AN NBER PUBLICATION ISSUE: No. 3, March 2009

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
Of those households receiving the rebate, almost 20 percent reported that they would spend it; nearly 32 percent reported that they would mostly save the rebate, and 48 percent reported that they would mostly pay debt with the rebate. In an effort to bolster economic performance in light of a looming downturn in economic activity, President George W. Bush signed the Economic Stimulus Act of 2008 on February 13, 2008. More than two-thirds of the $152 billion bill...

Research Summaries

Article
Securitization expanded credit but led to a decline in credit quality; this amplified the strain of declining housing prices and rising mortgage delinquencies that began in 2006. The current economic downturn - the worst in at least three decades -- began with the bursting of the U.S. housing bubble, when mortgage delinquencies forced banks to write down several hundred billion dollars in bad loans. But those overall mortgage losses, while large on an absolute scale,...
Article
Private equity owned companies use much stronger incentives for their top executives and have substantially higher debt levels ... (but there is) little evidence that (they)...outperform public firms in profitability or operational efficiency. In Managerial Incentives and Value Creation: Evidence from Private Equity (NBER Working Paper No. 14331), co-authors Phillip Leslie and Paul Oyer analyze the differences between companies owned by private equity (PE) investors...
Article
Delays and full flights had made passengers so averse to connecting flights that adding a layover to a route could reduce the number of passengers on it by almost four-fifths. The U.S. airline industry went through tremendous turmoil in the beginning of this decade. There were four major bankruptcies and two major mergers, with all legacy carriers -- American, United, Delta, US Airways, Continental, and Northwest -- reporting a large reduction in profits. In Tracing...
Article
The $140/barrel price in the summer of 2008 and the $60/barrel in November of 2008 could not both be consistent with the same calculation of a scarcity rent warranted by long-term fundamentals. What caused the high price of oil in the summer of 2008? In Understanding Crude Oil Prices (NBER Working Paper No. 14492), James Hamilton reviews a number of theories, including commodity price speculation, strong world demand, time delays or geological limitations on...
Article
The traditional theory - [the law of one price for traded goods] -- works best for pairs of countries that trade a lot with each other, and who share a relatively stable real exchange rate. Since the 1990s, a debate has raged over the relationship between currency depreciations and the prices of domestic goods. Traditionalists argue that when a nation's nominal exchange rate rises, the prices of its traded goods rise, so that the real exchange rate of traded goods...

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