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The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
Author(s): Gary Gorton
The subprime mortgage credit crisis demonstrates that while financial intermediaries have changed in many ways, at root their problems remain the same. Indeed, the old problem of banking panics can reappear in new guises. In the subprime mortgage crisis, investors without information about exactly which bonds have declined in value have refused to reinvest in the short-term obligations of structured vehicles, including Structured Investment Vehicles (SIVs) and Asset-...

Research Summaries

Frequent teacher feedback, data-driven instruction, intensified tutoring, increased instructional time, and high expectations - can explain roughly half of the variation between more effective and less effective schools. Traditional measures of what makes a good school - small class size, high per pupil spending, and a large share of teachers with advanced degrees but a small share with no certification - don't necessarily determine student achievement, according to a...
Imports from China and India over the past decade have increased the [number of] transitions to unemployment for those working in the service sector... by 0.9 percentage points. Trade in services has expanded dramatically in the past two decades, and the number of U.S. jobs exposed to service imports is estimated to be at least double the total number of jobs in manufacturing. An important piece of this "service tradability revolution" is the rise of service...
The propensity to donate and the average donation from donors are related to the ethnic makeup of the community. In Canada, increased ethnic and religious diversity within neighborhoods is associated with a lower level of individual donations to churches and charities. This finding emerges from analysis of data reported on individual tax returns. In Diversity and Donations: The Effect of Religious and Ethnic Diversity on Charitable Giving (NBER Working Paper No....
Untested individuals report perceived probabilities [of contracting Huntington's disease] that are much lower than their objective probability. Many people who may be carrying a life-threatening genetic disease evidently prefer not to know about it. In Optimal Expectations and Limited Medical Testing: Evidence from Huntington Disease (NBER Working Paper No. 17629), co-authors Emily Oster, Ira Shoulson, and Ray Dorsey find that even when testing is relatively...
CEOs who begin their careers during recessions ... end up heading smaller firms [and] receiving lower compensation. In Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Style (NBER Working Paper No. 17590), authors Antoinette Schoar and Luo Zuo find that economic conditions at the start of a manager's working life have lasting effects on his or her career path. Those CEOs who begin their careers during recessions take less time to become...

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