National Bureau of Economic Research

The dollar’s role as the world’s primary reserve currency has allowed the United States to borrow more cheaply than other countries, an advantage that economists call the “exorbitant privilege.” Foreign central banks, investors, and institutions hold Treasury bonds and other dollar assets not just for returns but for their value as safe, liquid instruments for payments and collateral. This demand generates what amounts to a fee, or seigniorage, paid by the rest of the world for access to dollar liquidity. There have been recent signs that this privilege is eroding: The premium investors pay to hold Treasuries over comparable foreign bonds has fallen since 2022. In the last two decades, foreign ownership of US public debt has dropped from roughly 45 to 30 percent, even as foreign holdings of private dollar assets have held steady.

In Dollar Erosion: Understanding the Loss of Reserve Currency Status (NBER Working Paper 35328), Zhengyang Jiang, Arvind Krishnamurthy, Hanno Lustig, and Robert J. Richmond estimate how...

NBER Research Associates Christopher Phelan and Hélène Rey have taken up new roles at the US Council of Economic Advisers (CEA) and the Bank for International Settlements (BIS), respectively. Phelan was confirmed as CEA Chair in early August. Phelan, a professor of economics at the University of Minnesota and an adviser to the research department of the Federal Reserve Bank of Minneapolis, is an expert on macroeconomics and economic theory. He was a Research Associate in the Economic Fluctuations and Growth program prior to taking up his new position. Rey, a professor of economics at the London Business School whose research focuses on monetary... 

Ajay K. Agrawal, Erik Brynjolfsson, and Anton Korinek, editors.

What happens to an economy when machines can think as well as, or even better than, humans? The Economics of Transformative AI tackles this issue, which is one of the most consequential economic questions of our time. 

Sixteen research studies from top economists examine how transformative AI reshapes everything from innovation and market structure to employment, inequality, and human purpose. They explore both opportunities, such as…

In research conducted in collaboration with Arkey Barnett at the University of Michigan and Meghan Beal at the National Sheriffs’ Association, we investigate the effects of innovative investments in local jails that aim to improve health and rehabilitation outcomes for incarcerated individuals and their communities. The US has one of the highest incarceration rates in the world, with nearly 2 million people detained in correctional facilities every year. While most people are held in state or federal prisons, local jails house 546,000 individuals across 3,116 facilities, the majority of whom are not convicted. Local jails serve as the front door to the criminal justice system, with more than 7.6 million admissions per year and a significant share of those released being rebooked within the same year, revealing a persistent…

Nursing homes certified by the Centers for Medicare & Medicaid Services to provide care and receive public reimbursement through Medicare and Medicaid are subject to mandatory annual inspections. While inspections are unannounced, they typically occur on an approximately yearly basis, as 74 percent of inspections take place between 40 and 60 weeks after the previous one. The average gap is around 53 weeks. Due to the cyclical nature of inspections, nursing home operators are able to anticipate when an inspection is likely and adjust their behavior accordingly. They appear to devote more effort to patient care when inspections are approaching.

In Predictably Unpredictable Inspections (NBER Working Paper 34491), Ashvin Gandhi, Andrew Olenski, and Maggie Shi study how the predictability of nursing home inspections shapes facility effort and patient...

Roughly one-quarter of new employer businesses in the United States are started by immigrants. Immigrant inventors have been responsible for approximately 23 percent of US patents produced since 1976 despite making up only 16 percent of the total US-based inventor population. Yet immigrant entrepreneurs usually do not build companies in isolation—many cofound startups alongside US-born entrepreneurs. In Native-Immigrant Entrepreneurial Synergies (NBER Working Paper 33804), Zhao Jin, Amir Kermani, and Timothy McQuade examine whether startups cofounded by immigrant and native entrepreneurs outperform those with founders from exclusively one...