AN NBER PUBLICATION ISSUE: No. 3, March 2017

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
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Inspired by the accomplishments of German air force aces to try harder, average pilots won few additional victories but perished at a much higher rate. Whether it's students receiving academic recognition in school or professionals winning prestigious industry awards for their achievements, human beings crave and welcome praise—and this can sometimes spur extraordinary effort. In Killer Incentives: Status Competition and Pilot Performance during World War II (...

Research Summaries

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Article
A measure derived from the federal funds futures market appears to offer predictive power for stock price movements. Monetary policy, Ben Bernanke once blogged, "is 98 percent talk and only two percent action." This underscores the challenge of deciphering how monetary policy announcements affect asset markets. A new study develops a way of measuring how speeches and other official pronouncements of Federal Reserve officials affect market predictions of future...
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...the edge they have enjoyed in offering profitable strategies may be eroding with the emergence of low-cost exchange-traded funds. Asset managers who actively manage large institutional investments outperformed benchmarks by 42 basis points after expenses, according to Asset Managers: Institutional Performance and Smart Betas (NBER Working Paper No. 22982). Researchers Joseph Gerakos, Juhani T. Linnainmaa, and Adair Morse estimate that they achieved this through...
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Firms in some Chinese industrial clusters, especially in special economic zones (SEZs), appear to engage in non-competitive pricing. Firms in the same industry often locate in the same geographic area. Alfred Marshall suggested in 1890 that such clustering reduced the cost of moving goods, people, and ideas. Subsequent work has found that clusters can enhance productivity by increasing competitive pressure. This result has been invoked to justify industrial...
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On average, a child who moved from downtown Chicago to the city's western suburbs at birth would earn almost 30 percent more than one who grew up downtown. Parents move their families for job opportunities, bigger houses, and better schools. Those who believe that where their children are raised will affect their future earnings are right. That's what Raj Chetty and Nathaniel Hendren find in The Impacts of Neighborhoods on Intergenerational Mobility II: County-...
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Minority cashiers at a French grocery chain scanned articles slower when working shifts for managers who appear to be biased. What happens to the job performance of minority workers when they are managed by someone who is biased against their group? In Discrimination as a Self-Fulfilling Prophecy: Evidence from French Grocery Stores (NBER Working Paper No. 22786), Dylan Glover, Amanda Pallais, and William Pariente follow workers at 34 outlets of a French grocery...

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