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The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
Investors tend to overreact to negative returns, immediately liquidating their positions in index funds. In Index Funds and Stock Market Growth (NBER Working Paper No. 7033) authors William Goetzmann and Massimo Massa use high-frequency (daily) data on index fund trading, coupled with separate analyses of inflows and outflows, to investigate the relationship between investor demand and the movement of the S&P 500. Their analysis suggests that investor demand...

Research Summaries

...eliminating the earnings test would bolster labor supply ... at a small fiscal cost. The Social Security earnings test generates some of the highest marginal tax rates in the economy today, according to an NBER Working Paper by Leora Friedberg. Previous research suggested that the earnings test has only a minor impact on behavior; Friedberg's work casts doubt on these earlier studies. In The Labor Supply Effects of the Social Security Earnings Test (NBER Working...
If the price of beer, wine, and liquor is higher, husbands are less likely to beat up their female partners, choke them, or threaten to use or actually use a gun or knife. Raising the price of alcohol, for example with a tax increase, will reduce the amount of severe violence that men impose on their female partners, according to Sara Markowitz writing in The Price of Alcohol, Wife Abuse, and Husband Abuse (NBER Working Paper No. 6916). If the weighted average price...
High levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries. High levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries, according to a recent paper by NBER Research Associate Robert Barro. In Inequality, Growth and Investment (NBER Working Paper No.7038), Barro studies a broad panel of countries between 1960 and1995 and finds that growth tends to fall with greater...

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