Search

In the summer of 1861, the United States embarked on its first widespread use of paper money: the Demand Notes of 1861. Although their convertibility into gold ended at the end of that year, they remained acceptable for tariff payment at a par with gold coin while they were gradually replaced with paper money that did not share this provision, the Greenbacks. We present daily observations of exchange rates between the Notes, Greenbacks, and gold for the extended period during which they simultaneously circulated. These exchange rates substantiate our revisionist notion that the Notes were replaced because the tariff provision prevented them from generating sufficient seigniorage for wartime needs. ( JEL E42, N12, N22) [ABSTRACT FROM AUTHOR]

This paper examines the persistent effects of eliminating tariffs on Mexican imports, following the implementation of the North American Free Trade Agreement (NAFTA), on Americans' human capital investment. We leverage quasi‐experimental changes in tariffs on Mexican imports across birth cohorts and within states. We show that NAFTA increases the probability of ever attending college and earning a degree. These results, however, mask important heterogeneous effects within the sample. We find white Americans drive these positive effects. In contrast, the educational attainment of racial and ethnic minorities, especially men, shrank under NAFTA, decreasing their probability of graduating from high school. [ABSTRACT FROM AUTHOR]

I consider a contest between scholars on the basis of three popular indices of citation. There exist equilibria in which there are more and better‐quality papers in the total citations contest than in the h‐index contest. In some cases, the total citations contest yields the same quality of papers but more papers than the Euclidean contest. As the cost of writing a paper increases,the h‐index is inferior to the total citations index in both the quality and quantity of papers. This result is partly driven by how the number of papers constrains how the h‐index counts citations. [ABSTRACT FROM AUTHOR]

This paper aims to investigate the impacts of exchange rate and income changes on financial and insurance services trade by utilizing the quarterly bilateral trade data of the United States and its major trading partners from 2003 to 2017. No long‐run exchange rate effects on imports and exports of insurance services trade are found. The impact of exchange rates on insurance services may be weak since competition among service providers depends on product differentiation than on exchange rates. On the contrary, income demonstrates significant impacts on both financial and insurance services trade in the United Kingdom, Canada, Japan and Australia. [ABSTRACT FROM AUTHOR]

This paper studies how the school choice policies that subsidize private school attendance using public funds affect the spatial distribution of private schools in the United States. Private school choice programs enacted between 1997 and 2010 are examined and linked to private school provision 2 years later. The paper finds that school choice policies lead to more private schools where the input to public schools is lower and the pool of students with special needs is larger. Yet the introduction of means‐tested school choice programs does not necessarily lead private schools to locate in low‐income neighborhoods. (JEL I2, H4, R3) [ABSTRACT FROM AUTHOR]

This paper examines changes in the effects of unconventional monetary policies in the United States. To this end, we estimate a Markov‐switching VAR model with absorbing regimes to capture possible structural changes. Our results detect regime changes around the beginning of 2011 and the middle of 2013. Before 2011, the U.S. large‐scale asset purchases (LSAPs) had relatively large impacts on the real economy and prices, but after the middle of 2013, their effects were weaker and less‐persistent. In addition, after the middle of 2013, which includes the monetary policy normalization period, the asset purchase (or balance sheet) shocks had slightly weaker effects than during the early stage of the LSAPs but stronger effects than during the late stage of the LSAPs, while interest rate shocks had insignificant effects on the real economy and prices. Finally, our results suggest that the positive responses of durables and capital goods expenditures to interest rate shocks weakened the negative impacts of interest rate hikes after the middle of 2013 including the period of monetary policy normalization. [ABSTRACT FROM AUTHOR]

This paper is the first to address the causal relationship between an abrupt change in the availability of public nutrition assistance and low‐income households' private nutrition assistance utilization. In particular, we examined the way in which loss of Women Infants and Children (WIC) benefits impacted a household's utilization of private food assistance. Using a regression discontinuity analysis framework, we found that households significantly increased utilization of private nutrition assistance following an abrupt loss in public nutrition assistance. Estimates indicated that some households might have been able to compensate from about half to more than 90% of their loss in public WIC nutrition assistance. [ABSTRACT FROM AUTHOR]

This paper examines the effects of exchange rate depreciation to the U.S. economy in a factor‐augmented vector autoregression model using monthly data of 148 variables for the post–Bretton Woods period of 1973–2017. Exchange rate shock is identified to reflect exogenous disturbances to the foreign exchange market, and movements in exchange rate that are not accounted for by changes in the U.S. monetary policy. We find that depreciation is expansionary and inflationary to the broad U.S. economy, the current account improves over time conforming to the J‐curve theory, and monetary policy is leaning against the wind. [ABSTRACT FROM AUTHOR]

Does legalizing retail marijuana generate more benefits than costs? This paper provides a first step toward addressing that question by measuring the benefits and costs that are capitalized into housing values. We exploit the time‐series and cross‐sectional variations in the adoption of Colorado's municipality retail marijuana laws (RMLs) and examine the effect on housing values with a difference‐in‐differences strategy. Our estimates show that the legalization leads to an average 6% increase in housing values, indicating that the capitalized benefits outweigh the costs. In addition, we find suggestive evidence that this relatively large housing value appreciation is likely due to RMLs inducing strong housing demand while having no discernible effect on housing supply. Finally, we show that the effect of RMLs is heterogeneous across locations and property types. (JEL K20, R28) [ABSTRACT FROM AUTHOR]

This paper studies the effect of oil price innovations on manufacturing job flows across U.S. states. First, I estimate a nonlinear structural equation model and compute impulse response functions by Monte Carlo integration. I find asymmetries in the responses of job flows to positive and negative oil price innovations. Yet, these asymmetries do not pass a test of symmetry on the impulse responses, especially after accounting for data mining. Third, I use a test for the absence of job reallocation to evaluate whether an unexpected increase in the real price of oil price triggers an important change in job reallocation. I find that oil price shocks have limited regional allocative effects. (JEL E24, E32, Q43) [ABSTRACT FROM AUTHOR]

This paper examines the relationship between immigrants' genetic diversity and economic development in the United States during the late nineteenth and the beginning of the twentieth centuries, a period commonly referred to as the age of mass migration from Europe to the New World. Our panel model estimates show that during this period, immigrants' genetic diversity is significantly positively correlated with measures of U.S. counties' economic development. There exists also a significant positive relationship between immigrants' genetic diversity in 1870 and contemporaneous measures of U.S. counties' average income. (JEL J11, O51, Z13) [ABSTRACT FROM AUTHOR]

Using an estimated dynamic stochastic general equilibrium model with banking, this paper first provides evidence that monetary policy reacted to bank loan growth in the United States during the Great Moderation. It then shows that the optimized simple interest-rate rule features no response to the growth of bank credit. However, the welfare loss associated to the empirical responsiveness is small. The sources of business cycle fluctuations are crucial in determining whether a 'leaning-against-the-wind' policy is optimal or not. In fact, the predominant role of supply shocks in the model gives rise to a trade-off between inflation and financial stabilization. ( JEL E32, E44, E52) [ABSTRACT FROM AUTHOR]

Every year billions of dollars are spent on research grants to produce new knowledge in universities. However, as grants may also affect other research funding, the effects of financial resources on knowledge production remain unclear. To uncover how financial resources affect knowledge production, we study the effects of research spending itself. Utilizing the legal constraints on university spending from an endowment we develop an instrumental variables approach. Our approach instruments for university research spending with time-series variation in stock prices interacted with cross-sectional variation in initial endowment market values for research universities in the United States. Our analysis reveals that research spending has a substantial positive effect on the number of papers produced, but not their impact. We also demonstrate that research spending effects are quite similar at private and public universities. (JEL H5, I2, O3) [ABSTRACT FROM AUTHOR]

This paper analyzes the incentives and responses of public schools in the context of an educational reform. Much of the literature studying the effect of voucher programs on public schools has looked at the effect on student and mean school scores. This paper tries to go inside the black box to investigate some of the ways in which schools facing the Florida accountability-tied voucher program behaved. Schools getting an 'F' grade for the first time were exposed to the threat of vouchers, but did not face vouchers unless and until they got a second 'F' within the next 3 years. In addition, 'F,' being the lowest grade, exposed the threatened schools to stigma. Exploiting the institutional details of this program, I analyze the incentives built into the system and investigate the behavior of the threatened public schools facing these incentives. There is strong evidence that they did respond to incentives. Using highly disaggregated school-level data, a difference-in-differences estimation strategy as well as a regression discontinuity (RD) analysis, I find that the threatened schools tended to focus more on students below the minimum criteria cutoffs rather than equally on all. Second, consistent with incentives, the threatened school improvements were, by far, the largest in writing. These results are robust to controlling for differential preprogram trends, changes in demographic compositions, mean reversion, and sorting. These findings have important policy implications. [ABSTRACT FROM AUTHOR]

Despite the growth in health insurance products that differentially cover preventive care and nonpreventive care, little is known about how preventive care utilization responds to targeted changes in coverage. Using administrative data from a large company, this paper examines the implementation of an insurance benefit design which differentially increased the price of nonpreventive care while decreasing the price of prevention. Leveraging a difference-in-differences research strategy, we find that preventive care utilization did not increase and even declined due to the differential price change. This evidence indicates a meaningful negative cross-price effect, suggesting that nonpreventive care and preventive care are complements. ( JEL I13, I11) [ABSTRACT FROM AUTHOR]

This paper investigates whether the party affiliation of governors (Democrat or Republican) has an impact on the allocation of state expenditures. Exploiting gubernatorial election results from 1960 to 2012 and a Regression Discontinuity Design ( RDD), we find that Democratic governors allocate a larger share of their budget to health/hospitals and education sectors. We find no significant impact of the political party of governors on total spending, only on the allocation of funds. The results are robust to a wide range of controls and model specifications. ( JEL D72, H75, H72) [ABSTRACT FROM AUTHOR]

This paper studies industry-level dynamics and demonstrates the ability of a modified neoclassical growth model to capture a range of empirical facts. The paper begins by using U.S. data to document skilled and unskilled labor trends within industry sector classifications as well as industry sector output trends. Using Current Population Survey data from 1968 to 2004, it is shown that the ratio of skilled workers to unskilled workers employed has risen in all industries. The absolute increase in this ratio was larger in the more skilled industries, while the growth rate was larger in the less skilled industries. Furthermore, using national income account data, it is shown that relatively high-skilled industries have accounted for an increasing share of output over time. A version of the neoclassical growth model is then constructed to match these observations. One important feature of this model is a structure that introduces new goods into the economy at each moment of time. The model is able to capture a rich set of labor market movements between sectors and between skill levels as well as changes in the relative output shares across industries, yet preserves many nice features of the neoclassical growth model.( JEL E13, J20, 030) [ABSTRACT FROM AUTHOR]

This paper introduces a new comprehensive panel of annual state-level income inequality measures spanning the postwar period 1945–2004. For many states, the share of income held by the top decile experienced a prolonged period of stability after World War II, followed by a substantial increase in inequality during the 1980s and 1990s. This paper also presents an examination of the long-run relationship between income inequality and economic growth. Our findings indicate that the long-run relationship between inequality and growth is positive in nature and driven principally by the concentration of income in the upper end of the income distribution. ( JEL D31, O40) [ABSTRACT FROM AUTHOR]

International students have long comprised an important part of U.S. higher education. However, little is known regarding the factors that encourage students from across the world to enroll in U.S. colleges and universities each year. This paper examines the relationship between international enrollment and the openness of the United States' skilled labor market, currently regulated by the H- 1B program. Gravity regressions reveal that H- 1B visa issuances to a country are positively and significantly related to the number of international students from that country. Causal estimates of the impact of labor market openness are achieved by exploiting a dramatic fall in the H- 1B visa cap in October 2003. Triple difference estimates show that the fall in the cap lowered foreign enrollment by 10%. ( JEL F22, I21, J11) [ABSTRACT FROM AUTHOR]

To obtain a surface water right in the arid American West, private appropriators have been required to undertake actual physical diversion of the water. That requirement largely negates the role of private contacting to preserve or enhance water flows for recreational, wildlife and aesthetic purposes. In this paper a model is developed and used to examine the courts' rationale for denying private claims to instream flows. The ways in which such claims can be made amenable to the prior appropriation system are explored. The paper is motivated by the failure of public agencies to achieve an approximately optimal solution. [ABSTRACT FROM AUTHOR]

Barro claims that since the public rationally forecasts and discounts future taxes, government debt does not represent net wealth to the public and therefore does not affect any real economic variables. Then why are there ever deficits? Barro has presented a theory of optimal deficits based on intertemporal tax smoothing. The theory predicts that nominal debt grows in proportion to anticipated inflation, varies contracyclically with respect to real income cycles, and varies procyclically with respect to war cycles. Barro tested his theory using annual American data for 1922-76 and found weak support for his theory. This paper reexamines Barro's tests, using quarterly American data for 1953:Q1 to 1978:Q4 and finds stronger support for Barro's theory than Barro found using annual data. This paper also concludes that state and local governments do not engage in tax-smoothing behavior--probably due to considerations of migration--and that the debt held by the central bank should be included in the definition of public debt. [ABSTRACT FROM AUTHOR]

This paper assesses the effects of U.S. tax policy reforms on inequality over around three decades, from 1979 to 2007. It applies a new method for decomposing changes in government redistribution into (1) a direct policy effect resulting from policy changes and (2) the effects of changing market incomes. Over the period as a whole, the tax policy changes increased income inequality by pushing up the income share of high-income earners (the top 20%). ( JEL H23, H31, H53, P16) [ABSTRACT FROM AUTHOR]

Unions can have either positive or negative effects on risk-adjusted returns in pension plans. On the positive side, a union can improve monitoring of pension advisors and asset managers. On the negative side, the union may sacrifice returns by making investments that promote union goals. This paper discusses how the structure of the pension plan affects the union's ability and willingness to sacrifice returns to promote union goals. Using panel data on over 38,000 pension plans drawn from IRS Form 5500 filings between 1988 and 2008, we find the lowest performing plans are unionized multi-employer plans. Among defined contribution plans, the underperformance of multi-employer union plans disappears when the pension is controlled by individual participants. ( JEL J32, J51) [ABSTRACT FROM AUTHOR]

This paper studies how fiscal policy affects loan market conditions in the United States. First, it conducts a structural vector-autoregression analysis showing that the bank spread responds negatively to an expansionary government spending shock, while lending increases. Second, it illustrates that these results are mimicked by a dynamic stochastic general equilibrium model where the bank spread is endogenized via the inclusion of a banking sector exploiting lending relationships. Third, it shows that lending relationships represent a friction that generates a financial accelerator effect in the transmission of the fiscal shock. (JEL E44, E62 ) [ABSTRACT FROM AUTHOR]

This paper examines the impact of house price gaps in Federal Reserve districts on the voting behavior in the Federal Open Market Committee (FOMC) from 1978 to 2010. Applying a random effects ordered probit model, we find that a higher regional house price gap significantly increases (decreases) the probability that this district's representative in the FOMC casts interest rate votes in favor of tighter (easier) monetary policy. In addition, our results suggest that Bank presidents react more sensitively to regional house price developments than Board members do. ( JEL E31, E58, R31) [ABSTRACT FROM AUTHOR]

In the 1980s and 1990s, many states and districts began to provide funding for prekindergarten (PK) programs for the first time. This paper takes advantage of the staggered timing in program funding to investigate the effect that increased availability of PK programs has on the labor supply of mothers with 4-year-olds. I find that mothers with a 4-year-old and no younger children were significantly more likely to be in the labor force and employed once PK became available. Mothers with a 4-year-old and other younger children were also significantly more likely to be in the labor force and employed. ( JEL I20, J01, J20) [ABSTRACT FROM AUTHOR]

Debit cards are the fastest growing consumer payment method despite being more expensive and less versatile than credit cards. In this paper, we investigate some of the oft cited explanations for debit card use. Checking account data shows that debit card use is correlated with age, pay frequency, overdrafting, and ATM use, but not income, gender, crime, or expenditure. The data contain some signs that debit cards might be used as a method of spending restraint. (JEL D14, G21, L14 ) [ABSTRACT FROM AUTHOR]

The number of automobile recalls in the United States has substantially increased over the last two decades, and after a record of over 30 million cars recalled in 2004, in the last few years it has consistently reached between 15 and 17 million, and in 2010 alone 20 million cars were recalled. Toyota's recall crisis in 2010 illustrates how recalls can affect a large number of American drivers and the defects connected to them can result in loss of life and serious accidents. However, in spite of the increase in public concern over recalls and the loss of property and life attached to them, there is no empirical evidence of the effect of vehicle recalls on safety. This paper investigates whether vehicle recalls reduce accidental harm measured by the severity of injuries in vehicle accidents. The results of our analysis show that if a recall for a new-year model is issued, then the severity of injuries of accidents continuously diminishes during the first year after the recall, something we do not find among cars not subject to recalls. This is because defects are repaired over time but also because drivers react by driving more carefully until the defects are fixed. To minimize the losses attached to having dangerously defective cars on our roads, both quick and timely recall issuance are needed and more detailed information on defects should be delivered to owners of defective vehicles. The latter can be made possible through simple but important policy changes by the U.S. government regarding recall information sharing with drivers and insurance companies. ( JEL L51, L62) [ABSTRACT FROM AUTHOR]

Because of several policy distortions, including import-substitution industrialization, widespread government intervention, and both domestic and international competitive barriers, there has been a general presumption that Latin America has been much less productive than the leading economies in the last decades. In this paper we show, however, that until the late 1970s Latin American countries had high productivity levels relative to the United States. It is only after the late 1970s that we observe a fast decrease of relative total factor productivity (TFP) in Latin America. We also show that the inclusion of human capital in the production function makes a crucial difference in the TFP calculations for Latin America. [ABSTRACT FROM AUTHOR]

Foster care caseloads have nearly doubled over the last three decades. Parental methamphetamine (meth) use grew significantly during the same period. While child welfare workers and law enforcement claim that parental meth use contributes to foster care growth, the evidence for a causal effect has not been determined. This paper presents the first evidence of a causal effect of meth on foster care admissions using two exogenous supply-side interventions in meth markets from the late 1990s for identification. First, we find that restrictions on meth precursor distribution caused meth use (proxied by white meth self-referred treatment cases) to decline 4.1%. Second, using two-stage least squares, we estimate a positive elasticity of foster care cases with respect to meth use of 1.54. We also estimate elasticities of 1.03 and 1.49 for cases of child neglect and parental abuse, respectively. These results suggest that child welfare policies should be designed specifically for the children of meth-using parents. [ABSTRACT FROM AUTHOR]

Recent research has documented a substantial role in antitrust enforcement by U.S. states. While many of the cases litigated involve small local firms, a nontrivial portion encompasses multiple-state issues. Some previous literature has investigated whether states engage in free-riding behavior in environmental regulation, and whether governments free ride on private decisions in provision of public goods. In this paper, we analyze a sample of antitrust cases involving cross-state impacts (from the Multi-State Antitrust Database, provided by the National Association of Attorneys General) and explain the determinants of free riding (which we define as participating in a case, but not as a lead plaintiff). [ABSTRACT FROM AUTHOR]

This paper studies the extent and variation in production cost pass-through for U.S. outsourcing imports. Data from 4,676 products imported through the U.S. overseas assembly program show that outsourcing imports were characterized by incomplete pass-through of production and trade costs to import prices. Notably, pass-through was higher for products assembled in high education countries while the response of outsourcing import prices to competing suppliers' prices was largest for products sold by firms in capital-intense industries. The reasons for these cross-country and cross-industry differences, as they relate to theories of outsourcing and trade, are explored. [ABSTRACT FROM AUTHOR]

This paper examines the impact of dynastic political privilege on the behavior of incumbents. Incumbents have opportunities to serve themselves at the expense of voters, but society can design political institutions to mitigate these principal-agent problems. Dynastic political privilege may be one such mechanism. We argue that the possibility that opportunistic behavior in office may damage family members' political prospects disciplines incumbents. We test this hypothesis using data for 1950-2005 on U.S. governors, including a new data set on the family relationships of politicians, and find that dynastic political privilege increases incumbent accountability. [ABSTRACT FROM AUTHOR]

This paper investigates the influence of economic news on consumer sentiment, and examines whether "news shocks "--changes in coverage that would not be expected from incoming data on economic fundamentals--have aggregate effects. Using monthly U.S. data and a structural vector autoregression, I find that (1) sentiment is affected by news shocks; (2) after filtering out effects of news shocks, shocks to sentiment still have positive effects on consumer spending; and (3) news shocks influence both spending and unemployment in significant, though transitory ways. These results are consistent with other evidence of a role of nonfundamental factors in aggregate fluctuations. [ABSTRACT FROM AUTHOR]

In the 1970s motion picture studios increased their use of blind bidding and nonrefundable guarantees in an attempt to reduce the risks associated with producing a small number of large budget films. However, theater owners claimed that blind bidding and guarantees shifted risk to them and increased the likelihood of bankruptcy, because they were required to bid for the right to exhibit a movie without seeing it first. In response to the lobbying of theater owners, 24 states passed laws between 1978 and 1984 that banned blind bidding, while 7 states also banned nonrefundable guarantees. This paper provides the first empirical analysis of the conflicting claims made by theater owners and movie studios about the impact of these laws on the survival rates of independent theaters, admission prices, and delays in the release of movies. We find that the laws were not only ineffective in keeping theater owners at risk of bankruptcy from exiting the market; they may have been even detrimental to those theater owners converting theaters to multiplexes at that time. [ABSTRACT FROM AUTHOR]

We examine the relationship between offshoring and the labor market in an occupational choice model of trade and endogenous growth where workers are employed on the basis of their individual skill levels. Trade liberalization leads to offshoring and reduces employment in the manufacturing sector. Displaced workers move into traditional and innovation sectors according to their skill levels, shaping real wages and aggregate productivity in the manufacturing sector. The paper aims to show how inter-sectoral labor market adjustments, highlighted by skill heterogeneity, could be a possible explanation for the simultaneous rise in productivity and reduction in real wages that have coincided with the sharp escalation of offshoring activities in the U.S. manufacturing sector since 2004. ( JEL F16, F23, J24) [ABSTRACT FROM AUTHOR]

In this paper, I explore the flexibility of the workweek in the United States, using the FIFA Soccer World Cup as a natural experiment. My empirical strategy exploits the exogenous variation that arises due to which country hosts the World Cup, as this will determine the time games are broadcast across different time zones in the United States. The hour of the day when games are broadcast differentially affects hours of work across different time zones. Further, the calendar timing of the World Cup allows me to compare labor market outcomes in June/July for a worker in World Cup year t, with the outcomes in June/July for a worker in non-World Cup years t + 1, t + 2 and t + 3. My results highlight the importance of the worker's pay frequency in their workweek flexibility, as all differences in weekly hours of work due to the World Cup are concentrated among salary paid workers. Also, my results show that after controlling for observable demographic characteristics as well as year and month fixed effects, a worker reduces on average his hours of work during the World Cup by statistically significant estimates that range from 9 weekly minutes to 28 weekly minutes, depending on specification choice and time of the day during which World Cup games are broadcast live in the United States. ( JEL J22) [ABSTRACT FROM AUTHOR]

This paper tests various political business cycle theories in a New Keynesian model with a monetary and fiscal policy mix. All the policy coefficients, the target levels of inflation and the budget deficit, the firms' frequency of price setting, and the standard deviations of the structural shocks are allowed to depend on 'political' regimes: a preelection versus postelection regime, a regime that depends on whether the president (or the Fed chairman) is a Democrat or a Republican, and a regime under which the president and the Fed chairman share party affiliation in preelection quarters or not. The results provide evidence that several coefficients are influenced by political variables. The best-fitting specification, in fact, is one that allows coefficients to vary according to a regime that depends on whether the economy is in the few quarters before a presidential election or not. Monetary policy becomes considerably more inertial before elections and fiscal policy deviations from a simple rule are more common. There is some evidence that policies become more expansionary before elections, but this evidence disappears for monetary policy in the post-1985 sample. ( JEL C11, D72, E32, E52, E58, E63) [ABSTRACT FROM AUTHOR]

Montgomery GI Bill (MGIB) educational benefits are a prime recruiting tool in today's all-volunteer military. This paper studies the effects of changes in education benefits using data of the period 1990-2005. Higher benefits lead to higher separation due to both pure incentive effects and by attracting more college-oriented youth into military service. We deal with potential selection issues by distinguishing between anticipated and unanticipated benefit changes. Higher education benefits are associated with higher separation from the Army and Air Force, but not the other services. A $10,000 increase in MGIB benefits is estimated to increase usage by about 5 percentage points, but the duration of usage is estimated to be insensitive to benefit levels. ( JEL H52, I21, J24) [ABSTRACT FROM AUTHOR]

College grade point averages in the United States rose substantially between the 1960s and the 2000s. Over the same period, study time declined by almost a half. This paper uses a 12-quarter panel of course evaluations from the University of California, San Diego to discern whether a link between grades and effort investment holds up in a micro setting. Results indicate that average study time would be about 50% lower in a class in which the average expected grade was an 'A' than in the same course taught by the same instructor in which students expected a 'C.' Simultaneity suggests estimates are biased toward 0. Findings do not appear to be driven primarily by the individual student's expected grade, but by the average expected grade of others in the class. Class-specific characteristics that generate low expected grades appear to produce higher effort choices-evidence that nominal changes in grades may lead to real changes in effort investment. ( JEL I21, J22, J24) [ABSTRACT FROM AUTHOR]

This paper investigates the link between the optimal level of nonfinancial firms’ short-term leverage and macroeconomic and idiosyncratic sources of uncertainty. We develop a structural model of a firm’s value maximization problem that predicts a negative relationship between uncertainty and optimal levels of borrowing. This proposition is tested using a panel of nonfinancial U.S. firms drawn from the COMPUSTAT quarterly database covering the period 1993–2003. The estimates confirm that as either form of uncertainty increases, firms decrease their levels of short-term leverage. This effect is stronger for macroeconomic uncertainty than for idiosyncratic uncertainty. ( JEL C23, D8, D92, G32) [ABSTRACT FROM AUTHOR]

This paper estimates the impact of fraternity and sorority membership on a wide array of drinking outcomes among respondents to four Harvard College Alcohol Study surveys from 1993 to 2001. Identification is achieved by including proxies for specific types of unobserved heterogeneity expected to influence the relationship. These include high school and parental drinking behaviors to account for time-invariant omitted factors and assessed importance of drinking-related activities and reasons for drinking to control for changes in preferences since starting college. Because self-selection is quantitatively important, I further hold constant variables plausibly affected by fraternity membership, such as current alcohol use categorization, ranging from abstainer to heavy drinker, and time spent socializing. Even in the fully saturated model, fraternity membership significantly increases drinking intensity, frequency, and recency, as well as the prevalence of many deleterious drinking consequences that potentially carry negative externalities. ( JEL I12, I20) [ABSTRACT FROM AUTHOR]

This paper explores the widely accepted view that Wal-Mart causes significant harm to the traditional, small “mom and pop” business sector of the U.S. economy. We present the first rigorous econometric investigation of this issue by examining the rate of self-employment and the number of small employer establishments using both time series and cross-sectional data. We also examine alternative measures and empirical techniques for robustness. Contrary to popular belief, our results suggest that the process of creative destruction unleashed by Wal-Mart has had no statistically significant long-run impact on the overall size and profitability of the small business sector in the United States. ( JEL L81, D59, C21) [ABSTRACT FROM AUTHOR]

This paper presents evidence on after-school programs’ effects on behavior from the national evaluation of the U.S. Department of Education’s 21st Century Community Learning Centers after-school program. Findings come from both of the study’s components: (1) an elementary school component based on random assignment of 2,308 students in 12 school districts and (2) a middle school component based on a matched comparison design including 4,264 students in 32 districts. Key findings include higher levels of negative behavior for elementary students and some evidence of higher levels of negative behaviors for middle school students. ( JEL I21) [ABSTRACT FROM AUTHOR]

Theories of commitment, altruism, and reciprocity have been invoked to explain and describe behavior in public goods and social dilemma situations. Commitment has been used to explain behaviors like water conservation and voting. Altruism has been applied to explain contributions to charities and intergenerational transfers and bequests. Reciprocity has been invoked to explain gift exchange and labor market decisions. This paper describes a set of experiments, which distinguish between these competing theories by testing their comparative statics predictions in a linear public goods setting. Results provide strong support for reciprocity theories over either theories of commitment or of altruism. [ABSTRACT FROM AUTHOR]

This paper examines contract-related incentive effects using a unique dataset on individual performance and individual contracts. Evidence from professional basketball players in the 1980s and 1990s shows that individual performance improves significantly in the year before signing a multi-year contract but declines after the contract is signed. One interpretation is that workers strategically increase effort to obtain the most lucrative, multi-year contract but then reduce it once the contract is locked in. This highlights the double-edged nature of long-term contracts: good for employers when workers are fighting for them, but less so when workers have them. [ABSTRACT FROM AUTHOR]

Prior work finds declining immigrant quality in the postwar period that is linked to source-country and skill-composition changes associated with the 1965 Immigration Act. This paper uses a unique panel of foreign- and native-born American Economic Association members to show that the highly skilled experienced a similar shift away from European migrants toward those from Asia. However, the findings do not indicate that this change in source-country composition has been accompanied by a decline in quality; rather, the most recent cohorts of foreign-born economists appear to be more productive than their native counterparts. (JEL J61) [ABSTRACT FROM AUTHOR]

Although food aid may have important medium- to long-term effects, there is a glaring absence of empirical research on food aid dynamics. This paper applies vector autoregression methods to data from 18 countries over the period 1961-95. We find evidence that food aid has a pronounced J-curve effect on recipient country per capita commercial food imports but only negligible negative effects on recipient country per capita food production. The commercial export gains are primarily enjoyed, however, by the donors' competitors, revealing heretofore unrecognized positive pecuniary trade externalities associated with foreign assistance. (JEL F14, O13, Q17, Q18) [ABSTRACT FROM AUTHOR]

The paper provides a new perspective on the estimate of the welfare losses due to oligopoly. I argue that the conventional analysis of monopoly/oligopoly welfare losses can be misleading. If causation runs from investment in new technology to increased concentration, dynamic gains from innovation should be taken into account for a fuller analysis of welfare losses. I use beer-industry data to demonstrate that technological changes Granger-cause beer prices, and beer prices Granger-cause the Herfindahl index. I then estimate the dynamic gains to consumers in the beer industry and find these gains to be impressive relative to conventional static losses. (JEL L10, L13) [ABSTRACT FROM AUTHOR]

This paper shows that many of the most distinctive features of Keynesian economics are best understood if one views the General Theory as essentially a gold standard model. A close examination of Keynes's statements on contemporaneous policy issues suggests that the gold standard had a profound impact on his views on monetary policy effectiveness. In particular, I show that the liquidity trap has been widely misunderstood. Finally, I argue that post-General Theory developments in Keynesian economics are best understood as a response to the inapplicability of Keynes's original message to a worm of fiat money regimes. (JEL B22, E12, N1) [ABSTRACT FROM AUTHOR]