AN NBER PUBLICATION ISSUE: No. 12, December 2009

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
Rising home prices, falling mortgage rates, and more efficient refinancing lured masses of homeowners to refinance their homes and extract equity at the same time, increasing systemic risk in the financial system. Three trends in the U.S. housing market combined to dramatically magnify the losses of homeowners between 2006 and 2008 and to increase the systemic risk in the financial system. Individually, these trends, rising home prices, falling mortgage rates,...

Research Summaries

Article
A relatively small number of recalls by a few large manufacturers appears to result in decreased sales and capital market losses for the segment as a whole. In 2007, the Consumer Product Safety Commission (CPSC) issued 276 recalls of toys and other children's products -- an 80 percent increase over the number of children's items recalled in 2006. Many of the 2007 recalls involved paint with excessively high levels of lead content and almost all of the recalled toys...
Article
Recent research suggests that the wars in Afghanistan and Iraq, also known as Operation Enduring Freedom (OEF) and Operation Iraqi Freedom (OIF), pose substantial mental health challenges to U.S. military service members and the mental health systems that serve them. Estimates of military service related post-traumatic stress disorder (PTSD) vary widely, from 4 percent to 45 percent depending on the samples and how PTSD was measured. PTSD is associated with a host of long-...
Article
The low longevity ranking of the United States is not likely a result of a poorly functioning health care system. According to the World Health Organization (WHO), the United States ranked 29th in the world in 2006 in life expectancy at age 50. That places it more than three years behind the world's leader, Japan, and more than one and a half years behind Australia, Canada, France, Italy, Iceland, Spain, and Switzerland. About 4 million Americans reach the age of 50...
Article
The loss of liquidity at the firms that were the biggest players in the securitized banking system ...led to the financial crisis. The financial panic of 2007-8 stemmed from a run on the repurchase or "repo" market -- the primary source of funds for the securitized banking system -- rather than a run on monetary deposits as in earlier banking panics, according to a recent study by Gary Gorton and Andrew Metrick. Repo is a form of banking in which firms and...
Article
Social capital -- as proxied by regional trust -- can improve aggregate productivity by facilitating greater decentralization of firms. In The Organization of Firms across Countries (NBER Working Paper No. 15129), co-authors Nicholas Bloom, Raffaella Sadun, and John Van Reenen collect the first international data on the decentralization of investment, hiring, production, and sales decisions from corporate headquarters to local plants. They survey managers in almost 4...

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