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This article contributes to the study of ethnic diversity and public goods provision by assessing the role of the spatial distribution of ethnic groups. Through a new theory that we call spatial interdependence , we argue that the segregation of ethnic groups can reduce or even neutralize the “diversity penalty” in public goods provision that results from ethnic fractionalization. This is because local segregation allows communities to use disparities in the level of public goods compared with other communities as leverage when advocating for more public goods for themselves, thereby ratcheting up the level of public goods across communities. We test this prediction on highly disaggregated data from Indonesia and find strong support that, controlling for ethnic fractionalization, segregated communities have higher levels of public goods. This has an important and underexplored implication: decentralization disadvantages integrated communities vis-à-vis their more segregated counterparts. [ABSTRACT FROM AUTHOR]

This article contributes to the study of ethnic diversity and public goods provision by assessing the role of the spatial distribution of ethnic groups. Through a new theory that we call spatial interdependence, we argue that the segregation of ethnic groups can reduce or even neutralize the “diversity penalty” in public goods provision that results from ethnic fractionalization. This is because local segregation allows communities to use disparities in the level of public goods compared with other communities as leverage when advocating for more public goods for themselves, thereby ratcheting up the level of public goods across communities. We test this prediction on highly disaggregated data from Indonesia and find strong support that, controlling for ethnic fractionalization, segregated communities have higher levels of public goods. This has an important and underexplored implication: decentralization disadvantages integrated communities vis-à-vis their more segregated counterparts. [ABSTRACT FROM AUTHOR]

We present a vision for improving household financial surveys by integrating responses from questionnaires more completely with financial statements and combining them with payments data from diaries. Integrated household financial accounts-balance sheet, income statement, and statement of cash flows-are used to assess the degree of integration in leading U.S. household surveys, focusing on inconsistencies in measures of the change in cash. Diaries of consumer payment choice can improve dynamic integration. Using payments data, we construct a statement of liquidity flows: a detailed analysis of currency, checking accounts, prepaid cards, credit cards, and other payment instruments, consistent with conventional cash flow measures and the other financial accounts. ( JEL D12, D14, E41, E42) [ABSTRACT FROM AUTHOR]

Banks play an important role in consumer credit, and when borrowers face a decision on whether to default on mortgage or non-mortgage loans first, banking relationship may matter. Our study provides first evidence into the interplay between banking relationship and consumer default priority via credit bureau data of 1 million individuals in Thailand. We find that same-bank borrowers are less likely to default on mortgage loans first, and borrowers with longer banking relationship and lower switching cost are more likely to default on mortgage loans first (which is welfare-improving). Our results suggest that banking relationship can lead to better outcomes for defaulting borrowers even when switching cost is high. • We study how Thai borrowers prioritize default on mortgage and non-mortgage loans. • One-third of borrowers choose to default on mortgage loans first. • Banking relationship affects default priority; stronger relationship is associated with less costly default for borrowers. [ABSTRACT FROM AUTHOR]

Lobbying dominates corporate political spending, but comprehensive studies of the benefits accrued are scarce. Using a dataset of all U.S. firms with publicly available financial statements, we delve into the tax benefits obtained from lobbying. Firms that spend more on lobbying in a given year pay lower effective tax rates in the next year. Increasing registered lobbying expenditures by 1% appears to lower effective tax rates by somewhere in the range of 0.5 to 1.6 percentage points for the average firm that lobbies. While individual firms amass considerable benefits, the costs of lobbying-induced tax breaks appear modest for the government. [ABSTRACT FROM AUTHOR]

Effective policies for adaptation to climate change require understanding how impacts are related to exposures and vulnerability, the dimensions of the climate system that will change most and where human impacts will be most draconian, and the institutions best suited to respond. Here, we propose a simple method for more credibly pairing empirical statistical damage estimates derived from recent weather and outcome observations with projected future climate changes and proposed responses. We first analyze agricultural production and loan repayment data from Brazil to understand vulnerability to historical variation in the more predictable components of temperature and rainfall (trend and seasonality) as well as to shocks (both local and over larger spatial scales). This decomposed weather variation over the past two decades explains over 50% of the yield variation in major Brazilian crops and, critically, can be constructed in the same way for future climate projections. Combining our estimates with bias-corrected downscaled climate simulations for Brazil, we find increased variation in yields and revenues (including more bad years and worse outcomes) and higher agricultural loan default at midcentury. Results in this context point to two particularly acute dimensions of vulnerability: Intensified seasonality and local idiosyncratic shocks both contribute to worsening outcomes, along with a reduced capacity for spatially correlated ("covariate") shocks to ameliorate these effects through prices. These findings suggest that resilience strategies should focus on institutions such as water storage, financial services, and reinsurance. [ABSTRACT FROM AUTHOR]