National Bureau of Economic Research

About: National Bureau of Economic Research is a nonprofit organization based out in Cambridge, Massachusetts, United States. It is known for research contribution in the topics: Monetary policy & Population. The organization has 2626 authors who have published 34177 publications receiving 2818124 citations. The organization is also known as: NBER & The National Bureau of Economic Research.

Global Evidence on Economic Preferences

Abstract: This paper studies the global variation in economic preferences. For this purpose, we present the Global Preference Survey (GPS), an experimentally validated survey dataset of time preference, risk preference, positive and negative reciprocity, altruism, and trust from 80,000 individuals in 76 countries. The data reveal substantial heterogeneity in preferences across countries, but even larger within-country heterogeneity. Across individuals, preferences vary with age, gender, and cognitive ability, yet these relationships appear partly country specific. At the country level, the data reveal correlations between preferences and bio-geographic and cultural variables such as agricultural suitability, language structure, and religion. Variation in preferences is also correlated with economic outcomes and behaviors. Within countries and subnational regions, preferences are linked to individual savings decisions, labor market choices, and prosocial behaviors. Across countries, preferences vary with aggregate outcomes ranging from per capita income, to entrepreneurial activities, to the frequency of armed conflicts.

A Unified Model of Investment Under Uncertainty

Abstract: This paper extends the theory of investment under uncertainty to incorporate fixed costs of investment, a wedge between the purchase price and sale price of capital, and potential irreversibility of investment. In this extended framework, investment is a non-decreasing function of q, the shadow price of installed capital. There are potentially three investment regimes, which depend on the value of q relative to two critical values. For values of q above the upper critical value, investment is positive and is an increasing function of q, as is standard in the theory branch of the adjustment cost literature. For intermediate values of q, between two critical values, investment is zero. Although this regime features prominently in the irreversibility literature, it is largely ignored in the adjustment cost literature. Finally, if q is below the lower critical value, gross investment is negative, a possibility that is ruled out by assumption in the irreversibility of literature. In general, however, the shadow price q is not directly observable, so we present two examples relating q to observable varieties.

The Going‐Public Decision and the Development of Financial Markets

Abstract: This paper explores the linkages between stock price efficiency, the choice between private and public financing, and the development of capital markets in emerging economies. Generally, the advantage of public financing is high if costly information is diverse and cheap to acquire, and if investors receive valuable information without cost. The value of public firms generally depends on public market size, which implies that there can be a positive externality associated with going public, so that an inferior equilibrium can exist where too few firms go public. The model is consistent with empirical observations on financial market development.

Are Some Mutual Fund Managers Better Than Others? Cross-Sectional Patterns in Behavior and Performance

Abstract: We examine whether mutual fund performance is related to characteristics of fund managers that may indicate ability, knowledge, or effort. In particular, we study the relationship between performance and the manager's age, the average composite SAT score at the manager's undergraduate institution, and whether the manager has an MBA. Although the raw data suggest striking return differences between managers with different characteristics, most of these can be explained by behavioral differences between managers and by selection biases. After adjusting for these, some performance differences remain. In particular, managers who attended higher-SAT undergraduate institutions have systematically higher risk-adjusted excess returns. THE FINANCIAL PRESS PRODUCES a tremendous volume and variety of information about the individuals who manage mutual funds. Profiles of fund managers are a staple of many financial magazines, and managerial changes at large funds merit front page stories in newspaper business sections. Recently, the Securities and Exchange Commission has allowed some funds to advertise the past records of their managers in the press, even though those track records were assembled while the managers were employed by other funds. Thus, one gets the impression that investors pay a great deal of attention to the individuals who are managing their money. In light of this behavior, an obvious question to ask is whether some managers are indeed better than others. A large number of previous papers have addressed the related question of whether some mutual funds are better than others (from an investor's perspective) by looking for evidence of persistence over time in mutual fund

The Architecture of Economic Systems: Hierarchies and Polyarchies

Abstract: We present some new ways of looking at economic systems. The aspect of human behavior which we emphasize is that individuals' judgments entail errors (they sometimes reject good projects and accept bad projects). The aspect of an economic system on which we focus is its architecture; that is, how the decision making units are organized together within a system, who gathers what information, and who communicates what with whom. The architecture of a system affects its performance not only because it influences the nature of errors which individuals make within the system, but also because it has a critical effect on the aggregation of individuals' errors. We analyze and compare the performance of two polar architectures, with decentralized (polyarchical) versus centralized (hierarchical) decision making authorities. Also, we discuss several extensions of our analysis.