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AN NBER PUBLICATION ISSUE: No. 2, February 2011

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
The younger companies are, the more jobs they create, regardless of their size. The popular perception that small businesses create most of America's jobs has been the focus of heated debate for three decades. However, the more telling characteristic for predicting job creation is the age of the firm, not its size, according to a new study by John Haltiwanger, Ron Jarmin, and Javier Miranda. In Who Creates Jobs? Small vs. Large vs. Young (NBER Working Paper No. 16300...

Research Summaries

Article
A sharp decline in sales after the program ended suggests that it had a muted total effect on auto purchases Under the $2.85 billion "Cash for Clunkers" program, the federal government paid automobile dealers between $3,500 and $4,500 each time a customer traded in an older, less fuel-efficient vehicle and purchased a newer, more fuel-efficient vehicle. The rebates were passed on to customers as a purchase incentive. The program was designed to boost automobile sales...
Article
The Treasury could save that money by buying back TIPS, entering into inflation swaps, and issuing Treasury bonds with the same maturity instead. Treasury Inflation-Protected Securities (TIPS) are obligations issued by the U.S. Treasury, similar in most respects to Treasury bonds except that the principal amount of a TIPS issue is inflation-indexed -- that is, it is adjusted over time to reflect changes in the consumer price index. The Treasury began issuing TIPS in...
Article
Every $1,000 in government grants a charity receives ... reduces fund-raising expenditures by $141, [which]... reduces [private] donations by an estimated $757. In Is Crowding Out Due Entirely to Fundraising? Evidence from a Panel of Charities (NBER Working Paper No. 16372), co-authors James Andreoni and Abigail Payne find that for every $1,000 in government grants a charity receives, contributions to the charity increase by an estimated $41, but the charity reduces...
Article
Technology can explain part of the difference [across countries] in economic recovery [after World War II]. Wars are extremely disruptive episodes that lead to major destruction of productive economic resources, yet different countries recover at very different speeds after wars. For example, it took Spain 15 years to reach the pre-Civil War level of per capita GDP, while Italy reached its pre-WWII level of GDP just six years after the end of that war. In Technology...
Article
Estimates of fiscal multipliers for 1940-41 are relevant to low-utilization situations like 2008-10 only when estimated through mid-1941, because the U. S. economy in the last half of 1941 was subject to severe capacity constraints. In The End of the Great Depression 1939-41: Policy Contributions and Fiscal Multipliers (NBER Working Paper No. 16380), co-authors Robert Gordon and Robert Krenn conclude that nearly 90 percent of the economic recovery that took place...

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