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2018-12-14

• The Demand for Apartments versus Single Family Homes
  by Matthew Kahn in Environmental and Urban Economics, 2018-12-14 14:01:00 UTC

  In New York City, Hong Kong, Shanghai and London and Paris,� rich people live in apartments.� President Trump owns several apartments in Manhattan.� Poor people also live in apartments.� These apartments are of different sizes, located in different areas and in different buildings and apartments are of different quality levels as well.� In the United States, the vast majority of people live in spread out single family homes. The majority's choice to not live in multi-family apartment buildings has social consequences.� If more of us lived in apartments in multi-family buildings, then we would [...]

2018-12-13

• Collateral Booms and Information Depletion
  by Christian Zimmermann in NEP-DGE blog, 2018-12-13 15:49:27 UTC

  By Vladimir Asriyan, Luc Laeven and Alberto Martín http://d.repec.org/n?u=RePEc:bge:wpaper:1064&r=dge We develop a new theory of information production during credit booms. In our model, entrepreneurs need credit to undertake investment projects, some of which enable them to divert resources towards private consumption. Lenders can protect themselves from such diversion in two ways: collateralization and costly screening, which generates durable information about projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral values r [...]

2018-12-12

• Minneapolis 2040: The most wonderful plan of the year
  by Jenny Schuetz in The Avenue, 2018-12-12 15:42:34 UTC

  By Jenny Schuetz Perhaps proximity to the North Pole has its advantages. On December 7, Santa Claus (a.k.a. the Minneapolis City Council ) delivered an early holiday gift to Twin Cities urbanists: several key zoning reforms, neatly packaged in an 1100-page comprehensive plan . YIMBYs around the country have been following the pitched battle over the plan’s most revolutionary feature : whether to allow small apartment buildings in neighborhoods currently zoned for only single-family homes. The approved plan would change the allowed residential uses on roughly half the city’s land. But, this is [...]

2018-12-11

• The Substitution and Income Effects Induced by Introducing Carbon Taxes
  by Matthew Kahn in Environmental and Urban Economics, 2018-12-11 15:41:00 UTC

  The protests in France over raising gasoline taxes there highlights that middle class people understand that higher carbon taxes have income effects.  If you drive 15,000 miles a year and if your vehicle achieves 30 miles per gallon and if the price of gasoline increases from $4 to $4.40 due to a 10% increase in the gas tax, then your disposable income declines each year by (15000/30)*.4 = $200. Economists celebrate the substitution effects induced by the carbon tax --- that people who drive will demand more fuel efficient vehicles and drive them less.  On the supply side, the tax will nudge f [...]

2018-12-10

• Social Norms, Labor Market Opportunities, and the Marriage Gap for Skilled Women
  by maximorossi in NEP-LTV blog, 2018-12-10 19:28:43 UTC

  By: Bertrand, Marianne  (University of Chicago);  Cortes, Patricia  (Boston University);  Olivetti, Claudia  (Boston College);  Pan, Jessica  (National University of Singapore) Abstract: In most of the developed world, skilled women marry at a lower rate than unskilled women. We document heterogeneity across countries in how the marriage gap for skilled women has evolved over time. As labor market opportunities for women have improved, the marriage gap has been growing in some countries but shrinking in others. We discuss the comparative statics of a theoretical model in which the (negat [...]

• Crisis at Home: Mancession-induced Change in Intrahousehold Distribution
  by maximorossi in NEP-LTV blog, 2018-12-10 19:27:30 UTC

  By: Olivier Bargain  (GREQAM – Groupement de Recherche en Économie Quantitative d’Aix-Marseille – ECM – Ecole Centrale de Marseille – CNRS – Centre National de la Recherche Scientifique – AMU – Aix Marseille Université – EHESS – École des hautes études en sciences sociales);  Laurine Martinoty  (CES – Centre d’économie de la Sorbonne – CNRS – Centre National de la Recherche Scientifique – UP1 – Université Panthéon-Sorbonne) Abstract: The Great Recessions was essentially a ‘mancession’ in countries like Spain, the UK or the US, i.e. it hit men harder than women for they were disproportion [...]

• Emigration, Remittances and the Subjective Well-Being of Those Staying Behind
  by maximorossi in NEP-LTV blog, 2018-12-10 19:26:33 UTC

  By: Ivlevs, Artjoms  (University of the West of England, Bristol);  Nikolova, Milena  (University of Groningen);  Graham, Carol Lee  (Brookings Institution) Abstract: Despite growing academic and policy interest in the subjective well-being consequences of emigration for those left behind, existing studies have focused on single origin countries or specific world regions. Our study is the first to offer a global perspective on the well-being consequences of emigration for those staying behind using several subjective well-being measures (evaluations of best possible life, positive affect [...]

• Government education expenditures, pre-primary education and school performance: A cross-country analysis
  by maximorossi in NEP-LTV blog, 2018-12-10 19:25:28 UTC

  By: Daniela Del Boca  (University of Turin and Collegio Carlo Alberto);  Chiara Monfardini  (University of Bologna);  Sarah Grace See  (University of York) Abstract: Using data from OECD’s PISA, Eurostat and World Bank’s WDI, we explore how child cognitive outcomes at the aggregate country level are related to macroeconomic conditions, specifically government education expenditures and early education experience. We find that both government expenditures in education and attendance to early child care are associated with better later school performance. We also consider different childca [...]

• Self Confidence Spillovers and Motivated Beliefs
  by maximorossi in NEP-LTV blog, 2018-12-10 19:24:34 UTC

  By: Ritwik Banerjee  (Indian Institute of Management Bangalore and IZA);  Nabanita Datta Gupta  (Department of Economics and Business Economics, Aarhus University, Denmark); Marie Claire Villeval  (University of Lyon) Abstract: Is success in a task used strategically by individuals to motivate their beliefs prior to taking action in a subsequent, unrelated, task? Also, is the distortion of beliefs reinforced for individuals who have lower status in society? Conducting an artefactual field experiment in India, we show that success when competing in a task increases the performers’ self-co [...]

• The Returns to Schooling Unveiled
  by maximorossi in NEP-LTV blog, 2018-12-10 19:23:37 UTC

  By: Cardoso, Ana Rute  (IAE Barcelona (CSIC));  Guimaraes, Paulo  (Banco de Portugal);  Portugal, Pedro  (Banco de Portugal);  Reis, Hugo  (Banco de Portugal) Abstract: We bring together the strands of literature on the returns to education, its spillovers, and the role of the employer shaping the wage distribution. The aim is to analyze the labor market returns to education taking into account who the worker is (worker unobserved ability), what he does (the job title), with whom (the coworkers) and, also crucially, for whom (the employer). We combine data of remarkable quality – exhaust [...]

• Navigating in Cloudy Skies
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-12-10 12:14:25 UTC

  “Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy‑‑that is, neither speeding up nor slowing down growth .” Federal Reserve Board Chairman Jerome Powell , November 28, 2018. “We’re a long way from neutral at this point, probably.” Video Interview of Chairman Powell by Judy Woodruff, PBS (at the 8:05 mark), October 3, 2018. Stargazers hate clouds. Even modest levels of humidity and wind make it hard to “see” the wonders of the night sky. Very few places on our planet have consistently [...]

• Rita Faria’s journal round-up for 10th December 2018
  by Rita Faria in The Academic Health Economists' Blog, 2018-12-10 12:00:31 UTC

  Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch . Calculating the expected value of sample information using efficient nested Monte Carlo: a tutorial . Value in Health [ PubMed ] Published 17th July 2018 The expected value of sample information (EVSI) represent [...]

2018-12-08

• What moves markets more, Twitter or traditional news?
  by ? in EUROPP European Politics and Policy, 2018-12-08 07:29:35 UTC

  Twitter has become a key communication tool for world leaders, but how does the impact of tweets on financial markets compare to the impact of traditional news? Based on a new study, Costas Milas, Theodore Panagiotidis and Theologos Dergiades identify a cl [...]

2018-12-06

• Recession risk and the circularity problem, by Scott Sumner
  by ? in Econlog, 2018-12-06 19:45:35 UTC

  [Trigger warning for acrophobics like me.] I have fond memories of growing up in the Midwest, and seeing big white mushroom-shaped water towers on the outskirts of small towns: Back in 1970, a friend of mine told me about some guys he knew that played a game of dare.  They’d go to the top of one of these, and then gradually crawl down as far as they dare, before climbing back up.  But if you make a mistake and go to far, over the horizon, then it’s all over.  I’m a bit acrophobic, so it makes me queasy every time I think about this story, which is several times a year. The reason I frequently [...]

• Quantitative Easing
  by Christian Zimmermann in NEP-DGE blog, 2018-12-06 18:55:43 UTC

  By Wei Cui and Vincent Sterk http://d.repec.org/n?u=RePEc:cfm:wpaper:1830&r=dge Is Quantitative Easing (QE) an effective substitute for conventional monetary policy? We study this question using a quantitative heterogeneous-agents model with nominal rigidities, as well as liquid and partially liquid wealth. The direct effect of QE on aggregate demand is determined by the difference in marginal propensities to consume out of the two types of wealth, which is large according to the model and empirical studies. A comparison of optimal QE and interest rate rules reveals that QE is indeed a very po [...]

2018-12-04

• Blind to luck
  by chris in Stumbling and Mumbling, 2018-12-04 16:23:35 UTC

  In a good article on how graduating in a recession does long-lasting damage to one’s career, Tim Harford says “it’s easy to overlook luck.” It is indeed. Evidence for this has been uncovered in experiments by Nattavudh Powdthavee and Yohanes Riyanto. They got students in Singapore and Thailand to bet upon tosses of a fair coin and found that people were willing to pay to back the bet of students who had correctly called previous tosses. “An average person is often happy to pay for what could only be described as transparently useless advice” they conclude. This is startling. But it has been co [...]

2018-12-03

• E Pluribus Unum: single vs. multiple point of entry resolution
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-12-03 13:22:14 UTC

  “The turmoil that followed the failure of Lehman and the decision to rescue AIG … underscored the absence of a third alternative to the options of bailout or disruptive bankruptcy.” Daniel K. Tarullo, October 18, 2013 . Addressing the calamity posed by the failure of large, global financial intermediaries has been high on the post-crisis regulatory reform agenda. When Lehman Brothers―a $600 billion entity―failed, it took heroic efforts by the world’s central bankers to prevent a financial meltdown. The lesson is that a robust resolution regime is a critical element of a resilient financial sys [...]

2018-12-01

• REED: The Devil, the Deep Blue Sea, and Replication
  by replicationnetwork in The Replication Network, 2018-12-01 08:51:09 UTC

  In a recent article (“ Between the Devil and the Deep Blue Sea: Tensions Between Scientific Judgement and Statistical Model Selection ” published in Computational Brain & Behavior),  Danielle Navarro identifies blurry edges around the subject of model selection. The article is a tour de force in thinking largely about statistical model selection. She writes, “ What goal does model selection serve when all models are known to be systematically wrong? How might “toy problems” tell a misleading story? How does the scientific goal of explanation align with (or differ from) traditional statistical [...]

2018-11-29

• Should I stay or should I go? Austerity, unemployment and migration
  by Christian Zimmermann in NEP-DGE blog, 2018-11-29 14:27:31 UTC

  By Guilherme Bandeira, Jordi Caballé, and Eugenia Vella http://d.repec.org/n?u=RePEc:bde:wpaper:1839&r=dge High unemployment and fiscal austerity during the Great Recession have led to significant migration outflows in those European countries that suffered a deep deterioration of their economy, Greece being the most obvious case. This paper introduces endogenous migration in a small open economy DSGE model to analyze the business cycle effects from the interaction of fiscal consolidation instruments with migration. A tax-based consolidation induces the strongest increase in emigration, leadi [...]

2018-11-26

• Star Trek and the Economics of the Future (Part I): Tribalism versus Terranism
  by Jason Barr in Building the skyline, 2018-11-26 12:46:53 UTC

  Jason M. Barr      November 26, 2018 You are a barbarian….Don’t sound so incredulous, captain. We all are. A killer first, a builder second. A hunter, a warrior, and—let’s be honest—a murderer. That is our joint heritage, is it not? –Anan 7, Leader of the High Council of Eminiar VII, to James T. Kirk, Captain of the U.S.S. Enterprise (TOS:S1:E:23, A Taste of Armageddon ) Here in the 21 st century, it is clear that the Homo sapiens of Planet Earth are moving inexorably towards one common global community— a Terran Community —rather than a series of independent nation-states. While we may retain [...]

• Sam Watson’s journal round-up for 26th November 2018
  by Sam Watson in The Academic Health Economists' Blog, 2018-11-26 12:00:19 UTC

  Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot . If you’d like to write one of our weekly journal round-ups, get in touch . Alcohol and self-control: a field experiment in India . American Economic Review Forthcoming Addiction is complex. For many people it is characterised by a need or compulsion to take something, often to prevent [...]

2018-11-19

• Why “Many-Model Thinkers” Make Better Decisions
  by Scott E. Page in HBR Blog Network, 2018-11-19 16:00:30 UTC

  “To be wise you must arrange your experiences on a lattice of models.”  — Charlie Munger Organizations are awash in data — from geocoded transactional data to real-time website traffic to semantic quantifications of corporate annual reports. All these data and data sources only add value if put to use. And that typically means that the data is incorporated into a model. By a model, I mean a formal mathematical representation that can be applied to or calibrated to fit data. Some organizations use models without knowing it. For example, a yield curve, which compares bonds with the same risk pro [...]

• From Basel to the Volcker Rule: A FinReg Glossary
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2018-11-19 13:24:10 UTC

  “A multitude of federal agencies, self-regulatory organizations, and state authorities share oversight of the financial system under a framework riddled with regulatory gaps, loopholes, and inefficiencies.” The Volcker Alliance, Reshaping the Financial Regulatory System , p. 1, 2015. Over the past century, an alphabet soup of agencies and rules overseeing and guiding domestic and cross-border finance has emerged. The wave of regulation following the 2007-09 crisis added to the complexity of this framework. With that in mind, we have developed this glossary to help students and teachers navigat [...]

2018-11-16

• Unemployment Insurance Take-up Rates in an Equilibrium Search Model
  by Christian Zimmermann in NEP-DGE blog, 2018-11-16 21:29:32 UTC

  By Stéphane Auray, David L. Fuller and Damba Lkhagvasuren http://d.repec.org/n?u=RePEc:crs:wpaper:2018-14&r=dge From 1989-2012; on average 23% of those eligible for unemployment insurance (UI) benefits in the US did not collect them. In a search model with matching frictions; private information associated with the UI non-collectors implies the market equilibrium is not Pareto optimal. The cause of the Pareto inefficiency is characterized along with the key features of collector vs. non-collector outcomes. Non-collectors transition to employment at a faster rate and a lower wage relative to t [...]

• Lower returns to education may lead to lower fertility
  by Bruno Duarte in EUnomics, 2018-11-16 06:26:35 UTC

  Galor and Weil’s  model of fertility and technological frontier (widely replicated by  other authors ) concludes individuals choose between allocating their available effort to increasing the quantity of descendants or improving the quality of descendant’s human capital. The model foresees that this choice shall inevitably lead to decreasing fertility as society improves its technological profile: individuals improve their income and from a certain moment onwards technology improvements leads to lower fertility and higher human capital. Consider the following chart Yellow – wage premia of ba [...]

2018-11-15

• Angry Brexiters
  by chris in Stumbling and Mumbling, 2018-11-15 13:48:24 UTC

  Brian Cox asks a good question : The thing I don’t understand about these Conservative MPs is that they are such angry people. They haven’t done badly out of Britain - they aren’t on the receiving end of their own policies. And yet they want to smash everything up. The EU, The Union and now their own party. It’s no coincidence that many of those he has in mind such as Rees-Mogg and Johnson - though we might add Farage and Banks – come from posh backgrounds. We know that our preferences adapt (pdf) to our circumstances. As Amartya Sen has written, “deprived people tend to come to terms with t [...]

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