AN NBER PUBLICATION ISSUE: No. 9, September 2014

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
...different responses of monetary policy to benefit increases and tax cuts probably explain their very different macroeconomic effects. Christina Romer and David Romer examine the macroeconomic effects of changes in Social Security benefits in the United States from 1952 to 1991 in their paper Transfer Payments and the Macroeconomy: The Effects of Social Security Benefit Changes, 1952-1991 (NBER Working Paper No. 20087). During this period, increases in Social...

Research Summaries

Article
...ETF ownership of stocks leads to higher volatility and turnover. In recent decades, exchange-traded funds (ETFs) have grown rapidly. There has been little analysis of whether or how this development may affect the performance of securities markets. In Do ETFs Increase Volatility? (NBER Working Paper No. 20071), Itzhak Ben-David, Francesco Franzoni, and Rabih Moussawi discover that the stocks that are held within such funds experience substantially higher intraday...
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Article
The average price of physician-administered drugs declined by between 38 and 48 percent following patent expiration. When a drug's U.S. patent expires, manufacturers other than the initial developer may take advantage of an abbreviated approval process to introduce lower-priced generic versions. In most uses, generics are clinically equivalent to the original branded drug. Some drugs are straightforward to imitate and produce at low cost. Others, particularly...
Article
...sales data show a substantial bunching of transactions right below the $1 million level. New York City levies a "mansion tax" on real estate transactions that exceed $1 million in value. In Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market (NBER Working Paper No. 20084), Wojciech Kopczuk and David Munroe study the impact of these taxes on real estate transaction prices and the level of trading volume around tax thresholds. They...
Article
...better job accessibility significantly decreases the duration of joblessness among lower-paid displaced workers. Urban concentrations of lower-income and minority populations have higher than average unemployment rates. The spatial mismatch hypothesis (SMH) postulates that a worker with locally inferior job access is likely to experience worse labor market outcomes. If it is correct, then improving spatial access to jobs could lead to better employment outcomes....
Article
...credit spread indexes are strong predictors of future economic activity and of the growth in bank lending. Measuring the extent of financial distress for countries within the European financial system is a difficult challenge. In Credit Risk in the Euro Area (NBER Working Paper No. 20041), Simon Gilchrist and Benoît Mojon develop new indexes of credit risks in the euro area. They analyze information on hundreds of thousands of monthly observations on the yield to...

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