Showing papers in "Journal of Political Economy in 2019"
TL;DR: In this paper, the authors provide evidence that democracy has a positive effect on GDP per capita and provide a dynamic panel strategy that controls for country fixed effects and the rich dynamics of GDP.
Abstract: We provide evidence that democracy has a positive effect on GDP per capita. Our dynamic panel strategy controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the ...
327 citations
TL;DR: This article developed an asset pricing model with flexible heterogeneity in asset demand across investors, designed to match institutional and household holdings, with a portfolio choice model implying characterist characteristics of asset demand.
Abstract: We develop an asset pricing model with flexible heterogeneity in asset demand across investors, designed to match institutional and household holdings. A portfolio choice model implies characterist...
230 citations
TL;DR: This paper developed statistical techniques for handling experimental measurement error and applied them to data from the Caltech Cohort Study, which conducts repeated incentivized surveys of the student body, demonstrating that results change substantially when measurement error is accounted for.
Abstract: Measurement error is ubiquitous in experimental work. It leads to imperfect statistical controls, attenuated estimated effects of elicited behaviors, and biased correlations between characteristics. We develop statistical techniques for handling experimental measurement error. These techniques are applied to data from the Caltech Cohort Study, which conducts repeated incentivized surveys of the Caltech student body. We replicate three classic experiments, demonstrating that results change substantially when measurement error is accounted for. Collectively, these results show that failing to properly account for measurement error may cause a field-wide bias leading scholars to identify “new” phenomena.
200 citations
TL;DR: The authors explored racial differences in police use of force and found that black and Hispanics are more likely to experience some form of force in interactions with police than whites, and that non-lethal uses of force were more likely for blacks and Hispanics.
Abstract: This paper explores racial differences in police use of force. On nonlethal uses of force, blacks and Hispanics are more than 50 percent more likely to experience some form of force in interactions...
186 citations
TL;DR: In this article, the authors build a model in which increased volatility at the firm level generates a downturn but has little effect on labor productivity, and they find that an increase in idiosyncratic volatility induces firms to reduce their inputs to reduce such risk.
Abstract: During the recent U.S. financial crisis, the large decline in economic activity and credit was accompanied by a large increase in the dispersion of growth rates across firms. However, even though aggregate labor and output fell sharply during this period, labor productivity did not. These features motivate us to build a model in which increased volatility at the firm level generates a downturn but has little effect on labor productivity. In the model, hiring inputs is risky because financial frictions limit firms’ ability to insure against shocks that occur between the time of production and the receipt of revenues. Hence, an increase in idiosyncratic volatility induces firms to reduce their inputs to reduce such risk. We find that our model can generate about 67% of the decline in output of the Great Recession of 2007—2009.
176 citations
TL;DR: The authors nonparametrically estimate spillovers of properties financed by the Low Income Housing Tax Credit (LIHTC) onto neighborhood residents by developing a new difference-in-differences style estimato...
Abstract: We nonparametrically estimate spillovers of properties financed by the Low Income Housing Tax Credit (LIHTC) onto neighborhood residents by developing a new difference-in-differences style estimato...
152 citations
TL;DR: In this article, the authors develop a framework of dynamical models for managing interactions between the climate and the economy, which is based on the work of the authors of this paper.
Abstract: Uncertainty about future economic and climate conditions substantially affects the choice of policies for managing interactions between the climate and the economy. We develop a framework of dynami...
147 citations
TL;DR: In this paper, the authors examined the allocational efficiency of such a model and found that the allocation of resources to such models can result in high degree of productivity differences within industries and their role in resource allocation.
Abstract: Empirical work has drawn attention to the high degree of productivity differences within industries and their role in resource allocation. This paper examines the allocational efficiency of such ma...
141 citations
TL;DR: In this paper, the authors explore the first period of sustained decline in child mortality in the U.S. and provide estimates of the independent and combined effects of clean water and effective sewerage systems on under-five mortality.
Abstract: We explore the first period of sustained decline in child mortality in the U.S. and provide estimates of the independent and combined effects of clean water and effective sewerage systems on under-five mortality. Our case is Massachusetts, 1880 to 1920, when authorities developed a sewerage and water district in the Boston area. We find the two interventions were complementary and together account for approximately one-third of the decline in log child mortality during the 41 years. Our findings are relevant to the developing world and suggest that a piecemeal approach to infrastructure investments is unlikely to significantly improve child health.
138 citations
TL;DR: In this paper, the authors review and apply standard statistical results to determine when such data permit identification of two groups' reliabilities in order to distinguish between very, pretty, and not too happy.
Abstract: Happiness is reported in ordered intervals (e.g., very, pretty, not too happy). We review and apply standard statistical results to determine when such data permit identification of two groups’ rel...
135 citations
TL;DR: An increase in credit supply driven by looser lending constraints in the mortgage market is the key force behind four empirical features of the housing boom before the Great Recession: the unpreceded, pre-emptive, and preemptive measures as discussed by the authors.
Abstract: An increase in credit supply driven by looser lending constraints in the mortgage market is the key force behind four empirical features of the housing boom before the Great Recession: the unpreced...
TL;DR: In this paper, the authors propose that self-insure via migration may reduce the need for informal risk sharing, and at the same time, informal insurance may decrease the need to migrate.
Abstract: When people can self-insure via migration, they may have less need for informal risk sharing. At the same time, informal insurance may reduce the need to migrate. To understand the joint determinat...
TL;DR: In this paper, the authors develop and test a property rights model of firm boundary choices along the production process and test it on a set of different stages of a production process, and show that the model works well for different stages in the process.
Abstract: A key decision facing firms is the extent of control to exert over the different stages in their production processes. We develop and test a property rights model of firm boundary choices along the...
TL;DR: In this article, the authors document the economywide extent of misconduct among financial advisers and the associated labor market consequences, and show that seven percent of financial advisers have misconduct records, and this share reaches a maximum of 15%.
Abstract: We document the economywide extent of misconduct among financial advisers and the associated labor market consequences. Seven percent of advisers have misconduct records, and this share reaches mor...
TL;DR: This paper showed that psychological well-being in adulthood varies with circumstance in early life, using a time series of real producer prices of cocoa with a nationally representative household survey. But they did not study the relationship between early life and early adulthood.
Abstract: We show that psychological well-being in adulthood varies with circumstance in early life. Combining a time series of real producer prices of cocoa with a nationally representative household survey...
TL;DR: A model in which human capital investments occur over the life cycle and across generations, à la Becker and Tomes, can explain a wide range of intergenerational relationships while remaining empirically consistent with cross-sectional inequality.
Abstract: We present a model in which human capital investments occur over the life cycle and across generations, a la Becker and Tomes. The human capital technology features multiple stages of childhood investments, college, and life cycle accumulation. The model can explain a wide range of intergenerational relationships while remaining empirically consistent with cross-sectional inequality. Much of the latter is determined by early investments in children, so that borrowing constraints faced by young parents are important for understanding the persistence of economic status across generations. Education subsidies, especially early on, can significantly reduce the intergenerational persistence of economic status.
TL;DR: Using census microdata on multistate firms and their organizational forms, this paper estimated the impact of state taxes on business activity, including employment and the number of establishment of new businesses.
Abstract: Using census microdata on multistate firms and their organizational forms, we estimate the impact of state taxes on business activity. For C corporations, employment and the number of establishment...
TL;DR: The authors designed and implemented a large-scale resume correspondence study to address limitations of existing field experiments testing for age discrimination that may bias their results, and found that one limitation of these field experiments is that they may bias the results.
Abstract: We design and implement a large-scale resume correspondence study to address limitations of existing field experiments testing for age discrimination that may bias their results. One limitation tha...
TL;DR: In this paper, the authors consider cost-reducing R&D investment with spillovers in a Cournot oligopoly with overlapping ownership and show that overlapping ownership leads to internalization of rivals' profits.
Abstract: This paper considers cost-reducing R&D investment with spillovers in a Cournot oligopoly with overlapping ownership. We show that overlapping ownership leads to internalization of rivals’ profits b...
TL;DR: The authors examined the consequences of nonresponse on earnings gaps and found that nonresponse biases earnings measures, and showed that earnings nonresponse in household surveys is widespread, yet there is limited knowledge of how nonresponse bias earnings measures.
Abstract: Earnings nonresponse in household surveys is widespread, yet there is limited knowledge of how nonresponse biases earnings measures. We examine the consequences of nonresponse on earnings gaps and ...
TL;DR: In this article, the degree of educational assortative mating, how it evolves over time, and the extent to which it differs over time was investigated in Denmark, Germany, Norway, United Kingdom, and United States.
Abstract: We use data from Denmark, Germany, Norway, the United Kingdom, and the United States to document the degree of educational assortative mating, how it evolves over time, and the extent to which it d...
TL;DR: This article propose a price-theoretic approach to Bayesian persuasion by establishing an analogy between the sender's problem and finding Walrasian equilibria of a persuasion economy, where the sender, who acts a...
Abstract: We propose a price-theoretic approach to Bayesian persuasion by establishing an analogy between the sender’s problem and finding Walrasian equilibria of a persuasion economy. The sender, who acts a...
TL;DR: In this article, the authors propose a non-cooperative framework for Nash-in-Nash bargaining that extends the Rubinstein (1982) model to multiple upstream and downstream rms and prove that there exists an equilibrium with immediate agreement and negotiated prices that correspond to Rubinstein prices.
Abstract: A \Nash equilibrium in Nash bargains" has become the workhorse bargaining model in applied analyses of bilateral oligopoly. This paper proposes a non-cooperative foundation for \Nash-in-Nash" bargaining that extends the Rubinstein (1982) model to multiple upstream and downstream rms. Assuming there exists gains from trade for each rm pair, we prove that there exists an equilibrium with immediate agreement and negotiated prices that correspond to Rubinstein prices if and only if the marginal contribution of a set of agreements is weakly greater than the sum of the agreements’ marginal contributions. We provide stronger conditions under which equilibrium prices are unique.
TL;DR: In this article, the authors studied how intelligence and personality affect the outcomes of groups, focusing on repeated interactions that provide the opportunity for profitable cooperation, and found that intelligence has a large and positive long-run effect on cooperative behavior.
Abstract: We study how intelligence and personality affect the outcomes of groups, focusing on repeated interactions that provide the opportunity for profitable cooperation. Our experimental method creates two groups of subjects who have different levels of certain traits, such as higher or lower levels of Intelligence, Conscientiousness, and Agreeableness, but who are very similar otherwise. Intelligence has a large and positive long-run effect on cooperative behavior. The effect is strong when at the equilibrium of the repeated game there is a trade-off between short-run gains and long-run losses. Conscientiousness and Agreeableness have a natural, significant but transitory effect on cooperation rates.
TL;DR: In this paper, the authors proposed a new model, the Bayesian probit, which has the same parameters as the standard multinomial probit model: each choice alternative is associated with a Gaussian random variable.
Abstract: The attraction eect and other decoy eects are often understood as anomalies and modeled as departures from rational inference. We show how these decoy eects may arise from simple Bayesian updating. Our new model, the Bayesian probit, has the same parameters as the standard multinomial probit model: each choice alternative is associated with a Gaussian random variable. We show how, unlike any random utility model, the Bayesian probit can jointly accommodate similarity eects, the attraction eect and the compromise eect. We also provide a new denition of revealed similarity based only on the choice rule and show that in the Bayesian probit (i) signal averages capture revealed preference; (ii) signal precision captures the decision maker’s familiarity with the options; and (iii) signal correlation captures our new denition of revealed similarity. This link of parameters to observable choice
TL;DR: In this article, a causal response of local retail prices to changes in local house prices is studied, with elasticities of 15-20 percent across housing cycles. These price responses are largest in zip codes with ZIP codes with...
Abstract: We document a causal response of local retail prices to changes in local house prices, with elasticities of 15–20 percent across housing cycles. These price responses are largest in zip codes with ...
TL;DR: The standard new Keynesian model predicts that economies behave differently at the zero lower bound: completely wasteful government spending or forward guidance is very stimulative, and capital des....
Abstract: The standard new Keynesian model predicts that economies behave differently at the zero lower bound: completely wasteful government spending or forward guidance is very stimulative, and capital des...
TL;DR: Exploration of mechanisms suggests that religiosity buffers against stressors in ways in which school activities and friendships do not, and that depression spreads among close friends rather than through broader peer groups that affect religiosity.
Abstract: Depression is the leading cause of illness and disability in adolescence. Many studies show a correlation between religiosity and mental health, yet the question remains whether the relationship is causal. We exploit within-school variation in adolescents’ peers to deal with selection into religiosity. We find robust effects of religiosity on depression that are stronger for the most depressed. These effects are not driven by the school social context; depression spreads among close friends rather than through broader peer groups that affect religiosity. Exploration of mechanisms suggests that religiosity buffers against stressors in ways in which school activities and friendships do not.
TL;DR: In this paper, the authors used data on hourly earnings and driving performance of Uber drivers to find the optimal work arrangement for each driver, based on the data collected by the company.
Abstract: Technology has facilitated new, nontraditional work arrangements, including the ride-sharing company Uber. Uber drivers provide rides anytime they choose. Using data on hourly earnings and driving,...
TL;DR: The authors examined whether propaganda broadcast over radio helped to change interethnic attitudes in postgenocide Rwanda and found that the variation in exposure to the government's radio propaganda due to radio exposure was correlated with the change in inter-ethnic attitudes.
Abstract: This paper examines whether propaganda broadcast over radio helped to change interethnic attitudes in postgenocide Rwanda. We exploit variation in exposure to the government’s radio propaganda due ...