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2019-12-10

• The Green Paradox
  by sense.sustainability@gmail.com (Jisung Park) in Sense and Sustainability, 2019-12-10 13:00:56 UTC

  When economists discuss climate change policies such as carbon taxes, cap-and-trade systems, and carbon intensity standards, effectiveness is a key question. Will these policies lead to the reductions in greenhouse gasses that we would like? The worst case scenario is usually thought of as an expensive policy that has zero effect on the global stock of gases, such as a tax that induces businesses to displace all the emissions they are “getting rid of” to other, untaxed regions. (The shifting of emissions across space like this is called carbon leakage ). So, we’re often considering whether cli [...]

2019-12-07

• Labor Market Frictions and Lowest Low Fertility
  by Christian Zimmermann in NEP-DGE blog, 2019-12-07 04:18:07 UTC

  By Nezih Guner, Ezgi Kaya and Virginia S�nchez Marcos http://d.repec.org/n?u=RePEc:iza:izadps:dp12771&r=dge The total fertility rate is well below its replacement level of 2.1 children in high- income countries. Why do women choose such low fertility levels? We study how labor market frictions affect the fertility of college-educated women. We focus on two frictions: uncertainty created by dual labor markets (the coexistence of jobs with temporary and open-ended contracts) and inflexibility of work schedules. Using rich administrative data from the Spanish Social Security records, we show that [...]

2019-12-05

• Science Demands a Sacrifice!
  by Vulgar Economics in Vulgar Economics, 2019-12-05 18:42:00 UTC

  So I've been pretty focused on the literature about fascists that I almost feel like I'm not an economist anymore. To combat that, I've decided to read more of the economic literature. Obviously, I'm still going to read what I'm interested in, but my research interests have gotten...weird. I combed through the American Economic Review until I found a title that interested me. It's about scientists dying. I picked the one about scientists dying. In Does Science Advance One Funeral at a Time? economists Pierre Azoulay, Christian Fons-Rosen, and Joshua S. Graff Zivin seek to answer the question [...]

2019-12-02

• Negative Nominal Interest Rates: A Primer
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2019-12-02 13:10:33 UTC

  Many people find negative interest rates confusing. Why should anyone pay a bank to make a deposit? Why should a bank pay someone to borrow? How can we value an asset with a future cash flow when the interest rate is negative? Policymakers also wonder whether the effects of negative interest rates on the economy are favorable or unfavorable. Do negative interest rates help central banks achieve price stability by stimulating economic activity? Do negative rates spur banks to make more good loans or to evergreen bad ones? Will borrowers and banks take on too much risk because they can fund inve [...]

2019-11-29

• The UK’s housing crisis: what should the next government do?
  by Artemis Photiadou in British Politics and Policy at LSE, 2019-11-29 00:00:21 UTC

  The real problem behind the ongoing housing crisis is unresponsive supply, write Paul Cheshire and Christian Hilber . They explain that the solution is not hard to fathom: to build more houses, there first has to be land, and then an incentive to build on that land. This straightforward solution nevertheless requires radical change in the inertia of UK housing policy. Since 2015, neither the government nor any opposition party has had any effective policy to tackle our housing crisis symbolised most starkly by Starter Homes . To the extent there has been action, it is largely ineffective at be [...]

2019-11-28

• A Theory of Cultural Revivals
  by maximorossi in NEP-LTV blog, 2019-11-28 12:44:52 UTC

  By: Murat Iyigun  (University of Colorado, Boulder);  Jared Rubin  (Chapman University);  Avner Seror  (Aix-Marseille Univ, CNRS, EHESS, Ecole Centrale, AMSE, Marseille, France) Abstract: Why do some societies fail to adopt more efficient institutions? And why do such failures often coincide with cultural movements that glorify the past? We propose a model highlighting the interplay—or lack thereof—between institutional change and cultural beliefs. The main insight is that institutional change by itself will not lead to a more efficient economy unless culture evolves in tandem. This is b [...]

• Is There a Link Between Air Pollution and Impaired Memory? Evidence on 34,000 English Citizens
  by maximorossi in NEP-LTV blog, 2019-11-28 12:43:59 UTC

  By: Oswald, Andrew J.  (Economics and CAGE, University of Warwick);  Powdthavee, Nattavudh  (WBS, University of Warwick) Abstract: It is known that people feel less happy in areas with higher levels of nitrogen dioxide NO2 (MacKerron and Mourato, 2009). What else might air pollution do to human wellbeing? This paper uses data on a standardized word-recall test that was done in the year 2011 by 34,000 randomly sampled English citizens across 318 geographical areas. We find that human memory is worse in areas where NO2 and PM10 levels are greater. The paper provides both (i) OLS results an [...]

• Is There Still Son Preference in the United States?
  by maximorossi in NEP-LTV blog, 2019-11-28 12:42:33 UTC

  By: Francine D. Blau ;  Lawrence M. Kahn ;  Peter Brummund ;  Jason Cook ;  Miriam Larson-Koester Abstract: In this paper, we use 2008-2013 American Community Survey data to update and further probe evidence on son preference in the United States. In light of the substantial increase in immigration, we examine this question separately for natives and immigrants. Dahl and Moretti (2008) found earlier evidence consistent with son preference in that having a female first child raised fertility and increased the probability that the family was living without a father. We find that for our mo [...]

2019-11-27

• How Sticky Wages In Existing Jobs Can Affect Hiring
  by Christian Zimmermann in NEP-DGE blog, 2019-11-27 18:53:46 UTC

  By Mark Bils, Yongsung Chang and Sun-Bin Kim http://d.repec.org/n?u=RePEc:snu:ioerwp:no118&r=dge We consider a matching model of employment with flexible wages for new hires, but sticky wages within matches. Unlike most models of sticky wages, we allow effort to respond if wages are too high or too low. In the Mortensen-Pissarides model, employment is not affected by wage stickiness in existing matches. But it is in our model. If wages of matched workers are stuck too high, firms require more effort, lowering the value of additional labor and reducing hiring. We find that effort’s response can [...]

2019-11-25

• Economic Insecurity and the Rise of the Right
  by maximorossi in NEP-LTV blog, 2019-11-25 22:30:16 UTC

  By: Walter Bossert  (CIREQ – Centre interuniversitaire de recherche en économie quantitative, University of Montreal – University of Montreal);  Andrew E. Clark  (PSE – Paris School of Economics, PJSE – Paris Jourdan Sciences Economiques – UP1 – Université Panthéon-Sorbonne – ENS Paris – École normale supérieure – Paris – INRA – Institut National de la Recherche Agronomique – EHESS – École des hautes études en sciences sociales – ENPC – École des Ponts ParisTech – CNRS – Centre National de la Recherche Scientifique);  Conchita d’Ambrosio  (INSIDE – INtegrative research unit on Social and I [...]

• Time Discounting and Wealth Inequality
  by maximorossi in NEP-LTV blog, 2019-11-25 22:29:11 UTC

  By: Epper, Thomas ;  Fehr, Ernst ;  Fehr-Duda, Helga ;  Thustrup Kreiner, Claus ;  Dreyer Lassen, David ;  Leth-Petersen, Søren ;  Nytoft Rasmussen, Gregers Abstract: This paper documents a large association between individuals’ time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish highquality administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initia [...]

• Equality of opportunity in four measures of well-being
  by maximorossi in NEP-LTV blog, 2019-11-25 22:27:53 UTC

  By: Xavier Ramos Morilla  (Departament d’Economia Aplicada, Universitat Autonoma de Barcelona);  Daniel Gerszon Mahler  (World Bank) Abstract: A growing literature has tried to measure the extent to which individuals have equal opportunities to acquire income. At the same time, policymakers have doubled down on e orts to go beyond income when designing policies to enhance well-being. We attempt to bridge these two areas by measuring the extent to which individuals have equal opportunities to achieve a high level of well-being. We use the German Socio-Economic Panel to measure well-being [...]

• Don Husereau’s journal round-up for 25th November 2019
  by Don Husereau in The Academic Health Economists' Blog, 2019-11-25 12:00:55 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 . Development and validation of the TRansparent Uncertainty ASsessmenT (TRUST) tool for assessing uncertainties in health economic decision models . PharmacoEconomics [ PubMed ] Published 11th November 2019 [...]

2019-11-24

• Labour's corporate tax plans: a half-defence
  by chris in Stumbling and Mumbling, 2019-11-24 12:40:01 UTC

  Who really pays corporate taxes? This is the question posed by Labour’s plan to raise £30bn (pdf) from extra taxes on companies. These plans run into the problem that several studies have found that, ultimately, it is workers who pay a hefty chunk of such taxes. Michael Devereaux and colleagues have found that, in European countries, workers pay 92% of extra corporate taxes. A study of Germany alone has found that they pay around half (pdf) of them. And a US study (pdf) has found that they pay around one-third. A literature survey (pdf) by Ben Southwood finds that, on average, workers pay more [...]

2019-11-22

• The vagaries of the sea: evidence on the real effects of money from maritime disasters in the Spanish Empire
  by Christian Zimmermann in NEP-DGE blog, 2019-11-22 17:14:55 UTC

  By Adam Brzezinski, Yao Chen, Nuno Palma and Felix Ward http://d.repec.org/n?u=RePEc:hes:wpaper:0170&r=dge We exploit a recurring natural experiment to identify the effects of money supply shocks: maritime disasters in the Spanish Empire (1531-1810) that resulted in the loss of substantial amounts of monetary silver. A one percentage point reduction in the money growth rate caused a 1.3% drop in real output that persisted for several years. The empirical evidence highlights nominal rigidities and credit frictions as the primary monetary transmission channels. Our model of the Spanish economy c [...]

2019-11-20

• Ownership and productivity
  by chris in Stumbling and Mumbling, 2019-11-20 14:12:03 UTC

  In last night’s leaders’ debate, the audience laughed when Jeremy Corbyn said that productivity gains could pay for a four-day week. This is an example of what I said recently – that we cannot have nice things because voters have resigned themselves to the inadequacy of British capitalism. And inadequate it is. The ONS estimates that UK productivity is one-fifth lower than that of the US, Germany or France and one-tenth lower than Italy’s. Closing some of this gap would allow for a cut in the working week with no loss of pay. In this context, Labour’s plans (pdf) to reform corporate governanc [...]

2019-11-19

• Measuring “OK Boomer”
  by Andrew Coleman in TVHE, 2019-11-19 19:00:47 UTC

  In a sense OK Boomer has as long history, as long as the lives of Baby Boomers themselves – at least if we relate such things to the overlapping generations models in economics. The literature on OK Boomer/intergenerational transfers The first “OK Boomer” paper was written by the Nobel prize winning economist Franco Modigliani and his co-author Richard Brumberg in 1954 . To analyse the process of saving and wealth transmission, they developed the overlapping generations model of an economy – simply a model in which people of different ages and incomes and wealth all live together, j [...]

2019-11-18

• Is Gentrification Good or Bad?
  by Jason Barr in Skynomics Blog, 2019-11-18 13:06:24 UTC

  Jason M. Barr         November 18, 2019 Across U.S. cities, perhaps nothing is more controversial than the issue of gentrification—the process of wealthier residents moving into lower-income, central city communities. Those who are against it claim it destroys cities and harms residents, while proponents say it helps neighborhoods grow and become livelier. So, which is it? Is gentrification good or bad? To answer this, we need to move beyond feelings and rhetoric and try to get a sense of what’s really going on. One of the best ways to do this is to employ rigorous social science methods with [...]

2019-11-17

• Why we can't have nice things
  by chris in Stumbling and Mumbling, 2019-11-17 13:32:23 UTC

  We can’t have nice things. That’s the message of Ed Davey’s speech yesterday, in which he called for a structural current budget surplus and denounced Labour’s spending plans as “fantasy economics”. Voters seem to agree. Although many individual Labour policies are popular, the majority think Labour’s plans are unaffordable, and very few trust Corbyn on the economy. From one perspective, all this is wrong. Over the last 25 years, two big things have changed. One is that real risk-free interest rates have slumped. This means government borrowing and investment is much more affordable than it u [...]

2019-11-15

• On the Heterogeneous Welfare Gains and Losses from Trade
  by Christian Zimmermann in NEP-DGE blog, 2019-11-15 02:09:41 UTC

  By Daniel Carroll and Sewon Hur http://d.repec.org/n?u=RePEc:fip:fedcwq:190602&r=dge How are the gains and losses from trade distributed across individuals within a country? First, we document that tradable goods and services constitute a larger fraction of expenditures for low-wealth and low-income households. Second, we build a trade model with nonhomothetic preferences—to generate the documented relationship between tradable expenditure shares, income, and wealth—and uninsurable earnings risk—to generate heterogeneity in income and wealth. Third, we use the calibrated model to quantify the [...]

2019-11-11

• Monitoring the Monitors
  by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets, 2019-11-11 12:47:22 UTC

  “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” Louis Brandeis, Other People's Money and How the Bankers Use It , 1914. Disclosure is a fundamental pillar of our market-based financial system. When information is accurate and complete, asset prices can reflect both expected return and risk. Without effective disclosure, how could anyone make good savings and investment decisions? Having information is one thing; using it appropriately is something else entirely. To eva [...]

2019-11-08

• Resilience and selection
  by chris in Stumbling and Mumbling, 2019-11-08 13:38:55 UTC

  If truth is the first casualty of war, social science is the first casualty of election campaigns. So it was with Sajid Javid’s speech yesterday. He claimed that Labour will tax everybody more, “saddle the next generation with debt”, “ruin your finances” and would be “letting prices run wild in the shops.” All this is silly hyperbole. I say so not just because, as Simon says . Labour’s spending plans are more sustainable than the Tories because it will not inflict a damaging Brexit upon the economy. Instead, there are two other reasons why Javid is wrong. One is that developed economies are r [...]

• Call to readers: let's talk about patent quality
  by noreply@blogger.com (Léon Dijkman) in The IPKat, 2019-11-08 11:35:00 UTC

  Last week, the Intellectual Property subcommittee to the U.S. Senate Committee on the Judiciary held a hearing to inquiry how the U.S. Congress can prevent the issuance of poor quality patents [video recording and testimony transcripts here ]. The hearing was part of a series to educate the subcommittee on the current state of U.S. patent law in light of the proposed STRONGER Patents Act of 2019 . Several interesting comments and suggestions for improvement were made during the hearing, which are briefly summarized below. The hearing is also a good opportunity to reflect on the quality of Euro [...]

2019-11-06

• Why your research project needs build automation
  by jdingel in Trade Diversion, 2019-11-06 19:45:25 UTC

  Software build tools automate compiling source code into executable binaries. (For example, if you’ve installed Linux packages, you’ve likely used Make.) Like software packages, research projects are large collections of code that are executed in sequence to produce output. Your research code has a first step (download raw data) and a last step (generate paper PDF). Its input-output structure is a directed graph ( dependency graph ). The simplest build approach for a Stata user is a “master” do file. If a project involves A through Z, this master file executes A, B, …, Y, and Z in order. But t [...]

• Imagine Riding the Ceteris Pari-bus into the Sunset ... in Argentina
  by Anna Gelpern in Credit Slips, 2019-11-06 01:36:18 UTC

  Imagine sovereign debt without Argentina -- no Paris Club , no pari passu , no CACs, no SDRM ... even sovereign immunity might look totally different. History teaches that whatever happens in Argentina's imminent bond restructuring ( revisiting, reprofiling, rejiggering, revamping --the difference is overblown) is likely to have consequences beyond the long-suffering Republic. The fact that Argentina has an actual government with authority over the economy and some capacity to execute a restructuring (unlike, say, Venezuela) justifies wading into the small print of its bond disclosure--as Mark [...]

2019-11-05

• The Cyclical Behavior of the Beveridge Curve in the Housing Market
  by Christian Zimmermann in NEP-DGE blog, 2019-11-05 21:08:01 UTC

  By Miroslav Gabrovski and Victor Ortego-Marti http://d.repec.org/n?u=RePEc:ucr:wpaper:201911&r=dge This paper develops a business cycle model of the housing market with search frictions and entry of both buyers and sellers. The housing market exhibits a well-established cyclical component, which features three stylized facts: prices move in the same direction as sales and the number of houses for sale, but opposite to the time it takes to sell a house. These stylized facts imply that in the data housing vacancies and the number of buyers are positively correlated, i.e. that the Beveridge Curve [...]

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