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AN NBER PUBLICATION ISSUE: No. 2, February 2019

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
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Declines in employment, output, and credit occurred when cash suddenly was in short supply due to a government anticorruption effort. Cash still matters in India. In the fourth quarter of 2016, a sudden, temporary, and almost complete disappearance of large-denomination bills caused a decline in the quarterly growth rate (not annualized) of employment, economic output, and in bank credit of 2 percentage points, according to a study by Gabriel Chodorow-Reich, Gita...

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Private firms increase their leverage as they grow, relying particularly on short-term debt, while many public firms deleverage as they expand. Privately held firms account for more than half of U.S. gross output and nearly two-thirds of employment, but they have been studied much less than publicly traded firms. In Leverage over the Life Cycle and Implications for Firm Growth and Shock Responsiveness (NBER Working Paper  25226), Emin Dinlersoz, Sebnem...
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When tariffs fell, instead of losing market share to Great Britain and becoming a net importer, France was able to sustain global sales even as imports surged. While in exile in Britain in the 1830s, France's Louis Napoléon had a ringside seat as his host country took its first steps toward liberalizing trade. He liked what he saw, and envisioned jumpstarting the French economy by eliminating trade barriers and lowering tariffs. When he became emperor in 1852,...
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Job-finding rates are lower for those who have been unemployed longer, but the long-term unemployed are still optimistic about their prospects. About 20 percent of unemployed Americans have been searching for a job for longer than 27 weeks. Known as the "long-term unemployed," these workers have lower job-finding rates than other unemployed workers, which has led to speculation that they may become discouraged about their job prospects over time. But in Job...
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  Environmental Rules, Cheaper Natural Gas, and More Renewables Have Reduced Damages   Annual damages from air pollution produced by U.S. power plants fell from $245 billion in 2010 to $133 billion in 2017, a 46 percent reduction, according to research reported by Stephen P. Holland, Erin T. Mansur, Nicholas Z. Muller, and Andrew J. Yates in Decompositions and Policy Consequences of an Extraordinary Decline in Air Pollution from Electricity...
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Announcing sales tax increases before they take effect substantially spurs auto purchases in the month before the tax increase kicks in. What can government authorities do if central bank interest rates are at zero and regulators still wish to stimulate the economy? Scott R. Baker, Lorenz Kueng, Leslie McGranahan, and Brian T. Melzer study the impact of pre-announced sales tax increases on new auto purchases. They find that such tax increases accelerate household...

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