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Massachusetts Institute of Technology Department of Economics
(29 results)-
White Papers
Climate Shocks And Economic Growth: Evidence From The Last Half Century
November 1, 2008, 12:00am PDT
This paper uses annual variation in climate to examine the impact of temperature and precipitation on national economies. The authors find three primary results. First, higher temperatures...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Heterogeneous Trade Costs And Wage Inequality
October 12, 2010, 12:00am PDT
The authors develop a model for analyzing the distributional effects of two phases of globalization and their interdependencies. They distinguish between a First Globalization, characterized by...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
An Elementary Theory Of Global Supply Chains
January 26, 2011, 12:00am PST
This paper develops an elementary theory of global supply chains. The authors consider a world economy with an arbitrary number of countries, one factor of production, a continuum of intermediate...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Media Markets, Special Interests, And Voters
January 23, 2011, 12:00am PST
This paper examines the role of mass media in countering special interest group influence by studying county-level support for candidates to the US Senate from 1980 to 2002 as a function of media...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
The Political Economy Of Rural Property Rights And The Persistence Of The Dual Economy
November 18, 2010, 12:00am PST
If property rights in land are so beneficial, why are they not adopted more widely? The author proposes a theory based on the idea that limited property rights over peasants' plots may be...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Cracks In The System: Repairing The Damaged Global Economy
December 1, 2008, 12:00am PST
The global economy is facing its worst crisis in 60 years. In the first half of the 2000s, a benign environment led investors, firms, and consumers to expect a permanently bright future and to...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
E-Ztax: Tax Salience And Tax Rates
September 1, 2008, 12:00am PDT
This paper examines whether the salience of a tax system affects equilibrium tax rates. The author analyzes how tolls change after toll facilities adopt Electronic Toll Collection (ETC); drivers...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Capital Income Taxes With Heterogeneous Discount Rates
January 27, 2010, 12:00am PST
With heterogeneity in both skills and discount factors, the Atkinson-Stiglitz theorem that savings should not be taxed does not hold. The authors consider a model with heterogeneity of preferences...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Pollution Permits And The Evolution Of Market Structure
November 1, 2010, 12:00am PDT
The authors explore the long run dynamic implications of subjecting an imperfectly competitive industry to market-based pollution regulation. They are particularly interested in understanding how...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
The Base For Direct Taxation
March 28, 2008, 12:00am PDT
'The Characteristics of a Good Tax Structure', is divided into six sections: Incentives and economic efficiency, Distributional effects, International aspects, Simplicity and costs of...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Analyzing Economic Effects Of Constitutions With Weak Instruments
February 6, 2007, 12:00am PST
The authors analyze the empirical results of Persson and Tabellini's The Economic Effects of Constitutions (2003) taking into account the possibility of a weak instrument problem. They find that...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Do Markets Reduce Costs? Assessing The Impact Of Regulatory Restructuring On U.S. Electric Generation Efficiency
September 1, 2007, 12:00am PDT
While neoclassical models assume static cost-minimization by firms, agency models suggest that firms may not minimize costs in less-competitive or regulated environments. The authors test this...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
The Growth In The Social Security Disability Rolls: A Fiscal Crisis Unfolding
August 7, 2006, 12:00am PDT
More than 80 percent of all nonelderly adults in the United States are insured against the risk of being unable to work because of a physical or mental disability by the Social Security Disability...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Financial Distortions And The Distribution Of Global Volatility
November 10, 2010, 12:00am PST
A generic feature of financial frictions, whatever their origins may be, is to distort the allocation of funds to projects, causing some less productive projects to be funded while more productive...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
The Inefficiency Of Financial Intermediation In General Equilibrium
September 15, 2010, 12:00am PDT
In the presence of liquidity constraints, there are rents from supplying liquidity to constrained entrepreneurs. In partial equilibrium, when the price of inputs is fixed in terms of liquidity, a...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Tournaments As Optimal Contracts
July 20, 2007, 12:00am PDT
The author considers a standard multi-agent moral hazard problem with an added assumption that puts an upper bound on wages. The author shows that when the distribution of the aggregate shock to...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
How General Are Risk Preferences? Choices Under Uncertainty In Different Domains
January 1, 2010, 12:00am PST
The authors examine the extent to which an individual's actual insurance and investment choices display a stable ranking in willingness to bear risk, relative to his peers, across different...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Property Taxes Under "Classification": Why Do Firms Pay More?
June 29, 2010, 12:00am PDT
This paper examines how communities will behave if they are given the option of taxing the property of commercial establishments at different rates from residential housing. In the last 2 decades...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
What Will It Take To Restore The Housing Market?
February 20, 2009, 12:00am PST
This paper examines the causes of the run up in house prices between 1998 and 2006 and the subsequent fall. It is argued that two unique factors have been at work: a true "Bubble" in 2nd homes,...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Inference For Parameters Defined By Moment Inequalities: A Recommended Moment Selection Procedure
September 1, 2008, 12:00am PDT
This paper is concerned with tests and confidence intervals for partially-identified parameters that are defined by moment inequalities and equalities. In the literature, different test...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
When Optimists Need Credit: Asymmetric Disciplining Of Optimism And Implications For Asset Prices
May 30, 2010, 12:00am PDT
Heterogeneity of beliefs has been suggested as a major contributing factor to the recent financial crisis. This paper theoretically evaluates this hypothesis. The author assumes that optimists...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Moral Hazard And Efficiency in General Equilibrium With Anonymous Trading
April 26, 2010, 12:00am PDT
A "Folk theorem" originating, among others, in the work of Stiglitz maintains that competitive equilibrium are always or "Generically" inefficient. This paper critically reevaluates these claims...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Sudden Financial Arrest
November 8, 2009, 12:00am PST
There are striking and terrifying similarities between the sudden failure of a heart and that of a financial system. In the medical literature, the former is referred to as a Sudden Cardiac Arrest...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Fire Sales In A Model Of Complexity
July 14, 2010, 12:00am PDT
In this paper the authors present a model of fire sales and market breakdowns, and of the financial amplification mechanism that follows from them. The distinctive feature of the model is the...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Crisis And Reform: Managing Systemic Risk
March 31, 2010, 12:00am PDT
Severe financial crises not only involve "Turbulence" but also the dramatic reaction of economic agents to the unknown. Perceived complexity builds up quickly and economic agents lose their...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Discussion Of "Global Imbalances And The Financial Crisis: Products Of Common Causes"
October 19, 2009, 12:00am PDT
One of the main global economic concerns before the financial crisis was the presence of large "Global imbalances," which refer to the massive and persistent current account deficits experienced...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
On The Role Of Financial Frictions And The Saving Rate During Trade Liberalizations
September 10, 2009, 12:00am PDT
The authors study how financial frictions and the saving rate shape the long-run effects of trade liberalization on income, consumption and the distribution of wealth in financially underdeveloped...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Public-Private Partnerships For Liquidity Provision
March 4, 2009, 12:00am PST
In this paper, the government must step to the plate by either replacing the missing insurance markets, or by supporting private insurance provision. The authors study the case of a bank with pro...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Inflating The Beast: Political Incentives Under Uncertainty
June 1, 2008, 12:00am PDT
The standard view of the political economy of public debt is that myopic and un-constrained politicians prefer to disregard intertemporal smoothing considerations and extract political rents as...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Inflating The Beast: Political Incentives Under Uncertainty
June 1, 2008, 12:00am PDT
The standard view of the political economy of public debt is that myopic and un-constrained politicians prefer to disregard intertemporal smoothing considerations and extract political rents as...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Public-Private Partnerships For Liquidity Provision
March 4, 2009, 12:00am PST
In this paper, the government must step to the plate by either replacing the missing insurance markets, or by supporting private insurance provision. The authors study the case of a bank with pro...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
On The Role Of Financial Frictions And The Saving Rate During Trade Liberalizations
September 10, 2009, 12:00am PDT
The authors study how financial frictions and the saving rate shape the long-run effects of trade liberalization on income, consumption and the distribution of wealth in financially underdeveloped...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Discussion Of "Global Imbalances And The Financial Crisis: Products Of Common Causes"
October 19, 2009, 12:00am PDT
One of the main global economic concerns before the financial crisis was the presence of large "Global imbalances," which refer to the massive and persistent current account deficits experienced...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Crisis And Reform: Managing Systemic Risk
March 31, 2010, 12:00am PDT
Severe financial crises not only involve "Turbulence" but also the dramatic reaction of economic agents to the unknown. Perceived complexity builds up quickly and economic agents lose their...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Fire Sales In A Model Of Complexity
July 14, 2010, 12:00am PDT
In this paper the authors present a model of fire sales and market breakdowns, and of the financial amplification mechanism that follows from them. The distinctive feature of the model is the...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Sudden Financial Arrest
November 8, 2009, 12:00am PST
There are striking and terrifying similarities between the sudden failure of a heart and that of a financial system. In the medical literature, the former is referred to as a Sudden Cardiac Arrest...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Moral Hazard And Efficiency in General Equilibrium With Anonymous Trading
April 26, 2010, 12:00am PDT
A "Folk theorem" originating, among others, in the work of Stiglitz maintains that competitive equilibrium are always or "Generically" inefficient. This paper critically reevaluates these claims...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
When Optimists Need Credit: Asymmetric Disciplining Of Optimism And Implications For Asset Prices
May 30, 2010, 12:00am PDT
Heterogeneity of beliefs has been suggested as a major contributing factor to the recent financial crisis. This paper theoretically evaluates this hypothesis. The author assumes that optimists...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Inference For Parameters Defined By Moment Inequalities: A Recommended Moment Selection Procedure
September 1, 2008, 12:00am PDT
This paper is concerned with tests and confidence intervals for partially-identified parameters that are defined by moment inequalities and equalities. In the literature, different test...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
What Will It Take To Restore The Housing Market?
February 20, 2009, 12:00am PST
This paper examines the causes of the run up in house prices between 1998 and 2006 and the subsequent fall. It is argued that two unique factors have been at work: a true "Bubble" in 2nd homes,...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Property Taxes Under "Classification": Why Do Firms Pay More?
June 29, 2010, 12:00am PDT
This paper examines how communities will behave if they are given the option of taxing the property of commercial establishments at different rates from residential housing. In the last 2 decades...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
How General Are Risk Preferences? Choices Under Uncertainty In Different Domains
January 1, 2010, 12:00am PST
The authors examine the extent to which an individual's actual insurance and investment choices display a stable ranking in willingness to bear risk, relative to his peers, across different...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Tournaments As Optimal Contracts
July 20, 2007, 12:00am PDT
The author considers a standard multi-agent moral hazard problem with an added assumption that puts an upper bound on wages. The author shows that when the distribution of the aggregate shock to...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
The Inefficiency Of Financial Intermediation In General Equilibrium
September 15, 2010, 12:00am PDT
In the presence of liquidity constraints, there are rents from supplying liquidity to constrained entrepreneurs. In partial equilibrium, when the price of inputs is fixed in terms of liquidity, a...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Financial Distortions And The Distribution Of Global Volatility
November 10, 2010, 12:00am PST
A generic feature of financial frictions, whatever their origins may be, is to distort the allocation of funds to projects, causing some less productive projects to be funded while more productive...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
The Growth In The Social Security Disability Rolls: A Fiscal Crisis Unfolding
August 7, 2006, 12:00am PDT
More than 80 percent of all nonelderly adults in the United States are insured against the risk of being unable to work because of a physical or mental disability by the Social Security Disability...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Do Markets Reduce Costs? Assessing The Impact Of Regulatory Restructuring On U.S. Electric Generation Efficiency
September 1, 2007, 12:00am PDT
While neoclassical models assume static cost-minimization by firms, agency models suggest that firms may not minimize costs in less-competitive or regulated environments. The authors test this...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Analyzing Economic Effects Of Constitutions With Weak Instruments
February 6, 2007, 12:00am PST
The authors analyze the empirical results of Persson and Tabellini's The Economic Effects of Constitutions (2003) taking into account the possibility of a weak instrument problem. They find that...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
The Base For Direct Taxation
March 28, 2008, 12:00am PDT
'The Characteristics of a Good Tax Structure', is divided into six sections: Incentives and economic efficiency, Distributional effects, International aspects, Simplicity and costs of...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Pollution Permits And The Evolution Of Market Structure
November 1, 2010, 12:00am PDT
The authors explore the long run dynamic implications of subjecting an imperfectly competitive industry to market-based pollution regulation. They are particularly interested in understanding how...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Capital Income Taxes With Heterogeneous Discount Rates
January 27, 2010, 12:00am PST
With heterogeneity in both skills and discount factors, the Atkinson-Stiglitz theorem that savings should not be taxed does not hold. The authors consider a model with heterogeneity of preferences...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
E-Ztax: Tax Salience And Tax Rates
September 1, 2008, 12:00am PDT
This paper examines whether the salience of a tax system affects equilibrium tax rates. The author analyzes how tolls change after toll facilities adopt Electronic Toll Collection (ETC); drivers...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Cracks In The System: Repairing The Damaged Global Economy
December 1, 2008, 12:00am PST
The global economy is facing its worst crisis in 60 years. In the first half of the 2000s, a benign environment led investors, firms, and consumers to expect a permanently bright future and to...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
The Political Economy Of Rural Property Rights And The Persistence Of The Dual Economy
November 18, 2010, 12:00am PST
If property rights in land are so beneficial, why are they not adopted more widely? The author proposes a theory based on the idea that limited property rights over peasants' plots may be...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Media Markets, Special Interests, And Voters
January 23, 2011, 12:00am PST
This paper examines the role of mass media in countering special interest group influence by studying county-level support for candidates to the US Senate from 1980 to 2002 as a function of media...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
An Elementary Theory Of Global Supply Chains
January 26, 2011, 12:00am PST
This paper develops an elementary theory of global supply chains. The authors consider a world economy with an arbitrary number of countries, one factor of production, a continuum of intermediate...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Heterogeneous Trade Costs And Wage Inequality
October 12, 2010, 12:00am PDT
The authors develop a model for analyzing the distributional effects of two phases of globalization and their interdependencies. They distinguish between a First Globalization, characterized by...
Provided by Massachusetts Institute of Technology Department of Economics
-
White Papers
Climate Shocks And Economic Growth: Evidence From The Last Half Century
November 1, 2008, 12:00am PDT
This paper uses annual variation in climate to examine the impact of temperature and precipitation on national economies. The authors find three primary results. First, higher temperatures...
Provided by Massachusetts Institute of Technology Department of Economics
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