Does Costly Reversibility Matter for U.S. Public Firms? — by Hang Bai, Erica X.N. Li, Chen Xue, Lu Zhang

Yes, most likely. The firm-level evidence on costly reversibility is even stronger than the prior evidence at the plant level. The firm-level investment rate distribution is highly skewed to the right, with a small fraction of negative investments, 5.79%, a tiny fraction of inactive investments, 1.46%, and a large fraction of positive investments, 92.75%. When … Read moreDoes Costly Reversibility Matter for U.S. Public Firms? — by Hang Bai, Erica X.N. Li, Chen Xue, Lu Zhang

Tax Policy and Lumpy Investment Behavior: Evidence from China’s VAT Reform — by Zhao Chen, Xian Jiang, Zhikuo Liu, Juan Carlos Suárez Serrato, Daniel Xu

A universal fact of firm-level data is that investment is lumpy: firms either replace a considerable fraction of their existing capital (spike) or do not invest at all (inaction). This paper incorporates the lumpy nature of investment into the study of how tax policy affects investment behavior. We show that tax policy can directly impact … Read moreTax Policy and Lumpy Investment Behavior: Evidence from China’s VAT Reform — by Zhao Chen, Xian Jiang, Zhikuo Liu, Juan Carlos Suárez Serrato, Daniel Xu

History Dependence, Cohort Attachment, and Job Referrals in Networks of Close Relationships — by Ayal Y. Chen-Zion, James E. Rauch

We model network formation in a firm. Agents learn about the quality of their working relationships with each other. Their good relationships become their networks. Accumulating relationships becomes increasingly costly, however. Over time agents become less open to forming relationships with others unknown to them, leading their networks to be front-loaded with agents they met … Read moreHistory Dependence, Cohort Attachment, and Job Referrals in Networks of Close Relationships — by Ayal Y. Chen-Zion, James E. Rauch

Exploring The Role of Limited Commitment Constraints in Argentina’s “Missing Capital” — by Marek Kapička, Finn Kydland, Carlos Zarazaga

We study why capital accumulation in Argentina was slow in the 1990s and 2000s, despite high productivity growth and low international interest rates. We show that limited commitment constraints introduce two mechanisms. First, the response of investment to a total factor productivity increase is muted and short-lived, while the response to a decrease is large … Read moreExploring The Role of Limited Commitment Constraints in Argentina’s “Missing Capital” — by Marek Kapička, Finn Kydland, Carlos Zarazaga

Can Diffuse Delivery System Reforms Improve Population Health? A Study of the State Innovation Models Initiative — by Partha Deb, Anjelica Gangaram, Hoda Khajavi

We examine the effects of the State Innovation Models (SIM) on population-level health status. The SIM initiative provided $250 million to six states in 2013 for delivery system reforms. We use data from the Behavioral Risk Factor Surveillance System for the years 2010 — 2016 to compare health of the populations in 6 SIM states … Read moreCan Diffuse Delivery System Reforms Improve Population Health? A Study of the State Innovation Models Initiative — by Partha Deb, Anjelica Gangaram, Hoda Khajavi

Macroeconomics Challenges and Resilience of Emerging Market Economies — by Joshua Aizenman

A Growing share of Emerging Markets (EMs) use hybrid versions of inflation targeting (IT) that differ from the IT regimes of OECD countries. Policy interest rates among commodity countries are impacted by real exchange rate and international reserves (IR) changes, aiming at stabilizing their real exchange rate in the presence of volatile terms of trade … Read moreMacroeconomics Challenges and Resilience of Emerging Market Economies — by Joshua Aizenman

Undue Burden Beyond Texas: An Analysis of Abortion Clinic Closures, Births, And Abortions in Wisconsin — by Joanna Venator, Jason Fletcher

In this paper, we estimate the impacts of abortion clinic closures on access to clinics in terms of distance and congestion, abortion rates, and birth rates. Legislation regulating abortion providers enacted in Wisconsin in 2011-2013 ultimately led to the closure of two of five abortion clinics in Wisconsin, increasing the average distance to the nearest … Read moreUndue Burden Beyond Texas: An Analysis of Abortion Clinic Closures, Births, And Abortions in Wisconsin — by Joanna Venator, Jason Fletcher

What Difference Does a Diagnosis Make? Evidence from Marginal Patients — by Mattan Alalouf, Sarah Miller, Laura R. Wherry

Over the past 30 years, the criteria used to diagnose many illnesses have been relaxed, resulting in millions more relatively healthy individuals receiving treatment. This paper explores the impact of receiving a diagnosis of a common disease among such “marginally ill” patients. We apply a regression discontinuity design to the cutoff in blood sugar levels … Read moreWhat Difference Does a Diagnosis Make? Evidence from Marginal Patients — by Mattan Alalouf, Sarah Miller, Laura R. Wherry

Job Loss, Credit and Crime in Colombia — by Gaurav Khanna, Carlos Medina, Anant Nyshadham, Christian Posso, Jorge A. Tamayo

We investigate the effects of job displacement, as a result of mass-layoffs, on criminal arrests using a novel matched employer-employee-crime dataset in Medellín, Colombia. Job displacement leads to immediate earnings losses, and an increased likelihood of being arrested for both the displaced worker and for other youth in the family. We leverage variation in opportunities … Read moreJob Loss, Credit and Crime in Colombia — by Gaurav Khanna, Carlos Medina, Anant Nyshadham, Christian Posso, Jorge A. Tamayo

Marriage Equality Laws and Youth Suicidal Behaviors — by D. Mark Anderson, Kyutaro Matsuzawa, Joseph J. Sabia

Since the landmark ruling in Goodridge v. Department of Public Health in 2004, the legalization of same-sex marriage (SSM) has proliferated throughout the United States via either legislative action or court order. Advocates of SSM laws argue that marriage equality will generate important health benefits not only for adult same-sex couples, but also for LGBQ-identifying … Read moreMarriage Equality Laws and Youth Suicidal Behaviors — by D. Mark Anderson, Kyutaro Matsuzawa, Joseph J. Sabia

Rule of Law and Female Entrepreneurship — by Nava Ashraf, Alexia Delfino, Edward L. Glaeser

Commerce requires trust, but trust is difficult when one group consistently fears expropriation by another. If men have a comparative advantage at violence and there is little rule-of-law, then unequal bargaining power can lead women to segregate into low-return industries and avoid entrepreneurship altogether. In this paper, we present a model of female entrepreneurship and … Read moreRule of Law and Female Entrepreneurship — by Nava Ashraf, Alexia Delfino, Edward L. Glaeser

Subsidy Targeting with Market Power — by Maria Polyakova, Stephen P. Ryan

In-kind public transfers are commonly targeted based on observable characteristics of potential recipients. This paper argues that when the subsidized good is provided by imperfectly-competitive firms, targeting can give rise to a “demographic externality,” creating unintended redistribution of surplus and distorting efficiency. We illustrate this mechanism empirically in the context of means-tested subsidies for privately-provided … Read moreSubsidy Targeting with Market Power — by Maria Polyakova, Stephen P. Ryan

Educational, Labor-market and Intergenerational Consequences of Poor Childhood Health — by Krzysztof Karbownik, Anthony Wray

We study whether childhood health capital affects school attendance, long-run occupational outcomes, and intergenerational mobility. We address this question in the context of London, England during the late-nineteenth century using the inpatient admission records of three large hospitals linked to population census records, from which we identify household characteristics and the patients’ siblings. Sibling fixed … Read moreEducational, Labor-market and Intergenerational Consequences of Poor Childhood Health — by Krzysztof Karbownik, Anthony Wray

The Banking View of Bond Risk Premia — by Valentin Haddad, David A. Sraer

Banks’ balance-sheet exposure to fluctuations in interest rates strongly forecasts excess Treasury bond returns. This result is consistent with optimal risk management, a banking counterpart to the household Euler equation. In equilibrium, the bond risk premium compensates banks for bearing fluctuations in interest rates. When banks’ exposure to interest rate risk increases, the price of … Read moreThe Banking View of Bond Risk Premia — by Valentin Haddad, David A. Sraer

A Note to “Do ETFs Increase Volatility?”: An Improved Method to Predict Assignment of Stocks into Russell Indexes — by Itzhak Ben-David, Francesco Franzoni, Rabih Moussawi

A growing literature uses the Russell 1000/2000 reconstitution event as an identification strategy to investigate corporate finance and asset pricing questions. To implement this identification strategy, researchers need to approximate the ranking variable used to assign stocks to indexes. We develop a procedure that predicts assignment to the Russell 1000/2000 with significant improvements relative to … Read moreA Note to “Do ETFs Increase Volatility?”: An Improved Method to Predict Assignment of Stocks into Russell Indexes — by Itzhak Ben-David, Francesco Franzoni, Rabih Moussawi

The Economic Effects of Private Equity Buyouts — by Steven J. Davis, John C. Haltiwanger, Kyle Handley, Ben Lipsius, Josh Lerner, Javier Miranda

We examine thousands of U.S. private equity (PE) buyouts from 1980 to 2013, a period that saw huge swings in credit market tightness and GDP growth. Our results show striking, systematic differences in the real-side effects of PE buyouts, depending on buyout type and external conditions. Employment at target firms shrinks 13% over two years … Read moreThe Economic Effects of Private Equity Buyouts — by Steven J. Davis, John C. Haltiwanger, Kyle Handley, Ben Lipsius, Josh Lerner, Javier Miranda

Macroeconomic Frameworks — by Alan J. Auerbach, Yuriy Gorodnichenko, Daniel Murphy

We link detailed data on defense spending, wages, hours, employment, establishments, and GDP across U.S. cities to study the effects of fiscal stimulus. Our small-open-economy empirical setting permits us to estimate key macroeconomic outcomes and elasticities, including the responses of the labor share and the labor wedge to demand shocks and the elasticity of output … Read moreMacroeconomic Frameworks — by Alan J. Auerbach, Yuriy Gorodnichenko, Daniel Murphy

All Medicaid Expansions Are Not Created Equal: The Geography and Targeting of the Affordable Care Act — by Craig Garthwaite, John A. Graves, Tal Gross, Zeynal Karaca, Victoria R. Marone, Matthew J. Notowidigdo

We use comprehensive patient-level discharge data to study the effect of Medicaid on the use of hospital services. Our analysis relies on cross-state variation in the Affordable Care Act’s Medicaid expansion, along with within-state variation across ZIP Codes in exposure to the expansion. We find that the Medicaid expansion increased Medicaid visits and decreased uninsured … Read moreAll Medicaid Expansions Are Not Created Equal: The Geography and Targeting of the Affordable Care Act — by Craig Garthwaite, John A. Graves, Tal Gross, Zeynal Karaca, Victoria R. Marone, Matthew J. Notowidigdo

Poverty, Seasonal Scarcity and Exchange Asymmetries — by Dietmar Fehr, Günther Fink, Kelsey Jack

A growing literature associates poverty with biases in decision-making. We investigate this link in a sample of over 3,000 small-scale farmers in Zambia, who participated in a series of experiments involving the opportunity to exchange randomly assigned household items for alternative items of similar value. Analyzing a total of 5,842 trading decisions over a range … Read morePoverty, Seasonal Scarcity and Exchange Asymmetries — by Dietmar Fehr, Günther Fink, Kelsey Jack

Marriage, Children, and Labor Supply: Beliefs and Outcomes — by Yifan Gong, Ralph Stinebrickner, Todd R. Stinebrickner

While a large literature is interested in the relationship between family and labor supply outcomes, little is known about the expectations of these objects at earlier stages. We examine these expectations, taking advantage of unique data from the Berea Panel Study. In addition to characterizing expectations, starting during college, the data details outcomes for ten … Read moreMarriage, Children, and Labor Supply: Beliefs and Outcomes — by Yifan Gong, Ralph Stinebrickner, Todd R. Stinebrickner

The Consumption Value of College — by Yifan Gong, Lance Lochner, Ralph Stinebrickner, Todd R. Stinebrickner

This paper uses the Euler equation and novel data from Berea College students on their consumption expenditures during and after college, desired borrowing amounts, beliefs about post-college earnings, and elicited risk-aversion and time preference parameters to determine their consumption value of college attendance. Estimates suggest an average annual consumption value of college as high as … Read moreThe Consumption Value of College — by Yifan Gong, Lance Lochner, Ralph Stinebrickner, Todd R. Stinebrickner

Retirement in the Shadow (Banking) — by Guillermo Ordoñez, Facundo Piguillem

The U.S. economy has recently experienced two, seemingly unrelated, phenomena: a large increase in post-retirement life expectancy and a major expansion in securitization and shadow banking activities. We argue they are intimately related. Agents rely on financial intermediaries to save for post-retirement consumption. When expecting to live longer, they rely more heavily on intermediaries that … Read moreRetirement in the Shadow (Banking) — by Guillermo Ordoñez, Facundo Piguillem

Drug Diffusion Through Peer Networks: The Influence of Industry Payments — by Leila Agha, Dan Zeltzer

Pharmaceutical companies’ marketing efforts primarily target physicians, often through individual detailing that entails monetary or in-kind transfers. We study how peer influence broadens these payments’ reach beyond the directly paid physicians. Combining Medicare prescriptions and Open Payments data for anticoagulant drugs, we document that pharmaceutical payments target highly connected physicians. We exploit within-physician variation in … Read moreDrug Diffusion Through Peer Networks: The Influence of Industry Payments — by Leila Agha, Dan Zeltzer

Poverty Alleviation Strategies Under Informality: Evidence for Latin America — by Martín Caruso, Sebastian Galiani, Federico Weinschelbaum

Strategies based on growth and inequality reduction require a long-run horizon, and this paper therefore argues that those strategies need to be complemented by poverty alleviation programs. With regards to such programs, informality in Latin America and the Caribbean is a primary obstacle to carry out means testing income-support programs, and countries in the region … Read morePoverty Alleviation Strategies Under Informality: Evidence for Latin America — by Martín Caruso, Sebastian Galiani, Federico Weinschelbaum

Benchmarking Global Optimizers — by Antoine Arnoud, Fatih Guvenen, Tatjana Kleineberg

We benchmark seven global optimization algorithms by comparing their performance on challenging multidimensional test functions as well as a method of simulated moments estimation of a panel data model of earnings dynamics. Five of the algorithms are taken from the popular NLopt open-source library: (i) Controlled Random Search with local mutation (CRS), (ii) Improved Stochastic … Read moreBenchmarking Global Optimizers — by Antoine Arnoud, Fatih Guvenen, Tatjana Kleineberg

On Frequent Batch Auctions for Stocks — by Ravi Jagannathan

I show that frequent batch auctions for stocks have the potential to reduce the severity of stock price crashes when they occur. For a given sequence of orders from a continuous electronic limit order book market, matching orders using one second apart batch auctions results in nearly the same trades and prices. Increasing the time … Read moreOn Frequent Batch Auctions for Stocks — by Ravi Jagannathan

The Transformation and Performance of Emerging Market Economies Across the Great Divide of the Global Financial Crisis — by Michael D. Bordo, Pierre Siklos

The process of central bank (CB) evolution by emerging market economies (EMEs), including central bank independence (CBI) and transparency (CBT), converged towards that of the advanced economies (AEs) before the Global Financial Crisis (GFC) of 2007-2008. It was greatly aided by the adoption of inflation targeting. In this paper we evaluate this convergence process for … Read moreThe Transformation and Performance of Emerging Market Economies Across the Great Divide of the Global Financial Crisis — by Michael D. Bordo, Pierre Siklos

Maternal and Fetal Health Effects of Working during Pregnancy — by Dhaval M. Dave, Muzhe Yang

We provide some of the first empirical evidence of maternal and fetal health effects of working during pregnancy by using a unique dataset from the New Jersey Department of Health that includes information not only on pregnancy and birth outcomes but also on maternal employment. We match the mother’s occupation with the Metabolic Equivalent of … Read moreMaternal and Fetal Health Effects of Working during Pregnancy — by Dhaval M. Dave, Muzhe Yang

Underwriter Certification, Issuer-Underwriter Matching, and SEO Performance — by Charles W. Calomiris, Yehuda Izhakian, Jaime F. Zender

The introduction of deal types for issues of seasoned equity in which the offer follows quickly after its announcement highlights the role of underwriter certification in the performance of SEOs. Controlling for the matching between underwriters and issuers, underwriter quality is positively related to the announcement effect in rapidly completed SEOs. For these deal types, … Read moreUnderwriter Certification, Issuer-Underwriter Matching, and SEO Performance — by Charles W. Calomiris, Yehuda Izhakian, Jaime F. Zender

On Latin American Populism, And Its Echoes Around the World — by Sebastian Edwards

In this paper I discuss the ways in which populist experiments have evolved historically. Populists are charismatic leaders that use a fiery rhetoric to pitch the interests of “the people” against those of banks, large firms, multinational companies, the IMF, and immigrants. Populists implement redistributive policies that violate the basic laws of economics, and in … Read moreOn Latin American Populism, And Its Echoes Around the World — by Sebastian Edwards

The Gender Gap in Self-Promotion — by Christine L. Exley, Judd B. Kessler

In job applications, job interviews, performance reviews, and a wide range of other environments, individuals are explicitly asked or implicitly invited to assess their own performance. In a series of experiments, we find that women rate their performance less favorably than equally performing men. This gender gap in self-promotion is notably persistent. It stays just … Read moreThe Gender Gap in Self-Promotion — by Christine L. Exley, Judd B. Kessler

Undisclosed Debt Sustainability — by Laura Alfaro, Fabio Kanczuk

Over the past decade, non–Paris Club creditors, notably China, have become an important source of financing for low- and middle-income countries. In contrast with typical sovereign debt, these lending arrangements are not public, and other creditors have no information about their magnitude. We transform the traditional sovereign debt and default model to quantitatively study incomplete … Read moreUndisclosed Debt Sustainability — by Laura Alfaro, Fabio Kanczuk

A Cross-Cohort Analysis of Human Capital Specialization and the College Gender Wage Gap — by Carolyn Sloane, Erik Hurst, Dan Black

This paper explores the importance of pre-market human capital specialization in explaining gender differences in labor market outcomes among the highly skilled. Using new data with detailed undergraduate major information for several cohorts of American college graduates, we establish many novel facts. First, we show evidence of a gender convergence in college major choice over … Read moreA Cross-Cohort Analysis of Human Capital Specialization and the College Gender Wage Gap — by Carolyn Sloane, Erik Hurst, Dan Black

Behavioral Responses to State Income Taxation of High Earners: Evidence from California — by Joshua Rauh, Ryan J. Shyu

Drawing on the universe of California income tax filings and the variation imposed by a 2012 tax increase of up to 3 percentage points for high-income households, we present new findings about the effects of personal income taxation on household location choice and pre-tax income. First, over and above baseline rates of taxpayer departure from … Read moreBehavioral Responses to State Income Taxation of High Earners: Evidence from California — by Joshua Rauh, Ryan J. Shyu

Household Labor Search, Spousal Insurance, and Health Care Reform — by Hanming Fang, Andrew J. Shephard

Health insurance in the United States for the working age population has traditionally been provided in the form of employer-sponsored health insurance (ESHI). If employers offered ESHI to their employees, they also typically extended coverage to their spouse and dependents. Provisions in the Affordable Care Act (ACA) significantly alter the incentive for firms to offer … Read moreHousehold Labor Search, Spousal Insurance, and Health Care Reform — by Hanming Fang, Andrew J. Shephard

A Plucking Model of Business Cycles — by Stéphane Dupraz, Emi Nakamura, Jón Steinsson

In standard models, economic activity fluctuates symmetrically around a “natural rate” and stabilization policies can dampen these fluctuations but do not affect the average level of activity. An alternative view—labeled the “plucking model” by Milton Friedman—is that economic fluctuations are drops below the economy’s full potential ceiling. If this view is correct, stabilization policy, by … Read moreA Plucking Model of Business Cycles — by Stéphane Dupraz, Emi Nakamura, Jón Steinsson

Long-Term Consequences of Growing up in a Recession on Risk Preferences — by Hitoshi Shigeoka

Risk preferences play a fundamental role in individuals’ economic decision-making. We examine whether the historical macroeconomic environment shapes individuals’ willingness to take risks. Using nationally representative samples from Japan and exploiting regional variation in economic conditions, we find that men who experienced severe economic conditions in youth are more risk averse in adulthood and the … Read moreLong-Term Consequences of Growing up in a Recession on Risk Preferences — by Hitoshi Shigeoka

The Consumption Response to Trade Shocks: Evidence from the US-China Trade War — by Michael E. Waugh

This paper provides evidence on the consumption effects of trade shocks by exploiting changes in US and Chinese trade policy between 2017 and 2018. The analysis uses a unique data set with the universe of new auto sales at the US county level, at a monthly frequency, and a simple difference-in-difference approach to measure the … Read moreThe Consumption Response to Trade Shocks: Evidence from the US-China Trade War — by Michael E. Waugh

Credit Smoothing — by Sean Hundtofte, Arna Olafsson, Michaela Pagel

Standard economic theory says that unsecured, high-interest, short-term debt — such as borrowing via credit cards and bank overdraft facilities — helps individuals smooth consumption in the event of transitory income shocks. This paper shows that — on average — individuals do not use such borrowing to smooth consumption when they experience a typical transitory … Read moreCredit Smoothing — by Sean Hundtofte, Arna Olafsson, Michaela Pagel

Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata — by Andrea Ariu, Katariina Nilsson Hakkala, J. Bradford Jensen, Saara Tamminen

This paper uses unique Finnish firm-level micro data on service imports, work- force composition, and firm characteristics to examine changes in employment composition and performance of Finnish service importers during a period of a significant increase in services imports (2002-2012). We use world service export supply shocks, which we allocate to firms based on their … Read moreService Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata — by Andrea Ariu, Katariina Nilsson Hakkala, J. Bradford Jensen, Saara Tamminen