National Bureau of Economic Research

Displaying 1-40 of 1498 results

  • White Papers // Aug 2011

    Innovation And Productivity

    What do we know about the relationship between innovation and productivity among firms? The workhorse model of this relationship is presented and the implications of analysis using this model and the usually available data on product and process innovation are derived. The recent empirical evidence on the relationship between innovation...

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  • White Papers // Aug 2011

    Deregulation, Consolidation, And Efficiency: Evidence From U.S. Nuclear Power

    For the first four decades of its existence the U.S. nuclear power industry was run by regulated utilities, with most companies owning only one or two reactors. Beginning in the late 1990s electricity markets in many states were deregulated and almost half of the nation's 103 reactors were sold to...

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  • White Papers // Aug 2011

    Propose With A Rose? Signaling In Internet Dating Markets

    The large literature on costly signaling and the somewhat scant literature on preference signaling had varying success in showing the effectiveness of signals. The authors use a field experiment to show that even when everyone can send a signal, signals are free and the only costs are opportunity costs, sending...

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  • White Papers // Aug 2011

    Financial Literacy, Retirement Planning, And Household Wealth

    There is sample empirical evidence documenting widespread financial illiteracy and limited pension knowledge. At the same time, the distribution of wealth is widely dispersed and many workers arrive on the verge of retirement with few or no personal assets. In this paper, the authors investigate the relationship between financial literacy...

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  • White Papers // Aug 2011

    A Model Of The Consumption Response To Fiscal Stimulus Payments

    A wide body of empirical evidence, based on randomized experiments, finds that 20-40 percent of fiscal stimulus payments (e.g. tax rebates) are spent on nondurable household consumption in the quarter that they are received. The authors develop a structural economic model to interpret this evidence. Their model integrates the classical...

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  • White Papers // Aug 2011

    Ethnic Innovation And U.S. Multinational Firm Activity

    This paper studies the impact that immigrant innovators have on the global activities of U.S. firms by analyzing detailed data on patent applications and on the operations of the foreign affiliates of U.S. multinational firms. The results indicate that increases in the share of a firm's innovation performed by inventors...

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  • White Papers // Aug 2011

    Country Size, International Trade, And Aggregate Fluctuations In Granular Economies

    This paper proposes a new mechanism by which country size and international trade affect macroeconomic volatility. The authors study a multi-country, multi-sector model with heterogeneous firms that are subject to idiosyncratic firm-specific shocks. When the distribution of firm sizes follows a power law with an exponent close to -1, the...

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  • White Papers // Aug 2011

    Unemployment In Latin America And The Caribbean

    This paper constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. The authors compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak....

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  • White Papers // Aug 2011

    Healthy, Wealthy And Wise? Revisited: An Analysis Of The Causal Pathways From Socio-Economic Status To Health

    Much has been said about the stylized fact that the economically successful are not only wealthier but also healthier than the less affluent. There is little doubt about the existence of this socio-economic gradient in health, but there remains a vivid debate about its source. In this paper, the authors...

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  • White Papers // Aug 2011

    Country Heterogeneity And The International Evidence On The Effects Of Fiscal Policy

    This paper shows how the richer frequency and variety of fiscal policy shocks available in an international sample can be analyzed recognizing the heterogeneity that exists across different countries. The main conclusion of the authors' empirical analysis is that the question "What is the fiscal policy multiplier" is an ill-posed...

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  • White Papers // Aug 2011

    Long-term Barriers To The International Diffusion Of Innovations

    The authors document an empirical relationship between the cross-country adoption of technologies and the degree of long-term historical relatedness between human populations. Historical relatedness is measured using genetic distance, a measure of the time since two populations' last common ancestors. They find that the measure of human relatedness that is...

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  • White Papers // Aug 2011

    Employment, Wages And Voter Turnout

    This paper argues that, since activities that provide political information are complementary with leisure, increased labor market activity should lower turnout, but should do so least in prominent elections where information is ubiquitous. Using official county-level voting data and a variety of OLS and TSLS models, the authors find that...

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  • White Papers // Aug 2011

    Why Did U.S. Banks Invest In Highly-rated Securitization Tranches?

    The authors estimate holdings of highly-rated tranches of mortgage securitizations of American deposit-taking banks ahead of the credit crisis and evaluate hypotheses that have been advanced to explain these holdings. They find that holdings of highly-rated tranches were economically trivial for the typical bank, but banks with greater holdings performed...

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  • White Papers // Aug 2011

    Tax Expenditures, The Size And Efficiency Of Government, And Implications For Budget Reform

    One possible explanation for the difficulty in controlling the budget is that a major component of spending - tax expenditures - receives privileged status. It is treated as tax cuts rather than spending. This paper explores the implications of that misclassification and illustrates how it can lead to higher taxes,...

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  • White Papers // Aug 2011

    The Influence Of Irving Fisher On Milton Friedman's Monetary Economics

    This paper examines the influence of Irving Fisher's writings on Milton Friedman's work in monetary economics. The authors focus first on Fisher's influences in monetary theory (the quantity theory of money, the Fisher effect, Gibson's Paradox, the monetary theory of business cycles, and the Phillips Curve, and empirics, e.g. distributed...

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  • White Papers // Aug 2011

    Constituencies And Legislation: The Fight Over The Mcfadden Act Of 1927

    The McFadden Act of 1927 was one of the most hotly contested pieces of legislation in U.S. banking history, and its influence was still felt over half a century later. The act was intended to force states to accord the same branching rights to national banks as they accorded to...

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  • White Papers // Aug 2011

    Would People Behave Differently If They Better Understood Social Security? Evidence From A Field Experiment

    This paper presents the results of a field experiment in which a sample of older workers was randomized between a treatment group that was given information about key Social Security provisions and a control group that was not. The experiment was designed to examine whether it is possible to affect...

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  • White Papers // Aug 2011

    Exam High Schools And Academic Achievement: Evidence From New York City

    Publicly funded exam schools educate many of the world's most talented students. These schools typically contain higher achieving peers, more rigorous instruction, and additional resources compared to regular public schools. This paper uses a sharp discontinuity in the admissions process at three prominent exam schools in New York City to...

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  • White Papers // Aug 2011

    Covariances Versus Characteristics In General Equilibrium

    The authors question a deep-ingrained doctrine in asset pricing: if an empirical characteristic-return relation is consistent with investor "Rationality," the relation must be "Explained" by a risk factor model. The investment approach changes the big picture of asset pricing. Factors formed on characteristics are not necessarily risk factors: characteristics-based factor...

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  • White Papers // Aug 2011

    Equilibrium Wage And Employment Dynamics In A Model Of Wage Posting Without Commitment

    A rich but tractable variant of the Burdett-Mortensen model of wage setting behavior is formulated and a dynamic market equilibrium solution to the model is defined and characterized. In the model, firms cannot commit to wage contracts. Instead, the Markov perfect equilibrium to the wage setting game, characterized by Coles...

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  • White Papers // Aug 2011

    A Simple Nonparametric Approach To Estimating The Distribution Of Random Coefficients In Structural Models

    The authors explore a nonparametric mixtures estimator for recovering the joint distribution of random coefficients in economic models. The estimator is based on linear regression subject to linear inequality constraints and is computationally attractive compared to alternative, nonparametric estimators. They provide conditions under which the estimated distribution function converges to...

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  • White Papers // Aug 2011

    Foreign Firms And Local Communities

    The literature on the effects of Foreign Direct Investment (FDI) and activities of MultiNational Enterprises (MNEs) on host-countries has been almost exclusively focused on issues of productivity, growth and wages. The authors argue that this leaves quite a bit of important unexplored areas of inquiry, particularly those connected with the...

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  • White Papers // Aug 2011

    Systemic Risk Exposures: A 10-by-10-by-10 Approach

    Here, the author presents and discuss a "10-by-10-by-10" network-based approach to monitoring systemic financial risk. Under this approach, a regulator would analyze the exposures of a core group of systemically important financial firms to a list of stressful scenarios, say 10 in number. For each scenario, about 10 such designated...

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  • White Papers // Aug 2011

    The Exact Law Of Large Numbers For Independent Random Matching

    This paper provides a mathematical foundation for independent random matching of a large population, as widely used in the economics literature. The authors consider both static and dynamic systems with random mutation, partial matching arising from search, and type changes induced by matching. Under independence assumptions at each randomization step,...

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  • White Papers // Aug 2011

    The Importance Of The Meaning And Measurement Of "Affordable" In The Affordable Care Act

    This working paper highlights the practical importance of two critical but under-explored assumptions behind existing estimates of the Affordable Care Act (ACA)'s potential impact on the mix of employees and families who may have Employer-Sponsored health Insurance (ESI) in the future or may receive subsidies in the new health insurance...

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  • White Papers // Aug 2011

    Carry Trades And Risk

    Carry trades, in which an investor borrows a low interest rate currency and lends a high interest rate currency, have been profitable historically. The risk exposure of carry traders might explain their high returns, but conventional models of risk do not work because traditional risk factors, used to price the...

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  • White Papers // Aug 2011

    The Continental Dollar: Initial Design, Ideal Performance, And The Credibility Of Congressional Commitment

    An alternative history of the Continental Dollar is constructed from the original resolutions passed by Congress. The Continental Dollar was a zero-interest bearer bond, not a fiat currency. The public could redeem it at face value in specie at fixed future dates. Being a zero-interest bearer bond, discounting must be...

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  • White Papers // Aug 2011

    Substitution Between Individual And Cultural Capital: Pre-migration Labor Supply, Culture And US Labor Market Outcomes Among Immigrant Women

    In this paper, the authors use New Immigrant Survey data to investigate the impact of immigrant women's own labor supply prior to migrating and female labor supply in their source country to provide evidence on the role of human capital and culture in affecting their labor supply and wages in...

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  • White Papers // Aug 2011

    Behavioral Corporate Finance: An Updated Survey

    The authors survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing. The managerial biases approach studies the direct effects of managers' biases and nonstandard...

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  • White Papers // Aug 2011

    Asset Liquidity And International Portfolio Choice

    The authors study optimal asset portfolio choice in a two-country search-theoretic model of monetary exchange. They allow assets not only to represent claims on future consumption, but also to serve as means of payment. Assuming foreign assets trade at a cost, they characterize equilibria in which different countries' assets arise...

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  • White Papers // Aug 2011

    Information Aggregation, Investment, And Managerial Incentives

    The authors study the interplay of share prices and firm decisions when share prices aggregate and convey noisy information about fundamentals to investors and managers. First, they show that the informational feedback between the firm's share price and its investment decisions leads to a systematic premium in the firm's share...

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  • White Papers // Aug 2011

    Is Leisure A Normal Good? Evidence From The European Parliament

    Prior to July 2009, salaries of the members of the European Parliament were paid by their home country and there were substantial salary differences between parliamentarians representing different EU countries. Starting in July 2009, the salary of each member of the Parliament is pegged to 38.5% of a European Court...

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  • White Papers // Aug 2011

    Rare Macroeconomic Disasters

    The potential for rare macroeconomic disasters may explain an array of asset-pricing puzzles. The authors' empirical studies of these extreme events rely on long-term data now covering 28 countries for consumption and 40 for GDP. A baseline model calibrated with observed peak-to-trough disaster sizes accords with the average equity premium...

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  • White Papers // Aug 2011

    Beauty Is The Promise Of Happiness?

    The authors measure the impact of individuals' looks on life satisfaction/happiness. Using five data sets, from the U.S., Canada, the U.K., and Germany, they construct beauty measures in different ways that allow placing lower bounds on the effects of beauty. Beauty raises happiness: a one standard-deviation change in beauty generates...

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  • White Papers // Aug 2011

    How Reliable Are De Facto Exchange Rate Regime Classifications?

    The authors analyze disagreements over de facto exchange-rate-regime classifications using three popular de facto regime data series. While there is a moderate degree of concurrence across classifications, disagreements are not uncommon, and they are not random. They are most prevalent in middle-income countries (emerging markets) and low-income (developing) countries as...

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  • White Papers // Aug 2011

    Vertical Integration And Optimal Reimbursement Policy

    Health care providers may vertically integrate not only to facilitate coordination of care, but also for strategic reasons that may not be in patients' best interests. Optimal Medicare reimbursement policy depends upon the extent to which each of these explanations is correct. To investigate, the authors compare the consequences of...

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  • White Papers // Aug 2011

    Labor Market Dysfunction During The Great Recession

    This paper documents the abnormally slow recovery in the labor market during the Great Recession, and analyzes how mortgage modification policies contributed to delayed recovery. By making modifications means-tested by reducing mortgage payments based on a borrower's current income, these programs change the incentive for households to relocate from a...

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  • White Papers // Aug 2011

    Why Didn't Canada Have A Banking Crisis In 2008

    The financial crisis of 2008 engulfed the banking system of the United States and many large European countries. Canada was a notable exception. In this paper, the authors argue that the structure of financial systems is path dependent. The relative stability of the Canadian banks in the recent crisis compared...

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  • White Papers // Aug 2011

    Credit Shocks And Aggregate Fluctuations In An Economy With Production Heterogeneity

    The authors study the cyclical implications of credit market imperfections in a calibrated dynamic, stochastic general equilibrium model wherein firms face persistent shocks to aggregate and individual productivity. In their model economy, optimal capital reallocation is distorted by two frictions: collateralized borrowing and partial capital irreversibility yielding (S,s) firm-level investment...

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  • White Papers // Aug 2011

    Is The Foreclosure Crisis Making Us Sick?

    The authors investigate the relationship between foreclosure activity and the health of residents using zip code level longitudinal data. They focus on Arizona, California, Florida, and New Jersey, four states that have been among the hardest hit by the foreclosure crisis. They combine foreclosure data for 2005 to 2009 from...

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  • White Papers // Jan 2003

    International Debt Service and Economic Growth: Some Simple Analytics

    The pension records contain information relevant to meeting the legal requirements of pension eligibility. Pension records can include information relating to the history of the veteran, as well as important health and demographic information relating to the military history of the veteran before, during, and after the war. The carded...

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  • White Papers // Nov 2005

    Liability for Accidents

    This paper presents a survey of legal liability for accidents addressing three general aspects of accident liability. The first is the effect of liability on incentives, both whether to engage in activities and how much care to exercise to reduce risk when so doing. The second general aspect concerns risk-bearing...

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  • White Papers // May 2005

    Bank Credit Cycles

    Private information about prospective borrowers produced by a bank can affect rival lenders due to a "winner's curse" effect. Strategic interaction between banks with respect to the intensity of costly information production results in endogenous credit cycles, periodic "credit crunches." Empirical tests are constructed based on parameterizing public information about...

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  • White Papers // May 2005

    Asset Float and Speculative Bubbles

    This report models the relationship between asset float (tradeable shares) and speculative bubbles. Investors trade a stock with limited float because of insider lock-ups. They have heterogeneous beliefs due to overconfidence and face short-sales constraints. A bubble arises as price overweighs optimists' beliefs and investors anticipate the option to resell...

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  • White Papers // Jun 2005

    Growth or Glamour? Fundamentals and Systematic Risk in Stock Returns

    The cash flows of growth stocks are particularly sensitive to temporary movements in aggregate stock prices, while the cash flows of value stocks are particularly sensitive to permanent movements in aggregate stock prices. Growth stocks are not merely ?glamour stocks? whose systematic risks are purely driven by investor sentiment. More...

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  • White Papers // Apr 2001

    Payment Systems and Interchange Fees

    In a typical bank credit card transaction, the merchant's bank pays an interchange fee, collectively determined by all participating banks, to the cardholder's bank. This paper shows how the interchange fee balances charges between cardholders and merchants under imperfect competition. The privately optimal fee depends mainly on differences between cardholders'...

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  • White Papers // Feb 2002

    Does Function Follow Organizational Form? Evidence From the Lending Practices of Large and Small Banks

    The paper explores the idea in the context of bank lending to small firms, an activity that is typically thought of as relying heavily on soft information. It finds that large banks are less willing than small banks to lend to informationally 'difficult' credits, such as firms that do not...

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  • White Papers // Jul 2010

    Human Capital And The Indian Software Industry

    The importance of human capital - skilled and creative workers - to a "High-tech" industry is routinely acknowledged but often public policy discussions tend to focus on more trendy prescriptions such technology parks, venture capital, incubators and university industry centers. Software relies intensively upon human capital, perhaps more so than...

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  • White Papers // May 2010

    Personnel Economics: Hiring And Incentives

    This paper surveys the Personnel Economics literature, focusing on how firms establish, maintain, and end employment relationships and on how firms provide incentives to employees. The author has been very successful in generating models and empirical work about incentive systems. Some of the unanswered questions in this area - for...

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  • White Papers // May 2010

    Why Has California's Residential Electricity Consumption Been So Flat Since The 1980s?

    The authors use detailed microeconomic data to investigate why aggregate residential electricity consumption in California has been flat since 1980. Using unique micro data, they document the role that household demographics and ideology play in determining electricity demand. They show that building codes have been effective for homes built after...

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  • White Papers // Nov 2010

    What Does Equity Sector Orderflow Tell Us About The Economy?

    Investors rebalance their portfolios as their views about expected returns and risk change. The authors use empirical measures of portfolio rebalancing to back out investors' views, specifically their views about the state of the economy. They show that aggregate portfolio rebalancing across equity sectors is consistent with sector rotation, an...

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  • White Papers // Nov 2010

    The Contribution Of The Minimum Wage To U.S. Wage Inequality Over Three Decades: A Reassessment

    The authors reassess the effect of state and federal minimum wages on U.S. earnings inequality, attending to two issues that appear to bias earlier work: violation of the assumed independence of state wage levels and state wage dispersion, and errors-in-variables that inflate impact estimates via an analogue of the well...

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  • White Papers // Nov 2010

    Estimating Turning Points Using Large Data Sets

    Dating business cycles entails ascertaining economy-wide turning points. Broadly speaking, there are two approaches in the literature. The first approach is to identify turning points individually in a large number of series, then to look for a common date that could be called an aggregate turning point. The second approach,...

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  • White Papers // Nov 2010

    Accelerating Energy Innovation: Insights From Multiple Sectors

    Re-orienting current energy systems toward a far greater reliance on technologies with low or no carbon dioxide emissions is an immense challenge. At the broadest level the histories presented here are very much consistent with widely held views within the energy innovation policy literature. In general, this literature has suggested...

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  • White Papers // Nov 2010

    What Hinders Investment In The Aftermath Of Financial Crises: Insolvent Firms Or Illiquid Banks?

    There are two leading views on how financial crises turn into recessions. The first view highlights the importance of a troubled banking sector that cannot provide credit to domestic firms. The second view stresses the relevance of short-term borrowing in foreign currency and the associated decline in net worth through...

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  • White Papers // Nov 2010

    For Better Or For Worse, But How About A Recession?

    In light of the current economic crisis, the authors estimate hazard models of divorce to determine how state and national unemployment rates affect the likelihood of divorce. With 89,340 observations over the 1978-2006 periods for 7633 couples from the 1979 NLSY, they find mixed evidence on whether increases in the...

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  • White Papers // Nov 2010

    Worker Absence And Productivity: Evidence From Teaching

    A significant amount of work time is lost each year due to worker absence, but evidence on the productivity losses from absenteeism remains scant due to difficulties with identification. In this paper, the authors use uniquely detailed data on the timing, duration, and cause of absences among teachers to address...

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  • White Papers // Nov 2010

    Does Menstruation Explain Gender Gaps In Work Absenteeism?

    The authors find that menstruation may contribute to gender gaps in absenteeism and earnings, based on evidence that absences of young female Italian bank employees follow a 28-day cycle. They analyze absenteeism of teachers and find no evidence of increased female absenteeism on a 28-day cycle. They also show that...

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  • White Papers // Nov 2010

    Animal Spirits, Persistent Unemployment And The Belief Function

    This paper presents a theory of the monetary transmission mechanism in an old-Keynesian model with multiple equilibrium unemployment rates. The model has two equations in common with the new-Keynesian model; the optimizing IS curve and the policy rule. It differs from the new-Keynesian model by replacing the Phillips curve with...

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  • White Papers // Nov 2010

    The Effects Of Government-Sponsored Venture Capital: International Evidence

    This paper examines the impact of Government-sponsored Venture Capitalists (GVCs) on the success of enterprises. Using international enterprise-level data, the authors identify a surprising non-monotonicity in the effect of GVC on the likelihood of exit via Initial Public Offerings (IPOs) or third party acquisitions. Enterprises that receive funding from both...

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  • White Papers // Nov 2010

    Do Product Market Regulations In Upstream Sectors Curb Productivity Growth? Panel Data Evidence For OECD Countries

    Based on an endogenous growth model, the authors show that intermediate goods markets imperfections can curb incentives to improve productivity downstream. They confirm such prediction by estimating a model of multifactor productivity growth in which the effects of upstream competition vary with distance to frontier on a panel of 15...

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  • White Papers // Nov 2010

    Liquidity Traps: An Interest-Rate-Based Exit Strategy

    This paper analyzes a potential strategy for escaping liquidity traps. The strategy is based on an augmented Taylor-type interest-rate feedback rule and differs from usual specifications in that when inflation falls below a threshold, the central bank temporarily deviates from the traditional Taylor rule by following a deterministic path for...

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  • White Papers // Nov 2010

    The Economics Of Cultural Transmission And Socialization

    Cultural transmission arguably plays an important role in the determination of many fundamental preference traits and most cultural traits, social norms, and ideological tenets. It is, however, the pervasive evidence of the resilience of ethnic and religious traits across generations that motivates a large fraction of the theoretical and empirical...

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  • White Papers // Nov 2010

    Property Rights And Financial Development: The Legacy Of Japanese Colonial Institutions

    Several studies link modern economic performance to institutions transplanted by European colonizers and here the authors extend this line of research to Asia. Japan imposed its system of well-defined property rights in land on some of its Asian colonies, including Korea, Taiwan and Palau. Within Micronesia robust economic development followed...

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  • White Papers // Nov 2010

    China's Foreign Trade: Perspectives From The Past 150 Years

    This paper studies the trade of China in the past 150 years, starting from the first opening of China after the Opium War. The main purpose of the paper is to identify what is China's 'Normal' level of foreign trade, and how these levels changed under different trade regimes, from...

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  • White Papers // Nov 2010

    A Note On Detecting Learning By Exporting

    Learning by exporting refers to the mechanism whereby firms improve their performance (productivity) after entering export markets. Although this mechanism is often mentioned in policy documents, a significant share of econometric studies has not found evidence for this hypothesis. This paper shows that the methods used to come to the...

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  • White Papers // Nov 2010

    Taxation And International Migration Of Superstars: Evidence From The European Football Market

    This paper analyzes the effects of top earnings tax rates on the international migration of top football players in Europe. The authors construct a panel data set of top earnings tax rates, football player careers, and club performances in the first leagues of 14 European countries since 1980. They identify...

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  • White Papers // Nov 2010

    Workplace Concentration Of Immigrants

    The authors find that immigrants are much more likely to have immigrant coworkers than are natives, and are particularly likely to work with their compatriots. They find much higher levels of concentration for small businesses than for large ones, that concentration varies substantially across industries, and that concentration is particularly...

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  • White Papers // Nov 2010

    Induction And Evolution In The Origin Of Inventions: Evidence From Smoking Cessation Products

    Neoclassical economic theory predicts that policies that discourage the consumption of a particular good will induce innovation in a socially desirable substitute. Evolutionary theory emphasizes the possibility of innovation waves associated with the identification of new dominant designs. The authors incorporate both of these possibilities in a model of the...

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  • White Papers // Nov 2010

    The Effect Of Uncertainty On Investment: Evidence From Texas Oil Drilling

    Despite widespread application of real options theory in the literature, the extent to which firms actually delay irreversible investments following an increase in the uncertainty of their environment is not empirically well-known. This paper estimates firms' responsiveness to changes in uncertainty using detailed data on oil well drilling in Texas...

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  • White Papers // Nov 2010

    Analyzing Compensation Methods In Manufacturing: Piece Rates, Time Rates, Or Gain-Sharing?

    Economists have often argued that "Pay for performance" is the optimal compensation scheme. However, use of the simplest form of pay for performance, the piece rate, has been in decline in manufacturing in recent decades. The authors show both theoretically and empirically that these changes are due to adoption of...

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  • White Papers // Nov 2010

    How Do Energy Prices, And Labor And Environmental Regulations Affect Local Manufacturing Employment Dynamics? A Regression Discontinuity Approach

    Manufacturing industries differ with respect to their energy intensity, labor-to-capital ratio and their pollution intensity. Across the United States, there is significant variation in electricity prices and labor and environmental regulation. This paper uses a regression discontinuity approach to examine whether the basic logic of comparative advantage can explain the...

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  • White Papers // Nov 2010

    Information Rigidity And The Expectations Formation Process: A Simple Framework And New Facts

    The authors propose a new approach to test of the null of full-information rational expectations which is informative about whether rejections of the null reflect departures from rationality or full-information. This approach can also quantify the economic significance of departures from the null by mapping them into the underlying degree...

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  • White Papers // Nov 2010

    Interstate Migration Has Fallen Less Than You Think: Consequences Of Hot Deck Imputation In The Current Population Survey

    The authors show that the significant drop in the annual interstate migration rate between the 2005 and 2006 Current Population Surveys is a statistical artifact. The Census Bureau's imputation procedure for dealing with missing data before the 2006 survey year inflated the estimated interstate migration rate. An undocumented change in...

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  • White Papers // Nov 2010

    Looking For Local Labor Market Effects Of NAFTA

    Using US Census data for 1990 and 2000, the authors estimate effects of the NAFTA agreement on the US wages. They look for any indication of effects of the agreement on local labor markets dependent on industries vulnerable to import competition from Mexico, and workers employed in industries competing with...

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  • White Papers // Oct 2010

    Empirical Models Of Consumer Behavior

    Models of consumer behavior play a key role in modern empirical Industrial Organization. In this paper, the author surveys some of the models used in this literature. In particular, the author discusses two commonly used demand systems: multi-stage budgeting approaches and discrete choice models. The author motivates their use and...

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  • White Papers // Oct 2010

    Inflation And The Fiscal Limit

    The authors use a rational expectations framework to assess the implications of rising debt in an environment with a "Fiscal limit." The fiscal limit is defined as the point where the government no longer has the ability to finance higher debt levels by increasing taxes, so either an adjustment to...

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  • White Papers // Oct 2010

    Productivity Growth And The Regional Dynamics Of Antebellum Southern Development

    Between 1800 and 1860, the United States became the preeminent world supplier of cotton as output increased sixty-fold. Technological changes, including the introduction of improved cotton varieties, contributed significantly to this growth. Measured output per worker in the cotton sector rose four-fold and large regional differences emerged. By 1840, output...

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  • White Papers // Oct 2010

    What Are The Costs Of Meeting Distributional Objectives For Climate Policy?

    This paper develops an analytical model to quantify the costs and distributional effects of various fiscal options for allocating the rents created under prospective cap-and-trade programs to reduce domestic, energy-related CO2 emissions. The trade-off between cost effectiveness and distribution is striking. The welfare costs of different policies, accounting for linkages...

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  • White Papers // Oct 2010

    Estimating Marginal Returns To Education

    This paper estimates the marginal returns to college for individuals induced to enroll in college by different marginal policy changes. The recent instrumental variables literature seeks to estimate this parameter, but in general it does so only under strong assumptions that are tested and found wanting. The authors show how...

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