Pompeu Fabra
Ramon Trias Fargas 25-27
08005 Barcelona (Spain)
E-Mail: ngennaioli@crei.cat
Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
AB - We present a theory of context-dependent choice in which a consumer's attention is drawn to salient attributes of goods, such as quality or price. An attribute is salient for a good when it stands out among the good's characteristics, in the precise sense of being furthest away in that good from its average level in the choice set (or more generally, an evoked set). A local thinker chooses among goods by attaching disproportionately high weights to their salient attributes. When goods are characterized by only one quality attribute and price, salience tilts choices toward goods with higher ratios of quality to price. We use the model to account for a variety of disparate bits of evidence, including decoy effects in consumer choice, context-dependent willingness to pay, balance of qualities in desirable goods, and shifts in demand toward low quality goods when all prices in a category rise. We then apply the model to study discounts and sales, and to explain demand for low deductible insurance.
ER -
TY - JOUR
AU - Strebulaev,Ilya A.
AU - Yang,Baozhong
TI - The Mystery of Zero-Leverage Firms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17946
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17946
L1 - http://www.nber.org/papers/w17946.pdf
N1 - Author contact info:
Ilya A. Strebulaev
Graduate School of Business
Stanford University
655 Knight Way
Stanford, CA 94305
Tel: 650/725-8239
Fax: 650/725-7979
E-Mail: istrebulaev@stanford.edu
Baozhong Yang
J. Mack Robinson College of Business
Georgia State University
35 Broad Street, Suite 1243, Atlanta GA 30303
E-Mail: bzyang@gsu.edu
AB - This paper documents the puzzling evidence that a substantial number of large public non-financial US firms follow a zero-debt policy. Over the 1962-2009 period, on average 10.2% of such firms have zero debt and almost 22% have less than 5% book leverage ratio. Neither industry nor size can account for such puzzling behavior. Zero-leverage behavior is a persistent phenomenon, with 30% of zero-debt firms refrain from debt for at least five consecutive years. Particularly surprising is the presence of a large number of zero-leverage firms who pay dividends. They are more profitable, pay higher taxes, issue less equity, and have higher cash balances than their proxies chosen by industry and size. These firms also pay substantially higher dividends than their proxies and thus their total payout ratio is virtually independent of leverage. Firms with higher CEO ownership and longer CEO tenure are more likely to follow a zero-leverage policy, especially if boards are smaller and less independent. Family firms are also more likely to be zero-levered. Our results suggest that managerial and governance characteristics are related to the zero-leverage phenomena in an important way.
ER -
TY - JOUR
AU - Grenadier,Steven
AU - Malenko,Andrey
AU - Strebulaev,Ilya A.
TI - Investment Busts, Reputation, and the Temptation to Blend in with the Crowd
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17945
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17945
L1 - http://www.nber.org/papers/w17945.pdf
N1 - Author contact info:
Steven Grenadier
Graduate School of Business
Stanford University
Stanford, CA 94305
Tel: 650/725-0706
Fax: 650/725-6152
E-Mail: sgren@stanford.edu
Andrey Malenko
MIT Sloan School of Management
100 Main Street
Cambridge, MA 02142
E-Mail: amalenko@mit.edu
Ilya A. Strebulaev
Graduate School of Business
Stanford University
655 Knight Way
Stanford, CA 94305
Tel: 650/725-8239
Fax: 650/725-7979
E-Mail: istrebulaev@stanford.edu
AB - We provide a dynamic model of an industry in which agents strategically time liquidation decisions in an effort to protect their reputations. As in traditional models, agents delay liquidation attempting to signal their quality. However, when the industry faces a common shock that indiscriminately forces liquidation of a subset of projects, agents with bad enough projects choose to liquidate even if their projects are unaffected by the shock. Such "blending in with the crowd" creates an additional incentive to delay liquidation, further amplifying the shock. As a result, even minuscule common shocks can be evidenced by massive liquidations. As agents await common shocks, the industry accumulates "living dead" projects. Surprisingly, the potential for moderate negative common shocks often improves agents values.
ER -
TY - JOUR
AU - Benigno,Pierpaolo
AU - Romei,Federica
TI - Debt Deleveraging and The Exchange Rate
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17944
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17944
L1 - http://www.nber.org/papers/w17944.pdf
N1 - Author contact info:
Pierpaolo Benigno
Dipartimento di Economia e Finanza
Luiss Guido Carli
Viale Romania 32
00197 Rome
ITALY
Tel: 39-0685225-552
E-Mail: pbenigno@luiss.it
Federica Romei
Dipartimento di Economia e Finanza
Luiss Guido Carli
Viale Romania 32
00197 Roma
Italy
E-Mail: fromei@luiss.it
AB - Deleveraging from high debt can provoke deep recession with significant international side effects. The exchange rate of the deleveraging country will depreciate in the short run and appreciate in the long run. The real interest rate will fall by more than in the rest of the world. Bounds and policies that constrain the adjustment can prolong and deepen the recession. Early exit strategies from accommodating monetary policy can be quite harmful, as can such other policies as keeping interest rates too high during the deleveraging period. The analysis also applies to a monetary union facing internal adjustment of current account imbalances.
ER -
TY - JOUR
AU - Cohen,Jessica
AU - Dupas,Pascaline
AU - Schaner,Simone G.
TI - Price Subsidies, Diagnostic Tests, and Targeting of Malaria Treatment: Evidence from a Randomized Controlled Trial
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17943
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17943
L1 - http://www.nber.org/papers/w17943.pdf
N1 - Author contact info:
Jessica Cohen
Harvard School of Public Health
Department of Global Health and Population
Building 1, Room 1209
665 Huntington Ave
Boston, Massachusetts 02115
E-Mail: cohenj@hsph.harvard.edu
Pascaline Dupas
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
E-Mail: pdupas@stanford.edu
Simone G. Schaner
Department of Economics
303B Silsby Hall
Hanover, NH 03755
E-Mail: Simone.Schaner@dartmouth.edu
AB - In response to parasite resistance to older malaria medicines, the global health community is considering making new, more effective malaria treatments called Artemisinin Combination Therapies (ACTs) available over-the-counter at heavily subsidized rates throughout Africa. While this may go a long way toward reducing under-treatment (thereby saving lives in the short-run), it is also likely to increase over-treatment, wasting subsidy dollars and contributing to drug resistance (thereby making lives harder to save in the long-run). We use data from a randomized controlled trial conducted with over 2,700 households in rural Kenya to study behavioral responses to changes in ACT prices and quantify this tradeoff. We find that ACT use increases by 59 percent in the presence of an ACT subsidy over 90 percent. However, only 56 percent of those buying such a highly subsidized ACT at retail sector drug shops test positive for malaria. We show that this share increases (without substantially compromising access) to 81 percent when the over-the-counter ACT subsidy is somewhat reduced and resources are redirected towards a subsidy for rapid malaria tests. While most of the targeting benefits come from reducing the ACT subsidy, making diagnostic tests available over-the-counter more than doubles the rate at which illnesses are tested for malaria. This high take up rate suggests that subsidizing rapid tests may have great scope to improve targeting and treatment outcomes in the longer run.
ER -
TY - JOUR
AU - Robinson,David T.
AU - Sensoy,Berk A.
TI - Do Private Equity Managers Earn Their Fees? Compensation, Ownership, and Cash Flow Performance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17942
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17942
L1 - http://www.nber.org/papers/w17942.pdf
N1 - Author contact info:
David T. Robinson
Fuqua School of Business
Duke University
100 Fuqua Drive
Durham, NC 27708
Tel: 919/660-8023
Fax: 919/684-2818
E-Mail: davidr@duke.edu
Berk Sensoy
Ohio State University
2100 Neil Ave.
Columbus, OH 43210
E-Mail: sensoy_4@fisher.osu.edu
AB - We study the relation between compensation practices, incentives, and performance in private equity using new data that connect ownership structures, management contracts, and quarterly cash flows for a large sample of buyout and venture capital funds from 1984-2010. Although many critics of private equity argue that PE firms earn excessive compensation and have muted performance incentives, we find no evidence that higher compensation or lower managerial ownership are associated with worse net-of-fee performance, in stark contrast to other asset management settings. Instead, compensation is largely unrelated to net-of-fee cash flow performance. Nevertheless, market conditions during fundraising are an important driver of compensation, as pay rises and shifts to fixed components during fundraising booms. In addition, the behavior of distributions around contractual triggers for fees and carried interest is consistent with an underlying agency conflict between investors and general partners. Our evidence is most consistent with an equilibrium in which compensation terms reflect agency concerns and the productivity of manager skills, and in which managers with higher compensation earn back their pay by delivering higher gross performance.
ER -
TY - JOUR
AU - Reinhart,Carmen M.
TI - A Series of Unfortunate Events:
Common Sequencing Patterns in Financial Crises
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17941
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17941
L1 - http://www.nber.org/papers/w17941.pdf
N1 - Author contact info:
Carmen M. Reinhart
Peterson Institute for International Economics
1750 Massachusetts Avenue, NW
Washington, DC 20036-1903
Tel: 202-454-1325
Fax: 202-659-3225
E-Mail: creinhart@piie.com
AB - We document that the global scope and depth of the crisis the began with the collapse of the subprime mortgage market in the summer of 2007 is unprecedented in the post World War II era and, as such, the most relevant comparison benchmark is the Great Depression (or the Great Contraction, as dubbed by Friedman and Schwartz, 1963) of the 1930s. Some of the similarities between these two global episodes are examined but the analysis of the aftermath of severe financial crises is extended to also include the most severe post-WWII crises as well. As to the causes of these great crises, we focus on those factors that are common across time and geography. We discriminate between root causes of the crises, recurring crises symptoms, and common features (such as misguided financial regulation or inadequate supervision) which serve as amplifiers of the boom-bust cycle. There are recurring temporal patterns in the boom-bust cycle and their broad sequencing is analyzed.
ER -
TY - JOUR
AU - Yermack,David
TI - Tailspotting: How Disclosure, Stock Prices and Volatility Change When CEOs Fly to Their Vacation Homes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17940
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17940
L1 - http://www.nber.org/papers/w17940.pdf
N1 - Author contact info:
David Yermack
Stern School of Business
New York University
44 West Fourth Street, Suite 9-160
New York, NY 10012
Tel: 212/998-0357
Fax: 212/995-4220
E-Mail: dyermack@stern.nyu.edu
AB - This paper shows close connections between CEOs’ vacation schedules and corporate news disclosures. I identify vacations by merging corporate jet flight histories with real estate records of CEOs’ property owned near leisure destinations. Companies disclose favorable news just before CEOs leave for vacation and delay subsequent announcements until CEOs return, releasing news at an unusually high rate on the CEO’s first day back. When CEOs are away, companies announce less news than usual and stock prices exhibit sharply lower volatility. Volatility increases immediately when CEOs return to work. CEOs spend fewer days out of the office when their ownership is high and when the weather at their vacation homes is cold or rainy.
ER -
TY - JOUR
AU - Duflo,Esther
AU - Dupas,Pascaline
AU - Kremer,Michael
TI - School Governance, Teacher Incentives, and Pupil-Teacher Ratios: Experimental Evidence from Kenyan Primary Schools
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17939
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17939
L1 - http://www.nber.org/papers/w17939.pdf
N1 - Author contact info:
Esther Duflo
Department of Economics
MIT, E52-252G
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/258-7013
Fax: 617/253-6915
E-Mail: eduflo@mit.edu
Pascaline Dupas
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
E-Mail: pdupas@stanford.edu
Michael Kremer
Harvard University
Department of Economics
Littauer Center M20
Cambridge, MA 02138
Tel: 617/495-9145
Fax: 617/495-7730
E-Mail: mkremer@fas.harvard.edu
AB - We examine a program that enabled Parent-Teacher Associations (PTAs) in Kenya to hire novice teachers on short-term contracts, reducing class sizes in grade one from 82 to 44 on average. PTA teachers earned approximately one-quarter as much as teachers operating under central government civil-service institutions but were absent one day per week less and their students learned more. In the weak institutional environment we study, civil-service teachers responded to the program along two margins: first, they reduced their effort in response to the drop in the pupil-teacher ratio, and second, they influenced PTA committees to hire their relatives. Both effects reduced the educational impact of the program. A governance program that empowered parents within PTAs mitigated both effects. Better performing contract teachers are more likely to transition into civil-service positions and we estimate large potential dynamic benefits of contract teacher programs on the teacher workforce.
ER -
TY - JOUR
AU - McFadden,Daniel L.
AU - Noton,Carlos E.
AU - Olivella,Pau
TI - Remedies for Sick Insurance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17938
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17938
L1 - http://www.nber.org/papers/w17938.pdf
N1 - Author contact info:
Daniel L. McFadden
University of California, Berkeley
Department of Economics
549 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-8428
Fax: 510/642-0638
E-Mail: mcfadden@econ.berkeley.edu
Carlos E. Noton
Department of Economics
University of Warwick
Coventry
Post Code: CV4 7AL
United Kingdom
E-Mail: C.Noton@warwick.ac.uk
Pau Olivella
Departament Economia i Historia Economica
Universitat Autonoma de Barcelona
08193 Cerdanyola del Valles
Barcelona
Spain
E-Mail: pau.olivella@uab.es
AB - This expository paper describes the factors that contribute to failure of health insurance markets, and the regulatory mechanisms that have been and can be used to combat these failures. Standardized contracts and creditable coverage mandates are discussed, along with premium support, enrollment mandates, guaranteed issue, and risk adjustment, as remedies for selection-related market damage. An overall conclusion of the paper is that the design and management of creditable coverage mandates are likely to be key determinants of the performance of the health insurance exchanges that are a core provision of the PPACA of 2010. Enrollment mandates, premium subsidies, and risk adjustment can improve the stability and relative efficiency of the exchanges, but with carefully designed creditable coverage mandates are not necessarily critical for their operation.
ER -
TY - JOUR
AU - Ales,Laurence
AU - Hosseini,Roozbeh
AU - Jones,Larry E.
TI - Is There “Too Much” Inequality in Health Spending Across Income Groups?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17937
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17937
L1 - http://www.nber.org/papers/w17937.pdf
N1 - Author contact info:
Laurence Ales
Tepper School of Business
Carnegie Mellon University
5000 Forbes Avenue
Pittsburgh, PA 15213
E-Mail: ales@cmu.edu
Roozbeh Hosseini
Department of Economics
Arizona State University
PO Box 879801
Tempe, AZ 85287-9801
Tel: 480-727-7933
Fax: 480-965-0748
E-Mail: roozbeh.hosseini@asu.edu
Larry E. Jones
Department of Economics
University of Minnesota
4-101 Hanson Hall
1925 Fourth Street South
Minneapolis, MN 55455
Tel: 612/624-4553
Fax: 612/624-0209
E-Mail: lej@umn.edu
AB - In this paper we study the efficient allocation of health resources across individuals. We focus on the relation between health resources and income (taken as a proxy for productivity). In particular we determine the efficient level of the health care social safety net for the indigent. We assume that individuals have different life cycle profiles of productivity. Health care increases survival probability. We adopt the classical approach of welfare economics by considering how a central planner with an egalitarian (ex-ante) perspective would allocate resources. We show that, under the efficient allocation, health care spending increases with labor productivity, but only during the working years. Post retirement, everyone would get the same health care. Quantitatively, we find that the amount of inequality across the income distribution in the data is larger that what would be justified solely on the basis of production efficiency, but not drastically so. As a rough summary, in U.S. data top to bottom spending ratios are about 1.5 for most of the life cycle. Efficiency implies a decline from about 2 (at age 25) to 1 at retirement. We find larger inefficiencies in the lower part of the income distribution and in post retirement ages.
ER -
TY - JOUR
AU - Doyle,Joseph J., Jr.
AU - Graves,John A.
AU - Gruber,Jonathan
AU - Kleiner,Samuel
TI - Do High-Cost Hospitals Deliver Better Care? Evidence from Ambulance Referral Patterns
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17936
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17936
L1 - http://www.nber.org/papers/w17936.pdf
N1 - Author contact info:
Joseph J. Doyle, Jr.
MIT Sloan School of Management
100 Main Street, E62-515
Cambridge, MA 02142
Tel: 617/452-3761
Fax: 617/258-6855
E-Mail: jjdoyle@mit.edu
John Graves
12 tufts st
Cambridge, MA 02139
Tel: 6179352824
E-Mail: graveja0@gmail.com
Jonathan Gruber
MIT Department of Economics
E52-355
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8892
Fax: 617/253-1330
E-Mail: gruberj@mit.edu
Samuel Kleiner
Cornell University
College of Human Ecology
108 Martha Van Rensselaer Hall
Ithaca, NY 14853
Tel: 607/255-1027
Fax: 607/255-4071
E-Mail: skleiner@cornell.edu
AB - Endogenous patient sorting across hospitals can confound performance comparisons. This paper provides a new lens to compare hospital performance for emergency patients: plausibly exogenous variation in ambulance-company assignment. Ambulances are effectively randomly assigned to patients in the same area based on rotational dispatch mechanisms. Using Medicare data from 2002-2008, we show that ambulance company assignment importantly affects hospital choice for patients in the same zip code. Using data for New York state from 2000-2006 that matches exact patient addresses to hospital discharge records, we show that patients who live very near each other but on either side of ambulance-dispatch boundaries go to different types of hospitals. Both strategies show that higher-cost hospitals have significantly lower one-year mortality rates compared to lower-cost hospitals. We find that common indicators of hospital quality, such as indicators for "appropriate care" for heart attacks, are generally not associated with better patient outcomes. On the other hand, we find that measures of "leading edge" hospitals, such as teaching hospitals and hospitals that quickly adopt the latest technologies, are associated with better outcomes, but have little impact on the estimated mortality-hospital cost relationship. We also find that hospital procedure intensity is a key determinant of the mortality-cost relationship, suggesting that treatment intensity, and not differences in quality reflected in prices, drives much of our findings. The evidence also suggests that there are diminishing returns to hospital spending and treatment intensity.
ER -
TY - JOUR
AU - He,Zhiguo
AU - Xiong,Wei
TI - Debt Financing in Asset Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17935
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17935
L1 - http://www.nber.org/papers/w17935.pdf
N1 - Author contact info:
Zhiguo He
University of Chicago
Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-3769
E-Mail: zhiguo.he@chicagobooth.edu
Wei Xiong
Princeton University
Department of Economics
Bendheim Center for Finance
Princeton, NJ 08450
Tel: 609/258-0282
Fax: 609/258-0771
E-Mail: wxiong@princeton.edu
AB - We study rollover risk and collateral value in a dynamic asset pricing model with endogenous debt financing by extending the framework of Geanakoplos (2009) with a generic binomial tree and time-varying heterogeneous beliefs. Optimistic borrowers face rollover risk if the belief dispersion between the borrowers and the pessimistic lenders widens after interim bad news. We demonstrate the optimality of the maximum riskless short-term debt financing for optimistic borrowers even in the presence of the rollover risk. We also highlight the role of interim trading which, by allowing creditors to sell seized collateral to other optimists with saved cashes, boosts the asset’s collateral value and equilibrium price.
ER -
TY - JOUR
AU - Kiyotaki,Nobuhiro
AU - Moore,John
TI - Liquidity, Business Cycles, and Monetary Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17934
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17934
L1 - http://www.nber.org/papers/w17934.pdf
N1 - Author contact info:
Nobuhiro Kiyotaki
Department of Economics
Princeton University
Fisher Hall
Princeton, NJ 08544-1021
Tel: 609-258-4000
Fax: 609-258-6419
E-Mail: kiyotaki@princeton.edu
John Moore
William Robertson Building
Edinburgh
Scotland, EH8 9JY
U.K.
E-Mail: j.h.moore@ed.ac.uk
AB - The paper presents a model of a monetary economy where there are differences in liquidity across assets. Money circulates because it is more liquid than other assets, not because it has any special function. There is a spectrum of returns on assets, reflecting their differences in liquidity. The model is used, first, to investigate how aggregate activity and asset prices fluctuate with shocks to productivity and liquidity; second, to examine what role government policy might have through open market operations that change the mix of assets held by the private sector. With its emphasis on liquidity rather than sticky prices, the model harks back to an earlier interpretation of Keynes (1936), following Tobin (1969).
ER -
TY - JOUR
AU - Meghir,Costas
AU - Palme,Mårten
AU - Simeonova,Emilia
TI - Education, Health and Mortality: Evidence from a Social Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17932
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17932
L1 - http://www.nber.org/papers/w17932.pdf
N1 - Author contact info:
Costas Meghir
Department of Economics
Yale University
37 Hillhouse Avenue
New Haven, CT 06511
Tel: 203/432-3558
E-Mail: c.meghir@yale.edu
Mårten Palme
Department of Economics
Stockholm University
SE-106 91 Stockholm
SWEDEN
E-Mail: Marten.Palme@ne.su.se
Emilia Simeonova
Department of Economics
Princeton University
355 Wallace Hall
Princeton, NJ 08540
Tel: 617/627-5948
E-Mail: emilia.simeonova@gmail.com
AB - We study the effect of a compulsory education reform in Sweden on adult health and mortality. The reform was implemented by municipalities between 1949 and 1962 as a social experiment and implied an extension of compulsory schooling from 7 or 8 years depending on municipality to 9 years nationally. We use detailed individual data on education, hospitalizations, labor force participation and mortality for Swedes born between 1946 and 1957. Individual level data allow us to study the effect of the education reform on three main groups of outcomes: (i) mortality until age 60 for different causes of death; (ii) hospitalization by cause and (iii) exit from the labor force primarily through the disability insurance program. The results show reduced male mortality up to age fifty for those assigned to the reform, but these gains were erased by increased mortality later on. We find similar patterns in the probability of being hospitalized and the average costs of inpatient care. Men who acquired more education due to the reform are less likely to retire early.
ER -
TY - JOUR
AU - Oster,Emily
AU - Shoulson,Ira
AU - Dorsey,E. Ray
TI - Limited Life Expectancy, Human Capital and Health Investments: Evidence from Huntington Disease
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17931
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17931
L1 - http://www.nber.org/papers/w17931.pdf
N1 - Author contact info:
Emily Oster
University of Chicago
Booth School of Business
5807 South Woodlawn Ave
Chicago, IL 60637
Tel: 773/834-1552
Fax: 773-834-8172
E-Mail: eoster@uchicago.edu
Ira Shoulson
Georgetown University
2115 Wisconsin Ave NW
Suite 603
Washington DC 20007
E-Mail: ira@irashoulson.org
E. Ray Dorsey
Johns Hopkins University
Department of Neurology
Meyer Bldg, Room 6-181
600 N. Wolfe Street
Baltimore, MD 21287
E-Mail: Ray.Dorsey@jhmi.edu
AB - One of the most basic predictions of human capital theory is that life expectancy should impact human capital investment. Limited exogenous variation in life expectancy makes this difficult to test, especially in the contexts most relevant to the macroeconomic applications. We estimate the relationship between life expectancy and human capital investments using genetic variation in life expectancy driven by Huntington disease (HD), an inherited degenerative neurological disorder with large impacts on mortality. We compare investment levels for individuals who have ex ante identical risks of HD but learn (through early symptom development or genetic testing) that they do or do not carry the genetic mutation which causes the disease. We find strong qualitative support: individuals with more limited life expectancy complete less education and less job training. We estimate the elasticity of demand for college completion with respect to years of life expectancy of 0.40. This figure implies that differences in life expectancy explain about 10% of cross-country differences in college enrollment. Finally, we use smoking and cancer screening data to test the corollary that health capital is responsive to life expectancy.
ER -
TY - JOUR
AU - Klapper,Leora F.
AU - Lusardi,Annamaria
AU - Panos,Georgios A.
TI - Financial Literacy and the Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17930
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17930
L1 - http://www.nber.org/papers/w17930.pdf
N1 - Author contact info:
Leora F. Klapper
The World Bank
1818 H Street, NW
Washington, DC 20433
Tel: 202/473-8738
E-Mail: lklapper@worldbank.org
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
Georgios A. Panos
University of Stirling
Stirling Management School
Room 3B79, Cottrell Building
Economics Division
Stirling, Scotland, FK9 4LA
United Kingdom
E-Mail: georgios.panos@stir.ac.uk
AB - The ability of consumers to make informed financial decisions improves their ability to develop sound personal finance. This paper uses a panel dataset from Russia, an economy in which consumer loans grew at an astounding rate - from about US$10 billion in 2003 to over US$170 billion in 2008 - to examine the importance of financial literacy and its effects on behavior. The survey contains questions on financial literacy, consumer borrowing (formal and informal), saving and spending behavior. The paper studies both the financial consequences and the real consequences of financial illiteracy. Even though consumer borrowing increased very rapidly in Russia, the authors find that only 41% of respondents demonstrate understanding of the workings of interest compounding and only 46% can answer a simple question about inflation. Financial literacy is positively related to participation in financial markets and negatively related to the use of informal sources of borrowing. Moreover, individuals with higher financial literacy are significantly more likely to report having greater availability of unspent income and higher spending capacity. The relationship between financial literacy and availability of unspent income is higher during the financial crisis, suggesting that financial literacy may better equip individuals to deal with macroeconomic shocks.
ER -
TY - JOUR
AU - Mullainathan,Sendhil
AU - Noeth,Markus
AU - Schoar,Antoinette
TI - The Market for Financial Advice: An Audit Study
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17929
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17929
L1 - http://www.nber.org/papers/w17929.pdf
N1 - Author contact info:
Sendhil Mullainathan
Department of Economics
Littauer M-18
Harvard University
Cambridge, MA 02138
Tel: 617/496-2720
Fax: 617/495-7730
E-Mail: mullain@fas.harvard.edu
Markus Noeth
LS Banking & Behavioral Finance
VMP 5
University of Hamburg
20146 Hamburg
Germany
Tel: +4940428383337
Fax: +4940428385512
E-Mail: markus.noeth@uni-hamburg.de
Antoinette Schoar
MIT Sloan School of Management
100 Main Street, E62-638
Cambridge, MA 02142
Tel: 617/253-3763
Fax: 617/258-6855
E-Mail: aschoar@mit.edu
AB - Do financial advisers undo or reinforce the behavioral biases and misconceptions of their clients? We use an audit methodology where trained auditors meet with financial advisers and present different types of portfolios. These portfolios reflect either biases that are in line with the financial interests of the advisers (e.g., returns-chasing portfolio) or run counter to their interests (e.g., a portfolio with company stock or very low-fee index funds). We document that advisers fail to de-bias their clients and often reinforce biases that are in their interests. Advisers encourage returns-chasing behavior and push for actively managed funds that have higher fees, even if the client starts with a well-diversified, low-fee portfolio.
ER -
TY - JOUR
AU - Goda,Gopi Shah
AU - Manchester,Colleen Flaherty
AU - Sojourner,Aaron
TI - What Will My Account Really Be Worth? An Experiment on Exponential Growth Bias and Retirement Saving
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17927
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17927
L1 - http://www.nber.org/papers/w17927.pdf
N1 - Author contact info:
Gopi Shah Goda
Stanford University
SIEPR
366 Galvez St.
Stanford, CA 94305
Tel: 650/736-0480
Fax: 650/723-8611
E-Mail: gopi@stanford.edu
Colleen Flaherty Manchester
Work and Organizations
University of Minnesota
Room 3-300R
321 - 19th Avenue South
Minneapolis, MN 55455
Tel: 612-625-9667
E-Mail: cmanch@umn.edu
Aaron Sojourner
University of Minnesota
Carlson School of Management
321 19th Ave S, 3-300
Minneapolis, MN 55455
E-Mail: asojourn@umn.edu
AB - Recent findings on limited financial literacy and exponential growth bias suggest saving decisions may not be optimal because such decisions require an accurate understanding of how current contributions can translate into income in retirement. This study uses a large-scale field experiment to measure how a low-cost, direct-mail intervention designed to inform subjects about this relationship affects their saving behavior. Using administrative data prior to and following the intervention, we measure its effect on participation and the level of contributions in retirement saving accounts. Those sent income projections along with enrollment information were more likely to change contribution levels and increase annual contributions relative to the control group. Among those who made a change in contribution, the increase in annual contributions was approximately $1,150. Results from a follow-up survey corroborate these findings and show heterogeneous effects of the intervention by rational and behavioral factors known to affect saving. Finally, we find evidence of behavioral influences on decision-making in that the assumptions used to generate the projections influence the saving response.
ER -
TY - JOUR
AU - Battaglini,Marco
AU - Nunnari,Salvatore
AU - Palfrey,Thomas
TI - The Free Rider Problem: a Dynamic Analysis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17926
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17926
L1 - http://www.nber.org/papers/w17926.pdf
N1 - Author contact info:
Marco Battaglini
Department of Economics
Fisher Hall
Princeton University
Princeton, NJ 08544
Tel: 609/258-4002
Fax: 609/258-6419
E-Mail: mbattagl@princeton.edu
Salvatore Nunnari
Division of the Humanities and Social Sciences
Mail Code 228-77
California Institute of Technology
Pasadena, CA, 91125
E-Mail: salvatore.nunnari@gmail.com
Thomas Palfrey
Division of the Humanities and Social Sciences
Mail Code 228-77
California Institute of Technology
Pasadena, CA 91125
E-Mail: trp@hss.caltech.edu
AB - We present a dynamic model of free riding in which n infinitely lived agents choose between private consumption and contributions to a durable public good g. We characterize the set of continuous Markov equilibria in economies with reversibility, where investments can be positive or negative; and in economies with irreversibility, where investments are non negative and g can only be reduced by depreciation. With reversibility, there is a continuum of equilibrium steady states: the highest equilibrium steady state of g is increasing in n, and the lowest is decreasing. With irreversibility, the set of equilibrium steady states converges to a unique point as depreciation converges to zero: the highest steady state possible with reversibility. In both cases, the highest steady state converges to the efficient steady state as agents become increasingly patient. In economies with reversibility there are always non-monotonic equilibria in which g converges to the steady state with damped oscillations; and there can be equilibria with no stable steady state, but a unique persistent limit cycle.
ER -
TY - JOUR
AU - Loecker,Jan De
AU - Goldberg,Pinelopi K.
AU - Khandelwal,Amit K.
AU - Pavcnik,Nina
TI - Prices, Markups and Trade Reform
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17925
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17925
L1 - http://www.nber.org/papers/w17925.pdf
N1 - Author contact info:
Jan De Loecker
Department of Economics
307 Fisher Hall
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-2149
E-Mail: jdeloeck@princeton.edu
Pinelopi K. Goldberg
Yale University
Department of Economics
37 Hillhouse Ave.
P.O. Box 208264
New Haven, CT 06520-8264
E-Mail: penny.goldberg@yale.edu
Amit Khandelwal
Graduate School of Business
Columbia University
Uris Hall 606, 3022 Broadway
New York, NY 10027
Tel: 212/854-7506
Fax: 212/316-9219
E-Mail: ak2796@columbia.edu
Nina Pavcnik
Department of Economics
6106 Rockefeller Center
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2537
Fax: 603/646-2122
E-Mail: nina.pavcnik@dartmouth.edu
AB - This paper examines how prices, markups and marginal costs respond to trade liberalization. We develop a framework to estimate markups from production data with multi-product firms. This approach does not require assumptions on the market structure or demand curves faced by firms, nor assumptions on how firms allocate their inputs across products. We exploit quantity and price information to disentangle markups from quantity-based productivity, and then compute marginal costs by dividing observed prices by the estimated markups. We use India’s trade liberalization episode to examine how firms adjust these performance measures. Not surprisingly, we find that trade liberalization lowers factory-gate prices. However, the price declines are small relative to the declines in marginal costs, which fall predominantly because of the input tariff liberalization. The reason is that firms offset their reductions in marginal costs by raising markups. This limited pass-through of cost reductions attenuates the reform’s impact on prices. Our results demonstrate substantial heterogeneity and variability in markups across firms and time and suggest that producers benefited relative to consumers, at least immediately after the reforms. To the extent that higher firm profits lead to the new product introductions and growth, long-term gains to consumers may be substantially higher.
ER -
TY - JOUR
AU - Bachmann,Rüdiger
AU - Ma,Lin
TI - Lumpy Investment, Lumpy Inventories
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17924
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17924
L1 - http://www.nber.org/papers/w17924.pdf
N1 - Author contact info:
Ruediger Bachmann
Department of Economics
University of Michigan
Lorch Hall 335 A
Ann Arbor, MI 48109-1220
Tel: +1 (734) 764-0241
E-Mail: rudib@umich.edu
Lin Ma
Lorch Hall
Ann Arbor
E-Mail: limma@umich.edu
AB - How do microeconomic frictions and microeconomic heterogeneity affect macroeconomic dynamics? We revisit the recent claim in the literature that nonconvex capital adjustment costs do not matter for aggregate dynamics. We argue that the neutrality of fixed adjustment frictions in general equilibrium hinges on the assumption of capital good homogeneity. With only one type of capital good to save and invest in, fixed capital investment dynamics are tightly linked to consumption dynamics, which are similar across lumpy and frictionless investment models. With capital goods heterogeneity, households optimally substitute between different ways of saving, which renders their consumption/saving decisions more sensitive to capital adjustment frictions. We quantify our arguments by introducing inventories into a two-sector lumpy investment model. We find that with inventories, frictionless fixed capital adjustment leads to an initial response of fixed capital investment to productivity shocks that is 50% higher than with capital adjustment frictions, calibrated to the fraction of plants undergoing lumpy investment episodes. We argue more generally that the details of how general equilibrium is introduced into the physical environment of a model matters for the aggregate relevance of microeconomic frictions and microeconomic heterogeneity.
ER -
TY - JOUR
AU - Alvarez,Fernando E.
AU - Lippi,Francesco
TI - Price Setting with menu cost for Multi-product firms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17923
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17923
L1 - http://www.nber.org/papers/w17923.pdf
N1 - Author contact info:
Fernando E. Alvarez
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-4412
Fax: 773/702-8490
E-Mail: f-alvarez1@uchicago.edu
Francesco Lippi
University of Sassari
Department of Economics
and
EIEF
via Sallustiana, 62
00184 Rome - Italy
E-Mail: flippi@uniss.it
AB - We model the decisions of a multi-product firm that faces a fixed “menu” cost: once it is paid, the firm can adjust the price of all its products. We characterize analytically the steady state firm’s decisions in terms of the structural parameters: the variability of the flexible prices, the curvature of the profit function, the size of the menu cost, and the number of products sold. We provide expressions for the steady state frequency of adjustment, the hazard rate of price adjustments, and the size distribution of price changes, all in terms of the structural parameters. We study analytically the impulse response of aggregate prices and output to a monetary shock. The size of the output response and its duration increase with the number of products, they more than double as the number of products goes from 1 to ten, quickly converging to the ones of Taylor’s staggered price model.
ER -
TY - JOUR
AU - Bailey,Martha J.
AU - Hershbein,Brad
AU - Miller,Amalia R.
TI - The Opt-In Revolution? Contraception and the Gender Gap in Wages
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17922
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17922
L1 - http://www.nber.org/papers/w17922.pdf
N1 - Author contact info:
Martha J. Bailey
University of Michigan
Department of Economics
611 Tappan Street
207 Lorch Hall
Ann Arbor, MI 48109-1220
Tel: 734/647-6874
Fax: 734/764-2769
E-Mail: baileymj@umich.edu
Brad Hershbein
Department of Economics
University of Michigan
Ann Arbor, MI 48109-1220
E-Mail: bjhersh@umich.edu
Amalia Miller
Department of Economics, University of Virginia
E-Mail: armiller@virginia.edu
AB - Decades of research on the U.S. gender gap in wages describes its correlates, but little is known about why women changed their career paths in the 1960s and 1970s. This paper explores the role of “the Pill” in altering women’s human capital investments and its ultimate implications for life-cycle wages. Using state-by-birth-cohort variation in legal access to contraception, we show that younger access to the Pill conferred an 8-percent hourly wage premium by age fifty. Our estimates imply that the Pill can account for 10 percent of the convergence of the gender gap in the 1980s and 30 percent in the 1990s.
ER -
TY - JOUR
AU - Cheng,Ing-Haw
AU - Kirilenko,Andrei
AU - Xiong,Wei
TI - Convective Risk Flows in Commodity Futures Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17921
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17921
L1 - http://www.nber.org/papers/w17921.pdf
N1 - Author contact info:
Ing-Haw Cheng
701 Tappan St
Ross School of Business
University of Michigan
Ann Arbor, MI 48109
Tel: 6128503093
E-Mail: ingcheng@umich.edu
Andrei Kirilenko
Office of the Chief Economist
1155 21st Street, N.W.
Washington, DC 20581
Tel: (202) 418-5587
Fax: (202) 418-5660
E-Mail: AKirilenko@CFTC.gov
Wei Xiong
Princeton University
Department of Economics
Bendheim Center for Finance
Princeton, NJ 08450
Tel: 609/258-0282
Fax: 609/258-0771
E-Mail: wxiong@princeton.edu
AB - This paper analyzes the joint responses of commodity futures prices and traders’ futures positions to changes in the VIX before and after the recent financial crisis. We find that while financial traders accommodate the needs of commercial hedgers in normal times, in times of distress, financial traders reduce their net long positions in response to an increase in the VIX causing the risk to flow to commercial hedgers. By exploiting a cross-section of traders, we provide micro-level evidence for a convective flow of risk from distressed financial traders to the ultimate producers of commodities in the real economy.
ER -
TY - JOUR
AU - Kolstad,Jonathan T.
AU - Kowalski,Amanda E.
TI - Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17933
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17933
L1 - http://www.nber.org/papers/w17933.pdf
N1 - Author contact info:
Jonathan T. Kolstad
The Wharton School
University of Pennsylvania
306 Colonial Penn Center
3641 Locust Walk
Philadelphia, PA 19104
Tel: 215/573-9075
E-Mail: jkolstad@wharton.upenn.edu
Amanda E. Kowalski
Department of Economics
Yale University
37 Hillhouse Avenue
Box 208264
New Haven, CT 06520
Tel: 203/432-3521
E-Mail: amanda.kowalski@yale.edu
AB - We model the labor market impact of the three key provisions of the recent Massachusetts and national “mandate-based" health reforms: individual and employer mandates and expansions in publicly-subsidized coverage. Using our model, we characterize the compensating differential for employer-sponsored health insurance (ESHI) -- the causal change in wages associated with gaining ESHI. We also characterize the welfare impact of the labor market distortion induced by health reform. We show that the welfare impact depends on a small number of “sufficient statistics" that can be recovered from labor market outcomes. Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We find that jobs with ESHI pay wages that are lower by an average of $6,058 annually, indicating that the compensating differential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.
ER -
TY - JOUR
AU - Ichniowski,Casey
AU - Preston,Anne E.
TI - Does March Madness Lead to Irrational Exuberance in the NBA Draft? High-Value Employee Selection Decisions and Decision-Making Bias
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17928
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17928
L1 - http://www.nber.org/papers/w17928.pdf
N1 - Author contact info:
Casey Ichniowski
Graduate School of Business
3022 Broadway Street, 713 Uris Hall
Columbia University
New York, NY 10027
Tel: 212/854-4433
Fax: 212/316-9355
E-Mail: bei1@columbia.edu
Anne E. Preston
Department of Economics
203 Stokes Hall
Haverford College
Haverford, PA 19041
E-Mail: apreston@haverford.edu
AB - Using a detailed personally-assembled data set on the performance of collegiate and professional basketball players over the 1997-2010 period, we conduct a very direct test of two questions. Does performance in the NCAA “March Madness” college basketball tournament affect NBA teams’ draft decisions? If so, is this effect the result of decision making biases which overweight player performance in these high-visibility college basketball games or rational judgments of how the players later perform in the NBA? The data provide very clear answers to these two questions. First, unexpected March Madness performance, in terms of unexpected team wins and unexpected player scoring, affects draft decisions. This result persists even when models control for a direct measure of the drafted players’ unobserved counterfactual – various mock draft rankings of where the players were likely to be drafted just prior to any participation in the March Madness tournament. Second, NBA personnel who are making these draft decisions are certainly not irrationally overweighting this MM information. If anything, the unexpected performance in the March Madness tournament deserves more weight than it gets in the draft decisions. Finally, there is no evidence that players who played in the March Madness tournament comprise a pool of players with a lower variance in future NBA performance and who are therefore less likely to become NBA superstars than are players who do not play in MM. Players with positive draft bumps due to unexpectedly good performance in the March Madness tournament are in fact more likely than those without bumps from March Madness participation to become one of the rare NBA superstars in the league.
ER -
TY - JOUR
AU - He,Zhiguo
AU - Matvos,Gregor
TI - Debt and Creative Destruction: Why Could Subsidizing Corporate Debt be Optimal?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17920
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17920
L1 - http://www.nber.org/papers/w17920.pdf
N1 - Author contact info:
Zhiguo He
University of Chicago
Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-3769
E-Mail: zhiguo.he@chicagobooth.edu
Gregor Matvos
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773-834-3188
E-Mail: gmatvos@chicagobooth.edu
AB - We illustrate the welfare benefit of tax subsidies to corporate debt financing. Two firms engage in a socially wasteful competition for survival in a declining industry. Firms differ on two dimensions: exogenous productivity and endogenously chosen amount of debt financing, resulting in a two dimensional war of attrition. Debt financing increases incentives to exit, which, while socially beneficial, is costly for the firm. Therefore the planner can increase welfare by subsidizing debt financing. The duration of industry distress determines the tradeoff between the welfare benefit illustrated in our model and the costs of subsidizing corporate debt from the existing literature. Our theory also sheds light on why the IRS considers "conflict of interest" as one of the key determinants in identifying securities that are qualified for tax-benefits.
ER -
TY - JOUR
AU - Li,Chunding
AU - Whalley,John
TI - Indirect Tax Initiatives and Global Rebalancing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17919
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17919
L1 - http://www.nber.org/papers/w17919.pdf
N1 - Author contact info:
Chunding Li
Institute of World Economics and Politics
Chinese Academy of Social Sciences
No.5 Jianguomenneidajie
Beijing, PRC
Postcode: 100732
E-Mail: cli428@uwo.ca
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB - This paper discusses how joint cross country indirect tax initiatives can be used to achieve global rebalancing. This is potentially an important development for G20 discussions which thus far have centered on exchange rates as the instruments to achieve rebalancing. We suggest that if China and Germany (as major surplus countries) switch their present VAT systems from a destination principle to an origin principle, and the US (as the major deficit country) adopts a VAT on a destination principle VAT, jointly these actions can significantly reduce the three countries’ joint imbalances and so contribute to global rebalancing. We use a numerical general equilibrium model with a monetary structure incorporating inside money to capture endogeneity of trade imbalances, and to also investigate the potential impacts of such initiatives. These confirm that VAT structures are not only good for global rebalancing but also the changes we consider are beneficial for welfare and revenue collection. Our research is aimed to inject new ideas to the present global rebalancing debate.
ER -
TY - JOUR
AU - Markowitz,Sara
AU - Nesson,Erik
AU - Poe-Yamagata,Eileen
AU - Florence,Curtis
AU - Deb,Partha
AU - Andrews,Tracy
AU - Barnett,Sarah Beth L.
TI - Estimating the Relationship between Alcohol Policies and Criminal Violence and Victimization
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17918
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17918
L1 - http://www.nber.org/papers/w17918.pdf
N1 - Author contact info:
Sara Markowitz
Department of Economics
Emory University
1602 Fishburne Dr.
Atlanta, GA 30322
Tel: (404) 712-8167
E-Mail: sara.markowitz@emory.edu
Erik Nesson
Department of Economics
Emory University
1602 Fishburne Dr.
Atlanta, GA 30322
Tel: 608-358-1658
E-Mail: enesson@emory.edu
Eileen Poe-Yamagata
IMPAQ International, LLC
10420 Little Patuxent Parkway, Suite 300
Columbia, MD 21044
E-Mail: epyamagata@impaqint.com
Curtis Florence
National Center for Injury Prevention and Control
Centers for Disease Control
Atlanta, Georgia
E-Mail: gul4@cdc.gov
Partha Deb
Hunter College
Department of Economics
695 Park Avenue
Room 1524 West
New York, NY 10065
Tel: 212/772-5435
Fax: 212/772-5398
E-Mail: partha.deb@hunter.cuny.edu
Tracy Andrews
IMPAQ International, LLC
10420 Little Patuxent Parkway
Suite 300
Columbia, MD 21044
E-Mail: troberts1975@gmail.com
Sarah Beth L. Barnett
National Center for Injury Prevention and Control
Centers for Disease Control
Atlanta, GA
E-Mail: Hun8@cdc.gov
AB - Violence is one of the leading social problems in the United States. The development of appropriate public policies to curtail violence is confounded by the relationship between alcohol and violence. In this paper, we estimate the propensity of alcohol control policies to reduce the perpetration and victimization of criminal violence. We measure violence with data on individual level victimizations from the U.S. National Crime Victimization Survey. We examine the effects of a number of different alcohol control policies in reducing violent crime. These policies include the retail price of beer, drunk driving laws and penalties, keg laws, and serving and selling laws. We find some evidence of a negative relationship between alcohol prices and the probability of alcohol or drug related assault victimizations. However, we find no strong evidence that other alcohol policies are effective in reducing violent crimes. These results provide policy makers with guidance on potential approaches for reducing violence through alcohol beverage control.
ER -
TY - JOUR
AU - Evans,Richard W.
AU - Kotlikoff,Laurence J.
AU - Phillips,Kerk L.
TI - Game Over: Simulating Unsustainable Fiscal Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17917
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17917
L1 - http://www.nber.org/papers/w17917.pdf
N1 - Author contact info:
Richard W. Evans
Brigham Young University
Department of Economics
167 FOB
Provo, Utah 84602
Tel: 801-422-8303
Fax: 801-422-0194
E-Mail: revans@byu.edu
Laurence J. Kotlikoff
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-4002
Fax: 617/353-4001
E-Mail: kotlikoff@gmail.com
Kerk Phillips
Department of Economics
Building 130 FOB
Brigham Young University
Provo, UT 84602
Tel: 801/378-5928 phone; 801/378-2844 fax
E-Mail: kerk_phillips@byu.edu
AB - Fiscal sustainability is one of the most pressing policy issues of our time. Yet it remains difficult to quantify. Official debt is plagued with a number of measurement difficulties since its measurement reflects the choice of words, not policies. And forming the fiscal gap–the imbalance in the government's intertemporal budget–requires strong discount rate assumptions. An alternative approach, taken here, is specifying a stochastic general equilibrium model and determining via simulation how long it takes for the economy to reach game over–the point where current policy can no longer be maintained. Our simulations, based on an OLG model calibrated to the U.S. economy, produce an average duration to game over of roughly one century, with a 35 percent chance of reaching the fiscal limit in roughly 30 years. The prospect of man-made economic collapse produces large equity premia, like those observed in the data. Our simulations show that both the fiscal gap and the equity premium rise as the economy gets closer to hitting its fiscal limit, suggesting that the fiscal gap and the equity premium may be good indicators of unsustainable policy.
ER -
TY - JOUR
AU - Feenstra,Robert C.
AU - Jensen,J. Bradford
TI - Evaluating Estimates of Materials Offshoring from U.S. Manufacturing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17916
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17916
L1 - http://www.nber.org/papers/w17916.pdf
N1 - Author contact info:
Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu
J. Bradford Jensen
McDonough School of Business
Georgetown University
Washington, DC 20057
Tel: 202/687-3767
E-Mail: jbj24@georgetown.edu
AB - When materials offshoring is measured by estimating imported intermediate inputs, a common assumption used is that an industry’s imports of each input, relative to its total demand, is the same as the economy-wide imports relative to total demand: this is the so-called “import comparability” or “proportionality” assumption. A report to the National Research Council identified this assumption as being a significant limitation of current data collection and analysis. In this note we move beyond this assumption to obtain a direct measure of imported materials by industry for the United States in 1997. At the 3-digit I-O industry level, there is a correlation of 0.68 between the offshoring shares made with and without the proportionality assumption, and a higher correlation of 0.87 when the shares are value weighted. While most value-weighted industry have differences below 50 percentage points in the two estimates, there is significant number of cases that differ by 10 percentage points or more.
ER -
TY - JOUR
AU - Garthwaite,Craig L.
TI - You Get a Book! Demand Spillovers, Combative Advertising, and Celebrity Endorsements
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17915
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17915
L1 - http://www.nber.org/papers/w17915.pdf
N1 - Author contact info:
Craig Garthwaite
Department of Management and Strategy
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-2509
Fax: 847/467-1777
E-Mail: c-garthwaite@kellogg.northwestern.edu
AB - This paper studies the economic effects of endorsements. In the publishing sector, endorsements from the Oprah Winfrey Book Club are found to be a business stealing form of advertising that raises title level sales without increasing the market size. The endorsements decrease aggregate adult fiction sales; likely as a result of the endorsed books being more difficult than those that otherwise would have been purchased. Economically meaningful sales increases are also found for non-endorsed titles by endorsed authors. These spillover demand estimates demonstrate a broad range of benefits from advertising for firms operating in a multiproduct brand setting.
ER -
TY - JOUR
AU - Glaeser,Edward L.
AU - Gottlieb,Joshua D.
AU - Tobio,Kristina
TI - Housing Booms and City Centers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17914
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17914
L1 - http://www.nber.org/papers/w17914.pdf
N1 - Author contact info:
Edward L. Glaeser
Department of Economics
315A Littauer Center
Harvard University
Cambridge, MA 02138
Tel: 617/495-0575
Fax: 617/495-7730
E-Mail: eglaeser@harvard.edu
Joshua D. Gottlieb
Department of Economics
Littauer Center 200
Harvard University
Cambridge, MA 02138
Tel: (617) 588-1477
E-Mail: gottlieb@post.harvard.edu
Kristina Tobio
Kennedy School of Government
79 JFK St- T347
Cambridge, MA 02138
E-Mail: kristina_tobio@ksg.harvard.edu
AB - Popular discussions often treat the great housing boom of the 1996-2006 period as if it were a national phenomenon with similar impacts across locales, but across metropolitan areas, price growth was dramatically higher in warmer, less educated cities with less initial density and higher initial housing values. Within metropolitan areas, price growth was faster in neighborhoods closer to the city center. The centralization of price growth during the boom was particularly dramatic in those metropolitan areas where income is higher away from the city center. We consider four different explanations for why city centers grew more quickly when wealth was more suburbanized: (1) gentrification, which brings rapid price growth, is more common in areas with centralized poverty; (2) areas with centralized poverty had more employment concentration which led to faster centralized price growth; (3) areas with centralized poverty had the weakest supply response to the boom in prices in the city center; and (4) poverty is centralized in cities with assets, like public transit, at the city center that became more valuable over the boom. We find some support for several of these hypotheses, but taken together they explain less than half of the overall connection between centralized poverty and centralized price growth.
ER -
TY - JOUR
AU - Mooij,Ruud de
AU - Keen,Michael
TI - 'Fiscal Devaluation' and Fiscal Consolidation: The VAT in Troubled Times
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17913
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17913
L1 - http://www.nber.org/papers/w17913.pdf
N1 - Author contact info:
Ruud de Mooij
IMF
1900 Pennsylvania Avenue, NW
Washington, DC 20431
Tel: 202-623-8012
E-Mail: RDeMooij@imf.org
Michael Keen
Fiscal Affairs Department
International Monetary Fund
700 19th Street, NW
Washington, DC 20431
Tel: 202/623-7000
E-Mail: mkeen@imf.org
M1 - published as Ruud de Mooij, Michael Keen. "'Fiscal Devaluation' and Fiscal Consolidation: The VAT in Troubled Times," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2012)
M3 - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB - This paper focuses on two core tax design issues that arise in addressing current fiscal challenges It first explores the idea, prominent in troubled Eurozone countries, of a ‘fiscal devaluation:’ shifting from social contributions to the VAT as a way to mimic a nominal devaluation. Empirical evidence is presented which suggests that in Eurozone countries this may indeed improve the trade balance quite sizably in the short-run, though, as theory predicts, the effects eventually disappear. The paper then assesses the wider scope for VAT reform in meeting fiscal consolidation needs, developing and beginning to apply a methodology for finding additional VAT revenue in ways less distortionary and fairer than further raising the standard rate.
ER -
TY - JOUR
AU - Banerjee,Abhijit
AU - Chattopadhyay,Raghabendra
AU - Duflo,Esther
AU - Keniston,Daniel
AU - Singh,Nina
TI - Can Institutions be Reformed from Within? Evidence from a Randomized Experiment with the Rajasthan Police
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17912
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17912
L1 - http://www.nber.org/papers/w17912.pdf
N1 - Author contact info:
Abhijit Banerjee
MIT
Department of Economics
E52-252d
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8855
Fax: 617/253-1330
E-Mail: banerjee@mit.edu
Raghabendra Chattopadhyay
Indian Institute of Management Calcutta
Diamond Harbour Road
Joka, Kolkata 700104 West Bengal INDIA
E-Mail: rc@iimcal.ac.in
Esther Duflo
Department of Economics
MIT, E52-252G
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/258-7013
Fax: 617/253-6915
E-Mail: eduflo@mit.edu
Daniel Keniston
Department of Economics
Yale University
Box 208269
New Haven, CT 06520-8269
E-Mail: daniel.keniston@yale.edu
Nina Singh
IPS
Inspector General of Police
Headquarters, Rajasthan Police
Jaipur
India
E-Mail: ninasingh89@gmail.com
AB - Institutions in developing countries, particularly those inherited from the colonial period, are often thought to be subject to strong inertia. This study presents the results of a unique randomized trial testing whether these institutions can be reformed through incremental administrative change. The police department of the state of Rajasthan, India collaborated with researchers at US and Indian universities to design and implement four interventions to improve police performance and the public’s perception of the police in 162 police stations (covering over one-fifth of the State’s police stations and personnel): (1) placing community observers in police stations; (2) a freeze on transfers of police staff; (3) in‐service training to update skills; and (4) weekly duty rotation with a guaranteed day off per week. These reforms were evaluated using data collected through two rounds of surveys including police interviews, decoy visits to police stations, and a large-scale public opinion and crime victimization survey—the first of its kind in India. The results illustrate that two of the reform interventions, the freeze on transfers and the training, improved police effectiveness and public and crime victims’ satisfaction. The decoy visits also led to an improvement in police performance. The other reforms showed no robust effects. This may be due to constraints on local implementation: The three successful interventions did not require the sustained cooperation of the communities or the local authorities (the station heads) and they were robustly implemented throughout the project. In contrast, the two unsuccessful interventions, which required local implementation, were not systematically implemented.
ER -
TY - JOUR
AU - Mitchell,Olivia S.
AU - Utkus,Stephen
TI - Target-Date Funds in 401(k) Retirement Plans
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17911
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17911
L1 - http://www.nber.org/papers/w17911.pdf
N1 - Author contact info:
Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
Stephen Utkus
Vanguard Center for Retirement Research
100 Vanguard Boulevard, M38
Malvern, PA 19355
E-Mail: steve_utkus@vanguard.com
AB - Individual responsibility for portfolio construction is a central theme for defined contribution pensions, yet the rise of target-date funds is shifting investment decisions from workers back to employers. A complex choice architecture including automatic enrollment, reenrollment, and fund mapping, is increasing the number of participants defaulting into employer-selected target-date funds. At the same time, portfolios of non-defaulted participants undergo sizeable changes, with equity share ratios widening by over 40 percent points between younger/older participants. Among active decision-makers, these funds act as a form of implicit employer-provided lifecycle investment advice. More broadly, our findings highlight malleable preferences among retirement investors and a demand for default-based guidance or simplified advice for households facing complex choices.
ER -
TY - JOUR
AU - Lazear,Edward P.
AU - Spletzer,James R.
TI - Hiring, Churn and the Business Cycle
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17910
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17910
L1 - http://www.nber.org/papers/w17910.pdf
N1 - Author contact info:
Edward P. Lazear
Graduate School of Business
Stanford University
Stanford, CA 94305
Tel: 650/723-9136
Fax: 650/723-0498
E-Mail: lazear@stanford.edu
James Spletzer
U.S. Census Bureau
E-Mail: James.R.Spletzer@census.gov
AB - Churn, defined as replacing departing workers with new ones as workers move to more productive uses, is an important feature of labor dynamics. The majority of hiring and separation reflects churn rather than hiring for expansion or separation for contraction. Using the JOLTS data, we show that churn decreased significantly during the most recent recession with almost four-fifths of the decline in hiring reflecting decreases in churn. Reductions in churn have costs because they reflect a reduction in labor movement to higher valued uses. We estimate the cost of reduced churn to be $208 billion. On an annual basis, this amounts to about .4% of GDP for a period of 3 1/2 years.
ER -
TY - JOUR
AU - Goodhart,Charles A.E.
AU - Kashyap,Anil K
AU - Tsomocos,Dimitrios P.
AU - Vardoulakis,Alexandros P.
TI - Financial Regulation in General Equilibrium
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17909
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17909
L1 - http://www.nber.org/papers/w17909.pdf
N1 - Author contact info:
Charles Goodhart
London School of Economics
E-Mail: caegoodhart@aol.com
Anil Kashyap
Booth School of Business
University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-7260
Fax: 773/702-0458
E-Mail: anil.kashyap@chicagobooth.edu
Dimitrios P. Tsomocos
Said Business School and St. Edmund Hall
University of Oxford
E-Mail: Dimitrios.Tsomocos@sbs.ox.ac.uk
Alexandros P. Vardoulakis
Banque de France
E-Mail: alexandros.vardoulakis@banque-france.fr
AB - This paper explores how different types of financial regulation could combat many of the phenomena that were observed in the financial crisis of 2007 to 2009. The primary contribution is the introduction of a model that includes both a banking system and a “shadow banking system” that each help households finance their expenditures. Households sometimes choose to default on their loans, and when they do this triggers forced selling by the shadow banks. Because the forced selling comes when net worth of potential buyers is low, the ensuing price dynamics can be described as a fire sale. The proposed framework can assess five different policy options that officials have advocated for combating defaults, credit crunches and fire sales, namely: limits on loan to value ratios, capital requirements for banks, liquidity coverage ratios for banks, dynamic loan loss provisioning for banks, and margin requirements on repurchase agreements used by shadow banks. The paper aims to develop some general intuition about the interactions between the tools and to determine whether they act as complements and substitutes.
ER -
TY - JOUR
AU - Cooper,Russell
TI - Exit from a Monetary Union through Euroization: Discipline without Chaos
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17908
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17908
L1 - http://www.nber.org/papers/w17908.pdf
N1 - Author contact info:
Russell Cooper
Department of Economics
European University Institute
via della Piazzola, 43
Firenze, 50133
ITALY
E-Mail: russellcoop@gmail.com
AB - This paper studies the role of exit from a monetary union during a debt crisis. A monetary union, such as the European Monetary Union, needs to establish a procedure for exit as a tool to cope with debt default. The paper studies various forms of exit and argues that “Euroization” is both a credible and effective means of punishment for countries in default.
ER -
TY - JOUR
AU - Bergin,Paul R.
AU - Pyun,Ju Hyun
TI - Multilateral Resistance to International Portfolio Diversification
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17907
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17907
L1 - http://www.nber.org/papers/w17907.pdf
N1 - Author contact info:
Paul Bergin
Department of Economics
University of California, Davis
One Shields Ave.
Davis, CA 95616
Tel: 530/752-8398
Fax: 530/752-9382
E-Mail: prbergin@ucdavis.edu
Ju Hyun Pyun
Department of Economics
University of California, Davis
One Shields Ave.
Davis, CA 95616
E-Mail: jpyun@ucdavis.edu
AB - Not only are investors biased toward home assets, but when they do invest abroad, they appear to favor countries with returns more correlated with home assets, reducing diversification yet further. This paper argues that understanding this correlation puzzle requires a multi-county theoretical perspective, and we construct an N-country DSGE model that allows for heterogeneous stock return correlations. It shows that bilateral asset holdings depend not only upon the stock return correlation with the destination country, but also on the correlation with all other countries. This effect is analogous to ‘multilateral resistance’ in the trade literature. An empirical study controlling for this multilateral resistance in correlations overturns the result of preceding literature, finding that higher stock return correlation lowers bilateral equity asset holdings as theory predicts, reducing the losses of home bias.
ER -
TY - JOUR
AU - Faust,Jon
AU - Gupta,Abhishek
TI - Posterior Predictive Analysis for Evaluating DSGE Models
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17906
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17906
L1 - http://www.nber.org/papers/w17906.pdf
N1 - Author contact info:
Jon Faust
Johns Hopkins University
Department of Economics
Mergenthaler Hall 456
3400 N. Charles Street
Baltimore, MD 21218
Tel: 410/516-7614
Fax: 410/516-7600
E-Mail: faustj@jhu.edu
Abhishek Gupta
National Institute of Public Finance and Policy
18/2, Satsang Vihar Marg
Special Institutional Area
New Delhi-110067
India
Tel: +91-98111-31767
Fax: +91-11-26852548
E-Mail: agupta28@gmail.com
AB - While dynamic stochastic general equilibrium (DSGE) models for monetary policy analysis have come a long way, there is considerable difference of opinion over the role these models should play in the policy process. The paper develops three main points about assessing the value of these models. First, we document that DSGE models continue to have aspects of crude approximation and omission. This motivates the need for tools to reveal the strengths and weaknesses of the models--both to direct development efforts and to inform how best to use the current flawed models. Second, posterior predictive analysis provides a useful and economical tool for finding and communicating strengths and weaknesses. In particular, we adapt a form of discrepancy analysis as proposed by Gelman, et al. (1996). Third, we provide a nonstandard defense of posterior predictive analysis in the DSGE context against long-standing objections. We use the iconic Smets-Wouters model for illustrative purposes, showing a number of heretofore unrecognized properties that may be important from a policymaking perspective.
ER -
TY - JOUR
AU - Buera,Francisco J.
AU - Kaboski,Joseph P.
AU - Shin,Yongseok
TI - The Macroeconomics of Microfinance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17905
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17905
L1 - http://www.nber.org/papers/w17905.pdf
N1 - Author contact info:
Francisco J. Buera
Department of Economics
University of California, Los Angeles
8283 Bunche Hall Office 8357
Mail Stop: 147703
Los Angeles, CA 90095
Tel: 310/825-8018
Fax: 310/825-9528
E-Mail: fjbuera@econ.ucla.edu
Joseph P. Kaboski
Department of Economics and Econometrics
University of Notre Dame
434 Flanner Hall
Notre Dame, IN 46556
Tel: 574/631-9906
E-Mail: jkaboski@nd.edu
Yongseok Shin
Department of Economics
Washington University in St. Louis
One Brookings Drive
St. Louis, MO 63130
Tel: 314/935-7138
Fax: 314/935-4156
E-Mail: yshin@wustl.edu
AB - We provide a quantitative evaluation of the aggregate and distributional impact of microfinance or credit programs targeted toward small businesses. We find that the redistributive impact of microfinance is stronger in general equilibrium than in partial equilibrium, but the impact on aggregate output and capital is smaller in general equilibrium. Aggregate total factor productivity (TFP) increases with microfinance in general equilibrium but decreases in partial equilibrium. When general equilibrium effects are accounted for, scaling up the microfinance program will have only a small impact on per-capita income, because the increase in TFP is counterbalanced by lower capital accumulation resulting from the redistribution of income from high-savers to low-savers. Nevertheless, the vast majority of the population will be positively affected by microfinance through the increase in equilibrium wages.
ER -
TY - JOUR
AU - Roussanov,Nikolai
AU - Savor,Pavel G.
TI - Status, Marriage, and Managers' Attitudes To Risk
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17904
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17904
L1 - http://www.nber.org/papers/w17904.pdf
N1 - Author contact info:
Nikolai Roussanov
University of Pennsylvania
Wharton School, Finance Department
2400 Steinberg-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6367
Tel: 215/746-0004
Fax: 215/898-6200
E-Mail: nroussan@wharton.upenn.edu
Pavel G. Savor
Finance Department, Wharton School
University of Pennsylvania
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215-898-7543
E-Mail: psavor@wharton.upenn.edu
AB - Relative wealth concerns can affect risk-taking behavior, as the payoff to a marginal dollar of wealth depends on the wealth of others. We develop a model where status concerns arise endogenously due to competition in the marriage market and lead to greater risk-taking for unmarried individuals. We evaluate empirically the importance of this effect in a high-stakes setting by studying corporate CEOs. We find that single CEOs, who are more likely to exhibit status concerns, are associated with firms that exhibit higher stock return volatility and pursue more aggressive investment policies. This effect is weaker for older CEOs. Our results hold both when we estimate the impact of marital status directly and when we use variation in divorce laws across U.S. states to instrument for CEO marital status.
ER -
TY - JOUR
AU - Leeper,Eric M.
AU - Walker,Todd B.
TI - Perceptions and Misperceptions of Fiscal Inflation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17903
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17903
L1 - http://www.nber.org/papers/w17903.pdf
N1 - Author contact info:
Eric M. Leeper
Department of Economics
304 Wylie Hall
Indiana University
Bloomington, IN 47405
Tel: 812/855-9157
Fax: NA
E-Mail: eleeper@indiana.edu
Todd B. Walker
Department of Economics
105 Wylie Hall
Indiana University
Bloomington, IN 47405
E-Mail: walkertb@indiana.edu
M1 - published as Eric M. Leeper, Todd B. Walker. "Perceptions and Misperceptions of Fiscal Inflation," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2012)
M3 - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB - The Great Recession and worldwide financial crisis have exploded fiscal imbalances and brought fiscal policy and inflation to the forefront of policy concerns. Those concerns will only grow as aging populations increase demands on government expenditures in coming decades. It is widely perceived that fiscal policy is inflationary if and only if it leads the central bank to print new currency to monetize deficits. Monetization can be inflationary. But it is a misperception that this is the only channel for fiscal inflations. Nominal bonds, the predominant form of government debt in advanced economies, derive their value from expected future nominal primary surpluses and money creation; changes in the price level can align the market value of debt to its expected real backing. This introduces a fresh channel, not requiring explicit monetization, through which fiscal deficits directly affect inflation. The paper describes various ways in which fiscal policy can directly affect inflation and explains why these fiscal effects are difficult to detect in time series data.
ER -
TY - JOUR
AU - Comin,Diego A.
TI - An Exploration of Luxury Hotels in Tanzania
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17902
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17902
L1 - http://www.nber.org/papers/w17902.pdf
N1 - Author contact info:
Diego A. Comin
Harvard Business School
Soldiers Field
Boston, MA 02163
Tel: 617/495-5011
E-Mail: dcomin@hbs.edu
M3 - presented at "African Development Successes", August 3-5, 2011
AB - Tourism is a tradable service activity that could allow some African countries to generate significant growth. Tanzania, given its unique natural assets, is an ideal candidate. However, despite being so richly endowed in touristic resources, Tanzania receives very few tourists and revenues from tourism. To explore the determinants of this performance, I conduct an international survey for upscale hotel managers to measure supply-side constraints on the operation of hotels. The survey reveals that hotels in the safari area in Tanzania are more expensive than comparable hotels, and that this difference in price cannot be accounted for by differences in supply constraints. Further, using cross-country panel data, I show that upscale hotel prices account for a significant fraction of cross-country differences in tourists.
ER -
TY - JOUR
AU - Cullen,Mark R.
AU - Cummins,Clint
AU - Fuchs,Victor R.
TI - Geographic and Racial Variation in Premature Mortality in the US: Analyzing the Disparities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17901
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17901
L1 - http://www.nber.org/papers/w17901.pdf
N1 - Author contact info:
Mark R. Cullen
Stanford University School of Medicine
1265 Welch Rd X338
Stanford, CA 94305
Tel: 650.721.6209
Fax: 650.723.8596
E-Mail: mrcullen@stanford.edu
Clint Cummins
Stanford University
Department of Health Research and Policy
HRP Redwood Building
Stanford, California 94305-5405
E-Mail: clint@leland.stanford.edu
Victor R. Fuchs
796 Cedro Way
Stanford, CA 94305
Tel: 650/326-7639
Fax: 650/328-4163
E-Mail: vfuchs@stanford.edu
AB - Life expectancy at birth, estimated from United States period life tables, has been shown to vary systematically and widely by region and race. We use the same tables to estimate the probability of survival from birth to age 70 (S70), a measure of mortality more sensitive to disparities and more reliably calculated for small populations, to describe the variation and identify its sources in greater detail to assess the patterns of this variation. Examination of the unadjusted probability of S70 for each US county with a sufficient population of whites and blacks reveals large geographic differences for each race-sex group. For example, white males born in the ten percent healthiest counties have a 77 percent probability of survival to age 70, but only a 61 percent chance if born in the ten percent least healthy counties. Similar geographical disparities face white women and blacks of each sex. Moreover, within each county, large differences in S70 prevail between blacks and whites, on average 17 percentage points for men and 12 percentage points for women. In linear regressions for each race-sex group, nearly all of the geographic variation is accounted for by a common set of 22 socio-economic and environmental variables, selected for previously suspected impact on mortality; R2 ranges from 0.86 for white males to 0.72 for black females. Analysis of black-white survival chances within each county reveals that the same variables account for most of the race gap in S70 as well. When actual white male values for each explanatory variable are substituted for black in the black male prediction equation to assess the role explanatory variables play in the black-white survival difference, residual black-white differences at the county level shrink markedly to a mean of -2.4% (+/-2.4); for women the mean difference is -3.7 % (+/-2.3).
ER -
TY - JOUR
AU - Ilut,Cosmin
AU - Schneider,Martin
TI - Ambiguous Business Cycles
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17900
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17900
L1 - http://www.nber.org/papers/w17900.pdf
N1 - Author contact info:
Cosmin Ilut
Department of Economics
Duke University
213 Social Sciences Bldg., Box 90097
Durham, NC, 27708
E-Mail: cosmin.ilut@duke.edu
Martin Schneider
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
Tel: (650) 721 6320
E-Mail: schneidr@stanford.edu
AB - This paper considers business cycle models with agents who dislike both risk and ambiguity (Knightian uncertainty). Ambiguity aversion is described by recursive multiple priors preferences that capture agents' lack of confidence in probability assessments. While modeling changes in risk typically requires higher-order approximations, changes in ambiguity in our models work like changes in conditional means. Our models thus allow for uncertainty shocks but can still be solved and estimated using first-order approximations. In our estimated medium-scale DSGE model, a loss of confidence about productivity works like 'unrealized' bad news. Time-varying confidence emerges as a major source of business cycle fluctuations.
ER -
TY - JOUR
AU - Fang,Hanming
AU - Kung,Edward
TI - Why Do Life Insurance Policyholders Lapse? The Roles of Income, Health and Bequest Motive Shocks
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17899
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17899
L1 - http://www.nber.org/papers/w17899.pdf
N1 - Author contact info:
Hanming Fang
Department of Economics
University of Pennsylvania
3718 Locust Walk
Philadelphia, PA 19104
Tel: 215-898-7767
Fax: 215-573-2057
E-Mail: hanming.fang@econ.upenn.edu
Edward Kung
Department of Economics
Duke University
213 Social Sciences Building
P.O. Box 90097
Durham, NC 27708-0097
E-Mail: edward.kung@duke.edu
AB - Previous research has shown that the reasons for lapsation have important implications regarding the effects of the emerging life settlement market on consumer welfare. We present and empirically implement a dynamic discrete choice model of life insurance decisions to assess the importance of various factors in explaining life insurance lapsations. In order to explain some key features in the data, our model incorporates serially correlated unobservable state variables which we deal with using posterior distributions of the unobservables simulated from Sequential Monte Carlo (SMC) method. We estimate the model using the life insurance holding information from the Health and Retirement Study (HRS) data. Counterfactual simulations using the estimates of our model suggest that a large fraction of life insurance lapsations are driven by i.i.d choice specific shocks, particularly when policyholders are relatively young. But as the remaining policyholders get older, the role of such i.i.d. shocks gets smaller, and more of their lapsations are driven either by income, health or bequest motive shocks. Income and health shocks are relatively more important than bequest motive shocks in explaining lapsations when policyholders are young, but as they age, the bequest motive shocks play a more important role. We also suggest the implications of these findings regarding the effects of the emerging life settlement market on consumer welfare.
ER -
TY - JOUR
AU - Atkeson,Andrew
AU - Hellwig,Christian
AU - Ordonez,Guillermo
TI - Optimal Regulation in the Presence of Reputation Concerns
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17898
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17898
L1 - http://www.nber.org/papers/w17898.pdf
N1 - Author contact info:
Andrew Atkeson
Bunche Hall 9381
Department of Economics
UCLA
Box 951477
Los Angeles, CA 90095-1477
Tel: 866/312-9770
Fax: 310/825-9528
E-Mail: andy@atkeson.net
Christian Hellwig
Toulouse School of Economics
Manufacture de Tabacs,
21 Allées de Brienne,
31000 Toulouse
Tel: +33 5 61 12 85 93
Fax: +33 5 61 12 86 37
E-Mail: christian.hellwig@tse-fr.eu
Guillermo Ordonez
Yale University
Department of Economics
28 Hillhouse Avenue
New Haven, CT 06511
Tel: 203/432-8320
Fax: 203/436-2626
E-Mail: guillermo.ordonez@yale.edu
AB - We study a market with free entry and exit of firms who can produce high-quality output by making a costly but efficient initial unobservable investment. If no learning about this investment occurs, an extreme "lemons problem" develops, no firm invests, and the market shuts down. Learning introduces reputation incentives such that a fraction of entrants do invest. If the market operates with spot prices, simple regulation can enhance the role of reputation to induce investment, thus mitigating the "lemons problem" and improving welfare.
ER -
TY - JOUR
AU - Qian,Yi
TI - Brand Management and Strategies Against Counterfeits
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17849
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17849
L1 - http://www.nber.org/papers/w17849.pdf
N1 - Author contact info:
Yi Qian
Department of Marketing
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-7113
Fax: 847/491-2498
E-Mail: yiqian@kellogg.northwestern.edu
AB - In this paper, I provide a theory for the brand-protection strategies to counterfeiting under weak intellectual property rights. My theoretical framework has general implications for endogenous sunk cost investments as a means of deterring counterfeiters. My model incorporates two layers of asymmetric information that counterfeits can incur: counterfeiters fooling consumers, and buyers of counterfeits fooling other consumers. Brands have a number of different tools at their disposal to maintain a separating equilibrium in the face of counterfeits. One of the theoretical predictions of this study is that counterfeit entry would induce incumbent brand to introduce new products. This helps to explain the innovation strategies that authentic firms employ in response to entry by their counterfeiters in the real world. Authentic prices rise if and only if the counterfeit quality is lower than a threshold level. In addition, the model demonstrates how authentic producers could invest in self-enforcement to increase counterfeiters' incentives to separate themselves. Better channel management through company stores and other costly devices are forms of non-price signals and complement a company's own enforcements against counterfeits. These predictions are validated using a unique panel data collected from Chinese shoe companies covering the years 1993-2004. Data further reveal that companies with worse relationships with the government invest more in various self-enforcement strategies, which are effective in reducing counterfeit sales, and that the set of strategies are complements rather than substitutes.
ER -
TY - JOUR
AU - Courtemanche,Charles J.
AU - Zapata,Daniela
TI - Does Universal Coverage Improve Health? The Massachusetts Experience
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17893
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17893
L1 - http://www.nber.org/papers/w17893.pdf
N1 - Author contact info:
Charles J. Courtemanche
University of Louisville
College of Business
Department of Economics
Louisville, KY 40292
Tel: 502-852-4854
Fax: 502-852-7672
E-Mail: cjcour02@louisville.edu
Daniela Zapata
University of North Carolina at Greensboro
Department of Economics
P.O. Box 26170
Greensboro, NC 27402
E-Mail: d_zapata@uncg.edu
AB - In 2006, Massachusetts passed health care reform legislation designed to achieve nearly universal coverage through a combination of insurance market reforms, mandates, and subsidies that later served as the model for national health care reform. Using individual-level data from the Behavioral Risk Factor Surveillance System, we provide evidence that health care reform in Massachusetts led to better overall self-assessed health. An assortment of robustness checks and placebo tests support a causal interpretation of the results. We also document improvements in several determinants of overall health, including physical health, mental health, functional limitations, joint disorders, body mass index, and moderate physical activity. The health effects were strongest among women, minorities, near-elderly adults, and those with incomes low enough to qualify for the law’s subsidies. Finally, we use the reform to instrument for health insurance and estimate a sizeable impact of coverage on health. The effects on coverage were strongest for men, non-black minorities, young adults, and those who qualified for the subsidies, while the effects of coverage were strongest for women, blacks, the near-elderly, and middle-to-upper income individuals.
ER -
TY - JOUR
AU - Banerjee,Abhijit
AU - Duflo,Esther
AU - Qian,Nancy
TI - On the Road: Access to Transportation Infrastructure and Economic Growth in China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17897
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17897
L1 - http://www.nber.org/papers/w17897.pdf
N1 - Author contact info:
Abhijit Banerjee
MIT
Department of Economics
E52-252d
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8855
Fax: 617/253-1330
E-Mail: banerjee@mit.edu
Esther Duflo
Department of Economics
MIT, E52-252G
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/258-7013
Fax: 617/253-6915
E-Mail: eduflo@mit.edu
Nancy Qian
Department of Economics
Yale University
27 Hillhouse Avenue
New Haven, CT 06520-8269
E-Mail: nancy.qian@yale.edu
AB - This paper estimates the effect of access to transportation networks on regional economic outcomes in China over a twenty-period of rapid income growth. It addresses the problem of the endogenous placement of networks by exploiting the fact that these networks tend to connect historical cities. Our results show that proximity to transportation networks have a moderate positive causal effect on per capita GDP levels across sectors, but no effect on per capita GDP growth. We provide a simple theoretical framework with empirically testable predictions to interpret our results. We argue that our results are consistent with factor mobility playing an important role in determining the economic benefits of infrastructure development.
ER -
TY - JOUR
AU - Bordo,Michael D.
AU - Meissner,Christopher M.
TI - Does Inequality Lead to a Financial Crisis?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17896
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17896
L1 - http://www.nber.org/papers/w17896.pdf
N1 - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu
Christopher M. Meissner
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: +1 (530) 752-3108
Fax: +1 (530) 752-9382
E-Mail: cmmeissner@ucdavis.edu
AB - The recent global crisis has sparked interest in the relationship between income inequality, credit booms, and financial crises. Rajan (2010) and Kumhof and Rancière (2011) propose that rising inequality led to a credit boom and eventually to a financial crisis in the US in the first decade of the 21st century as it did in the 1920s. Data from 14 advanced countries between 1920 and 2000 suggest these are not general relationships. Credit booms heighten the probability of a banking crisis, but we find no evidence that a rise in top income shares leads to credit booms. Instead, low interest rates and economic expansions are the only two robust determinants of credit booms in our data set. Anecdotal evidence from US experience in the 1920s and in the years up to 2007 and from other countries does not support the inequality, credit, crisis nexus. Rather, it points back to a familiar boom-bust pattern of declines in interest rates, strong growth, rising credit, asset price booms and crises.
ER -
TY - JOUR
AU - Carlin,Bruce Ian
AU - Ederer,Florian
TI - Search Fatigue
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17895
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17895
L1 - http://www.nber.org/papers/w17895.pdf
N1 - Author contact info:
Bruce I. Carlin
Anderson Graduate School of Management
UCLA
110 Westwood Plaza, Suite C413
Los Angeles, CA 90095-1481
Tel: 310/825-7246
E-Mail: bruce.carlin@anderson.ucla.edu
Florian Ederer
University of California at Los Angeles (UCLA)
Anderson School of Management
110 Westwood Plaza
Cornell Hall, Suite D515
Los Angeles, CA 90095-1481
Tel: 310 825 7348
Fax: 310 825 1581
E-Mail: florian.ederer@anderson.ucla.edu
AB - Consumer search is not only costly but also tiring. We characterize the intertemporal effects that search fatigue has on oligopoly prices, product proliferation, and the provision of consumer assistance (i.e., advice). These effects vary based on whether search is all-or-nothing or sequential in nature, whether learning takes place, and whether consumers exhibit brand loyalty. We perform welfare analysis and highlight the novel empirical implications that our analysis generates.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Inoue,Kenta
TI - Central Banks and Gold Puzzles
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17894
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17894
L1 - http://www.nber.org/papers/w17894.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Kenta Inoue
Economics E2, UCSC
1156 High St., Santa Cruz
CA 95064
E-Mail: kinoue@ucsc.edu
AB - We study the curious patterns of gold holding and trading by central banks during 1979-2010. With the exception of several discrete step adjustments, central banks keep maintaining passive stocks of gold, independently of the patterns of the real price of gold. We also observe the synchronization of gold sales by central banks, as most reduced their positions in tandem, and their tendency to report international reserves valuation excluding gold positions. Our analysis suggests that the intensity of holding gold is correlated with ‘global power’ – by the history of being a past empire, or by the sheer size of a country, especially by countries that are or were the suppliers of key currencies. These results are consistent with the view that central bank’s gold position signals economic might, and that gold retains the stature of a ‘safe haven’ asset at times of global turbulence. The under-reporting of gold positions in the international reserve/GDP statistics is consistent with loss aversion, wishing to maintain a sizeable gold position, while minimizing the criticism that may occur at a time when the price of gold declines.
ER -
TY - JOUR
AU - Olken,Benjamin A.
AU - Onishi,Junko
AU - Wong,Susan
TI - Should Aid Reward Performance? Evidence from a Field Experiment on Health and Education in Indonesia
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17892
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17892
L1 - http://www.nber.org/papers/w17892.pdf
N1 - Author contact info:
Benjamin A. Olken
Department of Economics
MIT
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/588-1437
Fax: 617/868-2742
E-Mail: bolken@mit.edu
Junko Onishi
World Bank
1818 H Street, NW
Washington, DC 20433
E-Mail: jonishi@worldbank.org
Susan Wong
World Bank
1818 H St, NW
Washington, DC 20433
E-Mail: swong1@worldbank.org
AB - This paper reports an experiment in over 3,000 Indonesian villages designed to test the role of performance incentives in improving the efficacy of aid programs. Villages in a randomly-chosen one-third of subdistricts received a block grant to improve 12 maternal and child health and education indicators, with the size of the subsequent year’s block grant depending on performance relative to other villages in the subdistrict. Villages in remaining subdistricts were randomly assigned to either an otherwise identical block grant program with no financial link to performance, or to a pure control group. We find that the incentivized villages performed better on health than the non-incentivized villages, particularly in less developed areas, but found no impact of incentives on education. We find no evidence of negative spillovers from the incentives to untargeted outcomes, and no evidence that villagers manipulated scores. The relative performance design was crucial in ensuring that incentives did not result in a net transfer of funds toward richer areas. Incentives led to what appear to be more efficient spending of block grants, and led to an increase in labor from health providers, who are partially paid fee-for-service, but not teachers. On net, between 50-75% of the total impact of the block grant program on health indicators can be attributed to the performance incentives.
ER -
TY - JOUR
AU - Li,Shanjun
AU - Linn,Joshua
AU - Muehlegger,Erich
TI - Gasoline Taxes and Consumer Behavior
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17891
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17891
L1 - http://www.nber.org/papers/w17891.pdf
N1 - Author contact info:
Shanjun Li
Cornell University
424 Warren Hall
Ithaca, NY 14853
E-Mail: sl2448@cornell.edu
Joshua Linn
Resources for the Future
1616 P St NW
Washington, DC 20036
Tel: 202-328-5047
E-Mail: linn@rff.org
Erich Muehlegger
Harvard Kennedy School
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-7735
E-Mail: erich_muehlegger@hks.harvard.edu
AB - Gasoline taxes can be employed to correct externalities associated with automobile use, to reduce dependency on foreign oil, and to raise government revenue. Our understanding of the optimal gasoline tax and the efficacy of existing taxes is largely based on empirical analysis of consumer responses to gasoline price changes. In this paper, we directly examine how gasoline taxes affect consumer behavior as distinct from tax-exclusive gasoline prices. Our analysis shows that a 5-cent tax increase reduces gasoline consumption by 1.3 percent in the short-run, much larger than that from a 5-cent increase in the tax-exclusive gasoline price. This difference suggests that traditional analysis could significantly underestimate policy impacts of tax changes. We further investigate the differential effect from gasoline taxes and tax-exclusive gasoline prices on both the intensive and extensive margins of gasoline consumption. We discuss implications of our findings for the estimation of the implicit discount rate for vehicle purchases and for the fiscal benefits of raising taxes.
ER -
TY - JOUR
AU - Arcidiacono,Peter
AU - Bayer,Patrick
AU - Bugni,Federico A.
AU - James,Jonathan
TI - Approximating High-Dimensional Dynamic Models: Sieve Value Function Iteration
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17890
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17890
L1 - http://www.nber.org/papers/w17890.pdf
N1 - Author contact info:
Peter Arcidiacono
Department of Economics
201A Social Sciences Building
Duke University
Durham, NC 27708
Tel: 919/660-1816
Fax: 919/684-8974
E-Mail: psarcidi@econ.duke.edu
Patrick Bayer
Department of Economics
Duke University
213 Social Sciences
Durham, NC 27708
Tel: 919/660-1832
E-Mail: patrick.bayer@duke.edu
Federico Bugni
Department of Economics
Duke University
Box 90097
Durham, NC 27708
E-Mail: federico.bugni@duke.edu
Jonathan James
Department of Economics, Duke University
Box 90097
Durham, NC 27708
E-Mail: jwj8@duke.edu
AB - Many dynamic problems in economics are characterized by large state spaces which make both computing and estimating the model infeasible. We introduce a method for approximating the value function of high-dimensional dynamic models based on sieves and establish results for the: (a) consistency, (b) rates of convergence, and (c) bounds on the error of approximation. We embed this method for approximating the solution to the dynamic problem within an estimation routine and prove that it provides consistent estimates of the model's parameters. We provide Monte Carlo evidence that our method can successfully be used to approximate models that would otherwise be infeasible to compute, suggesting that these techniques may substantially broaden the class of models that can be solved and estimated.
ER -
TY - JOUR
AU - Bresnahan,Timothy F.
AU - Levin,Jonathan D.
TI - Vertical Integration and Market Structure
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17889
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17889
L1 - http://www.nber.org/papers/w17889.pdf
N1 - Author contact info:
Timothy F. Bresnahan
Stanford University
Department of Economics, Room 325
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/723-3712
Fax: 650/725-5702
E-Mail: tbres@stanford.edu
Jonathan D. Levin
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/723-5962
E-Mail: jdlevin@stanford.edu
AB - Contractual theories of vertical integration derive firm boundaries as an efficient response to market transaction costs. These theories predict a relationship between underlying features of transactions and observed integration decisions. There has been some progress in testing these predictions, but less progress in quantifying their importance. One difficulty is that empirical applications often must consider firm structure together with industry structure. Research in industrial organization frequently has adopted this perspective, emphasizing how scale and scope economies, and strategic considerations, influence patterns of industry integration. But this research has paid less attention to contractual or organizational details, so that these two major lines of research on vertical integration have proceeded in parallel with only rare intersection. We discuss the value of combining different viewpoints from organizational economics and industrial organization.
ER -
TY - JOUR
AU - Hunt,Jennifer
AU - Garant,Jean-Philippe
AU - Herman,Hannah
AU - Munroe,David J.
TI - Why Don't Women Patent?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17888
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17888
L1 - http://www.nber.org/papers/w17888.pdf
N1 - Author contact info:
Jennifer Hunt
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick
NJ, 08901-1248
Tel: (732) 932-7363
E-Mail: jennifer.hunt@rutgers.edu
Jean-Philippe Garant
Department of Economics, McGill University
855 Sherbrooke Street West, Leacock 443
Montreal, QC H3A2T7
E-Mail: jean-philippe.garant@mail.mcgill.ca
Hannah Herman
Department of Economics, McGill University
855 Sherbrooke Street West, Leacock 443
Montreal, QC H3A2T7
E-Mail: hannah.herman@mail.mcgill.ca
David J. Munroe
Columbia University, Department of Economics
420 West 118th Street
New York, NY 10027
E-Mail: djm2166@columbia.edu
AB - We investigate women's underrepresentation among holders of commercialized patents: only 5.5% of holders of such patents are female. Using the National Survey of College Graduates 2003, we find only 7% of the gap is accounted for by women's lower probability of holding any science or engineering degree, because women with such a degree are scarcely more likely to patent than women without. Differences among those without a science or engineering degree account for 15%, while 78% is accounted for by differences among those with a science or engineering degree. For the latter group, we find that women's underrepresentation in engineering and in jobs involving development and design explain much of the gap; closing it would increase U.S. GDP per capita by 2.7%.
ER -
TY - JOUR
AU - Anwar,Shamena
AU - Bayer,Patrick
AU - Hjalmarsson,Randi
TI - A Fair and Impartial Jury? The Role of Age in Jury Selection and Trial Outcomes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17887
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17887
L1 - http://www.nber.org/papers/w17887.pdf
N1 - Author contact info:
Shamena Anwar
Carnegie Mellon University
5000 Forbes Ave
Heinz College, Hamburg Hall Room 2116D
Pittsburgh, PA 15213
Tel: 714-913-5172
E-Mail: shamena@andrew.cmu.edu
Patrick Bayer
Department of Economics
Duke University
213 Social Sciences
Durham, NC 27708
Tel: 919/660-1832
E-Mail: patrick.bayer@duke.edu
Randi Hjalmarsson
Queen Mary
University of London
School of Economics and Finance
Mile End Road
London E1 4NS, UK
E-Mail: r.hjalmarsson@qmul.ac.uk
AB - This paper uses data from over 700 felony trials in Sarasota and Lake Counties in Florida from 2000-2010 to examine the role of age in jury selection and trial outcomes. The results of the analysis imply that prosecutors are more likely to use their peremptory challenges to exclude younger members of the jury pool, while defense attorneys exclude older potential jurors. Having established that age has an important role in jury selection, the paper employs a research design that isolates the effect of the random variation in the age composition of the pool of eligible jurors called for jury duty to examine the causal impact of age on trial outcomes. Consistent with the jury selection patterns, the empirical evidence implies that older jurors are indeed more likely to convict. These results are robust to the inclusion of a broad set of controls for the racial and gender composition of the jury and a series of county, time, and judge fixed effects; almost identical effects are estimated separately for each county. These findings have implications for the role that the institution of peremptory challenges has on a defendant’s right to a fair trial and to an eligible citizen’s rights to serve on a jury.
ER -
TY - JOUR
AU - Balduzzi,Pierluigi
AU - Reuter,Jonathan
TI - Heterogeneity in Target-Date Funds and the Pension Protection Act of 2006
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17886
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17886
L1 - http://www.nber.org/papers/w17886.pdf
N1 - Author contact info:
Pierluigi Balduzzi
Carroll School of Management
Boston College
330B Fulton Hall
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-3976
Fax: 617/552-3985
E-Mail: pierluigi.balduzzi@bc.edu
Jonathan Reuter
Carroll School of Management
Boston College
224B Fulton Hall
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-2863
Fax: 617/552-0431
E-Mail: reuterj@bc.edu
AB - This paper studies the evolution of the market for target-date funds (TDFs) between 1994 and 2009. We document pronounced heterogeneity in the TDF universe: TDFs with the same target date have delivered very different returns because of differences in systematic risk in the stock allocations, and because of differences in the stock versus bond allocations. This heterogeneity has increased over time, especially after the passage of the Pension Protection Plan of 2006. Indeed, we can attribute the increased heterogeneity in TDFs to the entry of new fund families in the TDF market between 2007 and 2009. These developments in the TDF market are consistent with new entries in the market adopting a product-differentiation strategy. Our findings suggest that the widespread adoption of TDFs will not result in returns that are similar across investors enrolled in different 401(k) plans, and that the current proposals for further disclosure in TDF offerings may have little impact on the incentive for fund families to offer similar risk profiles.
ER -
TY - JOUR
AU - Belongia,Michael T.
AU - Ireland,Peter N.
TI - The Barnett Critique After Three Decades: A New Keynesian Analysis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17885
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17885
L1 - http://www.nber.org/papers/w17885.pdf
N1 - Author contact info:
Michael T. Belongia
University of Mississippi
Department of Economics
Box 1848
University, MS 38677
E-Mail: mtbelong@olemiss.edu
Peter N. Ireland
Boston College
Department of Economics
140 Commonwealth Ave.
Chestnut Hill, MA 02467-3859
Tel: 617/552-3687
Fax: 617/552-2308
E-Mail: irelandp@bc.edu
AB - This paper extends a New Keynesian model to include roles for currency and deposits as competing sources of liquidity services demanded by households. It shows that, both qualitatively and quantitatively, the Barnett critique applies: While a Divisia aggregate of monetary services tracks the true monetary aggregate almost perfectly, a simple-sum measure often behaves quite differently. The model also shows that movements in both quantity and price indices for monetary services correlate strongly with movements in output following a variety of shocks. Finally, the analysis characterizes the optimal monetary policy response to disturbances that originate in the financial sector.
ER -
TY - JOUR
AU - Wyplosz,Charles
TI - Fiscal Rules: Theoretical Issues and Historical Experiences
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17884
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17884
L1 - http://www.nber.org/papers/w17884.pdf
N1 - Author contact info:
Charles Wyplosz
Graduate Institute of International Studies
Avenue de la Paix 11a
1202 Geneva
Switzerland
Tel: 41 22 908 5946
Fax: 41 22 733 3049
E-Mail: charles.wyplosz@graduateinstitute.ch
M1 - published as Charles Wyplosz. "Fiscal Rules: Theoretical Issues and Historical Experiences," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2012)
M3 - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB - Fiscal indiscipline is a feature of many developed countries. It is generally accepted that the source of the phenomenon lies in the common pool problem, the fact that recipients of public spending to fail to fully internalize the costs that taxpayers must assume. As a result, democratically elected governments are led to postpone tax collection, or to cut spending. Solving the fiscal discipline problem requires internalizing this externality. This calls for adequate institutions or for rules, or both. This paper reviews the various types of solutions that have been discussed in the literature and surveys a number of experiments. With the European debt crisis in mind, the paper pays particular attention to the common pool problem that emerges in federal states. The main conclusions are the following. First, rules are unlikely to exist unless they come with supporting institutions. Second, fiscal institutions are neither necessary nor sufficient to achieve fiscal discipline, but they help. Third, because institutions must bind the policymakers without violating the democratic requirement that elected officials have the power to decide on budgets, effective arrangements are those that give institutions the authority to apply legal rules or to act as official watchdogs.
ER -
TY - JOUR
AU - Bryan,Gharad T.
AU - Karlan,Dean
AU - Zinman,Jonathan
TI - You Can Pick Your Friends, But You Need to Watch Them: Loan Screening and Enforcement in a Referrals Field Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17883
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17883
L1 - http://www.nber.org/papers/w17883.pdf
N1 - Author contact info:
Gharad T. Bryan
London School of Economics
Houghton Street
London WC2A 2AE
United Kingdom
E-Mail: g.t.bryan@lse.ac.uk
Dean Karlan
Department of Economics
Yale University
P.O. Box 208269
New Haven, CT 06520-8629
Tel: 203/432-4479
Fax: 203/432-5591
E-Mail: dean.karlan@yale.edu
Jonathan Zinman
Department of Economics
Dartmouth College
314 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-0075
Fax: 603/646-2122
E-Mail: jzinman@dartmouth.edu
AB - We examine a randomized trial that allows separate identification of peer screening and enforcement of credit contracts. A South African microlender offered half its clients a bonus for referring a friend who repaid a loan. For the remaining clients, the bonus was conditional on loan approval. After approval, the repayment incentive was removed from half the referrers in the first group and added for half those in the second. We find large enforcement effects, a $12 (100 Rand) incentive reduced default by 10 percentage points from a base of 20%. In contrast, we find no evidence of screening.
ER -
TY - JOUR
AU - Korteweg,Arthur
AU - Sorensen,Morten
TI - Estimating Loan-to-Value and Foreclosure Behavior
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17882
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17882
L1 - http://www.nber.org/papers/w17882.pdf
N1 - Author contact info:
Arthur Korteweg
Graduate School of Business
Stanford University
518 Memorial Way
Stanford, CA 94305-5015
Tel: 650/498-6993
Fax: 650/725-7979
E-Mail: korteweg@stanford.edu
Morten Sorensen
Columbia University
Columbia Business School
Uris Hall 802
3022 Broadway
New York, NY 10027
Tel: 212/851-2446
E-Mail: ms3814@columbia.edu
AB - We develop and estimate a unified model of house prices, loan-to-value ratios (LTVs), and trade and foreclosure behavior. House prices are only observed for traded properties, and trades are endogenous, creating sample-selection problems for traditional estimators. We develop a Bayesian filtering procedure to recover the price path for each individual property and produce selection-corrected estimates of historical LTVs and foreclosure behavior, both showing large unprecedented changes since 2007. Our model reduces the index revision problem by nearly half, and has applications in economics and finance (e.g., pricing mortgage-backed securities).
ER -
TY - JOUR
AU - Cahuc,Pïerre
AU - Carcillo,Stephane
TI - Can Public Sector Wage Bills Be Reduced?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17881
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17881
L1 - http://www.nber.org/papers/w17881.pdf
N1 - Author contact info:
Pïerre Cahuc
CREST, Ecole Polytechnique
15 boulevard Gabriel Peri
92245 Malakoff Cedex, France
Tel: (33)1 41 17 37 17
E-Mail: cahuc@ensae.fr
Stephane Carcillo
OECD
2, rue André Pascal
75775 Paris Cedex 16, France
E-Mail: stephane.carcillo@oecd.org
M1 - published as Pierre Cahuc, Stephane Carcillo. "Can Public Sector Wage Bills Be Reduced?," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2012)
M3 - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB - This paper analyzes the relation between public wage bills and public deficits in the OECD countries from 1995 to 2009. The paper shows that fiscal drift episodes, characterized by simultaneous increases in the GDP shares of public wage bills and budget deficits, are more frequent during booms and election years, but not during recessions, except for the 2009 exceptionally strong recession. The emergence of fiscal drift episodes during booms and election years is less frequent in countries with more transparent government, more freedom of the press, as well as in countries with presidential regimes and less union coverage. Inversely, fiscal tightening episodes, characterized by simultaneous decreases in the GDP shares of public wage bills and budget deficits, occur less often during booms than during recessions. The emergence of fiscal tightening episodes during recessions and election years is less frequent in countries with more union coverage.
ER -
TY - JOUR
AU - Dyrda,Sebastian
AU - Kaplan,Greg
AU - Ríos-Rull,José-Víctor
TI - Business Cycles and Household Formation: The Micro vs the Macro Labor Elasticity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17880
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17880
L1 - http://www.nber.org/papers/w17880.pdf
N1 - Author contact info:
Sebastian Dyrda
University of Minnesota
Department of Economics
4-101 Hanson Hall
1925 Fourth Street South
Minneapolis, MN 55455
E-Mail: dyrda020@umn.edu
Greg Kaplan
Department of Economics
University of Pennsylvania
160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-1875
E-Mail: gkaplan@sas.upenn.edu
Jose-Victor Rios-Rull
University of Minnesota
Department of Economics
4-101 Hanson Hall (off 4-179)
1925 Fourth Street South
Minneapolis, MN 55455
Tel: (612) 625-0941
Fax: (612) 624-0209
E-Mail: vr0j@umn.edu
AB - We provide new evidence on the the cyclical behavior of household size in the United States from 1979 to 2010. During economic downturns, people live in larger households. This is mostly, but not entirely, driven by young people moving into or delaying departure from the parental home. We assess the importance of these cyclical movements for aggregate labor supply by building a model of endogenous household formation within a real business cycle structure. We use the model to measure how much more volatile are hours due to two mechanisms: (i) the presence of a large group of mostly young individuals with non-traditional living arrangements; and (ii) the possibility for these individuals to change their living situation in response to aggregate conditions. Our exercise assumes that older people living in stable households have a Frisch elasticity that is consistent with the micro evidence that is based on such people. The inclusion of people living in unstable households yields an implied aggregate, or macro, Frisch elasticity that is around 45% larger than the assumed micro elasticity.
ER -
TY - JOUR
AU - Steckel,Richard H.
AU - White,William J.
TI - Engines of Growth: Farm Tractors and Twentieth-Century U.S. Economic Welfare
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17879
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17879
L1 - http://www.nber.org/papers/w17879.pdf
N1 - Author contact info:
Richard H. Steckel
Department of Economics
Ohio State University
410 Arps Hall, 1945 North High Street
Columbus, OH 43210-1172
Tel: 614/292-5008
Fax: 614/292-3906
E-Mail: steckel.1@osu.edu
William J. White
Pope & Associates, Inc.
11800 Conrey Road, Suite 240
Cincinnati, Ohio 45249
E-Mail: wjw630@yahoo.com
AB - The role of twentieth-century agricultural mechanization in changing the productivity, employment opportunities, and appearance of rural America has long been appreciated. Less attention has been paid to the impact made by farm tractors, combines, and associated equipment on the standard of living of the U.S. population as a whole. This paper demonstrates, through use of a detailed counterfactual analysis, that mechanization in the production of farm products increased GDP by more than 8.0 percent, using 1954 as a base year. This result suggests that studying individual innovations can significantly increase our understanding of the nature of economic growth.
ER -
TY - JOUR
AU - Fell,Harrison
AU - MacKenzie,Ian A.
AU - Pizer,William A.
TI - Prices versus Quantities versus Bankable Quantities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17878
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17878
L1 - http://www.nber.org/papers/w17878.pdf
N1 - Author contact info:
Harrison Fell
Colorado School of Mines
E-Mail: Fell@rff.org
Ian A. MacKenzie
Center of Economic Research
ETH Zurich
Zürichbergstrasse 18
ZUE F 10
8092 Zürich
SWITZERLAND
E-Mail: imackenzie@ethz.ch
William A. Pizer
Sanford School of Public Policy
Duke University
Box 90312
Durham, NC 27708
Tel: 919/613-9286
Fax: 877/240-9880
E-Mail: billy.pizer@duke.edu
AB - Quantity-based regulation with banking allows regulated firms to shift obligations across time in response to periods of unexpectedly high or low marginal costs. Despite its wide prevalence in existing and proposed emission trading programs, banking has received limited attention in past welfare analyses of policy choice under uncertainty. We address this gap with a model of banking behavior that captures two key constraints: uncertainty about the future from the firm’s perspective and a limit on negative bank values (e.g., borrowing). We show conditions where banking provisions reduce price volatility and lower expected costs compared to quantity policies without banking. For plausible parameter values related to U.S. climate change policy, we find that bankable quantities produce behavior quite similar to price policies for about two decades and, during this period, improve welfare by about a $1 billion per year over fixed quantities.
ER -
TY - JOUR
AU - Obstfeld,Maurice
TI - Does the Current Account Still Matter?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17877
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17877
L1 - http://www.nber.org/papers/w17877.pdf
N1 - Author contact info:
Maurice Obstfeld
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-9646
Fax: 510/642-6615
E-Mail: obstfeld@econ.berkeley.edu
AB - Do global current account imbalances still matter in a world of deep international financial markets where gross two-way financial flows often dwarf the net flows measured in the current account? Contrary to a complete markets or “consenting adults” view of the world, large current account imbalances, while very possibly warranted by fundamentals and welcome, can also signal elevated macroeconomic and financial stresses, as was arguably the case in the mid-2000s. Furthermore, the increasingly big valuation changes in countries’ net international investment positions, while potentially important in risk allocation, cannot be relied upon systematically to offset the changes in national wealth implied by the current account. The same factors that dictate careful attention to global imbalances also imply, however, that data on gross international financial flows and positions are central to any assessment of financial stability risks. The balance sheet mismatches of leveraged entities provide the most direct indicators of potential instability, much more so than do global imbalances, though the imbalances may well be a symptom that deeper financial threats are gathering.
ER -
TY - JOUR
AU - Guerrieri,Veronica
AU - Shimer,Robert
TI - Dynamic Adverse Selection: A Theory of Illiquidity, Fire Sales, and Flight to Quality
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17876
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17876
L1 - http://www.nber.org/papers/w17876.pdf
N1 - Author contact info:
Veronica Guerrieri
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-7834
Fax: 773/702-0458
E-Mail: vguerrie@chicagobooth.edu
Robert Shimer
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-9015
E-Mail: shimer@uchicago.edu
AB - We develop a dynamic equilibrium model of asset markets affected by adverse selection. There exists a unique equilibrium where better assets trade at higher prices but in less liquid markets. Sellers of high-quality assets can separate because they are more willing to accept a lower trading probability. As a result, the emergence of adverse selection generates a drop in liquidity. It may also lead to a decline in the price-dividend ratio—a fire sale—and a flight to quality. Subsidies to purchasing assets may be Pareto improving and can reverse the fire sale and flight to quality.
ER -
TY - JOUR
AU - Cheung,Yin-Wong
AU - Chinn,Menzie D.
AU - Qian,XingWang
TI - Are Chinese Trade Flows Different?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17875
PY - 2012
Y2 - March 2012
UR - http://www.nber.org/papers/w17875
L1 - http://www.nber.org/papers/w17875.pdf
N1 - Author contact info:
Yin-Wong Cheung
Department of Economics
University of California
Santa Cruz, CA 95064
E-Mail: cheung@ucsc.edu
Menzie D. Chinn
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI 53706
Tel: 608/262-7397
Fax: 608/262-2033
E-Mail: mchinn@lafollette.wisc.edu
Xingwang Qian
Economics and Finance Department
SUNY Buffalo State
1300 Elmwood Ave
Buffalo, NY 14222
E-Mail: qianx@buffalostate.edu
AB - We find that Chinese trade flows respond to economic activity and relative prices – as represented by a trade weighted exchange rate – but the relationships are not always precisely or robustly estimated. Chinese exports are generally well-behaved, rising with foreign GDP and decreasing as the Chinese renminbi (RMB) appreciates. However, the estimated income elasticity is sensitive to the treatment of time trends. Estimates of aggregate imports are more problematic. In many cases, Chinese aggregate imports actually rise in response to a RMB depreciation and decline with Chinese GDP. This is true even after accounting for the fact a substantial share of imports are subsequently incorporated into Chinese exports. We find that some of these counter-intuitive results are mitigated when we disaggregate the trade flows by customs type, commodity type, and the type of firm undertaking the transactions. However, for imports, we only obtain more reasonable estimates of elasticities when we allow for different import intensities for different components of aggregate demand (specifically, consumption versus investment), or when we include a relative productivity variable.
ER -
TY - JOUR
AU - Harris,Robert S.
AU - Jenkinson,Tim
AU - Kaplan,Steven N.
TI - Private Equity Performance: What Do We Know?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17874
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17874
L1 - http://www.nber.org/papers/w17874.pdf
N1 - Author contact info:
Robert S. Harris
University of Virginia Darden School of Business
100 Darden Boulevard
Charlottesville, VA 22903 USA
E-Mail: HarrisR@darden.virginia.edu
Tim Jenkinson
University of Oxford
Said Business School
Park End Street
Oxford OX1 1HP
UK
E-Mail: tim.jenkinson@sbs.ox.ac.uk
Steven N. Kaplan
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4513
Fax: 773/702-0458
E-Mail: steven.kaplan@chicagobooth.edu
AB - We present evidence on the performance of nearly 1400 U.S. private equity (buyout and venture capital) funds using a new research-quality dataset from Burgiss, sourced from over 200 institutional investors. Using detailed cash-flow data, we compare buyout and venture capital returns to the returns produced by public markets. We also compare the evidence from Burgiss to that derived from other commercial datasets – Venture Economics, Preqin and Cambridge Associates – as well as recent research. We find better buyout fund performance than has previously been documented. This in part reflects recently discovered problems with data provided by Venture Economics, upon which several previous studies had relied. Average U.S. buyout fund performance has exceeded that of public markets for most vintages for a long period of time. The outperformance versus the S&P 500 averages 20% to 27% over the life of the fund and more than 3% per year. Average U.S. venture capital funds, on the other hand, outperformed public equities in the 1990s, but have underperformed public equities in the 2000s. Using individual fund data, we explore the relationship between absolute measures of performance – internal rates of return (IRRs) and multiples of invested capital – and performance relative to public markets. Within a given vintage year, performance relative to public markets can be predicted well by a fund’s multiple of invested capital and IRR, so we are able to estimate the performance relative to public markets that would have been derived from the other commercial datasets, had the required cash-flow data been available. Private equity performance in the other commercial sources – other than Venture Economics – is qualitatively similar to that we find using the Burgiss data.
ER -
TY - JOUR
AU - Cetorelli,Nicola
AU - Goldberg,Linda S.
TI - Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17873
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17873
L1 - http://www.nber.org/papers/w17873.pdf
N1 - Author contact info:
Nicola Cetorelli
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 212 720 5071
Fax: 212 720 8363
E-Mail: nicola.cetorelli@ny.frb.org
Linda S. Goldberg
Federal Reserve Bank-New York
33 Liberty Street
New York, NY 10045
Tel: 212/720-2836
Fax: 212/720-6831
E-Mail: linda.goldberg@ny.frb.org
AB - Foreign banks pulled significant funding from their U.S. branches during the Great Recession. We estimate that the average-sized branch experienced a 12 percent net internal fund “withdrawal,” with the fund transfer disproportionately bigger for larger branches. This internal shock to the balance sheets of U.S. branches of foreign banks had sizable effects on their lending. On average, for each dollar of funds transferred internally to the parent, branches decreased lending supply by about 40 to 50 cents. However, the extent of the lending effects was very different across branches, depending on their pre-crisis modes of operation in the United States.
ER -
TY - JOUR
AU - Lewis,Karen K.
AU - Liu,Edith X.
TI - International Consumption Risk Is Shared After All: An Asset Return View
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17872
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17872
L1 - http://www.nber.org/papers/w17872.pdf
N1 - Author contact info:
Karen K. Lewis
Department of Finance, Wharton School
2300 SHDH
University of Pennsylvania
Philadelphia, PA 19104-6367
Tel: 215/898-7637
Fax: 215/898-6200
E-Mail: lewisk@wharton.upenn.edu
Edith Liu
Department of Applied Economics and Management
105 Warren Hall
Cornell University
Ithaca, NY 14853
E-Mail: edith.liu@cornell.edu
AB - International consumption risk sharing studies have largely ignored their models' counterfactual implications for asset returns although these returns incorporate direct market measures of risk. In this paper, we modify a canonical risk-sharing model to generate more plausible asset return behavior and then consider the effects on welfare gains. Matching the mean and variance of equity returns and the risk-free rate requires persistent consumption risk, leading to three main findings: (1) risk-sharing gains decrease as the ability to diversify persistent consumption risk decreases; (2) the international correlation of equity returns is high relative to the correlation of consumption and dividends, implying low diversification potential for persistent consumption risk; and (3) increasing persistent consumption risk reduces the gains. Taken together, our findings suggest that asset returns imply more international risk sharing than previously thought.
ER -
TY - JOUR
AU - Bromhead,Alan de
AU - Eichengreen,Barry
AU - O'Rourke,Kevin H.
TI - Right-Wing Political Extremism in the Great Depression
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17871
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17871
L1 - http://www.nber.org/papers/w17871.pdf
N1 - Author contact info:
Alan de Bromhead
Mansfield College
University of Oxford
Oxford OX1 3TF
United Kingdom
E-Mail: alan.debromhead@mansfield.ox.ac.uk
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
Kevin H. O'Rourke
All Souls College
Oxford University
Oxford OX1 4AL, UK
Tel: + 44 (0)1865 279 348
Fax: 353-1-6772503
E-Mail: kevin.orourke@all-souls.ox.ac.uk
AB - We examine the impact of the Great Depression on the share of votes for right-wing anti-system parties in elections in the 1920s and 1930s. We confirm the existence of a link between political extremism and economic hard times as captured by growth or contraction of the economy. What mattered was not simply growth at the time of the election but cumulative growth performance. But the effect of the Depression on support for right-wing anti-system parties was not equally powerful under all economic, political and social circumstances. It was greatest in countries with relatively short histories of democracy, with existing extremist parties, and with electoral systems that created low hurdles to parliamentary representation. Above all, it was greatest where depressed economic conditions were allowed to persist.
ER -
TY - JOUR
AU - Huckfeldt,Peter J.
AU - Sood,Neeraj
AU - Escarce,José J
AU - Grabowski,David C.
AU - Newhouse,Joseph P.
TI - Effects of Medicare Payment Reform:
Evidence from the Home Health Interim and Prospective Payment Systems
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17870
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17870
L1 - http://www.nber.org/papers/w17870.pdf
N1 - Author contact info:
Peter J. Huckfeldt
RAND Corporation
Santa Monica, California
E-Mail: Peter_Huckfeldt@rand.org
Neeraj Sood
Department of Clinical Pharmacy
USC School of Pharmacy
1985 Zonal Avenue
Los Angeles, CA 90033
Tel: 310/393-0411
Fax: 310/260-8156
E-Mail: nsood@usc.edu
Jose Escarce
UCLA Med-GIM-HSR
911 Broxton Avenue
Box 951736
Los Angeles, CA 90024
Tel: 310/794-3842
Fax: 310/794-0732
E-Mail: jescarce@mednet.ucla.edu
David Grabowski
Harvard University
Department of Health Care Policy
Harvard Medical School
180 Longwood Avenue
Boston, MA 02115
E-Mail: grabowski@med.harvard.edu
Joseph P. Newhouse
Division of Health Policy Research and Education
Harvard University
180 Longwood Avenue
Boston, MA 02115-5899
Tel: 617/432-1325
Fax: 617/432-3503
E-Mail: newhouse@hcp.med.harvard.edu
AB - Medicare continues to implement payment reforms that shift reimbursement from fee-for-service towards episode-based payment, affecting average and marginal reimbursement. We contrast the effects of two reforms for home health agencies. The Home Health Interim Payment System in 1997 lowered both types of reimbursement; our conceptual model predicts a decline in the likelihood of use and costs, both of which we find. The Home Health Prospective Payment System in 2000 raised average but lowered marginal reimbursement with theoretically ambiguous effects; we find a modest increase in use and costs. We find little substantive effect of either policy on readmissions or mortality.
ER -
TY - JOUR
AU - Nunn,Nathan
TI - Culture and the Historical Process
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17869
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17869
L1 - http://www.nber.org/papers/w17869.pdf
N1 - Author contact info:
Nathan Nunn
Department of Economics
Harvard University
1805 Cambridge St
Cambridge, Ma 02138
Tel: 617/496-4958
Fax: 617/495-8570
E-Mail: nnunn@fas.harvard.edu
AB - This article discusses the importance of accounting for cultural values and beliefs when studying the process of historical economic development. A notion of culture as heuristics or rules-of-thumb that aid in decision making is described. Because cultural traits evolve based upon relative fitness, historical shocks can have persistent impacts if they alter the costs and benefits of different traits. A number of empirical studies confirm that culture is an important mechanism that helps explain why historical shocks can have persistent impacts; these are reviewed here. As an example, I discuss the colonial origins hypothesis (Acemoglu, Johnson and Robinson, 2001), and show that our understanding of the transplantation of European legal and political institutions during the colonial period remains incomplete unless the values and beliefs brought by European settlers are taken into account. It is these cultural beliefs that formed the foundation of the initial institutions that in turn were key for long-term economic development.
ER -
TY - JOUR
AU - Calomiris,Charles W.
AU - Nissim,Doron
TI - Crisis-Related Shifts in the Market Valuation of Banking Activities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17868
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17868
L1 - http://www.nber.org/papers/w17868.pdf
N1 - Author contact info:
Charles W. Calomiris
Graduate School of Business
Columbia University
3022 Broadway Street, Uris Hall
New York, NY 10027
Tel: 212/854-8748
Fax: 212/316-9219
E-Mail: cc374@columbia.edu
Doron Nissim
Graduate School of Business
Columbia University
3022 Broadway
New York, NY 10027
E-Mail: dn75@columbia.edu
AB - We examine changes in the market valuation of banking activities over the last decade, focusing on the effects of the financial crisis. Our valuation model recognizes that banks create value through the types of assets and liabilities that they create and the various types of risk they undertake (including their leverage, their lending risk, and their interest rate risk). The model also allows for heterogeneous bank income streams, dividend signaling effects, and changes in capitalization rates for income streams over time depending on changing market conditions. This approach explains substantial cross-sectional variation in observed market-to-book values, allowing us to identify the market pricing of various banking activities and changes in market pricing over time. We find that the declines in bank stock values since 2007 reflect declining values of various categories of banking activity and changes in market conditions. Dividend payments matter for market values increasingly over time. “Carry-trade” effects from taking on interest rate risk are also apparent. The effects of leverage on bank valuation changed sign during the crisis; while the market rewarded high leverage with higher market values prior to the crisis, leverage become associated with lower values during and after the crisis. Contrary to the view that the declines in market-to-book values for U.S. banks from 2006-2011 mainly reflect unrecognized losses, we find that other factors explain most of the decline in market-to-book ratios. Although model parameters do change over time, more than three-quarters of the change in market-to-book values that occurred from 2006 to the end of 2008 were predictable based on changes in fundamental determinants of value using the model coefficients estimated in 2006.
ER -
TY - JOUR
AU - Erel,Isil
AU - Jang,Yeejin
AU - Weisbach,Michael S.
TI - Financing-Motivated Acquisitions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17867
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17867
L1 - http://www.nber.org/papers/w17867.pdf
N1 - Author contact info:
Isil Erel
Department of Finance
Ohio State University
832 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210
Tel: 614-292-5174
E-Mail: erel@fisher.osu.edu
YeeJin Jang
Ohio State University
Fisher College of Business
810 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210
E-Mail: Jang_122@fisher.osu.edu
Michael Weisbach
Department of Finance
Fisher College of Business
Ohio State University
2100 Neil Ave.
Columbus, OH 43210
Tel: 614/292-3264
E-Mail: weisbach.2@osu.edu
AB - Managers often claim that an important source of value in acquisitions is the acquiring firm’s ability to finance investments for the target firm. This claim implies that targets are financially constrained prior to being acquired and that these constraints are eased following the acquisition. We evaluate the extent to which acquisitions lower financial constraints on a sample of 5,187 European acquisitions occurring between 2001 and 2008. Each of these targets remains a subsidiary of its new parent, so we can observe the target’s financial policies following the acquisition. We examine whether these post-acquisition financial policies reflect improved access to capital. We find that the level of cash target firms hold, the sensitivity of cash to cash flow, and the sensitivity of investment to cash flow all decline significantly, while investment significantly increases following the acquisition. These effects are stronger in deals more likely associated with financing improvements. These findings are consistent with the view that easing financial frictions is a source of value that motivates acquisitions.
ER -
TY - JOUR
AU - Shoven,John B.
AU - Slavov,Sita Nataraj
TI - The Decision to Delay Social Security Benefits: Theory and Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17866
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17866
L1 - http://www.nber.org/papers/w17866.pdf
N1 - Author contact info:
John B. Shoven
Department of Economics
579 Serra Mall at Galvez Street
Stanford, CA 94305-6015
Tel: 650/723-3273
Fax: 650/723-8611
E-Mail: shoven@stanford.edu
Sita Slavov
Department of Economics
Occidental College
1600 Campus Road
Los Angeles, CA 90041
Tel: 323/259-1461
E-Mail: sslavov@oxy.edu
AB - Social Security benefits may be commenced at any time between age 62 and age 70. As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit amount to reflect the age at which benefits are claimed. We investigate the actuarial fairness of this adjustment. Our simulations suggest that delaying is actuarially advantageous for a large subset of people, particularly for real interest rates of 3.5 percent or below. The gains from delaying are greater at lower interest rates, for married couples relative to singles, for single women relative to single men, and for two-earner couples relative to one-earner couples. In a two-earner couple, the gains from deferring the primary earner’s benefit are greater than the gains from deferring the secondary earner’s benefit. We then use panel data from the Health and Retirement Study to investigate whether individuals’ actual claiming behavior appears to be influenced by the degree of actuarial advantage to delaying. We find no evidence of a consistent relationship between claiming behavior and factors that influence the actuarial advantage of delay, including gender and marital status, interest rates, subjective discount rates, or subjective assessments of life expectancy.
ER -
TY - JOUR
AU - Walque,Damien de
AU - Dow,William H.
AU - Medlin,Carol
AU - Nathan,Rose
TI - Stimulating Demand for AIDS Prevention: Lessons from the RESPECT Trial
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17865
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17865
L1 - http://www.nber.org/papers/w17865.pdf
N1 - Author contact info:
Damien de Walque
The World Bank
Development Research Group
1818 H Street, NW
Washington, DC 20433
Tel: (202) 473-2517
E-Mail: ddewalque@worldbank.org
William H. Dow
University of California, Berkeley
School of Public Health
239 University Hall, #7360
Berkeley, CA 94720-7360
Tel: 510/643-5439
Fax: 510/643-6981
E-Mail: wdow@berkeley.edu
Carol Medlin
Bill & Melinda Gates Foundation
Seattle, WA 98102
E-Mail: Carol.Medlin@gatesfoundation.org
Rose Nathan
Ifakara Health Institute
Dar es Salaam
Tanzania
E-Mail: rnathan@ihi.or.tz
M3 - presented at "African Development Successes", August 3-5, 2011
AB - HIV-prevention strategies have yielded only limited success so far in slowing down the AIDS epidemic. This paper examines novel intervention strategies that use incentives to discourage risky sexual behaviors. Widely-adopted conditional cash transfer programs that offer payments conditioning on easily monitored behaviors, such as well-child health care visits have shown positive impact on health outcomes. Similarly, contingency management approaches have successfully used outcome-based rewards to encourage behaviors that aren’t easily monitored, such as stopping drug abuse. These strategies have not been used in the sexual domain, so we assess how incentives can be used to reduce risky sexual behavior. After discussing theoretical pathways, we discuss the use of sexual-behavior incentives in the Tanzanian RESPECT trial. There, participants who tested negative for sexually transmitted infections are eligible for outcome-based cash rewards. The trial was well-received in the communities, with high enrollment rates and over 90% of participants viewing the incentives favorably. After one year, 57% of enrollees in the “low-value” reward arm stated that the cash rewards “very much” motivated sexual behavioral change, rising to 79% in the “high-value” reward arm. Despite its controversial nature, we argue for further testing of such incentive-based approaches to encouraging reductions in risky sexual behavior.
ER -
TY - JOUR
AU - Eaton,Jonathan
AU - Kortum,Samuel S.
AU - Sotelo,Sebastian
TI - International Trade: Linking Micro and Macro
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17864
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17864
L1 - http://www.nber.org/papers/w17864.pdf
N1 - Author contact info:
Jonathan Eaton
Department of Economics
Penn State University
608 Kern Graduate Building
University Park, PA 16802-3306
Tel: (814) 865 - 8871
Fax: (814) 863 - 4775
E-Mail: jxe22@psu.edu
Samuel S. Kortum
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-8251
Fax: 773/702-8490
E-Mail: kortum@uchicago.edu
Sebastian Sotelo
Sebastian Sotelo
Department of Economics
University of Chicago
1126 East 59th St.
Chicago, IL 60637
E-Mail: sotelo@uchicago.edu
AB - A recent literature has introduced heterogeneous firms into models of international trade. This literature has adopted the convention of treating individual firms as points on a continuum. While the continuum offers many advantages this convenience comes at some cost: (1) Shocks to individual firms can never have an aggregate effect. (2) It is hard to reconcile the small (sometimes zero) number of firms engaged in selling from one country to another with a continuum. (3) For such models to deliver finite solutions for aggregates, such as the price index, requires restrictions on parameter values that may not hold in the data. We show how a standard heterogeneous-firm trade model can be amended to allow for only an integer number of firms. The model overcomes the deficiencies of the continuum model enumerated above. Taking the model to aggregate data on bilateral trade in manufactures among 92 countries and to firm-level export data for a much narrower sample shows that it accounts for both the large share of a small number of firms in sales around the world and for zeros in bilateral trade data while maintaining the good fit of the standard gravity equation among country pairs with thick trade volumes. Randomness at the firm level adds substantially to aggregate variability.
ER -
TY - JOUR
AU - Lusardi,Annamaria
AU - Mitchell,Olivia S.
AU - Curto,Vilsa
TI - Financial Sophistication in the Older Population
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17863
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17863
L1 - http://www.nber.org/papers/w17863.pdf
N1 - Author contact info:
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
Vilsa Curto
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305
E-Mail: vcurto@stanford.edu
AB - This paper examines data on financial sophistication among the U.S. older population, using a special-purpose module implemented in the Health and Retirement Study. We show that financial sophistication is deficient for older respondents (aged 55+). Specifically, many in this group lack a basic grasp of asset pricing, risk diversification, portfolio choice, and investment fees. Subpopulations with particular deficits include women, the least educated, persons over the age of 75, and non-Whites. In view of the fact that people are increasingly being asked to take on responsibility for their own retirement security, such lack of knowledge can have serious implications.
ER -
TY - JOUR
AU - Trabandt,Mathias
AU - Uhlig,Harald
TI - How Do Laffer Curves Differ Across Countries?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17862
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17862
L1 - http://www.nber.org/papers/w17862.pdf
N1 - Author contact info:
Mathias Trabandt
Board of Governors of the Federal Reserve System
Division of International Finance
Trade and Financial Studies Section
20th Street and Constitution Avenue N.W.
Washington, D.C. 20551
Tel: +1-202-492-6999
E-Mail: mathias.trabandt@gmail.com
Harald Uhlig
Dept. of Economics
University of Chicago
1126 E 59th Street
Chicago, IL 60637
Tel: 773/702-3702
Fax: 773/702-8490
E-Mail: huhlig@uchicago.edu
M1 - published as Mathias Trabandt, Harald Uhlig. "How Do Laffer Curves Differ Across Countries?," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2012)
M3 - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB - We seek to understand how Laffer curves differ across countries in the US and the EU-14, thereby providing insights into fiscal limits for government spending and the service of sovereign debt. As an application, we analyze the consequences for the permanent sustainability of current debt levels, when interest rates are permanently increased e.g. due to default fears. We build on the analysis in Trabandt and Uhlig (2011) and extend it in several ways. To obtain a better fit to the data, we allow for monopolistic competition as well as partial taxation of pure profit income. We update the sample to 2010, thereby including recent increases in government spending and their fiscal consequences. We provide new tax rate data. We conduct an analysis for the pessimistic case that the recent fiscal shifts are permanent. We include a cross-country analysis on consumption taxes as well as a more detailed investigation of the inclusion of human capital considerations for labor taxation.
ER -
TY - JOUR
AU - Meer,Jonathan
AU - Rosen,Harvey S.
TI - Does Generosity Beget Generosity? Alumni Giving and Undergraduate Financial Aid
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17861
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17861
L1 - http://www.nber.org/papers/w17861.pdf
N1 - Author contact info:
Jonathan Meer
Department of Economics
Texas A&M University
College Station, TX 77843
E-Mail: jmeer@econmail.tamu.edu
Harvey S. Rosen
Department of Economics
Fisher Hall
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-4022
Fax: 609/258-6419
E-Mail: HSR@princeton.edu
AB - We investigate how undergraduates’ financial aid packages affect their subsequent donative behavior as alumni. The empirical work is based upon micro data on alumni giving at an anonymous research university. We focus on three types of financial aid, scholarships, loans, and campus jobs. A novel aspect of our modeling strategy is that, consistent with the view of some professional fundraisers, we allow the receipt of a given form of aid per se to affect alumni giving. At the same time, our model allows the amount of the support to affect giving behavior nonlinearly.
Our main findings are: 1) Individuals who took out student loans are less likely to make a gift, other things being the same. We conjecture that this phenomenon is caused by an “annoyance effect” — alumni resent the fact that they are burdened with loans. 2) Scholarship aid reduces the size of a gift, but has little effect on the probability of donating. The negative effect of receiving a scholarship on donations decreases in absolute value with the size of the scholarship. We do not find any evidence that scholarship recipients give less because they have relatively low incomes post graduation. 3) Aid in the form of campus jobs does not have a strong effect on donative behavior.
ER -
TY - JOUR
AU - Romer,Christina D.
AU - Romer,David H.
TI - The Incentive Effects of Marginal Tax Rates: Evidence from the Interwar Era
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17860
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17860
L1 - http://www.nber.org/papers/w17860.pdf
N1 - Author contact info:
Christina D. Romer
Department of Economics
University of California, Berkeley
Berkeley, CA 94720
Tel: 510/642-4317
Fax: 510/642-6615
E-Mail: cromer@econ.berkeley.edu
David H. Romer
Department of Economics
University of California, Berkeley
Berkeley, CA 94720-3880
E-Mail: dromer@econ.berkeley.edu
AB - This paper uses the interwar period in the United States as a laboratory for investigating the incentive effects of changes in marginal income tax rates. Marginal rates changed frequently and drastically in the 1920s and 1930s, and the changes varied greatly across income groups at the top of the income distribution. We examine the effect of these changes on taxable income using time-series/cross-section analysis of data on income and taxes by small slices of the income distribution. We find that the elasticity of taxable income to changes in the log after-tax share (one minus the marginal rate) is positive but small (approximately 0.2) and precisely estimated (a t-statistic over 6). The estimate is highly robust. We also examine the time-series response of available indicators of investment and entrepreneurial activity to changes in marginal rates. We find suggestive evidence of an impact on business formation, but no evidence of an important impact on other indicators.
ER -
TY - JOUR
AU - Jackson,C. Kirabo
TI - Do College-Prep Programs Improve Long-Term Outcomes?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17859
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17859
L1 - http://www.nber.org/papers/w17859.pdf
N1 - Author contact info:
C. Kirabo Jackson
Northwestern University
School of Education and Social Policy
2040 Sheridan Road
Evanston, IL 60208
Tel: 847/467-1803
E-Mail: kirabo-jackson@northwestern.edu
AB - I analyze the longer-run effects of a college-preparatory program implemented in inner-city schools that included payments to eleventh- and twelfth- grade students and their teachers for passing scores on Advanced Placement exams. Affected students attended college in greater numbers, were more likely to remain in college beyond their first year, more likely to earn a college degree, more likely to be employed, and earned higher wages. This is the first credible evidence that implementing college-preparatory programs in existing urban schools can improve both the long-run educational and labor market outcomes of disadvantaged students.
ER -
TY - JOUR
AU - Assunção,Juliano J.
AU - Benmelech,Efraim
AU - Silva,Fernando S. S.
TI - Repossession and the Democratization of Credit
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17858
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17858
L1 - http://www.nber.org/papers/w17858.pdf
N1 - Author contact info:
Juliano Assuncao
Catholic University of Rio de Janeiro (PUC-Rio)
Rua Marquês de São Vicente, 225
22451-900 Rio de Janeiro, RJ
Brazil
E-Mail: juliano@econ.puc-rio.br
Efraim Benmelech
Harvard University
Department of Economics
Littauer 233
Cambridge, MA 02138
Tel: 617/496-4787
Fax: 617/495-8570
E-Mail: effi_benmelech@harvard.edu
Fernando S. Silva
Catholic University of Rio de Janeiro (PUC-Rio)
Rua Marquês de São Vicente, 225
22451-900 Rio de Janeiro, RJ
Brazil
E-Mail: fernandosssilva@yahoo.com.br
AB - We exploit a 2004 credit reform in Brazil that simplified the sale of repossessed cars used as collateral for auto loans. We show that the change has led to larger loans with lower spreads and longer maturities. The reform expanded credit to riskier, low-income borrowers for newer, more expensive cars. Although the credit reform improved riskier borrowers’ access to credit, it also led to increased incidences of delinquency and default. Our results shed light on the consequences of a credit reform, highlighting the crucial role that collateral and repossession play in the liberalization and democratization of credit.
ER -
TY - JOUR
AU - McKnight,Robin
AU - Reuter,Jonathan
AU - Zitzewitz,Eric
TI - Insurance as Delegated Purchasing: Theory and Evidence from Health Care
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17857
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17857
L1 - http://www.nber.org/papers/w17857.pdf
N1 - Author contact info:
Robin McKnight
Department of Economics
Wellesley College
106 Central Street
Wellesley, MA 02481
Tel: 781/283-2153
E-Mail: rmcknigh@wellesley.edu
Jonathan Reuter
Carroll School of Management
Boston College
224B Fulton Hall
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-2863
Fax: 617/552-0431
E-Mail: reuterj@bc.edu
Eric Zitzewitz
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2891
Fax: 603/646-2122
E-Mail: eric.zitzewitz@dartmouth.edu
AB - Household demand for actuarially unfair insurance against small risks has long puzzled economists. One way to potentially rationalize this demand is to recognize that (non-life) insurance is an incentive-compatible means of engaging an expert buyer. To quantify the benefits of expert buying, we compare prices paid by the insured and uninsured for health care. In categories of health care where uncompensated care is more difficult to obtain (drugs, doctor office visits, and hospital outpatient visits), we find that insurers pay 10-20% less than the uninsured. For forms of care where payment by the uninsured is more likely to be negotiated after services are rendered (hospitalizations and emergency room visits) the uninsured pay about 30% less on average, due largely to the nontrivial share of uninsured who pay 5% or less of their billed charges. At least in settings where free services are difficult to obtain, expert buying is an important benefit of insurance. We discuss the implications of the delegated-purchasing view of insurance for con-sumer-driven health insurance and for self-insurance by employers.
ER -
TY - JOUR
AU - Lim,Jongha
AU - Minton,Bernadette A.
AU - Weisbach,Michael S.
TI - Equity-Holding Institutional Lenders: Do they Receive Better Terms?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17856
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17856
L1 - http://www.nber.org/papers/w17856.pdf
N1 - Author contact info:
Jongha Lim
Department of Finance
Trulaske College of Business School
University of Missouri
Columbia, MO 65211
E-Mail: limjong@missouri.edu
Bernadette Minton
Finance Department
Fisher College of Business
700 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210-1144
Tel: 614/292-5026
Fax: 614/292-2418
E-Mail: minton_15@fisher.osu.edu
Michael Weisbach
Department of Finance
Fisher College of Business
Ohio State University
2100 Neil Ave.
Columbus, OH 43210
Tel: 614/292-3264
E-Mail: weisbach.2@osu.edu
AB - The past decade has seen significant changes in the structure of the corporate lending market, with non-commercial bank institutional investors playing larger roles than they historically have played. In addition, non-commercial bank institutional lenders are often equity holders in their borrowing firms. In our sample of 11,137 tranches of institutional “leveraged” loans, 2,008 (18%) have a non-commercial bank institution that also owns at least 0.1% of the firm’s equity. Such “dual holder” loan tranches have higher spreads than otherwise similar loan tranches without equity holder participation. The dual holder premium is present for both revolver and term loans, and exists within all non-investment grade credit rating classes. Contrary to risk-based explanations of this finding, dual holder tranches are priced with premiums relative to other tranches of the same loan package. Dual holding premiums are higher when the equity-holder’s stake is larger, when the dual-holder’s share in the loan is larger, and when the equity holder is a hedge fund or a private equity fund. These premiums likely represent additional compensation to dual holders for providing capital to firms when the firms are having difficulty raising capital otherwise.
ER -
TY - JOUR
AU - Gneezy,Uri
AU - List,John
AU - Price,Michael K.
TI - Toward an Understanding of Why People Discriminate: Evidence from a Series of Natural Field Experiments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17855
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17855
L1 - http://www.nber.org/papers/w17855.pdf
N1 - Author contact info:
Uri Gneezy
Rady School of Management
University of California - San Diego
Otterson Hall, Room 4S136
9500 Gilman Drive #0553
La Jolla, CA 92093-0553
Tel: (858) 534-4312
Fax: (858) 534-0745
E-Mail: ugneezy@ucsd.edu
John List
Department of Economics
University of Chicago
1126 East 59th
Chicago, IL 60637
Tel: 301/405-1288
Fax: 301/314-9091
E-Mail: jlist@uchicago.edu
Michael Price
Department of Economics
University of Tennessee
515 Stokely Management Center
Knoxville, TN 27996
Tel: 865/974-5672
Fax: 865/974-4601
E-Mail: mprice21@utk.edu
AB - Social scientists have presented evidence that suggests discrimination is ubiquitous: women, nonwhites, and the elderly have been found to be the target of discriminatory behavior across several labor and product markets. Scholars have been less successful at pinpointing the underlying motives for such discriminatory patterns. We employ a series of field experiments across several market and agent types to examine the nature and extent of discrimination. Our exploration includes examining discrimination based on gender, age, sexual orientation, race, and disability. Using data from more than 3000 individual transactions, we find evidence of discrimination in each market. Interestingly, we find that when the discriminator believes the object of discrimination is controllable, any observed discrimination is motivated by animus. When the object of discrimination is not due to choice, the evidence suggests that statistical discrimination is the underlying reason for the disparate behavior.
ER -
TY - JOUR
AU - Giesecke,Kay
AU - Longstaff,Francis A.
AU - Schaefer,Stephen
AU - Strebulaev,Ilya
TI - Macroeconomic Effects of Corporate Default Crises: A Long-Term Perspective
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17854
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17854
L1 - http://www.nber.org/papers/w17854.pdf
N1 - Author contact info:
Kay Giesecke
Stanford University
E-Mail: giesecke@stanford.edu
Francis Longstaff
UCLA
Anderson Graduate School of Management
110 Westwood Plaza, Box 951481
Los Angeles, CA 90095-1481
Tel: 310/825-2218
Fax: 310/206-5455
E-Mail: francis.longstaff@anderson.ucla.edu
Stephen Schaefer
London Business School
Regents Park
London, NW14SA
United Kingdom
E-Mail: sschaefer@london.edu
Ilya A. Strebulaev
Graduate School of Business
Stanford University
655 Knight Way
Stanford, CA 94305
Tel: 650/725-8239
Fax: 650/725-7979
E-Mail: istrebulaev@stanford.edu
AB - Using an extensive new data set on corporate bond defaults in the U.S. from 1866 to 2010, we study the macroeconomic effects of bond market crises and contrast them with those resulting from banking crises. During the past 150 years, the U.S. has experienced many severe corporate default crises in which 20 to 50 percent of all corporate bonds defaulted. Although the total par amount of corporate bonds has often rivaled the amount of bank loans outstanding, we find that corporate default crises have far fewer real effects than do banking crises. These results provide empirical support for current theories that emphasize the unique role that banks and the credit and collateral channels play in amplifying macroeconomic shocks.
ER -
TY - JOUR
AU - Foster,Lucia
AU - Haltiwanger,John C.
AU - Syverson,Chad
TI - The Slow Growth of New Plants: Learning about Demand?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17853
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17853
L1 - http://www.nber.org/papers/w17853.pdf
N1 - Author contact info:
Lucia Foster
Center for Economic Studies
Census Bureau
Room 211/WP11
Washington, DC 20233-6300
Tel: 301-763-6444
Fax: Senior Economist
E-Mail: lucia.s.foster@census.gov
John C. Haltiwanger
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3504
Fax: 301/405-3542
E-Mail: haltiwan@econ.umd.edu
Chad Syverson
University of Chicago
Booth School of Business
5807 S. Woodlawn Ave.
Chicago, IL 60637
Tel: 773/702-7815
Fax: 773/702-8490
E-Mail: chad.syverson@chicagobooth.edu
AB - It is well known that new businesses are typically much smaller than their established industry competitors, and that this size gap closes slowly. We show that even in commodity-like product markets, these patterns do not reflect productivity gaps, but rather differences in demand-side fundamentals. We document and explore patterns in plants’ idiosyncratic demand levels by estimating a dynamic model of plant expansion in the presence of a demand accumulation process (e.g., building a customer base). We find active accumulation driven by plants’ past production decisions quantitatively dominates passive demand accumulation, and that within-firm spillovers affect demand levels but not growth.
ER -
TY - JOUR
AU - Chaudhary,Latika
AU - Musacchio,Aldo
AU - Nafziger,Steven
AU - Yan,Se
TI - Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17852
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17852
L1 - http://www.nber.org/papers/w17852.pdf
N1 - Author contact info:
Latika Chaudhary
1030 Columbia Avenue, #4072
Claremont, CA 91711
Tel: 909-607-0078
E-Mail: latika.chaudhary@scrippscollege.edu
Aldo Musacchio
Harvard Business School
Morgan Hall 279
Soldiers Field
Boston, MA 02163
Tel: 617/496-0995
E-Mail: amusacchio@hbs.edu
Steven Nafziger
Department of Economics, Williams College
Shapiro Hall, 24 Hopkins Hall Dr.
Williamstown, MA 01267
E-Mail: steven.nafziger@williams.edu
Se Yan
Department of Applied Economics
Guanghua School of Management
Peking University
Beijing 100871, China
E-Mail: seyan@gsm.pku.edu.cn
AB - Our paper provides a comparative perspective on the development of public primary education in four of the largest developing economies circa 1910: Brazil, Russia, India and China (BRIC). These four countries encompassed more than 50 percent of the world’s population in 1910, but remarkably few of their citizens attended any school by the early 20th century. We present new, comparable data on school inputs and outputs for BRIC drawn from contemporary surveys and government documents. Recent studies emphasize the importance of political decentralization, and relatively broad political voice for the early spread of public primary education in developed economies. We identify the former and the lack of the latter to be important in the context of BRIC, but we also outline how other factors such as factor endowments, colonialism, serfdom, and, especially, the characteristics of the political and economic elite help explain the low achievement levels of these four countries and the incredible amount of heterogeneity within each of them.
ER -
TY - JOUR
AU - Dupas,Pascaline
AU - Green,Sarah
AU - Keats,Anthony
AU - Robinson,Jonathan
TI - Challenges in Banking the Rural Poor: Evidence from Kenya's Western Province
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17851
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17851
L1 - http://www.nber.org/papers/w17851.pdf
N1 - Author contact info:
Pascaline Dupas
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
E-Mail: pdupas@stanford.edu
Sarah Green
Innovations for Poverty Action
101 Whitney Ave
New Haven, CT 06510
E-Mail: sgreen@poverty-action.org
Anthony Keats
Department of Economics
University of California, Los Angeles
8283 Bunche Hall
Los Angeles, CA 90095
E-Mail: akeats@ucla.edu
Jonathan Robinson
Department of Economics
University of California, Santa Cruz
457 Engineering 2
Santa Cruz, CA 95064
E-Mail: jmrtwo@ucsc.edu
M3 - presented at "African Development Successes", August 3-5, 2011
AB - Most people in rural Africa do not have bank accounts. In this paper, we combine experimental and survey evidence from Western Kenya to document some of the supply and demand factors behind such low levels of financial inclusion. Our experiment had two parts. In the first part, we waived the fixed cost of opening a basic savings account at a local bank for a random subset of individuals who were initially unbanked. While 63% of people opened an account, only 18% actively used it. Survey evidence suggests that the main reasons people did not begin saving in their bank accounts are that: (1) they do not trust the bank, (2) service is unreliable, and (3) withdrawal fees are prohibitively expensive. In the second part of the experiment, we provided information on local credit options and lowered the eligibility requirements for an initial small loan. Within the following 6 months, only 3% of people initiated the loan application process. Survey evidence suggests that people do not borrow because they do not want to risk losing their collateral. These results suggest that, while simply expanding access to banking services (for instance by lowering account opening fees) will benefit a minority, broader success may be unobtainable unless the quality of services is simultaneously improved. There are also challenges on the demand side, however. More work needs to be done to understand what savings and credit products are best suited for the majority of rural households.
ER -
TY - JOUR
AU - Bloom,Nicholas
AU - Genakos,Christos
AU - Sadun,Raffaella
AU - Reenen,John Van
TI - Management Practices Across Firms and Countries
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17850
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17850
L1 - http://www.nber.org/papers/w17850.pdf
N1 - Author contact info:
Nicholas Bloom
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/725-3266
Fax: 650/725-5702
E-Mail: nbloom@stanford.edu
Christos Genakos
Department of Economics
Athens University of Economics and Business
76 Patission Str.
Athens, 10434
GREECE
Tel: (+30) 210 8203 353
E-Mail: cgenakos@aueb.gr
Raffaella Sadun
Harvard Business School
Morgan Hall 219
Soldiers Field
Boston, MA 02163
Tel: 617/495-6190
Fax: 617/495-0355
E-Mail: rsadun@hbs.edu
John Van Reenen
Department of Economics
London School of Economics
Centre for Economic Performance
Houghton Street
London WC2A 2AE
UNITED KINGDOM
Tel: 00 44 207/955-6976
Fax: 00 44 207/955-6848
E-Mail: j.vanreenen@lse.ac.uk
AB - For the last decade we have been using double-blind survey techniques and randomized sampling to construct management data on over 10,000 organizations across twenty countries. On average, we find that in manufacturing American, Japanese, and German firms are the best managed. Firms in developing countries, such as Brazil, China and India tend to be poorly managed. American retail firms and hospitals are also well managed by international standards, although American schools are worse managed than those in several other developed countries. We also find substantial variation in management practices across organizations in every country and every sector, mirroring the heterogeneity in the spread of performance in these sectors. One factor linked to this variation is ownership. Government, family, and founder owned firms are usually poorly managed, while multinational, dispersed shareholder and private-equity owned firms are typically well managed. Stronger product market competition and higher worker skills are associated with better management practices. Less regulated labor markets are associated with improvements in incentive management practices such as performance based promotion.
ER -
TY - JOUR
AU - Ferson,Wayne E.
AU - Nallareddy,Suresh K.
AU - Xie,Biqin
TI - The "Out of Sample" Performance of Long-run Risk Models
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17848
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17848
L1 - http://www.nber.org/papers/w17848.pdf
N1 - Author contact info:
Wayne E. Ferson
Department of Finance
and Business Economics
University of Southern California
3670 Trousdale Parkway Suite 308
Los Angeles, CA 90089-0804
Tel: 213/740-5615
Fax: 213/740-6650
E-Mail: ferson@marshall.usc.edu
Suresh K. Nallareddy
School of Accounting
University of Southern California
3670 Trousdale Parkway Suite 308
Los Angeles, CA 90089-0804TER
E-Mail: suresh.nallareddy.2011@marshall.usc.edu
Biqin Xie
Leventhal School of Accounting
University of Southern California
3670 Trousdale Avenue, Los Angeles CA 90089
E-Mail: biqinxie@usc.edu
AB - This paper studies the ability of long-run risk models to explain out-of-sample asset returns during 1931-2009. The long-run risk models perform relatively well on the momentum effect. A cointegrated version of the model outperforms the classical, stationary version. Both the long-run and the short run consumption shocks in the models are empirically important for the models’ performance. The models’ average pricing errors are especially small in the decades from the 1950s to the 1990s. When we restrict the risk premiums to identify structural parameters, this results in larger average pricing errors but often smaller error variances. The mean squared errors are not substantially better than those of the classical CAPM, except for Momentum.
ER -
TY - JOUR
AU - Casella,Alessandra
AU - Palfrey,Thomas
AU - Turban,Sébastien
TI - Vote Trading With and Without Party Leaders
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17847
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17847
L1 - http://www.nber.org/papers/w17847.pdf
N1 - Author contact info:
Alessandra Casella
Department of Economics
Columbia University
420 West 118 Street
New York, NY 10027
Tel: 212/854-2459
Fax: 212/854-8059
E-Mail: ac186@columbia.edu
Thomas Palfrey
Division of the Humanities and Social Sciences
Mail Code 228-77
California Institute of Technology
Pasadena, CA 91125
E-Mail: trp@hss.caltech.edu
Sebastien Turban
Department of Economics
Columbia University
420 West 118 Street
New York NY 10027
E-Mail: st2511@columbia.edu
AB - Two groups of voters of known sizes disagree over a single binary decision to be taken by simple majority. Individuals have different, privately observed intensities of preferences and before voting can buy or sell votes among themselves for money. We study the implication of such trading for outcomes and welfare when trades are coordinated by the two group leaders and when they take place anonymously in a competitive market. The theory has strong predictions. In both cases, trading falls short of full efficiency, but for opposite reasons: with group leaders, the minority wins too rarely; with market trades, the minority wins too often. As a result, with group leaders, vote trading improves over no-trade; with market trades, vote trading can be welfare reducing. All predictions are strongly supported by experimental results.
ER -
TY - JOUR
AU - Guadalupe,Maria
AU - Li,Hongyi
AU - Wulf,Julie
TI - Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17846
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17846
L1 - http://www.nber.org/papers/w17846.pdf
N1 - Author contact info:
Maria Guadalupe
Graduate School of Business
Columbia University
3022 Broadway, Uris Hall 624
New York, NY 10027
Tel: 212/854-6176
E-Mail: mg2341@columbia.edu
Hongyi Li
MIT Sloan School of Management
100 Main Street, E62-513
Cambridge, MA 02142
E-Mail: hongyili@mit.edu
Julie Wulf
Harvard Business School
Soldiers Field
Boston, MA 02163
Tel: 617/495-8542
Fax: 617/496-5859
E-Mail: jwulf@hbs.edu
AB - This paper shows that top management structures in large US firms radically changed since the mid-1980s. While the number of managers reporting directly to the CEO doubled, the growth was driven primarily by functional managers rather than general managers. Using panel data on senior management positions, we explore the relationship between changes in executive team composition, firm diversification, and IT investments—which arguably alter returns to exploiting synergies through corporate-wide coordination by functional managers in headquarters. We find that the number of functional managers closer to the product (“product” functions i.e., marketing, R&D) increase as firms focus their businesses, while the number of functional managers farther from the product (“administrative” functions i.e., finance, law, HR) increase with IT investments. Finally, we show that general manager pay decreases as functional managers join the executive team suggesting a shift in activities from general to functional managers—a phenomenon we term “functional centralization.”
ER -
TY - JOUR
AU - Chan,Gabriel
AU - Stavins,Robert
AU - Stowe,Robert
AU - Sweeney,Richard
TI - The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17845
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17845
L1 - http://www.nber.org/papers/w17845.pdf
N1 - Author contact info:
Gabriel Chan
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-496-0739
Fax: 617-496-8753
E-Mail: gabe_chan@hksphd.harvard.edu
Robert Stavins
JFK School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1820
Fax: 617/496-3783
E-Mail: robert_stavins@harvard.edu
Robert Stowe
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-496-4265
E-Mail: robert_stowe@harvard.edu
Richard Sweeney
Harvard Kennedy School
E-Mail: rich_sweeney@hksphd.harvard.edu
AB - The introduction of the U.S. SO2 allowance-trading program to address the threat of acid rain as part of the Clean Air Act Amendments of 1990 is a landmark event in the history of environmental regulation. The program was a great success by almost all measures. This paper, which draws upon a research workshop and a policy roundtable held at Harvard in May 2011, investigates critically the design, enactment, implementation, performance, and implications of this path-breaking application of economic thinking to environmental regulation. Ironically, cap and trade seems especially well suited to addressing the problem of climate change, in that emitted greenhouse gases are evenly distributed throughout the world’s atmosphere. Recent hostility toward cap and trade in debates about U.S. climate legislation may reflect the broader political environment of the climate debate more than the substantive merits of market-based regulation.
ER -
TY - JOUR
AU - Bi,Huixin
AU - Leeper,Eric M.
AU - Leith,Campbell B.
TI - Uncertain Fiscal Consolidations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17844
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17844
L1 - http://www.nber.org/papers/w17844.pdf
N1 - Author contact info:
Huixin Bi
Bank of Canada
234 Wellington Street
Ottawa
Ontario K1A0G9
Canada
E-Mail: bihu@bankofcanada.ca
Eric M. Leeper
Department of Economics
304 Wylie Hall
Indiana University
Bloomington, IN 47405
Tel: 812/855-9157
Fax: NA
E-Mail: eleeper@indiana.edu
Campbell B. Leith
Department of Economics
University of Glasgow
Glasgow, G12 8QQ, Scotland
E-Mail: campbell.leith@glasgow.ac.uk
AB - The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition are uncertain. Drawing on the evidence in Alesina and Ardagna (2010), we emphasize whether or not the fiscal consolidation is driven by tax rises or expenditure cuts. We find that the composition of the fiscal consolidation, its duration, the monetary policy stance, the level of government debt and expectations over the likelihood and composition of fiscal consolidations all matter in determining the extent to which a given consolidation is expansionary and/or successful in stabilizing government debt.
ER -
TY - JOUR
AU - Choi,James J.
AU - Haisley,Emily
AU - Kurkoski,Jennifer
AU - Massey,Cade
TI - Small Cues Change Savings Choices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17843
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17843
L1 - http://www.nber.org/papers/w17843.pdf
N1 - Author contact info:
James J. Choi
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
E-Mail: james.choi@yale.edu
Emily Haisley
Barclays Bank PLC
1 Churchill Place
London, E14 5HP
United Kingdom
E-Mail: Emily.Haisley@barclayswealth.com
Jennifer Kurkoski
Google, Inc.
76 Ninth Avenue
4th Floor
New York, NY 10011
E-Mail: kurkoski@google.com
Cade Massey
Yale School of Management
135 Prospect Street
Box 208200
New Haven, CT 06520-8200
E-Mail: cade.massey@yale.edu
AB - In randomized field experiments, we embedded one- to two-sentence anchoring, goal-setting, or savings threshold cues in emails to employees about their 401(k) savings plan. We find that anchors increase or decrease 401(k) contribution rates by up to 1.4% of income. A high savings goal example raises contribution rates by up to 2.2% of income. Highlighting a higher savings threshold in the match incentive structure raises contributions by up to 1.5% of income relative to highlighting the lower threshold. Highlighting the maximum possible contribution rate raises contribution rates by up to 2.9% of income among low savers.
ER -
TY - JOUR
AU - Criscuolo,Chiara
AU - Martin,Ralf
AU - Overman,Henry
AU - Reenen,John Van
TI - The Causal Effects of an Industrial Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17842
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17842
L1 - http://www.nber.org/papers/w17842.pdf
N1 - Author contact info:
Chiara Criscuolo
Centre for Economic Performance
London School of Economics
Houghton Street
London
WC2A 2AE
United Kingdom
Tel: 004420 7955 6973
E-Mail: chiara.criscuolo@oecd.org
Ralf Martin
Imperial College Business School
London SW7 2AZ, UK
E-Mail: R.Martin@lse.ac.uk
Henry Overman
London School of Economics
Houghton Street
London WC2A 2AE UK
E-Mail: h.g.overman@lse.ac.uk
John Van Reenen
Department of Economics
London School of Economics
Centre for Economic Performance
Houghton Street
London WC2A 2AE
UNITED KINGDOM
Tel: 00 44 207/955-6976
Fax: 00 44 207/955-6848
E-Mail: j.vanreenen@lse.ac.uk
AB - Business support policies designed to raise productivity and employment are common worldwide, but rigorous micro-econometric evaluation of their causal effects is rare. We exploit multiple changes in the area-specific eligibility criteria for a major program to support manufacturing jobs (“Regional Selective Assistance”). Area eligibility is governed by pan-European state aid rules which change every seven years and we use these rule changes to construct instrumental variables for program participation. We match two decades of UK panel data on the population of firms to all program participants. IV estimates find positive program treatment effect on employment, investment and net entry but not on TFP. OLS underestimates program effects because the policy targets underperforming plants and areas. The treatment effect is confined to smaller firms with no effect for larger firms (e.g. over 150 employees). We also find the policy raises area level manufacturing employment mainly through significantly reducing unemployment. The positive program effect is not due to substitution between plants in the same area or between eligible and ineligible areas nearby. We estimate that “cost per job” of the program was only $6,300 suggesting that in some respects investment subsidies can be cost effective.
ER -
TY - JOUR
AU - Hallegatte,Stéphane
AU - Heal,Geoffrey
AU - Fay,Marianne
AU - Treguer,David
TI - From Growth to Green Growth - a Framework
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17841
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17841
L1 - http://www.nber.org/papers/w17841.pdf
N1 - Author contact info:
Stephane Hallegatte
CIRED
45 bis, Avenue de la Belle Gabrielle
94736 Nogent-sur-Marne FRANCE
E-Mail: hallegatte@centre-cired.fr
Geoffrey Heal
Graduate School of Business
616 Uris Hall
Columbia University
New York, NY 10027-6902
Tel: 212/854-6459
Fax: 212/316-9219
E-Mail: gmh1@columbia.edu
Marianne Fay
Chief Economist, Sustainable Development Program
The World Bank 1818 H St NW
Washington DC 20433
E-Mail: mfay@worldbank.org
David Treguer
Sustainable Development Network
The World Bank 1818 H St NW
Washington DC 20433
E-Mail: dtreguer@worldbank.org
AB - Green growth is about making growth resource-efficient, cleaner and more resilient without slowing it. This paper aims at clarifying this in an analytical framework and proposing foundations for green growth. This framework identifies channels through which green policies can potentially contribute to economic growth. Finally, the paper discusses the policies that can be implemented to capture co-benefits and environmental benefits. Since green growth policies pursue a variety of goals, they are best served by a combination of instruments: price-based policies are important but are only one component in a policy tool-box that can also include norms and regulation, public production and direct investment, information creation and dissemination, education and moral suasion, or industrial and innovation policies.
ER -
TY - JOUR
AU - Krishna,Pravin
TI - Preferential Trade Agreements and the World Trade System: A Multilateralist View
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17840
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17840
L1 - http://www.nber.org/papers/w17840.pdf
N1 - Author contact info:
Pravin Krishna
Johns Hopkins University
1740 Massachusetts Avenue, NW
Washington, DC 20036
Tel: 202/663 5733
Fax: 202/663 7718
E-Mail: Pravin_Krishna@jhu.edu
M3 - presented at "Globalization in an Age of Crisis", September 14-16, 2011
AB - This paper reviews recent developments in international trade to evaluate several arguments concerning the merits of preferential trade agreements (PTAs) and their place in the world trade system. Taking a multilateralist perspective, it makes several points: First, despite the proliferation of PTAs in recent years, the actual amount of liberalization that has been achieved through PTAs is actually quite limited. Second, at least a few studies point to significant trade diversion in the context of particular PTAs and thus serve as a cautionary note against casual dismissals of trade diversion as a merely theoretical concern. Equally, adverse effects on the terms-of-trade of non-member countries have also been found in the literature. Third, while the literature has found mixed results on the question of whether tariff preferences help or hurt multilateral liberalization, the picture is different with the more elastic tools of trade policy, such as antidumping duties (ADs); the use of ADs against non-members appears to have dramatically increased while the use of ADs against partner countries within PTAs has fallen. Fourth, despite the rapid expansion of preferences in trade, intra-PTA trade shares are relatively small for most PTAs; multilateral remain relevant to most member countries of the WTO.
ER -
TY - JOUR
AU - Ammer,John
AU - Holland,Sara B.
AU - Smith,David C.
AU - Warnock,Francis E.
TI - U.S. International Equity Investment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17839
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17839
L1 - http://www.nber.org/papers/w17839.pdf
N1 - Author contact info:
John Ammer
International Finance Division
Board of Governors of the Federal Reserve System
Washington DC 20551
E-Mail: john.ammer@frb.gov
Sara Holland
University of Georgia
Terry College of Business
E-Mail: sbh@uga.edu
David C. Smith
McIntire School of Commerce
University of Virginia
Charlottesville, VA 22903
Tel: 434/243-2272
E-Mail: dcs8f@comm.virginia.edu
Francis E. Warnock
Darden Business School
University of Virginia
Charlottesville, VA 22906-6550
Tel: 434/924-6076
Fax: 434/243-8945
E-Mail: warnockf@darden.virginia.edu
AB - U.S. investors are the largest group of international equity investors in the world, but to date conclusive evidence on which types of foreign firms are able to attract U.S. investment is not available. Using a comprehensive dataset of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. We also show that our firm-level analysis has implications for country-level studies, suggesting that research investigating equity investment patterns at the country-level should include cross-listing as an endogenous control variable. We describe easy-to-implement methods for including the importance of cross-listing at the country level.
ER -
TY - JOUR
AU - Acharya,Viral V.
AU - Mora,Nada
TI - Are Banks Passive Liquidity Backstops? Deposit Rates and Flows during the 2007-2009 Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17838
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17838
L1 - http://www.nber.org/papers/w17838.pdf
N1 - Author contact info:
Viral V. Acharya
Stern School of Business
New York University
44 West 4th Street, Suite 9-84
New York, NY 10012
Tel: 212/998-0354
Fax: 212 995 4233
E-Mail: vacharya@stern.nyu.edu
Nada Mora
Federal Reserve Bank of Kansas City
E-Mail: nada.mora@kc.frb.org
AB - Can banks maintain their advantage as liquidity providers when they are heavily exposed to a financial crisis? The standard argument - that banks can - hinges on deposit inflows that are seeking a safe haven and provide banks with a natural hedge to fund drawn credit lines and other commitments. We shed new light on this issue by studying the behavior of bank deposit rates and inflows during the 2007-09 crisis. Our results indicate that the role of the banking system as a stabilizing liquidity insurer is not one of the passive recipient, but of an active seeker, of deposits. We find that banks facing a funding squeeze sought to attract deposits by offering higher rates. Banks offering higher rates were also those most exposed to liquidity demand shocks (as measured by their unused commitments, wholesale funding dependence, and limited liquid assets), as well as with fundamentally weak balance-sheets (as measured by their non-performing loans or by subsequent failure). Such rate increases have a competitive effect in that they lead other banks to offer higher rates as well. Overall, the results present a nuanced view of deposit rates and flows to banks in a crisis, one that reflects banks not just as safety havens but also as stressed entities scrambling for deposits.
ER -
TY - JOUR
AU - Giavazzi,Francesco
AU - McMahon,Michael
TI - The Households Effects of Government Consumption
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17837
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17837
L1 - http://www.nber.org/papers/w17837.pdf
N1 - Author contact info:
Francesco Giavazzi
Universita' Bocconi and IGIER
Via Guglielmo Rontgen, 1
Milan 20136
ITALY
Tel: 0039-02-5836-3304
Fax: 0039-02-5836-3302
E-Mail: francesco.giavazzi@unibocconi.it
Michael McMahon
Department of Economics
University of Warwick
Coventry
CV4 7AL
UK
E-Mail: m.mcmahon@warwick.ac.uk
M3 - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB - This paper provides new evidence on the effects of fiscal policy by studying, using household-level data, how households respond to shifts in government spending. Our identification strategy allows us to control for time-specific aggregate effects, such as the stance of monetary policy or the U.S.-wide business cycle. However, it potentially prevents us from estimating the wealth effects associated with a shift in spending. We find significant heterogeneity in households' response to a spending shock; the effects appear vary over time depending, among other factors, on the state of business cycle and, at a lower frequency, on the composition of employment (such as the share of workers in part-time jobs). Shifts in spending could also have important distributional effects that are lost when estimating an aggregate multiplier. Heads of households working relatively few (weekly) hours, for instance, suffer from a spending shock of the type we analyzed: their consumption falls, their hours increase and their real wages fall.
ER -
TY - JOUR
AU - Ball,Laurence M.
TI - Ben Bernanke and the Zero Bound
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17836
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17836
L1 - http://www.nber.org/papers/w17836.pdf
N1 - Author contact info:
Laurence M. Ball
Department of Economics
Johns Hopkins University
Baltimore, MD 21218
Tel: 410/516-7605
Fax: 410/516-7600
E-Mail: lball@jhu.edu
AB - From 2000 to 2003, when Ben Bernanke was a professor and then a Fed Governor, he wrote extensively about monetary policy at the zero bound on interest rates. He advocated aggressive stimulus policies, such as a money-financed tax cut and an inflation target of 3-4%. Yet, since U.S. interest rates hit zero in 2008, the Fed under Chairman Bernanke has taken more cautious actions. This paper asks when and why Bernanke changed his mind about zero-bound policy. The answer, at one level, is that he was influenced by analysis from the Fed staff that was presented at the FOMC meeting of June 2003. This answer raises another question: why did the staff's views influence Bernanke so strongly? I seek answers to this question in the social psychology literature on group decision-making.
ER -
TY - JOUR
AU - Anderson,James E.
AU - Yotov,Yoto V.
TI - Gold Standard Gravity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17835
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17835
L1 - http://www.nber.org/papers/w17835.pdf
N1 - Author contact info:
James E. Anderson
Department of Economics
Boston College
Chestnut Hill, MA 02467
Tel: 617/552-3691
Fax: 617/552-2308
E-Mail: james.anderson.1@bc.edu
Yoto V. Yotov
Drexel University
LeBow College of Business
Department of Economics and International Business
Matheson Hall, Suite 503-C
Philadelphia, PA 19104
E-Mail: yotov@drexel.edu
AB - This paper provides striking confirmation of the restrictions of the structural gravity model of trade. Structural forces predicted by theory explain 95% of the variation of the fixed effects used to control for them in the recent gravity literature, fixed effects that in principle could reflect other forces. This validation opens avenues to inferring unobserved sectoral activity and multilateral resistance variables by equating fixed effects with structural gravity counterparts. Our findings also provide important validation of a host of general equilibrium comparative static exercises based on the structural gravity model.
ER -
TY - JOUR
AU - Dynarski,Susan
AU - Wiederspan,Mark
TI - Student Aid Simplification: Looking Back and Looking Ahead
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17834
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17834
L1 - http://www.nber.org/papers/w17834.pdf
N1 - Author contact info:
Susan Dynarski
University of Michigan
Weill Hall
735 South State Street
Ann Arbor, MI 48109-3091
Tel: 734 615 5113
Fax: NA
E-Mail: dynarski@umich.edu
Mark Wiederspan
University of Michigan
School of Education
610 East University Avenue
Ann Arbor, Michigan 48109-1259
E-Mail: mwieders@umich.edu
AB - Each year, fourteen million households seeking federal aid for college complete a detailed questionnaire about their finances, the Free Application for Federal Student Aid (FAFSA). At 116 questions, the FAFSA is almost as long as IRS Form 1040 and substantially longer than Forms 1040EZ and 1040A. Aid for college is intended to increase college attendance by reducing its price and loosening liquidity constraints. Economic theory, empirical evidence and common sense suggest that complexity in aid could undermine its ability to affect schooling decisions. In 2006, Dynarski and Scott-Clayton published an analysis of complexity in the aid system that generated considerable discussion in academic and policy circles. Over the next few years, complexity in the aid system drew the attention of the media, advocacy groups, presidential candidates, the National Economic Council and the Council of Economic Advisers. A flurry of legislative and agency activity followed. In this article, we provide a five-year retrospective of what has changed in the aid application process, what has not, and the possibilities for future reform.
ER -
TY - JOUR
AU - Caselli,Francesco
AU - Cunningham,Thomas E.
AU - Morelli,Massimo
AU - Barreda,Inés Moreno de
TI - Signalling, Incumbency Advantage, and Optimal Reelection Thresholds
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17833
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17833
L1 - http://www.nber.org/papers/w17833.pdf
N1 - Author contact info:
Francesco Caselli
Department of Economics
London School of Economics
Houghton Street
London WC2A 2AE
UNITED KINGDOM
Tel: (44) (0) 2079557498
E-Mail: f.caselli@lse.ac.uk
Thomas E. Cunningham
Harvard University
E-Mail: t.e.cunningham@lse.ac.uk
Massimo Morelli
Columbia University
E-Mail: mm3331@columbia.edu
Ines Moreno de Barreda
Oxford University
E-Mail: ines.morenodebarreda@economics.ox.ac.uk
AB - Much literature on political behavior treats politicians as motivated by reelection, choosing actions to signal their types to voters. We identify two novel implications of models in which signalling incentives are important. First, because incumbents only care about clearing a reelection hurdle, signals will tend to cluster just above the threshold needed for reelection. This generates a skew distribution of signals leading to an incumbency advantage in the probability of election. Second, voters can exploit the signalling behavior of politicians by precommitting to a higher threshold for signals received. Raising the threshold discourages signalling effort by low quality politicians but encourages effort by high quality politicians, thus increasing the separation of signals and improving the selection function of an election. This precommitment has a simple institutional interpretation as a supermajority rule, requiring that incumbents exceed some fraction of votes greater than 50% to be reelected.
ER -
TY - JOUR
AU - Adelino,Manuel
AU - Schoar,Antoinette
AU - Severino,Felipe
TI - Credit Supply and House Prices: Evidence from Mortgage Market Segmentation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17832
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17832
L1 - http://www.nber.org/papers/w17832.pdf
N1 - Author contact info:
Manuel Adelino
Tuck School of Business at Dartmouth
100 Tuck Hall
Hanover, NH 03755
Tel: 857-383-1027
E-Mail: manuel.adelino@tuck.dartmouth.edu
Antoinette Schoar
MIT Sloan School of Management
100 Main Street, E62-638
Cambridge, MA 02142
Tel: 617/253-3763
Fax: 617/258-6855
E-Mail: aschoar@mit.edu
Felipe Severino
MIT Sloan School of Management
100 Main Street, E62-678
Cambridge, MA 02142
E-Mail: fseverin@mit.edu
AB - We show that easier access to credit significantly increases house prices by using exogenous changes in the conforming loan limit as an instrument for lower cost of financing and higher supply. Houses that become eligible for financing with a conforming loan show an increase in house values of 1.1 dollars per square foot (for an average price per square foot of 224 dollars) and higher overall house prices controlling for a rich set of house characteristics. These coefficients are consistent with a local elasticity of house prices to interest rates below 10. In addition, loan to value ratios around the conforming loan limit deviate significantly from the common 80 percent norm, which confirms that it is an important factor in the financing choices of home buyers. In line with our interpretation, the results are stronger in the first half of our sample (1998-2001) when the conforming loan limit was more important, given that other forms of financing were less common and substantially more expensive.
ER -
TY - JOUR
AU - Mian,Atif R.
AU - Sufi,Amir
AU - Trebbi,Francesco
TI - Resolving Debt Overhang: Political Constraints in the Aftermath of Financial Crises
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17831
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17831
L1 - http://www.nber.org/papers/w17831.pdf
N1 - Author contact info:
Atif R. Mian
University of California, Berkeley
Haas School of Business
545 Student Services
Berkeley, CA 94720
Tel: 510/643-1425
Fax: 510/643-1425
E-Mail: atif@haas.berkeley.edu
Amir Sufi
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-6148
Fax: 773/702-0458
E-Mail: amir.sufi@chicagobooth.edu
Francesco Trebbi
University of British Columbia
1873 East Mall
Vancouver, BC, V6T1Z1
Canada
Tel: 604.218.5900
Fax: 604.822.5915
E-Mail: ftrebbi@mail.ubc.ca
AB - Debtors bear the brunt of a decline in asset prices associated with financial crises and policies aimed at partial debt relief may be warranted to boost growth in the midst of crises. Drawing on the US experience during the Great Recession of 2008-09 and historical evidence in a large panel of countries, we explore why the political system may fail to deliver such policies. We find that during the Great Recession creditors were able to use the political system more effectively to protect their interests through bailouts. More generally we show that politically countries become more polarized and fractionalized following financial crises. This results in legislative stalemate, making it less likely that crises lead to meaningful macroeconomic reforms.
ER -
TY - JOUR
AU - Mian,Atif R.
AU - Sufi,Amir
TI - What explains high unemployment? The aggregate demand channel
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17830
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17830
L1 - http://www.nber.org/papers/w17830.pdf
N1 - Author contact info:
Atif R. Mian
University of California, Berkeley
Haas School of Business
545 Student Services
Berkeley, CA 94720
Tel: 510/643-1425
Fax: 510/643-1425
E-Mail: atif@haas.berkeley.edu
Amir Sufi
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-6148
Fax: 773/702-0458
E-Mail: amir.sufi@chicagobooth.edu
AB - A drop in aggregate demand driven by shocks to household balance sheets is responsible for a large fraction of the decline in U.S. employment from 2007 to 2009. The aggregate demand channel for unemployment predicts that employment losses in the non-tradable sector are higher in high leverage U.S. counties that were most severely impacted by the balance sheet shock, while losses in the tradable sector are distributed uniformly across all counties. We find exactly this pattern from 2007 to 2009. Alternative hypotheses for job losses based on uncertainty shocks or structural unemployment related to construction do not explain our results. Using the relation between non-tradable sector job losses and demand shocks and assuming Cobb-Douglas preferences over tradable and non-tradable goods, we quantify the effect of aggregate demand channel on total employment. Our estimates suggest that the decline in aggregate demand driven by household balance sheet shocks accounts for almost 4 million of the lost jobs from 2007 to 2009, or 65% of the lost jobs in our data.
ER -
TY - JOUR
AU - Zinman,Jonathan
AU - Zitzewitz,Eric
TI - Wintertime for Deceptive Advertising?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17829
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17829
L1 - http://www.nber.org/papers/w17829.pdf
N1 - Author contact info:
Jonathan Zinman
Department of Economics
Dartmouth College
314 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-0075
Fax: 603/646-2122
E-Mail: jzinman@dartmouth.edu
Eric Zitzewitz
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2891
Fax: 603/646-2122
E-Mail: eric.zitzewitz@dartmouth.edu
AB - Casual empiricism suggests that deceptive advertising about product quality is prevalent, and several classes of theories explore its causes and consequences. We provide some unusually sharp empirical evidence on the extent, mechanics, and dynamics of deceptive advertising. Ski resorts self-report substantially more natural snowfall on weekends. Resorts that plausibly reap greater benefits from exaggerating do it more. Data on website visits suggests that consumers are appropriately skeptical of weekend reports. We find little evidence that competition restrains or encourages exaggeration. Near the end of our sample period, a new iPhone application feature makes it easier for skiers share information on ski conditions in real time. Exaggeration falls sharply, especially at resorts with better iPhone reception.
ER -
TY - JOUR
AU - Allen,Franklin
AU - Qian,Jun “QJ”
AU - Zhang,Chenying
AU - Zhao,Mengxin
TI - China’s Financial System: Opportunities and Challenges
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17828
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17828
L1 - http://www.nber.org/papers/w17828.pdf
N1 - Author contact info:
Franklin Allen
Wharton Finance Dept.
University of Pennsylvania
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-3629
Fax: 215/573-2207
E-Mail: allenf@wharton.upenn.edu
Jun Qian
Boston College
140 Commonwealth Ave
Chestnut Hill, MA 02467
E-Mail: qianju@bc.edu
Chenying Zhang
University of Pennsylvania
E-Mail: chezhang@wharton.upenn.edu
Mengxin Zhao
University of Alberta
Tel: 7802481318
E-Mail: mengxin.zhao@ualberta.ca
M3 - presented at "Capitalizing China Conference", December 15-16, 2009
AB - We provide a comprehensive review of China’s financial system, and explore directions of future development. First, the financial system has been dominated by a large banking sector. In recent years banks have made considerable progress in reducing the amount of non-performing loans and improving their efficiency. Second, the role of the stock market in allocating resources in the economy has been limited and ineffective. We discuss issues related to the further development of China’s stock market and other financial markets. Third, the most successful part of the financial system, in terms of supporting the growth of the overall economy, is a non-standard sector that consists of alternative financing channels, governance mechanisms, and institutions. The co-existence of this sector with banks and markets can continue to support the growth of the Hybrid Sector (non-state, non-listed firms). Finally, among the policies that will help to sustain stable economic growth in China are those that reduce the likelihood of damaging financial crises, including a banking sector crisis, a real estate or stock market crash, and a “twin crisis” in the currency market and banking sector.
ER -
TY - JOUR
AU - Cellini,Stephanie Riegg
AU - Goldin,Claudia
TI - Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17827
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17827
L1 - http://www.nber.org/papers/w17827.pdf
N1 - Author contact info:
Stephanie Cellini
Trachtenberg School of Public Policy and Public Ad
George Washington University
805 21st Street NW
Room 601M
Washington, DC 20052
Tel: 202/994-0019
E-Mail: scellini@gwu.edu
Claudia Goldin
National Bureau of Economic Research
1050 Massachusetts Ave.
Cambridge, MA 02138
Tel: 617/613-1200
Fax: 617/613-1245
E-Mail: cgoldin@harvard.edu
AB - We use administrative data from five states to provide the first comprehensive estimates of the size of the for-profit higher education sector in the U.S. Our estimates include schools that are not currently eligible to participate in federal student aid programs under Title IV of the Higher Education Act and are therefore missed in official counts. We find that the number of for-profit institutions is double the official count and the number of students is between one-quarter and one-third greater. Many for-profit institutions that are not Title IV eligible offer programs and certificates that are similar, if not identical, to those given by institutions that are part of Title IV. We find that the Title IV institutions charge tuition that is about 75 percent higher than that charged by comparable institutions whose students cannot apply for federal financial aid. The dollar value of the premium is about equal to the amount of financial aid received by students in eligible institutions, lending credence to the “Bennett hypothesis” that aid-eligible institutions raise tuition to maximize aid.
ER -
TY - JOUR
AU - Li,Chunding
AU - Whalley,John
TI - China's Potential Future Growth and Gains from Trade Policy Bargaining: Some Numerical Simulation Results
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17826
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17826
L1 - http://www.nber.org/papers/w17826.pdf
N1 - Author contact info:
Chunding Li
Institute of World Economics and Politics
Chinese Academy of Social Sciences
No.5 Jianguomenneidajie
Beijing, PRC
Postcode: 100732
E-Mail: cli428@uwo.ca
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB - Numerical simulation analysis of bargaining solutions is little developed in existing literature. Here we use a multi country, single period numerical general equilibrium model which captures China and her major trading partners and examine the outcomes of trade policy bargaining solutions (bargaining over tariffs and financial transfers) over time as China grows more rapidly than her trade partners. We compute gains relative to non-cooperative Nash equilibria for a range of model parameterizations. This yields a measure of both absolute and relative gain to China from bargaining. We calibrate our model to base case data for 2008 and use a model formulation where there are heterogeneous goods across countries. The gains from trade bargaining accrue more heavily to other countries when we use 2008 data rather than later year data.
We then consider the impacts out into the future of different country growth rates which sharply increases China’s relative size. Our objective is to assess how China’s gains from bargaining change over time; whether they grow at a faster rate than GDP growth and for which parameterizations. Our simulation results indicate that China’s welfare gain from trade bargaining will increase over time if countries keep their present GDP growth rates for several decades, but there are major difference when using different bargaining solution concepts. These differences have not been noted in existing literature but have an intuitive explanation. Our results also indicate that if China jointly bargains along with India, Brazil and other developing countries with the OECD, China’s gain will further increase. Bargaining gains are also sensitive to country size. When we use PPP to adjust China’s relative GDP size; China’s trade bargaining welfare gain increases by about 37%.
ER -
TY - JOUR
AU - Basker,Emek
TI - Raising the Barcode Scanner: Technology and Productivity in the Retail Sector
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17825
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17825
L1 - http://www.nber.org/papers/w17825.pdf
N1 - Author contact info:
Emek Basker
Department of Economics
118 Professional Building
University of Missouri
Columbia, MO 65211
E-Mail: emek@missouri.edu
M3 - presented at "Patents, Standards and Innovation Conference", January 20-21, 2012
AB - Barcodes and barcode scanners transformed the grocery industry in the 1970s. I use store-level data from the 1972, 1977, and 1982 Census of Retail Trade, matched to data on store scanner installations, to estimate scanners' effect on labor productivity. I find that early scanners increased a store's labor productivity, on average, by approximately 4.5 percent in the first few years. The effect was larger in stores carrying more packaged products, consistent with the presence of network externalities. Short-run gains were small relative to fixed costs, suggesting that the impediment to widespread adoption of the new technology was profitability, not coordination problems.
ER -
TY - JOUR
AU - Poterba,James M.
AU - Venti,Steven F.
AU - Wise,David A.
TI - Were They Prepared for Retirement? Financial Status at Advanced Ages in the HRS and AHEAD Cohorts
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17824
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17824
L1 - http://www.nber.org/papers/w17824.pdf
N1 - Author contact info:
James M. Poterba
Department of Economics
MIT, E52-350
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-6673
Fax: 617/258-7804
E-Mail: poterba@nber.org
Steven F. Venti
Department of Economics
6106 Rockefeller Center
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2526
Fax: 603/646-2122
E-Mail: steven.f.venti@dartmouth.edu
David A. Wise
Harvard Kennedy School
79 John F. Kennedy
Cambridge, MA 02138
E-Mail: dwise@nber.org
M3 - presented at "Aging Conference", May 6-7, 2011
AB - Many analysts have considered whether households approaching retirement age have accumulated enough assets to be well prepared for retirement. In this paper, we shift from studying household finances at the start of the retirement period, an ex ante measure of retirement preparation, to studying the asset holdings of households in their last years of life. The analysis is based on Health and Retirement Study with special attention to Asset and Health Dynamics Among the Oldest Old (AHEAD) cohort that was first surveyed in 1993. We consider the level of assets that households hold in the last survey wave preceding their death. We study how assets at the end of life depend on three family status pathways prior to death— (1) original one-person households in 1993, (2) persons in two-person household in 1993 with a deceased spouse in the last year observed, and (3) persons in two-person households in 1993 with the spouse alive when last observed. We find that a substantial fraction of persons die with virtually no financial assets—46.1 percent with less than $10,000—and many of these households also have no housing wealth and rely almost entirely on Social Security benefits for support. In addition this group is disproportionately in poor health. Based on a replacement rate comparison, many of these households may be deemed to have been well-prepared for retirement, in the sense that their income in their final years was not substantially lower than their income in their late 50s or early 60s. Yet with such low asset levels, they would have little capacity to pay for unanticipated needs such as health expenses or other financial shocks or to pay for entertainment, travel, or other activities. This raises a question of whether the replacement ratio is a sufficient statistic for the “adequacy” of retirement preparation.
ER -
TY - JOUR
AU - Svensson,Lars E.O.
TI - Practical Monetary Policy: Examples from Sweden and the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17823
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17823
L1 - http://www.nber.org/papers/w17823.pdf
N1 - Author contact info:
Lars E.O. Svensson
Sveriges Riksbank
SE-103 37 Stockholm
SWEDEN
Tel: +46 8 787 0107
Fax: +46 8 21 0531
E-Mail: lars.svensson@iies.su.se
AB - In the summer of 2010, the Federal Reserve’s and the Swedish Riksbank’s inflation forecasts were below the former’s mandate-consistent rate and the latter’s target, respectively, and their unemployment forecasts were above sustainable rates. Given the mandates of the Federal Reserve and the Riksbank, conditions in both countries clearly called for policy easing. The Federal Reserve maintained a minimum policy rate, soon started to communicate possible future easing, and in the fall launched QE2. In contrast, the Riksbank started a period of rapid tightening. I examine the arguments that were raised in opposition to the Federal Reserve's easing, and those for the Riksbank's tightening. Although the Swedish economy subsequently performed better than expected, probably an important reason was that the market implemented much easier financial conditions than were consistent with the Riksbank’s policy rate path. Without the policy tightening, performance would have been even better. The U.S. economy meanwhile performed worse than expected because of factors other than monetary policy. Without the policy easing, performance would have been even worse. Thus, the Federal Reserve appears to have followed its mandate in the summer of 2010, and subsequent adverse economic shocks contributed to weak performance of the U.S. economy. In contrast, the Riksbank appears to have deviated from its mandate, but favorable circumstances contributed to an economic outcome with better performance than might have been expected based on policy choices.
ER -
TY - JOUR
AU - Aiyar,Shekhar
AU - Calomiris,Charles W.
AU - Wieladek,Tomasz
TI - Does Macro-Pru Leak? Evidence from a UK Policy Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17822
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17822
L1 - http://www.nber.org/papers/w17822.pdf
N1 - Author contact info:
Shekhar Aiyar
International Monetary Fund
700 19th Street, N.W.
Washington DC 20431
E-Mail: SAiyar@imf.org
Charles W. Calomiris
Graduate School of Business
Columbia University
3022 Broadway Street, Uris Hall
New York, NY 10027
Tel: 212/854-8748
Fax: 212/316-9219
E-Mail: cc374@columbia.edu
Tomasz Wieladek
Economics Department
London Business School
Sussex Place
London NW1 4SA
England
E-Mail: twieladek@london.edu
AB - The regulation of bank capital as a means of smoothing the credit cycle is a central element of forthcoming macro-prudential regimes internationally. For such regulation to be effective in controlling the aggregate supply of credit it must be the case that: (i) changes in capital requirements affect loan supply by regulated banks, and (ii) unregulated substitute sources of credit are unable to offset changes in credit supply by affected banks. This paper examines micro evidence—lacking to date—on both questions, using a unique dataset. In the UK, regulators have imposed time-varying, bank-specific minimum capital requirements since Basel I. It is found that regulated banks (UK-owned banks and resident foreign subsidiaries) reduce lending in response to tighter capital requirements. But unregulated banks (resident foreign branches) increase lending in response to tighter capital requirements on a relevant reference group of regulated banks. This “leakage” is substantial, amounting to about one-third of the initial impulse from the regulatory change.
ER -
TY - JOUR
AU - Lusardi,Annamaria
TI - Numeracy, financial literacy, and financial decision-making
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17821
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17821
L1 - http://www.nber.org/papers/w17821.pdf
N1 - Author contact info:
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
AB - Financial decisions, be they related to asset building or debt management, require the capacity to do calculations, including some complex ones. But how numerate are individuals, in particular when it comes to calculations related to financial decisions? Studies and surveys implemented in both the United States and in other countries that are described in this paper show the level of numeracy among the population to be very low. Moreover, lack of numeracy is not only widespread but is particularly severe among some demographic groups, such as women, the elderly, and those with low educational attainment. This has potential consequences for individuals and for society as a whole because numeracy is found to be linked to many financial decisions. Now more than ever, numeracy and financial literacy are lifetime skills necessary to succeed in today’s complex economic environment.
ER -
TY - JOUR
AU - Acemoglu,Daron
AU - Autor,David
TI - What Does Human Capital Do? A Review of Goldin and Katz's The Race between Education and Technology
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17820
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17820
L1 - http://www.nber.org/papers/w17820.pdf
N1 - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu
David Autor
Department of Economics
MIT, E52-371
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/258-7698
Fax: 617/253-1330
E-Mail: dautor@mit.edu
AB - Goldin and Katz’s The Race between Education and Technology is a monumental achievement that supplies a unified framework for interpreting how the demand and supply of human capital have shaped the distribution of earnings in the U.S. labor market over the 20th century. This essay reviews the theoretical and conceptual underpinnings of this work and documents the success of Goldin and Katz’s framework in accounting for numerous broad labor market trends. The essay also considers areas where the framework falls short in explaining several key labor market puzzles of recent decades and argues that these shortcomings can potentially be overcome by relaxing the implicit equivalence drawn between workers’ skills and their job tasks in the conceptual framework on which Goldin and Katz build. The essay argues that allowing for a richer set of interactions between skills and technologies in accomplishing job tasks both augments and refines the predictions of Goldin and Katz’s approach and suggests an even more important role for human capital in economic growth than indicated by their analysis.
ER -
TY - JOUR
AU - Antràs,Pol
AU - Chor,Davin
AU - Fally,Thibault
AU - Hillberry,Russell
TI - Measuring the Upstreamness of Production and Trade Flows
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17819
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17819
L1 - http://www.nber.org/papers/w17819.pdf
N1 - Author contact info:
Pol Antràs
Department of Economics
Harvard University
1805 Cambridge Street
Littauer Center 207
Cambridge, MA 02138
Tel: 617/495-1236
Fax: 617/495-8570
E-Mail: pantras@fas.harvard.edu
Davin Chor
Singapore Management University
School of Economics
90 Stamford Rd
Singapore 178903
Singapore
Tel: 1-617-495-1045
E-Mail: davinchor@smu.edu.sg
Thibault Fally
Department of Economics
University of Colorado at Boulder
256 UCB
Boulder, Colorado 80309-0256
USA
Tel: 303-492-6652
E-Mail: Thibault.Fally@colorado.edu
Russell Hillberry
Department of Economics
University of Melbourne
3010, VIC, Australia
Phone: +61 3 8344 5354
E-Mail: rhhi@unimelb.edu.au
AB - We propose two distinct approaches to the measurement of industry upstreamness (or average distance from final use) and show that they yield an equivalent measure. Furthermore, we provide two additional interpretations of this measure, one of them related to the concept of forward linkages in Input-Output analysis. On the empirical side, we construct this measure for 426 industries using the 2002 US Input-Output Tables. We also verify the stability of upstreamness across countries in the OECD STAN database, albeit with a more aggregated industry classification. Finally, we present an application that explores the determinants of the average upstreamness of exports at the country level using trade flows for 2002.
ER -
TY - JOUR
AU - Lindo,Jason M.
AU - Stoecker,Charles F.
TI - Drawn into Violence: Evidence on 'What Makes a Criminal' from the Vietnam Draft Lotteries
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17818
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17818
L1 - http://www.nber.org/papers/w17818.pdf
N1 - Author contact info:
Jason M. Lindo
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4664
E-Mail: jlindo@uoregon.edu
Charles F. Stoecker
Department of Economics
One Shields Ave
Davis, CA 95616
E-Mail: cfstoecker@ucdavis.edu
AB - Draft lottery number assignment during the Vietnam Era provides a natural experiment to examine the effects of military service on crime. Using exact dates of birth for inmates in state and federal prisons in 1979, 1986, and 1991, we find that draft eligibility increases incarceration for violent crimes but decreases incarceration for non-violent crimes among whites. This is particularly evident in 1979, where two-sample instrumental variable estimates indicate that military service increases the probability of incarceration for a violent crime by 0.34 percentage points and decreases the probability of incarceration for a nonviolent crime by 0.30 percentage points. We conduct two falsification tests, one that applies each of the three binding lotteries to unaffected cohorts and another that considers the effects of lotteries that were not used to draft servicemen.
ER -
TY - JOUR
AU - Scheuer,Florian
TI - Optimal Asset Taxes in Financial Markets with Aggregate Uncertainty
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17817
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17817
L1 - http://www.nber.org/papers/w17817.pdf
N1 - Author contact info:
Florian Scheuer
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305
Tel: 650/725-3987
E-Mail: scheuer@stanford.edu
AB - This paper studies Pareto-optimal risk-sharing arrangements in a private information economy with aggregate uncertainty and ex ante heterogeneous agents. I show how to implement Pareto-optima as equilibria when agents can trade claims to consumption contingent on aggregate shocks in financial markets. The first result is that if aggregate and idiosyncratic shocks are independent, the implementation of optimal allocations does not require any interventions in financial markets. This result can be extended to dynamic settings in the sense that, in this case, only savings need to be distorted, but not trades in financial markets. Second, I characterize optimal trading distortions in financial markets when aggregate and idiosyncratic shocks are not independent. In this case, optimal asset taxes must be higher for those securities that pay out in aggregate states in which consumption is more volatile. For instance, this can provide an efficiency justification for the frequently observed differential tax treatment of different asset classes, such as debt and equity claims.
ER -
TY - JOUR
AU - White,T. Kirk
AU - Reiter,Jerome P.
AU - Petrin,Amil
TI - Plant-level Productivity and Imputation of Missing Data in U.S. Census Manufacturing Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17816
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17816
L1 - http://www.nber.org/papers/w17816.pdf
N1 - Author contact info:
Kirk White
Economic Research Service, USDA
1400 Independence Ave., SW
Mail Stop 1800
Washington, DC 20250-1800
Tel: 919-451-9357
Fax: 919-684-8974
E-Mail: tkirkwhite@gmail.com
Jerome P. Reiter
Duke University
E-Mail: jerry@stat.duke.edu
Amil Petrin
Department of Economics
University of Minnesota
4-101 Hanson Hall
Minneapolis, MN 55455
Tel: 612/625-0145
Fax: 612/624-0209
E-Mail: petrin@umn.edu
AB - Within-industry differences in measured plant-level productivity are large. A large literature has been devoted to explaining these differences. In the U.S. Census Bureau's manufacturing data, the Bureau imputes for missing values using methods known to result in underestimation of variability and potential bias in multivariate inferences. We present an alternative strategy for handling the missing data based on multiple imputation via sequences of classification and regression trees. We use our imputations and the Bureau's imputations to estimate within-industry productivity dispersions. The results suggest that there may be more within-industry productivity dispersion than previous research has indicated.
ER -
TY - JOUR
AU - Crucini,Mario J.
AU - Shintani,Mototsugu
AU - Tsuruga,Takayuki
TI - Noisy Information, Distance and Law of One Price Dynamics Across US Cities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17815
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17815
L1 - http://www.nber.org/papers/w17815.pdf
N1 - Author contact info:
Mario J. Crucini
Department of Economics
Vanderbilt University
Box 1819 Station B
Nashville, TN 37235-1819
Tel: 615/322-7357
Fax: 615/343-8459
E-Mail: mario.j.crucini@vanderbilt.edu
Mototsugu Shintani
Department of Economics
Vanderbilt University
Box 1819 Station B
Nashville, TN 37235-1819
E-Mail: mototsugu.shintani@vanderbilt.edu
Takayuki Tsuruga
Graduate School of Economics, Kyoto University
Yoshida Honmachi Sakyo-ku, Kyoto 606-8501
JAPAN
E-Mail: tsuruga@econ.kyoto-u.ac.jp
AB - Using micro price data across US cities, we provide evidence that both the volatility and persistence of deviations from the law of one price (LOP) are positively correlated with the distance between cities. A standard, two-city, equilibrium model with time-varying technology under homogeneous information can predict the relationship between the volatility and distance but not between the persistence and distance. To account for the latter fact, we augment the standard model with noisy signals about the state of nominal aggregate demand that are asymmetric across cities. We further establish that the interaction of imperfect information and sticky prices improves the fit of the model.
ER -
TY - JOUR
AU - Schmieder,Johannes F.
AU - Wachter,Till M. von
AU - Bender,Stefan
TI - The Long-Term Effects of Unemployment Insurance Extensions on Employment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17814
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17814
L1 - http://www.nber.org/papers/w17814.pdf
N1 - Author contact info:
Johannes F. Schmieder
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/299-9841
Fax: 617/353-4449
E-Mail: johannes@bu.edu
Till M. von Wachter
Department of Economics
Columbia University
601 West 115th Str. Apt. 101
New York, NY 10025
Tel: 212/854-5712
Fax: 212/854-8059
E-Mail: vw2112@columbia.edu
Stefan Bender
Institute for Employment Research (IAB)
Regensburger Str. 104
90478 Nuremberg
Germany
E-Mail: stefan.bender@iab.de
AB - The majority of papers analyzing the employment effects of unemployment insurance (UI) benefit durations focuses on the duration of the first unemployment spell. In this paper, we make two contributions. First, we use a regression discontinuity design to analyze the long-term effects of extensions in UI durations. These estimates differ from standard estimates that they incorporate differences in UI benefit receipt and employment due to recurrent unemployment spells. Second, we derive a welfare formula of UI extensions that incorporates recurrent nonemployment spells. We find that accounting for nonemployment beyond the initial spell leads to a significant reduction in estimates of the nonemployment effect of UI extensions by about 25 percent. We show this effect is only partly explained by a mechanical effect due to finite follow-up durations, and mainly arises from a lower probability of days in nonemployment in months after end of the initial nonemployment spell.
ER -
TY - JOUR
AU - Schmieder,Johannes F.
AU - Wachter,Till M. von
AU - Bender,Stefan
TI - The Effects of Extended Unemployment Insurance over the Business Cycle: Evidence from Regression Discontinuity Estimates Over Twenty Years
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17813
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17813
L1 - http://www.nber.org/papers/w17813.pdf
N1 - Author contact info:
Johannes F. Schmieder
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/299-9841
Fax: 617/353-4449
E-Mail: johannes@bu.edu
Till M. von Wachter
Department of Economics
Columbia University
601 West 115th Str. Apt. 101
New York, NY 10025
Tel: 212/854-5712
Fax: 212/854-8059
E-Mail: vw2112@columbia.edu
Stefan Bender
Institute for Employment Research (IAB)
Regensburger Str. 104
90478 Nuremberg
Germany
E-Mail: stefan.bender@iab.de
AB - One goal of extending the duration of unemployment insurance (UI) in recessions is to increase UI coverage in the face of longer unemployment spells. Although it is a common concern that such extensions may themselves raise nonemployment durations, it is not known how recessions would affect the magnitude of this moral hazard. To obtain causal estimates of the differential effects of UI in booms and recessions, this paper exploits the fact that, in Germany, potential UI benefit duration is a function of exact age which is itself invariant over the business cycle. We implement a regression discontinuity design separately for twenty years and correlate our estimates with measures of the business cycle. We find that the nonemployment effects of a month of additional UI benefits are, at best, somewhat declining in recessions. Yet, the UI exhaustion rate, and therefore the additional coverage provided by UI extensions, rises substantially during a downturn. The ratio of these two effects represents the nonemployment response of workers weighted by the probability of being affected by UI extensions. Hence, our results imply that the effective moral hazard effect of UI extensions is significantly lower in recessions than in booms. Using a model of job search with liquidity constraints, we also find that, in the absence of market-wide effects, the net social benefits from UI extensions can be expressed either directly in terms of the exhaustion rate and the nonemployment effect of UI durations, or as a declining function of our measure of effective moral hazard.
ER -
TY - JOUR
AU - Crucini,Mario J.
AU - Landry,Anthony
TI - Accounting for Real Exchange Rates Using Micro-data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17812
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17812
L1 - http://www.nber.org/papers/w17812.pdf
N1 - Author contact info:
Mario J. Crucini
Department of Economics
Vanderbilt University
Box 1819 Station B
Nashville, TN 37235-1819
Tel: 615/322-7357
Fax: 615/343-8459
E-Mail: mario.j.crucini@vanderbilt.edu
Anthony Landry
Federal Reserve Bank of Dallas
2200 North Pearl Street
Dallas, TX 75204
Tel: (214) 922-5831
Fax: (214) 922-5194
E-Mail: anthony.landry@dal.frb.org
AB - The classical dichotomy predicts that all of the time series variance in the aggregate real exchange rate is accounted for by non-traded goods in the CPI basket because traded goods obey the Law of One Price. In stark contrast, Engel (1999) found that traded goods had comparable volatility to the aggregate real exchange rate. Our work reconciles these two views by successfully applying the classical dichotomy at the level of intermediate inputs into the production of final goods using highly disaggregated retail price data. Since the typical good found in the CPI basket is about equal parts traded and non-traded inputs, we conclude that the classical dichotomy applied to intermediate inputs restores its conceptual value.
ER -
TY - JOUR
AU - Scott-Clayton,Judith
TI - Information Constraints and Financial Aid Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17811
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17811
L1 - http://www.nber.org/papers/w17811.pdf
N1 - Author contact info:
Judith Scott-Clayton
Teachers College
Columbia University
525 W.120th Street, Box 174
New York, NY 10027
Tel: 212/678-3478
Fax: 212/678-3699
E-Mail: scott-clayton@tc.columbia.edu
AB - One justification for public support of higher education is that prospective students, particularly those from underprivileged groups, lack complete information about the costs and benefits of a college degree. Beyond financial considerations, students may also lack information about what they need to do academically to prepare for and successfully complete college. Yet until recently, college aid programs have typically paid little attention to students' information constraints, and the complexity of some programs can exacerbate the problem. This chapter describes the information problems facing prospective students as well as their consequences, drawing upon economic theory and empirical evidence.
ER -
TY - JOUR
AU - Celik,Levent
AU - Karabay,Bilgehan
AU - McLaren,John
TI - When is it Optimal to Delegate: The Theory of Fast-track Authority
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17810
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17810
L1 - http://www.nber.org/papers/w17810.pdf
N1 - Author contact info:
Levent Celik
CERGE-EI
Politickych veznu 7, 111 21
Prague 1
Czech Republic
E-Mail: celik@cerge-ei.cz
Bilgehan Karabay
Department of Economics
University of Auckland
Owen G. Glenn Building
12 Grafton Road
Auckland 1010
New Zealand
Tel: +64-9-9237193
Fax: +64-9-3737427
E-Mail: bilgehan.karabay@gmail.com
John McLaren
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434/924-3994
Fax: 434/982-2904
E-Mail: jmclaren@virginia.edu
AB - With fast-track authority (FTA), the US Congress delegates trade-policy authority to the President by committing not to amend a trade agreement. We suggest an interpretation in which Congress uses FTA to forestall destructive competition between its members for protectionist rents. We show that FTA is never granted if an industry is operating in the majority of districts. Second, the more equally distributed are the industries across districts and the more similar are the industries' sizes, the more likely it is that FTA is granted. This is true since competition over rents is most punishing when bargaining power is symmetrically distributed, and in that case the ex ante expected welfare of each district is lower without FTA. Third, if existing levels of protection are very different across industries, even if FTA is granted, it may not lead to free trade because a majority of industries may prefer the status quo to free trade.
ER -
TY - JOUR
AU - Banzhaf,H. Spencer
AU - Farooque,Omar
TI - Interjurisdictional Housing Prices and Spatial Amenities: Which Measures of Housing Prices Reflect Local Public Goods?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17809
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17809
L1 - http://www.nber.org/papers/w17809.pdf
N1 - Author contact info:
H. Spencer Banzhaf
Department of Economics
Andrew Young School of Policy Studies
Georgia State University
P.O. Box 3992
Atlanta, GA 30302
Tel: 404/413-0252
Fax: 404/413-0248
E-Mail: hsbanzhaf@gsu.edu
Omar Farooque
Department of Economics
302 Arthur Andersen Hall
2001 Sheridan Road, Evanston, IL 60208-2600
E-Mail: omarfarooque2015@u.northwestern.edu
AB - Understanding the spatial variation in housing prices plays a crucial role in topics ranging from the cost of living to quality-of-life indices to studies of public goods and household mobility. Yet analysts have not reached a consensus on the best source of such data, variously using self-reported values from the census, transactions values, tax assessments, and rental values. Additionally, while most studies use micro-level data, some have used summary statistics such as the median housing value.
Assessing neighborhood price indices in Los Angeles, we find that indices based on transactions prices are highly correlated with indices based on self-reported values, but the former are better correlated with public goods. Moreover, rental values have a higher correlation with public goods and income levels than either asset-value measure. Finally, indices based on median values are poorly correlated with the other indices, public goods, and income.
ER -
TY - JOUR
AU - Bodenhorn,Howard
TI - Voting Rights, Share Concentration, and Leverage at Nineteenth-Century US Banks
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17808
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17808
L1 - http://www.nber.org/papers/w17808.pdf
N1 - Author contact info:
Howard Bodenhorn
John E. Walker Department of Economics
College of Business and Behavioral Science
201-B Sirrine Hall
Clemson University
Clemson, SC 29634
Tel: 864/656-4335
E-Mail: bodenhorn@gmail.com
AB - Studies of corporate governance are concerned with two features of modern shareholding: diffuse ownership and the resulting separation of ownership and control, which potentially leads to managerial self-dealing; and, majority shareholding, which potentially mitigates some managerial self-dealing but opens the door for the expropriation of minority shareholders. This paper provides a study of the second issue for nineteenth-century US corporations. It investigates two related questions. First, did voting rules that limited the control rights of large shareholders encourage diffuse ownership? It did. Second, did diffuse ownership systematically alter bank risk taking? It did. Banks with less concentrated ownership followed policies that reduced liquidity and bankruptcy risk.
ER -
TY - JOUR
AU - Gross,Tal
AU - Notowidigdo,Matthew J.
AU - Wang,Jialan
TI - Liquidity Constraints and Consumer Bankruptcy: Evidence from Tax Rebates
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17807
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17807
L1 - http://www.nber.org/papers/w17807.pdf
N1 - Author contact info:
Tal Gross
Department of Health Policy and Management
Mailman School of Public Health
Columbia University
600 West 168th Street, Sixth Floor
New York, NY 10032
Tel: (212) 342-4521
E-Mail: tg2370@columbia.edu
Matthew J. Notowidigdo
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-9758
E-Mail: noto@chicagobooth.edu
Jialan Wang
Olin Business School
Washington University in St. Louis
208 Simon Hall
1 Olympian Way
St. Louis, MO, 63130
E-Mail: jialan.wang@wustl.edu
AB - This paper estimates the extent to which legal fees prevent liquidity-constrained households from declaring bankruptcy. To do so, it studies how the 2001 and 2008 tax rebates affected consumer bankruptcy filings. We exploit the randomized timing of the rebate checks and estimate that the rebates caused a significant, short-run increase in consumer bankruptcies in both years, with larger effects in 2008 when the rebates were more generous and more widely distributed. Using hand-collected data from individual bankruptcy petitions, we document that the rebates caused an increase in the average liabilities and the liabilities-to-income ratios of filers.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Ito,Hiro
TI - Trilemma Policy Convergence Patterns and Output Volatility
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17806
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17806
L1 - http://www.nber.org/papers/w17806.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Hiro Ito
Portland State University
1721 SW Broadway, Suite 241
Portland, Oregon 97201
E-Mail: ito@pdx.edu
AB - We examine the open macroeconomic policy choices of developing economies from the perspective of the economic “trilemma” hypothesis. We construct an index of divergence of the three trilemma policy choices, and evaluate its patterns in recent decades. We find that the three dimensions of the trilemma configurations are converging towards a “middle ground” among emerging market economies -- managed exchange rate flexibility underpinned by sizable holdings of international reserves, intermediate levels of monetary independence, and controlled financial integration. Emerging market economies with more converged policy choices tend to experience smaller output volatility in the last two decades. Emerging markets with relatively low international reserves/GDP could experience higher levels of output volatility when they choose a policy combination with a greater degree of policy divergence. Yet this heightened output volatility effect does not apply to economies with relatively high international reserves/GDP holding.
ER -
TY - JOUR
AU - Campello,Murillo
AU - Hackbarth,Dirk
TI - The Firm-Level Credit Multiplier
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17805
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17805
L1 - http://www.nber.org/papers/w17805.pdf
N1 - Author contact info:
Murillo Campello
Johnson Graduate School of Management
Cornell University
114 East Avenue
369 Sage Hall
Ithaca, NY 148531-6201
Tel: 607-255-1282
E-Mail: campello@cornell.edu
Dirk Hackbarth
University of Illinois at Urbana-Champaign
515 East Gregory Drive, 4035 BIF
Champaign, IL, 61820
Tel: (217) 333-7343
Fax: (217) 244-3102
E-Mail: dhackbar@uiuc.edu
AB - We study the effect of asset tangibility on corporate financing and investment decisions. Financially constrained firms benefit the most from investing in tangible assets because those assets help relax constraints, allowing for further investment. Using a dynamic model, we characterize this effect – which we call firm-level credit multiplier – and show how asset tangibility increases the sensitivity of investment to Tobin’s Q for financially constrained firms. Examining a large sample of manufacturers over the 1971-2005 period as well as simulated data, we find support for our theory’s tangibility–investment channel. We further verify that our findings are driven by firms’ debt issuance activities. Consistent with our empirical identification strategy, the firm-level credit multiplier is absent from samples of financially unconstrained firms and samples of financially constrained firms with low spare debt capacity.
ER -
TY - JOUR
AU - Fairlie,Robert W.
AU - Karlan,Dean
AU - Zinman,Jonathan
TI - Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17804
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17804
L1 - http://www.nber.org/papers/w17804.pdf
N1 - Author contact info:
Robert Fairlie
Department of Economics
University of California, Santa Cruz
Santa Cruz, CA 95064
E-Mail: rfairlie@ucsc.edu
Dean Karlan
Department of Economics
Yale University
P.O. Box 208269
New Haven, CT 06520-8629
Tel: 203/432-4479
Fax: 203/432-5591
E-Mail: dean.karlan@yale.edu
Jonathan Zinman
Department of Economics
Dartmouth College
314 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-0075
Fax: 603/646-2122
E-Mail: jzinman@dartmouth.edu
AB - We use randomized program offers and multiple follow-up survey waves to examine the effects of entrepreneurship training on a broad set of outcomes. Training increases short run business ownership and employment, but there is no evidence of broader or longer run effects. We also test whether training mitigates market frictions by estimating heterogeneous treatment effects. Training does not have strong effects (in either relative or absolute terms) on those most likely to face credit or human capital constraints, or labor market discrimination. Training does have a relatively strong short-run effect on business ownership for those unemployed at baseline, but not at other horizons or for other outcomes.
ER -
TY - JOUR
AU - Branch,Gregory F.
AU - Hanushek,Eric A.
AU - Rivkin,Steven G.
TI - Estimating the Effect of Leaders on Public Sector Productivity: The Case of School Principals
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17803
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17803
L1 - http://www.nber.org/papers/w17803.pdf
N1 - Author contact info:
Gregory F. Branch
Texas Schools Project
University of Texas at Dallas
Richardson, TX 75080
E-Mail: gregory.branch@utdallas.edu
Eric A. Hanushek
Hoover Institution
Stanford University
Stanford, CA 94305-6010
Tel: 650/736-0942
Fax: 650/723-1687
E-Mail: hanushek@stanford.edu
Steven G. Rivkin
Department of Economics
University of Illinois at Chicago
601 South Morgan UH725 M/C144
Chicago, IL 60607
Tel: 312.413.2368
E-Mail: sgrivkin@uic.edu
AB - Although much has been written about the importance of leadership in the determination of organizational success, there is little quantitative evidence due to the difficulty of separating the impact of leaders from other organizational components – particularly in the public sector. Schools provide an especially rich environment for studying the impact of public sector management, not only because of the hypothesized importance of leadership but also because of the plentiful achievement data that provide information on institutional outcomes. Outcome-based estimates of principal value-added to student achievement reveal significant variation in principal quality that appears to be larger for high-poverty schools. Alternate lower-bound estimates based on direct estimation of the variance yield smaller estimates of the variation in principal productivity but ones that are still important, particularly for high poverty schools. Patterns of teacher exits by principal quality validate the notion that a primary channel for principal influence is the management of the teacher force. Finally, looking at principal transitions by quality reveals little systematic evidence that more effective leaders have a higher probability of exiting high poverty schools.
ER -
TY - JOUR
AU - Aron-Dine,Aviva
AU - Einav,Liran
AU - Finkelstein,Amy
AU - Cullen,Mark R.
TI - Moral Hazard in Health Insurance: How Important Is Forward Looking Behavior?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17802
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17802
L1 - http://www.nber.org/papers/w17802.pdf
N1 - Author contact info:
Aviva Aron-Dine
Department of Economics
MIT E52-369D
50 Memorial Drive
Cambridge, MA 02142
E-Mail: arondine@mit.edu
Liran Einav
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/723-3704
Fax: 650/725-5702
E-Mail: leinav@stanford.edu
Amy Finkelstein
Department of Economics
MIT E52-274C
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/253-4149
Fax: 617/868-2742
E-Mail: afink@mit.edu
Mark R. Cullen
Stanford University School of Medicine
1265 Welch Rd X338
Stanford, CA 94305
Tel: 650.721.6209
Fax: 650.723.8596
E-Mail: mrcullen@stanford.edu
AB - We investigate whether individuals exhibit forward looking behavior in their response to the non-linear pricing common in health insurance contracts. Our empirical strategy exploits the fact that employees who join an employer-provided health insurance plan later in the calendar year face the same initial ("spot") price of medical care but a higher expected end-of-year ("future") price than employees who join the same plan earlier in the year. Our results reject the null of completely myopic behavior; medical utilization appears to respond to the future price, with a statistically significant elasticity of medical utilization with respect to the future price of -0.4 to -0.6. To try to quantify the extent of forward looking behavior, we develop a stylized dynamic model of individual behavior and calibrate it using our estimated behavioral response and additional data from the RAND Health Insurance Experiment. Our calibration suggests that the elasticity estimate may be substantially smaller than the one implied by fully forward-looking behavior, yet it is sufficiently high to have an economically significant effect on the response of annual medical utilization to a non-linear health insurance contract. Overall, our results point to the empirical importance of accounting for dynamic incentives in analyses of the impact of health insurance on medical utilization.
ER -
TY - JOUR
AU - Foltz,Jeremy D.
AU - Aldana,Ursula T.
AU - Laris,Paul
TI - The Sahel's Silent Maize Revolution: Analyzing Maize Productivity in Mali at the Farm-level
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17801
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17801
L1 - http://www.nber.org/papers/w17801.pdf
N1 - Author contact info:
Jeremy D. Foltz
Dept. of Ag. & Applied Economics
University of Wisconsin, Madison
427 Lorch St.
Madison, WI 53706
Tel: (608) 262-6871
E-Mail: jdfoltz@wisc.edu
Ursula T. Aldana
Instituto de Estudios Peruanos
Lima, Peru
E-Mail: utaldana@gmail.com
Paul Laris
Department of Geography
California State University
1250 Bellflower Blvd.
Long Beach, CA 90840
Tel: (562) 985-1862
E-Mail: plaris@csulb.edu
M3 - presented at "African Development Successes", August 3-5, 2011
AB - Since independence a quiet revolution has taken place in maize production in the Sahel with Mali increasing production more than ten-fold and yields going up ~2% a year. This research work uses farm level panel data from southern Mali's maize growing regions to demonstrate this success in agricultural production and technological change. We analyze the determinants of production to unpack increases in input use from technological change. The estimations show that farmer adoption of increased fertilizer use has driven much of the productivity growth rather than the adoption of improvements in seeds and management. Additionally, we find strong evidence of observed and unobserved heterogeneity, which affects both the choice of fertilizer amounts and the marginal returns to fertilizer use. The results demonstrate the key changes behind this silent maize revolution and point to the importance of taking into account farmer heterogeneity in estimating productivity and returns to fertilizer.
ER -
TY - JOUR
AU - Borjas,George J.
AU - Doran,Kirk B.
TI - The Collapse of the Soviet Union and the Productivity of American Mathematicians
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17800
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17800
L1 - http://www.nber.org/papers/w17800.pdf
N1 - Author contact info:
George J. Borjas
Harvard Kennedy School
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1393
Fax: 617/495-9532
E-Mail: gborjas@harvard.edu
Kirk B. Doran
438 Flanner Hall
University of Notre Dame
Notre Dame, IN 46556
E-Mail: kdoran@nd.edu
AB - It has been difficult to open up the black box of knowledge production. We use unique international data on the publications, citations, and affiliations of mathematicians to examine the impact of a large post-1992 influx of Soviet mathematicians on the productivity of their American counterparts. We find a negative productivity effect on those mathematicians whose research overlapped with that of the Soviets. We also document an increased mobility rate (to lower-quality institutions and out of active publishing) and a reduced likelihood of producing “home run” papers. Although the total product of the pre-existing American mathematicians shrank, the Soviet contribution to American mathematics filled in the gap. However, there is no evidence that the Soviets greatly increased the size of the “mathematics pie.” Finally, we find that there are significant international differences in the productivity effects of the collapse of the Soviet Union, and that these international differences can be explained by both differences in the size of the émigré flow into the various countries and in how connected each country is to the global market for mathematical publications.
ER -
TY - JOUR
AU - Inman,Robert P.
AU - Rubinfeld,Daniel L.
TI - Understanding the Democratic Transition in South Africa
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17799
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17799
L1 - http://www.nber.org/papers/w17799.pdf
N1 - Author contact info:
Robert P. Inman
Department of Finance
Wharton School
University of Pennsylvania
Philadelphia, PA 19104-6367
Tel: 215/898-8299
Fax: 215/898-6200
E-Mail: inman@wharton.upenn.edu
Daniel L. Rubinfeld
Robert L. Bridges Professor of Law and
Professor of Economics Emeritus
788 Simon Tower, Boalt Hall
University of California, Berkeley
Berkeley, CA 94720
Tel: 510/642-1959
Fax: 510/642-3767
E-Mail: drubinfeld@law.berkeley.edu
AB - South Africa’s transition from apartheid to democracy stands as one of the past century’s most important political events. The transition has been successful to this point because the new constitution adopted a form of federal governance that has been able to provide protection for the economic elite from maximal redistributive taxation. Appropriately structured, federal governance creates a “hostage game” in which the majority central government controls the tax rate but elite run province(s) control the provision of important redistributive services to a significant fraction of lower income households. At least to today, the political economy of South Africa has found a stable equilibrium with less than maximal redistributive taxation. Moreover, the move to a democratic federalist system has improved the economic welfare of both the white minority and the black majority. Whether the federal structure can continue to check maximal taxation depends crucially upon the rate of time preference of the majority and their demands for redistributive public services. A new, impatient and more radical majority (ANC) party threatens the current equilibrium.
ER -
TY - JOUR
AU - Ang,Andrew
AU - Brière,Marie
AU - Signori,Ombretta
TI - Inflation and Individual Equities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17798
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17798
L1 - http://www.nber.org/papers/w17798.pdf
N1 - Author contact info:
Andrew Ang
Columbia Business School
3022 Broadway 413 Uris
New York, NY 10027
Tel: 212/854-9154
Fax: 212/662-8474
E-Mail: aa610@columbia.edu
Marie Briere
Amundi
90 bd Pasteur, 75015 Paris, France
E-Mail: marie.briere@amundi.com
Ombretta Signori
AXA Investment Managers
Coeur Défense Tour B - La Défense 4
100 Esplanade du Général de Gaulle
92932 Paris La Défense Cedex
France
E-Mail: ombretta.signori@axa-im.com
AB - We study the inflation hedging ability of individual stocks. While the poor inflation hedging ability of the aggregate stock market has long been documented, there is considerable heterogeneity in how individual stock returns covary with inflation. Stocks with good inflation-hedging abilities since 1990 have had higher returns, on average, than stocks with low inflation betas and tend to be drawn from the Oil and Gas and Technology sectors. However, we show that there is substantial time variation of stock inflation betas. This makes it difficult to construct portfolios of stocks that are good inflation hedges out of sample. This is true for portfolios constructed on past inflation betas, sector portfolios, and portfolios constructed from high-paying dividend stocks.
ER -
TY - JOUR
AU - Becker,Bo
AU - Bergstresser,Daniel
AU - Subramanian,Guhan
TI - Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17797
PY - 2012
Y2 - February 2012
UR - http://www.nber.org/papers/w17797
L1 - http://www.nber.org/papers/w17797.pdf
N1 - Author contact info:
Bo Becker
Harvard Business School
Baker Library 349
Soldiers Field
Boston, MA 02163
Tel: 617/496-5335
Fax: 617/495-7659
E-Mail: bbecker@hbs.edu
Daniel Bergstresser
Brandeis University
International Business School
415 South St
Waltham, MA 02453
E-Mail: dberg@brandeis.edu
Guhan Subramanian
Harvard University
E-Mail: subraman@law.harvard.edu
AB - We use the Business Roundtable’s challenge to the SEC’s 2010 proxy access rule as a natural experiment to measure the value of shareholder proxy access. We find that firms that would have been most vulnerable to proxy access, as measured by institutional ownership and activist institutional ownership in particular, lost value on October 4, 2010, when the SEC unexpectedly announced that it would delay implementation of the Rule in response to the Business Roundtable challenge. We also examine intra-day returns and find that the value loss occurred just after the SEC’s announcement on October 4. We find similar results on July 22, 2011, when the D.C. Circuit ruled in favor of the Business Roundtable. These findings are consistent with the view that financial markets placed a positive value on shareholder access, as implemented in the SEC’s 2010 Rule.
ER -
TY - JOUR
AU - Devereux,Michael B.
AU - Senay,Ozge
AU - Sutherland,Alan
TI - Nominal Stability and Financial Globalization
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17796
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17796
L1 - http://www.nber.org/papers/w17796.pdf
N1 - Author contact info:
Michael B. Devereux
Department of Economics
University of British Columbia
997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-2542
Fax: 604/822-5915
E-Mail: mbdevereux@gmail.com
Ozge Senay
Department of Economics
University of St. Andrews
St. Andrews, Fife KY16 9AL
UK
E-Mail: os12@st-andrews.ac.uk
Alan Sutherland
Department of Economics
University of St. Andrews
St. Andrews, Fife KY16 9AL
UK
E-Mail: ajs10@st-and.ac.uk
AB - Over the one and a half decades prior to the global financial crisis, advanced economies experienced a large growth in gross external portfolio positions. This phenomenon has been described as Financial Globalization. Over roughly the same time frame, most of these countries also saw a substantial fall in the level and variability of inflation. Many economists have conjectured that financial globalization contributed to the improved performance in the level and predictability of inflation. In this paper, we explore the causal link running in the opposite direction. We show that a monetary policy rule which reduces inflation variability leads to an increase in the size of gross external positions, both in equity and bond portfolios. This is a highly robust prediction of open economy macro models with endogenous portfolio choice. It holds across many different modeling specifications and parameterizations. We also present preliminary empirical evidence which shows a negative relationship between inflation volatility and the size of gross external positions.
ER -
TY - JOUR
AU - Kogan,Leonid
AU - Papanikolaou,Dimitris
TI - Growth Opportunities, Technology Shocks, and Asset Prices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17795
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17795
L1 - http://www.nber.org/papers/w17795.pdf
N1 - Author contact info:
Leonid Kogan
MIT Sloan School of Management
100 Main Street, E62-636
Cambridge, MA 02142
Tel: 617/504-9728
Fax: 617/258-6855
E-Mail: lkogan@mit.edu
Dimitris Papanikolaou
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-7704
E-Mail: d-papanikolaou@kellogg.northwestern.edu
AB - We explore the impact of investment-specific technology (IST) shocks on the crosssection of stock returns. IST shocks reflect technological advances embodied in new capital goods. Using a structural model, we show that IST shocks have a differential effect on the two fundamental components of firm value, the value of assets in place and the value of growth opportunities. This differential sensitivity to IST shocks has two main implications. First, risk premia on firms with abundant growth opportunities are different from those on firms with limited growth opportunities. Second, firms with similar levels of growth opportunities comove with each other, giving rise to the value factor in stock returns. Our model replicates the failure of the conditional CAPM to capture the value premium. Our empirical tests confirm the model's predictions for asset returns and investment rates.
ER -
TY - JOUR
AU - Nunn,Nathan
AU - Qian,Nancy
TI - Aiding Conflict: The Impact of U.S. Food Aid on Civil War
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17794
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17794
L1 - http://www.nber.org/papers/w17794.pdf
N1 - Author contact info:
Nathan Nunn
Department of Economics
Harvard University
1805 Cambridge St
Cambridge, Ma 02138
Tel: 617/496-4958
Fax: 617/495-8570
E-Mail: nnunn@fas.harvard.edu
Nancy Qian
Department of Economics
Yale University
27 Hillhouse Avenue
New Haven, CT 06520-8269
E-Mail: nancy.qian@yale.edu
AB - This paper examines the effect of U.S. food aid on conflict in recipient countries. To establish a causal relationship, we exploit time variation in food aid caused by fluctuations in U.S. wheat production together with cross-sectional variation in a country's tendency to receive any food aid from the United States. Our estimates show that an increase in U.S. food aid increases the incidence, onset and duration of civil conflicts in recipient countries. Our results suggest that the effects are larger for smaller scale civil conflicts. No effect is found on interstate warfare.
ER -
TY - JOUR
AU - Agrawal,Ajay K.
AU - Cockburn,Iain M.
AU - Galasso,Alberto
AU - Oettl,Alexander
TI - Why are Some Regions More Innovative than Others? The Role of Firm Size Diversity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17793
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17793
L1 - http://www.nber.org/papers/w17793.pdf
N1 - Author contact info:
Ajay K. Agrawal
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON M5S 3E6
CANADA
Tel: 416/946-0203
Fax: 416/978-5433
E-Mail: ajay.agrawal@rotman.utoronto.ca
Iain M. Cockburn
School of Management
Boston University
595 Commonwealth Ave
Boston, MA 02215
Tel: 617/588-1486
Fax: 815/550-2353
E-Mail: cockburn@bu.edu
Alberto Galasso
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON
CANADA M5S 3E6
Fax: 905-569-4397
E-Mail: Alberto.Galasso@Rotman.Utoronto.Ca
Alexander Oettl
College of Management
Georgia Institute of Technology
800 West Peachtree Street, NW
Atlanta, GA 30308
Tel: 404.385.4570
E-Mail: alexander.oettl@mgt.gatech.edu
AB - Large labs may spawn spin-outs caused by innovations deemed unrelated to the firm's overall business. Small labs generate demand for specialized services that lower entry costs for others. We develop a theoretical framework to study the interplay of these two localized externalities and their impact on regional innovation. We examine MSA-level patent data during the period 1975-2000 and find that innovation output is higher where large and small labs coexist. The finding is robust to across-region as well as within-region analysis, IV analysis, and the effect is stronger in certain subsamples consistent with our explanation but not the plausible alternatives.
ER -
TY - JOUR
AU - Popp,David
AU - Santen,Nidhi
AU - Fisher-Vanden,Karen
AU - Webster,Mort
TI - Technology Variation vs. R&D Uncertainty: What Matters Most for Energy Patent Success?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17792
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17792
L1 - http://www.nber.org/papers/w17792.pdf
N1 - Author contact info:
David Popp
Associate Professor of Public Administration
Syracuse University
The Maxwell School
426 Eggers Hall
Syracuse, NY 13244-1020
Tel: 315/443-2482
Fax: 315/443-1081
E-Mail: dcpopp@maxwell.syr.edu
Nidhi Santen
Engineering Systems Division
Massachusetts Institute of Technology
E19-411-ST20
77 Massachusetts Avenue
Cambridge, MA 02139
E-Mail: nrsanten@mit.edu
Karen Fisher-Vanden
Department of Agric. Economics and Rural Soc.
112-E Armsby Building
Pennsylvania State University
University Park, PA 16802
E-Mail: fishervanden@psu.edu
Mort Webster
Engineering Systems Division
Massachusetts Institute of Technology
E40-235
77 Massachusetts Avenue
Cambridge, MA 02139
E-Mail: mort@mit.edu
AB - R&D is an uncertain activity with highly skewed outcomes. Nonetheless, most recent empirical studies and modeling estimates of the potential of technological change focus on the average returns to research and development (R&D) for a composite technology and contain little or no information about the distribution of returns to R&D—which could be important for capturing the range of costs associated with climate change mitigation policies—by individual technologies. Through an empirical study of patent citation data, this paper adds to the literature on returns to energy R&D by focusing on the behavior of the most successful innovations for six energy technologies, allowing us to determine whether uncertainty or differences in technologies matter most for success. We highlight two key results. First, we compare the results from an aggregate analysis of six energy technologies to technology-by-technology results. Our results show that existing work that assumes diminishing returns but assumes one generic technology is too simplistic and misses important differences between more successful and less successful technologies. Second, we use quantile regression techniques to learn more about patents that have a high positive error term in our regressions – that is, patents that receive many more citations than predicted based on observable characteristics. We find that differences across technologies, rather than differences across quantiles within technologies, are more important. The value of successful technologies persists longer than those of less successful technologies, providing evidence that success is the culmination of several advances building upon one another, rather than resulting from one single breakthrough. Diminishing returns to research efforts appear most problematic during rapid increases of research investment, such as experienced by solar energy in the 1970s.
ER -
TY - JOUR
AU - Waggoner,Daniel F.
AU - Zha,Tao
TI - Confronting Model Misspecification in Macroeconomics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17791
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17791
L1 - http://www.nber.org/papers/w17791.pdf
N1 - Author contact info:
Daniel F. Waggoner
Federal Reserve Bank of Atlanta
1000 Peachtree Street N.E.
Atlanta, Georgia 30309-4470
E-Mail: dwaggoner@frbatlanta.org
Tao Zha
Emory University
1602 Fishburne Drive
Atlanta, GA 30322-2240
Tel: 404/723-3254
Fax: 404/727-4639
E-Mail: tzha@emory.edu
AB - We estimate a Markov-switching mixture of two familiar macroeconomic models: a richly parameterized DSGE model and a corresponding BVAR model. We show that the Markov-switching mixture model dominates both individual models and improves the fit considerably. Our estimation indicates that the DSGE model plays an important role only in the late 1970s and the early 1980s. We show how to use the mixture model as a data filter for estimation of the DSGE model when the BVAR model is not identified. Moreover, we show how to compute the impulse responses to the same type of shock shared by the DSGE and BVAR models when the shock is identified in the BVAR model. Our exercises demonstrate the importance of integrating model uncertainty and parameter uncertainty to address potential model misspecification in macroeconomics.
ER -
TY - JOUR
AU - Handley,Kyle
AU - Limão,Nuno
TI - Trade and Investment under Policy Uncertainty: Theory and Firm Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17790
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17790
L1 - http://www.nber.org/papers/w17790.pdf
N1 - Author contact info:
Kyle Handley
Stanford University
E-Mail: handleyk@gmail.com
Nuno Limao
Department of Economics
University of Maryland
3105 Tydings Hall
College Park, MD 20742
Tel: 301/405-7842
Fax: 301/405-3542
E-Mail: limao@econ.umd.edu
AB - We provide theoretical and empirical evidence that policy uncertainty can significantly affect firm level investment and entry decisions in the context of international trade. When market entry costs are sunk, policy uncertainty can create a real option value of waiting to enter foreign markets until conditions improve or uncertainty is resolved. Using a dynamic, heterogeneous firms model we show that: (i) investment and entry into export markets is reduced when trade policy is uncertain, and (ii) preferential trade agreements (PTAs) are valuable to exporters even if applied trade barriers are currently low or zero. We derive a structural equation that predicts how firm entry responds to changes in applied tariffs and a theory-based measure of policy uncertainty. Our novel approach using observable trade policies allows us to estimate the impact of policy uncertainty and quantify its aggregate implications. We apply this method to Portugal's accession to the European Community in 1986 using new firm-level trade data. We find that (i) the trade policy reform accounted for a large fraction of the observed Portuguese exporting firms' entry and sales upon accession (ii) the accession removed uncertainty about future preferences and (iii) this uncertainty channel accounted for a large fraction of the predicted growth. These results have broader implications for other PTAs and our approach can be applied to analyze other sources of policy uncertainty.
ER -
TY - JOUR
AU - Bolin,Kristian
AU - Lindgren,Bjorn
TI - The Double Facetted Nature of Health Investments - Implications for Equilibrium and Stability in a Demand-for-Health Framework
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17789
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17789
L1 - http://www.nber.org/papers/w17789.pdf
N1 - Author contact info:
Kristian Bolin
Department of Economics
Lund University
P.O.Box 7082
SE-22007 Lund
SWEDEN
E-Mail: Kristian.Bolin@nek.lu.se
Bjorn Lindgren
Department of Economics
University of Gothenburg
P.O.Box 640
SE-40530 Gothenburg
SWEDEN
E-Mail: Bjorn.Lindgren@economics.gu.se
AB - A number of behaviours influence health in a non-monotonic way. Physical activity and alcohol consumption, for instance, may be beneficial to one’s health in moderate but detrimental in large quantities. We develop a demand-for-health framework that incorporates the feature of a physiologically optimal level. An individual may still choose a physiologically non-optimal level, because of the trade-off in his or her preferences for health versus other utility-affecting commodities. However, any deviation from the physiologically optimal level will be punished with respect to health. A set of steady-state comparative statics is derived regarding the effects on the demand for health and health-related behaviour, indicating that individuals react differently to exogenous changes, depending on the amount of the health-related behaviour they demand. We also show (a) that a steady-state equilibrium is a saddle-point and (b) that the physiologically optimal level may be a steady-state equilibrium for the individual. Our analysis suggests that general public-health policies may, to some extent, be counterproductive due to the responses induced in part of the population.
ER -
TY - JOUR
AU - Cheung,Yin-Wong
AU - Dooley,Michael P.
AU - Sushko,Vladyslav
TI - Investment and Growth in Rich and Poor Countries
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17788
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17788
L1 - http://www.nber.org/papers/w17788.pdf
N1 - Author contact info:
Yin-Wong Cheung
Department of Economics
University of California
Santa Cruz, CA 95064
E-Mail: cheung@ucsc.edu
Michael P. Dooley
Department of Economics
Engineering II
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459 3662
Fax: 831/459-5077
E-Mail: MPD@UCSC.EDU
Vladyslav Sushko
Bank for International Settlements
Centralbahnplatz 2
4002 Basel
Switzerland
E-Mail: vlad.sushko@bis.org
AB - This paper revisits the association between investment and growth. The empirical findings highlight substantial heterogeneity for the effect of investment on growth and suggest a possible negative association. Results based on a battery of cross-sectional and time-series regressions show that the link between investment and growth has weakened over time and that investment in high-income countries is more likely to have a negative effect on growth. The adverse effect for high-income countries appears to have increased over time. An implication is that uphill capital flows could be associated with negative or zero returns. The result is robust to the presence of control variables that are commonly included in growth studies.
ER -
TY - JOUR
AU - Ramey,Valerie A.
TI - Government Spending and Private Activity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17787
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17787
L1 - http://www.nber.org/papers/w17787.pdf
N1 - Author contact info:
Valerie A. Ramey
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-2388
Fax: 858/534-7040
E-Mail: VRAMEY@UCSD.EDU
M1 - published as Valerie A. Ramey. "Government Spending and Private Activity," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2012)
M3 - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB - This paper asks whether increases in government spending stimulate private activity. The first part of the paper studies private spending. Using a variety of identification methods and samples, I find that in most cases private spending falls significantly in response to an increase in government spending. These results imply that the average GDP multiplier lies below unity. In order to determine whether concurrent increases in tax rates dampen the spending multiplier, I use two different methods to adjust for tax effects. Neither method suggests significant effects of current tax rate changes on the spending multiplier. In the second part of the paper, I explore the effects of government spending on labor markets. I find that increases in government spending lower unemployment. Most specifications and samples imply, however, that virtually all of the effect is through an increase in government employment, not private employment. I thus conclude that on balance government spending does not appear to stimulate private activity.
ER -
TY - JOUR
AU - Waldman,Michael
AU - Nicholson,Sean
AU - Adilov,Nodir
TI - Positive and Negative Mental Health Consequences of Early Childhood Television Watching
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17786
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17786
L1 - http://www.nber.org/papers/w17786.pdf
N1 - Author contact info:
Michael Waldman
Johnson Graduate School of Management
323 Sage Hall
Cornell University
Ithaca, NY 14853-6201
Tel: (607) 255-8631
Fax: (607) 254-4590
E-Mail: mw46@cornell.edu
Sean Nicholson
Professor
Department of Policy Analysis and Management
Cornell University
102 Martha Van Rensselaer Hall
Ithaca, NY 14853
Tel: 607/254-6498
Fax: 607/255-4071
E-Mail: sn243@cornell.edu
Nodir Adilov
Indiana University - Purdue University
Neff Hall
Fort Wayne, IN 46805
E-Mail: adilovn@ipfw.edu
AB - An extensive literature in medicine investigates the health consequences of early childhood television watching. However, this literature does not address the issue of reverse causation, i.e., does early childhood television watching cause specific health outcomes or do children more likely to have these health outcomes watch more television? This paper uses a natural experiment to investigate the health consequences of early childhood television watching and so is not subject to questions concerning reverse causation. Specifically, we use repeated cross-sectional data from 1972 through 1992 on county-level mental retardation rates, county-level autism rates, and county-level children’s cable-television subscription rates to investigate how early childhood television watching affects the prevalence of mental retardation and autism. We find a strong negative correlation between average county-level cable subscription rates when a birth cohort is below three and subsequent mental retardation diagnosis rates, but a strong positive correlation between the same cable subscription rates and subsequent autism diagnosis rates. Our results thus suggest that early childhood television watching has important positive and negative health consequences.
ER -
TY - JOUR
AU - Akresh,Richard
AU - Walque,Damien de
AU - Kazianga,Harounan
TI - Alternative Cash Transfer Delivery Mechanisms: Impacts on Routine Preventative Health Clinic Visits in Burkina Faso
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17785
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17785
L1 - http://www.nber.org/papers/w17785.pdf
N1 - Author contact info:
Richard Akresh
University of Illinois at Urbana-Champaign
Department of Economics
1407 West Gregory Drive
David Kinley Hall, Room 214
Urbana, IL 61801
Tel: 217-333-3467
Fax: 217-244-6678
E-Mail: akresh@illinois.edu
Damien de Walque
The World Bank
Development Research Group
1818 H Street, NW
Washington, DC 20433
Tel: (202) 473-2517
E-Mail: ddewalque@worldbank.org
Harounan Kazianga
Department of Economics
Oklahoma State University
Business 324
Stillwater, OK 74078
Tel: (405) 744-5110
E-Mail: harounan.kazianga@okstate.edu
M3 - presented at "African Development Successes", August 3-5, 2011
AB - We conducted a unique randomized experiment to estimate the impact of alternative cash transfer delivery mechanisms on household demand for routine preventative health services in rural Burkina Faso. The two-year pilot program randomly distributed cash transfers that were either conditional or unconditional and were given to either mothers or fathers. Families under the conditional cash transfer schemes were required to obtain quarterly child growth monitoring at local health clinics for all children under 60 months old. There were no such requirements under the unconditional programs. Compared with control group households, we find that conditional cash transfers significantly increase the number of preventative health care visits during the previous year, while unconditional cash transfers do not have such an impact. For the conditional cash transfers, transfers given to mothers or fathers showed similar magnitude beneficial impacts on increasing routine visits.
ER -
TY - JOUR
AU - Lockwood,Benjamin B.
AU - Weinzierl,Matthew C.
TI - De Gustibus non est Taxandum: Theory and Evidence on Preference Heterogeneity and Redistribution
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17784
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17784
L1 - http://www.nber.org/papers/w17784.pdf
N1 - Author contact info:
Benjamin B. Lockwood
Littauer Center, Room 200
Harvard University
Cambridge, MA 02138
E-Mail: lockwood@fas.harvard.edu
Matthew C. Weinzierl
Harvard Business School
277 Morgan
Soldiers Field
Boston, MA 02163
Tel: 617/495-6697
Fax: 617/496-5994
E-Mail: mweinzierl@hbs.edu
AB - Preferences over consumption and leisure play no role in the standard optimal tax model, which attributes all variation in earnings to differences in income-earning ability. We show how to incorporate these preferences, which like ability are publicly unobservable, into the standard model in a tractable way. In this more general model, the policy designer must guess at the relative importance of ability and preferences in explaining variation in earnings. We show that such preferences could, in principle, increase or decrease optimal redistribution. In the most plausible specifications of the model, however, the result is clear: greater variation in preferences lowers the optimal extent of redistribution. To generate more redistribution than in standard results, one must assume that the desire for income is inversely related to income earned. This result holds even when the conventional model accurately describes the average individual, and it suggests one potential resolution to the puzzle of why observed redistribution is in some cases weaker than conventional theory would suggest. We then establish a new empirical finding that confirms this model's central policy prediction across developed countries and U.S. states. In countries and states with more heterogeneous tastes for consumption relative to leisure, redistribution is statistically significantly lower.
ER -
TY - JOUR
AU - Gabaix,Xavier
TI - Boundedly Rational Dynamic Programming: Some Preliminary Results
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17783
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17783
L1 - http://www.nber.org/papers/w17783.pdf
N1 - Author contact info:
Xavier Gabaix
New York University
Finance Department
Stern School of Business
44 West 4th Street, 9th floor
New York, NY 10012
Tel: 212-998-0257
Fax: 212-995-4233
E-Mail: xgabaix@stern.nyu.edu
AB - A key open question in economics is the practical, portable modeling of bounded rationality. In this short note, I report ongoing progress that is more fully developed elsewhere. I present some results from a new model in which the decision-maker builds a simplified representation of the world. The model allows to model boundedly rational dynamic programming in a parsimonious and quite tractable way. I illustrate the approach via a boundedly rational version of the consumption-saving life cycle problem. The consumer can pay attention to the variables such as the interest rate and his income, or replace them, in his mental model, by their average values. Endogenously, the consumer pays little attention to interest rate but pays keen attention to his income. One consequence of this is that Euler equations will be biased, and the intertemporal elasticity of substitution will be biased toward 0, in a manner that is quantitatively important.
ER -
TY - JOUR
AU - Davis,Steven J.
AU - Faberman,R. Jason
AU - Haltiwanger,John C.
TI - Recruiting Intensity during and after the Great Recession: National and Industry Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17782
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17782
L1 - http://www.nber.org/papers/w17782.pdf
N1 - Author contact info:
Steven J. Davis
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-7312
Fax: 773/834-0733
E-Mail: Steven.Davis@ChicagoBooth.edu
Jason Faberman
Economic Research Department
Federal Reserve Bank of Chicago
230 S. LaSalle St.
Chicago, IL 60604
Tel: (312) 322-5274
Fax: (312) 322-2357
E-Mail: jfaberman@frbchi.org
John C. Haltiwanger
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3504
Fax: 301/405-3542
E-Mail: haltiwan@econ.umd.edu
AB - We measure job-filling rates and recruiting intensity per vacancy at the national and industry levels from January 2001 to September 2011 using data from the Job Openings and Labor Turnover Survey. Construction makes up less than 5 percent of employment but accounts for more than 40 percent of the large swings in the job-filling rate during and after the Great Recession. Leisure & Hospitality accounts for nearly a quarter of the large drop in recruiting intensity during the Great Recession. We show that industry-level movements in job-filling rates and recruiting intensity are at odds with the implications of the standard matching function in labor search theory but consistent with a generalized function that incorporates an important role for recruiting intensity per vacancy.
ER -
TY - JOUR
AU - Barcellos,Silvia H.
AU - Carvalho,Leandro
AU - Lleras-Muney,Adriana
TI - Child Gender And Parental Investments In India: Are Boys And Girls Treated Differently?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17781
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17781
L1 - http://www.nber.org/papers/w17781.pdf
N1 - Author contact info:
Silvia H. Barcellos
Rand Corporation
1776 Main Street
Santa Monica, CA 90401
E-Mail: silvia@rand.org
Leandro Carvalho
Rand Corporation
1776 Main Street
Santa Monica, CA 90401
E-Mail: carvalho@rand.org
Adriana Lleras-Muney
Department of Economics
9373 Bunche Hall
UCLA
Los Angeles, CA 90095
Tel: 310/825-3925
Fax: NA
E-Mail: alleras@ECON.UCLA.EDU
AB - Although previous research has not always found that boys and girls are treated differently in rural India, son-biased stopping rules imply that estimates of the effect of gender on parental investments are likely to be biased because girls systematically end up in larger families. We propose a novel identification strategy for overcoming this bias. We document that boys receive significantly more childcare time than girls. In addition boys are more likely to be breastfed longer, and to be given vaccinations and vitamin supplementation. We then present suggestive evidence that the differential treatment of boys is neither due to their greater needs nor to the effect of anticipated family size.
ER -
TY - JOUR
AU - Hahm,Joon-Ho
AU - Mishkin,Frederic S.
AU - Shin,Hyun Song
AU - Shin,Kwanho
TI - Macroprudential Policies in Open Emerging Economies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17780
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17780
L1 - http://www.nber.org/papers/w17780.pdf
N1 - Author contact info:
Joon-Ho Hahm
Yonsei University
Seoul, Korea
E-Mail: jhahm@yonsei.ac.kr
Frederic S. Mishkin
Columbia University
Graduate School of Business
Uris Hall 817
3022 Broadway
New York, NY 10027
Tel: 212-854-3488
Fax: 212/662-8474
E-Mail: fsm3@columbia.edu
Hyun Song Shin
Department of Economics
Princeton University
Princeton, NJ 08544
Tel: 609/258-4467
Fax: 609/258-0771
E-Mail: hsshin@princeton.edu
Kwanho Shin
Korea University
Department of Economics
Seoul 136-701
Korea
Tel: 02-3290-2220
Fax: 02-3290-2719
E-Mail: khshin@korea.ac.kr
AB - This paper examines macroprudential policies in open emerging economies. It discusses how the recent financial crisis has provided a rationale for macroprudential policies to help manage the economy and the need for policymakers to monitor the financial cycle and systemic risks. It also discusses one particularly promising measure of the state of the financial cycle, the growth of non-core liabilities of the financial sector, and evaluates macroprudential policy frameworks. The paper uses Korea as an example and conducts an empirical evaluation of non-core liabilities of Korean banks as a measure of the financial cycle.
ER -
TY - JOUR
AU - Krusell,Per
AU - Mukoyama,Toshihiko
AU - Rogerson,Richard
AU - Şahin,Ayşegül
TI - Is Labor Supply Important for Business Cycles?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17779
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17779
L1 - http://www.nber.org/papers/w17779.pdf
N1 - Author contact info:
Per Krusell
Institute for International Economic Studies
Stockholm University
106 91 STOCKHOLM
SWEDEN
E-Mail: per.krusell@iies.su.se
Toshihiko Mukoyama
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville VA 22904
E-Mail: tm5hs@virginia.edu
Richard Rogerson
Woodrow Wilson School of
Public and International Affairs
323 Bendheim Hall
Princeton University
Princeton, NJ 08544
Tel: 609-258-4839
Fax: 609-258-5349
E-Mail: rdr@princeton.edu
Aysegul Sahin
Federal Reserve Bank of New York
Research & Statistics Group
33 Liberty Street
New York, NY 10045
Tel: 212-720-5145
E-Mail: Aysegul.Sahin@ny.frb.org
AB - We build a general equilibrium model that features uninsurable idiosyncratic shocks, search frictions and an operative labor supply choice along the extensive margin. The model is calibrated to match the average levels of gross flows across the three labor market states: employment, unemployment, and non-participation. We use it to study the implications of two kinds of aggregate shocks for the cyclical behavior of labor market aggregates and flows: shocks to search frictions (the rates of job finding and job loss) and shocks to the return on the market activity (any factors affecting aggregate productivity). We find that both kinds of shocks are needed to explain the labor market data, and that an active labor supply channel is key. A model with friction shocks only, calibrated to match unemployment fluctuations, accounts for only a small fraction of employment fluctuations and has counterfactual cyclical predictions for participation.
ER -
TY - JOUR
AU - Buera,Francisco J.
AU - Moll,Benjamin
TI - Aggregate Implications of a Credit Crunch
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17775
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17775
L1 - http://www.nber.org/papers/w17775.pdf
N1 - Author contact info:
Francisco J. Buera
Department of Economics
University of California, Los Angeles
8283 Bunche Hall Office 8357
Mail Stop: 147703
Los Angeles, CA 90095
Tel: 310/825-8018
Fax: 310/825-9528
E-Mail: fjbuera@econ.ucla.edu
Benjamin Moll
106 Fisher Hall Department of Economics
Princeton University
Princeton, NJ 08544
E-Mail: moll@princeton.edu
AB - We take an off-the-shelf model with financial frictions and heterogeneity, and study the mapping from a credit crunch, modeled as a shock to collateral constraints, to simple aggregate wedges. We study three variants of this model that only differ in the form of underlying heterogeneity. We find that in all three model variants a credit crunch shows up as a different wedge: efficiency, investment, and labor wedges. Furthermore, all three model variants have an undistorted Euler equation for the aggregate of firm owners. These results highlight the limitations of using representative agent models to identify sources of business cycle fluctuations.
ER -
TY - JOUR
AU - Burstein,Ariel
AU - Cravino,Javier
TI - Measured Aggregate Gains from International Trade
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17767
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17767
L1 - http://www.nber.org/papers/w17767.pdf
N1 - Author contact info:
Ariel Burstein
Department of Economics
Bunche Hall 8365
Box 951477
UCLA
Los Angeles, CA 90095-1477
Tel: 310/206-6732
Fax: 310/825-9528
E-Mail: arielb@econ.ucla.edu
Javier Cravino
Department of Economics
UCLA
Bunche Hall 8365
Los Angeles, CA 90095-1477
E-Mail: jcravino@ucla.edu
AB - Do theoretical welfare gains from trade translate into aggregate measures of economic activity? We calculate the changes in real GDP and real consumption that result from changes in trade costs in a range of workhorse trade models, following the procedures outlined by statistical agencies in the United States. Our main findings are as follows: First, real GDP and measured aggregate productivity rise in response to reductions in variable trade costs if GDP deflators capture the decline in trade costs. Second, with balanced trade in each country, changes in world real consumption and changes in world real GDP (i.e.: weighting the change in each country by its nominal GDP) in response to changes in variable trade costs coincide, up to a first-order approximation, with changes in world theoretical (welfare-based) consumption. The equivalence between measured consumption and theoretical consumption holds country-by-country under stronger conditions. Third, for given trade shares and changes in variable trade costs, changes in real GDP and changes in world real consumption are approximately equal in magnitude across the models we consider.
ER -
TY - JOUR
AU - Kim,Yun Jung
AU - Tesar,Linda
AU - Zhang,Jing
TI - The Impact of Foreign Liabilities on Small Firms: Firm-Level Evidence from the Korean Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17756
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17756
L1 - http://www.nber.org/papers/w17756.pdf
N1 - Author contact info:
Yun Jung Kim
University of Michigan
Department of Economics
611 Tappan Street
Ann Arbor, MI 48109-1220
E-Mail: yunjungk@umich.edu
Linda Tesar
Department of Economics
University of Michigan
Ann Arbor, MI 48109-1220
Tel: 734/763 6015
Fax: 734/764-2769
E-Mail: ltesar@umich.edu
Jing Zhang
University of Michigan
Department of Economics
611 Tappan Street
Ann Arbor, MI 48109-1220
E-Mail: jzhang@umich.edu
AB - Using Korean firm-level data on publicly-listed and privately-held firms together with firm exit data, we find strong evidence of the balance-sheet effect for small firms at both the intensive and extensive margins. During the crisis, small firms with more short-term foreign debt are more likely to go bankrupt, and experience larger sales declines conditional on survival. The extensive margin accounts for a large fraction of small firms’ adjustment during the crisis. Consistent with many studies in the literature, large firms with larger exposure to foreign debt paradoxically have better performance during the crisis at both the intensive and extensive margin.
ER -
TY - JOUR
AU - Gorton,Gary B.
AU - Metrick,Andrew
TI - Getting up to Speed on the Financial Crisis: A One-Weekend-Reader's Guide
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17778
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17778
L1 - http://www.nber.org/papers/w17778.pdf
N1 - Author contact info:
Gary B. Gorton
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
Fax: 203/432-8931
E-Mail: Gary.Gorton@yale.edu
Andrew Metrick
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520
Tel: 203/432-3069
E-Mail: metrick@yale.edu
AB - All economists should be conversant with “what happened?” during the financial crisis of 2007-2009. We select and summarize 16 documents, including academic papers and reports from regulatory and international agencies. This reading list covers the key facts and mechanisms in the build-up of risk, the panics in short-term-debt markets, the policy reactions, and the real effects of the financial crisis.
ER -
TY - JOUR
AU - Gorton,Gary B.
AU - Lewellen,Stefan
AU - Metrick,Andrew
TI - The Safe-Asset Share
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17777
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17777
L1 - http://www.nber.org/papers/w17777.pdf
N1 - Author contact info:
Gary B. Gorton
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
Fax: 203/432-8931
E-Mail: Gary.Gorton@yale.edu
Stefan Lewellen
Yale School of Management
135 Prospect Street
New Haven, CT 06520
E-Mail: stefan.lewellen@yale.edu
Andrew Metrick
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520
Tel: 203/432-3069
E-Mail: metrick@yale.edu
AB - We document that the percentage of all U.S. assets that are “safe” has remained stable at about 33 percent since 1952. This stable ratio is a rare example of calm in a rapidly changing financial world. Over the same time period, the ratio of U.S. assets to GDP has increased by a factor of 2.5, and the main supplier of safe financial debt has shifted from commercial banks to the “shadow banking system.” We analyze this pattern of stylized facts and offer some tentative conclusions about the composition of the safe-asset share and its role within the overall economy.
ER -
TY - JOUR
AU - Cascio,Elizabeth U.
AU - Washington,Ebonya L.
TI - Valuing the Vote: The Redistribution of Voting Rights and State Funds Following the Voting Rights Act of 1965
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17776
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17776
L1 - http://www.nber.org/papers/w17776.pdf
N1 - Author contact info:
Elizabeth U. Cascio
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: (603) 646-4096
Fax: (603) 646-2122
E-Mail: elizabeth.u.cascio@dartmouth.edu
Ebonya L. Washington
Yale University
Box 8264
37 Hillhouse, Room 36
New Haven, CT 06520
Tel: 203/432-9901
Fax: 203/432-6323
E-Mail: ebonya.washington@yale.edu
AB - The Voting Rights Act of 1965 (VRA) has been called one of the most effective pieces of civil rights legislation in US history, having generated dramatic increases in black voter registration and black voter turnout across the South. We show that the expansion of black voting rights in some southern states brought about by one requirement of the VRA – the elimination of literacy tests at voter registration – was accompanied by a shift in the distribution of state aid toward localities with higher proportions of black residents, who held newfound power to affect the reelection of state officials, a finding that is consistent with models of distributive politics. Our estimates imply an elasticity of state transfers to counties with respect to turnout in presidential elections – the closest available measure of enfranchisement – of roughly one.
ER -
TY - JOUR
AU - Herbst,Chris M.
AU - Tekin,Erdal
TI - Child Care Subsidies, Maternal Well-Being, and Child-Parent Interactions: Evidence from Three Nationally Representative Datasets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17774
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17774
L1 - http://www.nber.org/papers/w17774.pdf
N1 - Author contact info:
Chris M. Herbst
School of Public Affairs, ASU, Mail Code 3720
411 N. Central Ave., Ste. 450
Phoenix, AZ 85004-0687
E-Mail: chris.herbst@asu.edu
Erdal Tekin
Department of Economics
Andrew Young School of Policy Studies
Georgia State University
P.O. Box 3992
Atlanta, GA 30302-3992
Tel: 404/413-0163
Fax: 404/413-0145
E-Mail: tekin@gsu.edu
AB - A complete account of the U.S. child care subsidy system requires an understanding of its implications for both parental and child well-being. Although the effects of child care subsidies on maternal employment and child development have been recently studied, many other dimensions of family well-being have received little attention. This paper attempts to fill this gap by examining the impact of child care subsidy receipt on maternal health and the quality of child-parent interactions. The empirical analyses use data from three nationally representative surveys, providing access to numerous measures of family well-being. In addition, we attempt to handle the possibility of non-random selection into subsidy receipt by using several identification strategies both within and across the surveys. Our results consistently indicate that child care subsidies are associated with worse maternal health and poorer interactions between parents and their children. In particular, subsidized mothers report lower levels of overall health and are more likely to show symptoms consistent with anxiety, depression, and parenting stress. Such mothers also reveal more psychological and physical aggression toward their children and are more likely to utilize spanking as a disciplinary tool. Together, these findings suggest that work-based public policies aimed at economically disadvantaged mothers may ultimately undermine family well-being.
ER -
TY - JOUR
AU - Hall,Bronwyn H.
AU - Harhoff,Dietmar
TI - Recent Research on the Economics of Patents
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17773
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17773
L1 - http://www.nber.org/papers/w17773.pdf
N1 - Author contact info:
Bronwyn H. Hall
Dept. of Economics
549 Evans Hall
UC Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-3878
Fax: 510/548-5561
E-Mail: bhhall@nber.org
Dietmar Harhoff
Institute for Innovation Research
Munich School of Management
University of Munich
Kaulbachstrasse 45
D-80539 Munich, Germany
E-Mail: harhoff@bwl.uni-muenchen.de
AB - Recent research on the economics of patents is surveyed. The topics covered include theoretical and empirical evidence on patents as an incentive for innovation, the effectiveness of patents for invention disclosure, patent valuation, and what we know about the design of patent systems. We also look at what is known about some current policy areas, including software and business method patents, university patenting, and the growth in patent litigation.
ER -
TY - JOUR
AU - Hamilton,James D.
AU - Wu,Jing Cynthia
TI - Identification and Estimation of Gaussian Affine Term Structure Models
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17772
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17772
L1 - http://www.nber.org/papers/w17772.pdf
N1 - Author contact info:
James D. Hamilton
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-5986
Fax: 858/534-7040
E-Mail: jhamilton@ucsd.edu
Jing Cynthia Wu
Booth School of Business
University of Chicago
5807 S Woodlawn Ave
Chicago, IL 60637-1610
E-Mail: Cynthia.Wu@chicagobooth.edu
AB - This paper develops new results for identification and estimation of Gaussian affine term structure models. We establish that three popular canonical representations are unidentified, and demonstrate how unidentified regions can complicate numerical optimization. A separate contribution of the paper is the proposal of minimum-chi-square estimation as an alternative to MLE. We show that, although it is asymptotically equivalent to MLE, it can be much easier to compute. In some cases, MCSE allows researchers to recognize with certainty whether a given estimate represents a global maximum of the likelihood function and makes feasible the computation of small-sample standard errors.
ER -
TY - JOUR
AU - Gorton,Gary B.
AU - Ordonez,Guillermo
TI - Collateral Crises
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17771
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17771
L1 - http://www.nber.org/papers/w17771.pdf
N1 - Author contact info:
Gary B. Gorton
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
Fax: 203/432-8931
E-Mail: Gary.Gorton@yale.edu
Guillermo Ordonez
Yale University
Department of Economics
28 Hillhouse Avenue
New Haven, CT 06511
Tel: 203/432-8320
Fax: 203/436-2626
E-Mail: guillermo.ordonez@yale.edu
AB - Short-term collateralized debt, such as demand deposits and money market instruments - private money, is efficient if agents are willing to lend without producing costly information about the collateral backing the debt. When the economy relies on such informationally-insensitive debt, firms with low quality collateral can borrow, generating a credit boom and an increase in output and consumption. Financial fragility builds up over time as information about counterparties decays. A crisis occurs when a small shock then causes a large change in the information environment. Agents suddenly have incentives to produce information, asymmetric information becomes a threat and there is a decline in output and consumption. A social planner would produce more information than private agents, but would not always want to eliminate fragility.
ER -
TY - JOUR
AU - DeBacker,Jason M.
AU - Heim,Bradley T.
AU - Tran,Anh
TI - Importing Corruption Culture from Overseas:
Evidence from Corporate Tax Evasion in the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17770
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17770
L1 - http://www.nber.org/papers/w17770.pdf
N1 - Author contact info:
Jason M. DeBacker
Department of the Treasury
Fax: Financial Economics
E-Mail: jason.debacker@gmail.com
Bradley Heim
School of Public and Environmental Affairs
Indiana University
1315 E 10th St
Bloomington, IN 47405
Tel: 812-855-9783
E-Mail: heimb@indiana.edu
Anh Tran
1315 E. 10th St
SPEA Room 410J
Bloomington, IN 47405
E-Mail: trananh@indiana.edu
M3 - presented at "Causes and Consequences of Corporate Culture", December 8-9, 2011
AB - This paper studies how cultural norms and enforcement policies influence illicit corporate activities. Using confidential IRS audit data, we show that corporations with owners from countries with higher corruption norms engage in higher amounts of tax evasion in the U.S. This effect is strong for small corporations and decreases as the size of the corporation increases. In the mid-2000s, the United States implemented several enforcement measures which significantly increased tax compliance. However, we find that these enforcement efforts were less effective in reducing tax evasion by corporations whose owners are from countries with higher corruption norms. This suggests that cultural norms can be a challenge to legal enforcement.
ER -
TY - JOUR
AU - Kogan,Leonid
AU - Papanikolaou,Dimitris
AU - Seru,Amit
AU - Stoffman,Noah
TI - Technological Innovation, Resource Allocation, and Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17769
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17769
L1 - http://www.nber.org/papers/w17769.pdf
N1 - Author contact info:
Leonid Kogan
MIT Sloan School of Management
100 Main Street, E62-636
Cambridge, MA 02142
Tel: 617/504-9728
Fax: 617/258-6855
E-Mail: lkogan@mit.edu
Dimitris Papanikolaou
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-7704
E-Mail: d-papanikolaou@kellogg.northwestern.edu
Amit Seru
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-2767
E-Mail: amit.seru@chicagobooth.edu
Noah Stoffman
Kelley School of Business, Indiana University
1309 E 10th Street
Bloomington, IN 47405
Tel: (812) 856-5664
E-Mail: nstoffma@indiana.edu
AB - We explore the role of technological innovation as a source of economic growth by constructing direct measures of innovation at the firm level. We combine patent data for US firms from 1926 to 2010 with the stock market response to news about patents to assess the economic importance of each innovation. Our innovation measure predicts productivity and output at the firm, industry and aggregate level. Furthermore, capital and labor flow away from non-innovating firms towards innovating firms within an industry. There exists a similar, though weaker, pattern across industries. Cross-industry differences in technological innovation are strongly related to subsequent differences in industry output growth.
ER -
TY - JOUR
AU - Krishnamurthy,Arvind
AU - Nagel,Stefan
AU - Orlov,Dmitry
TI - Sizing Up Repo
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17768
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17768
L1 - http://www.nber.org/papers/w17768.pdf
N1 - Author contact info:
Arvind Krishnamurthy
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-2671
Fax: 847/491-5719
E-Mail: a-krishnamurthy@northwestern.edu
Stefan Nagel
Stanford University
Graduate School of Business
655 Knight Way
Stanford, CA 94305
Tel: 650/724-9762
Fax: 650/725-7979
E-Mail: nagel_stefan@gsb.stanford.edu
Dmitry Orlov
Stanford University
Graduate School of Business
655 Knight Way
Stanford, CA 94305
E-Mail: dorlov@stanford.edu
AB - We measure the repo funding extended by money market funds (MMF) and securities lenders to the shadow banking system, including quantities, haircuts, and repo rates by type of underlying collateral. We find that repo played only a small role in funding private sector assets prior to the crisis, as most repos are backed by Treasury and Agency collateral. Repo with private sector collateral contracts during the crisis, but the magnitude is relatively insignificant compared with the contraction in asset-backed commercial paper (ABCP). While relatively small in aggregate, the contraction in repo particularly affected key dealer banks with large exposures to private sector securities, which then had knock-on effects on security markets, and led these dealer banks to resort to the Fed's emergency lending programs. We also find that haircuts in MMF-to-dealer repo rise less than the dealer-to-dealer or dealer-to-hedge fund repo haircuts reported in earlier papers. This finding suggests that the contraction in repo led dealers to take defensive actions, given their own capital and liquidity problems, raising credit terms to their borrowers. The picture that emerges from these findings looks less like a traditional bank run of depositors and more like a credit crunch among dealer banks.
ER -
TY - JOUR
AU - Allcott,Hunt
AU - Greenstone,Michael
TI - Is There an Energy Efficiency Gap?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17766
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17766
L1 - http://www.nber.org/papers/w17766.pdf
N1 - Author contact info:
Hunt Allcott
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
E-Mail: hunt.allcott@nyu.edu
Michael Greenstone
MIT Department of Economics
50 Memorial Drive, E52-359
Cambridge, MA 02142-1347
Tel: 617/452-4127
Fax: 617/253-1330
E-Mail: mgreenst@mit.edu
AB - Many analysts have argued that energy efficiency investments offer an enormous “win-win” opportunity to both reduce negative externalities and save money. This overview paper presents a simple model of investment in energy-using capital stock with two types of market failures: first, uninternalized externalities from energy consumption, and second, forces such as imperfect information that cause consumers and firms not to exploit privately-profitable energy efficiency investments. The model clarifies that only if the second type of market failure cannot be addressed directly through mechanisms such as information provision, energy efficiency subsidies and standards may be merited. We therefore review the empirical work on the magnitude of profitable unexploited energy efficiency investments, a literature which frequently does not meet modern standards for credibly estimating the net present value of energy cost savings and often leaves other benefits and costs unmeasured. These problems notwithstanding, recent empirical work in a variety of contexts implies that on average the magnitude of profitable unexploited investment opportunities is much smaller than engineering-accounting studies suggest. Finally, there is tremendous opportunity and need for policy-relevant research that utilizes randomized controlled trials and quasi-experimental techniques to estimate the returns to energy efficiency investments and the welfare effects of energy efficiency programs.
ER -
TY - JOUR
AU - Kaplow,Louis
TI - On the Optimal Burden of Proof
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17765
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17765
L1 - http://www.nber.org/papers/w17765.pdf
N1 - Author contact info:
Louis Kaplow
Harvard University
Hauser 322
Cambridge, MA 02138
Tel: 617/495-4101
Fax: 617/496-4880
E-Mail: meskridge@law.harvard.edu
AB - The burden of proof is a central feature of adjudication, and analogues exist in many other settings. It constitutes an important but largely unappreciated policy instrument that interacts with the level of enforcement effort and magnitude of sanctions in controlling harmful activity. Models are examined in which the prospect of sanctions affects not only harmful acts but also benign ones, on account of the prospect of mistaken application of sanctions. Accordingly, determination of the optimal strength of the burden of proof, as well as optimal enforcement effort and sanctions, involves trading off deterrence and the chilling of desirable behavior, the latter being absent in previous work. The character of the optimum differs markedly from prior results and from conventional understandings of proof burdens, which can be understood as involving Bayesian posterior probabilities. Additionally, there are important divergences across models in which enforcement involves monitoring (posting officials to be on the lookout for harmful acts), investigation (inquiry triggered by the costless observation of particular harmful acts), and auditing (scrutiny of a random selection of acts). A number of extensions are analyzed, in one instance nullifying key results in prior work.
ER -
TY - JOUR
AU - Edwards,Sebastian
TI - Is Tanzania a Success Story? A Long Term Analysis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17764
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17764
L1 - http://www.nber.org/papers/w17764.pdf
N1 - Author contact info:
Sebastian Edwards
UCLA Anderson Graduate School of Business
110 Westwood Plaza, Suite C508
Box 951481
Los Angeles, CA 90095-1481
Tel: 310/206-6797
Fax: 310/206-5825
E-Mail: sebastian.edwards@anderson.ucla.edu
M3 - presented at "African Development Successes", August 3-5, 2011
AB - The purpose of this paper is to provide a historical perspective on the reform process initiated in Tanzania in 1986, and deepened in 1996. In order to do this I concentrate mostly on the period spanning from 1967, when the Arusha Declaration was adopted by the official political party the TANU, and 1996, when a new approach towards foreign aid was implemented. I am particularly interested in investigating how external aid affected Tanzania during the early years, and how it contributed to the demise of the economy in the 1970s and 1980s. I also analyze the role played by foreign aid in the subsequent (after 1996) recovery of the country. I emphasize both technical as well as political economy issues related to imbalances, disequilibria, devaluation, black markets, adjustment, and reform. Because of the emphasis on foreign aid and macroeconomics, I pay special attention to three important episodes in Tanzania’s economic history: (a) the exchange rate crisis of the late 1970’s and early 1980s; (b) the IMF Stand-by Program and the maxi-devaluation of 1986; and (c) The serious impasse between donors and the Tanzanian authorities in the mid 1990s. At the end of the analysis I ask whether Tanzania is, as officials from the multilateral institutions have claimed repeatedly, a “success story.”
ER -
TY - JOUR
AU - Gozzi,Juan Carlos
AU - Levine,Ross
AU - Peria,Maria Soledad Martinez
AU - Schmukler,Sergio L.
TI - How Firms Use Domestic and International Corporate Bond Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17763
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17763
L1 - http://www.nber.org/papers/w17763.pdf
N1 - Author contact info:
Juan Carlos Gozzi
International Finance Division
Board of Governors of the Federal Reserve System
Washington, DC
E-Mail: Juan.C.GozziValdez@frb.gov
Ross Levine
Department of Economics
Brown University
64 Waterman Street
Providence, RI 02912
Tel: 401/863-2170
E-Mail: ross_levine@brown.edu
Maria Soledad Martinez Peria
The World Bank
E-Mail: mmartinezperia@worldbank.org
Sergio Schmukler
The World Bank
MSN MC3-301
1818 H Street, N.W.
Washington, DC 20433
Tel: 202-458-4167
Fax: 202-522-3518
E-Mail: Sschmukler@worldbank.org
AB - This paper provides the first comprehensive documentation of the main features of corporate bond issues in domestic and international markets and analyzes how firms use these markets after they internationalize. We find that debt issues in domestic and international bond markets have different characteristics, not explained by differences across firms or their country of origin. International issues tend to be larger, of shorter maturity, denominated in foreign currency, and include a higher fraction of fixed rate contracts. Moreover, a large proportion of firms remain active in domestic bond markets after accessing international markets, and many of these firms use both markets for different types of issues. This evidence suggests that domestic and international bond markets provide different financial services and are not substitutes, but rather complements.
ER -
TY - JOUR
AU - Bernheim,B. Douglas
AU - Meer,Jonathan
AU - Novarro,Neva K.
TI - Do Consumers Exploit Precommitment Opportunities? Evidence from Natural Experiments Involving Liquor Consumption
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17762
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17762
L1 - http://www.nber.org/papers/w17762.pdf
N1 - Author contact info:
B. Douglas Bernheim
Department of Economics
Stanford University
Stanford, CA 94305-6072
Tel: 650/725-8732
Fax: 650/725-5702
E-Mail: bernheim@stanford.edu
Jonathan Meer
Department of Economics
Texas A&M University
College Station, TX 77843
E-Mail: jmeer@econmail.tamu.edu
Neva K. Novarro
Department of Economics
425 N College Ave.
Claremont, CA 91711
E-Mail: nnovarro@gmail.com
AB - The object of this paper is to provide evidence concerning the extent to which consumers of liquor exhibit a demand for precommitment devices. One of the most frequently mentioned strategies for exercising self-control is to limit the availability of a problematic good by not maintaining an easily accessed supply. In a policy regime with shorter sales hours (either for on-premise or off-premise consumption), this strategy should be more effective; hence, if the strategy is widely used, alcohol consumption should be lower. In contrast, without time inconsistency, one would expect liquor consumption to decline with shorter on-premise sales, but not necessarily with shorter off-premise sales hours (because liquor is storable at low cost and the experience is repeated with high frequency). We examine a collection of natural experiments in which states expanded allowable Sunday sales hours for liquor. Our results indicate that consumers increase their liquor consumption in response to extended Sunday on-premise sales hours, but not in response to extended off-premise sales hours. Thus we find no indication that precommitment strategies affecting availability play meaningful roles in aggregate liquor consumption. Instead, the observed pattern coincides with predictions for time-consistent consumers who have rational expectations and low costs of carrying inventories.
ER -
TY - JOUR
AU - Bordalo,Pedro
AU - Gennaioli,Nicola
AU - Shleifer,Andrei
TI - Salience in Experimental Tests of the Endowment Effect
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17761
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17761
L1 - http://www.nber.org/papers/w17761.pdf
N1 - Author contact info:
Pedro Bordalo
Department of Economics
Royal Holloway
University of London
Egham Hill, Egham, TW20 0EX
United Kingdom
E-Mail: pedro.bordalo@rhul.ac.uk
Nicola Gennaioli
CREI
Universitat Pompeu Fabra
Ramon Trias Fargas 25-27
08005 Barcelona (Spain)
E-Mail: ngennaioli@crei.cat
Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
AB - We provide a novel account of experimental evidence for the endowment effect using the salience mechanism (Bordalo, Gennaioli, and Shleifer, 2011). The two-stage procedure implemented in experiments implies that the endowed good and other goods are evaluated in different contexts. We describe conditions under which the standard effect occurs, but also account for recent evidence such as a reverse endowment effect for bads and a role for reference prices in modulating the WTA-WTP gap.
ER -
TY - JOUR
AU - Rajan,Raghuram
TI - The Corporation in Finance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17760
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17760
L1 - http://www.nber.org/papers/w17760.pdf
N1 - Author contact info:
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu
AB - The nature of the firm and its financing are closely interlinked. To produce significant net present value, an entrepreneur has to transform her enterprise into one that is differentiated from the ordinary. To achieve the control that will allow her to execute this strategy, she needs to have substantial ownership, and thus financing. But it is hard to raise finance against differentiated assets. So an entrepreneur has to commit to undertake a second transformation, standardization, that will make the human capital in the firm, including her own, replaceable, so that outside financiers obtain control rights that will allow them to be repaid. I argue that the availability of a vibrant stock market helps the entrepreneur commit to these two transformations in a way that a debt market would not. This helps explain why the nature of firms and the extent of innovation differ so much in different financing environments.
ER -
TY - JOUR
AU - Hamilton,James D.
TI - Oil Prices, Exhaustible Resources, and Economic Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17759
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17759
L1 - http://www.nber.org/papers/w17759.pdf
N1 - Author contact info:
James D. Hamilton
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-5986
Fax: 858/534-7040
E-Mail: jhamilton@ucsd.edu
AB - This paper explores details behind the phenomenal increase in global crude oil production over the last century and a half and the implications if that trend should be reversed. I document that a key feature of the growth in production has been exploitation of new geographic areas rather than application of better technology to existing sources, and suggest that the end of that era could come soon. The economic dislocations that historically followed temporary oil supply disruptions are reviewed, and the possible implications of that experience for what the transition era could look like are explored.
ER -
TY - JOUR
AU - Hummels,David
AU - Schaur,Georg
TI - Time as a Trade Barrier
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17758
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17758
L1 - http://www.nber.org/papers/w17758.pdf
N1 - Author contact info:
David Hummels
Krannert School of Management
403 West State Street
Purdue University
West Lafayette, IN 47907-1310
Tel: 765/494-4495
Fax: 765/494-9658
E-Mail: hummelsd@purdue.edu
Georg Schaur
University of Tennessee
Department of Economics
519 Stokely Management Center
Knoxville TN 37996
E-Mail: gschaur@utk.edu
AB - A large and growing share of international trade is carried on airplanes. Air cargo is many times more expensive than maritime transport but arrives in destination markets much faster. We model firms’ choice between exporting goods using fast but expensive air cargo and slow but cheap ocean cargo. This choice depends on the price elasticity of demand and the value that consumers attach to fast delivery and is revealed in the relative market shares of firms who air and ocean ship. We use US imports data that provide rich variation in the premium paid for air shipping and in time lags for ocean transit to identify these parameters and extract consumer’s valuation of time. By exploiting variation across US entry coasts we are able to control for selection and for unobserved shocks to product quality and variety that affect market shares. We estimate that each day in transit is equivalent to an ad-valorem tariff of 0.6 to 2.3 percent and that the most time-sensitive trade flows are those involving parts and components trade. These results suggest a link between sharp declines in the price of air shipping and rapid growth in trade as well as growth in world-wide fragmentation of production. Our estimates are also useful for assessing the economic impact of policies that raise or lower time to trade such as security screening of cargo, port infrastructure investment, or streamlined customs procedures.
ER -
TY - JOUR
AU - Hassler,John
AU - Krusell,Per
TI - Economics and Climate Change: Integrated Assessment in a Multi-Region World
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17757
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17757
L1 - http://www.nber.org/papers/w17757.pdf
N1 - Author contact info:
John Hassler
Institute for International Economic Studies
Stockholm University
E-Mail: John.Hassler@iies.su.se
Per Krusell
Institute for International Economic Studies
Stockholm University
106 91 STOCKHOLM
SWEDEN
E-Mail: per.krusell@iies.su.se
AB - This paper develops a model that integrates the climate and the global economy---an integrated assessment model---with which different policy scenarios can be analyzed and compared. The model is a dynamic stochastic general-equilibrium setup with a continuum of regions. Thus, it is a full stochastic general-equilibrium version of RICE, Nordhaus's pioneering multi-region integrated assessment model. Like RICE, our model features traded fossil fuel but otherwise has no markets across regions---there is no insurance nor any intertemporal trade across them. The extreme form of market incompleteness is not fully realistic but arguably not a decent approximation of reality. Its major advantage is that, along with a set of reasonable assumptions on preferences, technology, and nature, it allows a closed-form model solution. We use the model to assess the welfare consequences of carbon taxes that differ across as well as within oil-consuming and -producing regions. We show that, surprisingly, only taxes on oil producers can improve the climate: taxes on oil consumers have no effect at all. The calibrated model suggests large differences in views on climate policy across regions.
ER -
TY - JOUR
AU - Manski,Charles F.
TI - Identification of Preferences and Evaluation of Income Tax Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17755
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17755
L1 - http://www.nber.org/papers/w17755.pdf
N1 - Author contact info:
Charles F. Manski
Department of Economics
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-8223
Fax: 847/491-7001
E-Mail: cfmanski@northwestern.edu
AB - The merits of alternative income tax policies depend on the population distribution of preferences for income, leisure, and public goods. Standard theory, which supposes that persons want more income and more leisure, does not predict how they resolve the tension between these desires. Empirical studies of labor supply have been numerous but have not shed much light on the matter. A persistent problem is that empirical researchers have imposed strong preference assumptions that lack foundation. This paper examines anew the problem of inference on preferences and considers the implications for comparison of tax policies. I first perform a basic revealed-preference analysis that imposes no assumptions on the preference distribution beyond the presumption that persons prefer more income and leisure. This shows that observation of a person’s labor supply under a status quo tax policy may bound his labor supply under a proposed policy or may have no implications, depending on the shapes of the two tax schedules and the location of status quo labor supply. I next explore the identifying power of two assumptions restricting the population distribution of income-leisure preferences. One assumes that groups of persons who face different choice sets have the same distribution of preferences, while the other adds restrictions on the shape of this distribution. I then address utilitarian policy comparison with partial knowledge of preferences. Partial knowledge of preferences implies partial knowledge of the welfare function. Hence, it may not be possible to rank policies.
ER -
TY - JOUR
AU - Sojourner,Aaron J.
AU - Town,Robert J.
AU - Grabowski,David C.
AU - Chen,Michelle M.
TI - Impacts of Unionization on Employment, Product Quality and Productivity: Regression Discontinuity Evidence From Nursing Homes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17733
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17733
L1 - http://www.nber.org/papers/w17733.pdf
N1 - Author contact info:
Aaron Sojourner
University of Minnesota
Carlson School of Management
321 19th Ave S, 3-300
Minneapolis, MN 55455
E-Mail: asojourn@umn.edu
Robert Town
Health Care Management Department
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
E-Mail: rtown@wharton.upenn.edu
David Grabowski
Harvard University
Department of Health Care Policy
Harvard Medical School
180 Longwood Avenue
Boston, MA 02115
E-Mail: grabowski@med.harvard.edu
Min Chen
Department of Finance and Real Estate
The College of Business Administration
Florida International University
11200 S.W. 8th Street
Miami, Florida 33199
Tel: (305) 348-4201
E-Mail: min.chen2@fiu.edu
AB - This paper studies the effects of unions in private-sector nursing homes on a broad range of labor, firm, and consumer outcomes. We link national data on nursing home characteristics from the Centers for Medicare and Medicaid Services to records on establishment-level unionization from federal labor agencies, and employ a regression discontinuity design to identify union effects by contrasting outcomes in nursing homes where unions closely won representation elections to outcomes in facilities where unions closely lost such elections. After showing that these two sets of homes are similar leading up to the election, we estimate union effects on staffing levels, care quality, and other outcomes. We find negative effects of unions on staffing levels and no decline in care quality, suggesting positive productivity effects. Consistent with these results, supplementary analysis shows significant increases in wages for some classes of nursing labor. Some evidence suggests that nursing homes in local product markets that were less competitive and had lower union density at the time of election experienced stronger union employment effects. We find no impact of unionization on facility survival. By combining credible identification of union effects, a comprehensive set of outcomes over time with measures of market-level characteristics, this study generates some of the best evidence available on many controversial questions in the economics of unions. Furthermore, it generates evidence from the service sector, which has grown in importance and where evidence on these questions has been thin.
ER -
TY - JOUR
AU - Keller,Wolfgang
AU - Li,Ben
AU - Shiue,Carol H.
TI - Shanghai’s Trade, China’s Growth: Continuity, Recovery, and Change since the Opium War
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17754
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17754
L1 - http://www.nber.org/papers/w17754.pdf
N1 - Author contact info:
Wolfgang Keller
Department of Economics
University of Colorado-Boulder
Boulder, CO 80309-0256
Tel: 303/735 5507
Fax: 303/492 8960
E-Mail: Wolfgang.Keller@colorado.edu
Ben Li
Department of Economics
Boston College
140 Commonwealth Avenue
Chestnut Hill MA 02467-3806 USA
Tel: 1-617-552-4517
E-Mail: benli36@gmail.com
Carol H. Shiue
Department of Economics
University of Colorado-Boulder
Boulder, CO 80309-0256
E-Mail: carol.shiue@colorado.edu
AB - In this paper, we provide aggregate trends in China’s trade performance from the 1840s to the present. Based on historical benchmarks, we argue that China’s recent gains are not exclusively due to the reforms since 1978. Rather, foreign economic activity can be understood by developments that were set in motion in the 19th century. We turn our focus to Shanghai, currently the world’s largest port. Shanghai began direct trade relations with western nations starting in 1843. By 1853, Shanghai already accounted for more than half of China’s foreign trade. In tracking the levels and growth rates of the city’s net and gross imports and exports, foreign direct investment, and foreign residents over more than a century, we find that Shanghai’s level of bilateral trade today with the United States, the United Kingdom, or Japan, for example, are by no means high given Shanghai’s 19th century experience. This paper argues that a regional approach that embeds national trading destinations within an international trading system provides a meaningful approach to understanding the history of China’s trade.
ER -
TY - JOUR
AU - Vegh,Carlos A.
AU - Vuletin,Guillermo
TI - How is Tax Policy Conducted over the Business Cycle?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17753
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17753
L1 - http://www.nber.org/papers/w17753.pdf
N1 - Author contact info:
Carlos A. Vegh
Department of Economics
Tydings Hall, Office 4118G
University of Maryland
College Park, MD 20742-7211
Tel: 301-405-3546
Fax: 301-405-3542
E-Mail: vegh@econ.bsos.umd.edu
Guillermo Vuletin
Colby College
Department of Economics
Diamond, 3rd floor
5230 Mayflower Hill
Waterville, ME 04901-8852
Tel: 207-859-5235
Fax: 207-859-5248
E-Mail: gvuletin@colby.edu
AB - It is well known by now that government spending has typically been procyclical in emerging economies but acyclical or countercyclical in industrial countries. Little, if any, is known, however, about the cyclical behavior of tax rates (as opposed to tax revenues, which are endogenous to the business cycle and hence cannot shed light on the cyclicality of tax policy). We build a novel dataset on tax rates for 62 countries for the period 1960-2009 that comprises corporate income, personal income, and value-added tax rates. We find that, by and large, tax policy is acyclical in industrial countries but procyclical in developing countries. We show that the evidence is consistent with a model of optimal fiscal policy under uncertainty.
ER -
TY - JOUR
AU - Fryer,Roland G., Jr
TI - Aligning Student, Parent, and Teacher Incentives: Evidence from Houston Public Schools
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17752
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17752
L1 - http://www.nber.org/papers/w17752.pdf
N1 - Author contact info:
Roland G. Fryer, Jr
Department of Economics
Harvard University
Littauer Center 208
Cambridge, MA 02138
Tel: 617/495-9592
Fax: 617/495-8570
E-Mail: rfryer@fas.harvard.edu
AB - This paper describes an experiment designed to investigate the impact of aligning student, parent, and teacher incentives on student achievement. On outcomes for which incentives were provided, there were large treatment effects. Students in treatment schools mastered more than one standard deviation more math objectives than control students, and their parents attended almost twice as many parent-teacher conferences. In contrast, on related outcomes that were not incentivized (e.g. standardized test scores, parental engagement), we observe both positive and negative effects. We argue that these facts are consistent with a moral hazard model with multiple tasks, though other explanations are possible.
ER -
TY - JOUR
AU - Favilukis,Jack
AU - Kohn,David
AU - Ludvigson,Sydney C.
AU - Nieuwerburgh,Stijn Van
TI - International Capital Flows and House Prices: Theory and Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17751
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17751
L1 - http://www.nber.org/papers/w17751.pdf
N1 - Author contact info:
Jack Favilukis
London School of Economics
Department of Finance
Houghton Street, London WC2A 2AE
United Kingdom
E-Mail: jack.favilukis@gmail.com
David Kohn
Department of Economics
New York University
19 W. 4th Street 6th Floor
New York, NY 10012
E-Mail: dk1310@nyu.edu
Sydney C. Ludvigson
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10002
Tel: 212/998-8927
Fax: 212/995-4186
E-Mail: sydney.ludvigson@nyu.edu
Stijn Van Nieuwerburgh
Stern School of Business
New York University
44 W 4th Street, Suite 9-120
New York, NY 10012
Tel: 646/284-4141
Fax: 646/284-4141
E-Mail: svnieuwe@stern.nyu.edu
M1 - published as Jack Favilukis, David Kohn, Sydney C. Ludvigson, Stijn Van Nieuwerburgh. "International Capital Flows and House Prices: Theory and Evidence," in Edward Glaeser and Todd Sinai, editors, "Housing and the Financial Crisis" University of Chicago Press (2012)
AB - The last fifteen years have been marked by a dramatic boom-bust cycle in real estate prices, accompanied by economically large fluctuations in international capital flows. We argue that changes in international capital flows played, at most, a small role in driving house price movements in this episode and that, instead, the key causal factor was a financial market liberalization and its subsequent reversal. Using observations on credit standards, capital flows, and interest rates, we find that a bank survey measure of credit supply, by itself, explains 53 percent of the quarterly variation in house price growth in the U.S. over the period 1992-2010, while it explains 66 percent over the period since 2000. By contrast, once we control for credit supply, various measures of capital flows, real interest rates, and aggregate activity—collectively—add less than 5% to the fraction of variation explained for these same movements in home values. Credit supply retains its strong marginal explanatory power for house price movements over the period 2002-2010 in a panel of international data, while capital flows have no explanatory power.
ER -
TY - JOUR
AU - Lichtenberg,Frank R.
TI - The Effect of Pharmaceutical Innovation on the Functional Limitations of Elderly Americans Evidence from the 2004 National Nursing Home Survey
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17750
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17750
L1 - http://www.nber.org/papers/w17750.pdf
N1 - Author contact info:
Frank R. Lichtenberg
Columbia University
504 Uris Hall
3022 Broadway
New York, NY 10027
Tel: 212/854-4408
Fax: (212) 854-9895
E-Mail: frl1@columbia.edu
AB - I examine the effect of pharmaceutical innovation on the functional status of nursing home residents using cross-sectional, patient-level data from the 2004 National Nursing Home Survey. This was the first public-use survey of nursing homes that contains detailed information about medication use, and it contains better data on functional status than previous surveys.
Residents using newer medications and a higher proportion of priority-review medications were more able to perform all five activities of daily living (ADLs), controlling for age, sex, race, marital status, veteran status, where the resident lived prior to admission, primary diagnosis at the time of admission, up to 16 diagnoses at the time of the interview, sources of payment, and facility fixed effects.
The ability of nursing home residents to perform activities of daily living is positively related to the number of “new” (post-1990) medications they consume, but unrelated to the number of old medications they consume. If 2004 nursing home residents had used only old medications, the fraction of residents with all five ADL dependencies would have been 58%, instead of 50%. During the period 1990-2004, pharmaceutical innovation reduced the functional limitations of nursing home residents by between 1.2% and 2.1% per year.
ER -
TY - JOUR
AU - Irwin,Douglas A.
TI - The Nixon Shock after Forty Years: The Import Surcharge Revisited
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17749
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17749
L1 - http://www.nber.org/papers/w17749.pdf
N1 - Author contact info:
Douglas A. Irwin
Department of Economics
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2942
Fax: 603/646-2122
E-Mail: douglas.irwin@dartmouth.edu
AB - On August 15, 1971, President Richard Nixon closed the gold window and imposed a 10 percent surcharge on all dutiable imports in an effort to force other countries to revalue their currencies against the dollar. The import surcharge was lifted four months later after the Smithsonian agreement led to new exchange rate parities. This paper examines the political, economic, and legal issues surrounding the import surcharge. This historical episode may shed light on the possible use of trade sanctions as part of the effort to get China to allow the renminbi to appreciate more rapidly.
ER -
TY - JOUR
AU - Hackmann,Martin B.
AU - Kolstad,Jonathan T.
AU - Kowalski,Amanda E.
TI - Health Reform, Health Insurance, and Selection: Estimating Selection into Health Insurance Using the Massachusetts Health Reform
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17748
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17748
L1 - http://www.nber.org/papers/w17748.pdf
N1 - Author contact info:
Martin Hackmann
Department of Economics
Yale University
37 Hillhouse Avenue
Box 208264
New Haven, CT 06520
E-Mail: martin.hackmann@yale.edu
Jonathan T. Kolstad
The Wharton School
University of Pennsylvania
306 Colonial Penn Center
3641 Locust Walk
Philadelphia, PA 19104
Tel: 215/573-9075
E-Mail: jkolstad@wharton.upenn.edu
Amanda E. Kowalski
Department of Economics
Yale University
37 Hillhouse Avenue
Box 208264
New Haven, CT 06520
Tel: 203/432-3521
E-Mail: amanda.kowalski@yale.edu
AB - We implement an empirical test for selection into health insurance using changes in coverage induced by the introduction of mandated health insurance in Massachusetts. Our test examines changes in the cost of the newly insured relative to those who were insured prior to the reform. We find that counties with larger increases in insurance coverage over the reform period face the smallest increase in average hospital costs for the insured population, consistent with adverse selection into insurance before the reform. Additional results, incorporating cross-state variation and data on health measures, provide further evidence for adverse selection.
ER -
TY - JOUR
AU - Wolfram,Catherine
AU - Shelef,Orie
AU - Gertler,Paul J.
TI - How Will Energy Demand Develop in the Developing World?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17747
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17747
L1 - http://www.nber.org/papers/w17747.pdf
N1 - Author contact info:
Catherine Wolfram
Haas School of Business
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-2588
Fax: 510/643-1420
E-Mail: wolfram@haas.berkeley.edu
Orie Shelef
University of California at Berkeley
E-Mail: orie_shelef@haas.berkeley.edu
Paul J. Gertler
Haas School of Business
545 Student Services Building
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-1418
Fax: 510/642-4700
E-Mail: gertler@haas.berkeley.edu
AB - Most of the medium-run growth in energy demand is forecast to come from the developing world, which consumed more total units of energy than the developed world in 2007. We argue that the main driver of the growth is likely to be increased incomes among the poor and near-poor. We document that as households come out of poverty and join the middle class, they acquire appliances, such as refrigerators, and vehicles for the first time. These new goods require energy to use and energy to manufacture. The current forecasts for energy demand in the developing world may be understated because they do not accurately capture the dramatic increase in demand associated with poverty reduction.
ER -
TY - JOUR
AU - Menzio,Guido
AU - Telyukova,Irina A.
AU - Visschers,Ludo
TI - Directed Search over the Life Cycle
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17746
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17746
L1 - http://www.nber.org/papers/w17746.pdf
N1 - Author contact info:
Guido Menzio
Department of Economics
University of Pennsylvania
467 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
Tel: 773/865-6337
Fax: 215/573-2057
E-Mail: gmenzio@econ.upenn.edu
Irina Telyukova
UCSD Department of Economics
9500 Gilman Drive, MC 0508
La Jolla, CA 92093-0508
Tel: 858-822-2097
Fax: 858-534-7040
E-Mail: itelyukova@ucsd.edu
Ludo Visschers
Department of Economics
Universidad Carlos III, Madrid
Calle Madrid 126, Getafe 28903
Spain
E-Mail: lvissche@eco.uc3m.es
AB - We develop a life-cycle model of the labor market in which different worker-firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment and across different firms is endogenous because search is directed and, hence, workers can choose whether to seek low-wage jobs that are easy to find or high-wage jobs that are hard to find. We calibrate our theory using data on labor market transitions aggregated across workers of different ages. We validate our theory by showing that it correctly predicts the pattern of labor market transitions for workers of different ages. Finally, we use our theory to decompose the age profiles of transition rates, wages and productivity into the effects of age variation in work-life expectancy, human capital and match quality.
ER -
TY - JOUR
AU - Kruse,Douglas L.
AU - Blasi,Joseph R.
AU - Freeman,Richard B.
TI - Does Linking Worker Pay to Firm Performance Help the Best Firms Do Even Better?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17745
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17745
L1 - http://www.nber.org/papers/w17745.pdf
N1 - Author contact info:
Douglas L. Kruse
School of Management and Labor Relations
Rutgers University
94 Rockafeller Road
Piscataway, NJ 08854
Tel: 732/445-5991
Fax: 732/445-2830
E-Mail: kruse@smlr.rutgers.edu
Joseph R. Blasi
Rutgers University
School of Management and Labor Relations
200 B Levin Building
Rockefeller Road
New Brunswick, NJ 08903
Tel: 732/445-5444
Fax: 732/445-2830
E-Mail: blasi@smlr.rutgers.edu
Richard B. Freeman
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138
Tel: 617/868-3900
Fax: 617/868-2742
E-Mail: freeman@nber.org
AB - This paper analyzes the linkages among group incentive methods of compensation, labor practices, worker assessments of workplace culture, turnover, and firm performance in a non-representative sample of companies: firms that applied to the “100 Best Companies to Work For in America” competition from 2005 to 2007. Although employers with good labor practices self- select into the 100 Best Companies firms sample, which should bias the analysis against finding strong associations among modes of compensation, labor policies, and outcomes, we find that in the firms that make more extensive use of group incentive pay employees participate more in decisions, have greater information sharing, trust supervisors more, and report a more positive workplace culture than in other companies. The combination of group incentive pay with policies that empower employees and create a positive workplace culture reduces voluntary turnover and increases employee intent to stay and raises return on equity. Finding these effects in the non-representative “100 Best Companies” sample strengthens the likelihood that the policies have a causal impact on employee well-being and firm performance.
ER -
TY - JOUR
AU - Scott-Clayton,Judith
TI - What Explains Trends in Labor Supply Among U.S. Undergraduates, 1970-2009?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17744
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17744
L1 - http://www.nber.org/papers/w17744.pdf
N1 - Author contact info:
Judith Scott-Clayton
Teachers College
Columbia University
525 W.120th Street, Box 174
New York, NY 10027
Tel: 212/678-3478
Fax: 212/678-3699
E-Mail: scott-clayton@tc.columbia.edu
AB - Recent cohorts of college enrollees are more likely to work, and work substantially more, than those of the past. October CPS data reveal that average labor supply among 18 to 22-year-old full-time undergraduates nearly doubled between 1970 and 2000, rising from 6 hours to 11 hours per week. In 2000 over half of these “traditional” college students were working for pay in the reference week, and the average working student worked 22 hours per week. After 2000, labor supply leveled off and then fell abruptly in the wake of the Great Recession to an average of 8 hours per week in 2009. This paper considers several explanations for the long-term trend of rising employment—including compositional change and rising tuition costs—and considers whether the upward trend is likely to resume when economic conditions improve.
ER -
TY - JOUR
AU - Banerjee,Abhijit
AU - Chandrasekhar,Arun G.
AU - Duflo,Esther
AU - Jackson,Matthew O.
TI - The Diffusion of Microfinance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17743
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17743
L1 - http://www.nber.org/papers/w17743.pdf
N1 - Author contact info:
Abhijit Banerjee
MIT
Department of Economics
E52-252d
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8855
Fax: 617/253-1330
E-Mail: banerjee@mit.edu
Arun G. Chandrasekhar
MIT Department of Economics
50 Memorial Drive, E52
Cambridge, MA 02142
E-Mail: agc2104@gmail.com
Esther Duflo
Department of Economics
MIT, E52-252G
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/258-7013
Fax: 617/253-6915
E-Mail: eduflo@mit.edu
Matthew Jackson
Department of Economics
Stanford University
Stanford, CA 94305-6072
Tel: 650 723 3544
E-Mail: jacksonm@stanford.edu
AB - We examine how participation in a microfinance program diffuses through social networks. We collected detailed demographic and social network data in 43 villages in South India before microfinance was introduced in those villages and then tracked eventual participation. We exploit exogenous variation in the importance (in a network sense) of the people who were first informed about the program, "the injection points". Microfinance participation is higher when the injection points have higher eigenvector centrality. We estimate structural models of diffusion that allow us to (i) determine the relative roles of basic information transmission versus other forms of peer influence, and (ii) distinguish information passing by participants and non-participants. We find that participants are significantly more likely to pass information on to friends and acquaintances than informed non-participants, but that information passing by non-participants is still substantial and significant, accounting for roughly a third of informedness and participation. We also find that, conditioned on being informed, an individual's decision is not significantly affected by the participation of her acquaintances.
ER -
TY - JOUR
AU - Kuehn,Lars-Alexander
AU - Petrosky-Nadeau,Nicolas
AU - Zhang,Lu
TI - An Equilibrium Asset Pricing Model with Labor Market Search
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17742
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17742
L1 - http://www.nber.org/papers/w17742.pdf
N1 - Author contact info:
Lars-Alexander Kuehn
Carnegie Mellon University
Tepper School of Business
5000 Forbes Avenue
Pittsburgh, PA 15206
E-Mail: kuehn@cmu.edu
Nicolas Petrosky-Nadeau
Carnegie Mellon University
Tepper School of Business
5000 Forbes Avenue
Pittsburgh, PA 15206
E-Mail: npn@andrew.cmu.edu
Lu Zhang
Fisher College of Business
The Ohio State University
2100 Neil Avenue
Columbus, OH 43210
Tel: 585-267-6250
E-Mail: zhanglu@fisher.osu.edu
AB - Search frictions in the labor market help explain the equity premium in the financial market. We embed the Diamond-Mortensen-Pissarides search framework into a dynamic stochastic general equilibrium model with recursive preferences. The model produces a sizeable equity premium of 4.54% per annum with a low interest rate volatility of 1.34%. The equity premium is strongly countercyclical, and forecastable with labor market tightness, a pattern we confirm in the data. Intriguingly, search frictions, combined with a small labor surplus and large job destruction flows, give rise endogenously to rare disaster risks a la Rietz (1988) and Barro (2006).
ER -
TY - JOUR
AU - Fisher-Vanden,Karen
AU - Mansur,Erin T.
AU - Wang,Qiong (Juliana)
TI - Costly Blackouts? Measuring Productivity and Environmental Effects of Electricity Shortages
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17741
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17741
L1 - http://www.nber.org/papers/w17741.pdf
N1 - Author contact info:
Karen Fisher-Vanden
Department of Agric. Economics and Rural Soc.
112-E Armsby Building
Pennsylvania State University
University Park, PA 16802
E-Mail: fishervanden@psu.edu
Erin T. Mansur
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: (603) 646-2531
Fax: (603) 646-2122
E-Mail: erin.mansur@dartmouth.edu
Qiong Wang
Environmental Studies Program
3502 Trousdale Parkway, SOS B15, MC0036
Los Angeles, CA 90089
E-Mail: juliana.wang@usc.edu
AB - In many countries, unreliable inputs, particularly those lacking storage, can significantly limit a firm's productivity. In the case of an increasing frequency of blackouts, a firm may change factor shares in a number of ways. It may decide to self generate electricity, to purchase intermediate goods that it used to produce directly, or to improve its technical efficiency. We examine how industrial firms responded to China's severe power shortages in the early 2000s. Fast-growing demand coupled with regulated electricity prices led to blackouts that varied in degree over location and time. Our data consist of annual observations from 1999 to 2004 for approximately 32,000 energy-intensive, enterprises from all industries. We estimate the losses in productivity due to factor-neutral and factor-biased effects of electricity scarcity. Our results suggest that enterprises re-optimize among factors in response to electricity scarcity by shifting from energy (both electric and non-electric sources) into materials---a shift from "make" to "buy." These effects are strongest for firms in textiles, timber, chemicals, and metals. Contrary to the literature, we do not find evidence of an increase in self generation. Finally, we find that these productivity changes, while costly to firms, led to small reductions in carbon emissions.
ER -
TY - JOUR
AU - Calomiris,Charles W.
AU - Longhofer,Stanley D.
AU - Miles,William
TI - The Housing Wealth Effect: The Crucial Roles of Demographics, Wealth Distribution and Wealth Shares
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17740
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17740
L1 - http://www.nber.org/papers/w17740.pdf
N1 - Author contact info:
Charles W. Calomiris
Graduate School of Business
Columbia University
3022 Broadway Street, Uris Hall
New York, NY 10027
Tel: 212/854-8748
Fax: 212/316-9219
E-Mail: cc374@columbia.edu
Stanley D. Longhofer
Director, Center for Real Estate
Barton School of Business
Wichita State University
Wichita, KS 67260-0077
E-Mail: stan.longhofer@wichita.edu
William Miles
Department of Economics
Wichita State University
Wichita, KS 67260-0077
E-Mail: mil122000@yahoo.com
AB - Current estimates of housing wealth effects vary widely. We consider the role of omitted variables suggested by economic theory that have been absent in a number of prior studies. Our estimates take into account age composition and wealth distribution (using poverty rates as a proxy), as well as wealth shares (how much of total wealth is comprised of housing vs. stock wealth). We exploit cross-state variation in housing, stock wealth and other variables in a newly assembled panel data set and find that the impact of housing on consumer spending depends crucially on age composition, poverty rates, and the housing wealth share. In particular, young people who are more likely to be credit-constrained, and older homeowners, likely to be “trading down” on their housing stock, experience the largest housing wealth effects, as suggested by theory. Also, as suggested by theory, housing wealth effects are higher in state-years with higher housing wealth shares, and in state-years with higher poverty rates (likely reflecting the greater importance of credit constraints for those observations). Taking these various factors into account implies huge variation over time and across states in the size of housing wealth effects.
ER -
TY - JOUR
AU - Gruber,Jonathan
AU - Hendren,Nathaniel
AU - Townsend,Robert
TI - Demand and Reimbursement Effects of Healthcare Reform: Health Care Utilization and Infant Mortality in Thailand
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17739
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17739
L1 - http://www.nber.org/papers/w17739.pdf
N1 - Author contact info:
Jonathan Gruber
MIT Department of Economics
E52-355
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8892
Fax: 617/253-1330
E-Mail: gruberj@mit.edu
Nathaniel Hendren
Massachusetts Institute of Technology
1534 Cambridge St #1
Cambridge, MA 02139
Tel: 773-344-8990
E-Mail: nhendren@gmail.com
Robert Townsend
Department of Economics
MIT
50 Memorial Drive, E52-252c
Cambridge, MA 02142
Tel: 617/452-3722
Fax: 617/253-1330
E-Mail: rtownsen@mit.edu
AB - The Thai 30 Baht program was one of the largest health system reforms ever undertaken by a low-middle income country. In addition to lowering the cost of care for the previously uninsured in public facilities, it also entailed a fourfold increase in funding provided to hospitals to care for the poorest 30% of the population (who were already publicly insured). For the previously uninsured, we find that the 30 Baht program led to increased health care utilization, as well as a shift from private to public sources of care. But, we find a larger increase for the poor who were previously publicly insured, especially amongst infants and women of childbearing age. Using vital statistics records, we find that the increased access to healthcare by the publicly insured poor led to a reduction in their infant mortality of at least 6.5 per 1,000 births. This suggests significant improvements in infant mortality rates can be achieved through increased access to healthcare services for the poor and marginalized groups.
ER -
TY - JOUR
AU - Cutler,David M.
AU - Lleras-Muney,Adriana
TI - Education and Health: Insights from International Comparisons
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17738
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17738
L1 - http://www.nber.org/papers/w17738.pdf
N1 - Author contact info:
David M. Cutler
Department of Economics
Harvard University
1875 Cambridge Street
Cambridge, MA 02138
Tel: 617/496-5216
Fax: 617/496-8951
E-Mail: dcutler@harvard.edu
Adriana Lleras-Muney
Department of Economics
9373 Bunche Hall
UCLA
Los Angeles, CA 90095
Tel: 310/825-3925
Fax: NA
E-Mail: alleras@ECON.UCLA.EDU
AB - In this review we synthesize what is known about the relationship between education and health. A large number of studies from both rich and poor countries show that education is associated with better health. While previous work has thought of the effect of education separately for rich and poor countries, we argue that there are insights to be gained by integrating the two. For example, education is associated with lower malnutrition in most countries, but in richer countries the educated have lower BMIs whereas in poor countries the educated have higher BMIs. This suggests that the behaviors associated with better health differ depending on the level of development. We illustrate this approach by comparing the effects of education on various health and health behaviors around the world, to generate hypotheses about why education is so often (but not always) predictive of health. Finally, we review the empirical evidence on the relationship between education and health, paying particular attention to causal evidence and evidence on mechanisms linking education to better health.
ER -
TY - JOUR
AU - Karlan,Dean
AU - McConnell,Margaret A.
TI - Hey Look at Me: The Effect of Giving Circles on Giving
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17737
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17737
L1 - http://www.nber.org/papers/w17737.pdf
N1 - Author contact info:
Dean Karlan
Department of Economics
Yale University
P.O. Box 208269
New Haven, CT 06520-8629
Tel: 203/432-4479
Fax: 203/432-5591
E-Mail: dean.karlan@yale.edu
Margaret McConnell
Harvard University
9 Bow St
Cambridge, MA 02138
E-Mail: mmcconnell@gmail.com
AB - Theories abound for why individuals give to charity. We conduct a field experiment with donors to a Yale University service club to test the impact of a promise of public recognition on giving. Some may claim that they respond to an offer of public recognition not to improve their social standing, but rather to motivate others to give. To tease apart these two theories, we conduct a laboratory experiment with undergraduates, and find no evidence to support the alternative, altruistic motivation. We conclude that charitable gifts increase in response to the promise of public recognition primarily because of individuals' desire to improve their social image.
ER -
TY - JOUR
AU - Agarwal,Sumit
AU - Lucca,David
AU - Seru,Amit
AU - Trebbi,Francesco
TI - Inconsistent Regulators: Evidence From Banking
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17736
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17736
L1 - http://www.nber.org/papers/w17736.pdf
N1 - Author contact info:
Sumit Agarwal
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, IL 60604
Tel: 312/322-5973
E-Mail: ushakri@yahoo.com
David Lucca
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
E-Mail: david.lucca@ny.frb.org
Amit Seru
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-2767
E-Mail: amit.seru@chicagobooth.edu
Francesco Trebbi
University of British Columbia
1873 East Mall
Vancouver, BC, V6T1Z1
Canada
Tel: 604.218.5900
Fax: 604.822.5915
E-Mail: ftrebbi@mail.ubc.ca
AB - US state chartered commercial banks are supervised alternately by state and federal regulators. Each regulator supervises a given bank for a fixed time period according to a predetermined rotation schedule. We use unique data to examine differences between federal and state regulators for these banks. Federal regulators are significantly less lenient, downgrading supervisory ratings about twice as frequently as state supervisors. Under federal regulators, banks report higher nonperforming loans, more delinquent loans, higher regulatory capital ratios, and lower ROA. There is a higher frequency of bank failures and problem-bank rates in states with more lenient supervision relative to the federal benchmark. Some states are more lenient than others. Regulatory capture by industry constituents and supervisory staff characteristics can explain some of these differences. These findings suggest that inconsistent oversight can hamper the effectiveness of regulation by delaying corrective actions and by inducing costly variability in operations of regulated entities.
ER -
TY - JOUR
AU - Greenwood,Jeremy
AU - Guner,Nezih
AU - Kocharkov,Georgi
AU - Santos,Cezar
TI - Technology and the Changing Family: A Unified Model of Marriage, Divorce, Educational Attainment and Married Female Labor-Force Participation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17735
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17735
L1 - http://www.nber.org/papers/w17735.pdf
N1 - Author contact info:
Jeremy Greenwood
Department of Economics
University of Pennsylvania
3718 Locust Walk
McNeil Building, Rm 160
Philadelphia, PA 19104-6297
Tel: 215/898-1505
Fax: 215/746-2947
E-Mail: do-not-use@jeremygreenwood.net
Nezih Guner
MOVE
Facultat d’Economia
Edifici B – Campus de Bellaterra
08193 Bellaterra
Cerdanyola del Vallès
Spain
E-Mail: nezih.guner@movebarcelona.eu
Georgi Kocharkov
Department of Economics
Universidad Carlos III
Calle Madrid 126
28903 Getafe, Spain
E-Mail: gkochark@eco.uc3m.es
Cezar Santos
Department of Economics
University of Pennsylvania
3718 Locust Walk,
McNeil Building, Rm 160
Philadelphia, PA 19104-6297
E-Mail: santosca@econ.upenn.edu
AB - Marriage has declined since 1960, with the drop being bigger for non-college educated individuals versus college educated ones. Divorce has increased, more so for the non-college educated vis-à-vis the college educated. Additionally, assortative mating has risen; i.e., people are more likely to marry someone of the same educational level today than in the past. A unified model of marriage, divorce, educational attainment and married female labor-force participation is developed and estimated to fit the postwar U.S. data. The role of technological progress in the household sector and shifts in the wage structure for explaining these facts is gauged.
ER -
TY - JOUR
AU - Feng,Shuaizhang
AU - Oppenheimer,Michael
AU - Schlenker,Wolfram
TI - Climate Change, Crop Yields, and Internal Migration in the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17734
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17734
L1 - http://www.nber.org/papers/w17734.pdf
N1 - Author contact info:
Shuaizhang Feng
Department of Economics
Shanghai University of Finance and Economics
Shanghai China
E-Mail: shuaizhang.feng@gmail.com
Michael Oppenheimer
Department of Geosciences
Woodrow Wilson School
Princeton University
448 Robertson Hall
Princeton, NJ 08544-1013
E-Mail: omichael@princeton.edu
Wolfram Schlenker
Department of Economics
School of International and Public Affairs
Columbia University
420 West 118th Street, MC 3323
New York, NY 10027
Tel: 212/854-1806
Fax: 212/854-5765
E-Mail: wolfram.schlenker@columbia.edu
AB - We investigate the link between agricultural productivity and net migration in the United States using a county-level panel for the most recent period of 1970-2009. In rural counties of the Corn Belt, we find a statistically significant relationship between changes in net outmigration and climate-driven changes in crop yields, with an estimated semi-elasticity of about -0.17, i.e., a 1% decrease in yields leads to a 0.17% net reduction of the population through migration. This effect is primarily driven by young adults. We do not detect a response for senior citizens, nor for the general population in eastern counties outside the Corn Belt. Applying this semi-elasticity to predicted yield changes under the B2 scenario of the Hadley III model, we project that, holding other factors constant, climate change would on average induce 3.7% of the adult population (ages 15-59) to leave rural counties of the Corn Belt in the medium term (2020-2049) compared to the 1960-1989 baseline, with the possibility of a much larger migration response in the long term (2077-2099). Since there is uncertainty about future warming, we also present projections for a range of uniform climate change scenarios in temperature or precipitation.
ER -
TY - JOUR
AU - Zitzewitz,Eric
TI - Does Transparency Reduce Favoritism and Corruption? Evidence from the Reform of Figure Skating Judging
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17732
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17732
L1 - http://www.nber.org/papers/w17732.pdf
N1 - Author contact info:
Eric Zitzewitz
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2891
Fax: 603/646-2122
E-Mail: eric.zitzewitz@dartmouth.edu
AB - Transparency is usually thought to reduce favoritism and corruption by facilitating monitoring by outsiders, but there is concern it can have the perverse effect of facilitating collusion by insiders. In response to vote trading scandals in the 1998 and 2002 Olympics, the International Skating Union (ISU) introduced a number of changes to its judging system, including obscuring which judge issued which mark. The stated intent was to disrupt collusion by groups of judges, but this change also frustrates most attempts by outsiders to monitor judge behavior. I find that the "compatriot-judge effect", which aggregates favoritism (nationalistic bias from own-country judges) and corruption (vote trading), actually increased slightly after the reforms.
ER -
TY - JOUR
AU - Braguinsky,Serguey
AU - Mityakov,Sergey V.
TI - Foreign Corporations and the Culture of Transparency: Evidence from Russian Administrative Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17731
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17731
L1 - http://www.nber.org/papers/w17731.pdf
N1 - Author contact info:
Serguey Braguinsky
Department of Social and Decision Sciences
and Heinz College,
School of Public Policy and Management
Carnegie Mellon University
Pittsburgh, PA 15213
E-Mail: sbrag@andrew.cmu.edu
Sergey V. Mityakov
John E. Walker Department of Economics
Clemson University
222 Sirrine Hall
Clemson SC 29634
E-Mail: smityak@clemson.edu
M3 - presented at "Causes and Consequences of Corporate Culture", December 8-9, 2011
AB - Foreign-owned firms from advanced countries carry the culture of transparency in business transactions that is orthogonal to the culture of hiding and insider dealing in many developing economies and economies in transition. In this paper, we document this using administrative data on reported earnings and market values of cars owned by workers employed in foreign-owned and domestic firms in Moscow, Russia. We examine whether closer ties to foreign corporations result in the diffusion of transparency to private Russian firms. We find that Russian firms initially founded in partnerships with foreign corporations are twice as transparent in reported earnings of their workers as other Russian firms, but they are still less than half as transparent as foreign firms themselves. We also find that increased links to foreign corporations, such as hiring more workers from them, raise the transparency of domestic firms. An important channel for this transmission appears to be the need to keep official wages and salaries of incumbent workers close to wages domestic firms have to pay to their newly hired workers with experience in multinationals.
ER -
TY - JOUR
AU - Hanushek,Eric A.
AU - Yilmaz,Kuzey
TI - Land Use Controls and the Provision of Education
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17730
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17730
L1 - http://www.nber.org/papers/w17730.pdf
N1 - Author contact info:
Eric A. Hanushek
Hoover Institution
Stanford University
Stanford, CA 94305-6010
Tel: 650/736-0942
Fax: 650/723-1687
E-Mail: hanushek@stanford.edu
Kuzey Yilmaz
University of Rochester
Rochester, NY 14627
E-Mail: kuyilmaz@hotmail.com
AB - Considerable prior analysis has gone into the study of zoning restrictions on locational choice and on fiscal burdens. The prior work on zoning - particularly fiscal or exclusionary zoning - has provided both inconclusive theoretical results and quite inconsistent empirical support of the theory. More importantly, none of this work addresses important questions about the level and distribution of public goods that are provided under fiscal zoning. Since fiscal issues and Tiebout demands are central to much of the motivation for exclusionary zoning, we expand the theoretical analysis to encompass the interplay between land use restrictions and public good provision. In this, we focus on schooling outcomes, since the provision of education is one of the primary activities of local jurisdictions. We develop a general equilibrium model of location and the provision of education. Some households create a fiscal burden, motivating the use by local governments of exclusionary land-use controls. Then, the paper analyzes what the market effects of land-use controls are and how successful they are. The policies considered (minimum lot size zoning, local public finance with a head tax, and fringe zoning) demonstrate how household behavior directly affects the equilibrium outcomes and the provision of the local public good.
ER -
TY - JOUR
AU - Feenstra,Robert C.
AU - Ma,Hong
AU - Neary,J. Peter
AU - Rao,D.S. Prasada
TI - Who Shrunk China? Puzzles in the Measurement of Real GDP
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17729
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17729
L1 - http://www.nber.org/papers/w17729.pdf
N1 - Author contact info:
Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu
Hong Ma
Tsinghua University
Department of Economics
Beijing, China
E-Mail: mahong@sem.tsinghua.edu.cn
Peter Neary
Department of Economics
University of Oxford
Manor Road Building
Oxford OX1 3UQ
United Kingdom
Tel: +44 (0) 1865 271085
E-Mail: peter.neary@economics.ox.ac.uk
Prasada Rao D.S.
School of Economics
University of Queensland
Brisbane Australia Qld 4072
E-Mail: d.rao@uq.edu.au
AB - The latest World Bank estimates of real GDP per capita for China are significantly lower than previous ones. We review possible sources of this puzzle and conclude that it reflects a combination of factors, including substitution bias in consumption, reliance on urban prices which we estimate are higher than rural ones, and the use of an expenditure-weighted rather than an output-weighted measure of GDP. Taking all these together, we estimate that real per-capita GDP in China was 50% higher relative to the U.S. in 2005 than the World Bank estimates.
ER -
TY - JOUR
AU - Feenstra,Robert C.
AU - Hong,Chang
AU - Ma,Hong
AU - Spencer,Barbara J.
TI - Contractual Versus Non-Contractual Trade: The Role of Institutions in China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17728
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17728
L1 - http://www.nber.org/papers/w17728.pdf
N1 - Author contact info:
Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu
Chang Hong
Department of Economics
Clark University
Worcester, MA 01610
E-Mail: CHong@clarku.edu
Hong Ma
Tsinghua University
Department of Economics
Beijing, China
E-Mail: mahong@sem.tsinghua.edu.cn
Barbara J. Spencer
University of British Columbia
Sauder School of Business
2053 Main Mall
Vancouver, BC V6T 1Z2
CANADA
Tel: 604/822-8479
Fax: 604/822-8477
E-Mail: barbara.spencer@sauder.ubc.ca
AB - Recent research has demonstrated the importance of institutional quality at the country level for both the volume of trade and the ability to trade in differentiated goods that rely on contract enforcement. This paper takes advantage of cross-provincial variation in institutional quality in China, and export data that distinguishes between foreign and domestic exporters and processing versus ordinary trade, to show that institutional quality is a significant factor in determining Chinese provincial export patterns. Institutions matter more for processing trade, and more for foreign firms, just as we would expect from a greater reliance on contracts in these cases.
ER -
TY - JOUR
AU - Robles,Verónica C. Frisancho
AU - Krishna,Kala
TI - Affirmative Action in Higher Education in India: Targeting, Catch Up, and Mismatch
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17727
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17727
L1 - http://www.nber.org/papers/w17727.pdf
N1 - Author contact info:
Verónica C. Frisancho Robles
Department of Economics
306 Kern Building
The Pennsylvania State University
University Park, PA 16802
E-Mail: vfrisancho@psu.edu
Kala Krishna
Department of Economics
523 Kern Graduate Building
The Pennsylvania State University
University Park, PA 16802
Tel: 814/865-1106
Fax: 814/863-4775
E-Mail: kmk4@psu.edu
AB - Affirmative action policies in higher education are used in many countries to try to socially advance historically disadvantaged minorities. Although the underlying social objectives of these policies are rarely criticized, there is intense debate over the actual impact of such preferences in higher education on educational performance and labor outcomes. Most of the work uses U.S. data where clean performance indicators are hard to find.
Using a remarkably detailed dataset on the 2008 graduating class from an elite engineering institution (EEI) in India we evaluate the impact of affirmative action policies in higher education on minority students focusing on three central issues in the current debate: targeting, catch up, and mismatch. In addition, we present preliminary evidence on labor market discrimination. We find that admission preferences effectively target minority students who are poorer than the average displaced non-minority student. Moreover, by analyzing the college performance of minority and non-minority students as they progress through college, we find that scheduled caste and scheduled tribe students, especially those in more selective majors, fall behind their same-major peers which is the opposite of catching up. We also identify evidence in favor of the mismatch hypothesis: once we control for selection into majors, minority students who enrol in more selective majors as a consequence of admission preferences end up earning less than if they would have had if they had chosen a less selective major. Finally, although there is no evidence of discrimination against minority students in terms of wages, we find that scheduled caste and scheduled tribe students are more likely to get worse jobs, even after controlling for selection.
ER -
TY - JOUR
AU - Fisman,Raymond
AU - Harmon,Nikolaj A.
AU - Kamenica,Emir
AU - Munk,Inger
TI - Labor Supply of Politicians
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17726
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17726
L1 - http://www.nber.org/papers/w17726.pdf
N1 - Author contact info:
Raymond Fisman
School of Business
Columbia University
622 Uris Hall
3022 Broadway
New York, NY 10027
Tel: 212/854-9157
Fax: 212-316-9219
E-Mail: rf250@columbia.edu
Nikolaj A. Harmon
Department of Economics
Princeton University, Fisher Hall
Princeton, NJ
E-Mail: nharmon@princeton.edu
Emir Kamenica
University of Chicago
Booth School of Business
5807 S. Woodlawn Ave.
Chicago, IL 60637
Tel: 773.834.8690
E-Mail: emir.kamenica@chicagobooth.edu
Inger Munk
Renewables - DONG Energy
Nesa Allé 1
2820 Gentofte
Denmark
E-Mail: ingmu@dongenergy.dk
AB - We examine the labor supply of politicians using data on Members of the European Parliament (MEPs). We exploit the introduction of a law that equalized MEPs' salaries, which had previously differed by as much as a factor of ten. Doubling an MEP's salary increases the probability of running for reelection by 23 percentage points and increases the logarithm of the number of parties that field a candidate by 29 percent of a standard deviation. A salary increase has no discernible impact on absenteeism or shirking from legislative sessions; in contrast, non-pecuniary motives, proxied by home-country corruption, substantially impact the intensive margin of labor supply. Finally, an increase in salary lowers the quality of elected MEPs, measured by the selectivity of their undergraduate institutions.
ER -
TY - JOUR
AU - Roberts,Mark J.
AU - Xu,Daniel Yi
AU - Fan,Xiaoyan
AU - Zhang,Shengxing
TI - A Structural Model of Demand, Cost, and Export Market Selection for Chinese Footwear Producers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17725
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17725
L1 - http://www.nber.org/papers/w17725.pdf
N1 - Author contact info:
Mark J. Roberts
Department of Economics
513 Kern Graduate Building
Pennsylvania State University
University Park, PA 16802
Tel: 814/863-1535
Fax: 814/863-4775
E-Mail: mroberts@psu.edu
Daniel Xu
Department of Economics
Duke University
213 Social Science Bldg
419 Chapel Drive
Box 90097
Durham, NC 27708-0097
Tel: 919-660-1824
E-Mail: daniel.xu@duke.edu
XiaoYan Fan
Department of Economics
Fudan University
E-Mail: ecofan0613@vip.163.com
Shengxing Zhang
Department of Economics
New York University
E-Mail: oo7zsx@gmail.com
AB - In this paper we use micro data on both trade and production for a sample of large Chinese manufacturing firms in the footwear industry from 2002-2006 to estimate an empirical model of export demand, pricing, and market participation by destination market. We use the model to construct indexes of firm-level demand, cost, and export market profitability. The empirical results indicate substantial firm heterogeneity in both the demand and cost dimensions with demand being more dispersed. The firm-specific demand and cost components are very useful in explaining differences in the extensive margin of trade, the length of time a firm exports to a destination, and the number and mix of destinations, as well as the export prices, while cost is more important in explaining the quantity of firm exports on the intensive margin. We use the estimates to analyze the reallocation resulting from removal of the quota on Chinese footwear exports to the EU and find that it led to a rapid restructuring of export supply sources in favor of firms with high demand and low cost indexes.
ER -
TY - JOUR
AU - Knittel,Christopher R.
TI - Reducing Petroleum Consumption from Transportation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17724
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17724
L1 - http://www.nber.org/papers/w17724.pdf
N1 - Author contact info:
Christopher R. Knittel
MIT Sloan School of Management
100 Main Street, E62-513
Cambridge, MA 02142
E-Mail: knittel@mit.edu
AB - The United States consumed more petroleum-based liquid fuel per capita than any other OECD-high-income country – 30 percent more than the second-highest country (Canada) and 40 percent more than the third-highest (Luxemburg). This paper examines the main channels through which reductions in U.S. oil consumption might take place: (a) increased fuel economy of existing vehicles, (b) increased use of non-petroleum-based low-carbon fuels, (c) alternatives to the internal combustion engine, and (d) reduced vehicles miles travelled. I then discuss how the policies for reducing petroleum consumption used in the US compare with the standard economics prescription for using a Pigouvian tax to deal with externalities. Taking into account that energy taxes are a political hot button in the United States, and also considering some evidence that consumers may not correctly value fuel economy, I offer some thoughts about the margins on which policy aimed at reducing petroleum consumption would have the largest impact on economic efficiency.
ER -
TY - JOUR
AU - Landvoigt,Tim
AU - Piazzesi,Monika
AU - Schneider,Martin
TI - The Housing Market(s) of San Diego
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17723
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17723
L1 - http://www.nber.org/papers/w17723.pdf
N1 - Author contact info:
Tim Landvoigt
Department of Economics
Stanford University
579 Serra Mall
Stanford CA 94305-6072
E-Mail: timlandvoigt@googlemail.com
Monika Piazzesi
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
Tel: (650) 723-9289
E-Mail: piazzesi@stanford.edu
Martin Schneider
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
Tel: (650) 721 6320
E-Mail: schneidr@stanford.edu
AB - This paper uses an assignment model to understand the cross section of house prices within a metro area. Movers' demand for housing is derived from a lifecycle problem with credit market frictions. Equilibrium house prices adjust to assign houses that differ by quality to movers who differ by age, income and wealth. To quantify the model, we measure distributions of house prices, house qualities and mover characteristics from micro data on San Diego County during the 2000s boom. The main result is that cheaper credit for poor households was a major driver of prices, especially at the low end of the market.
ER -
TY - JOUR
AU - Jackson,C. Kirabo
TI - Do High-School Teachers Really Matter?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17722
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17722
L1 - http://www.nber.org/papers/w17722.pdf
N1 - Author contact info:
C. Kirabo Jackson
Northwestern University
School of Education and Social Policy
2040 Sheridan Road
Evanston, IL 60208
Tel: 847/467-1803
E-Mail: kirabo-jackson@northwestern.edu
AB - Unlike in elementary-schools, high-school teacher effects may be confounded with track-level treatments that are correlated with individual teachers. I document bias due to track-specific treatments, and show that traditional tests for the existence of teacher effects suffer from finite sample bias. Using new methods to account for these biases, I find modest algebra teacher effects and little evidence of English teacher effects. Unlike in elementary-school, value-added estimates of high-school teachers are weak predictors of teacher's future performance. The results indicate that teachers might not influence test-scores as much as previously thought.
ER -
TY - JOUR
AU - Chi,Wei
AU - Freeman,Richard B.
AU - Li,Hongbin
TI - Adjusting to Really Big Changes: The Labor Market in China, 1989-2009
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17721
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17721
L1 - http://www.nber.org/papers/w17721.pdf
N1 - Author contact info:
Wei Chi
School of Economics and Management
Tsinghua University
Beijing, China, 100084
E-Mail: chiw@sem.tsinghua.edu.cn
Richard B. Freeman
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138
Tel: 617/868-3900
Fax: 617/868-2742
E-Mail: freeman@nber.org
Hongbin Li
School of Economics and Management
Tsinghua University
Beijing 100084, China
E-Mail: lihongbin@sem.tsinghua.edu.cn
AB - China’s emerging labor market was buffeted by changes in demand and supply and institutional changes in the last two decades. Using the Chinese Urban Household Survey data from 1989 to 2009, our study shows that the market responded with substantial changes in the structure of wages and in employment and types of jobs that workers obtained that mirrors the adjustments found in labor markets in advanced economies. However, the one place where the Chinese labor market appears to diverge from the labor markets in advanced countries is the rapid convergence in earnings and occupational positions of cohorts who entered the job market under more or less favorable conditions. On this dimension, China’s labor market seems more flexible than those in other countries. Three related factors may explain this pattern: (1) the rapid growth of China’s economy; (2) the high rate of employee turnover; (3) the relative weakness of internal labor markets in China. Bottom line, the Chinese labor market has responded about as well as one could expect to the changes in the demand and supply factors and institutional shocks in this critical period in Chinese economic history.
ER -
TY - JOUR
AU - Imberman,Scott A.
AU - Kugler,Adriana D.
TI - The Effect of Providing Breakfast on Student Performance: Evidence from an In-Class Breakfast Program
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17720
PY - 2012
Y2 - January 2012
UR - http://www.nber.org/papers/w17720
L1 - http://www.nber.org/papers/w17720.pdf
N1 - Author contact info:
Scott A. Imberman
Department of Economics
University of Houston
204 McElhinney Hall
Houston, TX 77204
Tel: 713/743-3839
Fax: 713/743-3798
E-Mail: simberman@uh.edu
Adriana D. Kugler
Georgetown University
Georgetown Public Policy Institute
37th and O Streets NW, Suite 311
Washington, DC 20057
Tel: 202/687-5716
Fax: 202/687-5544
E-Mail: ak659@georgetown.edu
AB - In response to low take-up, many public schools have experimented with moving breakfast from the cafeteria to the classroom. We examine whether such a program increases performance as measured by standardized test scores, grades and attendance rates. We exploit quasi-random timing of program implementation that allows for a difference-in-differences identification strategy. Our main identification assumption is that schools where the program was introduced earlier would have evolved similarly to those where the program was introduced later. We find that in-class breakfast increases both math and reading achievement by about one-tenth of a standard deviation relative to providing breakfast in the cafeteria. Moreover, we find that these effects are most pronounced for low performing, free-lunch eligible, Hispanic, and low BMI students. We also find some improvements in attendance for high achieving students but no impact on grades.
ER -
TY - JOUR
AU - Bond,Philip
AU - Edmans,Alex
AU - Goldstein,Itay
TI - The Real Effects of Financial Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17719
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17719
L1 - http://www.nber.org/papers/w17719.pdf
N1 - Author contact info:
Philip Bond
Department of Finance
Carlson School of Management
University of Minnesota
321 19th Ave S
Minneapolis MN 55410
E-Mail: apbond@umn.edu
Alex Edmans
The Wharton School
University of Pennsylvania
2318 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/746-0498
Fax: 215/898-6200
E-Mail: aedmans@wharton.upenn.edu
Itay Goldstein
Wharton School
University of Pennsylvania
Philadelphia, PA 19104
E-Mail: itayg@wharton.upenn.edu
AB - A large amount of activity in the financial sector occurs in secondary financial markets, where securities are traded among investors without capital flowing to firms. The stock market is the archetypal example, which in most developed economies captures a lot of attention and resources. Is the stock market just a side show or does it affect real economic activity? In this article, we discuss the potential real effects of financial markets that stem from the informational role of market prices. We review the theoretical literature and show that accounting for the feedback effect from market prices to the real economy significantly changes our understanding of the price formation process, the informativeness of the price, and speculators’ trading behavior. We make two main points. First, we argue that a new definition of price efficiency is needed to account for the extent to which prices reflect information useful for the efficiency of real decisions (rather than the extent to which they forecast future cash flows). Second, incorporating the feedback effect into models of financial markets can explain various market phenomena that otherwise seem puzzling. Finally, we review empirical evidence on the real effects of secondary financial markets.
ER -
TY - JOUR
AU - McMillan,Margaret S.
AU - Masters,William A.
AU - Kazianga,Harounan
TI - Rural Demography, Public Services and Land Rights in Africa:
A Village-Level Analysis in Burkina Faso
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17718
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17718
L1 - http://www.nber.org/papers/w17718.pdf
N1 - Author contact info:
Margaret S. McMillan
Tufts University
Department of Economics
114a Braker Hall
Medford, MA 02155
Tel: 617/627-3137
Fax: 617/627-3197
E-Mail: margaret.mcmillan@tufts.edu
William Masters
Tufts University
E-Mail: william.masters@tufts.edu
Harounan Kazianga
Department of Economics
Oklahoma State University
Business 324
Stillwater, OK 74078
Tel: (405) 744-5110
E-Mail: harounan.kazianga@okstate.edu
AB - This paper uses historical census data from Burkina Faso to characterize local demographic pressures associated with internal migration into river valleys after Onchocerciasis eradication, combined with a new survey of village elders to document change over time and differences across villages in local public goods provision, market institutions and land use rights. We hypothesize that higher local population densities are associated with more public goods and a transition from open-access to regulated land use. Controlling for province or village fixed effects, we find that villages’ variance in population associated with proximity to rivers is closely correlated with higher levels of infrastructure, markets and individual land rights, as opposed to familial or communal rights. Responding to population growth with both improved public services and private property rights is consistent with both scale effects in public good provision, and changes in the scarcity of land.
ER -
TY - JOUR
AU - Matvos,Gregor
AU - Seru,Amit
TI - Resource Allocation within Firms and Financial Market Dislocation: Evidence from Diversified Conglomerates
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17717
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17717
L1 - http://www.nber.org/papers/w17717.pdf
N1 - Author contact info:
Gregor Matvos
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773-834-3188
E-Mail: gmatvos@chicagobooth.edu
Amit Seru
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-2767
E-Mail: amit.seru@chicagobooth.edu
AB - When external capital markets are stressed they may not reallocate resources between firms. We show that resource allocation within firms' internal capital markets provides an important force countervailing financial market dislocation. Using data on US conglomerates we empirically verify that firms shift resources between industries in response to shocks to the financial sector. We estimate a structural model of internal capital market to separately identify and quantify the forces driving the reallocation decision and how these forces interact with external capital market stress. The frictions in internal capital markets drive a large wedge between productivity and investment: the weaker (stronger) division obtains too much (little) capital, as though it is 12 (9) percent more (less) productive than it really is. The cost of accessing external capital funds quadruple during extreme financial market dislocations, making resource allocation within firms significantly cheaper. The estimated model allows us to simulate the propagation of the 2007/2008 financial market dislocation. The counterfactual out of sample simulated data is remarkably consistent with the actual data and shows that improved resource allocation in internal capital markets offset financial market stress during the recent financial crisis by 16% to 30% relative to firms with no internal capital markets.
ER -
TY - JOUR
AU - Baldwin,Richard
TI - Trade And Industrialisation After Globalisation’s 2nd Unbundling: How Building And Joining A Supply Chain Are Different And Why It Matters
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17716
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17716
L1 - http://www.nber.org/papers/w17716.pdf
N1 - Author contact info:
Richard Baldwin
Cigale 2
1010 Lausanne
SWITZERLAND
Tel: 41-22-908-5900
E-Mail: rbaldwin@cepr.org
M3 - presented at "Globalization in an Age of Crisis", September 14-16, 2011
AB - Revolutionary transformations of industry and trade occurred from 1985 to the late-1990s – the regionalisation of supply chains. Before 1985, successful industrialisation meant building a domestic supply chain. Today, industrialisers join supply chains and grow rapidly because offshored production brings elements that took Korea and Taiwan decades to develop domestically. These changes have not been fully reflected in “high development theory” – a lacuna that may lead to misinterpretation of data and inattention to important policy questions.
ER -
TY - JOUR
AU - Rossin-Slater,Maya
AU - Ruhm,Christopher J.
AU - Waldfogel,Jane
TI - The Effects of California’s Paid Family Leave Program on Mothers’ Leave-Taking and Subsequent Labor Market Outcomes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17715
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17715
L1 - http://www.nber.org/papers/w17715.pdf
N1 - Author contact info:
Maya Rossin-Slater
Columbia University, Department of Economics
1022 International Affairs Building
420 West 118th Street
New York City, NY 10027
E-Mail: mr2856@columbia.edu
Christopher J. Ruhm
Frank Batten School of
Leadership and Public Policy
University of Virginia
235 McCormick Rd.
P.O. Box 400893
Charlottesville, VA 22904-40893
Tel: 434-243-3729
E-Mail: ruhm@virginia.edu
Jane Waldfogel
Columbia University
School of Social Work
1255 Amsterdam Avenue
New York, NY 10027
E-Mail: jw205@columbia.edu
AB - This analysis uses March Current Population Survey data from 1999-2010 and a differences-in-differences approach to examine how California’s first in the nation paid family leave (PFL) program affected leave-taking by mothers following childbirth, as well as subsequent labor market outcomes. We obtain robust evidence that the California program more than doubled the overall use of maternity leave, increasing it from around three to six or seven weeks for the typical new mother – with particularly large growth for less advantaged groups. We also provide suggestive evidence that PFL increased the usual weekly work hours of employed mothers of one-to-three year-old children by 6 to 9% and that their wage incomes may have risen by a similar amount.
ER -
TY - JOUR
AU - Krebs,Tom
AU - Kuhn,Moritz
AU - Wright,Mark L. J.
TI - Human Capital Risk, Contract Enforcement, and the Macroeconomy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17714
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17714
L1 - http://www.nber.org/papers/w17714.pdf
N1 - Author contact info:
Tom Krebs
Department of Economics
University of Mannheim
68131 Mannheim
Germany
E-Mail: tkrebs@econ.uni-mannheim.de
Moritz Kuhn
Department of Economics
University of Bonn
Adenauer Alle 24-42
53113 Bonn
Germany
E-Mail: mokuhn@uni-bonn.de
Mark L. J. Wright
Federal Reserve Bank of Chicago
230 South LaSalle St.
Chicago, IL 60604
E-Mail: mlwright@econ.ucla.edu
AB - We develop a macroeconomic model with physical and human capital, human capital risk, and limited contract enforcement. We show analytically that young (high-return) households are the most exposed to human capital risk and are also the least insured. We document this risk-insurance pattern in data on life-insurance drawn from the Survey of Consumer Finance. A calibrated version of the model can quantitatively account for the life-cycle variation of insurance observed in the US data and implies welfare costs of under-insurance for young households that are equivalent to a 4 percent reduction in lifetime consumption. A policy reform that makes consumer bankruptcy more costly leads to a substantial increase in the volume of credit and insurance.
ER -
TY - JOUR
AU - Almond,Douglas
AU - Mazumder,Bhashkar
AU - Ewijk,Reyn van
TI - Fasting During Pregnancy and Children's Academic Performance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17713
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17713
L1 - http://www.nber.org/papers/w17713.pdf
N1 - Author contact info:
Douglas Almond
Department of Economics
Columbia University
International Affairs Building, MC 3308
420 West 118th Street
New York, NY 10027
Tel: 212/854-7248
Fax: 212/854-3239
E-Mail: da2152@columbia.edu
Bhashkar Mazumder
Federal Reserve Bank of Chicago
230 S. LaSalle Street
Chicago, IL 60604
Tel: 312-322-8166
E-Mail: bmazumder@frbchi.org
Reyn van Ewijk
IMBEI
University of Mainz
Langenbeckstr. 1
55101 Mainz
Germany
E-Mail: vanewijk@imbei.uni-mainz.de
AB - We consider the effects of daytime fasting by pregnant women during the lunar month of Ramadan on their children's test scores at age seven. Using English register data, we find that scores are .05 to .08 standard deviations lower for Pakistani and Bangladeshi students exposed to Ramadan in early pregnancy. These estimates are downward biased to the extent that Ramadan is not universally observed. We conclude that the effects of prenatal investments on test scores are comparable to many conventional educational interventions but are likely to be more cost effective and less subject to "fade out".
ER -
TY - JOUR
AU - Bussière,Matthieu
AU - Callegari,Giovanni
AU - Ghironi,Fabio
AU - Sestieri,Giulia
AU - Yamano,Norihiko
TI - Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-09
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17712
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17712
L1 - http://www.nber.org/papers/w17712.pdf
N1 - Author contact info:
Matthieu Bussiere
Banque de France
31 rue Croix des Petits Champs
75001 Paris
France
E-Mail: Matthieu.Bussiere@banque-france.fr
Giovanni Callegari
European Central Bank
Kaiserstrasse 29
60311 Frankfurt am Main
Germany
E-Mail: Giovanni.Callegari@ecb.int
Fabio Ghironi
Boston College
Department of Economics
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3859
Tel: 617/552-3686
Fax: 617/552-2308
E-Mail: fabio.ghironi@bc.edu
Giulia Sestieri
Banque de France
31 rue Croix des Petits Champs
75001 Paris
France
E-Mail: Giulia.Sestieri@banque-france.fr
Norihiko Yamano
OECD
2 rue Andre Pascal
75775 Paris Cedex 16, Paris
France
E-Mail: Norihiko.Yamano@oecd.org
AB - This paper introduces a new methodology for the estimation of demand trade elasticities based on an import intensity-adjusted measure of aggregate demand, with the foundation of a stylized theoretical model. We compute the import intensity of demand components by using the OECD Input-Output tables. We argue that the composition of demand plays a key role in trade dynamics because of the large movements in the most import-intensive categories of expenditure (especially investment, but also exports). We provide evidence in favor of these mechanisms for a panel of 18 OECD countries, paying particular attention to the 2008-09 Great Trade Collapse.
ER -
TY - JOUR
AU - Bernard,Andrew B.
AU - Grazzi,Marco
AU - Tomasi,Chiara
TI - Intermediaries in International Trade: Direct versus indirect modes of export
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17711
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17711
L1 - http://www.nber.org/papers/w17711.pdf
N1 - Author contact info:
Andrew B. Bernard
Tuck School of Business at Dartmouth
100 Tuck Hall
Hanover, NH 03755
Tel: 603/646-0302
Fax: 603/646-0995
E-Mail: Andrew.B.Bernard@dartmouth.edu
marco grazzi
LEM Scuola Superiore Sant'Anna
Piazza Martiri della Liberta', 33
56127 Pisa, Italy
E-Mail: m.grazzi@sssup.it
Chiara Tomasi
University of Trento
Via Inama, 5
38122 Trento, Italy
E-Mail: chiara.tomasi@unitn.it
AB - This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different products than manufacturing exporters. In particular, high market-specific fixed costs of exporting, the (lack of) quality of the general contracting environment and product-specific factors play important roles in explaining the existence of export intermediaries. These underlying differences between direct and intermediary exporters have important consequences for trade flows. The ability of export intermediaries to overcome country and product fixed costs means that they can more easily respond along the extensive margin to external shocks. Intermediaries and direct exporters respond differently to exchange rate fluctuations both in terms of the total value of shipments and the number of products exported as well as in terms of prices and quantities. Aggregate exports to destinations with high shares of indirect exports are much less responsive to changes in the real exchange rate than are exports to countries served primarily by direct exporters.
ER -
TY - JOUR
AU - Deming,David J.
AU - Goldin,Claudia
AU - Katz,Lawrence F.
TI - The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17710
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17710
L1 - http://www.nber.org/papers/w17710.pdf
N1 - Author contact info:
David Deming
Harvard Graduate School of Education
Gutman 411
Appian Way
Cambridge, MA 02139
Tel: 617/495-0583
E-Mail: david_deming@gse.harvard.edu
Claudia Goldin
National Bureau of Economic Research
1050 Massachusetts Ave.
Cambridge, MA 02138
Tel: 617/613-1200
Fax: 617/613-1245
E-Mail: cgoldin@harvard.edu
Lawrence F. Katz
Department of Economics
Harvard University
Cambridge, MA 02138
Tel: 617/495-5148
Fax: 617/613-1245
E-Mail: lkatz@harvard.edu
AB - Private for-profit institutions have been the fastest growing part of the U.S. higher education sector. For-profit enrollment increased from 0.2 percent to 9.1 percent of total enrollment in degree-granting schools from 1970 to 2009, and for-profit institutions account for the majority of enrollments in non-degree granting postsecondary schools. We describe the schools, students, and programs in the for-profit higher education sector, its phenomenal recent growth, and its relationship to the federal and state governments. Using the 2004 to 2009 Beginning Postsecondary Students (BPS) longitudinal survey we assess outcomes of a recent cohort of first-time undergraduates who attended for-profits relative to comparable students who attended community colleges or other public or private non-profit institutions. We find that relative to these other institutions, for-profits educate a larger fraction of minority, disadvantaged, and older students, and they have greater success at retaining students in their first year and getting them to complete short programs at the certificate and associate degree levels. But we also find that for-profit students end up with higher unemployment and “idleness” rates and lower earnings six years after entering programs than do comparable students from other schools, and that they have far greater student debt burdens and default rates on their student loans.
ER -
TY - JOUR
AU - Cook,Philip J.
AU - Durrance,Christine Piette
TI - The Virtuous Tax: Lifesaving and Crime-Prevention Effects of the 1991 Federal Alcohol-Tax Increase
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17709
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17709
L1 - http://www.nber.org/papers/w17709.pdf
N1 - Author contact info:
Philip J. Cook
Sanford School of Public Policy
Duke University
215 Sanford Building
Durham, NC 27708-0245
Tel: 919 613 7360
Fax: 919/681-8288
E-Mail: pcook@duke.edu
Christine Durrance
UNC
E-Mail: Christine.Durrance@unc.edu
AB - On January 1, 1991, the federal excise tax on beer doubled, and the tax rates on wine and liquor increased as well. These changes are larger than the typical state-level changes that have been used to study the effect of price on alcohol abuse and its consequences. In this paper, we develop a method to estimate some important effects of those large 1991 changes, exploiting the interstate differences in alcohol consumption. We demonstrate that the relative importance of drinking in traffic fatalities is closely tied to per capita alcohol consumption across states. As a result, we expect that the proportional effects of the federal tax increase on traffic fatalities would be positively correlated with per capita consumption. We demonstrate that this is indeed the case, and infer estimates of the price elasticity and lives saved in each state. We repeat this exercise for other injury-fatality rates, and for nine categories of crime. For each outcome, the estimated effect of the tax increase is negatively related to average consumption, and that relationship is highly significant for the overall injury death rate, the violent crime rate, and the property crime rate. A conservative estimate is that the federal tax reduced injury deaths by 4.7%, or almost 7,000, in 1991.
ER -
TY - JOUR
AU - Corsetti,Giancarlo
AU - Müller,Gernot J.
TI - Multilateral Economic Cooperation and the International Transmission of Fiscal Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17708
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17708
L1 - http://www.nber.org/papers/w17708.pdf
N1 - Author contact info:
Giancarlo Corsetti
Faculty of Economics
Cambridge University
Sidgwick Avenue
CB3 9DD Cambridge, Cambs
United Kingdom
Tel: +44(0)1223335235
E-Mail: giancarlo.corsetti@gmail.com
Gernot Müller
University of Bonn
Kaiserstraße 1, 53113
Bonn, Germany
E-Mail: gernot.mueller@uni-bonn.de
M3 - presented at "Globalization in an Age of Crisis", September 14-16, 2011
AB - During the global financial crisis 2007–2009 fiscal policy was widely used as a stabilization tool. Policymakers allowed a large build-up of public debt resulting from both automatic and discretionary expansionary measures. At the same time, calls for policy coordination stressed that international spillovers of fiscal policy might be sizeable. We reconsider the case for fiscal coordination by providing new evidence on the cross-border effects of discretionary fiscal measures. We rely on a vector autoregression model as well as on a quantitative business cycle model. We find that i) large spillover effects cannot be ruled out and, in contrast to conventional wisdom, ii) financial factors rather than trade flows lie at the heart of the international transmission mechanism. We discuss the implications of these results for policy coordination when markets price sovereign default risk, and put pressure on governments for implementing budget consolidation measures.
ER -
TY - JOUR
AU - Henderson,J. Vernon
AU - Lee,Yong Suk
TI - Organization of Disaster Aid Delivery: Spending Your Donations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17707
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17707
L1 - http://www.nber.org/papers/w17707.pdf
N1 - Author contact info:
J. Vernon Henderson
Department of Economics
Box B
Brown University
Providence, RI 02912
Tel: 401/863-2886
Fax: 401/863-1970
E-Mail: j_henderson@brown.edu
Yong Suk Lee
Dept. of Economics
Brown University
Providence RI 0291
E-Mail: yong_suk_lee@brown.edu
AB - This paper analyzes how different organizational structures between funding and implementing agencies affect the quality of aid delivered and social agendas pursued across neighboring villages in a set disaster context. We model the implied objective functions and trade-offs concerning aid quality, aid quantity, and social agendas of different types of agencies. We analyze three waves of survey data on fishermen and fishing villages in Aceh, Indonesia from 2005-2009, following the tsunami. Different organizational structures result in significantly different qualities of hard aid, differential willingness to share aid delivery with other NGOs in a village, and differential promotion of public good objectives and maintenance of village religious and occupational traditions. This is the first time these aspects have been modeled and quantified in the literature. Some well known international NGOs delivered housing with relatively low rates of reported faults such as leaky roofs and cracked walls; others had relatively high rates. For boats, some had very high rates of boat “failure”, boats that sank upon launch, were not seaworthy, or fell apart within a month or two. We also document how a social agenda of particular agencies to promote greater equality can be thwarted and distorted by village leaders, potentially increasing inequality.
ER -
TY - JOUR
AU - Harrigan,James
AU - Ma,Xiangjun
AU - Shlychkov,Victor
TI - Export Prices of U.S. Firms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17706
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17706
L1 - http://www.nber.org/papers/w17706.pdf
N1 - Author contact info:
James Harrigan
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434-243-8354
Fax: 434-982-2904
E-Mail: harrigan@nber.org
Ma Xiangjun
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
E-Mail: xm2e@virginia.edu
Victor Shlychkov
Columbia University
E-Mail: vs2109@columbia.edu
AB - Using confidential firm-level data from the United States in 2002, we show that exporting firms charge prices for narrowly defined goods that differ substantially with the characteristics of firms and export markets. We control for selection into export markets using a three-stage estimator. We have three main results. First, we find that that highly productive and skill-intensive firms charge higher prices, while capital-intensive firms charge lower prices. Second, the very large correlation between distance and export prices found by Baldwin and Harrigan (2011) is largely due to a composition effect. Third, U.S. firms charge slightly higher prices to larger and richer markets, and substantially higher prices to markets other than Canada and Mexico.
ER -
TY - JOUR
AU - Aldy,Joseph E.
AU - Pizer,William A.
TI - The Competitiveness Impacts of Climate Change Mitigation Policies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17705
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17705
L1 - http://www.nber.org/papers/w17705.pdf
N1 - Author contact info:
Joseph E. Aldy
Harvard Kennedy School
Taubman 382, Mailbox 58
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-7213
E-Mail: joseph_aldy@hks.harvard.edu
William A. Pizer
Sanford School of Public Policy
Duke University
Box 90312
Durham, NC 27708
Tel: 919/613-9286
Fax: 877/240-9880
E-Mail: billy.pizer@duke.edu
AB - In order to clarify ongoing debates over the competitiveness impacts of climate change regulation, we develop a precise definition that can be estimated with available domestic production, trade, and energy price data. We use this definition and a 20+ year panel of 400+ U.S. manufacturing industries to estimate and predict the effects a U.S.-only $15 per ton CO2 price. We find competitiveness effects on the order of a 1.0 to 1.3 percent decline in production among energy-intensive manufacturing industries, representing about one-third of the policy’s impacts on these firms’ output.
ER -
TY - JOUR
AU - Gelber,Alexander M.
AU - Isen,Adam
TI - Children’s Schooling and Parents’ Investment in Children: Evidence from the Head Start Impact Study
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17704
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17704
L1 - http://www.nber.org/papers/w17704.pdf
N1 - Author contact info:
Alexander M. Gelber
The Wharton School
University of Pennsylvania
1403 Steinberg-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 857/998-0055
E-Mail: agelber@nber.org
Adam Isen
University of Pennsylvania
Steinberg-Dietrich Hall #1400
3620 Locust Walk
Philadelphia, PA 19104-6372
E-Mail: isen@wharton.upenn.edu
AB - Parents may have important effects on their children, but little work in economics explores whether children's schooling opportunities crowd out or encourage parents' investment in children. We analyze data from the Head Start Impact Study, which granted randomly-chosen preschool-aged children the opportunity to attend Head Start. We find that Head Start causes a substantial increase in parents' involvement with their children—such as time spent reading to children, math activities, or days spent with children by fathers who do not live with their children—both during and after the period when their children are potentially enrolled in Head Start. We discuss a variety of mechanisms that are consistent with our findings, including a simple model we present in which Head Start impacts parent involvement in part because parents perceive their involvement to be complementary with child schooling in the production of child qualities.
ER -
TY - JOUR
AU - Nyce,Steven
AU - Schieber,Sylvester
AU - Shoven,John B.
AU - Slavov,Sita
AU - Wise,David A.
TI - Does Retiree Health Insurance Encourage Early Retirement?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17703
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17703
L1 - http://www.nber.org/papers/w17703.pdf
N1 - Author contact info:
Steven Nyce
Towers Watson
901 North Glebe Road
Arlington, VA 22203
E-Mail: steven.nyce@towerswatson.com
Sylvester Schieber
Towers Watson
901 North Glebe Road
Arlington, VA 22203
Tel: 703/258-8000
Fax: 703/258-8585
E-Mail: Syl.Schieber@towerswatson.com
John B. Shoven
Department of Economics
579 Serra Mall at Galvez Street
Stanford, CA 94305-6015
Tel: 650/723-3273
Fax: 650/723-8611
E-Mail: shoven@stanford.edu
Sita Slavov
Department of Economics
Occidental College
1600 Campus Road
Los Angeles, CA 90041
Tel: 323/259-1461
E-Mail: sslavov@oxy.edu
David A. Wise
Harvard Kennedy School
79 John F. Kennedy
Cambridge, MA 02138
E-Mail: dwise@nber.org
AB - The strong link between health insurance and employment in the United States may cause workers to delay retirement until they become eligible for Medicare at age 65. However, some employers extend health insurance benefits to their retirees, and individuals who are eligible for such retiree health benefits need not wait until age 65 to retire with group health coverage. We investigate the impact of retiree health insurance on early retirement using employee-level data from 64 diverse firms that are clients of Towers Watson, a leading benefits consulting firm. We find that retiree health coverage has its strongest effects at ages 62 and 63, resulting in a 3.7 percentage point (21.2 percent) increase in the probability of turnover at age 62 and a 5.1 percentage point (32.2 percent) increase in the probability of turnover at age 63; it has a more modest effects for individuals under the age of 62. A more generous employer contribution of 50 percent or more raises turnover by 1-3 percentage points at ages 56-61, by 5.9 percentage points (33.7 percent) at age 62, and by 6.9 percentage points (43.7 percent) at age 63. Overall, an employer contribution of 50 percent or more reduces the total number of person-years worked between ages 56 and 64 by 9.6 percent relative to no coverage.
ER -
TY - JOUR
AU - Duflo,Esther
TI - Women’s Empowerment and Economic Development
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17702
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17702
L1 - http://www.nber.org/papers/w17702.pdf
N1 - Author contact info:
Esther Duflo
Department of Economics
MIT, E52-252G
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/258-7013
Fax: 617/253-6915
E-Mail: eduflo@mit.edu
AB - Women’s empowerment and economic development are closely related: in one direction, development alone can play a major role in driving down inequality between men and women; in the other direction, empowering women may benefit development. Does this imply that pushing just one of these two levers would set a virtuous circle in motion? This paper reviews the literature on both sides of the empowerment-development nexus, and argues that the inter-relationships are probably too weak to be self-sustaining, and that continuous policy commitment to equality for its own sake may be needed to bring about equality between men and women.
ER -
TY - JOUR
AU - Kerr,William R.
TI - Income Inequality and Social Preferences for Redistribution and Compensation Differentials
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17701
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17701
L1 - http://www.nber.org/papers/w17701.pdf
N1 - Author contact info:
William R. Kerr
Harvard Business School
Rock Center 212
Soldiers Field
Boston, MA 02163
Tel: 617/496-7021
E-Mail: wkerr@hbs.edu
AB - In cross-sectional studies, countries with greater income inequality typically exhibit less support for government-led redistribution and greater acceptance of wage inequality (e.g., United States versus Western Europe). If individual nations evolve along this pattern, a vicious cycle could form with reduced social concern amplifying primal increases in inequality due to forces like skill-biased technical change. Exploring movements around these long-term levels, however, this study finds mixed evidence regarding the vicious cycle hypothesis. On one hand, larger compensation differentials are accepted as inequality grows. This growth in differentials is of a smaller magnitude than the actual increase in inequality, but it is nonetheless positive and substantial in size. Weighing against this, growth in inequality is met with greater support for government-led redistribution to the poor. These patterns suggest that short-run inequality shocks can be reinforced in the labor market but do not result in weaker political preferences for redistribution.
ER -
TY - JOUR
AU - Kehoe,Timothy J.
AU - Meza,Felipe
TI - Catch-up Growth Followed by Stagnation: Mexico, 1950–2010
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17700
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17700
L1 - http://www.nber.org/papers/w17700.pdf
N1 - Author contact info:
Timothy J. Kehoe
University of Minnesota
Department of Economics
1925 Fourth Street South
Minneapolis, MN 55455-0462
Tel: 612/625-1589
Fax: 612/204-5515
E-Mail: tkehoe@umn.edu
Felipe Meza
Centro de Investigación Económica
Instituto Tecnólogico Autónomo de México
Camino a Santa Teresa 930
Mexico, D.F. 10700
Mexico
E-Mail: felipe.meza@itam.mx
AB - In 1950 Mexico entered an economic takeoff and grew rapidly for more than 30 years. Growth stopped during the crises of 1982–1995, despite major reforms, including liberalization of foreign trade and investment. Since then growth has been modest. We analyze the economic history of Mexico 1877–2010. We conclude that the growth 1950–1981 was driven by urbanization, industrialization, and education and that Mexico would have grown even more rapidly if trade and investment had been liberalized sooner. If Mexico is to resume rapid growth — so that it can approach U.S. levels of income — it needs further reforms.
ER -
TY - JOUR
AU - Chetty,Raj
AU - Friedman,John N.
AU - Rockoff,Jonah E.
TI - The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in Adulthood
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17699
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17699
L1 - http://www.nber.org/papers/w17699.pdf
N1 - Author contact info:
Raj Chetty
Department of Economics
Harvard University
1805 Cambridge St.
Cambridge, MA 02138
Tel: 617-744-9492
E-Mail: chetty@fas.harvard.edu
John N. Friedman
Harvard Kennedy School
Taubman 356
79 JFK St.
Cambridge, MA 02138
Tel: 617/233-6965
Fax: 617/496-1722
E-Mail: john_friedman@harvard.edu
Jonah E. Rockoff
Columbia University
Graduate School of Business
3022 Broadway #603
New York, NY 10027-6903
Tel: 212/854-9799
Fax: 212/316-9219
E-Mail: jonah.rockoff@columbia.edu
AB - Are teachers’ impacts on students’ test scores (“value-added”) a good measure of their quality? This question has sparked debate largely because of disagreement about (1) whether value-added (VA) provides unbiased estimates of teachers’ impacts on student achievement and (2) whether high-VA teachers improve students’ long-term outcomes. We address these two issues by analyzing school district data from grades 3-8 for 2.5 million children linked to tax records on parent characteristics and adult outcomes. We find no evidence of bias in VA estimates using previously unobserved parent characteristics and a quasi-experimental research design based on changes in teaching staff. Students assigned to high-VA teachers are more likely to attend college, attend higher- ranked colleges, earn higher salaries, live in higher SES neighborhoods, and save more for retirement. They are also less likely to have children as teenagers. Teachers have large impacts in all grades from 4 to 8. On average, a one standard deviation improvement in teacher VA in a single grade raises earnings by about 1% at age 28. Replacing a teacher whose VA is in the bottom 5% with an average teacher would increase the present value of students’ lifetime income by more than $250,000 for the average class- room in our sample. We conclude that good teachers create substantial economic value and that test score impacts are helpful in identifying such teachers.
ER -
TY - JOUR
AU - Hausman,Jerry A.
AU - Palmer,Christopher J.
TI - Heteroskedasticity-Robust Inference in Finite Samples
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17698
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17698
L1 - http://www.nber.org/papers/w17698.pdf
N1 - Author contact info:
Jerry A. Hausman
Department of Economics
MIT, Room E52-271A
50 Memorial Drive
Cambridge, MA 02139
Tel: 617/253-3644
Fax: 617/253-1330
E-Mail: jhausman@mit.edu
Christopher Palmer
Economcis Department
MIT, Room E52-391
50 Memorial Drive
Cambridge, MA 02142
Tel: 617-299-6511
E-Mail: cjpalmer@mit.edu
AB - Since the advent of heteroskedasticity-robust standard errors, several papers have proposed adjustments to the original White formulation. We replicate earlier findings that each of these adjusted estimators performs quite poorly in finite samples. We propose a class of alternative heteroskedasticity-robust tests of linear hypotheses based on an Edgeworth expansions of the test statistic distribution. Our preferred test outperforms existing methods in both size and power for low, moderate, and severe levels of heteroskedasticity.
ER -
TY - JOUR
AU - Autor,David H.
TI - The Unsustainable Rise of the Disability Rolls in the United States: Causes, Consequences, and Policy Options
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17697
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17697
L1 - http://www.nber.org/papers/w17697.pdf
N1 - Author contact info:
David Autor
Department of Economics
MIT, E52-371
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/258-7698
Fax: 617/253-1330
E-Mail: dautor@mit.edu
AB - Two ailments limit the effectiveness and threaten the long-term viability of the U.S. Social Security Disability Insurance program (SSDI). First, the program is ineffective in assisting the vast majority of workers with less severe disabilities to reach their employment potential or earn their own way. Second, the program’s expenditures on cash transfers and medical benefits— exceeding $1,500 per U.S. household—are extremely high and growing unsustainably. There is no compelling evidence, however, that the incidence of disabling conditions among the U.S. working age population is rising. This paper discusses the challenges facing the SSDI program, explains how its design has led to rapid and unsustainable growth, considers why past efforts to slow program growth have met with minimal and fleeting success, and outlines three recent proposals that would modify the program to slow growth while potentially improving the employment prospects of workers with disabilities. Because these proposals depart substantially from a program design that has seen little change in half a century, their efficacy is unproven. Additionally, even well-meaning efforts to place the SSDI program on a sustainable trajectory run the risk of creating additional hurdles for claimants who are truly unable to work. Nevertheless, the imminent exhaustion of the SSDI Trust Fund provides an impetus and an opportunity to explore innovative solutions to the longstanding policy challenges posed by the SSDI program.
ER -
TY - JOUR
AU - Acharya,Viral V.
AU - Lambrecht,Bart M.
TI - A Theory of Income Smoothing When Insiders Know More Than Outsiders
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17696
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17696
L1 - http://www.nber.org/papers/w17696.pdf
N1 - Author contact info:
Viral V. Acharya
Stern School of Business
New York University
44 West 4th Street, Suite 9-84
New York, NY 10012
Tel: 212/998-0354
Fax: 212 995 4233
E-Mail: vacharya@stern.nyu.edu
Bart Lambrecht
Lancaster University Management School
Room C-42
Bailrigg
Lancaster LA1 4YX, UK
Tel: 44 0 1524 592711
Fax: 44 0 1524 847321
E-Mail: b.lambrecht@lancaster.ac.uk
AB - We consider a setting in which insiders have information about income that outside shareholders do not, but property rights ensure that outside shareholders can enforce a fair payout. To avoid intervention, insiders report income consistent with outsiders' expectations based on publicly available information rather than true income, resulting in an observed income and payout process that adjust partially and over time towards a target. Insiders under-invest in production and effort so as not to unduly raise outsiders' expectations about future income, a problem that is more severe the smaller is the inside ownership and results in an "outside equity Laffer curve". A disclosure environment with adequate quality of independent auditing mitigates the problem, implying that accounting quality can enhance investments, size of public stock markets and economic growth.
ER -
TY - JOUR
AU - Borenstein,Severin
TI - The Private and Public Economics of Renewable Electricity Generation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17695
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17695
L1 - http://www.nber.org/papers/w17695.pdf
N1 - Author contact info:
Severin Borenstein
Haas School of Business
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-3689
E-Mail: borenste@haas.berkeley.edu
AB - Generating electricity from renewable sources is more expensive than conventional approaches, but reduces pollution externalities. Analyzing the tradeoff is much more challenging than often presumed, because the value of electricity is extremely dependent on the time and location at which it is produced, which is not very controllable with some renewables, such as wind and solar. Likewise, the pollution benefits from renewable generation depend on what type of generation it displaces, which also depends on time and location. Without incorporating these factors, cost-benefit analyses of alternatives are likely to be misleading. However, other common arguments for subsidizing renewable power – green jobs, energy security and driving down fossil energy prices – are unlikely to substantially alter the analysis. The role of intellectual property spillovers is a strong argument for subsidizing energy science research, but less persuasive as an enhancement to the value of installing current renewable energy technologies.
ER -
TY - JOUR
AU - Card,David
AU - Cardoso,Ana Rute
TI - Can Compulsory Military Service Increase Civilian Wages? Evidence from the Peacetime Draft in Portugal
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17694
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17694
L1 - http://www.nber.org/papers/w17694.pdf
N1 - Author contact info:
David Card
Department of Economics
549 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-5222
Fax: 510/643-7042
E-Mail: card@econ.berkeley.edu
Ana Rute Cardoso
IAE (CSIC) and Barcelona GSE
08193 Bellaterra
Barcelona
Spain
Tel: 34(9)35806612
Fax: 34(9)35801452
E-Mail: anarute.cardoso@iae.csic.es
AB - Although military conscription was widespread during most of the past century, credible evidence on the effects of mandatory service is limited. We provide new evidence on the long-term effects of peacetime conscription, using longitudinal data for Portuguese men born in 1967. These men were inducted at a relatively late age (21), allowing us to use pre-conscription wages to control for ability differences between conscripts and non-conscripts. We find that the average impact of military service for men who were working prior to age 21 is close to zero throughout the period from 2 to 20 years after their service. These small average effects arise from a significant 4-5 percentage point impact for men with only primary education, coupled with a zero-effect for men with higher education. The positive impacts for less-educated men suggest that mandatory service can be a valuable experience for those who might otherwise spend their careers in low-level jobs.
ER -
TY - JOUR
AU - Dougherty,Sean
AU - Robles,Verónica C. Frisancho
AU - Krishna,Kala
TI - Employment Protection Legislation and Plant-Level Productivity in India
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17693
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17693
L1 - http://www.nber.org/papers/w17693.pdf
N1 - Author contact info:
Sean Dougherty
OECD Economics Department
2, rue Andre Pascal
75775 Paris Cedex 16
France
E-Mail: sean.dougherty@oecd.org
Verónica C. Frisancho Robles
Department of Economics
306 Kern Building
The Pennsylvania State University
University Park, PA 16802
E-Mail: vfrisancho@psu.edu
Kala Krishna
Department of Economics
523 Kern Graduate Building
The Pennsylvania State University
University Park, PA 16802
Tel: 814/865-1106
Fax: 814/863-4775
E-Mail: kmk4@psu.edu
AB - Using plant-level data from the Annual Survey of Industries (ASI) for the fiscal years from 1998-99 through 2007-08, this study provides plant-level cross-state/time-series evidence of the impact of employment protection legislation (EPL) on total factor productivity (TFP) and labor productivity in India. Identification of the effect of EPL follows from a difference-in-differences estimator inspired by Rajan and Zingales (1998) that takes advantage of the state-level variation in labor regulation and heterogeneous industry characteristics. The fundamental identification assumption is that EPL is more likely to restrict firms operating in industries with higher labor intensity and/or higher sales volatility. Our results show that firms in labor intensive or more volatile industries benefited the most from labor reforms in their states. Our point estimates indicate that, on average, firms in labor intensive industries and in flexible labor markets have TFP residuals 14% higher than those registered for their counterparts in states with more stringent labor laws. However, no important differences are identified among plants in industries with low labor intensity when comparing states with high and low levels of EPL reform. Similarly, the TFP of plants in volatile industries and in states that experienced more pro-employer reforms is 11% higher than that of firms in volatile industries and in more restrictive states; however, the TFP residuals of plants in industries with low labor intensity are 11% lower in high EPL reform states than in states with lower levels of EPL reform. In sum, the evidence presented here suggests that the high labor costs and rigidities imposed through Indian federal labor laws are lessened by labor market reforms at the state level.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Edwards,Sebastian
AU - Riera-Crichton,Daniel
TI - Adjustment patterns to commodity terms of trade shocks: the role of exchange rate and international reserves policies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17692
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17692
L1 - http://www.nber.org/papers/w17692.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Sebastian Edwards
UCLA Anderson Graduate School of Business
110 Westwood Plaza, Suite C508
Box 951481
Los Angeles, CA 90095-1481
Tel: 310/206-6797
Fax: 310/206-5825
E-Mail: sebastian.edwards@anderson.ucla.edu
Daniel Riera-Crichton
Department of Economics, Bates College
Andrews Road 2
Office 237 Pettingill Hall
Lewiston, ME 04240
E-Mail: drieracr@bates.edu
AB - We analyze the way in which Latin American countries have adjusted to commodity terms of trade (CTOT) shocks in the 1970-2007 period. Specifically, we investigate the degree to which the active management of international reserves and exchange rates impacted the transmission of international price shocks to real exchange rates. We find that active reserve management not only lowers the short-run impact of CTOT shocks significantly, but also affects the long-run adjustment of REER, effectively lowering its volatility. We also show that relatively small increases in the average holdings of reserves by Latin American economies (to levels still well below other emerging regions current averages) would provide a policy tool as effective as a fixed exchange rate regime in insulating the economy from CTOT shocks. Reserve management could be an effective alternative to fiscal or currency policies for relatively trade closed countries and economies with relatively poor institutions or high government debt. Finally, we analyze the effects of active use of reserve accumulation aimed at smoothing REERs. The result support the view that “leaning against the wind” is potent, but more effective when intervening to support weak currencies rather than intervening to slow down the pace of real appreciation. The active reserve management reduces substantially REER volatility.
ER -
TY - JOUR
AU - Coeurdacier,Nicolas
AU - Rey,Hélène
TI - Home Bias in Open Economy Financial Macroeconomics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17691
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17691
L1 - http://www.nber.org/papers/w17691.pdf
N1 - Author contact info:
Nicolas Coeurdacier
SciencesPo
Department of Economics
28 rue des Saint Pères 75006 Paris, France
E-Mail: ncoeurdacier@london.edu
Helene Rey
London Business School
Regents Park
London NW1 4SA
UNITED KINGDOM
Tel: 44 2070008412
E-Mail: hrey@london.edu
AB - Home bias is a perennial feature of international capital markets. We review various explanations of this puzzling phenomenon highlighting recent developments in macroeconomic modelling that incorporate international portfolio choices in standard two-country general equilibrium models. We refer to this new literature as Open Economy Financial Macroeconomics. We focus on three broad classes of explanations: (i) hedging motives in frictionless financial markets (real exchange rate and non-tradable income risk), (ii) asset trade costs in international financial markets (such as transaction costs or differences in tax treatments between national and foreign assets), (iii) informational frictions and behavioural biases. Recent theories call for new portfolio facts beyond equity home bias. We present new evidence on crossborder asset holdings across different types of assets: equities, bonds and bank lending and new micro data on institutional holdings of equity at the fund level. These data should inform macroeconomic modelling of the open economy and a growing literature of models of delegated investment.
ER -
TY - JOUR
AU - Amarante,Verónica
AU - Manacorda,Marco
AU - Miguel,Edward
AU - Vigorito,Andrea
TI - Do Cash Transfers Improve Birth Outcomes? Evidence from Matched Vital Statistics, Social Security and Program Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17690
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17690
L1 - http://www.nber.org/papers/w17690.pdf
N1 - Author contact info:
Veronica Amarante
Universidad de la Republica
Joaquin Requena 1375
Montevideo 11200
Uruguay
E-Mail: vero@iecon.ccee.edu.uy
Marco Manacorda
Department of Economics
Queen Mary University of London
CEP - London School of Economics
Houghton Street
London WC2A 2AE
UK
E-Mail: m.manacorda@lse.ac.uk
Edward Miguel
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720
Tel: 510/642-7162
Fax: 510/642-6615
E-Mail: emiguel@econ.berkeley.edu
Andrea Vigorito
Instituto de Economia
Facultad de Ciencias Economicas
Universidad de la Republica
Joaquin Requena 1375
Montevideo 11200
Uruguay
E-Mail: andrea@iecon.ccee.edu.uy
AB - There is limited empirical evidence on whether unrestricted cash social assistance to poor pregnant women improves children’s birth outcomes. Using program administrative micro-data matched to longitudinal vital statistics on the universe of births in Uruguay, we estimate that participation in a generous cash transfer program led to a sizeable 15% reduction in the incidence of low birthweight. Improvements in mother nutrition and a fall in labor supply, out-of-wedlock births and mother’s smoking all appear to contribute to the effect. We conclude that, by improving child health, unrestricted unconditional cash transfers may help break the cycle of intergenerational poverty.
ER -
TY - JOUR
AU - Nardi,Mariacristina De
AU - French,Eric
AU - Jones,John Bailey
AU - Gooptu,Angshuman
TI - Medicaid and the Elderly
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17689
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17689
L1 - http://www.nber.org/papers/w17689.pdf
N1 - Author contact info:
Mariacristina De Nardi
Federal Reserve Bank of Chicago
230 South LaSalle St.
Chicago, IL 60604
Tel: 312/322-5769
Fax: 312/322-2357
E-Mail: denardim@nber.org
Eric French
Research Department
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, IL 60604
E-Mail: efrench@frbchi.org
John Bailey Jones
Department of Economics
BA-113B
University at Albany
State University of New York
Albany, NY 12222
Tel: 518/442-4926
E-Mail: jbjones@albany.edu
Angshuman Gooptu
Harris School
1155 East 60th Street
Chicago, IL 60637
E-Mail: agoopt1@gmail.com
AB - We describe the Medicaid eligibility rules for the elderly. Medicaid is administered jointly by the Federal and state governments, and each state has significant flexibility on the details of the implementation. We document the features common to all states, but we also highlight the most salient state-level differences.
There are two main pathways to Medicaid eligibility for people over age 65: either having low assets and income, or being impoverished due to large medical expenses. The first group of recipients (the categorically needy) mostly includes life-long poor individuals, while the second group (the medically needy) includes people who might have earned substantial amounts of money during their lifetime but have become impoverished by large medical expenses. The categorically needy program thus only affects the savings decision of people who have been poor throughout most of their lives. In contrast, the medically needy program provides some insurance even to people who have higher income and assets. Thus, this second pathway is to some extent going to affect the savings of the relatively higher income and assets people.
ER -
TY - JOUR
AU - Nardi,Mariacristina De
AU - French,Eric
AU - Benson,David
TI - Consumption and the Great Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17688
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17688
L1 - http://www.nber.org/papers/w17688.pdf
N1 - Author contact info:
Mariacristina De Nardi
Federal Reserve Bank of Chicago
230 South LaSalle St.
Chicago, IL 60604
Tel: 312/322-5769
Fax: 312/322-2357
E-Mail: denardim@nber.org
Eric French
Research Department
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, IL 60604
E-Mail: efrench@frbchi.org
David Benson
230 S. La Salle St.
Chicago, IL 60604
E-Mail: dbenson@frbchi.org
AB - We document some key facts about aggregate consumption and its subcomponents over time. We then document the behavior of some important determinants of consumption, such as consumers’ expectations about their future income, and changes in the consumers’ wealth positions. Finally, we use a simple permanent income model to show that the observed drop in consumption during the Great Recession can be explained by the observed drops in wealth and income expectations.
ER -
TY - JOUR
AU - Fan,Joseph
AU - Morck,Randall
AU - Yeung,Bernard
TI - Capitalizing China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17687
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17687
L1 - http://www.nber.org/papers/w17687.pdf
N1 - Author contact info:
Joseph Fan
School of Accountancy
Chinese University of Hong Kong
Shatin, N.T.
Hong Kong SAR
Tel: (852) 2609 7839
Fax: (852) 2603 5114
E-Mail: pjfan@cuhk.edu.hk
Randall Morck
Faculty of Business
University of Alberta
Edmonton, AB T6G 2R6
CANADA
Tel: 780/492-5683
Fax: 780/492-3325
E-Mail: randall.morck@ualberta.ca
Bernard Yeung
National University of Singapore
Mochtar Riady Building
15 Kent Ridge Drive
BIZ 1, Level 6, #6-19
Singapore 119245
Tel: +65 6516 3075
Fax: +65 6779 1365
E-Mail: bizdean@nus.edu.sg
M3 - presented at "Capitalizing China Conference", December 15-16, 2009
AB - Despite a vast accumulation of private capital, China is not embracing capitalism. Deceptively familiar capitalist features disguise the profoundly unfamiliar foundations of “market socialism with Chinese characteristics.” The Chinese Communist Party (CCP), by controlling the career advancement of all senior personnel in all regulatory agencies, all state-owned enterprises (SOEs), and virtually all major financial institutions state-owned enterprises (SOEs), and senior Party positions in all but the smallest non-SOE enterprises, retains sole possession of Lenin’s Commanding Heights. This manuscript introduces the chapters comprising the NBER volume Capitalizing China (Fan and Morck, eds. 2012), which examine China’s high savings rate, banking system, financial markets, financial regulations, corporate governance, and public finances; and consider policy alternatives the CCP might consider if its goal is China’s elevation into the ranks of high income countries.
ER -
TY - JOUR
AU - Wincoop,Eric van
TI - International Contagion Through Leveraged Financial Institutions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17686
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17686
L1 - http://www.nber.org/papers/w17686.pdf
N1 - Author contact info:
Eric van Wincoop
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434/924-3997
Fax: 434/982-2904
E-Mail: vanwincoop@virginia.edu
AB - The 2008-2009 financial crises, while originating in the United States, witnessed a drop in asset prices and output that was at least as large in the rest of the world as in the United States. A widely held view is that this was the result of global transmission through leveraged financial institutions. We investigate this in the context of a simple two-country model. The paper highlights what the various transmission mechanisms associated with balance sheet losses are, how they operate, what their magnitudes are and what the role is of different types of borrowing constraints faced by leveraged institutions. For realistic parameters we find that the model cannot account for the global nature of the crisis, both in terms of the size of the impact and the extent of transmission.
ER -
TY - JOUR
AU - Jaffee,Dwight
AU - Quigley,John M.
TI - The Future of the Government Sponsored Enterprises: The Role for Government in the U.S. Mortgage Market
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17685
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17685
L1 - http://www.nber.org/papers/w17685.pdf
N1 - Author contact info:
Dwight Jaffee
Haas School of Business
University of California
Berkeley, CA 94720-1900
Tel: 510/642-1273
Fax: 510/643-7441
E-Mail: jaffee@haas.berkeley.edu
John M. Quigley
Department of Economics
Evans Hall #3880
University of California
Berkeley, CA 94720-3880
Tel: 510-643-7411
Fax: 510-643-9657
E-Mail: quigley@econ.berkeley.edu
M1 - published as Dwight Jaffee, John M. Quigley. "The Future of the Government Sponsored Enterprises: The Role for Government in the U.S. Mortgage Market," in Edward Glaeser and Todd Sinai, editors, "Housing and the Financial Crisis" University of Chicago Press (2012)
M3 - presented at "Housing and the Financial Crisis", November 17-18, 2011
AB - This paper analyzes options for reforming the U.S. housing finance system in view of the failure of Fannie Mae and Freddie Mac as government sponsored enterprises (GSEs). The options considered include GSE reform, a range of possible new governmental mortgage guarantee plans, and greater reliance on private mortgage markets. The analysis also considers the likely consequences of adopting alternative roles for government in the U.S. housing and mortgage markets. We start by reviewing the history of the GSEs and their contributions to the operation of U.S. housing and mortgage markets, including the actions that led to their failure in conjunction with the recent mortgage market crisis. The reform options we consider include those proposed in a 2011 U.S. Treasury White Paper, plans for new government mortgage guarantees from various researchers and organizations, and the evidence from Western European countries for the efficacy of private mortgages markets.
ER -
TY - JOUR
AU - Schlenker,Wolfram
AU - Walker,W. Reed
TI - Airports, Air Pollution, and Contemporaneous Health
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17684
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17684
L1 - http://www.nber.org/papers/w17684.pdf
N1 - Author contact info:
Wolfram Schlenker
Department of Economics
School of International and Public Affairs
Columbia University
420 West 118th Street, MC 3323
New York, NY 10027
Tel: 212/854-1806
Fax: 212/854-5765
E-Mail: wolfram.schlenker@columbia.edu
Reed Walker
Graduate School of Arts and Sciences
Department of Economics
Columbia University
1022 International Affairs Building
New York, NY 10027
Tel: 315-382-4986
E-Mail: rw2157@columbia.edu
AB - Airports are some of the largest sources of air pollution in the United States. We demonstrate that daily airport runway congestion contributes significantly to local pollution levels and contemporaneous health of residents living nearby and downwind from airports. Our research design exploits the fact that network delays originating from large airports on the East Coast increase runway congestion in California, which in turn increases daily pollution levels around California airports. Using the component of California air pollution driven by airport congestion, we find that carbon monoxide (CO) leads to significant increases in hospitalization rates for asthma, respiratory, and heart related emergency room admissions that are an order of magnitude larger than conventional estimates: A one standard deviation increase in daily pollution levels leads to an additional $1 million in hospitalization costs for respiratory and heart related admissions for the 6 million individuals living within 10km (6.2 miles) of the 12 largest airports in California. While infants and the elderly are more sensitive to air pollution, we also find significant relationships for the adult population. The health impacts are driven by CO, not NO2 or O3, and occur at levels far below existing EPA mandates. Our results suggest there may be sizable morbidity benefits from lowering the existing CO standard.
ER -
TY - JOUR
AU - Ciccone,Antonio
AU - Peri,Giovanni
TI - Schooling Supply and the Structure of Production: Evidence from US States 1950-1990
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17683
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17683
L1 - http://www.nber.org/papers/w17683.pdf
N1 - Author contact info:
Antonio Ciccone
Universitat Pompeu Fabra
E-Mail: antonio.ciccone@upf.edu
Giovanni Peri
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-3033
E-Mail: gperi@ucdavis.edu
AB - We find that over the period 1950-1990, US states absorbed increases in the supply of schooling due to tighter compulsory schooling and child labor laws mostly through within-industry increases in the schooling intensity of production. Shifts in the industry composition towards more schooling-intensive industries played a less important role. To try and understand this finding theoretically, we consider a free trade model with two goods/industries, two skill types, and many regions that produce a fixed range of differentiated varieties of the same goods. We find that a calibrated version of the model can account for shifts in schooling supply being mostly absorbed through within-industry increases in the schooling intensity of production even if the elasticity of substitution between varieties is substantially higher than estimates in the literature.
ER -
TY - JOUR
AU - Goodhart,Charles
TI - Global Macroeconomic and Financial Supervision: Where Next?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17682
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17682
L1 - http://www.nber.org/papers/w17682.pdf
N1 - Author contact info:
Charles Goodhart
London School of Economics
E-Mail: caegoodhart@aol.com
M3 - presented at "Globalization in an Age of Crisis", September 14-16, 2011
AB - The overriding practical problem now is the tension between the global financial and market system and the national political and power structures. The main analytical short-coming lies in the failure to incorporate financial frictions, especially default, into our macro-economic models. Neither a move to a global sovereign authority, nor a reversion towards narrower economic nationalism, seems likely to take place in the near future. Meanwhile, the adjustment to economic imbalances remains asymmetric, with almost all the pressure on deficit countries. Almost by definition surplus countries are “virtuous”. But current account surpluses have to be matched by net capital outflows. Such capital flows to weaker deficit countries have often had unattractive returns. A program to give earlier and greater warnings of the risks of investing in deficit countries could lead to earlier policy reaction, and reduce the risk of crisis.
ER -
TY - JOUR
AU - Wang,Jing
AU - Medianu,Dana
AU - Whalley,John
TI - The Contribution of China, India and Brazil to Narrowing North-South Differences in GDP/capita, World Trade Shares, and Market Capitalization
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17681
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17681
L1 - http://www.nber.org/papers/w17681.pdf
N1 - Author contact info:
Jing Wang
Institute of Quantitative & Technical Economics
Chinese Academy of Social Sciences (CASS).
Beijing China
E-Mail: wj@cass.org.cn
Dana Medianu
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
Canada
E-Mail: dmedianu@uwo.ca
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB - This paper focuses on the contribution to recent narrowing of the gap between Northern and Southern economies in GDP/capita, shares in world trade and market capitalization attributable both jointly and single to China, India, and Brazil (the three currently largest rapidly growing Southern economies). We report North‐South differences in GDP/capita which (depending slightly on definition of North and South, as well as price deflators used) fall from 22 to 15.9 in constant USD between 1990 and 2009, changing Northern and Southern shares in world trade which fall for the North from 82.3% to 64.4% and rise for the South from 17.7% to 35.6%, and a changing North‐South gap in stock market capitalizations from 27.6 to 3.3 over the same time. In contrast the North‐China gap falls from 57.2 to 13.1 between 1990 and 2009, and India from 70.4 to 38.1 using market exchange rates and from 23.4 to 5.5 for China and from 20.7 to 11.4 for India using PPP rates. We calculate the portions of North‐South gap change after 1990 which is accounted for by growth individually and jointly of China, India, and Brazil. Our calculations show that the majority of the change occurs from growth in these three economies, and the most from China. We suggest that the conventional view of a North‐South bipolar world may need recasting into a tripolar world of the North, the Large South, and the rest of the South. In this, world manufacturing activity, trade, and even more rapidly, market capitalization are gravitating towards the Large Three, with a narrowing South‐Large Three gap as well as a shrinking North‐Large Three gap.
ER -
TY - JOUR
AU - Costinot,Arnaud
AU - Lorenzoni,Guido
AU - Werning,Iván
TI - A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17680
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17680
L1 - http://www.nber.org/papers/w17680.pdf
N1 - Author contact info:
Arnaud Costinot
Department of Economics
MIT, E52-243B
50 Memorial Drive
Cambridge MA 02142-1347
Tel: 617/324-1712
Fax: 617/253-1330
E-Mail: costinot@mit.edu
Guido Lorenzoni
MIT Department of Economics
E52-251C
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-4836
Fax: 617/253-1330
E-Mail: glorenzo@mit.edu
Ivan Werning
Department of Economics
MIT
50 Memorial Drive, E51-251a
Cambridge, MA 02142-1347
Tel: 617/452-3662
Fax: 617/253-1330
E-Mail: iwerning@mit.edu
AB - This paper develops a simple theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite horizon endowment economy with two countries. One country chooses taxes on international capital flows in order to maximize the welfare of its representative agent, while the other country is passive. We show that capital controls are not guided by the absolute desire to alter the intertemporal price of the goods produced in any given period, but rather by the relative strength of this desire between two consecutive periods. Specifically, it is optimal for the strategic country to tax capital inflows (or subsidize capital outflows) if it grows faster than the rest of the world and to tax capital outflows (or subsidize capital inflows) if it grows more slowly. In the long-run, if relative endowments converge to a steady state, taxes on international capital flows converge to zero. Although our theory emphasizes interest rate manipulation, the country's net financial position per se is irrelevant.
ER -
TY - JOUR
AU - Chong,Alberto
AU - O,Ana L. De La
AU - Karlan,Dean
AU - Wantchekon,Leonard
TI - Looking Beyond the Incumbent: The Effects of Exposing Corruption on Electoral Outcomes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17679
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17679
L1 - http://www.nber.org/papers/w17679.pdf
N1 - Author contact info:
Alberto Chong
Inter-American Development Bank
E-Mail: ALBERTOCH@iadb.org
Ana L. De La O
Yale University
177 Prospect Street
New Haven, CT 06520
E-Mail: ana.delao@yale.edu
Dean Karlan
Department of Economics
Yale University
P.O. Box 208269
New Haven, CT 06520-8629
Tel: 203/432-4479
Fax: 203/432-5591
E-Mail: dean.karlan@yale.edu
Leonard Wantchekon
Princeton University
E-Mail: lwantche@princeton.edu
AB - Does information about rampant political corruption increase electoral participation and the support for challenger parties? Democratic theory assumes that offering more information to voters will enhance electoral accountability. However, if there is consistent evidence suggesting that voters punish corrupt incumbents, it is unclear whether this translates into increased support for challengers and higher political participation. We provide experimental evidence that information about copious corruption not only decreases incumbent support in local elections in Mexico, but also decreases voter turnout, challengers' votes, and erodes voters' identification with the party of the corrupt incumbent. Our results suggest that while flows of information are necessary, they may be insufficient to improve political accountability, since voters may respond to information by withdrawing from the political process. We conclude with a discussion of the institutional contexts that could allow increased access to information to promote government accountability.
ER -
TY - JOUR
AU - Compton,Janice
AU - Pollak,Robert A.
TI - Family Proximity, Childcare, and Women's Labor Force Attachment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17678
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17678
L1 - http://www.nber.org/papers/w17678.pdf
N1 - Author contact info:
Janice Compton
Department of Economics
University of Manitoba
Winnipeg, MB, R3R 5V5
CANADA
E-Mail: comptonj@cc.umanitoba.ca
Robert Pollak
Washington University in St. Louis
Arts and Sciences
and the Olin Business School
Campus Box 1133
1 Brookings Drive
St. Louis, MO 63130-4899
Tel: 314/935-4918
Fax: 314/935-6359
E-Mail: pollak@wustl.edu
AB - We show that close geographical proximity to mothers or mothers-in-law has a substantial positive effect on the labor supply of married women with young children. We argue that the mechanism through which proximity increases labor supply is the availability of childcare. We interpret availability broadly enough to include not only regular scheduled childcare during work hours but also an insurance aspect of proximity (e.g., a mother or mother-in-law who can provide irregular or unanticipated childcare). Using two large datasets, the National Survey of Families and Households and the public use files of the U.S. Census, we find that the predicted probability of employment and labor force participation is 4-10 percentage points higher for married women with young children living in close proximity to their mothers or their mothers-in-law compared with those living further away.
ER -
TY - JOUR
AU - Lindo,Jason M.
AU - Swensen,Isaac D.
AU - Waddell,Glen R.
TI - Are Big-Time Sports a Threat to Student Achievement?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17677
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17677
L1 - http://www.nber.org/papers/w17677.pdf
N1 - Author contact info:
Jason M. Lindo
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4664
E-Mail: jlindo@uoregon.edu
Isaac Swensen
Department of Economics
University of Oregon
Eugene, OR 97403-1285
E-Mail: isaac@uoregon.edu
Glen Waddell
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541 346 1259
E-Mail: waddell@uoregon.edu
AB - We consider the relationship between collegiate-football success and non-athlete student performance. We find that the team's success significantly reduces male grades relative to female grades. This phenomenon is only present in fall quarters, which coincides with the football season. Using survey data, we find that males are more likely than females to increase alcohol consumption, decrease studying, and increase partying in response to the success of the team. Yet, females also report that their behavior is affected by athletic success, suggesting that their performance is likely impaired but that this effect is masked by the practice of grade curving.
ER -
TY - JOUR
AU - Almond,Douglas
AU - Currie,Janet
AU - Herrmann,Mariesa
TI - From Infant to Mother: Early Disease Environment and Future Maternal Health
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17676
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17676
L1 - http://www.nber.org/papers/w17676.pdf
N1 - Author contact info:
Douglas Almond
Department of Economics
Columbia University
International Affairs Building, MC 3308
420 West 118th Street
New York, NY 10027
Tel: 212/854-7248
Fax: 212/854-3239
E-Mail: da2152@columbia.edu
Janet Currie
Princeton University
316 Wallace Hall
Princeton, NJ 08544
Tel: 609-258-7393
Fax: 609-258-5974
E-Mail: jcurrie@princeton.edu
Mariesa Herrmann
International Affairs Building
Department of Economics
Columbia University
420 W 118th Street
New York, NY 10027
E-Mail: mariesah@gmail.com
AB - This paper examines the links between the disease environment around the time of a woman's birth, and her health at the time she delivers her own infant. Our results suggest that exposure to disease in early childhood significantly increases the incidence of diabetes in the population of future mothers. The exposed mothers are less likely to be married, have fewer years of education, are more likely to gain over 60 pounds while pregnant, and are more likely to smoke while pregnant. Not surprisingly then, exposure increases the probability of low birth weight in the next generation, at least among whites. Among whites, this effect remains when we control for maternal behaviors as well as disease exposure. Among blacks, we find that maternal exposure reduces the incidence of low birth weight. The difference between whites and blacks may reflect a “scarring” vs. selection story; whites who go on to have children are negatively impacted, while blacks who go on to have children are positively selected having survived a higher early childhood mortality rate.
ER -
TY - JOUR
AU - Levchenko,Andrei A.
TI - International Trade and Institutional Change
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17675
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17675
L1 - http://www.nber.org/papers/w17675.pdf
N1 - Author contact info:
Andrei Levchenko
Department of Economics
University of Michigan
611 Tappan Street
Ann Arbor, MI 48109
Tel: 734/764-3296
E-Mail: alev@umich.edu
AB - This paper analyzes the impact of international trade on the quality of institutions, such as contract enforcement, property rights, or investor protection. It presents a model in which imperfect institutions create rents for some parties within the economy, and are a source of comparative advantage in trade. Institutional quality is determined as an equilibrium of a political economy game. When countries share the same technology, there is a "race to the top'' in institutional quality: irrespective of country characteristics, both trade partners are forced to improve institutions after opening. On the other hand, domestic institutions will not improve in either country when one of the countries has a strong enough technological comparative advantage in the institutionally intensive good. We provide empirical evidence for a related cross-sectional prediction of the model. Countries whose exogenous geographical characteristics predispose them to exporting in institutionally intensive sectors exhibit significantly higher institutional quality.
ER -
TY - JOUR
AU - Davis,Lucas W.
TI - Prospects for Nuclear Power
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17674
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17674
L1 - http://www.nber.org/papers/w17674.pdf
N1 - Author contact info:
Lucas W. Davis
Haas School of Business
University of California
Berkeley, CA 94720-1900
E-Mail: ldavis@haas.berkeley.edu
AB - The prospects for a revival of nuclear power were dim even before the partial reactor meltdowns at the Fukushima nuclear plant. Nuclear power has long been controversial because of concerns about nuclear accidents, proliferation risk, and the storage of spent fuel. These concerns are real and important. In addition, however, a key challenge for nuclear power has been the high cost of construction for nuclear plants. Construction costs are high enough that it becomes difficult to make an economic argument for nuclear, even before incorporating these external costs. This is particularly true in countries like the United States where recent technological advances have dramatically increased the availability of natural gas.
ER -
TY - JOUR
AU - Gerber,Alan S.
AU - Huber,Gregory A.
AU - Doherty,David
AU - Dowling,Conor M.
AU - Hill,Seth J.
TI - Do Perceptions of Ballot Secrecy Influence Turnout? Results from a Field Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17673
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17673
L1 - http://www.nber.org/papers/w17673.pdf
N1 - Author contact info:
Alan S. Gerber
Yale University
Institution for Social and Policy Studies
77 Prospect Street
New Haven, CT 06520
Tel: 203/432-5232
E-Mail: alan.gerber@yale.edu
Gregory A. Huber
Yale University
Institution for Social and Policy Studies
77 Prospect Street
New Haven, CT 06520
E-Mail: gregory.huber@yale.edu
David Doherty
Loyola University Chicago
Political Science Department
1032 W. Sheridan Road
Coffey Hall, 3rd Floor
Chicago, IL 60660
E-Mail: ddoherty@luc.edu
Conor M. Dowling
Yale University
Institution for Social and Policy Studies
77 Prospect St.
New Haven, CT 06520
E-Mail: conor.dowling@yale.edu
Seth J. Hill
Institution for Social and Policy Studies
77 Prospect Street
New Haven, CT 06520
E-Mail: seth.hill@yale.edu
AB - Although the secret ballot has long been secured as a legal matter in the United States, formal secrecy protections are not equivalent to convincing citizens that they may vote privately and without fear of reprisal. We present survey evidence that those who have not previously voted are particularly likely to voice doubts about the secrecy of the voting process. We then report results from a field experiment where we provided registered voters with information about ballot secrecy protections prior to the 2010 general election. We find that these letters increased turnout for registered citizens without records of previous turnout, but did not appear to influence the behavior of citizens who had previously voted. These results suggest that although the secret ballot is a long-standing institution in the United States, providing basic information about ballot secrecy can affect the decision to participate to an important degree.
ER -
TY - JOUR
AU - Doepke,Matthias
AU - Tertilt,Michèle
AU - Voena,Alessandra
TI - The Economics and Politics of Women's Rights
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17672
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17672
L1 - http://www.nber.org/papers/w17672.pdf
N1 - Author contact info:
Matthias Doepke
Northwestern University
Department of Economics
2001 Sheridan Road
Evanston, IL 60208
Tel: 847-491-8207
E-Mail: doepke@northwestern.edu
Michèle Tertilt
Department of Economics
University of Mannheim
L7, 3-5
68131 Mannheim
Germany
Tel: +49-621-181-1902
E-Mail: tertilt@uni-mannheim.de
Alessandra Voena
Harvard Kennedy School
79 John F Kennedy Street, Mailbox 34
Cambridge, MA 02138
E-Mail: ale.voena@gmail.com
AB - Women's rights and economic development are highly correlated. Today, the discrepancy between the legal rights of women and men is much larger in developing compared to developed countries. Historically, even in countries that are now rich women had few rights before economic development took off. Is development the cause of expanding women's rights, or conversely, do women's rights facilitate development? We argue that there is truth to both hypotheses. The literature on the economic consequences of women's rights documents that more rights for women lead to more spending on health and children, which should benefit development. The political-economy literature on the evolution of women's rights finds that technological change increased the costs of patriarchy for men, and thus contributed to expanding women's rights. Combining these perspectives, we discuss the theory of Doepke and Tertilt (2009), where an increase in the return to human capital induces men to vote for women's rights, which in turn promotes growth in human capital and income per capita.
ER -
TY - JOUR
AU - Ferreira,Fernando
AU - Gyourko,Joseph
TI - Does Gender Matter for Political Leadership? The Case of U.S. Mayors
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17671
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17671
L1 - http://www.nber.org/papers/w17671.pdf
N1 - Author contact info:
Fernando Ferreira
The Wharton School
University of Pennsylvania
1461 Steinberg - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
Tel: 215/898-7181
Fax: 215/573-2220
E-Mail: fferreir@wharton.upenn.edu
Joseph Gyourko
University of Pennsylvania
Wharton School of Business
3620 Locust Walk
1480 Steinberg-Dietrich Hall
Philadelphia, PA 19104-6302
Tel: 215/898-3003
Fax: 215/573-2220
E-Mail: gyourko@wharton.upenn.edu
AB - What are the consequences of electing a female leader for policy and political outcomes? We answer this question in the context of U.S. cities, where women’s participation in mayoral elections increased from negligible numbers in 1970 to about one-third of the elections in the 2000’s. We use a novel data set of U.S. mayoral elections from 1950 to 2005, and apply a regression discontinuity design to deal with the endogeneity of female candidacy to city characteristics. In contrast to most research on the influence of female leadership, we find no effect of gender of the mayor on policy outcomes related to the size of local government, the composition of municipal spending and employment, or crime rates. While female mayors do not implement different policies, they do appear to have higher unobserved political skills, as they have a 6-7 percentage point higher incumbent effect than a comparable male. But we find no evidence of political spillovers: exogenously electing a female mayor does not change the long run political success of other female mayoral candidates in the same city or of female candidates in local congressional elections.
ER -
TY - JOUR
AU - Magud,Nicolas E.
AU - Reinhart,Carmen M.
AU - Vesperoni,Esteban R.
TI - Capital Inflows, Exchange Rate Flexibility, and Credit Booms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17670
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17670
L1 - http://www.nber.org/papers/w17670.pdf
N1 - Author contact info:
Nicolas Magud
International Monetary Fund
700 19 Street NW
Washington DC 20431
Tel: (202) 623-8497
Fax: (202) 589-8497
E-Mail: nmagud@imf.org
Carmen M. Reinhart
Peterson Institute for International Economics
1750 Massachusetts Avenue, NW
Washington, DC 20036-1903
Tel: 202-454-1325
Fax: 202-659-3225
E-Mail: creinhart@piie.com
Esteban R. Vesperoni
International Monetary Fund
700 19 Street NW
Washington DC 20431
E-Mail: evesperoni@imf.org
AB - The prospects of expansionary monetary policies in the advanced countries for the foreseeable future have renewed the debate over policy options to cope with large capital inflows that are, at least partly, driven by low interest rates in the financial centers. Historically, capital flow bonanzas have often fueled sharp credit expansions in advanced and emerging market economies alike. Focusing primarily on emerging markets, we analyze the impact of exchange rate flexibility on credit markets during periods of large capital inflows. We show that credit grows more rapidly and its composition tilts to foreign currency in economies with less flexible exchange rate regimes, and that these results are not explained entirely by the fact that the latter attract more capital inflows than economies with more flexible regimes. Our findings thus suggest countries with less flexible exchange rate regimes may stand to benefit the most from regulatory policies that reduce banks’ incentives to tap external markets and to lend/borrow in foreign currency; these policies include marginal reserve requirements on foreign lending, currency-dependent liquidity requirements, and higher capital requirement and/or dynamic provisioning on foreign exchange loans.
ER -
TY - JOUR
AU - Bosetti,Valentina
AU - Frankel,Jeffrey A.
TI - Sustainable Cooperation in Global Climate Policy: Specific Formulas and Emission Targets to Build on Copenhagen and Cancun
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17669
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17669
L1 - http://www.nber.org/papers/w17669.pdf
N1 - Author contact info:
Valentina Bosetti
Fondazione Eni Enrico Mattei
E-Mail: valentina.bosetti@feem.it
Jeffrey A. Frankel
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-3834
Fax: 617/496-5747
E-Mail: jeffrey_frankel@harvard.edu
M3 - presented at "SI 2011 Environmental & Energy Economics", July 29-30, 2011
AB - We explore a framework that could be used to assign quantitative allocations of emissions of greenhouse gases (GHGs), across countries, one budget period at a time. Under the two-part plan: (i) China, India, and other developing countries accept targets at Business as Usual (BAU) in the coming budget period, the same period in which the US first agrees to cuts below BAU; and (ii) all countries are asked in the future to make further cuts in accordance with a common numerical formula to all. The formula is expressed as the sum of a Progressive Reductions Factor, a Latecomer Catch-up Factor, and a Gradual Equalization Factor. This paper builds on our previous work in many ways. First we update targets to reflect pledges made by governments after the Copenhagen Accord of December 2010 and confirmed at the Cancun meeting of December 2011. Second, the WITCH model, which we use to project economic and environmental effects of any given set of emission targets, has been refined and updated to reflect economic and technological developments. We include the possibility of emissions reduction from bio energy (BE), carbon capture and storage (CCS), and avoided deforestation and forest degradation (REDD+) which is an important component of pledges in several developing countries. Third, we use a Nash criterion for evaluating whether a country’s costs are too high to sustain cooperation.
ER -
TY - JOUR
AU - Bitler,Marianne P.
AU - Schmidt,Lucie
TI - Utilization of Infertility Treatments: The Effects of Insurance Mandates
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17668
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17668
L1 - http://www.nber.org/papers/w17668.pdf
N1 - Author contact info:
Marianne Bitler
Department of Economics
University of California, Irvine
3151 Social Science Plaza
Irvine, CA 96297
Tel: 949/824-5606
Fax: 949/824-2182
E-Mail: mbitler@uci.edu
Lucie Schmidt
Dept. of Economics
Schapiro Hall
Williams College
Williamstown, MA 02167
E-Mail: lschmidt@williams.edu
AB - Over the last several decades, both delay of childbearing and fertility problems have become increasingly common among women in developed countries. At the same time, technological changes have made many more options available to individuals experiencing fertility problems. However, these technologies are expensive, and only 25% of health insurance plans in the United States cover infertility treatment. As a result of these high costs, legislation has been passed in 15 states that mandates insurance coverage of infertility treatment in private insurance plans. In this paper, we examine whether mandated insurance coverage for infertility treatment affects utilization. We allow utilization effects to differ by age and education, since previous research suggests that older, more educated women should be more likely to be directly affected by the mandates than younger women and less educated women, both because they are at higher risk of fertility problems and because they are more likely to have private health insurance which is subject to the mandate. We find robust evidence that the mandates do have a significant effect on utilization for older, more educated women that is larger than the effects found for other groups. These effects are largest for the use of ovulation-inducing drugs and artificial insemination.
ER -
TY - JOUR
AU - Bitler,Marianne
AU - Hoynes,Hilary W.
TI - Immigrants, Welfare Reform, and the U.S. Safety Net
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17667
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17667
L1 - http://www.nber.org/papers/w17667.pdf
N1 - Author contact info:
Marianne Bitler
Department of Economics
University of California, Irvine
3151 Social Science Plaza
Irvine, CA 96297
Tel: 949/824-5606
Fax: 949/824-2182
E-Mail: mbitler@uci.edu
Hilary W. Hoynes
Department of Economics
University of California, Davis
One Shields Ave.
Davis, CA 95616-8578
Tel: 530/564-0505
Fax: 530/752-9382
E-Mail: hwhoynes@ucdavis.edu
AB - Beginning with the 1996 federal welfare reform law many of the central safety net programs in the U.S. eliminated eligibility for legal immigrants, who had been previously eligible on the same terms as citizens. These dramatic cutbacks affected eligibility not only for cash welfare assistance for families with children, but also for food stamps, Medicaid, SCHIP, and SSI. In this paper, we comprehensively examine the status of the U.S. safety net for immigrants and their family members. We document the policy changes that affected immigrant eligibility for these programs and use the CPS for 1995-2010 to analyze trends in program participation, income, and poverty among immigrants (and natives). We pay particular attention to the recent period and examine how immigrants and their children are faring in the “Great Recession” with an eye toward revealing how these policy changes have affected the success of the safety net in protecting this population.
ER -
TY - JOUR
AU - Gerardi,Kristopher
AU - Lambie-Hanson,Lauren
AU - Willen,Paul S.
TI - Do Borrower Rights Improve Borrower Outcomes? Evidence from the Foreclosure Process
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17666
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17666
L1 - http://www.nber.org/papers/w17666.pdf
N1 - Author contact info:
Kristopher Gerardi
Federal Reserve Bank of Atlanta
1000 Peachtree St. NE
Atlanta, GA 30309
E-Mail: kristopher.gerardi@atl.frb.org
Lauren Lambie-Hanson
Department of Urban Studies and Planning
Massachusetts Institute of Technology
77 Massachusetts Ave
Room 7-346
Cambridge, MA 02139
E-Mail: lslh@mit.edu
Paul S. Willen
Federal Reserve Bank of Boston
600 Atlantic Avenue
Boston, MA 02210-2204
Tel: 617/973-3149
Fax: 617/973-2123
E-Mail: willen968@gmail.com
AB - We evaluate laws designed to protect borrowers from foreclosure. We find that these laws delay but do not prevent foreclosures. We first compare states that require lenders to seek judicial permission to foreclose with states that do not. Borrowers in judicial states are no more likely to cure and no more likely to renegotiate their loans, but the delays lead to a build-up in these states of persistently delinquent borrowers, the vast majority of whom eventually lose their homes. We next analyze a “right-to-cure” law instituted in Massachusetts on May 1, 2008. Using a difference-in-differences approach to evaluate the effect of the policy, we compare Massachusetts with neighboring states that did not adopt similar laws. We find that the right-to-cure law lengthens the foreclosure timeline but does not lead to better outcomes for borrowers.
ER -
TY - JOUR
AU - Eichengreen,Barry
TI - International Policy Coordination: The Long View
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17665
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17665
L1 - http://www.nber.org/papers/w17665.pdf
N1 - Author contact info:
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
M3 - presented at "Globalization in an Age of Crisis", September 14-16, 2011
AB - This paper places current efforts at international economic policy coordination in historical perspective. It argues that successful cooperation is most likely in four sets of circumstances. First, when it centers on technical issues. Second, when cooperation is institutionalized – when procedures and precedents create presumptions about the appropriate conduct of policy and reduce the transactions costs of reaching an agreement. Third, when it is concerned with preserving an existing set of policies and behaviors (when it is concerned with preserving a policy regime). Fourth, when it occurs in the context of broad comity among nations. These points are elaborated through a review of 150 years of historical experience and then used to assess the scope for cooperative responses to the current economic crisis.
ER -
TY - JOUR
AU - Landier,Augustin
AU - Thesmar,David
TI - Regulating Systemic Risk through Transparency: Tradeoffs in Making Data Public
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17664
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17664
L1 - http://www.nber.org/papers/w17664.pdf
N1 - Author contact info:
Augustin Landier
the Toulouse School of Economics
21 Allée de Brienne
31000 Toulouse, FRANCE
E-Mail: augustin.landier@tse-fr.eu
David Thesmar
HEC Paris
1 rue de la libération
78351 Jouy-en-Josas cedex
France
Tel: 33139679412
E-Mail: thesmar@hec.fr
M1 - published as Augustin Landier, David Thesmar. "Regulating Systemic Risk through Transparency: Tradeoffs in Making Data Public," in Markus K. Brunnermeier and Arvind Krishnamurthy, editors, "Systemic Risk and Macro Modeling" University of Chicago Press (2012)
M3 - presented at "Systemic Risk and Macro Modeling", April 28, 2011
AB - Public or partial disclosure of financial data is a key element in the design of a new regulatory environment. We study the costs and benefits of higher public access to financial data and analyze qualitatively how frequency, disclosure lag and granularity of such open data can be chosen to maximize welfare, depending on the relative magnitude of economic frictions. We lay out a simple framework to choose optimal transparency of financial data.
ER -
TY - JOUR
AU - Jenter,Dirk
AU - Lewellen,Katharina
TI - CEO Preferences and Acquisitions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17663
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17663
L1 - http://www.nber.org/papers/w17663.pdf
N1 - Author contact info:
Dirk Jenter
Stanford University
Graduate School of Business
655 Knight Way
Stanford, CA 94305-5015
Tel: 650/498-4411
E-Mail: djenter@stanford.edu
Katharina Lewellen
Tuck School at Dartmouth
100 Tuck Hall
Hanover, NH 03755
E-Mail: katharina.lewellen@tuck.dartmouth.edu
AB - This paper explores the impact of target CEOs’ retirement preferences on the incidence, the pricing, and the outcomes of takeover bids. Mergers frequently force target CEOs to retire early, and CEOs’ private merger costs are the forgone benefits of staying employed until the planned retirement date. Using retirement age as an instrument for CEOs’ private merger costs, we find strong evidence that target CEO preferences affect merger patterns. The likelihood of receiving a takeover bid increases sharply when target CEOs reach age 65. The probability of a bid is close to 4% per year for target CEOs below age 65 but increases to 6% for the retirement-age group, a 50% increase in the odds of receiving a bid. This increase in takeover activity appears discretely at the age-65 threshold, with no gradual increase as CEOs approach retirement age. Moreover, observed takeover premiums and target announcement returns are significantly lower when target CEOs are older than 65, reinforcing the conclusion that retirement-age CEOs are more willing to accept takeover offers. These results suggest that the preferences of target CEOs have first-order effects on both bidder and target behavior.
ER -
TY - JOUR
AU - Farhi,Emmanuel
AU - Gopinath,Gita
AU - Itskhoki,Oleg
TI - Fiscal Devaluations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17662
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17662
L1 - http://www.nber.org/papers/w17662.pdf
N1 - Author contact info:
Emmanuel Farhi
Harvard University
Department of Economics
Littauer Center
Cambridge, MA 02138
Tel: 617/496-1835
Fax: 617/495-8570
E-Mail: efarhi@harvard.edu
Gita Gopinath
Department of Economics
Harvard University
1875 Cambridge Street
Littauer 206
Cambridge, MA 02138
Tel: 617/495-8161
Fax: 617/495-7730
E-Mail: gopinath@harvard.edu
Oleg Itskhoki
Department of Economics
Princeton University
Fisher Hall 306
Princeton, NJ 08544-1021
Tel: 609/258-5493
Fax: 609/258-6419
E-Mail: itskhoki@princeton.edu
AB - We show that even when the exchange rate cannot be devalued, a small set of conventional fiscal instruments can robustly replicate the real allocations attained under a nominal exchange rate devaluation in a dynamic New Keynesian open economy environment. We perform the analysis under alternative pricing assumptions— producer or local currency pricing, along with nominal wage stickiness; under arbitrary degrees of asset market completeness and for general stochastic sequences of devaluations. There are two types of fiscal policies equivalent to an exchange rate devaluation—one, a uniform increase in import tariff and export subsidy, and two, a value-added tax increase and a uniform payroll tax reduction. When the devaluations are anticipated, these policies need to be supplemented with a consumption tax reduction and an income tax increase. These policies are revenue neutral. In certain cases equivalence requires, in addition, a partial default on foreign bond holders. We discuss the issues of implementation of these policies, in particular, under the circumstances of a currency union.
ER -
TY - JOUR
AU - Becker,Bo
AU - Strömberg,Per
TI - Fiduciary Duties and Equity-Debtholder Conflicts
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17661
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17661
L1 - http://www.nber.org/papers/w17661.pdf
N1 - Author contact info:
Bo Becker
Harvard Business School
Baker Library 349
Soldiers Field
Boston, MA 02163
Tel: 617/496-5335
Fax: 617/495-7659
E-Mail: bbecker@hbs.edu
Per Stromberg
Institute for Financial Research (SIFR)
Drottninggatan 89
SE-113 60 Stockholm
Sweden
Tel: +46 8 728-5128
Fax: +46 8 728 5130
E-Mail: per.stromberg@sifr.org
AB - We use an important legal event as a natural experiment to examine the effect of management fiduciary duties on equity-debt conflicts. A 1991 Delaware bankruptcy ruling changed the nature of corporate directors’ fiduciary duties in firms incorporated in that state. This change limited managers’ incentives to take actions favoring equity over debt for firms in the vicinity of financial distress. We show that this ruling increased the likelihood of equity issues, increased investment, and reduced firm risk, consistent with a decrease in debt-equity conflicts of interest. The changes are isolated to firms relatively closer to default. The ruling was also followed by an increase in average leverage and a reduction in covenant use. Finally, we estimate the welfare implications of this change and find that firm values increased when the rules were introduced. We conclude that managerial fiduciary duties affect equity-bond holder conflicts in a way that is economically important, has impact on ex ante capital structure choices, and affects welfare.
ER -
TY - JOUR
AU - Goetz,Martin
AU - Laeven,Luc
AU - Levine,Ross
TI - The Valuation Effects of Geographic Diversification: Evidence from U.S. Banks
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17660
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17660
L1 - http://www.nber.org/papers/w17660.pdf
N1 - Author contact info:
Martin Goetz
Financial Economist
Federal Reserve Bank of Boston
600 Atlantic Avenue
Boston, MA 02210
E-Mail: Martin.Goetz@bos.frb.org
Luc Laeven
Deputy Division Chief
International Monetary Fund
700 19th Avenue, NW
Washington, DC 20431
Tel: 202/623-9020
Fax: 202/623-4740
E-Mail: Llaeven@imf.org
Ross Levine
Department of Economics
Brown University
64 Waterman Street
Providence, RI 02912
Tel: 401/863-2170
E-Mail: ross_levine@brown.edu
AB - This paper assesses the impact of the geographic diversification of bank holding company (BHC) assets across the United States on their market valuations. Using two novel identification strategies based on the dynamic process of interstate bank deregulation, we find that exogenous increases in geographic diversity reduce BHC valuations. These findings are consistent with the view that geographic diversity makes it more difficult for shareholders and creditors to monitor firm executives, allowing corporate insiders to extract larger private benefits from firms.
ER -
TY - JOUR
AU - Castro,Rui
AU - Clementi,Gian Luca
AU - Lee,Yoonsoo
TI - Cross-Sectoral Variation in The Volatility of Plant-Level Idiosyncratic Shocks
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17659
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17659
L1 - http://www.nber.org/papers/w17659.pdf
N1 - Author contact info:
Rui Castro
Department of Economics
University of Montreal
Montreal H3C3J7 CANADA
E-Mail: rui.castro@umontreal.ca
Gian Luca Clementi
Department of Economics
Stern School of Business
New York University
44 West Fourth Street
New York, NY 10012
Tel: 212/998-0268
Fax: 212/995-4218
E-Mail: clem@nyu.edu
Yoonsoo Lee
Department of Economics
Sogang University
Seoul, 121-742, Korea
E-Mail: ylee@sogang.ac.kr
AB - We estimate plant--level idiosyncratic risk in the U.S. manufacturing sector. Our proxy for risk is the volatility of the portion of TFP growth which is not explained by either industry- or economy-wide factors, or by establishments' characteristics systematically associated with growth itself. Consistent with previous studies, we find that idiosyncratic shocks are much larger than aggregate random disturbances, accounting for about 90% of the overall uncertainty faced by plants. The extent of cross-sectoral variation in idiosyncratic risk is remarkable. Plants in the most volatile sector are subject to at least three times as much uncertainty as plants in the least volatile. Our evidence indicates that idiosyncratic risk is higher in industries where the extent of creative destruction is likely to be greater.
ER -
TY - JOUR
AU - Gresenz,Carole Roan
AU - Edgington,Sarah E.
AU - Laugesen,Miriam J.
AU - Escarce,José J.
TI - Take-Up of Public Insurance and Crowd-out of Private Insurance Under Recent CHIP Expansions to Higher Income Children
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17658
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17658
L1 - http://www.nber.org/papers/w17658.pdf
N1 - Author contact info:
Carole Gresenz
RAND Corporation
1200 South Hayes Street
Arlington, Virginia 22202-5050
E-Mail: gresenz@rand.org
Sarah E. Edgington
UCLA
Division of General Internal Medicine
and Heath Services Research
911 Broxton Plaza
Los Angeles, CA 90095
E-Mail: sarah@demography-la.com
Miriam J. Laugesen
Department of Health Policy and Management
Mailman School of Public Health
Columbia University
722 West 168th Street
New York, NY 10032
E-Mail: ml3111@columbia.edu
Jose Escarce
UCLA Med-GIM-HSR
911 Broxton Avenue
Box 951736
Los Angeles, CA 90024
Tel: 310/794-3842
Fax: 310/794-0732
E-Mail: jescarce@mednet.ucla.edu
AB - We analyze the effects of states’ expansions of CHIP eligibility to children in higher income families during 2002-2009 on take-up of public coverage, crowd-out of private coverage, and rates of uninsurance. Our results indicate these expansions were associated with limited uptake of public coverage and only a two percentage point reduction in the uninsurance rate among these children. Because not all of the take-up of public insurance among eligible children is accounted for by children who transfer from being uninsured to having public insurance, our results suggest that there may be some crowd-out of private insurance coverage; the upper bound crowd-out rate we calculate is 46 percent.
ER -
TY - JOUR
AU - Stevens,Ann Huff
AU - Miller,Douglas L.
AU - Page,Marianne E.
AU - Filipski,Mateusz
TI - The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17657
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17657
L1 - http://www.nber.org/papers/w17657.pdf
N1 - Author contact info:
Ann Huff Stevens
Department of Economics
One Shields Avenue
University of California, Davis
Davis, CA 95616
Tel: 530/752-3034
E-Mail: annstevens@ucdavis.edu
Douglas L. Miller
University of California, Davis
Department of Economics
One Shields Avenue
Davis, CA 95616-8578
Tel: 530/752-8490
E-Mail: dlmiller@ucdavis.edu
Marianne E. Page
Department of Economics
University of California, Davis
Davis, CA 95616-8578
Tel: 530-554-4940
Fax: NA
E-Mail: mepage@ucdavis.edu
Mateusz Filipski
Department of Agricultural Economics
One Shields Ave.
Davis, CA 95616
E-Mail: mjfilipski@ucdavis.edu
AB - A growing literature documents cyclical movements in mortality and health. We examine this pattern more closely and attempt to identify the mechanisms behind it. Specifically, we distinguish between mechanisms that rely on fluctuations in own employment or time use and those involving factors that are external to the individual. Our investigation suggests that changes in individuals’ own behavior contribute very little to pro-cyclical mortality. Looking across broad age and gender groups, we find that own-group employment rates are not systematically related to own-group mortality. In addition, we find that most of the additional deaths that occur during times of economic growth are among the elderly, particularly elderly women, who have limited labor force attachment. Focusing on mortality among the elderly, we show that cyclicality is especially strong for deaths occurring in nursing homes, and is stronger in states where a higher fraction of the elderly reside in nursing homes. We also demonstrate that staffing in skilled nursing facilities moves counter-cyclically. Taken together, these findings suggest that cyclical fluctuations in the mortality rate may be largely driven by fluctuations in the quality of health care.
ER -
TY - JOUR
AU - Caselli,Francesco
AU - Ciccone,Antonio
TI - A Note on Schooling in Development Accounting
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17656
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17656
L1 - http://www.nber.org/papers/w17656.pdf
N1 - Author contact info:
Francesco Caselli
Department of Economics
London School of Economics
Houghton Street
London WC2A 2AE
UNITED KINGDOM
Tel: (44) (0) 2079557498
E-Mail: f.caselli@lse.ac.uk
Antonio Ciccone
Universitat Pompeu Fabra
E-Mail: antonio.ciccone@upf.edu
AB - How much would output increase if underdeveloped economies were to increase their levels of schooling? We contribute to the development accounting literature by describing a non-parametric upper bound on the increase in output that can be generated by more schooling. The advantage of our approach is that the upper bound is valid for any number of schooling levels with arbitrary patterns of substitution/complementarity. We also quantify the upper bound for all economies with the necessary data, compare our results with the standard development accounting approach, and provide an update on the results using the standard approach for a large sample of countries.
ER -
TY - JOUR
AU - Papay,John P.
AU - West,Martin R.
AU - Fullerton,Jon B.
AU - Kane,Thomas J.
TI - Does Practice-Based Teacher Preparation Increase Student Achievement? Early Evidence from the Boston Teacher Residency
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17646
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17646
L1 - http://www.nber.org/papers/w17646.pdf
N1 - Author contact info:
John Papay
Brown University
Education Department
Providence, RI 02912
Tel: 617-493-3942
E-Mail: john_papay@mail.harvard.edu
Martin West
Harvard Graduate School of Education
6 Appian Way, Gutman 454
Cambridge, MA 02138
Tel: 617-496-4803
E-Mail: martin_west@gse.harvard.edu
Jon Fullerton
Harvard Graduate School of Education
Center for Education Policy Research
50 Church Street, 4th Floor
Cambridge, MA 02138
E-Mail: jon_fullerton@gse.harvard.edu
Thomas J. Kane
Harvard Graduate School of Education
Center for Education Policy Research
50 Church St., 4th Floor
Cambridge, MA 02138
Tel: 617/496-4359
E-Mail: kaneto@gse.harvard.edu
AB - The Boston Teacher Residency is an innovative practice-based preparation program in which candidates work alongside a mentor teacher for a year before becoming a teacher of record in Boston Public Schools. We find that BTR graduates are more racially diverse than other BPS novices, more likely to teach math and science, and more likely to remain teaching in the district through year five. Initially, BTR graduates for whom value-added performance data are available are no more effective at raising student test scores than other novice teachers in English language arts and less effective in math. The effectiveness of BTR graduates in math improves rapidly over time, however, such that by their fourth and fifth years they out-perform veteran teachers. Simulations of the program’s overall impact through retention and effectiveness suggest that it is likely to improve student achievement in the district only modestly over the long run.
ER -
TY - JOUR
AU - Alesina,Alberto F.
AU - Carloni,Dorian
AU - Lecce,Giampaolo
TI - The Electoral Consequences of Large Fiscal Adjustments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17655
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17655
L1 - http://www.nber.org/papers/w17655.pdf
N1 - Author contact info:
Alberto F. Alesina
Department of Economics
Harvard University
Littauer Center 210
Cambridge, MA 02138
Tel: 617/495-8388
Fax: 617/495-7730
E-Mail: aalesina@harvard.edu
Dorian Carloni
University of California, Berkeley
E-Mail: dcarloni@econ.berkeley.edu
Giampaolo Lecce
Bocconi University
E-Mail: gl834@nyu.edu
M1 - published as Alberto Alesina, Dorian Carloni, Giampaolo Lecce. "The Electoral Consequences of Large Fiscal Adjustments," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2012)
AB - The conventional wisdom regarding the political consequences of large reductions of budget deficits is that they are very costly for the governments which implement them: they are punished by voters at the following elections. In the present paper, instead, we find no evidence that governments which quickly reduce budget deficits are systematically voted out of office in a sample of 19 OECD countries from 1975 to 2008. We also take into consideration issues of reverse causality, namely the possibility that only "strong and popular" governments can implement fiscal adjustments and thus they are not voted out of office "despite" having reduced the deficits. In the end we conclude that many governments can reduce deficits avoiding an electoral defeat.
ER -
TY - JOUR
AU - Mulligan,Casey B.
TI - The Expanding Social Safety Net
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17654
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17654
L1 - http://www.nber.org/papers/w17654.pdf
N1 - Author contact info:
Casey B. Mulligan
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-9017
Fax: 773/702-8490
E-Mail: c-mulligan@uchicago.edu
AB - Inflation-adjusted spending on means-tested subsidies have increased sharply since 2007, and most of this growth was due to changes in eligibility rules, and increases in subsidies per eligible person, rather than increases in the number of people who would have been eligible under pre-recession subsidy rules. The non-elderly parts of the safety net have increased from about $10,000 per year of non- or under-employment by non-elderly household heads and spouses in 2007 to almost $15,000 per year in 2010, adjusted for inflation. From 2007 to 2010, inflation-adjusted safety net spending increased $35,000 for every added year of non-employment or under-employment. As a result, the average private returns to employment are substantially less than they were in 2007.
ER -
TY - JOUR
AU - Nagel,Stefan
TI - Evaporating Liquidity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17653
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17653
L1 - http://www.nber.org/papers/w17653.pdf
N1 - Author contact info:
Stefan Nagel
Stanford University
Graduate School of Business
655 Knight Way
Stanford, CA 94305
Tel: 650/724-9762
Fax: 650/725-7979
E-Mail: nagel_stefan@gsb.stanford.edu
AB - The returns of short-term reversal strategies in equity markets can be interpreted as a proxy for the returns from liquidity provision. Analysis of reversal strategies shows that the expected return from liquidity provision is strongly time-varying and highly predictable with the VIX index. Expected returns and conditional Sharpe Ratios increase enormously along with the VIX during times of financial market turmoil, such as the financial crisis 2007-09. Even reversal strategies formed from industry portfolios (which do not yield high returns unconditionally) produce high rates of return and high Sharpe Ratios during times of high VIX. The results point to withdrawal of liquidity supply, and an associated increase in the expected returns from liquidity provision, as a main driver behind the evaporation of liquidity during times of financial market turmoil, consistent with theories of liquidity provision by financially constrained intermediaries.
ER -
TY - JOUR
AU - Pagnotta,Emiliano
AU - Philippon,Thomas
TI - Competing on Speed
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17652
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17652
L1 - http://www.nber.org/papers/w17652.pdf
N1 - Author contact info:
Emiliano Pagnotta
New York University
Stern School of Business
44 West 4th Street, Suite 9-81
New York, NY 10012
E-Mail: emiliano.pagnotta@stern.nyu.edu
Thomas Philippon
New York University
Stern School of Business
44 West 4th Street, Suite 9-190
New York, NY 10012-1126
Tel: 212/998-0490
Fax: 212/995-4233
E-Mail: tphilipp@stern.nyu.edu
AB - Two forces have reshaped global securities markets in the last decade: Exchanges operate at much faster speeds and the trading landscape has become more fragmented. In order to analyze the positive and normative implications of these evolutions, we study a framework that captures (i) exchanges' incentives to invest in faster trading technologies and (ii) investors' trading and participation decisions. Our model predicts that regulation that protect prices will lead to fragmentation and faster trading speed. Asset prices decrease when there is intermediation competition and are further depressed by price protection. Endogenizing speed can also change the slope of asset demand curves. On normative side, we find that for a given number of exchanges, faster trading is in general socially desirable. Similarly, for a given trading speed, competition among exchange increases participation and welfare. However, when speed is endogenous, competition between exchanges is not necessarily desirable. In particular, speed can be inefficiently high. Our model sheds light on important features of the experience of European and U.S. markets since the implementation of Reg. NMS, and provides some guidance for optimal regulations.
ER -
TY - JOUR
AU - Beaudry,Paul
AU - Nam,Deokwoo
AU - Wang,Jian
TI - Do Mood Swings Drive Business Cycles and is it Rational?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17651
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17651
L1 - http://www.nber.org/papers/w17651.pdf
N1 - Author contact info:
Paul Beaudry
Department of Economics
University of British Columbia
Vancouver, Canada
Tel: 604/822-8624
Fax: 604/822-5915
E-Mail: paulbe@interchange.ubc.ca
Deokwoo Nam
Department of Economics
City University of Hong Kong
83 Tat Chee Avenue, Kowloon, Hong Kong
E-Mail: deokwnam@cityu.edu.hk
Jian Wang
Research Department, Federal Reserve Bank of Dalla
2200 N. Pearl St.
Dallas, TX 75201
E-Mail: Jian.Wang@dal.frb.org
AB - This paper provides new evidence in support of the idea that bouts of optimism and pessimism drive much of US business cycles. In particular, we begin by using sign-restriction based identification schemes to isolate innovations in optimism or pessimism and we document the extent to which such episodes explain macroeconomic fluctuations. We then examine the link between these identified mood shocks and subsequent developments in fundamentals using alternative identification schemes (i.e., variants of the maximum forecast error variance approach). We find that there is a very close link between the two, suggesting that agents' feelings of optimism and pessimism are at least partially rational as total factor productivity (TFP) is observed to rise 8-10 quarters after an initial bout of optimism. While this later finding is consistent with some previous findings in the news shock literature, we cannot rule out that such episodes reflect self-fulfilling beliefs. Overall, we argue that mood swings account for over 50% of business cycle fluctuations in hours and output.
ER -
TY - JOUR
AU - Bagwell,Kyle
AU - Staiger,Robert W.
TI - Can the Doha Round be a Development Round? Setting a Place at the Table
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17650
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17650
L1 - http://www.nber.org/papers/w17650.pdf
N1 - Author contact info:
Kyle Bagwell
Department of Economics
Stanford University
Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
Tel: (650) 723-3251
E-Mail: kbagwell@stanford.edu
Robert W. Staiger
Department of Economics
Stanford University
Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/723-0533
Fax: 650/725-5702
E-Mail: rstaiger@stanford.edu
M3 - presented at "Globalization in an Age of Crisis", September 14-16, 2011
AB - A fundamental objective of the Doha Round of WTO negotiations is to improve the trading prospects of developing countries. The 2001 declaration from the WTO Ministerial Conference in Doha, Qatar, commits the member governments to negotiations aimed at substantial improvements in market access with a view to phasing out export subsidies, while embracing “special and differential treatment” for developing countries as an integral part of all elements of the negotiations. The main message of this paper comes in three parts. First, these stated aims are incompatible from the perspective of our economic analysis; thus, if these aims are pursued as stated, then we conclude that they are unlikely to deliver the meaningful trade gains for developing countries that the WTO membership seeks. Second, in attempting to integrate its developing country membership into the world trading system, the WTO may face a “latecomers” problem that, while occurring also in earlier rounds, is unprecedented in its scale in the Doha Round, and which could potentially account for the current impasse. And third, we argue that if the Round maintains its stated aims but moves away from the non-reciprocal special-and-differential treatment norm as the cornerstone of the approach to meeting developing country needs in the WTO, and if developing countries prepare, in markets where they are large, to come to the bargaining table and to negotiate reciprocally with each other and with developing nations, then it might be possible to break the impasse at Doha, to address the latecomers problem, and to deliver trade gains for developing countries.
ER -
TY - JOUR
AU - Lee,Jungmin
AU - Kawaguchi,Daiji
AU - Hamermesh,Daniel S.
TI - Aggregate Impacts of a Gift of Time
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17649
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17649
L1 - http://www.nber.org/papers/w17649.pdf
N1 - Author contact info:
Jungmin Lee
Sogang University
Seoul, Korea
E-Mail: junglee@sogang.ac.kr
Daiji Kawaguchi
Hitotsubashi University
E-Mail: kawaguch@econ.hit-u.ac.jp
Daniel S. Hamermesh
Department of Economics
University of Texas
Austin, TX 78712-1173
Tel: 512/475-8526
Fax: 512/471-3510
E-Mail: hamermes@eco.utexas.edu
AB - How would people spend additional time if confronted by permanent declines in market work? We examine the impacts of cuts in legislated standard hours that raised employers’ overtime costs in Japan around 1990 and Korea in the early 2000s. Using time-diaries from before and after these shocks, we show that these shocks were effective—per-capita hours of market work declined discretely. The economy-wide drops in market work were reallocated solely to leisure and personal maintenance. In the absence of changing household technology a permanent time gift leads to no increase in time spent in household production by the average individual.
ER -
TY - JOUR
AU - Andreoni,James
AU - Rao,Justin M.
AU - Trachtman,Hannah
TI - Avoiding The Ask: A Field Experiment on Altruism, Empathy, and Charitable Giving
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17648
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17648
L1 - http://www.nber.org/papers/w17648.pdf
N1 - Author contact info:
James Andreoni
Department of Economics
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-3832
Fax: 858/534-7040
E-Mail: andreoni@ucsd.edu
Justin Rao
Yahoo! Research Labs
4401 Great America Pkwy
Santa Clara, CA 95054
E-Mail: justinmrao@yahoo.com
Hannah Trachtman
Innovations for Poverty Action
1731 Connecticut Ave
Washington, DC 20009
E-Mail: htrachtm@gmail.com
AB - What triggers giving? We explore this in a randomized natural field experiment during the Salvation Army's annual campaign. Solicitors were at one or both of two main entrances to a supermarket, making the solicitation either easy or difficult to avoid. Additionally, solicitors were either silent, or asked "please give" to passersby. We observed over 17,000 passings over four days, and found dramatic avoidance of the solicitors, but only during a direct ask. Furthermore, asking increased donations 75%. Across all conditions, seeking the solicitor was exceedingly rare. The results do not support static views of altruism, such as inequity aversion, and instead highlight the importance of social cues and psychological features of the giver-receiver interaction. We argue that avoidance could evidence a lack of altruism or self-control strategy to deal with empathic reflexes to give.
ER -
TY - JOUR
AU - Lewis,Gregory
AU - Bajari,Patrick
TI - Incentives and Adaptation: Evidence from Highway Procurement in Minnesota
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17647
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17647
L1 - http://www.nber.org/papers/w17647.pdf
N1 - Author contact info:
Gregory Lewis
Department of Economics
Harvard University
125 Littauer Center
1805 Cambridge Street
Cambridge, MA 02138
Tel: 617/496-1526
Fax: 617/495-8570
E-Mail: glewis@fas.harvard.edu
Patrick Bajari
Amazon.com
701 5th Avenue, Suite 1500
Seattle, WA 98104
Tel: 612/625-8369
Fax: 612/624-0209
E-Mail: bajari@umn.edu
AB - Procurement projects often encounter unanticipated problems. Deadlines and penalties are one important instrument used to incentivize contractors to adapt their plans. We develop a theory of highway procurement in which contractors must modify their construction rate following a productivity shock. We model how time incentives affect the work rate and time taken, characterizing the efficient contract design. Using new micro-level data from Minnesota that includes day-by-day information on work plans, actual outcomes and delays, we find strong evidence supporting the theory. As an application, we build an econometric model that endogenizes adaptation, and simulate how different incentive structures affect outcomes and the variance of contractor payments. Accounting for the traffic delays caused by construction, switching to a more efficient design would substantially increase welfare without substantially increasing risk.
ER -
TY - JOUR
AU - Whalley,John
AU - Agarwal,Manmohan
AU - Wang,Jing
AU - Walsh,Sean
AU - Yan,Chen
TI - Linking External Sector Imbalances and Changing Financial Instability before the 2008 Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17645
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17645
L1 - http://www.nber.org/papers/w17645.pdf
N1 - Author contact info:
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
Manmohan Agarwal
Center for International Governance Innovation (CI
57 Erb St. West
Waterloo, ON
Canada N2L 6C2
E-Mail: magarwal@cigionline.org
Jing Wang
Institute of Quantitative & Technical Economics
Chinese Academy of Social Sciences (CASS).
Beijing China
E-Mail: wj@cass.org.cn
Sean Walsh
Centre for International Governance Innovation
57 Erb Street West
Waterloo, Ontario N2L 6C2
Canada
E-Mail: swalsh@cigionline.org
Chen Yan
School of Economics
Xiamen University
Fujian Province
China, 361005
E-Mail: chenyan@xmu.edu.cn
AB - The G20 Framework for Strong, Sustainable and Balanced Growth builds on the claim that growing imbalances before the 2008 Financial Crisis were a major cause of the crisis, and the further claim that reducing imbalances post crisis must be a central part of any effort to prevent a further occurrence. Analytical literature in economics seemingly does not provide satisfactory measures of financial instability, either in individual national economies or in the combined global economy; nor ways of linking imbalance change to either worsening or improving financial (or real) instability and the onset of financial crises.
Here we focus on the external sector component of financial instability and link changes in country imbalances to individual economy growth rates in ways when summed across countries produce indices of expected worsening or improving financial instability at different points in time. We compute a variety of such indices for the years immediately before the 2008 Financial Crisis. We use the sum of the absolute value of external sector imbalances across countries (the trade imbalance, or the current account imbalance) as a proportion of the combined GDP of countries and link them in various ways to country growth rates. An increasing measure under an index is an indication of future widening excess demands and supplies over all countries as a group relative to gross world product. This, in turn, is an indication of increasing severity of adjustment problems ahead, and hence expected worsening financial instability. We compute such indices for all G20 countries, and various subsets of countries (G2, G8, G8+5) and examine their behavior over the period 2004-2007.
Our results suggest that depending upon the index used and the base date chosen for comparative purposes in determining changes, different implications emerge for the linkage between external sector imbalances, perceived future instability and hence the onset of a financial crisis. The implication we drawn is that the links between imbalances and both the onset and best policy response to the 2008 Financial Crisis asserted by the G20 may be more tenuous than claimed. Indeed no such links were suggested earlier for the 1930s, the Asian Financial Crisis or any other crisis. In turn economies have functioned with larger imbalances relative to GDP than in 2008 for considerable periods of time and with no financial implosion (UK in the pre World War I period; Germany and Australia in the 1990s).
ER -
TY - JOUR
AU - Gumpert,Anna
AU - Hines,James R., Jr.
AU - Schnitzer,Monika
TI - The Use of Tax Havens in Exemption Regimes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17644
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17644
L1 - http://www.nber.org/papers/w17644.pdf
N1 - Author contact info:
Anna Gumpert
Department of Economics
University of Munich
Akademiestr. 1/III
D-80799 Munich, Germany
E-Mail: anna.gumpert@lrz.uni-muenchen.de
James R. Hines
Department of Economics
University of Michigan
343 Lorch Hall
611 Tappan Street
Ann Arbor, MI 48109-1220
Tel: 734/764-2320
Fax: 734/764-2769
E-Mail: jrhines@umich.edu
Monika Schnitzer
Department of Economics, University of Munich,
Akademiestr. 1/III,
80799 Munich, Germany
E-Mail: schnitzer@lrz.uni-muenchen.de
AB - This paper analyzes the tax haven investment behavior of multinational firms from a country that exempts foreign income from taxation. High foreign tax rates generally encourage firms to invest in tax havens, though significant costs of reallocating taxable income dampen these incentives. The behavior of German manufacturing firms from 2002-2008 is consistent with this prediction: at the mean, one percentage point higher foreign tax rates are associated with three percentage point greater likelihoods of owning tax haven affiliates. This contrasts with earlier evidence for U.S. firms subject to home country taxation, which are more likely to invest in tax havens if they face lower foreign tax rates. Foreign tax rates appear to be unrelated to tax haven investments of German firms in service industries, possibly reflecting the difficulty they face in reallocating taxable income.
ER -
TY - JOUR
AU - Bajari,Patrick
AU - Hong,Han
AU - Park,Minjung
AU - Town,Robert
TI - Regression Discontinuity Designs with an Endogenous Forcing Variable and an Application to Contracting in Health Care
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17643
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17643
L1 - http://www.nber.org/papers/w17643.pdf
N1 - Author contact info:
Patrick Bajari
Amazon.com
701 5th Avenue, Suite 1500
Seattle, WA 98104
Tel: 612/625-8369
Fax: 612/624-0209
E-Mail: bajari@umn.edu
Han Hong
Landau Economics Building
579 Serra Mall
Stanford, CA 94305
E-Mail: doubleh@stanford.edu
Minjung Park
Haas School of Business
UC Berkeley
545 Student Services Building #1900
Berkeley
CA 94720-1900
Tel: 510-506-6780
E-Mail: minjungp@gmail.com
Robert Town
Health Care Management Department
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
E-Mail: rtown@wharton.upenn.edu
AB - Regression discontinuity designs (RDDs) are a popular method to estimate treatment effects. However, RDDs may fail to yield consistent estimates if the forcing variable can be manipulated by the agent. In this paper, we examine one interesting set of economic models with such a feature. Specifically, we examine the case where there is a structural relationship between the forcing variable and the outcome variable because they are determined simultaneously. We propose a modi
ed RDD estimator for such models and derive the conditions under which it is consistent. As an application of our method, we study contracts between a large managed care organization and leading hospitals for the provision of organ and tissue transplants. Exploiting "donut holes" in the reimbursement contracts we estimate how the total claims filed by the hospitals depend on the generosity of the reimbursement structure. Our results show that hospitals submit significantly larger bills when the reimbursement rate is higher, indicating informational asymmetries between the payer and hospitals in this market.
ER -
TY - JOUR
AU - Golosov,Mikhail
AU - Troshkin,Maxim
AU - Tsyvinski,Aleh
TI - Optimal Dynamic Taxes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17642
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17642
L1 - http://www.nber.org/papers/w17642.pdf
N1 - Author contact info:
Mikhail Golosov
Department of Economics
Princeton University
111 Fisher Hall
Princeton, NJ 08544
Tel: 609/258-4003
Fax: 609/258-6419
E-Mail: golosov@princeton.edu
Maxim Troshkin
Cowles Foundation
Yale University
28 Hillhouse Avenue B9
New Haven, CT 06511
E-Mail: maxim.troshkin@yale.edu
Aleh Tsyvinski
Department of Economics
Yale University
Box 208268
New Haven, CT 06520-8268
E-Mail: a.tsyvinski@yale.edu
AB - We study optimal labor and savings distortions in a lifecycle model with idiosyncratic shocks. We show a tight connection between its recursive formulation and a static Mirrlees model with two goods, which allows us to derive elasticity-based expressions for the dynamic optimal distortions. We derive a generalization of a savings distortion for non-separable preferences and show that, under certain conditions, the labor wedge tends to zero for sufficiently high skills. We estimate skill distributions using individual data on the U.S. taxes and labor incomes. Computed optimal distortions decrease for sufficiently high incomes and increase with age.
ER -
TY - JOUR
AU - Obstfeld,Maurice
TI - The International Monetary System: Living with Asymmetry
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17641
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17641
L1 - http://www.nber.org/papers/w17641.pdf
N1 - Author contact info:
Maurice Obstfeld
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-9646
Fax: 510/642-6615
E-Mail: obstfeld@econ.berkeley.edu
M3 - presented at "Globalization in an Age of Crisis", September 14-16, 2011
AB - This paper analyzes current stresses in the two key areas that concerned the architects of the original Bretton Woods system: international liquidity and exchange rate management. Despite radical changes since World War II in the market context for liquidity and exchange rate concerns, they remain central to discussions of international macroeconomic policy coordination. To take two prominent examples of specific (and related) coordination problems, liquidity issues are paramount in strategies of national self-insurance through foreign reserve accumulation, while recent attempts by emerging market economies (EMEs) to limit real currency appreciation have relied heavily on nominal exchange rate management. A central message is that a diverse set of potential asymmetries among sovereign member states provides fertile ground for a variety of coordination failures. The paper goes on to discuss institutions and policies that might mitigate some of these inefficiencies.
ER -
TY - JOUR
AU - Ashraf,Quamrul
AU - Galor,Oded
TI - Cultural Diversity, Geographical Isolation, and the Origin of the Wealth of Nations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17640
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17640
L1 - http://www.nber.org/papers/w17640.pdf
N1 - Author contact info:
Quamrul Ashraf
Williams College
Department of Economics
24 Hopkins Hall Drive
Williamstown, MA 01267
Tel: (413) 597-3051
Fax: (413) 597-4045
E-Mail: Quamrul.H.Ashraf@williams.edu
Oded Galor
Department of Economics
Brown University
Box B
Providence, RI 02912
Tel: 401/863-2117
Fax: 401/863-1970
E-Mail: oded_galor@brown.edu
AB - This research argues that variations in the interplay between cultural assimilation and cultural diffusion have played a significant role in giving rise to differential patterns of economic development across the globe. Societies that were geographically less vulnerable to cultural diffusion benefited from enhanced assimilation, lower cultural diversity, and more intense accumulation of society-specific human capital. Thus, they operated more efficiently with respect to their production-possibility frontiers and flourished in the technological paradigm that characterized the agricultural stage of development. The lack of cultural diffusion and its manifestation in cultural rigidity, however, diminished the ability of these societies to adapt to a new technological paradigm, which delayed their industrialization and, hence, their take-off to a state of sustained economic growth. The theory thus contributes to the understanding of the advent of divergence and overtaking in the process of development. Consistently with the theory, the empirical analysis establishes that (i) geographical isolation prevalent in pre-industrial times (i.e., prior to the advent of airborne transportation technology) has had a persistent negative impact on the extent of contemporary cultural diversity; (ii) pre-industrial geographical isolation had a positive impact on economic development in the agricultural stage but has had a negative impact on income per capita in the course of industrialization; and (iii) cultural diversity, as determined exogenously by pre-industrial geographical isolation, has had a positive impact on economic development in the process of industrialization.
ER -
TY - JOUR
AU - Brown,Jennifer
AU - Minor,Dylan B.
TI - Selecting the Best? Spillover and Shadows in Elimination Tournaments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17639
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17639
L1 - http://www.nber.org/papers/w17639.pdf
N1 - Author contact info:
Jennifer Brown
Department of Management and Strategy
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-2592
Fax: 847/467-1777
E-Mail: jen-brown@kellogg.northwestern.edu
Dylan B. Minor
Kellogg School of Management (MEDS)
Northwestern University
2001 Sheridan Road
Evanston, Il 60208
Tel: 1 847 491 2978
E-Mail: d-minor@kellogg.northwestern.edu
AB - We consider how an elimination tournament's ability to select the most skilled competitor as the winner is shaped by past, current, and future competition. We present a two-stage model that yields the following main results: (1) a shadow effect — the weaker the expected future competitor, the greater the probability that the stronger player wins in the current stage and (2) an effort spillover effect — previous effort reduces the probability that the stronger player wins in the current stage. We test our theory predictions using data from high-stakes tournaments and betting markets. Empirical results suggest that shadow and spillover effects influence match outcomes.
ER -
TY - JOUR
AU - Davis,Steven J.
AU - Wachter,Till M. von
TI - Recessions and the Cost of Job Loss
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17638
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17638
L1 - http://www.nber.org/papers/w17638.pdf
N1 - Author contact info:
Steven J. Davis
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-7312
Fax: 773/834-0733
E-Mail: Steven.Davis@ChicagoBooth.edu
Till M. von Wachter
Department of Economics
Columbia University
601 West 115th Str. Apt. 101
New York, NY 10025
Tel: 212/854-5712
Fax: 212/854-8059
E-Mail: vw2112@columbia.edu
AB - We develop new evidence on the cumulative earnings losses associated with job displacement, drawing on longitudinal Social Security records for U.S. workers from 1974 to 2008. In present value terms, men lose an average of 1.4 years of pre-displacement earnings if displaced in mass-layoff events that occur when the national unemployment rate is below 6 percent. They lose a staggering 2.8 years of pre-displacement earnings if displaced when the unemployment rate exceeds 8 percent. These results reflect discounting at a 5% annual rate over 20 years after displacement. We also document large cyclical movements in the incidence of job loss and job displacement and present evidence on how worker anxieties about job loss, wage cuts and job opportunities respond to contemporaneous economic conditions. Finally, we confront leading models of unemployment fluctuations with evidence on the present value earnings losses associated with job displacement. The model of Mortensen and Pissarides (1994) extended to include search on the job generates present value losses only one-fourth as large as observed losses. Moreover, present value losses in the model vary little with aggregate conditions at the time of displacement, unlike the pattern in the data.
ER -
TY - JOUR
AU - Lindo,Jason M.
AU - Swensen,Isaac D.
AU - Waddell,Glen R.
TI - Alcohol and Student Performance: Estimating the Effect of Legal Access
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17637
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17637
L1 - http://www.nber.org/papers/w17637.pdf
N1 - Author contact info:
Jason M. Lindo
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4664
E-Mail: jlindo@uoregon.edu
Isaac Swensen
Department of Economics
University of Oregon
Eugene, OR 97403-1285
E-Mail: isaac@uoregon.edu
Glen Waddell
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541 346 1259
E-Mail: waddell@uoregon.edu
AB - We consider the effect of legal access to alcohol on student achievement. We first estimate the effect using an RD design but argue that this approach is not well suited to the research question in our setting. Our preferred approach instead exploits the longitudinal nature of the data, identifying the effect by measuring the extent to which a student’s performance changes after he gains legal access to alcohol, controlling flexibly for the expected evolution of grades as students make progress towards their degrees. We find that students’ grades fall below their expected levels upon being able to drink legally, but by less than previously documented. We also show that there are effects on women and that the effects are persistent.
ER -
TY - JOUR
AU - Lacetera,Nicola
AU - Macis,Mario
AU - Slonim,Robert
TI - Rewarding Altruism? A Natural Field Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17636
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17636
L1 - http://www.nber.org/papers/w17636.pdf
N1 - Author contact info:
Nicola Lacetera
University of Toronto
105 St. George Street
Toronto, ON M5S 2E9
Canada
Tel: 416/946-0287
E-Mail: nicola.lacetera@utoronto.ca
Mario Macis
Johns Hopkins University
Carey Business School
100 International Dr.
Baltimore, MD 21202
Tel: 7738175801
E-Mail: mmacis@jhu.edu
Robert Slonim
The University of Sydney
Faculty of Arts and Social Sciences
H04 - Merewether
NSW 2006 Australia
E-Mail: robert.slonim@sydney.edu.au
AB - We present evidence from a natural field experiment involving nearly 100,000 individuals on the effects of offering economic incentives for blood donations. Subjects who were offered economic rewards to donate blood were more likely to donate, and more so the higher the value of the rewards. They were also more likely to attract others to donate, spatially alter the location of their donations towards the drives offering rewards, and modify their temporal donation schedule leading to a short-term reduction in donations immediately after the reward offer was removed. Although offering economic incentives, combining all of these effects, positively and significantly increased donations, ignoring individuals who took additional actions beyond donating to get others to donate would have led to an under-estimate of the total effect, whereas ignoring the spatial effect would have led to an over-estimate of the total effect. We also find that individuals who received a reward by surprise were less likely to donate after the intervention than subjects who received no reward, suggesting that for some individuals a surprise reward adversely affected their intrinsic motivations. We discuss the implications of these findings for understanding pro-social behavior.
ER -
TY - JOUR
AU - Andreoni,James
AU - Payne,A. Abigail
TI - Crowding-Out Charitable Contributions in Canada: New Knowledge from the North
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17635
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17635
L1 - http://www.nber.org/papers/w17635.pdf
N1 - Author contact info:
James Andreoni
Department of Economics
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-3832
Fax: 858/534-7040
E-Mail: andreoni@ucsd.edu
Abigail Payne
Department of Economics
McMaster University
KTH 426, 1280 Main Street West
Hamilton, Ontario, Canada L8S 4M4
Tel: 905/5259140 ext 23814
Fax: 905/521-8232
E-Mail: paynea@mcmaster.ca
AB - Using data from charitable organizations in the US, authors have established that government grants to charities largely crowd out giving from other sources, but that this reduction is due mostly to reduced fundraising activities of the charity itself. We use much more detailed data from over 6000 charities in Canada, measured for up to 15 years, to provide valuable new insights into this phenomenon. In particular, dollars received from individuals is largely unchanged by government grants. Instead, the crowding out is attributable to two other sources of donations not differentiated in US data: giving from other charities and charitable foundations, and donations gained from special fundraising activities, like galas or sponsorships. Only the latter-which is about half of the measured crowding out-represents a potential loss of dollars to the charitable sector as a result of government grants.
ER -
TY - JOUR
AU - Querubin,Pablo
AU - Snyder,James M., Jr.
TI - The Control of Politicians in Normal Times and Times of Crisis: Wealth Accumulation by U.S. Congressmen, 1850-1880
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17634
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17634
L1 - http://www.nber.org/papers/w17634.pdf
N1 - Author contact info:
Pablo Querubin
Harvard Academy
1727 Cambridge Street, Room E106
Cambridge, MA 02138
https://sites.google.com/site/pabloquerubin
Tel: 6173727322
E-Mail: pablo.querubin@gmail.com
James M. Snyder, Jr.
Harvard University
1737 Cambridge Street, CGIS
Knafel Building Room 413
Cambridge, MA 02138
Tel: 617/496-1089
E-Mail: jsnyder@gov.harvard.edu
AB - We employ a regression discontinuity design based on close elections to estimate the rents from a seat in the U.S. congress between 1850-1880. Using census data, we compare wealth accumulation among those who won or lost their first race by a small margin. We find evidence of significant returns for the first half of the 1860s, during the Civil War, but not for other periods. We hypothesize that increased opportunities from the sudden spike in government spending during the war and the decrease in control by the media and other monitors might have made it easier for incumbent congressmen to collect rents.
ER -
TY - JOUR
AU - Bailey,Martha J.
AU - Dynarski,Susan M.
TI - Gains and Gaps: Changing Inequality in U.S. College Entry and Completion
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17633
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17633
L1 - http://www.nber.org/papers/w17633.pdf
N1 - Author contact info:
Martha J. Bailey
University of Michigan
Department of Economics
611 Tappan Street
207 Lorch Hall
Ann Arbor, MI 48109-1220
Tel: 734/647-6874
Fax: 734/764-2769
E-Mail: baileymj@umich.edu
Susan Dynarski
University of Michigan
Weill Hall
735 South State Street
Ann Arbor, MI 48109-3091
Tel: 734 615 5113
Fax: NA
E-Mail: dynarski@umich.edu
AB - We describe changes over time in inequality in postsecondary education using nearly seventy years of data from the U.S. Census and the 1979 and 1997 National Longitudinal Surveys of Youth. We find growing gaps between children from high- and low-income families in college entry, persistence, and graduation. Rates of college completion increased by only four percentage points for low-income cohorts born around 1980 relative to cohorts born in the early 1960s, but by 18 percentage points for corresponding cohorts who grew up in high-income families. Among men, inequality in educational attainment has increased slightly since the early 1980s. But among women, inequality in educational attainment has risen sharply, driven by increases in the education of the daughters of high-income parents. Sex differences in educational attainment, which were small or nonexistent thirty years ago, are now substantial, with women outpacing men in every demographic group. The female advantage in educational attainment is largest in the top quartile of the income distribution. These sex differences present a formidable challenge to standard explanations for rising inequality in educational attainment.
ER -
TY - JOUR
AU - Dobbie,Will
AU - Fryer,Roland G., Jr
TI - Getting Beneath the Veil of Effective Schools: Evidence from New York City
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17632
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17632
L1 - http://www.nber.org/papers/w17632.pdf
N1 - Author contact info:
Will Dobbie
Education Innovation Laboratory
Harvard University
44 Brattle Street, 5th Floor
Cambridge, MA 02138
E-Mail: dobbie@fas.harvard.edu
Roland G. Fryer, Jr
Department of Economics
Harvard University
Littauer Center 208
Cambridge, MA 02138
Tel: 617/495-9592
Fax: 617/495-8570
E-Mail: rfryer@fas.harvard.edu
AB - Charter schools were developed, in part, to serve as an R&D engine for traditional public schools, resulting in a wide variety of school strategies and outcomes. In this paper, we collect unparalleled data on the inner-workings of 35 charter schools and correlate these data with credible estimates of each school's effectiveness. We find that traditionally collected input measures -- class size, per pupil expenditure, the fraction of teachers with no certification, and the fraction of teachers with an advanced degree -- are not correlated with school effectiveness. In stark contrast, we show that an index of five policies suggested by over forty years of qualitative research -- frequent teacher feedback, the use of data to guide instruction, high-dosage tutoring, increased instructional time, and high expectations -- explains approximately 50 percent of the variation in school effectiveness. Our results are robust to controls for three alternative theories of schooling: a model emphasizing the provision of wrap-around services, a model focused on teacher selection and retention, and the "No Excuses'' model of education. We conclude by showing that our index provides similar results in a separate sample of charter schools.
ER -
TY - JOUR
AU - Tong,Hui
AU - Wei,Shang-Jin
TI - Does Trade Globalization Induce or Inhibit Corporate Transparency? Unbundling the Growth Potential and Product Market Competition Channels
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17631
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17631
L1 - http://www.nber.org/papers/w17631.pdf
N1 - Author contact info:
Hui Tong
Research Department
IMF Washington DC
700 19th Street N.W.
Washington, DC 20431
E-Mail: htong@imf.org
Shang-Jin Wei
Graduate School of Business
Columbia University
Uris Hall 619
3022 Broadway
New York, NY 10027-6902
Tel: 212/854-9139
E-Mail: shangjin.wei@columbia.edu
AB - How does increasing globalization affect corporate transparency? Freer trade represents different facets and in theory has ambiguous effects on corporate transparency. On the one hand, by exposing firms to more product market competition, it could discourage discretionary disclosure. On the other hand, by opening up foreign markets and enhancing firms’ growth opportunities, it may promote more transparency. Rather than simply estimating a net effect, this paper pursues an approach that allows separate estimation of the two potentially opposing channels. We employ three different measures of corporate transparency and track their evolutions for 4061 firms in 49 countries during 1992-2005. By using detailed product-level tariff schedules for these countries, we construct a measure of growth opportunities enabled by foreign tariff liberalizations at the sector-country-year level, and a second measure of globalization-induced product market competition based on a country’s own tariff liberalization (again at the sector–country-year level). We find strong evidence that higher growth opportunities engendered by globalization promotes corporate transparency, especially in industries that depend heavily on external financing. At the same time, we find somewhat weaker evidence that greater product market competition engendered by globalization discourages corporate transparency. The results demonstrate the importance of disentangling the multiple and potentially conflicting effects of globalization.
ER -
TY - JOUR
AU - Anderson,James E.
AU - Milot,Catherine A.
AU - Yotov,Yoto V.
TI - The Incidence of Geography on Canada's Services Trade
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17630
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17630
L1 - http://www.nber.org/papers/w17630.pdf
N1 - Author contact info:
James E. Anderson
Department of Economics
Boston College
Chestnut Hill, MA 02467
Tel: 617/552-3691
Fax: 617/552-2308
E-Mail: james.anderson.1@bc.edu
Catherine A. Milot
Department of Foreign Affairs
and International Trade, Canada
111 Sussex Drive
Ottawa, Canada K1N 1J1
E-Mail: catherine.milot@international.gc.ca
Yoto V. Yotov
Drexel University
LeBow College of Business
Department of Economics and International Business
Matheson Hall, Suite 503-C
Philadelphia, PA 19104
E-Mail: yotov@drexel.edu
AB - We estimate geographic barriers to export trade in nine service categories for Canada's provinces from 1997 to 2007 using the structural gravity model. Constructed Home, Domestic and Foreign Bias indexes (the last two new) capture the direct plus indirect effect of services trade costs on intra-provincial, inter-provincial and international trade relative to their frictionless benchmarks. Barriers to services international trade are huge relative to inter-provincial trade and large relative to goods international trade. A novel test confirms the fit of structural gravity with services trade data.
ER -
TY - JOUR
AU - Oster,Emily
AU - Shoulson,Ira
AU - Dorsey,E. Ray
TI - Optimal Expectations and Limited Medical Testing: Evidence from Huntington Disease
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17629
PY - 2011
Y2 - December 2011
UR - http://www.nber.org/papers/w17629
L1 - http://www.nber.org/papers/w17629.pdf
N1 - Author contact info:
Emily Oster
University of Chicago
Booth School of Business
5807 South Woodlawn Ave
Chicago, IL 60637
Tel: 773/834-1552
Fax: 773-834-8172
E-Mail: eoster@uchicago.edu
Ira Shoulson
Georgetown University
2115 Wisconsin Ave NW
Suite 603
Washington DC 20007
E-Mail: ira@irashoulson.org
E. Ray Dorsey
Johns Hopkins University
Department of Neurology
Meyer Bldg, Room 6-181
600 N. Wolfe Street
Baltimore, MD 21287
E-Mail: Ray.Dorsey@jhmi.edu
AB - We use novel data to study the decision to undergo genetic testing by individuals at risk for Huntington disease (HD), a hereditary neurological disorder that reduces healthy life expectancy to about age 50. Although genetic testing is perfectly predictive and carries little financial or time cost, less than 10 percent of at-risk individuals are tested prior to the onset of symptoms. Testing rates are higher for individuals with higher ex ante risk of carrying the genetic expansion for HD. Untested individuals express optimistic beliefs about their probability of having HD and make fertility, savings, labor supply, and other decisions as if they do not have HD, even though individuals with confirmed HD behave quite differently. We show that these facts are qualitatively consistent with a model of optimal expectations (Brunnermeier and Parker, 2005) and can be reconciled quantitatively in this model with reasonable parameter values. This model nests the neoclassical framework and, we argue, provides strong evidence rejecting the assumptions of that framework. Finally, we briefly develop policy implications.
ER -
TY - JOUR
AU - Kotchen,Matthew
AU - Potoski,Matthew
TI - Conflicts of Interest Distort Public Evaluations: Evidence from the Top 25 Ballots of NCAA Football Coaches
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17628
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17628
L1 - http://www.nber.org/papers/w17628.pdf
N1 - Author contact info:
Matthew Kotchen
School of Forestry & Environmental Studies,
School of Management,
and Department of Economics
Yale University
195 Prospect Street
New Haven, CT 06511
Tel: 203/432-9533
Fax: 203/436-9150
E-Mail: matthew.kotchen@yale.edu
Matthew Potoski
University of California, Santa Barbara
2400 Bren Hall
Santa Barbara, CA 93106
E-Mail: mpotoski@bren.ucsb.edu
AB - This paper provides a study on conflicts of interest among college football coaches participating in the USA Today Coaches Poll of top 25 teams. The Poll provides a unique empirical setting that overcomes many of the challenges inherent in conflict of interest studies, because many agents are evaluating the same thing, private incentives to distort evaluations are clearly defined and measurable, and there exists an alternative source of computer rankings that is bias free. Using individual coach ballots between 2005 and 2010, we find that coaches distort their rankings to reflect their own team's reputation and financial interests. On average, coaches rank teams from their own athletic conference nearly a full position more favorably and boost their own team's ranking more than two full positions. Coaches also rank teams they defeated more favorably, thereby making their own team look better. When it comes to ranking teams contending for one of the high-profile Bowl Championship Series (BCS) games, coaches favor those teams that generate higher financial payoffs for their own team. Reflecting the structure of payoff disbursements, coaches from non-BCS conferences band together, while those from BCS conferences more narrowly favor teams in their own conference. Among all coaches an additional payoff between $3.3 and $5 million induces a more favorable ranking of one position. Moreover, for each increase in a contending team's payoff equal to 10 percent of a coach's football budget, coaches respond with more favorable rankings of half a position, and this effect is more than twice as large when coaches rank teams outside the top 10.
ER -
TY - JOUR
AU - Bernard,Andrew B.
AU - Jensen,J. Bradford
AU - Redding,Stephen J.
AU - Schott,Peter K.
TI - The Empirics of Firm Heterogeneity and International Trade
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17627
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17627
L1 - http://www.nber.org/papers/w17627.pdf
N1 - Author contact info:
Andrew B. Bernard
Tuck School of Business at Dartmouth
100 Tuck Hall
Hanover, NH 03755
Tel: 603/646-0302
Fax: 603/646-0995
E-Mail: Andrew.B.Bernard@dartmouth.edu
J. Bradford Jensen
McDonough School of Business
Georgetown University
Washington, DC 20057
Tel: 202/687-3767
E-Mail: jbj24@georgetown.edu
Stephen J. Redding
Department of Economics
and Woodrow Wilson School
Princeton University
Fisher Hall
Princeton, NJ 08544
Tel: 609/258-4016
Fax: 609/258-6419
E-Mail: reddings@princeton.edu
Peter K. Schott
Yale School of Management
135 Prospect Street
New Haven, CT 06520-8200
Tel: 203/436-4260
Fax: 203/432-6974
E-Mail: peter.schott@yale.edu
AB - This paper reviews the empirical evidence on firm heterogeneity in international trade. A first wave of empirical findings from micro data on plants and firms proposed challenges for existing models of international trade and inspired the development of new theories emphasizing firm heterogeneity. Subsequent empirical research has examined additional predictions of these theories and explored other dimensions of the data not originally captured by them. These other dimensions include multi-product firms, offshoring, intra-firm trade and firm export market dynamics.
ER -
TY - JOUR
AU - Sinn,Hans-Werner
AU - Wollmershaeuser,Timo
TI - Target Loans, Current Account Balances and Capital Flows: The ECB’s Rescue Facility
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17626
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17626
L1 - http://www.nber.org/papers/w17626.pdf
N1 - Author contact info:
Hans-Werner Sinn
Ifo Institute -
Leibniz Institute for Economic Research
at University of Munich
Poschingerstr. 5
81679 Munich
GERMANY
Tel: 49-89-21802748
Fax: 49-89-397303;49-89-8506434 (home)
E-Mail: sinn@ifo.de
Timo Wollmershaeuser
Ifo Institute - Leibniz Institute
for Economic Research
at University of Munich
Poschingerstrasse 5
81679 Munich
Germany
E-Mail: wollmershaeuser@ifo.de
AB - The European Monetary Union is stuck in a severe balance-of-payments imbalance of a nature similar to the one that destroyed the Bretton Woods System. Greece, Ireland, Portugal, Spain and Italy have suffered from balance-of-payments deficits whose accumulated value, as measured by the Target balances in the national central banks’ balance sheets, was 404 billion euros in August 2011. The national central banks of these countries covered the deficits by creating and lending out additional central bank money that flowed to the euro core countries, Germany in particular, and crowded out the central bank money resulting from local refinancing operations. Thus the ECB forced a public capital export from the core countries that partly compensated for the now reluctant private capital flows to, and the capital flight from, the periphery countries.
ER -
TY - JOUR
AU - Hornbeck,Richard
AU - Keskin,Pinar
TI - The Evolving Impact of the Ogallala Aquifer: Agricultural Adaptation to Groundwater and Climate
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17625
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17625
L1 - http://www.nber.org/papers/w17625.pdf
N1 - Author contact info:
Richard Hornbeck
Department of Economics
Harvard University
232 Littauer Center
Cambridge, MA 02138
Tel: 202/494-0722
E-Mail: hornbeck@fas.harvard.edu
Pinar Keskin
Department of Economics
Wellesley College
106 Central Street
Wellesley, MA 02481
pkeskin@wellesley.edu
E-Mail: pkeskin@wellesley.edu
AB - Agriculture on the American Great Plains has been constrained by historical water scarcity. After World War II, technological improvements made groundwater from the Ogallala aquifer available for irrigation. Comparing counties over the Ogallala with nearby similar counties, groundwater access increased irrigation intensity and initially reduced the impact of droughts. Over time, land-use adjusted toward water-intensive crops and drought-sensitivity increased; conversely, farmers in water-scarce counties maintained drought-resistant practices that fully mitigated higher drought-sensitivity. Land values capitalized the Ogallala's value at $26 billion in 1974; as extraction remained high and water levels declined, the Ogallala's value fell to $9 billion in 2002.
ER -
TY - JOUR
AU - Roberts,James W.
AU - Sweeting,Andrew
TI - When Should Sellers Use Auctions?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17624
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17624
L1 - http://www.nber.org/papers/w17624.pdf
N1 - Author contact info:
James W. Roberts
Duke University
Department of Economics
213 Social Sciences Building
Durham, NC 27708
Tel: 919/660-1822
E-Mail: j.roberts@duke.edu
Andrew Sweeting
Department of Economics
213 Social Sciences
Box 90097
Duke University
Durham, NC 27708
Tel: 919 660 1883
E-Mail: atsweet@duke.edu
AB - A bidding process can be organized so that offers are submitted simultaneously or sequentially. In the latter case, potential buyers can condition their behavior on previous entrants' decisions. The relative performance of these mechanisms is investigated when entry is costly and selective, meaning that potential buyers with higher values are more likely to participate. A simple sequential mechanism can give both buyers and sellers significantly higher payoffs than the commonly used simultaneous bid auction. The findings are illustrated with parameters estimated from simultaneous entry USFS timber auctions where our estimates predict that the sequential mechanism would increase revenue and efficiency.
ER -
TY - JOUR
AU - Bose,Gautam
AU - Lang,Kevin
TI - A Theory of Monitoring and Internal Labor Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17623
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17623
L1 - http://www.nber.org/papers/w17623.pdf
N1 - Author contact info:
Gautam Bose
School of Economics
University of New South Wales
Sydney NSW 2052 Australia
E-Mail: g.bose@unsw.edu.au
Kevin Lang
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-5694
Fax: 617/353-4001
E-Mail: lang@bu.edu
AB - We analyze a firm's job-assignment and worker-monitoring decisions when workers face occasional crises. Firms prefer to assign good workers to a difficult task and to not employ bad workers. Firms observe failures but only observe successfully resolved crises if they monitor the worker. If monitoring costs are positive but sufficiently small, for a range of probabilities that the worker is good, the firm assigns the worker to a low task (less sensitive to crises) and monitors her. At probabilities below this range and not too much above it, she is assigned to the low task and not monitored. At high probabilities of being good, she is assigned to the difficult task. We analyze the implications for internal labor markets of the case where a worker has the same ex ante probability of being good at all firms and learning is about ability at this particular firm.
ER -
TY - JOUR
AU - Guvenen,Fatih
TI - Macroeconomics With Heterogeneity: A Practical Guide
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17622
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17622
L1 - http://www.nber.org/papers/w17622.pdf
N1 - Author contact info:
Fatih Guvenen
Department of Economics
University of Minnesota
4-151 Hanson Hall
1925 Fourth Street South
Minneapolis, MN, 55455
Tel: 612-6250767
E-Mail: guvenen@umn.edu
AB - This article reviews macroeconomic models with heterogeneous households. A key question for the relevance of these models concerns the degree to which markets are complete. This is because the existence of complete markets imposes restrictions on (i) how much heterogeneity matters for aggregate phenomena and (ii) the types of cross-sectional distributions that can be obtained. The degree of market incompleteness, in turn, depends on two factors: (i) the richness of insurance opportunities provided by the economic environment and (ii) the nature and magnitude of idiosyncratic risks to be insured. First, I review a broad collection of empirical evidence—from econometric tests of “full insurance,” to quantitative and empirical analyses of the permanent income (“self-insurance”) model that examine how it fits the facts about life cycle allocations, to studies that try to directly measure where economies place between these two benchmarks (“partial insurance”). The empirical evidence I survey reveals significant uncertainty in the profession regarding the magnitudes of idiosyncratic risks as well as whether or not these risks have increased since the 1970s. An important difficulty stems from the fact that inequality often arises from a mixture of idiosyncratic risk and fixed (or predictable) heterogeneity, making the two challenging to disentangle. I also discuss applications of incomplete markets models to trends in wealth, consumption, and earnings inequality both over the life cycle and over time, where this challenge is evident. Third, I discuss “approximate” aggregation—the finding that some incomplete markets models generate aggregate implications very similar to representative-agent models. What approximate aggregation does and does not imply is illustrated through several examples. Finally, I discuss some computational issues relevant for solving and calibrating such models and I provide a simple yet fully parallelizable global optimization algorithm that can be used to calibrate heterogeneous agent models.
ER -
TY - JOUR
AU - Jordà,Òscar
AU - Schularick,Moritz HP.
AU - Taylor,Alan M.
TI - When Credit Bites Back: Leverage, Business Cycles, and Crises
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17621
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17621
L1 - http://www.nber.org/papers/w17621.pdf
N1 - Author contact info:
Òscar Jordà
Economic Research, MS 1130
Federal Reserve Bank of San Francisco
101 Market St.
San Francisco, CA 94105
E-Mail: oscar.jorda@sf.frb.org
Moritz HP. Schularick
John-F.-Kennedy-Institute,
Free University of Berlin,
Berlin,
Germany
E-Mail: moritz.schularick@fu-berlin.de
Alan M. Taylor
Department of Economics
University of Virginia
Monroe Hall
Charlottesville, VA 22903
Fax: (434) 982-2904
E-Mail: alan.m.taylor@virginia.edu
AB - This paper studies the role of leverage in the business cycle. Based on a study of nearly 200 recession episodes in 14 advanced countries between 1870 and 2008, we document a new stylized fact of the modern business cycle: more credit-intensive booms tend to be followed by deeper recessions and slower recoveries. We find a close relationship between the rate of credit growth relative to GDP in the expansion phase and the severity of the subsequent recession. We use local projection methods to study how leverage impacts the behavior of key macroeconomic variables such as investment, lending, interest rates, and inflation. The effects of leverage are particularly pronounced in recessions that coincide with financial crises, but are also distinctly present in normal cycles. The stylized facts we uncover lend support to the idea that financial factors play an important role in the modern business cycle.
ER -
TY - JOUR
AU - Michalopoulos,Stelios
AU - Papaioannou,Elias
TI - The Long-Run Effects of the Scramble for Africa
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17620
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17620
L1 - http://www.nber.org/papers/w17620.pdf
N1 - Author contact info:
Stelios Michalopoulos
Brown University
Department of Economics
64 Waterman Street
Providence, RI 02912
Tel: 401/863-2506
Fax: 401/863-1970
E-Mail: smichalo@brown.edu
Elias Papaioannou
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-8169
E-Mail: papaioannou.elias@gmail.com
AB - We examine the long-run consequences of the scramble for Africa among European powers in the late 19th century and uncover the following empirical regularities. First, using information on the spatial distribution of African ethnicities before colonization, we show that borders were arbitrarily drawn. Apart from the land mass and water area of an ethnicity's historical homeland, no other geographic, ecological, historical, and ethnic-specific traits predict which ethnic groups have been partitioned by the national border. Second, using data on the location of civil conflicts after independence, we show that partitioned ethnic groups have suffered significantly more warfare; moreover, partitioned ethnicities have experienced more prolonged and more devastating civil wars. Third, we identify sizeable spillovers; civil conflict spreads from the homeland of partitioned ethnicities to nearby ethnic regions. These results are robust to a rich set of controls at a fine level and the inclusion of country fixed effects and ethnic-family fixed effects. The uncovered evidence thus identifies a sizable causal impact of the scramble for Africa on warfare.
ER -
TY - JOUR
AU - Frankel,Jeffrey A.
AU - Végh,Carlos A.
AU - Vuletin,Guillermo
TI - On Graduation from Fiscal Procyclicality
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17619
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17619
L1 - http://www.nber.org/papers/w17619.pdf
N1 - Author contact info:
Jeffrey A. Frankel
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-3834
Fax: 617/496-5747
E-Mail: jeffrey_frankel@harvard.edu
Carlos A. Vegh
Department of Economics
Tydings Hall, Office 4118G
University of Maryland
College Park, MD 20742-7211
Tel: 301-405-3546
Fax: 301-405-3542
E-Mail: vegh@econ.bsos.umd.edu
Guillermo Vuletin
Colby College
Department of Economics
Diamond, 3rd floor
5230 Mayflower Hill
Waterville, ME 04901-8852
Tel: 207-859-5235
Fax: 207-859-5248
E-Mail: gvuletin@colby.edu
AB - In the past, industrial countries have tended to pursue countercyclical or, at worst, acyclical fiscal policy. In sharp contrast, emerging and developing countries have followed procyclical fiscal policy, thus exacerbating the underlying business cycle. We show that, over the last decade, about a third of the developing world has been able to escape the procyclicality trap and actually become countercyclical. We trace this critical shift in fiscal policy to the quality of institutions. We provide a formal analysis, which controls for the endogeneity of institutions and other determinants of fiscal procyclicality, that strongly suggests that there is a causal link running from stronger institutions to less procyclical or countercyclical fiscal policy.
ER -
TY - JOUR
AU - Andreoni,James
AU - Payne,Abigail
AU - Smith,Justin D.
AU - Karp,David
TI - Diversity and Donations: The Effect of Religious and Ethnic Diversity on Charitable Giving
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17618
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17618
L1 - http://www.nber.org/papers/w17618.pdf
N1 - Author contact info:
James Andreoni
Department of Economics
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-3832
Fax: 858/534-7040
E-Mail: andreoni@ucsd.edu
Abigail Payne
Department of Economics
McMaster University
KTH 426, 1280 Main Street West
Hamilton, Ontario, Canada L8S 4M4
Tel: 905/5259140 ext 23814
Fax: 905/521-8232
E-Mail: paynea@mcmaster.ca
Justin D. Smith
Department of Economics
Wilfrid Laurier University
P3090, 75 University Ave. W.
Waterloo, Ontario, Canada
N2L 3C5
E-Mail: jusmith@wlu.ca
David Karp
McMaster University
E-Mail: david@davidkarp.ca
AB - We explore the effects of local ethnic and religious diversity on individual donations to private charities. Using 10-year neighborhood-level panels derived from personal tax records in Canada, we find that diversity has a detrimental effect on charitable donations. A 10 percentage point increase in ethnic diversity reduces donations by 14%, and a 10 percentage point increase in religious diversity reduces donations by 10%. The ethnic diversity effect is driven by a within-group disposition among non-minorities, and is most evident in high income, but low education areas. The religious diversity effect is driven by a within-group disposition among Catholics, and is concentrated in high income and high education areas. Despite these large effects on amount donated, we find no evidence that increasing diversity affects the fraction of households that donate. Over the period studied, ethnic diversity rises by 6 percentage points and religious diversity rises by 4 percentage points; our results suggest that charities receive about 12% less in total donations. As areas like North America continue to grow more diverse over time, our results imply that these demographic changes may have significant implications for the charitable sector.
ER -
TY - JOUR
AU - Feldstein,Martin S.
TI - The Euro and European Economic Conditions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17617
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17617
L1 - http://www.nber.org/papers/w17617.pdf
N1 - Author contact info:
Martin S. Feldstein
President Emeritus
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138-5398
Tel: 617/868-3905
Fax: 617/868-7194
E-Mail: msfeldst@nber.org
AB - The creation of the euro should now be recognized as an experiment that has led to the sovereign debt crisis in several countries, the fragile condition of major European banks, the high levels of unemployment, and the large trade deficits that now exist in most Eurozone countries. Although the European Central Bank managed the euro in a way that achieved a low rate of inflation, other countries both in Europe and elsewhere have also had a decade of low inflation without incurring the costs of a monetary union.
The emergence of these problems just a dozen years after the start of the euro in 1999 was not an accident or the result of bureaucratic mismanagement but the inevitable consequence of imposing a single currency on a very heterogeneous group of countries, a heterogeneity that includes not only economic structures but also fiscal traditions and social attitudes.
This paper reviews (1) the reasons for these economic problems, (2) the political origins of the European Monetary Union, (3) the current attempts to solve the sovereign debt problem, (4) the long-term problem of inter-country differences of productivity growth and competitiveness, (5) the special problems of Greece and Italy, (6) and the pros and cons of a Greek departure from the Eurozone.
ER -
TY - JOUR
AU - Piketty,Thomas
AU - Saez,Emmanuel
AU - Stantcheva,Stefanie
TI - Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17616
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17616
L1 - http://www.nber.org/papers/w17616.pdf
N1 - Author contact info:
Thomas Piketty
Paris School of Economics
48 Boulevard Jourdan
75014 Paris, France
E-Mail: piketty@ens.fr
Emmanuel Saez
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720
Tel: 510/642-4631
Fax: 510/642-6615
E-Mail: saez@econ.berkeley.edu
Stefanie Stantcheva
MIT Department of Economics
50 Memorial Drive
Building E52
Cambridge, MA 02142-1347
E-Mail: stefanie@mit.edu
AB - This paper analyzes the problem of optimal taxation of top labor incomes. We develop a model where top incomes respond to marginal tax rates through three channels: (1) the standard supply-side channel through reduced economic activity, (2) the tax avoidance channel, (3) the compensation bargaining channel through efforts in influencing own pay setting. We derive the optimal top tax rate formula as a function of the three elasticities corresponding to those three channels of responses. The first elasticity (supply side) is the sole real factor limiting optimal top tax rates. The optimal tax system should be designed to minimize the second elasticity (avoidance) through tax enforcement and tax neutrality across income forms, in which case the second elasticity becomes irrelevant. The optimal top tax rate increases with the third elasticity (bargaining) as bargaining efforts are zero-sum in aggregate. We then analyze top income and top tax rate data in 18 OECD countries. There is a strong correlation between cuts in top tax rates and increases in top 1% income shares since 1975, implyingthat the overall elasticity is large. But top income share increases have not translated into higher economic growth, consistent with the zero-sum bargaining model. This suggests that the first elasticity is modest in size and that the overall effect comes mostly from the third elasticity. Consequently, socially optimal top tax rates might possibly be much higher than what is commonly assumed.
ER -
TY - JOUR
AU - Kacperczyk,Marcin
AU - Nieuwerburgh,Stijn Van
AU - Veldkamp,Laura
TI - Time-Varying Fund Manager Skill
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17615
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17615
L1 - http://www.nber.org/papers/w17615.pdf
N1 - Author contact info:
Marcin Kacperczyk
Stern School of Business
New York University
44 West 4th Street
KMC 9-190
New York, NY 10012
Tel: 212/998-0924
E-Mail: mkacperc@stern.nyu.edu
Stijn Van Nieuwerburgh
Stern School of Business
New York University
44 W 4th Street, Suite 9-120
New York, NY 10012
Tel: 646/284-4141
Fax: 646/284-4141
E-Mail: svnieuwe@stern.nyu.edu
Laura Veldkamp
Stern School of Business
New York University
44 W Fourth Street,Suite 7-77
New York, NY 10012
Tel: 212/998-0527
Fax: 212/995-4218
E-Mail: lveldkam@stern.nyu.edu
AB - Mutual fund managers can outperform the market by picking stocks or timing the market successfully. Previous work has estimated picking and timing skill, assuming that each manager is endowed with a fixed amount of each and found some evidence of picking skills and little evidence of timing skills among successful managers. This paper estimates skill separately in booms and recessions and finds that the extent to which managers focus on stock picking or market timing fluctuates with the state of the economy. Stock picking is more prevalent in booms, while market timing dominates in recessions. We use this finding to develop a new methodology for detecting managerial skill. The results suggest that some but not all managers have skill. We describe the characteristics of the skilled managers and show that skilled managers significantly outperform the market.
ER -
TY - JOUR
AU - Kézdi,Gábor
AU - Willis,Robert J.
TI - Household Stock Market Beliefs and Learning
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17614
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17614
L1 - http://www.nber.org/papers/w17614.pdf
N1 - Author contact info:
Gabor Kezdi
Department of Economics
Central European University
9 Nador St, Budapest, Hungary
E-Mail: kezdig@ceu.hu
Robert J. Willis
3254 ISR
University of Michigan
P. O. Box 1248
426 Thompson Street
Ann Arbor, MI 48106
Tel: 734/936-0314
E-Mail: rjwillis@isr.umich.edu
AB - This paper characterizes heterogeneity of the beliefs of American households about future stock market returns, provides an explanation for that heterogeneity and establishes its relationship to stock holding behavior. We find substantial belief heterogeneity that is puzzling since households can observe the same publicly available information about the stock market. We propose a simple learning model where agents can invest in the acquisition of financial knowledge. Differential incentives to learn about the returns process can explain heterogeneity in beliefs. We check this explanation by using data on beliefs elicited as subjective probabilities and a rich set of other variables from the Health and Retirement Study. Both descriptive statistics and estimated relevant heterogeneity of the structural parameters provide support for our explanation. People with higher lifetime earnings, higher education, higher cognitive abilities, defined contribution as opposed to defined benefit pension plans, for example, possess beliefs that are considerably closer to what historical time series would imply. Our results also suggest that a substantial part of the reduced form relationship between stock holding and household characteristics is due to differences in beliefs. Our methodological contribution is estimating relevant heterogeneity of structural belief parameters from noisy survey answers to probability questions.
ER -
TY - JOUR
AU - Novy-Marx,Robert
TI - Logical Implications of GASB’s Methodology for Valuing Pension Liabilities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17613
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17613
L1 - http://www.nber.org/papers/w17613.pdf
N1 - Author contact info:
Robert Novy-Marx
Simon Graduate School of Business
University of Rochester
305 Schlegel Hall
Rochester, NY 14627
Tel: 773/834-7123
E-Mail: Robert.Novy-Marx@Simon.Rochester.edu
AB - It is well known that the funding status of state and local government defined benefit pension plans, as measured by the accounting methodology prescribed by the Governmental Accounting Standards Board (GASB), improves when the plans take on more investment risk. This paper documents several lesser known logical implications of the GASB methodology. In particular, I show that GASB accounting is susceptible to the “Yogi Berra fallacy,” under which a pizza is less filling when sliced into fewer pieces: GASB gives different “valuations” for the exact same assets and liabilities when they are partitioned differently among plans. Moreover, the marginal valuation of assets can be negative under GASB. In such cases a plan can improve its GASB funding status literally by burning money. Finally, I show that GASB’s methodology is exactly equivalent to fairly valuing plan liabilities, but accounting for stocks at more than twice their traded prices, and further crediting a plan an additional dollar for each dollar of stock that it intends to buy in the future.
ER -
TY - JOUR
AU - Balli,Faruk
AU - Kalemli-Ozcan,Sebnem
AU - Sorensen,Bent
TI - Risk Sharing through Capital Gains
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17612
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17612
L1 - http://www.nber.org/papers/w17612.pdf
N1 - Author contact info:
Faruk Balli
Massey University
School of Economics and Finance
Palmerston North
New Zealand
Tel: +6463505799 ext2330
E-Mail: f.balli@massey.ac.nz
Sebnem Kalemli-Ozcan
John F. Kennedy School of Government
Harvard University
79 JFK Street, Mailbox 28
Cambridge, MA 02138
E-Mail: sebnem.kalemli-ozcan@mail.uh.edu
Bent Sorensen
Department of Economics
University of Houston
204 McElhinney Hall
Houston, TX 77204
Tel: 713-743-3841
Fax: 713-743-3798
E-Mail: bent.sorensen@mail.uh.edu
AB - We estimate channels of international risk sharing between European Monetary Union (EMU), European Union, and other OECD countries 1992-2007. We focus on risk sharing through savings, factor income flows, and capital gains. Risk sharing through factor income and capital gains was close to zero before 1999 but has increased since then. Risk sharing from capital gains, at about 6 percent, is higher than risk sharing from factor income flows for European Union countries and OECD countries. Risk sharing from factor income flows is higher for Euro zone countries, at 14 percent, reflecting increased international asset and liability holdings in the Euro area.
ER -
TY - JOUR
AU - Bishop,Kelly C.
AU - Timmins,Christopher
TI - Hedonic Prices and Implicit Markets: Estimating Marginal Willingness to Pay for Differentiated Products Without Instrumental Variables
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17611
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17611
L1 - http://www.nber.org/papers/w17611.pdf
N1 - Author contact info:
Kelly Bishop
Olin Business School
Washington University in St. Louis
Box 1133, 1 Brookings Drive
St. Louis, MO 63130
E-Mail: kbishop@wustl.edu
Christopher Timmins
Department of Economics
Duke University
209 Social Sciences Building
P.O. Box 90097
Durham, NC 27708-0097
Tel: 919/660-1809
Fax: 919/684-8974
E-Mail: christopher.timmins@duke.edu
AB - The hedonic model of Rosen (1974) has become a workhorse for valuing the characteristics of differentiated products despite a number of well-documented econometric problems. For example, Bartik (1987) and Epple (1987) each describe a source of endogeneity in the second stage of Rosen's procedure that has proven difficult to overcome. In this paper, we propose a new approach for recovering the marginal willingness-to-pay function that altogether avoids these endogeneity problems. Applying this estimator to data on large changes in violent crime rates, we find that marginal willingness-to-pay increases by ten cents with each additional violent crime per 100,000 residents.
ER -
TY - JOUR
AU - Rothstein,Jesse
AU - Wozny,Nathan
TI - Permanent Income and the Black-White Test Score Gap
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17610
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17610
L1 - http://www.nber.org/papers/w17610.pdf
N1 - Author contact info:
Jesse Rothstein
Goldman School of Public Policy
University of California, Berkeley
2607 Hearst Avenue
Berkeley, CA 94720-7320
Tel: 510/643-8561
Fax: 510/643-9657
E-Mail: rothstein@berkeley.edu
Nathan Wozny
Mathematica Policy Research
P.O. Box 2393
Princeton, NJ 08543-2393
Tel: 609-936-2795
Fax: 609-799-0005
E-Mail: nwozny@mathematica-mpr.com
AB - Analysts often examine the black-white test score gap conditional on family income. Typically only a current income measure is available. We argue that the gap conditional on permanent income is of greater interest, and we describe a method for identifying this gap using an auxiliary data set to estimate the relationship between current and permanent income. Current income explains only about half as much of the black-white test score gap as does permanent income, and the remaining gap in math achievement among families with the same permanent income is only 0.2 to 0.3 standard deviations in two commonly used data sets. When we add permanent income to the controls used by Fryer and Levitt (2006), the unexplained gap in 3rd grade shrinks below 0.15 standard deviations, less than half of what is found with their controls.
ER -
TY - JOUR
AU - Lewis,Ethan G.
TI - Immigrant-Native Substitutability: The Role of Language Ability
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17609
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17609
L1 - http://www.nber.org/papers/w17609.pdf
N1 - Author contact info:
Ethan G. Lewis
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2943
Fax: 603/646-2122
E-Mail: ethan.g.lewis@dartmouth.edu
AB - Wage evidence suggests that immigrant workers are imperfectly substitutable for native-born workers with similar education and experience. Using U.S. Censuses and recent American Community Survey data, I ask to what extent differences in language skills drive this. I find they are important. I estimate that the response of immigrants’ relative wages to immigration is concentrated among immigrants with poor English skills. Similarly, immigrants who arrive at young ages, as adults, both have stronger English skills and exhibit greater substitutability for native-born workers than immigrants who arrive older. In U.S. markets where Spanish speakers are concentrated, I find a “Spanish-speaking” labor market emerges: in such markets, the return to speaking English is low, and the wages of Spanish and non-Spanish speakers respond most strongly to skill ratios in their own language group. Finally, in Puerto Rico, where almost all workers speak Spanish, I find immigrants and natives are perfect substitutes. The implications for immigrant poverty and regional settlement patterns are analyzed.
ER -
TY - JOUR
AU - Gaynor,Martin
AU - Laudicella,Mauro
AU - Propper,Carol
TI - Can Governments Do It Better? Merger Mania and Hospital Outcomes in the English NHS
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17608
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17608
L1 - http://www.nber.org/papers/w17608.pdf
N1 - Author contact info:
Martin Gaynor
Heinz College
Carnegie Mellon University
4800 Forbes Avenue, Room 3008
Pittsburgh, PA 15213-3890
Tel: 412/268-7933
Fax: 412/268-5338
E-Mail: mgaynor@cmu.edu
Mauro Laudicella
Imperial College Business School
South Kensington Campus
London SW7 2AZ, United Kingdom
E-Mail: m.laudicella@imperial.ac.uk
Carol Propper
Imperial College Business School
South Kensington Campus
London SW7 2AZ, United Kingdom
E-Mail: carol.propper@bristol.ac.uk
AB - The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital merger. These mergers are initiated by a regulator, acting on behalf of the public, and justified on the grounds that merger will improve outcomes. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. In addition, mergers reduce the scope for competition between hospitals.
ER -
TY - JOUR
AU - Ashenfelter,Orley C.
TI - Economic History or History of Economics? A Review Essay on Sylvia Nasar’s Grand Pursuit: the Story of Economic Genius
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17607
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17607
L1 - http://www.nber.org/papers/w17607.pdf
N1 - Author contact info:
Orley C. Ashenfelter
Industrial Relations Section
Firestone Library
Princeton University
Princeton, NJ 08544
Tel: 609/258-4040
Fax: 609/258-2907
E-Mail: c6789@princeton.edu
AB - In this essay I review Sylvia Nasar’s long awaited new history of economics, Grand Pursuit. I describe how the book is really an economic history of the period from 1850-1950, with distinguished economists’ stories inserted in appropriate places. Nasar’s goal is to show how economists work, but also to show that they are people too--with more than enough warts and foibles to show they are human! I contrast the general view of the role of economics in Grand Pursuit with Robert Heilbroner’s remarkably different conception in The Worldly Philosophers. I also discuss more generally the question of why economists might be interested in their history at all.
ER -
TY - JOUR
AU - Edmans,Alex
AU - Goldstein,Itay
AU - Zhu,John Y.
TI - Contracting With Synergies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17606
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17606
L1 - http://www.nber.org/papers/w17606.pdf
N1 - Author contact info:
Alex Edmans
The Wharton School
University of Pennsylvania
2318 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/746-0498
Fax: 215/898-6200
E-Mail: aedmans@wharton.upenn.edu
Itay Goldstein
Wharton School
University of Pennsylvania
Philadelphia, PA 19104
E-Mail: itayg@wharton.upenn.edu
John Y. Zhu
Wharton School
University of Pennsylvania
Philadelphia, PA 19104
E-Mail: zhuyiran@wharton.upenn.edu
AB - This paper studies optimal contracting under synergies. We define influence as the extent to which effort by one agent reduces a colleague's marginal cost of effort, and synergy to be the sum of the (unidimensional) influence parameters across a pair of agents. In a two-agent model, effort levels are equal even if influence is asymmetric. The optimal effort level depends only on total synergy and not individual influence parameters. An increase in synergy raises total effort and total pay, consistent with strong equity incentives in small firms, including among low-level employees. The influence parameters matter only for individual pay. Pay is asymmetric, with the more influential agent being paid more, even though the level and productivity of effort are both symmetric. With three agents, effort levels differ and are higher for more synergistic agents. An increase in the synergy between two agents can lead to the third agent being excluded from the team, even if his productivity is unchanged. This has implications for optimal team composition and firm boundaries. Agents that influence a greater number of colleagues receive higher wages, consistent with the salary differential between CEOs and divisional managers.
ER -
TY - JOUR
AU - Mocan,Naci H.
AU - Unel,Bulent
TI - Skill-biased Technological Change, Earnings of Unskilled Workers, and Crime
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17605
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17605
L1 - http://www.nber.org/papers/w17605.pdf
N1 - Author contact info:
Naci H. Mocan
Department of Economics
Louisiana State University
2119 Patrick F. Taylor Hall
Baton Rouge, LA 70803-6306
Tel: 225/578-4570
E-Mail: mocan@lsu.edu
Bulent Unel
Department of Economics
2134 Taylor Hall
Baton Rouge, LA 70803-6306
E-Mail: bunel@lsu.edu
AB - This paper investigates the impact of unskilled workers' earnings on crime. Following the literature on wage inequality and skill-biased technological change, we employ CPS data to create state-year as well as state-year-and (broad) industry specific measures of skill-biased technological change, which are then used as instruments for unskilled workers' earnings in crime regressions. Regressions that employ state panels reveal that technology-induced variations in unskilled workers' earnings impact property crime with an elasticity of -1, but that wages have no impact on violent crime. The paper also estimates, for the first time in this literature, structural crime equations using micro panel data from NLSY97 and instrumenting real wages of young workers. Using state-year-industry specific technology shocks as instruments yields elasticities that are in the neighborhood of -2 for most types of crime, which is markedly larger than previous estimates. In both data sets there is evidence for asymmetric impact of unskilled workers' earnings on crime. A decline in earnings has a larger effect on crime in comparison to an increase in earnings by the same absolute value.
ER -
TY - JOUR
AU - Harrigan,James
AU - Reshef,Ariell
TI - Skill Biased Heterogeneous Firms, Trade Liberalization, and the Skill Premium
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17604
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17604
L1 - http://www.nber.org/papers/w17604.pdf
N1 - Author contact info:
James Harrigan
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434-243-8354
Fax: 434-982-2904
E-Mail: harrigan@nber.org
Ariell Reshef
University of Virginia
Department of Economics
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434-243-4977
Fax: 434-982-2904
E-Mail: ariellr@virginia.edu
AB - We propose a theory that rising globalization and rising wage inequality are related because trade liberalization raises the demand for highly competitive skill-intensive firms. In our model, only the lowest-cost firms participate in the global economy exactly along the lines of Melitz (2003). In addition to differing in their productivity, firms in our model differ in their skill intensity. We model skill-biased technology as a correlation between skill intensity and technological acumen, and we estimate this correlation to be large using firm-level data from Chile in 1995. A fall in trade costs leads to both greater trade volumes and an increase in the relative demand for skill, as the lowest-cost/most-skilled firms expand to serve the export market while less skill-intensive non-exporters retrench in the face of increased import competition. This mechanism works regardless of factor endowment differences, so we provide an explanation for why globalization and wage inequality move together in both skill-abundant and skill-scarce countries. In our model countries are net exporters of the services of their abundant factor, but there are no Stolper-Samuelson effects because import competition affects all domestic firms equally.
ER -
TY - JOUR
AU - Limao,Nuno
AU - Saggi,Kamal
TI - Size Inequality, Coordination Externalities and International Trade Agreements
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17603
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17603
L1 - http://www.nber.org/papers/w17603.pdf
N1 - Author contact info:
Nuno Limao
Department of Economics
University of Maryland
3105 Tydings Hall
College Park, MD 20742
Tel: 301/405-7842
Fax: 301/405-3542
E-Mail: limao@econ.umd.edu
Kamal Saggi
Vanderbilt University
Department of Economics
VU Station B# 351828
2301 Vanderbilt Place
Nashville, TN 37235-1828
Tel: (615)322 3237
Fax: 615-343-2391
E-Mail: k.saggi@vanderbilt.edu
AB - Developing countries now account for a significant fraction of both world trade and two thirds of the membership of the World Trade Organization (WTO). However, many are still individually small and thus have a limited ability to bilaterally extract and enforce trade concessions from larger developed economies even though as a group they would be able to do so. We show that this coordination externality generates asymmetric outcomes under agreements that rely on bilateral threats of trade retaliation. such as the WTO. but not under agreements extended to include certain financial instruments. In particular, we find that an extended agreement generates improvements in global efficiency and equity if it Includes the exchange of bonds prior to trading but not if it relies solely on ex-post fines. Moreover, a combination of bonds and fines generates similar improvements even if small countries are subject to financial constraints that prevent them from posting bonds.
ER -
TY - JOUR
AU - Akcigit,Ufuk
AU - Liu,Qingmin
TI - The Role of Information in Competitive Experimentation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17602
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17602
L1 - http://www.nber.org/papers/w17602.pdf
N1 - Author contact info:
Ufuk Akcigit
Department of Economics
University of Pennsylvania
3718 Locust Walk, #445
Philadelphia, PA 19104
Tel: 215/898-7711
Fax: 215/573-2057
E-Mail: uakcigit@econ.upenn.edu
Qingmin Liu
Columbia University
1022 International Affairs Building
Mail Code 3308
420 West 118th Street
New York, NY 10027
E-Mail: qingmin@econ.upenn.edu
AB - Technological progress is typically a result of trial-and-error research by competing firms. While some research paths lead to the innovation sought, others result in dead ends. Because firms benefit from their competitors working in the wrong direction, they do not reveal their dead-end findings. Time and resources are wasted on projects that other firms have already found to be dead ends. Consequently, technological progress is slowed down, and the society benefits from innovations with delay, if ever. To study this prevalent problem, we build a tractable two-arm bandit model with two competing firms. The risky arm could potentially lead to a dead end and the safe arm introduces further competition to make firms keep their dead-end findings private. We characterize the equilibrium in this decentralized environment and show that the equilibrium necessarily entails significant efficiency losses due to wasteful dead-end replication and a flight to safety – an early abandonment of the risky project. Finally, we design a dynamic mechanism where firms are incentivized to disclose their actions and share their private information in a timely manner. This mechanism restores efficiency and suggests a direction for welfare improvement.
ER -
TY - JOUR
AU - Caselli,Francesco
AU - Tesei,Andrea
TI - Resource Windfalls, Political Regimes, and Political Stability
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17601
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17601
L1 - http://www.nber.org/papers/w17601.pdf
N1 - Author contact info:
Francesco Caselli
Department of Economics
London School of Economics
Houghton Street
London WC2A 2AE
UNITED KINGDOM
Tel: (44) (0) 2079557498
E-Mail: f.caselli@lse.ac.uk
Andrea Tesei
Universitat Pompeu Fabra
Carrer Ramon Trias Fargas 25-27
Barcelona
Spain
E-Mail: andrea.tesei@upf.edu
AB - We study theoretically and empirically whether natural resource windfalls affect political regimes. We document the following regularities. Natural resource windfalls have no effect on the political system when they occur in democracies. However, windfalls have significant political consequences in autocracies. In particular, when an autocratic country receives a positive shock to its flow of resource rents it responds by becoming even more autocratic. Furthermore, there is heterogeneity in the response of autocracies. In deeply entrenched autocracies the effect of windfalls on politics is virtually nil, while in moderately entrenched autocracies windfalls significantly exacerbate the autocratic nature of the political system. To frame the empirical work we present a simple model in which political incumbents choose the degree of political contestability by deciding how much to spend on vote-buying, bullying, or outright repression. Potential challengers decide whether or not to try to unseat the incumbent and replace him. The model uncovers a reason for the asymmetric impact of resource windfalls on democracies and autocracies, as well as the differential impact within autocratic regimes.
ER -
TY - JOUR
AU - Cawley,John
AU - Moriya,Asako S.
AU - Simon,Kosali I.
TI - The Impact of the Macroeconomy on Health Insurance Coverage: Evidence from the Great Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17600
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17600
L1 - http://www.nber.org/papers/w17600.pdf
N1 - Author contact info:
John Cawley
3M24 MVR Hall
Department of Policy Analysis and Management
and Department of Economics
Cornell University
Ithaca, NY 14853
Tel: 607/255-0952
Fax: 607/255-4071
E-Mail: jhc38@cornell.edu
Asako S. Moriya
Carnegie Mellon University
E-Mail: asako.moriya@gmail.com
Kosali I. Simon
School of Public and Environmental Affairs
Indiana University
Rm 359
1315 East Tenth Street
Bloomington, IN 47405-1701
Tel: (812) 856-3850
E-Mail: simonkos@indiana.edu
AB - This paper investigates the impact of the macroeconomy on the health insurance coverage of Americans. We examine panel data from the Survey of Income and Program Participation (SIPP) for 2004-2010, a period that includes the Great Recession of 2007-09. We find that a one percentage point increase in the state unemployment rate is associated with a 1.67 percentage point (2.12%) reduction in the probability that men have health insurance; this effect is strongest among college-educated, white, and older (50-64 year old) men. For women and children, the unemployment rate was not significantly correlated with the probability of health insurance coverage through any source. When one examines the source of coverage, it becomes apparent that a one percentage point increase in the unemployment rate is associated with a 1.37 percentage point (4.69%) higher probability that a child is covered by public health insurance. Based on the point estimates in this paper, we estimate that 9.3 million adult Americans, the vast majority of whom were men, lost health insurance due to a higher unemployment rate alone during the 2007-09 recession. This is roughly nine times more than lost health insurance during the previous (2001) recession. We conclude with a discussion of how components of recent health care reform may influence these relationships in the future.
ER -
TY - JOUR
AU - Bolton,Patrick
AU - Oehmke,Martin
TI - Should Derivatives be Privileged in Bankruptcy?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17599
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17599
L1 - http://www.nber.org/papers/w17599.pdf
N1 - Author contact info:
Patrick Bolton
Columbia Business School
804 Uris Hall
New York, NY 10027
Tel: 212/854-9245
Fax: 212/854-8059
E-Mail: pb2208@columbia.edu
Martin Oehmke
Finance and Economics Division
Columbia Business School
3022 Broadway, Uris Hall 420
New York, NY 10027
Tel: 212/851-1804
Fax: 212/316-9180
E-Mail: moehmke@columbia.edu
AB - Derivative contracts, swaps, and repos enjoy "super-senior" status in bankruptcy: they are exempt from the automatic stay on debt and collateral collection that applies to virtually all other claims. We propose a simple corporate finance model to assess the effect of this exemption on firms' cost of borrowing and incentives to engage in swaps and derivatives transactions. Our model shows that while derivatives are value-enhancing risk management tools, super-seniority for derivatives can lead to inefficiencies: collateralization and effective seniority of derivatives shifts credit risk to the firm's creditors, even though this risk could be borne more efficiently by derivative counterparties. In addition, because super-senior derivatives dilute existing creditors, they may lead firms to take on derivative positions that are too large from a social perspective. Hence, derivatives markets may grow inefficiently large in equilibrium.
ER -
TY - JOUR
AU - Irwin,Douglas A.
AU - O'Rourke,Kevin H.
TI - Coping with Shocks and Shifts: The Multilateral Trading System in Historical Perspective
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17598
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17598
L1 - http://www.nber.org/papers/w17598.pdf
N1 - Author contact info:
Douglas A. Irwin
Department of Economics
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2942
Fax: 603/646-2122
E-Mail: douglas.irwin@dartmouth.edu
Kevin H. O'Rourke
All Souls College
Oxford University
Oxford OX1 4AL, UK
Tel: + 44 (0)1865 279 348
Fax: 353-1-6772503
E-Mail: kevin.orourke@all-souls.ox.ac.uk
M3 - presented at "Globalization in an Age of Crisis", September 14-16, 2011
AB - This paper provides a historical look at how the multilateral trading system has coped with the challenge of shocks and shifts. By shocks we mean sudden jolts to the world economy in the form of financial crises and deep recessions, or wars and political conflicts. By shifts we mean slow-moving, long-term changes in comparative advantage or shifts in the geopolitical equilibrium that force economies to undergo disruptive and potentially painful adjustments. We conclude that most shocks (financial crises and regional wars) have had relatively little effect on trade policy, but that shifts pose a greater challenge to the system of open, multilateral trade.
ER -
TY - JOUR
AU - Irwin,Douglas A.
TI - Anticipating the Great Depression? Gustav Cassel’s Analysis of the Interwar Gold Standard
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17597
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17597
L1 - http://www.nber.org/papers/w17597.pdf
N1 - Author contact info:
Douglas A. Irwin
Department of Economics
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2942
Fax: 603/646-2122
E-Mail: douglas.irwin@dartmouth.edu
AB - The intellectual response to the Great Depression is often portrayed as a battle between the ideas of Friedrich Hayek and John Maynard Keynes. Yet both the Austrian and the Keynesian interpretations of the Depression were incomplete. Austrians could explain how a country might get into a depression (bust following an investment boom) but not how to get out of one (liquidation). Keynesians could explain how a country might get out of a depression (government spending on public works) but not how it got into one (animal spirits). By contrast, the monetary approach of economists such as Gustav Cassel has been ignored. As early as 1920, Cassel warned that mismanagement of the gold standard could lead to a severe depression. Cassel not only explained how this could occur, but his explanation anticipates the way that scholars today describe how the Great Depression actually occurred. Unlike Keynes or Hayek, Cassel explained both how a country could get into a depression (deflation due to tight monetary policies) and how it could get out of one (monetary expansion).
ER -
TY - JOUR
AU - Eichengreen,Barry
AU - Tong,Hui
TI - The External Impact of China's Exchange Rate Policy: Evidence from Firm Level Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17593
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17593
L1 - http://www.nber.org/papers/w17593.pdf
N1 - Author contact info:
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
Hui Tong
Research Department
IMF Washington DC
700 19th Street N.W.
Washington, DC 20431
E-Mail: htong@imf.org
AB - We examine the impact of renminbi revaluation on firm valuations, considering two surprise announcements of changes in China’s exchange rate policy in 2005 and 2010 and data on 6,050 firms in 44 countries. Renminbi appreciation has a positive effect on firms exporting to China but little positive or even a negative impact on those providing inputs for China’s processing exports. Stock prices rise for firms competing with China in their home market while falling for firms importing Chinese products with large imported-input content. Renminbi appreciation also reduces the valuation of financially-constrained firms, particularly in more financially integrated countries.
ER -
TY - JOUR
AU - Ghani,Ejaz
AU - Kerr,William R.
AU - O'Connell,Stephen D.
TI - Local Industrial Structures and Female Entrepreneurship in India
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17596
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17596
L1 - http://www.nber.org/papers/w17596.pdf
N1 - Author contact info:
Ejaz Ghani
South Asia PREM
The World Bank
Washington D.C.
E-Mail: Eghani@worldbank.org
William R. Kerr
Harvard Business School
Rock Center 212
Soldiers Field
Boston, MA 02163
Tel: 617/496-7021
E-Mail: wkerr@hbs.edu
Stephen D. O'Connell
City University of New York
Department of Economics
The Graduate Center
365 Fifth Ave
New York, NY 10016-4309
E-Mail: soconnell@gc.cuny.edu
AB - We analyze the spatial determinants of female entrepreneurship in India in the manufacturing and services sectors. We focus on the presence of incumbent female-owned businesses and their role in promoting higher subsequent female entrepreneurship relative to male entrepreneurship. We find evidence of agglomeration economies in both sectors, where higher female ownership among incumbent businesses within a district-industry predicts a greater share of subsequent entrepreneurs will be female. Moreover, higher female ownership of local businesses in related industries (e.g., those sharing similar labor needs, industries related via input-output markets) predict greater relative female entry rates even after controlling for the focal district-industry’s conditions. The core patterns hold when using local industrial conditions in 1994 to instrument for incumbent conditions in 2000-2005. The results highlight that the traits of business owners in incumbent industrial structures influence the types of entrepreneurs supported.
ER -
TY - JOUR
AU - Irwin,Douglas A.
TI - Gold Sterilization and the Recession of 1937-38
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17595
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17595
L1 - http://www.nber.org/papers/w17595.pdf
N1 - Author contact info:
Douglas A. Irwin
Department of Economics
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2942
Fax: 603/646-2122
E-Mail: douglas.irwin@dartmouth.edu
AB - The Recession of 1937-38 is often cited as illustrating the dangers of withdrawing fiscal and monetary stimulus too early in a weak recovery. Yet our understanding of this severe downturn is incomplete: existing studies find that changes in fiscal policy were small in comparison to the magnitude of the downturn and that higher reserve requirements were not binding on banks. This paper focuses on a neglected change in monetary policy, the sterilization of gold inflows during 1937, and finds that it exerted a powerful contractionary force during this period. The transmission of this monetary shock to the real economy appears to have worked through lower asset (equity) prices and higher interest rates.
ER -
TY - JOUR
AU - Gopinath,Gita
AU - Itskhoki,Oleg
AU - Neiman,Brent
TI - Trade Prices and the Global Trade Collapse of 2008-2009
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17594
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17594
L1 - http://www.nber.org/papers/w17594.pdf
N1 - Author contact info:
Gita Gopinath
Department of Economics
Harvard University
1875 Cambridge Street
Littauer 206
Cambridge, MA 02138
Tel: 617/495-8161
Fax: 617/495-7730
E-Mail: gopinath@harvard.edu
Oleg Itskhoki
Department of Economics
Princeton University
Fisher Hall 306
Princeton, NJ 08544-1021
Tel: 609/258-5493
Fax: 609/258-6419
E-Mail: itskhoki@princeton.edu
Brent Neiman
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-3199
Fax: 773/753-8266
E-Mail: brent.neiman@chicagobooth.edu
AB - We document the behavior of trade prices during the Great Trade Collapse of 2008-2009 using transaction-level data from the U.S. Bureau of Labor Statistics. First, we find that differentiated manufactures exhibited marked stability in their trade prices during the large decline in their trade volumes. Prices of non-differentiated manufactures, by contrast, declined sharply. Second, while the trade collapse was much steeper among differentiated durable manufacturers than among non-durables, prices in both categories barely changed. Third, despite this lack of movement in average price levels, the frequency and magnitude of price adjustments at the product level noticeably changed with the onset of the crisis.
ER -
TY - JOUR
AU - Ait-Sahalia,Yacine
AU - Fan,Jianqing
AU - Li,Yingying
TI - The Leverage Effect Puzzle: Disentangling Sources of Bias at High Frequency
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17592
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17592
L1 - http://www.nber.org/papers/w17592.pdf
N1 - Author contact info:
Yacine Ait-Sahalia
Department of Economics
Fisher Hall
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-4015
Fax: 609/258-0719
E-Mail: yacine@princeton.edu
Jianqing Fan
Bendheim Center for Finance
26 Prospect Ave
Princeton NJ 08540
E-Mail: jqfan@princeton.edu
Yingying Li
Department of Information Systems, Business Statis
Hong Kong University of Science and Technology
E-Mail: yyli@ust.hk
AB - The leverage effect refers to the generally negative correlation between an asset return and its changes of volatility. A natural estimate consists in using the empirical correlation between the daily returns and the changes of daily volatility estimated from high-frequency data. The puzzle lies in the fact that such an intuitively natural estimate yields nearly zero correlation for most assets tested, despite the many economic reasons for expecting the estimated correlation to be negative. To better understand the sources of the puzzle, we analyze the different asymptotic biases that are involved in high frequency estimation of the leverage effect, including biases due to discretization errors, to smoothing errors in estimating spot volatilities, to estimation error, and to market microstructure noise. This decomposition enables us to propose novel bias correction methods for estimating the leverage effect.
ER -
TY - JOUR
AU - Hanushek,Eric A.
AU - Link,Susanne
AU - Woessmann,Ludger
TI - Does School Autonomy Make Sense Everywhere? Panel Estimates from PISA
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17591
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17591
L1 - http://www.nber.org/papers/w17591.pdf
N1 - Author contact info:
Eric A. Hanushek
Hoover Institution
Stanford University
Stanford, CA 94305-6010
Tel: 650/736-0942
Fax: 650/723-1687
E-Mail: hanushek@stanford.edu
Susanne Link
ifo Institute
Poschingerstr. 5
81679 Munich GERMANY
E-Mail: link@ifo.de
Ludger Woessmann
University of Munich
Ifo Institute for Economic Research and CESifo
Poschingerstr. 5
81679 Munich, Germany
E-Mail: woessmann@ifo.de
AB - Decentralization of decision-making is among the most intriguing recent school reforms, in part because countries went in opposite directions over the past decade and because prior evidence is inconclusive. We suggest that autonomy may be conducive to student achievement in well-developed systems but detrimental in low-performing systems. We construct a panel dataset from the four waves of international PISA tests spanning 2000-2009, comprising over one million students in 42 countries. Relying on panel estimation with country fixed effects, we identify the effect of school autonomy from within-country changes in the average share of schools with autonomy over key elements of school operations. Our results show that autonomy affects student achievement negatively in developing and low-performing countries, but positively in developed and high-performing countries. These results are unaffected by a wide variety of robustness and specification tests, providing confidence in the need for nuanced application of reform ideas.
ER -
TY - JOUR
AU - Schoar,Antoinette
AU - Zuo,Luo
TI - Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17590
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17590
L1 - http://www.nber.org/papers/w17590.pdf
N1 - Author contact info:
Antoinette Schoar
MIT Sloan School of Management
100 Main Street, E62-638
Cambridge, MA 02142
Tel: 617/253-3763
Fax: 617/258-6855
E-Mail: aschoar@mit.edu
Luo Zuo
MIT Sloan School of Management
100 Main Street, E62-661
Cambridge, MA 02142
E-Mail: luozuo@mit.edu
AB - This paper examines how early career experiences affect the career path and promotion of managers as well as the managerial styles that they develop when becoming CEOs. We identify the impact of an exogenous shock to a manager’s career, in particular the business cycle at the career starting date. Economic conditions at the beginning of a manager’s career have lasting effects on the career path and the ultimate outcome as a CEO. Those CEOs who begin their careers during recessions take less time to become CEOs, but end up heading smaller firms, receiving lower compensation, and being more likely to rise through the ranks within a given firm rather than to move across firms and industries. Moreover, managers who start in recessions have more conservative management styles once they become CEOs. Firms led by these managers spend less in capital expenditures and R&D, have lower leverage, are more diversified across segments, show more concern about cost effectiveness, and have lower stock return volatility. While looking at the role of early job choices on CEO careers is more endogenous, the results support the idea that certain types of starting positions are feeders for successful long-run management careers: Starting in a firm that ranks within the top ten firms from which CEOs come is associated with favorable outcomes for a manager – these CEOs end up heading larger companies and receiving higher compensation.
ER -
TY - JOUR
AU - Hungerman,Daniel M.
TI - Substitution and Stigma: Evidence on Religious Competition from the Catholic Sex-Abuse Scandal
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17589
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17589
L1 - http://www.nber.org/papers/w17589.pdf
N1 - Author contact info:
Daniel M. Hungerman
Department of Economics
University of Notre Dame
439 Flanner Hall
Notre Dame, IN 46556-5602
Tel: 574/631-4495
Fax: 574/631-4783
E-Mail: dhungerm@nd.edu
AB - This paper considers substituting one charitable activity for another in the context of religious practice. I examine the impact of the Catholic Church sex-abuse scandal on both Catholic and non-Catholic religiosity. I find that the scandal led to a 2-million-member fall in the Catholic population that was compensated by an increase in non-Catholic participation and by an increase in non-affiliation. Back-of-the-envelope calculations suggest the scandal generated over 3 billion dollars in donations to non-Catholic faiths. Those substituting out of Catholicism frequently chose highly dissimilar alternatives; for example, Baptist churches gained significantly from the scandal while the Episcopal Church did not. These results challenge several theories of religious participation and suggest that regulatory policies or other shocks specific to one religious group could have important spillover effects on other religious groups.
ER -
TY - JOUR
AU - Mullahy,John
TI - Marginal Effects in Multivariate Probit and Kindred Discrete and Count Outcome Models, with Applications in Health Economics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17588
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17588
L1 - http://www.nber.org/papers/w17588.pdf
N1 - Author contact info:
John Mullahy
University of Wisconsin-Madison
Dept. of Population Health Sciences
787 WARF, 610 N. Walnut Street
Madison, WI 53726
Tel: 608/265-5410
Fax: 608/263-2820
E-Mail: jmullahy@facstaff.wisc.edu
AB - Estimation of marginal or partial effects of covariates x on various conditional parameters or functionals is often the main target of applied microeconometric analysis. In the specific context of probit models such estimation is straightforward in univariate models, and Greene, 1996, 1998, has extended these results to cover the case of quadrant probability marginal effects in bivariate probit models.
The purpose of this paper is to extend these results to the general multivariate probit context for arbitrary orthant probabilities and to demonstrate the applicability of such extensions in contexts of interest in health economics applications. The baseline results are extended to models that condition on subvectors of y, to count data structures that derive from the probability structure of y, to multivariate ordered probit data structures, and to multinomial probit models whose marginal effects turn out to be a special case of those of the multivariate probit model. Simulations reveal that analytical formulae versus fully numerical derivatives result in a reduction in computational time as well as an increase in accuracy.
ER -
TY - JOUR
AU - Bernheim,B. Douglas
AU - Fradkin,Andrey
AU - Popov,Igor
TI - The Welfare Economics of Default Options: A Theoretical and Empirical Analysis of 401(k) Plans
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17587
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17587
L1 - http://www.nber.org/papers/w17587.pdf
N1 - Author contact info:
B. Douglas Bernheim
Department of Economics
Stanford University
Stanford, CA 94305-6072
Tel: 650/725-8732
Fax: 650/725-5702
E-Mail: bernheim@stanford.edu
Andrey Fradkin
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
E-Mail: afrad@stanford.edu
Igor Popov
Department of Economics
Stanford University
Stanford, CA 94305-6072
E-Mail: iapopov@stanford.edu
AB - According to previous research, changing the default contribution rate for a 401(k) pension plan has a powerful effect on the distribution of contributions among relatively new employees. Potential explanations include the following: (1) opting out may entail significant effort and inconvenience; (2) the default rate may serve as a psychological anchor, influencing choices because of its salience or imprimatur; (3) workers may procrastinate, putting off the opt-out decision; (4) workers may be inattentive. We examine the welfare implications of defaults under each of these theories. Because three of them involve non-standard behavioral hypotheses, we adopt and implement the framework for behavioral welfare economics proposed by Bernheim and Rangel (2009). In each case we begin by developing theoretical principles, and then confront the theory with data to reach concrete quantitative conclusions.
ER -
TY - JOUR
AU - Palladini,Giorgia
AU - Portes,Richard
TI - Sovereign CDS and Bond Pricing Dynamics in the Euro-area
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17586
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17586
L1 - http://www.nber.org/papers/w17586.pdf
N1 - Author contact info:
Giorgia Palladini
London Business School
Regents Park
London NW1 4SA UK
E-Mail: gpalladini@london.edu
Richard Portes
London Business School
Regent's Park
London NW1 4SA
UNITED KINGDOM
Tel: 44 (0) 20 7000 8424
Fax: 44 (0) 20 7000 8401
E-Mail: rportes@london.edu
AB - This analysis tests the price discovery relationship between sovereign CDS premia and bond yield spreads on the same reference entity. The theoretical no-arbitrage relationship between the two credit spreads is confronted with daily data from six Euro-area countries over the period 2004-2011. As a first step, the supposed non stationarity of the two series is verified. Then, we examine whether the non-stationary CDS and bond spreads series are bound by a cointegration relationship. Overall the cointegration analysis confirms that the two prices should be equal to each other in equilibrium, as theory predicts. Nonetheless the theoretical value [1, -1] for the cointegrating vector is rejected, meaning that in the short run the cash and synthetic market's valuation of credit risk differ to various degrees. The VECM analysis suggests that the CDS market moves ahead of the bond market in terms of price discovery. These findings are further supported by the Granger Causality Test: for most sovereigns in the sample, past values of CDS spreads help to forecast bond yield spreads. Short-run deviations from the equilibrium persist longer than it would take for participants in one market to observe the price in the other. That is consistent with the hypothesis of imperfections in the arbitrage relationship between the two markets.
ER -
TY - JOUR
AU - Rotemberg,Julio J.
TI - Charitable Giving When Altruism and Similarity are Linked
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17585
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17585
L1 - http://www.nber.org/papers/w17585.pdf
N1 - Author contact info:
Julio J. Rotemberg
Graduate School of Business
Harvard University, Morgan Hall
Soldiers Field
Boston, MA 02163
Tel: 617/495-1015
Fax: 617/496-5994
E-Mail: jrotemberg@hbs.edu
AB - This paper presents a model in which anonymous charitable donations are rationalized by two human tendencies drawn from the psychology literature. The first is people's disproportionate disposition to help those they agree with while the second is the dependence of peoples' self-esteem on the extent to which they perceive that others agree with them. Government spending crowds out the charity that ensues from these forces only modestly. Moreover, people's donations tend to rise when others donate. In some equilibria of the model, poor people give little because they expect donations to come mainly from richer individuals. In others, donations by poor individuals constitute a large fraction of donations and this raises the incentive for poor people to donate. The model predicts that, under some circumstances, charities with identical objectives can differ by obtaining funds from distinct donor groups. The model then provides an interpretation for situations in which the number of charities rises while total donations are stagnant.
ER -
TY - JOUR
AU - Mulligan,Casey B.
TI - Rising Labor Productivity during the 2008-9 Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17584
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17584
L1 - http://www.nber.org/papers/w17584.pdf
N1 - Author contact info:
Casey B. Mulligan
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-9017
Fax: 773/702-8490
E-Mail: c-mulligan@uchicago.edu
AB - During the recession of 2008-9, labor hours fell sharply, while wages and output per hour rose. Some, but not all, of the productivity and wage increase can be attributed to changing quality of the workforce. The rest of the increase appears to be due to increases in production inputs other than labor hours. All of these findings, plus the drop in consumer expenditure, are consistent with the hypothesis that labor market “distortions” were increasing during the recession and have remained in place during the slow “recovery.” Producers appear to be trying to continue production with less labor, rather than cutting labor hours as a means of cutting output.
ER -
TY - JOUR
AU - Guerrieri,Veronica
AU - Lorenzoni,Guido
TI - Credit Crises, Precautionary Savings, and the Liquidity Trap
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17583
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17583
L1 - http://www.nber.org/papers/w17583.pdf
N1 - Author contact info:
Veronica Guerrieri
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-7834
Fax: 773/702-0458
E-Mail: vguerrie@chicagobooth.edu
Guido Lorenzoni
MIT Department of Economics
E52-251C
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-4836
Fax: 617/253-1330
E-Mail: glorenzo@mit.edu
AB - We study the effects of a credit crunch on consumer spending in a heterogeneous-agent incomplete-market model. After an unexpected permanent tightening in consumers’ borrowing capacity, some consumers are forced to deleverage and others increase their precautionary savings. This depresses interest rates, especially in the short run, and generates an output drop, even with flexible prices. The output drop is larger with nominal rigidities, if the zero lower bound prevents the interest rate from adjusting downwards. Adding durable goods to the model, households take larger debt positions and the output response may be larger.
ER -
TY - JOUR
AU - Edmans,Alex
AU - Goldstein,Itay
AU - Jiang,Wei
TI - Feedback Effects and the Limits to Arbitrage
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17582
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17582
L1 - http://www.nber.org/papers/w17582.pdf
N1 - Author contact info:
Alex Edmans
The Wharton School
University of Pennsylvania
2318 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/746-0498
Fax: 215/898-6200
E-Mail: aedmans@wharton.upenn.edu
Itay Goldstein
Wharton School
University of Pennsylvania
Philadelphia, PA 19104
E-Mail: itayg@wharton.upenn.edu
Wei Jiang
Graduate School of Business
Columbia University
411 Uris Hall
New York, NY 10027
Tel: 212/854-9679
E-Mail: wj2006@columbia.edu
AB - This paper identifies a limit to arbitrage that arises from the fact that a firm's fundamental value is endogenous to the act of exploiting the arbitrage. Trading on private information reveals this information to managers and helps them improve their real decisions, in turn enhancing fundamental value. While this increases the profitability of a long position, it reduces the profitability of a short position -- selling on negative information reveals that firm prospects are poor, causing the manager to cancel investment. Optimal abandonment increases firm value and may cause the speculator to realize a loss on her initial sale. Thus, investors may strategically refrain from trading on negative information, and so bad news is incorporated more slowly into prices than good news. The effect has potentially important real consequences -- if negative information is not incorporated into stock prices, negative-NPV projects may not be abandoned, leading to overinvestment.
ER -
TY - JOUR
AU - Horioka,Charles Yuji
AU - Terada-Hagiwara,Akiko
TI - The Determinants and Long-term Projections of Saving Rates in Developing Asia
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17581
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17581
L1 - http://www.nber.org/papers/w17581.pdf
N1 - Author contact info:
Charles Y. Horioka
Institute of Social and Economic Research
Osaka University
6-1 Mihogaoka, Ibaraki-shi
Osaka-fu 567-0047
JAPAN
Tel: 81-6-6879-8586
Fax: 81-6-6878-2766
E-Mail: horioka@iser.osaka-u.ac.jp
Akiko Terada-Hagiwara
Asian Development Bank
Manila, Philippines
E-Mail: ahagiwara@adb.org
AB - In this paper, we present data on trends over time in domestic saving rates in twelve economies in developing Asia during the 1966-2007 period and analyze the determinants of these trends. We find that domestic saving rates in developing Asia have, in general, been high and rising but that there have been substantial differences from economy to economy and that the main determinants of these trends appear to have been the age structure of the population (especially the aged dependency ratio), income levels, and the level of financial sector development. We then project future trends in domestic saving rates in developing Asia for the 2011-2030 period based on our estimation results and find that the domestic saving rate in developing Asia as a whole will remain roughly constant during the next two decades despite rapid population aging in some economies in developing Asia because population aging will occur much later in other economies and because the negative impact of population aging on the domestic saving rate will be largely offset by the positive impact of higher income levels.
ER -
TY - JOUR
AU - Angeletos,George-Marios
AU - La'O,Jennifer
TI - Optimal Monetary Policy with Informational Frictions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17525
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17525
L1 - http://www.nber.org/papers/w17525.pdf
N1 - Author contact info:
George-Marios Angeletos
Department of Economics
MIT E52-251
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/452-3859
Fax: 617/253-1330
E-Mail: angelet@mit.edu
Jennifer La'O
University of Chicago
Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-9768
E-Mail: jenlao@chicagobooth.edu
AB - We study optimal monetary policy in an environment in which firms’ pricing and production decisions are subject to informational frictions. Our framework accommodates multiple formalizations of these frictions, including dispersed private information, sticky information, and certain forms of inattention. An appropriate notion of constrained efficiency is analyzed alongside the Ramsey policy problem. Similarly to the New-Keynesian paradigm, efficiency obtains with a subsidy that removes the monopoly distortion and a monetary policy that replicates flexible-price allocations. Nevertheless, “divine coincidence” breaks down and full price stability is no more optimal. Rather, the optimal policy is to “lean against the wind”, that is, to target a negative correlation between the price level and real economic activity.
ER -
TY - JOUR
AU - Guindon,G. Emmanuel
AU - Nandi,Arindam
AU - Chaloupka,Frank J., IV
AU - Jha,Prabhat
TI - Socioeconomic Differences in the Impact of Smoking Tobacco and Alcohol Prices on Smoking in India
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17580
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17580
L1 - http://www.nber.org/papers/w17580.pdf
N1 - Author contact info:
G. Emmanuel Guindon
University of Waterloo
Propel Centre for Population Health Impact
Lyle S. Hallman Institute
200 University Ave. West
Waterloo, ON, N2L 3G1, Canada
E-Mail: egguindon@uwaterloo.ca
Arindam Nandi
The Center for Disease Dynamics,
Economics & Policy
1616 P St NW, Ste 600
Washington DC 20036
E-Mail: nandi@cddep.org
Frank J. Chaloupka, IV
University of Illinois at Chicago
Department of Economics (m/c 144)
College of Liberal Arts and Sciences
601 S. Morgan Street, Room 713
Chicago, IL 60607-7121
Tel: 312/413-2287
Fax: 312/996-3344;630/801-8870
E-Mail: fjc@uic.edu
Prabhat Jha
University of Toronto
Centre for Global Health Research
LKSKI/KRC, St. Michael's Hospital
30 Bond Street, Toronto, ON, M5B 1W8, Canada
E-Mail: jhap@smh.ca
AB - The threat posed by smoking to health in India is severe. Already 1 in 5 of all adult male deaths and 1 in 20 of all adult female deaths at ages 30-69 are due to smoking and India will soon have 1 million smoking deaths a year. Increasing tobacco prices has been found to be the single most effective method to reduce smoking. Yet, bidis, the most common form of smoked tobacco in India, are largely untaxed, while cigarettes are taxed at about 40% of retail price, well below the 65–80% rate noted by the World Bank in countries with effective tobacco control policies. Moreover, low and stagnant tax rates have occurred in a period in which all tobacco products have become more affordable with income growth. First, we use data from the most recent three consecutive quinquennial National Sample Survey (NSS) rounds (NSS 50, 55 and 61 conducted in 1993/94, 1999/00 and 200/05) and a two-equation system of budget shares and unit values that attempts to correct for quality and measurement error. Second, we pool data from the most recent nine rounds of NSS (NSS 55-57, 59-64, conducted between 1999/00 to 2007/08). Our analyses of single and repeated cross-sections yield own-price elasticity for bidis that are roughly in keeping with existing evidence. We find that a 10% increase in bidi prices would reduce the demand for bidis by about 6 to 9.5%. We find, however, that own-price elasticity for cigarettes in India is substantially larger than previously thought. Our estimates suggest that cigarette users are at least as responsive as bidi users to price changes. On the whole, our analyses suggest that low SES households are likely more responsive to price changes than high SES households. Our analyses also uncovers important and policy-relevant cross-prices effects. Findings from this study provide additional evidence of the effectiveness of tobacco prices at reducing tobacco use.
ER -
TY - JOUR
AU - Benabou,Roland
AU - Tirole,Jean
TI - Laws and Norms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17579
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17579
L1 - http://www.nber.org/papers/w17579.pdf
N1 - Author contact info:
Roland Benabou
Department of Economics
and Woodrow Wilson School
Princeton University
Princeton, NJ 08544
Tel: 609/258-3672
Fax: 609/258-5533
E-Mail: rbenabou@princeton.edu
Jean Tirole
Institut d'Economie Industrielle
Bureau MF529 - Bat. F
21 allees de Brienne
31000 Toulouse
FRANCE
Tel: 33-561-128642
E-Mail: tirole@cict.fr
AB - This paper analyzes how private decisions and public policies are shaped by personal and societal preferences ("values"), material or other explicit incentives ("laws") and social sanctions or rewards ("norms"). It first examines how honor, stigma and social norms arise from individuals' behaviors and inferences, and how they interact with material incentives. It then characterizes optimal incentive-setting in the presence of norms, deriving in particular appropriately modified versions of Pigou and Ramsey taxation.
Incorporating agents' imperfect knowledge of the distribution of preferences opens up to analysis several new questions. The first is social psychologists' practice of "norms-based interventions", namely campaigns and messages that seek to alter people’s perceptions of what constitutes "normal" behavior or values among their peers. The model makes clear how such interventions operate but also how their effectiveness is limited by a credibility problem, particularly when the descriptive and prescriptive norms conflict.
The next main question is the expressive role of law. The choices of legislators and other principals naturally reflect their knowledge of societal preferences, and these same "community standards" are also what shapes social judgments and moral sentiments. Setting law thus means both imposing material incentives and sending a message about society's values, and hence about the norms that different behaviors are likely to encounter. The analysis, combining an informed principal with individually signaling agents, makes precise the notion of expressive law, determining in particular when a weakening or a strengthening of incentives is called for. Pushing further this logic, the paper also sheds light on why societies are often resistant to the message of economists, as well as on why they renounce certain policies, such as "cruel and unusual" punishments, irrespective of effectiveness considerations, in order to express their being "civilized".
ER -
TY - JOUR
AU - Ruhm,Christopher J.
AU - Jones,Alison Snow
AU - Kerr,William C.
AU - Greenfield,Thomas K.
AU - Terza,Joseph V.
AU - Pandian,Ravi S.
AU - McGeary,Kerry Anne
TI - What U.S. Data Should be Used to Measure the Price Elasticity of Demand for Alcohol?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17578
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17578
L1 - http://www.nber.org/papers/w17578.pdf
N1 - Author contact info:
Christopher J. Ruhm
Frank Batten School of
Leadership and Public Policy
University of Virginia
235 McCormick Rd.
P.O. Box 400893
Charlottesville, VA 22904-40893
Tel: 434-243-3729
E-Mail: ruhm@virginia.edu
Alison Snow Jones
E-Mail: N/A user is deceased
William C. Kerr
Alcohol Research Group
Public Health Institute
6475 Christie Avenue, Suite 400
Emeryville, CA 94608-1010
E-Mail: wkerr@arg.org
Thomas K. Greenfield
Alcohol Research Group
Public Health Institute
6475 Christie Avenue, Suite 400
Emeryville, CA 94608-1010
E-Mail: tgreenfield@arg.org
Joseph V. Terza
Department of Economics
University of North Carolina at Greensboro
Greensboro, NC 27402-6165
E-Mail: jvterza@uncg.edu
Ravi S. Pandian
Department of Health Management and Policy
Drexel University
Philadelphia, PA 19102
E-Mail: rsp46@drexel.edu
Kerry Anne McGeary
Department of Economics
Miller College of Business
Whitinger Business Building, RM 129
Ball State University
Muncie, IN 47306
Tel: 765-285-5378
Fax: 765-285-4313
E-Mail: kmcgeary@bsu.edu
AB - This paper examines how estimates of the price elasticity of demand for beer vary with the choice of alcohol price series used. Our most important finding is that the commonly used ACCRA price data are unlikely to reliably indicate alcohol demand elasticities. Instead, the estimates obtained using ACCRA prices vary drastically and unpredictably. As an alternative, researchers often use beer taxes to proxy for alcohol prices. However, since beer taxes are actually likely to poorly indicate prices, it is not surprising that the estimated beer tax elasticities are close to zero. We believe that our most useful estimates are obtained using annual Uniform Product Code (UPC) or “barcode” scanner data on grocery store alcohol prices. These estimates suggest a relatively low price elasticity of demand for beer, probably around -0.3, with evidence that the elasticities are considerably overstated in models that control for beer but not wine or spirits prices.
ER -
TY - JOUR
AU - Kerr,William R.
AU - Lincoln,William F.
AU - Mishra,Prachi
TI - The Dynamics of Firm Lobbying
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17577
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17577
L1 - http://www.nber.org/papers/w17577.pdf
N1 - Author contact info:
William R. Kerr
Harvard Business School
Rock Center 212
Soldiers Field
Boston, MA 02163
Tel: 617/496-7021
E-Mail: wkerr@hbs.edu
William Lincoln
University of Michigan
Economics Department
107 Lorch Hall
611 Tappan St.
Ann Arbor, MI 48109-1220
Tel: 781-710-5709
E-Mail: wlincoln@umich.edu
Prachi Mishra
International Monetary Fund
Research Department, HQ1-9-718
700, 19th Street NW
Washington DC
20431
Tel: 202-623-9409
Fax: 202-589-9409
E-Mail: pmishra@imf.org
AB - We study the determinants of the dynamics of firm lobbying behavior using a panel data set covering 1998-2006. Our data exhibit three striking facts: (i) few firms lobby, (ii) lobbying status is strongly associated with firm size, and (iii) lobbying status is highly persistent over time. Estimating a model of a firm's decision to engage in lobbying, we find significant evidence that up-front costs associated with entering the political process help explain all three facts. We then exploit a natural experiment in the expiration in legislation surrounding the H-1B visa cap for high-skilled immigrant workers to study how these costs affect firms' responses to policy changes. We find that companies primarily adjusted on the intensive margin: the firms that began to lobby for immigration were those who were sensitive to H-1B policy changes and who were already advocating for other issues, rather than firms that became involved in lobbying anew. For a firm already lobbying, the response is determined by the importance of the issue to the firm's business rather than the scale of the firm's prior lobbying efforts. These results support the existence of significant barriers to entry in the lobbying process.
ER -
TY - JOUR
AU - Devereux,Michael P.
AU - Loretz,Simon
TI - How Would EU Corporate Tax Reform Affect US Investment in Europe?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17576
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17576
L1 - http://www.nber.org/papers/w17576.pdf
N1 - Author contact info:
Michael P. Devereux
Centre for Business Taxation
Saïd Business School
Oxford University
Park End Street
Oxford OX1 1HP
United Kingdom
E-Mail: Michael.Devereux@sbs.ox.ac.uk
Simon Loretz
University of Bayreuth
Universitätsstr. 30
95447 Bayreuth
Germany
E-Mail: simon.loretz@uni-bayreuth.de
M3 - presented at "Tax Policy and the Economy", October 6, 2011
AB - This paper examines the likely impact of a proposed formula apportionment system for corporation tax in the EU on the inbound investment of US multinational companies. We pay attention to tax planning strategies that may be employed by US multinationals and investigate whether effective tax rates in Europe of US companies differ from those of European companies. The proposal is for an optional system: we estimate the extent to which both European and US companies would be likely to choose it taking into account their existing structures and future investment incentives. The relative position of US and European companies depends crucially on the taxation of foreign passive income.
ER -
TY - JOUR
AU - Bansal,Ravi
AU - Ochoa,Marcelo
TI - Temperature, Aggregate Risk, and Expected Returns
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17575
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17575
L1 - http://www.nber.org/papers/w17575.pdf
N1 - Author contact info:
Ravi Bansal
Fuqua School of Business
Duke University
1 Towerview Drive
Durham, NC 27708
Tel: 919/660-7758
Fax: 919/660-8038
E-Mail: ravi.bansal@duke.edu
Marcelo Ochoa
Department of Economics
Duke University
Social Sciences Building
Durham, NC 27708-0097
E-Mail: jmo6@duke.edu
AB - In this paper we show that temperature is an aggregate risk factor that adversely affects economic growth. Our argument is based on evidence from global capital markets which shows that the covariance between country equity returns and temperature (i.e., temperature betas) contains sharp information about the cross-country risk premium; countries closer to the Equator carry a positive temperature risk premium which decreases as one moves farther away from the Equator. The differences in temperature betas mirror exposures to aggregate growth rate risk, which we show is negatively impacted by temperature shocks. That is, portfolios with larger exposure to risk from aggregate growth also have larger temperature betas; hence, a larger risk premium. We further show that increases in global temperature have a negative impact on economic growth in countries closer to the Equator, while its impact is negligible in countries at high latitudes. Consistent with this evidence, we show that there is a parallel between a country's distance to the Equator and the economy's dependence on climate sensitive sectors; in countries closer to the Equator industries with a high exposure to temperature are more prevalent. We provide a Long-Run Risks based model that quantitatively accounts for cross-sectional differences in temperature betas, its link to expected returns, and the connection between aggregate growth and temperature risks.
ER -
TY - JOUR
AU - Bansal,Ravi
AU - Ochoa,Marcelo
TI - Welfare Costs of Long-Run Temperature Shifts
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17574
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17574
L1 - http://www.nber.org/papers/w17574.pdf
N1 - Author contact info:
Ravi Bansal
Fuqua School of Business
Duke University
1 Towerview Drive
Durham, NC 27708
Tel: 919/660-7758
Fax: 919/660-8038
E-Mail: ravi.bansal@duke.edu
Marcelo Ochoa
Department of Economics
Duke University
Social Sciences Building
Durham, NC 27708-0097
E-Mail: jmo6@duke.edu
AB - This article makes a contribution towards understanding the impact of temperature fluctuations on the economy and financial markets. We present a long-run risks model with temperature related natural disasters. The model simultaneously matches observed temperature and consumption growth dynamics, and key features of financial markets data. We use this model to evaluate the role of temperature in determining asset prices, and to compute utility-based welfare costs as well as dollar costs of insuring against temperature fluctuations. We find that the temperature related utility-costs are about 0.78% of consumption, and the total dollar costs of completely insuring against temperature variation are 2.46% of world GDP. If we allow for temperature-triggered natural disasters to impact growth, insuring against temperature variation raise to 5.47% of world GDP. We show that the same features, long-run risks and recursive-preferences, that account for the risk-free rate and the equity premium puzzles also imply that temperature-related economic costs are important. Our model implies that
a rise in global temperature lowers equity valuations and raises risk premiums.
ER -
TY - JOUR
AU - Lampe,Ryan L.
AU - Moser,Petra
TI - Patent Pools and the Direction of Innovation - Evidence from the 19th-century Sewing Machine Industry
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17573
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17573
L1 - http://www.nber.org/papers/w17573.pdf
N1 - Author contact info:
Ryan L. Lampe
DePaul University
1 East Jackson Blvd
Suite 6200
Chicago, IL 60604
E-Mail: rlampe@depaul.edu
Petra Moser
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650-723-9303
Fax: (650) 725-5702
E-Mail: pmoser@stanford.edu
AB - Patent pools allow a group of firms to combine their patents as if they were a single firm. Theoretical models predict that pools encourage innovation in pool technologies, albeit at the cost of innovation in substitutes. Empirical evidence is scarce because modern pools are too recent to allow empirical analyses. This article examines data on patents and innovations by new firms for a historical pool in the sewing machine industry (1856-1877) to examine effects on innovation. Contrary to theoretical predictions, this analysis suggests that pools may discourage innovation in pool technologies and shift R&D towards technologically inferior substitutes.
ER -
TY - JOUR
AU - Durante,Ruben
AU - Labartino,Giovanna
AU - Perotti,Roberto
TI - Academic Dynasties: Decentralization and Familism in the Italian Academia
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17572
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17572
L1 - http://www.nber.org/papers/w17572.pdf
N1 - Author contact info:
Ruben Durante
Department of Economics, Sciences Po
28, rue des Saints Pères
75007 Paris France
E-Mail: Ruben.Durante@sciences-po.org
Giovanna Labartino
Department of Economics - University of Padova
Via del Santo 33
35123 Padova Italy
E-Mail: giovanna.labartino@gmail.com
Roberto Perotti
IGIER Universita' Bocconi
Via Roentgen 1
20136 Milano
ITALY
Tel: 39 02 58363073
Fax: 39 02 58363302
E-Mail: roberto.perotti@unibocconi.it
AB - Decentralization can lead to "good" or "bad" outcomes depending on the socio-cultural norms of the targeted communities. We investigate this issue by looking at the evolution of familism and nepotism in the Italian academia before and after the 1998 reform, which decentralized the recruitment of professors from the national to the university level. To capture familism we use a novel dataset on Italian university professors between 1988 and 2008 focusing on the informative content of last names. We construct two indices of “homonymy” which capture the concentration of last names in a given academic department relative to that in the underlying general population. Our results suggest that increased autonomy by local university officials resulted in a significant increase in the incidence of familism in areas characterized by low civic capital but not in areas with higher civic capital.
ER -
TY - JOUR
AU - Perotti,Roberto
TI - The "Austerity Myth": Gain Without Pain?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17571
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17571
L1 - http://www.nber.org/papers/w17571.pdf
N1 - Author contact info:
Roberto Perotti
IGIER Universita' Bocconi
Via Roentgen 1
20136 Milano
ITALY
Tel: 39 02 58363073
Fax: 39 02 58363302
E-Mail: roberto.perotti@unibocconi.it
M1 - published as Roberto Perotti. "The "Austerity Myth": Gain Without Pain?," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2012)
AB - As governments around the world contemplate slashing budget deficits, the “expansionary fiscal consolidation hypothesis” is back in vogue. I argue that, as a statement about the short run, it should be taken with caution. I present four detailed case studies, two – Denmark and Ireland – undertaken under fixed exchange rates (the most relevant case for many Eurozone countries today) and two – Finland and Sweden - after floating the currency.
All four episodes were associated with an expansion; but only in Denmark the driver of growth was internal demand. However, after three years a long slump set in as the economy lost competitiveness. In all the others for a long time the main driver of growth was exports. In Ireland this occurred because the sterling coincidentally appreciated. In Finland and Sweden the currency experienced an extremely large depreciation after floating.
In all consolidations interest rate fell fast, and wage moderation played a key role in generating a gain competitiveness and a decline in interest rates. These results cast doubt on at least some versions of the “expansionary fiscal consolidations” hypothesis.
ER -
TY - JOUR
AU - Peri,Giovanni
TI - The Impact of Immigration on Native Poverty through Labor Market Competition
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17570
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17570
L1 - http://www.nber.org/papers/w17570.pdf
N1 - Author contact info:
Giovanni Peri
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-3033
E-Mail: gperi@ucdavis.edu
AB - In this paper I first analyze the wage effects of immigrants on native workers in the US economy and its top immigrant-receiving states and metropolitan areas. Then I quantify the consequences of these wage effects on the poverty rates of native families. The goal is to establish whether the labor market effects of immigrants have significantly affected the percentage of "poor" families among U.S.-born individuals. I consider the decade 2000-2009 during which poverty rates increased significantly in the U.S. As a reference, I also analyze the decade 1990-2000. To calculate the wage impact of immigrants I adopt a simple general equilibrium model of productive interactions, regulated by the elasticity of substitution across schooling groups, age groups and between US and foreign-born workers. Considering the inflow of immigrants by age, schooling and location I evaluate their impact in local markets (cities and states) assuming no mobility of natives and on the US market as a whole allowing for native internal mobility. Our findings show that for all plausible parameter values there is essentially no effect of immigration on native poverty at the national level. At the local level, only considering the most extreme estimates and only in some localities, we find non-trivial effects of immigration on poverty. In general, however, even the local effects of immigration bear very little correlation with the observed changes in poverty rates and they explain a negligible fraction of them.
ER -
TY - JOUR
AU - Aldy,Joseph E.
AU - Stavins,Robert
TI - The Promise and Problems of Pricing Carbon: Theory and Experience
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17569
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17569
L1 - http://www.nber.org/papers/w17569.pdf
N1 - Author contact info:
Joseph E. Aldy
Harvard Kennedy School
Taubman 382, Mailbox 58
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-7213
E-Mail: joseph_aldy@hks.harvard.edu
Robert Stavins
JFK School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1820
Fax: 617/496-3783
E-Mail: robert_stavins@harvard.edu
AB - Because of the global commons nature of climate change, international cooperation among nations will likely be necessary for meaningful action at the global level. At the same time, it will inevitably be up to the actions of sovereign nations to put in place policies that bring about meaningful reductions in the emissions of greenhouse gases. Due to the ubiquity and diversity of emissions of greenhouse gases in most economies, as well as the variation in abatement costs among individual sources, conventional environmental policy approaches, such as uniform technology and performance standards, are unlikely to be sufficient to the task. Therefore, attention has increasingly turned to market-based instruments in the form of carbon-pricing mechanisms. We examine the opportunities and challenges associated with the major options for carbon pricing: carbon taxes, cap-and-trade, emission reduction credits, clean energy standards, and fossil fuel subsidy reductions.
ER -
TY - JOUR
AU - Choi,Wonho Wilson
AU - Metrick,Andrew
AU - Yasuda,Ayako
TI - A Model of Private Equity Fund Compensation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17568
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17568
L1 - http://www.nber.org/papers/w17568.pdf
N1 - Author contact info:
Wilson W. Choi
KAIST Business School, S228
Seoul, South Korea
E-Mail: wonhochoi@business.kaist.ac.kr
Andrew Metrick
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520
Tel: 203/432-3069
E-Mail: metrick@yale.edu
Ayako Yasuda
Graduate School of Management
UC Davis
3206 Gallagher Hall
One Shields Ave.
Davis, CA 95616-8609
Tel: 530-752-0775
Fax: 530-752-2924
E-Mail: asyasuda@ucdavis.edu
AB - This paper analyzes the economics of the private equity fund compensation. We build a novel model to estimate the expected revenue to fund managers as a function of their investor contracts. In particular, we evaluate the present value of the fair-value test (FVT) carried interest scheme, which is one of the most common profit-sharing arrangements observed in practice. We extend the simulation model developed in Metrick and Yasuda (2010a) and compare the relative values of the FVT carry scheme to other benchmark carry schemes. We find that the FVT carry scheme is substantially more valuable to the fund managers than other commonly observed (and more conservative) carry schemes, largely due to the early timing of carry compensation that frequently occurs under the FVT scheme. Interestingly, conditional on having an FVT carry scheme, fund managers’ incremental gains from inflating the reported values of the funds’ un- exited portfolio companies would be negligible.
ER -
TY - JOUR
AU - Edmans,Alex
AU - Fang,Vivian W.
AU - Zur,Emanuel
TI - The Effect of Liquidity on Governance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17567
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17567
L1 - http://www.nber.org/papers/w17567.pdf
N1 - Author contact info:
Alex Edmans
The Wharton School
University of Pennsylvania
2318 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/746-0498
Fax: 215/898-6200
E-Mail: aedmans@wharton.upenn.edu
Vivian W.. Fang
Rutgers Business School
Rutgers University
Newark, NJ 07102
E-Mail: fang@business.rutgers.edu
Emanuel Zur
Zicklin School of Business, Baruch College
City University of New York
New York, NY 10010
E-Mail: emanuel.zur@baruch.cuny.edu
AB - This paper studies the effect of stock liquidity on blockholders’ choice of governance mechanisms. We focus on hedge funds as they are unconstrained by legal restrictions and business ties, and thus have all governance channels at their disposal. Since the threat of governance, not just actual governance, can discipline managers, we use Section 13 filings to measure governance intent rather than only studying instances of actual governance. We find that liquidity increases the likelihood that a hedge fund acquires a block in a firm. Conditional upon acquiring a stake, liquidity reduces the likelihood that a blockholder governs through voice (intervention) – as evidenced by the greater propensity to file Schedule 13Gs (passive investment) rather than 13Ds (active investment). Liquidity is more likely to lead to a 13G filing if the manager’s wealth is sensitive to the stock price, consistent with governance through exit (trading). A 13G filing leads to positive announcement returns, especially in liquid firms. These two results suggest that liquidity does not dissuade blockholders from governing altogether, but instead encourages them to govern through exit rather than voice. We use decimalization as an exogenous shock to liquidity to identify causal effects.
ER -
TY - JOUR
AU - Alvarez,Fernando E.
AU - Lippi,Francesco
TI - Persistent Liquidity Effects and Long Run Money Demand
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17566
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17566
L1 - http://www.nber.org/papers/w17566.pdf
N1 - Author contact info:
Fernando E. Alvarez
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-4412
Fax: 773/702-8490
E-Mail: f-alvarez1@uchicago.edu
Francesco Lippi
University of Sassari
Department of Economics
and
EIEF
via Sallustiana, 62
00184 Rome - Italy
E-Mail: flippi@uniss.it
AB - We present a monetary model in the presence of segmented asset markets that implies a persistent fall in interest rates after a once and for all increase in liquidity. The gradual propagation mechanism produced by our model is novel in the literature. We provide an analytical characterization of this mechanism, showing that the magnitude of the liquidity effect on impact, and its persistence, depend on the ratio of two parameters: the long-run interest rate elasticity of money demand and the intertemporal substitution elasticity. At the same time, the model has completely classical long-run predictions, featuring quantity theoretic and Fisherian properties. The model simultaneously explains the short-run “instability” of money demand estimates as-well-as the stability of long-run interest-elastic money demand.
ER -
TY - JOUR
AU - Mao,Risheng
AU - Whalley,John
TI - Ownership Characteristics, Real Exchange Rate Movements and Labor Market Adjustment in China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17565
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17565
L1 - http://www.nber.org/papers/w17565.pdf
N1 - Author contact info:
Risheng Mao
Institute of World Economics & Politics
Chinese Academy of Social Sciences
No.5 JianGuoMenNeiDajie
Beijing, China 100732
E-Mail: rmao3@uwo.ca
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB - This paper uses a firm level multi-industry data set covering 456 Chinese manufacturing sectors to assess the implications of Renminbi (RMB) real exchange rate appreciation for adjustments in employment and wage rates. We stress differences in both industry and firm characteristics within sectors. Our empirical results show that modest (and also larger) RMB real exchange rate appreciation would likely have pronounced effects on both net employment and wage rates. A 10% RMB appreciation would likely cause a net employment decline in Chinese manufacturing industries of between 4.1% and 5.3%, and a wage rate drop of 4% after controlling for other factors. Real exchange rate change effects by industry on net employment and wage rates vary significantly with the ownership characteristics of firms within industries. Employment and wage rates for private enterprises are less responsive to RMB real exchange rate fluctuations than is true for state owned enterprises (SOEs) and foreign invested enterprises (FIEs). This finding is opposite to the widely held belief that the labor market behavior of Chinese SOEs shows stronger labor market rigidities than for private firms. Impacts of exchange rate movements emerge as systematically related to export openness, overall import penetration and profit margins of individual manufacturing industries.
ER -
TY - JOUR
AU - Martin,Ian
TI - The Forward Premium Puzzle in a Two-Country World
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17564
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17564
L1 - http://www.nber.org/papers/w17564.pdf
N1 - Author contact info:
Ian Martin
Graduate School of Business
Stanford University
Stanford, CA 94305
Tel: 650/721-1297
E-Mail: ian.martin@gsb.stanford.edu
AB - I explore the behavior of asset prices and the exchange rate in a two-country world. When the large country has bad news, the relative price of the small country’s output declines. As a result, the small country’s bonds are risky, and uncovered interest parity fails, with positive excess returns available to investors who borrow at the large country’s interest rate and lend at the small country’s interest rate. I use a diagrammatic approach to derive these and other results in a calibration-free way.
ER -
TY - JOUR
AU - Martin,Ian
TI - The Lucas Orchard
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17563
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17563
L1 - http://www.nber.org/papers/w17563.pdf
N1 - Author contact info:
Ian Martin
Graduate School of Business
Stanford University
Stanford, CA 94305
Tel: 650/721-1297
E-Mail: ian.martin@gsb.stanford.edu
AB - This paper investigates the behavior of asset prices in an endowment economy in which a representative agent with power utility consumes the dividends of multiple assets. The assets are Lucas trees; a collection of Lucas trees is a Lucas orchard. The model generates return correlations that vary endogenously, spiking at times of disaster. Since disasters spread across assets, the model generates large risk premia even for assets with stable fundamentals. Very small assets may comove endogenously and hence earn positive risk premia even if their fundamentals are independent of the rest of the economy. I provide conditions under which the variation in a small asset’s price-dividend ratio can be attributed almost entirely to variation in its risk premium.
ER -
TY - JOUR
AU - Battaglini,Marco
AU - Coate,Stephen
TI - Fiscal Policy and Unemployment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17562
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17562
L1 - http://www.nber.org/papers/w17562.pdf
N1 - Author contact info:
Marco Battaglini
Department of Economics
Fisher Hall
Princeton University
Princeton, NJ 08544
Tel: 609/258-4002
Fax: 609/258-6419
E-Mail: mbattagl@princeton.edu
Stephen Coate
Department of Economics
Cornell University
Uris Hall
Ithaca, NY 14853-7601
Tel: 607/255-1912
Fax: 215/573-2057
E-Mail: sc163@cornell.edu
AB - This paper explores the interaction between fiscal policy and unemployment. It develops a dynamic economic model in which unemployment can arise but can be mitigated by tax cuts and public spending increases. Such policies are fiscally costly, but can be financed by issuing government debt. In the context of this model, the paper analyzes the simultaneous determination of fiscal policy and unemployment in long run equilibrium. Outcomes with both a benevolent government and political decision-making are studied. With political decision-making, the model yields a simple positive theory of fiscal policy and unemployment.
ER -
TY - JOUR
AU - Ang,Andrew
AU - Kristensen,Dennis
TI - Testing Conditional Factor Models
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17561
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17561
L1 - http://www.nber.org/papers/w17561.pdf
N1 - Author contact info:
Andrew Ang
Columbia Business School
3022 Broadway 413 Uris
New York, NY 10027
Tel: 212/854-9154
Fax: 212/662-8474
E-Mail: aa610@columbia.edu
Dennis Kristensen
Columbia University, Economics Department
1018 International Affairs Building, MC 3308
420 West 118th Street
New York, NY 10027
Tel: 212-854-5489
E-Mail: dk2313@columbia.edu
AB - Using nonparametric techniques, we develop a methodology for estimating conditional alphas and betas and long-run alphas and betas, which are the averages of conditional alphas and betas, respectively, across time. The tests can be performed for a single asset or jointly across portfolios. The traditional Gibbons, Ross, and Shanken (1989) test arises as a special case of no time variation in the alphas and factor loadings and homoskedasticity. As applications of the methodology, we estimate conditional CAPM and multifactor models on book-to-market and momentum decile portfolios. We reject the null that long-run alphas are equal to zero even though there is substantial variation in the conditional factor loadings of these portfolios.
ER -
TY - JOUR
AU - Coeurdacier,Nicolas
AU - Gourinchas,Pierre-Olivier
TI - When Bonds Matter: Home Bias in Goods and Assets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17560
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17560
L1 - http://www.nber.org/papers/w17560.pdf
N1 - Author contact info:
Nicolas Coeurdacier
SciencesPo
Department of Economics
28 rue des Saint Pères 75006 Paris, France
E-Mail: ncoeurdacier@london.edu
Pierre-Olivier Gourinchas
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-0720
Fax: 510/642-6615
E-Mail: pog@econ.berkeley.edu
AB - This paper presents a model of international portfolios with real exchange rate and non financial risks that accounts for observed levels of equity home bias. A key feature is that investors can trade equities as well as domestic and foreign real bonds. Bonds matter: in equilibrium, investors structure their bond portfolio to hedge real exchange rate risk since relative bond returns are strongly correlated with real exchange rate movements. Equity home bias does not arise from the co-movements between relative stock returns and real exchange rates, but from the hedging properties of stock returns against other sources of risk, conditionally on bond returns. We estimate the optimal equity and bond portfolios implied by the model for G-7 countries and find strong empirical support for the theory. We are able to account for a significant share of the equity home bias and obtain a currency exposure of bond portfolios comparable to the data.
ER -
TY - JOUR
AU - Liu,Runjuan
AU - Trefler,Daniel
TI - A Sorted Tale of Globalization: White Collar Jobs and the Rise of Service Offshoring
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17559
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17559
L1 - http://www.nber.org/papers/w17559.pdf
N1 - Author contact info:
Runjuan Liu
Alberta School of Business
University of Alberta
Edmonton AB
T6G 2R6
Canada
Tel: 7804920334
Fax: 7804923325
E-Mail: runjuan.liu@ualberta.ca
Daniel Trefler
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON M5S 3E6
CANADA
Tel: 416/946-7945
Fax: 416/978-5433
E-Mail: dtrefler@rotman.utoronto.ca
AB - We study how the rise of trade in services with China and India has impacted U.S. labour markets. The topic has two understudied aspects: it deals with service trade (most studies deal with manufacturing trade) and it examines the historical first of U.S. workers competing with educated but low-wage foreign workers. Our empirical agenda is made complicated by the endogeneity of service imports and the endogenous sorting of workers across occupations. To develop an estimation framework that deals with these, we imbed a partial equilibrium model of ‘trade in tasks’ within a general equilibrium model of occupational choice. The model highlights the need to estimate labour market outcomes using changes in the outcomes of individual workers and, in particular, to distinguish workers who switch ‘up’ from those who switch ‘down’. (Switching ‘down’ means switching to an occupation that pays less on average than the current occupation). We apply these insights to matched CPS data for 1996-2007. The cumulative 10-year impact of rising service imports from China and India has been as follows. (1) Downward and upward occupational switching increased by 17% and 4%, respectively. (2) Transitions to unemployment increased by a large 0.9 percentage points. (3) The earnings of occupational ‘stayers’ fell by a tiny 2.3%. (4) The earnings impact for occupational switchers is not identified without an assumption about worker sorting. Under the assumption of no worker sorting, downward (upward) switching was associated with an earning change of -13.9% (+12.1%). Under the assumption of worker sorting, there is no statistically significant impact on earnings.
ER -
TY - JOUR
AU - Acharya,Viral V.
TI - A Transparency Standard for Derivatives
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17558
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17558
L1 - http://www.nber.org/papers/w17558.pdf
N1 - Author contact info:
Viral V. Acharya
Stern School of Business
New York University
44 West 4th Street, Suite 9-84
New York, NY 10012
Tel: 212/998-0354
Fax: 212 995 4233
E-Mail: vacharya@stern.nyu.edu
M1 - published as Viral V. Acharya. "A Transparency Standard for Derivatives," in Markus K. Brunnermeier and Arvind Krishnamurthy, editors, "Systemic Risk and Macro Modeling" University of Chicago Press (2012)
AB - Derivatives exposures across large financial institutions often contribute to – if not necessarily create – systemic risk. Current reporting standards for derivatives exposures are nevertheless inadequate for assessing these systemic risk contributions. In this paper, I explain how a transparency standard, in contrast to the current standard, would facilitate such risk analysis. I also demonstrate that such a standard is implementable by providing examples of existing disclosures from large dealer firms in their quarterly filings. These disclosures often contain useful firm-level data on derivatives, but due to a lack of standardization, they cannot be aggregated to assess the risk to the system. I highlight the important contribution that reporting the “margin coverage ratio” (MCR), namely the ratio of a derivatives dealer’s cash (or liquidity, more broadly) to its contingent collateral or margin calls in case of a significant downgrade of its credit quality, could make toward assessing systemic risk contributions.
ER -
TY - JOUR
AU - Fox,Jeremy T.
AU - Gandhi,Amit
TI - Identifying Demand with Multidimensional Unobservables: A Random Functions Approach
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17557
PY - 2011
Y2 - November 2011
UR - http://www.nber.org/papers/w17557
L1 - http://www.nber.org/papers/w17557.pdf
N1 - Author contact info:
Jeremy T. Fox
Economics Department
University of Michigan
238 Lorch Hall
611 Tappan Ave
Ann Arbor, MI 48104
Tel: 734-330-2854
Fax: 734-274-2331
E-Mail: jeremyfox@gmail.com
Amit Gandhi
University of Wisconsin
1180 Observatory Drive
Madison, WI 53706-1393
E-Mail: agandhi@ssc.wisc.edu
AB - We explore the identification of nonseparable models without relying on the property that the model can be inverted in the econometric unobservables. In particular, we allow for infinite dimensional unobservables. In the context of a demand system, this allows each product to have multiple unobservables. We identify the distribution of demand both unconditional and conditional on market observables, which allows us to identify several quantities of economic interest such as the (conditional and unconditional) distributions of elasticities and the distribution of price effects following a merger. Our approach is based on a significant generalization of the linear in random coefficients model that only restricts the random functions to be analytic in the endogenous variables, which is satisfied by several standard demand models used in practice. We assume an (unknown) countable support for the the distribution of the infinite dimensional unobservables.
ER -
TY - JOUR
AU - Krishnamurthy,Arvind
AU - Vissing-Jorgensen,Annette
TI - The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17555
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17555
L1 - http://www.nber.org/papers/w17555.pdf
N1 - Author contact info:
Arvind Krishnamurthy
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-2671
Fax: 847/491-5719
E-Mail: a-krishnamurthy@northwestern.edu
Annette Vissing-Jorgensen
Finance Department
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208-2001
Tel: 847/467-6171
Fax: 847/491-5719
E-Mail: a-vissing@northwestern.edu
AB - We evaluate the effect of the Federal Reserve’s purchase of long-term Treasuries and other long-term bonds ("QE1" in 2008-2009 and "QE2" in 2010-2011) on interest rates. Using an event-study methodology we reach two main conclusions. First, it is inappropriate to focus only on Treasury rates as a policy target because QE works through several channels that affect particular assets differently. We find evidence for a signaling channel, a unique demand for long-term safe assets, and an inflation channel for both QE1 and QE2, and an MBS pre-payment channel and a corporate bond default risk channel for QE1. Second, effects on particular assets depend critically on which assets are purchased. The event-study suggests that (a) mortgage-backed securities purchases in QE1 were crucial for lowering mortgage-backed security yields as well as corporate credit risk and thus corporate yields for QE1, and (b) Treasuries-only purchases in QE2 had a disproportionate effect on Treasuries and Agencies relative to mortgage-backed securities and corporates, with yields on the latter falling primarily through the market’s anticipation of lower future federal funds rates.
ER -
TY - JOUR
AU - Arimura,Toshi H.
AU - Li,Shanjun
AU - Newell,Richard G.
AU - Palmer,Karen
TI - Cost-Effectiveness of Electricity Energy Efficiency Programs
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17556
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17556
L1 - http://www.nber.org/papers/w17556.pdf
N1 - Author contact info:
Toshi H. Arimura
Sophia University
E-Mail: t-arimu@sophia.ac.jp
Shanjun Li
Cornell University
424 Warren Hall
Ithaca, NY 14853
E-Mail: sl2448@cornell.edu
Richard G. Newell
Nicholas School of the Environment
Duke University
Box 90227
Durham, NC 27708
Tel: 919/681-8663
Fax: 919/684-5833
E-Mail: richard.newell@duke.edu
Karen Palmer
Resources for the Future
1616 P Street, NW
Washington, DC 20036
E-Mail: palmer@rff.org
AB - We analyze the cost-effectiveness of electric utility ratepayer–funded programs to promote demand-side management (DSM) and energy efficiency (EE) investments. We specify a model that relates electricity demand to previous EE DSM spending, energy prices, income, weather, and other demand factors. In contrast to previous studies, we allow EE DSM spending to have a potential long-term demand effect and explicitly address possible endogeneity in spending. We find that current period EE DSM expenditures reduce electricity demand and that this effect persists for a number of years. Our findings suggest that ratepayer funded DSM expenditures between 1992 and 2006 produced a central estimate of 0.9 percent savings in electricity consumption over that time period and a 1.8 percent savings over all years. These energy savings came at an expected average cost to utilities of roughly 5 cents per kWh saved when future savings are discounted at a 5 percent rate.
ER -
TY - JOUR
AU - Glewwe,Paul W.
AU - Hanushek,Eric A.
AU - Humpage,Sarah D.
AU - Ravina,Renato
TI - School Resources and Educational Outcomes in Developing Countries: A Review of the Literature from 1990 to 2010
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17554
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17554
L1 - http://www.nber.org/papers/w17554.pdf
N1 - Author contact info:
Paul W. Glewwe
Dept of Applied Economics, U of MN
1994 Buford Ave.
St. Paul MN 55108
E-Mail: pglewwe@umn.edu
Eric A. Hanushek
Hoover Institution
Stanford University
Stanford, CA 94305-6010
Tel: 650/736-0942
Fax: 650/723-1687
E-Mail: hanushek@stanford.edu
Sarah D. Humpage
University of Minnesota
St. Paul MN 55108
E-Mail: sarah.humpage@gmail.com
Renato Ravina
University of Minnesota
St. Paul MN 55108
E-Mail: rravina@gmail.com
AB - Developing countries spend hundreds of billions of dollars each year on schools, educational materials and teachers, but relatively little is known about how effective these expenditures are at increasing students’ years of completed schooling and, more importantly, the skills that they learn while in school. This paper examines studies published between 1990 and 2010, in both the education literature and the economics literature, to investigate which specific school and teacher characteristics, if any, appear to have strong positive impacts on learning and time in school. Starting with over 9,000 studies, 79 are selected as being of sufficient quality. Then an even higher bar is set in terms of econometric methods used, leaving 43 “high quality” studies. Finally, results are also shown separately for 13 randomized trials. The estimated impacts on time in school and learning of most school and teacher characteristics are statistically insignificant, especially when the evidence is limited to the “high quality” studies. The few variables that do have significant effects – e.g. availability of desks, teacher knowledge of the subjects they teach, and teacher absence – are not particularly surprising and thus provide little guidance for future policies and programs.
ER -
TY - JOUR
AU - Arkolakis,Costas
TI - A Unified Theory of Firm Selection and Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17553
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17553
L1 - http://www.nber.org/papers/w17553.pdf
N1 - Author contact info:
Costas Arkolakis
Department of Economics
Yale University, 28 Hillhouse Avenue
P.O. Box 208268
New Haven, CT 06520-8268
Tel: 203/432-3527
Fax: 203/432-6323
E-Mail: costas.arkolakis@yale.edu
AB - This paper studies the effects of marketing choice to firm growth. I assume that firm-level growth is the result of idiosyncratic productivity improvements with continuous arrival of new potential producers. A firm enters a market if it is profitable to incur the marginal cost to reach the first consumer and pays an increasing marketing cost to reach additional consumers. The model is calibrated using data on the cross-section of firms and their sales across markets as well as the rate of incumbent firm-exit. The calibrated model quantitatively predicts firm exit, growth, and the resulting firm size distribution in the US manufacturing data. It also predicts a distribution of firm growth rates that deviates from Gibrat's law –i.e. independence of firm size and growth– in a manner consistent with the data.
ER -
TY - JOUR
AU - Sandleris,Guido
AU - Wright,Mark L.J.
TI - The Costs of Financial Crises: Resource Misallocation, Productivity and Welfare in the 2001 Argentine Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17552
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17552
L1 - http://www.nber.org/papers/w17552.pdf
N1 - Author contact info:
Guido Sandleris
Universidad Torcuato Di Tella
Buenos Aires, Argentina
E-Mail: gsandleris@utdt.edu
Mark L. J. Wright
Federal Reserve Bank of Chicago
230 South LaSalle St.
Chicago, IL 60604
E-Mail: mlwright@econ.ucla.edu
AB - Financial crises in emerging market countries appear to be very costly: both output and a host of partial welfare indicators decline dramatically. The magnitude of these costs is puzzling both from an accounting perspective -- factor usage does not decline as much as output, resulting in large falls in measured productivity -- and from a theoretical perspective. Towards a resolution of this puzzle, we present a framework that allows us to (i) account for changes in a country's measured productivity during a financial crises as the result of changes in the underlying technology of the economy, the efficiency with which resources are allocated across sectors, and the efficiency of the resource allocation within sectors driven both by reallocation amongst existing plants and by entry and exit; and (ii) measure the change in the country's welfare resulting from changes in productivity, government spending, the terms of trade, and a country's international investment position. We apply this framework to the Argentine crisis of 2001 using a unique establishment level data-set and find that more than half of the roughly 10% decline in measured total factor productivity can be accounted for by deterioration in the allocation of resources both across and within sectors. We measure the decline in welfare to be on the order of one-quarter of one years GDP.
ER -
TY - JOUR
AU - Dias,Daniel A.
AU - Richmond,Christine J.
AU - Wright,Mark L.J.
TI - The Stock of External Sovereign Debt: Can We Take the Data At ‘Face Value’?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17551
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17551
L1 - http://www.nber.org/papers/w17551.pdf
N1 - Author contact info:
Daniel A. Dias
University of Illinois at Urbana Champaign
and CEMAPRE
109 David Kinley Hall
1407 W. Gregory Dr. - MC707
Urbana, IL, 61801
E-Mail: ddias@illinois.edu
Christine J. Richmond
International Monetary Fund
700 19th Street NW
Washington, DC 20431
E-Mail: CRichmond@imf.org
Mark L. J. Wright
Federal Reserve Bank of Chicago
230 South LaSalle St.
Chicago, IL 60604
E-Mail: mlwright@econ.ucla.edu
AB - The stock of sovereign debt is typically measured at face value. This is a misleading indicator when debts are issued with different contractual forms. In this paper we construct a new measure of the stock of external sovereign debt for 100 developing countries from 1979 to 2006 that is invariant to contractual form, and illustrate five problems with debt stocks measured at face value. First, we show that correcting for differences in the contractual form of debt paints a very different quantitative, and in some cases also qualitative, picture of the stock of developing country external sovereign debt. Second, rankings of indebtedness across countries, which were historically used to define eligibility for debt forgiveness, are sometimes inverted once we correct for differences in contractual form. Third, the empirical performance of the benchmark quantitative model of sovereign debt deteriorates by between 40 to 70 percent once model-consistent measures of debt are used. Fourth, we show how the spread of aggregation clauses in debt contracts which award creditors voting power in proportion to the contractual face value may introduce inefficiencies into the process of restructuring sovereign debts. Fifth, we show how the use of contractual face values gives issuing countries the ability to manipulate their debt stock data, and illustrate the use of these techniques in practice.
ER -
TY - JOUR
AU - Fajgelbaum,Pablo D.
AU - Grossman,Gene M.
AU - Helpman,Elhanan
TI - A Linder Hypothesis for Foreign Direct Investment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17550
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17550
L1 - http://www.nber.org/papers/w17550.pdf
N1 - Author contact info:
Pablo Fajgelbaum
UCLA
E-Mail: PFajgelbaum@econ.ucla.edu
Gene M. Grossman
International Economics Section
Department of Economics
Princeton University
Princeton, NJ 08544
Tel: 609/258-4823
Fax: 609/258-1374
E-Mail: grossman@princeton.edu
Elhanan Helpman
Department of Economics
Harvard University
1875 Cambridge Street
Cambridge, MA 02138
Tel: 617-495-4690
Fax: 617-495-7730
E-Mail: ehelpman@harvard.edu
AB - We study patterns of FDI in a multi-country world economy. First, we present evidence for a broad sample of countries that firms direct FDI disproportionately to markets with income levels similar to their home market. Then we develop a model featuring non-homothetic preferences for quality and monopolistic competition in which specialization is purely demand-driven and the decision to serve foreign countries via exports or FDI depends on a proximity-concentration trade-off. We characterize the joint patterns of trade and FDI when countries differ in income distribution and size and show that FDI is more likely to occur between countries with similar per capita income levels. The model predicts a Linder Hypothesis for FDI, consistent with the patterns found in the data.
ER -
TY - JOUR
AU - Ju,Jiandong
AU - Shi,Kang
AU - Wei,Shang-Jin
TI - On the Connection between Intertemporal and Intra-temporal Trades
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17549
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17549
L1 - http://www.nber.org/papers/w17549.pdf
N1 - Author contact info:
Jiandong Ju
Department of Economics
University of Oklahoma
Norman, OK 73019
E-Mail: jdju@ou.edu
Kang Shi
Department of Economics
Chinese University of Hong Kong
Shatin, New Territories
Hong Kong
E-Mail: kangshi@cuhk.edu.hk
Shang-Jin Wei
Graduate School of Business
Columbia University
Uris Hall 619
3022 Broadway
New York, NY 10027-6902
Tel: 212/854-9139
E-Mail: shangjin.wei@columbia.edu
AB - Sticky (or slow-adjusting) current accounts are observed in many countries. This paper explores the role of domestic factor market flexibility in understanding the phenomenon. To do so, we consider multiple tradable sectors with different factor intensities and allow substitution between intertemporal trade (current account adjustment) and intra-temporal trade (goods trade) in a dynamic general equilibrium model. An economy’s response to a shock generally involves a combination of a change in the composition of goods trade and a change in the current account. Flexible factor markets reduce the need for the current account to adjust. On the other hand, the more rigid the factor markets, the larger the size of current account adjustment relative to the volume of goods trade, and the slower the speed of adjustment of the current account towards its long-run equilibrium. We present empirical evidence in support of the theory.
ER -
TY - JOUR
AU - Albagli,Elias
AU - Hellwig,Christian
AU - Tsyvinski,Aleh
TI - A Theory of Asset Pricing Based on Heterogeneous Information
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17548
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17548
L1 - http://www.nber.org/papers/w17548.pdf
N1 - Author contact info:
Elias Albagli
University of Southern California
Marshall School of Business
E-Mail: albagli@marshall.usc.edu
Christian Hellwig
Toulouse School of Economics
Manufacture de Tabacs,
21 Allées de Brienne,
31000 Toulouse
Tel: +33 5 61 12 85 93
Fax: +33 5 61 12 86 37
E-Mail: christian.hellwig@tse-fr.eu
Aleh Tsyvinski
Department of Economics
Yale University
Box 208268
New Haven, CT 06520-8268
E-Mail: a.tsyvinski@yale.edu
AB - We propose a theory of asset prices that emphasizes heterogeneous information as the main element determining prices of different securities. Our main analytical innovation is in formulating a model of noisy information aggregation through asset prices, which is parsimonious and tractable, yet flexible in the specification of cash flow risks. We show that the noisy aggregation of heterogeneous investor beliefs drives a systematic wedge between the impact of fundamentals on an asset price, and the corresponding impact on cash flow expectations. The key intuition behind the wedge is that the identity of the marginal trader has to shift for different realization of the underlying shocks to satisfy the market-clearing condition. This identity shift amplifies the impact of price on the marginal trader's expectations. We derive tight characterization for both the conditional and the unconditional expected wedges. Our first main theorem shows how the sign of the expected wedge (that is, the difference between the expected price and the dividends) depends on the shape of the dividend payoff function and on the degree of informational frictions. Our second main theorem provides conditions under which the variability of prices exceeds the variability for realized dividends. We conclude with two applications of our theory. First, we highlight how heterogeneous information can lead to systematic departures from the Modigliani-Miller theorem. Second, in a dynamic extension of our model we provide conditions under which bubbles arise.
ER -
TY - JOUR
AU - Gustman,Alan L.
AU - Steinmeier,Thomas L.
AU - Tabatabai,Nahid
TI - How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17547
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17547
L1 - http://www.nber.org/papers/w17547.pdf
N1 - Author contact info:
Alan L. Gustman
Department of Economics
Dartmouth College
Hanover, NH 03755-3514
Tel: 603/646-2641
Fax: 603/646-2122
E-Mail: ALAN.L.GUSTMAN@DARTMOUTH.EDU
Thomas Steinmeier
Department of Economics
Texas Tech University
Lubbock, TX 79409
E-Mail: thomas.steinmeier@ttu.edu
Nahid Tabatabai
Department of Economics
Dartmouth College
Hanover, N.H. 03755
E-Mail: Nahid.Tabatabai@dartmouth.edu
AB - This paper uses asset and labor market data from the Health and Retirement Study (HRS) to investigate how the recent "Great Recession" has affected the wealth and retirement of those in the population who were just approaching retirement age at the beginning of the recession, a potentially vulnerable segment of the working age population. The retirement wealth held by those ages 53 to 58 before the onset of the recession in 2006 declined by a relatively modest 2.8 percentage points by 2010. In more normal times, their wealth would have increased over these four years. Members of older cohorts accumulated an additional 5 percent of wealth over the same age span. To be sure, a part of their accumulation was the result of the upside of the housing bubble. The wealth holdings of poorer households were least affected by the recession. Relative losses are greatest for those who initially had the highest wealth when the recession began.
The adverse labor market effects of the Great Recession are more modest. Although there is an increase in unemployment, that increase is not mirrored in the rate of flow out of full-time work or partial retirement. All told, the retirement behavior of the Early Boomer cohort looks similar, at least so far, to the behavior observed for members of older cohorts at comparable ages.
Very few in the population nearing retirement age have experienced multiple adverse events. Although most of the loss in wealth is due to a fall in the net value of housing, because very few in this cohort have found their housing wealth under water, and housing is the one asset this cohort is not likely to cash in for another decade or two, there is time for their losses in housing wealth to recover.
ER -
TY - JOUR
AU - Rodrik,Dani
TI - Unconditional Convergence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17546
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17546
L1 - http://www.nber.org/papers/w17546.pdf
N1 - Author contact info:
Dani Rodrik
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9454
Fax: 617/496-5747
E-Mail: dani_rodrik@harvard.edu
AB - Unlike economies as a whole, manufacturing industries exhibit unconditional convergence in labor productivity. The paper documents this finding for 4-digit manufacturing sectors for a large group of developed and developing countries over the period since 1990. The coefficient of unconditional convergence is estimated quite precisely and is large, at 3.0-5.6 percent per year depending on the estimation horizon. The result is robust to a large number of specification tests, and statistically highly significant. Because of data coverage, these findings should be as viewed as applying to the organized, formal parts of manufacturing.
ER -
TY - JOUR
AU - Fehr,Ernst
AU - Hart,Oliver D.
AU - Zehnder,Christian
TI - How Do Informal Agreements and Renegotiation Shape Contractual Reference Points?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17545
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17545
L1 - http://www.nber.org/papers/w17545.pdf
N1 - Author contact info:
Ernst Fehr
Institute for Empirical Economics Research
University of Zurich
Blumlisalpstrasse 10
8006 Zurich
SWITZERLAND
E-Mail: efehr@iew.unizh.ch
Oliver D. Hart
Department of Economics
Littauer Center 220
Harvard University
Cambridge, MA 02138
Tel: 617/496-3461
Fax: 617-495-7730
E-Mail: ohart@harvard.edu
Christian Zehnder
Faculty of Business and Economics
University of Lausanne
Quartier UNIL-Dorigny
Internef 612
CH-1015 Lausanne
Switzerland
E-Mail: christian.zehnder@unil.ch
AB - Previous experimental work provides encouraging support for some of the central assumptions underlying Hart and Moore (2008)’s theory of contractual reference points. However, existing studies ignore realistic aspects of trading relationships such as informal agreements and ex post renegotiation. We investigate the relevance of these features experimentally. Our evidence indicates that the central behavioral mechanism underlying the concept of contractual reference points is robust to the presence of informal agreements and ex post renegotiation. However, our data also reveal new behavioral features that suggest refinements of the theory. In particular, we find that the availability of informal agreements and ex post renegotiation changes how trading parties evaluate ex post outcomes. Interestingly, the availability of these additional options affects ex post evaluations even in situations in which the parties do not use them.
ER -
TY - JOUR
AU - Weisbrod,Aaron
AU - Whalley,John
TI - The Contribution of Chinese FDI to Africa’s Pre Crisis Growth Surge
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17544
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17544
L1 - http://www.nber.org/papers/w17544.pdf
N1 - Author contact info:
Aaron Weisbrod
Department of Economics
The University of Western Ontario
London, Ontario N6A 5C2 CANADA
E-Mail: A.Weisbrod@lse.ac.uk
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB - In the 3 years before the 2008 Financial Crisis, GDP growth in sub Saharan Africa (averaged over individual economies) was around 6%, or 2 percentage points above mean growth rates for the preceding 10 years. This period also coincided with significant Chinese FDI flows into these countries, accounting for up to 10% of total inward FDI flows for certain countries in these years. We use growth accounting methods to assess what portion of this elevated growth can be attributed to Chinese inward FDI. We follow Solow (1957), Dennison (1962), and others and use data for individual economies between 1990 and 2008 to calculate Solow residuals for these years for individual economies. We use capital stock data, workforce, and factor share data by country. Capital stock data is unavailable directly, and so we use perpetual inventory methods to construct the data. Factor shares come from UN National Accounts data. We then run counterfactual growth accounting experiments for thirteen Sub-Saharan African countries excluding Chinese FDI inflows for 2005-2007 and also 2003-2009. Our individual results vary by year and country, but there are several year/country combinations where Chinese FDI contributed to an additional one half of a percentage point or above to GDP growth. These results suggest that a significant, even if in some cases small, portion of the elevated growth in sub Saharan Africa in the three years before the Financial Crisis and also in the two years afterwards (2008-2009) can be attributed to Chinese inward investment.
ER -
TY - JOUR
AU - Fernández-Villaverde,Jesús
AU - Guerrón-Quintana,Pablo A.
AU - Rubio-Ramírez,Juan
TI - Supply-Side Policies and the Zero Lower Bound
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17543
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17543
L1 - http://www.nber.org/papers/w17543.pdf
N1 - Author contact info:
Jesus Fernandez-Villaverde
University of Pennsylvania
160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
Tel: 267/307-1068
E-Mail: jesusfv@econ.upenn.edu
Pablo A. Guerrón-Quintana
Federal Reserve Bank of Philadelphia
Tel: 9195132869
E-Mail: pablo.guerron@phil.frb.org
Juan Rubio-Ramírez
Duke University
P.O. Box 90097
Durham, NC 27708
Tel: 9196601865
E-Mail: juan.rubio-ramirez@duke.edu
AB - This paper examines how supply-side policies may play a role in fighting a low aggregate demand that traps an economy at the zero lower bound (ZLB) of nominal interest rates. Future increases in productivity or reductions in mark-ups triggered by supply-side policies generate a wealth effect that pulls current consumption and output up. Since the economy is at the ZLB, increases in the interest rates do not undo this wealth effect, as we will have in the case outside the ZLB. We illustrate this mechanism with a simple two-period New Keynesian model. We discuss possible objections to this set of policies and the relation of supply-side policies with more conventional monetary and fiscal policies.
ER -
TY - JOUR
AU - Acharya,Viral V.
AU - Rajan,Raghuram G.
TI - Sovereign Debt, Government Myopia, and the Financial Sector
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17542
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17542
L1 - http://www.nber.org/papers/w17542.pdf
N1 - Author contact info:
Viral V. Acharya
Stern School of Business
New York University
44 West 4th Street, Suite 9-84
New York, NY 10012
Tel: 212/998-0354
Fax: 212 995 4233
E-Mail: vacharya@stern.nyu.edu
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu
AB - What determines the sustainability of sovereign debt? In this paper, we develop a model where myopic governments seek electoral popularity but can nevertheless commit credibly to service external debt. They do not default when they are poor because they would lose access to debt markets and be forced to reduce spending; they do not default when they become rich because of the adverse consequences to the domestic financial sector. Interestingly, the more myopic a government, the greater the advantage it sees in borrowing, and therefore the less likely it will be to default (in contrast to models where sovereigns repay because they are concerned about their long term reputation). More myopic governments are also likely to tax in a more distortionary way, and create more dependencies between the domestic financial sector and government debt that raise the costs of default. We use the model to explain recent experiences in sovereign debt markets.
ER -
TY - JOUR
AU - Bertrand,Marianne
AU - Pan,Jessica
TI - The Trouble with Boys: Social Influences and the Gender Gap in Disruptive Behavior
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17541
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17541
L1 - http://www.nber.org/papers/w17541.pdf
N1 - Author contact info:
Marianne Bertrand
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-5943
Fax: 773/702-0458
E-Mail: marianne.bertrand@chicagobooth.edu
Jessica Pan
Department of Economics
National University of Singapore
1 Arts Link
Singapore 117570
E-Mail: jesspan@nus.edu.sg
AB - This paper explores the importance of the home and school environments in explaining the gender gap in disruptive behavior. We document large differences in the gender gap across key features of the home environment – boys do especially poorly in broken families. In contrast, we find little impact of the early school environment on non-cognitive gaps. Differences in endowments explain a small part of boys’ non-cognitive deficit in single-mother families. More importantly, non-cognitive returns to parental inputs differ markedly by gender. Broken families are associated with worse parental inputs and boys’ non-cognitive development, unlike girls’, appears extremely responsive to such inputs.
ER -
TY - JOUR
AU - Nordhaus,William D.
TI - Estimates of the Social Cost of Carbon:
Background and Results from the RICE-2011 Model
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17540
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17540
L1 - http://www.nber.org/papers/w17540.pdf
N1 - Author contact info:
William D. Nordhaus
Yale University, Department of Economics
28 Hillhouse Avenue
Box 208264
New Haven, CT 06520-8264
Tel: 203/432-3598
Fax: 203/432-5779
E-Mail: william.nordhaus@yale.edu
AB - A new and important concept in global warming economics and policy is the social cost of carbon or SCC. This concept represents the economic cost caused by an additional ton of carbon-dioxide emissions or its equivalent. The present study describes the development of the concept as well as its analytical background. We estimate the SCC using an updated version of the RICE-2011 model. Additional concerns are uncertainty about different aspects of global warming as well as the treatment of different countries or generations. The most important results are: First, the estimated social cost of carbon for the current time (2015) including uncertainty, equity weighting, and risk aversion is $44 per ton of carbon (or $12 per ton CO2) in 2005 US$ and international prices). Second, including uncertainty increases the expected value of the SCC by approximately 8 percent. Third, equity weighting generally tends to reduce the SCC. Finally, the major open issue concerning the SCC continues to be the appropriate discount rate.
ER -
TY - JOUR
AU - Kotchen,Matthew J.
AU - Boyle,Kevin J.
AU - Leiserowitz,Anthony A.
TI - Policy-Instrument Choice and Benefit Estimates for Climate-Change Policy in the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17539
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17539
L1 - http://www.nber.org/papers/w17539.pdf
N1 - Author contact info:
Matthew Kotchen
School of Forestry & Environmental Studies,
School of Management,
and Department of Economics
Yale University
195 Prospect Street
New Haven, CT 06511
Tel: 203/432-9533
Fax: 203/436-9150
E-Mail: matthew.kotchen@yale.edu
Kevin J. Boyle
Virginia Tech University
Blacksburg, VA 24061
E-Mail: kjboyle@vt.edu
Anthony A. Leiserowitz
Yale University
New Haven, CT 06511
E-Mail: anthony.leiserowitz@yale.edu
AB - This paper provides the first willingness-to-pay (WTP) estimates in support of a national climate-change policy that are comparable with the costs of actual legislative efforts in the U.S. Congress. Based on a survey of 2,034 American adults, we find that households are, on average, willing to pay between $79 and $89 per year in support of reducing domestic greenhouse-gas (GHG) emissions 17 percent by 2020. Even very conservative estimates yield an average WTP at or above $60 per year. Taking advantage of randomized treatments within the survey valuation question, we find that mean WTP does not vary substantially among the policy instruments of a cap-and-trade program, a carbon tax, or a GHG regulation. But there are differences in the sociodemographic characteristics of those willing to pay across policy instruments. Greater education always increases WTP. Older individuals have a lower WTP for a carbon tax and a GHG regulation, while greater household income increases WTP for these same two policy instruments. Republicans, along with those indicating no political party affiliation, have a significantly lower WTP regardless of the policy instrument. But many of these differences are no longer evident after controlling for respondent opinions about whether global warming is actually happening.
ER -
TY - JOUR
AU - Whelan,Kenneth T.
AU - Ehrenberg,Ronald G.
AU - Hallock,Kevin F.
AU - Seeber,Ronald L.
TI - Adverse Selection and Incentives in an Early Retirement Program
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17538
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17538
L1 - http://www.nber.org/papers/w17538.pdf
N1 - Author contact info:
Kenneth Whelan
Cornell Higher Education Research Institute
273 Ives Hall
Ithaca, NY 14853-3901
E-Mail: ktw29@cornell.edu
Ronald G. Ehrenberg
Cornell Higher Education Research Institute
271 Ives Hall East
Ithaca, NY 14853-3901
Tel: 607/255-3026
Fax: 607 255 4496
E-Mail: rge2@cornell.edu
Kevin F. Hallock
ILR School
Cornell University
391 Ives Hall (East)
Ithaca, NY 14853
Tel: 607/255-3193
E-Mail: kfh7@cornell.edu
Ronald Seeber
ILR- Cornell University
Ithaca, NY 14853-3901
E-Mail: rs60@cornell.edu
AB - We evaluate potential determinants of enrollment in an early retirement incentive program for non-tenure-track employees of a large university. Using administrative record on the eligible population of employees not covered by collective bargaining agreements, historical employee count and layoff data by budget units, and public information on unit budgets, we find dips in per-employee finance in a budget unit during the application year and higher recent per employee layoffs were associated with increased probabiliites of eligible employee program enrollment. Our results also suggest, on average, that employees whose salaries are lower than we would predict given their personal characteristics and job titles were more likely to enroll in the early retirement program. To the extent that employees' compensation reflects their productivity, as it should under a pay system in which annual salary increases are based on merit, this finidng suggests that adverse selection was not a problem with the program. That is, we find no evidence that on average the "most productive" employees took the incentive.
ER -
TY - JOUR
AU - Jeske,Karsten
AU - Krueger,Dirk
AU - Mitman,Kurt
TI - Housing and the Macroeconomy: The Role of Bailout Guarantees for Government Sponsored Enterprises
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17537
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17537
L1 - http://www.nber.org/papers/w17537.pdf
N1 - Author contact info:
Karsten Jeske
Mellon Capital Management Corporation
E-Mail: Karstenj@mcm.com
Dirk Krueger
Department of Economics
University of Pennsylvania
3718 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-6691
Fax: 215/573-2057
E-Mail: dkrueger@econ.upenn.edu
Kurt Mitman
Department of Economics, McNeil 160
3718 Locust Walk
Philadelphia, PA 19104
E-Mail: mitmanke@econ.upenn.edu
AB - This paper evaluates the macroeconomic and distributional effects of government bailout guarantees for Government Sponsored Enterprises (such as Fannie Mae and Freddy Mac) in the mortgage market. In order to do so we construct a model with heterogeneous, infinitely lived households and competitive housing and mortgage markets. Households have the option to default on their mortgages, with the consequence of having their homes foreclosed. We model the bailout guarantee as a government provided and tax-financed mortgage interest rate subsidy. We find that eliminating this subsidy leads to substantially lower equilibrium mortgage origination and increases aggregate welfare, but has little effect on foreclosure rates and housing investment. The interest rate subsidy is a regressive policy: eliminating it benefits low-income and low-asset households who did not own homes or had small mortgages, while lowering the welfare of high-income, high-asset households.
ER -
TY - JOUR
AU - Poterba,James M.
AU - Venti,Steven F.
AU - Wise,David A.
TI - The Composition and Draw-down of Wealth in Retirement
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17536
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17536
L1 - http://www.nber.org/papers/w17536.pdf
N1 - Author contact info:
James M. Poterba
Department of Economics
MIT, E52-350
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-6673
Fax: 617/258-7804
E-Mail: poterba@nber.org
Steven F. Venti
Department of Economics
6106 Rockefeller Center
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2526
Fax: 603/646-2122
E-Mail: steven.f.venti@dartmouth.edu
David A. Wise
Harvard Kennedy School
79 John F. Kennedy
Cambridge, MA 02138
E-Mail: dwise@nber.org
AB - This paper presents evidence on the resources available to households as they enter retirement. It draws heavily on data collected by the Health and Retirement Study and calculates the "potential additional annuity income" that households could purchase, given their holdings of non-annuitized financial assets at the start of retirement. Even if households used all of their financial assets inside and outside personal retirement accounts to purchase a life annuity, only 47 percent of households between the ages of 65 and 69 in 2008 could increase their life-contingent income by more than $5,000 per year. At the upper end of the wealth distribution, however, a substantial number of households could make large annuity purchases. The paper also considers the role of housing equity in the portfolios of retirement-age households, and explores the extent to which households draw down housing equity and financial assets as they age. Many households appear to treat housing equity and non-annuitized financial assets as “precautionary savings,” tending to draw them down only when they experience a shock such as the death of a spouse or a period of substantial medical outlays. Because home equity is often conserved until very late in life, for many households it may provide some insurance against the risk of living longer than expected.
ER -
TY - JOUR
AU - Rebitzer,James B.
AU - Votruba,Mark E.
TI - Organizational Economics and Physician Practices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17535
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17535
L1 - http://www.nber.org/papers/w17535.pdf
N1 - Author contact info:
James B. Rebitzer
Professor of Management, Economics, Public Policy
Markets, Public Policy and Law Department
Boston University School of Management
595 Commonwealth Ave.
Boston, MA 02215
Tel: 617-383-7356
Fax: NA
E-Mail: rebitzer@bu.edu
Mark Votruba
Weatherhead School of Management
Case Western Reserve University
11119 Bellflower Road
Cleveland, OH 44106
Tel: 216-368-4296
Fax: 216-368-5039
E-Mail: mark.votruba@case.edu
AB - Economists seeking to improve the efficiency of health care delivery frequently emphasize two issues: the fragmented structure of physician practices and poorly designed physician incentives. This paper analyzes these issues from the perspective of organizational economics. We begin with a brief overview of the structure of physician practices and observe that the long anticipated triumph of integrated care delivery has largely gone unrealized. We then analyze the special problems that fragmentation poses for the design of physician incentives. Organizational economics suggests some promising incentive strategies for this setting, but implementing these strategies is complicated by norms of autonomy in the medical profession and by other factors that inhibit effective integration between hospitals and physicians. Compounding these problems are patterns of medical specialization that complicate coordination among physicians. We conclude by considering the policy implications of our analysis - paying particular attention to proposed Accountable Care Organizations.
ER -
TY - JOUR
AU - Rothstein,Jesse
TI - Unemployment Insurance and Job Search in the Great Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17534
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17534
L1 - http://www.nber.org/papers/w17534.pdf
N1 - Author contact info:
Jesse Rothstein
Goldman School of Public Policy
University of California, Berkeley
2607 Hearst Avenue
Berkeley, CA 94720-7320
Tel: 510/643-8561
Fax: 510/643-9657
E-Mail: rothstein@berkeley.edu
AB - Nearly two years after the official end of the "Great Recession," the labor market remains historically weak. One candidate explanation is supply-side effects driven by dramatic expansions of Unemployment Insurance (UI) benefit durations, to as many as 99 weeks. This paper investigates the effect of these UI extensions on job search and reemployment. I use the longitudinal structure of the Current Population Survey to construct unemployment exit hazards that vary across states, over time, and between individuals with differing unemployment durations. I then use these hazards to explore a variety of comparisons intended to distinguish the effects of UI extensions from other determinants of employment outcomes.
The various specifications yield quite similar results. UI extensions had significant but small negative effects on the probability that the eligible unemployed would exit unemployment, concentrated among the long-term unemployed. The estimates imply that UI benefit extensions raised the unemployment rate in early 2011 by only about 0.1-0.5 percentage points, much less than is implied by previous analyses, with at least half of this effect attributable to reduced labor force exit among the unemployed rather than to the changes in reemployment rates that are of greater policy concern.
ER -
TY - JOUR
AU - Dynarski,Susan
AU - Hyman,Joshua M.
AU - Schanzenbach,Diane Whitmore
TI - Experimental Evidence on the Effect of Childhood Investments on Postsecondary Attainment and Degree Completion
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17533
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17533
L1 - http://www.nber.org/papers/w17533.pdf
N1 - Author contact info:
Susan Dynarski
University of Michigan
Weill Hall
735 South State Street
Ann Arbor, MI 48109-3091
Tel: 734 615 5113
Fax: NA
E-Mail: dynarski@umich.edu
Joshua M. Hyman
University of Michigan
Weill Hall
735 South State Street
Ann Arbor, MI 48109-3091
http://www-personal.umich.edu/~jmhyman/
E-Mail: jmhyman@umich.edu
Diane Whitmore Schanzenbach
School of Education and Social Policy
Northwestern University
Annenberg Hall, Room 205
2120 Campus Drive
Evanston, IL 60208
Tel: 847/491-3884
E-Mail: dws@northwestern.edu
AB - This paper examines the effect of early childhood investments on college enrollment and degree completion. We use the random assignment in the Project STAR experiment to estimate the effect of smaller classes in primary school on college entry, college choice, and degree completion. We improve on existing work in this area with unusually detailed data on college enrollment spells and the previously unexplored outcome of college degree completion. We find that assignment to a small class increases the probability of attending college by 2.7 percentage points, with effects more than twice as large among blacks. Among those with the lowest ex ante probability of attending college, the effect is 11 percentage points. Smaller classes increase the likelihood of earning a college degree by 1.6 percentage points and shift students towards high-earning fields such as STEM (science, technology, engineering and medicine), business and economics. We confirm the standard finding that test score effects fade out by middle school, but show that test score effects at the time of the experiment are an excellent predictor of long-term improvements in postsecondary outcomes. We compare the costs and impacts of this intervention with other tools for increasing postsecondary attainment, such as Head Start and financial aid, and conclude that early investments are no more cost effective than later investments in boosting adult educational attainment.
ER -
TY - JOUR
AU - Cai,Jing
AU - Harrison,Ann
TI - The Value-Added Tax Reform Puzzle
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17532
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17532
L1 - http://www.nber.org/papers/w17532.pdf
N1 - Author contact info:
Jing Cai
Department of Agricultural and Resource Economics
University of California, Berkeley
317 Giannini Hall
Berkeley, CA 94704
Tel: 510-846-8676
E-Mail: caijing516@berkeley.edu
Ann Harrison
The Wharton School
University of Pennsylvania
2016 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6370
Tel: 215 746 3132
E-Mail: annh@wharton.upenn.edu
AB - We explore the impact of a tax reform in some provinces of China which eliminated the value-added tax on some investment goods. While the goal of the experiment was to encourage upgrading of technology, our results suggest that there was no evident increase overall in fixed investment, and employment fell significantly in the treated provinces and sectors. The reform reduced the total number of employees for all types of firms. For domestic firms, it reduced employment by almost 8%. Our results are robust to a variety of approaches, and suggest that the primary impact of the policy has been to induce labor-saving growth. This experiment has since been extended to the rest of China.
ER -
TY - JOUR
AU - Feldstein,Martin S.
TI - The Tax Reform Act of 1986: Comment on the 25th Anniversary
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17531
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17531
L1 - http://www.nber.org/papers/w17531.pdf
N1 - Author contact info:
Martin S. Feldstein
President Emeritus
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138-5398
Tel: 617/868-3905
Fax: 617/868-7194
E-Mail: msfeldst@nber.org
AB - The Tax Reform Act of 1986 was a powerful pro-growth force for the American economy. Equally important, as we look back on it after 25 years, we also see that it taught us two important lessons. First, it showed that politicians with very different political philosophies on the right and on the left could agree on a major program of tax rate reduction and tax reform. Second, it showed that the amount of taxable income is very sensitive to marginal tax rates.
More specifically, the evidence based on the 1986 tax rate reductions shows that the response of taxpayers to reductions in marginal tax rates offsets a substantial portion of the revenue that would otherwise be lost. This implies that combining a broadening of the tax base that raises revenue equal to 10 percent of existing personal income tax revenue with a 10 percent across the board cut in all marginal tax rates would raise revenue equal to about four percent of existing tax revenue. With personal income tax revenue in 2011 of about $1 trillion, that four percent increase in net revenue would be $40 billion at the current level of taxable income or more than $500 billion over the next ten years.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Pinto,Brian
AU - Sushko,Vladyslav
TI - Financial Sector Ups and Downs and the Real Sector: Big Hindrance, Little Help
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17530
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17530
L1 - http://www.nber.org/papers/w17530.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Brian Pinto
MSN MC4-406
The World Bank, 1818 H Street NW
Washington DC 20433
E-Mail: bpinto2@worldbank.org
Vladyslav Sushko
Bank for International Settlements
Centralbahnplatz 2
4002 Basel
Switzerland
E-Mail: vlad.sushko@bis.org
AB - We examine how financial expansion and contraction cycles affect the broader economy through their impact on 8 real economic sectors in a panel of 28 countries over 1960-2005, paying particular attention to large, or sharp, contractions and magnifying and mitigating factors. Overall, the construction sector is the most responsive to financial sector growth, with a number of others such as government, public utilities, and transportation also exhibiting significant sensitivity to lagged financial sector growth. Sharp fluctuations in the financial sector have asymmetric effects, with the majority of real sectors adversely affected by contractions but not helped by expansions. The adverse effects of financial contractions are transmitted almost exclusively by the financial openness channel with foreign reserves mitigating these effects with a sizeable (10 to 15 times greater) impact during sharp financial contractions. Both effects are magnified during particularly large financial contractions (with coefficients on interaction terms 2 to 3 times greater than when all contractions are considered). Consequent upon a financial contraction, the most severe real sector contractions occur in countries with high financial openness, relative predominance of construction, manufacturing, and wholesale and retail sectors, and low international reserves. Finally, we find that abrupt financial contractions are more likely to follow periods of accelerated growth, indicative of “up by the stairs, down by the elevator dynamics.”
ER -
TY - JOUR
AU - Pollak,Robert A.
TI - Allocating Time: Individuals' Technologies, Household Technology, Perfect Substitutes, and Specialization
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17529
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17529
L1 - http://www.nber.org/papers/w17529.pdf
N1 - Author contact info:
Robert Pollak
Washington University in St. Louis
Arts and Sciences
and the Olin Business School
Campus Box 1133
1 Brookings Drive
St. Louis, MO 63130-4899
Tel: 314/935-4918
Fax: 314/935-6359
E-Mail: pollak@wustl.edu
AB - In an efficient household if the spouses' time inputs are perfect substitutes, then spouses will “specialize" regardless of their preferences and the governance structure. That is, both spouses will not allocate time to both household production and the market sector. The perfect substitutes assumption implies that spouses' "unilateral" production functions (i.e., the household production function when only one spouse allocates time to home production) are closely related, satisfying a highly restrictive condition that I call "compatibility."
I introduce the “correspondence assumption,” which postulates that the unilateral production functions in a newly formed household coincide with individuals’ production functions before they enter marriage. The correspondence assumption provides a plausible account of the genesis of household technology and simplifies its estimation. I introduce the "additivity assumption” which postulates that the household production function is the sum of the spouses' unilateral production functions and argue that additivity is implicit in much of the new home economics. Together, the correspondence and additivity assumptions imply that individuals’ technologies reveal the entire household technology.
I show that perfect substitutes, additivity and concavity imply that the household production function is of the same form as the unilateral production functions, exhibits constant returns to scale, and depends on the spouses' total time inputs, measured in efficiency units.
ER -
TY - JOUR
AU - Conti,Rena M.
AU - Huskamp,Haiden A.
AU - Berndt,Ernst R.
TI - The Effect of FDA Advisories on Branded Pharmaceutical Firms' Valuations and Promotion Efforts
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17528
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17528
L1 - http://www.nber.org/papers/w17528.pdf
N1 - Author contact info:
Rena M. Conti
University of Chiccago
Department of Pediatrics
Section of Heamtology/Oncology
5812 S. Ellis Street
Chicago, IL 60637
E-Mail: rconti@uchicago.edu
Haiden A. Huskamp
Harvard Medical School
Dept. of Health Care Policy
180 Longwood Avenue
Boston, MA 02115
E-Mail: huskamp@hcp.med.harvard.edu
Ernst R. Berndt
MIT Sloan School of Management
100 Main Street, E62-518
Cambridge, MA 02142
Tel: 617/253-2665
Fax: 617-227-0880
E-Mail: eberndt@mit.edu
AB - The US Food and Drug Administration (FDA) expends considerable efforts in regulating medications approved for use. Yet the impact of medication labeling changes on brand pharmaceutical products, and whether and what firms do to respond to increased information regarding the safety and efficacy of a drug, have not be characterized. We propose a behavioral framework for examining the effects of FDA advisories on branded pharmaceutical firms and their products. We empirically assess the impact of recent FDA advisories on the stock market valuations of a sample of branded pharmaceutical manufacturing firms using event study methods. We examine whether and how branded pharmaceutical manufacturers respond to an advisory by assessing changes in promotion compared to non-affected firms. We find firms targeted by an advisory have average stock price declines of 3% in three days and 11% in five days following the advisory release, and in turn appear to decrease total physician-directed promotion spending, journals ads and detailing visits significantly six months following the advisory release; the provision of free samples is unaffected. We find no changes among therapeutic substitutes unaffected by the advisory. Results of sensitivity analyses suggest firms with market dominant positions experience similar decreases in stock market valuations and physician-directed promotion compared to pooled results. The results are also robust to alternative definitions of the timing of advisory release dates and the severity of advisories’ wording. Theory and empirical results suggest the public release of FDA advisories negatively impacts firm’s short-term market valuations. The results suggest an additional rationale for previously documented declines in prescribing after FDA advisory releases – significant declines in physician-directed promotion following FDA advisory releases; the combined (and likely correlated) effects of the release of the advisory and declines in physician-directed promotion on prescribing behavior are likely larger than the sum of the independent effects.
ER -
TY - JOUR
AU - Algan,Yann
AU - Cahuc,Pierre
AU - Shleifer,Andrei
TI - Teaching Practices and Social Capital
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17527
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17527
L1 - http://www.nber.org/papers/w17527.pdf
N1 - Author contact info:
Yann Algan
Department of Economics
Sciences Po
75007 Paris, France
28 rue des Saints-Pères 75007 Paris
France
E-Mail: yann.algan@sciences-po.org
Pïerre Cahuc
CREST, Ecole Polytechnique
15 boulevard Gabriel Peri
92245 Malakoff Cedex, France
Tel: (33)1 41 17 37 17
E-Mail: cahuc@ensae.fr
Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
AB - We use several data sets to consider the effect of teaching practices on student beliefs, as well as on organization of firms and institutions. In cross-country data, we show that teaching practices (such as copying from the board versus working on projects together) are strongly related to various dimensions of social capital, from beliefs in cooperation to institutional outcomes. We then use micro-data to investigate the influence of teaching practices on student beliefs about cooperation both with each other and with teachers, and students’ involvement in civic life. A two-stage least square strategy provides evidence that teaching practices have an independent sizeable effect on student social capital. The relationship between teaching practices and student test performance is nonlinear. The evidence supports the idea that progressive education promotes social capital.
ER -
TY - JOUR
AU - Barreca,Alan
AU - Fishback,Price V.
AU - Kantor,Shawn
TI - Agricultural Policy, Migration, and Malaria in the 1930s United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17526
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17526
L1 - http://www.nber.org/papers/w17526.pdf
N1 - Author contact info:
Alan Barreca
206 Tilton Hall
Tulane University
New Orleans, LA
70118
Tel: 504-252-0258
E-Mail: abarreca@tulane.edu
Price V. Fishback
Department of Economics
University of Arizona
Tucson, AZ 85721
Tel: 520/621-4421
Fax: 520/621-8450
E-Mail: pfishback@eller.arizona.edu
Shawn E. Kantor
School of Social Sciences, Humanities and Arts
University of California, Merced
5200 N. Lake Road
Merced, CA 95343
Tel: 209-228-2956
Fax: 209-228-4007
E-Mail: skantor@ucmerced.edu
AB - The Agricultural Adjustment Act (AAA) caused a population shift in the United States in the 1930s. Evaluating the effects of the AAA on the incidence of malaria can therefore offer important lessons regarding the broader consequences of demographic changes. Using a quasi-first difference model and a robust set of controls, we find a negative association between AAA expenditures and malaria death rates at the county level. Further, we find the AAA caused relatively low-income groups to migrate from counties with high-risk malaria ecologies. These results suggest that the AAA-induced migration played an important role in the reduction of malaria.
ER -
TY - JOUR
AU - Khandelwal,Amit K.
AU - Schott,Peter K.
AU - Wei,Shang-Jin
TI - Trade Liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17524
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17524
L1 - http://www.nber.org/papers/w17524.pdf
N1 - Author contact info:
Amit Khandelwal
Graduate School of Business
Columbia University
Uris Hall 606, 3022 Broadway
New York, NY 10027
Tel: 212/854-7506
Fax: 212/316-9219
E-Mail: ak2796@columbia.edu
Peter K. Schott
Yale School of Management
135 Prospect Street
New Haven, CT 06520-8200
Tel: 203/436-4260
Fax: 203/432-6974
E-Mail: peter.schott@yale.edu
Shang-Jin Wei
Graduate School of Business
Columbia University
Uris Hall 619
3022 Broadway
New York, NY 10027-6902
Tel: 212/854-9139
E-Mail: shangjin.wei@columbia.edu
AB - If trade barriers are managed by inefficient institutions, trade liberalization can lead to greater-than-expected gains. We examine Chinese textile and clothing exports before and after the elimination of externally imposed export quotas. We find that the surge in export value and decline in export prices following quota removal is driven by net entry, and show that this dominance is inconsistent with use of a productivity-based allocation of quota licenses by the Chinese government. Our counterfactual implies that elimination of misallocated quotas raised the overall productivity gain of quota removal by 28 percent.
ER -
TY - JOUR
AU - Rin,Marco Da
AU - Hellmann,Thomas F.
AU - Puri,Manju
TI - A survey of venture capital research
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17523
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17523
L1 - http://www.nber.org/papers/w17523.pdf
N1 - Author contact info:
Marco Da Rin
Department of Finance-Office K 936
Tilburg University
Warandelaan 2
P.O. Box 90153
5000 LE Tilburg
The Netherlands
Tel: 31 13 466 2054
Fax: 31 13 466 2875
E-Mail: marco.darin@uvt.nl
Thomas F. Hellmann
Sauder School of Business
University of British Columbia
2053 Main Mall
Vancouver, BC V6T 1Z2
CANADA
Tel: 604/822-8476
Fax: 604/822-8477
E-Mail: hellmann@sauder.ubc.ca
Manju Puri
Fuqua School of Business
Duke University
1 Towerview Drive, Box 90120
Durham, NC 27708-0120
Tel: 919/660-7657
Fax: 919/681-6246
E-Mail: mpuri@duke.edu
AB - This survey reviews the growing body of academic work on venture capital. It lays out the major data sources used. It examines the work on venture capital investments in companies, looking at issues of selection, contracting, post-investment services and exits. The survey considers recent work on organizational structures of venture capital firms, and the relationship between general and limited partners. It discusses the work on the returns to venture capital investments. It also examines public policies, and the role of venture capital in the economy at large.
ER -
TY - JOUR
AU - Rydqvist,Kristian
AU - Spizman,Joshua
AU - Strebulaev,Ilya A.
TI - Government Policy and Ownership of Financial Assets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17522
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17522
L1 - http://www.nber.org/papers/w17522.pdf
N1 - Author contact info:
Kristian Rydqvist
Binghamton University
State University of New York
PO BOX 6000
Binghamton, NY 13902-6000
E-Mail: rydqvist@binghamton.edu
Joshua Spizman
Loyola Marymount University
Hilton Center for Business
1 LMU Drive, MS 8385
Los Angeles, CA 90045-2659
E-Mail: joshua.spizman@lmu.edu
Ilya A. Strebulaev
Graduate School of Business
Stanford University
655 Knight Way
Stanford, CA 94305
Tel: 650/725-8239
Fax: 650/725-7979
E-Mail: istrebulaev@stanford.edu
AB - Since World War II, direct stock ownership by households across the globe has largely been replaced by indirect stock ownership by financial institutions. We argue that tax policy is the driving force. Using long time-series from eight countries, we show that the fraction of household ownership decreases with measures of the tax benefits of holding stocks inside tax-deferred plans. This finding is important for policy considerations on effective taxation and for financial economics research on the long-term effects of taxation on corporate finance and asset prices.
ER -
TY - JOUR
AU - Demidova,Svetlana
AU - Rodriguez-Clare,Andres
TI - The Simple Analytics of the Melitz Model in a Small Open Economy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17521
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17521
L1 - http://www.nber.org/papers/w17521.pdf
N1 - Author contact info:
Svetlana Demidova
Department of Economics
McMaster University
Canada
E-Mail: demidov@mcmaster.ca
Andres Rodriguez-Clare
University of California at Berkeley
Department of Economics
Berkeley, CA 94720-3880
E-Mail: andres1000@gmail.com
AB - In this paper we present a version of the Melitz (2003) model for the case of a small economy and summarize its key relationships with the aid of a simple figure. We then use this figure to provide an intuitive analysis of the implications of asymmetric changes in trade barriers and show that a decline in import costs always benefits the liberalizing country. This stands in contrast to variants of the Melitz model with a freely traded (outside) sector, such as Demidova (2008) and Melitz and Ottaviano (2008), where the country that reduces importing trade costs experiences a decline in welfare.
ER -
TY - JOUR
AU - Head,Allen
AU - Liu,Lucy Qian
AU - Menzio,Guido
AU - Wright,Randall
TI - Sticky Prices: A New Monetarist Approach
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17520
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17520
L1 - http://www.nber.org/papers/w17520.pdf
N1 - Author contact info:
Allen Head
Dept. of Economics
Queen's University
Kingston ON K7L 3N6
CANADA
E-Mail: heada@qed.econ.queensu.ca
Lucy Qian Liu
International Monetary Fund
Washington, DC
E-Mail: qliu3@imf.org
Guido Menzio
Department of Economics
University of Pennsylvania
467 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
Tel: 773/865-6337
Fax: 215/573-2057
E-Mail: gmenzio@econ.upenn.edu
Randall Wright
Department of Finance and Department of Economics
University of Wisconsin - Madison
Grainger Hall
975 University Ave
Madison, WI 53706
E-Mail: rwright@bus.wisc.edu
AB - Why do some sellers set nominal prices that apparently do not respond to changes in the aggregate price level? In many models, prices are sticky by assumption; here it is a result. We use search theory, with two consequences: prices are set in dollars, since money is the medium of exchange; and equilibrium implies a nondegenerate price distribution. When the money supply increases, some sellers may keep prices constant, earning less per unit but making it up on volume, so profit stays constant. The calibrated model matches price-change data well. But, in contrast with other sticky-price models, money is neutral.
ER -
TY - JOUR
AU - Kolesár,Michal
AU - Chetty,Raj
AU - Friedman,John N.
AU - Glaeser,Edward L.
AU - Imbens,Guido W.
TI - Identification and Inference with Many Invalid Instruments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17519
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17519
L1 - http://www.nber.org/papers/w17519.pdf
N1 - Author contact info:
Michal Kolesar
Department of Economics
Harvard University
1805 Cambridge St.
Cambridge, MA 02138
E-Mail: kolesarmi@gmail.com
Raj Chetty
Department of Economics
Harvard University
1805 Cambridge St.
Cambridge, MA 02138
Tel: 617-744-9492
E-Mail: chetty@fas.harvard.edu
John N. Friedman
Harvard Kennedy School
Taubman 356
79 JFK St.
Cambridge, MA 02138
Tel: 617/233-6965
Fax: 617/496-1722
E-Mail: john_friedman@harvard.edu
Edward L. Glaeser
Department of Economics
315A Littauer Center
Harvard University
Cambridge, MA 02138
Tel: 617/495-0575
Fax: 617/495-7730
E-Mail: eglaeser@harvard.edu
Guido Imbens
Department of Economics
Littauer Center
Harvard University
1805 Cambridge Street
Cambridge, MA 02138
Tel: 617/384-7485
Fax: 617/495-7730
E-Mail: imbens@fas.harvard.edu
AB - We analyze linear models with a single endogenous regressor in the presence of many instrumental variables. We weaken a key assumption typically made in this literature by allowing all the instruments to have direct effects on the outcome. We consider restrictions on these direct effects that allow for point identification of the effect of interest. The setup leads to new insights concerning the properties of conventional estimators, novel identification strategies, and new estimators to exploit those strategies. A key assumption underlying the main identification strategy is that the product of the direct effects of the instruments on the outcome and the effects of the instruments on the endogenous regressor has expectation zero. We argue in the context of two specific examples with a group structure that this assumption has substantive content.
ER -
TY - JOUR
AU - Gormley,Todd A.
AU - Johnson,Simon
AU - Rhee,Changyong
TI - Ending "Too Big To Fail": Government Promises vs. Investor Perceptions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17518
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17518
L1 - http://www.nber.org/papers/w17518.pdf
N1 - Author contact info:
Todd Gormley
The Wharton School
University of Pennsylvania
3620 Locust Walk, Suite 2400
Philadelphia, PA 19104
Tel: 215-746-0496
E-Mail: tgormley@wharton.upenn.edu
Simon Johnson
MIT Sloan School of Management
100 Main Street, E52-562
Cambridge, MA 02142
Tel: 617/290-9618
Fax: 617/253-2660
E-Mail: sjohnson@mit.edu
Changyong Rhee
Economics and Research Department
Asian Development Bank
6 ADB Avenue, Mandaluyong City
1550 Philippines
E-Mail: crhee@adb.org
AB - Can a government credibly promise not to bailout firms whose failure would have major negative systemic consequences? Our analysis of Korea's 1997-99 crisis, suggests an answer: No. Despite a general "no bailout" policy during the crisis, the largest Korean corporate groups (chaebol) – facing severe financial and governance problems – could still borrow heavily from households through issuing bonds at prices implying very low expected default risk. The evidence suggests "too big to fail" beliefs were not eliminated by government promises, presumably because investors believed that this policy was not time consistent. Subsequent government handling of potential and actual defaults by Daewoo and Hyundai confirmed the market view that creditors would be protected.
ER -
TY - JOUR
AU - Brav,Alon
AU - Jiang,Wei
AU - Kim,Hyunseob
TI - The Real Effects of Hedge Fund Activism: Productivity, Risk, and Product Market Competition
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17517
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17517
L1 - http://www.nber.org/papers/w17517.pdf
N1 - Author contact info:
Alon Brav
Fuqua School of Business
Duke University
One Towerview Drive
Durham, NC 27708
Tel: 919/660-2908
Fax: 919/684-2818
E-Mail: brav@duke.edu
Wei Jiang
Graduate School of Business
Columbia University
411 Uris Hall
New York, NY 10027
Tel: 212/854-9679
E-Mail: wj2006@columbia.edu
Hyunseob Kim
Duke University
Fuqua School of Business
100 Fuqua Drive
Durham, NC 27708-0120
E-Mail: hyunseob.kim@duke.edu
AB - This paper studies the long-term effect of hedge fund activism on the productivity of target firms using plant-level information from the U.S. Census Bureau. A typical target firm improves its production efficiency within two years after activism, and this improvement is concentrated in industries with a high degree of product market competition. By following plants that were sold post-intervention we also find that efficient capital redeployment is an important channel via which activists create value. Furthermore, our analyses demonstrate that measuring performance using the Compustat data is likely to lead to a downward bias because target firms experiencing greater improvement post-intervention are also more likely to disappear from the Compustat database. Finally, consistent with recent work in asset-pricing linking firm investment decisions and expected returns, we show how changes to target firms’ productivity are associated with a decline in systemic risk, particularly in competitive industries.
ER -
TY - JOUR
AU - Campbell,John Y.
AU - Cocco,João F.
TI - A Model of Mortgage Default
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17516
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17516
L1 - http://www.nber.org/papers/w17516.pdf
N1 - Author contact info:
John Y. Campbell
Morton L. and Carole S.
Olshan Professor of Economics
Department of Economics
Harvard University
Littauer Center 213
Cambridge, MA 02138
Tel: 617/496-6448
Fax: 617/495-7730
E-Mail: john_campbell@harvard.edu
Joao Cocco
London Business School
Regent's Park
London NW1 4SA, UK
E-Mail: jcocco@london.edu
AB - This paper solves a dynamic model of a household's decision to default on its mortgage, taking into account labor income, house price, inflation, and interest rate risk. Mortgage default is triggered by negative home equity, which results from declining house prices in a low inflation environment with large mortgage balances outstanding. Not all households with negative home equity default, however. The level of negative home equity that triggers default depends on the extent to which households are borrowing constrained. High loan-to-value ratios at mortgage origination increase the probability of negative home equity. High loan-to-income ratios also increase the probability of default by tightening borrowing constraints. Comparing mortgage types, adjustable-rate mortgage defaults occur when nominal interest rates increase and are substantially affected by idiosyncratic shocks to labor income. Fixed-rate mortgages default when interest rates and inflation are low, and create a higher probability of a default wave with a large number of defaults. Interest-only mortgages trade off an increased probability of negative home equity against a relaxation of borrowing constraints, but overall have the highest probability of a default wave.
ER -
TY - JOUR
AU - Razin,Assaf
AU - Wahba,Jackline
TI - Welfare Magnet Hypothesis, Fiscal Burden and Immigration Skill Selectivity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17515
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17515
L1 - http://www.nber.org/papers/w17515.pdf
N1 - Author contact info:
Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu
Jackline Wahba
Economics Division
School of Social Sciences
University of Southampton
Southampton, SO17 1BJ
United Kingdom
E-Mail: J.Wahba@soton.ac.uk
AB - This paper revisits the magnet hypothesis and investigates the impact of the welfare generosity on the difference between skilled and unskilled migration rates. The main purpose of the paper is to assess the role of mobility restriction on shaping the effect of the welfare state genrosity. In a free migration regime, the impact is expected to be negative on the skill composition of migrants while in a restricted mobility regime, the impact will be the opposite, as voters will prefer selective migration policies, favoring skilled migrants who tend to be net contributors to the fiscal system. We utilize the free labor movement within EUR (the EU, Norway and Switzerland) and the restricted movement from outside of the EUR to compare the free migration.
ER -
TY - JOUR
AU - Ghani,Ejaz
AU - Kerr,William R.
AU - O'Connell,Stephen D.
TI - Spatial Determinants of Entrepreneurship in India
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17514
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17514
L1 - http://www.nber.org/papers/w17514.pdf
N1 - Author contact info:
Ejaz Ghani
South Asia PREM
The World Bank
Washington D.C.
E-Mail: Eghani@worldbank.org
William R. Kerr
Harvard Business School
Rock Center 212
Soldiers Field
Boston, MA 02163
Tel: 617/496-7021
E-Mail: wkerr@hbs.edu
Stephen D. O'Connell
City University of New York
Department of Economics
The Graduate Center
365 Fifth Ave
New York, NY 10016-4309
E-Mail: soconnell@gc.cuny.edu
AB - We analyze the spatial determinants of entrepreneurship in India in the manufacturing and services sectors. Among general district traits, quality of physical infrastructure and workforce education are the strongest predictors of entry, with labor laws and household banking quality also playing important roles. Looking at the district-industry level, we find extensive evidence of agglomeration economies among manufacturing industries. In particular, supportive incumbent industrial structures for input and output markets are strongly linked to higher establishment entry rates. We also find substantial evidence for the Chinitz effect where small local incumbent suppliers encourage entry. The importance of agglomeration economies for entry hold when considering changes in India’s incumbent industry structures from 1989, determined before large-scale deregulation began, to 2005.
ER -
TY - JOUR
AU - Chinn,Menzie D.
AU - Eichengreen,Barry
AU - Ito,Hiro
TI - A Forensic Analysis of Global Imbalances
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17513
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17513
L1 - http://www.nber.org/papers/w17513.pdf
N1 - Author contact info:
Menzie D. Chinn
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI 53706
Tel: 608/262-7397
Fax: 608/262-2033
E-Mail: mchinn@lafollette.wisc.edu
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
Hiro Ito
Portland State University
1721 SW Broadway, Suite 241
Portland, Oregon 97201
E-Mail: ito@pdx.edu
AB - We examine whether the behavior of current account balances changed in the years preceding the global crisis of 2008-09, and assess the prospects for global imbalances in the post-crisis period. Changes in the budget balance are an important factor affecting current account balances for deficit countries such as the U.S. and the U.K. The effect of the “saving glut variables” on current account balances has been relatively stable for emerging market countries, suggesting that those factors cannot explain the bulk of their recent current account movements. We also find the 2006-08 period to constitute a structural break for emerging market countries, and to a lesser extent, for industrialized countries. We attribute the anomalous behavior of pre-crisis current account balances to stock market performance and real housing appreciation; fiscal procyclicality and the stance of monetary policy do not matter as much. Household leverage also appears to explain some of the standard model’s prediction errors. Looking forward, U.S., fiscal consolidation alone cannot induce significant deficit reduction. For China, financial development might help shrink its current account surplus, but only when it is coupled with financial liberalization. These findings suggest that unless countries implement substantially more policy change, global imbalances are unlikely to disappear.
ER -
TY - JOUR
AU - Chiu,Jonathan
AU - Meh,Cesaire
AU - Wright,Randall
TI - Innovation and Growth with Financial, and other, Frictions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17512
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17512
L1 - http://www.nber.org/papers/w17512.pdf
N1 - Author contact info:
Jonathan Chiu
Bank of Canada
234 Wellington, Ottawa, ON
K1A 0G9
Canada
E-Mail: jchiu@bank-banque-canada.ca
Cesaire Meh
Bank of Canada
234 Wellington, Ottawa, ON
K1A 0G9
Canada
E-Mail: CMeh@bank-banque-canada.ca
Randall Wright
Department of Finance and Department of Economics
University of Wisconsin - Madison
Grainger Hall
975 University Ave
Madison, WI 53706
E-Mail: rwright@bus.wisc.edu
AB - The generation and implementation of ideas, or knowledge, is crucial for economic performance. We study this process in a model of endogenous growth with frictions. Productivity increases with knowledge, which advances via innovation, and with the exchange of ideas from those who generate them to those best able to implement them (technology transfer). But frictions in this market, including search, bargaining, and commitment problems, impede exchange and thus slow growth. We characterize optimal policies to subsidize research and trade in ideas, given both knowledge and search externalities. We discuss the roles of liquidity and financial institutions, and show two ways in which intermediation can enhance efficiency and innovation. First, intermediation allows us to finance more transactions with fewer assets. Second, it ameliorates certain bargaining problems, by allowing entrepreneurs to undo otherwise sunk investments in liquidity. We also discuss some evidence, suggesting that technology transfer is a significant source of innovation and showing how it is affected by credit considerations.
ER -
TY - JOUR
AU - Wong,Yuet-Yee
AU - Wright,Randall
TI - Buyers, Sellers and Middlemen: Variations on Search-Theoretic Themes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17511
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17511
L1 - http://www.nber.org/papers/w17511.pdf
N1 - Author contact info:
Yuet-Yee Wong
Binghamton University
Department of Economics
POB 6000
Binghamton, NY 13902
E-Mail: yywong01@gmail.com
Randall Wright
Department of Finance and Department of Economics
University of Wisconsin - Madison
Grainger Hall
975 University Ave
Madison, WI 53706
E-Mail: rwright@bus.wisc.edu
AB - We study bilateral exchange, both direct trade and indirect trade that happens through chains of intermediaries or middlemen. We develop a model of this activity and present applications. This illustrates how, and how many, intermediaries get involved, and how the terms of trade are determined. We show how bargaining with one intermediary depends on upcoming negotiations with downstream intermediaries, leading to holdup problems. We discuss the roles of buyers and sellers in bilateral exchanges, and how to interpret prices. We develop a particular bargaining solution and relate it to other solutions. In addition to contrasting our framework with other models of middlemen, we discuss the connection to different branches of search theory. We also illustrate how bubbles can emerge in intermediation.
ER -
TY - JOUR
AU - Gu,Chao
AU - Wright,Randall
TI - Endogenous Credit Cycles
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17510
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17510
L1 - http://www.nber.org/papers/w17510.pdf
N1 - Author contact info:
Chao Gu
University of Missouri
E-Mail: guc@missouri.edu
Randall Wright
Department of Finance and Department of Economics
University of Wisconsin - Madison
Grainger Hall
975 University Ave
Madison, WI 53706
E-Mail: rwright@bus.wisc.edu
AB - We study models of credit with limited commitment, which implies endogenous borrowing constraints. We show that there are multiple stationary equilibria, as well as nonstationary equilibria, including some that display deterministic cyclic and chaotic dynamics. There are also stochastic (sunspot) equilibria, in which credit conditions change randomly over time, even though fundamentals are deterministic and stationary. We show this can occur when the terms of trade are determined by Walrasian pricing or by Nash bargaining. The results illustrate how it is possible to generate equilibria with credit cycles (crunches, freezes, crises) in theory, and as recently observed in actual economies.
ER -
TY - JOUR
AU - Schwartz-Ziv,Miriam
AU - Weisbach,Michael
TI - What do Boards Really Do? Evidence from Minutes of Board Meetings
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17509
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17509
L1 - http://www.nber.org/papers/w17509.pdf
N1 - Author contact info:
Miriam Schwartz-Ziv
Program on Corporate Governance
Harvard Law School
1557 Massachusetts Avenue
Cambridge, MA 02138
E-Mail: miriam.schwartz@mail.huji.ac.il
Michael Weisbach
Department of Finance
Fisher College of Business
Ohio State University
2100 Neil Ave.
Columbus, OH 43210
Tel: 614/292-3264
E-Mail: weisbach.2@osu.edu
AB - We analyze a unique database from a sample of real-world boardrooms – minutes of board meetings and board-committee meetings of eleven business companies for which the Israeli government holds a substantial equity interest. We use these data to evaluate the underlying assumptions and predictions of models of boards of directors. These models generally fall into two categories: “managerial models” assume boards play a direct role in managing the firm, and “supervisory models” assume that boards’ monitor top management but do not make business decisions themselves. Consistent with the supervisory models, our minutes-based data suggest that boards spend most of their time monitoring management: 67% of the issues they discussed were of a supervisory nature, they were presented with only a single option in 99% of the issues discussed, and they disagreed with the CEO only 3.3% of the time. In addition, managerial models describe boards at times as well: Boards requested to receive further information or an update for 8% of the issues discussed, and they took an initiative with respect to 8.1% of them. In 63% of the meetings, boards took at least one of these actions or did not vote in line with the CEO.
ER -
TY - JOUR
AU - Fernández,Raquel
AU - Wong,Joyce Cheng
TI - The Disappearing Gender Gap: The Impact of Divorce, Wages, and Preferences on Education Choices and Women's Work
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17508
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17508
L1 - http://www.nber.org/papers/w17508.pdf
N1 - Author contact info:
Raquel Fernández
Department of Economics
New York University
19 West 4th Street, 6th Floor
New York, NY 10012
Tel: 212/998-8908
Fax: 212/995-4186
E-Mail: raquel.fernandez@nyu.edu
Joyce C. Wong
Department of Economics
New York University
19 West 4th Street, 6th Floor
New York, NY 10012
E-Mail: cwong@nyu.edu
AB - Women born in 1935 went to college significantly less than their male counterparts and married women’s labor force participation (LFP) averaged 40% between the ages of thirty and forty. The cohort born twenty years later behaved very differently. The education gender gap was eliminated and married women’s LFP averaged 70% over the same ages. In order to evaluate the quantitative contributions of the many significant changes in the economic environment, family structure, and social norms that occurred over this period, this paper develops a dynamic life-cycle model calibrated to data relevant to the 1935 cohort. We find that the higher probability of divorce and the changes in wage structure faced by the 1955 cohort are each able to explain, in isolation, a large proportion (about 60%) of the observed changes in female LFP. After combining all economic and family structure changes, we find that a simple change in preferences towards work can account for the remaining change in LFP. To eliminate the education gender gap requires, on the other hand, for the psychic cost of obtaining higher education to change asymmetrically for women versus men.
ER -
TY - JOUR
AU - Cobb-Clark,Deborah A.
AU - Tekin,Erdal
TI - Fathers and Youth's Delinquent Behavior
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17507
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17507
L1 - http://www.nber.org/papers/w17507.pdf
N1 - Author contact info:
Deborah A. Cobb-Clark
Melbourne Institute of Applied Economics
and Social Research
Faculty of Business and Economics
The University of Melbourne
Parkville VIC, 3010 Australia
Tel: +61 3 9035 4219
Fax: +61 3 8344 2111
E-Mail: d.cobb-clark@unimelb.edu.au
Erdal Tekin
Department of Economics
Andrew Young School of Policy Studies
Georgia State University
P.O. Box 3992
Atlanta, GA 30302-3992
Tel: 404/413-0163
Fax: 404/413-0145
E-Mail: tekin@gsu.edu
AB - This paper analyzes the relationship between having one or more father figures and the likelihood that young people engage in delinquent criminal behavior. We pay particular attention to distinguishing the roles of residential and non-residential, biological fathers as well as stepfathers. Using data from the National Longitudinal Study of Adolescent Health, we find that adolescent boys engage in more delinquent behavior if there is no father figure in their lives. However, adolescent girls' behavior is largely independent of the presence (or absence) of their fathers. The strong effect of family structure is not explained by the lack of paternal involvement that generally comes with fathers’ absence, even though adolescents, especially boys, who spend time doing things with their fathers usually have better outcomes. There is also a link between adult delinquent behavior and adolescent family structure that cannot be explained by fathers' involvement with their adolescent sons and is only partially explained by fathers' involvement with their adolescent daughters. Finally, the strong link between adolescent family structure and delinquent behavior is not accounted for by the income differentials associated with fathers' absence. Our results suggest that the presence of a father figure during adolescence is likely to have protective effects, particularly for males, in both adolescence and young adulthood.
ER -
TY - JOUR
AU - Simsek,Alp
TI - Speculation and Risk Sharing with New Financial Assets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17506
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17506
L1 - http://www.nber.org/papers/w17506.pdf
N1 - Author contact info:
Alp Simsek
Department of Economics
Harvard University
Littauer Center 319
Cambridge, Ma. 02138
Tel: 617/496-3374
Fax: 617/495-7730
E-Mail: asimsek@fas.harvard.edu
AB - While the traditional view of financial innovation emphasizes the risk sharing role of new financial assets, belief disagreements about these assets naturally lead to speculation, which represents a powerful economic force in the opposite direction. This paper investigates the effect of financial innovation on portfolio risks in an economy when both the risk sharing and the speculation forces are present. I consider this question in a standard mean-variance framework. Financial assets provide hedging services but they are also subject to speculation because traders do not necessarily agree about their payoffs. I define the average variance of traders' net worths as a measure of portfolio risks for this economy, and I decompose it into two components: the uninsurable variance, defined as the average variance that would obtain if there were no belief disagreements, and the speculative variance, defined as the residual variance that results from speculative trades based on belief disagreements. Financial innovation always decreases the uninsurable variance because new assets increase the possibilities for risk sharing. My main result shows that financial innovation also always increases the speculative variance. This is true even if traders completely agree about the payoffs of new assets. The intuition behind this result is the hedge-more/bet-more effect: Traders use new assets to hedge their bets on existing assets, which in turn enables them to place larger bets and take on greater risks.
The net effect of financial innovation on portfolio risks depends on the quantitative strength of its effects on the uninsurable and the speculative variances. I consider a calibration of the model for new assets linked to national incomes of G7 countries, which were recommended by Athanasoulis and Shiller (2001) to facilitate risk sharing. For reasonable levels of belief disagreements, these assets would actually increase the average consumption risks of individuals in G7 countries. In addition, a profit seeking market maker would introduce a different subset of these assets than the ones proposed by Athanasoulis and Shiller (2001). The endogenous set of new assets would be directed towards increasing the opportunities for speculation rather than risk sharing.
ER -
TY - JOUR
AU - Kartashov,Vasily
AU - Maurer,Raimond
AU - Mitchell,Olivia S.
AU - Rogalla,Ralph
TI - Lifecycle Portfolio Choice with Systematic Longevity Risk and Variable Investment-Linked Deferred Annuities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17505
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17505
L1 - http://www.nber.org/papers/w17505.pdf
N1 - Author contact info:
Vasily Kartashov
Finance Department
Goethe University
Grueneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: kartashov@finance.uni-frankfurt.de
Raimond Maurer
Finance Department
Goethe University
Grüneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: rmaurer@wiwi.uni-frankfurt.de
Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
Ralph Rogalla
Finance Department
Goethe University
Grüneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: rogalla@wiwi.uni-frankfurt.de
AB - This paper assesses the impact of variable investment-linked deferred annuities (VILDAs) on lifecycle consumption, saving, and portfolio allocation patterns given stochastic and systematic mortality. Insurers have taken two approaches to manage systematic mortality risks, namely self-insurance and risk transfer to purchasers of the annuity products. We demonstrate that self-insurance leads to high loadings, so that households offered a choice would favor the risk transfer scheme. Reservation loadings on the actuarially fair VILDA price for non-participation are 0.5-8%; if insurers cannot hedge within this range, they will transfer systematic longevity risks to the annuitants. Our findings have implications for new payout products that may be attractive to older households seeking to protect against retirement shortfalls.
ER -
TY - JOUR
AU - Hanushek,Eric A.
AU - Woessmann,Ludger
AU - Zhang,Lei
TI - General Education, Vocational Education, and Labor-Market Outcomes over the Life-Cycle
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17504
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17504
L1 - http://www.nber.org/papers/w17504.pdf
N1 - Author contact info:
Eric A. Hanushek
Hoover Institution
Stanford University
Stanford, CA 94305-6010
Tel: 650/736-0942
Fax: 650/723-1687
E-Mail: hanushek@stanford.edu
Ludger Woessmann
University of Munich
Ifo Institute for Economic Research and CESifo
Poschingerstr. 5
81679 Munich, Germany
E-Mail: woessmann@ifo.de
Lei Zhang
Institute for Fiscal Studies
Tsinghua University
Beijing 100084, China
E-Mail: zlei89@gmail.com
AB - Policy debates about the balance of vocational and general education programs focus on the school-to-work transition. But with rapid technological change, gains in youth employment from vocational education may be offset by less adaptability and thus diminished employment later in life. To test our main hypothesis that any relative labor-market advantage of vocational education decreases with age, we employ a difference-in-differences approach that compares employment rates across different ages for people with general and vocational education. Using micro data for 18 countries from the International Adult Literacy Survey, we find strong support for the existence of such a trade-off, which is most pronounced in countries emphasizing apprenticeship programs. Results are robust to accounting for ability patterns and to propensity-score matching.
ER -
TY - JOUR
AU - Waldfogel,Joel
TI - Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music since Napster
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17503
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17503
L1 - http://www.nber.org/papers/w17503.pdf
N1 - Author contact info:
Joel Waldfogel
Frederick R. Kappel Chair in Applied Economics
3-177 Carlson School of Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Tel: 612/626-7128
E-Mail: jwaldfog@umn.edu
AB - Recent technological changes may have altered the balance between technology and copyright law for digital products. While file-sharing has reduced revenue, other technological changes have reduced the costs of bringing creative works to market. As a result, we don’t know whether the effective copyright protection currently available provides adequate incentives to bring forth a steady stream of valuable new products. This paper assesses the quality of new recorded music since Napster, using three independent approaches. The first is an index of the quantity of high-quality music based on critics’ retrospective lists. The second and third approaches rely directly on music sales and airplay data, respectively, using of the idea that if one vintage’s music is better than another’s, its superior quality should generate higher sales or greater airplay through time, after accounting for depreciation. The three resulting indices of vintage quality for the past half-century are both consistent with each other and with other historical accounts of recorded music quality. There is no evidence of a reduction in the quality of music released since Napster, and the two usage-based indices suggest an increase since 1999. Hence, researchers and policymakers thinking about the strength of copyright protection should supplement their attention to producer surplus with concern for consumer surplus as well.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Jinjarak,Yothin
AU - Park,Donghyun
TI - Capital Flows and Economic Growth in the Era of Financial Integration and Crisis, 1990-2010
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17502
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17502
L1 - http://www.nber.org/papers/w17502.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Yothin Jinjarak
University of London
College Buildings, 534
London
UK, WC1H 0XG
E-Mail: yothin.jinjarak@gmail.com
Donghyun Park
Economics and Research Department
Asian Development Bank
Manila, Philippines
Tel: (632) 632-5825/6385
Fax: (632) 636-2342
E-Mail: dpark@adb.org
AB - We investigate the relationship between economic growth and lagged international capital flows, disaggregated into FDI, portfolio investment, equity investment, and short-term debt. We follow about 100 countries during 1990-2010 when emerging markets became more integrated into the international financial system. We look at the relationship both before and after the global crisis. Our study reveals a complex and mixed picture. The relationship between growth and lagged capital flows depends on the type of flows, economic structure, and global growth patterns. We find a large and robust relationship between FDI – both inflows and outflows – and growth. The relationship between growth and equity flows is smaller and less stable. Finally, the relationship between growth and short-term debt is nil before the crisis, and negative during the crisis.
ER -
TY - JOUR
AU - Corsetti,Giancarlo
AU - Dedola,Luca
AU - Viani,Francesca
TI - Traded and Nontraded Goods Prices, and International Risk Sharing: an Empirical Investigation.
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17501
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17501
L1 - http://www.nber.org/papers/w17501.pdf
N1 - Author contact info:
Giancarlo Corsetti
Faculty of Economics
Cambridge University
Sidgwick Avenue
CB3 9DD Cambridge, Cambs
United Kingdom
Tel: +44(0)1223335235
E-Mail: giancarlo.corsetti@gmail.com
Luca Dedola
Monetary Policy Research Div.
European Central Bank
Postfach 16 03 19
D- 60066 Frankfurt am Manin GERMANY
E-Mail: luca.dedola@ecb.int
Francesca Viani
Bank of Spain
C/ Alcalá, 48
Madrid SPAIN
E-Mail: francesca.viani@bde.es
M3 - presented at "ISOM", June 17-18, 2011
AB - Accounting for the pervasive evidence of limited international risk sharing is an important hurdle for open-economy models, especially when these are adopted in the analysis of policy trade-offs likely to be affected by imperfections in financial markets. Key to the literature is the evidence, at odds with efficiency, that consumption is relatively high in countries where its international relative price (the real exchange rate) is also high. We reconsider the relation between cross-country consumption differentials and real exchange rates, by decomposing it into two components, reflecting the prices of tradable and nontradable goods, respectively. We document that, as a common pattern among OECD countries, both components tend to contribute to the overall lack of risk sharing, with the tradable price component playing the dominant role in accounting for efficiency deviations. We relate these findings to two mechanisms proposed by the literature to reconcile open economy models with the data. One features strong Balassa-Samuelson effects on nontradable prices due to productivity gains in the tradable sector, with a muted offsetting response of tradable prices. The other, endogenous income effects causing nontradable but especially tradable prices to appreciate with a rise in domestic consumption demand.
ER -
TY - JOUR
AU - Li,Yiting
AU - Rocheteau,Guillaume
AU - Weill,Pierre-Olivier
TI - Liquidity and the Threat of Fraudulent Assets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17500
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17500
L1 - http://www.nber.org/papers/w17500.pdf
N1 - Author contact info:
Yiting Li
Department of Economics
National Taiwan University
21 Hsu-Chow Rd. 100 Taipei, Taiwan
E-Mail: yitingli@ntu.edu.tw
Guillaume Rocheteau
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, California 9269
E-Mail: grochete@uci.edu
Pierre-Olivier Weill
Department of Economics
University of California, Los Angeles
Bunche Hall 8283
Los Angeles, CA 90095
Tel: 310/794-6495
Fax: 310/825-9528
E-Mail: poweill@econ.ucla.edu
AB - We study an over-the-counter (OTC) market with bilateral meetings and bargaining where the usefulness of assets, as means of payment or collateral, is limited by the threat of fraudulent practices. We assume that agents can produce fraudulent assets at a positive cost, which generates endogenous upper bounds on the quantity of each asset that can be sold, or posted as collateral in the OTC market. Each endogenous, asset-specific, resalability constraint depends on the vulnerability of the asset to fraud, on the frequency of trade, and on the current and future prices of the asset. In equilibrium, the set of assets can be partitioned into three liquidity tiers, which differ in their resalability, their prices, their sensitivity to shocks, and their responses to policy interventions. The dependence of an asset's resalability on its price creates a pecuniary externality, which leads to the result that some policies commonly thought to improve liquidity can be welfare reducing.
ER -
TY - JOUR
AU - Fullerton,Don
AU - Wolfram,Catherine
TI - The Design and Implementation of U.S. Climate Policy: An Introduction
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17499
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17499
L1 - http://www.nber.org/papers/w17499.pdf
N1 - Author contact info:
Don Fullerton
Department of Finance
University of Illinois
BIF Box#30 (MC520)
515 East Gregory Drive
Champaign, IL 61820
Tel: 217/244-3621
Fax: 217/244-3102
E-Mail: dfullert@illinois.edu
Catherine Wolfram
Haas School of Business
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-2588
Fax: 510/643-1420
E-Mail: wolfram@haas.berkeley.edu
M3 - presented at "The Design & Implementation of US Climate Policy", May 13-14, 2010
AB - While economic models have already proven useful to analyze big picture questions about climate policy such as the choice between a carbon tax or cap-and-trade permit system, the 19 chapters in this book show how economic models also are useful to address the many remaining smaller questions that arise as policy is implemented. For example, chapters consider: the tradeoffs policymakers confront in deciding whether to implement the policy upstream on energy producers or downstream on energy users; how to monitor and enforce climate policy; how Federal actions might interact with climate policies at other levels of government or with other non-climate policies; the distributional effects of different policy variations; policies that might impact particular sectors, including residential energy use, agriculture and transportation; and specific questions regarding offsets, trade, innovation, and adaptation.
ER -
TY - JOUR
AU - Whalley,John
TI - What Role for Trade in a Post 2012 Global Climate Policy Regime
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17498
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17498
L1 - http://www.nber.org/papers/w17498.pdf
N1 - Author contact info:
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB - This paper discusses the role that trade can potentially play in both negotiating and operating a post Kyoto/post 2012 global climate policy regime. As an addition to the bargaining set for a global climate negotiation, trade in principle widens the range of jointly beneficial potential outcomes and can in this sense be a potential facilitator of an agreed global climate regime. The reverse is also true, that in a linked climate-trade-finance global policy coordination structure that goes well beyond what was envisioned at Bretton Woods, climate now added to the global policy bargaining set also offers the prospect of potentially stronger trade disciplines (and even beyond WTO disciplines being negotiated). Trade policy can as well be an instrument for the implementation of a global climate regime, since trade provides a mechanism for achieving an internalization outcome for the global externality that climate change represents, and that provides a potentially more efficient outcome and also helps meet distributional objectives. In short, trade added to the emerging post 2012 climate regime can both expand the bargaining set for both (effectively linked) negotiations, and additionally provide an instrument for the implementation of an agreed outcome.
ER -
TY - JOUR
AU - Prasad,Eswar S.
TI - Role Reversal in Global Finance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17497
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17497
L1 - http://www.nber.org/papers/w17497.pdf
N1 - Author contact info:
Eswar S. Prasad
Dyson School of Applied Economics and
Management
Cornell University
440 Warren Hall
Ithaca, NY 14853
Tel: 607/255-5687
Fax: 607/255-9984
E-Mail: eswar.prasad@cornell.edu
AB - I document that emerging markets have cast off their “original sin”--their external liabilities are no longer dominated by foreign-currency debt and have instead shifted sharply towards direct investment and portfolio equity. Their external assets are increasingly concentrated in foreign exchange reserves held in advanced economy government bonds. Given the enormous and rising public debt burdens of reserve currency economies, this means that the long-term risk on emerging markets’ external balance sheets is shifting to the asset side. However, emerging markets continue to look for more insurance against balance of payments crises, even as self-insurance through reserve accumulation itself becomes riskier. I discuss a possible mechanism for global liquidity insurance that would meet emerging markets’ demand for insurance with fewer domestic policy distortions while facilitating a quicker adjustment of global imbalances. I also argue that emerging markets have become less dependent on foreign finance and more resilient to capital flow volatility. The main risk that increasing financial openness poses for these economies is that capital flows exacerbate vulnerabilities arising from weak domestic policies and institutions.
ER -
TY - JOUR
AU - Hummels,David
AU - Jørgensen,Rasmus
AU - Munch,Jakob R.
AU - Xiang,Chong
TI - The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17496
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17496
L1 - http://www.nber.org/papers/w17496.pdf
N1 - Author contact info:
David Hummels
Krannert School of Management
403 West State Street
Purdue University
West Lafayette, IN 47907-1310
Tel: 765/494-4495
Fax: 765/494-9658
E-Mail: hummelsd@purdue.edu
Rasmus Jorgensen
Department of Economics
University of Copenhagen
Øster Farimagsgade 5
Building 26
DK-1353 Copenhagen K
E-Mail: rasmus.jorgensen@econ.ku.dk
Jakob Munch
Department of Economics
University of Copenhagen
Øster Farimagsgade 5
Building 26
DK-1353 Copenhagen K
E-Mail: Jakob.Roland.Munch@econ.ku.dk
Chong Xiang
Department of Economics
Purdue University
403 West State Street
West Lafayette, IN 47907-2506
Tel: 765/494-4499
Fax: 765/496-1778
E-Mail: cxiang@purdue.edu
AB - We estimate how offshoring and exporting affect wages by skill type. Our data match the population of Danish workers to the universe of private-sector Danish firms, whose trade flows are broken down by product and origin and destination countries. Our data reveal new stylized facts about offshoring activities at the firm level, and allow us to both condition our identification on within-job-spell changes and construct instruments for offshoring and exporting that are time varying and uncorrelated with the wage setting of the firm. We find that within job spells, (1) offshoring tends to increase the high-skilled wage and decrease the low-skilled wage; (2) exporting tends to increase the wages of all skill types; (3) the net wage effect of trade varies substantially across workers of the same skill type; and (4) conditional on skill, the wage effect of offshoring exhibits additional variation depending on task characteristics. We then track the outcomes for workers after a job spell and find that those displaced from offshoring firms suffer greater earnings losses than other displaced workers, and that low-skilled workers suffer greater and more persistent earnings losses than high-skilled workers.
ER -
TY - JOUR
AU - Lucas,Robert E., Jr.
AU - Moll,Benjamin
TI - Knowledge Growth and the Allocation of Time
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17495
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17495
L1 - http://www.nber.org/papers/w17495.pdf
N1 - Author contact info:
Robert E. Lucas, Jr.
Department of Economics
The University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-8179
Fax: 773/702-8490
E-Mail: relucas@midway.uchicago.edu
Benjamin Moll
106 Fisher Hall Department of Economics
Princeton University
Princeton, NJ 08544
E-Mail: moll@princeton.edu
AB - We analyze a model economy with many agents, each with a different productivity level. Agents divide their time between two activities: producing goods with the production-related knowledge they already have, and interacting with others in search of new, productivity-increasing ideas. These choices jointly determine the economy’s current production level and its rate of learning and real growth. Individuals’ time allocation decisions depend on the knowledge distribution because the productivity levels of others determine their own chances of improving their productivities through search. The time allocations of everyone in the economy in turn determine the evolution of its knowledge distribution. We construct the balanced growth path for this economy, thereby obtaining a theory of endogenous growth that captures in a tractable way the social nature of knowledge creation. We also study the allocation chosen by an idealized planner who takes into account and internalizes the external benefits of search, and tax structures that implement an optimal solution. Finally, we provide two examples of alternative learning technologies, as concrete illustrations of other directions that might be pursued.
ER -
TY - JOUR
AU - Fryer,Roland G., Jr
TI - Injecting Successful Charter School Strategies into Traditional Public Schools: Early Results from an Experiment in Houston
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17494
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17494
L1 - http://www.nber.org/papers/w17494.pdf
N1 - Author contact info:
Roland G. Fryer, Jr
Department of Economics
Harvard University
Littauer Center 208
Cambridge, MA 02138
Tel: 617/495-9592
Fax: 617/495-8570
E-Mail: rfryer@fas.harvard.edu
AB - In the 2010-2011 school year, we implemented five strategies gleaned from practices in successful charter schools – increased instructional time, a more rigorous approach to building human capital, high-dosage tutoring, frequent use of data to inform instruction, and a culture of high expectations – in nine of the lowest performing schools in Houston, Texas. We show that the average impact of these changes on student achievement is 0.277 standard deviations in math and 0.062 standard deviations in reading, which is strikingly similar to reported impacts of attending the Harlem Children’s Zone and Knowledge is Power Program schools – two widely lauded charter organizations.
ER -
TY - JOUR
AU - Atkeson,Andrew
AU - Burstein,Ariel T.
TI - Aggregate Implications of Innovation Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17493
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17493
L1 - http://www.nber.org/papers/w17493.pdf
N1 - Author contact info:
Andrew Atkeson
Bunche Hall 9381
Department of Economics
UCLA
Box 951477
Los Angeles, CA 90095-1477
Tel: 866/312-9770
Fax: 310/825-9528
E-Mail: andy@atkeson.net
Ariel Burstein
Department of Economics
Bunche Hall 8365
Box 951477
UCLA
Los Angeles, CA 90095-1477
Tel: 310/206-6732
Fax: 310/825-9528
E-Mail: arielb@econ.ucla.edu
AB - We present a tractable model of innovating firms and the aggregate economy that we use to assess the link between the responses of firms to changes in innovation policy and the impact of those policy changes on aggregate output and welfare. We argue that the key theoretical determinant of the relative long-run aggregate impact of alternative policies is their impact on the expected profitability of entering firms. We show that, to a first-order approximation, a wide range of policy changes have a long-run aggregate impact in direct proportion to the fiscal expenditures on those policies, and that to evaluate the aggregate impact of such policy changes, there is no need to calculate changes in firms' decisions in response to these policy changes.
We use these results to compare the relative magnitudes of the impact on aggregates in the long run of three innovation policies in the United States: the Research and Experimentation Tax Credit, federal expenditure on R&D, and the corporate profits tax. We argue that the corporate profits tax is a relatively important policy through its negative effects on innovation and physical capital accumulation that may well undo the benefits of federal support for R&D. We also use a calibrated version of our model to examine the absolute magnitude of the impact of these policies on aggregates. We show that, depending on the magnitude of spillovers, it is possible for changes in innovation policies to have a very large impact on aggregates in the long run. However, over a 15-year horizon, the impact of changes in innovation policies on aggregate output is not very sensitive to the magnitude of spillovers.
On the basis of these results we conclude that, while it is possible to make comparisons about the relative importance of different policies and sharp predictions about their aggregate impact in the medium term, it is very difficult to shed much light on the implications of innovation policies for long-run aggregate outcomes and welfare without accurate estimates as to the magnitude of innovation spillovers.
ER -
TY - JOUR
AU - Bordo,Michael D.
AU - James,Harold
TI - Reserves and Baskets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17492
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17492
L1 - http://www.nber.org/papers/w17492.pdf
N1 - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu
Harold James
History Department and Woodrow Wilson School
Princeton University
Princeton NJ 08544
E-Mail: hjames@princeton.edu
AB - We discuss three well known plans that were offered in the twentieth century to provide an artificial replacement for gold and key currencies as international reserves: Keynes’ Bancor, the SDR and the Ecu( predecessor to the euro).The latter two of these reserve substitutes were institutionalized but neither replaced the dollar as the principal medium of international reserve.
ER -
TY - JOUR
AU - Guercio,Diane Del
AU - Reuter,Jonathan
TI - Mutual Fund Performance and the Incentive to Invest in Active Management
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17491
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17491
L1 - http://www.nber.org/papers/w17491.pdf
N1 - Author contact info:
Diane Del Guercio
Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403-1208
E-Mail: dianedg@lcbmail.uoregon.edu
Jonathan Reuter
Carroll School of Management
Boston College
224B Fulton Hall
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-2863
Fax: 617/552-0431
E-Mail: reuterj@bc.edu
AB - It is well known that within U.S. domestic equity mutual funds, actively managed funds significantly underperform index funds. However, this comparison ignores the fact that mutual funds targeted at different types of investors charge different fees, and use these fees to provide different bundles of services. To control for these differences, we compare the performance of actively managed funds and index funds within each of three broad market segments: retail funds sold directly to investors, retail funds sold through brokers, and institutional funds. We find that underperformance is strongest in the broker-sold segment and weakest in the direct-sold segment. In fact, we find that within the direct-sold segment, the risk-adjusted, after-fee returns of actively managed funds are statistically indistinguishable from those of index funds, consistent with the equilibrium condition in Grossman and Stiglitz (1980). To rationalize differences in performance, we test for differences in the flow-performance relation across the three segments. We find that fund flows respond most strongly to risk-adjusted returns in the direct-sold segment. We find a wide variety of evidence that direct-sold funds respond to investor preferences for risk-adjusted performance by investing more in active management. Our findings suggest that the underperformance of the average actively managed fund reflects its weaker incentives to generate alpha rather than an inability to generate alpha. We argue that our findings also help to explain the continued demand for actively managed funds.
ER -
TY - JOUR
AU - Diebold,Francis X.
AU - Yilmaz,Kamil
TI - On the Network Topology of Variance Decompositions: Measuring the Connectedness of Financial Firms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17490
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17490
L1 - http://www.nber.org/papers/w17490.pdf
N1 - Author contact info:
Francis X. Diebold
Department of Economics
University of Pennsylvania
3718 Locust Walk
Philadelphia, PA 19104-6297
Tel: 215/898-1507
Fax: 212/573-4217
E-Mail: fdiebold@sas.upenn.edu
Kamil Yilmaz
Koc University
Rumelifeneri Yolu, Sariyer
Istanbul 34450
TURKEY
Tel: 90-212-338-1458
Fax: 90-212-338-1653
E-Mail: kyilmaz@ku.edu.tr
AB - We propose several connectedness measures built from pieces of variance decompositions, and we argue that they provide natural and insightful measures of connectedness among financial asset returns and volatilities. We also show that variance decompositions define weighted, directed networks, so that our connectedness measures are intimately-related to key measures of connectedness used in the network literature. Building on these insights, we track both average and daily time-varying connectedness of major U.S. financial institutions' stock return volatilities in recent years, including during the financial crisis of 2007-2008.
ER -
TY - JOUR
AU - Bilbiie,Florin O.
AU - Fujiwara,Ippei
AU - Ghironi,Fabio
TI - Optimal Monetary Policy with Endogenous Entry and Product Variety
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17489
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17489
L1 - http://www.nber.org/papers/w17489.pdf
N1 - Author contact info:
Florin O. Bilbiie
Université Paris 1 Panthéon-Sorbonne
Centre d’Economie de la Sorbonne
106/112 Boulevard de l'Hôpital
75647 Paris Cedex 13
France
E-Mail: florin.bilbiie@univ-paris1.fr
Ippei Fujiwara
Australian National University
Crawford School of Economics and Government
Lennox Crossing, Building #132
Canberra ACT 0200, Australia
Tel: +61 2 6125 4705
Fax: +61 2 6125 5448
E-Mail: ippei.fujiwara@anu.edu.au
Fabio Ghironi
Boston College
Department of Economics
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3859
Tel: 617/552-3686
Fax: 617/552-2308
E-Mail: fabio.ghironi@bc.edu
AB - We show that deviations from long-run stability of product prices are optimal in the presence of endogenous producer entry and product variety in a sticky-price model with monopolistic competition in which price stability would be optimal in the absence of entry. Specifically, a long-run positive (negative) rate of inflation is optimal when the benefit of variety to consumers falls short of (exceeds) the market incentives for creating that variety under flexible prices, governed by the desired markup. Plausible preference specifications and parameter values justify a long-run inflation rate of two percent or higher. Price indexation implies even larger deviations from long-run price stability. However, price stability (around this non-zero trend) is close to optimal in the short run, even in the presence of time-varying flexible-price markups that distort the allocation of resources across time and states. The central bank uses its leverage over real activity in the long run, but not in the short run. Our results point to the need for continued empirical research on the determinants of markups and investigation of the benefit of product variety to consumers.
ER -
TY - JOUR
AU - Aldy,Joseph E.
AU - Stavins,Robert N.
TI - Using the Market to Address Climate Change: Insights from Theory and Experience
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17488
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17488
L1 - http://www.nber.org/papers/w17488.pdf
N1 - Author contact info:
Joseph E. Aldy
Harvard Kennedy School
Taubman 382, Mailbox 58
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-7213
E-Mail: joseph_aldy@hks.harvard.edu
Robert Stavins
JFK School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1820
Fax: 617/496-3783
E-Mail: robert_stavins@harvard.edu
AB - Emissions of greenhouse gases linked with global climate change are affected by diverse aspects of economic activity, including individual consumption, business investment, and government spending. An effective climate policy will have to modify the decision calculus for these activities in the direction of more efficient generation and use of energy, lower carbon intensity of energy, and – more broadly – a more carbon-lean economy. The only approach to doing this on a meaningful scale that would be technically feasible and cost-effective is carbon pricing, that is, market-based climate policies that place a shadow-price on carbon dioxide emissions. We examine alternative designs of three such instruments – carbon taxes, cap-and-trade, and clean energy standards. We note that the U.S. political response to possible market-based approaches to climate policy has been and will continue to be largely a function of issues and structural factors that transcend the scope of environmental and climate policy.
ER -
TY - JOUR
AU - Jones,Benjamin F.
TI - The Human Capital Stock: A Generalized Approach
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17487
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17487
L1 - http://www.nber.org/papers/w17487.pdf
N1 - Author contact info:
Benjamin Jones
Northwestern University
Kellogg School of Management
Department of Management and Strategy
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-3177
Fax: 847/467-1777
E-Mail: bjones@kellogg.northwestern.edu
AB - This paper presents a new framework for human capital measurement. The generalized framework can (i) substantially amplify the role of human capital in accounting for cross-country income differences and (ii) reconcile the existing conflict between regression and accounting evidence in assessing the wealth and poverty of nations. One natural interpretation emphasizes differences across economies in the acquisition of advanced knowledge by skilled workers.
ER -
TY - JOUR
AU - Tyler,John H.
TI - If You Build It Will They Come? Teacher Use of Student Performance Data on a Web-Based Tool
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17486
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17486
L1 - http://www.nber.org/papers/w17486.pdf
N1 - Author contact info:
John H. Tyler
Box 1938
340 Brook Street
Brown University
Providence, RI 02912
Tel: 401/863-1036
Fax: 401/863-1276
E-Mail: john_tyler@brown.edu
AB - The past decade has seen increased testing of students and the concomitant proliferation of computer-based systems to store, manage, analyze, and report the data that comes from these tests. The research to date on teacher use of these data has mostly been qualitative and has mostly focused on the conditions that are necessary (but not necessarily sufficient) for effective use of data by teachers. Absent from the research base in this area is objective information on how much and in what ways teachers actually use student test data, even when supposed precursors of teacher data use are in place. This paper addresses this knowledge gap by analyzing usage data generated when teachers in one mid-size urban district log onto the web-based, district-provided data deliver and analytic tool. Based on information contained in the universe of web logs from the 2008-2009 and 2009-2010 school years, I find relatively low levels of teacher interaction with pages on the web tool that contain student test information that could potentially inform practice. I also find no evidence that teacher usage of web-based student data is related student achievement, but there is reason to believe these estimates are downwardly biased.
ER -
TY - JOUR
AU - Dettling,Lisa J.
AU - Kearney,Melissa Schettini
TI - House Prices and Birth Rates: The Impact of the Real Estate Market on the Decision to Have a Baby
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17485
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17485
L1 - http://www.nber.org/papers/w17485.pdf
N1 - Author contact info:
Lisa J. Dettling
Department of Economics
University of Maryland
3105 Tydings Hall
College Park, MD 20742
E-Mail: dettling@econ.umd.edu
Melissa Schettini Kearney
Department of Economics
University of Maryland
3105 Tydings Hall
College Park, MD 20742
Tel: 301/405-6202
E-Mail: kearney@econ.umd.edu
AB - This project investigates how changes in Metropolitan Statistical Area (MSA)- level housing prices affect household fertility decisions. Recognizing that housing is a major cost associated with child rearing, and assuming that children are normal goods, we hypothesize that an increase in real estate prices will have a negative price effect on current period fertility. This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child. On the other hand, for current homeowners, an increase in MSA-level house prices will increase home equity, leading to a positive effect on birth rates. Controlling for MSA fixed effects, trends, and time-varying conditions, our analysis finds that indeed, short-term increases in house prices lead to a decline in births among non-owners and a net increase among owners. Our estimates suggest that a $10,000 increase in house prices leads to a 2.1 percent increase in births among home owners, and a 0.4 percent decrease among non-owners. At the mean U.S. home ownership rate, our estimates imply that the net effect of a $10,000 increase in house prices is a 0.8 percent increase in births. Given underlying differences in home ownership rates, the predicted net effect of house price changes varies across demographic groups. Our paper provides evidence that homeowners use some of their increased housing wealth, coming from increases in local area house prices, to fund their childbearing goals. In addition, we find that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates.
ER -
TY - JOUR
AU - Jagannathan,Ravi
AU - Marakani,Srikant
TI - Long Run Risks & Price/Dividend Ratio Factors
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17484
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17484
L1 - http://www.nber.org/papers/w17484.pdf
N1 - Author contact info:
Ravi Jagannathan
Kellogg Graduate School of Management
Northwestern University
2001 Sheridan Road
Leverone/Anderson Complex
Evanston, IL 60208-2001
Tel: 847/491-8338
Fax: 847/491-5719
E-Mail: rjaganna@northwestern.edu
Srikant Marakani
Department of Economics and Finance, College of Bu
City University of Hong Kong, P7422, Academic 1
Tat Chee Avenue, Kowloon, Hong Kong
E-Mail: smarakan@cityu.edu.hk
AB - We show that long run consumption risk models imply that the covariance matrix of the logarithm of price to dividend (P/D) ratios of stocks has a strict factor structure. Factor analysis of the P/D ratios of 25 portfolios formed by sorting stocks based on their size and book to market ratio during the 1943 to 2008 reveals two significant factors. Consistent with theory, these factors predict growth in US aggregate consumption & dividends and consumption growth volatility, and explain the cross section of average excess returns on portfolios based on size, book/market, long term reversal, short term reversal, and earnings to price ratios.
ER -
TY - JOUR
AU - Courtemanche,Charles J.
AU - Heutel,Garth
AU - McAlvanah,Patrick
TI - Impatience, Incentives, and Obesity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17483
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17483
L1 - http://www.nber.org/papers/w17483.pdf
N1 - Author contact info:
Charles J. Courtemanche
University of Louisville
College of Business
Department of Economics
Louisville, KY 40292
Tel: 502-852-4854
Fax: 502-852-7672
E-Mail: cjcour02@louisville.edu
Garth Heutel
Bryan 466, Department of Economics
University of North Carolina at Greensboro
P. O. Box 26170
Greensboro, NC 27402
Tel: 336/334-4872
Fax: 336/334-5580
E-Mail: gaheutel@uncg.edu
Patrick McAlvanah
Federal Trade Commission
600 Pennsylvania Avenue NW
Mail Drop NJ 4136
Washington, DC 20580
E-Mail: pmcalvanah@ftc.gov
AB - This paper explores the relationship between time preferences, economic incentives, and body mass index (BMI). Using data from the 2006 National Longitudinal Survey of Youth, we first show that greater impatience increases BMI and the likelihood of obesity even after controlling for demographic, human capital, occupational, and financial characteristics as well as risk preference. Next, we provide evidence of an interaction effect between time preference and food prices, with cheaper food leading to the largest weight gains among those exhibiting the most impatience. The interaction of changing economic incentives with heterogeneous discounting may help explain why increases in BMI have been concentrated amongst the right tail of the distribution, where the health consequences are especially severe. Lastly, we model time-inconsistent preferences by computing individuals' quasi-hyperbolic discounting parameters (beta and delta). Both long-run patience (delta) and present-bias (beta) predict BMI, suggesting obesity is partly attributable to rational intertemporal tradeoffs but also partly to time inconsistency.
ER -
TY - JOUR
AU - Bridges,John
AU - Buttorff,Christine
AU - Groothuis-Oudshoorn,Karin
TI - Estimating Patients' Preferences for Medical Devices: Does the Number of Profile in Choice Experiments Matter?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17482
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17482
L1 - http://www.nber.org/papers/w17482.pdf
N1 - Author contact info:
John F. P. Bridges
Department of Health Policy & Management
Johns Hopkins Bloomberg School of Public Health
624 N. Broadway, Rm 689
Baltimore, MD 21205
Tel: 410/614-9851
Fax: 410/614-9152
E-Mail: jbridges@jhsph.edu
Christine Buttorff
Johns Hopkins Bloomberg
School of Public Health
624 N. Broadway
Rm. 691
Baltimore, MD 21205
E-Mail: cbuttorf@jhsph.edu
Karin Groothuis-Oudshoorn
Department of Health Technology and Services Resea
University of Twente
7500 AE Enschede, Netherlands
E-Mail: c.g.m.oudshoorn@utwente.nl
AB - Background: Most applications of choice-based conjoint analysis in health use choice tasks with only two profiles, while those in marketing routinely use three or more. This study reports on a randomized trial comparing paired with triplet profile choice formats focused on measuring patient preference for hearing aids.
Methods: Respondents with hearing loss were drawn from a nationally representative cohort, completed identical surveys incorporating a conjoint analysis, but were randomized to choice tasks with two or three profiles. Baseline differences between the two groups were explored using ANOVA and chi-square tests. The primary outcomes of differences in estimated preferences were explored using t-tests, likelihood ratio tests, and analysis of individual-level models estimated with ordinary least squares.
Results: 500 respondents were recruited. 127 had no hearing loss, 28 had profound loss and 22 declined to participate and were not analyzed. Of the remaining 323 participants, 146 individuals were randomized to the pairs and 177 to triplets. The only significant difference between the groups was time to complete the survey (11.5 and 21 minutes respectively). Pairs and triplets produced identical rankings of attribute importance but homogeneity was rejected (P<0.0001). Pairs led to more variation, and were systematically biased toward the null because a third (32.2%) of respondents focused on only one attribute. This is in contrast to respondents in the triplet design who traded across all attributes.
Discussion: The number of profiles in choice tasks affects the results of conjoint analysis studies. Here triplets are preferred to pairs as they avoid non-trading and allow for more accurate estimation of preferences models.
ER -
TY - JOUR
AU - Becker,Bo
AU - Jacob,Marcus
AU - Jacob,Martin
TI - Payout Taxes and the Allocation of Investment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17481
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17481
L1 - http://www.nber.org/papers/w17481.pdf
N1 - Author contact info:
Bo Becker
Harvard Business School
Baker Library 349
Soldiers Field
Boston, MA 02163
Tel: 617/496-5335
Fax: 617/495-7659
E-Mail: bbecker@hbs.edu
Marcus Jacob
EBS European Business School
Oestrich-Winkel
Germany
E-Mail: marcus.jacob@ebs.edu
Martin Jacob
WHU - Otto Beisheim School of Management
Burgplatz 2
56179 Vallendar
Germany
E-Mail: martin.jacob@whu.edu
AB - When corporate payout is taxed, internal equity (retained earnings) is cheaper than external equity (share issues). High taxes will favor firms who can finance internally. If there are no perfect substitutes for equity finance, payout taxes may thus change the investment behavior of firms. Using an international panel with many changes in payout taxes, we show that this prediction holds well. Payout taxes have a large impact on the dynamics of corporate investment and growth. Investment is “locked in” in profitable firms when payout is heavily taxed. Thus, apart from any aggregate effects, payout taxes change the allocation of capital.
ER -
TY - JOUR
AU - Blonigen,Bruce A.
AU - Oldenski,Lindsay
AU - Sly,Nicholas
TI - Separating the Opposing Effects of Bilateral Tax Treaties
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17480
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17480
L1 - http://www.nber.org/papers/w17480.pdf
N1 - Author contact info:
Bruce Blonigen
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4680
Fax: 541/346-1243
E-Mail: bruceb@uoregon.edu
Lindsay Oldenski
Georgetown University
37th and O Streets, NW
Washington DC, 20057
E-Mail: lo36@georgetown.edu
Nicholas Sly
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
E-Mail: sly@uoregon.edu
AB - Bilateral tax treaties (BTT) are intended to promote foreign direct investment and foreign affiliate activity through double taxation relief. However, BTTs also typically contain provisions that facilitate sharing of tax information between countries intended to curtail tax avoidance by multinational firms. These provisions should disproportionately affect firms that intensively use inputs for which an arms-length price is easily observed, since strategic transfer practices that manipulate tax liabilities are no longer effective with information sharing between countries. Using BEA firm-level data we are able to separately estimate the impacts of double-taxation relief and sharing of tax information on investment behavior of US multinational firms. We find a significant positive effect of new tax treaties on foreign affiliate activity between member nations that is offset (and even reversed) the more a firm relies on inputs traded on an organized exchange (i.e., inputs for which the arms-length price is easily observed). We find these opposing BTT effects for both the intensive margin (sales of existing affiliates) and the extensive margin (entry of new affiliates).
ER -
TY - JOUR
AU - Farmer,Roger E.A.
TI - The Stock Market Crash of 2008 Caused the Great Recession: Theory and Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17479
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17479
L1 - http://www.nber.org/papers/w17479.pdf
N1 - Author contact info:
Roger Farmer
UCLA
Department of Economics
Box 951477
Los Angeles, CA 90095-1477
Tel: 310/825-6547
Fax: 310/825-9528
E-Mail: rfarmer@econ.ucla.edu
AB - This paper argues that the stock market crash of 2008, triggered by a collapse in house prices, caused the Great Recession. The paper has three parts. First, it provides evidence of a high correlation between the value of the stock market and the unemployment rate in U.S. data since 1929. Second, it compares a new model of the economy developed in recent papers and books by Farmer, with a classical model and with a textbook Keynesian approach. Third, it provides evidence that fiscal stimulus will not permanently restore full employment. In Farmer’s model, as in the Keynesian model, employment is demand determined. But aggregate demand depends on wealth, not on income.
ER -
TY - JOUR
AU - Cuffe,Harold E.
AU - Harbaugh,William T.
AU - Lindo,Jason M.
AU - Musto,Giancarlo
AU - Waddell,Glen R.
TI - Evidence on the Efficacy of School-Based Incentives for Healthy Living
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17478
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17478
L1 - http://www.nber.org/papers/w17478.pdf
N1 - Author contact info:
Harold E. Cuffe
Department of Economics
University of Oregon
Eugene, OR 97403-1285
E-Mail: cuffe@uoregon.edu
William T. Harbaugh
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-1244
Fax: 541/346-1243
E-Mail: harbaugh@uoregon.edu
Jason M. Lindo
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4664
E-Mail: jlindo@uoregon.edu
Giancarlo Musto
Université de Lyon
93 Chemin des mouilles
69130 Ecully
E-Mail: musto@gate.cnrs.fr
Glen Waddell
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541 346 1259
E-Mail: waddell@uoregon.edu
AB - We analyze the effects of a school-based incentive program on children's exercise habits. The program offers children an opportunity to win prizes if they walk or bike to school during prize periods. We use daily child-level data and individual fixed effects models to measure the impact of the prizes by comparing behavior during prize periods with behavior during non-prize periods. Variation in the timing of prize periods across different schools allows us to estimate models with calendar-date fixed effects to control for day-specific attributes, such as weather and proximity to holidays. On average, we find that being in a prize period increases riding behavior by sixteen percent, a large impact given that the prize value is just six cents per participating student. We also find that winning a prize lottery has a positive impact on ridership over subsequent weeks; consider heterogeneity across prize type, gender, age, and calendar month; and explore differential effects on the intensive versus extensive margins.
ER -
TY - JOUR
AU - Lefgren,Lars
AU - Platt,Brennan
AU - Price,Joseph
TI - Sticking with What (Barely) Worked
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17477
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17477
L1 - http://www.nber.org/papers/w17477.pdf
N1 - Author contact info:
Lars Lefgren
Department of Economics
Brigham Young University
130 Faculty Office Bulding
Provo, UT 84602-2363
Tel: (801) 422-5169
E-Mail: l-lefgren@byu.edu
Brennan Platt
Department of Economics
Brigham Young University
130 Faculty Office Building
Provo, UT 84602-2363
E-Mail: brennan_platt@byu.edu
Joseph Price
Department of Economics
Brigham Young University
162 FOB
Provo, UT 84602
Tel: 801/422-5296
Fax: 801/422-0194
E-Mail: joseph_price@byu.edu
AB - Outcome bias occurs when an evaluator considers ex-post outcomes when judging whether a choice was correct, ex-ante. We formalize this cognitive bias in a simple model of distorted Bayesian updating. We then examine strategy changes made by professional football coaches. We find they are more likely to revise their strategy after a loss than a win — even for narrow losses, which are uninformative about future success. This increased revision following a loss occurs even when a loss was expected, and the offensive strategy is revised even when failure is attributable to the defense. These results are consistent with our model’s predictions.
ER -
TY - JOUR
AU - Ashenfelter,Orley C.
AU - Hosken,Daniel S.
AU - Weinberg,Matthew C.
TI - The Price Effects of a Large Merger of Manufacturers: A Case Study of Maytag-Whirlpool
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17476
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17476
L1 - http://www.nber.org/papers/w17476.pdf
N1 - Author contact info:
Orley C. Ashenfelter
Industrial Relations Section
Firestone Library
Princeton University
Princeton, NJ 08544
Tel: 609/258-4040
Fax: 609/258-2907
E-Mail: c6789@princeton.edu
Daniel Hosken
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
E-Mail: dhosken@ftc.gov
Matthew C. Weinberg
Dalton Hall
Bryn Mawr College
Bryn Mawr, PA 19010
L ADDRESS HERE
E-Mail: mweinberg@brynmawr.edu
AB - Many experts speculate that U.S. antitrust policy towards horizontal mergers has been too lenient. We estimate the price effects of Whirlpool’s acquisition of Maytag to provide new evidence on this debate. We compare price changes in appliance markets most affected by the merger to markets where concentration changed much less or not at all. We estimate price increases for dishwashers and relatively large price increases for clothes dryers, but no price effects for refrigerators or clothes washers. The combined firm’s market share fell across all four affected categories and the number of distinct appliance products fell.
ER -
TY - JOUR
AU - Karlan,Dean
AU - Zinman,Jonathan
TI - List Randomization for Sensitive Behavior:
An Application for Measuring Use of Loan Proceeds
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17475
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17475
L1 - http://www.nber.org/papers/w17475.pdf
N1 - Author contact info:
Dean Karlan
Department of Economics
Yale University
P.O. Box 208269
New Haven, CT 06520-8629
Tel: 203/432-4479
Fax: 203/432-5591
E-Mail: dean.karlan@yale.edu
Jonathan Zinman
Department of Economics
Dartmouth College
314 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-0075
Fax: 603/646-2122
E-Mail: jzinman@dartmouth.edu
AB - Policymakers and microfinance institutions (MFIs) often claim to target poor entrepreneurs who then invest loan proceeds in their businesses. Typically in nonresearch settings these claims are assessed using readily available but unverified self-reports from client loan applications. Alternatively, independent surveyors could directly elicit how borrowers spent their loan proceeds. That too, however, could suffer from deliberate misreporting. We use data from the Peru and the Philippines in which independent surveyors elicited loan use both directly (i.e., by asking how individuals spent their loan proceeds) and indirectly (i.e., through a list-randomization technique that allows individuals to hide their answer from the surveyor). We find that direct elicitation under-reports the non-enterprise uses of loan proceeds.
ER -
TY - JOUR
AU - Adrian,Tobias
AU - Brunnermeier,Markus K.
TI - CoVaR
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17454
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17454
L1 - http://www.nber.org/papers/w17454.pdf
N1 - Author contact info:
Tobias Adrian
Federal Reserve Bank of New York
Capital Market Research
33 Liberty Street
New York, NY 10045
Tel: 212-720-1717
Fax: 212-720-1582
E-Mail: tobias.adrian@ny.frb.org
Markus K. Brunnermeier
Princeton University
Department of Economics
Bendheim Center for Finance
Princeton, NJ 08540
Tel: 609/258-4050
Fax: 609/258-0771
E-Mail: markus@princeton.edu
AB - We propose a measure for systemic risk: CoVaR, the value at risk (VaR) of the financial system conditional on institutions being under distress. We define an institution's contribution to systemic risk as the difference between CoVaR conditional on the institution being under distress and the CoVaR in the median state of the institution. From our estimates of CoVaR for the universe of publicly traded financial institutions, we quantify the extent to which characteristics such as leverage, size, and maturity mismatch predict systemic risk contribution. We also provide out of sample forecasts of a countercyclical, forward looking measure of systemic risk and show that the 2006Q4 value of this measure would have predicted more than half of realized covariances during the financial crisis.
ER -
TY - JOUR
AU - Eichengreen,Barry
AU - Razo-Garcia,Raul
TI - How Reliable are De Facto Exchange Rate Regime Classifications?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17318
PY - 2011
Y2 - October 2011
UR - http://www.nber.org/papers/w17318
L1 - http://www.nber.org/papers/w17318.pdf
N1 - Author contact info:
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
Raul Razo-Garcia
Department of Economics
Carleton University
Ottawa K1S 5B6
Canada
E-Mail: rrazogar@connect.carleton.ca
AB - We analyze disagreements over de facto exchange-rate-regime classifications using three popular de facto regime data series. While there is a moderate degree of concurrence across classifications, disagreements are not uncommon, and they are not random. They are most prevalent in middle-income countries (emerging markets) and low-income (developing) countries as opposed to advanced economies. They are most prevalent for countries with well-developed financial markets, low reserves and open capital accounts. This suggests caution when attempting to relate the exchange rate regime to financial development, the openness of the financial account, and reserve management and accumulation decisions.
ER -
TY - JOUR
AU - Bartel,Ann P.
AU - Phibbs,Ciaran S.
AU - Beaulieu,Nancy
AU - Stone,Patricia
TI - Human Capital and Organizational Performance: Evidence from the Healthcare Sector
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17474
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17474
L1 - http://www.nber.org/papers/w17474.pdf
N1 - Author contact info:
Ann P. Bartel
Graduate School of Business
Columbia University
3022 Broadway, 623 Uris Hall
New York, NY 10027
Tel: 212/854-4419
Fax: (212) 316-9219
E-Mail: apb2@columbia.edu
Ciaran Phibbs
Health Economics Resource Center (152)
VA Medical Center, 795 Willow Road
Menlo Park, CA 94025
E-Mail: cphibbs@stanford.edu
Nancy Beaulieu
22A Chandler Road
Boxford, MA 01921
Tel: 978-352-8048
E-Mail: nancydeanbeaulieu@yahoo.com
Patricia Stone
Columbia University
School of Nursing
E-Mail: ps2024@columbia.edu
AB - This paper contributes to the literature on the relationship between human capital and organizational performance. We use detailed longitudinal monthly data on nursing units in the Veterans Administration hospital system to identify how the human capital (general, hospital-specific and unit or team-specific) of the nursing team on the unit affects patients' outcomes. Since we use monthly, not annual, data, we are able to avoid the omitted variable bias and endogeneity bias that could result when annual data are used. Nurse staffing levels, general human capital, and unit-specific human capital have positive and significant effects on patient outcomes while the use of contract nurses, who have less specific capital than regular staff nurses, negatively impacts patient outcomes. Policies that would increase the specific human capital of the nursing staff are found to be cost-effective.
ER -
TY - JOUR
AU - Landry,Craig E.
AU - Lange,Andreas
AU - List,John A.
AU - Price,Michael K.
AU - Rupp,Nicholas G.
TI - The Hidden Benefits of Control: Evidence from a Natural Field Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17473
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17473
L1 - http://www.nber.org/papers/w17473.pdf
N1 - Author contact info:
Craig Landry
East Carolina University
E-Mail: landryc@ecu.edu
Andreas Lange
University of Hamburg
Department of Economics
Von Melle Park 5
20146 Hamburg
Germany
Tel: +49-40-42838-4035
Fax: +49-40-42838-3243
E-Mail: andreas.lange@wiso.uni-hamburg.de
John List
Department of Economics
University of Chicago
1126 East 59th
Chicago, IL 60637
Tel: 301/405-1288
Fax: 301/314-9091
E-Mail: jlist@uchicago.edu
Michael Price
Department of Economics
University of Tennessee
515 Stokely Management Center
Knoxville, TN 27996
Tel: 865/974-5672
Fax: 865/974-4601
E-Mail: mprice21@utk.edu
Nicholas G. Rupp
East Carolina University
E-Mail: ruppn@ecu.edu
AB - An important dialogue between theorists and experimentalists over the past few decades has raised the study of the interaction of psychological and economic incentives from academic curiosity to a bona fide academic field. One recent area of study within this genre that has sparked interest and debate revolves around the “hidden costs” of conditional incentives. This study overlays randomization on a naturally-occurring environment in a series of temporally-linked field experiments to advance our understanding of the economics of charity and test if such “costs” exist in the field. This approach permits us to examine why people initially give to charities, and what factors keep them committed to the cause. Several key findings emerge. First, there are hidden benefits of conditional incentives that would have gone undetected had we maintained a static theory and an experimental design that focused on short run substitution effects rather than dynamic interactions. Second, we can reject the pure altruism model of giving. Third, we find that public good provision is maximized in both the short and long run by using conditional, rather than unconditional, incentives.
ER -
TY - JOUR
AU - Landry,Craig E.
AU - Lange,Andreas
AU - List,John A.
AU - Price,Michael K.
AU - Rupp,Nicholas G.
TI - Is There a 'Hidden Cost of Control' in Naturally-Occurring Markets? Evidence from a Natural Field Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17472
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17472
L1 - http://www.nber.org/papers/w17472.pdf
N1 - Author contact info:
Craig Landry
East Carolina University
E-Mail: landryc@ecu.edu
Andreas Lange
University of Hamburg
Department of Economics
Von Melle Park 5
20146 Hamburg
Germany
Tel: +49-40-42838-4035
Fax: +49-40-42838-3243
E-Mail: andreas.lange@wiso.uni-hamburg.de
John List
Department of Economics
University of Chicago
1126 East 59th
Chicago, IL 60637
Tel: 301/405-1288
Fax: 301/314-9091
E-Mail: jlist@uchicago.edu
Michael Price
Department of Economics
University of Tennessee
515 Stokely Management Center
Knoxville, TN 27996
Tel: 865/974-5672
Fax: 865/974-4601
E-Mail: mprice21@utk.edu
Nicholas G. Rupp
East Carolina University
E-Mail: ruppn@ecu.edu
AB - Several recent laboratory experiments have shown that the use of explicit incentives—such as conditional rewards and punishment—entail considerable “hidden” costs. The costs are hidden in the sense that they escape our attention if our reasoning is based on the assumption that people are exclusively self-interested. This study represents a first attempt to explore whether, and to what extent, such considerations affect equilibrium outcomes in the field. Using data gathered from nearly 3000 households, we find little support for the negative consequences of control in naturally-occurring labor markets. In fact, even though we find evidence that workers are reciprocal, we find that worker effort is maximized when we use conditional—not unconditional—rewards to incent workers.
ER -
TY - JOUR
AU - Herbst,Chris M.
AU - Tekin,Erdal
TI - The Geographic Accessibility of Child Care Subsidies and Evidence on the Impact of Subsidy Receipt on Childhood Obesity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17471
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17471
L1 - http://www.nber.org/papers/w17471.pdf
N1 - Author contact info:
Chris M. Herbst
School of Public Affairs, ASU, Mail Code 3720
411 N. Central Ave., Ste. 450
Phoenix, AZ 85004-0687
E-Mail: chris.herbst@asu.edu
Erdal Tekin
Department of Economics
Andrew Young School of Policy Studies
Georgia State University
P.O. Box 3992
Atlanta, GA 30302-3992
Tel: 404/413-0163
Fax: 404/413-0145
E-Mail: tekin@gsu.edu
AB - This paper examines the impact of the spatial accessibility of public human services agencies on the likelihood of receiving a child care subsidy among disadvantaged mothers with young children. In particular, we collect data on the location of virtually every human services agency in the U.S. and use this information to calculate the approximate distance that families must travel from home in order to reach the nearest office that administers the subsidy application process. Using data from the Kindergarten cohort of the Early Childhood Longitudinal Study (ECLS-K), our results indicate that an increase in the distance to a public human services agency reduces the likelihood that a family receives a child care subsidy. Specifically, we estimate an elasticity of subsidy receipt with respect to distance of -0.13. The final section of the paper provides an empirical application in which we use variation in families’ travel distance to identify the causal effect of child care subsidies on children’s weight outcomes. Our instrumental variables estimates suggest that subsidized child care leads to sizeable increases in the prevalence of overweight and obesity among low-income children.
ER -
TY - JOUR
AU - Antràs,Pol
TI - Grossman-Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17470
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17470
L1 - http://www.nber.org/papers/w17470.pdf
N1 - Author contact info:
Pol Antràs
Department of Economics
Harvard University
1805 Cambridge Street
Littauer Center 207
Cambridge, MA 02138
Tel: 617/495-1236
Fax: 617/495-8570
E-Mail: pantras@fas.harvard.edu
AB - I survey the influence of Grossman and Hart's (1986) seminal paper in the field of International Trade. I discuss the implementation of the theory in open-economy environments and its implications for the international organization of production and the structure of international trade flows. I also review empirical work suggestive of the empirical relevance of the property-rights theory. Along the way, I develop novel theoretical results and also outline some of the key limitations of existing contributions.
ER -
TY - JOUR
AU - Knight,Brian G.
TI - State Gun Policy and Cross-State Externalities: Evidence from Crime Gun Tracing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17469
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17469
L1 - http://www.nber.org/papers/w17469.pdf
N1 - Author contact info:
Brian G. Knight
Brown University
Department of Economics, Box B
64 Waterman Street
Providence, RI 02912
Tel: 401/863-1584
Fax: 401/863-1970
E-Mail: Brian_Knight@brown.edu
AB - This paper provides a theoretical and empirical analysis of cross-state externalities associated with gun regulations in the context of the gun trafficking market. Using gun tracing data, which identify the source state for crime guns recovered in destination states, we find that firearms in this market tend to flow from states with weak gun laws to states with strict gun laws, satisfying a necessary condition for the existence of cross-state externalities in the theoretical model. We also find an important role for transportation costs in this market, with gun flows more significant between nearby states; this finding suggests that externalities are spatial in nature. Finally, we present evidence that criminal possession of guns is higher in states exposed to weak gun laws in nearby states.
ER -
TY - JOUR
AU - Benmelech,Efraim
AU - Dvir,Eyal
TI - Does Short-Term Debt Increase Vulnerability to Crisis? Evidence from the East Asian Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17468
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17468
L1 - http://www.nber.org/papers/w17468.pdf
N1 - Author contact info:
Efraim Benmelech
Harvard University
Department of Economics
Littauer 233
Cambridge, MA 02138
Tel: 617/496-4787
Fax: 617/495-8570
E-Mail: effi_benmelech@harvard.edu
Eyal Dvir
Department of Economics
Boston College
140 Commonwealth Ave
Chestnut Hill, MA 02467
E-Mail: dvire@bc.edu
AB - Does short-term debt increase vulnerability to financial crisis, or does short-term debt reflect -- rather than cause -- the incipient crisis? We study the role that short-term debt played in the collapse of the East Asian financial sector in 1997-1998. We alleviate concerns about the endogeneity of short-term debt by using long-term debt obligations that matured during the crisis. We find that debt obligations issued at least three years before the crisis had a negative, albeit sometimes insignificant, effect on the probability of failure. Our results are consistent with the view that short-term debt reflects, rather than causes, distress in financial institutions.
ER -
TY - JOUR
AU - Neumark,David
AU - Song,Joanne
TI - Do Stronger Age Discrimination Laws Make Social Security Reforms More Effective?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17467
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17467
L1 - http://www.nber.org/papers/w17467.pdf
N1 - Author contact info:
David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA 92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu
Joanne Song
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA 92697
E-Mail: jihs@uci.edu
AB - Supply-side Social Security reforms to increase employment and delay benefit claiming among older individuals may be frustrated by age discrimination. We test for policy complementarities between supply-side Social Security reforms and demand-side efforts to deter age discrimination, specifically studying whether stronger state-level age discrimination protections enhanced the impact of the increases in the Social Security Full Retirement Age (FRA) that occurred in the past decade. The evidence indicates that, for older individuals who were “caught” by the increase in the FRA, benefit claiming reductions and employment increases were sharper in states with stronger age discrimination protections.
ER -
TY - JOUR
AU - Felix,R. Alison
AU - Hines,James R., Jr.
TI - Who Offers Tax-Based Business Development Incentives?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17466
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17466
L1 - http://www.nber.org/papers/w17466.pdf
N1 - Author contact info:
R. Alison Felix
Federal Reserve Bank of Kansas City
1 Memorial Drive
Kansas City, MO 64198-0001
E-Mail: alison.felix@kc.frb.org
James R. Hines
Department of Economics
University of Michigan
343 Lorch Hall
611 Tappan Street
Ann Arbor, MI 48109-1220
Tel: 734/764-2320
Fax: 734/764-2769
E-Mail: jrhines@umich.edu
AB - Many American communities seek to attract or retain businesses with tax abatements, tax credits, or tax increment financing of infrastructure projects (TIFs). The evidence for 1999 indicates that communities are most likely to offer one or more of these business development incentives if their residents have low incomes, if they are located close to state borders, and if their states have troubled political cultures. Ten percent greater median household income is associated with a 3.2 percent lower probability of offering incentives; ten percent greater distance from a state border is associated with a 1.0 percent lower probability of offering incentives; and a 10 percent higher rate at which government officials are convicted of federal corruption crimes is associated with a 1.2 percent greater probability of offering business incentives. TIFs are the preferred incentive of communities whose residents have household incomes between $25,000 and $75,000; whereas TIFs are much less commonly offered by communities whose residents have household incomes below $25,000. The need to finance TIFs out of incremental tax revenues may make it infeasible for many of the poorest of communities to use TIFs for local business development.
ER -
TY - JOUR
AU - Gottlieb,Daniel
AU - Smetters,Kent
TI - Grade Non-Disclosure
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17465
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17465
L1 - http://www.nber.org/papers/w17465.pdf
N1 - Author contact info:
Daniel Gottlieb
University of Pennsylvania
SH-DH 3303
3620 Locust Walk
Philadelphia, PA 19104
E-Mail: dgott@wharton.upenn.edu
Kent Smetters
University of Pennsylvania
SH-DH 3303
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-9811
Fax: 215/898-0310
E-Mail: smetters@wharton.upenn.edu
AB - This paper documents and explains the existence of grade non-disclosure policies in Masters in Business Administration programs, why these policies are concentrated in highly-ranked programs, and why these policies are not prevalent in most other professional degree programs. Related policies, including honors and minimum grade requirements, are also consistent with our model.
ER -
TY - JOUR
AU - Pastor,Lubos
AU - Veronesi,Pietro
TI - Political Uncertainty and Risk Premia
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17464
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17464
L1 - http://www.nber.org/papers/w17464.pdf
N1 - Author contact info:
Lubos Pastor
University of Chicago
Booth School of Business
5807 South Woodlawn Ave
Chicago, IL 60637
Tel: 773/834-4080
Fax: NA
E-Mail: lubos.pastor@chicagobooth.edu
Pietro Veronesi
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-6348
Fax: 773/702-0458
E-Mail: pietro.veronesi@chicagobooth.edu
AB - We study the pricing of political uncertainty in a general equilibrium model of government policy choice. The model implies that political uncertainty commands a risk premium whose magnitude is larger in weaker economic conditions. Political uncertainty reduces the value of the implicit put protection that the government provides to the market. It also makes stocks more volatile and more correlated, especially when the economy is weak. We find empirical evidence consistent with these predictions. We also show that government policies cannot be judged by the stock market response to their announcement.
ER -
TY - JOUR
AU - Arikan,Asli M.
AU - Stulz,René M.
TI - Corporate Acquisitions, Diversification, and the Firm’s Lifecycle
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17463
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17463
L1 - http://www.nber.org/papers/w17463.pdf
N1 - Author contact info:
Asli Arikan
The Ohio State University
Fisher College of Business
307 Fisher Hall
2100 Neil Avenue
Columbus, Ohio 43210-1144
E-Mail: arikan_1@fisher.osu.edu
Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu
AB - Lifecycle theories of mergers and diversification predict that firms make acquisitions and diversify when their internal growth opportunities become exhausted. Free cash flow theories make similar predictions. In contrast to these theories, we find that the acquisition rate of firms (defined as the number of acquisitions in an IPO cohort-year divided by the number of firms in that cohort-year) follows a u-shape through their lifecycle as public firms, with young and mature firms being equally acquisitive but more so than middle-aged firms. Firms that go public during the merger/IPO wave of the 1990s are significantly more acquisitive early in their public life than firms that go public at other times. Young public firms have a lower acquisition rate of public firms than mature firms, but the opposite is true for acquisitions of private firms and subsidiaries. Strikingly, firms diversify early in their life and there is a 41% chance that a firm’s first acquisition is a diversifying acquisition. The stock market reacts more favorably to acquisitions by young firms than to acquisitions by mature firms except for acquisitions of public firms paid for with stock. There is no evidence that the market reacts more adversely to diversifying acquisitions by young firms than to other acquisitions.
ER -
TY - JOUR
AU - Fryer,Roland G., Jr
AU - Pager,Devah
AU - Spenkuch,Jörg L.
TI - Racial Disparities in Job Finding and Offered Wages
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17462
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17462
L1 - http://www.nber.org/papers/w17462.pdf
N1 - Author contact info:
Roland G. Fryer, Jr
Department of Economics
Harvard University
Littauer Center 208
Cambridge, MA 02138
Tel: 617/495-9592
Fax: 617/495-8570
E-Mail: rfryer@fas.harvard.edu
Devah Pager
Department of Sociology
Princeton University
157 Wallace Hall
Princeton, NJ 08544
E-Mail: pager@princeton.edu
Jorg L. Spenkuch
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
E-Mail: jspenkuch@uchicago.edu
AB - The extent to which discrimination can explain racial wage gaps is one of the most divisive subjects in the social sciences. Using a newly available dataset, this paper develops a simple empirical test which, under plausible conditions, provides a lower bound on the extent of discrimination in the labor market. Taken at face value, our estimates imply that differential treatment accounts for at least one third of the black-white wage gap. We argue that the patterns in our data are consistent with a search-matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers, but learn about their marginal product over time. However, we cannot rule out other forms of discrimination.
ER -
TY - JOUR
AU - Borjas,George J.
AU - Grogger,Jeffrey
AU - Hanson,Gordon H.
TI - Substitution Between Immigrants, Natives, and Skill Groups
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17461
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17461
L1 - http://www.nber.org/papers/w17461.pdf
N1 - Author contact info:
George J. Borjas
Harvard Kennedy School
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1393
Fax: 617/495-9532
E-Mail: gborjas@harvard.edu
Jeffrey Grogger
Irving B. Harris Professor of Urban Policy
Harris School of Public Policy
University of Chicago
1155 E. 60th Street
Chicago, IL 60637
Tel: 773/542-3533
Fax: 773/702-0926
E-Mail: jgrogger@uchicago.edu
Gordon H. Hanson
IR/PS 0519
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0519
Tel: 858/822-5087
Fax: 858/534-3939
E-Mail: gohanson@ucsd.edu
AB - The wage impact of immigration depends crucially on the elasticity of substitution between similarly skilled immigrants and natives and the elasticity of substitution between high school dropouts and graduates. This paper revisits the estimation of these elasticities. The U.S. data indicate that equally skilled immigrants and natives are perfect substitutes. The value of the second elasticity depends on how one controls for changes in demand that have differentially affected high school dropouts and graduates. The groups are imperfect substitutes under standard trend assumptions, but even slight deviations from these assumptions can lead to an outright rejection of the CES framework.
ER -
TY - JOUR
AU - Burstein,Ariel
AU - Cravino,Javier
AU - Vogel,Jonathan
TI - Importing Skill-Biased Technology
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17460
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17460
L1 - http://www.nber.org/papers/w17460.pdf
N1 - Author contact info:
Ariel Burstein
Department of Economics
Bunche Hall 8365
Box 951477
UCLA
Los Angeles, CA 90095-1477
Tel: 310/206-6732
Fax: 310/825-9528
E-Mail: arielb@econ.ucla.edu
Javier Cravino
Department of Economics
UCLA
Bunche Hall 8365
Los Angeles, CA 90095-1477
E-Mail: jcravino@ucla.edu
Jonathan Vogel
Department of Economics
Columbia University
420 West 118th Street
New York, NY 10027
Tel: 212/854-9925
Fax: 212/854-8059
E-Mail: jvogel@columbia.edu
AB - Capital equipment – such as computers and industrial machinery – embodies skill-biased technology, in the sense that it is complementary to skilled labor. Most countries import a large share of their capital equipment, and by doing so import skill-biased technology. In this paper we develop a tractable quantitative model of international trade in capital goods to quantify the extent to which trade, through capital-skill complementarity, raises the relative demand for skill and hence increases the skill premium. In one counterfactual, we find that moving from the trade levels observed in the year 2000 to autarky would decrease the skill premium by 16% in the median country in our sample, by 5% in the US, and by a much larger magnitude in countries that heavily rely on imported capital equipment.
ER -
TY - JOUR
AU - Handel,Benjamin R.
TI - Adverse Selection and Switching Costs in Health Insurance Markets: When Nudging Hurts
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17459
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17459
L1 - http://www.nber.org/papers/w17459.pdf
N1 - Author contact info:
Benjamin R. Handel
Department of Economics
University of California, Berkeley
508-1 Evans Hall #3880
Berkeley, CA 94720
Tel: 609/240-5199
Fax: 510/642-6615
E-Mail: handel@berkeley.edu
AB - This paper investigates consumer switching costs in the context of health insurance markets, where adverse selection is a potential concern. Though previous work has studied these phenomena in isolation, they interact in a way that directly impacts market outcomes and consumer welfare. Our identification strategy leverages a unique natural experiment that occurred at a large firm where we also observe individual-level panel data on health insurance choices and medical claims. We present descriptive results to show that (i) switching costs are large and (ii) adverse selection is present. To formalize this analysis we develop and estimate a choice model that jointly quantifies switching costs, risk preferences, and ex ante health risk. We use these estimates to study the welfare impact of an information provision policy that nudges consumers toward better decisions by reducing switching costs. This policy increases welfare in a naive setting where insurance plan prices are held fixed. However, when insurance prices change endogenously to reflect updated enrollee risk pools, the same policy substantially exacerbates adverse selection and reduces consumer welfare, doubling the existing welfare loss from adverse selection.
ER -
TY - JOUR
AU - Collins,William J.
AU - Shester,Katharine L.
TI - Slum Clearance and Urban Renewal in the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17458
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17458
L1 - http://www.nber.org/papers/w17458.pdf
N1 - Author contact info:
William J. Collins
Department of Economics
Vanderbilt University
VU Station B #351819
2301 Vanderbilt Place
Nashville, TN 37235-1819
Tel: 615/322-3428
Fax: NA
E-Mail: william.collins@vanderbilt.edu
Katharine Shester
Washington and Lee University
Holekamp Hall
Lexington, Virginia 24450
E-Mail: shesterk@wlu.edu
AB - We study the local effects of the Housing Act of 1949, which established a federally subsidized program that helped cities clear areas for redevelopment, rehabilitate deteriorating structures, complete comprehensive city plans, and enforce building codes. We use an instrumental variable strategy to estimate the program’s effects on city-level measures of median income, property values, employment and poverty rates, and population. The estimates are generally positive and economically significant, and they are not driven by differential changes in cities’ demographic composition. The results are consistent with a model of spatial equilibrium in which local productivity is enhanced.
ER -
TY - JOUR
AU - Aguiar,Mark A.
AU - Amador,Manuel
TI - Fiscal Policy in Debt Constrained Economies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17457
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17457
L1 - http://www.nber.org/papers/w17457.pdf
N1 - Author contact info:
Mark A. Aguiar
Department of Economics
Princeton University
Fisher Hall
Princeton, NJ 08544-1021
E-Mail: mark@markaguiar.com
Manuel Amador
Stanford University
Department of Economics
Landau Economics Building
579 Serra Mall, Room 330
Stanford , CA 94305-6072
Tel: 650/725-5257
E-Mail: amador@stanford.edu
AB - We study optimal fiscal policy in a small open economy (SOE) with sovereign and private default risk. The SOE's government uses linear taxation to fund exogenous expenditures and uses public debt to inter-temporally allocate tax distortions. We characterize a class of environments in which the tax on labor goes to zero in the long run, while the tax on capital income may be non-zero, reversing the standard prediction of the Ramsey tax literature. The zero labor tax is an optimal long run outcome if the private agents are impatient relative to the international interest rate and the economy is subject to sovereign debt constraints. The front loading of labor taxes allows the economy to build a large (aggregate) debt position in the presence of limited commitment. We show that a similar result holds in a closed economy with imperfect inter-generational altruism.
ER -
TY - JOUR
AU - Cunha,Jesse M.
AU - Giorgi,Giacomo De
AU - Jayachandran,Seema
TI - The Price Effects of Cash Versus In-Kind Transfers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17456
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17456
L1 - http://www.nber.org/papers/w17456.pdf
N1 - Author contact info:
Jesse Cunha
Naval Postgraduate School
Graduate School of Business
and Public Policy
555 Dyer Rd
Monterey, CA 93943
Tel: 650.492.0381
E-Mail: jcunha@nps.edu
Giacomo De Giorgi
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305
Tel: 650/723-3982
E-Mail: degiorgi@stanford.edu
Seema Jayachandran
Department of Economics
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: (847) 491-4757
Fax: (847) 491-7001
E-Mail: seema@northwestern.edu
AB - This paper compares how cash and in-kind transfers affect local prices. Both types of transfers increase the demand for normal goods, but only in-kind transfers also increase supply. Hence, in-kind transfers should lead to lower prices than cash transfers, which helps consumers at the expense of local producers. We test and confirm this prediction using a program in Mexico that randomly assigned villages to receive boxes of food (trucked into the village), equivalently-valued cash transfers, or no transfers. The pecuniary benefit to consumers of in-kind transfers, relative to cash transfers, equals 11% of the direct transfer.
ER -
TY - JOUR
AU - Manski,Charles F.
AU - Pepper,John V.
TI - Deterrence and the Death Penalty: Partial Identification Analysis Using Repeated Cross Sections
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17455
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17455
L1 - http://www.nber.org/papers/w17455.pdf
N1 - Author contact info:
Charles F. Manski
Department of Economics
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-8223
Fax: 847/491-7001
E-Mail: cfmanski@northwestern.edu
John Pepper
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
E-Mail: jvp3m@virginia.edu
AB - Researchers have long used repeated cross sectional observations of homicide rates and sanctions to examine the deterrent effect of the adoption and implementation of death penalty statutes. The empirical literature, however, has failed to achieve consensus. A fundamental problem is that the outcomes of counterfactual policies are not observable. Hence, the data alone cannot identify the deterrent effect of capital punishment. How then should research proceed? It is tempting to impose assumptions strong enough to yield a definitive finding, but strong assumptions may be inaccurate and yield flawed conclusions. Instead, we study the identifying power of relatively weak assumptions restricting variation in treatment response across places and time. The results are findings of partial identification that bound the deterrent effect of capital punishment. By successively adding stronger identifying assumptions, we seek to make transparent how assumptions shape inference. We perform empirical analysis using state-level data in the United States in 1975 and 1977. Under the weakest restrictions, there is substantial ambiguity: we cannot rule out the possibility that having a death penalty statute substantially increases or decreases homicide. This ambiguity is reduced when we impose stronger assumptions, but inferences are sensitive to the maintained restrictions. Combining the data with some assumptions implies that the death penalty increases homicide, but other assumptions imply that the death penalty deters it.
ER -
TY - JOUR
AU - Kuhn,Peter J.
AU - Shen,Kailing
TI - Gender Discrimination in Job Ads: Theory and Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17453
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17453
L1 - http://www.nber.org/papers/w17453.pdf
N1 - Author contact info:
Peter J. Kuhn
Department of Economics
University of California, Santa Barbara
2127 North Hall
Santa Barbara, CA 93106
Tel: 805/893-3666
Fax: 805/893-8830
E-Mail: pjkuhn@econ.ucsb.edu
Kailing Shen
Wang Yanan Institute for Studies in Economics
(WISE)
Xiamen University
China 361005
E-Mail: kailing.shen@gmail.com
AB - We study firms' advertised gender preferences in a population of ads on a Chinese internet job board, and interpret these patterns using a simple employer search model. The model allows us to distinguish firms' underlying gender preferences from firms' propensities to restrict their search to their preferred gender. The model also predicts that higher job skill requirements should reduce the tendency to gender-target a job ad; this is strongly confirmed in our data, and suggests that rising skill demands may be a potent deterrent to explicit discrimination of the type we document here. We also find that firms' underlying gender preferences are highly job-specific, with many firms requesting men for some jobs and women for others, and with one third of the variation in gender preferences within firm*occupation cells.
ER -
TY - JOUR
AU - Gibbs,Chloe
AU - Ludwig,Jens
AU - Miller,Douglas L.
TI - Does Head Start Do Any Lasting Good?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17452
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17452
L1 - http://www.nber.org/papers/w17452.pdf
N1 - Author contact info:
Chloe Gibbs
University of Chicago
1155 East 60th Street
Chicago, IL60637
E-Mail: chloeh@uchicago.edu
Jens Ludwig
University of Chicago
1155 East 60th Street
Chicago, IL 60637
Tel: 773/834-0811
Fax: 773/834-1582
E-Mail: jludwig@uchicago.edu
Douglas L. Miller
University of California, Davis
Department of Economics
One Shields Avenue
Davis, CA 95616-8578
Tel: 530/752-8490
E-Mail: dlmiller@ucdavis.edu
AB - Head Start is a federal early childhood intervention designed to reduce disparities in preschool outcomes. The first randomized experimental study of Head Start, the National Head Start Impact Study (NHSIS), found impacts on academic outcomes of .15 to .3 standard deviations measured at the end of the program year, although the estimated impacts were no longer significant when measured at the end of kindergarten or first grade. Assessments that Head Start is ineffective based on the NHSIS results are in our view premature, given our currently limited understanding of how and why early childhood education improves long-term life chances. Many of the specific changes to Head Start that have been proposed could potentially wind up doing more harm than good.
ER -
TY - JOUR
AU - Brown,Jeffrey
AU - Finkelstein,Amy
TI - Insuring Long Term Care In the US
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17451
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17451
L1 - http://www.nber.org/papers/w17451.pdf
N1 - Author contact info:
Jeffrey Brown
Department of Finance
University of Illinois at Urbana-Champaign
515 East Gregory Drive
Champaign, IL 61820
Tel: 217/333-3322
E-Mail: brownjr@illinois.edu
Amy Finkelstein
Department of Economics
MIT E52-274C
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/253-4149
Fax: 617/868-2742
E-Mail: afink@mit.edu
AB - Long-term care expenditures constitute one of the largest uninsured financial risks facing the elderly in the United States. This paper provides an overview of the economic and policy issues surrounding insuring long-term care expenditure risk. Through this lens we also discuss the likely impact of recent long-term care public policy initiatives at both the state and federal level.
ER -
TY - JOUR
AU - Lang,Kevin
AU - Lehmann,Jee-Yeon K.
TI - Racial Discrimination in the Labor Market: Theory and Empirics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17450
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17450
L1 - http://www.nber.org/papers/w17450.pdf
N1 - Author contact info:
Kevin Lang
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-5694
Fax: 617/353-4001
E-Mail: lang@bu.edu
Jee-Yeon K. Lehmann
Department of Economics
University of Houston
211B McElhinney Hall
Houston, TX 77204
Tel: 713-743-3378
Fax: 713-743-3798
E-Mail: jlehmann@uh.edu
AB - We review theories of race discrimination in the labor market. Taste-based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread, but no existing model explains the unemployment rate differential. Models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment. At their current state of development, models of statistical discrimination based on rational stereotypes have little empirical content. It is plausible that models combining elements of the search models with statistical discrimination could fit the data. We suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy.
ER -
TY - JOUR
AU - Giné,Xavier
AU - Goldberg,Jessica
AU - Yang,Dean
TI - Credit Market Consequences of Improved Personal Identification: Field Experimental Evidence from Malawi
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17449
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17449
L1 - http://www.nber.org/papers/w17449.pdf
N1 - Author contact info:
Xavier Gine
The World Bank
1818 H Street N.W.
Mail Stop MC 3-307
Washington, D.C. 20433
Tel: (202) 473-0451
Fax: (202) 522-1155
E-Mail: xgine@worldbank.org
Jessica Goldberg
University of Maryland
Department of Economics
3115G Tydings Hall
College Park, MD 20742
Tel: (301) 405-3559
E-Mail: goldberg@econ.umd.edu
Dean Yang
University of Michigan
Gerald R. Ford School of Public Policy
and Department of Economics
735 S. State Street, Room 3316
Ann Arbor, MI 48109
Tel: 734/764-6158
Fax: 734/763-9181
E-Mail: deanyang@umich.edu
AB - We report the results of a randomized field experiment that examines the credit market impacts of improvements in a lender's ability to determine borrowers’ identities. Improved personal identification enhances the credibility of a lender’s dynamic repayment incentives by allowing it to withhold future loans from past defaulters and expand credit for good borrowers. The experimental context, rural Malawi, is characterized by an imperfect identification system. Consistent with a simple model of borrower heterogeneity and information asymmetries, fingerprinting led to substantially higher repayment rates for borrowers with the highest ex ante default risk, but had no effect for the rest of the borrowers. The change in repayment rates is driven by reductions in adverse selection (smaller loan sizes) and lower moral hazard (for example, less diversion of loan-financed fertilizer from its intended use on the cash crop).
ER -
TY - JOUR
AU - Livshits,Igor
AU - MacGee,James
AU - Tertilt,Michèle
TI - Costly Contracts and Consumer Credit
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17448
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17448
L1 - http://www.nber.org/papers/w17448.pdf
N1 - Author contact info:
Igor Livshits
Department of Economics
University of Western Ontario
Social Science Centre
London, Ontario N6A5C2
Tel: 519/661-2111 X85539
Fax: 519/661-3666
E-Mail: livshits@uwo.ca
James MacGee
Department of Economics
University of Western Ontario
London, Ontario Canada NCA 5C2
Tel: 519/661-2111 Ext 85207
Fax: 519/661-3666
E-Mail: jmacgee@uwo.ca
Michèle Tertilt
Department of Economics
University of Mannheim
L7, 3-5
68131 Mannheim
Germany
Tel: +49-621-181-1902
E-Mail: tertilt@uni-mannheim.de
AB - Financial innovations are a common explanation of the rise in consumer credit and bankruptcies. To evaluate this story, we develop a simple model that incorporates two key frictions: asymmetric information about borrowers’ risk of default and a fixed cost to create each contract offered by lenders. Innovations which reduce the fixed cost or ameliorate asymmetric information have large extensive margin effects via the entry of new lending contracts targeted at riskier borrowers. This results in more defaults and borrowing, as well as increased dispersion of interest rates. Using the Survey of Consumer Finance and interest rate data collected by the Board of Governors, we find evidence supporting these predictions, as the dispersion of credit card interest rates nearly tripled, and the share of credit card debt of lower income households nearly doubled.
ER -
TY - JOUR
AU - Auerbach,Alan J.
AU - Gorodnichenko,Yuriy
TI - Fiscal Multipliers in Recession and Expansion
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17447
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17447
L1 - http://www.nber.org/papers/w17447.pdf
N1 - Author contact info:
Alan J. Auerbach
Department of Economics
530 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0711
Fax: 510/643-0413
E-Mail: auerbach@econ.berkeley.edu
Yuriy Gorodnichenko
Department of Economics
508-1 Evans Hall #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0720
Fax: 510/642-6615
E-Mail: ygorodni@econ.berkeley.edu
M1 - published as Alan Auerbach, Yuriy Gorodnichenko. "Fiscal Multipliers in Recession and Expansion," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2012)
AB - In this paper, we estimate government purchase multipliers for a large number of OECD countries, allowing these multipliers to vary smoothly according to the state of the economy and using real-time forecast data to purge policy innovations of their predictable components. We adapt our previous methodology (Auerbach and Gorodnichenko, 2011) to use direct projections rather than the SVAR approach to estimate multipliers, to economize on degrees of freedom and to relax the assumptions on impulse response functions imposed by the SVAR method. Our findings confirm those of our earlier paper. In particular, GDP multipliers of government purchases are larger in recession, and controlling for real-time predictions of government purchases tends to increase the estimated multipliers of government purchases in recession. We also consider the responses of other key macroeconomic variables and find that these responses generally vary over the cycle as well, in a pattern consistent with the varying impact on GDP.
ER -
TY - JOUR
AU - Martin,Ralf
AU - Preux,Laure B. de
AU - Wagner,Ulrich J.
TI - The Impacts of the Climate Change Levy on Manufacturing: Evidence from Microdata
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17446
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17446
L1 - http://www.nber.org/papers/w17446.pdf
N1 - Author contact info:
Ralf Martin
Imperial College Business School
London SW7 2AZ, UK
E-Mail: R.Martin@lse.ac.uk
Laure B. de Preux
Centre for Health Economics
University of York
Heslington
York YO10 5DD, UK
E-Mail: L.B.dePreux@lse.ac.uk
Ulrich Wagner
Universidad Carlos III de Madrid
Department of Economics
Calle de Madrid, 126
28903 Getafe (Madrid)
Spain
Tel: +34916248488
Fax: +34916249329
E-Mail: uwagner@eco.uc3m.es
M3 - presented at "SI 2010 Environmental and Energy Economics", July 29-30, 2010
AB - We estimate the impacts of the Climate Change Levy (CCL) on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a Climate Change Agreement (CCA). Exploiting exogenous variation in eligibility for CCA participation, we find that the CCL had a strong negative impact on energy intensity and electricity use. We cannot reject the hypothesis that the tax had no detrimental effects on economic performance and on plant exit.
ER -
TY - JOUR
AU - Mulligan,Casey B.
TI - Means-Tested Subsidies and Economic Performance Since 2007
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17445
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17445
L1 - http://www.nber.org/papers/w17445.pdf
N1 - Author contact info:
Casey B. Mulligan
University of Chicago
Department of Economics
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-9017
Fax: 773/702-8490
E-Mail: c-mulligan@uchicago.edu
AB - The aggregate neoclassical growth model – with means-tested subsidies whose replacement rates began rising at the end of 2007 as its only impulse – produces time series for aggregate labor usage, consumption, investment, and real GDP that closely resemble actual U.S. time series. Despite having no explicit financial market, the model has investment fall steeply during the recession not because of any distortions with the supply of capital, but merely because labor is falling and labor is complementary with capital in the production function. Through the lens of the model, the fact that real consumption fell significantly below trend during 2008 suggests that labor usage per capita is expected to remain well below pre-recession levels for several years.
ER -
TY - JOUR
AU - Leeper,Eric M.
AU - Traum,Nora
AU - Walker,Todd B.
TI - Clearing Up the Fiscal Multiplier Morass
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17444
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17444
L1 - http://www.nber.org/papers/w17444.pdf
N1 - Author contact info:
Eric M. Leeper
Department of Economics
304 Wylie Hall
Indiana University
Bloomington, IN 47405
Tel: 812/855-9157
Fax: NA
E-Mail: eleeper@indiana.edu
Nora Traum
Department of Economics
Nelson Hall Campus Box 8110
North Carolina State University
Raleigh, NC 27695
E-Mail: nora_traum@ncsu.edu
Todd B. Walker
Department of Economics
105 Wylie Hall
Indiana University
Bloomington, IN 47405
E-Mail: walkertb@indiana.edu
AB - Bayesian prior predictive analysis of five nested DSGE models suggests that model specifications and prior distributions tightly circumscribe the range of possible government spending multipliers. Multipliers are decomposed into wealth and substitution effects, yielding uniform comparisons across models. By constraining the multiplier to tight ranges, model and prior selections bias results, revealing less about fiscal effects in data than about the lenses through which researchers choose to interpret data. When monetary policy actively targets inflation, output multipliers can exceed one, but investment multipliers are likely to be negative. Passive monetary policy produces consistently strong multipliers for output, consumption, and investment.
ER -
TY - JOUR
AU - Komai,Alejandro
AU - Richardson,Gary
TI - A Brief History of Regulations Regarding Financial Markets in the United States: 1789 to 2009
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17443
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17443
L1 - http://www.nber.org/papers/w17443.pdf
N1 - Author contact info:
Alejandro Komai
8283 Bunche Hall
Mail Stop 147703
Los Angeles, CA 90095
E-Mail: atkomai@ucla.edu
Gary Richardson
Department of Economics
University of California, Irvine
3155 Social Sciences Plaza
Irvine, CA 92697-5100
Tel: 949/824-3189
Fax: 949/824-2182
E-Mail: garyr@uci.edu
AB - In the United States today, the system of financial regulation is complex and fragmented. Responsibility to regulate the financial services industry is split between about a dozen federal agencies, hundreds of state agencies, and numerous industry-sponsored self-governing associations. Regulatory jurisdictions often overlap, so that most financial firms report to multiple regulators; but gaps exist in the supervisory structure, so that some firms report to few, and at times, no regulator. The overlapping jumble of standards; laws; and federal, state, and private jurisdictions can confuse even the most sophisticated student of the system. This article explains how that confusion arose. The story begins with the Constitutional Convention and the foundation of our nation. Our founding fathers fragmented authority over financial markets between federal and state governments. That legacy survives today, complicating efforts to create a financial system that can function effectively during the twenty-first century.
ER -
TY - JOUR
AU - Abadie,Alberto
AU - Imbens,Guido W.
AU - Zheng,Fanyin
TI - Robust Inference for Misspecified Models Conditional on Covariates
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17442
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17442
L1 - http://www.nber.org/papers/w17442.pdf
N1 - Author contact info:
Alberto Abadie
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-4547
Fax: 617/496-5960
E-Mail: alberto_abadie@harvard.edu
Guido Imbens
Department of Economics
Littauer Center
Harvard University
1805 Cambridge Street
Cambridge, MA 02138
Tel: 617/384-7485
Fax: 617/495-7730
E-Mail: imbens@fas.harvard.edu
Fanyin Zheng
Harvard University
E-Mail: fzheng@fas.harvard.edu
AB - Following the work by White (1980ab; 1982) it is common in empirical work in economics to report standard errors that are robust against general misspecification. In a regression setting these standard errors are valid for the parameter that in the population minimizes the squared difference between the conditional expectation and the linear approximation, averaged over the population distribution of the covariates. In nonlinear settings a similar interpretation applies. In this note we discuss an alternative parameter that corresponds to the approximation to the conditional expectation based on minimization of the squared difference averaged over the sample, rather than the population, distribution of a subset of the variables. We argue that in some cases this may be a more interesting parameter. We derive the asymptotic variance for this parameter, generally smaller than the White robust variance, and we propose a consistent estimator for the asymptotic variance.
ER -
TY - JOUR
AU - Link,Albert N.
AU - Ruhm,Christopher J.
TI - Creativity and the Family Tree: Human Capital Endowments and the Propensity of Entrepreneurs to Patent
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17441
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17441
L1 - http://www.nber.org/papers/w17441.pdf
N1 - Author contact info:
Albert Link
Department of Economics
Bryan School, UNCG
P.O. Box 26165
Greensboro, NC 27402-6165
E-Mail: al_link@uncg.edu
Christopher J. Ruhm
Frank Batten School of
Leadership and Public Policy
University of Virginia
235 McCormick Rd.
P.O. Box 400893
Charlottesville, VA 22904-40893
Tel: 434-243-3729
E-Mail: ruhm@virginia.edu
AB - In this paper we show that the patenting behavior of creative entrepreneurs is correlated with the patenting behavior of their fathers, which we refer to as a source of the entrepreneurs’ human capital endowments. Our argument for this relationship follows from established theories of developmental creativity, and our empirical analysis is based on survey data collected from MIT’s Technology Review winners.
ER -
TY - JOUR
AU - Goda,Gopi Shah
AU - Shoven,John B.
AU - Slavov,Sita Nataraj
TI - Does Widowhood Explain Gender Differences in Out-of-Pocket Medical Spending Among the Elderly?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17440
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17440
L1 - http://www.nber.org/papers/w17440.pdf
N1 - Author contact info:
Gopi Shah Goda
Stanford University
SIEPR
366 Galvez St.
Stanford, CA 94305
Tel: 650/736-0480
Fax: 650/723-8611
E-Mail: gopi@stanford.edu
John B. Shoven
Department of Economics
579 Serra Mall at Galvez Street
Stanford, CA 94305-6015
Tel: 650/723-3273
Fax: 650/723-8611
E-Mail: shoven@stanford.edu
Sita Slavov
Department of Economics
Occidental College
1600 Campus Road
Los Angeles, CA 90041
Tel: 323/259-1461
E-Mail: sslavov@oxy.edu
AB - Despite the presence of Medicare, out-of-pocket medical spending is a large expenditure risk facing the elderly. While women live longer than men, elderly women incur higher out-of-pocket medical spending than men at each age. In this paper, we examine whether differences in marital status and living arrangements can explain this difference. We find that out-of-pocket medical spending is approximately 29 percent higher when an individual becomes widowed, a large portion of which is spending on nursing homes. Our results suggest a substantial role of living arrangements in out-of-pocket medical spending; however, our estimates combined with differences in rates of widowhood across gender suggest that marital status can explain only one third of the gender difference in total out-of-pocket medical spending, leaving a large portion unexplained. On the other hand, gender differences in widowhood more than explain the observed gender difference in out-of-pocket spending on nursing homes.
ER -
TY - JOUR
AU - Gustman,Alan L.
AU - Steinmeier,Thomas L.
AU - Tabatabai,Nahid
TI - The Effects of Changes in Women's Labor Market Attachment on Redistribution Under the Social Security Benefit Formula
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17439
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17439
L1 - http://www.nber.org/papers/w17439.pdf
N1 - Author contact info:
Alan L. Gustman
Department of Economics
Dartmouth College
Hanover, NH 03755-3514
Tel: 603/646-2641
Fax: 603/646-2122
E-Mail: ALAN.L.GUSTMAN@DARTMOUTH.EDU
Thomas Steinmeier
Department of Economics
Texas Tech University
Lubbock, TX 79409
E-Mail: thomas.steinmeier@ttu.edu
Nahid Tabatabai
Department of Economics
Dartmouth College
Hanover, N.H. 03755
E-Mail: Nahid.Tabatabai@dartmouth.edu
AB - Studies using data from the early 1990s suggested that while the progressive Social Security benefit formula succeeded in redistributing benefits from individuals with high earnings to individuals with low earnings, it was much less successful in redistributing benefits from households with high earnings to households with low earnings. Wives often earned much less than their husbands. As a result, much of the redistribution at the individual level was effectively from high earning husbands to their own lower earning wives. In addition, spouse and survivor benefits accrue disproportionately to women from high income households. Both factors mitigate redistribution at the household level.
This paper compares outcomes for the earlier cohort with those of a cohort born twelve years later. The aim of the study is to see whether, after the recent growth in two earner households, and the growth in women's labor market activity and earnings, the Social Security system now fosters somewhat more redistribution from high to low earning households. The analysis is based on data from the Health and Retirement Study and includes members of households with at least one person age 51 to 56 in either 1992 or in 2004.
As expected, women enjoyed a more rapid growth of labor force participation, hours of work and covered earnings than men. This increased the redistribution of Social Security benefits among households. Nevertheless, a considerable gap remains between the labor market activities and earnings of women versus men. As a result, the Social Security system remains much less successful in redistributing benefits from households with high covered earnings to those with lower covered earnings than in redistributing benefits from individuals with high covered earnings to those with lower covered earnings.
ER -
TY - JOUR
AU - Deming,David J.
AU - Hastings,Justine S.
AU - Kane,Thomas J.
AU - Staiger,Douglas O.
TI - School Choice, School Quality and Postsecondary Attainment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17438
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17438
L1 - http://www.nber.org/papers/w17438.pdf
N1 - Author contact info:
David Deming
Harvard Graduate School of Education
Gutman 411
Appian Way
Cambridge, MA 02139
Tel: 617/495-0583
E-Mail: david_deming@gse.harvard.edu
Justine S. Hastings
Brown University
Department of Economics
64 Waterman Street
Providence, RI 02912
Tel: 203/432-3714
Fax: 203/432-6323
E-Mail: justine_hastings@brown.edu
Thomas J. Kane
Harvard Graduate School of Education
Center for Education Policy Research
50 Church St., 4th Floor
Cambridge, MA 02138
Tel: 617/496-4359
E-Mail: kaneto@gse.harvard.edu
Douglas O. Staiger
Dartmouth College
Department of Economics
HB6106, 301 Rockefeller Hall
Hanover, NH 03755-3514
Tel: 603/646-2979
Fax: 603/646-2122
E-Mail: douglas.staiger@dartmouth.edu
AB - We study the impact of a public school choice lottery in Charlotte-Mecklenburg (CMS) on postsecondary attainment. We match CMS administrative records to the National Student Clearinghouse (NSC), a nationwide database of college enrollment. Among applicants with low-quality neighborhood schools, lottery winners are more likely than lottery losers to graduate from high school, attend a four-year college, and earn a bachelor’s degree. They are twice as likely to earn a degree from an elite university. The results suggest that school choice can improve students’ longer-term life chances when they gain access to schools that are better on observed dimensions of quality.
ER -
TY - JOUR
AU - Richardson,Gary
AU - Horn,Patrick Van
TI - When the Music Stopped: Transatlantic Contagion During the Financial Crisis of 1931
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17437
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17437
L1 - http://www.nber.org/papers/w17437.pdf
N1 - Author contact info:
Gary Richardson
Department of Economics
University of California, Irvine
3155 Social Sciences Plaza
Irvine, CA 92697-5100
Tel: 949/824-3189
Fax: 949/824-2182
E-Mail: garyr@uci.edu
Patrick Van Horn
New College of Florida
Division of Social Sciences
5800 Bay Shore Road
Sarasota, FL 34243
E-Mail: pvanhorn@ncf.edu
AB - In 1931, a financial crisis began in Austria, struck numerous European nations, forced Britain to abandon the gold standard, and spread across the Atlantic. This article describes how banks in New York City, the central money market of the United States, reacted to events in Europe. An array of data sources – including memos detailing private conversations between leading bankers the governors of the New York Federal Reserve, articles written by prominent commentators, and financial data drawn from the balance sheets of commercial banks – tell a consistent tale. Banks in New York anticipated events in Europe, prepared for them by accumulating substantial reserves, and during the crisis, continued business as usual. Leading international bankers deliberately and collectively decided on the business-as-usual policy in order to minimize the impact of the panic in the United States and Europe.
ER -
TY - JOUR
AU - Gentzkow,Matthew
AU - Kamenica,Emir
TI - Competition in Persuasion
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17436
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17436
L1 - http://www.nber.org/papers/w17436.pdf
N1 - Author contact info:
Matthew Gentzkow
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-2177
Fax: 773/702-0458
E-Mail: gentzkow@chicagobooth.edu
Emir Kamenica
University of Chicago
Booth School of Business
5807 S. Woodlawn Ave.
Chicago, IL 60637
Tel: 773.834.8690
E-Mail: emir.kamenica@chicagobooth.edu
AB - Does competition among persuaders increase the extent of information revealed? We study ex ante symmetric information games where a number of senders choose what information to gather and communicate to a receiver, who takes a non-contractible action that affects the welfare of all players. We characterize the information revealed in pure-strategy equilibria. We consider three ways of increasing competition among senders: (i) moving from collusive to non-cooperative play, (ii) introducing additional senders, and (iii) decreasing the alignment of senders' preferences. For each of these notions, we establish that increasing competition cannot decrease the amount of information revealed, and will in a certain sense tend to increase it.
ER -
TY - JOUR
AU - Lochner,Lance
AU - Monge-Naranjo,Alexander
TI - Credit Constraints in Education
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17435
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17435
L1 - http://www.nber.org/papers/w17435.pdf
N1 - Author contact info:
Lance Lochner
Department of Economics, Faculty of Social Science
University of Western Ontario
1151 Richmond Street, North
London, ON N6A 5C2
CANADA
Tel: 519/661-2111 ext. 85281
Fax: 519/661-3666
E-Mail: llochner@uwo.ca
Alexander Monge-Naranjo
Department of Economics
Pennsylvania State University
502 Kern Graduate Building
University Park, PA 16802-3306
E-Mail: aum26@psu.edu
AB - We review studies of the impact of credit constraints on the accumulation of human capital. Evidence suggests that credit constraints are increasingly important for schooling and other aspects of households' behavior. We highlight the importance of early childhood investments, since their response largely determines the impact of credit constraints on the overall lifetime acquisition of human capital. We also review the intergenerational literature and examine the macroeconomic impacts of credit constraints on social mobility and the income distribution.
A common limitation across all areas of the human capital literature is the imposition of ad hoc constraints on credit. We propose a more careful treatment of the structure of government student loan programs as well as the incentive problems underlying private credit. We show that endogenizing constraints on credit for human capital helps explain observed borrowing, schooling, and default patterns and offers new insights about the design of government policy.
ER -
TY - JOUR
AU - Sanders,Nicholas J.
AU - Stoecker,Charles F.
TI - Where Have All the Young Men Gone? Using Gender Ratios to Measure Fetal Death Rates
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17434
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17434
L1 - http://www.nber.org/papers/w17434.pdf
N1 - Author contact info:
Nicholas J. Sanders
Stanford University
366 Galvez Street, Room 228
Stanford, CA 94305-6015
E-Mail: sandersn@stanford.edu
Charles F. Stoecker
Department of Economics
One Shields Ave
Davis, CA 95616
E-Mail: cfstoecker@ucdavis.edu
M3 - presented at "SI 2011 Environmental & Energy Economics", July 29-30, 2011
AB - Fetal health is an important consideration in the formation of health-based policy. However, a complete census of true fetal deaths is impossible to obtain. We present the gender ratio of live births as an under-exploited metric of fetal health and apply it to examine the effects of air quality on fetal health. Males are more vulnerable to side effects of maternal stress in utero, and thus are more likely to suffer fetal death due to pollution exposure. We demonstrate this metric in the context of the Clean Air Act Amendments of 1970 (CAAA) which provide a source of exogenous variation in county-level ambient total suspended particulate matter (TSPs). We find that a standard deviation increase in annual average TSPs (approximately 35 μg/m3) decreases the percentage of live births that are male by 3.1 percentage points. We then explore the use of observed differences in neonatal and one-year mortality rates across genders in response to pollution exposure as a metric to estimate total fetal losses in utero. These calculations suggest the pollution reductions from the CAAA prevented approximately 21,000-134,000 fetal deaths in 1972.
ER -
TY - JOUR
AU - Ottaviano,Gianmarco I.P.
TI - Firm Heterogeneity, Endogenous Entry, and the Business Cycle
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17433
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17433
L1 - http://www.nber.org/papers/w17433.pdf
N1 - Author contact info:
Gianmarco Ottaviano
Department of Economics
Bocconi University
Via Roentgen 1
20136 Milan
Italy
E-Mail: gianmarco.ottaviano@unibocconi.it
M3 - presented at "ISOM", June 17-18, 2011
AB - This paper investigates the role that the entry and exit of heterogeneous firms plays in shaping aggregate fluctuations in economic activity. In so doing, it develops a dynamic stochastic general equilibrium model in which procyclical entry and countercyclical exit along a real business cycle lead to endogenous cyclical movements in average firm productivity. These movements stem from a composition effect due to the reallocation of market shares among firms with different levels of efficiency and affect the propagation of exogenous technological shocks. Numerical analysis suggests that existing models with representative firms may overstate the actual role of procyclical entry and exit in imperfectly competitive markets as a propagation mechanism of exogenous technology shocks. The reason is that procyclical entry and countercyclical exit disproportionately involve less efficiency firms whose impact on aggregate economic activity is hampered by their smaller size.
ER -
TY - JOUR
AU - Murtin,Fabrice
AU - Wacziarg,Romain
TI - The Democratic Transition
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17432
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17432
L1 - http://www.nber.org/papers/w17432.pdf
N1 - Author contact info:
Fabrice Murtin
Organisation for Economic
Co-operation and Development
2 rue Andre Pascal
75016 Paris, France
E-Mail: fabrice.murtin@oecd.org
Romain Wacziarg
Anderson School of Management at UCLA
C-510 Entrepreneurs Hall
110 Westwood Plaza
Los Angeles, CA 90095-1481
Tel: 310 825 4507
E-Mail: wacziarg@ucla.edu
AB - Over the last two centuries, many countries experienced regime transitions toward democracy. We document this democratic transition over a long time horizon. We use historical time series of income, education and democracy levels from 1870 to 2000 to explore the economic factors associated with rising levels of democracy. We find that primary schooling, and to a weaker extent per capita income levels, are strong determinants of the quality of political institutions. We find little evidence of causality running the other way, from democracy to income or education.
ER -
TY - JOUR
AU - Paul,Gilles St.
TI - Toward a Political Economy of Macroeconomic Thinking
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17431
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17431
L1 - http://www.nber.org/papers/w17431.pdf
N1 - Author contact info:
Gilles St. Paul
IDEI
Universite de Toulouse 1
21, Allee de Brienne
31000 Toulouse
France
Tel: 00 33 5 61 12 85 44
E-Mail: gilles.saint-paul@tse-fr.eu
M3 - presented at "ISOM", June 17-18, 2011
AB - This paper investigates, in a simplified macro context, the joint determination of the (incorrect) perceived model and the equilibrium. I assume that the model is designed by a self-interested economist who knows the true structural model, but reports a distorted one so as to influence outcomes. This model influences both the people and the government; the latter tries to stabilize an unobserved demand shock and will make different inferences about that shock depending on the model it uses. The model's choice is constrained by a set of autocoherence conditions that state that, in equilibrium, if everybody uses the model then it must correctly predict the moments of the observables. I then study, in particular, how the models devised by the economists vary depending on whether they are "progressive" vs. "conservative".
The predictions depend greatly on the specifics of the economy being considered. But in many cases, they are plausible. For example, conservative economists will tend to report a lower keynesian multiplier, and a greater long-term inflationary impact of output expansions. On the other hand, the economists' margin of manoeuver is constrained by the autocoherence conditions. Here, a "progressive" economist who promotes a Keynesian multiplier larger than it really is, must, to remain consistent, also claim that demand shocks are more volatile than they really are. Otherwise, people will be disappointed by the stabilization performance of fiscal policy and reject the hypothesized value of the multiplier. In some cases, autocoherence induces the experts to make, loosely speaking, ideological concessions on some parameter values. The analysis is illustrated by empirical evidence from the Survey of Professional Forecasters.
ER -
TY - JOUR
AU - Keane,Michael P.
AU - Rogerson,Richard
TI - Reconciling Micro and Macro Labor Supply Elasticities: A Structural Perspective
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17430
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17430
L1 - http://www.nber.org/papers/w17430.pdf
N1 - Author contact info:
Michael P. Keane
School of Economics
University of New South Wales
Sydney NSW 2052
Australia
E-Mail: Michael.Keane@uts.edu.au
Richard Rogerson
Woodrow Wilson School of
Public and International Affairs
323 Bendheim Hall
Princeton University
Princeton, NJ 08544
Tel: 609-258-4839
Fax: 609-258-5349
E-Mail: rdr@princeton.edu
AB - The response of aggregate labor supply to various changes in the economic environment is central to many economic issues, especially the optimal design of tax policies. This paper surveys recent work that uses structural models and micro data to evaluate the size of this response. Whereas the earlier literature on this issue often concluded that aggregate labor supply elasticities were small, recent work has identified three key reasons that the aggregate elasticity may be quite large. First, earlier estimates abstracted from several key features, including human capital accumulation, leading to estimates that are dramatically negatively biased. Second, failure to understand that aggregate labor supply adjustments can occur along both the hours per worker and employment margins has led economists to misinterpret the implications of previous estimates for aggregate labor supply. Third, structural estimation of responses along the extensive (i.e., employment) margin are typically quite large.
ER -
TY - JOUR
AU - Justiniano,Alejandro
AU - Michelacci,Claudio
TI - The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the US and Europe
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17429
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17429
L1 - http://www.nber.org/papers/w17429.pdf
N1 - Author contact info:
Alejandro Justiniano
Economic Research Department
Federal Reserve Bank of Chicago
230 S. LaSalle Street
Chicago, IL 60604
Tel: 312/322-5900
E-Mail: ajustiniano@frbchi.org
Claudio Michelacci
CEMFI, Calle Casado del Alisal 5
Madrid, SPAIN
Tel: 0034-91-4290-551
Fax: 0034-91-4291-056
E-Mail: c.michelacci@cemfi.es
M3 - presented at "ISOM", June 17-18, 2011
AB - We set-up a real business cycle model with search and matching frictions driven by several shocks, which nests full Nash Bargaining and wage rigidity as special cases and includes other transmission mechanisms suggested by the literature for the propagation and amplification of disturbances. The model is estimated using full information methods for two Anglo-Saxon countries (the US and the UK), two Continental European countries (France and Germany) and two Scandinavian countries (Norway and Sweden). We conduct inference with mixed frequency data, combining quarterly series for unemployment, vacancies, GDP, consumption, and investment, with annual data on unemployment flows. Parameters and shocks are estimated separately for each country, which can then vary in terms of search and hiring costs, workers' bargaining power, unemployment benefits levels, wage rigidity and the stochastic properties of disturbances. Overall, the structural model accounts reasonably well for differences in labor market dynamics observed between the two sides of the Atlantic and within Europe. Our estimates indicate that there is considerable cross-country variation in the contribution of technology shocks to the cyclical fluctuations of the labor market. Technology shocks alone replicate remarkably well the volatility in vacancies, unemployment and finding probabilities observed in US, with mixed success in Europe. In contrast, matching shocks and job destruction shocks play a larger role in most European countries relative to the US.
ER -
TY - JOUR
AU - Robinson,David T.
AU - Sensoy,Berk A.
TI - Cyclicality, Performance Measurement, and Cash Flow Liquidity in Private Equity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17428
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17428
L1 - http://www.nber.org/papers/w17428.pdf
N1 - Author contact info:
David T. Robinson
Fuqua School of Business
Duke University
100 Fuqua Drive
Durham, NC 27708
Tel: 919/660-8023
Fax: 919/684-2818
E-Mail: davidr@duke.edu
Berk Sensoy
Ohio State University
2100 Neil Ave.
Columbus, OH 43210
E-Mail: sensoy_4@fisher.osu.edu
AB - Public and private equity waves move together. Using quarterly cash-flow data for a large sample of venture capital and buyout funds from 1984-2010, we investigate the implications of this co-cyclicality for understanding private equity cash flows and performance. In the cross-section, varying the beta used to assess relative performance has a large effect on inference near a beta of zero, but only a modest effect for more reasonable beta estimates. A similar message comes through in the time series. Though funds raised in hot markets underperform in absolute terms, this underperformance is sharply reduced by a comparison to the S&P 500, and disappears entirely at the levels of beta recently estimated in the literature. These findings imply that high private equity fundraising forecasts both low private equity cash flows and low market returns, suggesting a positive correlation between private equity net cash flows and public equity valuations. Examining cash flows directly, we find that this is indeed the case. While both capital calls and distributions rise with public equity valuations, distributions are more sensitive than calls. Net cash flows are therefore procyclical and private equity funds are liquidity providers (sinks) when market valuations are high (low). Venture cash flows and performance are considerably more procyclical than buyout. Debt market conditions also have a significant impact on private equity cash flows. At the same time, most cash-flow variation is idiosyncratic across funds, and most predictable variation is explained by the age of the fund.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Jinjarak,Yothin
TI - The Fiscal Stimulus of 2009-10: Trade Openness, Fiscal Space and Exchange Rate Adjustment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17427
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17427
L1 - http://www.nber.org/papers/w17427.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Yothin Jinjarak
University of London
College Buildings, 534
London
UK, WC1H 0XG
E-Mail: yothin.jinjarak@gmail.com
M3 - presented at "ISOM", June 17-18, 2011
AB - This paper studies the cross-country variation of the fiscal stimulus and the exchange rate adjustment propagated by the global crisis of 2008-9, identifying the role of economic structure in accounting for the heterogeneity of response. We find that greater de facto fiscal space prior to the global crisis and lower trade openness were associated with a higher fiscal stimulus/GDP during 2009-2010 (where the de facto fiscal space is the inverse of the average tax-years it would take to repay the public debt). Lowering the 2006 public debt/average tax base from the level of low-income countries (5.94) down to the average level of the Euro minus the Euro-area peripheral countries (1.97), was associated with a larger crisis stimulus in 2009-11 of 2.78 GDP percentage points. Joint estimation of fiscal stimuli and exchange rate depreciations indicates that higher trade openness was associated with a smaller fiscal stimulus and a higher depreciation rate during the crisis. Overall, the results are in line with the predictions of the neo-Keynesian open-economy model.
ER -
TY - JOUR
AU - Busch,Susan
AU - Golberstein,Ezra
AU - Meara,Ellen
TI - The FDA and ABCs: The Unintended Consequences of Antidepressant Warnings on Human Capital
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17426
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17426
L1 - http://www.nber.org/papers/w17426.pdf
N1 - Author contact info:
Susan Busch
School of Publc Health
Yale University
P.O. Box 208034
New Haven, CT 06520-8034
E-Mail: susan.busch@yale.edu
Ezra Golberstein
Division of Health Policy and Management
University of Minnesota
School of Public Health
420 Delaware St. SE, MMC 729
Minneapolis, MN 55455
E-Mail: egolber@umn.edu
Ellen Meara
Dartmouth Institute for Health Policy
and Clinical Practice
35 Centerra Parkway
Lebanon, NH 03755
Tel: 603/653-0899
E-Mail: ellen.r.meara@dartmouth.edu
AB - Using annual cross-sectional data on over 100,000 adolescents aged 12-17, we studied academic and behavioral outcomes among those who were and were not likely affected by FDA warnings regarding the safety of antidepressants. Just before the FDA warnings, adolescents with probable depression had grade point averages 0.14 points higher than adolescents with depression just after the warnings. The FDA warnings also coincided with increased delinquency, use of tobacco and illicit drugs. Together, our results stress the importance of mental health and its treatment as an input into cognitive and non-cognitive aspects of human capital.
ER -
TY - JOUR
AU - Bordo,Michael D.
AU - Humpage,Owen F.
AU - Schwartz,Anna J.
TI - The Federal Reserve as an Informed Foreign Exchange Trader: 1973 – 1995
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17425
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17425
L1 - http://www.nber.org/papers/w17425.pdf
N1 - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu
Owen Humpage
Federal Reserve Bank of Cleveland
P.O. Box 6387
Cleveland, OH 44101-1387
Tel: 216 579 2019
Fax: 216 579 3050
E-Mail: owen.f.humpage@clev.frb.org
Anna J. Schwartz
NBER
365 Fifth Ave, 5th Floor
New York, NY 10016
Tel: 212/817-7957
Fax: 212/817-1597
E-Mail: aschwartz@gc.cuny.edu
AB - If official interventions convey private information useful for price discovery in foreign-exchange markets, then they should have value as a forecast of near-term exchange-rate movements. Using a set of standard criteria, we show that approximately 60 percent of all U.S. foreign-exchange interventions between 1973 and 1995 were successful in this sense. This percentage, however, is no better than random. U.S. intervention sales and purchases of foreign exchange were incapable of forecasting dollar appreciations or depreciations. U.S. interventions, however, were associated with more moderate dollar movements in a manner consistent with leaning against the wind, but only about 22 percent of all U.S. interventions conformed to this pattern. We also found that the larger the size of an intervention, the greater was its probability of success, although some interventions were inefficiently large. Other potential characteristics of intervention, notably coordination and secrecy, did not seem to influence our success rates.
ER -
TY - JOUR
AU - Gorodnichenko,Yuriy
AU - Mikusheva,Anna
AU - Ng,Serena
TI - Estimators for Persistent and Possibly Non-Stationary Data with Classical Properties
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17424
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17424
L1 - http://www.nber.org/papers/w17424.pdf
N1 - Author contact info:
Yuriy Gorodnichenko
Department of Economics
508-1 Evans Hall #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0720
Fax: 510/642-6615
E-Mail: ygorodni@econ.berkeley.edu
Anna Mikusheva
MIT
E-Mail: amikushe@mit.edu
Serena Ng
Department of Economics
Columbia University
440 W. 118 St.
International Affairs Building, MC 3308
New York
NY 10027
Tel: 212-854-5488
E-Mail: serena.ng@columbia.edu
AB - This paper considers a moments based non-linear estimator that is root-T consistent and uniformly asymptotically normal irrespective of the degree of persistence of the forcing process. These properties hold for linear autoregressive models, linear predictive regressions, as well as certain non-linear dynamic models. Asymptotic normality is obtained because the moments are chosen so that the objective function is uniformly bounded in probability and that a central limit theorem can be applied.
Critical values from the normal distribution can be used irrespective of the treatment of the deterministic terms. Simulations show that the estimates are precise, and the t-test has good size in the parameter region where the least squares estimates usually yield distorted inference.
ER -
TY - JOUR
AU - Baum,Charles L.
AU - Chou,Shin-Yi
TI - The Socio-Economic Causes of Obesity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17423
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17423
L1 - http://www.nber.org/papers/w17423.pdf
N1 - Author contact info:
Charles Baum
Economics and Finance Department
P. O. Box 27
Middle Tennessee State University
Murfreesboro, TN 37132
E-Mail: cbaum@mtsu.edu
Shin-Yi Chou
Department of Economics
College of Business and Economics
Lehigh University
621 Taylor Street
Bethlehem, PA 18015-3117
Tel: 610/758-3444
Fax: NA
E-Mail: syc2@lehigh.edu
AB - An increasing number of Americans are obese, with a body mass index of 30 or more. In fact, the latest estimates indicate that about 30% of Americans are currently obese, which is roughly a 100% increase from 25 years ago. It is well accepted that weight gain is caused by caloric imbalance, where more calories are consumed than expended. Nevertheless, it is not clear why the prevalence of obesity has increased so dramatically over the last 30 years.
We simultaneously estimate the effects of the various socio-economic factors on weight status, considering in our analysis many of the socio-economic factors that have been identified by other researchers as important influences on caloric imbalance: employment, physical activity at work, food prices, the prevalence of restaurants, cigarette smoking, cigarette prices and taxes, food stamp receipt, and urbanization. We use 1979- and 1997-cohort National Longitudinal Survey of Youth (NLSY) data, which allows us to compare the prevalence of obesity between cohorts surveyed roughly 25 years apart. Using the traditional Blinder-Oaxaca decomposition technique, we find that cigarette smoking has the largest effect: the decline in cigarette smoking explains about 2% of the increase in the weight measures. The other significant factors explain less.
ER -
TY - JOUR
AU - Jurek,Jakub W.
AU - Stafford,Erik
TI - Crashes and Collateralized Lending
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17422
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17422
L1 - http://www.nber.org/papers/w17422.pdf
N1 - Author contact info:
Jakub W. Jurek
Princeton University
Bendheim Center for Finance 211
26 Prospect Avenue
Princeton, NJ 08540
Tel: 609/258-4037
Fax: 609/258-0771
E-Mail: jjurek@princeton.edu
Erik Stafford
Graduate School of Business
Harvard University
Baker 371
Boston, MA 02163
Tel: 617/495-8064
E-Mail: estafford@hbs.edu
AB - This paper develops a parsimonious static model for characterizing financing terms in collateralized lending markets. We characterize the systematic risk exposures for a variety of securities and develop a simple indifference-pricing framework to value the systematic crash risk exposure of the collateral. We then apply Modigliani and Miller's (1958) Proposition Two (MM) to split the cost of bearing this risk between the borrower and lender, resulting in a schedule of haircuts and financing rates. The model produces comparative statics and time-series dynamics that are consistent with the empirical features of repo market data, including the dramatic change in financing terms for structured products during the credit crisis of 2007-2008.
ER -
TY - JOUR
AU - Aruoba,S. Boragan
AU - Diebold,Francis X.
AU - Nalewaik,Jeremy
AU - Schorfheide,Frank
AU - Song,Dongho
TI - Improving GDP Measurement: A Forecast Combination Perspective
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17421
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17421
L1 - http://www.nber.org/papers/w17421.pdf
N1 - Author contact info:
S. Boragan Aruoba
Department of Economics
University of Maryland
3105 Tydings Hall
College Park, MD 20742-7211
Tel: 301/405-3523
E-Mail: aruoba@econ.umd.edu
Francis X. Diebold
Department of Economics
University of Pennsylvania
3718 Locust Walk
Philadelphia, PA 19104-6297
Tel: 215/898-1507
Fax: 212/573-4217
E-Mail: fdiebold@sas.upenn.edu
Jeremy Nalewaik
Federal Reserve Board
20th and C, NW
Washington, DC 20551
E-Mail: jeremy.j.nalewaik@frb.gov
Frank Schorfheide
University of Pennsylvania
Department of Economics
3718 Locust Walk
McNeil 525
Philadelphia, PA 19104-6297
Tel: 215/898-8486
Fax: 215/573-2057
E-Mail: schorf@ssc.upenn.edu
Dongho Song
University of Pennsylvania
Department of Economics
3718 Locust Walk
Philadelphia, PA 19104
E-Mail: donghos@sas.upenn.edu
AB - Two often-divergent U.S. GDP estimates are available, a widely-used expenditure side version, GDPE, and a much less widely-used income-side version GDPI . We propose and explore a "forecast combination" approach to combining them. We then put the theory to work, producing a superior combined estimate of GDP growth for the U.S., GDPC. We compare GDPC to GDPE and GDPI , with particular attention to behavior over the business cycle. We discuss several variations and extensions.
ER -
TY - JOUR
AU - Ohanian,Lee E.
AU - Raffo,Andrea
TI - Aggregate Hours Worked in OECD Countries: New Measurement and Implications for Business Cycles
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17420
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17420
L1 - http://www.nber.org/papers/w17420.pdf
N1 - Author contact info:
Lee E. Ohanian
8283 Bunche Hall
UCLA, Department of Economics
Box 951477
Los Angeles, CA 90095
Tel: 310/825-0979
Fax: 310/825-9528
E-Mail: ohanian@econ.ucla.edu
Andrea Raffo
Economist
Board of Governors of the Federal Reserve System
20th & C St, NW
Washington DC 20551
E-Mail: andrea.raffo@frb.gov
AB - We build a new quarterly dataset of aggregate hours worked consistent with standard NIPA constructs for 14 OECD countries over the last fifty years. We find that cyclical features of labor markets across countries differ markedly from the accepted empirical facts reported in the literature based on either just U.S. hours data, or based on cross-country employment data. We document that total hours worked in many OECD countries are about as volatile as output, that a relatively large fraction of labor market adjustment takes place along the intensive margin outside the United States, and that the volatility of total hours relative to output volatility has increased over time in almost all countries. We use these data to re-assess productivity and labor wedges during the Great Recession and during prior recessions. We find that the Great Recession in many OECD countries is a significant puzzle in that labor wedges are quite small, while those in the U.S. Great Recession - and those in previous European recessions - are much larger. These new data indicate that understanding cyclical labor fluctuations in OECD countries requires understanding why hours fluctuate so much more than previously considered, how and why labor markets changed so much in the last few years, why cyclical adjustment of hours per worker in countries with large firing costs is not even larger than observed, and why the Great Recession differs so much across countries.
ER -
TY - JOUR
AU - David,Guy
AU - Rawley,Evan
AU - Polsky,Daniel
TI - Integration and Task Allocation: Evidence from Patient Care
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17419
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17419
L1 - http://www.nber.org/papers/w17419.pdf
N1 - Author contact info:
Guy David
The Wharton School
University of Pennsylvania
202 Colonial Penn Center
3641 Locust Walk
Philadelphia, PA 19104-6218
Tel: 215/573-5780
Fax: 215/573-2157
E-Mail: gdavid2@wharton.upenn.edu
Evan Rawley
The Wharton School
University of Pennsylvania
2000 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA
19104-6370
Tel: 215-746-2047
E-Mail: rawley@wharton.upenn.edu
Daniel Polsky
University of Pennsylvania School of Medicine
Division of General Internal Medicine
423 Guardian Drive, Blockley Hall, Rm 1212
Philadelphia, PA 19104
E-Mail: polsky@mail.med.upenn.edu
AB - We develop a formal model to show how integration solves task allocation problems between organizations and test the predictions of the model, using a large and rich patient-level dataset on hospital discharges to nursing homes and home health care. As predicted by the theory, we find that vertical integration allows hospitals to shift patient recovery tasks downstream to lower cost delivery systems by discharging patients earlier and in poorer health, and integration leads to greater post-hospitalization service intensity. While integration facilitates a shift in the allocation of tasks, health outcomes are no worse when patients receive care from an integrated provider. The evidence suggests that by improving the allocation of tasks, integration solves coordination problems that arise in market exchange.
ER -
TY - JOUR
AU - Judd,Kenneth L.
AU - Maliar,Lilia
AU - Maliar,Serguei
TI - How to Solve Dynamic Stochastic Models Computing Expectations Just Once
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17418
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17418
L1 - http://www.nber.org/papers/w17418.pdf
N1 - Author contact info:
Kenneth L. Judd
Hoover Institution
Stanford University
Stanford, CA 94305-6010
Tel: 650/723-5866
Fax: 650/723-1687
E-Mail: kennethjudd@mac.com
Lilia Maliar
Office T-24 Hoover Institution
Stanford University
CA 94305-6010, USA
Tel: 6507253416
Fax: 6507231687
E-Mail: maliarl@stanford.edu
Serguei Maliar
Office T-24 Hoover Institution
Stanford University
CA 94305-6010, USA
Tel: 6507253416
Fax: 6507231687
E-Mail: maliars@stanford.edu
AB - We introduce a technique called "precomputation of integrals" that makes it possible to compute conditional expectations in dynamic stochastic models in the initial stage of the solution procedure. This technique can be applied to any set of equations that contains conditional expectations, in particular, to the Bellman and Euler equations. After the integrals are precomputed, we can solve stochastic models as if they were deterministic. We illustrate the benefits of precomputation of integrals using one- and multi-agent numerical examples.
ER -
TY - JOUR
AU - Burgess,Robin
AU - Hansen,Matthew
AU - Olken,Benjamin A.
AU - Potapov,Peter
AU - Sieber,Stefanie
TI - The Political Economy of Deforestation in the Tropics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17417
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17417
L1 - http://www.nber.org/papers/w17417.pdf
N1 - Author contact info:
Robin Burgess
R524, Department of Economics and STICERD
LSE Research Laboratory
London School of Economics
Houghton Street
London WC2A 2AE UNITED KINGDOM
Tel: 020-7955-6676
Fax: 020-79556951
E-Mail: r.burgess@lse.ac.uk
Matthew Hansen
Department of Geography
2181 LeFrak Hall
University of Maryland
College Park, MD 20742
E-Mail: mhansen@umd.edu
Benjamin A. Olken
Department of Economics
MIT
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/588-1437
Fax: 617/868-2742
E-Mail: bolken@mit.edu
Peter Potapov
Department of Geography
2181 LeFrak Hall
University of Maryland
College Park, MD 20742
E-Mail: peter.potapov@hermes.geog.umd.edu
Stefanie Sieber
The World Bank
1818 H Street, NW
Washington, DC 20433
E-Mail: ssieber@worldbank.org
AB - Tropical deforestation accounts for almost one-fifth of greenhouse gas emissions worldwide and threatens the world's most diverse ecosystems. The prevalence of illegal forest extraction in the tropics suggests that understanding the incentives of local bureaucrats and politicians who enforce forest policy may be critical to understanding tropical deforestation. We find support for this thesis using a novel satellite-based dataset that tracks annual changes in forest cover across eight years of institutional change in post-Soeharto Indonesia. Increases in the numbers of political jurisdictions are associated with increased deforestation and with lower prices in local wood markets, consistent with a model of Cournot competition between jurisdictions. Illegal logging increases dramatically in the years leading up to local elections, suggesting the presence of "political logging cycles". And, illegal logging and rents from unevenly distributed oil and gas revenues are short run substitutes, but this effect dissapears over time as political turnover occurs. The results illustrate how incentives faced by local government officials affect deforestation, and provide an example of how standard economic theories can explain illegal behavior.
ER -
TY - JOUR
AU - Binsbergen,Jules H. van
AU - Hueskes,Wouter
AU - Koijen,Ralph
AU - Vrugt,Evert B.
TI - Equity Yields
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17416
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17416
L1 - http://www.nber.org/papers/w17416.pdf
N1 - Author contact info:
Jules H. van Binsbergen
Kellogg Graduate School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60201
Tel: 847/491-3562
Fax: 847/491-5719
E-Mail: j-vanbinsbergen@kellogg.northwestern.edu
Wouter Hueskes
Gustav Mahlerplein 3
1082 MS Amsterdam
The Netherlands
E-Mail: wouter.hueskes@apg-am.nl
Ralph Koijen
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-4199
E-Mail: ralph.koijen@chicagobooth.edu
Evert B. Vrugt
De Boelelaan 1105
1081 HV Amsterdam
The Netherlands
E-Mail: evrugt@xs4all.nl
AB - We study a new data set of prices of traded dividends with maturities up to 10 years across three world regions: the US, Europe, and Japan. We use these asset prices to construct equity yields, analogous to bond yields. We decompose these yields to obtain a term structure of expected dividend growth rates and a term structure of risk premia, which allows us to decompose the equity risk premium by maturity. We find that both expected dividend growth rates and risk premia exhibit substantial variation over time, particularly for short maturities. In addition to predicting dividend growth, equity yields help predict other measures of economic growth such as consumption growth. We relate the dynamics of growth expectations to recent events such as the financial crisis and the earthquake in Japan.
ER -
TY - JOUR
AU - Moser,Christoph
AU - Rose,Andrew K.
TI - Who Benefits from Regional Trade Agreements? The View from the Stock Market
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17415
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17415
L1 - http://www.nber.org/papers/w17415.pdf
N1 - Author contact info:
Christoph Moser
ETH Zurich
KOF Swiss Economic Institute
8092 Zurich, Switzerland
E-Mail: moser@kof.ethz.ch
Andrew K. Rose
Haas School of Business Administration
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-6609
Fax: 510/642-4700
E-Mail: arose@haas.berkeley.edu
AB - The effects of Regional Trade Agreements (RTAs) are disputed. In this paper, we assess these effects using capital market data and an event-study approach, using a daily data set covering a thousand announcements spanning over eighty economies and a hundred RTAs over twenty recent years. We measure the effects of news concerning RTAs on the returns of national stock markets, adjusted for international stock market movements. We then link these excess returns to features of the RTA members and the agreements themselves. We find evidence of the natural trading partner hypothesis; stock markets rise more when RTAs are signed between countries that already engage in high volumes of trade. Stock markets also rise more when poorer countries sign RTAs.
ER -
TY - JOUR
AU - Lichtenberg,Frank R.
TI - The Impact of Therapeutic Procedure Innovation on Hospital Patient Longevity: Evidence from Western Australia, 2000-2007
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17414
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17414
L1 - http://www.nber.org/papers/w17414.pdf
N1 - Author contact info:
Frank R. Lichtenberg
Columbia University
504 Uris Hall
3022 Broadway
New York, NY 10027
Tel: 212/854-4408
Fax: (212) 854-9895
E-Mail: frl1@columbia.edu
AB - We investigate the effect of therapeutic procedure innovation in general on the longevity of all hospital patients, i.e. patients with a variety of medical conditions. The analysis is based on data on over one million discharges from public and private hospitals in Western Australia (WA) during the period 2000-2007. We can measure survival for a period as long as 8 years after admission, and we know the date each procedure was added to the Medicare Benefits Schedule.
Estimates based on patient-level data indicate that therapeutic procedure innovation increased the life expectancy of WA hospital patients by almost 3 months between 2000 and 2007, controlling for the patient’s age, sex, Diagnosis Related Group (DRG, over 600 categories), Aboriginal status, marital status, insurance coverage (whether or not the patient had private insurance), postcode (over 400 postcodes), year of hospital admission, and number of procedures performed.. Estimates based on longitudinal DRG-level data also indicate that therapeutic procedure innovation increased the life expectancy of WA hospital patients, but the implied increase may be smaller—about 2 months. In either case, therapeutic procedure innovation in WA hospitals appears to have been remarkably cost-effective, because it increased the cost of medical procedures by a negligible amount.
ER -
TY - JOUR
AU - Saffer,Henry
AU - Dave,Dhaval M.
AU - Grossman,Michael
TI - Racial, Ethnic and Gender Differences in Physical Activity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17413
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17413
L1 - http://www.nber.org/papers/w17413.pdf
N1 - Author contact info:
Henry Saffer
NBER
365 Fifth Avenue, 5th Floor
New York, NY 10016-4309
Tel: 212/817-7956
Fax: 212/817-1597
E-Mail: hsaffer@gc.cuny.edu
Dhaval M. Dave
Bentley University
Department of Economics
175 Forest Street, AAC 195
Waltham, MA 02452-4705
Tel: 212/817-7955
Fax: 212/817-1597
E-Mail: ddave@bentley.edu
Michael Grossman
Ph.D. Program in Economics
City University of New York Graduate Center
365 Fifth Avenue, 5th Floor
New York, NY 10016-4309
Tel: 212/817-7959
Fax: 212/817-1597
E-Mail: mgrossman@gc.cuny.edu
AB - This study examines racial, ethnic and gender differentials in physical activity. Individuals engage in physical activity during leisure-time and also during in many other activities such as walking to work, home maintenance, shopping and child care. Physical activity also occurs on the job is this is referred to as work physical activity. Prior studies have shown that non-work physical activity has a positive impact on health while work physical activity has a negative impact on health. Many prior studies have relied primarily on leisure-time physical activity, which typically constitutes only about 10% of non-work physical activity and does not capture specific information on the intensity or duration of the activity. This study addresses these limitations by constructing measures of physical activity from the American Time Use Surveys, which are all-inclusive and capture the duration of each activity combined with its intensity based on the Metabolic Equivalent of Task (MET). Non-work physical activity tends to be significantly lower for Blacks, Hispanics, other racial groups than for Whites and lower for males than for females. These adjusted differentials are consistent with racial, ethnic and gender differentials in health. About 25-46% of the differentials in non-work physical activity can be attributed to differences in education, socio-economic status, proxies for time constraints, and locational attributes.
ER -
TY - JOUR
AU - Nurnberg,Peter
AU - Schapiro,Morton
AU - Zimmerman,David
TI - Educational “Goodwill”: Measuring the Intangible Assets at Highly Selective Private Colleges and Universities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17412
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17412
L1 - http://www.nber.org/papers/w17412.pdf
N1 - Author contact info:
Peter Nurnberg
Williams Project on the Economics
of Higher Education
Mears West, Williams College
Williamstown, MA 01267
E-Mail: peter.s.nurnberg@gmail.com
Morton Schapiro
Office of the President
Northwestern University
633 Clark Street
Evanston, IL 60208
E-Mail: nu-president@northwestern.edu
David Zimmerman
Department of Economics
Williams College
South Academic Building
24 Hopkins Hall Drive
Williamstown, MA 01267
Tel: 413/597-2192
Fax: 413/597-4045
E-Mail: David.J.Zimmerman@williams.edu
AB - In this paper we utilize data on the head-to-head loss rate for students accepted at Williams College, but who opt to enroll elsewhere. For example, we employ data that measure the fraction of students admitted to Williams and to Amherst (or Harvard or Yale, etc.) but who opt to attend Amherst (or Harvard or Yale, etc.) instead of Williams. We then model this head-to-head loss rate using data from a variety of sources. A better understanding of the head-to-head loss rate can assist an institution in the competition for high quality students. Importantly, it can also shed light on the degree to which some part of the loss rate might be due to “intangible” differences between the schools being compared. These intangibles (positive or negative) might grant a school greater success (or failure) in the market for students than an objective accounting of its characteristics might suggest. Such an advantage (or disadvantage) is closely aligned with the business concept of “goodwill.” We present preliminary evidence on how a quantitative measure of educational goodwill can be computed.
ER -
TY - JOUR
AU - Finan,Frederico
AU - Schechter,Laura A.
TI - Vote-Buying and Reciprocity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17411
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17411
L1 - http://www.nber.org/papers/w17411.pdf
N1 - Author contact info:
Frederico Finan
Department of Economics
University of California
508-1 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 310/794-5958
Fax: 310/825-9528
E-Mail: ffinan@econ.berkeley.edu
Laura A. Schechter
Department of Agricultural and Applied Economics
University of Wisconsin, Madison
427 Lorch St.
334 Taylor Hall
Madison, WI
53706
E-Mail: lschechter@wisc.edu
AB - While vote-buying is common, little is known about how politicians determine who to target. We argue that vote-buying can be sustained by an internalized norm of reciprocity. Receiving money engenders feelings of obligation. Combining survey data on vote-buying with an experiment-based measure of reciprocity, we show that politicians target reciprocal individuals. Overall, our findings highlight the importance of social preferences in determining political behavior.
ER -
TY - JOUR
AU - Kling,Jeffrey R.
AU - Mullainathan,Sendhil
AU - Shafir,Eldar
AU - Vermeulen,Lee
AU - Wrobel,Marian
TI - Comparison Friction: Experimental Evidence from Medicare Drug Plans
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17410
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17410
L1 - http://www.nber.org/papers/w17410.pdf
N1 - Author contact info:
Jeffrey R. Kling
Congressional Budget Office
3403 Ordway St NW
Washington, DC 20016
E-Mail: jeffrey.r.kling@gmail.com
Sendhil Mullainathan
Department of Economics
Littauer M-18
Harvard University
Cambridge, MA 02138
Tel: 617/496-2720
Fax: 617/495-7730
E-Mail: mullain@fas.harvard.edu
Eldar Shafir
Dept. of Psychology
Princeton University
Green Hall
Princeton, NJ 08544
E-Mail: shafir@princeton.edu
Lee Vermeulen
University of Wisconsin - Madison
E-Mail: lc.vermeulen@hosp.wisc.edu
Marian Wrobel
Mathematica Policy Research, Inc.
955 Massachusetts Avenue, Suite 801
Cambridge, MA 02139
Tel: 617/491-7900
Fax: 617/491-8044
E-Mail: marian.wrobel@gmail.com
AB - Consumers need information to compare alternatives for markets to function efficiently. Recognizing this, public policies often pair competition with easy access to comparative information. The implicit assumption is that comparison friction—the wedge between the availability of comparative information and consumers’ use of it—is inconsequential because information is readily available and consumers will access this information and make effective choices. We examine the extent of comparison friction in the market for Medicare Part D prescription drug plans in the United States. In a randomized field experiment, an intervention group received a letter with personalized cost information. That information was readily available for free and widely advertised. However, this additional step—providing the information rather than having consumers actively access it—had an impact. Plan switching was 28 percent in the intervention group, versus 17 percent in the comparison group, and the intervention caused an average decline in predicted consumer cost of about $100 per year among letter recipients—roughly 5 percent of the cost in the comparison group. Our results suggest that comparison friction can be large even when the cost of acquiring information is small, and may be relevant for a wide range of public policies that incorporate consumer choice.
ER -
TY - JOUR
AU - Harstad,Bård
TI - The Market for Conservation and Other Hostages
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17409
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17409
L1 - http://www.nber.org/papers/w17409.pdf
N1 - Author contact info:
Bård Harstad
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-5166
Fax: 847/467-1220
E-Mail: harstad@kellogg.northwestern.edu
AB - A conservation good, such as the rainforest, is a hostage: it is possessed by S who may prefer to consume it, but B receives a larger value from continued conservation. A range of prices would make trade mutually beneficial. So, why doesn't B purchase conservation, or the forest, from S?
If this were an equilibrium, S would never consume, anticipating a higher price at the next stage. Anticipating this, B prefers to deviate and not pay. The Markov-perfect equilibria are in mixed strategies, implying that the good is consumed (or the forest is cut) at a positive rate. If conservation is more valuable, it is less likely to occur. If there are several interested buyers, cutting increases. If S sets the price and players are patient, the forest disappears with probability one.
A rental market has similar properties. By comparison, a rental market dominates a sale market if the value of conservation is low, the consumption value high, and if remote protection is costly. Thus, the theory can explain why optimal conservation does not always occur and why conservation abroad is rented, while domestic conservation is bought.
ER -
TY - JOUR
AU - Barreca,Alan I.
AU - Lindo,Jason M.
AU - Waddell,Glen R.
TI - Heaping-Induced Bias in Regression-Discontinuity Designs
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17408
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17408
L1 - http://www.nber.org/papers/w17408.pdf
N1 - Author contact info:
Alan Barreca
206 Tilton Hall
Tulane University
New Orleans, LA
70118
Tel: 504-252-0258
E-Mail: abarreca@tulane.edu
Jason M. Lindo
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4664
E-Mail: jlindo@uoregon.edu
Glen Waddell
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541 346 1259
E-Mail: waddell@uoregon.edu
AB - This study uses Monte Carlo simulations to demonstrate that regression-discontinuity designs arrive at biased estimates when attributes related to outcomes predict heaping in the running variable. After showing that our usual diagnostics are poorly suited to identifying this type of problem, we provide alternatives. We also demonstrate how the magnitude and direction of the bias varies with bandwidth choice and the location of the data heaps relative to the treatment threshold. Finally, we discuss approaches to correcting for this type of problem before considering these issues in several non-simulated environments.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Hutchison,Michael M.
AU - Jinjarak,Yothin
TI - What is the Risk of European Sovereign Debt Defaults? Fiscal Space, CDS Spreads and Market Pricing of Risk
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17407
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17407
L1 - http://www.nber.org/papers/w17407.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Michael M. Hutchison
Department of Economics
E2
University of California
Santa Cruz, CA 95064
Tel: 831-459-2600; hutch@.ucsc.edu
E-Mail: hutch@ucsc.edu
Yothin Jinjarak
University of London
College Buildings, 534
London
UK, WC1H 0XG
E-Mail: yothin.jinjarak@gmail.com
AB - We estimate the pricing of sovereign risk for sixty countries based on fiscal space (debt/tax; deficits/tax) and other economic fundamentals over 2005-10. We measure how accurately the model predicts sovereign credit default swap (CDS) spreads, focusing in particular on the five countries in the South-West Eurozone Periphery (Greece, Ireland, Italy, Portugal, and Spain). Dynamic panel estimates of the model suggest that fiscal space and other macroeconomic factors are statistically significant and economically important determinants of market-based sovereign risk. Although the explanatory power of fiscal space measures drop during the crisis, the TED spread, trade openness, external debt and inflation play a larger role. As expectations of market volatility jumped during the crisis, the weakly concavity of creditors’ payoff probably accounts for the emergence of TED spread as a key pricing factor. However, risk-pricing of the South-West Eurozone Periphery countries is not predicted accurately by the model either in-sample or out-of-sample: unpredicted high spreads are evident during global crisis period, especially in 2010 when the sovereign debt crisis swept over the periphery area. We “match” the periphery group with five middle income countries outside Europe that were closest in terms of fiscal space during the European fiscal crisis. We find that Eurozone periphery default risk is priced much higher than the “matched” countries in 2010, even allowing for differences in fundamentals. One interpretation is that the market has mispriced risk in the Eurozone periphery. An alternative interpretation is that the market is pricing not on current fundamentals but future fundamentals, expecting the periphery fiscal space to deteriorate markedly and posing a high risk of debt restructuring. Adjustment challenges of the Eurozone periphery may be perceived as economically and politically more difficult than the matched group of middle income countries because of exchange rate and monetary constraints.
ER -
TY - JOUR
AU - Colman,Gregory J.
AU - Dave,Dhaval M.
TI - Exercise, Physical Activity, and Exertion over the Business Cycle
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17406
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17406
L1 - http://www.nber.org/papers/w17406.pdf
N1 - Author contact info:
Gregory J. Colman
Pace University
Department of Economics
41 Park Row, 11th Floor
New York, NY 10038
Tel: 212/346-1102
E-Mail: gcolman@pace.edu
Dhaval M. Dave
Bentley University
Department of Economics
175 Forest Street, AAC 195
Waltham, MA 02452-4705
Tel: 212/817-7955
Fax: 212/817-1597
E-Mail: ddave@bentley.edu
AB - As economic recessions reduce employment and wages, associated shifts in time and income constraints would be expected to also impact individuals’ health behaviors. Prior work has focused exclusively on recreational exercise, which typically represents only about 4% of total daily physical exertion. The general presumption in these studies is that, because exercise improves health, if unemployment increases exercise it must also improve health. Yet a person may be laid off from a physically demanding job, exercise more, and still be less physically active than when employed. Thus the relevant question is whether unemployment leads persons to become more physically active. We study this question with the American Time Use Survey (2003-2010), exploring the impact of the business cycle (and specifically the Great Recession) on individuals’ exercise, other uses of time, and physical activity during the day. We also utilize more precise measures of exercise (and all other physical activities), which reflect information on the duration as well as intensity of each component activity, than has been employed in past studies. Using within-state variation in employment and unemployment, we find that recreational exercise tends to increase as employment decreases. In addition, we also find that individuals substitute into television watching, sleeping, childcare, and housework. However, this increase in exercise as well as other activities does not compensate for the decrease in work-related exertion due to job-loss. Thus total physical exertion, which prior studies have not analyzed, declines. These behavioral effects are strongest among low-educated males, which is validating given that the Great Recession led to some of the largest layoffs within the manufacturing, mining, and construction sectors. Due to the concentration of low-educated workers in boom-and-bust industries, the drop in total physical activity during recessions is especially problematic for vulnerable populations and may play a role in exacerbating the SES-health gradient during recessions. We also find some evidence of intra-household spillover effects, wherein individuals respond to shifts in spousal employment conditional on their own labor supply.
ER -
TY - JOUR
AU - Ferreira,Fernando
AU - Gyourko,Joseph
AU - Tracy,Joseph
TI - Housing Busts and Household Mobility: An Update
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17405
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17405
L1 - http://www.nber.org/papers/w17405.pdf
N1 - Author contact info:
Fernando Ferreira
The Wharton School
University of Pennsylvania
1461 Steinberg - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
Tel: 215/898-7181
Fax: 215/573-2220
E-Mail: fferreir@wharton.upenn.edu
Joseph Gyourko
University of Pennsylvania
Wharton School of Business
3620 Locust Walk
1480 Steinberg-Dietrich Hall
Philadelphia, PA 19104-6302
Tel: 215/898-3003
Fax: 215/573-2220
E-Mail: gyourko@wharton.upenn.edu
Joseph Tracy
Executive Vice President
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 212/720-6344
E-Mail: joseph.tracy@ny.frb.org
AB - This paper provides updated estimates of the impact of three financial frictions – negative equity, mortgage lock-in, and property tax lock-in – on household mobility. We add the 2009 wave of the American Housing Survey (AHS) to our sample and also create an improved measure of permanent moves in response to Schulhofer-Wohl’s (2011) critique of our earlier work (Ferreira, Gyourko and Tracy (2010)). Our updated estimates corroborate our previous results: negative equity reduces household mobility by 30 percent, and $1,000 of additional mortgage or property tax costs reduces household mobility by 10%-16%. Schulhofer-Wohl’s finding of a slight positive correlation between mobility and negative equity appears due to a large fraction of false positives, as his coding methodology has the propensity to misclassify almost half of the additional moves it identifies relative to our measure of permanent moves. This also makes his mobility measure dynamically inconsistent, as many transitions originally classified as a move are reclassified as a non-move when additional AHS panels become available. We conclude with directions for future research, including potential improvements to measures of household mobility.
ER -
TY - JOUR
AU - Zucker,Lynne G.
AU - Darby,Michael R.
AU - Fong,Jason
TI - Communitywide Database Designs for Tracking Innovation Impact: COMETS, STARS and Nanobank
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17404
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17404
L1 - http://www.nber.org/papers/w17404.pdf
N1 - Author contact info:
Lynne G. Zucker
Departments of Sociology & Public Policy
UCLA
Box 951551
Los Angeles, CA 90095-1551
Tel: 310/825-9155
Fax: 310/454-2748
E-Mail: zucker@ucla.edu
Michael R. Darby
John E. Anderson Graduate School of Management
University of California, Los Angeles
110 Westwood Plaza, Box 951481
Los Angeles, CA 90095-1481
Tel: 310/825-4180
Fax: 310/454-2748
E-Mail: michael.r.darby@anderson.ucla.edu
Jason Fong
Ctr for Intl. Science Technology & Cultural Policy
UCLA Luskin School of Public Affairs
Los Angeles, CA 90095-1656
E-Mail: jfong@ucla.edu
AB - Data availability is arguably the greatest impediment to advancing the science of science and innovation policy and practice (SciSIPP). This paper describes the contents, methodology and use of the public online COMETS (Connecting Outcome Measures in Entrepreneurship Technology and Science) database spanning all sciences, technologies, and high-tech industries; its sibling COMETSandSTARS database which adds more data at organization and individual scientist-inventor-entrepreneur level restricted by vendor licenses to onsite use at NBER and/or UCLA; and their prototype Nanobank covering only nano-scale sciences and technologies. Some or all of these databases include or will include: US patents (granted and applications); NIH, NSF, SBIR, STTR Grants; Thomson Reuters Web of Knowledge; ISI Highly Cited; US doctoral dissertations; IPEDS/HEGIS universities; all firms and other organizations which ever publish in ISI listed journals beginning in 1981, are assigned US patents (from 1975), or are listed on a covered grant; additional nanotechnology firms based on web search. Ticker/CUSIP codes enable linking public firms to the major databases covering them. A major matching/disambiguation effort assigns unique identifiers for an organization or individual so that their appearances are linked within and across the constituent legacy databases. Extensive geographic coding enables analysis at country, region, state, county, or city levels as well as computation of distances between any two addresses. The databases provide very flexible sources of data for serious research on many issues in the science of science and technology.
ER -
TY - JOUR
AU - Michel-Kerjan,Erwann
AU - Raschky,Paul
AU - Kunreuther,Howard
TI - Corporate Demand for Insurance: An Empirical Analysis of the U.S. Market for Catastrophe and Non-Catastrophe Risks
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17403
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17403
L1 - http://www.nber.org/papers/w17403.pdf
N1 - Author contact info:
Erwann Michel-Kerjan
The Wharton School
University of Pennsylvania
Center for Risk Management
3730 Walnut Street, 556 JMHH
Philadelphia, PA 19104-6340
Tel: 215-573-0515
Fax: 215-573-2130
E-Mail: erwannmk@wharton.upenn.edu
Paul Raschky
University of Innsbruck
E-Mail: paul.raschky@buseco.monash.edu.au
Howard Kunreuther
Operations and Information Management
The Wharton School
University of Pennsylvania
3730 Walnut Street, 500 JMHH
Philadelphia, PA 19104-6366
Tel: 215/898-4589
Fax: 215/573-2130
E-Mail: kunreuther@wharton.upenn.edu
AB - Using a unique dataset of insurance decisions by over 1,800 large U.S. corporations, this study provides the first empirical analysis of firm behavior that compares corporate demand for property and catastrophe insurance (here, terrorism). We combine demand and supply data and apply a simultaneous-equation approach to address the problem of endogenous premium decisions. The main finding is that demand for property and catastrophe insurance are not very different and that the demand for catastrophe coverage is actually more price inelastic. We also show that a corporation’s ability to self-insure affects the demand for catastrophe insurance but not for property insurance.
ER -
TY - JOUR
AU - Dobbie,Will
AU - Fryer,Roland G., Jr
TI - The Impact of Youth Service on Future Outcomes: Evidence from Teach For America
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17402
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17402
L1 - http://www.nber.org/papers/w17402.pdf
N1 - Author contact info:
Will Dobbie
Education Innovation Laboratory
Harvard University
44 Brattle Street, 5th Floor
Cambridge, MA 02138
E-Mail: dobbie@fas.harvard.edu
Roland G. Fryer, Jr
Department of Economics
Harvard University
Littauer Center 208
Cambridge, MA 02138
Tel: 617/495-9592
Fax: 617/495-8570
E-Mail: rfryer@fas.harvard.edu
AB - Nearly one million American youth have participated in service programs such as Peace Corps and Teach For America. This paper provides the first causal estimate of the impact of service programs on those who serve, using data from a web-based survey of former Teach For America applicants. We estimate the effect of voluntary youth service using a sharp discontinuity in the Teach For America application process. Participating in Teach For America increases racial tolerance, makes individuals more optimistic about the life chances of poor children, and makes them more likely to work in education. We argue that these facts are broadly consistent with the “Contact Hypothesis,” which states that, under appropriate conditions, interpersonal contact can reduce prejudice.
ER -
TY - JOUR
AU - Eichengreen,Barry
AU - Dincer,Nergiz
TI - Who Should Supervise? The Structure of Bank Supervision and the Performance of the Financial System
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17401
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17401
L1 - http://www.nber.org/papers/w17401.pdf
N1 - Author contact info:
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
Nergiz Dincer
T.R. Prime Ministry State Planning Organization
Necatibey cad. No:108, Yucetepe
06100, Ankara, TURKEY
E-Mail: nergiz.dincer@gmail.com
AB - We assemble data on the structure of bank supervision, distinguishing supervision by the central bank from supervision by a nonbank governmental agency and independent from dependent governmental supervisors. Using observations for 140 countries from 1998 through 2010, we find that supervisory responsibility tends to be assigned to the central bank in low-income countries where that institution is one of few public-sector agencies with the requisite administrative capacity. It is more likely to be undertaken by a non-independent agency of the government in countries ranked high in terms of government efficiency and regulatory quality. We show that the choice of institutional arrangement makes a difference for outcomes. Countries with independent supervisors other than the central bank have fewer nonperforming loans as a share of GDP even after controlling for inflation, per capita income, and country and/or year fixed effects. Their banks are required to hold less capital against assets, presumably because they have less need to protect against loan losses. Savers in such countries enjoy higher deposit rates. There is some evidence, albeit more tentative, that countries with these arrangements are less prone to systemic banking crises.
ER -
TY - JOUR
AU - Rodrik,Dani
TI - The Future of Economic Convergence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17400
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17400
L1 - http://www.nber.org/papers/w17400.pdf
N1 - Author contact info:
Dani Rodrik
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9454
Fax: 617/496-5747
E-Mail: dani_rodrik@harvard.edu
AB - The question addressed in this paper is whether the gap in performance between the developed and developing worlds can continue, and in particular, whether developing nations can sustain the rapid growth they have experienced of late. The good news is that growth in the developing world should depend not on growth in the advanced economies themselves, but on the difference in the productivity levels of the two groups of countries – on the “convergence gap” – which remains quite large. Yet much of this convergence potential is likely to go to waste. Convergence is anything but automatic, and depends on sustaining rapid structural change in the direction of tradables such as manufacturing and modern services. The policies that successful countries have used to achieve this are hard to emulate. Moreover, these policies – such as currency undervaluation and industrial policies – will meet greater resistance on the part of industrial countries struggling with stagnant economies and high unemployment.
ER -
TY - JOUR
AU - Davis,Steven J.
AU - Haltiwanger,John C.
AU - Jarmin,Ron S.
AU - Lerner,Josh
AU - Miranda,Javier
TI - Private Equity and Employment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17399
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17399
L1 - http://www.nber.org/papers/w17399.pdf
N1 - Author contact info:
Steven J. Davis
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-7312
Fax: 773/834-0733
E-Mail: Steven.Davis@ChicagoBooth.edu
John C. Haltiwanger
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3504
Fax: 301/405-3542
E-Mail: haltiwan@econ.umd.edu
Ron S. Jarmin
Center for Economic Studies
U.S. Census Bureau
4600 Silver Hill Road
Washington, DC 20233
Tel: 301.763.1858
Fax: 301.763.5935
E-Mail: ron.s.jarmin@census.gov
Josh Lerner
Harvard Business School
Rock Center 214
Boston, MA 02163
Tel: 617/495-6065
Fax: 617/496-7357
E-Mail: jlerner@hbs.edu
Javier Miranda
U.S. Bureau of the Census
Center for Economic Studies
4600 Silver Hill Road
Washington, DC 20233
Tel: 301-763-6466
E-Mail: javier.miranda@census.gov
AB - Private equity critics claim that leveraged buyouts bring huge job losses. To investigate this claim, we construct and analyze a new dataset that covers U.S. private equity transactions from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing outcomes to controls similar in terms of industry, size, age, and prior growth. Relative to controls, employment at target establishments declines 3 percent over two years post buyout and 6 percent over five years. The job losses are concentrated among public-to-private buyouts, and transactions involving firms in the service and retail sectors. But target firms also create more new jobs at new establishments, and they acquire and divest establishments more rapidly. When we consider these additional adjustment margins, net relative job losses at target firms are less than 1 percent of initial employment. In contrast, the sum of gross job creation and destruction at target firms exceeds that of controls by 13 percent of employment over two years. In short, private equity buyouts catalyze the creative destruction process in the labor market, with only a modest net impact on employment. The creative destruction response mainly involves a more rapid reallocation of jobs across establishments within target firms.
ER -
TY - JOUR
AU - Olken,Benjamin A.
AU - Pande,Rohini
TI - Corruption in Developing Countries
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17398
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17398
L1 - http://www.nber.org/papers/w17398.pdf
N1 - Author contact info:
Benjamin A. Olken
Department of Economics
MIT
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/588-1437
Fax: 617/868-2742
E-Mail: bolken@mit.edu
Rohini Pande
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-384-5267
Fax: 617-496-8753
E-Mail: rohini_pande@harvard.edu
AB - Recent years have seen a remarkable expansion in economists’ ability to measure corruption. This, in turn, has led to a new generation of well-identified, microeconomic studies. We review the evidence on corruption in developing countries in light of these recent advances, focusing on three questions: how much corruption is there, what are the efficiency consequences of corruption, and what determines the level of corruption. We find robust evidence that corruption responds to standard economic incentive theory, but also that effects of anti-corruption policies often attenuate as officials find alternate strategies to pursue rents.
ER -
TY - JOUR
AU - Faravelli,Marco
AU - Walsh,Randall
TI - Smooth Politicians and Paternalistic Voters: A Theory of Large Elections
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17397
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17397
L1 - http://www.nber.org/papers/w17397.pdf
N1 - Author contact info:
Marco Faravelli
University of Queensland
Level 5, Colin Clark Building (39)
St Lucia, Brisbane, QLD 4072
Australia
E-Mail: m.faravelli@uq.edu.au
Randall Walsh
Department of Economics
University of Pittsburgh
4901 WW Posvar Hall
230 S. Bouquet St.
Pittsburgh, PA 15260
Tel: 412/648-1737
Fax: 412/648-3011
E-Mail: walshr@pitt.edu
AB - We propose a new game theoretic approach to modeling large elections that overcomes the “paradox of voting” in a costly voting framework, without reliance on the assumption of ad hoc preferences for voting. The key innovation that we propose is the adoption of a “smooth” policy rule under which the degree to which parties favor their own interests is increasing in their margin of victory. In other words, mandates matter. We argue that this approach is an improvement over the existing literature as it is consistent with the empirical evidence. Incorporating this policy rule into a costly voting model with paternalistic voters yields a parsimonious model with attractive properties. Specifically, the model predicts that when the size of the electorate grows without bound, limiting turnout is strictly positive both in terms of numbers and proportions. Further, the model preserves the typical comparative statics predictions that have been identified in the extant costly voting models such as the underdog effect and the competition effect. Finally, under the case of selfish agents, we are able to extend Palfrey and Rosenthal’s (1985) zero turnout result to a general class of smooth policy rules. Thus, this new approach reconciles the predictions of standard costly voting, both in terms of positive turnout and comparative statics predictions with the assumption of a large electorate environment.
ER -
TY - JOUR
AU - Alfaro,Laura
AU - Kalemli-Ozcan,Sebnem
AU - Volosovych,Vadym
TI - Sovereigns, Upstream Capital Flows and Global Imbalances
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17396
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17396
L1 - http://www.nber.org/papers/w17396.pdf
N1 - Author contact info:
Laura Alfaro
Harvard Business School
Morgan Hall 263
Soldiers Field
Boston, MA 02163
Tel: 617/495-7981
Fax: 617/496-5985
E-Mail: lalfaro@hbs.edu
Sebnem Kalemli-Ozcan
John F. Kennedy School of Government
Harvard University
79 JFK Street, Mailbox 28
Cambridge, MA 02138
E-Mail: sebnem.kalemli-ozcan@mail.uh.edu
Vadym Volosovych
Finance Group, Department of Business Economics
Erasmus University Rotterdam
Room H14-30
P.O. Box 1738
3000 DR Rotterdam, The Netherlands
Tel: +31 10 408-1326
Fax: +31 10 408-9165
E-Mail: volosovych@ese.eur.nl
AB - We decompose capital flows – both debt and equity – into public and private components and study their relationship with productivity growth. This exercise reveals that international capital flows are mainly shaped by government decisions and sovereign to sovereign transactions. Specifically, we show: (i) international capital flows net of government debt are positively correlated with growth and allocated according to the neoclassical predictions; (ii) international capital flows net of official aid flows, which are mostly accounted as debt, are also positively correlated with productivity growth consistent with the predictions of the neoclassical model; (iii) public debt flows are negatively correlated with growth only if government debt is financed by another sovereign and not by private lenders. Our results show that the failure to consider official flows as the main driver of uphill flows and global imbalances is an important shortcoming of the recent literature.
ER -
TY - JOUR
AU - Edmond,Chris
TI - Information Manipulation, Coordination, and Regime Change
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17395
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17395
L1 - http://www.nber.org/papers/w17395.pdf
N1 - Author contact info:
Chris Edmond
Department of Economics
University of Melbourne
Parkville VIC 3010
AUSTRALIA
Tel: +61-3-8344-9733
Fax: +61-3-8344-6899
E-Mail: chris.edmond@gmail.com
AB - This paper presents a model of information and political regime change. If enough citizens act against a regime, it is overthrown. Citizens are imperfectly informed about how hard this will be and the regime can, at a cost, engage in propaganda so that at face-value it seems hard. This coordination game with endogenous information manipulation has a unique equilibrium and the paper gives a complete analytic characterization of its comparative statics. If the quantity of information available to citizens is sufficiently high, then the regime has a better chance of surviving. However, an increase in the reliability of information can reduce the regime's chances. These two effects are always in tension: a regime benefits from an increase in information quantity if and only if an increase in information reliability reduces its chances. The model allows for two kinds of information revolutions. In the first, associated with radio and mass newspapers under the totalitarian regimes of the early twentieth century, an increase in information quantity coincides with a shift towards media institutions more accommodative of the regime and, in this sense, a decrease in information reliability. In this case, both effects help the regime. In the second kind, associated with diffuse technologies like modern social media, an increase in information quantity coincides with a shift towards sources of information less accommodative of the regime and an increase in information reliability. This makes the quantity and reliability effects work against each other. The model predicts that a given percentage increase in information reliability has exactly twice as large an effect on the regime's chances as the same percentage increase in information quantity, so, overall, an information revolution that leads to roughly equal-sized percentage increases in both these characteristics will reduce a regime's chances of surviving.
ER -
TY - JOUR
AU - Asker,John
AU - Farre-Mensa,Joan
AU - Ljungqvist,Alexander
TI - Comparing the Investment Behavior of Public and Private Firms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17394
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17394
L1 - http://www.nber.org/papers/w17394.pdf
N1 - Author contact info:
John Asker
Stern School of Business
Department of Economics, Suite 7-79
New York University
44 West 4th Street
New York, NY 10012
Tel: 212/998-0062
Fax: 212/995-4218
E-Mail: jasker@stern.nyu.edu
Joan Farre-Mensa
Harvard Business School
Rock Center 218
Boston, MA 02163
E-Mail: jfarremensa@hbs.edu
Alexander Ljungqvist
Stern School of Business
New York University
44 West Fourth Street, #9-160
New York, NY 10012
Tel: 212/998-0304
Fax: 212/995-4220
E-Mail: aljungqv@stern.nyu.edu
AB - We evaluate differences in investment behavior between stock market listed and privately held firms in the U.S. using a rich new data source on private firms. Listed firms invest less and are less responsive to changes in investment opportunities compared to observably similar, matched private firms, especially in industries in which stock prices are particularly sensitive to current earnings. These differences do not appear to be due to unobserved differences between public and private firms, how we measure investment opportunities, lifecycle differences, or our matching criteria. We suggest that the patterns we document are most consistent with theoretical models emphasizing the role of managerial myopia.
ER -
TY - JOUR
AU - Becker,Bo
AU - Cronqvist,Henrik
AU - Fahlenbrach,Rüdiger
TI - Estimating the Effects of Large Shareholders Using a Geographic Instrument
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17393
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17393
L1 - http://www.nber.org/papers/w17393.pdf
N1 - Author contact info:
Bo Becker
Harvard Business School
Baker Library 349
Soldiers Field
Boston, MA 02163
Tel: 617/496-5335
Fax: 617/495-7659
E-Mail: bbecker@hbs.edu
Henrik Cronqvist
Claremont McKenna College
Robert Day School of Economics and Finance
Bauer Center
500 E. 9th Street
Claremont, CA 91711
Tel: (909) 607-1732
E-Mail: henrik.cronqvist@claremontmckenna.edu
Rüdiger Fahlenbrach
Ecole Polytechnique Fédérale de Lausanne (EPFL)
Quartier UNIL-Dorigny Bâtiment Extranef, # 211
1015 Lausanne
Switzerland
E-Mail: ruediger.fahlenbrach@epfl.ch
AB - Large shareholders may play an important role for firm performance and policies, but identifying this empirically presents a challenge due to the endogeneity of ownership structures. We develop and test an empirical framework which allows us to separate selection from treatment effects of large shareholders. Individual blockholders tend to hold blocks in public firms located close to where they reside. Using this empirical observation, we develop an instrument – the density of wealthy individuals near a firm’s headquarters – for the presence of a large, non-managerial individual shareholder in a firm. These shareholders have a large impact on firms, controlling for selection effects.
ER -
TY - JOUR
AU - Becker,Bo
AU - Ivashina,Victoria
TI - Cyclicality of Credit Supply: Firm Level Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17392
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17392
L1 - http://www.nber.org/papers/w17392.pdf
N1 - Author contact info:
Bo Becker
Harvard Business School
Baker Library 349
Soldiers Field
Boston, MA 02163
Tel: 617/496-5335
Fax: 617/495-7659
E-Mail: bbecker@hbs.edu
Victoria Ivashina
Harvard Business School
Baker Library 233
Soldiers Field
Boston, MA 02163
Tel: 617/495-8018
Fax: 617/495-6198
E-Mail: vivashina@hbs.edu
AB - Theory predicts that there is a close link between bank credit supply and the evolution of the business cycle. Yet fluctuations in bank-loan supply have been hard to quantify in the time-series. While loan issuance falls in recessions, it is not clear if this is due to demand or supply. We address this question by studying firms’ substitution between bank debt and non-bank debt (public bonds) using firm-level data. Any firm that raises new debt must have a positive demand for external funds. Conditional on issuance of new debt, we interpret firm’s switching from loans to bonds as a contraction in bank credit supply. We find strong evidence of substitution from loans to bonds at times characterized by tight lending standards, high levels of non-performing loans and loan allowances, low bank share prices and tight monetary policy. The bank-to-bond substitution can only be measured for firms with access to bond markets. However, we show that this substitution behavior has strong predictive power for bank borrowing and investments by small, out-of-sample firms. We consider and reject several alternative explanations of our findings.
ER -
TY - JOUR
AU - Nakamura,Emi
AU - Steinsson,Jón
TI - Fiscal Stimulus in a Monetary Union: Evidence from U.S. Regions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17391
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17391
L1 - http://www.nber.org/papers/w17391.pdf
N1 - Author contact info:
Emi Nakamura
Columbia Business School
3022 Broadway, Uris Hall 820
New York, NY 10027
Tel: 212/854-8162
E-Mail: enakamura@columbia.edu
Jón Steinsson
Department of Economics
Columbia University
1026 International Affairs Building
420 West 118th Street
New York, NY 10027
Tel: 212/854-3690
Fax: 212/854-8059
E-Mail: jsteinsson@columbia.edu
AB - We use rich historical data on military procurement spending across U.S. regions to estimate the effects of government spending in a monetary union. Aggregate military build-ups and draw-downs have differential effects across regions. We use this variation to estimate an "open economy relative multiplier'' of approximately 1.5. We develop a framework for interpreting this estimate and relating it to estimates of the standard closed economy aggregate multiplier. The closed economy aggregate multiplier is highly sensitive to how strongly aggregate monetary and tax policy "leans against the wind.'' In contrast, our estimate "differences out'' these effects because different regions in the union share a common monetary and tax policy. Our estimate provides evidence in favor of models in which demand shocks can have large effects on output.
ER -
TY - JOUR
AU - Knittel,Christopher R.
AU - Sandler,Ryan
TI - Cleaning the Bathwater with the Baby: The Health Co-Benefits of Carbon Pricing in Transportation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17390
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17390
L1 - http://www.nber.org/papers/w17390.pdf
N1 - Author contact info:
Christopher R. Knittel
MIT Sloan School of Management
100 Main Street, E62-513
Cambridge, MA 02142
E-Mail: knittel@mit.edu
Ryan Sandler
University of California, Davis
Department of Economics
One Shields Ave
Davis CA 95616
E-Mail: rsandler@ucdavis.edu
AB - Efforts to reduce greenhouse gas emissions in the US have relied on Corporate Average Fuel Economy (CAFE) Standards and Renewable Fuel Standards (RFS). Economists often argue that these policies are inefficient relative to carbon pricing because they ignore existing vehicles and do not adequately reduce the incentive to drive. This paper presents evidence that the net social costs of carbon pricing are significantly less than previous thought. The bias arises from the fact that the demand elasticity for miles travelled varies systematically with vehicle emissions; dirtier vehicles are more responsive to changes in gasoline prices. This is true for all four emissions for which we have data—nitrogen oxides, carbon monoxide, hydrocarbon, and greenhouse gases—as well as weight. This reduces the net social costs associated with carbon pricing through increasing the co-benefits. Accounting for this heterogeneity implies that the welfare losses from $1.00 gas tax, or a $110 per ton of CO2 tax, are negative over the period of 1998 to 2008 even when we ignore the climate change benefits from the tax. Co-benefits increase by over 60 percent relative to ignoring the heterogeneity that we document. In addition, accounting for this heterogeneity raises the optimal gas tax associated with local pollution, as calculated by Parry and Small (2005), by as much as 57 percent. While our empirical setting is California, we present evidence that the effects may be larger for the rest of the US.
ER -
TY - JOUR
AU - Monacelli,Tommaso
AU - Quadrini,Vincenzo
AU - Trigari,Antonella
TI - Financial Markets and Unemployment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17389
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17389
L1 - http://www.nber.org/papers/w17389.pdf
N1 - Author contact info:
Tommaso Monacelli
IGIER Universita' Bocconi and CEPR
Via Roentgen 1
20136 Milano
Italy
E-Mail: tommaso.monacelli@unibocconi.it
Vincenzo Quadrini
Department of Finance and Business Economics
Marshall School of Business
University of Southern California
701 Exposition Boulevard
Los Angeles, CA 90089
Tel: 213/740-6521
Fax: 213/740-6650
E-Mail: quadrini@usc.edu
Antonella Trigari
IGIER Università Bocconi
Via Roentgen 1
20136 Milano
Italy
Tel: +39 02 58363040
Fax: +39 02 58363302
E-Mail: antonella.trigari@unibocconi.it
AB - We study the importance of financial markets for (un)employment fluctuations in a model with searching and matching frictions where firms issue debt under limited enforcement. Higher debt allows employers to bargain lower wages which in turn increases the incentive to create jobs. The transmission mechanism of 'credit shocks' is fundamentally different from the typical credit channel and the model can explain why firms cut hiring after a credit contraction even if they have not shortage of funds for hiring workers. The theoretical predictions are consistent with the estimation of a structural VAR whose identifying restrictions are derived from the theoretical model.
ER -
TY - JOUR
AU - Graham,John R.
AU - Hazarika,Sonali
AU - Narasimhan,Krishnamoorthy
TI - Financial Distress in the Great Depression
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17388
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17388
L1 - http://www.nber.org/papers/w17388.pdf
N1 - Author contact info:
John Graham
Duke University
Fuqua School of Business
100 Fuqua Drive
Durham, NC 27708-0120
Tel: 919/660-7857
Fax: 919/660-8038
E-Mail: john.graham@duke.edu
Sonali Hazarika
Baruch College/CUNY
Zicklin School Of Business
One Bernard Baruch Way
55 Lexington Avenue at East 24th
New York, NY 10010
E-Mail: sonali.hazarika@baruch.cuny.edu
Krishnamoorthy Narasimhan
PIMCO
840 Newport Center Drive
Newport Beach, CA
E-Mail: Krishna.Narasimhan@pimco.com
AB - We use firm-level data to study corporate performance during the Great Depression era for all industrial firms on the NYSE. Our goal is to identify the factors that contribute to business insolvency and valuation changes during the period 1928 to 1938. We find that firms with more debt and lower bond ratings in 1928 became financially distressed more frequently during the Depression, consistent with the trade-off theory of leverage and the information production role of credit rating agencies. We also document for the first time that firms responded to tax incentives to use debt during the Depression era, but that the extra debt used in response to this tax-driven “debt bias” did not contribute significantly to the occurrence of distress. Finally, we conduct an out of sample test during the recent 2008-2009 Recession and find that higher leverage and lower bond ratings also increased the occurrence of financial distress during this period.
ER -
TY - JOUR
AU - Graham,John R.
AU - Hazarika,Sonali
AU - Narasimhan,Krishnamoorthy
TI - Corporate Governance, Debt, and Investment Policy during the Great Depression
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17387
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17387
L1 - http://www.nber.org/papers/w17387.pdf
N1 - Author contact info:
John Graham
Duke University
Fuqua School of Business
100 Fuqua Drive
Durham, NC 27708-0120
Tel: 919/660-7857
Fax: 919/660-8038
E-Mail: john.graham@duke.edu
Sonali Hazarika
Baruch College/CUNY
Zicklin School Of Business
One Bernard Baruch Way
55 Lexington Avenue at East 24th
New York, NY 10010
E-Mail: sonali.hazarika@baruch.cuny.edu
Krishnamoorthy Narasimhan
PIMCO
840 Newport Center Drive
Newport Beach, CA
E-Mail: Krishna.Narasimhan@pimco.com
AB - We study a period of severe disequilibrium to investigate whether board characteristics are related to corporate investment, debt usage, and firm value. During the 1930-1938 Depression era, when the corporate sector was shocked by an unprecedented downturn, we document a relation between board characteristics and firm performance that varies in economically sensible ways: Complex firms (that would benefit more from board advice) exhibit a positive relation between board size and firm value, and simple firms exhibit a negative relation between board size and firm value. Moreover, simple firms with large boards do not downsize adequately in response to the severe economic contraction: they invest more (or shrink less) and use more debt during the 1930s. We document similar effects for the number of outside directors on the board. Finally, we also find that companies with properly aligned governance structures are more likely to replace the company president following poor performance.
ER -
TY - JOUR
AU - Holland,Stephen P.
AU - Hughes,Jonathan E.
AU - Knittel,Christopher R.
AU - Parker,Nathan C.
TI - Some Inconvenient Truths About Climate Change Policy: The Distributional Impacts of Transportation Policies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17386
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17386
L1 - http://www.nber.org/papers/w17386.pdf
N1 - Author contact info:
Stephen P. Holland
Bryan School of Business and Economics
University of North Carolina, Greensboro
P.O. Box 26165
Greensboro, NC 27402-6165
Tel: 336/334-4925
Fax: 336/334-4089
E-Mail: sphollan@uncg.edu
Jonathan E. Hughes
Department of Economics
University of Colorado at Boulder
0256 UCB
Boulder, CO 80309
Tel: 303-735-0220
E-Mail: jonathan.e.hughes@colorado.edu
Christopher R. Knittel
MIT Sloan School of Management
100 Main Street, E62-513
Cambridge, MA 02142
E-Mail: knittel@mit.edu
Nathan C. Parker
Institute of Transportation Studies
University of California, Davis
E-Mail: ncparker@ucdavis.edu
AB - Instead of efficiently pricing greenhouse gases, policy makers have favored measures that implicitly or explicitly subsidize low carbon fuels. We simulate a transportation-sector cap & trade program (CAT) and three policies currently in use: ethanol subsidies, a renewable fuel standard (RFS), and a low carbon fuel standard (LCFS). Our simulations confirm that the alternatives to CAT are quite costly–2.5 to 4 times more expensive. We provide evidence that the persistence of these alternatives in spite of their higher costs lies in the political economy of carbon policy. The alternatives to CAT exhibit a feature that make them amenable to adoption–a right skewed distribution of gains and losses where many counties have small losses, but a smaller share of counties gain considerably–as much as $6,800 per capita, per year. We correlate our estimates of gains from CAT and the RFS with Congressional voting on the Waxman-Markey cap & trade bill, H.R. 2454. Because Waxman-Markey (WM) would weaken the RFS, House members likely viewed the two policies as competitors. Conditional on a district's CAT gains, increases in a district's RFS gains are associated with decreases in the likelihood of voting for WM. Furthermore, we show that campaign contributions are correlated with a district's gains under each policy and that these contributions are correlated with a Member's vote on WM.
ER -
TY - JOUR
AU - Einav,Liran
AU - Kuchler,Theresa
AU - Levin,Jonathan D.
AU - Sundaresan,Neel
TI - Learning from Seller Experiments in Online Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17385
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17385
L1 - http://www.nber.org/papers/w17385.pdf
N1 - Author contact info:
Liran Einav
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/723-3704
Fax: 650/725-5702
E-Mail: leinav@stanford.edu
Theresa Kuchler
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
E-Mail: tkuchler@stanford.edu
Jonathan D. Levin
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/723-5962
E-Mail: jdlevin@stanford.edu
Neel Sundaresan
eBay Research Labs
2065 Hamilton Avenue
San Jose, CA 95125
E-Mail: nsundaresan@ebay.com
AB - The internet has dramatically reduced the cost of varying prices, displays and information provided to consumers, facilitating both active and passive experimentation. We document the prevalence of targeted pricing and auction design variation on eBay, and identify hundreds of thousands of experiments conducted by sellers across a wide array of retail products. We show how this type of data can be used to address questions about consumer behavior and market outcomes, and provide illustrative results on price dispersion, the frequency of over-bidding, the choice of reserve prices, "buy now" options and other auction design parameters, and on consumer sensitivity to shipping fees. We argue that leveraging the experiments of market participants takes advantage of the scale and heterogeneity of online markets and can be a powerful approach for testing and measurement.
ER -
TY - JOUR
AU - Fang,Hanming
AU - Shapiro,Dmitry A.
AU - Zillante,Arthur
TI - An Experimental Study of Alternative Campaign Finance Systems: Donations, Elections and Policy Choices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17384
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17384
L1 - http://www.nber.org/papers/w17384.pdf
N1 - Author contact info:
Hanming Fang
Department of Economics
University of Pennsylvania
3718 Locust Walk
Philadelphia, PA 19104
Tel: 215-898-7767
Fax: 215-573-2057
E-Mail: hanming.fang@econ.upenn.edu
Dmitry A. Shapiro
Belk College of Business
University of North Carolina at Charlotte
9201 University City Boulevard
Charlotte, NC 28223-0001
E-Mail: dashapir@email.uncc.edu
Arthur Zillante
Belk College of Business
University of Carolina at Charlotte
9201 University City Boulevard
Charlotte, NC 28223-0001
E-Mail: azillant@uncc.edu
AB - We experimentally study the effect of alternative campaign finance systems – as characterized by different information structure about donors – on donations, election outcomes, political candidates' policy choices, and welfare. Three alternative campaign finance systems are considered: a full anonymity (FA) system in which neither the politicians nor the voters are informed about the donors' ideal policies or levels of donations; a partial anonymity (PA) system in which only the politicians, but not the voters, are informed about the donors' ideal policies and donations; and finally a no anonymity (NA) system in which both the politicians and the voters are informed about the donors' ideal policies and donations.
We find that donors contribute less in the FA system than in the PA and NA system, and candidates are less likely to deviate from their ideal policies under FA than under the PA and NA systems. The effect of donations on the candidate's policy deviations differs in FA from that in PA and NA. Specifically, in the FA system larger donations lead to smaller deviations from the candidate's ideal policy; but in the NA and PA systems, larger donations lead to larger deviations. As a result we observe that the donations lead to a centrist bias in the candidate's policy choices, i.e., donations are more likely to make extreme candidate move to the center than to make centrist candidate move to the right. This centrist bias is present more robustly in FA treatments. Finally, we find that donors greatly benefit from the possibility of donations regardless of the finance system. Voter welfare remains virtually unchanged under the PA and NA systems, especially when there is competition among the donors. Our findings provide the first experimental evidence supportive of Ayres and Ackerman's (2002) campaign finance reform proposal.
ER -
TY - JOUR
AU - Cropper,Maureen L.
AU - Limonov,Alexander
AU - Malik,Kabir
AU - Singh,Anoop
TI - Estimating the Impact of Restructuring on Electricity Generation Efficiency: The Case of the Indian Thermal Power Sector
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17383
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17383
L1 - http://www.nber.org/papers/w17383.pdf
N1 - Author contact info:
Maureen L. Cropper
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3483
Fax: 301/405-3542
E-Mail: cropper@econ.umd.edu
Alexander Limonov
Resources for the Future
1616 P Street NW
Washington, DC 20036
E-Mail: limonov@rff.org
Kabir Malik
Department of Agricultural and Resource Economics
University of Maryland
College Park, MD 20742
E-Mail: kmalik@arec.umd.edu
Anoop Singh
Department of Industrial Management
and Engineering
Indian Institute of Technology Kanpur
Kanpur-208 016 India
E-Mail: anoops@iitk.ac.in
AB - This paper examines the impact of unbundling of generation from transmission and distribution on the operating efficiency of state-owned thermal power plantsin India. Using information collected by India’s Central Electricity Authority we construct a panel dataset for thermal power plants for the years 1994-2008. We take advantage of variation across states in the timing of reforms to examine the impact of restructuring on plant performance and thermal efficiency. We estimate difference-in-differences models that control for state-level time trends, and plant and year fixed effects. The models suggest that unbundling significantly improved average annual plant availability by about 4.6 percentage points and reduced forced outages by about 2.9 percentage points in states that unbundled before 2003. Restructuring has not, however, improved thermal efficiency. This may reflect the fact that unbundling has not yet attracted independent power producers into the market to the same extent as has occurred in the US.
ER -
TY - JOUR
AU - Costa,Dora
TI - Leaders: Privilege, Sacrifice, Opportunity and Personnel Economics in the American Civil War
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17382
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17382
L1 - http://www.nber.org/papers/w17382.pdf
N1 - Author contact info:
Dora Costa
Bunche Hall 9272
Department of Economics
UCLA
Box 951477
Los Angeles, CA 90095-1477
Tel: (310) 825-4249
Fax: (310) 825-9528
E-Mail: costa@econ.ucla.edu
AB - The US Civil War provides researchers a unique opportunity to identify wartime leaders and thus to test theories of leadership. By observing both leaders and followers during the war and forty years after it, I establish that the most able became wartime leaders, that leading by example from the front was an effective strategy in reducing desertion rates, and that leaders later migrated to the larger cities because this is where their superior skills would have had the highest pay-offs. I find that US cities were magnets for the most able and provided training opportunities for both leaders and followers: men might start in a low social status occupation in a city but then move to a higher status occupation.
ER -
TY - JOUR
AU - Fairlie,Robert
AU - Hoffmann,Florian
AU - Oreopoulos,Philip
TI - A Community College Instructor Like Me: Race and Ethnicity Interactions in the Classroom
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17381
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17381
L1 - http://www.nber.org/papers/w17381.pdf
N1 - Author contact info:
Robert Fairlie
Department of Economics
University of California, Santa Cruz
Santa Cruz, CA 95064
E-Mail: rfairlie@ucsc.edu
Florian Hoffmann
Department of Economics
University of British Columbia
E-Mail: florian.hoffmann@ubc.ca
Philip Oreopoulos
Department of Economics
University of Toronto
150 St. George Street
Toronto, ON M5S 3G7
Canada
E-Mail: philip.oreopoulos@utoronto.ca
AB - Detailed administrative data from a large and diverse community college are used to examine whether academic performance depends on whether students are the same race or ethnicity as their instructors. To address the concern of endogenous sorting, we focus on students with restricted course enrollment options due to low registration priorities, courses with no within-term or within-year racial variation in instructors, and models that include both student and classroom fixed effects. Given the computational complexity of the 2-way fixed effects model we rely on numerical algorithms that exploit the particular structure of the model’s normal equations. We find that the performance gap in terms of class dropout and pass rates between white and underrepresented minority students falls by roughly half when taught by an underrepresented minority instructor. The racial performance gap in grades is also lower with minority instructors. Results from detailed racial interactions indicate that African-American students perform particularly better when taught by African-American instructors.
ER -
TY - JOUR
AU - Bordo,Michael D.
AU - Markiewicz,Agnieszka
AU - Jonung,Lars
TI - A Fiscal Union for the Euro: Some Lessons from History
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17380
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17380
L1 - http://www.nber.org/papers/w17380.pdf
N1 - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu
Agnieszka Markiewicz
Erasmus University, Rotterdam
E-Mail: markiewicz@ese.eur.nl
Lars Jonung
Knut Wicksell Centre of Financial Studies
School of Economics and Management
Lund university
Box 7080
220 07 Lund
Sweden
Tel: +46-70-2740273
E-Mail: Lars.Jonung@ehl.lu.se
AB - The recent financial crisis 2007-2009 was the longest and the deepest recession since the Great Depression of 1930. The crisis that originated in subprime mortgage markets was spread and amplified through globalised financial markets and resulted in severe debt crises in several European countries in 2010 and 2011. Events revealed that the European Union had insufficient means to halt the spiral of European debt crisis. In particular, no pan-European fiscal mechanism to face a global crisis is available at present. The aim of this study is to identify the characteristics of a robust common fiscal policy framework that could have alleviated the consequences of the recent crisis. This is done by using the political and fiscal history of five federal states; Argentina, Brazil, Canada, Germany and the United States.
ER -
TY - JOUR
AU - Obstfeld,Maurice
TI - International Liquidity: The Fiscal Dimension
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17379
PY - 2011
Y2 - September 2011
UR - http://www.nber.org/papers/w17379
L1 - http://www.nber.org/papers/w17379.pdf
N1 - Author contact info:
Maurice Obstfeld
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-9646
Fax: 510/642-6615
E-Mail: obstfeld@econ.berkeley.edu
AB - This paper argues that if policymakers seek to enhance global liquidity, then the international community must provide a higher and better coordinated level of fiscal support than it has in the past. Loans to troubled sovereigns or financial institutions imply a credit risk that ultimately must be lodged somewhere. Expanded international lending facilities, including an expanded IMF, cannot remain unconditionally solvent absent an expanded level of fiscal backup. The same point obviously applies to the European framework for managing internal sovereign debt problems, including proposals for a jointly guaranteed eurozone sovereign bond. Even attainment of a significant role for the Special Drawing Right depends upon enhanced fiscal resources and burden sharing at the international level.
ER -
TY - JOUR
AU - Heckman,James J.
TI - Integrating Personality Psychology into Economics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17378
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17378
L1 - http://www.nber.org/papers/w17378.pdf
N1 - Author contact info:
James J. Heckman
Department of Economics
The University of Chicago
1126 E. 59th Street
Chicago, IL 60637
Tel: 773/702-0634
Fax: 773/702-8490
E-Mail: jjh@uchicago.edu
AB - This paper reviews the problems and potential benefits of integrating personality psychology into economics. Economists have much to learn from and contribute to personality psychology.
ER -
TY - JOUR
AU - Ashraf,Quamrul H.
AU - Weil,David N.
AU - Wilde,Joshua
TI - The Effect of Interventions to Reduce Fertility on Economic Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17377
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17377
L1 - http://www.nber.org/papers/w17377.pdf
N1 - Author contact info:
Quamrul Ashraf
Williams College
Department of Economics
24 Hopkins Hall Drive
Williamstown, MA 01267
Tel: (413) 597-3051
Fax: (413) 597-4045
E-Mail: Quamrul.H.Ashraf@williams.edu
David N. Weil
Department of Economics
Box B
Brown University
Providence, RI 02912
Tel: 401/863-1754
Fax: 401/863-1970
E-Mail: david_weil@brown.edu
Joshua Wilde
University of South Florida
Department of Economics
4202 E. Fowler Avenue, BSN3403
Tampa, FL 33620
E-Mail: jkwilde@usf.edu
AB - We assess quantitatively the effect of exogenous reductions in fertility on output per capita. Our simulation model allows for effects that run through schooling, the size and age structure of the population, capital accumulation, parental time input into child-rearing, and crowding of fixed natural resources. The model is parameterized using a combination of microeconomic estimates, data on demographics and natural resource income in developing countries, and standard components of quantitative macroeconomic theory. We apply the model to examine the effect of an intervention that immediately reduces TFR by 1.0, using current Nigerian vital rates as a baseline. For a base case set of parameters, we find that an immediate decline in the TFR of 1.0 will raise output per capita by approximately 13.2 percent at a horizon of 20 years, and by 25.4 percent at a horizon of 50 years.
ER -
TY - JOUR
AU - Böhringer,Christoph
AU - Carbone,Jared C.
AU - Rutherford,Thomas F.
TI - Embodied Carbon Tariffs
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17376
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17376
L1 - http://www.nber.org/papers/w17376.pdf
N1 - Author contact info:
Christoph Böhringer
University of Oldenburg
Department of Economics
D-26111 Oldenburg
Germany
E-Mail: christoph.boehringer@uni-oldenburg.de
Jared Carbone
University of Calgary
Department of Economics, SS 454
2500 University Drive NW
Calgary, AB T2N 1N4, Canada
Tel: 403.220.4094
Fax: 403.282.5262
E-Mail: jccarbon@ucalgary.ca
Thomas F. Rutherford
ETH Zurich
Zurichbergstrasse 18
8032 Zurich
Switzerland
E-Mail: trutherford@ethz.ch
M3 - presented at "SI 2011 Environmental & Energy Economics", July 29-30, 2011
AB - In a world where the prospects of a global agreement to control greenhouse gas emissions are bleak, the idea of using trade policy as an implicit regulation of foreign emission sources has gained many supporters in countries contemplating unilateral climate policies. Embodied carbon tariffs tax the direct and indirect carbon emissions embodied in imported goods. The appeal seems obvious: as OECD countries are, on average, large net importers of embodied emissions from non-OECD countries, carbon tariffs could substantially extend the reach of OECD climate policies. We investigate this claim by simulating the effects of embodied carbon tariffs with a computable general equilibrium model of global trade and energy use. We find that embodied carbon tariffs do effectively reduce carbon leakage. However, the scope for improvements in the global cost-effectiveness of unilateral climate policy is limited. The main welfare effect of the tariffs is to shift the burden of OECD climate policy to the developing world.
ER -
TY - JOUR
AU - Hungerman,Daniel M.
TI - Do Religious Proscriptions Matter? Evidence from a Theory-Based Test
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17375
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17375
L1 - http://www.nber.org/papers/w17375.pdf
N1 - Author contact info:
Daniel M. Hungerman
Department of Economics
University of Notre Dame
439 Flanner Hall
Notre Dame, IN 46556-5602
Tel: 574/631-4495
Fax: 574/631-4783
E-Mail: dhungerm@nd.edu
AB - A large literature shows that religious participation is associated with a wide range of behaviors and outcomes, but what drives this association is unclear. On the one hand, this association may stem from correlations in preferences, where those with tastes for religion coincidentally have particular tastes for other behaviors as well. Alternately, religious participation may directly affect behavior; for example many religious organizations impose rules and proscriptions on their members and these rules may affect members’ decisions. Using the canonical economic model of religiosity, I develop an empirical test to investigate the importance of religious proscriptions on behavior. Several empirical applications of this test are conducted; the results indicate a strong role for religious proscriptions in determining behavior. The test developed here does not require an instrumental variable for religion and could be applied to the study of criminal gangs, terrorist organizations, fraternities, communes, political groups, and other “social clubs.”
ER -
TY - JOUR
AU - Ferreira,Fernando
AU - Gyourko,Joseph
TI - Anatomy of the Beginning of the Housing Boom: U.S. Neighborhoods and Metropolitan Areas, 1993-2009
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17374
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17374
L1 - http://www.nber.org/papers/w17374.pdf
N1 - Author contact info:
Fernando Ferreira
The Wharton School
University of Pennsylvania
1461 Steinberg - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
Tel: 215/898-7181
Fax: 215/573-2220
E-Mail: fferreir@wharton.upenn.edu
Joseph Gyourko
University of Pennsylvania
Wharton School of Business
3620 Locust Walk
1480 Steinberg-Dietrich Hall
Philadelphia, PA 19104-6302
Tel: 215/898-3003
Fax: 215/573-2220
E-Mail: gyourko@wharton.upenn.edu
AB - We provide novel estimates of the timing, magnitudes, and potential determinants of the start of the last housing boom across American neighborhoods and metropolitan areas (MSAs) using a rich new micro data set containing 23 million housing transactions in 94 metropolitan areas between 1993 and 2009. We also match transactions data with loan information, enabling us to observe household income and other demographics for each neighborhood. Five major findings are reported. First, the start of the boom was not a single, national event. Booms, which are defined by the global breakpoint in an area’s price appreciation series, begin at different times over a decade-long period from 1995-2006. Second, the magnitude of the initial jump in house price appreciation at the start of the boom is economically, not just statistically, significant. On average, log house prices are over four points higher during the first year of the boom relative to the previous twelve month period for both MSAs and neighborhoods. There is no evidence that price growth was trending up prior to the start of the boom. Third, local income is the only potential demand shifter found that also had an economically and statistically significant change around the time that local housing booms began. Contemporaneous local income growth is large enough to account for half or more of the initial jump in house price appreciation. While these estimates indicate that the beginning of the boom was fundamentally justified on average, they do not imply that what followed was rational. Fourth, there is important heterogeneity in that result. Income growth is large and jumps at the same time as house price appreciation in areas that boomed early and have inelastic supplies of housing, but not in late booming areas and those with elastic supply sides. Fifth and finally, none of the demand-shifters analyzed show positive pre-trends, but some such as the share of subprime lending, do lag the beginning of the boom. This suggests that key players in the lending market more responded to the boom, rather than caused it to start.
ER -
TY - JOUR
AU - Petrin,Amil
AU - Sivadasan,Jagadeesh
TI - Estimating Lost Output from Allocative Inefficiency, with an Application to Chile and Firing Costs
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17373
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17373
L1 - http://www.nber.org/papers/w17373.pdf
N1 - Author contact info:
Amil Petrin
Department of Economics
University of Minnesota
4-101 Hanson Hall
Minneapolis, MN 55455
Tel: 612/625-0145
Fax: 612/624-0209
E-Mail: petrin@umn.edu
Jagadeesh Sivadasan
University of Michigan
Ross School of Business
701 Tappan, Room R4310
Ann Arbor, MI 48103
Tel: 7348468165
Fax: 7347642557
E-Mail: jagadees@umich.edu
AB - We propose a new measure of allocative efficiency based on unrealized increases in aggregate productivity growth. We show that the difference in the value of the marginal product of an input and its marginal cost at any plant - the plant-input "gap" - is exactly equal to the change in aggregate output that would occur if that plant changed that input's use by one unit. The mean absolute gap across plants for any input can then be interpreted as an approximation to the gain to society that would occur if every plant had a one-unit change in that input in the efficient direction, holding everything else constant. We show how to estimate this average gap using plant-level data for 1982-1994 from Chilean manufacturing, a sector largely viewed as being one of South America's least distorted. We find the gaps for blue and white collar labor are quite large in absolute value and imply that a one-unit move in the correct direction for blue collar would increase aggregate value added by almost 0.5%. We also find that the gaps for blue and white collar workers are increasing over time while the gaps for materials and electricity are not. The timing of the two separate increases in firing costs and the sharpest increases in the labor gaps is suggestive that the increases in average within-firm labor gaps may be related to the increases in severance pay.
ER -
TY - JOUR
AU - Menezes-Filho,Naércio Aquino
AU - Muendler,Marc-Andreas
TI - Labor Reallocation in Response to Trade Reform
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17372
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17372
L1 - http://www.nber.org/papers/w17372.pdf
N1 - Author contact info:
Náercio Aquino Menezes-Filho
Insper Institute of Education and Research
Rua Quatá, 300
São Paulo, SP 04546-042
Brazil
E-Mail: naercioamf@isp.edu.br
Marc-Andreas Muendler
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-4799
Fax: 858/534-7040
E-Mail: muendler@ucsd.edu
AB - Tracking individual workers across jobs after Brazil’s trade liberalization in the 1990s shows that tariff cuts trigger worker displacements, but neither exporters nor comparative-advantage sectors absorb trade-displaced labor. On the contrary, exporters separate from significantly more and hire fewer workers than the average employer. Trade liberalization increases transitions to services, unemployment, and out of the labor force. Results are consistent with faster labor productivity growth than sales expansions so that output shifts to more productive firms while labor does not. Higher rates of failed reallocations and longer durations of complete reallocations result, associated with a costly incidence of idle resources.
ER -
TY - JOUR
AU - Howard,David H.
AU - Shen,Yu-Chu
TI - Comparative Effectiveness Research, COURAGE, and Technological Abandonment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17371
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17371
L1 - http://www.nber.org/papers/w17371.pdf
N1 - Author contact info:
David Howard
Department of Health Policy and Management
Emory University
1518 Clifton Road NE
Atlanta, GA 30322
Tel: 404-727-3907
Fax: 404-727-9198
E-Mail: dhhowar@emory.edu
Yu-Chu Shen
Graduate School of Business and Public Policy
Naval Postgraduate School
555 Dyer Road
Monterey, CA 93943
Tel: 831/656-2951
E-Mail: yshen@nps.edu
AB - When a major study finds that a widely used medical treatment is no better than a less expensive alternative, do physicians stop using it? Policymakers hope that comparative effectiveness research will identify less expensive substitutes for widely-used treatments, but physicians may be reluctant to abandon profitable therapies. We examine the impact of the COURAGE trial, which found that medical therapy is as effective as percutaneous coronary intervention (PCI) for patients with stable angina, on practice patterns. Using hospital discharge data from US community, Veterans Administration, and English hospitals, we detect a moderate decline in PCI volume post-COURAGE. However, many patients with stable angina continue to receive PCI. We do not find differences in PCI volume trends by reimbursement scheme or hospitals’ teaching status, ownership, or degree of vertical integration.
ER -
TY - JOUR
AU - Graham,John R.
AU - Harvey,Campbell R.
AU - Puri,Manju
TI - Capital Allocation and Delegation of Decision-Making Authority within Firms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17370
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17370
L1 - http://www.nber.org/papers/w17370.pdf
N1 - Author contact info:
John Graham
Duke University
Fuqua School of Business
100 Fuqua Drive
Durham, NC 27708-0120
Tel: 919/660-7857
Fax: 919/660-8038
E-Mail: john.graham@duke.edu
Campbell R. Harvey
Duke University
Fuqua School of Business
Durham, NC 27708-0120
Tel: 919/660-7768
Fax: 919/660-8030
E-Mail: cam.harvey@duke.edu
Manju Puri
Fuqua School of Business
Duke University
1 Towerview Drive, Box 90120
Durham, NC 27708-0120
Tel: 919/660-7657
Fax: 919/681-6246
E-Mail: mpuri@duke.edu
AB - We survey more than 1,000 CEOs and CFOs to understand how capital is allocated, and decision-making authority is delegated, within firms. We find that CEOs are least likely to share or delegate decision-making authority in mergers and acquisitions, relative to delegation of capital structure, payout, investment, and capital allocation decisions. We also find that CEOs are more likely to delegate decision authority when the firm is large or complex. Delegation is less likely when the CEO is particularly knowledgeable about a project, when the CEO has an MBA degree or long tenure, and when the CEO's pay is tilted towards incentive compensation. We study capital allocation in detail and learn that most companies allocate funds across divisions using the net present value rule, the reputation of the divisional manager, the timing of a project‟s cash flows, and senior management's "gut feel." Corporate politics and corporate socialism are more important allocation criteria in foreign countries than in the U.S.
ER -
TY - JOUR
AU - Jacob,Brian A.
AU - Ludwig,Jens
AU - Miller,Douglas L.
TI - The Effects of Housing and Neighborhood Conditions on Child Mortality
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17369
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17369
L1 - http://www.nber.org/papers/w17369.pdf
N1 - Author contact info:
Brian Jacob
Gerald R. Ford School of Public Policy
University of Michigan
735 South State Street
Ann Arbor, MI 48109
Tel: 734-615-6994
Fax: NA
E-Mail: bajacob@umich.edu
Jens Ludwig
University of Chicago
1155 East 60th Street
Chicago, IL 60637
Tel: 773/834-0811
Fax: 773/834-1582
E-Mail: jludwig@uchicago.edu
Douglas L. Miller
University of California, Davis
Department of Economics
One Shields Avenue
Davis, CA 95616-8578
Tel: 530/752-8490
E-Mail: dlmiller@ucdavis.edu
AB - In this paper we estimate the causal effects on child mortality from moving into less distressed neighborhood environments. We match mortality data to information on every child in public housing that applied for a housing voucher in Chicago in 1997 (N=11,848). Families were randomly assigned to the voucher wait list, and only some families were offered vouchers. The odds ratio for the effects of being offered a housing voucher on overall mortality rates is equal to 1.11 for all children (95% CI 0.54 to 2.10), 1.50 for boys (95% CI 0.72 to 2.89) and 0.00 for girls – that is, the voucher offer is perfectly protective for mortality for girls (95% CI 0 to 0.79). Our paper also addresses a methodological issue that may arise in studies of low-probability outcomes – perfect prediction by key explanatory variables.
ER -
TY - JOUR
AU - Graham,John R.
AU - Li,Si
AU - Qiu,Jiaping
TI - Managerial Attributes and Executive Compensation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17368
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17368
L1 - http://www.nber.org/papers/w17368.pdf
N1 - Author contact info:
John Graham
Duke University
Fuqua School of Business
100 Fuqua Drive
Durham, NC 27708-0120
Tel: 919/660-7857
Fax: 919/660-8038
E-Mail: john.graham@duke.edu
Si Li
School of Business and Economics
Wilfrid Laurier University
Waterloo, ON
N2L 3C5, Canada
E-Mail: sli@wlu.ca
Jiaping Qiu
DeGroote School of Business
McMaster University
Hamilton, ON
L8S 4M4, Canada
E-Mail: qiu@mcmaster.ca
AB - We study the role of firm- and manager-specific heterogeneities in executive compensation. We decompose the variation in executive compensation and find that time invariant firm and especially manager fixed effects explain a majority of the variation in executive pay. We then show that in many settings, it is important to include fixed effects to mitigate potential omitted variable bias. Furthermore, we find that compensation fixed effects are significantly correlated with management styles (i.e., manager fixed effects in corporate policies). Finally, the method used in the paper has a number of potential applications in financial economics.
ER -
TY - JOUR
AU - Galasso,Alberto
AU - Schankerman,Mark
AU - Serrano,Carlos J.
TI - Trading and Enforcing Patent Rights
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17367
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17367
L1 - http://www.nber.org/papers/w17367.pdf
N1 - Author contact info:
Alberto Galasso
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON
CANADA M5S 3E6
Fax: 905-569-4397
E-Mail: Alberto.Galasso@Rotman.Utoronto.Ca
Mark Schankerman
Department of Economics, R.516
London School of Economics
Houghton Street
London WC2A 2AE
UK
Tel: 442079557518
E-Mail: M.Schankerman@lse.ac.uk
Carlos J. Serrano
Department of Economics
University of Toronto
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/946-3404
E-Mail: carlos.serrano@utoronto.ca
AB - We study how the market for innovation affects enforcement of patent rights. Conventional wisdom associates the gains from trade with comparative advantage in manufacturing or marketing. We show that these gains imply that patent transactions should increase litigation risk. We identify a new source of gains from trade, comparative advantage in patent enforcement, and show that transactions driven by this motive should reduce litigation. Using data on trade and litigation of individually-owned patents in the U.S., we exploit variation in capital gains tax rates as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly effect patent transactions, and that reallocation of patent rights reduces litigation risk, on average. The impact of trade on litigation is heterogeneous, however. Patents with larger potential gains from trade are more likely to change ownership, suggesting that the market for innovation is efficient. We also show that the impact of trade on litigation depends on characteristics of the transactions.
ER -
TY - JOUR
AU - Dong,Yan
AU - Whalley,John
TI - Gains and Losses from Potential Bilateral US-China Trade Retaliation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17366
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17366
L1 - http://www.nber.org/papers/w17366.pdf
N1 - Author contact info:
Yan Dong
Institute of World Economics and Politics
Chinese Academy of Social Sciences
15th Floor of CASS Building
No.5 Jianguomen Nei Avenue
Beijing, China, 100732
E-Mail: dongyan@cass.org.cn
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB - Two closely related numerical general equilibrium models of world trade are used to analyze the potential consequences of US-China bilateral retaliation on trade flows and welfare. One is a conventional Armington trade model with five regions, the US, China, EU, Japan and Rest of the World, and calibrated to a global 2009 micro consistent data set. The other is a modified version of this model with monetary non neutrals and including China’s trade surplus as an endogenous variable.
Who may gain or loss from global trade conflicts spawned by adjustment pressures in the post crisis world is much debated. In a US-China trade conflict, Europe and Japan would seem gainers from preferential access to US and Chinese markets. The loss of markets would hurt the US, but moving closer to an optimal tariff could be the source of terms of trade gains. And the ease of substitution across trading partners practices would determine costs for China.
Results from the conventional model suggest that retaliation between the two countries can be welfare improving for US as it substitutes expenditures into own goods and improve its terms of trade with non retaliatory regions, while China and non retaliatory regions maybe adversely affected. Results in the endogenous trade surplus model from the central case model specification ,however, suggest that both the US and the EU (the deficit regions) have welfare losses in most cases, while the surplus region, China, and the ROW have welfare gains. In both models, when the bilateral tariff rates are very high, gains accrue to the EU and Japan from trade diversion if the substitutions elasticities of imports are high. Costs will are borne by the US and China in lost exports, lowered terms of trade and adjustment costs at home.
ER -
TY - JOUR
AU - Chen,Hejing
AU - Whalley,John
TI - The WTO Government Procurement Agreement and Its Impacts on Trade
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17365
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17365
L1 - http://www.nber.org/papers/w17365.pdf
N1 - Author contact info:
Hejing Chen
Department of International Economics and Business
School of Economics
Xiamen University
361005 Fujian Province
P.R.China
E-Mail: hjchen.xmu@gmail.com
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB - This paper assesses the impacts of the WTO Government Procurement Agreement (GPA) on trade in both goods and services among members using a gravity model applied to a panel dataset covering 20 OECD countries over the period 1996-2008 for trade in goods and 1999-2008 for trade in services. The agreement dates from 1996 and covers 41 (mainly OECD) countries (/areas). China is now negotiating possible membership. Little has been written on the GPA which is a plurilateral agreement covering both goods and services. It mutually extends commitments only to signatories, but has commitments going beyond those in the earlier GATT procurement code. Government service markets are large, and trade in these also has spillover effects on trade in services and goods.
Results suggest that GPA membership has a positive impact on trade in both goods and services between parties as well as on outward foreign affiliate service sales. The number of GPA parties has a small marginal negative effect on trade in goods. Service exports also increase slightly with more parties participating in the GPA. The growth of government procurement contracts above the threshold under the GPA also fosters service imports, exports and outward foreign affiliate sales.
ER -
TY - JOUR
AU - Bayer,Patrick
AU - McMillan,Robert
TI - Tiebout Sorting and Neighborhood Stratification
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17364
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17364
L1 - http://www.nber.org/papers/w17364.pdf
N1 - Author contact info:
Patrick Bayer
Department of Economics
Duke University
213 Social Sciences
Durham, NC 27708
Tel: 919/660-1832
E-Mail: patrick.bayer@duke.edu
Robert McMillan
University of Toronto
Department of Economics
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/978-4190
Fax: 416/978-6713
E-Mail: mcmillan@chass.utoronto.ca
AB - Tiebout’s classic 1956 paper has strong implications regarding stratification across and within jurisdictions, predicting in the simplest instance a hierarchy of internally homogeneous communities ordered by income. Typically, urban areas are less than fully stratified, and the question arises how much departures from standard Tiebout assumptions contribute to observed within-neighborhood mixing. This paper quantifies the separate effects on neighborhood stratification of employment geography (via costly commuting) and preferences for housing attributes. It does so using an equilibrium sorting model, estimated with rich Census micro-data. Simulations based on the model using credible preference estimates show that counterfactual reductions in commuting costs lead to marked increases in racial and education segregation and, to a lesser degree, increases in income segregation, given that households now find it easier to locate in neighborhoods with like households. While turning off preferences for housing characteristics increases racial segregation, especially for blacks, doing so reduces income segregation, indicating that heterogeneity in the housing stock serves to stratify households based on ability-to-pay. Further, we show that differences in housing also help accentuate differences in the consumption of local amenities.
ER -
TY - JOUR
AU - Qureshi,Mahvash S.
AU - Ostry,Jonathan D.
AU - Ghosh,Atish R.
AU - Chamon,Marcos
TI - Managing Capital Inflows: The Role of Capital Controls and Prudential Policies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17363
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17363
L1 - http://www.nber.org/papers/w17363.pdf
N1 - Author contact info:
Mahvash S. Qureshi
Research Department
International Monetary Fund
HQ1-09-612
700 19th Street, N.W.
Washington DC, 20431
E-Mail: mqureshi@imf.org
Jonathan D. Ostry
Research Department
International Monetary Fund
HQ1-10-700
700 19th Street, N.W.
Washington DC, 20431
E-Mail: jostry@imf.org
Atish R. Ghosh
Research Department
International Monetary Fund
HQ1-09-612
700 19th Street, N.W.
Washington DC, 20431
E-Mail: aghosh@imf.org
Marcos Chamon
Research Department
International Monetary Fund
HQ1-09-612
700 19th Street, N.W.
Washington DC, 20431
E-Mail: MCHAMON@imf.org
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - We examine whether macroprudential policies and capital controls can contribute to enhancing financial stability in the face of large capital inflows. We construct new indices of foreign currency (FX)-related prudential measures, domestic prudential measures, and financial-sector capital controls for 51 emerging market economies over the period 1995–2008. Our results indicate that both capital controls and FX-related prudential measures are associated with a lower proportion of FX lending in total domestic bank credit and a lower proportion of portfolio debt in total external liabilities. Other prudential policies appear to help restrain the intensity of aggregate credit booms. Experience from the global financial crisis suggests that prudential and capital control policies in place during the boom seem to have enhanced economic resilience during the bust.
ER -
TY - JOUR
AU - Dominguez,Kathryn M.E.
AU - Hashimoto,Yuko
AU - Ito,Takatoshi
TI - International Reserves and the Global Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17362
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17362
L1 - http://www.nber.org/papers/w17362.pdf
N1 - Author contact info:
Kathryn M.E. Dominguez
University of Michigan
Department of Economics and Ford School
Weill Hall
735 South State Street
Ann Arbor, MI 48109
Tel: 734-764-9498
Fax: 734-763-9181
E-Mail: kathrynd@umich.edu
Yuko Hashimoto
Statistics Department
International Monetary Fund
700 19th Street, NW
Washington D.C., 20431
E-Mail: yhashimoto@imf.org
Takatoshi Ito
Graduate School of Economics
University of Tokyo
7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033
JAPAN
Tel: 81-3-5841-5608
Fax: 81-3-5841-5521
E-Mail: tito@e.u-tokyo.ac.jp
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - This study examines whether pre-crisis international reserve accumulations, as well as exchange rate and reserve policy decisions made during the global financial crisis, can help to explain cross-country differences in post-crisis economic performance. Our approach focuses not only on the total stock of official reserves held by countries, but also on the decisions by governments to purchase or sell reserve assets during the crisis period. We introduce new data made available through the IMF Special Data Dissemination Standard (SDDS) Reserve Template, which allow us to distinguish interest income and valuation changes in the stock of official reserves from the actively managed component of reserves. We use this novel data to gauge how (and whether) reserve accumulation policies influenced the economic and financial performance of countries during and after the global crisis. Our findings support the view that higher reserve accumulations prior to the crisis are associated with higher post-crisis GDP growth.
ER -
TY - JOUR
AU - Barkbu,Bergljot
AU - Eichengreen,Barry
AU - Mody,Ashoka
TI - International Financial Crises and the Multilateral Response: What the Historical Record Shows
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17361
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17361
L1 - http://www.nber.org/papers/w17361.pdf
N1 - Author contact info:
Bergljot Barkbu
European Department
International Monetary Fund
700 19th Street, NW
Washington DC 20431
E-Mail: bbarkbu@imf.org
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu
Ashoka Mody
Research Department
International Monetary Fund
700 19th Street, NW
Washington DC 20431
E-Mail: amody@imf.org
AB - We review the modern history of financial crises, providing a context for analyses of the world’s recent bout of financial instability. Along with indicators of economic performance in the subject countries, we present a comprehensive description of multilateral rescue efforts spanning the last 30 years. We show that while emergency lending has grown, reliance on debt restructuring has declined. This leads us to ask what can be done to rebalance the management of debt problems toward a better mix of emergency lending and private sector burden sharing. Building on the literature on collective action clauses, we explore the idea of sovereign cocos, contingent debt securities that automatically reduce payment obligations in the event of debt-sustainability problems.
ER -
TY - JOUR
AU - Claessens,Stijn
AU - Tong,Hui
AU - Wei,Shang-Jin
TI - From the Financial Crisis to the Real Economy:
Using Firm-level Data to Identify Transmission Channels
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17360
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17360
L1 - http://www.nber.org/papers/w17360.pdf
N1 - Author contact info:
Stijn Claessens
Research Department
IMF Washington DC
700 19th Street N.W.
Washington, DC 20431
E-Mail: SClaessens@imf.org
Hui Tong
Research Department
IMF Washington DC
700 19th Street N.W.
Washington, DC 20431
E-Mail: htong@imf.org
Shang-Jin Wei
Graduate School of Business
Columbia University
Uris Hall 619
3022 Broadway
New York, NY 10027-6902
Tel: 212/854-9139
E-Mail: shangjin.wei@columbia.edu
AB - Using accounting data for 7722 non-financial firms in 42 countries, we examine how the 2007-2009 crisis affected firm performance and how various linkages propagated shocks across borders. We isolate and compare effects from changes in external financing conditions, domestic demand, and international trade on firms’ profits, sales and investment using both sectoral benchmarks and firm-specific sensitivities estimated prior to the crisis. We find that the crisis had a bigger negative impact on firms with greater sensitivity to demand and trade, particularly in countries more open to trade. Interestingly, financial openness appears to have made limited difference.
ER -
TY - JOUR
AU - Rose,Andrew K.
AU - Spiegel,Mark M.
TI - Dollar Illiquidity and Central Bank Swap Arrangements During the Global Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17359
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17359
L1 - http://www.nber.org/papers/w17359.pdf
N1 - Author contact info:
Andrew K. Rose
Haas School of Business Administration
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-6609
Fax: 510/642-4700
E-Mail: arose@haas.berkeley.edu
Mark M. Spiegel
Federal Reserve Bank of San Francisco
101 Market Street
San Francisco, CA 94105
E-Mail: mark.spiegel@sf.frb.org
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - While the global financial crisis was centered in the United States, it led to a surprising appreciation in the dollar, suggesting global dollar illiquidity. In response, the Federal Reserve partnered with other central banks to inject dollars into the international financial system. Empirical studies of the success of these efforts have yielded mixed results, in part because their timing is likely to be endogenous. In this paper, we examine the cross-sectional impact of these interventions. Theory consistent with dollar appreciation in the crisis suggests that their impact should be greater for countries that have greater exposure to the United States through trade and financial channels, less transparent holdings of dollar assets, and greater illiquidity difficulties. We examine these predictions for observed cross-sectional changes in CDS spreads, using a new proxy for innovations in perceived changes in sovereign risk based upon Google-search data. We find robust evidence that auctions of dollar assets by foreign central banks disproportionately benefited countries that were more exposed to the United States through either trade linkages or asset exposure. We obtain weaker results for differences in asset transparency or illiquidity. However, several of the important announcements concerning the international swap programs disproportionately benefited countries exhibiting greater asset opaqueness.
ER -
TY - JOUR
AU - Raddatz,Claudio
AU - Schmukler,Sergio L.
TI - On the International Transmission of Shocks: Micro-Evidence from Mutual Fund Portfolios
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17358
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17358
L1 - http://www.nber.org/papers/w17358.pdf
N1 - Author contact info:
Claudio Raddatz
Research Economist
World Bank, MSN3-301
1818 H Street, N.W.
Washington, DC 20433
Tel: 202/458-2145
E-Mail: craddatz@bcentral.cl
Sergio Schmukler
The World Bank
MSN MC3-301
1818 H Street, N.W.
Washington, DC 20433
Tel: 202-458-4167
Fax: 202-522-3518
E-Mail: Sschmukler@worldbank.org
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - This paper uses micro-level data on mutual funds from different financial centers investing in equity and bonds to study how investors and managers behave and transmit shocks across countries. The paper finds that the volatility of mutual fund investments is driven quantitatively by both the underlying investors and fund managers through (i) injections/redemptions into each fund and (ii) managerial changes in country weights and cash. Both investors and managers respond to country returns and crises and adjust their investments substantially, for example, generating large reallocations during the global crisis. Their behavior tends to be pro-cyclical, reducing their exposure to countries during bad times and increasing it when conditions improve. Managers actively change country weights over time, although there is significant short-run pass-through from returns to these weights. Consequently, capital flows from mutual funds do not seem to have a stabilizing role and expose countries in their portfolios to foreign shocks.
ER -
TY - JOUR
AU - Fratzscher,Marcel
TI - Capital Flows, Push versus Pull Factors and the Global Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17357
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17357
L1 - http://www.nber.org/papers/w17357.pdf
N1 - Author contact info:
Marcel Fratzscher
European Central Bank
Kaiserstrasse 29
D-60311 Frankfurt/Main GERMANY
Tel: +49 - 69 1344 6871
E-Mail: marcel.fratzscher@ecb.int
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - The causes of the 2008 collapse and subsequent surge in global capital flows remain an open and highly controversial issue. Employing a factor model coupled with a dataset of high-frequency portfolio capital flows to 50 economies, the paper finds that common shocks – key crisis events as well as changes to global liquidity and risk – have exerted a large effect on capital flows both in the crisis and in the recovery. However, these effects have been highly heterogeneous across countries, with a large part of this heterogeneity being explained by differences in the quality of domestic institutions, country risk and the strength of domestic macroeconomic fundamentals. Comparing and quantifying these effects shows that common factors (“push” factors) were overall the main drivers of capital flows during the crisis, while country-specific determinants (“pull” factors) have been dominant in accounting for the dynamics of global capital flows in 2009 and 2010, in particular for emerging markets.
ER -
TY - JOUR
AU - Hale,Galina
TI - Bank Relationships, Business Cycles, and Financial Crises
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17356
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17356
L1 - http://www.nber.org/papers/w17356.pdf
N1 - Author contact info:
Galina Hale
Economic Research
Federal Reserve Bank of San Francisco
101 Market St., MS 1130
San Francisco, CA 94105
Tel: 415-974-3131
Fax: 415-974-2168
E-Mail: Galina.B.Hale@sf.frb.org
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - The importance of information asymmetries in the capital markets is commonly accepted as one of the main reasons for home bias in investment. We posit that effects of such asymmetries may be reduced through relationships between banks established through bank-to-bank lending and provide evidence to support this claim. To analyze dynamics of formation of such relationships during 1980-2009 time period, we construct a global banking network of 7938 banking institutions from 141 countries. We find that recessions and banking crises tend to have negative effects on the formation of new connections and that these effects are not the same for all countries or all banks. We also find that the global financial crisis of 2008-09 had a large negative impact on the formation of new relationships in the global banking network, especially by large banks that have been previously immune to effects of banking crises and recessions.
ER -
TY - JOUR
AU - Cetorelli,Nicola
AU - Goldberg,Linda S.
TI - Liquidity management of U.S. global banks: Internal capital markets in the great recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17355
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17355
L1 - http://www.nber.org/papers/w17355.pdf
N1 - Author contact info:
Nicola Cetorelli
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 212 720 5071
Fax: 212 720 8363
E-Mail: nicola.cetorelli@ny.frb.org
Linda S. Goldberg
Federal Reserve Bank-New York
33 Liberty Street
New York, NY 10045
Tel: 212/720-2836
Fax: 212/720-6831
E-Mail: linda.goldberg@ny.frb.org
AB - The recent crisis highlighted the importance of globally active banks in linking markets. One channel for this linkage is through how these banks manage liquidity across their entire banking organization. We document that funds regularly flow between parent banks and their affiliates in diverse foreign markets. We use the Great Recession as an opportunity to identify the balance sheet shocks to parent banks in the United States, and then explore which foreign affiliate features are associated with those businesses being protected, for example their status as important locations in sourcing funding or as destinations for foreign investment activity. We show that distance from the parent organization lays a significant role in this allocation, where distance is bank-affiliate specific and depends on the ex ante relative importance of such locations as local funding pools and in their overall foreign investment strategies. These flows are a form of global interdependence previously unexplored in the literature on international shock transmission.
ER -
TY - JOUR
AU - Kalemli-Ozcan,Sebnem
AU - Sorensen,Bent
AU - Yesiltas,Sevcan
TI - Leverage Across Firms, Banks, and Countries
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17354
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17354
L1 - http://www.nber.org/papers/w17354.pdf
N1 - Author contact info:
Sebnem Kalemli-Ozcan
John F. Kennedy School of Government
Harvard University
79 JFK Street, Mailbox 28
Cambridge, MA 02138
E-Mail: sebnem.kalemli-ozcan@mail.uh.edu
Bent Sorensen
Department of Economics
University of Houston
204 McElhinney Hall
Houston, TX 77204
Tel: 713-743-3841
Fax: 713-743-3798
E-Mail: bent.sorensen@mail.uh.edu
Sevcan Yesiltas
Johns Hopkins University
Department of Economics
3400 N. Charles Street
440 Mergenthaler Hall
Baltimore, MD 21218
Tel: 410-516-7601
Fax: 410-516-7600
E-Mail: syesilt1@jhu.edu
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - We present new stylized facts on bank and firm leverage for 2000-2009 using extensive internationally comparable micro level data from several countries. The main result is that there was very little buildup in leverage for the average non-financial firm and commercial bank before the crisis, but the picture was quite different for large commercial banks in the United States and for investment banks worldwide. We document the following patterns: a) there was an increase in leverage ratios of investment banks and financial firms during the early 2000s; b) there was no visible increase for commercial banks and non-financial firms; c) off balance-sheet items constitute a big fraction of assets, especially for large commercial banks in the United States; d) the leverage ratio is procyclical for investment banks and for large commercial banks in the United States; e) banks in emerging markets with tighter bank regulation and stronger investor protection experienced significantly less deleveraging during the crisis. These results show that excessive risk taking before the crisis was not easily detectable because the risk involved the quality rather than the amount of assets.
ER -
TY - JOUR
AU - Gourinchas,Pierre-Olivier
AU - Rey,Hélène
AU - Truempler,Kai
TI - The Financial Crisis and The Geography of Wealth Transfers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17353
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17353
L1 - http://www.nber.org/papers/w17353.pdf
N1 - Author contact info:
Pierre-Olivier Gourinchas
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-0720
Fax: 510/642-6615
E-Mail: pog@econ.berkeley.edu
Helene Rey
London Business School
Regents Park
London NW1 4SA
UNITED KINGDOM
Tel: 44 2070008412
E-Mail: hrey@london.edu
Kai Truempler
Kai Alexander Truempler
Economics Department
London Business School
Regent's Park
London NW1 4SA
United Kingdom
Tel: +44 75 15149509
E-Mail: ktruempler.phd2007@london.edu
AB - This paper studies the geography of wealth transfers during the 2008 global financial crisis. We construct valuation changes on bilateral external positions in equity, direct investment and portfolio debt at the height of the crisis to map who benefited and who lost on their external exposure. We find a very diverse set of fortunes governed by the structure of countries' external portfolios. In particular, we are able to relate the gains and losses on debt portfolios to the country's exposure to ABCP conduits and the extent of dollar shortage.
ER -
TY - JOUR
AU - Lane,Philip R.
AU - Ferretti,Gian Maria Milesi
TI - External Adjustment and the Global Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17352
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17352
L1 - http://www.nber.org/papers/w17352.pdf
N1 - Author contact info:
Philip Lane
The Sutherland Centre
Arts Block
Trinity College Dublin
Dublin 2 IRELAND
E-Mail: plane@tcd.ie
Gian Maria Milesi Ferretti
International Monetary Fund
Western Hemisphere Department, HQ1-10-120
700 19th Street, N.W.
Washington, DC 20431
Tel: 202 623-7441
Fax: 202 589-7441
E-Mail: gmilesiferretti@imf.org
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - The period preceding the global financial crisis was characterized by a substantial widening of current account imbalances across the world. Since the onset of the crisis, these imbalances have contracted to a significant extent. In this paper, we analyze the ongoing process of external adjustment in advanced economies and emerging markets. We find that countries whose pre-crisis current account balances were in excess of what could be explained by standard economic fundamentals have experienced the largest contractions in their external balance. We subsequently examine the contributions of real exchange rates, domestic demand and domestic output to the adjustment process (allowing for differences across exchange rate regimes) and find that external adjustment in deficit countries was achieved primarily through demand compression, rather than expenditure switching. Finally, we show that changes in other investment flows were the main channel of financial account adjustment, with official external assistance and ECB liquidity cushioning the exit of private capital flows for some countries.
ER -
TY - JOUR
AU - Forbes,Kristin J.
AU - Warnock,Francis E.
TI - Capital Flow Waves: Surges, Stops, Flight, and Retrenchment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17351
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17351
L1 - http://www.nber.org/papers/w17351.pdf
N1 - Author contact info:
Kristin Forbes
MIT Sloan School of Management
100 Main Street, E62-416
Cambridge, MA 02142
Tel: 617/253-8996
Fax: 617/258-6855
E-Mail: kjforbes@mit.edu
Francis E. Warnock
Darden Business School
University of Virginia
Charlottesville, VA 22906-6550
Tel: 434/924-6076
Fax: 434/243-8945
E-Mail: warnockf@darden.virginia.edu
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - This paper analyzes waves in international capital flows. We develop a new methodology for identifying episodes of extreme capital flow movements using data that differentiates activity by foreigners and domestics. We identify episodes of “surges” and “stops” (sharp increases and decreases, respectively, of gross inflows) and “flight” and “retrenchment” (sharp increases and decreases, respectively, of gross outflows). Our approach yields fundamentally different results than the previous literature that used measures of net flows. Global factors, especially global risk, are significantly associated with extreme capital flow episodes. Contagion, whether through trade, banking, or geography, is also associated with stop and retrenchment episodes. Domestic macroeconomic characteristics are generally less important, and we find little association between capital controls and the probability of having surges or stops driven by foreign capital flows. The results provide insights for different theoretical approaches explaining crises and capital flow volatility.
ER -
TY - JOUR
AU - Bertaut,Carol
AU - DeMarco,Laurie Pounder
AU - Kamin,Steven B.
AU - Tryon,Ralph W.
TI - ABS Inflows to the United States and the Global Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17350
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17350
L1 - http://www.nber.org/papers/w17350.pdf
N1 - Author contact info:
Carol Bertaut
Board of Governors
20th Street and Constitution Avenue, NW
Washington, DC 20551
E-Mail: bertautc@frb.gov
Laurie Pounder DeMarco
Board of Governors
20th Street and Constitution Avenue, NW
Washington, DC 20551
E-Mail: laurie.p.demarco@frb.gov
Steven B. Kamin
Board of Governors
20th Street and Constitution Avenue, NW
Washington, DC 20551
Tel: 202/452-3339
E-Mail: steven.kamin@frb.gov
Ralph W. Tryon
Board of Governors
20th Street and Constitution Avenue, NW
Washington, DC 20551
E-Mail: ralph.tryon@frb.gov
M3 - presented at "Global Financial Crisis Conference", June 3-4, 2011
AB - The “global saving glut” (GSG) hypothesis argues that the surge in capital inflows from emerging market economies to the United States led to significant declines in long-term interest rates in the United States and other industrial economies. In turn, these lower interest rates, when combined with both innovations and deficiencies of the U.S. credit market, are believed to have contributed to the U.S. housing bubble and to the buildup in financial vulnerabilities that led to the financial crisis. Because the GSG countries for the most part restricted their U.S. purchases to Treasuries and Agency debt, their provision of savings to ultimately risky subprime mortgage borrowers was necessarily indirect, pushing down yields on safe assets and increasing the appetite for alternative investments on the part of other investors. We present a more complete picture of how capital flows contributed to the crisis, drawing attention to the sizable inflows from European investors into U.S. private-label asset-backed securities (ABS), including mortgage-backed securities and other structured investment products. By adding to domestic demand for private-label ABS, substantial foreign acquisitions of these securities contributed to the decline in their spreads over Treasury yields. Through a combination of empirical estimation and model simulation, we verify that both GSG inflows into Treasuries and Agencies, as well as European acquisitions of ABS, played a role in contributing to downward pressures on U.S. interest rates.
ER -
TY - JOUR
AU - Olivetti,Claudia
AU - Petrongolo,Barbara
TI - Gender Gaps across Countries and Skills: Supply, Demand and the Industry Structure
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17349
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17349
L1 - http://www.nber.org/papers/w17349.pdf
N1 - Author contact info:
Claudia Olivetti
Boston University
Department of Economics
270 Bay State Road
Boston, MA 02215
Tel: 617/613-1228
Fax: 617/353-4449
E-Mail: olivetti@bu.edu
Barbara Petrongolo
Centre for Economic Performance
London School of Economics
Houghton Street
London WC2A 2AE
E-Mail: B.Petrongolo@lse.ac.uk
AB - The gender wage gap varies widely across countries and across skill groups within countries. Interestingly, there is a positive cross-country correlation between the unskilled-to-skilled gender wage gap and the corresponding gap in hours worked. Based on a canonical supply and demand framework, this positive correlation would reveal the presence of net demand forces shaping gender differences in labor market outcomes across skills and countries. We use a simple multi-sector framework to illustrate how differences in labor demand for different inputs can be driven by both within-industry and between-industry factors. The main idea is that, if the service sector is more developed in the US than in continental Europe, and unskilled women tend to be over-represented in this sector, we expect unskilled women to suffer a relatively large wage and/or employment penalty in the latter than in the former. We find that, overall, the between-industry component of labor demand explains more than half of the total variation in labor demand between the US and the majority of countries in our sample, as well as one-third of the correlation between wage and hours gaps. The between-industry component is relatively more important in countries where the relative demand for unskilled females is lowest.
ER -
TY - JOUR
AU - Golosov,Mikhail
AU - Hassler,John
AU - Krusell,Per
AU - Tsyvinski,Aleh
TI - Optimal Taxes on Fossil Fuel in General Equilibrium
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17348
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17348
L1 - http://www.nber.org/papers/w17348.pdf
N1 - Author contact info:
Mikhail Golosov
Department of Economics
Princeton University
111 Fisher Hall
Princeton, NJ 08544
Tel: 609/258-4003
Fax: 609/258-6419
E-Mail: golosov@princeton.edu
John Hassler
Institute for International Economic Studies
Stockholm University
E-Mail: John.Hassler@iies.su.se
Per Krusell
Institute for International Economic Studies
Stockholm University
106 91 STOCKHOLM
SWEDEN
E-Mail: per.krusell@iies.su.se
Aleh Tsyvinski
Department of Economics
Yale University
Box 208268
New Haven, CT 06520-8268
E-Mail: a.tsyvinski@yale.edu
AB - We analyze a dynamic stochastic general-equilibrium (DSGE) model with an externality through climate change from using fossil energy. A central result of our paper is an analytical derivation of a simple formula for the marginal externality damage of emissions. This formula, which holds under quite plausible assumptions, reveals that the damage is proportional to current GDP, with the proportion depending only on three factors: (i) discounting, (ii) the expected damage elasticity (how many percent of the output flow is lost from an extra unit of carbon in the atmosphere), and (iii) the structure of carbon depreciation in the atmosphere. Very importantly, future values of output, consumption, and the atmospheric CO2 concentration, as well as the paths of technology and population, and so on, all disappear from the formula. The optimal tax, using a standard Pigou argument, is then equal to this marginal externality. The simplicity of the formula allows the optimal tax to be easily parameterized and computed. Based on parameter estimates that rely on updated natural-science studies, we find that the optimal tax should be a bit higher than the median, or most well-known, estimates in the literature. We also show how the optimal taxes depend on the expectations and the possible resolution of the uncertainty regarding future damages. Finally, we compute the optimal and market paths for the use of energy and the corresponding climate change.
ER -
TY - JOUR
AU - Ossa,Ralph
TI - Trade Wars and Trade Talks with Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17347
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17347
L1 - http://www.nber.org/papers/w17347.pdf
N1 - Author contact info:
Ralph Ossa
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-8907
E-Mail: ralph.ossa@chicagobooth.edu
AB - What are the optimal tariffs of the US? What tariffs would prevail in a worldwide trade war? How costly would be a breakdown of international trade policy cooperation? And what is the scope for future multilateral trade negotiations? I address these and other questions using a unified framework which nests traditional, new trade, and political economy motives for protection. I find that US optimal tariffs average 60 percent, world trade war tariffs average 58 percent, the welfare losses from a breakdown of international trade policy cooperation average 3.5 percent, and the possible welfare gains from future multi- lateral trade negotiations average 0.3 percent. Optimal tariffs are tariffs which maximize a political economy augmented measure of real income.
ER -
TY - JOUR
AU - Sher,Itai
AU - Fox,Jeremy T.
AU - Kim,Kyoo il
AU - Bajari,Patrick
TI - Partial Identification of Heterogeneity in Preference Orderings Over Discrete Choices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17346
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17346
L1 - http://www.nber.org/papers/w17346.pdf
N1 - Author contact info:
Itai Sher
Department of Economics
University of Minnesota
4-145 Hanson Hall
1925 Fourth Street South
Minneapolis, MN 55455
E-Mail: isher@umn.edu
Jeremy T. Fox
Economics Department
University of Michigan
238 Lorch Hall
611 Tappan Ave
Ann Arbor, MI 48104
Tel: 734-330-2854
Fax: 734-274-2331
E-Mail: jeremyfox@gmail.com
Kyoo il Kim
Department of Economics
University of Minnesota
4-129 Hanson Hall
1925 4th Street South
Minneapolis, MN 55455
Tel: 612-625-6793
E-Mail: kyookim@umn.edu
Patrick Bajari
Amazon.com
701 5th Avenue, Suite 1500
Seattle, WA 98104
Tel: 612/625-8369
Fax: 612/624-0209
E-Mail: bajari@umn.edu
AB - We study a variant of a random utility model that takes a probability distribution over preference relations as its primitive. We do not model products using a space of observed characteristics. The distribution of preferences is only partially identified using cross-sectional data on varying budget sets. Imposing monotonicity in product characteristics does not restore full identification. Using a linear programming approach to partial identification, we show how to obtain bounds on probabilities of any ordering relation. We also do constructively point identify the proportion of consumers who prefer one budget set over one or two others. This result is useful for welfare. Panel data and special regressors are two ways to gain full point identification.
ER -
TY - JOUR
AU - Beshears,John
AU - Choi,James J.
AU - Laibson,David
AU - Madrian,Brigitte C.
AU - Milkman,Katherine L.
TI - The Effect of Providing Peer Information on Retirement Savings Decisions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17345
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17345
L1 - http://www.nber.org/papers/w17345.pdf
N1 - Author contact info:
John Beshears
Stanford Graduate School of Business
655 Knight Way
Stanford, CA 94305-7298
Tel: 650/723-6792
E-Mail: beshears@stanford.edu
James J. Choi
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
E-Mail: james.choi@yale.edu
David Laibson
Department of Economics
Littauer M-12
Harvard University
Cambridge, MA 02138
Tel: 617/496-3402
Fax: 617/495-8570
E-Mail: dlaibson@gmail.com
Brigitte C. Madrian
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-495-8917
Fax: 617-496-5960
E-Mail: Brigitte_Madrian@Harvard.edu
Katherine L. Milkman
University of Pennsylvania
3730 Walnut Street
561 Jon M. Huntsman Hall
Philadelphia, PA19104
E-Mail: kmilkman@wharton.upenn.edu
AB - We measure how receiving information about coworkers’ savings behavior affects recipients’ savings choices. Low-saving employees were sent a simplified 401(k) plan enrollment or contribution increase form. A randomized subset of forms included information on the (high) fraction of coworkers either participating in or contributing at least 6% of pay to the plan. We find no significant evidence that this peer information altered the savings decisions of recipients who had previously opted out of an automatic 401(k) enrollment program. Peer information decreased the savings of (unionized) recipients who were not eligible for automatic enrollment. Our results highlight the limitations of peer information interventions.
ER -
TY - JOUR
AU - Werning,Ivan
TI - Managing a Liquidity Trap: Monetary and Fiscal Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17344
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17344
L1 - http://www.nber.org/papers/w17344.pdf
N1 - Author contact info:
Ivan Werning
Department of Economics
MIT
50 Memorial Drive, E51-251a
Cambridge, MA 02142-1347
Tel: 617/452-3662
Fax: 617/253-1330
E-Mail: iwerning@mit.edu
AB - I study monetary and fiscal policy in liquidity trap scenarios, where the zero bound on the nominal interest rate is binding. I work with a continuous-time version of the standard New Keynesian model. Without commitment, the economy suffers from deflation and depressed output. I show that, surprisingly, both are exacerbated with greater price flexibility. I examine monetary and fiscal policies that maximize utility for the agent in the model and refer to these as optimal throughout the paper. I find that the optimal interest rate is set to zero past the liquidity trap and jumps discretely up upon exit. Inflation may be positive throughout, so the absence of deflation is not evidence against a liquidity trap. Output, on the other hand, always starts below its efficient level and rises above it. I then study fiscal policy and show that, regardless of parameters that govern the value of "fiscal multipliers" during normal or liquidity trap times, at the start of a liquidity trap optimal spending is above its natural level. However, it declines over time and goes below its natural level. I propose a decomposition of spending according to "opportunistic" and "stimulus" motives. The former is defined as the level of government purchases that is optimal from a static, cost-benefit standpoint, taking into account that, due to slack resources, shadow costs may be lower during a slump; the latter measures deviations from the former. I show that stimulus spending may be zero throughout, or switch signs, depending on parameters. Finally, I consider the hybrid where monetary policy is discretionary, but fiscal policy has commitment. In this case, stimulus spending is typically positive and increasing throughout the trap.
ER -
TY - JOUR
AU - Bailey,Martha J.
TI - Reexamining the Impact of Family Planning Programs on U.S. Fertility: Evidence from the War on Poverty and the Early Years of Title X
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17343
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17343
L1 - http://www.nber.org/papers/w17343.pdf
N1 - Author contact info:
Martha J. Bailey
University of Michigan
Department of Economics
611 Tappan Street
207 Lorch Hall
Ann Arbor, MI 48109-1220
Tel: 734/647-6874
Fax: 734/764-2769
E-Mail: baileymj@umich.edu
AB - Almost 50 years after domestic U.S. family planning programs began, their effects on childbearing remain controversial. Using the county-level roll-out of these programs from 1964 to 1973, this paper reevaluates their shorter- and longer-term effects on U.S. fertility rates. I find that the introduction of family planning is associated with significant and persistent reductions in fertility driven both by falling completed childbearing and childbearing delay. Although federally-funded family planning accounted for a small portion of the post-baby boom U.S. fertility decline, the estimates imply that they reduced childbearing among poor women by 21 to 29 percent.
ER -
TY - JOUR
AU - Andreoni,James
AU - Sprenger,Charles
TI - Uncertainty Equivalents: Testing the Limits of the Independence Axiom
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17342
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17342
L1 - http://www.nber.org/papers/w17342.pdf
N1 - Author contact info:
James Andreoni
Department of Economics
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-3832
Fax: 858/534-7040
E-Mail: andreoni@ucsd.edu
Charles Sprenger
Department of Economics
Stanford University
Stanford, CA 94305
E-Mail: c.sprenger@gmail.com
AB - There is convincing experimental evidence that Expected Utility fails, but when does it fail, how severely, and for what fraction of subjects? We explore these questions using a novel measure we call the uncertainty equivalent. We find Expected Utility performs well away from certainty, but fails near certainty for about 40% of subjects. Comparing non-Expected Utility theories, we strongly reject Prospect Theory probability weighting, we support disappointment aversion if amended to allow violations of stochastic dominance, but find the u-v model of a direct preference for certainty the most parsimonious approach.
ER -
TY - JOUR
AU - Davis,Lucas W.
AU - Wolfram,Catherine
TI - Deregulation, Consolidation, and Efficiency: Evidence from U.S. Nuclear Power
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17341
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17341
L1 - http://www.nber.org/papers/w17341.pdf
N1 - Author contact info:
Lucas W. Davis
Haas School of Business
University of California
Berkeley, CA 94720-1900
E-Mail: ldavis@haas.berkeley.edu
Catherine Wolfram
Haas School of Business
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-2588
Fax: 510/643-1420
E-Mail: wolfram@haas.berkeley.edu
AB - For the first four decades of its existence the U.S. nuclear power industry was run by regulated utilities, with most companies owning only one or two reactors. Beginning in the late 1990s electricity markets in many states were deregulated and almost half of the nation’s 103 reactors were sold to independent power producers selling power in competitive wholesale markets. Deregulation has been accompanied by substantial market consolidation and today the three largest companies control more than one-third of all U.S. nuclear capacity. We find that deregulation and consolidation are associated with a 10 percent increase in operating efficiency, achieved primarily by reducing the frequency and duration of reactor outages. At average wholesale prices the value of this increased efficiency is approximately $2.5 billion annually and implies an annual decrease of almost 40 million metric tons of carbon dioxide emissions.
ER -
TY - JOUR
AU - Lee,Soohyung
AU - Niederle,Muriel
AU - Kim,Hye-Rim
AU - Kim,Woo-Keum
TI - Propose with a Rose? Signaling in Internet Dating Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17340
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17340
L1 - http://www.nber.org/papers/w17340.pdf
N1 - Author contact info:
Soohyung Lee
Department of Economics
University of Maryland, College Park
E-Mail: lees@econ.umd.edu
Muriel Niederle
Department of Economics
579 Serra Mall
Stanford University
Stanford, CA 94305-6072
Tel: 650/723-7359
Fax: 650/725-5702
E-Mail: niederle@stanford.edu
Hye-Rim Kim
Korea Marriage Culture Institute
E-Mail: soohlee@gmail.com
Woo-Keum Kim
Korea Marriage Culture Institute
E-Mail: muriel.niederle@gmail.com
AB - The large literature on costly signaling and the somewhat scant literature on preference signaling had varying success in showing the effectiveness of signals. We use a field experiment to show that even when everyone can send a signal, signals are free and the only costs are opportunity costs, sending a signal increases the chances of success. In an online dating experiment, participants can attach “virtual roses” to a proposal to signal special interest in another participant. We find that attaching a rose to an offer substantially increases the chance of acceptance. This effect is driven by an increase in the acceptance rate when the offer is made to a participant who is less desirable than the proposer. Furthermore, participants endowed with more roses have more of their offers accepted than their counterparts.
ER -
TY - JOUR
AU - Rooij,Maarten van
AU - Lusardi,Annamaria
AU - Alessie,Rob J.
TI - Financial Literacy, Retirement Planning, and Household Wealth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17339
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17339
L1 - http://www.nber.org/papers/w17339.pdf
N1 - Author contact info:
Maarten van Rooij
Dutch Central Bank
P. O. Box 98
1000 AB Amsterdam
The Netherlands
E-Mail: M.C.J.van.Rooij@DNB.NL
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
Rob J. Alessie
University of Groningen
Department of Economics
P.O. Box 800
9700 AV Groningen
Tel: +31-50-3637240
E-Mail: r.j.m.alessie@rug.nl
AB - There is ample empirical evidence documenting widespread financial illiteracy and limited pension knowledge. At the same time, the distribution of wealth is widely dispersed and many workers arrive on the verge of retirement with few or no personal assets. In this paper, we investigate the relationship between financial literacy and household net worth, relying on comprehensive measures of financial knowledge designed for a special module of the Dutch Central Bank Household Survey (DHS). Our findings provide evidence of a strong positive association between financial literacy and net worth, even after controlling for many determinants of wealth. Moreover, we discuss two channels through which financial literacy might facilitate wealth accumulation. First, financial knowledge increases the likelihood of investing in the stock market, allowing individuals to benefit from the equity premium. Second, financial literacy is positively related to retirement planning, and the development of a savings plan has been shown to boost wealth. Overall, financial literacy, both directly and indirectly, is found to have a strong link to household wealth.
ER -
TY - JOUR
AU - Kaplan,Greg
AU - Violante,Giovanni L.
TI - A Model of the Consumption Response to Fiscal Stimulus Payments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17338
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17338
L1 - http://www.nber.org/papers/w17338.pdf
N1 - Author contact info:
Greg Kaplan
Department of Economics
University of Pennsylvania
160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-1875
E-Mail: gkaplan@sas.upenn.edu
Giovanni L. Violante
Department of Economics
New York University
19 W. 4th Street
New York, NY 10012-1119
Tel: 212/992-9771
Fax: 212/995-3932
E-Mail: glv2@nyu.edu
AB - A wide body of empirical evidence, based on randomized experiments, finds that 20-40 percent of fiscal stimulus payments (e.g. tax rebates) are spent on nondurable household consumption in the quarter that they are received. We develop a structural economic model to interpret this evidence. Our model integrates the classical Baumol-Tobin model of money demand into the workhorse incomplete-markets life-cycle economy. In this framework, households can hold two assets: a low-return liquid asset (e.g., cash, checking account) and a high-return illiquid asset (e.g., housing, retirement account) that carries a transaction cost. The optimal life-cycle pattern of wealth accumulation implies that many households are "wealthy hand-to-mouth" : they hold little or no liquid wealth despite owning sizeable quantities of illiquid assets. They therefore display large propensities to consume out of additional income. We document the existence of such households in data from the Survey of Consumer Finances. A version of the model parameterized to the 2001 tax rebate episode is able to generate consumption responses to fiscal stimulus payments that are in line with the data.
ER -
TY - JOUR
AU - Gentile,Elisabetta
AU - Imberman,Scott A.
TI - Dressed for Success? The Effect of School Uniforms on Student Achievement and Behavior
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17337
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17337
L1 - http://www.nber.org/papers/w17337.pdf
N1 - Author contact info:
Elisabetta Gentile
204 McElhinney Hall
Houston, TX 77204-5019
E-Mail: egentile@mail.uh.edu
Scott A. Imberman
Department of Economics
University of Houston
204 McElhinney Hall
Houston, TX 77204
Tel: 713/743-3839
Fax: 713/743-3798
E-Mail: simberman@uh.edu
AB - Uniform use in public schools is rising, but we know little about how they affect students. Using a unique dataset from a large urban school district in the southwest United States, we assess how uniforms affect behavior, achievement and other outcomes. Each school in the district determines adoption independently, providing variation over schools and time. By including student and school fixed-effects we find evidence that uniform adoption improves attendance in secondary grades, while in elementary schools they generate large increases in teacher retention.
ER -
TY - JOUR
AU - Foley,C. Fritz
AU - Kerr,William R.
TI - Ethnic Innovation and U.S. Multinational Firm Activity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17336
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17336
L1 - http://www.nber.org/papers/w17336.pdf
N1 - Author contact info:
C. Fritz Foley
Graduate School of Business Administration
Harvard University
Soldiers Field
Boston, MA 02163
Tel: 617/495-6375
Fax: 617/496-8443
E-Mail: ffoley@hbs.edu
William R. Kerr
Harvard Business School
Rock Center 212
Soldiers Field
Boston, MA 02163
Tel: 617/496-7021
E-Mail: wkerr@hbs.edu
AB - This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors of a particular ethnicity are associated with increases in the share of that firm's affiliate activity in their native countries. Ethnic innovators also appear to facilitate the disintegration of innovative activity across borders and to allow U.S. multinationals to form new affiliates abroad without the support of local joint venture partners. Thus, this paper points out that immigration can enhance the competitiveness of multinational firms.
ER -
TY - JOUR
AU - Giovanni,Julian di
AU - Levchenko,Andrei A.
TI - Country Size, International Trade, and Aggregate Fluctuations in Granular Economies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17335
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17335
L1 - http://www.nber.org/papers/w17335.pdf
N1 - Author contact info:
Julian di Giovanni
Research Department
International Monetary Fund
700 19th Street NW
Washington, DC 20431
Tel: 202/623-7558
Fax: 202/589-7558
E-Mail: julian.digiovanni@utoronto.ca
Andrei Levchenko
Department of Economics
University of Michigan
611 Tappan Street
Ann Arbor, MI 48109
Tel: 734/764-3296
E-Mail: alev@umich.edu
AB - This paper proposes a new mechanism by which country size and international trade affect macroeconomic volatility. We study a multi-country, multi-sector model with heterogeneous firms that are subject to idiosyncratic firm-specific shocks. When the distribution of firm sizes follows a power law with an exponent close to -1, the idiosyncratic shocks to large firms have an impact on aggregate output volatility. We explore the quantitative properties of the model calibrated to data for the 50 largest economies in the world. Smaller countries have fewer firms, and thus higher volatility. The model performs well in matching this pattern both qualitatively and quantitatively: the rate at which macroeconomic volatility decreases in country size in the model is very close to what is found in the data. Opening to trade increases the importance of large firms to the economy, thus raising macroeconomic volatility. Our simulation exercise shows that the contribution of trade to aggregate fluctuations depends strongly on country size: in the largest economies in the world, such as the U.S. or Japan, international trade increases volatility by only 1.5-3.5%. By contrast, trade increases aggregate volatility by some 15-20% in a small open economy, such as Denmark or Romania.
ER -
TY - JOUR
AU - Wachter,Jessica A.
AU - Warusawitharana,Missaka
TI - What is the Chance that the Equity Premium Varies over Time? Evidence from Predictive Regressions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17334
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17334
L1 - http://www.nber.org/papers/w17334.pdf
N1 - Author contact info:
Jessica Wachter
Department of Finance
2300 SH-DH
The Wharton School
University of Pennsylvania
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-7634
Fax: 215/898-6200
E-Mail: jwachter@wharton.upenn.edu
Missaka Warusawitharana
Department of Research and Statistics
Board of Governors of the Federal Reserve
Mail Stop 97
20th and Constitution Ave
Washington D.C., 20551
E-Mail: Missaka.N.Warusawitharana@frb.gov
AB - We examine the evidence on excess stock return predictability in a Bayesian setting in which the investor faces uncertainty about both the existence and strength of predictability. When we apply our methods to the dividend-price ratio, we find that even investors who are quite skeptical about the existence of predictability sharply modify their views in favor of predictability when confronted by the historical time series of returns and predictor variables. Correctly taking into account the stochastic properties of the regressor has a dramatic impact on inference, particularly over the 2000-2005 period.
ER -
TY - JOUR
AU - Baker,Malcolm
AU - Wurgler,Jeffrey
TI - Behavioral Corporate Finance: An Updated Survey
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17333
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17333
L1 - http://www.nber.org/papers/w17333.pdf
N1 - Author contact info:
Malcolm Baker
Baker Library 261
Harvard Business School
Soldiers Field
Boston, MA 02163
Tel: 617/495-6566
Fax: 617/496-5271
E-Mail: mbaker@hbs.edu
Jeffrey Wurgler
Stern School of Business, Suite 9-190
New York University
44 West 4th Street
New York, NY 10012
Tel: 212/998-0367
Fax: 212/995-4233
E-Mail: jwurgler@stern.nyu.edu
AB - We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing. The managerial biases approach studies the direct effects of managers’ biases and nonstandard preferences on their decisions. We review relevant psychology, economic theory and predictions, empirical challenges, empirical evidence, new directions such as behavioral signaling, and open questions.
ER -
TY - JOUR
AU - Angrist,Joshua D.
AU - Pathak,Parag A.
AU - Walters,Christopher R.
TI - Explaining Charter School Effectiveness
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17332
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17332
L1 - http://www.nber.org/papers/w17332.pdf
N1 - Author contact info:
Joshua Angrist
Department of Economics
MIT, E52-353
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8909
Fax: 617/253-1330
E-Mail: angrist@mit.edu
Parag Pathak
MIT Department of Economics
50 Memorial Drive
E52-391C
Cambridge, MA 02142
Tel: 617/253-7458
E-Mail: ppathak@mit.edu
Christopher R. Walters
MIT Economics
50 Memorial Drive
Cambridge, MA 02142
E-Mail: crwalt@mit.edu
AB - Estimates using admissions lotteries suggest that urban charter schools boost student achievement, while charter schools in other settings do not. We explore student-level and school-level explanations for these differences using a large sample of Massachusetts charter schools. Our results show that urban charter schools boost achievement well beyond ambient non-charter levels (that is, the average achievement level for urban non-charter students), and beyond non-urban achievement in math. Student demographics explain some of these gains since urban charters are most effective for non-whites and low-baseline achievers. At the same time, non-urban charter schools are uniformly ineffective. Our estimates also reveal important school-level heterogeneity in the urban charter sample. A non-lottery analysis suggests that urban schools with binding, well-documented admissions lotteries generate larger score gains than under-subscribed urban charter schools with poor lottery records. We link the magnitude of charter impacts to distinctive pedagogical features of urban charters such as the length of the school day and school philosophy. The relative effectiveness of urban lottery-sample charters is accounted for by over-subscribed urban schools' embrace of the No Excuses approach to education.
ER -
TY - JOUR
AU - Geromichalos,Athanasios
AU - Simonovska,Ina
TI - Asset Liquidity and International Portfolio Choice
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17331
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17331
L1 - http://www.nber.org/papers/w17331.pdf
N1 - Author contact info:
Athanasios Geromichalos
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
E-Mail: ageromich@ucdavis.edu
Ina Simonovska
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 612/703-2265
Fax: 530/752-9382
E-Mail: inasimonovska@ucdavis.edu
AB - We study optimal portfolio choice in a two-country model where assets represent claims on future consumption and facilitate trade in markets with imperfect credit. Assuming that foreign assets trade at a cost, agents hold relatively more domestic assets. Consequently, agents have larger claims to domestic over foreign consumption. Moreover, foreign assets turn over faster than domestic assets because the former have desirable liquidity properties, but represent inferior saving tools. Our mechanism offers an answer to a long-standing puzzle in international finance: a positive relationship between consumption and asset home bias coupled with higher turnover rates of foreign over domestic assets.
ER -
TY - JOUR
AU - Albagli,Elias
AU - Hellwig,Christian
AU - Tsyvinski,Aleh
TI - Information Aggregation, Investment, and Managerial Incentives
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17330
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17330
L1 - http://www.nber.org/papers/w17330.pdf
N1 - Author contact info:
Elias Albagli
University of Southern California
Marshall School of Business
E-Mail: albagli@marshall.usc.edu
Christian Hellwig
Toulouse School of Economics
Manufacture de Tabacs,
21 Allées de Brienne,
31000 Toulouse
Tel: +33 5 61 12 85 93
Fax: +33 5 61 12 86 37
E-Mail: christian.hellwig@tse-fr.eu
Aleh Tsyvinski
Department of Economics
Yale University
Box 208268
New Haven, CT 06520-8268
E-Mail: a.tsyvinski@yale.edu
AB - We study the interplay of share prices and firm decisions when share prices aggregate and convey noisy information about fundamentals to investors and managers. First, we show that the informational feedback between the firm's share price and its investment decisions leads to a systematic premium in the firm's share price relative to expected dividends. Noisy information aggregation leads to excess price volatility, over-valuation of shares in response to good news, and undervaluation in response to bad news. By optimally increasing its exposure to fundamental risks when the market price conveys good news, the firm shifts its dividend risk to the upside, which amplifies the overvaluation and explains the premium. Second, we argue that explicitly linking managerial compensation to share prices gives managers an incentive to manipulate the firm's decisions to their own benefit. The managers take advantage of shareholders by taking excessive investment risks when the market is optimistic, and investing too little when the market is pessimistic. The amplified upside exposure is rewarded by the market through a higher share price, but is inefficient from the perspective of dividend value.
ER -
TY - JOUR
AU - Mocan,Naci H.
AU - Altindag,Duha Tore
TI - Is Leisure a Normal Good? Evidence from the European Parliament
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17329
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17329
L1 - http://www.nber.org/papers/w17329.pdf
N1 - Author contact info:
Naci H. Mocan
Department of Economics
Louisiana State University
2119 Patrick F. Taylor Hall
Baton Rouge, LA 70803-6306
Tel: 225/578-4570
E-Mail: mocan@lsu.edu
Duha Tore Altindag
Auburn University
Department of Economics
0334 Haley Center
Auburn AL, 36849
Tel: 334-844-2929
E-Mail: altindag@auburn.edu
AB - Prior to July 2009, salaries of the members of the European Parliament were paid by their home country and there were substantial salary differences between parliamentarians representing different EU countries. Starting in July 2009, the salary of each member of the Parliament is pegged to 38.5% of a European Court judge’s salary, paid by the EU. This created an exogenous change in salaries, the magnitude and direction of which varied substantially between parliamentarians. Parliamentarians receive per diem compensation for each plenary session they attend, but salaries constitute unearned income as they are independent of attendance to the Parliament. Using detailed information on each parliamentarian of the European Parliament between 2004 and 2011 we show that an increase in salaries reduces attendance to plenary sessions and an increase in per diem compensation increases it. We also show that corruption in home country has a negative effect on attendance for seasoned members of the Parliament.
ER -
TY - JOUR
AU - Barro,Robert J.
AU - Ursua,José F.
TI - Rare Macroeconomic Disasters
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17328
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17328
L1 - http://www.nber.org/papers/w17328.pdf
N1 - Author contact info:
Robert J. Barro
Department of Economics
Littauer Center 218
Harvard University
Cambridge, MA 02138
Tel: 617/495-3203
Fax: 617/496-8629
E-Mail: rbarro@harvard.edu
Jose Ursua
Department of Economics
Littauer Center G32
Harvard University
Cambridge, MA 02138
E-Mail: ursuaj@gmail.com
AB - The potential for rare macroeconomic disasters may explain an array of asset-pricing puzzles. Our empirical studies of these extreme events rely on long-term data now covering 28 countries for consumption and 40 for GDP. A baseline model calibrated with observed peak-to-trough disaster sizes accords with the average equity premium with a reasonable coefficient of relative risk aversion. High stock-price volatility can be explained by incorporating time-varying long-run growth rates and disaster probabilities. Business-cycle models with shocks to disaster probability have implications for the cyclical behavior of asset returns and corporate leverage, and international versions may explain the uncovered-interest-parity puzzle. Richer models of disaster dynamics allow for transitions between normalcy and disaster, bring in post-crisis recoveries, and use the full time series on consumption. Potential future research includes applications to long-term economic growth and environmental economics and the use of stock-price options and other variables to gauge time-varying disaster probabilities.
ER -
TY - JOUR
AU - Hamermesh,Daniel S.
AU - Abrevaya,Jason
TI - "Beauty Is the Promise of Happiness"?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17327
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17327
L1 - http://www.nber.org/papers/w17327.pdf
N1 - Author contact info:
Daniel S. Hamermesh
Department of Economics
University of Texas
Austin, TX 78712-1173
Tel: 512/475-8526
Fax: 512/471-3510
E-Mail: hamermes@eco.utexas.edu
Jason Abrevaya
Department of Economics
University of Texas
Speedway Avenue
Austin, TX 78712-1173 USA
E-Mail: abrevaya@eco.utexas.edu
AB - We measure the impact of individuals’ looks on life satisfaction/happiness. Using five data sets, from the U.S., Canada, the U.K., and Germany, we construct beauty measures in different ways that allow placing lower bounds on the effects of beauty. Beauty raises happiness: A one standard-deviation change in beauty generates about 0.10 standard deviations of additional satisfaction/happiness among men, 0.12 among women. Accounting for a wide variety of covariates, particularly effects in the labor and marriage markets, including those that might be affected by differences in beauty, the impact among men is more than halved, among women slightly less than halved.
ER -
TY - JOUR
AU - Biddle,Jeff
AU - Hamermesh,Daniel S.
TI - Cycles of Wage Discrimination
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17326
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17326
L1 - http://www.nber.org/papers/w17326.pdf
N1 - Author contact info:
Jeff Biddle
Department of Economics
Michigan State University
East Lansing, MI 48824-1038
E-Mail: biddle@msu.edu
Daniel S. Hamermesh
Department of Economics
University of Texas
Austin, TX 78712-1173
Tel: 512/475-8526
Fax: 512/471-3510
E-Mail: hamermes@eco.utexas.edu
AB - Using CPS data from 1979-2009 we examine how cyclical downturns and industry-specific demand shocks affect wage differentials between white non-Hispanic males and women, Hispanics and African-Americans. Women’s and Hispanics’ relative earnings are harmed by negative shocks, while the earnings disadvantage of African-Americans may drop with negative shocks. Negative shocks also appear to increase the earnings disadvantage of bad-looking workers. A theory of job search suggests two opposite-signed mechanisms that affect these wage differentials. It suggests greater absolute effects among job-movers, which is verified using the longitudinal component of the CPS.
ER -
TY - JOUR
AU - Koijen,Ralph
AU - Nieuwerburgh,Stijn Van
AU - Yogo,Motohiro
TI - Health and Mortality Delta: Assessing the Welfare Cost of Household Insurance Choice
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17325
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17325
L1 - http://www.nber.org/papers/w17325.pdf
N1 - Author contact info:
Ralph Koijen
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-4199
E-Mail: ralph.koijen@chicagobooth.edu
Stijn Van Nieuwerburgh
Stern School of Business
New York University
44 W 4th Street, Suite 9-120
New York, NY 10012
Tel: 646/284-4141
Fax: 646/284-4141
E-Mail: svnieuwe@stern.nyu.edu
Motohiro Yogo
Federal Reserve Bank of Minneapolis
Research Department
90 Hennepin Avenue
Minneapolis, MN 55401-1804
Tel: 612/204-6476
E-Mail: yogo@minneapolisfed.org
AB - We develop a pair of risk measures for the universe of health and longevity products that includes life insurance, annuities, and supplementary health insurance. Health delta measures the differential payoff that a policy delivers in poor health, while mortality delta measures the differential payoff that a policy delivers at death. Optimal portfolio choice simplifies to the problem of choosing a combination of health and longevity products that replicates the optimal exposure to health and mortality delta. For each household in the Health and Retirement Study, we calculate the health and mortality delta implied by its ownership of life insurance, annuities including private pensions, supplementary health insurance, and long-term care insurance. For the median household aged 51 to 58, the lifetime welfare cost of market incompleteness and suboptimal portfolio choice is 28 percent of total wealth.
ER -
TY - JOUR
AU - Kessler,Judd B.
AU - Roth,Alvin E.
TI - Organ Allocation Policy and the Decision to Donate
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17324
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17324
L1 - http://www.nber.org/papers/w17324.pdf
N1 - Author contact info:
Judd Kessler
Department of Business and Public Policy
The Wharton School
University of Pennsylvania
3620 Locust Walk
Philadelphia, PA 19104
Tel: (215) 898-7696
Fax: (215) 898-7635
E-Mail: judd.kessler@wharton.upenn.edu
Alvin E. Roth
Harvard University
Department of Economics
Littauer 308
Cambridge, MA 02138-3001
Tel: 617/496-6009 (econ)
Fax: 617/495-6537
E-Mail: aroth@hbs.edu
AB - Organ donations from deceased donors provide the majority of transplanted organs in the United States, and one deceased donor can save numerous lives by providing multiple organs. Nevertheless, most Americans are not registered organ donors despite the relative ease of becoming one. We study in the laboratory an experimental game modeled on the decision to register as an organ donor, and investigate how changes in the management of organ waiting lists might impact donations. We find that an organ allocation policy giving priority on waiting lists to those who previously registered as donors has a significant positive impact on registration.
ER -
TY - JOUR
AU - Ross,Stephen A.
TI - The Recovery Theorem
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17323
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17323
L1 - http://www.nber.org/papers/w17323.pdf
N1 - Author contact info:
Stephen A. Ross
MIT Sloan School of Management
100 Main Street, E62-616
Cambridge, MA 02142
Tel: 617/258-8371
Fax: 203/772-1365
E-Mail: sross@mit.edu
AB - We can only estimate the distribution of stock returns but we observe the distribution of risk neutral state prices. Risk neutral state prices are the product of risk aversion – the pricing kernel – and the natural probability distribution. The Recovery Theorem enables us to separate these and to determine the market’s forecast of returns and the market’s risk aversion from state prices alone. Among other things, this allows us to determine the pricing kernel, the market risk premium, the probability of a catastrophe, and to construct model free tests of the efficient market hypothesis.
ER -
TY - JOUR
AU - Fogel,Robert W.
AU - Cain,Louis
AU - Burton,Joseph
AU - Bettenhausen,Brian
TI - Was What Ail'd Ya' What Kill'd Ya'?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17322
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17322
L1 - http://www.nber.org/papers/w17322.pdf
N1 - Author contact info:
Robert W. Fogel
Director, Center for Population Economics
University of Chicago, Booth School of Business
5807 S. Woodlawn Avenue, Suite 367
Chicago, IL 60637
Tel: 773/702-7709
Fax: 773/702-2901
E-Mail: rwf@cpe.uchicago.edu
Louis Cain
Loyola University Chicago
E-Mail: lcain@luc.edu
Joseph Burton
Center for Population Economics
University of Chicago - GSB
1101 E. 58th Street
Chicago, IL 60637
E-Mail: jburton@cpe.uchicago.edu
Brian Bettenhausen
CPE
University of Chicago
E-Mail: bbett@cpe.uchicago.edu
AB - Making use of those Union Army veterans for whom death certificates are available, we compare the conditions with which they were diagnosed by Civil War pension surgeons to the causes of death on the certificates. We divide the data between those veterans who entered the pension system early because of war injuries and those who entered the pension system after the 1890 reform that made it available to many more veterans. We examine the correlation between specific conditions and death causes to gauge support for the hypothesis that death is attributable to something specific. We also examine the correlation between the accumulation of rated conditions to time until death to gauge support for the “insult hypothesis.” In general, we find support for both hypotheses. Examining the hazard ratios for dying of a specific condition, there is support for the idea that what ail’d ya’ is what kill’d ya’.
ER -
TY - JOUR
AU - Kacperczyk,Marcin
AU - Schnabl,Philipp
TI - Implicit Guarantees and Risk Taking: Evidence from Money Market Funds
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17321
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17321
L1 - http://www.nber.org/papers/w17321.pdf
N1 - Author contact info:
Marcin Kacperczyk
Stern School of Business
New York University
44 West 4th Street
KMC 9-190
New York, NY 10012
Tel: 212/998-0924
E-Mail: mkacperc@stern.nyu.edu
Philipp Schnabl
Stern School of Business
New York University
44 West Fourth Street
New York, NY 10012
Tel: 212/998-0356
E-Mail: schnabl@stern.nyu.edu
AB - A firm's termination generates bankruptcy costs. This may create incentives for a firm's owner to bail out a firm in bankruptcy and to curb the firm's risk taking outside bankruptcy. We analyze the role of such implicit guarantees in the context of financial institutions that sponsor money market mutual funds. Our identification strategy exploits a large, exogenous expansion in risk-taking opportunities of money market funds during the period of August 2007 to August 2008. We find that a fund's response to the expansion depends on its sponsor's ability to provide implicit guarantees: Funds sponsored by financial institutions with higher equity take on less risk than those sponsored by financial institutions with lower equity. Moreover, fund sponsors with higher equity are more likely to provide financial support to their funds during a market-wide run in September 2008. The difference in risk taking disappears once implicit guarantees by fund sponsors are replaced with an explicit government guarantee. Overall, our findings suggest that implicit guarantees may reduce, rather than increase, risk taking.
ER -
TY - JOUR
AU - Manoli,Dayanand S.
AU - Weber,Andrea
TI - Nonparametric Evidence on the Effects of Financial Incentives on Retirement Decisions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17320
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17320
L1 - http://www.nber.org/papers/w17320.pdf
N1 - Author contact info:
Dayanand S. Manoli
Department of Economics
University of California, Los Angeles
8283 Bunche Hall
Box 951477
Los Angeles, CA 90095-1477
Tel: 310/794-6617
E-Mail: dsmanoli@econ.ucla.edu
Andrea Weber
University of Mannheim
Economics Department
L7, 3-4
68131 Mannheim
Germany
Tel: +49 621 1811928
E-Mail: a.weber@uni-mannheim.de
AB - This paper presents new empirical evidence on the effects of retirement benefits on labor force participation decisions. We use administrative data on the census of private sector employees in Austria and variation from mandated discontinuous changes in retirement benefits from the Austrian pension system. We present graphical evidence documenting labor supply responses to the policy discontinuities. Next, we develop nonparametric procedures to estimate labor supply elasticities based on the graphical evidence and mandated financial incentives. We estimate elasticities of 0.12 for men and 0.38 for women. These relatively low elasticities highlight that many retirement decisions are likely to be affected by factors beyond only financial incentives from retirement benefits.
ER -
TY - JOUR
AU - Chugh,Sanjay K.
AU - Ghironi,Fabio
TI - Optimal Fiscal Policy with Endogenous Product Variety
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17319
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17319
L1 - http://www.nber.org/papers/w17319.pdf
N1 - Author contact info:
Sanjay K. Chugh
Boston College
Department of Economics
Chestnut Hill, MA 02167
Tel: 215-668-8930
E-Mail: sanjay.chugh@bc.edu
Fabio Ghironi
Boston College
Department of Economics
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3859
Tel: 617/552-3686
Fax: 617/552-2308
E-Mail: fabio.ghironi@bc.edu
AB - We study Ramsey-optimal fiscal policy in an economy in which product varieties are the result of forward-looking investment decisions by firms. There are two main results. First, depending on the particular form of variety aggregation in preferences, firms' dividend payments may be either subsidized or taxed in the long run. This policy balances monopoly incentives for product creation with consumers' welfare benefit of product variety. In the most empirically relevant form of variety aggregation, socially efficient outcomes entail a substantial tax on dividend income, removing the incentive for over-accumulation of capital, which takes the form of variety. Second, optimal policy induces dramatically smaller, but efficient, fluctuations of both capital and labor markets than in a calibrated exogenous policy. Decentralization requires zero intertemporal distortions and constant static distortions over the cycle. The results relate to Ramsey theory, which we show by developing welfare-relevant concepts of efficiency that take into account product creation.
ER -
TY - JOUR
AU - Fernández-Villaverde,Jesús
AU - Guerrón-Quintana,Pablo A.
AU - Kuester,Keith
AU - Rubio-Ramírez,Juan
TI - Fiscal Volatility Shocks and Economic Activity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17317
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17317
L1 - http://www.nber.org/papers/w17317.pdf
N1 - Author contact info:
Jesus Fernandez-Villaverde
University of Pennsylvania
160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
Tel: 267/307-1068
E-Mail: jesusfv@econ.upenn.edu
Pablo A. Guerrón-Quintana
Federal Reserve Bank of Philadelphia
Tel: 9195132869
E-Mail: pablo.guerron@phil.frb.org
Keith Kuester
Federal Reserve Bank of Philadelphia
E-Mail: Keith.Kuester@phil.frb.org
Juan Rubio-Ramírez
Duke University
P.O. Box 90097
Durham, NC 27708
Tel: 9196601865
E-Mail: juan.rubio-ramirez@duke.edu
AB - We study the effects of changes in uncertainty about future fiscal policy on aggregate economic activity. Fiscal deficits and public debt have risen sharply in the wake of the financial crisis. While these developments make fiscal consolidation inevitable, there is considerable uncertainty about the policy mix and timing of such budgetary adjustment. To evaluate the consequences of this increased uncertainty, we first estimate tax and spending processes for the U.S. that allow for time-varying volatility. We then feed these processes into an otherwise standard New Keynesian business cycle model calibrated to the U.S. economy. We find that fiscal volatility shocks have an adverse effect on economic activity that is comparable to the effects of a 25-basis-point innovation in the federal funds rate.
ER -
TY - JOUR
AU - Afendulis,Christopher
AU - Kessler,Daniel
TI - Vertical Integration and Optimal Reimbursement Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17316
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17316
L1 - http://www.nber.org/papers/w17316.pdf
N1 - Author contact info:
Christopher Afendulis
Department of Health Care Policy
Harvard Medical School
180 Longwood Avenue
Boston, MA 02115
E-Mail: afendulis@hcp.med.harvard.edu
Daniel Kessler
Hoover Institution
Stanford University
434 Galvez Mall
Stanford, CA 94305
Tel: 650/723-0596
E-Mail: fkessler@stanford.edu
AB - Health care providers may vertically integrate not only to facilitate coordination of care, but also for strategic reasons that may not be in patients' best interests. Optimal Medicare reimbursement policy depends upon the extent to which each of these explanations is correct. To investigate, we compare the consequences of the 1997 adoption of prospective payment for skilled nursing facilities (SNF PPS) in geographic areas with high versus low levels of hospital/SNF integration. We find that SNF PPS decreased spending more in high integration areas, with no measurable consequences for patient health outcomes. Our findings suggest that subjecting integrated providers to higher-powered reimbursement incentives, i.e., less cost-sharing, may enhance medical productivity. More generally, we conclude that it may be efficient for purchasers of health services (and other services subject to agency problems) to consider the organizational form of their suppliers when choosing a reimbursement mechanism.
ER -
TY - JOUR
AU - Amromin,Gene
AU - Huang,Jennifer
AU - Sialm,Clemens
AU - Zhong,Edward
TI - Complex Mortgages
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17315
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17315
L1 - http://www.nber.org/papers/w17315.pdf
N1 - Author contact info:
Gene Amromin
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, IL 60604-1413
Fax: Financial Economist
E-Mail: gamromin@frbchi.org
Jennifer Huang
University of Texas at Austin
McCombs School of Business
1 University Station; B6600
Austin, TX 78712
Tel: 512-232-9375
E-Mail: Jennifer.Huang@mccombs.utexas.edu
Clemens Sialm
University of Texas at Austin
McCombs School of Business
1 University Station; B6600
Austin, TX 78712
Tel: 512-232-6835
E-Mail: clemens.sialm@mccombs.utexas.edu
Edward Zhong
University of Wisconsin, Madison
1180 Observatory Drive
Madison, WI 53706
E-Mail: edzhong@gmail.com
AB - We investigate the characteristics and the default behavior of households who take out complex mortgages. Unlike traditional fixed rate or adjustable rate mortgages, complex mortgages are not fully amortizing and enable households to postpone loan repayment. We find that complex mortgages are used by sophisticated households with high income levels and prime credit scores, in contrast to the low income population targeted by subprime mortgages. Complex mortgage borrowers have significantly higher delinquency rates than traditional mortgage borrowers even after controlling for leverage, payment resets, and other household and loan characteristics. The difference in the delinquency rates between complex and traditional borrowers increases with measures of financial sophistication and leverage, suggesting that complex borrowers are more strategic in their default decisions than traditional borrowers.
ER -
TY - JOUR
AU - Voigtländer,Nico
AU - Voth,Hans-Joachim
TI - How the West 'Invented' Fertility Restriction
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17314
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17314
L1 - http://www.nber.org/papers/w17314.pdf
N1 - Author contact info:
Nico Voigtlaender
UCLA Anderson School of Management
110 Westwood Plaza
C513 Entrepreneurs Hall
Los Angeles, CA 90095
Tel: 310/794-6382
E-Mail: nico.v@anderson.ucla.edu
Hans-Joachim Voth
Economics Department
UPF & CREI
Ramon Trias Fargas 25-27
E-08005 Barcelona
E-Mail: jvoth@crei.cat
AB - Europeans restricted their fertility long before the 'Demographic Transition.' By raising the marriage age of women and ensuring that a substantial proportion remained celibate, the "European Marriage Pattern" (EMP) reduced childbirths by up to 40% between the 14th and 18th century. In a Malthusian environment, this translated into lower population pressure, raising average wages significantly, which in turn laid the foundation for industrialization. We analyze the rise of this first socio-economic institution in history that limited fertility through delayed marriage. Our model emphasizes changes in agricultural production following the Black Death in 1348-50. The land-intensive production of meat, wool, and dairy (pastoral products) increased, while labor-intensive grain production declined. Women had a comparative advantage producing pastoral goods. They often worked as servants in husbandry, where they remained unmarried long after they had left the parental household. The emergence of EMP enabled Europe to shift from a high-fertility, low income to a low-fertility, high income Malthusian steady state. We demonstrate the importance of this effect in a calibration of our model and show why the same shock to population did not have similar consequences in China.
ER -
TY - JOUR
AU - Herkenhoff,Kyle F.
AU - Ohanian,Lee E.
TI - Labor Market Dysfunction During the Great Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17313
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17313
L1 - http://www.nber.org/papers/w17313.pdf
N1 - Author contact info:
Kyle F. Herkenhoff
Department of Economics
UCLA 405 Hilgard Ave.
LA, CA 90095
E-Mail: kfh@ucla.edu
Lee E. Ohanian
8283 Bunche Hall
UCLA, Department of Economics
Box 951477
Los Angeles, CA 90095
Tel: 310/825-0979
Fax: 310/825-9528
E-Mail: ohanian@econ.ucla.edu
AB - This paper documents the abnormally slow recovery in the labor market during the Great Recession, and analyzes how mortgage modification policies contributed to delayed recovery. By making modifications means-tested by reducing mortgage payments based on a borrower's current income, these programs change the incentive for households to relocate from a relatively poor labor market to a better labor market. We find that modifications raise the unemployment rate by about 0.5 percentage points, and reduce output by about 1 percent, reflecting both lower employment and lower productivity, which is the result of individuals losing skills as unemployment duration is longer.
ER -
TY - JOUR
AU - Bordo,Michael D.
AU - Redish,Angela
AU - Rockoff,Hugh
TI - Why didn’t Canada have a banking crisis in 2008
(or in 1930, or 1907, or ...)?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17312
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17312
L1 - http://www.nber.org/papers/w17312.pdf
N1 - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu
Angela Redish
Dept. of Economics
University of British Columbia
#997 1873 East Mall
Vancouver BC V6T 1Z1 CANADA
E-Mail: anji@econ.ubc.ca
Hugh Rockoff
Department of Economics
75 Hamilton Street
Rutgers University
College Avenue Campus
New Brunswick, NJ 08901-1248
Tel: 609/897-0117
Fax: 732/932-7416
E-Mail: rockoff@fas-econ.rutgers.edu
AB - The financial crisis of 2008 engulfed the banking system of the United States and many large European countries. Canada was a notable exception. In this paper we argue that the structure of financial systems is path dependent. The relative stability of the Canadian banks in the recent crisis compared to the United States in our view reflected the original institutional foundations laid in place in the early 19th century in the two countries. The Canadian concentrated banking system that had evolved by the end of the twentieth century had absorbed the key sources of systemic risk -- the mortgage market and investment banking -- and was tightly regulated by one overarching regulator. In contrast the relatively weak, fragmented, and crisis prone U.S. banking system that had evolved since the early nineteenth century, led to the rise of securities markets, investment banks and money market mutual funds (the shadow banking system) combined with multiple competing regulatory authorities. The consequence was that the systemic risk that led to the crisis of 2007-2008 was not contained.
ER -
TY - JOUR
AU - Khan,Aubhik
AU - Thomas,Julia K.
TI - Credit Shocks and Aggregate Fluctuations in an Economy with Production Heterogeneity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17311
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17311
L1 - http://www.nber.org/papers/w17311.pdf
N1 - Author contact info:
Aubhik Khan
Department of Economics
Ohio State University
410 Arps Hall
1945 N. High Street
Columbus, OH 43210
Tel: 614 247 0097
E-Mail: mail@aubhik-khan.net
Julia Thomas
Department of Economics
The Ohio State University
410 Arps Hall
1945 N High Street
Columbus, OH 43210
E-Mail: mail@juliathomas.net
AB - We study the cyclical implications of credit market imperfections in a calibrated dynamic, stochastic general equilibrium model wherein firms face persistent shocks to aggregate and individual productivity. In our model economy, optimal capital reallocation is distorted by two frictions: collateralized borrowing and partial capital irreversibility yielding (S,s) firm-level investment policies.
In the presence of persistent heterogeneity in capital, debt and total factor productivity, the effects of a financial shock are amplified and propagated through large and long-lived disruptions to the distribution of capital that, in turn, imply large and persistent reductions in aggregate total factor productivity. We find that an unanticipated tightening in borrowing conditions can, on its own, generate a large recession far more persistent than the financial shock itself. This recession, and the subsequent recovery, is distinguished both quantitatively and qualitatively from that driven by exogenous shocks to total factor productivity.
ER -
TY - JOUR
AU - Currie,Janet
AU - Tekin,Erdal
TI - Is the Foreclosure Crisis Making Us Sick?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17310
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17310
L1 - http://www.nber.org/papers/w17310.pdf
N1 - Author contact info:
Janet Currie
Princeton University
316 Wallace Hall
Princeton, NJ 08544
Tel: 609-258-7393
Fax: 609-258-5974
E-Mail: jcurrie@princeton.edu
Erdal Tekin
Department of Economics
Andrew Young School of Policy Studies
Georgia State University
P.O. Box 3992
Atlanta, GA 30302-3992
Tel: 404/413-0163
Fax: 404/413-0145
E-Mail: tekin@gsu.edu
AB - We investigate the relationship between foreclosure activity and the health of residents using zip code level longitudinal data. We focus on Arizona, California, Florida, and New Jersey, four states that have been among the hardest hit by the foreclosure crisis. We combine foreclosure data for 2005 to 2009 from RealtyTrac with data on emergency room visits and hospital discharges. Our zip code level quarterly data allow us to control for many potential confounding factors through the inclusion of fixed effects for each zip code as well as for each combination of county, quarter, and year. We find that an increase in the number of foreclosures is associated with increases in medical visits for mental health (anxiety and suicide attempts), for preventable conditions (such as hypertension), and for a broad array of physical complaints that are plausibly stress-related. They are not related to visits for cancer morbidity, which arguably should not respond as rapidly to stress. Foreclosures also have a zero or negative effect on elective procedures, as one might expect. Age specific results suggest that the foreclosure crisis is having its most harmful effects on individuals 20 to 49. We also find that larger effects for African-Americans and Hispanics than for whites, consistent with the perception that minorities have been particularly hard hit.
ER -
TY - JOUR
AU - Tella,Rafael Di
AU - Dubra,Juan
TI - Free to Punish? The American Dream and the Harsh Treatment of Criminals
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17309
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17309
L1 - http://www.nber.org/papers/w17309.pdf
N1 - Author contact info:
Rafael Di Tella
Harvard Business School
Soldiers Field Rd
Boston, MA 02163
Tel: 617/495-6000
E-Mail: rditella@hbs.edu
Juan Dubra
Universidad de Montevideo
Montevideo, Uruguay
E-Mail: dubraj@um.edu.uy
AB - We describe the evolution of selective aspects of punishment in the US over the period 1980-2004. We note that imprisonment increased around 1980, a period that coincides with the “Reagan revolution” in economic matters. We build an economic model where beliefs about economic opportunities and beliefs about punishment are correlated. We present three pieces of evidence (across countries, within the US and an experimental exercise) that are consistent with the model.
ER -
TY - JOUR
AU - Caliendo,Lorenzo
AU - Rossi-Hansberg,Esteban
TI - The Impact of Trade on Organization and Productivity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17308
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17308
L1 - http://www.nber.org/papers/w17308.pdf
N1 - Author contact info:
Lorenzo Caliendo
Yale School of Management
135 Prospect Street
New Haven, CT 06520
Tel: 203/432-4069
E-Mail: lorenzo.caliendo@yale.edu
Esteban Rossi-Hansberg
Princeton University
Department of Economics
Fisher Hall
Princeton, NJ 08544-1021
Tel: 609/2584024
Fax: 650/725-5702
E-Mail: erossi@princeton.edu
AB - A firm's productivity depends on how production is organized given the level of demand for its product. To capture this mechanism, we develop a theory of an economy where firms with heterogeneous demands use labor and knowledge to produce. Entrepreneurs decide the number of layers of management and the knowledge and span of control of each agent. As a result, in the theory, heterogeneity in demand leads to heterogeneity in productivity and other firms' outcomes. We use the theory to analyze the impact of international trade on organization and calibrate the model to the U.S. economy. Our results indicate that, as a result of a bilateral trade liberalization, firms that export will increase the number of layers of management and will decentralize decisions. The new organization of the average exporter results in higher productivity, although the responses of productivity are heterogeneous across these firms. In contrast, non-exporters reduce their number of layers, decentralization, and, on average, their productivity. The marginal exporter increases its productivity by about 1% and its revenue productivity by about 1.8%.
ER -
TY - JOUR
AU - Molloy,Raven
AU - Smith,Christopher L.
AU - Wozniak,Abigail K.
TI - Internal Migration in the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17307
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17307
L1 - http://www.nber.org/papers/w17307.pdf
N1 - Author contact info:
Raven Molloy
Federal Reserve Board of Governors
20th and C Streets NW
Washington, DC 20551
E-Mail: raven.s.molloy@frb.gov
Christopher Smith
Federal Reserve Board
Research Division
Stop # 80
20th & C Sts., NW
Washington, DC 20551-0001
E-Mail: Christopher.L.Smith@frb.gov
Abigail K. Wozniak
Department of Economics
University of Notre Dame
441 Flanner Hall
South Bend, IN 46556
Tel: 574/631-6208
E-Mail: a_wozniak@nd.edu
AB - We review patterns in migration within the US over the past thirty years. Internal migration has fallen noticeably since the 1980s, reversing increases from earlier in the century. The decline in migration has been widespread across demographic and socioeconomic groups, as well as for moves of all distances. Although a convincing explanation for the secular decline in migration remains elusive and requires further research, we find only limited roles for the housing market contraction and the economic recession in reducing migration recently. Despite its downward trend, migration within the US remains higher than that within most other developed countries.
ER -
TY - JOUR
AU - Acemoglu,Daron
AU - Egorov,Georgy
AU - Sonin,Konstantin
TI - A Political Theory of Populism
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17306
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17306
L1 - http://www.nber.org/papers/w17306.pdf
N1 - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu
Georgy Egorov
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/467-2154
Fax: 847/467-1220
E-Mail: g-egorov@kellogg.northwestern.edu
Konstantin Sonin
New Economic School
47 Nakhimovsky prosp.
Moscow, 117418 RUSSIA
E-Mail: ksonin@nes.ru
AB - When voters fear that politicians may have a right-wing bias or that they may be influenced or corrupted by the rich elite, signals of true left-wing conviction are valuable. As a consequence, even a moderate politician seeking reelection chooses “populist’ policies - i.e., policies to the left of the median voter - as a way of signaling that he is not from the right. Truly right-wing politicians respond by choosing more moderate, or even left-of-center policies. This populist bias of policy is greater when the value of remaining in office is higher for the politician; when there is greater polarization between the policy preferences of the median voter and right-wing politicians; when politicians are indeed more likely to have a hidden right-wing agenda; when there is an intermediate amount of noise in the information that voters receive; when politicians are more forward-looking; and when there is greater uncertainty about the type of the incumbent. We show that similar results apply when some politicians can be corrupted or influenced through other non-electoral means by the rich elite. We also show that ‘soft term limits’ may exacerbate, rather than reduce, the populist bias of policies.
ER -
TY - JOUR
AU - Doi,Takero
AU - Hoshi,Takeo
AU - Okimoto,Tatsuyoshi
TI - Japanese Government Debt and Sustainability of Fiscal Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17305
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17305
L1 - http://www.nber.org/papers/w17305.pdf
N1 - Author contact info:
Takero Doi
Faculty of Economics
Keio University
Mita 2-15-45, Minato-ku
Tokyo 108-8345
JAPAN
Tel: +81-3-3453-4511
Fax: +81-3-5427-1578
E-Mail: tdoi@econ.keio.ac.jp
Takeo Hoshi
School of International Relations and Pacific Stud
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0519
Tel: 858/534-5018
Fax: 858/534-3939
E-Mail: thoshi@ucsd.edu
Tatsuyoshi Okimoto
Graduate School of International Corporate Strateg
Hitotsubashi University
2-1-2 Hitotsubashi, Chiyoda-ku, Tokyo 101-8439, JA
E-Mail: tatsuyoshi.okimoto@gmail.com
AB - We construct quarterly series of the revenues, expenditures, and debt outstanding for Japan from 1980 to 2010, and analyze the sustainability of the fiscal policy. We pursue three approaches to examine the sustainability. First, we calculate the minimum tax rate that stabilizes the debt to GDP ratio given the future government expenditures. Using 2010 as the base year, we find that the government revenue to GDP ratio must rise permanently to 40%-47% (from the current 33%) to stabilize the debt to GDP ratio. Second, we estimate the response of the primary surplus when the debt to GDP ratio increases. We allow the relationship to fluctuate between two “regimes” using a Markov switching model. In both regimes, the primary surplus to GDP ratio fails to respond positively to debt, which suggests the process is explosive. Finally, we estimate a fiscal policy function and a monetary policy function with Markov switching. We find that the fiscal policy is “active” (the tax revenues do not rise when the debt increases) and the monetary policy is “passive” (the interest rate does not react to the inflation rate sufficiently) in both regimes. These results suggest that the current fiscal situation for the Japanese government is not sustainable.
ER -
TY - JOUR
AU - Serrano,Carlos J.
TI - Estimating the Gains from Trade in the Market for Innovation: Evidence from the Transfer of Patents
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17304
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17304
L1 - http://www.nber.org/papers/w17304.pdf
N1 - Author contact info:
Carlos J. Serrano
Department of Economics
University of Toronto
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/946-3404
E-Mail: carlos.serrano@utoronto.ca
AB - The "market for innovation" — the sale and licensing of patents — is an often discussed source of incentives to invest in R&D. This article presents and estimates a model of the transfer and renewal of patents that, under some assumptions, allows us to quantify the gains resulting from the transfer of patents in the market for innovation. The gains from trade measure the benefits of reallocating the ownership of a patent from the original inventor to a new owner for whom the patent has a higher value. In addition, we study the effect that lowering the costs of technology transfer has on the proportion of patents traded and the gains from trade.
ER -
TY - JOUR
AU - Frydman,Carola
AU - Molloy,Raven
TI - Pay Cuts for the Boss: Executive Compensation in the 1940s
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17303
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17303
L1 - http://www.nber.org/papers/w17303.pdf
N1 - Author contact info:
Carola Frydman
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
E-Mail: cfrydman@bu.edu
Raven Molloy
Federal Reserve Board of Governors
20th and C Streets NW
Washington, DC 20551
E-Mail: raven.s.molloy@frb.gov
AB - Executive pay fell during the 1940s, marking the last notable decrease in the past 70 years. We study this decline using a new panel dataset on the remuneration of top executives in 246 firms. We find that government regulation—including explicit salary restrictions and taxation—had, at best, a modest effect on executive pay. By contrast, a decline in the returns to firm size and an increase in the power of labor unions contributed greatly to the reduction in executive compensation relative to other workers’ earnings from 1940 to 1946. The continued decrease in relative executive pay remains largely unexplained.
ER -
TY - JOUR
AU - Hanna,Rema
AU - Oliva,Paulina
TI - The Effect of Pollution on Labor Supply: Evidence from a Natural Experiment in Mexico City
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17302
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17302
L1 - http://www.nber.org/papers/w17302.pdf
N1 - Author contact info:
Rema Hanna
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-1140
Fax: 617/496-5747
E-Mail: Rema_Hanna@hks.harvard.edu
Paulina Oliva
Department of Economics
2127 North Hall
University of California
Santa Barbara, CA 93106
Tel: 805/893-5572
E-Mail: oliva@econ.ucsb.edu
AB - Moderate effects of pollution on health may exert an important influence on labor market decisions. We exploit exogenous variation in pollution due to the closure of a large refinery in Mexico City to understand how pollution impacts labor supply. The closure led to an 8 percent decline in pollution in the surrounding neighborhoods. We find that a one percent increase in sulfur dioxide results in a 0.61 percent decrease in the hours worked. The effects do not appear to be driven by labor demand shocks nor differential migration as a result of the closure in the areas located near the refinery.
ER -
TY - JOUR
AU - Fuster,Andreas
AU - Hebert,Benjamin
AU - Laibson,David
TI - Natural Expectations, Macroeconomic Dynamics, and Asset Pricing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17301
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17301
L1 - http://www.nber.org/papers/w17301.pdf
N1 - Author contact info:
Andreas Fuster
Federal Reserve Bank of New York
Research Group
33 Liberty St
New York, NY 10045
Tel: 212-720-5995
E-Mail: andreas.fuster@ny.frb.org
Benjamin Hebert
Department of Economics
Harvard University
Littauer Center
1805 Cambridge St.
Cambridge, MA 02138
E-Mail: benmhebert@gmail.com
David Laibson
Department of Economics
Littauer M-12
Harvard University
Cambridge, MA 02138
Tel: 617/496-3402
Fax: 617/495-8570
E-Mail: dlaibson@gmail.com
M3 - presented at "26th Annual Conference on Macroeconomics", April 8-9, 2011
AB - How does an economy behave if (1) fundamentals are truly hump-shaped, exhibiting momentum in the short run and partial mean reversion in the long run, and (2) agents do not know that fundamentals are hump-shaped and base their beliefs on parsimonious models that they fit to the available data? A class of parsimonious models leads to qualitatively similar biases and generates empirically observed patterns in asset prices and macroeconomic dynamics. First, parsimonious models will robustly pick up the short-term momentum in fundamentals but will generally fail to fully capture the long-run mean reversion. Beliefs will therefore be characterized by endogenous extrapolation bias and pro-cyclical excess optimism. Second, asset prices will be highly volatile and exhibit partial mean reversion—i.e., overreaction. Excess returns will be negatively predicted by lagged excess returns, P/E ratios, and consumption growth. Third, real economic activity will have amplified cycles. For example, consumption growth will be negatively auto-correlated in the medium run. Fourth, the equity premium will be large. Agents will perceive that equities are very risky when in fact long-run equity returns will co-vary only weakly with long-run consumption growth. If agents had rational expectations, the equity premium would be close to zero. Fifth, sophisticated agents—i.e., those who are assumed to know the true model—will hold far more equity than investors who use parsimonious models. Moreover, sophisticated agents will follow a counter-cyclical asset allocation policy. These predicted effects are qualitatively confirmed in U.S. data.
ER -
TY - JOUR
AU - David,Guy
AU - Lindrooth,Richard
AU - Helmchen,Lorens A.
AU - Burns,Lawton R.
TI - Do Hospitals Cross Subsidize?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17300
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17300
L1 - http://www.nber.org/papers/w17300.pdf
N1 - Author contact info:
Guy David
The Wharton School
University of Pennsylvania
202 Colonial Penn Center
3641 Locust Walk
Philadelphia, PA 19104-6218
Tel: 215/573-5780
Fax: 215/573-2157
E-Mail: gdavid2@wharton.upenn.edu
Richard Lindrooth
University of Colorado Denver
Room E3313, Third Floor Building 500
13001 E. 17th Place
Aurora, CO 80045
E-Mail: richard.lindrooth@ucdenver.edu
Lorens Helmchen
Department of Health Administration and Policy
George Mason University
4400 University Drive - MS 1J3
Northeast Module I, 121
Fairfax, VA 22030
Tel: (703) 993-9734
Fax: (703) 993-1953
E-Mail: lhelmche@gmu.edu
Lawton Burns
Health Care Systems Department
The Wharton School
University of Pennsylvania
203 Colonial Penn Center
641 Locust Walk
Philadelphia, PA 19104-6218
E-Mail: burnsl@wharton.upenn.edu
AB - Cross-subsidies are often considered the principal mechanism through which hospitals provide unprofitable care. Yet, hospitals’ reliance on and extent of cross-subsidization are difficult to establish. We exploit entry by cardiac specialty hospitals as an exogenous shock to incumbent hospitals’ profitability and in turn to their ability to cross-subsidize unprofitable services. Using patient-level data from general short-term hospitals in Arizona and Colorado before and after entry, we find that the hospitals most exposed to entry reduced their provision of services considered to be unprofitable (psychiatric, substance- abuse, and trauma care) and expanded their admissions for neurosurgery, a highly profitable service.
ER -
TY - JOUR
AU - Hart,Oliver D.
AU - Zingales,Luigi
TI - Inefficient Provision of Liquidity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17299
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17299
L1 - http://www.nber.org/papers/w17299.pdf
N1 - Author contact info:
Oliver D. Hart
Department of Economics
Littauer Center 220
Harvard University
Cambridge, MA 02138
Tel: 617/496-3461
Fax: 617-495-7730
E-Mail: ohart@harvard.edu
Luigi Zingales
Booth School of Business
The University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-3196
Fax: 773/834-2081
E-Mail: luigi.zingales@ChicagoBooth.edu
AB - We study an economy where the lack of a simultaneous double coincidence of wants creates the need for a relatively safe asset (money). We show that, even in the absence of asymmetric information or an agency problem, the private provision of liquidity is inefficient. The reason is that liquidity affects prices and the welfare of others, and creators do not internalize this. This distortion is present even if we introduce lending and government money. To eliminate the inefficiency the government must restrict the creation of liquidity by the private sector.
ER -
TY - JOUR
AU - Avery,Christopher
AU - Chevalier,Judith A.
AU - Zeckhauser,Richard J.
TI - The "CAPS" Prediction System and Stock Market Returns
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17298
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17298
L1 - http://www.nber.org/papers/w17298.pdf
N1 - Author contact info:
Christopher Avery
Harvard Kennedy School of Government
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-4063
Fax: 617/496-5960
E-Mail: christopher_avery@hks.harvard.edu
Judith A. Chevalier
Yale School of Management
135 Prospect Street
New Haven, CT 06520
Tel: 203/432-3122
Fax: NA
E-Mail: judith.chevalier@yale.edu
Richard J. Zeckhauser
John F. Kennedy School of Government
Harvard University
79 John F. Kennedy Street
Cambridge, MA 02138
Tel: 617/495-1174
Fax: 617/384-9340
E-Mail: richard_zeckhauser@harvard.edu
AB - We study the predictive power of approximately 2.5 million stock picks submitted by individual users to the "CAPS" website run by the Motley Fool company (www.caps.fool.com). These picks prove to be surprisingly informative about future stock prices. Indeed, a strategy of shorting stocks with a disproportionate number of negative picks on the site and buying stocks with a disproportionate number of positive picks produces a return of over nine percent per annum over the sample period. These results are mostly driven by the fact that negative picks on the site strongly predict future stock price declines; positive picks on the site produce returns that are statistically indistinguishable from the market. A Fama French decomposition suggests that these results are largely due to stock-picking rather than style factors or market timing.
ER -
TY - JOUR
AU - Iyengar,Radha
AU - Monten,Jonathan
AU - Hanson,Matthew
TI - Building Peace: The Impact of Aid on the Labor Market for Insurgents
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17297
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17297
L1 - http://www.nber.org/papers/w17297.pdf
N1 - Author contact info:
Radha Iyengar
London School of Economics
Department of Economics
Houghton St
London WC2A 2AE
UNITED KINGDOM
Tel: 44 (0) 20 7852 3563
Fax: 44 (0) 20 7955 7595
E-Mail: R.Iyengar1@lse.ac.uk
Jonathan Monten
Department of Government
London School of Economics
Houghton St
London WC2A 2AE
United Kingdom
Tel: (202) 669-5378
E-Mail: jmonten@gmail.com
Matthew Hanson
NBER
1050 Massachusetts Ave
Cambridge, MA 02138
Tel: (703) 599-7785
E-Mail: hansonm@nber.org
AB - Employment growth could reduce violence during civil conflicts. To determine if increased employment affects violence we analyzed varying employment in development programs run by different US military divisions in Iraqi districts. Employment levels vary with funding periods and the military division in charge. Controlling for variability between districts, we find that a 10% increase in labor-related spending generates a 15-20% decline in labor-intensive insurgent violence. Overall the 10% spending increase is associated with a nearly 10% violence reduction, due to reduction in attacks which kill civilians, but increased attacks against the military. These findings indicate that labor-intensive development programs can reduce violence during insurgencies.
ER -
TY - JOUR
AU - Duffie,Darrell
AU - Strulovici,Bruno
TI - Capital Mobility and Asset Pricing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17296
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17296
L1 - http://www.nber.org/papers/w17296.pdf
N1 - Author contact info:
Darrell Duffie
Graduate School of Business
Stanford University
Stanford, CA 94305-5015
Tel: 650/723-1976
Fax: 650/725-7979
E-Mail: duffie@stanford.edu
Bruno Strulovici
Economics Department
Northwestern University
Evanston IL 60201
E-Mail: b-strulovici@northwestern.edu
AB - We present a model for the equilibrium movement of capital between asset markets that are distinguished only by the levels of capital invested in each. Investment in that market with the greatest amount of capital earns the lowest risk premium. Intermediaries optimally trade off the costs of intermediation against fees that depend on the gain they can offer to investors for moving their capital to the market with the higher mean return. Those fees also depend on the bargaining power of the investor, in light of potential alternative intermediaries. In equilibrium, the speeds of adjustment of mean returns and of capital between the two markets are increasing in the degree to which capital is imbalanced between the two markets.
ER -
TY - JOUR
AU - Duffie,Darrell
AU - Malamud,Semyon
AU - Manso,Gustavo
TI - Information Percolation in Segmented Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17295
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17295
L1 - http://www.nber.org/papers/w17295.pdf
N1 - Author contact info:
Darrell Duffie
Graduate School of Business
Stanford University
Stanford, CA 94305-5015
Tel: 650/723-1976
Fax: 650/725-7979
E-Mail: duffie@stanford.edu
Semyon Malamud
Swiss Finance Institute @ EPFL
Quartier UNIL-Dorigny, Extranef 213
CH - 1015 Lausanne, Switzerland
E-Mail: semyon.malamud@epfl.ch
Gustavo Manso
University of California at Berkeley
E-Mail: manso@mit.edu
AB - We calculate equilibria of dynamic double-auction markets in which agents are distinguished by their preferences and information. Over time, agents are privately informed by bids and offers. Investors are segmented into groups that differ with respect to characteristics determining information quality, including initial information precision as well as market “connectivity,” the expected frequency of their trading opportunities. Investors with superior information sources attain strictly higher expected profits, provided their counterparties are unable to observe the quality of those sources. If, however, the quality of bidders’ information sources are commonly observable, then, under conditions, investors with superior information sources have strictly lower expected profits.
ER -
TY - JOUR
AU - Davis,Steven J.
AU - Faberman,Jason
AU - Haltiwanger,John C.
TI - Labor Market Flows in the Cross Section and Over Time
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17294
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17294
L1 - http://www.nber.org/papers/w17294.pdf
N1 - Author contact info:
Steven J. Davis
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-7312
Fax: 773/834-0733
E-Mail: Steven.Davis@ChicagoBooth.edu
Jason Faberman
Economic Research Department
Federal Reserve Bank of Chicago
230 S. LaSalle St.
Chicago, IL 60604
Tel: (312) 322-5274
Fax: (312) 322-2357
E-Mail: jfaberman@frbchi.org
John C. Haltiwanger
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3504
Fax: 301/405-3542
E-Mail: haltiwan@econ.umd.edu
AB - Many theoretical models of labor market search imply a tight link between worker flows (hires and separations) and job gains and losses at the employer level. Partly motivated by these theories, we exploit establishment-level data from U.S. sources to study the relationship between worker flows and job flows in the cross section and over time. We document strong, highly nonlinear relationships of hiring, quit and layoff rates to employer growth in the cross section. Simple statistical models that capture these cross-sectional relationships greatly improve our ability to account for fluctuations in aggregate worker flows. We also evaluate how well various theoretical models and views fit the patterns in the data. Aggregate fluctuations in layoffs are well captured by micro specifications that impose a tight cross-sectional link between worker flows and job flows. Aggregate fluctuations in quits are not. Instead, quit rates rise and fall with booms and recessions across the distribution of establishment growth rates, but more so at shrinking employers. Finally, we use our preferred statistical models – in combination with data on the cross-sectional distribution of establishment growth rates – to construct synthetic JOLTS-type measures of hires, separations, quits and layoffs back to 1990.
ER -
TY - JOUR
AU - Acemoglu,Daron
AU - Robinson,James A.
AU - Torvik,Ragnar
TI - Why Do Voters Dismantle Checks and Balances?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17293
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17293
L1 - http://www.nber.org/papers/w17293.pdf
N1 - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu
James A. Robinson
Harvard University
Department of Government
N309, 1737 Cambridge Street
Cambridge, MA 02138
Tel: 617/496-2839
Fax: 617/495-0438
E-Mail: jrobinson@gov.harvard.edu
Ragnar Torvik
Norwegian University of Science and Technology
Department of Economics
N-7491 Trondheim
Norway
E-Mail: ragnar.torvik@svt.ntnu.no
AB - Voters often dismantle constitutional checks and balances on the executive. If such checks and balances limit presidential abuses of power and rents, why do voters support their removal? We argue that by reducing politician rents, checks and balances also make it cheaper to bribe or influence politicians through non-electoral means. In weakly-institutionalized polities where such non-electoral influences, particularly by the better organized elite, are a major concern, voters may prefer a political system without checks and balances as a way of insulating politicians from these influences. When they do so, they are effectively accepting a certain amount of politician (presidential) rents in return for redistribution. We show that checks and balances are less likely to emerge when (equilibrium) politician rents are low; when the elite are better organized and are more likely to be able to influence or bribe politicians; and when inequality and potential taxes are high (which makes redistribution more valuable to the majority). We show that the main intuition, that checks and balances, by making politicians “cheaper to bribe,” are potentially costly to the majority, is valid under different ways of modeling the form of checks and balances.
ER -
TY - JOUR
AU - Sialm,Clemens
AU - Tham,T. Mandy
TI - Spillover Effects in Mutual Fund Companies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17292
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17292
L1 - http://www.nber.org/papers/w17292.pdf
N1 - Author contact info:
Clemens Sialm
University of Texas at Austin
McCombs School of Business
1 University Station; B6600
Austin, TX 78712
Tel: 512-232-6835
E-Mail: clemens.sialm@mccombs.utexas.edu
Mandy Tham
Nanyang Technological University
50 Nanyang Avenue
S3-B1a-34
Singapore 639798
E-Mail: atmtham@ntu.edu.sg
AB - Our paper investigates spillover effects across different business segments of publicly traded mutual fund management companies. We find that the prior stock price performance of the management company has a significant impact on the money flows and the management turnover of the affiliated mutual funds. Mutual funds managed by poorly performing firms experience unexpectedly low flows of new money and exhibit a significantly higher attrition of fund managers even if the mutual funds themselves performed well. Our results remain strong for companies where mutual funds account for only a small fraction of the overall revenues and hold for both equity and bond mutual funds. These results indicate that the financial health of a diversified firm has a significant impact on the prospects of the various business segments.
ER -
TY - JOUR
AU - Beaudry,Paul
AU - Portier,Franck
TI - A Gains from Trade Perspective on Macroeconomic Fluctuations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17291
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17291
L1 - http://www.nber.org/papers/w17291.pdf
N1 - Author contact info:
Paul Beaudry
Department of Economics
University of British Columbia
Vancouver, Canada
Tel: 604/822-8624
Fax: 604/822-5915
E-Mail: paulbe@interchange.ubc.ca
Franck Portier
GREMAQ-IDEI
University of Toulouse
Manufacture des Tabacs
21 Allee de Brienne
31000 Toulouse, FRANCE
Tel: fax 05-61-12-8637; fportier@cict.fr
E-Mail: fportier@cict.fr
AB - Business cycles reflect changes over time in the amount of trade between individuals. In this paper we show that incorporating explicitly intra-temporal gains from trade between individuals into a macroeconomic model can provide new insight into the potential mechanisms driving economic fluctuations as well as modify key policy implications. We first show how a "gains from trade" approach can easily explain why changes in perceptions about the future (including "news" about the future) can cause booms and bust. We then turn to fiscal policy, and discuss under what conditions fiscal multipliers can be observed. While much of our analysis is conducted in a flexible price environment, we also present implications of our model for a sticky price environments, as it allows to understand stable-inflation boom-bust cycles. The source of the explicit gains from trade in our setup derives from simply assuming that in the short run workers are not perfect mobile across all sectors of the economy. We provide evidence from the PSID in support of this modeling assumption.
ER -
TY - JOUR
AU - Hovakimian,Armen
AU - Kayhan,Ayla
AU - Titman,Sheridan
TI - Are Corporate Default Probabilities Consistent with the Static Tradeoff Theory?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17290
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17290
L1 - http://www.nber.org/papers/w17290.pdf
N1 - Author contact info:
Armen Hovakimian
Department of Economics and Finance
Baruch College Zicklin School of Business
1 Bernard Baruch Way
New York, NY 10010
Tel: 646-312-3490
Fax: 646-312-3451
E-Mail: Armen_Hovakimian@baruch.cuny.edu
Ayla Kayhan
Department of Finance
E.J. Ourso School of Business
Louisiana State University
Baton Rouge, LA 70803
Tel: 512/785-4995
E-Mail: akayhan@lsu.edu
Sheridan Titman
Finance Department
McCombs School of Business
University of Texas at Austin
Austin, TX 78712-1179
Tel: 512/232-2787
Fax: 512/471-5073
E-Mail: titman@mail.utexas.edu
AB - Default probability plays a central role in the static tradeoff theory of capital structure. We directly test this theory by regressing the probability of default on proxies for costs and benefits of debt. Contrary to predictions of the theory, firms with higher bankruptcy costs, i.e., smaller firms and firms with lower asset tangibility, choose capital structures with higher bankruptcy risk. Further analysis suggests that the capital structures of smaller firms with lower asset tangibility, which tend to have less access to capital markets, are more sensitive to negative profitability and equity value shocks, making them more susceptible to bankruptcy risk.
ER -
TY - JOUR
AU - Devereux,Michael B.
AU - Hnatkovska,Viktoria
TI - The Extensive Margin, Sectoral Shares and International Business Cycles
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17289
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17289
L1 - http://www.nber.org/papers/w17289.pdf
N1 - Author contact info:
Michael B. Devereux
Department of Economics
University of British Columbia
997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-2542
Fax: 604/822-5915
E-Mail: mbdevereux@gmail.com
Viktoria Hnatkovska
Department of Economics
University of British Columbia
Vancouver, BC V6T 1Z1
E-Mail: hnatkovs@interchange.ubc.ca
AB - This paper documents some previously neglected features of sectoral shares at business cycle frequencies in OECD economies. In particular, we find that the nontraded sector share of output is as volatile as aggregate GDP, and that for most countries, the nontraded sector is distinctly countercyclical. While the standard international real business cycle model has difficulty in accounting for these properties of the data, an extended model which allows for sectoral adjustment along both the intensive and extensive margins does a much better job in replicating the volatilities and co-movements in the data. In addition, the model provides a closer match between theory and data with respect to the correlation between relative consumption growth and real exchange rate changes, a key measure of international risk-sharing.
ER -
TY - JOUR
AU - Devereux,Michael B.
AU - Hnatkovska,Viktoria
TI - Consumption Risk-Sharing and the Real Exchange Rate: Why does the Nominal Exchange Rate Make Such a Difference?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17288
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17288
L1 - http://www.nber.org/papers/w17288.pdf
N1 - Author contact info:
Michael B. Devereux
Department of Economics
University of British Columbia
997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-2542
Fax: 604/822-5915
E-Mail: mbdevereux@gmail.com
Viktoria Hnatkovska
Department of Economics
University of British Columbia
Vancouver, BC V6T 1Z1
E-Mail: hnatkovs@interchange.ubc.ca
AB - A basic prediction of effcient risk-sharing is that relative consumption growth rates across countries or regions should be positively related to real exchange rate growth rates across the same areas. We investigate this hypothesis, employing a newly constructed multi-country and multi-regional data set. Within countries, we find signifcant evidence for risk sharing: episodes of high relative regional consumption growth are associated with regional real exchange rate depreciation. Across countries however, the association is reversed: relative consumption and real exchange rates are negatively correlated. We identify this failure of risk sharing as a border effect. We find that the border effect is substantially (but not fully) accounted for by nominal exchange rate variability. We then ask whether standard open economy macro models can explain these features of the data. We argue that they cannot. To explain the role of the nominal exchange rate in deviations from cross country consumption risk sharing, it is necessary to combine multiple sources of shocks, ex-ante price setting, and incomplete financial markets.
ER -
TY - JOUR
AU - Liebman,Jeffrey B.
AU - Luttmer,Erzo F.P.
TI - Would People Behave Differently If They Better Understood Social Security? Evidence From a Field Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17287
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17287
L1 - http://www.nber.org/papers/w17287.pdf
N1 - Author contact info:
Jeffrey B. Liebman
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-8518
Fax: 617/496-9053
E-Mail: jeffrey_liebman@harvard.edu
Erzo F.P. Luttmer
6106 Rockefeller Center, Room 305
Department of Economics
Dartmouth College
Hanover, NH 03755
Tel: 603/646-6479
E-Mail: Erzo.FP.Luttmer@Dartmouth.Edu
AB - This paper presents the results of a field experiment in which a sample of older workers was randomized between a treatment group that was given information about key Social Security provisions and a control group that was not. The experiment was designed to examine whether it is possible to affect individual behavior using a relatively inexpensive informational intervention about the provisions of a public program and to explore the mechanisms underlying the behavior change. We find that our relatively mild intervention (sending an informational brochure and an invitation to a web-tutorial) increased labor force participation one year later by 4 percentage points relative to the control group mean of 74 percent and that this effect is driven by a 7.2 percentage point increase among female subjects. In addition to affecting actual labor supply behavior, the information intervention increased survey measures of the perceived returns to working longer, especially among female respondents.
ER -
TY - JOUR
AU - Dobbie,Will
AU - Fryer,Roland G., Jr.
TI - Exam High Schools and Academic Achievement: Evidence from New York City
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17286
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17286
L1 - http://www.nber.org/papers/w17286.pdf
N1 - Author contact info:
Will Dobbie
Education Innovation Laboratory
Harvard University
44 Brattle Street, 5th Floor
Cambridge, MA 02138
E-Mail: dobbie@fas.harvard.edu
Roland G. Fryer, Jr
Department of Economics
Harvard University
Littauer Center 208
Cambridge, MA 02138
Tel: 617/495-9592
Fax: 617/495-8570
E-Mail: rfryer@fas.harvard.edu
AB - Publicly funded exam schools educate many of the world's most talented students. These schools typically contain higher achieving peers, more rigorous instruction, and additional resources compared to regular public schools. This paper uses a sharp discontinuity in the admissions process at three prominent exam schools in New York City to provide the first causal estimate of the impact of attending an exam school in the United States on longer term academic outcomes. Attending an exam school increases the rigor of high school courses taken and the probability that a student graduates with an advanced high school degree. Surprisingly, however, attending an exam school has little impact on Scholastic Aptitude Test scores, college enrollment, or college graduation -- casting doubt on their ultimate long term impact.
ER -
TY - JOUR
AU - Lin,Xiaoji
AU - Zhang,Lu
TI - Covariances versus Characteristics in General Equilibrium
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17285
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17285
L1 - http://www.nber.org/papers/w17285.pdf
N1 - Author contact info:
Xiaoji Lin
Department of Finance
Ohio State University
2100 Neil Ave, Columbus, OH, 43210
Tel: 614-292-4318
Fax: 614-292-7062
Tel: 44-020-7852-3717
Fax: 44-020-7955-7420
E-Mail: lin_1376@fisher.osu.edu
Lu Zhang
Fisher College of Business
The Ohio State University
2100 Neil Avenue
Columbus, OH 43210
Tel: 585-267-6250
E-Mail: zhanglu@fisher.osu.edu
AB - We question a deep-ingrained doctrine in asset pricing: If an empirical characteristic-return relation is consistent with investor "rationality," the relation must be "explained" by a risk factor model. The investment approach changes the big picture of asset pricing. Factors formed on characteristics are not necessarily risk factors: Characteristics-based factor models are linear approximations of firm-level investment returns. The evidence that characteristics dominate covariances in horse races does not necessarily mean mispricing: Measurement errors in covariances are more likely to blame. Most important, the investment approach completes the consumption approach in general equilibrium, especially for cross-sectional asset pricing.
ER -
TY - JOUR
AU - Coles,Melvyn G.
AU - Mortensen,Dale T.
TI - Equilibrium Wage and Employment Dynamics in a Model of Wage Posting without Commitment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17284
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17284
L1 - http://www.nber.org/papers/w17284.pdf
N1 - Author contact info:
Melvyn Coles
Department of Economics
University of Essex
Colchester CO435Q
ENGLAND
E-Mail: mcole@essex.ac.uk
Dale T. Mortensen
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL 60208-2600
Tel: 847/491-8230
Fax: 847/491-7001
E-Mail: d-mortensen@northwestern.edu
AB - A rich but tractable variant of the Burdett-Mortensen model of wage setting behavior is formulated and a dynamic market equilibrium solution to the model is defined and characterized. In the model, firms cannot commit to wage contracts. Instead, the Markov perfect equilibrium to the wage setting game, characterized by Coles (2001), is assumed. In addition, firm recruiting decisions, firm entry and exit, and transitory firm productivity shocks are incorporated into the model.
Given that the cost of recruiting workers is proportional to firm employment, we establish the existence of an equilibrium solution to the model in which wages are not contingent on firm size but more productive employers always pay higher wages. Although the state space, the distribution of workers over firms, is large in the general case, it reduces to a scalar that can be interpreted as the unemployment rate in the special case of homogenous firms. Furthermore, the equilibrium is unique. As the dimension of the state space is equal to the number of firms types in general, an (approximate) equilibrium is computable.
ER -
TY - JOUR
AU - Fox,Jeremy T.
AU - Kim,Kyoo il
TI - A Simple Nonparametric Approach to Estimating the Distribution of Random Coefficients in Structural Models
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17283
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17283
L1 - http://www.nber.org/papers/w17283.pdf
N1 - Author contact info:
Jeremy T. Fox
Economics Department
University of Michigan
238 Lorch Hall
611 Tappan Ave
Ann Arbor, MI 48104
Tel: 734-330-2854
Fax: 734-274-2331
E-Mail: jeremyfox@gmail.com
Kyoo il Kim
Department of Economics
University of Minnesota
4-129 Hanson Hall
1925 4th Street South
Minneapolis, MN 55455
Tel: 612-625-6793
E-Mail: kyookim@umn.edu
AB - We explore a nonparametric mixtures estimator for recovering the joint distribution of random coefficients in economic models. The estimator is based on linear regression subject to linear inequality constraints and is computationally attractive compared to alternative, nonparametric estimators. We provide conditions under which the estimated distribution function converges to the true distribution in the weak topology on the space of distributions. We verify the consistency conditions for discrete choice, continuous outcome and selection models.
ER -
TY - JOUR
AU - Blonigen,Bruce
AU - O'Fallon,Cheyney
TI - Foreign Firms and Local Communities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17282
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17282
L1 - http://www.nber.org/papers/w17282.pdf
N1 - Author contact info:
Bruce Blonigen
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4680
Fax: 541/346-1243
E-Mail: bruceb@uoregon.edu
Cheyney O'Fallon
U.C. Santa Cruz, Economics Department
401 Engineering 2 Building, 1156 High Street
Santa Cruz, CA 95064
E-Mail: cofallon@ucsc.edu
AB - The literature on the effects of foreign direct investment (FDI) and activities of multinational enterprises (MNEs) on host-countries has been almost exclusively focused on issues of productivity, growth and wages. We argue that this leaves quite a bit of important unexplored areas of inquiry, particularly those connected with the interactions of local communities and governments with MNEs. As an example, we provide a novel analysis of local corporate philanthropy, which shows significant differences between local- and foreign-owned corporations. We find that foreign-owned enterprises are less likely to give, but that when they do give, it is substantially more in magnitude than domestic firms, everything else equal. This evidence is consistent with the hypothesis that foreign-owned firms would prefer to use corporate social responsibility (CSR) activities on a more international scale, but will strategically use CSR activities for public relation motives when the MNE faces greater local scrutiny and/or bias.
ER -
TY - JOUR
AU - Duffie,Darrell
TI - Systemic Risk Exposures: A 10-by-10-by-10 Approach
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17281
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17281
L1 - http://www.nber.org/papers/w17281.pdf
N1 - Author contact info:
Darrell Duffie
Graduate School of Business
Stanford University
Stanford, CA 94305-5015
Tel: 650/723-1976
Fax: 650/725-7979
E-Mail: duffie@stanford.edu
M1 - published as Darrell Duffie. "Systemic Risk Exposures: A 10-by-10-by-10 Approach," in Markus K. Brunnermeier and Arvind Krishnamurthy, editors, "Systemic Risk and Macro Modeling" University of Chicago Press (2012)
AB - Here, I present and discuss a “10-by-10-by-10” network-based approach to monitoring systemic financial risk. Under this approach, a regulator would analyze the exposures of a core group of systemically important financial firms to a list of stressful scenarios, say 10 in number. For each scenario, about 10 such designated firms would report their gains or losses. Each reporting firm would also provide the identities of the 10, say, counterparties with whom the gain or loss for that scenario is the greatest in magnitude relative to all counterparties. The gains or losses with each of those 10 counterparties would also be reported, scenario by scenario.
Gains and losses would be measured in terms of market value and also in terms of cash flow, allowing regulators to assess risk magnitudes in terms of stresses to both economic values and also liquidity. Exposures would be measured before and after collateralization. One of the scenarios would be the failure of a counterparty. The “top ten” counterparties for this scenario would therefore be those whose defaults cause the greatest losses to the reporting firm.
In eventual practice, the number of reporting firms, the number of stress scenarios, and the number of major counterparties could all exceed 10, but it is reasonable to start with a small reporting system until the approach is better understood and agreed upon internationally.
ER -
TY - JOUR
AU - Duffie,Darrell
AU - Sun,Yeneng
TI - The Exact Law of Large Numbers for Independent Random Matching
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17280
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17280
L1 - http://www.nber.org/papers/w17280.pdf
N1 - Author contact info:
Darrell Duffie
Graduate School of Business
Stanford University
Stanford, CA 94305-5015
Tel: 650/723-1976
Fax: 650/725-7979
E-Mail: duffie@stanford.edu
Yeneng Sun
National University of Singapore
Department of Economics
1 Arts Link
Singapore 117570
Republic of Singapore
E-Mail: ynsun@nus.edu.sg
AB - This paper provides a mathematical foundation for independent random matching of a large population, as widely used in the economics literature. We consider both static and dynamic systems with random mutation, partial matching arising from search, and type changes induced by matching. Under independence assumptions at each randomization step, we show that there is an almost-sure constant cross-sectional distribution of types in a large population, and moreover that the multi-period cross-sectional distribution of types is deterministic and evolves according to the transition matrices of the type process of a given agent. We also show the existence of a joint agent-probability space, and randomized mutation, partial matching and match-induced type-changing functions that satisfy appropriate independence conditions, where the agent space is an extension of the classical Lebesgue unit interval.
ER -
TY - JOUR
AU - Burkhauser,Richard V.
AU - Lyons,Sean
AU - Simon,Kosali I.
TI - The Importance of the Meaning and Measurement of “Affordable” in the Affordable Care Act
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17279
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17279
L1 - http://www.nber.org/papers/w17279.pdf
N1 - Author contact info:
Richard V. Burkhauser
Cornell University
Department of Policy Analysis & Management
259 MVR Hall
Ithaca, NY 14853-4401
Tel: 607/255-2097
Fax: 607/255-4071
E-Mail: rvb1@cornell.edu
Sean Lyons
PhD candidate
Dept. of PAM
Cornell University, Ithaca NY
E-Mail: sml55@cornell.edu
Kosali I. Simon
School of Public and Environmental Affairs
Indiana University
Rm 359
1315 East Tenth Street
Bloomington, IN 47405-1701
Tel: (812) 856-3850
E-Mail: simonkos@indiana.edu
AB - This paper focuses on the practical importance of a critical but under-explored interpretation of a provision in the Affordable Care Act (ACA): whether “affordable” refers to the cost of single coverage alone, or to family or single coverage as applicable to the worker, in determining the employer’s mandated coverage requirement and workers’ (and their dependents’) access to subsidized exchange coverage. Since the average annual total premium for family coverage is substantially higher than that for single coverage (on average $12,298 vs. $4,386 in 2008) this is a non-trivial distinction.
Using data on workers from the Current Population Survey merged with estimates of employer and exchange policy premiums, we investigate the impact of the affordability decision on the fraction of workers who could then access exchange coverage subsidies and on the correspondingly lower employer sponsored insurance (ESI) coverage rates. We do via a series of calculations for each worker that first shows the financial incentives at stake in deciding between ESI and subsidized exchange coverage. We then show how many of those who stand to gain from exchange coverage could do so under the two different affordability rules and different levels of employee contributions. Finally, we show the extent to which a single affordability rule would cause low-income workers with families to fall into a “no-man’s land” with no source of affordable family coverage.
We estimate that choosing a family affordability rule could initially lead to as many as 1.3 million more workers accessing exchange subsidies for themselves and their families than under a single affordability rule. If employees pay 50 percent of the premiums in the future, this number increases to 6 million. Increased use of exchange subsidies would be accompanied by reductions in ESI coverage and increased costs to taxpayers. Alternatively, choosing a single affordability rule would initially result in close to 4 million dependents of workers with affordable single coverage not having affordable health insurance. This would grow to close to 13 million if employees pay 50 percent of the premium.
ER -
TY - JOUR
AU - Burnside,Craig
TI - Carry Trades and Risk
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17278
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17278
L1 - http://www.nber.org/papers/w17278.pdf
N1 - Author contact info:
Craig Burnside
Department of Economics
Duke University
213 Social Sciences Building
Durham, NC 27708-0097
Tel: 919/660-1808
Fax: 919/684-8974
E-Mail: craig.burnside@duke.edu
AB - Carry trades, in which an investor borrows a low interest rate currency and lends a high interest rate currency, have been profitable historically. The risk exposure of carry traders might explain their high returns, but conventional models of risk do not work because traditional risk factors, used to price the stock market, do not price currency returns. Less traditional factors that are more successful in explaining currency returns, are, however, unsuccessful in explaining the returns to the stock market. More exotic models of "crisis risk" are another possibility, but I show that any time-variation in the exposure of the carry trade to market risk has been insufficient, in sample, to explain the average returns earned by carry traders. Instead, peso events remain a candidate explanation of the returns to the carry trade.
ER -
TY - JOUR
AU - Gourio,François
AU - Siemer,Michael
AU - Verdelhan,Adrien
TI - International Risk Cycles
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17277
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17277
L1 - http://www.nber.org/papers/w17277.pdf
N1 - Author contact info:
Francois Gourio
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-4534
Fax: 617/353-4449
E-Mail: fgourio@bu.edu
Michael Siemer
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
E-Mail: msiemer@bu.edu
Adrien Verdelhan
MIT Sloan School of Management
100 Main Street, E62-621
Cambridge, MA 02142
Tel: 617/253-5123
E-Mail: adrienv@mit.edu
AB - Recent work in international finance suggests that the forward premium puzzle can be accounted for if (1) aggregate uncertainty is time-varying, and (2) countries have heterogeneous exposures to a world aggregate shock. We embed these features in a standard two-country real business cycle framework, and calibrate the model to match the differences between low and high interest rates countries. Unlike traditional real business cycle models, our model generates volatile exchange rates, a large currency forward premium, "excess comovement'' of asset prices relative to quantities, and an imperfect correlation between relative consumption growth and exchange rates. Our model implies, however, that high interest rate countries have smoother quantities, equity returns and interest rates than low interest rate countries, contrary to the data.
ER -
TY - JOUR
AU - Grubb,Farley
TI - The Continental Dollar: Initial Design, Ideal Performance, and the Credibility of Congressional Commitment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17276
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17276
L1 - http://www.nber.org/papers/w17276.pdf
N1 - Author contact info:
Farley Grubb
University of Delaware
Economics Department
Newark, DE 19716
Tel: 302/831-1905
Fax: 302/831-6968
E-Mail: grubbf@udel.edu
AB - An alternative history of the Continental Dollar is constructed from the original resolutions passed by Congress. The Continental Dollar was a zero-interest bearer bond, not a fiat currency. The public could redeem it at face value in specie at fixed future dates. Being a zero-interest bearer bond, discounting must be separated from depreciation. Before 1779 there was no depreciation, only discounting. In 1779 and again in 1780 Congress passed ex post facto laws which altered the redemption dates of past Continental Dollars in ways that were not fiscally credible. These laws were the turning point. Depreciation and collapse followed.
ER -
TY - JOUR
AU - Blau,Francine D.
AU - Kahn,Lawrence M.
TI - Substitution Between Individual and Cultural Capital: Pre-Migration Labor Supply, Culture and US Labor Market Outcomes Among Immigrant Women
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17275
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17275
L1 - http://www.nber.org/papers/w17275.pdf
N1 - Author contact info:
Francine D. Blau
ILR School
Cornell University
268 Ives Hall
Ithaca, New York 14853-3901
Tel: 607/255-4381
Fax: 607/255-4496
E-Mail: fdb4@cornell.edu
Lawrence Kahn
ILR School
Cornell University
258 Ives Hall
Ithaca, NY 14853
Tel: 607-255-0510
Fax: 607-255-4496
E-Mail: lmk12@cornell.edu
AB - In this paper we use New Immigrant Survey data to investigate the impact of immigrant women’s own labor supply prior to migrating and female labor supply in their source country to provide evidence on the role of human capital and culture in affecting their labor supply and wages in the United States. We find, as expected, that women who migrate from countries with relatively high levels of female labor supply work more in the United States. Moreover, most of this effect remains when we further control for each woman’s own labor supply prior to migrating, which itself also strongly affects labor supply in the United States. Importantly, we find a significantly negative interaction between pre-migration labor supply and source country female labor supply. We obtain broadly similar effects analyzing the determinants of hourly earnings among the employed in the United States, although the results are not always significant. These results suggest an important role for culture and norms in affecting immigrant women’s labor supply, since the effect of source country female labor supply on immigrant women’s US work hours is still strong even controlling for the immigrant’s own pre-migration labor supply. The negative interaction effects between previous work experience and source country female labor supply on women’s US work hours and wages suggest that cultural capital and individual job-related human capital act as substitutes in affecting preparedness for work in the US.
ER -
TY - JOUR
AU - Ball,Laurence M.
AU - Roux,Nicolás De
AU - Hofstetter,Marc
TI - Unemployment in Latin America and the Caribbean
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17274
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17274
L1 - http://www.nber.org/papers/w17274.pdf
N1 - Author contact info:
Laurence M. Ball
Department of Economics
Johns Hopkins University
Baltimore, MD 21218
Tel: 410/516-7605
Fax: 410/516-7600
E-Mail: lball@jhu.edu
Nicolas De Roux
Department of Economics
Columbia University
420 West 118th Street
New York, NY 10027
E-Mail: nd2282@columbia.edu
Marc Hofstetter
Faculdad de Economia
Universidad de los Andes
Carrera 1 No 18A-70
Bogota, Colombia
E-Mail: mahofste@uniandes.edu.co
AB - This study constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. We compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak. We also examine large, persistent increases in unemployment over time, finding that they are caused by contractions in aggregate demand. These demand contractions result from either disinflationary monetary policy or the defense of an exchange-rate peg in the face of capital flight. Our evidence supports hysteresis theories in which short-run changes in unemployment influence the natural rate.
ER -
TY - JOUR
AU - Stowasser,Till
AU - Heiss,Florian
AU - McFadden,Daniel
AU - Winter,Joachim
TI - "Healthy, Wealthy and Wise?" Revisited: An Analysis of the Causal Pathways from Socio-economic Status to Health
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17273
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17273
L1 - http://www.nber.org/papers/w17273.pdf
N1 - Author contact info:
Till Stowasser
University of Munich
Department of Economics
Ludwigstr. 28
D-80539 Munich
Germany
E-Mail: till.stowasser@lrz.uni-muenchen.de
Florian Heiss
Department of Statistics and Econometrics
Johannes Gutenberg-Universität Mainz
Haus Recht und Wirtschaft II
D-55099 Mainz
Germany
Tel: +49 (0) 6131/39 22551
Fax: +49 (0) 6131/39 23717
E-Mail: heiss@uni-mainz.de
Daniel L. McFadden
University of California, Berkeley
Department of Economics
549 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-8428
Fax: 510/642-0638
E-Mail: mcfadden@econ.berkeley.edu
Joachim Winter
Department of Economics
LMU
Ludwigstr. 28 (RG)
D-80539 Munich
Germany
E-Mail: winter@lmu.de
M3 - presented at "Aging Conference", May 6-7, 2011
AB - Much has been said about the stylized fact that the economically successful are not only wealthier but also healthier than the less affluent. There is little doubt about the existence of this socio-economic gradient in health, but there remains a vivid debate about its source. In this paper, we review the methodological challenges involved in testing the causal relationships between socio-economic status and health. We describe the approach of testing for the absence of causal channels developed by Adams et al. (2003) that seeks identification without the need to isolate exogenous variation in economic variables, and we repeat their analysis using the full range of data that have become available in the Health and Retirement Study since, both in terms of observations years and age ranges covered. This analysis shows that causal inference critically depends on which time periods are used for estimation. Using the information of longer panels has the greatest effect on results. We find that SES causality cannot be ruled out for a larger number of health conditions than in the original study. An approach based on a reduced-form interpretation of causality thus is not very informative, at least as long as the confounding influence of hidden common factors is not fully controlled.
ER -
TY - JOUR
AU - Favero,Carlo
AU - Giavazzi,Francesco
AU - Perego,Jacopo
TI - Country Heterogeneity and the International Evidence on the Effects of Fiscal Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17272
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17272
L1 - http://www.nber.org/papers/w17272.pdf
N1 - Author contact info:
Carlo Favero
Department of Finance
Bocconi University and IGIER
Via Röntgen, 1
20136 Milano, ITALY
E-Mail: carlo.favero@unibocconi.it
Francesco Giavazzi
Universita' Bocconi and IGIER
Via Guglielmo Rontgen, 1
Milan 20136
ITALY
Tel: 0039-02-5836-3304
Fax: 0039-02-5836-3302
E-Mail: francesco.giavazzi@unibocconi.it
Jacopo Perego
IGIER Universita' Bocconi
1 via Roentgen
20136 Milano
Italy
E-Mail: jacopo.perego@unibocconi.it
AB - This paper shows how the richer frequency and variety of fiscal policy shocks available in an international sample can be analyzed recognizing the heterogeneity that exists across different countries. The main conclusion of our empirical analysis is that the question "what is the fiscal policy multiplier" is an ill-posed one. There is no unconditional fiscal policy multiplier. The effect of fiscal policy on output is different depending on the different debt dynamics, the different degree of openness and the different fiscal reaction functions across different countries. There are many fiscal multipliers and an average fiscal multiplier is of very little use to describe the effect of exogenous shifts in fiscal policy on output.
ER -
TY - JOUR
AU - Spolaore,Enrico
AU - Wacziarg,Romain
TI - Long-Term Barriers to the International Diffusion of Innovations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17271
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17271
L1 - http://www.nber.org/papers/w17271.pdf
N1 - Author contact info:
Enrico Spolaore
Department of Economics
Tufts University
Braker Hall 315
8 Upper Campus Road
Medford, MA 02155
Tel: 617/627-4068
Fax: 617/627-3917
E-Mail: enrico.spolaore@tufts.edu
Romain Wacziarg
Anderson School of Management at UCLA
C-510 Entrepreneurs Hall
110 Westwood Plaza
Los Angeles, CA 90095-1481
Tel: 310 825 4507
E-Mail: wacziarg@ucla.edu
M3 - presented at "ISOM", June 17-18, 2011
AB - We document an empirical relationship between the cross-country adoption of technologies and the degree of long-term historical relatedness between human populations. Historical relatedness is measured using genetic distance, a measure of the time since two populations’ last common ancestors. We find that the measure of human relatedness that is relevant to explain international technology diffusion is genetic distance relative to the world technological frontier (“relative frontier distance”). This evidence is consistent with long-term historical relatedness acting as a barrier to technology adoption: societies that are more distant from the technological frontier tend to face higher imitation costs. The results can help explain current differences in total factor productivity and income per capita across countries.
ER -
TY - JOUR
AU - Charles,Kerwin Kofi
AU - Stephens,Melvin,Jr.
TI - Employment, Wages and Voter Turnout
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17270
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17270
L1 - http://www.nber.org/papers/w17270.pdf
N1 - Author contact info:
Kerwin Kofi Charles
Harris School of Public Policy
University of Chicago
1155 East 60th Street
Chicago, IL 60637
Tel: 773.834.8922
Fax: NA
E-Mail: kcharles@uchicago.edu
Melvin Stephens, Jr.
University of Michigan
Department of Economics
341 Lorch Hall
611 Tappan St.
Ann Arbor, MI 48109-1220
Tel: 734/647-5606
E-Mail: mstep@umich.edu
AB - This paper argues that, since activities that provide political information are complementary with leisure, increased labor market activity should lower turnout, but should do so least in prominent elections where information is ubiquitous. Using official county-level voting data and a variety of OLS and TSLS models, we find that increases in wages and employment: reduce voter turnout in gubernatorial elections by a significant amount; have no effect on Presidential turnout; and raise the share of persons voting in a Presidential election who do not vote on a House of Representative election on the same ballot. We argue that this pattern (which contradicts some previous findings in the literature) can be fully accounted for by an information argument, and is either inconsistent with or not fully explicable by arguments based on citizens’ psychological motivations to vote in good or bad times; changes in logistical voting costs; or transitory migration. Using individual-level panel data methods and multiple years’ data from the American National Election Study (ANES) we confirm that increases in employment lead to less use of the media and reduced political knowledge, and present associational individual evidence that corroborates our main argument.
ER -
TY - JOUR
AU - Erel,Isil
AU - Nadauld,Taylor D.
AU - Stulz,René M.
TI - Why Did U.S. Banks Invest in Highly-Rated Securitization Tranches?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17269
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17269
L1 - http://www.nber.org/papers/w17269.pdf
N1 - Author contact info:
Isil Erel
Department of Finance
Ohio State University
832 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210
Tel: 614-292-5174
E-Mail: erel@fisher.osu.edu
Taylor D. Nadauld
Department of Finance
Brigham Young University
Provo, Utah 84602
E-Mail: taylor.nadauld@byu.edu
Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu
AB - We estimate holdings of highly-rated tranches of mortgage securitizations of American deposit-taking banks ahead of the credit crisis and evaluate hypotheses that have been advanced to explain these holdings. We find that holdings of highly-rated tranches were economically trivial for the typical bank, but banks with greater holdings performed more poorly during the crisis. Though univariate comparisons show that banks with large trading books had greater holdings, the holdings of highly-rated tranches are not higher for banks with large trading books in regressions that control for bank size. The ratio of highly-rated tranches holdings to assets increases with bank assets, but not for banks with more than $50 billion of assets. This evidence is inconsistent with explanations for holdings of highly-rated tranches that emphasize the incentives of banks deemed “too-big-to-fail”. Further, the evidence does not provide support for “bad incentives” theories of holdings of highly-rated tranches. We find, however, that banks active in securitization held more highly-rated tranches. Such a result can be consistent with regulatory arbitrage as well as with securitizing banks holding highly-rated tranches to convince investors of the quality of these securities. Our evidence supports the latter hypothesis.
ER -
TY - JOUR
AU - Burman,Leonard E.
AU - Phaup,Marvin
TI - Tax Expenditures, the Size and Efficiency of Government, and Implications for Budget Reform
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17268
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17268
L1 - http://www.nber.org/papers/w17268.pdf
N1 - Author contact info:
Leonard E. Burman
Center for Policy Research
426 Eggers Hall
Syracuse, NY 13244
Tel: 315/443-2692
Fax: 315/443-1081
E-Mail: leburman@maxwell.syr.edu
Marvin Phaup
Trachtenberg School of Public Policy and Public Ad
The George Washington University
601K Media and Public Affairs
Washington, D.C. 20052
E-Mail: MPhaup@gwu.edu
M1 - published as Leonard E. Burman, Marvin Phaup. "Tax Expenditures, the Size and Efficiency of Government, and Implications for Budget Reform," in Jeffrey Brown, editor, "Tax Policy and the Economy, Volume 26" University of Chicago Press (2012)
AB - One possible explanation for the difficulty in controlling the budget is that a major component of spending —tax expenditures—receives privileged status. It is treated as tax cuts rather than spending. This paper explores the implications of that classification and illustrates how it can lead to higher taxes, larger government, and an inefficient mix of spending (too many tax expenditures). The paper then analyzes alternative budgeting approaches that would explicitly incorporate and measure tax expenditures. It concludes by analyzing ways to control tax expenditures (and other spending) and the special challenges presented by tax expenditures.
ER -
TY - JOUR
AU - Bordo,Michael D.
AU - Rockoff,Hugh
TI - The Influence of Irving Fisher on Milton Friedman’s Monetary Economics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17267
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17267
L1 - http://www.nber.org/papers/w17267.pdf
N1 - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu
Hugh Rockoff
Department of Economics
75 Hamilton Street
Rutgers University
College Avenue Campus
New Brunswick, NJ 08901-1248
Tel: 609/897-0117
Fax: 732/932-7416
E-Mail: rockoff@fas-econ.rutgers.edu
AB - This paper examines the influence of Irving Fisher’s writings on Milton Friedman’s work in monetary economics. We focus first on Fisher’s influences in monetary theory (the quantity theory of money, the Fisher effect, Gibson’s Paradox, the monetary theory of business cycles, and the Phillips Curve, and empirics, e.g. distributed lags.). Then we discuss Fisher and Friedman's views on monetary policy and various schemes for monetary reform (the k% rule, freezing the monetary base, the compensated dollar, a mandate for price stability, 100% reserve money, and stamped money.) Assessing the influence of an earlier economist's writings on that of later scholars is a challenge. As a science progresses the views of its earlier pioneers are absorbed in the weltanschauung. Fisher's Purchasing Power of Money as well as the work of Pigou and Marshall were the basic building blocks for later students of monetary economics. Thus, the Chicago School of the 1930s absorbed Fisher's approach, and Friedman learned from them. However, in some salient aspects of Friedman's work we can clearly detect a major direct influence of Fisher's writings on Friedman's. Thus, for example with the buildup of inflation in the 1960s Friedman adopted the Fisher effect and Fisher's empirical approach to inflationary expectations into his analysis. Thus, Fisher's influence on Friedman was both indirect through the Chicago School and direct. Regardless of the weight attached to the two influences, Fisher' impact on Friedman was profound.
ER -
TY - JOUR
AU - Rajan,Raghuram G.
AU - Ramcharan,Rodney
TI - Constituencies and Legislation: The Fight over the McFadden Act of 1927
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17266
PY - 2011
Y2 - August 2011
UR - http://www.nber.org/papers/w17266
L1 - http://www.nber.org/papers/w17266.pdf
N1 - Author contact info:
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu
Rodney Ramcharan
Federal Reserve Board
Washington DC
Tel: 202-912-7851
Fax: 202-452-5295
E-Mail: rodney.ramcharan@frb.gov
AB - The McFadden Act of 1927 was one of the most hotly contested pieces of legislation in U.S. banking history, and its influence was still felt over half a century later. The act was intended to force states to accord the same branching rights to national banks as they accorded to state banks. By uniting the interests of large state and national banks, it also had the potential to expand the number of states that allowed branching. Congressional votes for the act therefore could reflect the strength of various interests in the district for expanded banking competition. Unlike previous work, we find strong evidence of elite influence. We find congressmen in districts in which landholdings were concentrated (suggesting a landed elite), and where the cost of bank credit was high and its availability limited (suggesting limited banking competition and high potential rents), were significantly more likely to oppose the act. The evidence suggests that while the law and the overall regulatory structure can shape the financial system far into the future, they themselves are likely to be shaped by well organized elites, even in countries with benign political institutions.
ER -
TY - JOUR
AU - Braguinsky,Serguey
AU - Branstetter,Lee G.
AU - Regateiro,Andre
TI - The Incredible Shrinking Portuguese Firm
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17265
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17265
L1 - http://www.nber.org/papers/w17265.pdf
N1 - Author contact info:
Serguey Braguinsky
Department of Social and Decision Sciences
and Heinz College,
School of Public Policy and Management
Carnegie Mellon University
Pittsburgh, PA 15213
E-Mail: sbrag@andrew.cmu.edu
Lee G. Branstetter
Heinz College
School of Public Policy and Management
Department of Social and Decision Sciences
Carnegie Mellon University
Pittsburgh, PA 15213
Tel: 412/268-4649
E-Mail: branstet@andrew.cmu.edu
Andre Regateiro
Heinz College
School of Public Policy and Management
Carnegie Mellon University
Pittsburgh, PA 15213
E-Mail: AndreRegateiro@ist.utl.pt
AB - Using Portugal's extensive matched employer-employee data set, this paper documents an unusual feature of the Portuguese economy. For decades, the entire Portuguese firm size distribution has been shifting to the left. We argue in this paper that Portugal's shrinking firms are linked to the country's anemic growth and low productivity. We show that the shift in the Portuguese firm size distribution is not reflected in other advanced industrial economies for which we have been able to obtain comparable data. Careful attempts to account for expanding data coverage, a structural shift from manufacturing to services, and aggressive efforts to "demonopolize" the Portuguese economy leave about half of this shift unexplained by these factors. So, what does explain the shift? We argue that Portugal's uniquely strong protections for regular workers have played an important role. Drawing upon an emerging literature that that attributes much of the productivity gap between advanced nations and developing nations to the misallocation of resources across firms in developing countries, we develop a theoretical model that shows how Portugal's labor market institutions could prevent more productive firms from reaching their optimal size, thereby constraining GDP per capita. Calibration exercises based on this model quantify the degree of labor market distortion consistent with recent shifts in the Portuguese firm size distribution. These calibration exercises suggest quite substantial growth effects could arise if the distortions were lessened or abolished altogether.
ER -
TY - JOUR
AU - Abdulkadiroglu,Atila
AU - Angrist,Joshua D.
AU - Pathak,Parag A.
TI - The Elite Illusion: Achievement Effects at Boston and New York Exam Schools
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17264
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17264
L1 - http://www.nber.org/papers/w17264.pdf
N1 - Author contact info:
Atila Abdulkadiroğlu
Duke University
Department of Economics
Durham, NC 27708
E-Mail: atila.abdulkadiroglu@duke.edu
Joshua Angrist
Department of Economics
MIT, E52-353
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8909
Fax: 617/253-1330
E-Mail: angrist@mit.edu
Parag Pathak
MIT Department of Economics
50 Memorial Drive
E52-391C
Cambridge, MA 02142
Tel: 617/253-7458
E-Mail: ppathak@mit.edu
AB - Talented students compete fiercely for seats at Boston and New York exam schools. These schools are characterized by high levels of peer achievement and a demanding curriculum tailored to each district's highest achievers. While exam school students do very well in school, the question of whether an exam school education adds value relative to a regular public education remains open. We estimate the causal effect of exam school attendance using a regression-discontinuity design, reporting both parametric and non- parametric estimates. The outcomes studied here include scores on state standardized achievement tests, PSAT and SAT participation and scores, and AP scores. Our estimates show little effect of exam school offers on most students' achievement. We use two-stage least squares to convert reduced form estimates of the effects of exam school offers into estimates of peer and tracking effects, arguing that these appear to be unimportant in this context. Finally, we explore the external validity of RD estimates, arguing that as best we can tell, there is little effect of an exam school education on achievement even for the highest-ability marginal applicants and for applicants to the right of admissions cutoffs. On the other hand, a Boston exam school education seems to have a modest effect on high school English scores for minority applicants. A small group of 9th grade applicants also appears to do better on SAT Reasoning. These localized gains notwithstanding, the intense competition for exam school seats does not appear to be justified by improved learning for a broad set of students.
ER -
TY - JOUR
AU - Puglisi,Riccardo
AU - Snyder,James M., Jr.
TI - The Balanced U.S. Press
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17263
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17263
L1 - http://www.nber.org/papers/w17263.pdf
N1 - Author contact info:
Riccardo Puglisi
Department of Economics, Statistics and Law
University of Pavia
Corso Strada Nuova 65
27100 Pavia
Italy
E-Mail: riccardo.puglisi@unipv.it
James M. Snyder, Jr.
Harvard University
1737 Cambridge Street, CGIS
Knafel Building Room 413
Cambridge, MA 02138
Tel: 617/496-1089
E-Mail: jsnyder@gov.harvard.edu
AB - We propose a new method for measuring the relative ideological positions of newspapers, voters, interest groups, and political parties. The method uses data on ballot propositions. We exploit the fact that newspapers, parties, and interest groups take positions on these propositions, and the fact that citizens ultimately vote on them. We find that, on average, newspapers in the U.S. are located almost exactly at the median voter in their states. Newspapers also tend to be centrist relative to interest groups.
ER -
TY - JOUR
AU - Celik,Levent
AU - Karabay,Bilgehan
AU - McLaren,John
TI - Trade Policy Making in a Model of Legislative Bargaining
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17262
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17262
L1 - http://www.nber.org/papers/w17262.pdf
N1 - Author contact info:
Levent Celik
CERGE-EI
Politickych veznu 7, 111 21
Prague 1
Czech Republic
E-Mail: celik@cerge-ei.cz
Bilgehan Karabay
Department of Economics
University of Auckland
Owen G. Glenn Building
12 Grafton Road
Auckland 1010
New Zealand
Tel: +64-9-9237193
Fax: +64-9-3737427
E-Mail: bilgehan.karabay@gmail.com
John McLaren
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434/924-3994
Fax: 434/982-2904
E-Mail: jmclaren@virginia.edu
AB - In democracies, trade policy is the result of interactions among many agents with different agendas. In accordance with this observation, we construct a dynamic model of legislative trade policy-making in the realm of distributive politics. An economy consists of different sectors, each of which is concentrated in one or more electoral districts. Each district is represented by a legislator in the Congress. Legislative process is modeled as a multilateral sequential bargaining game a la Baron and Ferejohn (1989). Some surprising results emerge: bargaining can be welfare-worsening for all participants; legislators may vote for bills that make their constituents worse off; identical industries will receive very different levels of tariff. The results pose a challenge to empirical work, since equilibrium trade policy is a function not only of economic fundamentals but also of political variables at the time of congressional negotiations – some of them random realizations of mixed bargaining strategies.
ER -
TY - JOUR
AU - Lewis,Karen K.
TI - Global Asset Pricing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17261
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17261
L1 - http://www.nber.org/papers/w17261.pdf
N1 - Author contact info:
Karen K. Lewis
Department of Finance, Wharton School
2300 SHDH
University of Pennsylvania
Philadelphia, PA 19104-6367
Tel: 215/898-7637
Fax: 215/898-6200
E-Mail: lewisk@wharton.upenn.edu
AB - Financial markets have become increasingly global in recent decades, yet the pricing of internationally traded assets continues to depend strongly upon local risk factors, leading to several observations that are difficult to explain with standard frameworks. Equity returns depend upon both domestic and global risk factors. Further, local investors tend to overweight their asset portfolios in local equity. The stock prices of firms that begin to trade across borders increase in response to this information. Foreign exchange markets also display anomalous relationships. The forward rate predicts the wrong sign of future movements in the exchange rate, implying that traders can make profits by borrowing in lower interest rate currencies and investing in higher interest rate currencies. Furthermore, the sign of the foreign exchange premium changes over time, a fact difficult to reconcile with consumption variability. In this review, I describe the implications of the current body of research for addressing these and other global asset pricing challenges.
ER -
TY - JOUR
AU - Feldstein,Martin S.
TI - What's Next for the Dollar?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17260
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17260
L1 - http://www.nber.org/papers/w17260.pdf
N1 - Author contact info:
Martin S. Feldstein
President Emeritus
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138-5398
Tel: 617/868-3905
Fax: 617/868-7194
E-Mail: msfeldst@nber.org
AB - The real trade weighted value of the dollar fell 11 percent against the Federal Reserve Bank’s index of major currencies during the 12 months through May 2011 and 31 percent during the past ten years. Four strong market forces are likely to cause further declines over the next several years: a portfolio rebalancing by major international investors who regard their portfolios as overweight dollars, the large US current account deficit, a Chinese policy to raise consumption, and interest rate differences that make dollar investments less attractive.
A declining dollar could have a powerful positive effect on the short-run performance of the American economy by raising exports (now more than $1.3 trillion) and inducing American consumers to shift from imports to American made products and services. Without a boost to demand from an increase in net exports, the U.S. recovery is likely to remain weak and could run out of steam.
There are of course also negative effects of a falling dollar: reducing the real value of any given level of personal incomes by raising the cost to households of the imported products that they consume and creating inflationary pressures as import prices rise.
ER -
TY - JOUR
AU - Aguiar,Mark A.
AU - Hurst,Erik
AU - Karabarbounis,Loukas
TI - Time Use During Recessions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17259
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17259
L1 - http://www.nber.org/papers/w17259.pdf
N1 - Author contact info:
Mark A. Aguiar
Department of Economics
Princeton University
Fisher Hall
Princeton, NJ 08544-1021
E-Mail: mark@markaguiar.com
Erik Hurst
Booth School of Business
University of Chicago
Harper Center
Chicago, IL 60637
Tel: 773/834-4073
Fax: 773/702-0458
E-Mail: erik.hurst@chicagobooth.edu
Loukas Karabarbounis
University of Chicago
Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-8327
E-Mail: loukas.karabarbounis@chicagobooth.edu
AB - We use data from the American Time Use Survey (ATUS), covering both the recent recession and the pre-recessionary period, to explore how foregone market work hours are allocated to other activities over the business cycle. Given the short time series, it is hard to distinguish business cycle effects from low frequency trends by simply comparing time spent on a given category prior to the recession with time spent on that category during the recession. Instead, we identify the business cycle effects on time use using cross state variation with respect to the severity of the recessions. We find that roughly 30% to 40% of the foregone market work hours are allocated to increased home production. Additionally, 30% of the foregone hours are allocated to increased sleep time and increased television watching. Other leisure activities absorb 20% of the foregone market work hours. We use our evidence from the ATUS to calibrate and test the predictions of workhorse macroeconomic models with home production. We show that the quantitative implications of these models regarding the allocation of time over the business cycle matches reasonably well the actual behavior of households.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Sushko,Vladyslav
TI - Capital flows: Catalyst or Hindrance to economic takeoffs?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17258
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17258
L1 - http://www.nber.org/papers/w17258.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Vladyslav Sushko
Bank for International Settlements
Centralbahnplatz 2
4002 Basel
Switzerland
E-Mail: vlad.sushko@bis.org
AB - This paper applies a probit estimation to assess the relationship between economic takeoffs during 1950-2000 and inflows of portfolio debt, portfolio equity, and FDI, controlling for country’s stock of short-term external debt and commodity terms of trade. Average level of FDI inflows is associated with a 23 percent higher takeoff probability relative to a zero FDI inflow benchmark, and this effect is highest for the Latin America subsample, with a 65 rise in takeoff probability. Higher stock of short term external debt has been associated with a substantial negative effect on the probability of a takeoff, and the effect of the short terms debt overhang is largest for Latin American countries. Yet, virtually all the takeoffs were associated with a rise in portfolio debt inflows. At the sample mean, inflow of portfolio debt is associated with approximately 25 percent higher probability of a takeoff. In contrast, a one standard deviation increase in equity outflows (inflows) is associated with a 47 percent (17 percent) decline in the probability of a takeoff. A one standard deviation improvement in commodity terms of trade is associated with 28 percent higher takeoff probability.
ER -
TY - JOUR
AU - Krishna,Pravin
AU - Sethupathy,Guru
TI - Trade and Inequality in India
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17257
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17257
L1 - http://www.nber.org/papers/w17257.pdf
N1 - Author contact info:
Pravin Krishna
Johns Hopkins University
1740 Massachusetts Avenue, NW
Washington, DC 20036
Tel: 202/663 5733
Fax: 202/663 7718
E-Mail: Pravin_Krishna@jhu.edu
Guru Sethupathy
The Paul H. Nitze School of Advanced
International Studies (SAIS)
Johns Hopkins University
1740 Massachusetts Avenue, N.W.
Washington D.C., 20036
E-Mail: gsethupathy@jhu.edu
AB - To study the effects of the dramatic economic reforms undertaken in India in the early 1990s on inequality, this paper examines Theil inequality as well as other inequality measures constructed using Indian household expenditure survey data from 1988-2005. Overall inequality shows some variation over the period, falling between 1988 and 1994, rising between 1994 and 2000, but falling again by 2005. The evolution of inequality in the post reform period is thus non-monotonic. A similar inequality trend is seen within most Indian states over this time period. Finally, the change in inequality across households within states is found to be uncorrelated with the change in state-level measures of tariff and non-tariff protection.
ER -
TY - JOUR
AU - Krishna,Pravin
AU - Poole,Jennifer P.
AU - Senses,Mine Zeynep
TI - Wage Effects of Trade Reform with Endogenous Worker Mobility
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17256
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17256
L1 - http://www.nber.org/papers/w17256.pdf
N1 - Author contact info:
Pravin Krishna
Johns Hopkins University
1740 Massachusetts Avenue, NW
Washington, DC 20036
Tel: 202/663 5733
Fax: 202/663 7718
E-Mail: Pravin_Krishna@jhu.edu
Jennifer Poole
UC, Santa Cruz
1156 High Street
Santa Cruz, CA 95064
E-Mail: jpoole@ucsc.edu
Mine Zeynep Senses
Johns Hopkins University
1740 Massachusetts Avenue, NW
Washington, DC 20036
E-Mail: msenses@jhu.edu
AB - In this paper, we use a linked employer-employee database from Brazil to examine the impact of trade reform on the wages of workers employed at heterogeneous firms. Our analysis of data at the firm level confirms earlier findings of a differential positive effect of trade liberalization on average wages at exporting firms relative to non-exporting firms. However, the analysis of average firm-level wages is incomplete along several dimensions. First, it cannot fully account for the impact of a change in trade barriers on workforce composition, especially in terms of unobservable (time-invariant) worker characteristics (innate ability) and any additional productivity that results from employment in a specific firm (match-specific ability). Furthermore, the firm-level analysis is undertaken under the assumption that the assignment of workers to firms is random. This ignores the sorting of workers into firms and leads to a bias in estimates of the differential impact of trade on average wages at exporting firms relative to non-exporting firms. Using detailed information on worker and firm characteristics to control for compositional effects and allowing for the endogenous assignment of workers to firms due to time-invariant firm-worker match-specific productivity effects, we find an insignificant differential effect of trade openness on wages at exporting firms relative to domestic firms. We also show that workforce composition post-liberalization improves systematically in exporting firms in terms of the combination of innate worker ability and the quality of the worker-firm matches. Our findings confirm the importance of labor market matching mechanisms in determining the effects of trade policy changes on wages.
ER -
TY - JOUR
AU - Dupas,Pascaline
AU - Robinson,Jonathan
TI - Why Don't the Poor Save More? Evidence from Health Savings Experiments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17255
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17255
L1 - http://www.nber.org/papers/w17255.pdf
N1 - Author contact info:
Pascaline Dupas
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
E-Mail: pdupas@stanford.edu
Jonathan Robinson
Department of Economics
University of California, Santa Cruz
457 Engineering 2
Santa Cruz, CA 95064
E-Mail: jmrtwo@ucsc.edu
AB - Using data from a field experiment in Kenya, we document that providing individuals with simple informal savings technologies can substantially increase investment in preventative health and reduce vulnerability to health shocks. Simply providing a safe place to keep money was sufficient to increase health savings, through a mental accounting effect. Adding an earmarking feature was only helpful when funds were put towards emergencies; earmarking for preventative health reduced savings on average, because the liquidity cost of tying up money was too great. Providing social pressure and credit through a ROSCA-based savings scheme had very large effects.
ER -
TY - JOUR
AU - Kotchen,Matthew J.
AU - Moon,Jon Jungbien
TI - Corporate Social Responsibility for Irresponsibility
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17254
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17254
L1 - http://www.nber.org/papers/w17254.pdf
N1 - Author contact info:
Matthew Kotchen
School of Forestry & Environmental Studies,
School of Management,
and Department of Economics
Yale University
195 Prospect Street
New Haven, CT 06511
Tel: 203/432-9533
Fax: 203/436-9150
E-Mail: matthew.kotchen@yale.edu
Jon Jungbien Moon
Business School, Korea University
Anam-dong, Seongbuk-gu
Seoul, 136-701, Korea
E-Mail: jonjmoon@korea.ac.kr
AB - This paper provides an empirical investigation of the hypothesis that companies engage in corporate social responsibility (CSR) in order to offset corporate social irresponsibility (CSI). We find general support for the causal relationship: when companies do more “harm,” they also do more “good.” The empirical analysis is based on an extensive 15-year panel dataset that covers nearly 3,000 publicly traded companies. In addition to the overall finding that more CSI results in more CSR, we find evidence of heterogeneity among industries, where the effect is stronger in industries where CSI tends to be the subject of greater public scrutiny. We also investigate the degree of substitutability between different categories of CSR and CSI. Within the categories of community relations, environment, and human rights—arguably among those dimensions of social responsibility that are most salient—there is a strong within-category relationship. In contrast, the within-category relationship for corporate governance is weak, but CSI related to corporate governance appears to increase CSR in most other categories. Thus, when CSI concerns arise about corporate governance, companies seemingly choose to offset with CSR in other dimensions, rather than reform governance itself.
ER -
TY - JOUR
AU - Ryan,Stephen P.
AU - Tucker,Catherine
TI - Heterogeneity and the Dynamics of Technology Adoption
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17253
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17253
L1 - http://www.nber.org/papers/w17253.pdf
N1 - Author contact info:
Stephen P. Ryan
MIT Department of Economics
E52-262C
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/253-6082
Fax: 617/253-1330
E-Mail: sryan@mit.edu
Catherine Tucker
MIT Sloan School of Management
100 Main Street, E62-533
Cambridge, MA 02142
Tel: 617/252-1499
Fax: 617/258-7597
E-Mail: cetucker@mit.edu
AB - We estimate the demand for a videocalling technology in the presence of both network effects and heterogeneity. Using a unique dataset from a large multinational firm, we pose and estimate a fully dynamic model of technology adoption. We propose a novel identification strategy based on post-adoption technology usage to disentangle equilibrium beliefs concerning the evolution of the network from observed and unobserved heterogeneity in technology adoption costs and use benefits. We find that employees have significant heterogeneity in both adoption costs and network benefits, and have preferences for diverse networks. Using our estimates, we evaluate a number of counterfactual adoption policies, and find that a policy of strategically targeting the right subtype for initial adoption can lead to a faster-growing and larger network than a policy of uncoordinated or diffuse adoption.
ER -
TY - JOUR
AU - Gourinchas,Pierre-Olivier
AU - Obstfeld,Maurice
TI - Stories of the Twentieth Century for the Twenty-First
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17252
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17252
L1 - http://www.nber.org/papers/w17252.pdf
N1 - Author contact info:
Pierre-Olivier Gourinchas
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-0720
Fax: 510/642-6615
E-Mail: pog@econ.berkeley.edu
Maurice Obstfeld
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-9646
Fax: 510/642-6615
E-Mail: obstfeld@econ.berkeley.edu
AB - A key precursor of twentieth-century financial crises in emerging and advanced economies alike was the rapid buildup of leverage. Those emerging economies that avoided leverage booms during the 2000s also were most likely to avoid the worst effects of the twenty-first century's first global crisis. A discrete-choice panel analysis using 1973-2010 data suggests that domestic credit expansion and real currency appreciation have been the most robust and significant predictors of financial crises, regardless of whether a country is emerging or advanced. For emerging economies, however, higher foreign exchange reserves predict a sharply reduced probability of a subsequent crisis.
ER -
TY - JOUR
AU - Calabrese,Stephen
AU - Epple,Dennis N.
AU - Romano,Richard
TI - Inefficiencies from Metropolitan Political and Fiscal Decentralization: Failures of Tiebout Competition
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17251
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17251
L1 - http://www.nber.org/papers/w17251.pdf
N1 - Author contact info:
Stephen Calabrese
Tepper School of Business
Carnegie Mellon University
Posner Hall, Room 243
Pittsburgh, PA 15213
Tel: 813-974-0656
Fax: 813-974-0832
E-Mail: sc45@qatar.cmu.edu
Dennis N. Epple
Tepper School of Business
Carnegie Mellon University
Posner Hall, Room 257B
Pittsburgh, PA 15213
Tel: 412/268-1536
Fax: 412/268-7357
E-Mail: epple@cmu.edu
Richard Romano
University of Florida
E-Mail: richard.romano@cba.ufl.edu
AB - We examine the welfare effects of provision of local public goods in an empirically relevant setting using a multi-community model with mobile and heterogeneous households, and with flexible housing supplies. We characterize the first-best allocation and show efficiency can be implemented with decentralization using head taxes. We calibrate the model and compare welfare in property-tax equilibria, both decentralized and centralized, to the efficient allocation. Inefficiencies with decentralization and property taxation are large, dissipating most if not all the potential welfare gains that efficient decentralization could achieve. In property tax equilibrium centralization is frequently more efficient! An externality in community choice underlies the failure to achieve efficiency with decentralization and property taxes: Poorer households crowd richer communities and free ride by consuming relatively little housing thereby avoiding taxes.
ER -
TY - JOUR
AU - Bayer,Patrick
AU - McMillan,Robert
AU - Murphy,Alvin
AU - Timmins,Christopher
TI - A Dynamic Model of Demand for Houses and Neighborhoods
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17250
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17250
L1 - http://www.nber.org/papers/w17250.pdf
N1 - Author contact info:
Patrick Bayer
Department of Economics
Duke University
213 Social Sciences
Durham, NC 27708
Tel: 919/660-1832
E-Mail: patrick.bayer@duke.edu
Robert McMillan
University of Toronto
Department of Economics
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/978-4190
Fax: 416/978-6713
E-Mail: mcmillan@chass.utoronto.ca
Alvin Murphy
Olin Business School
Washington University in St. Louis
Box 1133, 1 Brookings Drive
St. Louis, MO 63130
Tel: 314-935-6306
E-Mail: murphya@wustl.edu
Christopher Timmins
Department of Economics
Duke University
209 Social Sciences Building
P.O. Box 90097
Durham, NC 27708-0097
Tel: 919/660-1809
Fax: 919/684-8974
E-Mail: christopher.timmins@duke.edu
AB - We develop a tractable model of neighborhood choice in a dynamic setting along with a computationally straightforward estimation approach. This approach uses information about neighborhood choices and the timing of moves to recover moving costs and preferences for dynamically-evolving housing and neighborhood attributes. The model and estimator are potentially applicable to the study of a wide range of dynamic phenomena in housing markets and cities. We focus here on estimating the marginal willingness to pay for non-marketed amenities – neighborhood racial composition, air pollution, and violent crime – using rich dynamic data. Consistent with the time-series properties of each amenity, we find that a static demand model understates willingness to pay to avoid pollution and crime but overstates willingness to pay to live near neighbors of one’s own race. These findings have important implications for the class of static housing demand models typically used to value urban amenities.
ER -
TY - JOUR
AU - Hafner,Tamara
AU - Popp,David
TI - China and India as Suppliers of Affordable Medicines to Developing Countries
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17249
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17249
L1 - http://www.nber.org/papers/w17249.pdf
N1 - Author contact info:
Tamara Hafner
Assistant Professor
Department of Public Administration and Policy
School of Public Affairs, American University
4400 Massachusetts Ave. NW
Ward Circle Building, Room 345
Washington, DC 20016
E-Mail: hafner@american.edu
David Popp
Associate Professor of Public Administration
Syracuse University
The Maxwell School
426 Eggers Hall
Syracuse, NY 13244-1020
Tel: 315/443-2482
Fax: 315/443-1081
E-Mail: dcpopp@maxwell.syr.edu
AB - As countries reform their patent laws to be in compliance with the Trade Related Intellectual Property Rights Agreement, an important question is how increased patent protection will affect drug prices in low-income countries. Using pharmaceutical trade data from 1996 to 2005, we examine the role of China and India as suppliers of medicines to other middle- and low-income countries and evaluate the competitive effect of medicine imports from these countries on the price of medicines from high- income countries. We find that imports of antibiotics and unspecified medicaments from India and China significantly depress the average price of these commodities imported from high-income trading partners, suggesting that India and China are not only important sources of inexpensive medicines but also have an indirect effect by lowering prices through competition. As India is the leading supplier of medicines in Sub-Saharan Africa, this region will likely be affected most adversely.
ER -
TY - JOUR
AU - Levinsohn,James A.
AU - Pugatch,Todd
TI - Prospective Analysis of a Wage Subsidy for Cape Town Youth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17248
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17248
L1 - http://www.nber.org/papers/w17248.pdf
N1 - Author contact info:
James A. Levinsohn
Yale School of Management
PO Box 208200
New Haven, CT 06520
Tel: 734/763-2319
Fax: 734/764-2769
E-Mail: James.Levinsohn@yale.edu
Todd Pugatch
Department of Economics
University of Michigan
Ann Arbor, MI 48109
E-Mail: tpugatch@umich.edu
AB - Recognizing that a credible estimate of a wage subsidy's impact requires a model of the labor market that itself generates high unemployment in equilibrium, we estimate a structural search model that incorporates both observed heterogeneity and measurement error in wages. Using the model to examine the impact of a wage subsidy, we find that a R1000/month wage subsidy paid to employers leads to an increase of R660 in mean accepted wages and a decrease of 15 percentage points in the share of youth experiencing long-term unemployment.
ER -
TY - JOUR
AU - LaLumia,Sara
AU - Sallee,James M.
TI - The Value of Honesty: Empirical Estimates from the Case of the Missing Children
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17247
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17247
L1 - http://www.nber.org/papers/w17247.pdf
N1 - Author contact info:
Sara LaLumia
Department of Economics
Williams College
24 Hopkins Hall Drive
Williamstown, MA 01267
E-Mail: sl2@williams.edu
James M. Sallee
Harris School of Public Policy Studies
University of Chicago
1155 East 60th Street
Chicago, IL 60637
Tel: 773/316-3480
Fax: 773/702-2286
E-Mail: sallee@uchicago.edu
AB - How much are people willing to forego to be honest, to follow the rules? When people do break the rules, what can standard data sources tell us about their behavior? Standard economic models of crime typically assume that individuals are indifferent to dishonesty, so that they will cheat or lie as long as the expected pecuniary benefits exceed the expected costs of being caught and punished. We investigate this presumption by studying the response to a change in tax reporting rules that made it much more difficult for taxpayers to evade taxes by inappropriately claiming additional dependents. The policy reform induced a substantial reduction in the number of dependents claimed, which indicates that many filers had been cheating before the reform. Yet, the number of filers who availed themselves of this evasion opportunity is dwarfed by the number of filers who passed up substantial tax savings by not claiming extra dependents. By declining the opportunity to cheat, these taxpayers reveal information about their willingness to pay to be honest. We present a novel method for inferring the characteristics of taxpayers in the absence of audit data. Our analysis suggests both that this willingness to pay to be honest is large on average and that it varies significantly across the population of taxpayers.
ER -
TY - JOUR
AU - Tucker,Catherine
TI - Network Stability, Network Externalities and Technology Adoption
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17246
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17246
L1 - http://www.nber.org/papers/w17246.pdf
N1 - Author contact info:
Catherine Tucker
MIT Sloan School of Management
100 Main Street, E62-533
Cambridge, MA 02142
Tel: 617/252-1499
Fax: 617/258-7597
E-Mail: cetucker@mit.edu
AB - This paper investigates how the destabilizing of a social network may increase the scope of network externalities, using data on sales of a video-calling system made to an investment bank's employees and subsequent usage by these customers. The terrorist attacks of 2001 led potential customers in New York to start communicating with a new and less predictable set of people when their work teams were reorganized as a result of the physical displacement that resulted from the attacks. This did not happen in other comparable cities. These destabilized communication patterns were associated with potential adopters in New York being more likely to take into account a wider spectrum of the user base when deciding whether to adopt relative to those in other cities. Empirical analysis suggests that the aggregate effect of network externalities on adoption was doubled by this instability.
ER -
TY - JOUR
AU - Ebenstein,Avraham
AU - Zhang,Jian
AU - McMillan,Margaret S.
AU - Chen,Kevin
TI - Chemical Fertilizer and Migration in China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17245
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17245
L1 - http://www.nber.org/papers/w17245.pdf
N1 - Author contact info:
Avraham Ebenstein
Department of Economics
Hebrew University of Jerusalem
Mount Scopus Campus, #4208
Jerusalem, Israel 91905
E-Mail: ebenstein@mscc.huji.ac.il
Jian Zhang
Central University of Finance and Economics
39 South College Road
Beijing, China 100081
E-Mail: jian32@gmail.com
Margaret S. McMillan
Tufts University
Department of Economics
114a Braker Hall
Medford, MA 02155
Tel: 617/627-3137
Fax: 617/627-3197
E-Mail: margaret.mcmillan@tufts.edu
Kevin Chen
International Food Policy Research Institute
Institute of Agricultural Economics
Chinese Academy of Agricultural Sciences (CAAS)
No. 176 mail box
No. 12, Zhongguancun Nandajie
Beijing, 10081, China
E-Mail: k.chen@cgiar.org
AB - This paper examines a possible connection between China’s massive rural to urban migration and high chemical fertilizer use rates during the late 1980s and 1990s. Using panel data on villages in rural China (1987-2002), we find that labor out-migration and fertilizer use per hectare are positively correlated. Using 2SLS, employing the opening of a Special Economic Zone in a nearby city as an instrument, we find that village fertilizer use is linked to contemporaneous short-term out-migration of farm workers. We also examine the long-term environmental consequences of chemical fertilizer use during this period. Using OLS, we find that fertilizer use intensity is correlated with future fertilizer use rates and diminished effectiveness of fertilizer, demonstrating persistency in use patterns, and suggesting that in areas with high use of fertilizer, the land is becoming less responsive. We also demonstrate that fertilizer use within a river basin is correlated with organic forms of water pollution, suggesting that industrialization has induced pollution in China both directly and through its impact on rural labor supply.
ER -
TY - JOUR
AU - Exterkate,Anneke
AU - Lumsdaine,Robin L.
TI - How Survey Design Affects Inference Regarding Health Perceptions and Outcomes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17244
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17244
L1 - http://www.nber.org/papers/w17244.pdf
N1 - Author contact info:
Anneke Exterkate
Erasmus University
Burgemeester Oudlaan 50
3062 PA Rotterdam, Netherlands
E-Mail: a.exterkate@gmail.com
Robin L. Lumsdaine
Kogod School of Business
American University
4400 Massachusetts Avenue NW
Washington, DC 20016
Tel: 202/885-1964
E-Mail: robin.lumsdaine@american.edu
AB - This paper considers the role of survey design and question phrasing in evaluating the subjective health assessment responses using the Survey of Health, Ageing and Retirement in Europe (SHARE) dataset. A unique feature of this dataset is that respondents were twice asked during the survey to evaluate their health on a five-point scale, using two different sets of descriptors to define the five points, with the ordering of which set was first given determined randomly. We find no evidence to refute the assertion that the order was determined by random assignment. Yet we document differences in the response distributions between the two questions, as well as differences in inference in comparing the two populations (those that were asked one question first versus those that were asked the other). We then consider determinants of the degree of concordance between the two questions, as well as the determinants of individuals that provide conflicting responses. There appears to be evidence to suggest that individuals’ assessments of their health in response to the second question may be influenced by the battery of health questions that were asked following the first assessment. We find that information in self-assessed health responses is useful in examining health outcomes. Our results suggest that adjusting such responses to take into account framing and sequencing of questions may improve inference. In addition, we show that accounting for survey design may be important in models for predicting outcomes of interest, such as the probability of a major health event.
ER -
TY - JOUR
AU - Béteille,Tara
AU - Kalogrides,Demetra
AU - Loeb,Susanna
TI - Stepping Stones: Principal Career Paths and School Outcomes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17243
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17243
L1 - http://www.nber.org/papers/w17243.pdf
N1 - Author contact info:
Tara Beteille
The World Bank
MSN M9A-007
1900 Pennsylvania Avenue, NW
Washington, DC 20431
E-Mail: tara.beteille@gmail.com
Demetra Kalogrides
Stanford University
520 Galvez Mall Drive
Stanford CA, 94305
E-Mail: dkalo@stanford.edu
Susanna Loeb
524 CERAS, 520 Galvez Mall
Stanford University
Stanford, CA 94305
Tel: 650/725-4262
E-Mail: sloeb@stanford.edu
AB - More than one out of every five principals leaves their school each year. In some cases, these career changes are driven by the choices of district leadership. In other cases, principals initiate the move, often demonstrating preferences to work in schools with higher achieving students from more advantaged socioeconomic backgrounds. Principals often use schools with many poor or low-achieving students as stepping stones to what they view as more desirable assignments. We use longitudinal data from one large urban school district to study the relationship between principal turnover and school outcomes. We find that principal turnover is, on average, detrimental to school performance. Frequent turnover of school leadership results in lower teacher retention and lower student achievement gains. Leadership changes are particularly harmful for high poverty schools, low-achieving schools, and schools with many inexperienced teachers. These schools not only suffer from high rates of principal turnover but are also unable to attract experienced successors. The negative effect of leadership changes can be mitigated when vacancies are filled by individuals with prior experience leading other schools. However, the majority of new principals in high poverty and low-performing schools lack prior leadership experience and leave when more attractive positions become available in other schools.
ER -
TY - JOUR
AU - Jacks,David S.
TI - Defying Gravity: The 1932 Imperial Economic Conference and the Reorientation of Canadian Trade
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17242
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17242
L1 - http://www.nber.org/papers/w17242.pdf
N1 - Author contact info:
David S. Jacks
Department of Economics
Simon Fraser University
8888 University Drive
Burnaby, BC V5A 1S6
CANADA
Tel: 778/782-5392
Fax: 778/782-5944
E-Mail: dsjacks@gmail.com
AB - In the wake of the Great Depression, the Canadian government embarked on a stunning reversal in its commercial policy. A key element of its response was the promotion of intra-imperial trade at the Imperial Economic Conference of 1932. This paper addresses whether or not Canadian trade was able to defy gravity and divert trade flows towards other signatories at Ottawa. The results strongly suggest that the conference was a failure from the Canadian perspective. Potential sources of this failure include unreasonable expectations about the likely reductions in trade costs and a neglect of key considerations related to certainty and credibility.
ER -
TY - JOUR
AU - Blau,Francine D.
AU - Kahn,Lawrence M.
TI - The Feasibility and Importance of Adding Measures of Actual Experience to Cross-Sectional Data Collection
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17241
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17241
L1 - http://www.nber.org/papers/w17241.pdf
N1 - Author contact info:
Francine D. Blau
ILR School
Cornell University
268 Ives Hall
Ithaca, New York 14853-3901
Tel: 607/255-4381
Fax: 607/255-4496
E-Mail: fdb4@cornell.edu
Lawrence Kahn
ILR School
Cornell University
258 Ives Hall
Ithaca, NY 14853
Tel: 607-255-0510
Fax: 607-255-4496
E-Mail: lmk12@cornell.edu
AB - We use Michigan Panel Study of Income Dynamics data and data from a 2008 telephone survey of adults conducted by Westat for the Princeton Data Improvement Initiative (PDII) to explore the importance and feasibility of adding retrospective questions about actual work experience to cross-sectional data sets. We demonstrate that having such actual experience data is important for analyzing women’s post-school human capital accumulation, residual wage inequality, and the gender pay gap. Further, our PDII survey results show that it is feasible to collect actual experience data in cross-sectional telephone surveys like the March Current Population Survey annual supplement.
ER -
TY - JOUR
AU - Parker,Jonathan A.
TI - On Measuring the Effects of Fiscal Policy in Recessions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17240
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17240
L1 - http://www.nber.org/papers/w17240.pdf
N1 - Author contact info:
Jonathan Parker
Finance Department
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208-2001
Tel: 847/491-4113
Fax: 847/491-5719
E-Mail: Jonathan-Parker@Kellogg.Northwestern.edu
AB - We do not have a good measure of the effects of fiscal policy in a recession because the methods that we use to estimate the effects of fiscal policy — both those using the observed outcomes following different policies in aggregate data and those studying counterfactuals in fitted model economies -- almost entirely ignore the state of the economy and estimate 'the' government multiplier, which is presumably a weighted average of the one we care about — the multiplier in a recession — and one we care less about — the multiplier in an expansion. Notable exceptions to this general claim suggest this difference is potentially large. Our lack of knowledge stems significantly from the focus on linear dynamics: VARs and linearized (or close-to-linear) DSGEs. Our lack of knowledge also reflects a lack of data: deep recessions are few and nonlinearities hard to measure. The lack of statistical power in the estimation of nonlinear models using aggregate data can be addressed by exploiting estimates of partial-equilibrium responses in dissaggregated data. Microeconomic estimates of the partial-equilibrium causal effects of a policy can discipline the causal channels inherent in any DSGE model of the general equilibrium effects of policy. Microeconomic studies can also provide measures of the dependence of the effects of a policy on the states of different agents which is a key component of the dependence of the general-equilibrium effects of fiscal policy on the state of the economy.
ER -
TY - JOUR
AU - Frankel,Jeffrey A.
TI - Over-optimism in Forecasts by Official Budget Agencies and Its Implications
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17239
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17239
L1 - http://www.nber.org/papers/w17239.pdf
N1 - Author contact info:
Jeffrey A. Frankel
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-3834
Fax: 617/496-5747
E-Mail: jeffrey_frankel@harvard.edu
AB - The paper studies forecasts of real growth rates and budget balances made by official government agencies among 33 countries. In general, the forecasts are found: (i) to have a positive average bias, (ii) to be more biased in booms, (iii) to be even more biased at the 3-year horizon than at shorter horizons. This over-optimism in official forecasts can help explain excessive budget deficits, especially the failure to run surpluses during periods of high output: if a boom is forecasted to last indefinitely, retrenchment is treated as unnecessary. Many believe that better fiscal policy can be obtained by means of rules such as ceilings for the deficit or, better yet, the structural deficit. But we also find: (iv) countries subject to a budget rule, in the form of euroland’s Stability and Growth Path, make official forecasts of growth and budget deficits that are even more biased and more correlated with booms than do other countries. This effect may help explain frequent violations of the SGP. One country, Chile, has managed to overcome governments’ tendency to satisfy fiscal targets by wishful thinking rather than by action. As a result of budget institutions created in 2000, Chile’s official forecasts of growth and the budget have not been overly optimistic, even in booms. Unlike many countries in the North, Chile took advantage of the 2002-07 expansion to run budget surpluses, and so was able to ease in the 2008-09 recession.
ER -
TY - JOUR
AU - He,Jie (Jack)
AU - Qian,Jun 'QJ'
AU - Strahan,Philip E.
TI - Are All Ratings Created Equal? The Impact of Issuer Size on the Pricing of Mortgage-backed Securities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17238
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17238
L1 - http://www.nber.org/papers/w17238.pdf
N1 - Author contact info:
Jie He
University of Georgia
Terry College of Business
Department of Banking and Finance
424 Brooks Hall
Athens, GA 30602
E-Mail: jiehe@uga.edu
Jun Qian
Boston College
140 Commonwealth Ave
Chestnut Hill, MA 02467
E-Mail: qianju@bc.edu
Philip Strahan
Carroll School of Management
324B Fulton Hall
Boston College
Chestnut Hill, MA 02467
Tel: 617/552-6430
E-Mail: philip.strahan@bc.edu
AB - We examine whether rating agencies (Moody’s, S&P, and Fitch) reward large issuers of mortgage-backed securities, who bring substantial business, by granting them unduly favorable ratings. The initial yield on both AAA-rated and non-AAA rated tranches sold by large issuers is higher than that on similar tranches sold by small issuers during the market boom years of 2004-2006. Moreover, the prices of MBS sold by large issuers drop more than those sold by small issuers, and the differences are concentrated among tranches issued during 2004-2006. We conclude that large issuers receive more favorable ratings and that the market prices the risk of inflated ratings, especially during booming periods.
ER -
TY - JOUR
AU - White,Michelle J.
TI - Corporate and Personal Bankruptcy Law
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17237
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17237
L1 - http://www.nber.org/papers/w17237.pdf
N1 - Author contact info:
Michelle J. White
Department of Economics
University of California, San Diego
La Jolla, CA 92093-0508
Tel: 858/534-2783
Fax: 858/534-7040
E-Mail: miwhite@ucsd.edu
AB - Bankruptcy is the legal process by which the debts of firms, individuals, and occasionally governments in financial distress are resolved. Bankruptcy law always includes three components. First, it provides a collective framework for simultaneously resolving all debts of the bankrupt entity, regardless of when they are due. Second, it provides rules for determining how the assets and earnings used to repay are divided among creditors. Third, bankruptcy law specifies punishments intended to discourage debtors from defaulting on their debts and filing for bankruptcy. This review discusses and evaluates bankruptcy law by examining whether and when the law encourages debtors and creditors to behave in economically efficient ways. It also considers how bankruptcy law might be changed to improve economic efficiency. The review shows that there are multiple economic objectives of bankruptcy law, because the law affects has very diverse effects. Some of these objectives differ for individuals versus corporations in bankruptcy.
ER -
TY - JOUR
AU - Duggan,Mark
AU - Hayford,Tamara
TI - Has the Shift to Managed Care Reduced Medicaid Expenditures? Evidence from State and Local-Level Mandates
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17236
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17236
L1 - http://www.nber.org/papers/w17236.pdf
N1 - Author contact info:
Mark Duggan
The Wharton School
University of Pennsylvania
1452 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215-898-0928
Fax: 215-898-7635
E-Mail: mduggan@wharton.upenn.edu
Tamara Hayford
Congressional Budget Office
Second and D Streets, SW
Washington, DC 20515-6925
E-Mail: tamara.hayford@cbo.gov
AB - From 1991 to 2003, the fraction of Medicaid recipients enrolled in HMOs and other forms of Medicaid managed care (MMC) increased from 11 percent to 58 percent. This increase was largely driven by state and local mandates that required most Medicaid recipients to enroll in an MMC plan. Theoretically, it is ambiguous whether the shift from fee-for-service into managed care would lead to an increase or a reduction in Medicaid spending. This paper investigates this effect using a data set on state and local level MMC mandates and detailed data from CMS on state Medicaid expenditures. The findings suggest that shifting Medicaid recipients from fee-for-service into MMC did not reduce Medicaid spending in the typical state. However, the effects of the shift varied significantly across states as a function of the generosity of the state’s baseline Medicaid provider reimbursement rates. These results are consistent with recent research on managed care among the privately insured, which finds that HMOs and other forms of managed care achieve their savings largely through reduced prices rather than lower quantities.
ER -
TY - JOUR
AU - Kuziemko,Ilyana
TI - Human Capital Spillovers in Families: Do Parents Learn from or Lean on their Children?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17235
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17235
L1 - http://www.nber.org/papers/w17235.pdf
N1 - Author contact info:
Ilyana Kuziemko
361 Wallace Hall
Princeton University
Princeton, NJ 08544
Tel: 609/258-6917
Fax: 609/258-5974
E-Mail: kuziemko@princeton.edu
AB - I develop a model in which a child's acquisition of a given form of human capital incentivizes adults in his household to either learn from him (if children act as teachers then adults' cost of learning the skill falls) or lean on him (if children's human capital substitutes for that of adults in household production then adults' benefit of learning the skill falls). I exploit regional variation in two shocks to children's human capital and examine the effect on adults. The rapid introduction of primary education for black children in the South during Reconstruction not only increased literacy of children but also of adults living in the same household ("learning" outweighs "leaning"). Conversely, the 1998 introduction of English immersion in California public schools appears to have increased the English skills of children but discouraged adults living with them from acquiring the language ("leaning" outweighs "learning"). Whether family members learn from or lean on each other has implications for the externalities associated with education policies.
ER -
TY - JOUR
AU - Kuziemko,Ilyana
AU - Buell,Ryan W.
AU - Reich,Taly
AU - Norton,Michael I.
TI - "Last-place Aversion": Evidence and Redistributive Implications
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17234
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17234
L1 - http://www.nber.org/papers/w17234.pdf
N1 - Author contact info:
Ilyana Kuziemko
361 Wallace Hall
Princeton University
Princeton, NJ 08544
Tel: 609/258-6917
Fax: 609/258-5974
E-Mail: kuziemko@princeton.edu
Ryan Buell
Harvard Business School
Boston, MA 02163
E-Mail: rbuell@hbs.edu
Taly Reich
Stanford Graduate School of Business
655 Knight Way
Stanford, CA 94305-7298
E-Mail: treich@stanford.edu
Michael I. Norton
Marketing Unit
Harvard Business School
Boston, MA 02163
E-Mail: mnorton@hbs.edu
AB - Why do low-income individuals often oppose redistribution? We hypothesize that an aversion to being in "last place" undercuts support for redistribution, with low-income individuals punishing those slightly below themselves to keep someone "beneath" them. In laboratory experiments, we find support for "last-place aversion" in the contexts of risk aversion and redistributive preferences. Participants choose gambles with the potential to move them out of last place that they reject when randomly placed in other parts of the distribution. Similarly, in money- transfer games, those randomly placed in second-to-last place are the least likely to costlessly give money to the player one rank below. Last-place aversion predicts that those earning just above the minimum wage will be most likely to oppose minimum-wage increases as they would no longer have a lower-wage group beneath them, a prediction we confirm using survey data.
ER -
TY - JOUR
AU - Phillips,Gordon M.
AU - Sertsios,Giorgo
TI - How Do Firm Financial Conditions Affect Product Quality and Pricing?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17233
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17233
L1 - http://www.nber.org/papers/w17233.pdf
N1 - Author contact info:
Gordon M. Phillips
Marshall School of Business
University of Southern California
Citigroup Center
Los Angeles, CA 90089
Tel: 213/740-0038
E-Mail: Gordon.Phillips@marshall.usc.edu
Giorgo Sertsios
Bauer College of Business
University of Houston
Houston, TX
E-Mail: Sertsios@econ.umd.edu
AB - We analyze the interaction of firm product quality and pricing decisions with financial distress and bankruptcy in the airline industry. We consider an airline's choices of quality and price as dynamic decisions that trade off current cash flows for future revenue. We examine how airline mishandled baggage, on-time performance and pricing are related to financial distress and bankruptcy, controlling for the endogeneity of financial distress and bankruptcy. We find that an airline's quality decisions are differentially affected by financial distress and bankruptcy. Product quality decreases when airlines are in financial distress, consistent with financial distress reducing a firm's incentive to invest in quality. In contrast, in bankruptcy product quality increases relative to financial distress. In addition, we find that firms price more aggressively when in financial distress consistent with firms trying to increase short-term market share and revenues.
ER -
TY - JOUR
AU - Abraham,Jean M.
AU - Royalty,Anne Beeson
AU - DeLeire,Thomas
TI - Gauging the Generosity of Employer-Sponsored Insurance: Differences Between Households With and Without a Chronic Condition
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17232
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17232
L1 - http://www.nber.org/papers/w17232.pdf
N1 - Author contact info:
Jean Abraham
Department of Health Policy and Management
University of Minnesota
20 Delaware St SE
MMC 729
Minneapolis, MN 55455
E-Mail: abrah042@umn.edu
Anne Beeson Royalty
Department of Economics
Indiana University - Purdue University
at Indianapolis
425 University Blvd.
Indianapolis, IN 46202-5140
E-Mail: royalty@iupui.edu
Thomas DeLeire
La Follette School of Public Affairs
University of Wisconsin-Madison
1225 Observatory Drive
Madison, WI 53706
Tel: 608-263-6998
Fax: 608/263-2820
E-Mail: deleire@wisc.edu
AB - We develop an empirical method to assess the generosity of employer-sponsored insurance across groups within the U.S. population. A key feature of this method is its simplicity – it only requires data on out-of-pocket (OOP) health care spending and total health care spending and does not require detailed knowledge of health insurance benefit design. We apply our method to assess whether households with a chronically ill member have more or less generous insurance relative to households with no chronically ill members. We find that the chronically ill have less generous insurance coverage than the non-chronically ill. Additional analyses suggest that the reason for this less generous coverage is not that households with a chronically ill member are in different, less generous plans, on average. Rather, households with a chronically ill member have higher spending on certain types of medical services (e.g., pharmaceutical drugs) that are covered less generously by insurance. Given recent work on value-based insurance design and coinsurance as an obstacle to medication adherence, our findings suggest that the current design of health plans may put the health and financial well-being of the chronically ill at risk.
ER -
TY - JOUR
AU - Bloom,Nicholas
AU - Schweiger,Helena
AU - Reenen,John Van
TI - The Land that Lean Manufacturing Forgot? Management Practices in Transition Countries
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17231
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17231
L1 - http://www.nber.org/papers/w17231.pdf
N1 - Author contact info:
Nicholas Bloom
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/725-3266
Fax: 650/725-5702
E-Mail: nbloom@stanford.edu
Helena Schweiger
EBRD, Office of the Chief Economist
One Exchange Square
London EC2A 2JN United Kingdom
E-Mail: helena.schweiger@gmail.com
John Van Reenen
Department of Economics
London School of Economics
Centre for Economic Performance
Houghton Street
London WC2A 2AE
UNITED KINGDOM
Tel: 00 44 207/955-6976
Fax: 00 44 207/955-6848
E-Mail: j.vanreenen@lse.ac.uk
AB - We have conducted the first survey on management practices in transition countries. We found that Central Asian transition countries, such as Uzbekistan and Kazakhstan, have on average very poor management practices. Their average scores are below emerging countries such as Brazil, China and India. In contrast, the central European transition countries such as Poland and Lithuania operate with management practices that are only moderately worse than those of western European countries such as Germany. Since we find these practices are strongly linked to firm performance, this suggests poor management practices may be impeding the development of Central Asian transition countries. We find that competition, multinational ownership, private ownership and human capital are all strongly correlated with better management. This implies that the continued opening of markets to domestic and foreign competition, privatisation of state-owned firms and increased levels of workforce education should promote better management, and ultimately faster economic growth.
ER -
TY - JOUR
AU - Bachmann,Ruediger
AU - Bai,Jinhui
TI - Public Consumption Over the Business Cycle
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17230
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17230
L1 - http://www.nber.org/papers/w17230.pdf
N1 - Author contact info:
Ruediger Bachmann
Department of Economics
University of Michigan
Lorch Hall 335 A
Ann Arbor, MI 48109-1220
Tel: +1 (734) 764-0241
E-Mail: rudib@umich.edu
Jinhui Bai
Department of Economics
Georgetown University
Washington, DC 20057-1036
E-Mail: jb543@georgetown.edu
AB - What fraction of the business cycle volatility of government purchases is accounted for as endogenous reactions to overall macroeconomic conditions? We answer this question in the framework of a neoclassical representative household model where the provision of a public consumption good is decided upon endogenously and in a time-consistent fashion. A simple frictionless version of such a model with aggregate productivity as the sole driving force can explain almost all the volatility of U.S. non-defense government consumption expenditures. However, such a model fails to match other important features of the business cycle dynamics of public consumption, which comes out as not persistent enough and too synchronized with the cycle. We add implementation lags and implementation costs in the budgeting process to the model, plus taste shocks for public consumption relative to private consumption, and achieve a substantially better match to the data. All these ingredients are essential to improve the fit. Depending on the precise specification of the flow utility function over private consumption, public consumption and leisure, 25-40 percent of the variance of public consumption is driven by aggregate productivity shocks.
ER -
TY - JOUR
AU - Danzon,Patricia M.
AU - Furukawa,Michael F.
TI - Cross-National Evidence on Generic Pharmaceuticals: Pharmacy vs. Physician-Driven Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17226
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17226
L1 - http://www.nber.org/papers/w17226.pdf
N1 - Author contact info:
Patricia M. Danzon
Health Care Management Department
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-0694
Fax: 215/573-2157
E-Mail: danzon@wharton.upenn.edu
Michael Furukawa
Department of Information Systems
W.P. Carey School of Business
Arizona State University
PO Box 874606
Tempe, AZ 85287-4606
E-Mail: Michael.Furukawa@asu.edu
AB - This paper examines the role of regulation and competition in generic markets. Generics offer large potential savings to payers and consumers of pharmaceuticals. Whether the potential savings are realized depends on the extent of generic entry and uptake and the level of generic prices. In the U.S., the regulatory, legal and incentive structures encourage prompt entry, aggressive price competition and patient switching to generics. Key features are that pharmacists are authorized and incentivized to switch patients to cheap generics. By contrast, in many other high and middle income countries, generics traditionally competed on brand rather than price because physicians rather than pharmacies are the decision-makers. Physician-driven generic markets tend to have higher generic prices and may have lower generic uptake, depending on regulations and incentives.
Using IMS data to analyze generic markets in the U.S., Canada, France, Germany, U.K., Italy, Spain, Japan, Australia, Mexico, Chile, Brazil over the period 1998-2009, we estimate a three-equation model for number of generic entrants, generic prices and generic volume shares. We find little effect of originator defense strategies, significant differences between unbranded and unbranded generics, variation across countries in volume response to prices. Policy changes adopted to stimulate generic uptake and reduce generic prices have been successful in some E.U. countries.
ER -
TY - JOUR
AU - Adam,Klaus
AU - Kuang,Pei
AU - Marcet,Albert
TI - House Price Booms and the Current Account
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17224
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17224
L1 - http://www.nber.org/papers/w17224.pdf
N1 - Author contact info:
Klaus Adam
University of Mannheim
Dept. of Economics
L7,3-5
68131 Mannheim
Germany
E-Mail: adam@mail.uni-mannheim.de
Pei Kuang
Goethe University of Frankfurt
Departmnet of Economics
Campus Westend - Grüneburgplatz 1,
60629 Frankfurt am Main
Germany
E-Mail: Kuang@finance.uni-frankfurt.de
Albert Marcet
Department of Economics
London School of Economics
Houghton Street
London WC2A 2AE
United Kingdom
Tel: 00-44-207-955-7480
E-Mail: a.marcet@lse.ac.uk
M3 - presented at "26th Annual Conference on Macroeconomics", April 8-9, 2011
AB - A simple open economy asset pricing model can account for the house price and current account dynamics in the G7 over the years 2001-2008. The model features rational households, but assumes that households entertain subjective beliefs about price behavior and update these using Bayes' rule. The resulting beliefs dynamics considerably propagate economic shocks and crucially contribute to replicating the empirical evidence. Belief dynamics can temporarily delink house prices from fundamentals, so that low interest rates can fuel a house price boom. House price booms, however, are not necessarily synchronized across countries and the model is consistent with the heterogeneous response of house prices across the G7 following the reduction in real interest rates at the beginning of the millennium. The response to interest rates depends sensitively on agents' beliefs at the time of the interest rate reduction, which in turn are a function of the country specific history prior to the year 2000. According to the model, the US house price boom could have been largely avoided, if real interest rates had decreased by less after the year 2000.
ER -
TY - JOUR
AU - Angeletos,George-Marios
AU - Iovino,Luigi
AU - La'O,Jennifer
TI - Cycles, Gaps, and the Social Value of Information
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17229
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17229
L1 - http://www.nber.org/papers/w17229.pdf
N1 - Author contact info:
George-Marios Angeletos
Department of Economics
MIT E52-251
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/452-3859
Fax: 617/253-1330
E-Mail: angelet@mit.edu
Luigi Iovino
Department of Economics
MIT E52-391
50 Memorial Drive
Cambridge, MA 02142-1347
E-Mail: liovino@MIT.EDU
Jennifer La'O
University of Chicago
Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-9768
E-Mail: jenlao@chicagobooth.edu
AB - What are the welfare effects of the information contained in macroeconomic statistics, central-bank communications, or news in the media? We address this question in a business-cycle framework that nests the neoclassical core of modern DSGE models. Earlier lessons that were based on “beauty contests” (Morris and Shin, 2002) are found to be inapplicable. Instead, the social value of information is shown to hinge on essentially the same conditions as the optimality of output stabilization policies. More precise information is unambiguously welfare-improving as long as the business cycle is driven primarily by technology and preference shocks—but can be detrimental when shocks to markups and wedges cause sufficient volatility in “output gaps.” A numerical exploration suggests that the first scenario is more plausible.
ER -
TY - JOUR
AU - Aizenman,Joshua
AU - Sushko,Vladyslav
TI - Capital Flow Types, External Financing Needs, and Industrial Growth: 99 countries, 1991-2007
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17228
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17228
L1 - http://www.nber.org/papers/w17228.pdf
N1 - Author contact info:
Joshua Aizenman
Department of Economics; E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA 95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu
Vladyslav Sushko
Bank for International Settlements
Centralbahnplatz 2
4002 Basel
Switzerland
E-Mail: vlad.sushko@bis.org
AB - We examine the differential impact of portfolio debt, portfolio equity, and FDI inflows on 37 manufacturing industries, 99 countries, 1991-2007, extending Rajan-Zingales (1998). We utilize external finance dependence measures in a series of cross-sectional regressions of manufacturing industries’ growth rates covering 17 years. Net portfolio debt inflows are negatively associated with growth during the mid 1990s. The magnitudes of the negative effect of surges in portfolio debt inflows on growth are substantial in the late 1990s for a number of countries. The effect of debt inflows on growth in the 2000s is rather muted. Surges in portfolio equity inflows also exhibit a negative association with aggregate growth in the manufacturing sector. For instance, the inflow surge during the financial liberalization period, 1993-1994, is associated with a sharp decline in aggregate manufacturing sector growth, but a rise in the growth of relatively more financially constrained industries. Equity inflows exhibited economically significant positive impact on the growth of financially constrained industries, unlike their negative impact on the average manufacturing growth rate. FDI inflows exhibit a positive association with aggregate manufacturing growth during most of the sample period, both at the aggregate level and specifically for the industries in need of external financing.
ER -
TY - JOUR
AU - Barwick,Panle Jia
AU - Pathak,Parag A.
TI - The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17227
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17227
L1 - http://www.nber.org/papers/w17227.pdf
N1 - Author contact info:
Panle Jia Barwick
MIT Department of Economics
E52-243C
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-7229
Fax: 617/253-1330
E-Mail: pjia@mit.edu
Parag Pathak
MIT Department of Economics
50 Memorial Drive
E52-391C
Cambridge, MA 02142
Tel: 617/253-7458
E-Mail: ppathak@mit.edu
AB - This paper studies the real estate brokerage industry in Greater Boston, an industry with low entry barriers and substantial turnover. Using a comprehensive dataset of agents and transactions from 1998-2007, we find that entry does not increase sales probabilities or reduce the time it takes for properties to sell, decreases the market share of experienced agents, and leads to a reduction in average service quality. These empirical patterns motivate an econometric model of the dynamic optimizing behavior of agents that serves as the foundation for simulating counterfactual market structures. A one-half reduction in the commission rate leads to a 73% increase in the number of houses each agent sells and benefits consumers by about $2 billion. House price appreciation in the first half of the 2000s accounts for 24% of overall entry and a 31% decline in the number of houses sold by each agent. Low cost programs that provide information about past agent performance have the potential to increase overall productivity and generate significant social savings.
ER -
TY - JOUR
AU - Jackson,C. Kirabo
TI - School Competition and Teacher Labor Markets: Evidence from Charter School Entry in North Carolina
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17225
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17225
L1 - http://www.nber.org/papers/w17225.pdf
N1 - Author contact info:
C. Kirabo Jackson
Northwestern University
School of Education and Social Policy
2040 Sheridan Road
Evanston, IL 60208
Tel: 847/467-1803
E-Mail: kirabo-jackson@northwestern.edu
AB - I analyze changes in teacher turnover, hiring, effectiveness, and salaries at traditional public schools after the opening of a nearby charter school. While I find small effects on turnover overall, difficult to staff schools (low-income, high-minority share) hired fewer new teachers and experienced small declines in teacher quality. I also find evidence of a demand side response where schools increased teacher compensation to better retain quality teachers. The results are robust across a variety of alternate specifications to account for non-random charter entry.
ER -
TY - JOUR
AU - Bradley,Cathy J.
AU - Neumark,David
AU - Motika,Meryl I.
TI - The Effects of Health Shocks on Employment and Health Insurance: The Role of Employer-Provided Health Insurance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17223
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17223
L1 - http://www.nber.org/papers/w17223.pdf
N1 - Author contact info:
Cathy J. Bradley
Department of Healthcare Policy and Research
Virginia Commonwealth University
830 E. Main Street
Richmond, VA 23219
E-Mail: cjbradley@vcu.edu
David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA 92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu
Meryl I. Motika
Department of Economics
3151 Social Science Plaza
University of California-Irvine
Irvine, CA 92697-5100
E-Mail: mmotika@uci.edu
AB - We study how men’s dependence on their own employer for health insurance affects labor supply responses and loss of health insurance coverage when faced with a serious health shock. Men with employment-contingent health insurance (ECHI) are more likely to remain working following some kinds of adverse health shocks, and are more likely to lose insurance. With the passage of health care reform, the tendency of men with ECHI as opposed to other sources of insurance to remain employed following a health shock may be diminished, along with the likelihood of losing health insurance.
ER -
TY - JOUR
AU - Knittel,Christopher R.
AU - Miller,Douglas L.
AU - Sanders,Nicholas J.
TI - Caution, Drivers! Children Present: Traffic, Pollution, and Infant Health
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17222
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17222
L1 - http://www.nber.org/papers/w17222.pdf
N1 - Author contact info:
Christopher R. Knittel
MIT Sloan School of Management
100 Main Street, E62-513
Cambridge, MA 02142
E-Mail: knittel@mit.edu
Douglas L. Miller
University of California, Davis
Department of Economics
One Shields Avenue
Davis, CA 95616-8578
Tel: 530/752-8490
E-Mail: dlmiller@ucdavis.edu
Nicholas J. Sanders
Stanford University
366 Galvez Street, Room 228
Stanford, CA 94305-6015
E-Mail: sandersn@stanford.edu
AB - Since the Clean Air Act Amendments of 1990 (CAAA), atmospheric concentration of local pollutants has fallen drastically. A natural question is whether further reductions will yield additional health benefits. We further this research by addressing two related research questions: (1) what is the impact of automobile driving (and especially congestion) on ambient air pollution levels, and (2) what is the impact of modern air pollution levels on infant health? Our setting is California (with a focus on the Central Valley and Southern California) in the years 2002-2007. Using an instrumental variables approach that exploits the relationship between traffic, ambient weather conditions, and various pollutants, our findings suggest that ambient pollution levels, specifically particulate matter, still have large impacts on weekly infant mortality rates. Our results also illustrate the importance of weather controls in measuring pollution’s impact on infant mortality.
ER -
TY - JOUR
AU - Hoberg,Gerard
AU - Phillips,Gordon M.
TI - Conglomerate Industry Choice and Product Differentiation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17221
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17221
L1 - http://www.nber.org/papers/w17221.pdf
N1 - Author contact info:
Gerard Hoberg
Robert H. Smith School of Business
University of Maryland
4423 Van Munching Hall
College Park, MD 20742
Tel: 301/405-9685
Fax: 301/405-0359
E-Mail: ghoberg@rhsmith.umd.edu
Gordon M. Phillips
Marshall School of Business
University of Southern California
Citigroup Center
Los Angeles, CA 90089
Tel: 213/740-0038
E-Mail: Gordon.Phillips@marshall.usc.edu
AB - We use text-based computational analysis of business descriptions from 10-Ks to examine in which industries conglomerates are most likely to operate and to understand conglomerate valuations. We find that conglomerates are more likely to operate in industry pairs that are closer together in the product space and in industry pairs that have profitable opportunities "between" them. Conglomerate firms have lower stock market valuations than matched single-segment firms when their products are easier to replicate with single-segment firms. Conglomerate firms have stock market premiums when they have higher product differentiation and produce in more profitable industries. These findings are consistent with successful conglomerate firms having higher product differentiation and lower cost entry into profitable markets when operating in strategically chosen industry pairs.
ER -
TY - JOUR
AU - Courtemanche,Charles J.
AU - Carden,Art
TI - Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17220
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17220
L1 - http://www.nber.org/papers/w17220.pdf
N1 - Author contact info:
Charles J. Courtemanche
University of Louisville
College of Business
Department of Economics
Louisville, KY 40292
Tel: 502-852-4854
Fax: 502-852-7672
E-Mail: cjcour02@louisville.edu
Art Carden
Department of Economics and Business
Rhodes College
2000 N. Parkway
Memphis TN 38112
Tel: 901-843-3829
Fax: 901-843-3736
E-Mail: cardena@rhodes.edu
AB - Prior research shows grocery stores reduce prices to compete with Walmart Supercenters. This study finds evidence that the competitive effects of two other big box retailers – Costco and Walmart-owned Sam's Club – are quite different. Using city-level panel grocery price data matched with a unique data set on Walmart and warehouse club locations, we find that Costco entry is associated with higher grocery prices at incumbent retailers, and that the effect is strongest in cities with small populations and high grocery store densities. This is consistent with incumbents competing with Costco along non-price dimensions such as product quality or quality of the shopping experience. We find no evidence that Sam’s Club entry affects grocery stores’ prices, consistent with Sam’s Club’s focus on small businesses instead of consumers.
ER -
TY - JOUR
AU - Backus,David
AU - Chernov,Mikhail
AU - Zin,Stanley E.
TI - Sources of Entropy in Representative Agent Models
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17219
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17219
L1 - http://www.nber.org/papers/w17219.pdf
N1 - Author contact info:
David Backus
Stern School of Business
NYU
44 West 4th Street
New York, NY 10012-1126
Tel: 212/998-0873
Fax: 212/995-4221
E-Mail: dbackus@stern.nyu.edu
Mikhail Chernov
London School of Economics
Houghton Street
London, WC2A 2AE
United Kingdom
E-Mail: m.chernov@lse.ac.uk
Stanley E. Zin
Department of Economics
Leonard N. Stern School of Business
New York University
44 West 4th Street, Suite 7-91
New York, NY 10012-1126
Tel: 212/998-0121
E-Mail: stan.zin@nyu.edu
AB - We propose two metrics for asset pricing models and apply them to representative agent models with recursive preferences, habits, and jumps. The metrics describe the pricing kernel’s dispersion (the entropy of the title) and dynamics (time dependence, a measure of how entropy varies over different time horizons). We show how each model generates entropy and time dependence and compare their magnitudes to estimates derived from asset returns. This exercise — and transparent loglinear approximations — clarifies the mechanisms underlying these models. It also reveals, in some cases, tension between entropy, which should be large enough to account for observed excess returns, and time dependence, which should be small enough to account for mean yield spreads.
ER -
TY - JOUR
AU - Belley,Philippe
AU - Frenette,Marc
AU - Lochner,Lance
TI - Post-Secondary Attendance by Parental Income in the U.S. and Canada: What Role for Financial Aid Policy?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17218
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17218
L1 - http://www.nber.org/papers/w17218.pdf
N1 - Author contact info:
Philippe Belley
Kansas State University
Economics
339A Waters Hall
Manhattan, KS 66506-4001
U.S.A.
Tel: 785-532-4574
Fax: 785-532-6919
E-Mail: pbelley@k-state.edu
Marc Frenette
Social Research & Demonstration Corporation
55 Murray Street Suite 400
Ottawa, Ontario
Tel: 613/237-7668
Fax: 613/237-5045
E-Mail: mfrenette@srdc.org
Lance Lochner
Department of Economics, Faculty of Social Science
University of Western Ontario
1151 Richmond Street, North
London, ON N6A 5C2
CANADA
Tel: 519/661-2111 ext. 85281
Fax: 519/661-3666
E-Mail: llochner@uwo.ca
AB - This paper examines the implications of tuition and need-based financial aid policies for family income – post-secondary (PS) attendance relationships. We first conduct a parallel empirical analysis of the effects of parental income on PS attendance for recent high school cohorts in both the U.S. and Canada using data from the 1997 Cohort of the National Longitudinal Survey of Youth and Youth in Transition Survey. We estimate substantially smaller PS attendance gaps by parental income in Canada relative to the U.S., even after controlling for family background, adolescent cognitive achievement, and local residence fixed effects. We next document that U.S. public tuition and financial aid policies are actually more generous to low-income youth than are Canadian policies. By contrast, Canada offers more generous aid to middle-class youth than does the U.S. These findings suggest that the much stronger family income – PS attendance relationship in the U.S. is not driven by differences in the need-based nature of financial aid policies. Based on previous estimates of the effects of tuition and aid on PS attendance, we consider how much stronger income – attendance relationships would be in the absence of need-based aid and how much additional aid would need to be offered to lower income families to eliminate existing income – attendance gaps entirely.
ER -
TY - JOUR
AU - Sawhney,Aparna
AU - Kahn,Matthew E.
TI - Understanding Cross-National Trends in High-Tech Renewable Power Equipment Exports to the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17217
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17217
L1 - http://www.nber.org/papers/w17217.pdf
N1 - Author contact info:
Aparna Sawhney
Centre for International Trade and Development
Jawaharlal Nehru University
New Delhi 110067
E-Mail: asawhney@mail.jnu.ac.in
Matthew E. Kahn
UCLA Institute of the Environment
Department of Economics
Department of Public Policy
Box 951496
La Kretz Hall, Suite 300
Los Angeles, CA 90095-1496
Tel: 310/794-4904
Fax: 310/825-9663
E-Mail: mkahn@ioe.ucla.edu
AB - We track US imports of advanced technology wind and solar power-generation equipment from a panel of countries during 1989-2010, and examine the determining factors including sector-specific US FDI outflow, country size, and domestic wind and solar power generation. Differentiating between the core high-tech and the balance of system equipment, we find US imports of the both categories have grown at significantly higher rate from the relatively poorer countries, particularly China and India. US FDI is found to play a significant positive role in the exports of high-tech equipment from both rich and poor countries, especially for the balance of system equipment. For the core wind and solar equipment, we find domestic renewable power generation played a significant positive role, and the effect is more pronounced for the rich countries as well as China compared to other poor countries.
ER -
TY - JOUR
AU - Ashraf,Quamrul
AU - Galor,Oded
TI - The "Out of Africa" Hypothesis, Human Genetic Diversity, and Comparative Economic Development
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17216
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17216
L1 - http://www.nber.org/papers/w17216.pdf
N1 - Author contact info:
Quamrul Ashraf
Williams College
Department of Economics
24 Hopkins Hall Drive
Williamstown, MA 01267
Tel: (413) 597-3051
Fax: (413) 597-4045
E-Mail: Quamrul.H.Ashraf@williams.edu
Oded Galor
Department of Economics
Brown University
Box B
Providence, RI 02912
Tel: 401/863-2117
Fax: 401/863-1970
E-Mail: oded_galor@brown.edu
AB - This research argues that deep-rooted factors, determined tens of thousands of years ago, had a significant effect on the course of economic development from the dawn of human civilization to the contemporary era. It advances and empirically establishes the hypothesis that, in the course of the exodus of Homo sapiens out of Africa, variation in migratory distance from the cradle of humankind to various settlements across the globe affected genetic diversity and has had a long-lasting effect on the pattern of comparative economic development that is not captured by geographical, institutional, and cultural factors. In particular, the level of genetic diversity within a society is found to have a hump-shaped effect on development outcomes in both the pre-colonial and the modern era, reflecting the trade-off between the beneficial and the detrimental effects of diversity on productivity. While the intermediate level of genetic diversity prevalent among Asian and European populations has been conducive for development, the high degree of diversity among African populations and the low degree of diversity among Native American populations have been a detrimental force in the development of these regions.
ER -
TY - JOUR
AU - Mancall,Peter C.
AU - Rosenbloom,Joshua L.
AU - Weiss,Thomas J.
TI - Economic Growth in the Mid Atlantic Region: Conjectural Estimates for 1720 to 1800
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17215
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17215
L1 - http://www.nber.org/papers/w17215.pdf
N1 - Author contact info:
Peter Mancall
Department of History
University of Southern California
Los Angeles, CA 90089
E-Mail: mancall@usc.edu
Joshua Rosenbloom
Department of Economics
University of Kansas
Snow Hall 436
1460 Jayhawk Blvd
Lawrence, KS 66045-2113
Tel: 785/864-2839
Fax: 785/864-5270
E-Mail: jrosenbloom@ku.edu
Thomas J. Weiss
Department of Economics
University of Kansas
Lawrence, KS 66045
Tel: 785/840-6878
Fax: 785/864-5270
E-Mail: t-weiss@ku.edu
AB - We employ the conjectural approach to estimate the growth of GDP per capita for the colonies and states of the mid-Atlantic region (Del., NJ, NY and Penn). In contrast to previous studies of the region’s growth that relied heavily on the performance of the export sector, the conjectural method enables us to take into account the impact of domestic sector, in particular the production of agricultural products for the domestic market. We find that the region experienced modest growth of real GDP per capita. Although the rate of growth was modest in comparison to what would materialize in the late nineteenth century, it was faster than that of the Lower South in the eighteenth century, and at times as fast as that for the U.S. in the first half of the nineteenth century. In its heyday of growth from 1740 to 1750—before the dislocations produced by the spread of the Seven Years’ War--real GDP per capita rose at 0.7 percent per year, driven by the growth of output per worker in both agriculture and nonagriculture, and by capital accumulation.
ER -
TY - JOUR
AU - Kaplow,Louis
TI - An Optimal Tax System
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17214
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17214
L1 - http://www.nber.org/papers/w17214.pdf
N1 - Author contact info:
Louis Kaplow
Harvard University
Hauser 322
Cambridge, MA 02138
Tel: 617/495-4101
Fax: 617/496-4880
E-Mail: meskridge@law.harvard.edu
AB - A notable feature and principal virtue of Tax by Design is its system-wide perspective on different elements of the tax system. This review essay builds on this trait and offers a more explicit foundation for the report’s general approach, drawing on a distribution-neutral methodology that is developed in other work. This technique is then employed to illuminate and extend Tax by Design’s analysis regarding the VAT, environmental taxation, wealth transfer taxation, and income transfers.
ER -
TY - JOUR
AU - Neumark,David
AU - Johnson,Hans P.
AU - Mejia,Marisol Cuellar
TI - Future Skill Shortages in the U.S. Economy?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17213
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17213
L1 - http://www.nber.org/papers/w17213.pdf
N1 - Author contact info:
David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA 92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu
Hans P. Johnson
Public Policy Institute of California
500 Washington St., Suite 600
San Francisco, CA 94111
E-Mail: johnson@ppic.org
Marisol Cuellar Mejia
Public Policy Institute of California
500 Washington St., Suite 600
San Francisco, CA 94111
E-Mail: cuellar@ppic.org
AB - The impending retirement of the baby boom cohort represents the first time in the history of the United States that such a large and well-educated group of workers will exit the labor force. This could imply skill shortages in the U.S. economy. We develop medium-term labor force projections of the educational demands on the workforce and the supply of workers by education to assess the potential for skill imbalances to emerge. Based on our formal projections, we see little likelihood of skill shortages emerging by the end of this decade. More tentatively, though, skill shortages are more likely as all of the baby boomers retire in later years, and skill shortages are more likely in the medium-term in states with large and growing immigrant populations. We discuss conflicting evidence on skill shortages based on alternative projections as well as criticisms of the definition of skill requirements, concluding that our projections are likely the most reasonable.
ER -
TY - JOUR
AU - Chatterji,Pinka
AU - Markowitz,Sara
AU - Brooks-Gunn,Jeanne
TI - Early Maternal Employment and Family Wellbeing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17212
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17212
L1 - http://www.nber.org/papers/w17212.pdf
N1 - Author contact info:
Pinka Chatterji
State University of New York at Albany
Economics Department
1400 Washington Avenue
Albany, NY 12222
Tel: 518/442-4746
E-Mail: pchatterji@albany.edu
Sara Markowitz
Department of Economics
Emory University
1602 Fishburne Dr.
Atlanta, GA 30322
Tel: (404) 712-8167
E-Mail: sara.markowitz@emory.edu
Jeanne Brooks-Gunn
Columbia University
National Center for Children and Families
525 West 120th Street, Box 39
New York, NY 10027
E-Mail: brooks-gunn@columbia.edu
AB - This study uses longitudinal data from the NICHD Study on Early Child Care (SECC) to examine the effects of maternal employment on family well-being, measured by maternal mental and overall health, parenting stress, and parenting quality. First, we estimate the effects of maternal employment on these outcomes measured when children are 6 months old. Next, we use dynamic panel data models to examine the effects of maternal employment on family outcomes during the first 4.5 years of children’s lives. Among mothers of six month old infants, maternal work hours are positively associated with depressive symptoms and self-reported parenting stress, and negatively associated with self-rated overall health among mothers. Compared to mothers who are on leave 3 months after childbirth, mothers who are working full-time score 22 percent higher on the CES-D scale of depressive symptoms. However, maternal employment is not associated with the quality of parenting at 6 months, based on trained assessors’ observations of maternal sensitivity. Moreover, during the first 4.5 years of life as a whole, we find only weak evidence that maternal work hours are associated with maternal health, and no evidence that maternal employment is associated with parenting stress and quality. We find that unobserved heterogeneity is an important factor in modeling family outcomes.
ER -
TY - JOUR
AU - Lindert,Peter H.
AU - Williamson,Jeffrey G.
TI - American Incomes before and after the Revolution
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17211
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17211
L1 - http://www.nber.org/papers/w17211.pdf
N1 - Author contact info:
Peter H. Lindert
Department of Economics
University of California, Davis
Davis, CA 95616
Tel: 530/752-1983
Fax: 530/752-5611
E-Mail: phlindert@ucdavis.edu
Jeffrey G. Williamson
350 South Hamilton Street #1002
Madison, WI 53703
Tel: 608-441-0023
Fax: 608-204-0783
E-Mail: jwilliam@fas.harvard.edu
AB - Building social tables in the tradition of Gregory King, we quantify the level and inequality of American incomes before and after the Revolutionary War. Our tentative estimates suggest that between 1774 and 1800 American incomes fell in real per capita terms. The colonial South was richer, and then suffered a greater Revolutionary decline, than suggested by previous estimates. Any rapid growth after 1790 seems to have just partially offset part of a very steep wartime decline. We also find that free American colonists had much more equal incomes than did households in England and Wales. Indeed, New England and the Middle Colonies appear to have been more egalitarian than anywhere else in the measurable world. The colonists also had greater purchasing power than their English counterparts over all of the income ranks except in the top few percent.
ER -
TY - JOUR
AU - Greenstone,Michael
AU - Hanna,Rema
TI - Environmental Regulations, Air and Water Pollution, and Infant Mortality in India
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17210
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17210
L1 - http://www.nber.org/papers/w17210.pdf
N1 - Author contact info:
Michael Greenstone
MIT Department of Economics
50 Memorial Drive, E52-359
Cambridge, MA 02142-1347
Tel: 617/452-4127
Fax: 617/253-1330
E-Mail: mgreenst@mit.edu
Rema Hanna
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-1140
Fax: 617/496-5747
E-Mail: Rema_Hanna@hks.harvard.edu
AB - Using the most comprehensive data file ever compiled on air pollution, water pollution, environmental regulations, and infant mortality from a developing country, the paper examines the effectiveness of India’s environmental regulations. The air pollution regulations were effective at reducing ambient concentrations of particulate matter, sulfur dioxide, and nitrogen dioxide. The most successful air pollution regulation is associated with a modest and statistically insignificant decline in infant mortality. However, the water pollution regulations had no observable effect. Overall, these results contradict the conventional wisdom that environmental quality is a deterministic function of income and underscore the role of institutions and politics.
ER -
TY - JOUR
AU - Grubb,Farley
TI - State Redemption of the Continental Dollar, 1779-1790
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17209
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17209
L1 - http://www.nber.org/papers/w17209.pdf
N1 - Author contact info:
Farley Grubb
University of Delaware
Economics Department
Newark, DE 19716
Tel: 302/831-1905
Fax: 302/831-6968
E-Mail: grubbf@udel.edu
AB - Remittances of Continental Dollars to the national treasury from each state by year from 1779 through 1789 are used to determine state compliance with congressional resolutions regarding Continental-Dollar redemption. From 1781 through 1789, the states as a whole stayed well ahead of the remittance schedule set by Congress in 1779. Individual state compliance, however, varied considerably. By the time Congress changed redemption requirements with the Funding Act of 4 August 1790, a majority of the net new Continental Dollars ever emitted by Congress had already been redeemed by the states and remitted to the national treasury to be burned.
ER -
TY - JOUR
AU - Gaynor,Martin
AU - Town,Robert J.
TI - Competition in Health Care Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17208
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17208
L1 - http://www.nber.org/papers/w17208.pdf
N1 - Author contact info:
Martin Gaynor
Heinz College
Carnegie Mellon University
4800 Forbes Avenue, Room 3008
Pittsburgh, PA 15213-3890
Tel: 412/268-7933
Fax: 412/268-5338
E-Mail: mgaynor@cmu.edu
Robert Town
Health Care Management Department
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
E-Mail: rtown@wharton.upenn.edu
AB - This paper reviews the literature devoted to studying markets for health care services and health insurance. There has been tremendous growth and progress in this field. A tremendous amount of new research has been done in this area over the last 10 years. In addition, there has been increasing development and use of frontier industrial organization methods. We begin by examining research on the determinants of market structure, considering both static and dynamic models. We then model the strategic determination of prices between health insurers and providers where insurers market their products to consumers based, in part, on the quality and breadth of their provider network. We then review the large empirical literature on the strategic determination of hospital prices through the lens of this model. Variation in the quality of health care clearly can have large welfare consequences. We therefore also describe the theoretical and empirical literature on the impact of market structure on quality of health care. The paper then moves on to consider competition in health insurance markets and physician services markets. We conclude by considering vertical restraints and monopsony power.
ER -
TY - JOUR
AU - Fafchamps,Marcel
AU - McKenzie,David
AU - Quinn,Simon R.
AU - Woodruff,Christopher
TI - When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17207
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17207
L1 - http://www.nber.org/papers/w17207.pdf
N1 - Author contact info:
Marcel Fafchamps
Oxford University
E-Mail: marcel.fafchamps@economics.ox.ac.uk
David McKenzie
The World Bank, MSN MC3-307
1818 H Street N.W.
Washington, DC 20433
Tel: 202-458-9332
E-Mail: dmckenzie@worldbank.org
Simon R. Quinn
Oxford University
E-Mail: simon.quinn@economics.ox.ac.uk
Christopher Woodruff
Department of Economics
University of Warwick
Coventry CV4 7AL
UK
Tel: 44 787 258 2800
Fax: 44 024 7652 3032
E-Mail: c.woodruff@warwick.ac.uk
AB - Standard models of investment predict that credit-constrained firms should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. We randomly gave cash and in-kind grants to male- and female-owned microenterprises in urban Ghana. Our findings cast doubt on the ability of capital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zero for women with initial profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women we strongly reject equality of the cash and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in-kind grants are less robust. The difference in the effects of cash and in-kind grants is associated more with a lack of self-control than with external pressure. As a result, the manner in which funding is provided affects microenterprise growth.
ER -
TY - JOUR
AU - Pincus,Steven C.A.
AU - Robinson,James A.
TI - What Really Happened During the Glorious Revolution?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17206
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17206
L1 - http://www.nber.org/papers/w17206.pdf
N1 - Author contact info:
Steven Pincus
Yale University
Department of History
320 York Street
New Haven, CT 06511
E-Mail: steven.pincus@yale.edu
James A. Robinson
Harvard University
Department of Government
N309, 1737 Cambridge Street
Cambridge, MA 02138
Tel: 617/496-2839
Fax: 617/495-0438
E-Mail: jrobinson@gov.harvard.edu
AB - The English Glorious Revolution of 1688-89 is one of the most famous instances of ‘institutional’ change in world history which has fascinated scholars because of the role it may have played in creating an environment conducive to making England the first industrial nation. This claim was most forcefully advanced by North and Weingast yet the existing literature in history and economic history dismisses their arguments. In this paper we argue that North and Weingast were entirely correct in arguing that the Glorious Revolution represented a critical change in institutions. In addition, and contrary to the claims of many historians, most of the things they claimed happened, for example parliamentary sovereignty, did happen. However, we argue that they happened for reasons different from those put forward by North and Weingast. We show that rather than being an instance of a de jure ‘re-writing the rules’, as North and Weingast argued, the Glorious Revolution was actually an interlinked series of de facto institutional changes which came from a change in the balance of power and authority and was part of a broader reorientation in the political equilibrium of England. Moreover, it was significant for the economy not because it solved a problem of credible commitment, but for two other reasons. First, because the institutional changes it led to meant that party political ministries, rather than the king’s private advisors, now initiated policy. Second, because these ministries were dominated by Whigs with a specific program of economic modernization.
ER -
TY - JOUR
AU - Danzon,Patricia M.
AU - Pereira,Nuno S.
TI - Vaccine Supply: Effects Of Regulation And Competition
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17205
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17205
L1 - http://www.nber.org/papers/w17205.pdf
N1 - Author contact info:
Patricia M. Danzon
Health Care Management Department
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-0694
Fax: 215/573-2157
E-Mail: danzon@wharton.upenn.edu
Nuno S. Pereira
Dean, Business School
University of Porto
Rua de Salazares
4200-464 Porto, Portugal
E-Mail: nsp@egp-upbs.up.pt
AB - In US vaccine markets, competing producers with high fixed, sunk costs face relatively concentrated demand. The resulting price and quality competition leads to the exit of all but one or very few producers per vaccine. Our empirical analysis of exits from US vaccine markets supports the hypothesis that high fixed costs and both price and quality competition contribute to vaccine exits.
We find no evidence that government purchasing has significant effects, possibly because government purchase tends to increase volume but lower price, with offsetting effects. Evidence from the flu vaccine market confirms that government purchasing is not a necessary condition for exits and the existence of few suppliers per vaccine in the US.
ER -
TY - JOUR
AU - Iacovone,Leonardo
AU - Javorcik,Beata Smarzynska
AU - Keller,Wolfgang
AU - Tybout,James R.
TI - Supplier Responses to Wal-Mart's Invasion of Mexico
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17204
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17204
L1 - http://www.nber.org/papers/w17204.pdf
N1 - Author contact info:
Leonardo Iacovone
1818 H St, NW, Mail-stop J8-808
Private and Financial Sector Development
Africa Region, The World Bank
1818 H St, NW, Mail-stop J8-808
Washington, DC 20433
Tel: 202 4738153
Fax: 202 522 1159
E-Mail: Liacovone@worldbank.org
Beata Smarzynska Javorcik
University of Oxford
E-Mail: beata.javorcik@economics.ox.ac.uk
Wolfgang Keller
Department of Economics
University of Colorado-Boulder
Boulder, CO 80309-0256
Tel: 303/735 5507
Fax: 303/492 8960
E-Mail: Wolfgang.Keller@colorado.edu
James R. Tybout
Department of Economics
Penn State University
517 Kern Graduate Building
University Park, PA 16802
Tel: 814/865-4259
Fax: 814/863-4775
E-Mail: jtybout@psu.edu
AB - This paper examines the effect of Wal-Mart's entry into Mexico on Mexican manufacturers of consumer goods. Guided by firm interviews that suggested substantial heterogeneity across firms in how they responded to Wal-Mart's entry, we develop a dynamic industry model in which firms decide whether to sell their products through Walmex (short for Wal-Mart de Mexico), or use traditional retailers. Walmex provides access to a larger market, but it puts continuous pressure on its suppliers to improve their product's appeal, and it forces them to accept relatively low prices relative to product appeal. Simulations of the model show that the arrival of Walmex separates potential suppliers into two groups. Those with relatively high-appeal products choose Walmex as their retailer, whereas those with lower appeal products do not. For the industry as a whole, the model predicts that the associated market share reallocations, adjustments in innovative effort, and exit patterns increase productivity and the rate of innovation. These predictions accord well with the results from our firm interviews. The model's predictions are also supported by establishment-level panel data that characterize Mexican producers' domestic sales, investments, and productivity gains in regions with differing levels of Walmex presence during the years 1994 to 2002.
ER -
TY - JOUR
AU - Hurd,Michael D.
AU - Rohwedder,Susann
TI - Economic Preparation for Retirement
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17203
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17203
L1 - http://www.nber.org/papers/w17203.pdf
N1 - Author contact info:
Michael D. Hurd
RAND Corporation
1776 Main Street
Santa Monica, CA 90407
Tel: 310/451-6945
Fax: 310/451-6923
E-Mail: mhurd@rand.org
Susann Rohwedder
RAND
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407
Tel: 310-393 0411,ext. 7885
Fax: 310-451-6923
E-Mail: Susann_Rohwedder@rand.org
M3 - presented at "Aging Conference", May 6-7, 2011
AB - We define and estimate measures of economic preparation for retirement based on a complete inventory of economic resources while taking into account the risk of living to advanced old age and the risk of high out-of-pocket spending for health care services. We ask whether, in a sample of 66–69 year-olds, observed economic resources could support with high probability a life-cycle consumption path anchored at the initial level of consumption until the end of life. We account for taxes, widowing, differential mortality and out-of-pocket health spending risk. We find that 71% of persons in our target age group are adequately prepared according to our definitions, but there is substantial variation by observable characteristics: 80% of married persons are adequately prepared compared with just 55% of single persons. We estimate that a reduction in Social Security benefits of 30 percent would reduce the fraction adequately prepared by 7.8 percentage points among married persons and by as much as 10.7 percentage points among single persons.
ER -
TY - JOUR
AU - Desai,Mihir A.
AU - Foley,C. Fritz
AU - Hines,James R.,Jr.
TI - Tax Policy and the Efficiency of U.S. Direct Investment Abroad
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17202
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17202
L1 - http://www.nber.org/papers/w17202.pdf
N1 - Author contact info:
Mihir A. Desai
Graduate School of Business Administration
Harvard University
Soldiers Field
Boston, MA 02163
Tel: 617/495-6693
Fax: 617/496-6592
E-Mail: mdesai@hbs.edu
C. Fritz Foley
Graduate School of Business Administration
Harvard University
Soldiers Field
Boston, MA 02163
Tel: 617/495-6375
Fax: 617/496-8443
E-Mail: ffoley@hbs.edu
James R. Hines
Department of Economics
University of Michigan
343 Lorch Hall
611 Tappan Street
Ann Arbor, MI 48109-1220
Tel: 734/764-2320
Fax: 734/764-2769
E-Mail: jrhines@umich.edu
AB - Deferral of U.S. taxes on foreign source income is commonly characterized as a subsidy to foreign investment, as reflected in its inclusion among “tax expenditures” and occasional calls for its repeal. This paper analyzes the extent to which tax deferral and other policies inefficiently subsidize U.S. direct investment abroad. Investments are dynamically inefficient if they consistently generate fewer returns to investors than they absorb in new investment funds. From 1982–2010, repatriated earnings from foreign affiliates exceeded net capital investments by $1.1 trillion in 2010 dollars; and from 1950–2010, repatriated earnings and net interest from foreign affiliates exceeded net equity investments and loans by $2.1 trillion in 2010 dollars. By either measure, cash flows received from abroad exceeded 160 percent of net investments, implying that foreign investment over these periods was dynamically efficient.
ER -
TY - JOUR
AU - Perri,Fabrizio
AU - Quadrini,Vincenzo
TI - International Recessions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17201
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17201
L1 - http://www.nber.org/papers/w17201.pdf
N1 - Author contact info:
Fabrizio Perri
University of Minnesota
Department of Economics
4-177 Hanson Hall
Minneapolis, MN 55455
Tel: 612/625-7504
Fax: 612/624-0209
E-Mail: fperri@umn.edu
Vincenzo Quadrini
Department of Finance and Business Economics
Marshall School of Business
University of Southern California
701 Exposition Boulevard
Los Angeles, CA 90089
Tel: 213/740-6521
Fax: 213/740-6650
E-Mail: quadrini@usc.edu
AB - The 2008-2009 crisis was characterized by an unprecedented degree of international synchronization as all major industrialized countries experienced large macroeconomic contractions around the date of Lehman bankruptcy. At the same time countries also experienced large and synchronized tightening of credit conditions. We present a two-country model with financial market frictions where a credit tightening can emerge as a self-fulling equilibrium caused by pessimistic but fully rational expectations. As a result of the credit tightening, countries experience large and endogenously synchronized declines in asset prices and economic activity (international recessions). The model suggests that these recessions are more severe if they happen after a prolonged period of credit expansion.
ER -
TY - JOUR
AU - Dastrup,Samuel
AU - Zivin,Joshua S. Graff
AU - Costa,Dora L.
AU - Kahn,Matthew E.
TI - Understanding the Solar Home Price Premium: Electricity Generation and “Green” Social Status
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17200
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17200
L1 - http://www.nber.org/papers/w17200.pdf
N1 - Author contact info:
Samuel Dastrup
University of California, San Diego
Department of Economics
9500 Gilman Dr.
La Jolla, CA 92093
E-Mail: sdastrup@ucsd.edu
Joshua S. Graff Zivin
University of California, San Diego
9500 Gilman Drive, MC 0519
La Jolla, CA 92093-0519
Tel: 858/822-6438
E-Mail: jgraffzivin@ucsd.edu
Dora Costa
Bunche Hall 9272
Department of Economics
UCLA
Box 951477
Los Angeles, CA 90095-1477
Tel: (310) 825-4249
Fax: (310) 825-9528
E-Mail: costa@econ.ucla.edu
Matthew E. Kahn
UCLA Institute of the Environment
Department of Economics
Department of Public Policy
Box 951496
La Kretz Hall, Suite 300
Los Angeles, CA 90095-1496
Tel: 310/794-4904
Fax: 310/825-9663
E-Mail: mkahn@ioe.ucla.edu
AB - This study uses a large sample of homes in the San Diego area and Sacramento, California area to provide some of the first capitalization estimates of the sales value of homes with solar panels relative to comparable homes without solar panels. Although the residential solar home market continues to grow, there is little direct evidence on the market capitalization effect. Using both hedonics and a repeat sales index approach we find that solar panels are capitalized at roughly a 3.5% premium. This premium is larger in communities with a greater share of college graduates and of registered Prius hybrid vehicles.
ER -
TY - JOUR
AU - Tran,Ngoc-Khanh
AU - Zeckhauser,Richard J.
TI - The Behavior of Savings and Asset Prices When Preferences and Beliefs are Heterogeneous
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17199
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17199
L1 - http://www.nber.org/papers/w17199.pdf
N1 - Author contact info:
Ngoc-Khanh Tran
Massachusetts Institute of Technology
8 Sixth Street
Apt. 2
Cambridge, MA 02141
E-Mail: khanh@MIT.EDU
Richard J. Zeckhauser
John F. Kennedy School of Government
Harvard University
79 John F. Kennedy Street
Cambridge, MA 02138
Tel: 617/495-1174
Fax: 617/384-9340
E-Mail: richard_zeckhauser@harvard.edu
AB - Movements in asset prices are a major risk confronting individuals. This paper establishes new asset pricing results when agents differ in risk preference, time preference and/or expectations. It shows that risk tolerance is a critical concept driving savings decisions, consumption allocations, prices and return volatilities. Surprisingly, due to the equilibrium risk sharing, the precautionary savings motive in the aggregate can vastly exceed that of even the most prudent actual agent in the economy. Consequently, a low real interest rate, resulting from large aggregate savings, can prevail with reasonable risk aversions for all agents. One downside of a large aggregate savings motive is that savings rates become extremely sensitive to output fluctuation. Thus, the same mechanism that produces realistically low interest rates tends to make them unrealistically volatile.
A powerful isomorphism allows differences in time preference and expectations to be swept away in the analysis, yielding an equivalent economy whose agents differ merely in risk aversion. These results hold great potential to simplify the analysis of heterogeneous-agent economies, as we demonstrate in quantifying how asset prices move and bounding their volatilities. All results are obtained in closed form for any number of agents possessing additively separable preferences in an endowment economy.
ER -
TY - JOUR
AU - Colla,Carrie H.
AU - Dow,William H.
AU - Dube,Arindrajit
TI - The Labor Market Impact of Employer Health Benefit Mandates: Evidence from San Francisco’s Health Care Security Ordinance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17198
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17198
L1 - http://www.nber.org/papers/w17198.pdf
N1 - Author contact info:
Carrie H. Colla
The Dartmouth Institute for
Health Policy and Clinical Practice
Dartmouth Medical School
35 Centerra Parkway
Lebanon, NH 03766
Tel: (603) 650-3521
Fax: (603) 653-0896
E-Mail: carrie.colla@dartmouth.edu
William H. Dow
University of California, Berkeley
School of Public Health
239 University Hall, #7360
Berkeley, CA 94720-7360
Tel: 510/643-5439
Fax: 510/643-6981
E-Mail: wdow@berkeley.edu
Arindrajit Dube
Department of Economics
1030 Thompson Hall
University of Massachusetts Amherst
Amherst, MA 01003
E-Mail: adube@econs.umass.edu
AB - A key issue surrounding employer benefit mandates is the incidence on workers through wages and employment. In this paper, we address this question using a pay-or-play policy implemented in San Francisco in 2008 that requires employers to either provide health benefits or contribute to a public option health plan. We estimate the impact on employment and earnings for the private sector overall, as well as for high impact sectors: retail and accommodation and food services. We develop a novel approach for individual case studies by combining both spatial discontinuity in policies and permutation-type inference using other MSAs. We find that, compared to control counties, employment and earnings patterns in San Francisco did not change appreciably following the policy. This was true for industries most affected by the mandate, as well as for overall private sector employment. The results are generally robust to inclusion of different control groups, county-specific time trends, and varying pre-periods. In contrast to the small effects on the labor market, we do find that about 25% of surveyed restaurants imposed customer surcharges, with the median surcharge being 4% of the bill. These results indicate that while little of the burden of the mandate fell on San Francisco workers, approximately half of the incidence of the mandate fell on consumers.
ER -
TY - JOUR
AU - Greenwood,Robin
AU - Hanson,Samuel G.
TI - Issuer Quality and the Credit Cycle
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17197
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17197
L1 - http://www.nber.org/papers/w17197.pdf
N1 - Author contact info:
Robin Greenwood
Harvard Business School
Baker Library 267
Soldiers Field
Boston, MA 02163
Tel: 617/495-6979
Fax: 617/496-8443
E-Mail: rgreenwood@hbs.edu
Samuel Hanson
Harvard Business School
Soldiers Field Road
Boston, MA 02163
E-Mail: shanson@hbs.edu
AB - We show that the credit quality of corporate debt issuers deteriorates during credit booms, and that this deterioration forecasts low excess returns to corporate bondholders. The key insight is that changes in the pricing of credit risk disproportionately affect the financing costs faced by low quality firms, so the debt issuance of low quality firms is particularly useful for forecasting bond returns. We show that a significant decline in issuer quality is a more reliable signal of credit market overheating than rapid aggregate credit growth. We use these findings to investigate the forces driving time-variation in expected corporate bond returns.
ER -
TY - JOUR
AU - Bisin,Alberto
AU - Moro,Andrea
AU - Topa,Giorgio
TI - The Empirical Content of Models with Multiple Equilibria in Economies with Social Interactions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17196
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17196
L1 - http://www.nber.org/papers/w17196.pdf
N1 - Author contact info:
Alberto Bisin
Department of Economics
New York University
19 West 4th Street, 5th Floor
New York, NY 10012
Tel: 212/998-8916
Fax: 212/995-4186
E-Mail: alberto.bisin@nyu.edu
Andrea Moro
Department of Economics
Vanderbilt University
VU Station B #351819
Nashville, TN 37235
E-Mail: andrea.moro@vanderbilt.edu
Giorgio Topa
Federal Reserve Bank of New York
Domestic Research Function
33 Liberty Street
New York, NY 10045
Tel: 212-720-5497
Fax: 212-720-1844
E-Mail: giorgio.topa@ny.frb.org
AB - We study a general class of models with social interactions that might display multiple equilibria. We propose an estimation procedure for these models and evaluate its efficiency and computational feasibility relative to different approaches taken to the curse of dimensionality implied by the multiplicity. Using data on smoking among teenagers, we implement the proposed estimation procedure to understand how group interactions affect health-related choices. We find that interaction effects are strong both at the school level and at the smaller friends-network level. Multiplicity of equilibria is pervasive at the estimated parameter values, and equilibrium selection accounts for about 15 percent of the observed smoking behavior. Counterfactuals show that student interactions, surprisingly, reduce smoking by approximately 70 percent with respect to the equilibrium smoking that would occur without interactions.
ER -
TY - JOUR
AU - Bobashev,Georgiy
AU - Cropper,Maureen L.
AU - Epstein,Joshua M.
AU - Goedecke,D. Michael
AU - Hutton,Stephen
AU - Over,Mead
TI - Policy Response to Pandemic Influenza: The Value of Collective Action
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17195
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17195
L1 - http://www.nber.org/papers/w17195.pdf
N1 - Author contact info:
Georgiy Bobashev
RTI International
3040 E. Cornwallis Road
Research Triangle Park, NC 27709-2194
E-Mail: bobashev@rti.org
Maureen L. Cropper
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3483
Fax: 301/405-3542
E-Mail: cropper@econ.umd.edu
Joshua M. Epstein
Johns Hopkins University School of Medicine
733 North Broadway
Baltimore, MD 21205
E-Mail: jepste15@jhmi.edu
D. Michael Goedecke
RTI International
3040 E. Cornwallis Road
Research Triangle Park, NC 27709-2194
E-Mail: mgoedecke@rti.org
Stephen Hutton
The World Bank
1818 H Street NW, MSC 9-001
Washington, DC 20433
E-Mail: shutton@worldbank.org
Mead Over
Center for Global Development
E-Mail: mover@cgdev.org
AB - This paper examines positive externalities and complementarities in the use of antiviral pharmaceuticals to mitigate pandemic influenza. The paper demonstrates the presence of treatment externalities in simple epidemiological SIR models, and then through simulations of a Global Epidemiological Model, in which the pandemic spreads between cities through the international airline network, and between cities and rural areas through ground transport. While most treatment benefits are private, spillovers may mean that it is in the self-interest of rich countries to pay for some AV treatment in poor countries. The most cost-effective policy is for rich countries to donate doses to the outbreak source country; however, donating doses to poor countries in proportion to their populations may also be cost-effective. These results depend on the transmissibility of the flu strain, the efficacy of antivirals in reducing transmissibility and on the proportion of infectious that can be identified and treated.
ER -
TY - JOUR
AU - Barlevy,Gadi
AU - Neal,Derek
TI - Pay for Percentile
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17194
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17194
L1 - http://www.nber.org/papers/w17194.pdf
N1 - Author contact info:
Gadi Barlevy
Economic Research Department
Federal Reserve Bank of Chicago
230 South LaSalle
Chicago, IL 60604
Tel: 312/322-6379
Fax: 312/322-2357
E-Mail: gbarlevy@frbchi.org
Derek Neal
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-8166
Fax: 773-702-8490
E-Mail: d-neal@uchicago.edu
AB - We analyze an incentive pay scheme for educators that links educator compensation to the ranks of their students within appropriately defined comparison sets, and we show that under certain conditions this scheme induces teachers to allocate socially optimal levels of effort to all students. Moreover, because this scheme employs only ordinal information, it allows education authorities to employ completely new assessments at each testing date without ever having to equate various assessment forms. This approach removes incentives for teachers to teach to a particular assessment form and eliminates opportunities to influence reward pay by corrupting the equating process or the scales used to report assessment results. Education authorities can use the incentive scheme we describe while employing a separate no-stakes assessment system to track secular trends in scaled measures of student achievement.
ER -
TY - JOUR
AU - Berry,Steven T.
AU - Gandhi,Amit
AU - Haile,Philip
TI - Connected Substitutes and Invertibility of Demand
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17193
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17193
L1 - http://www.nber.org/papers/w17193.pdf
N1 - Author contact info:
Steven T. Berry
Yale University Department of Economics
Box 208264
37 Hillhouse Avenue
New Haven, CT 06520-8264
Tel: 203/432-3556
Fax: 203/432-6323
E-Mail: steven.berry@yale.edu
Amit Gandhi
University of Wisconsin
1180 Observatory Drive
Madison, WI 53706-1393
E-Mail: agandhi@ssc.wisc.edu
Philip Haile
Department of Economics
Yale University
37 Hillhouse Avenue
P.O. Box 208264
New Haven, CT 06520
Tel: 203/432-3568
Fax: 203/432-6323
E-Mail: philip.haile@yale.edu
AB - We consider the invertibility of a nonparametric nonseparable demand system. Invertibility of demand is important in several contexts, including identification of demand, estimation of demand, testing of revealed preference, and economic theory requiring uniqueness of market clearing prices. We introduce the notion of "connected substitutes" and show that this structure is sufficient for invertibility. The connected substitutes conditions require weak substitution between all goods and sufficient strict substitution to necessitate treating them in a single demand system. These conditions are satisfied in many standard models, have transparent economic interpretation, and allow us to show invertibility without functional form restrictions, smoothness assumptions, or strong domain restrictions.
ER -
TY - JOUR
AU - Benmelech,Efraim
AU - Bergman,Nittai K.
AU - Enriquez,Ricardo
TI - Negotiating with Labor Under Financial Distress
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17192
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17192
L1 - http://www.nber.org/papers/w17192.pdf
N1 - Author contact info:
Efraim Benmelech
Harvard University
Department of Economics
Littauer 233
Cambridge, MA 02138
Tel: 617/496-4787
Fax: 617/495-8570
E-Mail: effi_benmelech@harvard.edu
Nittai Bergman
MIT Sloan School of Management
100 Main Street, E62-632
Cambridge, MA 02142
Tel: 617/253-2933
Fax: 617/258-6855
E-Mail: nbergman@mit.edu
Ricardo Enriquez
Harvard University
E-Mail: enriquez@fas.harvard.edu
AB - We analyze how firms renegotiate labor contracts to extract concessions from labor. While anecdotal evidence suggests that firms tend to renegotiate down wages in times of financial distress, there is no empirical evidence that documents such renegotiation, its determinants, and its magnitude. This paper attempts to fill this gap. Using a unique data set of airlines that includes detailed information on wages and pension plans we document an empirical link between airline financial distress, pension underfunding, and wage concessions.
ER -
TY - JOUR
AU - Gourio,Francois
AU - Rudanko,Leena
TI - Customer Capital
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17191
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17191
L1 - http://www.nber.org/papers/w17191.pdf
N1 - Author contact info:
Francois Gourio
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-4534
Fax: 617/353-4449
E-Mail: fgourio@bu.edu
Leena Rudanko
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-7082
E-Mail: rudanko@bu.edu
AB - Firms spend substantial resources on marketing and selling. Interpreting this as evidence of frictions in product markets, which require firms to spend resources on customer acquisition, this paper develops a search theoretic model of firm dynamics in frictional product markets. Introducing search frictions generates long-term customer relationships, rendering the customer base a state variable for firms, which is sluggish to adjust. This affects: the level and volatility of firm investment, sales, profits, value and markups, the timing of firm responses to shocks, and the relationship between investment and Tobin’s q. We document support for these predictions in firm-level data from Compustat, using cross-industry variation in selling expenses to quantify differences in the degree of friction across markets.
ER -
TY - JOUR
AU - Finkelstein,Amy
AU - Taubman,Sarah
AU - Wright,Bill
AU - Bernstein,Mira
AU - Gruber,Jonathan
AU - Newhouse,Joseph P.
AU - Allen,Heidi
AU - Baicker,Katherine
AU - Group,The Oregon Health Study
TI - The Oregon Health Insurance Experiment: Evidence from the First Year
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17190
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17190
L1 - http://www.nber.org/papers/w17190.pdf
N1 - Author contact info:
Amy Finkelstein
Department of Economics
MIT E52-274C
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/253-4149
Fax: 617/868-2742
E-Mail: afink@mit.edu
Sarah Taubman
National Bureau of Economic Research
E-Mail: taubmans@nber.org
Bill J. Wright
Center for Outcomes Research and Education
Providence Health & Services
E-Mail: bill.wright@providence.org
Mira Bernstein
National Bureau of Economic Research
E-Mail: mbernst@nber.org
Jonathan Gruber
MIT Department of Economics
E52-355
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8892
Fax: 617/253-1330
E-Mail: gruberj@mit.edu
Joseph P. Newhouse
Division of Health Policy Research and Education
Harvard University
180 Longwood Avenue
Boston, MA 02115-5899
Tel: 617/432-1325
Fax: 617/432-3503
E-Mail: newhouse@hcp.med.harvard.edu
Heidi Allen
Center for Outcomes Research and Education
Providence Health & Services
E-Mail: heidi.allen@providence.org .
Katherine Baicker
Professor of Health Economics
Department of Health Policy and Management
Harvard School of Public Health
677 Huntington Avenue
Boston, MA 02115
E-Mail: kbaicker@hsph.harvard.edu
The Oregon Health Study Group
includes Matt Carlson (Portland State University),
Tina Edlund (Deputy Director, Oregon Health
Authority),Charles Gallia (Oregon DHS), Eric
Schneider (RAND), and Jeanene Smith (Office for
Oregon Health Policy and Research) in addition
to the other authors of this paper
AB - In 2008, a group of uninsured low-income adults in Oregon was selected by lottery to be given the chance to apply for Medicaid. This lottery provides a unique opportunity to gauge the effects of expanding access to public health insurance on the health care use, financial strain, and health of low-income adults using a randomized controlled design. In the year after random assignment, the treatment group selected by the lottery was about 25 percentage points more likely to have insurance than the control group that was not selected. We find that in this first year, the treatment group had substantively and statistically significantly higher health care utilization (including primary and preventive care as well as hospitalizations), lower out-of-pocket medical expenditures and medical debt (including fewer bills sent to collection), and better self-reported physical and mental health than the control group.
ER -
TY - JOUR
AU - Ferraro,Paul J.
AU - Price,Michael K.
TI - Using Non-Pecuniary Strategies to Influence Behavior: Evidence from a Large Scale Field Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17189
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17189
L1 - http://www.nber.org/papers/w17189.pdf
N1 - Author contact info:
Paul Ferraro
Georgia State University
E-Mail: prcpjf@langate.gsu.edu
Michael Price
Department of Economics
University of Tennessee
515 Stokely Management Center
Knoxville, TN 27996
Tel: 865/974-5672
Fax: 865/974-4601
E-Mail: mprice21@utk.edu
AB - Policymakers are increasingly using norm-based messages to influence individual decision-making. We partner with a metropolitan water utility to implement a natural field experiment examining the effect of such messages on residential water demand. The data, drawn from more than 100,000 households, indicate that social comparison messages had a greater influence on behavior than simple pro-social messages or technical information alone. Moreover, our data suggest social comparison messages are most effective among households identified as the least price sensitive: high-users. Yet the effectiveness of such messages wanes over time. Our results thus highlight important complementarities between pecuniary and non-pecuniary strategies.
ER -
TY - JOUR
AU - Helliwell,John F.
AU - Wang,Shun
TI - Weekends and Subjective Well-Being
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17180
PY - 2011
Y2 - July 2011
UR - http://www.nber.org/papers/w17180
L1 - http://www.nber.org/papers/w17180.pdf
N1 - Author contact info:
John F. Helliwell
Canadian Institute for Advanced Research
and Department of Economics
University of British Columbia
997-1873 East Mall
Vancouver BC V6T 1Z1
CANADA
Tel: 604/822-4953
Fax: 604/822-5915
E-Mail: john.helliwell@ubc.ca
Shun Wang
Department of Economics,
University of British Columbia
997-1873 East Mall
Vancouver B.C. V6T 1Z1 CANADA
E-Mail: swangubc@hotmail.com
AB - This paper exploits the richness and large sample size of the Gallup/Healthways US daily poll to illustrate significant differences in the dynamics of two key measures of subjective well-being: emotions and life evaluations. We find that there is no day-of-week effect for life evaluations, represented here by the Cantril Ladder, but significantly more happiness, enjoyment, and laughter, and significantly less worry, sadness, and anger on weekends (including public holidays) than on weekdays. We then find strong evidence of the importance of the social context, both at work and at home, in explaining the size and likely determinants of the weekend effects for emotions. Weekend effects are twice as large for full-time paid workers as for the rest of the population, and are much smaller for those whose work supervisor is considered a partner rather than a boss and who report trustable and open work environments. A large portion of the weekend effects is explained by differences in the amount of time spent with friends or family between weekends and weekdays (7.1 vs. 5.4 hours). The extra daily social time of 1.7 hours in weekends raises average happiness by about 2%.
ER -
TY - JOUR
AU - Branstetter,Lee G.
AU - Chatterjee,Chirantan
AU - Higgins,Matthew
TI - Regulation and Welfare: Evidence from Paragraph IV Generic Entry in the Pharmaceutical Industry
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17188
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17188
L1 - http://www.nber.org/papers/w17188.pdf
N1 - Author contact info:
Lee G. Branstetter
Heinz College
School of Public Policy and Management
Department of Social and Decision Sciences
Carnegie Mellon University
Pittsburgh, PA 15213
Tel: 412/268-4649
E-Mail: branstet@andrew.cmu.edu
Chirantan Chatterjee
Indian Institute of Management Bangalore
E-Mail: chirantan.chatterjee@IIMB.ERNET.IN
Matthew Higgins
Georgia Institute of Technology
College of Management
800 West Peachtree Street
Atlanta, GA 30308
Tel: 404/894-4368
Fax: 404/894-6030
E-Mail: matt.higgins@mgt.gatech.edu
AB - With increasing frequency, generic drug manufacturers in the United States are able to challenge the monopoly status of patent-protected drugs even before their patents expire. The legal foundation for these challenges is found in Paragraph IV of the Hatch-Waxman Act. If successful, these Paragraph IV challenges generally lead to large market share losses for incumbents and sharp declines in average market prices. This paper estimates, for the first time, the welfare effects of accelerated generic entry via these challenges. Using aggregate brand level sales data between 1997 and 2008 for hypertension drugs in the U.S. we estimate demand using a nested logit model in order to back out cumulated consumer surplus, which we find to be approximately $270 billion. We then undertake a counterfactual analysis, removing the stream of Paragraph IV facilitated generic products, finding a corresponding cumulated consumer surplus of $177 billion. This implies that gains flowing to consumers as a result of this regulatory mechanism amount to around $92 billion or about $133 per consumer in this market. These gains come at the expense to producers who lose, approximately, $14 billion. This suggests that net short-term social gains stands at around $78 billion. We also demonstrate significant cross-molecular substitution within the market and discuss the possible appropriation of consumer rents by the insurance industry. Policy and innovation implications are also discussed.
ER -
TY - JOUR
AU - Burda,Michael C.
AU - Hunt,Jennifer
TI - What Explains the German Labor Market Miracle in the Great Recession?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17187
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17187
L1 - http://www.nber.org/papers/w17187.pdf
N1 - Author contact info:
Michael Burda
Faculty of Business and Economics
Humboldt University Berlin
Spandauer Str. 1
D-10178 Berlin
Germany
E-Mail: burda@wiwi.hu-berlin.de
Jennifer Hunt
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick
NJ, 08901-1248
Tel: (732) 932-7363
E-Mail: jennifer.hunt@rutgers.edu
AB - Germany experienced an even deeper fall in GDP in the Great Recession than the United States, with little employment loss. Employers’ reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession. Another 20 percent may be explained by wage moderation. A third important element was the widespread adoption of working time accounts, which permit employers to avoid overtime pay if hours per worker average to standard hours over a window of time. We find that this provided disincentives for employers to lay off workers in the downturn. Although the overall cuts in hours per worker were consistent with the severity of the Great Recession, reduction of working time account balances substituted for traditional government-sponsored short-time work.
ER -
TY - JOUR
AU - Burchardi,Konrad B.
AU - Hassan,Tarek Alexander
TI - The Economic Impact of Social Ties: Evidence from German Reunification
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17186
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17186
L1 - http://www.nber.org/papers/w17186.pdf
N1 - Author contact info:
Konrad Burch. Burchardi
E-Mail: konrad.burchardi@iies.su.se
Tarek Alexander Hassan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-3291
Fax: 773/753-0851
E-Mail: tarek.hassan@chicagobooth.edu
AB - We use the fall of the Berlin Wall in 1989 to show that personal relationships which individuals maintain for non-economic reasons can be an important determinant of regional economic growth. We show that West German households who have social ties to East Germany in 1989 experience a persistent rise in their personal incomes after the fall of the Berlin Wall. Moreover, the presence of these households significantly affects economic performance at the regional level: it increases the returns to entrepreneurial activity, the share of households who become entrepreneurs, and the likelihood that firms based within a given West German region invest in East Germany. As a result, West German regions which (for idiosyncratic reasons) have a high concentration of households with social ties to the East exhibit substantially higher growth in income per capita in the early 1990s. A one standard deviation rise in the share of households with social ties to East Germany in 1989 is associated with a 4.6 percentage point rise in income per capita over six years. We interpret our findings as evidence of a causal link between social ties and regional economic development.
ER -
TY - JOUR
AU - Abeberese,Ama Baafra
AU - Kumler,Todd J.
AU - Linden,Leigh L.
TI - Improving Reading Skills by Encouraging Children to Read: A Randomized Evaluation of the Sa Aklat Sisikat Reading Program in the Philippines
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17185
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17185
L1 - http://www.nber.org/papers/w17185.pdf
N1 - Author contact info:
Ama B. Abeberese
Department of Economics
Columbia University
420 West 118th Street, MC3308
New York, NY 10027
E-Mail: aba2114@columbia.edu
Todd J. Kumler
Department of Economics
Columbia University
420 West 118th Street, MC3308
New York, NY 10027
E-Mail: tjk2110@columbia.edu
Leigh L. Linden
Department of Economics
The Univesrity of Texas at Austin
2225 Speedway
BRB 1.116, C3100
Austin, Texas 78712
Tel: (512) 475-8556
E-Mail: leigh.linden@austin.utexas.edu
AB - We evaluate a program that aims to improve children’s reading skills by providing classes with age-appropriate reading material and incentivizing children to read through a 31 day read-a-thon. During the read-a-thon, the program significantly increases the propensity of children to read, causing 20 percent more children to have read a book in the last week at school and increasing the number of books read by 2.3 in the last week and 7.2 in the last month. These increases extend both after the end of the program and outside of school, although at lower rates. The program also increased students’ scores on a reading assessment, causing students’ scores to improve by 0.13 standard deviations immediately after the program. The effect persisted even after the program ended with an effect of 0.06 standard deviations three months later.
ER -
TY - JOUR
AU - Michalopoulos,Stelios
AU - Papaioannou,Elias
TI - Divide and Rule or the Rule of the Divided? Evidence from Africa
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17184
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17184
L1 - http://www.nber.org/papers/w17184.pdf
N1 - Author contact info:
Stelios Michalopoulos
Brown University
Department of Economics
64 Waterman Street
Providence, RI 02912
Tel: 401/863-2506
Fax: 401/863-1970
E-Mail: smichalo@brown.edu
Elias Papaioannou
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-8169
E-Mail: papaioannou.elias@gmail.com
AB - We investigate jointly the importance of contemporary country-level institutional structures and local ethnic-specific pre-colonial institutions in shaping comparative regional development in Africa. We utilize information on the spatial distribution of African ethnicities before colonization and regional variation in contemporary economic performance, as proxied by satellite light density at night. We exploit the fact that political boundaries across the African landscape partitioned ethnic groups in different countries subjecting identical cultures to different country-level institutions. Our regression discontinuity estimates reveal that differences in countrywide institutional arrangements across the border do not explain differences in economic performance within ethnic groups. In contrast, we document a strong association between pre-colonial ethnic institutional traits and contemporary regional development. While this correlation does not necessarily identify a causal relationship, this result obtains conditional on country fixed-effects, controlling for other ethnic traits and when we focus on pairs of contiguous ethnic homelands.
ER -
TY - JOUR
AU - Milkman,Katherine L.
AU - Beshears,John
AU - Choi,James J.
AU - Laibson,David
AU - Madrian,Brigitte C.
TI - Using Implementation Intentions Prompts to Enhance Influenza Vaccination Rates
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17183
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17183
L1 - http://www.nber.org/papers/w17183.pdf
N1 - Author contact info:
Katherine L. Milkman
University of Pennsylvania
3730 Walnut Street
561 Jon M. Huntsman Hall
Philadelphia, PA19104
E-Mail: kmilkman@wharton.upenn.edu
John Beshears
Stanford Graduate School of Business
655 Knight Way
Stanford, CA 94305-7298
Tel: 650/723-6792
E-Mail: beshears@stanford.edu
James J. Choi
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
E-Mail: james.choi@yale.edu
David Laibson
Department of Economics
Littauer M-12
Harvard University
Cambridge, MA 02138
Tel: 617/496-3402
Fax: 617/495-8570
E-Mail: dlaibson@gmail.com
Brigitte C. Madrian
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-495-8917
Fax: 617-496-5960
E-Mail: Brigitte_Madrian@Harvard.edu
AB - We evaluate the results of a field experiment designed to measure the effect of prompts to form implementation intentions on realized behavioral outcomes. The outcome of interest is influenza vaccination receipt at free on-site clinics offered by a large firm to its employees. All employees eligible for study participation received reminder mailings that listed the times and locations of the relevant vaccination clinics. Mailings to employees randomly assigned to the treatment conditions additionally included a prompt to write down either (1) the date the employee planned to be vaccinated or (2) the date and time the employee planned to be vaccinated. Vaccination rates increased when these implementation intentions prompts were included in the mailing. The vaccination rate among control condition employees was 33.1%. Employees who received the prompt to write down just a date had a vaccination rate 1.5 percentage points higher than the control group, a difference that is not statistically significant. Employees who received the more specific prompt to write down both a date and a time had a 4.2 percentage point higher vaccination rate, a difference that is both statistically significant and of meaningful magnitude.
ER -
TY - JOUR
AU - Ang,Andrew
AU - Timmermann,Allan
TI - Regime Changes and Financial Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17182
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17182
L1 - http://www.nber.org/papers/w17182.pdf
N1 - Author contact info:
Andrew Ang
Columbia Business School
3022 Broadway 413 Uris
New York, NY 10027
Tel: 212/854-9154
Fax: 212/662-8474
E-Mail: aa610@columbia.edu
Allan Timmermann
Department of Economics
University of California
La Jolla, CA 92093-0508
E-Mail: atimmerm@ucsd.edu
AB - Regime switching models can match the tendency of financial markets to often change their behavior abruptly and the phenomenon that the new behavior of financial variables often persists for several periods after such a change. While the regimes captured by regime switching models are identified by an econometric procedure, they often correspond to different periods in regulation, policy, and other secular changes. In empirical estimates, the regime switching means, volatilities, autocorrelations, and cross-covariances of asset returns often differ across regimes, which allow regime switching models to capture the stylized behavior of many financial series including fat tails, heteroskedasticity, skewness, and time-varying correlations. In equilibrium models, regimes in fundamental processes, like consumption or dividend growth, strongly affect the dynamic properties of equilibrium asset prices and can induce non-linear risk-return trade-offs. Regime switches also lead to potentially large consequences for investors' optimal portfolio choice.
ER -
TY - JOUR
AU - Åstebro,Thomas
AU - Serrano,Carlos J.
TI - Business Partners, Financing, and the Commercialization of Inventions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17181
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17181
L1 - http://www.nber.org/papers/w17181.pdf
N1 - Author contact info:
Thomas Astebro
HEC Paris
E-Mail: astebro@hec.fr
Carlos J. Serrano
Department of Economics
University of Toronto
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/946-3404
E-Mail: carlos.serrano@utoronto.ca
AB - This paper studies the effect of business partners on the commercialization of nvention based ventures, and it assesses the relative importance of partners’ human and social capital on commercialization outcomes. Projects run by partnerships were five times more likely to reach commercialization, and they had mean revenues approximately ten times greater than projects run by solo-entrepreneurs. These gross differences may be due both to business partners’ value added and to selection. After controlling for selection effects and observed/unobserved heterogeneity, our smallest estimate of partner value added approximately doubles the probability of commercialization and increases expected revenues by 29% at the sample mean.
ER -
TY - JOUR
AU - Hall,Robert E.
TI - Clashing Theories of Unemployment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17179
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17179
L1 - http://www.nber.org/papers/w17179.pdf
N1 - Author contact info:
Robert E. Hall
Hoover Institution
Stanford University
Stanford, CA 94305-6010
Tel: 650/723-2215
E-Mail: rehall@gmail.com
AB - General-equilibrium models for studying monetary influences in general and the zero lower bound on the nominal interest rate in particular contain implicit theories of unemployment. In some cases, the theory is explicit. When the nominal rate is above the level that clears the current market for output, the excess supply shows up as diminished output, lower employment, and higher unemployment. Quite separately, the Diamond-Mortensen-Pissarides model is a widely accepted and well-developed account of turnover, wage determination, and unemployment. The DMP model is a clashing theory of unemployment, in the sense that its determinants of unemployment do not include any variables that signal an excess supply of current output. In consequence, a general-equilibrium monetary model with a DMP labor market generally has no equilibrium. After demonstrating the clash in a minimal but adequate setting, I consider modifications of the DMP model that permit the complete model to have an equilibrium. No fully satisfactory modification has yet appeared.
ER -
TY - JOUR
AU - Hall,Bronwyn H.
TI - Innovation and Productivity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17178
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17178
L1 - http://www.nber.org/papers/w17178.pdf
N1 - Author contact info:
Bronwyn H. Hall
Dept. of Economics
549 Evans Hall
UC Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-3878
Fax: 510/548-5561
E-Mail: bhhall@nber.org
AB - What do we know about the relationship between innovation and productivity among firms? The workhorse model of this relationship is presented and the implications of analysis using this model and the usually available data on product and process innovation are derived. The recent empirical evidence on the relationship between innovation and productivity in firms is then surveyed. The conclusion is that there are substantial positive impacts of product innovation on revenue productivity, but that the impact of process innovation is more ambiguous, suggesting some market power on the part of the firms being analyzed.
ER -
TY - JOUR
AU - Loeb,Susanna
AU - Kalogrides,Demetra
AU - Béteille,Tara
TI - Effective Schools: Teacher Hiring, Assignment, Development, and Retention
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17177
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17177
L1 - http://www.nber.org/papers/w17177.pdf
N1 - Author contact info:
Susanna Loeb
524 CERAS, 520 Galvez Mall
Stanford University
Stanford, CA 94305
Tel: 650/725-4262
E-Mail: sloeb@stanford.edu
Demetra Kalogrides
Stanford University
520 Galvez Mall Drive
Stanford CA, 94305
E-Mail: dkalo@stanford.edu
Tara Beteille
The World Bank
MSN M9A-007
1900 Pennsylvania Avenue, NW
Washington, DC 20431
E-Mail: tara.beteille@gmail.com
AB - The literature on effective schools emphasizes the importance of a quality teaching force in improving educational outcomes for students. In this paper, we use value-added methods to examine the relationship between a school’s effectiveness and the recruitment, assignment, development and retention of its teachers. We ask whether effective schools systematically recruit more effective teachers; whether they assign teachers to students more effectively; whether they do a better job of helping their teachers improve; whether they retain more effective teachers; or whether they do a combination of these processes. Our results reveal four key findings. First, we find that more effective schools are able to attract and hire more effective teachers from other schools when vacancies arise. Second, we find that more effective schools assign novice teachers to students in a more equitable fashion. Third, we find that teachers who work in schools that were more effective at raising achievement in a prior period improve more rapidly in a subsequent period than do those in less effective schools. Finally, we find that more effective schools are better able to retain higher-quality teachers, though they are not differentially able to remove ineffective teachers. The results point to the importance of personnel, and perhaps, school personnel practices, for improving student outcomes.
ER -
TY - JOUR
AU - Ronfeldt,Matthew
AU - Lankford,Hamilton
AU - Loeb,Susanna
AU - Wyckoff,James
TI - How Teacher Turnover Harms Student Achievement
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17176
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17176
L1 - http://www.nber.org/papers/w17176.pdf
N1 - Author contact info:
Matthew Ronfeldt
University of Michigan
School of Education
E-Mail: ronfeldt@stanford.edu
Hamilton Lankford
School of Education, ED 317
University at Albany
State University of New York
Albany, NY 12222
E-Mail: hamp@albany.edu
Susanna Loeb
524 CERAS, 520 Galvez Mall
Stanford University
Stanford, CA 94305
Tel: 650/725-4262
E-Mail: sloeb@stanford.edu
James Wyckoff
Curry School of Education
University of Virginia
P.O. Box 400277
Charlottesville, VA 22904-4277
E-Mail: wyckoff@virginia.edu
AB - Researchers and policymakers often assume that teacher turnover harms student achievement, but recent evidence calls into question this assumption. Using a unique identification strategy that employs grade-level turnover and two classes of fixed-effects models, this study estimates the effects of teacher turnover on over 600,000 New York City 4th and 5th grade student observations over 5 years. The results indicate that students in grade-levels with higher turnover score lower in both ELA and math and that this effect is particularly strong in schools with more low-performing and black students. Moreover, the results suggest that there is a disruptive effect of turnover beyond changing the composition in teacher quality.
ER -
TY - JOUR
AU - Collard-Wexler,Allan
AU - Asker,John
AU - Loecker,Jan De
TI - Productivity Volatility and the Misallocation of Resources in Developing Economies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17175
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17175
L1 - http://www.nber.org/papers/w17175.pdf
N1 - Author contact info:
Allan Collard-Wexler
Stern School of Business
New York University
44 West Fourth Street
KMC-7-80
New York, NY 10012
Tel: 212/998-0889
Fax: 212/995-4218
E-Mail: wexler@nyu.edu
John Asker
Stern School of Business
Department of Economics, Suite 7-79
New York University
44 West 4th Street
New York, NY 10012
Tel: 212/998-0062
Fax: 212/995-4218
E-Mail: jasker@stern.nyu.edu
Jan De Loecker
Department of Economics
307 Fisher Hall
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-2149
E-Mail: jdeloeck@princeton.edu
AB - We investigate the role of dynamic production inputs and their associated adjustment costs in shaping the dispersion of total factor productivity (TFP) and static measures of capital misallocation within a country. Using data on 5,010 establishments in 33 developing countries from the World Bank’s Enterprise Research Data, we find that countries exhibiting greater time-series volatility of productivity are also characterized by greater cross-sectional dispersion in productivity. Volatility in TFP explains one quarter to one third of cross-country productivity dispersion. We document a similar relationship between productivity volatility and the dispersion of the marginal revenue product of capital (static capital misallocation). We then use a standard model of investment with adjustment costs, parameterized using numbers calibrated to U.S. data, to show that increasing the volatility of productivity to the level observed in these developing economies can quantitatively replicate the observed relationship between static misallocation and volatility observed in the data. We find that sixty-one percent of the static capital misallocation in the data is captured by the model’s prediction. Our findings suggest that the dynamic process governing productivity shocks is a first-order determinant of differences in misallocation and, hence, income across countries.
ER -
TY - JOUR
AU - Danzon,Patricia M.
AU - Mulcahy,Andrew W.
AU - Towse,Adrian K.
TI - Pharmaceutical Pricing in Emerging Markets: Effects of Income, Competition and Procurement
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17174
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17174
L1 - http://www.nber.org/papers/w17174.pdf
N1 - Author contact info:
Patricia M. Danzon
Health Care Management Department
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-0694
Fax: 215/573-2157
E-Mail: danzon@wharton.upenn.edu
Andrew W. Mulcahy
Health Care Management Department
The Wharton School
University of Pennsylvania
3641 Locust Walk
Philadelphia, PA 19104
E-Mail: mulcahaw@wharton.upenn.edu
Adrian K. Towse
Office of Health Economics
Southside, 7th Floor
105 Victoria St.
London SW1E 6QT
United Kingdom
E-Mail: atowse@ohe.org
AB - This paper analyzes determinants of ex-manufacturer prices for originator and generic drugs across a large sample of countries. We focus on drugs to treat HIV/AIDS, TB and malaria in middle and low income countries (MLICs), with robustness checks to other therapeutic categories and other countries. We examine effects of per capita income, income dispersion, number and type of therapeutic and generic competitors, and whether the drugs are sold to retail pharmacies vs. tendered procurement by NGOs.
The cross-national income elasticity of prices is 0.4 across high and low income countries, but is only 0.15 between MLICs, implying that drugs are least affordable relative to income in the lowest income countries. Within-country income inequality contributes to relatively high prices in MLICs. Number of therapeutic and generic competitors only weakly affects prices to retail pharmacies, plausibly because uncertain quality leads to competition on brand rather than price. Tendered procurement attracts multi-national generic suppliers and significantly reduces prices for originators and generics, compared to prices to retail pharmacies.
ER -
TY - JOUR
AU - Kroft,Kory
AU - Notowidigdo,Matthew J.
TI - Should Unemployment Insurance Vary With the Unemployment Rate? Theory and Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17173
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17173
L1 - http://www.nber.org/papers/w17173.pdf
N1 - Author contact info:
Kory Kroft
University of Toronto
E-Mail: kory.kroft@utoronto.ca
Matthew J. Notowidigdo
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-9758
E-Mail: noto@chicagobooth.edu
AB - We study how the level of unemployment insurance (UI) benefits that trades off the consumption smoothing benefit with the moral hazard cost of distorting job search behavior varies over the business cycle. Empirically, we find that the moral hazard cost is procyclical, greater when the unemployment rate is relatively low. By contrast, our evidence suggests that the consumption smoothing benefit of UI is acyclical. Using these estimates to calibrate our model, we find that a one standard deviation increase in the unemployment rate leads to a roughly 14 to 27 percentage point increase in the welfare-maximizing wage replacement rate.
ER -
TY - JOUR
AU - Genakos,Christos
AU - Kühn,Kai-Uwe
AU - Reenen,John Van
TI - Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17172
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17172
L1 - http://www.nber.org/papers/w17172.pdf
N1 - Author contact info:
Christos Genakos
Department of Economics
Athens University of Economics and Business
76 Patission Str.
Athens, 10434
GREECE
Tel: (+30) 210 8203 353
E-Mail: cgenakos@aueb.gr
Kai-Uwe Kuhn
University of Michigan
Department of Economics
611 Tappan Street
258 Lorch Hall
Ann Arbor, MI 48109-1220
E-Mail: kukuhn@umich.edu
John Van Reenen
Department of Economics
London School of Economics
Centre for Economic Performance
Houghton Street
London WC2A 2AE
UNITED KINGDOM
Tel: 00 44 207/955-6976
Fax: 00 44 207/955-6848
E-Mail: j.vanreenen@lse.ac.uk
AB - When will a monopolist have incentives to foreclose a complementary market by degrading compatibility/interoperability of his products with those of rivals? We develop a framework where leveraging extracts more rents from the monopoly market by “restoring” second degree price discrimination. In a random coefficient model with complements we derive a policy test for when incentives to reduce rival quality will hold. Our application is to Microsoft’s strategic incentives to leverage market power from personal computer to server operating systems. We estimate a structural random coefficients demand system which allows for complements (PCs and servers). Our estimates suggest that there were incentives to reduce interoperability which were particularly strong at the turn of the 21st Century.
ER -
TY - JOUR
AU - Figueiredo,John M. de
TI - Committee Jurisdiction, Congressional Behavior and Policy Outcomes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17171
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17171
L1 - http://www.nber.org/papers/w17171.pdf
N1 - Author contact info:
John M. de Figueiredo
The Law School
Duke University
210 Science Drive
Durham, NC 27708
Tel: 919-613-8513
E-Mail: jdefig@law.duke.edu
AB - The literature on congressional committees has largely overlooked the impact of jurisdictional fights on policy proposals and outcomes. This paper develops a theory of how legislators balance the benefits of expanded committee jurisdiction against preferred policy outcomes. It shows why a) senior members and young members in safe districts are most likely to challenge a committee’s jurisdiction; b) policy proposals may be initiated off the proposer’s ideal point in order to obtain jurisdiction; c) policy outcomes will generally be more moderate with jurisdictional fights than without these turf wars. We empirically investigate these results examining proposed Internet intellectual property protection legislation in the 106th Congress.
ER -
TY - JOUR
AU - Anderson,Michael
AU - Auffhammer,Maximilian
TI - Pounds that Kill: The External Costs of Vehicle Weight
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17170
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17170
L1 - http://www.nber.org/papers/w17170.pdf
N1 - Author contact info:
Michael L. Anderson
Department of Agricultural and Resource Economics
207 Giannini Hall, MC 3310
University of California, Berkeley
Berkeley, CA 94720
Tel: 510/642-7628
Fax: 510/643-8911
E-Mail: mlanderson@berkeley.edu
Maximilian Auffhammer
Agricultural and Resource Economics Department
University of California, Berkeley
207 Giannini Hall
Berkeley, CA 94720-3310
Tel: 510/643-5472
Fax: 510/643-8911
E-Mail: auffhammer@berkeley.edu
AB - Heavier vehicles are safer for their own occupants but more hazardous for the occupants of other vehicles. In this paper we estimate the increased probability of fatalities from being hit by a heavier vehicle in a collision. We show that, controlling for own-vehicle weight, being hit by a vehicle that is 1,000 pounds heavier results in a 47% increase in the baseline fatality probability. Estimation results further suggest that the fatality risk is even higher if the striking vehicle is a light truck (SUV, pickup truck, or minivan). We calculate that the value of the external risk generated by the gain in fleet weight since 1989 is approximately 27 cents per gallon of gasoline. We further calculate that the total fatality externality is roughly equivalent to a gas tax of $1.08 per gallon. We consider two policy options for internalizing this external cost: a gas tax and an optimal weight varying mileage tax. Comparing these options, we find that the cost is similar for most vehicles.
ER -
TY - JOUR
AU - Chen,Chongyang
AU - Dai,Zhonglan
AU - Shackelford,Douglas
AU - Zhang,Harold
TI - Does Financial Constraint Affect Shareholder Taxes and the Cost of Equity Capital?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17169
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17169
L1 - http://www.nber.org/papers/w17169.pdf
N1 - Author contact info:
Chongyang Chen
School of Management,
The University of Texas at Dallas
Richardson, TX 75080-3021
E-Mail: cchen@utdallas.edu
Zhonglan Dai
School of Management
The University of Texas at Dallas
Richardson, TX 75080-3021
E-Mail: zdai@utdallas.edu
Douglas Shackelford
University of North Carolina at Chapel Hill
Kenan-Flagler Business School
Campus Box 3490, McColl Building
Chapel Hill, NC 27599-3490
Tel: 919/962-3197
Fax: 919/962-4727
E-Mail: doug_shack@unc.edu
Harold Zhang
University of Texas at Dallas
E-Mail: harold.zhang@utdallas.edu
AB - We show that firms with the least elastic demand for equity capital should benefit the most from reductions in shareholder taxes. Consistent with this prediction, we find that, following 1997 and 2003 cuts in U.S. individual shareholder taxes, financially constrained firms, and particularly those with disproportionate ownership by U.S. individuals, enjoyed larger reductions in their cost of equity capital than did other firms. The results are consistent with the incidence of the tax reductions falling mostly on firms with the most pressing needs for capital. Furthermore, the findings provide an explanation for the heretofore puzzling finding that, following the unprecedented 2003 reduction in dividend tax rates, non-dividend-paying firms outperformed dividend-paying firms. Not surprisingly, we find that non-dividend-paying firms are more financial constrained than dividend-paying firms are. When a firm’s financial constraint and dividend choice are jointly considered, we find that the extent of financial constraint affects the change in the cost of equity capital, but whether a firm issues a dividend does not. In other words, it appears that the extant studies suffered from the omission of a correlated variation, the extent to which a firm is financially constrained.
ER -
TY - JOUR
AU - Gruber,Jonathan
TI - The Impacts of the Affordable Care Act: How Reasonable Are the Projections?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17168
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17168
L1 - http://www.nber.org/papers/w17168.pdf
N1 - Author contact info:
Jonathan Gruber
MIT Department of Economics
E52-355
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8892
Fax: 617/253-1330
E-Mail: gruberj@mit.edu
AB - The Patient Protection and Affordable Care Act (ACA) is the most comprehensive reform of the U.S. medical system in at least 45 years. The ACA transforms the non-group insurance market in the United States, mandates that most residents have health insurance, significantly expands public insurance and subsidizes private insurance coverage, raises revenues from a variety of new taxes, and reduces and reorganizes spending under the nation’s largest health insurance plan, Medicare. Projecting the impacts of such fundamental reform to the health care system is fraught with difficulty. But such projections were required for the legislative process, and were delivered by the Congressional Budget Office (CBO). This paper discusses the projected impact of the ACA in more detail, and describes the evidence that sheds light upon the accuracy of the projections. It begins by reviewing in broad details the structure of the ACA and then reviews evidence from a key case study that informs our understanding of the ACA’s impacts: a comparable health reform that was carried out in Massachusetts four years earlier. The paper discusses the key results from that earlier reform and what they might imply for the impacts of the ACA. The paper ends with a discussion of the projected impact of the ACA and offers some observations on those estimates.
ER -
TY - JOUR
AU - Notowidigdo,Matthew J.
TI - The Incidence of Local Labor Demand Shocks
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17167
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17167
L1 - http://www.nber.org/papers/w17167.pdf
N1 - Author contact info:
Matthew J. Notowidigdo
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-9758
E-Mail: noto@chicagobooth.edu
AB - Low-skill workers are comparatively immobile: when labor demand slumps in a city, low-skill workers are disproportionately likely to remain to face declining wages and employment. This paper estimates the extent to which (falling) housing prices and (rising) social transfers can account for this fact using a spatial equilibrium model. Nonlinear reduced form estimates of the model using U.S. Census data document that positive labor demand shocks increase population more than negative shocks reduce population, this asymmetry is larger for low-skill workers, and such an asymmetry is absent for wages, housing values, and rental prices. GMM estimates of the full model suggest that the comparative immobility of low-skill workers is not due to higher mobility costs per se, but rather a lower incidence of adverse labor demand shocks.
ER -
TY - JOUR
AU - Fetter,Daniel K.
TI - How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-century GI Bills
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17166
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17166
L1 - http://www.nber.org/papers/w17166.pdf
N1 - Author contact info:
Daniel K. Fetter
Department of Economics
Wellesley College
106 Central Street
Wellesley, MA 02481
Tel: 781/283-2979
E-Mail: dfetter@wellesley.edu
AB - The sharpest increase in U.S. home ownership over the last century occurred between 1940 and 1960, associated primarily with a decrease in the age at first ownership. To shed light on the contribution of several coincident large-scale government interventions in housing finance, I examine veterans' home loan benefits provided under the postwar GI Bills. I use two breaks in the probability of military service by date of birth, for cohorts coming of age at the end of World War II and the Korean War, to estimate the impact of veteran status on home ownership. I find significant, positive effects of veteran status on home ownership in 1960. Consistent with a model in which the impact of easier loan terms declines with age, these effects are larger for younger veterans and diminish in 1970 and 1980 as the cohorts age. Complementary evidence suggests veterans' non-housing benefits and military service itself are unlikely to explain the observed differences in home ownership. Veterans' housing benefits appear to have increased aggregate home ownership rates primarily by shifting purchase earlier in life; they can explain approximately 7.4 percent of the increase in aggregate home ownership from 1940 to 1960, and 25 percent of the increase for the affected cohorts.
ER -
TY - JOUR
AU - Akresh,Richard
AU - Edmonds,Eric V.
TI - Residential Rivalry and Constraints on the Availability of Child Labor
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17165
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17165
L1 - http://www.nber.org/papers/w17165.pdf
N1 - Author contact info:
Richard Akresh
University of Illinois at Urbana-Champaign
Department of Economics
1407 West Gregory Drive
David Kinley Hall, Room 214
Urbana, IL 61801
Tel: 217-333-3467
Fax: 217-244-6678
E-Mail: akresh@illinois.edu
Eric V. Edmonds
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2944
Fax: 603/646-2122
E-Mail: Eric.V.Edmonds@Dartmouth.edu
AB - We consider the influence of household-based production on human capital investment. In data from rural Burkina Faso, we document a positive correlation between the presence of girls and enrollment that disappears in households that are able to send out or receive in children. We argue that the connection between education and the sex composition of co-resident children in households that are constrained in their ability to adjust child labor owes to residential rivalry, the idea that having a greater share of resident children with an advantage in household based production increases education by reducing the within-household equilibrium value of child time.
ER -
TY - JOUR
AU - Burkhauser,Richard V.
AU - Larrimore,Jeff
AU - Simon,Kosali I.
TI - A "Second Opinion" on the Economic Health of the American Middle Class
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17164
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17164
L1 - http://www.nber.org/papers/w17164.pdf
N1 - Author contact info:
Richard V. Burkhauser
Cornell University
Department of Policy Analysis & Management
259 MVR Hall
Ithaca, NY 14853-4401
Tel: 607/255-2097
Fax: 607/255-4071
E-Mail: rvb1@cornell.edu
Jeff Larrimore
Joint Committee on Taxation
1625 Longworth House Office Building
Washington, D.C. 20515
E-Mail: jeff.larrimore@mail.house.gov
Kosali I. Simon
School of Public and Environmental Affairs
Indiana University
Rm 359
1315 East Tenth Street
Bloomington, IN 47405-1701
Tel: (812) 856-3850
E-Mail: simonkos@indiana.edu
AB - Researchers considering levels and trends in the resources available to the middle class traditionally measure the pre-tax cash income of either tax units or households. In this paper, we demonstrate that this choice carries significant implications for assessing income trends. Focusing on tax units rather than households greatly reduces measured growth in middle class income. Furthermore, excluding the effect of taxes and the value of in-kind benefits further reduces observed improvements in the resources of the middle class. Finally, we show how these distinctions change the observed distribution of benefits from the tax exclusion of employer provided health insurance.
ER -
TY - JOUR
AU - Caplin,Andrew
AU - Martin,Daniel
TI - A Testable Theory of Imperfect Perception
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17163
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17163
L1 - http://www.nber.org/papers/w17163.pdf
N1 - Author contact info:
Andrew Caplin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
Tel: 212/998-8950
Fax: 212/995-3932
E-Mail: andrew.caplin@nyu.edu
Daniel J. Martin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
E-Mail: daniel.martin@nyu.edu
AB - We introduce a rational choice theory that allows for many forms of imperfect perception, including failures of memory, selective attention, and adherence to simplifying rules of thumb. Despite its generality, the theory has strong, simple, and intuitive implications for standard choice data and for more enriched choice data. The central assumption is rational expectations: decision makers understand the relationship between their perceptions, however limited they may be, and the (stochastic) consequences of their available choices. Our theory separately identifies two distinct "framing" effects: standard effects involving the layout of the prizes (e.g. order in a list) and novel effects relating to the information content of the environment (e.g. how likely is the first in the list to be the best). Simple experimental tests both affirm the basic model and confirm the existence of information-based framing effects.
ER -
TY - JOUR
AU - David,Guy
AU - Markowitz,Sara
TI - Side Effects of Competition: the Role of Advertising and Promotion in Pharmaceutical Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17162
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17162
L1 - http://www.nber.org/papers/w17162.pdf
N1 - Author contact info:
Guy David
The Wharton School
University of Pennsylvania
202 Colonial Penn Center
3641 Locust Walk
Philadelphia, PA 19104-6218
Tel: 215/573-5780
Fax: 215/573-2157
E-Mail: gdavid2@wharton.upenn.edu
Sara Markowitz
Department of Economics
Emory University
1602 Fishburne Dr.
Atlanta, GA 30322
Tel: (404) 712-8167
E-Mail: sara.markowitz@emory.edu
AB - The extent of pharmaceutical advertising and promotion can be characterized by a balancing act between profitable demand expansions and potentially unfavorable subsequent regulatory actions. However, this balance also depends on the nature of competition (e.g. monopoly versus oligopoly). In this paper we model the firm’s behavior under different competitive scenarios and test the model’s predictions using a novel combination of sales, promotion, advertising, and adverse event reports data. We focus on the market for erectile dysfunction drugs as the basis for estimation. This market is ideal for analysis as it is characterized by an abrupt shift in structure, all drugs are branded, the drugs are associated with adverse health events, and have extensive advertising and promotion. We find that advertising and promotion expenditures increase own market share but also increase the share of adverse drug reactions. Competitors’ spending decreases market share, while also having an influence on adverse drug reactions.
ER -
TY - JOUR
AU - Ferrie,Joseph P.
AU - Rolf,Karen
AU - Troesken,Werner
TI - Cognitive Disparities, Lead Plumbing, and Water Chemistry: Intelligence Test Scores and Exposure to Water-Borne Lead Among World War Two U.S. Army Enlistees
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17161
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17161
L1 - http://www.nber.org/papers/w17161.pdf
N1 - Author contact info:
Joseph P. Ferrie
Department of Economics
Northwestern University
Evanston, IL 60208-2600
Tel: 847/491-8210
Fax: 847/491-7001
E-Mail: ferrie@northwestern.edu
Karen Rolf
Grace Abbott School of Social Work
University of Nebraska-Omaha
6001 Dodge Street
Omaha, NE 68182
E-Mail: krolf@unomaha.edu
Werner Troesken
Department of Economics
University of Pittsburgh
Pittsburgh, PA 15260
Tel: 412/648-2823
Fax: 412/648-9074
E-Mail: troesken@pitt.edu
AB - Assessing the impact of lead exposure is difficult if individuals select on the basis of their characteristics into environments with different exposure levels. We address this issue with data from when the dangers of lead exposure were still largely unknown, using new evidence on intelligence test scores for male World War Two U.S. Army enlistees linked to the households where they resided in 1930. Higher exposure to water-borne lead (proxied by urban residence and low water pH levels) was associated with lower test scores: going from pH 6 to pH 5.5, scores fell 5 points (1/4 standard deviation). A longer time exposed led to a more severe effect. The ubiquity of lead in urban water systems at this time and uncertainty regarding its impact mean these effects are unlikely to have resulted from selection into locations with different levels of exposure.
ER -
TY - JOUR
AU - Markowitz,Sara
AU - Adams,E. Kathleen
AU - Dietz,Patricia M.
AU - Kannan,Viji
AU - Tong,Van
TI - Smoking Policies and Birth Outcomes: Estimates From a New Era
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17160
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17160
L1 - http://www.nber.org/papers/w17160.pdf
N1 - Author contact info:
Sara Markowitz
Department of Economics
Emory University
1602 Fishburne Dr.
Atlanta, GA 30322
Tel: (404) 712-8167
E-Mail: sara.markowitz@emory.edu
E. Kathleen Adams
Emory School of Public Health
1518 Clifton Road, NE
Atlanta, GA 30322
E-Mail: eadam01@emory.edu
Patricia M. Dietz
Centers for Disease Control and Prevention
Division of Reproductive Health
4770 Buford Hwy, NE
Atlanta, GA 30341
E-Mail: pdietz@cdc.gov
Viji Kannan
University of Rochester Medical College
Rochester, NY
E-Mail: viji_kannan@urmc.rochester.edu
Van Tong
Centers for Disease Control and Prevention
Division of Reproductive Health
4770 Buford Hwy, NE
Atlanta, GA 30341
E-Mail: Vtong@cdc.gov
AB - Smoking during pregnancy has been shown to have significant adverse health effects for new born babies. Smoking is the leading preventable cause of low birth weight of infants who in turn, need more resources at delivery and are more likely to have related health problems in infancy and beyond. Despite these outcomes, many women still smoke during pregnancy. The main question for policy makers is whether tobacco control policies can influence maternal smoking and reduce adverse birth outcomes. We examine this question using data from the Pregnancy Risk Assessment Monitoring System data from 2000 to 2005. This is a time period during which states significantly changed their tobacco control policies by raising excise taxes and imposing strong restrictions on indoor smoking. We estimate reduced form models of birth weight and gestational weeks, focusing on the effects of taxes and workplace restrictions on smoking as the policies of interest. We also estimate demand equations for the probability of smoking during the third trimester. Results show that the smoking policies are effective, but limited to babies born to mothers of certain age groups. For babies born to teenage mothers, higher cigarette taxes are associated with small increases in birth weight and gestational weeks. For babies born to mothers ages 25-34, restrictions on smoking in the workplace are associated with small increases in gestational weeks.
ER -
TY - JOUR
AU - Dale,Stacy
AU - Krueger,Alan B.
TI - Estimating the Return to College Selectivity over the Career Using Administrative Earnings Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17159
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17159
L1 - http://www.nber.org/papers/w17159.pdf
N1 - Author contact info:
Stacy Dale
Mathematica Policy Research
P.O. Box 2393
Princeton, NJ 08543-2393
E-Mail: sdale@mathematica-mpr.com
Alan B. Krueger
Industrial Relations Section
Firestone Library
Princeton University
Princeton, NJ 08544
Tel: 609/258-4046
Fax: 609/258-2907
E-Mail: akrueger@princeton.edu
AB - We estimate the monetary return to attending a highly selective college using the College and Beyond (C&B) Survey linked to Detailed Earnings Records from the Social Security Administration (SSA). This paper extends earlier work by Dale and Krueger (2002) that examined the relationship between the college that students attended in 1976 and the earnings they self-reported reported in 1995 on the C&B follow-up survey. In this analysis, we use administrative earnings data to estimate the return to various measures of college selectivity for a more recent cohort of students: those who entered college in 1989. We also estimate the return to college selectivity for the 1976 cohort of students, but over a longer time horizon (from 1983 through 2007) using administrative data.
We find that the return to college selectivity is sizeable for both cohorts in regression models that control for variables commonly observed by researchers, such as student high school GPA and SAT scores. However, when we adjust for unobserved student ability by controlling for the average SAT score of the colleges that students applied to, our estimates of the return to college selectivity fall substantially and are generally indistinguishable from zero. There were notable exceptions for certain subgroups. For black and Hispanic students and for students who come from less-educated families (in terms of their parents’ education), the estimates of the return to college selectivity remain large, even in models that adjust for unobserved student characteristics.
ER -
TY - JOUR
AU - Gennaioli,Nicola
AU - Porta,Rafael La
AU - Lopez-de-Silanes,Florencio
AU - Shleifer,Andrei
TI - Human Capital and Regional Development
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17158
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17158
L1 - http://www.nber.org/papers/w17158.pdf
N1 - Author contact info:
Nicola Gennaioli
CREI
Universitat Pompeu Fabra
Ramon Trias Fargas 25-27
08005 Barcelona (Spain)
E-Mail: ngennaioli@crei.cat
Rafael La Porta
Dartmouth College
Tuck School
210 Tuck Hall
Hanover, NH 03755
Tel: 603/646-3739
E-Mail: rafael.laporta@dartmouth.edu
Florencio Lopez-de-Silanes
EDHEC Business School
393, Promenade des Anglais BP 3116
06202 Nice Cedex 3
FRANCE
Tel: +33 (0) 4 93 18 78 07
Fax: +33 (0) 4 93 18 78 41
E-Mail: Florencio.lopezdesilanes@edhec.edu
Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
AB - We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world’s surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.
ER -
TY - JOUR
AU - Kearney,Melissa Schettini
AU - Levine,Phillip B.
TI - Income Inequality and Early Non-Marital Childbearing: An Economic Exploration of the "Culture of Despair"
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17157
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17157
L1 - http://www.nber.org/papers/w17157.pdf
N1 - Author contact info:
Melissa Schettini Kearney
Department of Economics
University of Maryland
3105 Tydings Hall
College Park, MD 20742
Tel: 301/405-6202
E-Mail: kearney@econ.umd.edu
Phillip B. Levine
Department of Economics
Wellesley College
106 Central Street
Wellesley, MA 02481
Tel: 781/283-2162
Fax: 781/283-2177
E-Mail: plevine@wellesley.edu
AB - Using individual-level data from the United States and a number of other developed countries, we empirically investigate the role of income inequality in determining rates of early, non-marital childbearing among low socioeconomic status (SES) women. We present robust evidence that low SES women are more likely to give birth at a young age and outside of marriage when they live in more unequal places, all else held constant. Our results suggest that inequality itself, as opposed to other correlated geographic factors, drives this relationship. We calculate that differences in the level of inequality are able to explain a sizeable share of the geographic variation in teen fertility rates both across U.S. states and across developed countries. We propose a model of economic “despair” that facilitates the interpretation of our results. It reinterprets the sociological and ethnographic literature that emphasizes the role of economic marginalization and hopelessness into a parsimonious framework that captures the concept of “despair” with an individual’s perception of economic success. Our empirical results are consistent with the idea that income inequality heightens a sense of economic despair among those at the bottom of the distribution.
ER -
TY - JOUR
AU - Papay,John P.
AU - Murnane,Richard J.
AU - Willett,John B.
TI - How Performance Information Affects Human-Capital Investment Decisions: The Impact of Test-Score Labels on Educational Outcomes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17120
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17120
L1 - http://www.nber.org/papers/w17120.pdf
N1 - Author contact info:
John Papay
Brown University
Education Department
Providence, RI 02912
Tel: 617-493-3942
E-Mail: john_papay@mail.harvard.edu
Richard Murnane
Graduate School of Education
Harvard University
6 Appian Way - Gutman 469
Cambridge, MA 02138
Tel: 617/496-4820
Fax: 617/496-3095
E-Mail: richard_murnane@harvard.edu
John Willett
Graduate School of Education
Harvard University
6 Appian Way - Gutman 412
Cambridge, MA 02138
E-Mail: John_Willett@harvard.edu
AB - Students receive abundant information about their educational performance, but how this information affects future educational-investment decisions is not well understood. Increasingly common sources of information are state-mandated standardized tests. On these tests, students receive a score and a label that summarizes their performance. Using a regression-discontinuity design, we find persistent effects of earning a more positive label on the college-going decisions of urban, low-income students. Consistent with a Bayesian-updating model, these effects are concentrated among students with weaker priors, specifically those who report before taking the test that they do not plan to attend a four-year college.
ER -
TY - JOUR
AU - Charles,Kerwin Kofi
AU - Guryan,Jonathan
TI - Studying Discrimination: Fundamental Challenges and Recent Progress
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17156
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17156
L1 - http://www.nber.org/papers/w17156.pdf
N1 - Author contact info:
Kerwin Kofi Charles
Harris School of Public Policy
University of Chicago
1155 East 60th Street
Chicago, IL 60637
Tel: 773.834.8922
Fax: NA
E-Mail: kcharles@uchicago.edu
Jonathan Guryan
Northwestern University
Institute for Policy Research
2040 Sheridan Road
Evanston, IL 60208
Tel: 847/467-7144
E-Mail: j-guryan@northwestern.edu
AB - We discuss research on discrimination against blacks and other racial minorities in labor market outcomes, highlighting fundamental challenges faced by empirical work in this area. Specifically, for work devoted to measuring whether and how much discrimination exists, we discuss how the absence of relevant data, the potential noncomparability of blacks and whites, and various conceptual concerns peculiar to race may frustrate or render impossible the application of empirical methods used in other areas of study. For work seeking to arbitrate empirically between the two main alternative theoretical explanations for such discrimination as it exists, we distinguish between indirect analyses, which do not directly study the variation in prejudice or the variation in information, the mechanisms at the heart of the two types of models we review, and direct analyses, which are more recent and much less common. We highlight problems with both approaches. Throughout, we discuss recent work, which, the various challenges notwithstanding, permits tentative conclusions about discrimination. We conclude by pointing to areas that might be fruitful avenues for future investigation.
ER -
TY - JOUR
AU - Cascio,Elizabeth U.
AU - Gordon,Nora E.
AU - Reber,Sarah J.
TI - Federal Aid and Equality of Educational Opportunity: Evidence from the Introduction of Title I in the South
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17155
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17155
L1 - http://www.nber.org/papers/w17155.pdf
N1 - Author contact info:
Elizabeth U. Cascio
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: (603) 646-4096
Fax: (603) 646-2122
E-Mail: elizabeth.u.cascio@dartmouth.edu
Nora E. Gordon
Georgetown Public Policy Institute
306 Old North
37th and O Streets NW
Washington, DC 20057
Tel: 202/687-6756
E-Mail: neg24@georgetown.edu
Sarah J. Reber
University of California, Los Angeles
Department of Public Policy
School of Public Affairs
3250 Public Policy Building
Los Angeles, CA 90095
Tel: 310-694-8699
E-Mail: sreber@ucla.edu
AB - Title I of the 1965 Elementary and Secondary Education Act substantially increased federal aid for education, with the goal of expanding educational opportunity. Combining the timing of the program’s introduction with variation in its intensity, we find that Title I increased school spending by 46 cents on the dollar in the average school district in the South and increased spending nearly dollar-for-dollar in Southern districts with little scope for local offset. Based on this differential fiscal response, we find that increases in school budgets from Title I decreased high school dropout rates for whites, but not blacks.
ER -
TY - JOUR
AU - Wright,Jonathan H.
TI - What does Monetary Policy do to Long-Term Interest Rates at the Zero Lower Bound?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17154
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17154
L1 - http://www.nber.org/papers/w17154.pdf
N1 - Author contact info:
Jonathan H. Wright
Department of Economics
Johns Hopkins University
3400 N. Charles Street
Baltimore, MD 21218
Tel: 410/516-5728
Fax: 410/516-7600
E-Mail: wrightj@jhu.edu
AB - The federal funds rate has been stuck at the zero bound for over two years and the Fed has turned to unconventional monetary policies, such as large scale asset purchases to provide stimulus to the economy. This paper uses a structural VAR with daily data to identify the effects of monetary policy shocks on various longer-term interest rates during this period. The VAR is identified using the assumption that monetary policy shocks are heteroskedastic: monetary policy shocks have especially high variance on days of FOMC meetings and certain speeches, while there is nothing unusual about these days from the perspective of any other shocks to the economy. A complementary high-frequency event-study approach is also used. I find that stimulative monetary policy shocks lower Treasury and corporate bond yields, but the effects die off fairly fast, with an estimated half-life of about two months.
ER -
TY - JOUR
AU - Soest,Arthur van
AU - Andreyeva,Tatiana
AU - Kapteyn,Arie
AU - Smith,James P.
TI - Self Reported Disability and Reference Groups
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17153
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17153
L1 - http://www.nber.org/papers/w17153.pdf
N1 - Author contact info:
Arthur van Soest
Tilburg University
P.O. Box 90153
5000 LE Tilburg
The Netherlands
E-Mail: avas@uvt.nl
Tatiana Andreyeva
Yale University
Rudd Center for Food Policy and Obesity
309 Edwards Street
New Haven, CT 06520
Tel: (203) 432-8432
Fax: (203) 432-9674
E-Mail: tatiana.andreyeva@yale.edu
Arie Kapteyn
RAND Corporation
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
Tel: (310) 393-0411 x 7973
E-Mail: arie_kapteyn@rand.org
James P. Smith
RAND Corporation
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
Tel: 310-451-6925
E-Mail: smith@rand.org
M3 - presented at "Aging Conference", May 6-7, 2011
AB - Social networks and social interactions affect individual and social norms. We develop a direct test of this using Dutch survey data on how respondents evaluate work disability of hypothetical people with some work related health problem (vignettes). We analyze how the thresholds respondents use to decide what constitutes a (mild or more serious) work disability depend on the number of people receiving disability insurance benefits (DI) in their reference group. We find that reference group effects are significant and contribute substantially to an explanation of why self-reported work disability in the Netherlands is much higher than in, for example, the US.
ER -
TY - JOUR
AU - Andersen,Torben G.
AU - Dobrev,Dobrislav
AU - Schaumburg,Ernst
TI - A Functional Filtering and Neighborhood Truncation Approach to Integrated Quarticity Estimation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17152
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17152
L1 - http://www.nber.org/papers/w17152.pdf
N1 - Author contact info:
Torben G. Andersen
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/467-1285
Fax: 847/491-5719
E-Mail: t-andersen@kellogg.northwestern.edu
Dobrislav Dobrev
Federal Reserve Board of Governors
20th Street and Constitution Avenue NW
Washington, DC 20551
E-Mail: Dobrislav.P.Dobrev@frb.gov
Ernst Schaumburg
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
E-Mail: ernst.schaumburg@ny.frb.org
AB - We provide a first in-depth look at robust estimation of integrated quarticity (IQ) based on high frequency data. IQ is the key ingredient enabling inference about volatility and the presence of jumps in financial time series and is thus of considerable interest in applications. We document the significant empirical challenges for IQ estimation posed by commonly encountered data imperfections and set forth three complementary approaches for improving IQ based inference. First, we show that many common deviations from the jump diffusive null can be dealt with by a novel filtering scheme that generalizes truncation of individual returns to truncation of arbitrary functionals on return blocks. Second, we propose a new family of efficient robust neighborhood truncation (RNT) estimators for integrated power variation based on order statistics of a set of unbiased local power variation estimators on a block of returns. Third, we find that ratio-based inference, originally proposed by Barndorff-Nielsen and Shephard, has desirable robustness properties and is well suited for our empirical applications. We confirm that the proposed filtering scheme and the RNT estimators perform well in our extensive simulation designs and in an application to the individual Dow Jones 30 stocks.
ER -
TY - JOUR
AU - Mendoza,Enrique G.
AU - Yue,Vivian Z.
TI - A General Equilibrium Model of Sovereign Default and Business Cycles
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17151
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17151
L1 - http://www.nber.org/papers/w17151.pdf
N1 - Author contact info:
Enrique G. Mendoza
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3845
Fax: 301/405-7835
E-Mail: mendozae@econ.umd.edu
Vivian Z. Yue
Federal Reserve Board
Mail stop 20
Washington
DC 20551
E-Mail: vivianyue1@gmail.com
AB - Emerging markets business cycle models treat default risk as part of an exogenous interest rate on working capital, while sovereign default models treat income fluctuations as an exogenous endowment process with ad-hoc default costs. We propose instead a general equilibrium model of both sovereign default and business cycles. In the model, some imported inputs require working capital financing; default triggers an efficiency loss as these inputs are replaced by imperfect substitutes; and default on public and private obligations occurs simultaneously. The model explains several features of cyclical dynamics around defaults, countercyclical spreads, high debt ratios, and key business cycle moments.
ER -
TY - JOUR
AU - Jordà,Òscar
AU - Taylor,Alan M.
TI - Performance Evaluation of Zero Net-Investment Strategies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17150
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17150
L1 - http://www.nber.org/papers/w17150.pdf
N1 - Author contact info:
Òscar Jordà
Economic Research, MS 1130
Federal Reserve Bank of San Francisco
101 Market St.
San Francisco, CA 94105
E-Mail: oscar.jorda@sf.frb.org
Alan M. Taylor
Department of Economics
University of Virginia
Monroe Hall
Charlottesville, VA 22903
Fax: (434) 982-2904
E-Mail: alan.m.taylor@virginia.edu
AB - This paper introduces new nonparametric statistical methods to evaluate zero-cost investment strategies. We focus on directional trading strategies, risk-adjusted returns, and the investor’s decisions under uncertainty as the core of our analysis. By relying on classification tools with a long tradition in the sciences and biostatistics, we can provide a tighter connection between model-based risk characteristics and the no-arbitrage conditions for market efficiency. Moreover, we extend the methods to multicategorical settings, such as when the investor can sometimes take a neutral position. A variety of inferential procedures are provided, many of which are illustrated with applications to excess equity returns and to currency carry trades.
ER -
TY - JOUR
AU - Kelly,Bryan T.
AU - Lustig,Hanno
AU - Nieuwerburgh,Stijn Van
TI - Too-Systemic-To-Fail: What Option Markets Imply About Sector-wide Government Guarantees
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17149
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17149
L1 - http://www.nber.org/papers/w17149.pdf
N1 - Author contact info:
Bryan T. Kelly
University of Chicago
Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-8359
E-Mail: bryan.kelly@chicagobooth.edu
Hanno Lustig
UCLA Anderson School of Management
110 Westwood Plaza, Suite C413
Los Angeles, CA 90095-1481
Tel: 310/825-1011
Fax: 310/825-9528
E-Mail: hlustig@anderson.ucla.edu
Stijn Van Nieuwerburgh
Stern School of Business
New York University
44 W 4th Street, Suite 9-120
New York, NY 10012
Tel: 646/284-4141
Fax: 646/284-4141
E-Mail: svnieuwe@stern.nyu.edu
AB - Investors in option markets price in a substantial collective government bailout guarantee in the financial sector, which puts a floor on the equity value of the financial sector as a whole, but not on the value of the individual firms. The guarantee makes put options on the financial sector index cheap relative to put options on its member banks. The basket-index put spread rises fourfold from 0.8 cents per dollar insured before the financial crisis to 3.8 cents during the crisis for deep out-of-the-money options. The spread peaks at 12.5 cents per dollar, or 70% of the value of the index put. The rise in the put spread cannot be attributed to an increase in idiosyncratic risk because the correlation of stock returns increased during the crisis. The government’s collective guarantee partially absorbs financial sector-wide tail risk, which lowers index put prices but not individual put prices, and hence can explain the basket-index spread. A structural model with financial disasters quantitatively matches these facts and attributes as much as half of the value of the financial sector to the bailout guarantee during the crisis. The model solves the problem of how to measure systemic risk in a world where the government distorts market prices.
ER -
TY - JOUR
AU - Cutler,David M.
AU - Landrum,Mary Beth
TI - Dimensions of Health in the Elderly Population
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17148
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17148
L1 - http://www.nber.org/papers/w17148.pdf
N1 - Author contact info:
David M. Cutler
Department of Economics
Harvard University
1875 Cambridge Street
Cambridge, MA 02138
Tel: 617/496-5216
Fax: 617/496-8951
E-Mail: dcutler@harvard.edu
Mary Beth Landrum
Harvard Medical School
Department of Health Care Policy
180 Longwood Avenue
Boston, MA 02115-5899
Tel: (617) 432-2460
Fax: (617) 432-2563
E-Mail: landrum@hcp.med.harvard.edu
M3 - presented at "Aging Conference", May 6-7, 2011
AB - In this paper, we characterize the multi-faceted health of the elderly and understand how health along multiple dimensions has changed over time. Our data are from the Medicare Current Beneficiary Survey, 1991-2007. We show that 19 measures of health can be combined into three broad categories: a first dimension representing severe physical and social incapacity such as difficulty dressing or bathing; a second dimension representing less severe difficulty such as walking long distances or lifting heavy objects; and a third dimension representing vision and hearing impairment. These dimensions have changed at different rates over time. The first and third have declined rapidly over time, while the second has not. The improvement in health is not due to differential mortality of the sick or a new generation of more healthy people entering old age. Rather, the aging process itself is associated with less rapid deterioration in health. We speculate about the factors that may lead to this.
ER -
TY - JOUR
AU - Hilt,Eric
AU - Valentine,Jacqueline
TI - Democratic Dividends: Stockholding, Wealth and Politics in New York, 1791-1826
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17147
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17147
L1 - http://www.nber.org/papers/w17147.pdf
N1 - Author contact info:
Eric Hilt
Wellesley College
Department of Economics
106 Central Street
Wellesley, MA 02481
Tel: 781/283-2986
Fax: 781/283-2177
E-Mail: ehilt@wellesley.edu
Jacqueline Valentine
Wellesley College
Department of Economics
106 Central Street
Wellesley, MA 02482
E-Mail: valentine.jacqueline@gmail.com
AB - This paper analyzes the early history of corporate shareholding, and its relationship with political change. In the late eighteenth century, corporations were extremely rare and were dominated by elites, but in the early nineteenth century, after American politics became significantly more democratic, corporations proliferated rapidly. Using newly collected data, this paper compares the wealth and status of New York City households who owned corporate stock to the general population there both in 1791, when there were only two corporations in the state, and in 1826, when there were hundreds. The results indicate that although corporate stock was held principally by the city’s elite merchants in both periods, share ownership became more widespread over time among less affluent households. In particular, the corporations created in the 1820s were owned and managed by investors who were less wealthy than the stockholders of corporations created in earlier, less democratic periods in the state’s history.
ER -
TY - JOUR
AU - Klapper,Leora F.
AU - Laeven,Luc
AU - Rajan,Raghuram
TI - Trade Credit Contracts
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17146
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17146
L1 - http://www.nber.org/papers/w17146.pdf
N1 - Author contact info:
Leora F. Klapper
The World Bank
1818 H Street, NW
Washington, DC 20433
Tel: 202/473-8738
E-Mail: lklapper@worldbank.org
Luc Laeven
Deputy Division Chief
International Monetary Fund
700 19th Avenue, NW
Washington, DC 20431
Tel: 202/623-9020
Fax: 202/623-4740
E-Mail: Llaeven@imf.org
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu
AB - We employ a novel dataset on almost 30,000 trade credit contracts to describe the broad characteristics of the parties that contract together, the key contractual terms such as the discount for early payment and the days by when payment is due. Whereas prior work has typically used information on only one side of the buyer-seller transaction, this paper utilizes information on both. We find that the largest and most creditworthy buyers receive contracts with the longest maturities from smaller suppliers, with the latter extending credit to the former perhaps as a way of certifying product quality. Discounts for early payment seem to be offered to riskier buyers to limit the potential nonpayment risk when credit is extended for these non-financial reasons.
ER -
TY - JOUR
AU - Coate,Stephen
TI - Property Taxation, Zoning, and Efficiency: A Dynamic Analysis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17145
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17145
L1 - http://www.nber.org/papers/w17145.pdf
N1 - Author contact info:
Stephen Coate
Department of Economics
Cornell University
Uris Hall
Ithaca, NY 14853-7601
Tel: 607/255-1912
Fax: 215/573-2057
E-Mail: sc163@cornell.edu
AB - This paper revisits the classic argument that a system of local governments financing public service provision via property taxes will produce an efficient allocation of both housing and services if communities can implement zoning ordinances. The novel feature of the analysis is a dynamic model in which housing stocks and public policies are endogenously determined. In each period, citizens choose both the level of services for their communities and the zoning ordinances that govern future new construction. The main result of the paper is that there does not exist an equilibrium which has a steady state that is both efficient and satisfies a local stability property. The paper also develops examples in which equilibrium allocations converge to a steady state in which there is over-zoning and households are forced to over-consume housing. The findings of the paper challenge the well-known Benefit View of the property tax.
ER -
TY - JOUR
AU - Benmelech,Efraim
AU - Bergman,Nittai K.
AU - Seru,Amit
TI - Financing Labor
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17144
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17144
L1 - http://www.nber.org/papers/w17144.pdf
N1 - Author contact info:
Efraim Benmelech
Harvard University
Department of Economics
Littauer 233
Cambridge, MA 02138
Tel: 617/496-4787
Fax: 617/495-8570
E-Mail: effi_benmelech@harvard.edu
Nittai Bergman
MIT Sloan School of Management
100 Main Street, E62-632
Cambridge, MA 02142
Tel: 617/253-2933
Fax: 617/258-6855
E-Mail: nbergman@mit.edu
Amit Seru
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-2767
E-Mail: amit.seru@chicagobooth.edu
AB - Financial market imperfections can have significant impact on employment decisions of firms. We illustrate the economic importance of this channel by demonstrating that the responsiveness of employment decisions to firms’ financial health is quantitatively similar to the much-studied responsiveness of investment decisions to cash-flows. We use a collage of three ‘quasi-experiments’ used previously in the investment-cash flow and finance-growth literatures to trace the effects of finance on employment. Our results suggest that financial constraints and the availability of credit play an important role in firm-level employment decisions, as well as aggregate unemployment outcomes
ER -
TY - JOUR
AU - McMillan,Margaret S.
AU - Rodrik,Dani
TI - Globalization, Structural Change and Productivity Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17143
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17143
L1 - http://www.nber.org/papers/w17143.pdf
N1 - Author contact info:
Margaret S. McMillan
Tufts University
Department of Economics
114a Braker Hall
Medford, MA 02155
Tel: 617/627-3137
Fax: 617/627-3197
E-Mail: margaret.mcmillan@tufts.edu
Dani Rodrik
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9454
Fax: 617/496-5747
E-Mail: dani_rodrik@harvard.edu
AB - Large gaps in labor productivity between the traditional and modern parts of the economy are a fundamental reality of developing societies. In this paper, we document these gaps, and emphasize that labor flows from low-productivity activities to high-productivity activities are a key driver of development. Our results show that since 1990 structural change has been growth reducing in both Africa and Latin America, with the most striking changes taking place in Latin America. The bulk of the difference between these countries’ productivity performance and that of Asia is accounted for by differences in the pattern of structural change – with labor moving from low- to high-productivity sectors in Asia, but in the opposite direction in Latin America and Africa. In our empirical work, we identify three factors that help determine whether (and the extent to which) structural change contributes to overall productivity growth. In countries with a relatively large share of natural resources in exports, structural change has typically been growth reducing. Even though these “enclave” sectors usually operate at very high productivity, they cannot absorb the surplus labor from agriculture. By contrast, competitive or undervalued exchange rates and labor market flexibility have contributed to growth enhancing structural change.
ER -
TY - JOUR
AU - Christiano,Lawrence
AU - Ikeda,Daisuke
TI - Government Policy, Credit Markets and Economic Activity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17142
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17142
L1 - http://www.nber.org/papers/w17142.pdf
N1 - Author contact info:
Lawrence Christiano
Department of Economics
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-8231
Fax: 847/491-7001
E-Mail: l-christiano@northwestern.edu
Daisuke Ikeda
Bank of Japan
2-1-1 Nihonbashi Hongokucho Chuo-ku
Tokyo 103-8660
JAPAN
Tel: 81-3-3279-1111
Fax: 81-3-3510-1265
E-Mail: daisuke.ikeda@boj.or.jp
AB - The US government has recently conducted large scale purchases of assets and implemented policies that reduced the cost of funds to financial institutions. Arguably these policies have helped to correct credit market dysfunctions, allowing interest rate spreads to shrink and output to begin a recovery. We study four models of financial frictions which explore different channels by which these effects might have occured. Recent events have sparked a renewed interest in leverage restrictions and the consequences of bailouts of the creditors of banks with under-performing assets. We use two of our models to consider the welfare and other effects of these policies.
ER -
TY - JOUR
AU - Alfaro,Laura
AU - Chen,Maggie
TI - Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17141
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17141
L1 - http://www.nber.org/papers/w17141.pdf
N1 - Author contact info:
Laura Alfaro
Harvard Business School
Morgan Hall 263
Soldiers Field
Boston, MA 02163
Tel: 617/495-7981
Fax: 617/496-5985
E-Mail: lalfaro@hbs.edu
Maggie Chen
Dept. of Economics
George Washington University
2115 G ST, NW, #367
Washington, DC 20052
Tel: 202-994-0192
E-Mail: xchen@gwu.edu
AB - We examine the differential response of establishments to the recent global financial crisis with particular emphasis on the role of foreign ownership. Using a worldwide establishment panel dataset, we investigate how multinational subsidiaries around the world responded to the crisis relative to local establishments. We find that, first, multinational subsidiaries fared on average better than local counterfactuals with similar economic characteristics. Second, among multinational subsidiaries, establishments sharing stronger vertical production and financial linkages with parents exhibited greater resilience. Finally, in contrast to the crisis period, the effect of foreign ownership and linkages on establishment performance was insignificant in non-crisis years.
ER -
TY - JOUR
AU - Moon,Hyungsik Roger
AU - Schorfheide,Frank
AU - Granziera,Eleonora
AU - Lee,Mihye
TI - Inference for VARs Identified with Sign Restrictions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17140
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17140
L1 - http://www.nber.org/papers/w17140.pdf
N1 - Author contact info:
Hyungsik Moon
University of Southern California
Department of Economics
KAP 300
University Park Campus
Los Angeles, CA 90089
E-Mail: hyungsikmoon@gmail.com
Frank Schorfheide
University of Pennsylvania
Department of Economics
3718 Locust Walk
McNeil 525
Philadelphia, PA 19104-6297
Tel: 215/898-8486
Fax: 215/573-2057
E-Mail: schorf@ssc.upenn.edu
Eleonora Granziera
Bank of Canada
234 Rue Wellington
Ottawa (Ontario) K1A 0G9
Canada
E-Mail: egranziera@bankofcanada.ca
Mihye Lee
Department of Economics
University of Southern California
Los Angeles, CA 90089
E-Mail: mihyelee@usc.edu
AB - There is a fast growing literature that partially identifies structural vector autoregressions (SVARs) by imposing sign restrictions on the responses of a subset of the endogenous variables to a particular structural shock (sign-restricted SVARs). To date, the methods that have been used are only justified from a Bayesian perspective. This paper develops methods of constructing error bands for impulse response functions of sign-restricted SVARs that are valid from a frequentist perspective. We also provide a comparison of frequentist and Bayesian error bands in the context of an empirical application - the former can be twice as wide as the latter.
ER -
TY - JOUR
AU - D'Amuri,Francesco
AU - Peri,Giovanni
TI - Immigration, Jobs and Employment Protection: Evidence from Europe
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17139
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17139
L1 - http://www.nber.org/papers/w17139.pdf
N1 - Author contact info:
Francesco D'Amuri
Economic Research and International Relations
Bank of Italy
Via Nazionale 91
00184, Rome
Italy
E-Mail: francesco.damuri@bancaditalia.it.
Giovanni Peri
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-3033
E-Mail: gperi@ucdavis.edu
AB - In this paper we analyze the effect of immigrants on native jobs in fourteen Western European countries. We test whether the inflow of immigrants in the period 1996-2007 decreased employment rates and/or if it altered the occupational distribution of natives with similar education and age. We find no evidence of the first but significant evidence of the second: immigrants took "simple" (manual-routine) type of occupations and natives moved, in response, toward more "complex" (abstract-communication) jobs. The results are robust to the use of an IV strategy based on past settlement of different nationalities of immigrants across European countries. We also document the labor market flows through which such a positive reallocation took place: immigration stimulated job creation, and the complexity of jobs offered to new native hires was higher relative to the complexity of destructed native jobs. Finally, we find evidence that the occupation reallocation of natives was significantly larger in countries with more flexible labor laws. This tendency was particularly strong for less educated workers.
ER -
TY - JOUR
AU - Bingley,Paul
AU - Gupta,Nabanita Datta
AU - Pedersen,Peder J.
TI - Disability Programs, Health and Retirement in Denmark since 1960
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17138
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17138
L1 - http://www.nber.org/papers/w17138.pdf
N1 - Author contact info:
Paul Bingley
Danish National Centre for Social Research
Herluf Trollesgade 11
1052
Copenhagen
DENMARK
Tel: +4533480937
Fax: +4533480833
E-Mail: pab@sfi.dk
Nabanita Datta Gupta
E-Mail: ndg@asb.dk
Peder Pedersen
School of Economics and Management
B 1322, Bartholins Alle 10
Arhus University- 8000 Arhus C
DENMARK
Tel: +4589421581
E-Mail: ppedersen@econ.au.dk
M3 - presented at "International Social Security Conference", May 2, 2011
AB - This paper investigates the interaction between measures of health, disability pension take up and labor market performance in Denmark by charting their development over time and by examining how they are affected by key policy reforms in the area of early retirement. The main emphasis is on the long-run development of the Social Disability Pension (SDP) program, and whether it concurs with trends in population health based on mortality indicators (both overall and cause-specific) and with self-reported health. A strong relationship is found between labor force activity measures and non-health related programs for early retirement for those 60 and older. However, no clear relationship is evident between SDP take up and the health indicators. One reason for the lack of a correlation is most probably that SDP is “on its own track” due to program innovations and reforms creating competing risks or program substitution especially for the 50+ population.
ER -
TY - JOUR
AU - Farmer,Roger
TI - Animal Spirits, Financial Crises and Persistent Unemployment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17137
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17137
L1 - http://www.nber.org/papers/w17137.pdf
N1 - Author contact info:
Roger Farmer
UCLA
Department of Economics
Box 951477
Los Angeles, CA 90095-1477
Tel: 310/825-6547
Fax: 310/825-9528
E-Mail: rfarmer@econ.ucla.edu
AB - This paper develops a rational expectations model with multiple equilibrium unemployment rates and uses it to explain financial crises. In contrast to earlier work on this topic, the model has equilibria where asset prices are unbounded above. I argue that this is an important feature of any rational-agent explanation of a financial crisis, since for the expansion phase of the crisis to be rational, investors must credibly believe that asset prices could keep increasing forever with positive probability. I explain the sudden crash in asset prices that precipitates a financial crisis as a switch from a non-stationary equilibrium, to an alternative stationary equilibrium, with a high and inefficient unemployment rate. I also explain how variations in beliefs about future wealth cause movements in the stock market. These wealth movements are transmitted to the unemployment rate through variations in aggregate demand.
ER -
TY - JOUR
AU - Acharya,Viral V.
AU - Drechsler,Itamar
AU - Schnabl,Philipp
TI - A Pyrrhic Victory? - Bank Bailouts and Sovereign Credit Risk
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17136
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17136
L1 - http://www.nber.org/papers/w17136.pdf
N1 - Author contact info:
Viral V. Acharya
Stern School of Business
New York University
44 West 4th Street, Suite 9-84
New York, NY 10012
Tel: 212/998-0354
Fax: 212 995 4233
E-Mail: vacharya@stern.nyu.edu
Itamar Drechsler
Stern School of Business
New York University
44 West 4th Street, Suite 9-79
New York, NY 10012
E-Mail: Itamar.Drechsler@stern.nyu.edu
Philipp Schnabl
Stern School of Business
New York University
44 West Fourth Street
New York, NY 10012
Tel: 212/998-0356
E-Mail: schnabl@stern.nyu.edu
AB - We show that financial sector bailouts and sovereign credit risk are intimately linked. A bailout benefits the economy by ameliorating the under-investment problem of the financial sector. However, increasing taxation of the non-financial sector to fund the bailout may be inefficient since it weakens its incentive to invest, decreasing growth. Instead, the sovereign may choose to fund the bailout by diluting existing government bondholders, resulting in a deterioration of the sovereign's creditworthiness. This deterioration feeds back onto the financial sector, reducing the value of its guarantees and existing bond holdings and increasing its sensitivity to future sovereign shocks. We provide empirical evidence for this two-way feedback between financial and sovereign credit risk using data on the credit default swaps (CDS) of the Eurozone countries for 2007-10. We show that the announcement of financial sector bailouts was associated with an immediate, unprecedented widening of sovereign CDS spreads and narrowing of bank CDS spreads; however, post-bailouts there emerged a significant co-movement between bank CDS and sovereign CDS, even after controlling for banks' equity performance, the latter being consistent with an effect of the quality of sovereign guarantees on bank credit risk.
ER -
TY - JOUR
AU - Fox,Liana E.
AU - Han,Wen-Jui
AU - Ruhm,Christopher
AU - Waldfogel,Jane
TI - Time for Children: Trends in the Employment Patterns of Parents, 1967-2009
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17135
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17135
L1 - http://www.nber.org/papers/w17135.pdf
N1 - Author contact info:
Liana E. Fox
Columbia University
School of Social Work
1255 Amsterdam Avenue
New York, NY 10027
E-Mail: lef2118@columbia.edu
Wen-Jui Han
Columbia University
School of Social Work
1255 Amsterdam Avenue
New York, NY 10027
E-Mail: wh41@columbia.edu
Christopher J. Ruhm
Frank Batten School of
Leadership and Public Policy
University of Virginia
235 McCormick Rd.
P.O. Box 400893
Charlottesville, VA 22904-40893
Tel: 434-243-3729
E-Mail: ruhm@virginia.edu
Jane Waldfogel
Columbia University
School of Social Work
1255 Amsterdam Avenue
New York, NY 10027
E-Mail: jw205@columbia.edu
AB - Utilizing data from the 1967-2009 years of the March Current Population Surveys, we examine two important resources for children’s well-being: time and money. We document trends in parental employment, from the perspective of children, and show what underlies these trends. We find that increases in family work hours mainly reflect movements into jobs by parents who, in prior decades, would have remained at home. This increase in market work has raised incomes for children in the typical two-parent family but not for those in lone-parent households. Time use data from 1975 and 2003-2008 reveal that working parents spend less time engaged in primary childcare than their counterparts without jobs but more than employed peers in previous cohorts. Analysis of 2004 work schedule data suggests that non-daytime work provides an alternative method of coordinating employment schedules for some dual-earner families.
ER -
TY - JOUR
AU - Chai,Jingjing
AU - Maurer,Raimond
AU - Mitchell,Olivia S.
AU - Rogalla,Ralph
TI - Lifecycle Impacts of the Financial and Economic Crisis on Household Optimal Consumption, Portfolio Choice, and Labor Supply
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17134
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17134
L1 - http://www.nber.org/papers/w17134.pdf
N1 - Author contact info:
Jingjing Chai
Finance Department
Goethe University
Grüneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: chai@finance.uni-frankfurt.de
Raimond Maurer
Finance Department
Goethe University
Grüneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: rmaurer@wiwi.uni-frankfurt.de
Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
Ralph Rogalla
Finance Department
Goethe University
Grüneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: rogalla@wiwi.uni-frankfurt.de
AB - The direct financial impact of the financial crisis has been to deal a heavy blow to investment-based pensions; many workers lost a substantial portion of their retirement saving. The financial sector implosion produced an economic crisis for the rest of the economy via high unemployment and reduced labor earnings, which reduced household contributions to Social Security and some private pensions. Our research asks which types of individuals were most affected by these dual financial and economic shocks, and it also explores how people may react by changing their consumption, saving and investment, work and retirement, and annuitization decisions. We do so with a realistically calibrated lifecycle framework allowing for time-varying investment opportunities and countercyclical risky labor income dynamics. We show that households near retirement will reduce both short- and long-term consumption, boost work effort, and defer retirement. Younger cohorts will initially reduce their work hours, consumption, saving, and equity exposure; later in life, they will work more, retire later, consume less, invest more in stocks, save more, and reduce their demand for private annuities.
ER -
TY - JOUR
AU - Benigno,Gianluca
AU - Benigno,Pierpaolo
AU - Nisticò,Salvatore
TI - Risk, Monetary Policy and the Exchange Rate
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17133
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17133
L1 - http://www.nber.org/papers/w17133.pdf
N1 - Author contact info:
Gianluca Benigno
London School of Economics
Department of Economics
Houghton Street
London WC2A 2AE ENGLAND
E-Mail: G.Benigno@lse.ac.uk
Pierpaolo Benigno
Dipartimento di Economia e Finanza
Luiss Guido Carli
Viale Romania 32
00197 Rome
ITALY
Tel: 39-0685225-552
E-Mail: pbenigno@luiss.it
Salvatore Nisticò
Università di Roma "La Sapienza"
Dipartimento di Analisi Economiche e Sociali
viale Aldo Moro 5
00185 Rome
Italy
Tel: +39.06.8522.5637
Fax: +39.06.8522.5949
E-Mail: salvatore.nistico@uniroma1.it
M3 - presented at "26th Annual Conference on Macroeconomics", April 8-9, 2011
AB - In this research, we provide new empirical evidence on the importance of time-varying uncertainty for the exchange rate and the excess return in currency markets. Following an increase in monetary policy uncertainty, the dollar exchange rate appreciates in the medium run, while an increase in the volatility of productivity leads to a dollar depreciation. We propose a general-equilibrium theory of exchange rate determination based on the interaction between monetary policy and time-varying uncertainty aimed at understanding these regularities. In the model, the behaviour of the exchange rate following nominal and real volatility shocks is consistent with the empirical evidence. Furthermore we show that risk factors and interest-rate smoothing are important in accounting for the negative coefficient in the UIP regression.
ER -
TY - JOUR
AU - Treisman,Daniel
TI - Income, Democracy, and the Cunning of Reason
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17132
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17132
L1 - http://www.nber.org/papers/w17132.pdf
N1 - Author contact info:
Daniel Treisman
Department of Political Science
UCLA
4289 Bunche Hall
Los Angeles, CA 90095-1472
Tel: 310/794-5875
Fax: 310/825-0778
E-Mail: treisman@polisci.ucla.edu
AB - A long-standing debate pits those who think economic development leads to democratization against those who argue that both result from distant historical causes. Using the most comprehensive estimates of national income available, I show that development is associated with more democratic government—but in the medium run (10 to 20 years). The reason is that, for the most part, higher income only prompts a breakthrough to more democratic politics after the incumbent leader falls from power. And in the short run, faster economic growth increases the leader’s odds of survival. This logic—for which I provide evidence at the levels of individual countries and the world—helps explain why democracy advances in waves followed by periods of stasis and why dictators, concerned only to entrench themselves in power, end up preparing their countries to leap to a higher level of democracy when they are eventually overthrown.
ER -
TY - JOUR
AU - Cook,David
AU - Devereux,Michael B.
TI - Sharing the Burden: Monetary and Fiscal Responses to a World Liquidity Trap
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17131
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17131
L1 - http://www.nber.org/papers/w17131.pdf
N1 - Author contact info:
David Cook
Hong Kong University of Science & Technology
Department of Economics
Clear Water Bay
Kowloon, HONG KONG
E-Mail: davcook@ust.hk
Michael B. Devereux
Department of Economics
University of British Columbia
997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-2542
Fax: 604/822-5915
E-Mail: mbdevereux@gmail.com
AB - With integrated trade and financial markets, a collapse in aggregate demand in a large country can cause ‘natural real interest rates’ to fall below zero in all countries, giving rise to a global ‘liquidity trap’. This paper explores the policy choices that maximize the joint welfare of all countries following such a shock, when governments cooperate on both fiscal and monetary policy. Adjusting to a large negative demand shock requires raising world aggregate demand, as well as redirecting demand towards the source (home) country. The key feature of demand shocks in a liquidity trap is that relative prices respond perversely. A negative shock causes an appreciation of the home terms of trade, exacerbating the slump in the home country. At the zero bound, the home country cannot counter this shock. Because of this, it may be optimal for the foreign policy-maker to raise interest rates. Strikingly, the foreign country may choose to have a positive policy interest rate, even though its ‘natural real interest rate’ is below zero. A combination of relatively tight monetary policy in the foreign country combined with substantial fiscal expansion in the home country achieves the level and composition of world expenditure that maximizes the joint welfare of the home and foreign country. Thus, in response to conditions generating a global liquidity trap, there is a critical mutual interaction between monetary and fiscal policy.
ER -
TY - JOUR
AU - Chen,Xiaohong
AU - Favilukis,Jack
AU - Ludvigson,Sydney C.
TI - An Estimation of Economic Models with Recursive Preferences
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17130
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17130
L1 - http://www.nber.org/papers/w17130.pdf
N1 - Author contact info:
Xiaohong Chen
Department of Economics Yale University
Box 208281
New Haven, CT 06520-8281
E-Mail: xiaohong.chen@yale.edu
Jack Favilukis
London School of Economics
Department of Finance
Houghton Street, London WC2A 2AE
United Kingdom
E-Mail: jack.favilukis@gmail.com
Sydney C. Ludvigson
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10002
Tel: 212/998-8927
Fax: 212/995-4186
E-Mail: sydney.ludvigson@nyu.edu
AB - This paper presents estimates of key preference parameters of the Epstein and Zin (1989, 1991) and Weil (1989) (EZW) recursive utility model, evaluates the model's ability to fit asset return data relative to other asset pricing models, and investigates the implications of such estimates for the unobservable aggregate wealth return. Our empirical results indicate that the estimated relative risk aversion parameter ranges from 17-60, with higher values for aggregate consumption than for stockholder consumption, while the estimated elasticity of intertemporal substitution is above one. In addition, the estimated model-implied aggregate wealth return is found to be weakly correlated with the CRSP value-weighted stock market return, suggesting that the return to human wealth is negatively correlated with the aggregate stock market return.
ER -
TY - JOUR
AU - Mbiti,Isaac
AU - Weil,David N.
TI - Mobile Banking: The Impact of M-Pesa in Kenya
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17129
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17129
L1 - http://www.nber.org/papers/w17129.pdf
N1 - Author contact info:
Isaac Mbiti
Department of Economics
Southern Methodist University
3300 Dyer Street
Dallas, TX 75275-0496
E-Mail: imbiti@smu.edu
David N. Weil
Department of Economics
Box B
Brown University
Providence, RI 02912
Tel: 401/863-1754
Fax: 401/863-1970
E-Mail: david_weil@brown.edu
M3 - presented at "African Development Successes Conference", July 18-20, 2010
AB - M-Pesa is a mobile phone based money transfer system in Kenya which grew at a blistering pace following its inception in 2007. We examine how M-Pesa is used as well as its economic impacts. Analyzing data from two waves of individual data on financial access in Kenya, we find that increased use of M-Pesa lowers the propensity of people to use informal savings mechanisms such as ROSCAS, but raises the probability of their being banked. Using aggregate data, we calculate the velocity of M-Pesa at between 11.0 and 14.6 person-to-person transfers per month. In addition, we find that M-Pesa causes decreases in the prices of competing money transfer services such as Western Union. While we find little evidence that people use their M-Pesa accounts as a place to store wealth, our results suggest that M-Pesa improves individual outcomes by promoting banking and increasing transfers.
ER -
TY - JOUR
AU - Deaton,Angus S.
TI - The Financial Crisis and the Well-Being of Americans
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17128
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17128
L1 - http://www.nber.org/papers/w17128.pdf
N1 - Author contact info:
Angus S. Deaton
328 Wallace Hall
Woodrow Wilson School
Princeton University
Princeton, NJ 08544-1013
Tel: 609/258-5967
Fax: 609/258-5974
E-Mail: deaton@princeton.edu
M3 - presented at "Aging Conference", May 6-7, 2011
AB - The Great Recession was associated with large changes in income, wealth, and unemployment, changes that affected many lives. Since January 2008, the Gallup Organization has been collecting daily data on 1,000 Americans each day, with a range of self-reported well-being (SWB) questions. I use these data to examine how the recession affected the emotional and evaluative lives of the population, as well as of subgroups within it. In the fall of 2008, around the time of the collapse of Lehman Brothers, and lasting into the spring of 2009, at the bottom of the stock market, Americans reported sharp declines in their life evaluation, sharp increases in worry and stress, and declines in positive affect. By the end of 2010, in spite of continuing high unemployment, these measures had largely recovered, though worry remained higher and life evaluation lower than in January 2008. The SWB measures do a much better job of monitoring short-run levels of anxiety as the crisis unfolded than they do of reflecting the evolution of the economy over a year or two. Even large macroeconomic shocks to income and unemployment can be expected to produce only small and hard to detect effects on SWB measures. SWB, particularly evaluation of life as a whole, is sensitive to question order effects. Asking political questions before the life evaluation question reduces reported life evaluation by an amount that dwarfs the effects of even the worst of the crisis; these order effects persist deep into the interview, and condition the reporting of hedonic experience and of satisfaction with standard of living. Methods for controlling these effects need to be developed and tested if national measures are to be comparable over space and time.
ER -
TY - JOUR
AU - Bebchuk,Lucian A.
AU - Cohen,Alma
AU - Wang,Charles C.Y.
TI - Staggered Boards and the Wealth of Shareholders: Evidence from Two Natural Experiments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17127
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17127
L1 - http://www.nber.org/papers/w17127.pdf
N1 - Author contact info:
Lucian A. Bebchuk
Harvard Law School
1545 Massachusetts Avenue
Cambridge, MA 02138
Tel: 617/495-3138
Fax: 617/812-0554
E-Mail: bebchuk@law.harvard.edu
Alma Cohen
The Eitan Berglas School of Economics
Tel Aviv University
Ramat-Aviv, Tel-Aviv
ISRAEL
Tel: 011-972-3-640-993
E-Mail: almac@post.tau.ac.il
Charles C.Y. Wang
Stanford University
579 Serra Mall
Stanford, CA 94309
E-Mail: charles.cy.wang@stanford.edu
AB - While staggered boards have been documented to be negatively correlated with firm valuation, such association might be due to staggered boards either bringing about lower firm value or merely reflecting the tendency of low-value firms to have staggered boards. In this paper, we use two natural experiments to shed light on the causality question. In particular, we focus on two recent court rulings, separated by several weeks, that affected in opposite directions the antitakeover force of staggered boards: (i) a ruling by the Delaware Chancery Court approving the legality of shareholder-adopted bylaws that weaken the antitakeover force of a staggered board by moving the company’s annual meeting up from later parts of the calendar year to January, and (ii) the subsequent decision by the Delaware Supreme Court to overturn the Chancery Court ruling and invalidate such bylaws.
We find evidence consistent with the hypothesis that the Chancery Court ruling increased the value of affected companies – namely, companies with a staggered board and an annual meeting in later parts of the calendar year – and that the Supreme Court ruling produced a reduction in the affected companies’ value. The identified effects were most pronounced for firms for which control contests are especially relevant due to relative underperformance, small firm size, high asset pledgibility, or high takeover intensity in their industry.
Our findings have implications for the long-standing debate on staggered boards. The findings are consistent with the market’s viewing staggered boards as bringing about a reduction in firm value. Our findings are thus consistent with leading institutional investors’ policies in favor of board de-staggering, and with the view that the ongoing process of board de-staggering in public firms can be expected to enhance shareholder value.
ER -
TY - JOUR
AU - Berka,Martin
AU - Devereux,Michael B.
AU - Rudolph,Thomas
TI - Price Setting in a Leading Swiss Online Supermarket
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17126
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17126
L1 - http://www.nber.org/papers/w17126.pdf
N1 - Author contact info:
Martin Berka
Victoria University of Wellington
School of Economics and Finance
PO Box 600
Welliongton 6140
New Zealand
Tel: 64-4-463-5893
Fax: 64-4-463-5014
E-Mail: martin.berka@vuw.ac.nz
Michael B. Devereux
Department of Economics
University of British Columbia
997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-2542
Fax: 604/822-5915
E-Mail: mbdevereux@gmail.com
Thomas Rudolph
university of st. gallen
switzerland
E-Mail: trudolph888@gmail.com
AB - We study a newly released data set of scanner prices for food products in a large Swiss online supermarket. We find that average prices change about every two months, but when we exclude temporary sales, prices are extremely sticky, changing on average once every three years. Non-sale price behavior is broadly consistent with menu cost models of sticky prices. When we focus specifically on the behavior of sale prices, however, we find that the characteristics of price adjustment seems to be substantially at odds with standard theory.
ER -
TY - JOUR
AU - Sood,Neeraj
AU - Huckfeldt,Peter J.
AU - Grabowski,David C.
AU - Newhouse,Joseph P.
AU - Escarce,José J.
TI - The Effect of Prospective Payment on Admission and Treatment Policy: Evidence from Inpatient Rehabilitation Facilities
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17125
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17125
L1 - http://www.nber.org/papers/w17125.pdf
N1 - Author contact info:
Neeraj Sood
Department of Clinical Pharmacy
USC School of Pharmacy
1985 Zonal Avenue
Los Angeles, CA 90033
Tel: 310/393-0411
Fax: 310/260-8156
E-Mail: nsood@usc.edu
Peter J. Huckfeldt
RAND Corporation
Santa Monica, California
E-Mail: Peter_Huckfeldt@rand.org
David Grabowski
Harvard University
Department of Health Care Policy
Harvard Medical School
180 Longwood Avenue
Boston, MA 02115
E-Mail: grabowski@med.harvard.edu
Joseph P. Newhouse
Division of Health Policy Research and Education
Harvard University
180 Longwood Avenue
Boston, MA 02115-5899
Tel: 617/432-1325
Fax: 617/432-3503
E-Mail: newhouse@hcp.med.harvard.edu
Jose Escarce
UCLA Med-GIM-HSR
911 Broxton Avenue
Box 951736
Los Angeles, CA 90024
Tel: 310/794-3842
Fax: 310/794-0732
E-Mail: jescarce@mednet.ucla.edu
AB - We examine provider responses to the Medicare inpatient rehabilitation facility (IRF) prospective payment system (PPS), which simultaneously reduced marginal reimbursement and increased average reimbursement. IRFs could respond to the PPS by changing the total number of patients admitted, admitting different types of patients, or changing the intensity of care for admitted patients. We use Medicare claims data to separately estimate each type of provider response to the PPS. We also examine changes in patient outcomes and spillover effects on other post acute care providers. We find that costs of care initially fell following the PPS implementation, which we attribute to changes in treatment decisions rather than the types of patients admitted to IRFs. However, the probability of admission to IRFs increased after the PPS due to the expanded admission policies of providers. We find modest spillover effects on skilled nursing home costs and no substantive impact on patient health outcomes.
ER -
TY - JOUR
AU - Goldfarb,Avi
AU - Tucker,Catherine
TI - Privacy and Innovation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17124
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17124
L1 - http://www.nber.org/papers/w17124.pdf
N1 - Author contact info:
Avi Goldfarb
Rotman School of Management
University of Toronto
105 St George St
Toronto, ON M5S 3E6
E-Mail: agoldfarb@rotman.utoronto.ca
Catherine Tucker
MIT Sloan School of Management
100 Main Street, E62-533
Cambridge, MA 02142
Tel: 617/252-1499
Fax: 617/258-7597
E-Mail: cetucker@mit.edu
AB - Information and communication technology now enables firms to collect detailed and potentially intrusive data about their customers both easily and cheaply. This means that privacy concerns are no longer limited to government surveillance and public figures' private lives. The empirical literature on privacy regulation shows that privacy regulation may affect the extent and direction of data-based innovation. We also show that the impact of privacy regulation can be extremely heterogeneous. Therefore, we argue that digitization means that privacy policy is now a part of innovation policy.
ER -
TY - JOUR
AU - Burdekin,Richard C.K.
AU - Mitchener,Kris James
AU - Weidenmier,Marc D.
TI - Irving Fisher and Price-Level Targeting in Austria: Was Silver the Answer?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17123
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17123
L1 - http://www.nber.org/papers/w17123.pdf
N1 - Author contact info:
Richard Burdekin
Robert Day School of Economics and Finance
Claremont McKenna College
500 East Ninth Street
Claremont, CA 91711
E-Mail: richard.burdekin@claremontmckenna.edu
Kris James Mitchener
Department of Economics
Leavey School of Business
Santa Clara University
Santa Clara, CA 95053
Tel: 408/554-4340
Fax: 408/554-2331
E-Mail: kmitchener@scu.edu
Marc D. Weidenmier
Robert Day School of Economics and Finance
Claremont McKenna College
500 East Ninth Street
Claremont, CA 91711
Tel: 909/607-8497
Fax: 909/621-8249
E-Mail: marc_weidenmier@claremontmckenna.edu
AB - The question of price level versus inflation targeting remains controversial. Disagreement concerns, not so much the desirability of price stability, but rather the means of achieving it. Irving Fisher argued for a commodity dollar standard where the purchasing power of money was fixed by indexing it to a basket of commodities. We show that movements in the price of silver closely track the movements in overall prices during the classical gold standard era. The one-to-one relationship between paper and silver bonds suggests that a simple “silver rule" could have sufficed to fix the purchasing power of money.
ER -
TY - JOUR
AU - Hochberg,Yael V.
AU - Rauh,Joshua D.
TI - Local Overweighting and Underperformance: Evidence from Limited Partner Private Equity Investments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17122
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17122
L1 - http://www.nber.org/papers/w17122.pdf
N1 - Author contact info:
Yael Hochberg
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/467-4574
Fax: 847/491-5719
E-Mail: y-hochberg@kellogg.northwestern.edu
Joshua Rauh
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-4462
Fax: 847/491-5719
E-Mail: joshua-rauh@kellogg.northwestern.edu
AB - Institutional investors of all types exhibit substantial home-state bias when investing in private equity (PE) funds. This effect is particularly pronounced for public pension funds, where the local overweighting amounts to 9.7% of the private equity portfolio on average, based on 5-year rolling average benchmarks. Public pension funds’ own-state investments perform significantly worse than their out-of-state investments, an average of 3-4 percentage points of net IRR per year, and those that that overweight their portfolios towards home-state investments also perform worse overall. These underperformance patterns are not evident for other types of institutional investors, such as endowments, foundations and corporate pension funds, and we do not observe similar overweighting or underperformance of investments in neighboring states. Overweighting in home state investments by public pension funds is greater in states with higher levels of corruption, although there is no positive correlation of underperformance with corruption for these investors. The overweighting and underperformance of local investments cost public pension funds between $0.9 and $1.2 billion per year, depending on the benchmark.
ER -
TY - JOUR
AU - Bekaert,Geert
AU - Ehrmann,Michael
AU - Fratzscher,Marcel
AU - Mehl,Arnaud J.
TI - Global Crises and Equity Market Contagion
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17121
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17121
L1 - http://www.nber.org/papers/w17121.pdf
N1 - Author contact info:
Geert Bekaert
Graduate School of Business
Columbia University
3022 Broadway, 411 Uris Hall
New York, NY 10027
Tel: 212/854-9156
Fax: 212/662-8474
E-Mail: gb241@columbia.edu
Michael Ehrmann
European Central Bank
Postfach 16 03 19
D-60066 Frankfurt am Main
GERMANY
E-Mail: michael.ehrmann@ecb.int
Marcel Fratzscher
European Central Bank
Kaiserstrasse 29
D-60311 Frankfurt/Main GERMANY
Tel: +49 - 69 1344 6871
E-Mail: marcel.fratzscher@ecb.int
Arnaud J. Mehl
European Central Bank
Kaiserstrasse 29
60311 Frankfurt
Germany
E-Mail: Arnaud.Mehl@ecb.int
AB - Using the 2007-2009 financial crisis as a laboratory, we analyze the transmission of crises to country-industry equity portfolios in 55 countries. We use an asset pricing framework with global and local factors to predict crisis returns, defining unexplained increases in factor loadings as indicative of contagion. We find evidence of systematic contagion from US markets and from the global financial sector, but the effects are very small. By contrast, there has been systematic and substantial contagion from domestic equity markets to individual domestic equity portfolios, with its severity inversely related to the quality of countries’ economic fundamentals and policies. Consequently, we reject the globalization hypothesis that links the transmission of the crisis to the extent of global exposure. Instead, we confirm the old “wake-up call” hypothesis, with markets and investors focusing substantially more on idiosyncratic, country-specific characteristics during the crisis.
ER -
TY - JOUR
AU - Bettinger,Eric P.
AU - Evans,Brent J.
AU - Pope,Devin G.
TI - Improving College Performance and Retention the Easy Way: Unpacking the ACT Exam
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17119
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17119
L1 - http://www.nber.org/papers/w17119.pdf
N1 - Author contact info:
Eric Bettinger
Stanford School of Education
CERAS 522, 520 Galvez Mall
Stanford, CA 94305
Tel: 650/736-7727
Fax: 650/723-9931
E-Mail: ebettinger@stanford.edu
Brent J. Evans
School of Education
Stanford University
E-Mail: bjevans@stanford.edu
Devin G. Pope
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-2297
Fax: 773/702-0458
E-Mail: devin.pope@chicagobooth.edu
AB - Colleges rely on the ACT exam in their admission decisions to increase their ability to differentiate between students likely to succeed and those that have a high risk of under-performing and dropping out. We show that two of the four sub tests of the ACT, English and Mathematics, are highly predictive of positive college outcomes while the other two subtests, Science and Reading, provide little or no additional predictive power. This result is robust across various samples, specifications, and outcome measures. We demonstrate that focusing solely on the English and Mathematics test scores greatly enhances the predictive validity of the ACT exam.
ER -
TY - JOUR
AU - Beshears,John
AU - Choi,James J.
AU - Laibson,David
AU - Madrian,Brigitte C.
TI - The Availability and Utilization of 401(k) Loans
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17118
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17118
L1 - http://www.nber.org/papers/w17118.pdf
N1 - Author contact info:
John Beshears
Stanford Graduate School of Business
655 Knight Way
Stanford, CA 94305-7298
Tel: 650/723-6792
E-Mail: beshears@stanford.edu
James J. Choi
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
E-Mail: james.choi@yale.edu
David Laibson
Department of Economics
Littauer M-12
Harvard University
Cambridge, MA 02138
Tel: 617/496-3402
Fax: 617/495-8570
E-Mail: dlaibson@gmail.com
Brigitte C. Madrian
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-495-8917
Fax: 617-496-5960
E-Mail: Brigitte_Madrian@Harvard.edu
M3 - presented at "Aging Conference", May 6-7, 2011
AB - We document the loan provisions in 401(k) savings plans and how participants use 401(k) loans. Although only about 22% of savings plan participants who are allowed to borrow from their 401(k) have such a loan at any given point in time, almost half had used a 401(k) loan over a longer, seven-year horizon. The probability of having a loan follows a hump-shaped pattern with respect to age, job tenure, account balance, and salary, but conditional on having a loan, loan size as a fraction of 401(k) balances declines with respect to these variables. Participants are less likely to use loans in plans that charge a higher interest rate, and loans are smaller when plans allow fewer simultaneously outstanding loans, impose a shorter maximum possible loan duration, or charge a lower interest rate.
ER -
TY - JOUR
AU - Cristea,Anca D.
AU - Hummels,David
AU - Puzzello,Laura
AU - Avetisyan,Misak G.
TI - Trade and the Greenhouse Gas Emissions from International Freight Transport
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17117
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17117
L1 - http://www.nber.org/papers/w17117.pdf
N1 - Author contact info:
Anca D. Cristea
University of Oregon
E-Mail: cristea@uoregon.edu
David Hummels
Krannert School of Management
403 West State Street
Purdue University
West Lafayette, IN 47907-1310
Tel: 765/494-4495
Fax: 765/494-9658
E-Mail: hummelsd@purdue.edu
Laura Puzzello
Monash University
E-Mail: laura.puzzello@monash.edu
Misak G. Avetisyan
University of Southern California
School of Policy, Planning and Development
3710 McClintock Avenue, RTH 322
Los Angeles, CA 90089-2902
Tel: (213) 7405747
E-Mail: mgavetis@sppd.usc.edu
AB - We collect extensive data on worldwide trade by transportation mode and use this to provide detailed comparisons of the greenhouse gas emissions associated with output versus international transportation of traded goods. International transport is responsible for 33 percent of world-wide trade-related emissions, and over 75 percent of emissions for major manufacturing categories like machinery, electronics and transport equipment. US exports intensively make use of air cargo; as a result two-thirds of its export-related emissions are due to international transport, and US exports by themselves generate a third of transport emissions worldwide. Inclusion of transport dramatically changes the ranking of countries by emission intensity. US production emissions per dollar of exports are 16 percent below the world average, but once we include transport US emissions per dollar exported are 59 percent above the world average. We use our data to systematically investigate whether trade inclusive of transport can lower emissions. In one-quarter of cases, the difference in output emissions is more than enough to compensate for the emissions cost of transport. Finally, we examine how likely patterns of trade growth will affect modal use and emissions. Full liberalization of tariffs and GDP growth concentrated in China and India lead to transport emissions growing much faster than the value of trade, due to trade shifting toward distant trading partners. Emissions growth from growing GDP dwarfs any growth from tariff liberalization.
ER -
TY - JOUR
AU - Engel,Charles
TI - The Real Exchange Rate, Real Interest Rates, and the Risk Premium
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17116
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17116
L1 - http://www.nber.org/papers/w17116.pdf
N1 - Author contact info:
Charles Engel
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI 53706-1393
Tel: 608/262-3697
Fax: 608/262-2033
E-Mail: cengel@ssc.wisc.edu
AB - The well-known uncovered interest parity puzzle arises from the empirical regularity that, among developed country pairs, the high interest rate country tends to have high expected returns on its short term assets. At the same time, another strand of the literature has documented that high real interest rate countries tend to have currencies that are strong in real terms – indeed, stronger than can be accounted for by the path of expected real interest differentials under uncovered interest parity. These two strands – one concerning short-run expected changes and the other concerning the level of the real exchange rate – have apparently contradictory implications for the relationship of the foreign exchange risk premium and interest-rate differentials. This paper documents the puzzle, and shows that existing models appear unable to account for both empirical findings. The features of a model that might reconcile the findings are discussed.
ER -
TY - JOUR
AU - Gennaioli,Nicola
AU - Shleifer,Andrei
AU - Vishny,Robert W.
TI - A Model of Shadow Banking
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17115
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17115
L1 - http://www.nber.org/papers/w17115.pdf
N1 - Author contact info:
Nicola Gennaioli
CREI
Universitat Pompeu Fabra
Ramon Trias Fargas 25-27
08005 Barcelona (Spain)
E-Mail: ngennaioli@crei.cat
Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
Robert W. Vishny
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-2522
Fax: 773/834-1920
E-Mail: Rvishny@gmail.com
AB - We present a model of shadow banking in which financial intermediaries originate and trade loans, assemble these loans into diversified portfolios, and then finance these portfolios externally with riskless debt. In this model: i) outside investor wealth drives the demand for riskless debt and indirectly for securitization, ii) intermediary assets and leverage move together as in Adrian and Shin (2010), and iii) intermediaries increase their exposure to systematic risk as they reduce their idiosyncratic risk through diversification, as in Acharya, Schnabl, and Suarez (2010). Under rational expectations, the shadow banking system is stable and improves welfare. When investors and intermediaries neglect tail risks, however, the expansion of risky lending and the concentration of risks in the intermediaries create financial fragility and fluctuations in liquidity over time.
ER -
TY - JOUR
AU - Jousten,Alain
AU - Lefebvre,Mathieu
AU - Perelman,Sergio
TI - Disability in Belgium: There is More than Meets the Eye
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17114
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17114
L1 - http://www.nber.org/papers/w17114.pdf
N1 - Author contact info:
Alain Jousten
HEC Ecole de gestion de l'Université de Liège
7 Boulevard du Rectorat
Bât. B31 Boîte 41
4000 Liege 1
BELGIUM
Tel: +32 4 366 3198
E-Mail: ajousten@ulg.ac.be
Mathieu Lefebvre
CREPP - Universite de Liege
Bvd du Rectorat 7 (B31) - B4000 Liège
Tel: ++32 4 366 31 03
Fax: ++32 4 366 31 06
E-Mail: mathieu.lefebvre@ulg.ac.be
Sergio Perelman
CREPP - HEC Management School
Universite de Liege
Bd. du Rectorat 7 (B31)
4000 Liege
BELGIUM
E-Mail: sergio.perelman@ulg.ac.be
M3 - presented at "International Social Security Conference", May 2, 2011
AB - The paper provides a perspective on the development of the Belgian disability insurance system. Using both survey and administrative data, it sketches a picture of the (changing) factors leading towards disability, as well as the outcomes in terms of program participation. The paper shows the key role of integrating other forms of early retirement programs into the analysis. The main findings are an unspectacular trend in the number of DI beneficiaries over time combined with a strong expansion of (early-) retirement schemes.
ER -
TY - JOUR
AU - Voigtlaender,Nico
AU - Voth,Hans-Joachim
TI - Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17113
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17113
L1 - http://www.nber.org/papers/w17113.pdf
N1 - Author contact info:
Nico Voigtlaender
UCLA Anderson School of Management
110 Westwood Plaza
C513 Entrepreneurs Hall
Los Angeles, CA 90095
Tel: 310/794-6382
E-Mail: nico.v@anderson.ucla.edu
Hans-Joachim Voth
Economics Department
UPF & CREI
Ramon Trias Fargas 25-27
E-08005 Barcelona
E-Mail: jvoth@crei.cat
AB - How persistent are cultural traits? This paper uses data on anti-Semitism in Germany and finds continuity at the local level over more than half a millennium. When the Black Death hit Europe in 1348-50, killing between one third and one half of the population, its cause was unknown. Many contemporaries blamed the Jews. Cities all over Germany witnessed mass killings of their Jewish population. At the same time, numerous Jewish communities were spared. We use plague pogroms as an indicator for medieval anti-Semitism. Pogroms during the Black Death are a strong and robust predictor of violence against Jews in the 1920s, and of votes for the Nazi Party. In addition, cities that saw medieval anti-Semitic violence also had higher deportation rates for Jews after 1933, were more likely to see synagogues damaged or destroyed in the 'Night of Broken Glass' in 1938, and their inhabitants wrote more anti-Jewish letters to the editor of the Nazi newspaper Der Stürmer.
ER -
TY - JOUR
AU - Papay,John P.
AU - Willett,John B.
AU - Murnane,Richard J.
TI - High-School Exit Examinations and the Schooling Decisions of Teenagers: A Multi-Dimensional Regression-Discontinuity Analysis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17112
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17112
L1 - http://www.nber.org/papers/w17112.pdf
N1 - Author contact info:
John Papay
Brown University
Education Department
Providence, RI 02912
Tel: 617-493-3942
E-Mail: john_papay@mail.harvard.edu
John Willett
Graduate School of Education
Harvard University
6 Appian Way - Gutman 412
Cambridge, MA 02138
E-Mail: John_Willett@harvard.edu
Richard Murnane
Graduate School of Education
Harvard University
6 Appian Way - Gutman 469
Cambridge, MA 02138
Tel: 617/496-4820
Fax: 617/496-3095
E-Mail: richard_murnane@harvard.edu
AB - We ask whether failing one or more of the state-mandated high-school exit examinations affects whether students graduate from high school. Using a new multi-dimensional regression-discontinuity approach, we examine simultaneously scores on mathematics and English language arts tests. Barely passing both examinations, as opposed to failing them, increases the probability that students graduate by 7.6 percentage points. The effects are greater for students scoring near each cutoff than for students further away from them. We explain how the multi-dimensional regression-discontinuity approach provides insights over conventional methods for making causal inferences when multiple variables assign individuals to a range of treatments.
ER -
TY - JOUR
AU - Drautzburg,Thorsten
AU - Uhlig,Harald
TI - Fiscal Stimulus and Distortionary Taxation
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17111
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17111
L1 - http://www.nber.org/papers/w17111.pdf
N1 - Author contact info:
Thorsten Drautzburg
University of Chicago
E-Mail: tdrautzburg@uchicago.edu
Harald Uhlig
Dept. of Economics
University of Chicago
1126 E 59th Street
Chicago, IL 60637
Tel: 773/702-3702
Fax: 773/702-8490
E-Mail: huhlig@uchicago.edu
AB - We quantify the fiscal multipliers in response to the American Recovery and Reinvestment Act (ARRA) of 2009. We extend the benchmark Smets-Wouters (2007) New Keynesian model, allowing for credit-constrained households, the zero lower bound, government capital and distortionary taxation. The posterior yields modestly positive short-run multipliers around 0.52 and modestly negative long-run multipliers around -0.42. The multiplier is sensitive to the fraction of transfers given to credit-constrained households, the duration of the zero lower bound and the capital. The stimulus results in negative welfare effects for unconstrained agents. The constrained agents gain, if they discount the future substantially.
ER -
TY - JOUR
AU - Bucher-Koenen,Tabea
AU - Lusardi,Annamaria
TI - Financial Literacy and Retirement Planning in Germany
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17110
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17110
L1 - http://www.nber.org/papers/w17110.pdf
N1 - Author contact info:
Tabea Bucher-Koenen
MEA
University of Mannheim
68131 Mannheim, Germany
E-Mail: bucher-koenen@mea.mpisoc.mpg.de
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
AB - We examine financial literacy in Germany using data from the SAVE survey. We find that knowledge of basic financial concepts is lacking among women, the less educated, and those living in East Germany. In particular, those with low education and low income in East Germany have little financial literacy compared to their West German counterparts. Interestingly, there is no gender disparity in financial knowledge in the East. In order to investigate the nexus of causality between financial literacy and retirement planning, we develop an IV strategy by making use of regional variation in the financial knowledge of peers. We find a positive impact of financial knowledge on retirement planning.
ER -
TY - JOUR
AU - Alessie,Rob J.
AU - Rooij,Maarten van
AU - Lusardi,Annamaria
TI - Financial Literacy, Retirement Preparation and Pension Expectations in the Netherlands
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17109
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17109
L1 - http://www.nber.org/papers/w17109.pdf
N1 - Author contact info:
Rob J. Alessie
University of Groningen
Department of Economics
P.O. Box 800
9700 AV Groningen
Tel: +31-50-3637240
E-Mail: r.j.m.alessie@rug.nl
Maarten van Rooij
Dutch Central Bank
P. O. Box 98
1000 AB Amsterdam
The Netherlands
E-Mail: M.C.J.van.Rooij@DNB.NL
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
AB - We present new evidence on financial literacy and retirement preparation in the Netherlands based on two surveys conducted before and after the onset of the financial crisis. We document that while financial knowledge did not increase from 2005 to 2010, significantly more individuals planned for their retirement in 2010. At the same time, employees’ expectations about the level of their pension income are high compared to what retirement plans may realistically provide. However, financially knowledgeable employees report lower expected replacement rates and acknowledge higher levels of uncertainty. Moreover using instrumental variables estimates for financial knowledge, we find a positive effect of financial literacy on retirement preparation. Employing the panel feature of our dataset, we show that financial knowledge has a causal impact on retirement planning. Our findings suggest that the formation of pension expectations might be an important mechanism contributing to the impact of financial literacy on planning.
ER -
TY - JOUR
AU - Lusardi,Annamaria
AU - Mitchell,Olivia S.
TI - Financial Literacy and Retirement Planning in the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17108
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17108
L1 - http://www.nber.org/papers/w17108.pdf
N1 - Author contact info:
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
AB - We examine financial literacy in the United States using the new National Financial Capability Study, wherein we demonstrate that financial literacy is particularly low among the young, women, and the less-educated. Moreover, Hispanics and African-Americans score the least well on financial literacy concepts. Interestingly, all groups rate themselves as rather well-informed about financial matters, notwithstanding their actual performance on the key literacy questions. Finally, we show that people who score higher on the financial literacy questions are also much more likely to plan for retirement, which is likely to leave them better positioned for old-age. Our results will inform those seeking to target financial literacy programs to those in most need.
ER -
TY - JOUR
AU - Lusardi,Annamaria
AU - Mitchell,Olivia S.
TI - Financial Literacy around the World: An Overview
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17107
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17107
L1 - http://www.nber.org/papers/w17107.pdf
N1 - Author contact info:
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
AB - In an increasingly risky and globalized marketplace, people must be able to make well-informed financial decisions. Yet new international research demonstrates that financial illiteracy is widespread when financial markets are well developed as in Germany, the Netherlands, Sweden, Japan, Italy, New Zealand, and the United States, or when they are changing rapidly as in Russia. Further, across these countries, we show that the older population believes itself well informed, even though it is actually less well informed than average. Other common patterns are also evident: women are less financially literate than men and are aware of this shortfall. More educated people are more informed, yet education is far from a perfect proxy for literacy. There are also ethnic/racial and regional differences: city-dwellers in Russia are better informed than their rural counterparts, while in the U.S., African Americans and Hispanics are relatively less financially literate than others. Moreover, the more financially knowledgeable are also those most likely to plan for retirement. In fact, answering one additional financial question correctly is associated with a 3-4 percentage point higher chance of planning for retirement in countries as diverse as Germany, the U.S., Japan, and Sweden; in the Netherlands, it boosts planning by 10 percentage points. Finally, using instrumental variables, we show that these estimates probably underestimate the effects of financial literacy on retirement planning. In sum, around the world, financial literacy is critical to retirement security.
ER -
TY - JOUR
AU - Robinson,James A.
AU - Torvik,Ragnar
TI - Institutional Comparative Statics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17106
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17106
L1 - http://www.nber.org/papers/w17106.pdf
N1 - Author contact info:
James A. Robinson
Harvard University
Department of Government
N309, 1737 Cambridge Street
Cambridge, MA 02138
Tel: 617/496-2839
Fax: 617/495-0438
E-Mail: jrobinson@gov.harvard.edu
Ragnar Torvik
Norwegian University of Science and Technology
Department of Economics
N-7491 Trondheim
Norway
E-Mail: ragnar.torvik@svt.ntnu.no
AB - Why was the Black Death followed by the decline of serfdom in Western Europe but its' intensification in Eastern Europe? What explains why involvement in Atlantic trade in the Early Modern period was positively correlated with economic growth in Britain but negatively correlated in Spain? Why did frontier expansion in the 19th Century Americas go along with economic growth in the United States and economic decline in Latin America? Why do natural resource booms seem to stimulate growth in some countries, but lead to a 'curse' in others, and why does foreign aid sometimes seem to encourage, other times impede economic growth? In this paper we argue that the response of economies to shocks or innovations in economic opportunities depends on the nature of institutions. When institutions are strong, new opportunities or windfalls can have positive effects. But when institutions are weak they can have negative effects. We present a simple model to illustrate how comparative statics are conditional on the nature of institutions and show how this perspective helps to unify a large number of historical episodes and empirical studies.
ER -
TY - JOUR
AU - Baker,Michael
AU - Milligan,Kevin S.
TI - Maternity Leave and Children’s Cognitive and Behavioral Development
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17105
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17105
L1 - http://www.nber.org/papers/w17105.pdf
N1 - Author contact info:
Michael Baker
Department of Economics
University of Toronto
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/978-4138
Fax: 416/978-6713
E-Mail: baker@chass.utoronto.ca
Kevin S. Milligan
Department of Economics
University of British Columbia
#997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-6747
Fax: 604/822-5915
E-Mail: kevin.milligan@ubc.ca
AB - We investigate the impact of maternity leave on the cognitive and behavioral development of children at ages 4 and 5. The impact is identified by legislated increases in the duration of maternity leave in Canada, which significantly increased the amount of maternal care children received in the second half of their first year. We carefully document how other observable inputs to child development vary across cohorts of children exposed to different maternity leave regimes. Our results indicate that maternity leave changes had no positive effect on indices of children’s cognitive and behavioral development. We uncover a small negative impact on PPVT and Who Am I? scores, which suggests the timing of the mother/child separation due to the mother’s return to work may be important.
ER -
TY - JOUR
AU - Ananat,Elizabeth Oltmans
AU - Gassman-Pines,Anna
AU - Francis,Dania V.
AU - Gibson-Davis,Christina M.
TI - Children Left Behind: The Effects of Statewide Job Loss on Student Achievement
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17104
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17104
L1 - http://www.nber.org/papers/w17104.pdf
N1 - Author contact info:
Elizabeth Ananat
Sanford Institute of Public Policy
Duke University
Box 90245
Durham, NC 27708
Tel: 919/613-7302
Fax: 919/681-8288
E-Mail: eoananat@duke.edu
Anna Gassman-Pines
Sanford Building
Duke University
Box 90245
Durham, NC 27708
E-Mail: agassman.pines@duke.edu
Dania V. Francis
Sanford Building
Duke University
Box 90245
Durham, NC 27708
E-Mail: dania.frank@duke.edu
Christina M. Gibson-Davis
Sanford Building
Duke University
Box 90245
Durham, NC 27708
E-Mail: cgibson@duke.edu
AB - Given the magnitude of the recent recession, and the high-stakes testing the U.S. has implemented under the No Child Left Behind Act (NCLB), it is important to understand the effects of large-scale job losses on student achievement. We examine the effects of state-level job losses on fourth- and eighth-grade test scores, using federal Mass Layoff Statistics and 1996-2009 National Assessment of Educational Progress data. Results indicate that job losses decrease scores. Effects are larger for eighth than fourth graders and for math than reading assessments, and are robust to specification checks. Job losses to 1% of a state’s working-age population lead to a .076 standard deviation decrease in the state’s eighth-grade math scores. This result is an order of magnitude larger than those found in previous studies that have compared students whose parents lose employment to otherwise similar students, suggesting that downturns affect all students, not just students who experience parental job loss. Our findings have important implications for accountability schemes: we calculate that a state experiencing one-year job losses to 2% of its workers (a magnitude observed in seven states) likely sees a 16% increase in the share of its schools failing to make Adequate Yearly Progress under NCLB.
ER -
TY - JOUR
AU - Lusardi,Annamaria
TI - Americans' Financial Capability
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17103
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17103
L1 - http://www.nber.org/papers/w17103.pdf
N1 - Author contact info:
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
AB - This paper examines Americans’ financial capability, using data from a new survey. Financial capability is measured in terms of how well people make ends meet, plan ahead, choose and manage financial products, and possess the skills and knowledge to make financial decisions. The findings reported in this work paint a troubling picture of the state of financial capability in the United States. The majority of Americans do not plan for predictable events such as retirement or children’s college education. Most importantly, people do not make provisions for unexpected events and emergencies, leaving themselves and the economy exposed to shocks. To understand financial capability, it is important to look not only at assets but also at debt and debt management, as an increasingly large portion of the population carry debt. In managing debt, Americans engage in behaviors that can generate large expenses, such as sizable interest payments and fees. Moreover, more than one in five Americans has used alternative (and often costly) borrowing methods (payday loans, advances on tax refunds, pawn shops, etc.) in the past five years. The most worrisome finding is that many people do not seem well informed and knowledgeable about their terms of borrowing; a sizeable group does not know the terms of their mortgages or the interest rates they pay on their loans. Finally, the majority of Americans lack basic numeracy and knowledge of fundamental economic principles such as the workings of inflation, risk diversification, and the relationship between asset prices and interest rates.
ER -
TY - JOUR
AU - Ashraf,Quamrul
AU - Gershman,Boris
AU - Howitt,Peter
TI - Banks, Market Organization, and Macroeconomic Performance: An Agent-Based Computational Analysis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17102
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17102
L1 - http://www.nber.org/papers/w17102.pdf
N1 - Author contact info:
Quamrul Ashraf
Williams College
Department of Economics
24 Hopkins Hall Drive
Williamstown, MA 01267
Tel: (413) 597-3051
Fax: (413) 597-4045
E-Mail: Quamrul.H.Ashraf@williams.edu
Boris Gershman
Brown University
Department of Economics
64 Waterman St
Providence, RI 02912
E-Mail: boris_gershman@brown.edu
Peter Howitt
Department of Economics
Brown University, Box B
Providence, RI 02912
Tel: 401/863-2145
Fax: 401/863-1970
E-Mail: peter_howitt@brown.edu
AB - This paper is an exploratory analysis of the role that banks play in supporting the mechanism of exchange. It considers a model economy in which exchange activities are facilitated and coordinated by a self-organizing network of entrepreneurial trading firms. Collectively, these firms play the part of the Walrasian auctioneer, matching buyers with sellers and helping the economy to approximate equilibrium prices that no individual is able to calculate. Banks affect macroeconomic performance in this economy because their lending activities facilitate entry of trading firms and also influence their exit decisions. Both entry and exit have conflicting effects on performance, and we resort to computational analysis to understand how they are resolved. Our analysis sheds new light on the conflict between micro-prudential bank regulation and macroeconomic stability. Specifically, it draws an important distinction between "normal" performance of the economy and "worst-case" scenarios, and shows that micro prudence conflicts with macro stability only in bad times. The analysis also shows that banks provide a "financial stabilizer" that in some respects can more than counteract the more familiar financial accelerator.
ER -
TY - JOUR
AU - Massetti,Emanuele
AU - Mendelsohn,Robert
TI - Estimating Ricardian Models With Panel Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17101
PY - 2011
Y2 - June 2011
UR - http://www.nber.org/papers/w17101
L1 - http://www.nber.org/papers/w17101.pdf
N1 - Author contact info:
Emanuele Massetti
Fondazione Eni Enrico Mattei
C.so Magenta, 63
20123 Milano - Italy
E-Mail: emanuele.massetti@yale.edu
Robert Mendelsohn
School of Forestry & Environmental Studies
Yale University
195 Prospect St.
New Haven, CT 06511
Tel: 203/432-5128
Fax: 203/432-3809
E-Mail: robert.mendelsohn@yale.edu
M3 - presented at "SI 2010 Environmental and Energy Economics", July 29-30, 2010
AB - Many nonmarket valuation models, such as the Ricardian model, have been estimated using cross sectional methods with a single year of data. Although multiple years of data should increase the robustness of such methods, repeated cross sections suggest the results are not stable. We argue that repeated cross sections do not properly specify the model. Panel methods that correctly specify the Ricardian model are stable over time. The results suggest that many cross sectional methods including hedonic studies and travel cost studies could be enhanced using panel data.
ER -
TY - JOUR
AU - Hovhannisyan,Nune
AU - Keller,Wolfgang
TI - International Business Travel: An Engine of Innovation?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17100
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17100
L1 - http://www.nber.org/papers/w17100.pdf
N1 - Author contact info:
Nune Hovhannisyan
Department of Economics, Boulder, CO 80309
E-Mail: Nune.Hovhannisyan@colorado.edu
Wolfgang Keller
Department of Economics
University of Colorado-Boulder
Boulder, CO 80309-0256
Tel: 303/735 5507
Fax: 303/492 8960
E-Mail: Wolfgang.Keller@colorado.edu
AB - While it is well known that managers prefer in-person meetings for negotiating deals and selling their products, face-to-face communication may be particularly important for the transfer of technology because technology is best explained and demonstrated in person. This paper studies the role of short-term cross-border labor movements for innovation by estimating the recent impact of U.S. business travel to foreign countries on their patenting rates. Business travel is shown to have a significant effect up and beyond technology transfer through the channels of international trade and foreign direct investment. On average, a 10% increase in business travel leads to an increase in patenting by about 0.3%. We show that the technological knowledge of each business traveler matters by estimating a higher impact for travelers that originate in U.S. states with substantial innovation, such as California. Moreover, the business traveler effect on innovation also varies across industries. This study provides initial evidence that international air travel may be an important channel through which cross-country income differences can be reduced. We also discuss a number of policy issues in the context of short-term cross-border labor movements.
ER -
TY - JOUR
AU - Washington,Ebonya L.
TI - Do Majority Black Districts Limit Blacks’ Representation? The Case of the 1990 Redistricting
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17099
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17099
L1 - http://www.nber.org/papers/w17099.pdf
N1 - Author contact info:
Ebonya L. Washington
Yale University
Box 8264
37 Hillhouse, Room 36
New Haven, CT 06520
Tel: 203/432-9901
Fax: 203/432-6323
E-Mail: ebonya.washington@yale.edu
AB - Conventional wisdom and empirical academic research conclude that majority Black districts decrease Black representation by increasing conservatism in Congress. However, this research generally suffers from three limitations: 1) too low a level of aggregation 2) lack of a counterfactual and 3) failure to account for the endogeneity of the creation of majority minority districts. I compare congressional delegations of states that during the 1990 redistricting were under greater pressure to create majority minority districts with those under lesser pressure in a difference-in-difference framework. I find no evidence that the creation of majority minority districts leads to more conservative House delegations. In fact point estimates indicate that states that increased their share of majority Black districts saw their delegations grow increasingly liberal. I find similar results for majority Latino districts in the southwest. Thus I find no evidence for the common view that majority minority districts decrease minority representation in Congress.
ER -
TY - JOUR
AU - Alesina,Alberto F.
AU - Giuliano,Paola
AU - Nunn,Nathan
TI - On the Origins of Gender Roles: Women and the Plough
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17098
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17098
L1 - http://www.nber.org/papers/w17098.pdf
N1 - Author contact info:
Alberto F. Alesina
Department of Economics
Harvard University
Littauer Center 210
Cambridge, MA 02138
Tel: 617/495-8388
Fax: 617/495-7730
E-Mail: aalesina@harvard.edu
Paola Giuliano
Anderson School of Management
UCLA
110 Westwood Plaza
C517 Entrepreneurs Hall
Los Angeles, CA 90095-1481
Tel: 310/206-6890
Fax: 310/825-4011
E-Mail: paola.giuliano@anderson.ucla.edu
Nathan Nunn
Department of Economics
Harvard University
1805 Cambridge St
Cambridge, Ma 02138
Tel: 617/496-4958
Fax: 617/495-8570
E-Mail: nnunn@fas.harvard.edu
AB - This paper seeks to better understand the historical origins of current differences in norms and beliefs about the appropriate role of women in society. We test the hypothesis that traditional agricultural practices influenced the historical gender division of labor and the evolution and persistence of gender norms. We find that, consistent with existing hypotheses, the descendants of societies that traditionally practiced plough agriculture, today have lower rates of female participation in the workplace, in politics, and in entrepreneurial activities, as well as a greater prevalence of attitudes favoring gender inequality. We identify the causal impact of traditional plough use by exploiting variation in the historical geo-climatic suitability of the environment for growing crops that differentially benefited from the adoption of the plough. Our IV estimates, based on this variation, support the findings from OLS. To isolate the importance of cultural transmission as a mechanism, we examine female labor force participation of second-generation immigrants living within the US.
ER -
TY - JOUR
AU - Griffin,John D.
AU - Nickerson,David
AU - Wozniak,Abigail K.
TI - Racial Differences in Inequality Aversion: Evidence from Real World Respondents in the Ultimatum Game
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17097
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17097
L1 - http://www.nber.org/papers/w17097.pdf
N1 - Author contact info:
John D. Griffin
Department of Political Science
University of Notre Dame
South Bend, IN 46556
E-Mail: John.Griffin@nd.edu
David Nickerson
Department of Economics
University of Notre Dame
441 Flanner Hall
Notre Dame, IN 46556
Abigail K. Wozniak
Department of Economics
University of Notre Dame
441 Flanner Hall
South Bend, IN 46556
Tel: 574/631-6208
E-Mail: a_wozniak@nd.edu
AB - The distinct historical and cultural experiences of American blacks and whites may influence whether members of those groups perceive a particular exchange as fair. We investigate racial differences in fairness standards using preferences for equal treatment in the ultimatum game, where responders choose to allow a proposed division of a monetary amount or to block it. Although previous research has studied group differences in the ultimatum game, no study has been able to examine these across races in America. We use a sample of over 1600 blacks and whites drawn from the universe of registered voters in three states and merged with information on neighborhood income and racial composition. We experimentally vary proposed divisions as well as the implied race of the ultimatum game proposer. We find no overall racial differences in acceptance rates or aversion to unequal divisions. However, we uncover racial differences in the response to pecuniary returns conditional on inequality of the division. This is driven by the lowest income group in our sample, which represents the 10th percentile of the black income distribution. The racial differences are robust across gender and age groups. We also find that blacks are more sensitive to unfair proposals from other blacks.
ER -
TY - JOUR
AU - Banks,James
AU - Oldfield,Zoe
AU - Smith,James P.
TI - Childhood Health and Differences in Late-Life Health Outcomes Between England and the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17096
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17096
L1 - http://www.nber.org/papers/w17096.pdf
N1 - Author contact info:
James Banks
University College London
E-Mail: j.banks@ucl.ac.uk
Zoe Oldfield
Institute for Fiscal Studies
7 Ridgemount
London, WC1 7AE U.K.
E-Mail: zoe_o@ifs.org.uk
James P. Smith
RAND Corporation
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
Tel: 310-451-6925
E-Mail: smith@rand.org
M3 - presented at "Aging Conference", May 6-7, 2011
AB - In this paper we examine the link between retrospectively reported measures of childhood health and the prevalence of various major and minor diseases at older ages. Our analysis is based on comparable retrospective questionnaires placed in the Health and Retirement Study and the English Longitudinal Study of Ageing – nationally representative surveys of the age 50 plus population in America and England respectively. We show that the origins of poorer adult health among older Americans compared to the English trace right back into the childhood years – the American middle and old-age population report higher rates of specific childhood health conditions than their English counterparts. The transmission into poor health in mid life and older ages of these higher rates of childhood illnesses also appears to be higher in America compared to England. Both factors contribute to higher rates of adult illness in the United States compared to England although even in combination they do not explain the full extent of the country difference in late-life health outcomes.
ER -
TY - JOUR
AU - Henderson,Daniel J.
AU - List,John A.
AU - Millimet,Daniel L.
AU - Parmeter,Christopher F.
AU - Price,Michael K.
TI - Empirical Implementation of Nonparametric First-Price Auction Models
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17095
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17095
L1 - http://www.nber.org/papers/w17095.pdf
N1 - Author contact info:
Daniel Henderson
Dept. of Economics
State University of New York at Binghamton
Binghamton, NY 13902-6000
Tel: 607-777-4480
Fax: 607-777-2681
E-Mail: djhender@binghamton.edu
John List
Department of Economics
University of Chicago
1126 East 59th
Chicago, IL 60637
Tel: 301/405-1288
Fax: 301/314-9091
E-Mail: jlist@uchicago.edu
Daniel Millimet
Southern Methodist University
Department of Economics
Box 0496
Dallas, TX 75275-0496
Tel: 214-768-3269
Fax: 214-768-1821
E-Mail: millimet@mail.smu.edu
Christopher F. Parmeter
University of Miami
E-Mail: cparmeter@bus.miami.edu
Michael Price
Department of Economics
University of Tennessee
515 Stokely Management Center
Knoxville, TN 27996
Tel: 865/974-5672
Fax: 865/974-4601
E-Mail: mprice21@utk.edu
AB - Nonparametric estimators provide a flexible means of uncovering salient features of auction data. Although these estimators are popular in the literature, many key features necessary for proper implementation have yet to be uncovered. Here we provide several suggestions for nonparamteric estimation of first-price auction models. Specifically, we show how to impose monotonicity of the equilibrium bidding strategy; a key property of structural auction models not guaranteed in standard nonparametric estimation. We further develop methods for automatic bandwidth selection. Finally, we discuss how to impose monotonicity in auctions with differering number of bidders, reserve prices, and auction-specific characteristics. Finite sample performance is examined using simulated data as well as experimental auction data.
ER -
TY - JOUR
AU - Jones,Charles I.
TI - Life and Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17094
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17094
L1 - http://www.nber.org/papers/w17094.pdf
N1 - Author contact info:
Charles I. Jones
Graduate School of Business
Stanford University
655 Knight Way
Stanford, CA 94305-4800
Tel: 510/288-8650
Fax: 650/725-0468
E-Mail: chad.jones@stanford.edu
AB - Some technologies save lives — new vaccines, new surgical techniques, safer highways. Others threaten lives — pollution, nuclear accidents, global warming, the rapid global transmission of disease, and bioengineered viruses. How is growth theory altered when technologies involve life and death instead of just higher consumption? This paper shows that taking life into account has first-order consequences. Under standard preferences, the value of life may rise faster than consumption, leading society to value safety over consumption growth. As a result, the optimal rate of consumption growth may be substantially lower than what is feasible, in some cases falling all the way to zero.
ER -
TY - JOUR
AU - Abramitzky,Ran
AU - Lavy,Victor
TI - How Responsive is Investment in Schooling to Changes in Redistribution Policies and in Returns
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17093
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17093
L1 - http://www.nber.org/papers/w17093.pdf
N1 - Author contact info:
Ran Abramitzky
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305
Tel: 650/723-9276
Fax: 650/725-5702
E-Mail: ranabr@stanford.edu
Victor Lavy
Department of Economics
Hebrew University of Jerusalem
Mount Scopus
Jerusalem 91905
ISRAEL
Tel: 972-2-5883245
E-Mail: msvictor@mscc.huji.ac.il
AB - This paper uses an unusual pay reform to test the responsiveness of investment in schooling to changes in redistribution schemes that increase the rate of return to education. We exploit an episode where different Israeli kibbutzim shifted from equal sharing to productivity-based wages in different years and find that students in kibbutzim that reformed earlier invested more in education. This effect is stronger for males and is mainly driven by students whose parents have lower levels of education. Our findings support the prediction that education is highly responsive to changes in the redistribution policy, especially for students from weaker backgrounds.
ER -
TY - JOUR
AU - Burke,Marshall
AU - Dykema,John
AU - Lobell,David
AU - Miguel,Edward
AU - Satyanath,Shanker
TI - Incorporating Climate Uncertainty into Estimates of Climate Change Impacts, with Applications to U.S. and African Agriculture
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17092
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17092
L1 - http://www.nber.org/papers/w17092.pdf
N1 - Author contact info:
Marshall Burke
Department of Agricultural
and Resource Economics
University of California
Berkeley, CA 94720
E-Mail: marshall.burke@berkeley.edu
John Dykema
Harvard University
School of Engineering
and Applied Sciences
12 Oxford Street
Cambridge, MA 02138
E-Mail: dykema@fas.harvard.edu
David Lobell
Stanford University
Department of Environmental Earth System Science
Y2E2 Bldg - MC4205, 473 Via Ortega, room 367
Stanford, CA 94305
E-Mail: dlobell@stanford.edu
Edward Miguel
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720
Tel: 510/642-7162
Fax: 510/642-6615
E-Mail: emiguel@econ.berkeley.edu
Shanker Satyanath
Department of Politics
New York University
19 West 4th Street
New York, NY 10012
E-Mail: shanker.satyanath@nyu.edu
AB - A growing body of economics research projects the effects of global climate change on economic outcomes. Climate scientists often criticize these articles because nearly all ignore the well-established uncertainty in future temperature and rainfall changes, and therefore appear likely to have downward biased standard errors and potentially misleading point estimates. This paper incorporates climate uncertainty into estimates of climate change impacts on U.S. agriculture. Accounting for climate uncertainty leads to a much wider range of projected impacts on agricultural profits, with the 95% confidence interval featuring drops of between 17% to 88%. An application to African agriculture yields similar results.
ER -
TY - JOUR
AU - Antràs,Pol
AU - Foley,C. Fritz
TI - Poultry in Motion: A Study of International Trade Finance Practices
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17091
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17091
L1 - http://www.nber.org/papers/w17091.pdf
N1 - Author contact info:
Pol Antràs
Department of Economics
Harvard University
1805 Cambridge Street
Littauer Center 207
Cambridge, MA 02138
Tel: 617/495-1236
Fax: 617/495-8570
E-Mail: pantras@fas.harvard.edu
C. Fritz Foley
Graduate School of Business Administration
Harvard University
Soldiers Field
Boston, MA 02163
Tel: 617/495-6375
Fax: 617/496-8443
E-Mail: ffoley@hbs.edu
AB - This paper analyzes the financing terms that support international trade and sheds light on how and why these arrangements affect trade. Using detailed transaction level data from a U.S. based exporter of frozen and refrigerated food products, primarily poultry, it begins by describing broad patterns about the use of alternative financing terms. These patterns help discipline a model in which the trade finance mode is shaped by the risk that an importer defaults on an exporter and by the possibility that an exporter does not deliver goods as specified in the contract. The empirical results indicate that transactions are more likely to occur on cash in advance or letter of credit terms when the importer is located in a country with weak contractual enforcement and in a country that is further from the exporter. Letters of credit, however, are rarely used by the exporter. As an importer develops a relationship with the exporter, transactions are less likely to occur on terms that require prepayment. During the recent crisis, the exporter was more likely to demand cash in advance terms when transacting with new customers, and customers that traded on cash in advance terms prior to the crisis disproportionately reduced their purchases. These results can be rationalized by the model whenever (i) misbehavior on the part of the exporter is of little concern to importers, and (ii) local banks in importing countries are typically more effective than the exporter in pursuing financial claims against importers.
ER -
TY - JOUR
AU - Baele,Lieven
AU - Bekaert,Geert
AU - Cho,Seonghoon
AU - Inghelbrecht,Koen
AU - Moreno,Antonio
TI - Macroeconomic Regimes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17090
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17090
L1 - http://www.nber.org/papers/w17090.pdf
N1 - Author contact info:
Lieven Baele
Tilburg University
5000 LE Tilburg
The Netherlands
E-Mail: Lieven.Baele@uvt.nl
Geert Bekaert
Graduate School of Business
Columbia University
3022 Broadway, 411 Uris Hall
New York, NY 10027
Tel: 212/854-9156
Fax: 212/662-8474
E-Mail: gb241@columbia.edu
Seonghoon Cho
School of Economics
Yonsei University
Seoul 120-749, Korea
E-Mail: sc719@yonsei.ac.kr
Koen Inghelbrecht
Department Finance
Faculty of Business Administration
and Public Administration
University College Ghent
Voskenslaan 270
B-9000 Gent, Belgium
E-Mail: Koen.Inghelbrecht@hogent.be
Antonio Moreno
Department of Economics
University of Navarra
E-Mail: antmoreno@unav.es
AB - We estimate a New-Keynesian macro model accommodating regime-switching behavior in monetary policy and in macro shocks. Key to our estimation strategy is the use of survey-based expectations for inflation and output. We identify accommodating monetary policy before 1980, with activist monetary policy prevailing most but not 100% of the time thereafter. Systematic monetary policy switched to the activist regime in the 2000-2005 period through an aggressive lowering of interest rates. Discretionary policy spells became less frequent since 1985, but the Volcker period is identified as a discretionary period. Output shocks shift to the low volatility regime around 1985 whereas inflation shocks do so only around 1990, suggesting active monetary policy may have played role in anchoring inflation expectations. Shocks and policy regimes jointly drive the volatility of the macro variables. We provide new estimates of the onset and demise of the Great Moderation and the relative role played by macro-shocks and monetary policy.
ER -
TY - JOUR
AU - Bui,Sa A.
AU - Craig,Steven G.
AU - Imberman,Scott A.
TI - Is Gifted Education a Bright Idea? Assessing the Impact of Gifted and Talented Programs on Achievement
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17089
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17089
L1 - http://www.nber.org/papers/w17089.pdf
N1 - Author contact info:
Sa Bui
University of Houston
204 McElhinney Hall
Houston, TX 77204-5019
E-Mail: sabui2@mail.uh.edu
Steven G.. Craig
University of Houston
Department of Economics
204 McElhinney Hall
Houston, TX 77204-5019
E-Mail: scraig@uh.edu
Scott A. Imberman
Department of Economics
University of Houston
204 McElhinney Hall
Houston, TX 77204
Tel: 713/743-3839
Fax: 713/743-3798
E-Mail: simberman@uh.edu
AB - In this paper we determine how the receipt of gifted and talented (GT) services affects student outcomes. We identify the causal relationship by exploiting a discontinuity in eligibility requirements and find that for students on the margin there is no discernable impact on achievement even though peers improve substantially. We then use randomized lotteries to examine the impact of attending a GT magnet program relative to GT programs in other schools and find that, despite being exposed to higher quality teachers and peers that are one standard deviation higher achieving, only science achievement improves. We argue that these results are consistent with an invidious comparison model of peer effects offsetting other benefits. Evidence of large reductions in course grades and rank relative to peers in both regression discontinuity and lottery models are consistent with this explanation.
ER -
TY - JOUR
AU - Card,David
AU - Giuliano,Laura
TI - Peer Effects and Multiple Equilibria in the Risky Behavior of Friends
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17088
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17088
L1 - http://www.nber.org/papers/w17088.pdf
N1 - Author contact info:
David Card
Department of Economics
549 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-5222
Fax: 510/643-7042
E-Mail: card@econ.berkeley.edu
Laura Giuliano
Department of Economics
University of Miami
P.O. Box 248126
Coral Gables, FL 33124-6550
Tel: 305-284-1628
E-Mail: l.giuliano@miami.edu
AB - We study social interactions in the risky behavior of best-friend pairs in the National Longitudinal Study of Adolescent Health (Add Health). Focusing on friends who had not yet initiated a particular behavior (sex, smoking, marijuana use, truancy) by the first wave of the survey, we estimate bivariate discrete choice models for their subsequent decisions that include peer effects and unobserved heterogeneity. Social interactions can lead to multiple equilibria in friends’ choices: we consider simple equilibrium selection models as well as partial likelihood models that remain agnostic about the choice of equilibrium. Our identification strategy assumes that there is at least one individual characteristic (e.g., physical development) that does not directly affect a friend’s propensity to engage in a risky activity. Our estimates suggest that patterns of initiation of risky behavior by adolescent friends exhibit significant interaction effects. The likelihood that one friend initiates intercourse within a year of the baseline interview increases by 4 percentage points (on a base of 14%) if the other also initiates intercourse, holding constant family and individual factors. Similar effects are also present for smoking, marijuana use, and truancy. We find larger peer effects for females and for pairs that are more likely to remain best friends after a year. We also find important asymmetries in the strength of the peer effects in non-reciprocated friendships.
ER -
TY - JOUR
AU - Rausch,Sebastian
AU - Metcalf,Gilbert E.
AU - Reilly,John M.
TI - Distributional Impacts of Carbon Pricing: A General Equilibrium Approach with Micro-Data for Households
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17087
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17087
L1 - http://www.nber.org/papers/w17087.pdf
N1 - Author contact info:
Sebastian Rausch
Joint Program on the Science
and Policy of Global Change
Massachusetts Institute of Technology
1 Amherst St. (Bldg. E40)
Cambridge, MA 02139
E-Mail: rausch@mit.edu
Gilbert E. Metcalf
Room 3221
Department of the Treasury
Washington, DC 20220
1500 Pennsylvania Ave., NW
Tel: 202-622-0173
E-Mail: gilbert.metcalf@tufts.edu
John Reilly
Joint Program on the Science
and Policy of Global Change
Massachusetts Institute of Technology
1 Amherst St. (Bldg. E40)
Cambridge, MA 02139
E-Mail: jreilly@mit.edu
AB - Many policies to limit greenhouse gas emissions have at their core efforts to put a price on carbon emissions. Carbon pricing impacts households both by raising the cost of carbon intensive products and by changing factor prices. A complete analysis requires taking both effects into account. The impact of carbon pricing is determined by heterogeneity in household spending patterns across income groups as well as heterogeneity in factor income patterns across income groups. It is also affected by precise formulation of the policy (how is the revenue from carbon pricing distributed) as well as the treatment of other government policies (e.g. the treatment of transfer payments). What is often neglected in analyses of policy is the heterogeneity of impacts across households even within income or regional groups. In this paper, we incorporate 15,588 households from the U.S. Consumer and Expenditure Survey data as individual agents in a comparative-static general equilibrium framework. These households are represented within the MIT USREP model, a detailed general equilibrium model of the U.S. economy. In particular, we categorize households by full household income (factor income as well as transfer income) and apply various measures of lifetime income to distinguish households that are temporarily low-income (e.g., retired households drawing down their financial assets) from permanently low-income households. We also provide detailed within-group distributional measures of burden impacts from various policy scenarios.
ER -
TY - JOUR
AU - Gowrisankaran,Gautam
AU - Reynolds,Stanley S.
AU - Samano,Mario
TI - Intermittency and the Value of Renewable Energy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17086
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17086
L1 - http://www.nber.org/papers/w17086.pdf
N1 - Author contact info:
Gautam Gowrisankaran
Professor of Economics
Department of Economics
University of Arizona
P.O. Box 210108
Tucson, AZ 85721-0108
Tel: 520/621-2529
Fax: 520/621-8450
E-Mail: gowrisankaran@eller.arizona.edu
Stanley Reynolds
Professor of Economics
Department of Economics
P.O. Box 210108
Tucson, AZ 85721
E-Mail: reynolds@eller.arizona.edu
Mario Samano
Department of Economics
University of Arizona
P.O. Box 210108
Tucson, AZ 85721
E-Mail: msamano@email.arizona.edu
AB - This paper develops an empirical approach to estimate the equilibrium value of intermittent renewable energy. We model an electricity system operator who optimizes the amount of generation capacity, operating reserves, and demand curtailment potentially in the presence of large-scale solar facilities. We use generator characteristics, solar output, demand and weather forecast data to estimate parameters for southeastern Arizona. The deadweight loss of a 20% solar mandate is 79% of its $184/MWh average cost. Unforecastable intermittency accounts for $12.5/MWh. At a $21/ton social cost of CO2 this mandate is welfare neutral if solar capacity costs decrease from $5/W to $1.38/W.
ER -
TY - JOUR
AU - DeCicca,Philip
AU - Smith,Justin D.
TI - The Long-Run Impacts of Early Childhood Education: Evidence From a Failed Policy Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17085
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17085
L1 - http://www.nber.org/papers/w17085.pdf
N1 - Author contact info:
Philip DeCicca
Department of Economics
422 Kenneth Taylor Hall
McMaster University
Hamilton, ON L8S 4M4
CANADA
Tel: 905/525-9140
E-Mail: decicca@mcmaster.ca
Justin D. Smith
Department of Economics
Wilfrid Laurier University
P3090, 75 University Ave. W.
Waterloo, Ontario, Canada
N2L 3C5
E-Mail: jusmith@wlu.ca
AB - We investigate short and long-term effects of early childhood education using variation created by a unique policy experiment in British Columbia, Canada. Our findings imply starting Kindergarten one year late substantially reduces the probability of repeating the third grade, and meaningfully increases in tenth grade math and reading scores. Effects are highest for low income students and males. Estimates suggest that entering kindergarten early may have a detrimental effect on future outcomes.
ER -
TY - JOUR
AU - Galí,Jordi
AU - Smets,Frank
AU - Wouters,Rafael
TI - Unemployment in an Estimated New Keynesian Model
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17084
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17084
L1 - http://www.nber.org/papers/w17084.pdf
N1 - Author contact info:
Jordi Gali
Centre de Recerca en Economia Internacional (CREI)
Ramon Trias Fargas 25
08005 Barcelona
SPAIN
Tel: 011-34-93-5422754
Fax: 011-34-93-5421860
E-Mail: jgali@crei.cat
Frank Smets
European Central Bank
Postfach 16 03 19
D-60311 Frankfurt
GERMANY
E-Mail: frank.smets@ecb.int
Rafael Wouters
National Bank of Belgium
B-1000 Brussels
BELGIUM
E-Mail: rafael.wouters@nbb.be
M3 - presented at "26th Annual Conference on Macroeconomics", April 8-9, 2011
AB - We reformulate the Smets-Wouters (2007) framework by embedding the theory of unemployment proposed in Galí (2011a,b). We estimate the resulting model using postwar U.S. data, while treating the unemployment rate as an additional observable variable. Our approach overcomes the lack of identification of wage markup and labor supply shocks highlighted by Chari, Kehoe and McGrattan (2008) in their criticism of New Keynesian models, and allows us to estimate a "correct" measure of the output gap. In addition, the estimated model can be used to analyze the sources of unemployment fluctuations.
ER -
TY - JOUR
AU - Heutel,Garth
TI - Optimal Policy Instruments for Externality-Producing Durable Goods Under Time Inconsistency
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17083
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17083
L1 - http://www.nber.org/papers/w17083.pdf
N1 - Author contact info:
Garth Heutel
Bryan 466, Department of Economics
University of North Carolina at Greensboro
P. O. Box 26170
Greensboro, NC 27402
Tel: 336/334-4872
Fax: 336/334-5580
E-Mail: gaheutel@uncg.edu
AB - When consumers exhibit present bias and are time-inconsistent, the standard solution to market failures caused by externalities—Pigouvian pricing—is suboptimal. I investigate policies aimed at externalities for time-inconsistent consumers. Welfare-maximizing policy in this case includes an instrument to correct the externality and an instrument to correct the present bias. Either instrument can be an incentive-based policy or a command-and-control policy. Calibrated to the US automobile market, simulation results from a model with time-inconsistent consumers suggest that the second-best gasoline tax is 18%–30% higher than marginal external damages. These simulations also suggest that social welfare is maximized with a gasoline tax set about equal to marginal external damages and a fuel economy tax that increases the price of an average non-hybrid car by about $750–$2200 relative to the price of an average hybrid car.
ER -
TY - JOUR
AU - Ponds,Eduard
AU - Severinson,Clara
AU - Yermo,Juan
TI - Funding in Public Sector Pension Plans - International Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17082
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17082
L1 - http://www.nber.org/papers/w17082.pdf
N1 - Author contact info:
Eduard Ponds
Tilburg University
Economics of Collective Pension Plans
The Netherlands
E-Mail: eduard.ponds@apg-am.nl
Clara Severinson
OECD Financial Affairs Division
2 Rue André Pascal
75016 Paris FRANCE
E-Mail: Clara.SEVERINSON@oecd.org
Juan Yermo
OECD
Directorate For Financial and Enterprise Affaires
2, rue André Pascal
75016 Paris
E-Mail: Juan.YERMO@oecd.org
M3 - presented at "State and Local Pensions Conference", August 19-20, 2010
AB - Most countries have separate pension plan for public sector employees. The future fiscal burden of these plans can be substantial as the government usually is the largest employer, pension promises in the public sector tend to be relatively generous, and future payments have to be paid out directly from government revenues (pay-as-you-go) or by funded plans (pension funds) which tend to be underfunded. The valuation and disclosure of these promises in some countries lacks transparency, which may be hiding potentially huge fiscal liabilities that are being passed on to future generations of workers.
In order to arrive at a fair comparison between countries regarding the fiscal burden of their DB public sector pension plans, this paper gathers more evidence on public sector pension plans regarding the type of pension promise and quantifies the future tax burden related to these pension promises. The reported liabilities are recalculated using both a fair value approach (local market discount rates) and a common, fixed discount rate across all countries which reflects projected growth in national income. We also estimate for a number of plans from a sample of OECD countries the size of the net unfunded liabilities in fair value terms as of the end of 2008. This fiscal burden can also be interpreted as the implicit pension debt in fair value terms.
ER -
TY - JOUR
AU - Cawley,John
AU - Ruhm,Christopher
TI - The Economics of Risky Health Behaviors
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17081
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17081
L1 - http://www.nber.org/papers/w17081.pdf
N1 - Author contact info:
John Cawley
3M24 MVR Hall
Department of Policy Analysis and Management
and Department of Economics
Cornell University
Ithaca, NY 14853
Tel: 607/255-0952
Fax: 607/255-4071
E-Mail: jhc38@cornell.edu
Christopher J. Ruhm
Frank Batten School of
Leadership and Public Policy
University of Virginia
235 McCormick Rd.
P.O. Box 400893
Charlottesville, VA 22904-40893
Tel: 434-243-3729
E-Mail: ruhm@virginia.edu
AB - Risky health behaviors such as smoking, drinking alcohol, drug use, unprotected sex, and poor diets and sedentary lifestyles (leading to obesity) are a major source of preventable deaths. This chapter overviews the theoretical frameworks for, and empirical evidence on, the economics of risky health behaviors. It describes traditional economic approaches emphasizing utility maximization that, under certain assumptions, result in Pareto-optimal outcomes and a limited role for policy interventions. It also details nontraditional models (e.g. involving hyperbolic time discounting or bounded rationality) that even without market imperfections can result in suboptimal outcomes for which government intervention has greater potential to increase social welfare. The chapter summarizes the literature on the consequences of risky health behaviors for economic outcomes such as medical care costs, educational attainment, employment, wages, and crime. It also reviews the research on policies and strategies with the potential to modify risky health behaviors, such as taxes or subsidies, cash incentives, restrictions on purchase and use, providing information and restricting advertising. The chapter concludes with suggestions for future research.
ER -
TY - JOUR
AU - Boersch-Supan,Axel H.
AU - Juerges,Hendrik
TI - Disability, Pension Reform and Early Retirement in Germany
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17079
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17079
L1 - http://www.nber.org/papers/w17079.pdf
N1 - Author contact info:
Axel H. Boersch-Supan
Munich Center for the Economics of Aging
Max Planck Institute
for Social Law and Social Policy
Amalienstrasse 33
80779 Munich
GERMANY
Tel: +49 (89) 3860-2355
Fax: 49 (89) 3860-2390
E-Mail: axel@boersch-supan.de
Hendrik Juerges
Schumpeter School of Business and Economics
University of Wuppertal
Rainer-Gruenter-Str. 21 [FN.01]
42119 Wuppertal
GERMANY
Tel: +49-621-181-3519
Fax: +49-621-181-1863
E-Mail: juerges@uni-wuppertal.de
M3 - presented at "International Social Security Conference", May 2, 2011
AB - The aim of this paper is to describe for (West) Germany the historical relationship between health and disability on the one hand and old-age labor force participation or early retirement on the other hand. We explore how both are linked with various pension reforms. To put the historical developments into context, the paper first describes the most salient features and reforms of the pension system since the 1960s. Then we show how mortality, health and labor force participation of the elderly have changed since the 1970. While mortality (as our main measure of health) has continuously decreased and population health improved, labor force participation has also decreased, which is counterintuitive. We then look at a number of specific pension reforms in the 1970s and 1980s and show that increasing or decreasing the generosity of the pension system has had the expected large effects on old-age labor force participation. Finally, we explore the possible link between early childhood environment and early retirement by analyzing the retirement behavior of cohorts born during World War I, a period of harsh living conditions among the civilian population in Germany. Our data show higher early retirement rates among those cohorts, presumably because those cohorts still suffer from worse health on average many decades after their birth.
ER -
TY - JOUR
AU - Acemoglu,Daron
AU - Jackson,Matthew O.
TI - History, Expectations, and Leadership in the Evolution of Social Norms
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17066
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17066
L1 - http://www.nber.org/papers/w17066.pdf
N1 - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu
Matthew Jackson
Department of Economics
Stanford University
Stanford, CA 94305-6072
Tel: 650 723 3544
E-Mail: jacksonm@stanford.edu
AB - We study the evolution of the social norm of “cooperation” in a dynamic environment. Each agent lives for two periods and interacts with agents from the previous and next generations via a coordination game. Social norms emerge as patterns of behavior that are stable in part due to agents’ interpretations of private information about the past, which are influenced by occasional past behaviors that are commonly observed. We first characterize the (extreme) cases under which history completely drives equilibrium play, leading to a social norm of high or low cooperation. In intermediate cases, the impact of history is potentially countered by occasional “prominent” agents, whose actions are visible by all future agents, and who can leverage their greater visibility to influence expectations of future agents and overturn social norms of low cooperation. We also show that in equilibria not completely driven by history, there is a pattern of “reversion” whereby play starting with high (low) cooperation reverts toward lower (higher) cooperation.
ER -
TY - JOUR
AU - Orphanides,Athanasios
AU - Williams,John
TI - Monetary Policy Mistakes and the Evolution of Inflation Expectations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17080
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17080
L1 - http://www.nber.org/papers/w17080.pdf
N1 - Author contact info:
Athanasios Orphanides
Central Bank of Cyprus
80 Kennedy Avenue
1076 Nicosia, Cyprus
E-Mail: athanasios.orphanides@gmail.com
John Williams
Federal Reserve Bank of San Francisco
Executive Offices
101 Market St.
San Francisco, CA 94105
Tel: (415) 974-2121
E-Mail: john.c.williams@sf.frb.org
M3 - presented at "The Great Inflation Conference", September 25-27, 2008
AB - What monetary policy framework, if adopted by the Federal Reserve, would have avoided the Great Inflation of the 1960s and 1970s? We use counterfactual simulations of an estimated model of the U.S. economy to evaluate alternative monetary policy strategies. We show that policies constructed using modern optimal control techniques aimed at stabilizing inflation, economic activity, and interest rates would have succeeded in achieving a high degree of economic stability as well as price stability only if the Federal Reserve had possessed excellent information regarding the structure of the economy or if it had acted as if it placed relatively low weight on stabilizing the real economy. Neither condition held true. We document that policymakers at the time both had an overly optimistic view of the natural rate of unemployment and put a high priority on achieving full employment. We show that in the presence of realistic informational imperfections and with an emphasis on stabilizing economic activity, an optimal control approach would have failed to keep inflation expectations well anchored, resulting in high and highly volatile inflation during the 1970s. Finally, we show that a strategy of following a robust first-difference policy rule would have been highly effective at stabilizing inflation and unemployment in the presence of informational imperfections. This robust monetary policy rule yields simulated outcomes that are close to those seen during the period of the Great Moderation starting in the mid-1980s.
ER -
TY - JOUR
AU - Lusardi,Annamaria
AU - Mitchell,Olivia S.
TI - Financial Literacy and Planning: Implications for Retirement Wellbeing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17078
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17078
L1 - http://www.nber.org/papers/w17078.pdf
N1 - Author contact info:
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
AB - Relatively little is known about why people fail to plan for retirement and whether planning and information costs might affect retirement saving patterns. This paper reports on a purpose-built survey module on planning and financial literacy for the Health and Retirement Study which measures how people make financial plans, collect the information needed to make these plans, and implement the plans. We show that financial illiteracy is widespread among older Americans, particularly women, minorities, and the least educated. We also find that the financially savvy are more likely to plan and to succeed in their planning, and they rely on formal methods such as retirement calculators, retirement seminars, and financial experts, instead of family/relatives or co-workers. These results have implications for targeted financial education efforts.
ER -
TY - JOUR
AU - Lusardi,Annamaria
AU - Mitchell,Olivia S.
TI - The Outlook for Financial Literacy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17077
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17077
L1 - http://www.nber.org/papers/w17077.pdf
N1 - Author contact info:
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
AB - As the world becomes more financially integrated and complex, average individuals and their families are increasingly faced with making highly sophisticated and all-too-often irreversible financial decisions. Nowhere is this more evident than with regard to retirement decision-making. Indeed, the global financial crisis suggests that poor financial decision-making can have substantial costs not only for individuals but also society at large. This paper focuses on key lessons for financial decision-making in the wake of that crisis, exploring how financial literacy can enhance peoples’ skills and abilities to make more informed economic choices.
ER -
TY - JOUR
AU - Igan,Deniz
AU - Mishra,Prachi
AU - Tressel,Thierry
TI - A Fistful of Dollars: Lobbying and the Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17076
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17076
L1 - http://www.nber.org/papers/w17076.pdf
N1 - Author contact info:
Deniz Igan
International Monetary Fund
Research Department, HQ1-9-700
700 19th St NW
Washington, DC
20431
Tel: 202-623-4743
E-Mail: digan@imf.org
Prachi Mishra
International Monetary Fund
Research Department, HQ1-9-718
700, 19th Street NW
Washington DC
20431
Tel: 202-623-9409
Fax: 202-589-9409
E-Mail: pmishra@imf.org
Thierry Tressel
International Monetary Fund
European Department, HQ1-9-302,
700, 19th Street NW
Washington DC
20431
E-Mail: ttressel@imf.org
M3 - presented at "26th Annual Conference on Macroeconomics", April 8-9, 2011
AB - Has lobbying by financial institutions contributed to the financial crisis? This paper uses detailed information on financial institutions’ lobbying and mortgage lending activities to answer this question. We find that lobbying was associated with more risk-taking during 2000-07 and with worse outcomes in 2008. In particular, lenders lobbying more intensively on issues related to mortgage lending and securitization (i) originated mortgages with higher loan-to-income ratios, (ii) securitized a faster growing proportion of their loans, and (iii) had faster growing originations of mortgages. Moreover, delinquency rates in 2008 were higher in areas where lobbying lenders’ mortgage lending grew faster. These lenders also experienced negative abnormal stock returns during the rescue of Bear Stearns and the collapse of Lehman Brothers, but positive abnormal returns when the bailout was announced. Finally, we find a higher bailout probability for lobbying lenders. These findings suggest that lending by politically active lenders played a role in accumulation of risks and thus contributed to the financial crisis.
ER -
TY - JOUR
AU - Galor,Oded
AU - Michalopoulos,Stelios
TI - Evolution and the Growth Process: Natural Selection of Entrepreneurial Traits
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17075
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17075
L1 - http://www.nber.org/papers/w17075.pdf
N1 - Author contact info:
Oded Galor
Department of Economics
Brown University
Box B
Providence, RI 02912
Tel: 401/863-2117
Fax: 401/863-1970
E-Mail: oded_galor@brown.edu
Stelios Michalopoulos
Brown University
Department of Economics
64 Waterman Street
Providence, RI 02912
Tel: 401/863-2506
Fax: 401/863-1970
E-Mail: smichalo@brown.edu
AB - This research suggests that a Darwinian evolution of entrepreneurial spirit played a significant role in the process of economic development and the dynamics of inequality within and across societies. The study argues that entrepreneurial spirit evolved non-monotonically in the course of human history. In early stages of development, risk-tolerant, growth promoting traits generated an evolutionary advantage and their increased representation accelerated the pace of technological progress and the process of economic development. In mature stages of development, however, risk-averse traits gained an evolutionary advantage, diminishing the growth potential of advanced economies and contributing to convergence in economic growth across countries.
ER -
TY - JOUR
AU - Edwards,Sebastian
TI - Exchange Rates in Emerging Countries: Eleven Empirical Regularities from Latin America and East Asia
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17074
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17074
L1 - http://www.nber.org/papers/w17074.pdf
N1 - Author contact info:
Sebastian Edwards
UCLA Anderson Graduate School of Business
110 Westwood Plaza, Suite C508
Box 951481
Los Angeles, CA 90095-1481
Tel: 310/206-6797
Fax: 310/206-5825
E-Mail: sebastian.edwards@anderson.ucla.edu
AB - In this paper I discuss some of the most important lessons on exchange rate policies in emerging markets during the last 35 years. The analysis is undertaken from the perspective of both the Latin American and East Asian nations. Some of the topics addressed include: the relationship between exchange rate regimes and growth, the costs of currency crises, the merits of “dollarization,” the relation between exchange rates and macroeconomic stability, monetary independence under alternative exchange rate arrangements, and the effects of the recent global “currency wars” on exchange rates in commodity exporters.
ER -
TY - JOUR
AU - Rose,Andrew K.
AU - Wieladek,Tomasz
TI - Financial Protectionism: the First Tests
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17073
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17073
L1 - http://www.nber.org/papers/w17073.pdf
N1 - Author contact info:
Andrew K. Rose
Haas School of Business Administration
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-6609
Fax: 510/642-4700
E-Mail: arose@haas.berkeley.edu
Tomasz Wieladek
Economics Department
London Business School
Sussex Place
London NW1 4SA
England
E-Mail: twieladek@london.edu
AB - We provide the first empirical tests for financial protectionism, defined as a nationalistic change in banks’ lending behaviour, as the result of public intervention, which leads domestic banks either to lend less or at higher interest rates to foreigners. We use a bank-level panel data set spanning all British and foreign banks providing loans within the United Kingdom between 1997Q3 and 2010Q1. During this time, a number of banks were nationalised, privatised, given unusual access to loan or credit guarantees, or received capital injections. We use standard empirical panel-data techniques to study the “loan mix,” domestic (British) loans of a bank expressed as a fraction of its total loan activity. We also study effective short-term interest rates, though our data set here is much smaller. We examine the loan mix for both British and foreign banks, both before and after unusual public interventions such as nationalisations and public capital injections. We find strong evidence of financial protectionism. After nationalisations, foreign banks reduced the fraction of loans going to the UK by about eleven percentage points and increased their effective interest rates by about 70 basis points. By way of contrast, nationalised British banks did not significantly change either their loan mix or effective interest rates. Succinctly, foreign nationalised banks seem to have engaged in financial protectionism, while British nationalised banks have not.
ER -
TY - JOUR
AU - Lusardi,Annamaria
AU - Schneider,Daniel J.
AU - Tufano,Peter
TI - Financially Fragile Households: Evidence and Implications
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17072
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17072
L1 - http://www.nber.org/papers/w17072.pdf
N1 - Author contact info:
Annamaria Lusardi
The George Washington University
School of Business
2201 G Street, NW
Duques Hall, Suite 450E
Washington, DC 20052
Tel: 202-994-8410
E-Mail: alusardi@gwu.edu
Daniel J. Schneider
Princeton University
Department of Sociology
Office of Population Research
Princeton, NJ 08544
E-Mail: djschnei@princeton.edu
Peter Tufano
Peter Moores Dean
University of Oxford
Saïd Business School
Park End Street
Oxford OX1 1HP UK
Tel: +1 44(0) 1865 288 812
E-Mail: peter.tufano@sbs.ox.ac.uk
AB - This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. Using data from the 2009 TNS Global Economic Crisis survey, we document widespread financial weakness in the United States: Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans. If we consider the respondents who report being certain or probably not able to cope with an ordinary financial shock of this size, we find that nearly half of Americans are financially fragile. While financial fragility is more severe among those with low educational attainment and no financial education, families with children, those who suffered large wealth losses, and those who are unemployed, a sizable fraction of seemingly “middle class” Americans also judge themselves to be financially fragile. We examine the coping methods people use to deal with shocks. While savings is used most often, relying on family and friends, using formal and alternative credit, increasing work hours, and selling items are also used frequently to deal with emergencies, especially for some subgroups. Household finance researchers must look beyond precautionary savings to understand how families cope with risk. We also find evidence of a “pecking order” of coping methods in which savings appears to be first in the ordering. Finally, the paper compares the levels of financial fragility and methods of coping among eight industrialized countries. While there are differences in coping ability across countries, there is general evidence of a consistent ordering of coping methods
ER -
TY - JOUR
AU - Justiniano,Alejandro
AU - Primiceri,Giorgio E.
AU - Tambalotti,Andrea
TI - Is there a trade-off between inflation and output stabilization?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17071
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17071
L1 - http://www.nber.org/papers/w17071.pdf
N1 - Author contact info:
Alejandro Justiniano
Economic Research Department
Federal Reserve Bank of Chicago
230 S. LaSalle Street
Chicago, IL 60604
Tel: 312/322-5900
E-Mail: ajustiniano@frbchi.org
Giorgio Primiceri
Department of Economics
Northwestern University
318 Andersen Hall
2001 Sheridan Road
Evanston, IL 60208-2600
Tel: 847/491-5395
Fax: 847/491-7001
E-Mail: g-primiceri@northwestern.edu
Andrea Tambalotti
Federal Reserve Bank of New York
33 Liberty Street, 3rd Floor
New York, NY 10045
E-Mail: a.tambalotti@gmail.com
AB - Not in an estimated DSGE model of the US economy, once we account for the fact that most of the high-frequency volatility in wages appears to be due to noise, rather than to variation in workers' preferences or market power.
ER -
TY - JOUR
AU - Garthwaite,Craig L.
TI - The Doctor Might See You Now: The Supply Side Effects of Public Health Insurance Expansions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17070
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17070
L1 - http://www.nber.org/papers/w17070.pdf
N1 - Author contact info:
Craig Garthwaite
Department of Management and Strategy
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-2509
Fax: 847/467-1777
E-Mail: c-garthwaite@kellogg.northwestern.edu
AB - In the United States, public health insurance programs cover over 90 million individuals. Changes in the scope of these programs, such as the Medicaid expansions under the recently passed Patient Protection and Affordable Care Act, may have large effects on physician behavior. This study finds that following the implementation of the State Children’s Health Insurance Program, physicians decreased the number of hours spent with patients, but increased their participation in the expanded program. Suggestive evidence is found that this decrease in hours was a result of shorter office visits. These findings are consistent with the predictions from a mixed-economy model of physician behavior with public and private payers and also provide evidence of crowd out resulting from the creation of SCHIP.
ER -
TY - JOUR
AU - Cataife,Guido
AU - Courtemanche,Charles J.
TI - Is Universal Health Care in Brazil Really Universal?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17069
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17069
L1 - http://www.nber.org/papers/w17069.pdf
N1 - Author contact info:
Guido Cataife
ICF International
3 Corporate Square NE Suite 370
Atlanta, GA 30329
E-Mail: gcataife@icfi.com
Charles J. Courtemanche
University of Louisville
College of Business
Department of Economics
Louisville, KY 40292
Tel: 502-852-4854
Fax: 502-852-7672
E-Mail: cjcour02@louisville.edu
AB - Since Brazil's adoption of a universal health care policy in 1988, the country's health care has been delivered by a mix of private providers and free public providers. We examine whether income-based disparities in medical care usage still exist after the development of the public network using a nationally representative sample of over 46,000 Brazilians from 2003. We find robust evidence of a positive association between income and doctor visits, private doctor visits, and private medical expenditures. Interestingly, we also find a pro-rich disparity in public doctor visits that disappears after including local area fixed effects to account for variation in availability and quality of medical services across localities. We then estimate the income elasticity of private medical expenditures to be well below one, suggesting that private care remains a necessity despite the availability of free public care. These results suggest that the public health care system in Brazil is not effectively reaching the segments of the population that need it most.
ER -
TY - JOUR
AU - Dave,Dhaval M.
AU - Tennant,Jennifer
AU - Colman,Gregory J.
TI - Isolating the Effect of Major Depression on Obesity: Role of Selection Bias
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17068
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17068
L1 - http://www.nber.org/papers/w17068.pdf
N1 - Author contact info:
Dhaval M. Dave
Bentley University
Department of Economics
175 Forest Street, AAC 195
Waltham, MA 02452-4705
Tel: 212/817-7955
Fax: 212/817-1597
E-Mail: ddave@bentley.edu
Jennifer Tennant
Cornell University
Department of Policy Analysis and Management
292 Martha Van Rensselaer Hall
Ithaca, NY 14853
E-Mail: jrt229@cornell.edu
Gregory J. Colman
Pace University
Department of Economics
41 Park Row, 11th Floor
New York, NY 10038
Tel: 212/346-1102
E-Mail: gcolman@pace.edu
AB - There is suggestive evidence that rates of major depression have risen markedly in the U.S. concurrent with the rise in obesity. The economic burden of depression, about $100 billion annually, is under-estimated if depression has a positive causal impact on obesity. If depression plays a causal role in increasing the prevalence of obesity, then policy interventions aimed at promoting mental health may also have the indirect benefits of promoting a healthy bodyweight. However, virtually the entire existing literature on the connection between the two conditions has examined merely whether they are significantly correlated, sometimes holding constant a limited set of demographic factors. This study utilizes multiple large-scale nationally-representative datasets to assess whether, and the extent to which, the positive association reflects a causal link from major depression to higher BMI and obesity. While contemporaneous effects are considered, the study primarily focuses on the effects of past and lifetime depression to bypass reverse causality and further assess the role of non-random selection on unobservable factors. There are expectedly no significant or substantial effects of current depression on BMI or overweight/obesity, given that BMI is a stock measure that changes relatively slowly over time. Results are also not supportive of a causal interpretation among males. However, among females, estimates indicate that past or lifetime diagnosis of major depression raises the probability of being overweight or obese by about seven percentage points. Results also suggest that this effect appears to plausibly operate through shifts in food consumption and physical activity. We estimate that this higher risk of overweight and obesity among females could potentially add about 10% (or $9.7 billion) to the estimated economic burden of depression.
ER -
TY - JOUR
AU - Handbury,Jessie
AU - Weinstein,David E.
TI - Is New Economic Geography Right? Evidence from Price Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17067
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17067
L1 - http://www.nber.org/papers/w17067.pdf
N1 - Author contact info:
Jessie Handbury
Columbia University, Department of Economics
420 W. 118th Street
MC 3308
New York, NY 10027
E-Mail: jhh2002@columbia.edu
David Weinstein
Columbia University, Department of Economics
420 W. 118th Street
MC 3308
New York, NY 10027
Tel: 212/854-6880
Fax: 212/854-8059
E-Mail: dew35@columbia.edu
AB - The agglomeration force behind the New Economic Geography literature initiated by Krugman is based on the notion that larger markets should have a lower variety adjusted price index. Despite his Nobel Prize, there have been no tests of this idea. This paper represents the first such test. Using a rich dataset covering 10-20 million purchases of grocery items, we find that after controlling for store and shopping effects: 1) Aggregate grocery prices are lower in larger cities; 2) Residents of larger cities have access to substantially more varieties than residents of smaller cities; and 3) These forces combine to substantially lower variety adjusted prices in large cities. In short, Krugman was right.
ER -
TY - JOUR
AU - Mayer,Christopher J.
AU - Morrison,Edward
AU - Piskorski,Tomasz
AU - Gupta,Arpit
TI - Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17065
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17065
L1 - http://www.nber.org/papers/w17065.pdf
N1 - Author contact info:
Christopher J. Mayer
Columbia Business School
3022 Broadway, Uris Hall #805
New York, NY 10027
Tel: 212/854-4221
Fax: 212-932-0545
E-Mail: cm310@columbia.edu
Edward Morrison
Columbia Law School
Greene Hall, Room 819
435 W. 116th Street
New York, NY 10027
E-Mail: emorri@law.columbia.edu
Tomasz Piskorski
Columbia Business School
3022 Broadway, Uris Hall 810
New York, NY 10027
Tel: 212-854-4655
E-Mail: tp2252@columbia.edu
Arpit Gupta
Columbia Law School
Greene Hall
435 W. 116th Street
New York, NY 10027
E-Mail: ag2968@columbia.edu
AB - We investigate whether homeowners respond strategically to news of mortgage modification programs. We exploit plausibly exogenous variation in modification policy induced by U.S. state government lawsuits against Countrywide Financial Corporation, which agreed to offer modifications to seriously delinquent borrowers with subprime mortgages throughout the country. Using a difference-in-difference framework, we find that Countrywide’s relative delinquency rate increased thirteen percent per month immediately after the program’s announcement. The borrowers whose estimated default rates increased the most in response to the program were those who appear to have been the least likely to default otherwise, including those with substantial liquidity available through credit cards and relatively low combined loan-to-value ratios. These results suggest that strategic behavior should be an important consideration in designing mortgage modification programs.
ER -
TY - JOUR
AU - Cole,Harold L.
AU - Kubler,Felix
TI - Recursive Contracts, Lotteries and Weakly Concave Pareto Sets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17064
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17064
L1 - http://www.nber.org/papers/w17064.pdf
N1 - Author contact info:
Harold L. Cole
Economics Department
University of Pennsylvania
3718 Locust Walk
160 McNeil Building
Philadelphia, PA 19104
Tel: 215-898-7788
E-Mail: colehl@sas.upenn.edu
Felix Kubler
University of Zurich
Plattenstrasse 32
CH-8032 Zurich
Switzerland
E-Mail: fkubler@gmail.com
AB - Marcet and Marimon (1994, revised 1998, revised 2011) developed a recursive saddle point method which can be used to solve dynamic contracting problems that include participation, enforcement and incentive constraints. Their method uses a recursive multiplier to capture implicit prior promises to the agent(s) that were made in order to satisfy earlier instances of these constraints. As a result, their method relies on the invertibility of the derivative of the Pareto frontier and cannot be applied to problems for which this frontier is not strictly concave. In this paper we show how one can extend their method to a weakly concave Pareto frontier by expanding the state space to include the realizations of an end of period lottery over the extreme points of a flat region of the Pareto frontier. With this expansion the basic insight of Marcet and Marimon goes through – one can make the problem recursive in the Lagrangian multiplier which yields significant computational advantages over the conventional approach of using utility as the state variable. The case of a weakly concave Pareto frontier arises naturally in applications where the principal's choice set is not convex but where randomization is possible.
ER -
TY - JOUR
AU - Bachmann,Rüdiger
AU - Sims,Eric R.
TI - Confidence and the Transmission of Government Spending Shocks
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17063
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17063
L1 - http://www.nber.org/papers/w17063.pdf
N1 - Author contact info:
Ruediger Bachmann
Department of Economics
University of Michigan
Lorch Hall 335 A
Ann Arbor, MI 48109-1220
Tel: +1 (734) 764-0241
E-Mail: rudib@umich.edu
Eric R. Sims
Department of Economics
University of Notre Dame
723 Flanner Hall
South Bend, IN 46556
Tel: 574/631-6309
Fax: 574/631-4783
E-Mail: esims1@nd.edu
AB - There seems to be a widespread belief among economists, policy-makers, and members of the media that the "confidence'" of households and businesses is a critical component in the transmission of fiscal policy shocks into economic activity. We take this proposition to the data using standard structural VARs with government spending and aggregate output augmented to include empirical measures of consumer or business confidence. We also estimate non-linear VAR specifications to allow for differential impacts of government spending in "normal'' times versus recessions. In normal times confidence does not react significantly to unexpected increases in government spending and spending multipliers are in the neighborhood of one; during recessions confidence rises and spending multipliers are significantly larger. We then quantify the importance of the systematic response of confidence to spending shocks for the spending multiplier and find that, in normal times, confidence is irrelevant for the transmission of government spending shocks to output, but during periods of economic slack it is important. We argue and present evidence that it is not confidence per se – in the sense of pure sentiment – that matters for the transmission of spending shocks during downturns, but rather that the composition of spending during a downtown is different. In particular, spending shocks during downturns predict future productivity improvements through a persistent increase in government investment relative to consumption, which is in turn reflected in higher measured confidence.
ER -
TY - JOUR
AU - Ludwig,Jens
AU - Kling,Jeffrey R.
AU - Mullainathan,Sendhil
TI - Mechanism Experiments and Policy Evaluations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17062
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17062
L1 - http://www.nber.org/papers/w17062.pdf
N1 - Author contact info:
Jens Ludwig
University of Chicago
1155 East 60th Street
Chicago, IL 60637
Tel: 773/834-0811
Fax: 773/834-1582
E-Mail: jludwig@uchicago.edu
Jeffrey R. Kling
Congressional Budget Office
3403 Ordway St NW
Washington, DC 20016
E-Mail: jeffrey.r.kling@gmail.com
Sendhil Mullainathan
Department of Economics
Littauer M-18
Harvard University
Cambridge, MA 02138
Tel: 617/496-2720
Fax: 617/495-7730
E-Mail: mullain@fas.harvard.edu
AB - Randomized controlled trials are increasingly used to evaluate policies. How can we make these experiments as useful as possible for policy purposes? We argue greater use should be made of experiments that identify behavioral mechanisms that are central to clearly specified policy questions, what we call “mechanism experiments.” These types of experiments can be of great policy value even if the intervention that is tested (or its setting) does not correspond exactly to any realistic policy option.
ER -
TY - JOUR
AU - Schoar,Antoinette
AU - Washington,Ebonya L.
TI - Are the Seeds of Bad Governance Sown in Good Times?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17061
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17061
L1 - http://www.nber.org/papers/w17061.pdf
N1 - Author contact info:
Antoinette Schoar
MIT Sloan School of Management
100 Main Street, E62-638
Cambridge, MA 02142
Tel: 617/253-3763
Fax: 617/258-6855
E-Mail: aschoar@mit.edu
Ebonya L. Washington
Yale University
Box 8264
37 Hillhouse, Room 36
New Haven, CT 06520
Tel: 203/432-9901
Fax: 203/432-6323
E-Mail: ebonya.washington@yale.edu
AB - This paper examines the extent to which the corporate governance structure of a firm arises endogenously in response to its performance. We demonstrate that following periods of abnormally good performance managers are more likely to call special meetings and to propose and pass governance measures that are contrary to shareholder interests (based on IRRC classification). These results are driven primarily by firms that are characterized as having poor governance according to either the GIM Index or the proportion of activist shareholders. Following these special meeting we find that next quarter performance of the firm is negative. Our results are consistent with an interpretation of shareholder inattention to governance following good firm performance or a desire to reward management for good past performance. Overall our evidence seems more consistent with the former interpretation.
ER -
TY - JOUR
AU - Angeletos,George-Marios
AU - La'O,Jennifer
TI - Decentralization, Communication, and the Origins of Fluctuations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17060
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17060
L1 - http://www.nber.org/papers/w17060.pdf
N1 - Author contact info:
George-Marios Angeletos
Department of Economics
MIT E52-251
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/452-3859
Fax: 617/253-1330
E-Mail: angelet@mit.edu
Jennifer La'O
University of Chicago
Booth School of Business
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-9768
E-Mail: jenlao@chicagobooth.edu
AB - We consider a class of convex, competitive, neoclassical economies in which agents are rational; the equilibrium is unique; there is no room for randomization devices; and there are no shocks to preferences, technologies, endowments, or other fundamentals. In short, we rule out every known source of macroeconomic volatility. And yet, we show that these economies can be ridden with large and persistent fluctuations in equilibrium allocations and prices. These fluctuations emerge because decentralized trading impedes communication and, in so doing, opens the door to self-fulfilling beliefs despite the uniqueness of the equilibrium. In line with Keynesian thinking, these fluctuations may be attributed to “coordination failures” and “animal spirits”. They may also take the form of “fads”, or waves of optimism and pessimism that spread in the population like contagious diseases. Yet, these ostensibly pathological phenomena emerge at the heart of the neoclassical paradigm and require neither a deviation from rationality, nor multiple equilibria, nor even a divergence between private and social motives.
ER -
TY - JOUR
AU - Harbaugh,William T.
AU - Mocan,Naci H.
AU - Visser,Michael S.
TI - Theft and Deterrence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17059
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17059
L1 - http://www.nber.org/papers/w17059.pdf
N1 - Author contact info:
William T. Harbaugh
Department of Economics
University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-1244
Fax: 541/346-1243
E-Mail: harbaugh@uoregon.edu
Naci H. Mocan
Department of Economics
Louisiana State University
2119 Patrick F. Taylor Hall
Baton Rouge, LA 70803-6306
Tel: 225/578-4570
E-Mail: mocan@lsu.edu
Michael S. Visser
1801 East Cotati Ave.
Rohnert Park, CA 94928
E-Mail: visser@sonoma.edu
AB - We report results from economic experiments of decisions that are best described as petty larceny, with high school and college students who can anonymously steal real money from each other. Our design allows exogenous variation in the rewards of crime, and the penalty and probability of detection. We find that the probability of stealing is increasing in the amount of money that can be stolen, and that it is decreasing in the probability of getting caught and in the penalty for getting caught. Furthermore, the impact of the certainty of getting caught is larger when the penalty is bigger, and the impact of the penalty is bigger when the probability of getting caught is larger.
ER -
TY - JOUR
AU - Galor,Oded
TI - Inequality, Human Capital Formation and the Process of Development
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17058
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17058
L1 - http://www.nber.org/papers/w17058.pdf
N1 - Author contact info:
Oded Galor
Department of Economics
Brown University
Box B
Providence, RI 02912
Tel: 401/863-2117
Fax: 401/863-1970
E-Mail: oded_galor@brown.edu
AB - Conventional wisdom about the relationship between income distribution and economic development has been subjected to dramatic transformations in the past century. While classical economists advanced the hypothesis that inequality is beneficial for growth, the neoclassical paradigm dismissed the classical hypothesis and suggested that income distribution has limited role in the growth process. A metamorphosis in these perspectives has taken place in the past two decades. Theory and subsequent empirical evidence have demonstrated that income distribution has a significant impact on human capital formation and the development process. In early stages of industrialization, as physical capital accumulation was a prime engine of growth, inequality enhanced the process of development by channeling resources towards individuals whose marginal propensity to save is higher. In later stages of development, however, as human capital has become a main engine of growth, equality, in the presence of credit constraints, has stimulated human capital formation and growth. Moreover, unequal distribution of land has been a hurdle for economic development. While industrialists have had an incentive to support education policies that foster human capital formation, landowners, whose interests lay in the reduction of the mobility of their labor force, have favored policies that deprived the masses of education.
ER -
TY - JOUR
AU - Mankiw,N. Gregory
AU - Weinzierl,Matthew C.
TI - An Exploration of Optimal Stabilization Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17029
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17029
L1 - http://www.nber.org/papers/w17029.pdf
N1 - Author contact info:
N. Gregory Mankiw
Department of Economics
Littauer 223
Harvard University
Cambridge, MA 02138
Tel: 617/495-4301
Fax: 617/495-7730
E-Mail: ngmankiw@fas.harvard.edu
Matthew C. Weinzierl
Harvard Business School
277 Morgan
Soldiers Field
Boston, MA 02163
Tel: 617/495-6697
Fax: 617/496-5994
E-Mail: mweinzierl@hbs.edu
AB - This paper examines the optimal response of monetary and fiscal policy to a decline in aggregate demand. The theoretical framework is a two-period general equilibrium model in which prices are sticky in the short run and flexible in the long run. Policy is evaluated by how well it raises the welfare of the representative household. While the model has Keynesian features, its policy prescriptions differ significantly from textbook Keynesian analysis. Moreover, the model suggests that the commonly used "bang for the buck" calculations are potentially misleading guides for the welfare effects of alternative fiscal policies.
ER -
TY - JOUR
AU - Galor,Oded
TI - The Demographic Transition: Causes and Consequences
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17057
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17057
L1 - http://www.nber.org/papers/w17057.pdf
N1 - Author contact info:
Oded Galor
Department of Economics
Brown University
Box B
Providence, RI 02912
Tel: 401/863-2117
Fax: 401/863-1970
E-Mail: oded_galor@brown.edu
AB - This paper develops the theoretical foundations and the testable implications of the various mechanisms that have been proposed as possible triggers for the demographic transition. Moreover, it examines the empirical validity of each of the theories and their significance for the understanding of the transition from stagnation to growth. The analysis suggests that the rise in the demand for human capital in the process of development was the main trigger for the decline in fertility and the transition to modern growth
ER -
TY - JOUR
AU - Pischke,Jörn-Steffen
TI - Money and Happiness: Evidence from the Industry Wage Structure
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17056
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17056
L1 - http://www.nber.org/papers/w17056.pdf
N1 - Author contact info:
Jorn-Steffen Pischke
CEP
London School of Economics
Houghton Street
London WC2A 2AE
UNITED KINGDOM
Tel: 44-20-7955-6509
Fax: 44-20-7955-7595
E-Mail: s.pischke@lse.ac.uk
AB - There is a well-established positive correlation between life-satisfaction measures and income in individual level cross-sectional data. This paper attempts to provide some evidence on whether this correlation reflects causality running from money to happiness. I use industry wage differentials as instruments for income. This is based on the idea that at least part of these differentials are due to rents, and part of the pattern of industry affiliations of individuals is random. To probe the validity of these assumptions, I compare estimates for life satisfaction with those for job satisfaction, present fixed effects estimates, and present estimates for married women using their husbands' industry as the instrument. All these specifications paint a fairly uniform picture across three different data sets. IV estimates are similar to the OLS estimates suggesting that most of the association of income and well-being is causal.
ER -
TY - JOUR
AU - Behaghel,Luc
AU - Blanchet,Didier
AU - Debrand,Thierry
AU - Roger,Muriel
TI - Disability and Social Security Reforms: The French Case
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17055
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17055
L1 - http://www.nber.org/papers/w17055.pdf
N1 - Author contact info:
Luc Behaghel
Paris School of Economics - Inra
48 boulevard Jourdan
75014 PARIS
FRANCE
E-Mail: luc.behaghel@ens.fr
Didier Blanchet
INSEE
15 Blvd. Gabriel Péri BP 100
92244 Makakoff Cedex FRANCE
E-Mail: didier.blanchet@insee.fr
Thierry Debrand
OFCE - IRDES
69, quai d'Orsay
75340 Paris Cedex 07
France
E-Mail: thierryd2007@gmail.com
Muriel Roger
Paris School of Economics - Inra
48 Bd JOURDAN
75014 PARIS
France
Tel: 33 1 43 13 63 71
Fax: 33 1 43 13 63 62
E-Mail: muriel.roger@ens.fr
M3 - presented at "International Social Security Conference", May 2, 2011
AB - The French pattern of early transitions out of employment is basically explained by the low age at “normal” retirement and by the importance of transitions through unemployment insurance and early-retirement schemes before access to normal retirement. These routes have exempted French workers from massively relying on disability motives for early exits, contrarily to the situation that prevails in some other countries where normal ages are high, unemployment benefits low and early-retirement schemes almost non-existent. Yet the role of disability remains interesting to examine in the French case, at least for prospective reasons in a context of decreasing generosity of other programs.
The study of the past reforms of the pension system underlines that disability routes have often acted as a substitute to other retirement routes. Changes in the claiming of invalidity benefits seem to match changes in pension schemes or controls more than changes in such health indicators as the mortality rates. However, our results suggest that increases in average health levels over the past two decades have come along with increased disparities. In that context, less generous pensions may induce an increase in the claiming of invalidity benefits partly because of substitution effects, but also because the share of people with poor health increases.
ER -
TY - JOUR
AU - Jönsson,Lisa
AU - Palme,Mårten
AU - Svensson,Ingemar
TI - Disability Insurance, Population Health and Employment in Sweden
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17054
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17054
L1 - http://www.nber.org/papers/w17054.pdf
N1 - Author contact info:
Lisa Jönsson
Department of Economics
Stockholm University
SE-106 91 Stockholm
SWEDEN
E-Mail: lisa.jonsson@ne.su.se
Mårten Palme
Department of Economics
Stockholm University
SE-106 91 Stockholm
SWEDEN
E-Mail: Marten.Palme@ne.su.se
Ingemar Svensson
Swedish Pensions Agency
Box 38190
100 64 Stockholm
SWEDEN
E-Mail: Ingemar.Svensson@pensionsmyndigheten.se
M3 - presented at "International Social Security Conference", May 2, 2011
AB - This paper describes the development of population health and disability insurance utilization for older workers in Sweden and analyzes the relation between the two. We use three different measures of population health: (1) the mortality rate (measured between 1950 and 2009); (2) the prevalence of different types of health deficiencies obtained from Statistics Sweden’s Survey on Living Conditions (ULF, 1975-2005); (3) the utilization of health care from the inpatient register (1968–2008). We also study the development of the relative health between disability insurance recipients and non-recipients. Finally, we study the effect of the introduction of less strict eligibility criteria for older workers in 1970 and 1972 as well as the subsequent abolishment of these rules in 1991 and 1997, respectively.
ER -
TY - JOUR
AU - Vos,Klaas de
AU - Kapteyn,Arie
AU - Kalwij,Adriaan
TI - Disability Insurance and Labor Market Exit Routes of Older Workers in The Netherlands
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17053
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17053
L1 - http://www.nber.org/papers/w17053.pdf
N1 - Author contact info:
Klaas de Vos
CentERdata
Tilburg University
Warandelaan 2
5037 AB Tilburg THE NETHERLANDS
E-Mail: K.deVos@uvt.nl
Arie Kapteyn
RAND Corporation
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
Tel: (310) 393-0411 x 7973
E-Mail: arie_kapteyn@rand.org
Adriaan Kalwij
Utrecht University School of Economics
Network for Studies on Pensions, Aging and Retirem
E-Mail: a.s.kalwij@uu.nl
M3 - presented at "International Social Security Conference", May 2, 2011
AB - This paper presents information on labor market participation of the elderly, mortality and health, pathways to retirement and rates of participation in various earnings replacing programs in the Netherlands. It presents an overview of reforms to Disability Insurance (DI) and other income maintenance and early retirement programs over the past few decades, and examines to what extent these reforms have affected labor market exit routes of older workers. The overall picture that emerges is that DI receipt appears unrelated to the general health of the population and that over the last two decades relatively fewer older workers exit the labor market through DI. This reduction may, arguably, in part be attributed to stricter DI eligibility rules.
ER -
TY - JOUR
AU - Oshio,Takashi
AU - Shimizutani,Satoshi
TI - Disability Pension Program and Labor Force Participation in Japan: A Historical Perspective
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17052
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17052
L1 - http://www.nber.org/papers/w17052.pdf
N1 - Author contact info:
Takashi Oshio
Institute of Economic Research
2-1 Naka, Kunitachi
Tokyo 186-8603
Japan
E-Mail: oshio@ier.hit-u.ac.jp
Satoshi Shimizutani
Institute for International Policy Studies
Toranomon 30 Mori Bldg., 6F
3-2-2 Toranomon Minato-ku
Tokyo 105-0001
Japan
E-Mail: sshimizutani@gmail.com
M3 - presented at "International Social Security Conference", May 2, 2011
AB - This paper utilizes historical information to explore the relationship between labor force participation of middle aged and old people and the disability program in Japan. In particular, we explore the time series dimension to identify what has determined the trend in disability program participation over time and relate it with the labor supply. We find that mortality and health measures have been largely unrelated to the disability program participation rates. While major revisions to the disability program have slightly expanded the eligibility for DI programs, the program participation is still very low; thus, the effect on labor force participation is very limited in Japan, which is in contrast with some European countries that have high take up rates, inducing early retirement.
ER -
TY - JOUR
AU - Naidu,Suresh
AU - Yuchtman,Noam
TI - Coercive Contract Enforcement: Law and the Labor Market in 19th Century Industrial Britain
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17051
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17051
L1 - http://www.nber.org/papers/w17051.pdf
N1 - Author contact info:
Suresh Naidu
Columbia University
School of International and Public Affairs
MC 3328
420 West 118th Street
New York, NY 10027
Tel: 212/854-3213
E-Mail: sn2430@columbia.edu
Noam Yuchtman
Haas School of Business
University of California, Berkeley
Berkeley, CA 94720
Tel: 510/642-4632
E-Mail: yuchtman@haas.berkeley.edu
AB - British Master and Servant law made employee contract breach a criminal offense until 1875. We develop a contracting model generating equilibrium contract breach and prosecutions, then exploit exogenous changes in output prices to examine the effects of labor demand shocks on prosecutions. Positive shocks in the textile, iron, and coal industries increased prosecutions. Following the abolition of criminal sanctions, wages differentially rose in counties that had experienced more prosecutions, and wages responded more to labor demand shocks. Coercive contract enforcement was applied in industrial Britain; restricted mobility allowed workers to commit to risk-sharing contracts with lower, but less volatile, wages.
ER -
TY - JOUR
AU - Conti,Annamaria
AU - Thursby,Marie C.
AU - Rothaermel,Frank
TI - Show Me the Right Stuff: Signals for High Tech Startups
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17050
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17050
L1 - http://www.nber.org/papers/w17050.pdf
N1 - Author contact info:
Annamaria Conti
Annamaria Conti
800 W. Peachtree St N.W.
Atlanta, GA 30308
E-Mail: annamaria.conti@mgt.gatech.edu
Marie C. Thursby
College of Management
Georgia Institute of Technology
800 West Peachtree Street, NW
Atlanta, GA 30308-1149
Tel: 404/894-6249
Fax: 404/385-4894
E-Mail: marie.thursby@mgt.gatech.edu
Frank Rothaermel
Professor Frank Rothaermel
800 W. Peachtree St N.W.
Atlanta, GA 30308
E-Mail: frank.rothaermel@mgt.gatech.edu
AB - This paper revisits a central issue in entrepreneurial finance, namely the signals technology startups send to external investors to convey information about their quality. We examine the potential for technology startups to use patents and founders, friends and family money (FFF money) as signals to attract business angel and venture capital funds, patents reflect technology quality and FFF money reflects founder commitment. We find that if investors value technology quality more (less) than founder commitment, the optimal mix of signals is a relatively higher (lower) use of patents than FFF money. Regardless of investor preferences, high quality founders should invest more in both signals than in the absence of private information. This investment is inversely related to the opportunity cost of investing in the signals. We test our predictions empirically and find strong support for our theoretical view that FFF and patents are endogenously determined signals. Moreover, we find that startups who invest in both signals receive greater external funds. When we distinguish between venture capitalist and business angel investment, we find that patents serve as a signal for venture capitalists and FFF money is a signal for business angels (but not vice versa).
ER -
TY - JOUR
AU - Banks,James
AU - Blundell,Richard
AU - Bozio,Antoine
AU - Emmerson,Carl
TI - Disability, Health and Retirement in the United Kingdom
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17049
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17049
L1 - http://www.nber.org/papers/w17049.pdf
N1 - Author contact info:
James Banks
University College London
E-Mail: j.banks@ucl.ac.uk
Richard Blundell
University College London
Department of Economics
Gower Street
London, ENGLAND
E-Mail: r.blundell@ucl.ac.uk
Antoine Bozio
Institute for Fiscal Studies
7 Ridgemount Street
London WC1E 7AE ENGLAND
E-Mail: antoine_b@ifs.org.uk
Carl Emmerson
Institute for Fiscal Studies
7 Ridgemount Street
London WC1E 7AE ENGLAND
E-Mail: cemmerson@ifs.org.uk
M3 - presented at "International Social Security Conference", May 2, 2011
AB - Over the last thirty years pathways to retirement have changed substantially in the UK. They have been dominated by spells of unemployment in the late 1970s, with then an increased importance of disability spells from the mid-1980s onwards. At the end of the period the direct route from work to retirement was increasingly more common. General economic conditions seem to have been important driving forces during the entire period. In contrast changes in health do not seem to provide convincing explanations for these trends: mortality has been falling over the period without any apparent link to the share of the population reporting ill health or disability or to the number claiming benefits. We also find evidence that recent reforms have had some impact. The halting of the previous growth in the rate of in-flow onto disability benefits in the mid-1990s coincided with the implementation of a major reform. Evidence from the pilots of the Pathways-to-Work programme in 2003-2005 suggests that those moving onto disability benefits moved off these benefits faster than they would otherwise have done as a direct result of the programme.
ER -
TY - JOUR
AU - García-Gómez,Pilar
AU - Jiménez-Martín,Sergi
AU - Castelló,Judit Vall
TI - Health, Disability and Pathways to Retirement in Spain
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17048
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17048
L1 - http://www.nber.org/papers/w17048.pdf
N1 - Author contact info:
Pilar Garcia-Gomez
Erasmus School of Economics
P.O. Box 1738; 3000 DR Rotterdam
The Netherlands
E-Mail: garciagomez@ese.eur.nl
Sergi Jimenez-Martin
Universitat Pompeu Fabra
Ramon Trias Fargas 25-27
08005 BARCELONA (SPAIN)
E-Mail: sergi.jimenez@upf.edu
judit vall castello
Universitat Pompeu Fabra
Ramon Trias Fargas 25-27
08005 BARCELONA (SPAIN)
E-Mail: judit.vallcastello@governance.unimaas.nl
M3 - presented at "International Social Security Conference", May 2, 2011
AB - In this paper we analyze the trends in labor force participation and transitions to benefit programs of older workers in relation to health trends as well as recent Social Security reforms. Our preliminary conclusions are pessimistic regarding the effect of health improvements on the labor market attachment of older workers since we show that despite the large improvements in the mortality rates among older individuals in Spain, the employment rates of individuals older than fifty-five remain lower than the ones observed in the late 1970s. Some caution should remain in our conclusions as the evidence on health trends is inconclusive. Regarding the effect of Social Security reforms, we find that both the 1997 and the 2002 reform decreased the stock into old-age benefits at the cost of an increased share of the participation into disability. Finally, we find that there was a significant increase in the outflow from employment into disability after the 2002 reform.
ER -
TY - JOUR
AU - Card,David
AU - DellaVigna,Stefano
AU - Malmendier,Ulrike
TI - The Role of Theory in Field Experiments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17047
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17047
L1 - http://www.nber.org/papers/w17047.pdf
N1 - Author contact info:
David Card
Department of Economics
549 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-5222
Fax: 510/643-7042
E-Mail: card@econ.berkeley.edu
Stefano DellaVigna
University of California, Berkeley
Department of Economics
549 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-0715
Fax: 510/642-6615
E-Mail: sdellavi@econ.berkeley.edu
Ulrike Malmendier
Department of Economics
549 Evans Hall # 3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510-642-5038
E-Mail: ulrike@econ.berkeley.edu
AB - We propose a new classification of experiments that captures the extent to which the experimental design and analysis are linked to economic theory. We then use this system to classify all published field experiments in the five top economics journals from 1975 to 2010. We find that the vast majority of field experiments (68%) are Descriptive studies that lack any explicit model; 18% are Single Model studies that test a single model-based hypothesis; 6% are Competing Models studies that test competing model-based hypotheses; and 8% are Parameter Estimation studies that estimate structural parameters in a completely specified model. Using the same system to classify laboratory experiments published over the same period, we find that economic theory has played a more central role in the laboratory than in the field. Finally, we discuss in detail three sets of field experiments, on gift exchange, on charitable giving, and on negative income tax, that illustrate both the benefits and the potential costs of a tighter link between experimental design and theoretical underpinnings.
ER -
TY - JOUR
AU - Huckfeldt,Peter J.
AU - Knittel,Christopher R.
TI - Pharmaceutical Use Following Generic Entry: Paying Less and Buying Less
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17046
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17046
L1 - http://www.nber.org/papers/w17046.pdf
N1 - Author contact info:
Peter J. Huckfeldt
RAND Corporation
Santa Monica, California
E-Mail: Peter_Huckfeldt@rand.org
Christopher R. Knittel
MIT Sloan School of Management
100 Main Street, E62-513
Cambridge, MA 02142
E-Mail: knittel@mit.edu
AB - We study the effects of generic entry on prices and utilization using both event study models that exploit the differential timing of generic entry across drug molecules and cast studies. Our analysis examines drugs treating hypertension, high blood pressure, type 2 diabetes, and depression using price and utilization data from the Medical Expenditure Panel Survey. We find that utilization of drug molecules starts decreasing in the two years prior to generic entry and continues to decrease in the years following generic entry, despite decreases in prices offered by generic versions of a drug. This decrease coincides with the market entry and increased utilization of branded reformulations of a drug going off patent. We show case study evidence that utilization patterns coincide with changes in marketing by branded drug manufacturers. While the reformulations---often extended-release versions of the patent-expiring drug---offer potential health benefits, the FDA does not require evidence that the reformulations are improvements over the previous drug in order to grant a patent. Indeed, in a number of experiments comparing the efficacies of the patent-expiring and reformulated drugs do not find statistical differences in health outcomes calling into question the patent-extension policy.
ER -
TY - JOUR
AU - Liu,Zheng
AU - Wang,Pengfei
AU - Zha,Tao
TI - Land-price dynamics and macroeconomic fluctuations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17045
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17045
L1 - http://www.nber.org/papers/w17045.pdf
N1 - Author contact info:
Zheng Liu
Federal Reserve Bank of San Francisco
101 Market Street, MS 1130
San Francisco, CA 94105
Tel: 415-974-3328
Fax: 415-974-2168
E-Mail: zheng.liu@sf.frb.org
Pengfei Wang
Department of Economics
Business School
Hong Kong University of Science & Technology
E-Mail: pfwanghkust@gmail.com
Tao Zha
Emory University
1602 Fishburne Drive
Atlanta, GA 30322-2240
Tel: 404/723-3254
Fax: 404/727-4639
E-Mail: tzha@emory.edu
AB - We argue that positive co-movements between land prices and business investment are a driving force behind the broad impact of land-price dynamics on the macroeconomy. We develop an economic mechanism that captures the co-movements by incorporating two key features into a DSGE model: We introduce land as a collateral asset in firms' credit constraints and we identify a shock that drives most of the observed fluctuations in land prices. Our estimates imply that these two features combine to generate an empirically important mechanism that amplifies and propagates macroeconomic fluctuations through the joint dynamics of land prices and business investment.
ER -
TY - JOUR
AU - Ball,Laurence M.
AU - Mazumder,Sandeep
TI - Inflation Dynamics and the Great Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17044
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17044
L1 - http://www.nber.org/papers/w17044.pdf
N1 - Author contact info:
Laurence M. Ball
Department of Economics
Johns Hopkins University
Baltimore, MD 21218
Tel: 410/516-7605
Fax: 410/516-7600
E-Mail: lball@jhu.edu
Sandeep Mazumder
Department of Economics
Wake Forest University
Winston-Salem, NC 27109
E-Mail: mazumds@wfu.edu
AB - This paper examines inflation dynamics in the United States since 1960, with a particular focus on the Great Recession. A puzzle emerges when Phillips curves estimated over 1960-2007 are used to predict inflation over 2008-2010: inflation should have fallen by more than it did. We resolve this puzzle with two modifications of the Phillips curve, both suggested by theories of costly price adjustment: we measure core inflation with the median CPI inflation rate, and we allow the slope of the Phillips curve to change with the level and variance of inflation. We then examine the hypothesis of anchored inflation expectations. We find that expectations have been fully "shock-anchored" since the 1980s, while "level anchoring" has been gradual and partial, but significant. It is not clear whether expectations are sufficiently anchored to prevent deflation over the next few years. Finally, we show that the Great Recession provides fresh evidence against the New Keynesian Phillips curve with rational expectations.
ER -
TY - JOUR
AU - Conley,John P.
AU - Crucini,Mario J.
AU - Driskill,Robert A.
AU - Onder,Ali Sina
TI - Incentives and the Effects of Publication Lags on Life Cycle Research Productivity in Economics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17043
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17043
L1 - http://www.nber.org/papers/w17043.pdf
N1 - Author contact info:
John P. Conley
Department of Economics
Vanderbilt University
401 Calhoun Hall
Nashville, TN 27235
E-Mail: j.p.conley@vanderbilt.edu
Mario J. Crucini
Department of Economics
Vanderbilt University
Box 1819 Station B
Nashville, TN 37235-1819
Tel: 615/322-7357
Fax: 615/343-8459
E-Mail: mario.j.crucini@vanderbilt.edu
Robert Driskill
Vanderbilt University
E-Mail: robert.a.driskill@vanderbilt.edu
Ali Sina Onder
Department of Economics and
Uppsala Center for Fiscal Studies
Uppsala University
E-Mail: alisina.onder@nek.uu.se
AB - We investigate how increases in publication delays have affected the life-cycle of publications of recent Ph.D. graduates in economics. We construct a panel dataset of 14,271 individuals who were awarded Ph.D.s between 1986 and 2000 in US and Canadian economics departments. For this population of scholars, we amass complete records of publications in peer reviewed journals listed in the JEL (a total of 368,672 observations). We find evidence of significantly diminished productivity in recent relative to earlier cohorts when productivity of an individual is measured by the number of AER equivalent publications. Diminished productivity is less evident when number of AER equivalent pages is used instead. Our findings are consistent with earlier empirical findings of increasing editorial delays, decreasing acceptance rates at journals, and a trend toward longer manuscripts. This decline in productivity is evident in both graduates of top thirty and non-top thirty ranked economics departments and may have important implications for what should constitute a tenurable record. We also find that the research rankings of the faculty do not line up with the research quality of their students in many cases.
ER -
TY - JOUR
AU - Ben-Shalom,Yonatan
AU - Moffitt,Robert A.
AU - Scholz,John Karl
TI - An Assessment of the Effectiveness of Anti-Poverty Programs in the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17042
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17042
L1 - http://www.nber.org/papers/w17042.pdf
N1 - Author contact info:
Yonatan Ben-Shalom
Mathematica Policy Research
E-Mail: yben-shalom@mathematica-mpr.com
Robert A. Moffitt
Department of Economics
Johns Hopkins University
3400 North Charles Street
Baltimore, MD 21218
Tel: 410/516-7611
Fax: 410/516-7600
E-Mail: moffitt@jhu.edu
John Karl Scholz
University of Wisconsin - Madison
Department of Economics
1180 Observatory Drive
Madison, WI 53706
Tel: 608/262-5380
Fax: 608/263-3876
E-Mail: jkscholz@facstaff.wisc.edu
AB - We assess the effectiveness of means-tested and social insurance programs in the United States. We show that per capita expenditures on these programs as a whole have grown over time but expenditures on some programs have declined. The benefit system in the U.S. has a major impact on poverty rates, reducing the percent poor in 2004 from 29 percent to 13.5 percent, estimates which are robust to different measures of the poverty line. We find that, while there are significant behavioral side effects of many programs, their aggregate impact is very small and does not affect the magnitude of the aggregate poverty impact of the system. The system reduces poverty the most for the disabled and the elderly and least for several groups among the non-elderly and non-disabled. Over time, we find that expenditures have shifted toward the disabled and the elderly, and away from those with the lowest incomes and toward those with higher incomes, with the consequence that post-transfer rates of deep poverty for some groups have increased. We conclude that the U.S. benefit system is paternalistic and tilted toward the support of the employed and toward groups with special needs and perceived deservingness.
ER -
TY - JOUR
AU - Hurst,Erik
AU - Pugsley,Benjamin Wild
TI - What Do Small Businesses Do?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17041
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17041
L1 - http://www.nber.org/papers/w17041.pdf
N1 - Author contact info:
Erik Hurst
Booth School of Business
University of Chicago
Harper Center
Chicago, IL 60637
Tel: 773/834-4073
Fax: 773/702-0458
E-Mail: erik.hurst@chicagobooth.edu
Benjamin Wild. Pugsley
Department of Economics
University of Chicago
Chicago, IL 60637
E-Mail: bpugsley@uchicago.edu
AB - In this paper, we show that most small business owners are very different from the entrepreneurs that economic models and policy makers often have in mind. Using new data that samples early stage entrepreneurs just prior to business start up, we show that few small businesses intend to bring a new idea to market. Instead, most intend to provide an existing service to an existing market. Further, we find that most small businesses have little desire to grow big or to innovate in any observable way. We show that such behavior is consistent with the industry characteristics of the majority of small businesses, which are concentrated among skilled craftsmen, lawyers, real estate agents, doctors, small shopkeepers, and restaurateurs. Lastly, we show non pecuniary benefits (being one’s own boss, having flexibility of hours, etc.) play a first-order role in the business formation decision. We then discuss how our findings suggest that the importance of entrepreneurial talent, entrepreneurial luck, and financial frictions in explaining the firm size distribution may be overstated. We conclude by discussing the potential policy implications of our findings.
ER -
TY - JOUR
AU - Farber,Henry S.
TI - Job Loss in the Great Recession: Historical Perspective from the Displaced Workers Survey, 1984-2010
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17040
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17040
L1 - http://www.nber.org/papers/w17040.pdf
N1 - Author contact info:
Henry S. Farber
Industrial Relations Section
Firestone Library
Princeton University
Princeton, NJ 08544-2098
Tel: 609/258-4044
Fax: 609/258-2907
E-Mail: farber@princeton.edu
AB - The Great Recession from December 2007 to June 2009 is associated with a dramatic weakening of the labor market from which the labor market is now only slowly recovering. The unemployment rate remains stubbornly high and durations of unemployment are unprecedentedly long. I use data from the Displaced Workers Survey (DWS) from 1984-2010 to investigate the incidence and consequences of job loss from 1981-2009. In particular, the January 2010 DWS, which captures job loss during the 2007-2009 period, provides a window through which to examine the experience of job losers in the Great Recession and to compare their experience to that of earlier job losers. These data show a record high rate of job loss, with almost one in six workers reporting having lost a job in the 2007-2009 period. The consequences of job loss are also very serious during this period with very low rates of reemployment, difficulty finding full-time employment, and substantial earnings losses.
ER -
TY - JOUR
AU - Lochner,Lance
AU - Moretti,Enrico
TI - Estimating and Testing Non-Linear Models Using Instrumental Variables
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17039
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17039
L1 - http://www.nber.org/papers/w17039.pdf
N1 - Author contact info:
Lance Lochner
Department of Economics, Faculty of Social Science
University of Western Ontario
1151 Richmond Street, North
London, ON N6A 5C2
CANADA
Tel: 519/661-2111 ext. 85281
Fax: 519/661-3666
E-Mail: llochner@uwo.ca
Enrico Moretti
University of California, Berkeley
Department of Economics
549 Evans Hall
Berkeley, CA 94720-3880
Tel: 510/642 6649
Fax: 510/643 7042
E-Mail: moretti@econ.berkeley.edu
AB - In many empirical studies, researchers seek to estimate causal relationships using instrumental variables. When only one valid instrumental variable is available, researchers are limited to estimating linear models, even when the true model may be non-linear. In this case, ordinary least squares and instrumental variable estimators will identify different weighted averages of the underlying marginal causal effects even in the absence of endogeneity. As such, the traditional Hausman test for endogeneity is uninformative. We build on this insight to develop a new test for endogeneity that is robust to any form of non-linearity. Notably, our test works well even when only a single valid instrument is available. This has important practical applications, since it implies that researchers can estimate a completely unrestricted non-linear model by OLS, and then use our test to establish whether those OLS estimates are consistent. We re-visit a few recent empirical examples to show how the test can be used to shed new light on the role of non-linearity.
ER -
TY - JOUR
AU - Fahlenbrach,Rüdiger
AU - Prilmeier,Robert
AU - Stulz,René M.
TI - This Time Is the Same: Using Bank Performance in 1998 to Explain Bank Performance During the Recent Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17038
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17038
L1 - http://www.nber.org/papers/w17038.pdf
N1 - Author contact info:
Rüdiger Fahlenbrach
Ecole Polytechnique Fédérale de Lausanne (EPFL)
Quartier UNIL-Dorigny Bâtiment Extranef, # 211
1015 Lausanne
Switzerland
E-Mail: ruediger.fahlenbrach@epfl.ch
Robert Prilmeier
The Ohio State University
Fisher College of Business
810 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210-1144
E-Mail: prilmeier_1@fisher.osu.edu
Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu
AB - We investigate whether a bank’s performance during the 1998 crisis, which was viewed at the time as the most dramatic crisis since the Great Depression, predicts its performance during the recent financial crisis. One hypothesis is that a bank that has an especially poor experience in a crisis learns and adapts, so that it performs better in the next crisis. Another hypothesis is that a bank’s poor experience in a crisis is tied to aspects of its business model that are persistent, so that its past performance during one crisis forecasts poor performance during another crisis. We show that banks that performed worse during the 1998 crisis did so as well during the recent financial crisis. This effect is economically important. In particular, it is economically as important as the leverage of banks before the start of the crisis. The result cannot be attributed to banks having the same chief executive in both crises. Banks that relied more on short-term funding, had more leverage, and grew more are more likely to be banks that performed poorly in both crises.
ER -
TY - JOUR
AU - Ashraf,Quamrul
AU - Galor,Oded
TI - Dynamics and Stagnation in the Malthusian Epoch
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17037
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17037
L1 - http://www.nber.org/papers/w17037.pdf
N1 - Author contact info:
Quamrul Ashraf
Williams College
Department of Economics
24 Hopkins Hall Drive
Williamstown, MA 01267
Tel: (413) 597-3051
Fax: (413) 597-4045
E-Mail: Quamrul.H.Ashraf@williams.edu
Oded Galor
Department of Economics
Brown University
Box B
Providence, RI 02912
Tel: 401/863-2117
Fax: 401/863-1970
E-Mail: oded_galor@brown.edu
AB - This paper examines the central hypothesis of the influential Malthusian theory, according to which improvements in the technological environment during the pre-industrial era had generated only temporary gains in income per capita, eventually leading to a larger, but not significantly richer, population. Exploiting exogenous sources of cross-country variations in land productivity and the level of technological advancement the analysis demonstrates that, in accordance with the theory, technological superiority and higher land productivity had significant positive effects on population density but insignificant effects on the standard of living, during the time period 1-1500 CE.
ER -
TY - JOUR
AU - Baker,Scott A.
AU - Malani,Anup
TI - Does Accuracy Improve the Information Value of Trials?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17036
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17036
L1 - http://www.nber.org/papers/w17036.pdf
N1 - Author contact info:
Scott A. Baker
School of Law
Washington University in St. Louis
Tel: 919/962-8514
Fax: 919/962-1277
E-Mail: no email available
Anup Malani
University of Chicago Law School
1111 E. 60th Street
Chicago, IL 60637
Tel: 773/702-9602
E-Mail: amalani@uchicago.edu
AB - We develop a model where products liability trials provide information to consumers who are not parties to the litigation. Consumers use this information to take precautions against dangerous products. A critical assumption is that consumers cannot differentiate between firms that have never been sued and firms that have been sued but settled out of court. In this framework, we show that perfectly accurate courts do not maximize information to consumers and thus welfare, contrary to Kaplow and Shavell (1994). More accurate courts provide more information only if producers go to trial. Greater accuracy, however, encourages producers of dangerous products to settle and hide their type. When courts are perfectly accurate, all low quality producers settle. And given the lack of any information from trials about bad types, consumers (rationally) fail to take precautions. If consumer precautions are relatively more efficient than producer precautions, our conclusion stands even when firms can invest in improving the safety of their products.
ER -
TY - JOUR
AU - DellaVigna,Stefano
AU - Enikolopov,Ruben
AU - Mironova,Vera
AU - Petrova,Maria
AU - Zhuravskaya,Ekaterina
TI - Unintended Media Effects in a Conflict Environment: Serbian Radio and Croatian Nationalism
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16989
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w16989
L1 - http://www.nber.org/papers/w16989.pdf
N1 - Author contact info:
Stefano DellaVigna
University of California, Berkeley
Department of Economics
549 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-0715
Fax: 510/642-6615
E-Mail: sdellavi@econ.berkeley.edu
Ruben Enikolopov
New Economic School
E-Mail: renikolopov@gmail.com
Vera Mironova
Department of Political Science
University of Maryland
E-Mail: vera-ge0@mail.ru
Maria Petrova
New Economic School
E-Mail: petrova.ma@gmail.com
Ekaterina Zhuravskaya
Paris School of Economics
48 Bd Jourdan
75014 Paris
France
E-Mail: zhuravsk@pse.ens.fr
AB - Do media broadcasts matter when they reach audiences that are not their target? In a conflict, the media may have an unintended effect of increasing ethnic animosity. We consider radio signals travelling across country borders in the region that witnessed one of Europe’s deadliest conflicts since WWII: the Serbo-Croatian conflict in the Yugoslavian wars. Using survey data, we find that a large fraction of Croats listen to Serbian radio (intended for Serbian listeners across the border) whenever signal is available. Then, using official election results, we document that residents of Croatian villages with good-quality signal of Serbian public radio were more likely to vote for extreme nationalist parties, even after several years of peace time. Finally, ethnically-offensive graffiti are more likely to be exposed openly in the center of villages with Serbian radio reception. The effect is identified from the variation in the availability of the signal mostly due to topography and forestation. The results of a laboratory experiment confirm that Serbian radio exposure causes an increase in anti-Serbian sentiment among Croats.
ER -
TY - JOUR
AU - Rothschild,Casey
AU - Scheuer,Florian
TI - Optimal Taxation with Rent-Seeking
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17035
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17035
L1 - http://www.nber.org/papers/w17035.pdf
N1 - Author contact info:
Casey Rothschild
Middlebury College
Department of Economics
Warner Hall 503
Middlebury, VT 05753
E-Mail: crothsch@wellesley.edu
Florian Scheuer
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305
Tel: 650/725-3987
E-Mail: scheuer@stanford.edu
AB - Recent policy proposals have suggested taxing top incomes at very high rates on the grounds that some or all of the highest wage earners are engaged in socially unproductive or counterproductive activities, such as externality imposing speculation in the financial sector. To address this, we provide a model in which agents can choose between working in a traditional sector, where private and social products coincide, and a crowdable rent-seeking sector, where some or all of earned income reflects the capture of pre-existing output rather than increased production. We characterize Pareto optimal linear and non-linear income tax systems under the assumption that the social planner cannot or does not observe whether any given individual is a traditional worker or a rent-seeker. We find that optimal marginal taxes on the highest wage earners can remain remarkably modest even if all high earners are socially unproductive rent-seekers and the government has a strong intrinsic desire for progressive redistribution. Intuitively, taxing their effort at a lower rate stimulates their rent-seeking efforts, thereby keeping private returns for other potential rent-seekers low and discouraging further entry.
ER -
TY - JOUR
AU - Coibion,Olivier
TI - Are the Effects of Monetary Policy Shocks Big or Small?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17034
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17034
L1 - http://www.nber.org/papers/w17034.pdf
N1 - Author contact info:
Olivier Coibion
Department of Economics
College of William and Mary
115 Morton Hall
Williamsburg, VA 23188
Tel: 757/221-1389
E-Mail: ocoibion@gmail.com
AB - This paper studies the small estimated effects of monetary policy shocks from standard VAR’s versus the large effects from the Romer and Romer (2004) approach. The differences are driven by three factors: the different contractionary impetus, the period of reserves targeting and lag length selection. Accounting for these factors, the real effects of policy shocks are consistent across approaches and most likely medium. Alternative monetary policy shock measures from estimated Taylor rules also yield medium-sized real effects and indicate that the historical contribution of monetary policy shocks to real fluctuations has been significant, particularly during the 1970s and early 1980s.
ER -
TY - JOUR
AU - Andreoni,James
AU - Gee,Laura K.
TI - Gun For Hire: Does Delegated Enforcement Crowd out Peer Punishment in Giving to Public Goods?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17033
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17033
L1 - http://www.nber.org/papers/w17033.pdf
N1 - Author contact info:
James Andreoni
Department of Economics
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-3832
Fax: 858/534-7040
E-Mail: andreoni@ucsd.edu
Laura K. Gee
Department of Economics
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
E-Mail: l1gee@ucsd.edu
AB - This paper compares two methods to encourage socially optimal provision of a public good. We compare the efficacy of vigilante justice, as represented by peer-to-peer punishment, to delegated policing, as represented by the “hired gun” mechanism, to deter free riding and improve group welfare. The “hired gun” mechanism (Andreoni and Gee, 2011) is an example of a low cost device that promotes complete compliances and minimal enforcement as the unique Nash equilibrium. We find that subjects are willing to pay to hire a delegated policing mechanism over 70% of the time, and that this mechanism increases welfare between 15% to 40%. Moreover, the lion’s share of the welfare gain comes because the hired gun crowds out vigilante peer-to-peer punishments.
ER -
TY - JOUR
AU - Andreoni,James
AU - Gee,Laura K.
TI - The Hired Gun Mechanism
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17032
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17032
L1 - http://www.nber.org/papers/w17032.pdf
N1 - Author contact info:
James Andreoni
Department of Economics
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-3832
Fax: 858/534-7040
E-Mail: andreoni@ucsd.edu
Laura K. Gee
Department of Economics
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
E-Mail: l1gee@ucsd.edu
AB - We present and experimentally test a mechanism that provides a simple, natural, low cost, and realistic solution to the problem of compliance with socially determined efficient actions, such as contributing to a public good. We note that small self-governing organizations often place enforcement in the hands of an appointed leader–the department chair, the building superintendent, the team captain. This hired gun, we show, need only punish the least compliant group member, and then only punish this person enough so that the person would have rather been the second least compliant. We show experimentally this mechanism, despite having very small penalties out of equilibrium, reaches the full compliance equilibrium almost instantly.
ER -
TY - JOUR
AU - Lacetera,Nicola
AU - Zirulia,Lorenzo
TI - Individual Preferences, Organization, and Competition in a Model of R&D Incentive Provision
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17031
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17031
L1 - http://www.nber.org/papers/w17031.pdf
N1 - Author contact info:
Nicola Lacetera
University of Toronto
105 St. George Street
Toronto, ON M5S 2E9
Canada
Tel: 416/946-0287
E-Mail: nicola.lacetera@utoronto.ca
Lorenzo Zirulia
University of Bologna
Department of Economics
Strada Maggiore, 45
Bologna, Italy
E-Mail: lorenzo.zirulia@unibocconi.it
AB - Understanding the organization of R&D activities requires the simultaneous consideration of scientific workers' talent and tastes, companies' organizational choices, and the characteristics of the relevant industry. We develop a model of the provision of incentives to corporate scientists, in an environment where (1) scientists engage in multiple activities when performing research; (2) knowledge is not perfectly appropriable; (3) scientists are responsive to both monetary and non-monetary incentives; and (4) firms compete on the product market. We show that both the degree of knowledge spillovers and of market competition affect the incentives given to scientists, and these effects interact. First, high knowledge spillovers lead firms to soften incentives when product market competition is high, and to strengthen incentives when competition is low. Second, the relationship between the intensity of competition and the power of incentives is U-shaped, with the exact shape depending on the degree of knowledge spillovers. We also show that the performance-contingent pay for both applied and basic research increases with the non-pecuniary benefits that scientists obtain from research. We relate our findings to the existing empirical research, and also discuss their implications for management and public policy.
ER -
TY - JOUR
AU - Lacetera,Nicola
AU - Pope,Devin G.
AU - Sydnor,Justin R.
TI - Heuristic Thinking and Limited Attention in the Car Market
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17030
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17030
L1 - http://www.nber.org/papers/w17030.pdf
N1 - Author contact info:
Nicola Lacetera
University of Toronto
105 St. George Street
Toronto, ON M5S 2E9
Canada
Tel: 416/946-0287
E-Mail: nicola.lacetera@utoronto.ca
Devin G. Pope
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-2297
Fax: 773/702-0458
E-Mail: devin.pope@chicagobooth.edu
Justin R. Sydnor
University of Wisconsin - Madison
975 University Avenue
Madison, WI 53706
E-Mail: jsydnor@bus.wisc.edu
AB - Can heuristic information processing affect important product markets? We explore whether the tendency to focus on the left-most digit of a number affects how used car buyers incorporate odometer values in their purchase decisions. Analyzing over 22 million wholesale used-car transactions, we find substantial evidence of this left-digit bias; there are large and discontinuous drops in sale prices at 10,000-mile thresholds in odometer mileage, along with smaller drops at 1,000-mile thresholds. We obtain estimates for the inattention parameter in a simple model of this left-digit bias. We also investigate whether this heuristic behavior is primarily attributable to the final used-car customers or the used-car salesmen who buy cars in the wholesale market. The evidence is most consistent with partial inattention by final customers. We discuss the significance of these results for the literature on inattention and point to other market settings where this type of heuristic thinking may be important. Our results suggest that information-processing heuristics may be important even in markets with large stakes and where information is easy to observe.
ER -
TY - JOUR
AU - Stango,Victor
AU - Zinman,Jonathan
TI - Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17028
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17028
L1 - http://www.nber.org/papers/w17028.pdf
N1 - Author contact info:
Victor Stango
Graduate School of Management
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-3535
Fax: 530/752-2924
E-Mail: vstango@ucdavis.edu
Jonathan Zinman
Department of Economics
Dartmouth College
314 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-0075
Fax: 603/646-2122
E-Mail: jzinman@dartmouth.edu
AB - We explore dynamics of limited attention in the $35 billion market for checking overdrafts, using survey content as shocks to the salience of overdraft fees. Conditional on selection into surveys, individuals who face overdraft-related questions are less likely to incur a fee in the survey month. Taking multiple overdraft surveys builds a “stock” of attention that reduces overdrafts for up to two years. The effects are significant among consumers with lower education and financial literacy. Consumers avoid overdrafts not by increasing balances but by making fewer debit transactions and cancelling automatic recurring withdrawals. The results raise new questions about consumer financial protection policy.
ER -
TY - JOUR
AU - Hassan,Tarek A.
AU - Mertens,Thomas M.
TI - The Social Cost of Near-Rational Investment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17027
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17027
L1 - http://www.nber.org/papers/w17027.pdf
N1 - Author contact info:
Tarek Alexander Hassan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-3291
Fax: 773/753-0851
E-Mail: tarek.hassan@chicagobooth.edu
Thomas Mertens
New York University
Stern School of Business
44 W Fourth Street
New York, NY 10012
E-Mail: mertens@stern.nyu.edu
AB - We show that the stock market may fail to aggregate information even if it appears to be efficient and that the resulting decrease in the information content of stock prices may drastically reduce welfare. We solve a macroeconomic model in which information about fundamentals is dispersed and households make small, correlated errors around their optimal investment policies. As information aggregates in the market, these errors amplify and crowd out the information content of stock prices. When stock prices reflect less information, the volatility of stock returns rises. The increase in volatility makes holding stocks unattractive, distorts the long-run level of capital accumulation, and causes costly (first-order) distortions in the long-run level of consumption.
ER -
TY - JOUR
AU - Gourio,Francois
TI - Credit Risk and Disaster Risk
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17026
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17026
L1 - http://www.nber.org/papers/w17026.pdf
N1 - Author contact info:
Francois Gourio
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-4534
Fax: 617/353-4449
E-Mail: fgourio@bu.edu
AB - Corporate credit spreads are large, volatile, countercyclical, and significantly larger than expected losses, but existing macroeconomic models with financial frictions fail to reproduce these patterns, because they imply small and constant aggregate risk premia. Building on the idea that corporate debt, while safe in normal times, is exposed to the risk of economic depression, this paper embeds a trade-off theory of capital structure into a real business cycle model with a small, time-varying risk of large economic disaster. This simple feature generates large, volatile and countercyclical credit spreads as well as novel business cycle implications. In particular, financial frictions substantially amplify the effect of shocks to the disaster probability.
ER -
TY - JOUR
AU - Li,Jialun
AU - Smetters,Kent
TI - Optimal Portfolio Choice with Wage-Indexed Social Security
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17025
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17025
L1 - http://www.nber.org/papers/w17025.pdf
N1 - Author contact info:
Jialun Li
3620 Locust Walk
Philadelphia, PA 19104
E-Mail: jialunli@wharton.upenn.edu
Kent Smetters
University of Pennsylvania
SH-DH 3303
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-9811
Fax: 215/898-0310
E-Mail: smetters@wharton.upenn.edu
AB - This paper re-examines the classic question of how a household should optimally allocate its portfolio between risky stocks and risk-free bonds over its lifecycle. We show that allowing for the wage indexation of social security benefits fundamentally alters the optimal decisions. Moreover, the optimal allocation is close to observed empirical behavior. Households, therefore, do not appear to be making large "mistakes," as sometimes believed. In fact, traditional financial planning advice, as embedded in "target date" funds – whose enormous recent growth has been encouraged by new government policy – often leads to even relatively larger "mistakes" and welfare losses.
ER -
TY - JOUR
AU - Bordo,Michael D.
AU - Rousseau,Peter L.
TI - Historical Evidence on the Finance-Trade-Growth Nexus
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17024
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17024
L1 - http://www.nber.org/papers/w17024.pdf
N1 - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu
Peter L. Rousseau
Department of Economics
Vanderbilt University
VU Station B #351819
2301 Vanderbilt Place
Nashville, TN 37235-1819
Tel: 615/343-2466
E-Mail: peter.l.rousseau@vanderbilt.edu
AB - We study linkages between financial development, international trade, and long-run growth using data since 1880 for seventeen now-developed “Atlantic” economies and a set of cross-country and dynamic panel data models. We find that finance and trade reinforced each other before 1930, but that these effects did not persist after the Second World War. Financial development has positive effects on growth throughout the sample period, while trade affects growth strongly and independently after 1945. We attribute the rising importance of trade in explaining growth to major post-World War II changes in tariffs and quantity restrictions associated with the GATT, the establishment of the European Common Market, and the gradual elimination of capital controls after 1973. The findings are robust to the use of ‘deep’ fundamentals such as legal origin and indicators of the political environment as instruments for financial development and trade. Financial development, however, is more closely linked to these fundamentals than trade.
ER -
TY - JOUR
AU - Levitt,Steven D.
AU - Miles,Thomas J.
TI - The Role of Skill Versus Luck in Poker: Evidence from the World Series of Poker
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17023
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17023
L1 - http://www.nber.org/papers/w17023.pdf
N1 - Author contact info:
Steven D. Levitt
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/834-1862
Fax: 773/702-8490
E-Mail: slevitt@midway.uchicago.edu
Thomas Miles
University of Chicago
E-Mail: tmiles@law.uchicago.edu
AB - In determining the legality of online poker – a multibillion dollar industry – courts have relied heavily on the issue of whether or not poker is a game of skill. Using newly available data, we analyze that question by examining the performance in the 2010 World Series of Poker of a group of poker players identified as being highly skilled prior to the start of the events. Those players identified a priori as being highly skilled achieved an average return on investment of over 30 percent, compared to a -15 percent for all other players. This large gap in returns is strong evidence in support of the idea that poker is a game of skill.
ER -
TY - JOUR
AU - Duffey,Romney B.
TI - The Quantification of Systemic Risk and Stability: New Methods and Measures
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17022
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17022
L1 - http://www.nber.org/papers/w17022.pdf
N1 - Author contact info:
Romney Duffey
Atomic Energy of Canada Limited
E-Mail: duffeyr@aecl.ca
M1 - published as Romney B. Duffey. "The Quantification of Systemic Risk and Stability: New Methods and Measures," in Joseph G. Haubrich and Andrew W. Lo, editors, "Quantifying Systemic Risk" University of Chicago Press (2012)
M3 - presented at "Research Conference on Quantifying Systemic Risk", November 6, 2009
AB - We address the question of the prediction of large failures, busts, or system collapse, and the necessary concepts related to risk quantification, minimization and management. Answering this question requires a new approach since predictions using standard financial techniques and statistical distributions fail to predict or anticipate crises. The key points are that financial markets, systems, trading and manoeuvres are not just about money, debt, stocks, instruments and assets but reflect the actions and motivations of humans, which includes the presence or absence of learning effects. Therefore we have the possibility of failures or rare or low frequency events due to human involvement. The rare or unknown event is directly due to human influence, and reflects both learning and risk taking, with the presence of the finite and persistent human error contribution while taking or exposed to risk. This presence of humans in the marketplace explains the failure of present purely statistical methods to correctly estimate, predict or determine the onset of financial crises, busts and collapses.
In this essay, we unify the concepts for predicting financial systemic risk with the general theory for outcomes, trends and measures already derived for other technical and social systems with human involvement. We replace words and qualitative reasoning with measures and quantitative predictions. The paper is therefore written with an introductory section devoted to the measures relevant to risk prediction in other modern technological systems; and is then extended and applied specifically to risk prediction for financial and business systems. The resulting measures also provide useful guidance for risk governance.
ER -
TY - JOUR
AU - Gilchrist,Simon
AU - Zakrajšek,Egon
TI - Credit Spreads and Business Cycle Fluctuations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17021
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17021
L1 - http://www.nber.org/papers/w17021.pdf
N1 - Author contact info:
Simon Gilchrist
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-6824
Fax: NA
E-Mail: sgilchri@bu.edu
Egon Zakrajsek
Division of Monetary Affairs
Federal Reserve Board
20th Street & Constitution Avenue, NW
Washington, D.C. 20551
Tel: 202/728-5864
Fax: 202/452-2846
E-Mail: egon.zakrajsek@frb.gov
AB - This paper examines the evidence on the relationship between credit spreads and economic activity. Using an extensive data set of prices of outstanding corporate bonds trading in the secondary market, we construct a credit spread index that is—compared with the standard default-risk indicators—a considerably more powerful predictor of economic activity. Using an empirical framework, we decompose our index into a predictable component that captures the available firm-specific information on expected defaults and a residual component—the excess bond premium. Our results indicate that the predictive content of credit spreads is due primarily to movements in the excess bond premium. Innovations in the excess bond premium that are orthogonal to the current state of the economy are shown to lead to significant declines in economic activity and equity prices. We also show that during the 2007–09 financial crisis, a deterioration in the creditworthiness of broker-dealers—key financial intermediaries in the corporate cash market—led to an increase in the excess bond premium. These find- ings support the notion that a rise in the excess bond premium represents a reduction in the effective risk-bearing capacity of the financial sector and, as a result, a contraction in the supply of credit with significant adverse consequences for the macroeconomy.
ER -
TY - JOUR
AU - Cadena,Ximena
AU - Schoar,Antoinette
TI - Remembering to Pay? Reminders vs. Financial Incentives for Loan Payments
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17020
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17020
L1 - http://www.nber.org/papers/w17020.pdf
N1 - Author contact info:
Ximena Cadena
Harvard University
1737 Cambridge Street
Room K 350
Cambridge, MA 02138
E-Mail: xcadena@iq.harvard.edu
Antoinette Schoar
MIT Sloan School of Management
100 Main Street, E62-638
Cambridge, MA 02142
Tel: 617/253-3763
Fax: 617/258-6855
E-Mail: aschoar@mit.edu
AB - We report the results from a field experiment with a micro lender in Uganda to test the effectiveness of privately implemented incentives for loan repayment. Using a randomized control trial we measure the impact of three different treatments: Borrowers are either given a lump sum cash reward upon completion of the loan (equivalent to a 25% interest rate reduction on the current loan), a 25% reduction of the interest rate in the next loan the borrower takes from the bank, or a monthly text message reminder before the loan payment is due (SMS). We find that on average the size of the treatment effect is similar across all the treatment groups: borrowers in the treatment groups have a 7-9% increase in the probability of paying on time and the average days late drop by 2 days a month. The results suggest that simple text messages which help borrowers to better manage their repayment dates have similar effects as large changes in the cost of capital of 25% of interest. The impact of the cash back incentives are stronger for customers with smaller loans and less banking experience, the reduced future interest rate seemed to be most effective for customers with larger loans, while the SMS text messages were particularly effective for younger customers.
ER -
TY - JOUR
AU - Grainger,Corbett A.
AU - Costello,Christopher
TI - The Value of Secure Property Rights: Evidence from Global Fisheries
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17019
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17019
L1 - http://www.nber.org/papers/w17019.pdf
N1 - Author contact info:
Corbett A. Grainger
Department of Agricultural and Applied Economics
University of Wisconsin, Madison
429 Taylor Hall
427 Lorch St.
Madison, WI 53706
http://www.aae.wisc.edu/cagrainger
Tel: 608-262-3651
E-Mail: cagrainger@wisc.edu
Christopher Costello
Bren School of Environmental
Science & Management
University of California, Santa Barbara
Santa Barbara, CA 93106
Tel: 805/893-5802
Fax: 805/893-7612
E-Mail: costello@bren.ucsb.edu
AB - Property rights are commonly touted as a solution to common pool resource problems. But in practice the security of these property rights varies substantially owing to differences in design. In fisheries, the design of individual transferable quotas (ITQs) varies widely; the consequences of these design differences on economic outcomes has not been studied. To test whether the security of these property rights affects asset values, we compile a unique dataset to examine the relationship between the exclusivity of property rights and the dividend price ratios for ITQs. We find evidence that stronger property rights lead to higher asset values and lower dividend price ratios in ITQ fisheries. This pecuniary effect of property rights security informs the current policy debate on the design of property rights institutions for managing natural resources.
ER -
TY - JOUR
AU - Brown,Jeffrey R.
AU - Kapteyn,Arie
AU - Mitchell,Olivia S.
TI - Framing Effects and Expected Social Security Claiming Behavior
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17018
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17018
L1 - http://www.nber.org/papers/w17018.pdf
N1 - Author contact info:
Jeffrey Brown
Department of Finance
University of Illinois at Urbana-Champaign
515 East Gregory Drive
Champaign, IL 61820
Tel: 217/333-3322
E-Mail: brownjr@illinois.edu
Arie Kapteyn
RAND Corporation
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
Tel: (310) 393-0411 x 7973
E-Mail: arie_kapteyn@rand.org
Olivia S. Mitchell
University of Pennsylvania
Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
AB - Eligible participants in the U.S. Social Security system may claim benefits anytime from age 62-70, with benefit levels actuarially adjusted based on the claiming age. This paper shows that individual intentions with regard to Social Security claiming ages are sensitive to how the early versus late claiming decision is framed. Using an experimental design, we find that the use of a “break-even analysis” has the very strong effect of encouraging individuals to claim early. We also show that individuals are more likely to report they will delay claiming when later claiming is framed as a gain, and when the information provides an anchoring point at older, rather than younger, ages. Moreover, females, individuals with credit card debt, and workers with lower expected benefits are more strongly influenced by framing. We conclude that some individuals may not make fully rational optimizing choices when it comes to choosing a claiming date.
ER -
TY - JOUR
AU - Kolstad,Charles D.
TI - Public Goods Agreements with Other-Regarding Preferences
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17017
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17017
L1 - http://www.nber.org/papers/w17017.pdf
N1 - Author contact info:
Charles D. Kolstad
Department of Economics
University of California
Santa Barbara, CA 93106
Tel: 805/893-2108
Fax: 805/893-8830
E-Mail: kolstad@econ.ucsb.edu
AB - Why cooperation occurs when noncooperation appears to be individually rational has been an issue in economics for at least a half century. In the 1960’s and 1970’s the context was cooperation in the prisoner’s dilemma game; in the 1980’s concern shifted to voluntary provision of public goods; in the 1990’s, the literature on coalition formation for public goods provision emerged, in the context of coalitions to provide transboundary pollution abatement. The problem is that theory suggests fairly low (even zero) levels of contributions to the public good and high levels of free riding. Experiments and empirical evidence suggests higher levels of cooperation. This is a major reason for the emergence in the 1990’s and more recently of the literature on other-regarding preferences (also known as social preferences). Such preferences tend to involve higher levels of cooperation (though not always). This paper contributes to the literature on coalitions, public good provision and other-regarding preferences. For standard preferences, the marginal per capita return (MPCR) to investing in the public good must be greater than one for contributing to be individually rational. We find that Charness-Rabin preferences tend to reduce this threshold for individual contributions. We also find that Charness-Rabin preferences reduce the equilibrium size of a coalition of agents formed to provide the public good. In addition to theoretical results, some experimental implications of the theoretical model are provided. In contrast to much of the literature, we treat the wealth of agents as heterogeneous.
ER -
TY - JOUR
AU - Ferrie,Joseph P.
AU - Rolf,Karen
TI - Socioeconomic Status in Childhood and Health After Age 70: A New Longitudinal Analysis for the U.S., 1895-2005
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17016
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17016
L1 - http://www.nber.org/papers/w17016.pdf
N1 - Author contact info:
Joseph P. Ferrie
Department of Economics
Northwestern University
Evanston, IL 60208-2600
Tel: 847/491-8210
Fax: 847/491-7001
E-Mail: ferrie@northwestern.edu
Karen Rolf
Grace Abbott School of Social Work
University of Nebraska-Omaha
6001 Dodge Street
Omaha, NE 68182
E-Mail: krolf@unomaha.edu
AB - The link between circumstances faced by individuals early in life (including those encountered in utero) and later life outcomes has been of increasing interest since the work of Barker in the 1970s on birth weight and adult disease. We provide such a life course perspective for the U.S. by following 45,000 U.S.-born males from the household where they resided before age 5 until their death and analyzing the link between the characteristics of their childhood environment – particularly, its socioeconomic status – and their longevity and specific cause of death. Individuals living before age 5 in lower SES households (measured by father’s occupation and family home ownership) die younger and are more likely to die from heart disease than those living in higher SES households. The pathways potentially generating these effects are discussed.
ER -
TY - JOUR
AU - Smetters,Kent
AU - Theseira,Walter E.
TI - A Matter of Trust: Understanding Worldwide Public Pension Conversions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17015
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17015
L1 - http://www.nber.org/papers/w17015.pdf
N1 - Author contact info:
Kent Smetters
University of Pennsylvania
SH-DH 3303
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215/898-9811
Fax: 215/898-0310
E-Mail: smetters@wharton.upenn.edu
Walter E. Theseira
Nanyang Technological University
HSS-04-49, 14 Nanyang Drive
Singapore 637332
Republic of Singapore
E-Mail: wetheseira@ntu.edu.sg
AB - This paper seeks to explain the key two stylized facts of fundamental reforms to social security systems worldwide: Why have so many countries reformed when traditional systems seem, at first glance, to have a higher probability of delivering a secure retirement income? Why have these reforms been larger in developing countries facing less severe demographic problems? We show that an OLG voter model can answer both questions. Larger reforms are motivated by a fundamental breakdown in intergenerational trust while smaller reforms are caused by a lack of trust in the ability of the government to save. Empirical analysis seems to support the model.
ER -
TY - JOUR
AU - Mobius,Markus M.
AU - Niederle,Muriel
AU - Niehaus,Paul
AU - Rosenblat,Tanya S.
TI - Managing Self-Confidence: Theory and Experimental Evidence
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17014
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17014
L1 - http://www.nber.org/papers/w17014.pdf
N1 - Author contact info:
Markus Mobius
Department of Economics
Iowa State University
460A Heady Hall
Ames, IA 50011
Tel: (515) 257-6233
Fax: (515) 294-0221
E-Mail: mobius@fas.harvard.edu
Muriel Niederle
Department of Economics
579 Serra Mall
Stanford University
Stanford, CA 94305-6072
Tel: 650/723-7359
Fax: 650/725-5702
E-Mail: niederle@stanford.edu
Paul Niehaus
University of California at San Diego, 9500 Gillma
CA 92093-0508
E-Mail: pniehaus@ucsd.edu
Tanya Rosenblat
Department of Economics
Iowa State University
460A Heady Hall
Ames, IA 50011
E-Mail: tanyar@iastate.edu
AB - Evidence from social psychology suggests that agents process information about their own ability in a biased manner. This evidence has motivated exciting research in behavioral economics, but has also garnered critics who point out that it is potentially consistent with standard Bayesian updating. We implement a direct experimental test. We study a large sample of 656 undergraduate students, tracking the evolution of their beliefs about their own relative performance on an IQ test as they receive noisy feedback from a known data-generating process. Our design lets us repeatedly measure the complete relevant belief distribution incentive-compatibly. We find that subjects (1) place approximately full weight on their priors, but (2) are asymmetric, over-weighting positive feedback relative to negative, and (3) conservative, updating too little in response to both positive and negative signals. These biases are substantially less pronounced in a placebo experiment where ego is not at stake. We also find that (4) a substantial portion of subjects are averse to receiving information about their ability, and that (5) less confident subjects are causally more likely to be averse. We unify these phenomena by showing that they all arise naturally in a simple model of optimally biased Bayesian information processing.
ER -
TY - JOUR
AU - Arora,Ashish
AU - Belenzon,Sharon
AU - Rios,Luis A.
TI - The Organization of R&D in American Corporations: The Determinants and Consequences of Decentralization
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17013
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17013
L1 - http://www.nber.org/papers/w17013.pdf
N1 - Author contact info:
Ashish Arora
Fuqua School of Business
Duke University
Box 90120
Durham, NC 27708-0120
Tel: 919 660 7746
Fax: 919 684-2818
E-Mail: ashish.arora@duke.edu
Sharon Belenzon
Duke University
Fuqua School of Business
1 Towerview Drive, Durham, NC
United States
E-Mail: sharon.belenzon@duke.edu
Luis Rios
Duke University
E-Mail: luis.rios@duke.edu
AB - We study the relationship between decentralization of R&D, innovation and firm performance using a novel dataset on the organizational structure of 1,290 American publicly-listed corporations, 2,615 of their affiliate firms, as well as characteristics of 594,903 patents that they hold. We explore the tension between centralization and decentralization of R&D, which trades off between responsiveness to immediate and local business needs and the type of research that can benefit the firm as a whole. To do this, we develop two novel measures of decentralization. First, using intra-firm patent assignments, we distinguish between patents that are assigned to the inventing unit rather than to corporate headquarters. Second, we exploit the variation between firms which posses a central corporate R&D labs and those that do not. We find that centralized R&D tends be more scientific, broader in scope, and have more technical impact, while being more likely in firms that operate within a narrower range of businesses, in complex technologies, or that are less reliant upon acquisitions. Additionally, we find that firms with a more decentralized structure, on average, invest less in R&D, generate fewer patents per R&D, and exhibit greater sales growth and higher market value. We discuss several theories that can explain these relationships, as well as potential avenues for future research.
ER -
TY - JOUR
AU - Casey,Katherine
AU - Glennerster,Rachel
AU - Miguel,Edward
TI - Reshaping Institutions: Evidence on Aid Impacts Using a Pre-Analysis Plan
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17012
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17012
L1 - http://www.nber.org/papers/w17012.pdf
N1 - Author contact info:
Katherine Casey
Stanford GSB
Memorial Way
Stanford, CA 94305
E-Mail: kecasey@stanford.edu
Rachel Glennerster
Abdul Latif Jameel Poverty Action Lab
MIT Department of Economics
E60-275
Cambridge MA 02139
Tel: 617 324 0098
E-Mail: rglenner@mit.edu
Edward Miguel
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720
Tel: 510/642-7162
Fax: 510/642-6615
E-Mail: emiguel@econ.berkeley.edu
AB - Although institutions are believed to be key determinants of economic performance, there is limited evidence on how they can be successfully reformed. Evaluating the effects of specific reforms is complicated by the lack of exogenous variation in the presence of institutions; the difficulty of empirically measuring institutional performance; and the temptation to “cherry pick” a few novel treatment effect estimates from amongst the large number of indicators required to capture the complex and multi-faceted subject. We evaluate one attempt to make local institutions more egalitarian by imposing minority participation requirements in Sierra Leone and test for longer term learning-by-doing effects. In so doing, we address these three pervasive challenges by: exploiting the random assignment of a participatory local governance intervention, developing innovative real-world outcomes measures, and using a pre-analysis plan to bind our hands against data mining. The specific program under study is a “community driven development” (CDD) project, which has become a popular strategy amongst donors to improve local institutions in developing countries. We find positive short-run effects on local public goods provision and economic outcomes, but no sustained impacts on collective action, decision-making processes, or the involvement of marginalized groups (like women) in local affairs, indicating that the intervention was ineffective at durably reshaping local institutions. We further show that in the absence of a pre-analysis plan, we could have instead generated two highly divergent, equally erroneous interpretations of the impacts—one positive, one negative—of external aid on institutions.
ER -
TY - JOUR
AU - Malani,Anup
AU - Philipson,Tomas J.
TI - Can Medical Progress be Sustained? Implications of the Link Between Development and Output Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17011
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17011
L1 - http://www.nber.org/papers/w17011.pdf
N1 - Author contact info:
Anup Malani
University of Chicago Law School
1111 E. 60th Street
Chicago, IL 60637
Tel: 773/702-9602
E-Mail: amalani@uchicago.edu
Tomas Philipson
Irving B. Harris Graduate School
of Public Policy Studies
University of Chicago
1155 E. 60th Street
Chicago, IL 60637
Tel: 773/502-7773
E-Mail: t-philipson@uchicago.edu
AB - Improvements in health have been a major contributor to gains in overall economic welfare. In this paper, we argue that previous economic research on R&D has overlooked an important difference between medical R&D and R&D in other sectors. The health care sector exhibits a unique linkage between product development and output markets. Participants in clinical trials for new medical products are also potential consumers of existing approved medical products. This overlap between input supply and output demand has non-standard effects on innovative returns over time and across geography. First, medical R&D has a self-limiting effect. Contemporary innovation discourages trial participation and slows down development necessary for future innovation. Thus, medical R&D suffers increasing costs over time, driven by improvements in the standard of care. Second, policies that affect output markets, such as universal coverage and price controls, affect the returns to innovation, not only by altering the firm’s variable profits, but also by increasing the length and cost of development. Third, the amount of medical R&D in a location is driven, not only by the local relative R&D talent, but also by consumer demographics and output market policies in that location. We provide evidence of the input-output linkage for the break-through HIV therapies introduced in 1996. We document the substantial drop in trial recruitment induced by these new innovations and argue that this has slowed down development and lowered returns to subsequent HIV-related innovations.
ER -
TY - JOUR
AU - Burkart,Mike
AU - Gromb,Denis
AU - Mueller,Holger M.
AU - Panunzi,Fausto
TI - Legal Investor Protection and Takeovers
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17010
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17010
L1 - http://www.nber.org/papers/w17010.pdf
N1 - Author contact info:
Mike Burkart
Department of Finance
Stockholm School of Economics, Room 940
PO Box 6501
SE-113 83 Stockholm
SWEDEN
Tel: 4687369678
Fax: 468312327
E-Mail: Mike.Burkart@hhs.se
Denis Gromb
INSEAD
Boulevard de Constance
77305 Fontanebleau
France
E-Mail: denis.gromb@insead.edu
Holger Mueller
Stern School of Business
New York University
44 West Fourth Street
Suite 9-190
New York, NY 10012-1126
Tel: 212/998-0341
Fax: 212/995-4233
E-Mail: hmueller@stern.nyu.edu
Fausto Panunzi
Dipartimento di Economia
Universita Bocconi
Via Roentgen 1
20136 Milano
Tel: 39 02 5836 5327
E-Mail: fausto.panunzi@unibocconi.it
AB - We study the role of legal investor protection for the efficiency of the market for corporate control. Stronger legal investor protection limits the ease with which an acquirer, once in control, can extract private benefits at the expense of non-controlling investors. This, in turn, increases the acquirer’s capacity to raise outside funds to finance the takeover. Absent effective competition for the target, the increased outside funding capacity does not make efficient takeovers more likely, however, because the bid price, and thus the acquirer’s need for funds, increase in lockstep with his pledgeable income. In contrast, under effective competition, the increased outside funding capacity makes it less likely that the takeover outcome is determined by the bidders’ financing constraints–and thus by their internal funds–and more likely that it is determined by their ability to create value. Accordingly, stronger legal investor protection can improve the efficiency of the takeover outcome. Taking into account the interaction between legal investor protection and financing constraints also provides new insights into the optimal allocation of voting rights, sales of controlling blocks, and the role of legal investor protection in cross-border M&A.
ER -
TY - JOUR
AU - Dague,Laura
AU - DeLeire,Thomas
AU - Friedsam,Donna
AU - Kuo,Daphne
AU - Leininger,Lindsey
AU - Meier,Sarah
AU - Voskuil,Kristen
TI - Estimates of Crowd-Out from a Public Health Insurance Expansion Using Administrative Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17009
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17009
L1 - http://www.nber.org/papers/w17009.pdf
N1 - Author contact info:
Laura Dague
Department of Economics
University of Wisconsin-Madison
1180 Observatory Drive
Madison, WI 53706-1393
E-Mail: dague@wisc.edu
Thomas DeLeire
La Follette School of Public Affairs
University of Wisconsin-Madison
1225 Observatory Drive
Madison, WI 53706
Tel: 608-263-6998
Fax: 608/263-2820
E-Mail: deleire@wisc.edu
Donna Friedsam
UW Population Health Institute
University of Wisconsin-Madison
610 Walnut Street
Madison, WI 53726
E-Mail: dafriedsam@wisc.edu
Daphne Kuo
UW Population Health Institute
University of Wisconsin-Madison
610 Walnut Street
Madison, WI 53726
E-Mail: dkuo@ssc.wisc.edu
Lindsey Leininger
Chapin Hall at the University of Chicago
1313 E. 60th Street
Chicago, IL 60637
Tel: 773-256-5132
E-Mail: lleininger@chapinhall.org
Sarah Meier
University of Wisconsin-Madison
Department of Population Health Sciences
610 Walnut Street
Madison, WI 53726
E-Mail: skmeier@wisc.edu
Kristen Voskuil
University of Wisconsin-Madison
UW Population Health Institute
610 Walnut Street
Madison, WI 53726
E-Mail: krvoskuil@wisc.edu
AB - We use a combination of administrative and survey data to estimate the fraction of individuals newly enrolled in public health coverage (Wisconsin’s combined Medicaid and CHIP program) that had access to private, employer-sponsored health insurance at the time of their enrollment and the fraction that dropped this coverage. We estimate that after expansion of eligibility for public coverage, approximately 20% of new enrollees had access to private health insurance at the time of enrollment and that only 8% dropped this coverage (with the remaining 12% having both private and public coverage). We also identify an “upper bound” estimate, which suggests that the percentage of new enrollees with private insurance coverage at the time of enrollment is, at most, 27%. These estimates of crowd-out are relatively low compared with estimates from the literature based on Medicaid and CHIP expansions, although based both on different data and on a different method.
ER -
TY - JOUR
AU - Heal,Geoffrey
TI - Sustainability and its Measurement
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17008
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17008
L1 - http://www.nber.org/papers/w17008.pdf
N1 - Author contact info:
Geoffrey Heal
Graduate School of Business
616 Uris Hall
Columbia University
New York, NY 10027-6902
Tel: 212/854-6459
Fax: 212/316-9219
E-Mail: gmh1@columbia.edu
AB - I present a non-technical high-level review the concept of sustainability and the various approaches to quantifying it.
ER -
TY - JOUR
AU - Shiller,Robert J.
AU - Wojakowski,Rafal M.
AU - Ebrahim,M. Shahid
AU - Shackleton,Mark B.
TI - Continuous Workout Mortgages
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17007
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17007
L1 - http://www.nber.org/papers/w17007.pdf
N1 - Author contact info:
Robert J. Shiller
Yale University, Cowles Foundation
Box 208281
30 Hillhouse Avenue
New Haven, CT 06520-8281
Tel: 203/432-3708
Fax: 203/432-6167
E-Mail: robert.shiller@yale.edu
Rafal M. Wojakowski
Lancaster University
Management School,
Department of Accounting and Finance
Lancaster LA1 4YX
United Kingdom
E-Mail: r.wojakowski@lancaster.ac.uk
M. Shahid Ebrahim
Bangor Business School
Hen Goleg, College Road
Bangor LL57 2DG
United Kingdom
E-Mail: m.s.ebrahim@bangor.ac.uk
Mark B. Shackleton
Lancaster University
Management School,
Department of Accounting and Finance
Lancaster LA1 4YX
United Kingdom
E-Mail: m.shackleton@lancaster.ac.uk
AB - Continuous Workout Mortgage (CWM) balance and payments are indexed using market-observable house price index in an economic environment with prepayments. Our main results include: (a) explicit modelling of repayment and interest-only CWMs; (b) closed form formulas for mortgage payment and mortgage balance of a repayment CWM; (c) a closed form formula for the actuarially fair mortgage rate of an interest-only CWM. For repayment CWMs we extend our analysis to include two negotiable parameters: adjustable "workout proportion" and adjustable "workout threshold." These results are of importance as they not only help in the understanding of the mechanics of CWMs and estimating key contract parameters, but they also provide guidance on how to enhance the resilience of the financial architecture and mitigate systemic risk.
ER -
TY - JOUR
AU - Nakamura,Leonard
TI - Durable Financial Regulation: Monitoring Financial Instruments as a Counterpart to Regulating Financial Institutions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17006
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17006
L1 - http://www.nber.org/papers/w17006.pdf
N1 - Author contact info:
Leonard Nakamura
Economic Research
Federal Reserve Bank of Philadelphia
10 Independence Mall
Philadelphia PA 19106-1574
USA
Tel: 215-574-3804
Fax: 215-574-4364
E-Mail: leonard.nakamura@phil.frb.org
M3 - presented at "Conference on Research in Income and Wealth", November 12-13, 2010
AB - This paper sets forth a discussion framework for the information requirements of systemic financial regulation. It specifically describes a potentially large macro-micro database for the U.S. based on an extended version of the Flow of Funds. I argue that such a database would have been of material value to U.S. regulators in ameliorating the recent financial crisis and could be of aid in understanding the potential vulnerabilities of an innovative financial system in the future. I also suggest that making these data available to the academic research community, under strict confidentiality restrictions, would enhance the detection and measurement of systemic risk.
ER -
TY - JOUR
AU - McCallum,Bennett T.
TI - Should Central Banks Raise their Inflation Targets? Some Relevant Issues
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17005
PY - 2011
Y2 - May 2011
UR - http://www.nber.org/papers/w17005
L1 - http://www.nber.org/papers/w17005.pdf
N1 - Author contact info:
Bennett T. McCallum
Tepper School of Business, Posner 256
Carnegie Mellon University
Pittsburgh, PA 15213
Tel: 412/268-2347
Fax: 412/268-6830
E-Mail: bm05@andrew.cmu.edu
AB - Should central banks, because of the zero-lower-bound problem, raise their inflation-rate targets? Several arguments are relevant. (1) In the absence of the ZLB, the optimal steady-state inflation rate, according to standard New Keynesian reasoning, lies between the Friedman-rule value of deflation at the steady-state real interest rate and the Calvo-model value of zero, with calibration indicating a larger weight on the latter. (2) An attractive modification of the Calvo pricing equation would, however, imply that the weight on the second of these values should be zero. (3) There may be some scope for activist monetary policy to be effective even when the one-period interest rate is at the ZLB; but there is professional disagreement on this matter. (4) Present institutional arrangements are not immutable. In particular, elimination of traditional currency is feasible (even arguably attractive) and would remove the ZLB constraint on policy. (5) Increasing target inflation for the purpose of avoiding occasional ZLB difficulties would tend to undermine the rationale for central bank independence and would constitute an additional movement away from policy recognition of the economic necessity for intertemporal discipline.
ER -
TY - JOUR
AU - Zivin,Joshua S. Graff
AU - Neidell,Matthew J.
TI - The Impact of Pollution on Worker Productivity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17004
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w17004
L1 - http://www.nber.org/papers/w17004.pdf
N1 - Author contact info:
Joshua S. Graff Zivin
University of California, San Diego
9500 Gilman Drive, MC 0519
La Jolla, CA 92093-0519
Tel: 858/822-6438
E-Mail: jgraffzivin@ucsd.edu
Matthew J. Neidell
Department of Health Policy and Management
Columbia University
600 W 168th Street, 6th Floor
New York, NY 10032
Tel: 212/342-4522
Fax: 212/305-3405
E-Mail: mn2191@columbia.edu
AB - Environmental protection is typically cast as a tax on the labor market and the economy in general. Since a large body of evidence links pollution with poor health, and health is an important part of human capital, efforts to reduce pollution could plausibly be viewed as an investment in human capital and thus a tool for promoting economic growth. While a handful of studies have documented the impacts of pollution on labor supply, this paper is the first to rigorously assess the less visible but likely more pervasive impacts on worker productivity. In particular, we exploit a novel panel dataset of daily farm worker output as recorded under piece rate contracts merged with data on environmental conditions to relate the plausibly exogenous daily variations in ozone with worker productivity. We find robust evidence that ozone levels well below federal air quality standards have a significant impact on productivity: a 10 ppb decrease in ozone concentrations increases worker productivity by 4.2 percent.
ER -
TY - JOUR
AU - Anderson,James E.
AU - Yotov,Yoto V.
TI - Terms of Trade and Global Efficiency Effects of Free Trade Agreements, 1990-2002
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17003
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w17003
L1 - http://www.nber.org/papers/w17003.pdf
N1 - Author contact info:
James E. Anderson
Department of Economics
Boston College
Chestnut Hill, MA 02467
Tel: 617/552-3691
Fax: 617/552-2308
E-Mail: james.anderson.1@bc.edu
Yoto V. Yotov
Drexel University
LeBow College of Business
Department of Economics and International Business
Matheson Hall, Suite 503-C
Philadelphia, PA 19104
E-Mail: yotov@drexel.edu
AB - This paper infers the terms of trade effects of Free Trade Agreements (FTA's) with the structural gravity model. Using panel data methods to resolve two way causality between trade and FTA's, we estimate direct FTA effects on bilateral trade volume in 2 digit manufacturing goods from 1990-2002. We deduce the terms of trade changes implied by these volume effects for 40 countries plus a rest-of-the-world aggregate. Some gain over 10%, some lose less than 0.2%. Overall, using a novel measure of the change in iceberg melting, global efficiency rises 0.62%.
ER -
TY - JOUR
AU - Zheng,Siqi
AU - Kahn,Matthew E.
TI - Does Government Investment in Local Public Goods Spur Gentrification? Evidence from Beijing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17002
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w17002
L1 - http://www.nber.org/papers/w17002.pdf
N1 - Author contact info:
Siqi Zheng
Institute of Real Estate Studies
Department of Construction Management
Tsinghua University
Beijing 100084, P. R. China
Tel: 8610-62772734
Fax: 8610-62788678
E-Mail: zhengsiqi@tsinghua.edu.cn
Matthew E. Kahn
UCLA Institute of the Environment
Department of Economics
Department of Public Policy
Box 951496
La Kretz Hall, Suite 300
Los Angeles, CA 90095-1496
Tel: 310/794-4904
Fax: 310/825-9663
E-Mail: mkahn@ioe.ucla.edu
AB - In Beijing, the metropolitan government has made enormous place based investments to increase green space and to improve public transit. We examine the gentrification consequences of such public investments. Using unique geocoded real estate and restaurant data, we document that the construction of the Olympic Village and two recent major subway systems have led to increased new housing supply in the vicinity of these areas, higher local prices and an increased quantity of nearby private chain restaurants.
ER -
TY - JOUR
AU - Fullerton,Don
AU - Karney,Daniel
AU - Baylis,Kathy
TI - Negative Leakage
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17001
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w17001
L1 - http://www.nber.org/papers/w17001.pdf
N1 - Author contact info:
Don Fullerton
Department of Finance
University of Illinois
BIF Box#30 (MC520)
515 East Gregory Drive
Champaign, IL 61820
Tel: 217/244-3621
Fax: 217/244-3102
E-Mail: dfullert@illinois.edu
Daniel Karney
Department of Economics
University of Illinois
David Kinley Hall
Champaign, IL 61820
E-Mail: dkarney2@illinois.edu
Kathy Baylis
Department of Agricultural and Consumer Economics
University of Illinois
Mumford Hall
Urbana, IL 61801
E-Mail: baylis@illinois.edu
AB - We build a simple analytical general equilibrium model and linearize it, to find a closed-from expression for the effect of a small change in carbon tax on leakage – the increase in emissions elsewhere. The model has two goods produced in two sectors or regions. Many identical consumers buy both goods using income from a fixed stock of capital that is mobile between sectors. An increase in one sector’s carbon tax raises the price of its output, so consumption shifts to the other good, causing positive carbon leakage. However, the taxed sector substitutes away from carbon into capital. It thus absorbs capital, which shrinks the other sector, causing negative leakage. This latter effect could swamp the former, reducing carbon emissions in both sectors.
ER -
TY - JOUR
AU - Acharya,Viral V.
AU - Bisin,Alberto
TI - Counterparty Risk Externality: Centralized Versus Over-the-counter Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17000
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w17000
L1 - http://www.nber.org/papers/w17000.pdf
N1 - Author contact info:
Viral V. Acharya
Stern School of Business
New York University
44 West 4th Street, Suite 9-84
New York, NY 10012
Tel: 212/998-0354
Fax: 212 995 4233
E-Mail: vacharya@stern.nyu.edu
Alberto Bisin
Department of Economics
New York University
19 West 4th Street, 5th Floor
New York, NY 10012
Tel: 212/998-8916
Fax: 212/995-4186
E-Mail: alberto.bisin@nyu.edu
AB - We model the opacity of over-the-counter (OTC) markets in a setup where agents share risks, but have incentives to default and their financial positions are not mutually observable. We show that this setup results in excess "leverage" in that parties take on short OTC positions that lead to levels of default risk that are higher than Pareto-efficient ones. In particular, OTC markets feature a "counterparty risk externality" that we show can lead to ex-ante productive inefficiency. This externality is absent when trading is organized via a centralized clearing mechanism that provides transparency of trade positions, or a centralized counterparty (such as an exchange) that observes all trades and sets prices competitively. While collateral requirements and subordination of OTC positions in bankruptcy can ameliorate the counterparty risk externality, they are in general inadequate in addressing it fully.
ER -
TY - JOUR
AU - Chakrabarti,Rajashri
AU - Lee,Donghoon
AU - Klaauw,Wilbert van der
AU - Zafar,Basit
TI - Household Debt and Saving During the 2007 Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16999
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16999
L1 - http://www.nber.org/papers/w16999.pdf
N1 - Author contact info:
Rajashri Chakrabarti
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 212-720-6415
Fax: 212-720-1844
E-Mail: Rajashri.Chakrabarti@ny.frb.org
Donghoon Lee
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 2127208699
E-Mail: donghoon.lee@ny.frb.org
Wilbert H. van der Klaauw
33 Liberty Street
Research and Statistics, Federal Reserve Bank NY
New York, NY 10045
E-Mail: Wilbert.vanderklaauw@ny.frb.org
Basit Zafar
Federal Reserve Bank of New York
E-Mail: basit.zafar@ny.frb.org
M3 - presented at "Conference on Research in Income and Wealth", November 12-13, 2010
AB - Using administrative credit report records and data collected through several special household surveys we analyze changes in household debt and savings during the 2007 recession. We find that while different segments of the population were affected in distinct ways, depending on whether they owned a home, whether they owned stocks and whether they had secure jobs, the crisis’ impact appears to have been widespread, affecting large shares of households across all age, income and education groups. In response to their deteriorated financial situation, households reduced their average spending and increased saving. The latter increase – at least in 2009 – did not materialize itself through an increase in contributions to retirement and savings accounts. If anything, such contributions actually declined on average during that year. Instead, the higher saving rate appears to reflect a considerable decline in household debt, with households paying down mortgage debt in particular. At the end of 2009 individuals expected to continue to increase saving and pay down debt, which is consistent with what we have observed so far in 2010. In contrast, consumers were pessimistic about the availability of credit, with credit expected to become harder to obtain during 2010.
ER -
TY - JOUR
AU - Nicolò,Gianni De
AU - Lucchetta,Marcella
TI - Systemic Risks and the Macroeconomy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16998
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16998
L1 - http://www.nber.org/papers/w16998.pdf
N1 - Author contact info:
Gianni De Nicolo
International Monetary Fund
E-Mail: gdenicolo@imf.org
Marcella Lucchetta
University of Venice Ca' Foscari
E-Mail: lucchett@unive.it
M1 - published as Gianni De Nicolò, Marcella Lucchetta. "Systemic Risks and the Macroeconomy," in Joseph G. Haubrich and Andrew W. Lo, editors, "Quantifying Systemic Risk" University of Chicago Press (2012)
M3 - presented at "Research Conference on Quantifying Systemic Risk", November 6, 2009
AB - This paper presents a modeling framework that delivers joint forecasts of indicators of systemic real risk and systemic financial risk, as well as stress-tests of these indicators as impulse responses to structural shocks identified by standard macroeconomic and banking theory. This framework is implemented using large sets of quarterly time series of indicators of financial and real activity for the G-7 economies for the 1980Q1-2009Q3 period. We obtain two main results. First, there is evidence of out-of sample forecasting power for tail risk realizations of real activity for several countries, suggesting the usefulness of the model as a risk monitoring tool. Second, in all countries aggregate demand shocks are the main drivers of the real cycle, and bank credit demand shocks are the main drivers of the bank lending cycle. These results challenge the common wisdom that constraints in the aggregate supply of credit have been a key driver of the sharp downturn in real activity experienced by the G-7 economies in 2008Q4-2009Q1.
ER -
TY - JOUR
AU - Chernozhukov,Victor
AU - Fernández-Val,Iván
AU - Kowalski,Amanda E.
TI - Quantile Regression with Censoring and Endogeneity
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16997
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16997
L1 - http://www.nber.org/papers/w16997.pdf
N1 - Author contact info:
Victor Chernozhukov
Department of Economics
MIT
Cambridge, MA 02142
E-Mail: vchern@mit.edu
Iván Fernández-Val
Department of Economics
Boston University
270 Bay State Rd
Boston, MA 02215
E-Mail: ivanf@bu.edu
Amanda E. Kowalski
Department of Economics
Yale University
37 Hillhouse Avenue
Box 208264
New Haven, CT 06520
Tel: 203/432-3521
E-Mail: amanda.kowalski@yale.edu
AB - In this paper, we develop a new censored quantile instrumental variable (CQIV) estimator and describe its properties and computation. The CQIV estimator combines Powell (1986) censored quantile regression (CQR) to deal semiparametrically with censoring, with a control variable approach to incorporate endogenous regressors. The CQIV estimator is obtained in two stages that are nonadditive in the unobservables. The first stage estimates a nonadditive model with infinite dimensional parameters for the control variable, such as a quantile or distribution regression model. The second stage estimates a nonadditive censored quantile regression model for the response variable of interest, including the estimated control variable to deal with endogeneity. For computation, we extend the algorithm for CQR developed by Chernozhukov and Hong (2002) to incorporate the estimation of the control variable. We give generic regularity conditions for asymptotic normality of the CQIV estimator and for the validity of resampling methods to approximate its asymptotic distribution. We verify these conditions for quantile and distribution regression estimation of the control variable. We illustrate the computation and applicability of the CQIV estimator with numerical examples and an empirical application on estimation of Engel curves for alcohol.
ER -
TY - JOUR
AU - Lettau,Martin
AU - Ludvigson,Sydney C.
TI - Shocks and Crashes
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16996
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16996
L1 - http://www.nber.org/papers/w16996.pdf
N1 - Author contact info:
Martin Lettau
Haas School of Business
University of California, Berkeley
545 Student Services Bldg. #1900
Berkeley, CA 94720-1900
Tel: 510/642-6349
Fax: 510/643-1412
E-Mail: lettau@haas.berkeley.edu
Sydney C. Ludvigson
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10002
Tel: 212/998-8927
Fax: 212/995-4186
E-Mail: sydney.ludvigson@nyu.edu
AB - Three shocks, distinguished by whether their effects are permanent or transitory, are identified to characterize the post-war dynamics of aggregate consumer spending, labor earnings, and household wealth. The first shock accounts for virtually all of the variation in consumption and has effects akin to a permanent total factor productivity shock in canonical frictionless macroeconomic models. The second shock underlies the bulk of fluctuations in labor income, accounting for 76% of its variation. This shock permanently reallocates rewards between shareholders and workers but leaves consumption unaffected. Over the last 25 years, the cumulative effect of this shock has persistently boosted stock market wealth and persistently lowered labor earnings. The third shock is a persistent but transitory innovation that accounts for the vast majority of quarterly fluctuations in asset values but has a negligible impact on consumption and labor earnings at all horizons. We show that the 2000-02 asset market crash was the result of a negative transitory wealth shock, which predominantly affected stock market wealth. By contrast, the 2007-09 crash was accompanied by a string of large negative realizations in both the transitory shock and the permanent productivity shock, with the latter having especially important implications for housing wealth.
ER -
TY - JOUR
AU - Acharya,Viral V.
AU - Davydenko,Sergei A.
AU - Strebulaev,Ilya A.
TI - Cash Holdings and Credit Risk
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16995
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16995
L1 - http://www.nber.org/papers/w16995.pdf
N1 - Author contact info:
Viral V. Acharya
Stern School of Business
New York University
44 West 4th Street, Suite 9-84
New York, NY 10012
Tel: 212/998-0354
Fax: 212 995 4233
E-Mail: vacharya@stern.nyu.edu
Sergei Davydenko
Assistant Professor of Finance
Rotman School of Management
University of Toronto
105 St George Street, Toronto
Canada M5S 3E6
Tel: 44 207 262 5050 ext 3768
Fax: 44 207 724 3317
E-Mail: davydenko@rotman.utoronto.ca
Ilya A. Strebulaev
Graduate School of Business
Stanford University
655 Knight Way
Stanford, CA 94305
Tel: 650/725-8239
Fax: 650/725-7979
E-Mail: istrebulaev@stanford.edu
AB - Intuition suggests that firms with higher cash holdings are safer and should have lower credit spreads. Yet empirically, the correlation between cash and spreads is robustly positive and higher for lower credit ratings. This puzzling finding can be explained by the precautionary motive for saving cash. In our model endogenously determined optimal cash reserves are positively related to credit risk, resulting in a positive correlation between cash and spreads. In contrast, spreads are negatively related to the "exogenous'' component of cash holdings that is independent of credit risk factors. Similarly, although firms with higher cash reserves are less likely to default over short horizons, endogenously determined liquidity may be related positively to the longer-term probability of default. Our empirical analysis confirms these predictions, suggesting that precautionary savings are central to understanding the effects of cash on credit risk.
ER -
TY - JOUR
AU - Diamond,Douglas W.
AU - Rajan,Raghuram
TI - Illiquid Banks, Financial Stability, and Interest Rate Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16994
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16994
L1 - http://www.nber.org/papers/w16994.pdf
N1 - Author contact info:
Douglas W. Diamond
Booth School of Business
University of Chicago
5807 S Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-7283
Fax: 773/834-9134
E-Mail: douglas.diamond@chicagobooth.edu
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu
AB - Do low interest rates alleviate banking fragility? Banks finance illiquid assets with demandable deposits, which discipline bankers but expose them to damaging runs. Authorities may choose to bail out banks being run. Unconstrained bailouts undermine the disciplinary role of deposits. Moreover, competition forces banks to promise depositors more, increasing intervention and making the system worse off. By contrast, constrained intervention to lower rates maintains private discipline, while offsetting contractual rigidity. It may still lead banks to make excessive liquidity promises. Anticipating this, central banks can reduce financial fragility by raising rates in normal times to offset their propensity to reduce rates in adverse times.
ER -
TY - JOUR
AU - Meisenzahl,Ralf
AU - Mokyr,Joel
TI - The Rate and Direction of Invention in the British Industrial Revolution: Incentives and Institutions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16993
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16993
L1 - http://www.nber.org/papers/w16993.pdf
N1 - Author contact info:
Ralf Meisenzahl
Board of Governors of the Federal Reserve System
20th Street and Constitution Ave NW - MS 153
Washington, DC 20551
Tel: 202 912 7997
Fax: 202 452 5295
E-Mail: Ralf.R.Meisenzahl@frb.gov
Joel Mokyr
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL 60208
E-Mail: j-mokyr@northwestern.edu
M3 - presented at "Rate & Direction of Inventive Activity Conference", September 30-October 2, 2010
AB - During the Industrial Revolution technological progress and innovation became the main drivers of economic growth. But why was Britain the technological leader? We argue that one hitherto little recognized British advantage was the supply of highly skilled, mechanically able craftsmen who were able to adapt, implement, improve, and tweak new technologies and who provided the micro inventions necessary to make macro inventions highly productive and remunerative. Using a sample of 759 of these mechanics and engineers, we study the incentives and institutions that facilitated the high rate of inventive activity during the Industrial Revolution. First, apprenticeship was the dominant form of skill formation. Formal education played only a minor role. Second, many skilled workmen relied on secrecy and first-mover advantages to reap the benefits of their innovations. Over 40 percent of the sample here never took out a patent. Third, skilled workmen in Britain often published their work and engaged in debates over contemporary technological and social questions. In short, they were affected by the Enlightenment culture. Finally, patterns differ for the textile sector; therefore, any inferences from textiles about the whole economy are likely to be misleading.
ER -
TY - JOUR
AU - Zheng,Siqi
AU - Cao,Jing
AU - Kahn,Matthew E.
TI - China's Rising Demand for "Green Cities": Evidence from Cross-City Real Estate Price Hedonics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16992
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16992
L1 - http://www.nber.org/papers/w16992.pdf
N1 - Author contact info:
Siqi Zheng
Institute of Real Estate Studies
Department of Construction Management
Tsinghua University
Beijing 100084, P. R. China
Tel: 8610-62772734
Fax: 8610-62788678
E-Mail: zhengsiqi@tsinghua.edu.cn
Jing Cao
School of Economics and Management
Tsinghua University
Haidian District, Beijing, 100084, China
E-Mail: caojing@sem.tsinghua.edu.cn
Matthew E. Kahn
UCLA Institute of the Environment
Department of Economics
Department of Public Policy
Box 951496
La Kretz Hall, Suite 300
Los Angeles, CA 90095-1496
Tel: 310/794-4904
Fax: 310/825-9663
E-Mail: mkahn@ioe.ucla.edu
AB - With the decline of the traditional hukou system, migrants in China have a broad set of cities to choose from. Within an open system of cities, compensating differentials theory predicts that local real estate prices will reflect the marginal valuation of non-market local public goods. More polluted cities will feature lower real estate prices. But, local pollution may be caused by booming local industries. To address such endogeneity concerns, we estimate hedonic regressions using an instrumental variable strategy based on “imports” of pollution from nearby sources. By documenting the importance of spatial emissions patterns, our study highlights how real estate prices in one city are affected by Pigouvian externalities originating in another location. On average, a 10% decrease in imported neighbor pollution is associated with a 1.8% increase in local home prices.
ER -
TY - JOUR
AU - Wolff,Edward N.
TI - Pensions in the 2000s: the Lost Decade?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16991
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16991
L1 - http://www.nber.org/papers/w16991.pdf
N1 - Author contact info:
Edward N. Wolff
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY 10012
Tel: 212/998-8917
Fax: 212/995-4186
E-Mail: edward.wolff@nyu.edu
AB - One of the most dramatic changes in the retirement income system over the last three decades has been a decline in traditional defined benefit (DB) pension plans and a corresponding rise in defined contribution (DC) pensions. Have workers benefited from this change? Using data from the Survey of Consumer Finances, I find that after robust gains in the 1980s and 1990s, pension wealth experienced a marked slowdown in growth from 2001 to 2007. Projections to 2009 indicate no increase in pension wealth from 2001 to 2009. Retirement wealth is also found to offset the inequality in standard household net worth. However, I find that pensions had a weaker offsetting effect on wealth inequality in 2007 than in 1989. As a result, whereas standard net worth inequality showed little change from 1989 to 2007, the inequality of private augmented wealth (the sum of pension wealth and net worth) did increase over this period. These results hold up even when Social Security wealth and employer contributions to DC plans are included in the measure of wealth and when adjustments are made for future tax liabilities on retirement wealth.
ER -
TY - JOUR
AU - Chandra,Amitabh
AU - Jena,Anupam B.
AU - Skinner,Jonathan S.
TI - The Pragmatist’s Guide to Comparative Effectiveness Research
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16990
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16990
L1 - http://www.nber.org/papers/w16990.pdf
N1 - Author contact info:
Amitabh Chandra
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-7356
E-Mail: amitabh_chandra@harvard.edu
Anupam Jena
Department of Medicine
Massachusetts General Hospital
Wang Ambulatory Care Center
15 Parkman Street
Boston, MA 02114
E-Mail: jena.anupam@mgh.harvard.edu
Jonathan S. Skinner
Department of Economics
6106 Rockefeller Hall
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2535
Fax: 603/646-2122
E-Mail: jonathan.skinner@dartmouth.edu
AB - All developed countries have been struggling with a trend toward health care absorbing an ever-larger fraction of government and private budgets. Adopting any treatment that improves health outcomes, no matter what the cost, can worsen allocative inefficiency by paying dearly for small health gains. One potential solution is to rely more heavily on studies of the costs and effectiveness of new technologies in an effort to ensure that new spending is justified by a commensurate gain in consumer benefits. But not everyone is a fan of such studies and we discuss the merits of comparative effectiveness studies and its cousin, cost-effectiveness analysis. We argue that effectiveness research can generate some moderating effects on cost growth in healthcare if such research can be used to nudge patients away from less-effective therapies, whether through improved decision making or by encouraging beefed-up copayments for cost-ineffective procedures. More promising still for reducing growth is the use of a cost-effectiveness framework to better understand where the real savings lie—and the real savings may well lie in figuring out the complex interaction and fragmentation of healthcare systems.
ER -
TY - JOUR
AU - Hendel,Igal
AU - Nevo,Aviv
TI - Intertemporal Price Discrimination in Storable Goods Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16988
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16988
L1 - http://www.nber.org/papers/w16988.pdf
N1 - Author contact info:
Igal Hendel
Department of Economics
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-8226
Fax: 847/491-7001
E-Mail: igal@northwestern.edu
Aviv Nevo
Department of Economics
Northwestern University
2001 Sheridan Road
Evanston, IL 60208-2600
Tel: 847/491-8212
Fax: 847/491-7001
E-Mail: nevo@northwestern.edu
AB - We study intertemporal price discrimination when consumers can store for future consumption needs. To make the problem tractable we offer a simple model of demand dynamics, which we estimate using market level data. Optimal pricing involves temporary price reductions that enable sellers to discriminate between price sensitive consumers, who anticipate future needs, and less price-sensitive consumers. We empirically quantify the impact of intertemporal price discrimination on profits and welfare. We find that sales: (1) capture 25-30% of the profit gap between non-discriminatory and third degree price discrimination profits, and (2) increase total welfare.
ER -
TY - JOUR
AU - Chugh,Randy
AU - Cropper,Maureen L.
AU - Narain,Urvashi
TI - The Cost of Fuel Economy in the Indian Passenger Vehicle Market
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16987
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16987
L1 - http://www.nber.org/papers/w16987.pdf
N1 - Author contact info:
Randy Chugh
Department of Economics
University of Maryland
College Park, MD 20742
E-Mail: chugh@econ.umd.edu
Maureen L. Cropper
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3483
Fax: 301/405-3542
E-Mail: cropper@econ.umd.edu
Urvashi Narain
Environment Department
World Bank
Washington, DC 20433
E-Mail: unarain@worldbank.org
AB - To investigate how fuel economy is valued in the Indian car market, we compute the cost to Indian consumers of purchasing a more fuel-efficient vehicle and compare it to the benefit of lower fuel costs over the life of the vehicle. We use hedonic price functions for four market segments (petrol hatchbacks, diesel hatchbacks, petrol sedans, and diesel sedans) to compute 95 percent confidence intervals for the marginal cost to the consumer of an increase in fuel economy. We find that the associated present value of fuel savings falls within the 95 percent confidence interval for some specifications, in all market segments, for the years 2002 through 2006. Thus, we fail to consistently reject the hypothesis that consumers appropriately value fuel economy. When we reject the null hypothesis, the marginal cost of additional fuel economy exceeds the present value of fuel savings, suggesting that consumers may, in fact, be overvaluing fuel economy.
ER -
TY - JOUR
AU - Hellerstein,Judith K.
AU - Neumark,David
TI - Employment in Black Urban Labor Markets: Problems and Solutions
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16986
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16986
L1 - http://www.nber.org/papers/w16986.pdf
N1 - Author contact info:
Judith K. Hellerstein
Department of Economics
Tydings Hall
University of Maryland
College Park, MD 20742
Tel: 301/405-3545
Fax: 301/405-3542
E-Mail: hellerst@econ.umd.edu
David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA 92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu
AB - Blacks in the United States are poorer than whites and have much lower employment rates. “Place-based” policies seek to improve the labor markets in which blacks – especially low-income urban blacks – tend to reside. We first review the literature on spatial mismatch, which provides much of the basis for place-based policies. New evidence demonstrates an important racial dimension to spatial mismatch, and this “racial mismatch” suggests that simply creating more jobs where blacks live, or moving blacks to where jobs are located, is unlikely to make a major dent in black employment problems. We also discuss new evidence of labor market networks that are to some extent stratified by race, which may help explain racial mismatch. We then turn to evidence on place-based policies. Many of these, such as enterprise zones and Moving to Opportunity (MTO), are largely ineffective in increasing employment, likely because spatial mismatch is not the core problem facing urban blacks, and because, in the case of MTO, the role of labor market networks was weakened. Finally, we discuss policies focused on place that also target incentives and other expenditures on the residents of the targeted locations, which may do more to take advantage of labor market networks.
ER -
TY - JOUR
AU - Bricker,Jesse
AU - Bucks,Brian K.
AU - Kennickell,Arthur
AU - Mach,Traci L.
AU - Moore,Kevin
TI - Drowning or Weathering the Storm? Changes in Family Finances from 2007 to 2009
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16985
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16985
L1 - http://www.nber.org/papers/w16985.pdf
N1 - Author contact info:
Jesse Bricker
Board of Governors
Federal Reserve Board
Washington, DC 20551
E-Mail: jesse.bricker@frb.gov
Brian K. Bucks
Board of Governors
Federal Reserve Board
Washington, DC 20551
E-Mail: Brian.Bucks@cfpb.gov
Arthur Kennickell
Board of Governors
Federal Reserve Board
Washington, DC 20551
Tel: 202/452-2247
Fax: 202/452-5295
E-Mail: arthur.kennickell@frb.gov
Traci L. Mach
Board of Governors
Federal Reserve Board
Washington, DC 20551
E-Mail: traci.l.mach@frb.gov
Kevin Moore
Board of Governors
Federal Reserve Board
Washington, DC 20551
E-Mail: kevin.b.moore@frb.gov
M3 - presented at "Conference on Research in Income and Wealth", November 12-13, 2010
AB - In 2009, the Federal Reserve Board implemented a survey of families that participated in the 2007 Survey of Consumer Finances (SCF) to gain detailed information on the effects of the recent recession on all types of households. Using data from the 2007–09 SCF panel, we highlight the variation in households’ financial experiences by examining the distribution of changes in families’ balance sheets. Further, we use information on changes in families’ saving, investing, and spending behavior to consider the potential longer-term consequences of the current recession on households’ finances and decisions.
Most families experienced a decline in wealth between 2007 and 2009, but many families saw only small changes on net, and others saw substantial increases in their wealth. This pattern of gains and losses typically holds within demographic groups. Changes in families’ wealth over the period appear to reflect changes in asset values (particularly the value of homes, stocks, and businesses) rather than changes in the level of ownership of assets and debts or in the amount of debt held. On the whole, families appear more cautious in 2009 than in 2007, as most families reported greater desired buffer savings, and many expressed concern over future income and employment.
ER -
TY - JOUR
AU - Acemoglu,Daron
TI - Diversity and Technological Progress
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16984
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16984
L1 - http://www.nber.org/papers/w16984.pdf
N1 - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu
AB - This paper proposes a tractable model to study the equilibrium diversity of technological progress and shows that equilibrium technological progress may exhibit too little diversity (too much conformity), in particular, foregoing socially beneficial investments in “alternative” technologies that will be used at some point in the future. The presence of future innovations that will replace current innovations imply that social benefits from innovation are not fully internalized. As a consequence, the market favors technologies that generate current gains relative to those that will bear fruit in the future; current innovations in research lines that will be profitable in the future are discouraged because current innovations are typically followed by further innovations before they can be profitably marketed. A social planner would choose a more diverse research portfolio and would induce a higher growth rate than the equilibrium allocation. The diversity of researchers is a partial (imperfect) remedy against the misallocation induced by the market. Researchers with different interests, competences or ideas may choose non-profit maximizing and thus more diverse research portfolios, indirectly contributing to economic growth.
ER -
TY - JOUR
AU - Moser,Petra
AU - Rhode,Paul W.
TI - Did Plant Patents Create the American Rose?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16983
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16983
L1 - http://www.nber.org/papers/w16983.pdf
N1 - Author contact info:
Petra Moser
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650-723-9303
Fax: (650) 725-5702
E-Mail: pmoser@stanford.edu
Paul Rhode
Economics Department
University of Michigan
205 Lorch Hall
611 Tappan St.
Ann Arbor, MI 48109-1220
Tel: 734/647-5603
Fax: 734/764-2769
E-Mail: pwrhode@umich.edu
M3 - presented at "Rate & Direction of Inventive Activity Conference", September 30-October 2, 2010
AB - The Plant Patent Act of 1930 was the first step towards creating property rights for biological innovation: it introduced patent rights for asexually-propagated plants. This paper uses data on plant patents and registrations of new varieties to examine whether the Act encouraged innovation. Nearly half of all plant patents between 1931 and 1970 were for roses. Large commercial nurseries, which began to build mass hybridization programs in the 1940s, accounted for most of these patents, suggesting that the new intellectual property rights may have helped to encourage the development of a commercial rose breeding industry. Data on registrations of newly-created roses, however, yield no evidence of an increase in innovation: less than 20 percent of new roses were patented, European breeders continued to create most new roses, and there was no increase in the number of new varieties per year after 1931.
ER -
TY - JOUR
AU - Ang,Andrew
AU - Longstaff,Francis A.
TI - Systemic Sovereign Credit Risk: Lessons from the U.S. and Europe
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16982
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16982
L1 - http://www.nber.org/papers/w16982.pdf
N1 - Author contact info:
Andrew Ang
Columbia Business School
3022 Broadway 413 Uris
New York, NY 10027
Tel: 212/854-9154
Fax: 212/662-8474
E-Mail: aa610@columbia.edu
Francis Longstaff
UCLA
Anderson Graduate School of Management
110 Westwood Plaza, Box 951481
Los Angeles, CA 90095-1481
Tel: 310/825-2218
Fax: 310/206-5455
E-Mail: francis.longstaff@anderson.ucla.edu
AB - We study the nature of systemic sovereign credit risk using CDS spreads for the U.S. Treasury, individual U.S. states, and major European countries. Using a multifactor affine framework that allows for both systemic and sovereign-specific credit shocks, we find that there is considerable heterogeneity across U.S. and European issuers in their sensitivity to systemic risk. U.S. and Euro systemic shocks are highly correlated, but there is much less systemic risk among U.S. sovereigns than among European sovereigns. We also find that U.S. and European systemic sovereign risk is strongly related to financial market variables. These results provide strong support for the view that systemic sovereign risk has its roots in financial markets rather than in macroeconomic fundamentals.
ER -
TY - JOUR
AU - Alesina,Alberto F.
AU - Ferrara,Eliana La
TI - A Test of Racial Bias in Capital Sentencing
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16981
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16981
L1 - http://www.nber.org/papers/w16981.pdf
N1 - Author contact info:
Alberto F. Alesina
Department of Economics
Harvard University
Littauer Center 210
Cambridge, MA 02138
Tel: 617/495-8388
Fax: 617/495-7730
E-Mail: aalesina@harvard.edu
Eliana La Ferrara
Universita' Bocconi
Dept of Economics
via Roentgen 1
20136 Milano
Italy
Tel: 3902-58363328
E-Mail: eliana.laferrara@unibocconi.it
AB - This paper proposes a test of racial bias in capital sentencing based upon patterns of judicial errors in lower courts. We model the behavior of the trial court as minimizing a weighted sum of the probability of sentencing an innocent and that of letting a guilty defendant free. We define racial bias as a situation where the relative weight on the two types of errors is a function of defendant and/or victim race. The key prediction of the model is that if the court is unbiased, ex post the error rate should be independent of the combination of defendant and victim race. We test this prediction using an original dataset that contains the race of the defendant and of the victim(s) for all capital appeals that became final between 1973 and 1995. We find robust evidence of bias against minority defendants who killed white victims: In Direct Appeal and Habeas Corpus the probability of error in these cases is 3 and 9 percentage points higher, respectively, than for minority defendants who killed minority victims.
ER -
TY - JOUR
AU - Gans,Joshua
AU - Murray,Fiona E.
TI - Funding Scientific Knowledge: Selection, Disclosure and the Public-Private Portfolio
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16980
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16980
L1 - http://www.nber.org/papers/w16980.pdf
N1 - Author contact info:
Joshua Gans
Rotman School of Management
University of Toronto
105 St. George Street
Toronto ON M5S 3E6
Tel: 416/978-3243
E-Mail: joshua.gans@gmail.com
Fiona E. Murray
MIT Sloan School of Management
50 Memorial Drive, E52-568
Cambridge, MA 02142
Tel: 617/253-3681
Fax: 617/253-2660
E-Mail: fmurray@mit.edu
M3 - presented at "Rate & Direction of Inventive Activity Conference", September 30-October 2, 2010
AB - This paper examines argues that while two distinct perspectives characterize the foundations of the public funding of research – filling a selection gap and solving a disclosure problem – in fact both the selection choices of public funders and their criteria for disclosure and commercialization shape the level and type of funding for research and the disclosures that arise as a consequence. In making our argument, we begin by reviewing project selection criteria and policies towards disclosure and commercialization (including patent rights) made by major funding organizations, noting the great variation between these institutions. We then provide a model of how selection criteria and funding conditions imposed by funders interact with the preferences of scientists to shape those projects that accept public funds and the overall level of openness in research. Our analysis reveals complex and unexpected relationships between public funding, private funding, and public disclosure of research. We show, for example, that funding choices made by public agencies can lead to unintended, paradoxical effects, providing short-term openness while stifling longer-term innovation. Implications for empirical evaluation and an agenda for future research are discussed.
ER -
TY - JOUR
AU - Anderson,Soren T.
AU - Kellogg,Ryan
AU - Sallee,James M.
TI - What Do Consumers Believe About Future Gasoline Prices?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16974
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16974
L1 - http://www.nber.org/papers/w16974.pdf
N1 - Author contact info:
Soren T. Anderson
Department of Economics
Marshall - Adams Hall, Office 18C
Michigan State University
East Lansing, MI 48824-1038
Tel: 517/355-0286
Fax: 517/432-1068
E-Mail: sta@msu.edu
Ryan Kellogg
University of Michigan
Department of Economics
238 Lorch Hall
611 Tappan Street
Ann Arbor, MI 48109-1220
Tel: 734/764-2371
Fax: 734/764-2769
E-Mail: kelloggr@umich.edu
James M. Sallee
Harris School of Public Policy Studies
University of Chicago
1155 East 60th Street
Chicago, IL 60637
Tel: 773/316-3480
Fax: 773/702-2286
E-Mail: sallee@uchicago.edu
AB - Researchers estimating the demand for energy-using durable goods must specify consumers' beliefs about future energy prices. Policy-relevant inference hinges on this specification, yet there is little direct evidence on the nature of consumer beliefs. We provide such evidence by analyzing two decades of data on gasoline price expectations from the Michigan Survey of Consumers. We find that average consumer beliefs are indistinguishable from a no-change forecast. This finding has important implications for the literature on consumer valuation of energy efficiency, and it implies that researchers are likely justified in assuming a no-change forecast, as is common practice.
ER -
TY - JOUR
AU - Fiore,Fiorella De
AU - Uhlig,Harald
TI - Bank Finance Versus Bond Finance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16979
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16979
L1 - http://www.nber.org/papers/w16979.pdf
N1 - Author contact info:
Fiorella de Fiore
European Central Bank
Postfach 160319
D-60066 Frankfurt am Main, GERMANY
E-Mail: fiorella.De_fiore@ecb.int
Harald Uhlig
Dept. of Economics
University of Chicago
1126 E 59th Street
Chicago, IL 60637
Tel: 773/702-3702
Fax: 773/702-8490
E-Mail: huhlig@uchicago.edu
AB - We present a dynamic general equilibrium model with agency costs where: i) firms are heterogeneous in the risk of default; ii) they can choose to raise finance through bank loans or corporate bonds; and iii) banks are more efficient than the market in resolving informational problems. The model is used to analyze some major long-run differences in corporate finance between the US and the euro area. We suggest an explanation of those differences based on information availability. Our model replicates the data when the euro area is characterized by limited availability of public information about corporate credit risk relative to the US, and when european firms value more than US firms the flexibility and information acquisition role provided by banks.
ER -
TY - JOUR
AU - Krueger,Alan B.
AU - Kuziemko,Ilyana
TI - The Demand for Health Insurance Among Uninsured Americans:
Results of a Survey Experiment and Implications for Policy
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16978
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16978
L1 - http://www.nber.org/papers/w16978.pdf
N1 - Author contact info:
Alan B. Krueger
Industrial Relations Section
Firestone Library
Princeton University
Princeton, NJ 08544
Tel: 609/258-4046
Fax: 609/258-2907
E-Mail: akrueger@princeton.edu
Ilyana Kuziemko
361 Wallace Hall
Princeton University
Princeton, NJ 08544
Tel: 609/258-6917
Fax: 609/258-5974
E-Mail: kuziemko@princeton.edu
AB - Most existing work on the price elasticity of demand for health insurance focuses on employees’ decisions to enroll in employer-provided plans. Yet any attempt to achieve universal coverage must focus on the uninsured, the vast majority of whom are not offered employer-sponsored insurance. In the summer of 2008, we conducted a survey experiment to assess the willingness to pay for a health plan among a large sample of uninsured Americans. The experiment yields price elasticities substantially greater than those found in most previous studies. We use these results to estimate coverage expansion under the Affordable Care Act, with and without an individual mandate. We estimate that 39 million uninsured individuals would gain coverage and find limited evidence of adverse selection.
ER -
TY - JOUR
AU - Brown,Jason
AU - Duggan,Mark
AU - Kuziemko,Ilyana
AU - Woolston,William
TI - How does Risk Selection Respond to Risk Adjustment? Evidence from the Medicare Advantage Program
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16977
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16977
L1 - http://www.nber.org/papers/w16977.pdf
N1 - Author contact info:
Jason Brown
U.S. Department of the Treasury
1500 Pennsylvania Ave, NW
Washington, D.C. 20220
E-Mail: Jason.Brown@do.treas.gov
Mark Duggan
The Wharton School
University of Pennsylvania
1452 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215-898-0928
Fax: 215-898-7635
E-Mail: mduggan@wharton.upenn.edu
Ilyana Kuziemko
361 Wallace Hall
Princeton University
Princeton, NJ 08544
Tel: 609/258-6917
Fax: 609/258-5974
E-Mail: kuziemko@princeton.edu
William Woolston
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305
E-Mail: william.woolston@stanford.edu
AB - Governments often contract with private firms to provide public services such as health care and education. To decrease firms' incentives to selectively enroll low-cost individuals, governments frequently "risk-adjust" payments to firms based on enrollees' characteristics. We model how risk adjustment affects selection and differential payments---the government's payments to a firm for covering an individual minus the counterfactual cost had the government directly covered her. We show that firms reduce selection along dimensions included in the risk-adjustment formula, while increasing selection along excluded dimensions. These responses can actually increase differential payments relative to pre-risk-adjustment levels and thus risk adjustment can raise the total cost to the government of providing the public service. We confirm both selection predictions using individual-level data from Medicare, which in 2004 began risk-adjusting payments to private Medicare Advantage plans. We find that differential payments actually rise after risk adjustment and estimate that they totaled $30 billion in 2006, or nearly eight percent of total Medicare spending.
ER -
TY - JOUR
AU - Schwert,G. William
TI - Stock Volatility During the Recent Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16976
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16976
L1 - http://www.nber.org/papers/w16976.pdf
N1 - Author contact info:
G. William Schwert
William E. Simon Graduate School of Business Admin
University of Rochester
Rochester, NY 14627
Tel: 585/275-2470
Fax: 585/461-5475
E-Mail: Schwert@schwert.ssb.rochester.edu
AB - This paper uses monthly returns from 1802-2010, daily returns from 1885-2010, and intraday returns from 1982-2010 in the United States to show how stock volatility has changed over time. It also uses various measures of volatility implied by option prices to infer what the market was expecting to happen in the months following the financial crisis in late 2008. This episode was associated with historically high levels of stock market volatility, particularly among financial sector stocks, but the market did not expect volatility to remain high for long and it did not. This is in sharp contrast to the prolonged periods of high volatility during the Great Depression. Similar analysis of stock volatility in the United Kingdom and Japan reinforces the notion that the volatility seen in the 2008 crisis was relatively short-lived. While there is a link between stock volatility and real economic activity, such as unemployment rates, it can be misleading.
ER -
TY - JOUR
AU - Paravisini,Daniel
AU - Rappoport,Veronica
AU - Schnabl,Philipp
AU - Wolfenzon,Daniel
TI - Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16975
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16975
L1 - http://www.nber.org/papers/w16975.pdf
N1 - Author contact info:
Daniel Paravisini
Columbia University
Graduate School of Business
3022 Broadway, Uris Hall 416
New York, NY 10027
Tel: 212/854-4489
Fax: 212/316-9180
E-Mail: dp2239@columbia.edu
Veronica Rappoport
Finance & Economics Division
Columbia Business School
3022 Broadway, Uris Hall 821
New York, NY 10027
Tel: 212/854-0223
Fax: 212/662-8474
E-Mail: ver2102@columbia.edu
Philipp Schnabl
Stern School of Business
New York University
44 West Fourth Street
New York, NY 10012
Tel: 212/998-0356
E-Mail: schnabl@stern.nyu.edu
Daniel Wolfenzon
Graduate School of Business
Columbia University
Uris Hall, Room 808
3022 Broadway
New York, NY 10027
Tel: 212/998-0309
Fax: 212/995-4233
E-Mail: dw2382@columbia.edu
AB - We estimate the elasticity of exports to credit using matched customs and firm-level bank credit data from Peru. To account for non-credit determinants of exports, we compare changes in exports of the same product and to the same destination by firms borrowing from banks differentially affected by capital flow reversals during the 2008 financial crisis. We obtain elasticity estimates for the intensive and extensive margins of exports, size and frequency of shipments, and the method of freight and payment. Our results suggest that the credit shortage reduces exports through raising the cost of working capital for general production, rather than the cost of financing export-specific cash cycles or sunk entry investments.
ER -
TY - JOUR
AU - Hungerman,Daniel M.
TI - The Effect of Education on Religion: Evidence from Compulsory Schooling Laws
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16973
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16973
L1 - http://www.nber.org/papers/w16973.pdf
N1 - Author contact info:
Daniel M. Hungerman
Department of Economics
University of Notre Dame
439 Flanner Hall
Notre Dame, IN 46556-5602
Tel: 574/631-4495
Fax: 574/631-4783
E-Mail: dhungerm@nd.edu
AB - For over a century, social scientists have debated how educational attainment impacts religious belief. In this paper, I use Canadian compulsory schooling laws to identify the relationship between completed schooling and later religiosity. I find that higher levels of education lead to lower levels of religious participation later in life. An additional year of education leads to a 4-percentage-point decline in the likelihood that an individual identifies with any religious tradition; the estimates suggest that increases in schooling can explain most of the large rise in non-affiliation in Canada in recent decades.
ER -
TY - JOUR
AU - Cochrane,John H.
TI - Discount Rates
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16972
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16972
L1 - http://www.nber.org/papers/w16972.pdf
N1 - Author contact info:
John H. Cochrane
Booth School of Business
University of Chicago
5807 S. Woodlawn
Chicago, IL 60637
Tel: 773/702-3059
Fax: 773/702-0458
E-Mail: john.cochrane@chicagobooth.edu
AB - Discount rate variation is the central organizing question of current asset pricing research. I survey facts, theories and applications. We thought returns were uncorrelated over time, so variation in price-dividend ratios was due to variation in expected cashflows. Now it seems all price-dividend variation corresponds to discount-rate variation. We thought that the cross-section of expected returns came from the CAPM. Now we have a zoo of new factors. I categorize discount-rate theories based on central ingredients and data sources. Discount-rate variation continues to change finance applications, including portfolio theory, accounting, cost of capital, capital structure, compensation, and macroeconomics.
ER -
TY - JOUR
AU - Cropper,Maureen L.
AU - Hammitt,James K.
AU - Robinson,Lisa A.
TI - Valuing Mortality Risk Reductions: Progress and Challenges
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16971
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16971
L1 - http://www.nber.org/papers/w16971.pdf
N1 - Author contact info:
Maureen L. Cropper
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3483
Fax: 301/405-3542
E-Mail: cropper@econ.umd.edu
James Hammitt
Harvard University (Center for Risk Analysis)
718 Huntington Avenue
Boston, MA 02115
E-Mail: jkh@harvard.edu
Lisa A. Robinson
29 Caroline Park
Waban, MA 02468
E-Mail: lisa.a.robinson@comcast.net
AB - The value of mortality risk reduction is an important component of the benefits of environmental policies. In recent years, the number, scope, and quality of valuation studies have increased dramatically. Revealed-preference studies of wage compensation for occupational risks, on which analysts have primarily relied, have benefited from improved data and statistical methods. Stated-preference research has improved methodologically and expanded dramatically. Studies are now available for several health conditions associated with environmental causes and researchers have explored many issues concerning the validity of the estimates. With the growing numbers of both types of studies, several meta-analyses have become available that provide insight into the results of both methods. Challenges remain, including better understanding of the persistently smaller estimates from stated-preference than from wage-differential studies and of how valuation depends on the individual’s age, health status, and characteristics of the illnesses most frequently associated with environmental causes.
ER -
TY - JOUR
AU - Bassetto,Marco
AU - McGranahan,Leslie
TI - On the Relationship Between Mobility, Population Growth, and Capital Spending in the United States
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16970
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16970
L1 - http://www.nber.org/papers/w16970.pdf
N1 - Author contact info:
Marco Bassetto
Research Department
Federal Reserve Bank of Chicago
230 S. LaSalle Street
Chicago, IL 60604
Tel: 312/322-5909
Fax: 312/322-2357
E-Mail: mbassetto@frbchi.org
Leslie McGranahan
Federal Reserve Bank of Chicago
E-Mail: leslie.mcgranahan@chi.frb.org
AB - In this paper, we investigate the relationship between public capital spending and population dynamics at the state level. Empirically, we document two robust facts. First, states with faster population growth do not spend more (per capita) to accommodate the needs of their growing population. Second, states whose population is more likely to leave do tend to spend more per capita than states with low gross emigration rates. To interpret these facts, we introduce an explicit, quantitative political-economy model of government spending determination, where mobility and population growth generate departures from Ricardian equivalence by shifting some of the costs and benefits of public projects to future residents. The magnitude of the empirical response of capital spending to mobility is at the upper end of what can be explained by the theory with a plausible calibration. In the model, more mobile voters favor more spending because the maturity of states' debt is very long term and costs are shifted into the future more than benefits.
ER -
TY - JOUR
AU - Einav,Liran
AU - Finkelstein,Amy
AU - Ryan,Stephen P.
AU - Schrimpf,Paul
AU - Cullen,Mark R.
TI - Selection on Moral Hazard in Health Insurance
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16969
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16969
L1 - http://www.nber.org/papers/w16969.pdf
N1 - Author contact info:
Liran Einav
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305-6072
Tel: 650/723-3704
Fax: 650/725-5702
E-Mail: leinav@stanford.edu
Amy Finkelstein
Department of Economics
MIT E52-274C
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/253-4149
Fax: 617/868-2742
E-Mail: afink@mit.edu
Stephen P. Ryan
MIT Department of Economics
E52-262C
50 Memorial Drive
Cambridge, MA 02142
Tel: 617/253-6082
Fax: 617/253-1330
E-Mail: sryan@mit.edu
Paul Schrimpf
Department of Economics
MIT
50 Memorial Drive
Cambridge, MA 02142
E-Mail: paul_s@mit.edu
Mark R. Cullen
Stanford University School of Medicine
1265 Welch Rd X338
Stanford, CA 94305
Tel: 650.721.6209
Fax: 650.723.8596
E-Mail: mrcullen@stanford.edu
AB - In this paper we explore the possibility that individuals may select insurance coverage in part based on their anticipated behavioral response to the insurance contract. Such "selection on moral hazard" can have important implications for attempts to combat either selection or moral hazard. We explore these issues using individual-level panel data from a single firm, which contain information about health insurance options, choices, and subsequent claims. To identify the behavioral response to health insurance coverage and the heterogeneity in it, we take advantage of a change in the health insurance options offered to some, but not all of the firm's employees. We begin with descriptive evidence that is suggestive of both heterogeneous moral hazard as well as selection on it, with individuals who select more coverage also appearing to exhibit greater behavioral response to that coverage. To formalize this analysis and explore its implications, we develop and estimate a model of plan choice and medical utilization. The results from the modeling exercise echo the descriptive evidence, and allow for further explorations of the interaction between selection and moral hazard. For example, one implication of our estimates is that abstracting from selection on moral hazard could lead one to substantially over-estimate the spending reduction associated with introducing a high deductible health insurance option.
ER -
TY - JOUR
AU - Kolko,Jed
AU - Neumark,David
AU - Mejia,Marisol Cuellar
TI - Public Policy, State Business Climates, and Economic Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16968
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16968
L1 - http://www.nber.org/papers/w16968.pdf
N1 - Author contact info:
Jed Kolko
Trulia
116 New Montgomery St, 3rd floor
San Francisco, CA 94105
E-Mail: jdkolko@yahoo.com
David Neumark
Department of Economics
University of California at Irvine
3151 Social Science Plaza
Irvine, CA 92697
Tel: 949-824-8496
Fax: 949/824-2182
E-Mail: dneumark@uci.edu
Marisol Cuellar Mejia
Public Policy Institute of California
500 Washington St., Suite 600
San Francisco, CA 94111
E-Mail: cuellar@ppic.org
AB - State business climate indexes are a popular means of summarizing the “bundles” of state policies that might affect state economic growth. But the rankings of states’ business climates vary wildly, raising questions about what these business climate indexes measure, and hence about which policies they capture are more important determinants of state economic growth. Business climate rankings tend to focus on policies related either to productivity, or to taxes and other costs of doing business. States that rank poorly along one of these dimensions often rank quite highly on the other. Business climate indexes that focus on productivity-related variables have essentially no predictive power for economic growth. In contrast, business climate indexes focusing on taxes and costs predict growth of employment, wages, and Gross State Product. Looking at sub-indexes that disaggregate the policies captured by the taxes-and-cost related indexes, two types of policies are associated with faster economic growth: less spending on welfare and transfer payments; and a more uniform and simpler corporate tax structure. But factors beyond the control of policy, like a state’s industry mix, population density, and weather, have a stronger relationship with economic growth than even the tax-and-cost-focused business climate indexes.
ER -
TY - JOUR
AU - Puri,Manju
AU - Rocholl,Jörg
AU - Steffen,Sascha
TI - Global retail lending in the aftermath of the US financial crisis: Distinguishing between supply and demand effects
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16967
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16967
L1 - http://www.nber.org/papers/w16967.pdf
N1 - Author contact info:
Manju Puri
Fuqua School of Business
Duke University
1 Towerview Drive, Box 90120
Durham, NC 27708-0120
Tel: 919/660-7657
Fax: 919/681-6246
E-Mail: mpuri@duke.edu
Jorg Rocholl
European School of Management and Technology
Schlossplatz 1
D-10178 Berlin
E-Mail: rocholl@esmt.org
Sascha Steffen
European School of Management and Technology
Schlossplatz 1
10178 Berlin
Germany
E-Mail: steffen@esmt.org
AB - This paper examines the broader effects of the US financial crisis on global lending to retail customers. In particular we examine retail bank lending in Germany using a unique data set of German savings banks during the period 2006 through 2008 for which we have the universe of loan applications and loans granted. Our experimental setting allows us to distinguish between savings banks affected by the US financial crisis through their holdings in Landesbanken with substantial subprime exposure and unaffected savings banks. The data enable us to distinguish between demand and supply side effects of bank lending and find that the US financial crisis induced a contraction in the supply of retail lending in Germany. While demand for loans goes down, it is not substantially different for the affected and nonaffected banks. More important, we find evidence of a significant supply side effect in that the affected banks reject substantially more loan applications than nonaffected banks. This result is particularly strong for smaller and more liquidity-constrained banks as well as for mortgage as compared with consumer loans. We also find that bank-depositor relationships help mitigate these supply side effects.
ER -
TY - JOUR
AU - Acemoglu,Daron
AU - Johnson,Simon
AU - Robinson,James A.
TI - Hither Thou Shalt Come, But No Further: Reply to "The Colonial Origins of Comparative Development: An Empirical Investigation: Comment"
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16966
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16966
L1 - http://www.nber.org/papers/w16966.pdf
N1 - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu
Simon Johnson
MIT Sloan School of Management
100 Main Street, E52-562
Cambridge, MA 02142
Tel: 617/290-9618
Fax: 617/253-2660
E-Mail: sjohnson@mit.edu
James A. Robinson
Harvard University
Department of Government
N309, 1737 Cambridge Street
Cambridge, MA 02138
Tel: 617/496-2839
Fax: 617/495-0438
E-Mail: jrobinson@gov.harvard.edu
AB - David Albouy expresses three main concerns about the results in Acemoglu, Johnson and Robinson (2001) on the relationship between potential settler mortality and institutions. First, there is a general concern that there are high mortality outliers, potentially affecting this relationship, with which we agree. However, limiting the effect of outliers has no impact on our substantive results and if anything significantly strengthens them, in fact making them robust to even extreme versions of his other critiques. His second argument that all the data from Latin America and much of the data from Africa, making up almost 60% of our sample, should be dropped is arbitrary - there is a great deal of well-documented comparable information on the mortality of Europeans in those places during the relevant period. His third argument that a "campaign" dummy should be included in the first stage is at odds with the historical record and is implemented inconsistently; even modest corrections undermine his claims.
ER -
TY - JOUR
AU - Philippon,Thomas
AU - Midrigan,Virgiliu
TI - Household Leverage and the Recession
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16965
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16965
L1 - http://www.nber.org/papers/w16965.pdf
N1 - Author contact info:
Thomas Philippon
New York University
Stern School of Business
44 West 4th Street, Suite 9-190
New York, NY 10012-1126
Tel: 212/998-0490
Fax: 212/995-4233
E-Mail: tphilipp@stern.nyu.edu
Virgiliu Midrigan
Department of Economics
New York University
19 W. 4th St.
New York, NY 10012
Tel: 212/992-8081
Fax: 212/995-4186
E-Mail: virgiliu.midrigan@nyu.edu
AB - A salient feature of the recent U.S. recession is that output and employment have declined more in regions (states, counties) where household leverage had increased more during the credit boom. This pattern is difficult to explain with standard models of financing frictions. We propose a theory that can account for these cross-sectional facts. We study a cash-in-advance economy in which home equity borrowing, alongside public money, is used to conduct transactions. A decline in home equity borrowing tightens the cash-in-advance constraint, thus triggering a recession. We show that the evidence on house prices, leverage and employment across US regions identifies the key parameters of the model. Models estimated with cross-sectional evidence display high sensitivity of real activity to nominal credit shocks. Since home equity borrowing and public money are, in the model, perfect substitutes, our counter-factual experiments suggest that monetary policy actions have significantly reduced the severity of the recent recession.
ER -
TY - JOUR
AU - Hanson,Gordon H.
AU - Xiang,Chong
TI - Exporting Christianity: Governance and Doctrine in the Globalization of US Denominations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16964
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16964
L1 - http://www.nber.org/papers/w16964.pdf
N1 - Author contact info:
Gordon H. Hanson
IR/PS 0519
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0519
Tel: 858/822-5087
Fax: 858/534-3939
E-Mail: gohanson@ucsd.edu
Chong Xiang
Department of Economics
Purdue University
403 West State Street
West Lafayette, IN 47907-2506
Tel: 765/494-4499
Fax: 765/496-1778
E-Mail: cxiang@purdue.edu
AB - In this paper we build a model of market competition among religious denominations, using a framework that involves incomplete contracts and the production of club goods. We treat denominations akin to multinational enterprises, which decide which countries to enter based on local market conditions and their own “productivity.” The model yields predictions for how a denomination’s religious doctrine and governance structure affect its ability to attract adherents. We test these predictions using data on the foreign operations of US Protestant denominations in 2005 from the World Christian Database. Consistent with the model, we find that (1) denominations with stricter religious doctrine attract more adherents in countries in which the risk of natural disaster or disease outbreak is greater and in which government provision of health services is weaker, and (2) denominations with a decentralized governance structure attract more adherents in countries in which the productivity of pastor effort is higher. These findings shed light on factors determining the composition of religion within countries, helping account for the rise of new Protestant denominations in recent decades.
ER -
TY - JOUR
AU - Mason,Charles
AU - Plantinga,Andrew
TI - Contracting for Impure Public Goods: Carbon Offsets and Additionality
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16963
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16963
L1 - http://www.nber.org/papers/w16963.pdf
N1 - Author contact info:
Charles Mason
Department of Economics and Finance
University of Wyoming
1000 E. University Avenue
Laramie, WY 82071-3985
E-Mail: bambuzlr@uwyo.edu
Andrew Plantinga
Department of Agricultural
& Resource Economics
Oregon State University
Rm #212B Ballard Extension Hall
Corvallis, OR 97331-4501
E-Mail: Plantinga@oregonstate.edu
M3 - presented at "SI 2010 Environmental and Energy Economics", July 29-30, 2010
AB - Governments contracting with private agents for the provision of an impure public good must contend with agents who would potentially supply the good absent any payments. This additionality problem is centrally important to the use of carbon offsets to mitigate climate change. We analyze optimal contracts for forest carbon, an important offset category. A novel national-scale simulation of the contracts is conducted that uses econometric results derived from micro data. For a 50 million acre increase in forest area, annual government expenditures with optimal contracts are found to be about $4 billion lower compared to costs with a uniform subsidy.
ER -
TY - JOUR
AU - Fukuda,Shin-ichi
TI - Market-specific and Currency-specific Risk During the Global Financial Crisis: Evidence from the Interbank Markets in Tokyo and London
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16962
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16962
L1 - http://www.nber.org/papers/w16962.pdf
N1 - Author contact info:
Shin-ichi Fukuda
Faculty of Economics
University of Tokyo
7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033, JAPAN
Fax: 81-3-5841-5521
E-Mail: sfukuda@e.u-tokyo.ac.jp
M3 - presented at "East Asian Seminar on Economics", June 25-26, 2010
AB - This paper explores how international money markets reflected credit and liquidity risks during the global financial crisis. After matching the currency denomination, we investigate how the Tokyo Interbank Offered Rate (TIBOR) was synchronized with the London Interbank Offered Rate (LIBOR) denominated in the US dollar and the Japanese yen. Regardless of the currency denomination, TIBOR was highly synchronized with LIBOR in tranquil periods. However, the interbank rates showed substantial deviations in turbulent periods. We find remarkable asymmetric responses in reflecting market-specific and currency-specific risks during the crisis. The regression results suggest that counter-party credit risk increased the difference across the markets, while liquidity risk caused the difference across the currency denominations. They also support the view that a shortage of US dollar as liquidity distorted the international money markets during the crisis. We find that coordinated central bank liquidity provisions were useful in reducing liquidity risk in the US dollar transactions. But their effectiveness was asymmetric across the markets.
ER -
TY - JOUR
AU - Bushway,Shawn D.
AU - Owens,Emily G.
AU - Piehl,Anne Morrison
TI - Sentencing Guidelines and Judicial Discretion:
Quasi-experimental Evidence from Human Calculation Errors
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16961
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16961
L1 - http://www.nber.org/papers/w16961.pdf
N1 - Author contact info:
Shawn Bushway
School of Criminal Justice
University at Albany, SUNY
135 Western Avenue
Albany, NY 12222 USA
E-Mail: SBushway@uamail.albany.edu
Emily G. Owens
Cornell University
Department of Policy Analysis and Management
137 MVR Hall
Ithaca, NY 14853
E-Mail: ego5@cornell.edu
Anne Piehl
Department of Economics
Rutgers, The State University of New Jersey
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901-1248
E-Mail: apiehl@economics.rutgers.edu
AB - There is a debate about whether advisory non-binding sentencing guidelines affect the sentences outcomes of individuals convicted in jurisdictions with this sentencing framework. Identifying the impact of sentencing guidelines is a difficult empirical problem because court actors may have preferences for sentencing severity that are correlated with the preferences that are outlined in the guidelines. But, in Maryland, ten percent of the recommended sentences computed in the guideline worksheets contain calculation errors. We use this unique source of quasi-experimental variation to quantify the extent to which sentencing guidelines influence policy outcomes. Among drug offenses, we find that the direct impact of the guidelines is roughly ½ the size of the overall correlation between recommendations and outcomes. For violent offenses, we find the same ½ discount for sentence recommendations that are higher than they should have been, but more responsiveness to recommendations that are too low. We find no evidence that the guidelines themselves directly affect discretion for property offenders, perhaps because judges generally have substantial experience with property cases and therefore do not rely on the errant information. Sentences are more sensitive to both accurate and inaccurate recommendations for crimes that occur less frequently and have more complicated sentencing. This suggests that when the court has more experience, the recommendations have less influence. More tentative findings suggest that, further down the decision chain, parole boards counteract the remaining influence of the guidelines.
ER -
TY - JOUR
AU - Burstein,Ariel
AU - Melitz,Marc J.
TI - Trade Liberalization and Firm Dynamics
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16960
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16960
L1 - http://www.nber.org/papers/w16960.pdf
N1 - Author contact info:
Ariel Burstein
Department of Economics
Bunche Hall 8365
Box 951477
UCLA
Los Angeles, CA 90095-1477
Tel: 310/206-6732
Fax: 310/825-9528
E-Mail: arielb@econ.ucla.edu
Marc Melitz
Department of Economics
Harvard University
215 Littauer Center
Cambridge, MA 02138
E-Mail: mmelitz@harvard.edu
AB - In this paper, we analyze the transition dynamics associated with an economy's response to trade liberalization. We start by reviewing the recent literature that incorporates firm dynamics into models of international trade. We then build upon that literature to characterize the role of firm dynamics, export-market selection, firm-level innovation, sunk export costs, and firms expectations regarding the time path of liberalization in generating those transition dynamics following trade liberalization. These modeling ingredients generate substantial aggregate transition dynamics as they shift and shape the endogenous distribution of firms over time. Our results show how the responses of trade volumes, innovation, and aggregate output can vary greatly over time depending on those modeling ingredients. This has important consequences for many issues in international economics that rely on predictions for the effects of globalization over time on those key aggregate outcomes.
ER -
TY - JOUR
AU - Mayer,Thierry
AU - Melitz,Marc J.
AU - Ottaviano,Gianmarco I.P.
TI - Market Size, Competition, and the Product Mix of Exporters
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16959
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16959
L1 - http://www.nber.org/papers/w16959.pdf
N1 - Author contact info:
Thierry Mayer
Sciences-Po, Paris
Department of Economics
28 rue des Saints-Peres
75007 Paris
France
E-Mail: thierry.mayer@sciences-po.fr
Marc Melitz
Department of Economics
Harvard University
215 Littauer Center
Cambridge, MA 02138
E-Mail: mmelitz@harvard.edu
Gianmarco Ottaviano
Department of Economics
Bocconi University
Via Roentgen 1
20136 Milan
Italy
E-Mail: gianmarco.ottaviano@unibocconi.it
AB - We build a theoretical model of multi-product firms that highlights how market size and geography (the market sizes of and bilateral economic distances to trading partners) affect both a firm's exported product range and its exported product mix across market destinations (the distribution of sales across products for a given product range). We show how tougher competition in an export market induces a firm to skew its export sales towards its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Trade models based on exogenous markups cannot explain this strong significant link between destination market characteristics and the within-firm skewness of export sales (after controlling for bilateral trade costs). Theoretically, this within firm change in product mix driven by the trading environment has important repercussions on firm productivity and how it responds to changes in that trading environment.
ER -
TY - JOUR
AU - Gopinath,Gita
AU - Neiman,Brent
TI - Trade Adjustment and Productivity in Large Crises
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16958
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16958
L1 - http://www.nber.org/papers/w16958.pdf
N1 - Author contact info:
Gita Gopinath
Department of Economics
Harvard University
1875 Cambridge Street
Littauer 206
Cambridge, MA 02138
Tel: 617/495-8161
Fax: 617/495-7730
E-Mail: gopinath@harvard.edu
Brent Neiman
University of Chicago
Booth School of Business
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/834-3199
Fax: 773/753-8266
E-Mail: brent.neiman@chicagobooth.edu
AB - We empirically characterize the mechanics of trade adjustment during the Argentine crisis using detailed transaction-level customs data covering the universe of import transactions during 1996-2008. Though imports collapsed by nearly 70 percent from 2000-2002, the entry and exit of firms or products at the country level (the "extensive margin") played a small role in this adjustment. By contrast, the within-firm churning of inputs (the "sub-extensive margin") played a sizeable role, and we highlight significant heterogeneity in how firms adjusted their import mix. Motivated by these facts, we build a model of trade in intermediate inputs with heterogeneous firms, fixed import costs, and roundabout production to evaluate the channels through which a collapse in imports affects productivity and welfare. Import demand is non-homothetic and therefore the implications for productivity and welfare depend on the details of individual firm adjustments and cannot be summarized by the change in the aggregate import share. We simulate an imported input cost shock and show that these mechanisms can deliver quantitatively significant declines in productivity and welfare.
ER -
TY - JOUR
AU - Bonaparte,Yosef
AU - Cooper,Russell
AU - Zhu,Guozhong
TI - Consumption Smoothing and Portfolio Rebalancing: The Effects of Adjustment Costs
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16957
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16957
L1 - http://www.nber.org/papers/w16957.pdf
N1 - Author contact info:
Yosef Bonaparte
Claremont Graduate University
Claremont, CA 91711
E-Mail: bonaparte20@gmail.com
Russell Cooper
Department of Economics
European University Institute
via della Piazzola, 43
Firenze, 50133
ITALY
E-Mail: russellcoop@gmail.com
Guozhong Zhu
Guanghua School of Management
Peking University
Beijing, China
E-Mail: aaronandrewzhu@gmail.com
AB - This paper studies the dynamics of portfolio rebalancing and consumption smoothing in the presence of non-convex portfolio adjustment costs. The goal is to understand a household's response to income and return shocks. The model includes the choice of two assets: one riskless without adjustment costs and a second risky asset with adjustment costs. With these multiple assets, a household can buffer some income fluctuations through the asset without adjustment costs and engage in costly portfolio rebalancing less frequently. We estimate both preference parameters and portfolio adjustment costs. The estimates are used for evaluating consumption smoothing and portfolio adjustment in the face of income and return shocks.
ER -
TY - JOUR
AU - Hamilton,James D.
AU - Wu,Jing Cynthia
TI - The Effectiveness of Alternative Monetary Policy Tools in a Zero Lower Bound Environment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16956
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16956
L1 - http://www.nber.org/papers/w16956.pdf
N1 - Author contact info:
James D. Hamilton
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-5986
Fax: 858/534-7040
E-Mail: jhamilton@ucsd.edu
Jing Cynthia Wu
Booth School of Business
University of Chicago
5807 S Woodlawn Ave
Chicago, IL 60637-1610
E-Mail: Cynthia.Wu@chicagobooth.edu
AB - This paper reviews alternative options for monetary policy when the short-term interest rate is at the zero lower bound and develops new empirical estimates of the effects of the maturity structure of publicly held debt on the term structure of interest rates. We use a model of risk-averse arbitrageurs to develop measures of how the maturity structure of debt held by the public might affect the pricing of level, slope and curvature term-structure risk. We find these Treasury factors historically were quite helpful for predicting both yields and excess returns over 1990-2007. The historical correlations are consistent with the claim that if in December of 2006, the Fed were to have sold off all its Treasury holdings of less than one-year maturity (about $400 billion) and use the proceeds to retire Treasury debt from the long end, this might have resulted in a 14-basis-point drop in the 10-year rate and an 11-basis-point increase in the 6-month rate. We also develop a description of how the dynamic behavior of the term structure of interest rates changed after hitting the zero lower bound in 2009. Our estimates imply that at the zero lower bound, such a maturity swap would have the same effects as buying $400 billion in long-term maturities outright with newly created reserves, and could reduce the 10-year rate by 13 basis points without raising short-term yields.
ER -
TY - JOUR
AU - Bennett,Daniel
AU - Chiang,Chun-Fang
AU - Malani,Anup
TI - Learning During a Crisis: the SARS Epidemic in Taiwan
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16955
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16955
L1 - http://www.nber.org/papers/w16955.pdf
N1 - Author contact info:
Daniel Bennett
University of Chicago
Harris School of Public Policy
1155 E. 60th Street
Chicago, IL 60637
E-Mail: dmbennett@uchicago.edu
Chun-Fang Chiang
National Taiwan University
E-Mail: chunfang@ntu.edu.tw
Anup Malani
University of Chicago Law School
1111 E. 60th Street
Chicago, IL 60637
Tel: 773/702-9602
E-Mail: amalani@uchicago.edu
AB - When SARS struck Taiwan in the spring of 2003, many people feared that the disease would spread through the healthcare system. As a result, outpatient medical visits fell by over 30 percent in the course of a few weeks. This paper examines how both public information (SARS incidence reports) and private information (the behavior and opinions of peers) contributed to this public reaction. We identify social learning through a difference-in-difference strategy that compares long time community residents to recent arrivals, who are less socially connected. We find that people learned from both public and private sources during SARS. In a dynamic simulation based on the regressions, social learning substantially magnifes the response to SARS.
ER -
TY - JOUR
AU - Heal,Geoffrey
AU - Kunreuther,Howard
TI - Tipping Climate Negotiations
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16954
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16954
L1 - http://www.nber.org/papers/w16954.pdf
N1 - Author contact info:
Geoffrey Heal
Graduate School of Business
616 Uris Hall
Columbia University
New York, NY 10027-6902
Tel: 212/854-6459
Fax: 212/316-9219
E-Mail: gmh1@columbia.edu
Howard Kunreuther
Operations and Information Management
The Wharton School
University of Pennsylvania
3730 Walnut Street, 500 JMHH
Philadelphia, PA 19104-6366
Tel: 215/898-4589
Fax: 215/573-2130
E-Mail: kunreuther@wharton.upenn.edu
AB - Thinking about tipping provides a novel perspective on finding a way forward in climate negotiations and suggests an alternative to the current framework of negotiating a global agreement on reductions in greenhouse gas emissions. Recent work on non-cooperative games shows games with increasing differences have multiple equilibria and have a “tipping set,” a subset of agents who by changing from the inefficient to the efficient equilibrium can induce all others to do the same. We argue that international climate negotiations may form such a game and so have a tipping set. This set is a small group of countries who by adopting climate control measures can make in the interests of all others to do likewise.
ER -
TY - JOUR
AU - Chandra,Amitabh
AU - Skinner,Jonathan S.
TI - Technology Growth and Expenditure Growth in Health Care
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16953
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16953
L1 - http://www.nber.org/papers/w16953.pdf
N1 - Author contact info:
Amitabh Chandra
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-7356
E-Mail: amitabh_chandra@harvard.edu
Jonathan S. Skinner
Department of Economics
6106 Rockefeller Hall
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2535
Fax: 603/646-2122
E-Mail: jonathan.skinner@dartmouth.edu
AB - In the United States, health care technology has contributed to rising survival rates, yet health care spending relative to GDP has also grown more rapidly than in any other country. We develop a model of patient demand and supplier behavior to explain these parallel trends in technology growth and cost growth. We show that health care productivity depends on the heterogeneity of treatment effects across patients, the shape of the health production function, and the cost structure of procedures such as MRIs with high fixed costs and low marginal costs. The model implies a typology of medical technology productivity: (I) highly cost-effective “home run” innovations with little chance of overuse, such as anti-retroviral therapy for HIV, (II) treatments highly effective for some but not for all (e.g. stents), and (III) “gray area” treatments with uncertain clinical value such as ICU days among chronically ill patients. Not surprisingly, countries adopting Category I and effective Category II treatments gain the greatest health improvements, while countries adopting ineffective Category II and Category III treatments experience the most rapid cost growth. Ultimately, economic and political resistance in the U.S. to ever-rising tax rates will likely slow cost growth, with uncertain effects on technology growth.
ER -
TY - JOUR
AU - Dube,Arindrajit
AU - Kaplan,Ethan
AU - Naidu,Suresh
TI - Coups, Corporations, and Classified Information
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16952
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16952
L1 - http://www.nber.org/papers/w16952.pdf
N1 - Author contact info:
Arindrajit Dube
Department of Economics
1030 Thompson Hall
University of Massachusetts Amherst
Amherst, MA 01003
E-Mail: adube@econs.umass.edu
Ethan Kaplan
Stockholm University
IIES
Stockholm, SWEDEN
E-Mail: ekaplan@iies.su.se
Suresh Naidu
Columbia University
School of International and Public Affairs
MC 3328
420 West 118th Street
New York, NY 10027
Tel: 212/854-3213
E-Mail: sn2430@columbia.edu
AB - We estimate the impact of coups and top-secret coup authorizations on asset prices of partially nationalized multinational companies that stood to benefit from US-backed coups. Stock returns of highly exposed firms reacted to coup authorizations classified as top-secret. The average cumulative abnormal return to a coup authorization was 9% over 4 days for a fully nationalized company, rising to more than 13% over sixteen days. Pre-coup authorizations accounted for a larger share of stock price increases than the actual coup events themselves.There is no effect in the case of the widely publicized, poorly executed Cuban operations, consistent with abnormal returns to coup authorizations reflecting credible private information. We also introduce two new intuitive and easy to implement nonparametric tests that do not rely on asymptotic justifications.
ER -
TY - JOUR
AU - Leeper,Eric M.
AU - Walker,Todd B.
AU - Yang,Shu-Chun Susan
TI - Foresight and Information Flows
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16951
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16951
L1 - http://www.nber.org/papers/w16951.pdf
N1 - Author contact info:
Eric M. Leeper
Department of Economics
304 Wylie Hall
Indiana University
Bloomington, IN 47405
Tel: 812/855-9157
Fax: NA
E-Mail: eleeper@indiana.edu
Todd B. Walker
Department of Economics
105 Wylie Hall
Indiana University
Bloomington, IN 47405
E-Mail: walkertb@indiana.edu
Shu-Chun Susan Yang
International Monetary Fund
700 19th Street, N.W.
Washington, D.C. 20431
Tel: 202-226-2762
E-Mail: ssyang@econ.sinica.edu.tw
AB - News--or foresight--about future economic fundamentals can create rational expectations equilibria with non-fundamental representations that pose substantial challenges to econometric efforts to recover the structural shocks to which economic agents react. Using tax policies as a leading example of foresight, simple theory makes transparent the economic behavior and information structures that generate non-fundamental equilibria. Econometric analyses that fail to model foresight will obtain biased estimates of output multipliers for taxes; biases are quantitatively important when two canonical theoretical models are taken as data generating processes. Both the nature of equilibria and the inferences about the effects of anticipated tax changes hinge critically on hypothesized tax information flows. Differential U.S. federal tax treatment of municipal and treasury bonds embeds news about future taxes in bond yield spreads. Including that measure of tax news in identified VARs produces substantially different inferences about the macroeconomic impacts of anticipated taxes.
ER -
TY - JOUR
AU - Lynch,Anthony W.
AU - Randall,Oliver
TI - Why Surplus Consumption in the Habit Model May be Less Persistent than You Think
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16950
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16950
L1 - http://www.nber.org/papers/w16950.pdf
N1 - Author contact info:
Anthony W. Lynch
New York University
44 W. 4th Street, #9-190
New York, NY 10012
Tel: 212/998-0350
Fax: NA
E-Mail: alynch@stern.nyu.edu
Oliver Randall
New York University
44 W. 4th Street, #9-190
New York, NY 10012
E-Mail: orandall@stern.nyu.edu
AB - In U.S. data, value stocks have higher expected excess returns and higher CAPM alphas than growth stocks. We find the external-habit model of Campbell and Cochrane (1999) can generate a value premium in both CAPM alpha and expected excess return so long as the persistence of the log surplus-consumption ratio is not too high. In contrast, Lettau and Wachter (2007) find that when the log surplus-consumption ratio is assumed to be highly persistent as in Campbell and Cochrane, the external-habit model generates a growth premium in expected excess return. However, the micro evidence favors a less persistent log surplus-consumption ratio. We choose a value for this persistence which is sufficiently low that the most recent 2 years of log consumption contribute over 98% of all past consumption to log habit, which is a much more reasonable number than the 25% contribution generated by the Lettau-Wachter value. In our model, expected consumption is slowly mean-reverting, as in the long-run risk model of Bansal and Yaron (2004), which is why our model is able to generate a price-dividend ratio for aggregate equity that exhibits the high autocorrelation found in the data, despite the very low persistence of the price-of-risk state variable. Our results suggest that an external habit model in the spirit of Campbell and Cochrane can deliver an empirically sensible value premium once the persistence of the surplus consumption ratio is calibrated to the micro evidence rather than set to a value close to one. When we allow the conditional volatility of consumption growth to also be slowly mean reverting as in the long-run risk model of Bansal and Yaron, our model is also able to generate empirically sensible predictability of long-horizon returns using the price-dividend ratio, without eroding the value premium. Our results also suggest that models with fast-moving habit can deliver several empirical properties of aggregate dividend strips that have been recently documented.
ER -
TY - JOUR
AU - Snowberg,Erik
AU - Wolfers,Justin
AU - Zitzewitz,Eric
TI - How Prediction Markets Can Save Event Studies
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16949
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16949
L1 - http://www.nber.org/papers/w16949.pdf
N1 - Author contact info:
Erik Snowberg
Division of Humanities and Social Sciences
MC 228-77
California Institute of Technology
Pasadena, CA 91125
Tel: 626/395-4094
E-Mail: snowberg@caltech.edu
Justin Wolfers
Business and Public Policy Department
Wharton School, University of Pennsylvania
3620 Locust Walk
Room 1456 Steinberg-Deitrich Hall
Philadelphia, PA 19104-6372
Tel: (215) 898-3013
Fax: (215) 898-7635
E-Mail: jwolfers@wharton.upenn.edu
Eric Zitzewitz
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2891
Fax: 603/646-2122
E-Mail: eric.zitzewitz@dartmouth.edu
AB - This review paper articulates the relationship between prediction market data and event studies, with a special focus on applications in political economy. Event studies have been used to address a variety of political economy questions from the economic effects of party control of government to the importance of complex rules in congressional committees. However, the results of event studies are notoriously sensitive to both choices made by researchers and external events. Specifically, event studies will generally produce different results depending on three interrelated things: which event window is chosen, the prior probability assigned to an event at the beginning of the event window, and the presence or absence of other events during the event window. In this paper we show how each of these may bias the results of event studies, and how prediction markets can mitigate these biases.
ER -
TY - JOUR
AU - Martinez-Bravo,Monica
AU - Miquel,Gerard Padró i
AU - Qian,Nancy
AU - Yao,Yang
TI - Do Local Elections in Non-Democracies Increase Accountability? Evidence from Rural China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16948
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16948
L1 - http://www.nber.org/papers/w16948.pdf
N1 - Author contact info:
Monica Martinez-Bravo
Johns Hopkins University
1717 Massachusetts Ave, NW
Washington D.C., 20036
E-Mail: mmb@jhu.edu
Gerard Padro i Miquel
STICERD
London School of Economics
Houghton Street
London, WC2A 2AE
UNITED KINGDOM
Tel: (44) (0) 2078523554
E-Mail: g.padro@lse.ac.uk
Nancy Qian
Department of Economics
Yale University
27 Hillhouse Avenue
New Haven, CT 06520-8269
E-Mail: nancy.qian@yale.edu
Yang Yao
China Center for Economic Research
Peking University
Peking, China
E-Mail: yyao@ccer.pku.edu.cn
AB - We use unique survey data to study whether the introduction of local elections in China made local leaders more accountable towards local constituents. We develop a simple model to predict the effects on different policies of increasing local leader accountability, taking into account that there is an autocratic upper government. We exploit variation in the timing of the top-down introduction of elections across villages to estimate the causal effects of elections and find that elections affected policy outcomes in a way that is consistent with the predicted effects of increased local leader accountability.
ER -
TY - JOUR
AU - Artopoulos,Alejandro
AU - Friel,Daniel
AU - Hallak,Juan Carlos
TI - Lifting the Domestic Veil: The Challenges of Exporting Differentiated Goods Across the Development Divide
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16947
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16947
L1 - http://www.nber.org/papers/w16947.pdf
N1 - Author contact info:
Alejandro Artopoulos
Universidad de San Andrés
Departamento de Administración
Vito Dumas 284 (B1644BID)
Victoria, Provincia de Buenos Aires
ARGENTINA
E-Mail: alepoulos@udesa.edu.ar
Daniel Friel
Universidad de San Andrés
Departamento de Administración
Vito Dumas 284 (B1644BID)
Victoria, Provincia de Buenos Aires
ARGENTINA
E-Mail: dfriel@udesa.edu.ar
Juan Carlos Hallak
Universidad de San Andrés
Departamento de Economía
Vito Dumas 284 (B1644BID)
Victoria, Provincia de Buenos Aires
ARGENTINA
Tel: (5411) 4725-7081
Fax: (5411) 4725-7010
E-Mail: jchallak@udesa.edu.ar
AB - Several developing countries feature weak performances as exporters of differentiated goods to developed countries. This paper builds a conceptual framework to explain the obstacles that prevent producers of differentiated products from establishing a consistent presence in the developed world and the process through which those obstacles may be overcome. We build our framework based on case studies of export emergence in four Argentine industries: motorboats, television programs, wines, and wooden furniture. We find that exporting consistently to developed countries requires drastic changes in how business is conceived and conducted relative to the practices that prevail among domestically-oriented firms. Attempts by these firms to export often do not succeed because they approach foreign markets the same way that they approach the domestic one. Their failure to change the business approach stems from their inability to access critical (tacit) knowledge about differences in consumption patterns and business practices in developed countries. In three of the sectors we study, an export pioneer is the first to implement the necessary changes to established practices. His actions set a benchmark, unleashing a diffusion process that fosters export emergence in the sector. The most salient feature of export pioneers is their knowledge advantage about foreign markets stemming from their embeddedness in the business community of their industry in a developed country.
ER -
TY - JOUR
AU - Bordo,Michael D.
AU - Humpage,Owen F.
AU - Schwartz,Anna J.
TI - U.S. Intervention During the Bretton Woods Era: 1962-1973
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16946
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16946
L1 - http://www.nber.org/papers/w16946.pdf
N1 - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu
Owen Humpage
Federal Reserve Bank of Cleveland
P.O. Box 6387
Cleveland, OH 44101-1387
Tel: 216 579 2019
Fax: 216 579 3050
E-Mail: owen.f.humpage@clev.frb.org
Anna J. Schwartz
NBER
365 Fifth Ave, 5th Floor
New York, NY 10016
Tel: 212/817-7957
Fax: 212/817-1597
E-Mail: aschwartz@gc.cuny.edu
AB - By the early 1960s, outstanding U.S. dollar liabilities began to exceed the U.S. gold stock, suggesting that the United States could not completely maintain its pledge to convert dollars into gold at the official price. This raised uncertainty about the Bretton Woods parity grid, and speculation seemed to grow. In response, the Federal Reserve instituted a series of swap lines to provide central banks with cover for unwanted, but temporary accumulations of dollars and to provide foreign central banks with dollar funds to finance their own interventions. The Treasury also began intervening in the market. The operations often forestalled gold losses, but in so doing, delayed the need to solve Bretton Woods’ fundamental underlying problems. In addition, the institutional arrangements forged between the Federal Reserve and the U.S. Treasury raised important questions bearing on Federal Reserve independence.
ER -
TY - JOUR
AU - Frankel,Jeffrey A.
TI - A Solution to Fiscal Procyclicality: The Structural Budget Institutions Pioneered by Chile
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16945
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16945
L1 - http://www.nber.org/papers/w16945.pdf
N1 - Author contact info:
Jeffrey A. Frankel
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-3834
Fax: 617/496-5747
E-Mail: jeffrey_frankel@harvard.edu
AB - Historically, many countries have suffered a pattern of procyclical fiscal policy: spending too much in booms and then forced to cut back in recessions. This problem has especially plagued Latin American commodity exporters. Since 2000, fiscal policy in Chile has been governed by a structural budget rule that has succeeded in implementing countercyclical fiscal policy. Official estimates of trend output and the 10-year price of copper – which are key to the decomposition of the budget into structural versus cyclical components – are made by expert panels and thus insulated from the political process. Chile’s fiscal institutions hold useful lessons everywhere, but especially in other commodity exporting countries.
This paper finds statistical support for a series of hypotheses regarding forecasts by official agencies that have responsibility for formulating the budget.
1) Official forecasts of budgets and GDP in a 33-country sample are overly optimistic on average.
2) The bias is stronger at longer horizons
3) The bias is greater among European governments that are politically subject to the budget rules in the Stability and Growth Pact (SGP).
4) The bias is greater in booms.
5) In most countries, the real growth rate is the key macroeconomic input for budget forecasting. In Chile it is the price of copper.
6) Real copper prices mean-revert in the long run, but this is not readily perceived.
7) Chile has avoided the problem of overly optimistic official forecasts.
The conclusion: official forecasts tend to be overly optimistic, if not insulated from politics, and the problem can be worse when the government is formally subject to budget rules. The key innovation that has allowed Chile to achieve countercyclical fiscal policy in general, and to run surpluses in booms in particular, is not just a structural budget rule in itself, but a regime that entrusts to independent expert panels responsibility for estimating long-run trends in copper prices and GDP.
ER -
TY - JOUR
AU - Heckman,James J.
AU - Pinto,Rodrigo
AU - Shaikh,Azeem M.
AU - Yavitz,Adam
TI - Inference with Imperfect Randomization: The Case of the Perry Preschool Program
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16935
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16935
L1 - http://www.nber.org/papers/w16935.pdf
N1 - Author contact info:
James J. Heckman
Department of Economics
The University of Chicago
1126 E. 59th Street
Chicago, IL 60637
Tel: 773/702-0634
Fax: 773/702-8490
E-Mail: jjh@uchicago.edu
Rodrigo Pinto
Department of Economics
The University of Chicago
1126 E. 59th Street
Chicago, IL 60637
E-Mail: rodrig@uchicago.edu
Azeem Shaikh
Department of Economics
University of Chicago
1126 E. 59th Street
Chicago IL 60637
E-Mail: amshaikh@uchicago.edu
Adam Yavitz
Department of Economics
University of Chicago
1126 E. 59th Street
Chicago, IL 60637
E-Mail: adamy@uchicago.edu
AB - This paper considers the problem of making inferences about the effects of a program on multiple outcomes when the assignment of treatment status is imperfectly randomized. By imperfect randomization we mean that treatment status is reassigned after an initial randomization on the basis of characteristics that may be observed or unobserved by the analyst. We develop a partial identification approach to this problem that makes use of information limiting the extent to which randomization is imperfect to show that it is still possible to make nontrivial inferences about the effects of the program in such settings. We consider a family of null hypotheses in which each null hypothesis specifies that the program has no effect on one of several outcomes of interest. Under weak assumptions, we construct a procedure for testing this family of null hypotheses in a way that controls the familywise error rate -- the probability of even one false rejection -- in finite samples. We develop our methodology in the context of a reanalysis of the HighScope Perry Preschool program. We find statistically significant effects of the program on a number of different outcomes of interest, including outcomes related to criminal activity for males and females, even after accounting for the imperfectness of the randomization and the multiplicity of null hypotheses.
ER -
TY - JOUR
AU - Cadena,Ximena
AU - Schoar,Antoinette
AU - Cristea,Alexandra
AU - Delgado-Medrano,Héber M.
TI - Fighting Procrastination in the Workplace: An Experiment
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16944
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16944
L1 - http://www.nber.org/papers/w16944.pdf
N1 - Author contact info:
Ximena Cadena
Harvard University
1737 Cambridge Street
Room K 350
Cambridge, MA 02138
E-Mail: xcadena@iq.harvard.edu
Antoinette Schoar
MIT Sloan School of Management
100 Main Street, E62-638
Cambridge, MA 02142
Tel: 617/253-3763
Fax: 617/258-6855
E-Mail: aschoar@mit.edu
Alexandra Cristea
ideas42
E-Mail: alexandra.cristea@gmail.com
Heber M. Delgado-Medrano
Princeton University
88 College Road West
Princeton New Jersey, 08544
E-Mail: hdelgado@princeton.edu
AB - In this paper we test whether procrastination and planning problems affect the performance, compensation and work satisfaction among employees. We conducted a randomized controlled experiment with a bank in Colombia to change the frequency and intensity with which employees received reminders about goal achievements. We also provided small in-kind prizes every week to remind employees of their goal achievement. Loan officers in the treatment group showed strong improvements in their goal achievements, better work load distribution, and higher monthly compensation (not including the value of the small prizes). The intervention also improved worker satisfaction and reduced stress levels, without affecting the quality of the loan officers’ portfolios. We show that including branch managers (the supervisors of the loan officers) in the intervention was central in achieving these results, since they played a key role in reinforcing the reminders and helping employees with planning problems.
ER -
TY - JOUR
AU - Hellmann,Thomas F.
AU - Perotti,Enrico C.
TI - The Circulation of Ideas in Firms and Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16943
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16943
L1 - http://www.nber.org/papers/w16943.pdf
N1 - Author contact info:
Thomas F. Hellmann
Sauder School of Business
University of British Columbia
2053 Main Mall
Vancouver, BC V6T 1Z2
CANADA
Tel: 604/822-8476
Fax: 604/822-8477
E-Mail: hellmann@sauder.ubc.ca
Enrico C. Perotti
Department of Finance
University of Amsterdam
Roeterstraat 11
1018 WB Amsterdam
NETHERLANDS
Tel: 31205254159
Fax: 31205255285
E-Mail: e.c.perotti@uva.nl
AB - Novel early stage ideas face uncertainty on the expertise needed to elaborate them, which creates a need to circulate them widely to find a match. Yet as information is not excludable, shared ideas may be stolen, reducing incentives to innovate. Still, in idea-rich environments inventors may share them without contractual protection. Idea density is enhanced by firms ensuring rewards to inventors, while their legal boundaries limit idea leakage. As firms limit idea circulation, the innovative environment involves a symbiotic interaction: firms incubate ideas and allow employees leave if they cannot find an internal fit; markets allow for wide ideas circulation of ideas until matched and completed; under certain circumstances ideas may be even developed in both firms and markets.
ER -
TY - JOUR
AU - Burnside,Craig
AU - Eichenbaum,Martin S.
AU - Rebelo,Sergio
TI - Carry Trade and Momentum in Currency Markets
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16942
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16942
L1 - http://www.nber.org/papers/w16942.pdf
N1 - Author contact info:
Craig Burnside
Department of Economics
Duke University
213 Social Sciences Building
Durham, NC 27708-0097
Tel: 919/660-1808
Fax: 919/684-8974
E-Mail: craig.burnside@duke.edu
Martin S. Eichenbaum
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL 60208
Tel: 847/491-8232
Fax: 847/491-7001
E-Mail: eich@northwestern.edu
Sergio Rebelo
Northwestern University
Kellogg School of Management
Department of Finance
Leverone Hall
Evanston, IL 60208-2001
Tel: 847/467-2329
Fax: 847/491-5719
E-Mail: s-rebelo@northwestern.edu
AB - We examine the empirical properties of the payoffs to two popular currency speculation strategies: the carry trade and momentum. We review three possible explanations for the apparent profitability of these strategies. The first is that speculators are being compensated for bearing risk. The second is that these strategies are vulnerable to rare disasters or peso problems. The third is that there is price pressure in currency markets.
ER -
TY - JOUR
AU - Erel,Isil
AU - Julio,Brandon
AU - Kim,Woojin
AU - Weisbach,Michael S.
TI - Macroeconomic Conditions and Capital Raising
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16941
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16941
L1 - http://www.nber.org/papers/w16941.pdf
N1 - Author contact info:
Isil Erel
Department of Finance
Ohio State University
832 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210
Tel: 614-292-5174
E-Mail: erel@fisher.osu.edu
Brandon Julio
London Business School
Regent's Park
London NW1 4SA
United Kingdom
E-Mail: bjulio@london.edu
Woojin Kim
SNU Business School
Seoul National University
1 Gwanak Ro
Gwanak-gu
Seoul, 151-916
Korea
Tel: +82-2-880-5831
E-Mail: woojinkim@snu.ac.kr
Michael Weisbach
Department of Finance
Fisher College of Business
Ohio State University
2100 Neil Ave.
Columbus, OH 43210
Tel: 614/292-3264
E-Mail: weisbach.2@osu.edu
AB - Do macroeconomic conditions affect firms’ abilities to raise capital? If so, how do they affect the manner in which the capital is raised? We address these questions using a large sample of publicly-traded debt issues, seasoned equity offers, bank loans and private placements of equity and debt. Our results suggest that a borrower’s credit quality significantly affects its ability to raise capital during macroeconomic downturns. For noninvestment-grade borrowers, capital raising tends to be procyclical while for investment-grade borrowers, it is countercyclical. Moreover, proceeds raised by investment grade firms are more likely to be held in cash in recessions than in expansions. Poor market conditions also affect the structure of securities offered, shifting them towards shorter maturities and more security. Overall, our results suggest that macroeconomic conditions influence the securities that firms issue to raise capital, the way in which these securities are structured and indeed firms’ ability to raise capital at all. This influence likely occurs primarily through the effect of macroeconomic conditions on the supply of capital.
ER -
TY - JOUR
AU - Feenstra,Robert C.
AU - Li,Zhiyuan
AU - Yu,Miaojie
TI - Exports and Credit Constraints Under Incomplete Information: Theory and Evidence from China
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16940
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16940
L1 - http://www.nber.org/papers/w16940.pdf
N1 - Author contact info:
Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu
Zhiyuan Li
School of Economics
Shanghai University of Finance & Economics
777 Guoding Road, Shanghai, P.R. China. 200433
Tel: +8618621053782
E-Mail: zhyli97@gmail.com
Miaojie Yu
China Center for Economic Research
Peking University
Beijing, China
E-Mail: mjyu@ccer.edu.cn
AB - This paper examines why credit constraints for domestic and exporting firms arise in a setting where banks do not observe firms' productivities. To maintain incentive-compatibility, banks lend below the amount needed for first-best production. The longer time needed for export shipments induces a tighter credit constraint on exporters than on purely domestic firms, even in the exporters' home market. Greater risk faced by exporters also affects the credit extended by banks. Extra fixed costs reduce exports on the extensive margin, but can be offset by collateral held by exporting firms. The empirical application to Chinese firms strongly supports these theoretical results, and we find a sizable impact of the financial crisis in reducing exports.
ER -
TY - JOUR
AU - Friedman,Willa
AU - Kremer,Michael
AU - Miguel,Edward
AU - Thornton,Rebecca
TI - Education as Liberation?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16939
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16939
L1 - http://www.nber.org/papers/w16939.pdf
N1 - Author contact info:
Willa Friedman
Department of Economics
University of California at Berkeley
508-1 Evans Hall #3880
Berkeley, CA 94720-3880
E-Mail: willa@econ.berkeley.edu
Michael Kremer
Harvard University
Department of Economics
Littauer Center M20
Cambridge, MA 02138
Tel: 617/495-9145
Fax: 617/495-7730
E-Mail: mkremer@fas.harvard.edu
Edward Miguel
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720
Tel: 510/642-7162
Fax: 510/642-6615
E-Mail: emiguel@econ.berkeley.edu
Rebecca Thornton
University of Michigan
611 Tappan St.
Ann Arbor, MI 48109
Tel: 734-763-3720
E-Mail: rebeccal@umich.edu
AB - Scholars have long speculated about education’s political impacts, variously arguing that it promotes modern or pro-democratic attitudes; that it instills acceptance of existing authority; and that it empowers the disadvantaged to challenge authority. To avoid endogeneity bias, if schooling requires some willingness to accept authority, we assess the political and social impacts of a randomized girls’ merit scholarship incentive program in Kenya that raised test scores and secondary schooling. We find little evidence for modernization theory. Consistent with the empowerment view, young women in program schools were less likely to accept domestic violence. Moreover, the program increased objective political knowledge, and reduced acceptance of political authority. However, this rejection of the status quo did not translate into greater perceived political efficacy, community participation, or voting intentions. Instead, the perceived legitimacy of political violence increased. Reverse causality may help account for the view that education instills greater acceptance of authority.
ER -
TY - JOUR
AU - Fogel,Robert W.
AU - Grotte,Nathaniel
TI - An Overview of The Changing Body: Health, Nutrition, and Human Development in the Western World Since 1700
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16938
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16938
L1 - http://www.nber.org/papers/w16938.pdf
N1 - Author contact info:
Robert W. Fogel
Director, Center for Population Economics
University of Chicago, Booth School of Business
5807 S. Woodlawn Avenue, Suite 367
Chicago, IL 60637
Tel: 773/702-7709
Fax: 773/702-2901
E-Mail: rwf@cpe.uchicago.edu
Nathaniel Grotte
Center for Population Economics
University of Chicago, Booth School of Business
5807 S. Woodlawn Avenue, Suite 367
Chicago, IL 60637
Tel: 773-834-5388
E-Mail: Nathaniel.Grotte@ChicagoBooth.edu
AB - This summary of The Changing Body: Health, Nutrition, and Human Development in the Western World since 1700 (Cambridge) was prepared for presentation at the University of Alabama at Birmingham School of Public Health in March 2011. The book is built on the authors’ work with 300 years of height and nutrition data and discusses their findings in the context of technophysio evolution, a uniquely modern form of rapid physiological development, the result of humanity’s ability to control its environment and create technological innovations to adapt to it.
ER -
TY - JOUR
AU - Clark,Jonathan R.
AU - Huckman,Robert
TI - Broadening Focus: Spillovers, Complementarities and Specialization in the Hospital Industry
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16937
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16937
L1 - http://www.nber.org/papers/w16937.pdf
N1 - Author contact info:
Jonathan R. Clark
601A Donald H. Ford Building
The Pennsylvania State University
University Park PA 16802
E-Mail: jrc24@psu.edu
Robert Huckman
435 Morgan Hall
Harvard Business School
Boston, MA 02163
Tel: 617/495-6649
E-Mail: rhuckman@hbs.edu
AB - The long-standing argument that focused operations outperform others stands in contrast to claims about the benefits of broader operational scope. The performance benefits of focus are typically attributed to reduced complexity, lower uncertainty, and the development of specialized expertise, while the benefits of greater breadth are linked to the economies of scope achieved by sharing common resources, such as advertising or production capacity, across activities. Within the literature on corporate strategy, this tension between focus and breadth is reconciled by the concept of related diversification (i.e., a firm with multiple operating units, each specializing in distinct but related activities). We consider whether there are similar benefits to related diversification within an operating unit and examine the mechanism that generates these benefits. Using the empirical context of cardiovascular care within hospitals, we first examine the relationship between a hospital’s level of specialization in cardiovascular care and the quality of its clinical performance on cardiovascular patients. We find that, on average, focus has a positive effect on quality performance. We then distinguish between positive spillovers and complementarities to examine: (1) the extent to which a hospital’s specialization in areas related to cardiovascular care directly impacts performance on cardiovascular patients (positive spillovers) and (2) whether the marginal benefit of a hospital’s focus in cardiovascular care depends on the degree to which the hospital “co-specializes” in related areas (complementarities). In our setting, we find evidence of such complementarities in specialization.
ER -
TY - JOUR
AU - Costinot,Arnaud
AU - Vogel,Jonathan
AU - Wang,Su
TI - An Elementary Theory of Global Supply Chains
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16936
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16936
L1 - http://www.nber.org/papers/w16936.pdf
N1 - Author contact info:
Arnaud Costinot
Department of Economics
MIT, E52-243B
50 Memorial Drive
Cambridge MA 02142-1347
Tel: 617/324-1712
Fax: 617/253-1330
E-Mail: costinot@mit.edu
Jonathan Vogel
Department of Economics
Columbia University
420 West 118th Street
New York, NY 10027
Tel: 212/854-9925
Fax: 212/854-8059
E-Mail: jvogel@columbia.edu
Su Wang
MIT
E-Mail: su_wang@mit.edu
AB - This paper develops an elementary theory of global supply chains. We consider a world economy with an arbitrary number of countries, one factor of production, a continuum of intermediate goods, and one final good. Production of the final good is sequential and subject to mistakes. In the unique free trade equilibrium, countries with lower probabilities of making mistakes at all stages specialize in later stages of production. Because of the sequential nature of production, absolute productivity differences are a source of comparative advantage among nations. Using this simple theoretical framework, we offer a first look at how vertical specialization shapes the interdependence of nations.
ER -
TY - JOUR
AU - Glaeser,Edward L.
AU - Ponzetto,Giacomo A.M.
AU - Tobio,Kristina
TI - Cities, Skills, and Regional Change
JF - National Bureau of Economic Research Working Paper Series
VL - No. 16934
PY - 2011
Y2 - April 2011
UR - http://www.nber.org/papers/w16934
L1 - http://www.nber.org/papers/w16934.pdf
N1 - Author contact info:
Edward L. Glaeser
Department of Economics
315A Littauer Center
Harvard University
Cambridge, MA 02138
Tel: 617/495-0575
Fax: 617/495-7730
E-Mail: eglaeser@harvard.edu
Giacomo Ponzetto
CREI and Universitat Pompeu Fabra
C/ Ramon Trias Fargas, 25-27
08005 Barcelona
Spain
Tel: +34 93 542 2829
Fax: +34 93 542 2826
E-Mail: gponzetto@crei.cat
Kristina Tobio
Kennedy School of Government
79 JFK St- T347
Cambridge, MA 02138
E-Mail: kristina_tobio@ksg.harvard.edu
AB - One approach to urban areas emphasizes the existence of certain immutable relationships, such as Zipf’s or Gibrat’s Law. An alternative view is that urban change reflects individual responses to changing tastes or technologies. This paper examines almost 200 years of regional change in the U.S. and finds that few, if any, growth relationships remain constant, including Gibrat’s Law. Education does a reasonable job of explaining urban resilience in recent decades, but does not seem to predict county growth a century ago. After reviewing this evidence, we present and estimate a simple model of regional change, where education increases the level of entrepreneurship. Human capital spillovers occur at the city level because skilled workers produce more product varieties and thereby increase labor demand. We find that skills are associated with growth in productivity or entrepreneurship, not with growth in quality of life, at least outside of the West. We also find that skills seem to have depressed housing supply growth in the West, but not in other regions, which supports the view that educated residents in that region have fought for tougher land-use controls. We also present evidence that skills have had a disproportionately large impact on unemployment during the current recession.
ER -
TY - JOUR
AU - Devoto,Florencia
AU - Duflo,Esther
AU - Dupas,Pascaline
AU - Pariente,William
AU - Pons,Vincent
TI - Happiness on Tap: Piped Water Adoption in Urban Moroc