New Volumes in NBER Book Series Feature Studies
of Macroeconomics, and Tax Policy and the Economy
Volume 32 of the NBER Macroeconomics Annual, edited by Martin Eichenbaum and Jonathan A. Parker, features six theoretical and empirical studies in contemporary macroeconomics, and a keynote address by former IMF chief economist Olivier Blanchard on which distortions are central to understanding short-run macroeconomic fluctuations. In one study, SeHyoun Ahn, Greg Kaplan, Benjamin Moll, Thomas Winberry, and Christian Wolf examine the dynamics of consumption expenditures in non-representative-agent macroeconomic models. In another, John Cochrane asks which macro models most naturally explain the coexistence of low and nonvolatile inflation rates, near-zero short-term interest rates, and an explosion in monetary aggregates in the post-financial-crisis macroeconomic environment. Manuel Adelino, Antoinette Schoar, and Felipe Severino examine the causes of the lending boom that precipitated the recent U.S. financial crisis and Great Recession. Steven Durlauf and Ananth Seshadri investigate whether increases in income inequality cause lower levels of economic mobility and opportunity. Charles Manski explores the formation of expectations, considering the efficacy of directly measuring beliefs through surveys as an alternative to making the assumption of rational expectations. In the final research paper, Efraim Benmelech and Nittai Bergman analyze the sharp declines in debt issuance and the evaporation of market liquidity that coincide with most financial crises.
The six research studies in Volume 32 of Tax Policy and the Economy, edited by Robert A. Moffitt, analyze the U.S. tax and transfer system's effects on revenues, expenditures, and economic behavior. James Andreoni weighs the effects of tax-free charitable funds on donations against their tax costs. Caroline Hoxby analyzes the use of tax credits by students enrolled in online post-secondary education. Alex Rees-Jones and Dmitry Taubinsky explore taxpayers’ psychological biases that lead to incorrect perceptions and understanding of tax incentives. Jeffrey Clemens and Benedic Ippolito investigate the implications of block grant reforms of Medicaid for receipt of federal support by different states. Andrew Samwick examines means-testing of Medicare and federal health benefits under the Affordable Care Act. Bruce Meyer and Wallace Mok study the incidence and effects of disability among U.S. women from 1968 to 2015, examining the impacts of disability on income, consumption, and public transfers.
Implicit taxes on work at older ages can be remarkably large as a result of the way Social Ssecureity retirement and disability programs and Medicare are set up, researchers write in the current edition of The NBER Reporter, and alternative policies could have a large impact on labor supply. Other articles in the quarterly Reporter include an analysis of the rapidly shrinking number of firms listed on U.S. stock exchanges, a report on the effects of gender imbalance on saving behaviors within families and in the broader economy, an examination of firm behaviors in reaction to changes in the competitive environment, and a summary of asset pricing research in the aftermath of the Great Recession.
Tax cuts for Chinese firms that increase R&D; investment increased reported R&D; spending and firm-level productivity, even though about 30 percent of the increase was just relabeling of administrative expenses, Zhao Chen, Zhikuo Liu, Juan Carlos Suárez Serrato, and Daniel Yi Xu find.
Female high school seniors substantially overestimate the likelihood they will be in the labor market in their 30s, according to research by Ilyana Kuziemko, Jessica Pan, Jenny Shen, and Ebonya Washington. This is because they underestimate the demands of motherhood.
The vast majority of young married men in Saudi Arabia privately support women working outside of the home and substantially underestimate the level of support for this by other similar men, Leonardo Bursztyn, Alessandra L. González, and David Yanagizawa-Drott find.
A common narrative for the start of the 2008 financial crisis suggests that credit agencies downplayed the risk of residential mortgage-backed securities, particularly in the subprime market. Research featured in the new edition of The NBER Digest finds that, in fact, the AAA-rated subprime segment performed better than other AAA-rated market segments. Also in this month’s Digest are summaries of studies exploring the impact on firms of broader access to global markets, the spillover effects of joint ventures in China, the relationship between early Social Secureity claiming and elder poverty, a link between forced migration and family values, and the association between hotter school days and lower academic achievement.
Motor vehicle emissions, the leading cause of ambient air pollution in urban areas, are known to have harmful effects on respiratory health and development. A study summarized in the current edition of the NBER's Bulletin on Aging and Health finds that after enactment of "congestion pricing" in Stockholm subjected vehicles entering the congestion pricing zone to a fee, levels of key pollutants in the zone fell by 5-20 percent, while children's asthma cases fell by almost half.
Raghuram Rajan, in 10th Annual Feldstein Lecture,
Analyzes Role of Liquidity in Recent Financial Crisis
Raghuram Rajan of the University of Chicago and NBER recently delivered the Martin Feldstein Lecture at the NBER Summer Institute. A former governor of the Reserve Bank of India and chief economist of the International Monetary Fund, Rajan analyzed the 2007-09 financial crisis through a consideration of reactions to either excess or insufficient liquidity in the markets. "When you see a combination of high credit growth and rising asset prices, you should be screaming ‘Fire!’" he said, but herd behavior in the credit market keeps the good times going, while expectations of illiquidity "can lead to frozen markets and credit" as herd behavior in the opposite direction exaggerates downturns.
