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The Latest NBER Working Papers
22 мая, 16:02

Management and Student Achievement: Evidence from a Randomized Field Experiment -- by Roland G. Fryer, Jr

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This study examines the impact on student achievement of implementing management training for principals in traditional public schools in Houston, Texas, using a school-level randomized field experiment. Across two years, principals were provided 300 hours of training on lesson planning, data-driven instruction, and teacher observation and coaching. The findings show that offering management training to principals significantly increases student achievement in all subjects in year one and has an insignificant effect in year two. We argue that the results in year two are driven by principal turnover, coupled with the cumulative nature of the training. Schools with principals who are predicted to remain in their positions for both years of the experiment demonstrate large treatment effects in both years - particularly those with principals who are also predicted to implement the training with high fidelity - while those with principals that are predicted to leave have statistically insignificant effects in each year of treatment.

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22 мая, 16:02

Deterrence and the Optimal Use of Prison, Parole, and Probation -- by A. Mitchell Polinsky, Paul N. Riskind

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We derive the sentence--choosing among the sanctions of prison, parole, and probation--that achieves a target level of deterrence at least cost. Potential offenders discount the future disutility of sanctions and the state discounts the future costs of sanctions. Prison has higher disutility and higher cost per unit time than parole and probation, but the cost of prison per unit of disutility can be lower or higher than the cost of parole and probation per unit of disutility. The optimal order of sanctions depends on the relative discount rates of offenders and the state, and the optimal duration of sanctions depends on the relative costs per unit of disutility among the sanctions and on the target level of deterrence. In the case we focus on, in which potential offenders discount the disutility of sanctions at a higher rate than the state discounts the costs of sanctions, we demonstrate that (a) it is optimal for prison to precede parole if both sanctions are used; and (b) it may be optimal to employ prison even if prison has a higher cost per unit of disutility than parole and probation and even if prison is not needed to achieve the deterrence target.

22 мая, 16:02

Nation-Building, Nationalism and Wars -- by Alberto Alesina, Bryony Reich, Alessandro Riboni

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The increase in army size observed in early modern times changed the way states conducted wars. Starting in the late 18th century, states switched from mercenaries to a mass army by conscription. In order for the population to accept to fight and endure war, the government elites began to provide public goods, reduced rent extraction and adopted policies to homogenize the population with nation-building. This paper explores a variety of ways in which nation-building can be implemented and studies its effects as a function of technological innovation in warfare.

22 мая, 16:02

How Production Risk and Flexibility Affect Liquidity Management: Evidence from Electricity Generating Firms -- by Chen Lin, Thomas Schmid, Michael S. Weisbach

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Production inflexibility together with product price uncertainty creates production risk, which is a potentially important factor for firms' liquidity management. One industry for which production risk can be measured is the electricity producing industry. We use data on hourly electricity prices in 41 markets to measure fluctuations in output prices and information on over 60,000 power plants to approximate firms' cost to vary output quantities. Our results suggest that higher electricity price volatility leads to increased cash holdings, but only in firms using inflexible production technologies. This effect is robust to a number of specification choices including instrumenting for volatility in electricity prices using weather forecast data. After deregulation, firms hold 20-25% more cash, suggesting that the process of deregulation increases the risk firms' face. Production risk affects cash holdings most in financially constrained firms, and in firms that cannot easily hedge the electricity price through derivative markets. Capital market liquidity and balance sheet liquidity appear to be substitutes for one another.

22 мая, 16:02

The Labor Market Effects of Refugee Waves: Reconciling Conflicting Results -- by Michael A. Clemens, Jennifer Hunt

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An influential strand of research has tested for the effects of immigration on natives' wages and employment using exogenous refugee supply shocks as natural experiments. Several studies have reached conflicting conclusions about the effects of noted refugee waves such as the Mariel Boatlift in Miami and post-Soviet refugees to Israel. We show that conflicting findings on the effects of the Mariel Boatlift can be explained by a sudden change in the race composition of the Current Population Survey extracts in 1980, specific to Miami but unrelated to the Boatlift. We also show that conflicting findings on the labor-market effects of other important refugee waves can be produced by spurious correlation between the instrument and the endogenous variable introduced by applying a common divisor to both. As a whole, the evidence from refugee waves reinforces the existing consensus that the impact of immigration on average native-born workers is small, and fails to substantiate claims of large detrimental impacts on workers with less than high school.

22 мая, 16:02

Innovation Policy in a Networked World -- by Olav Sorenson

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Social relationships channel information, influence, and access to scarce resources. As a consequence, social networks - the patterns of these relationships across the members of a community - influence who comes up with important innovations, whether and how rapidly those innovations get adopted, and who has the ability to commercialize them. They therefore also affect the overall rate at which innovation occurs in the economy. This essay provides an introduction to and review of the research on social networks most relevant to innovation, with a particular focus on the earliest stages of the innovation process. It then discusses the likely consequences of a variety of policy interventions that could either reduce the importance of social relationships to innovation or alter the patterns of relationships in ways that might promote innovation.

22 мая, 16:02

Finance and Growth: Household Savings, Public Investment, and Public Health in Late Nineteenth-Century New Jersey -- by Howard Bodenhorn

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Saving is essential to the health of economies because it provides the wherewithal for investment. In the late nineteenth century, saving was also essential to the health of urban working-class households. This study brings together information from surveys of household spending and saving, reports of savings banks and insurance companies, water and sewer authorities, and health commissioners to illuminate the connections between household savings and health improvements. Contemporary financial institutions positively influenced economic growth by allocating capital to highly productive employments, including public infrastructure. Specifically, investments in waterworks contributed to the long-run decline in typhoid infection, which improved worker health and productivity.

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22 мая, 16:02

Why You Should Never Use the Hodrick-Prescott Filter -- by James D. Hamilton

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Here's why. (1) The HP filter produces series with spurious dynamic relations that have no basis in the underlying data-generating process. (2) Filtered values at the end of the sample are very different from those in the middle, and are also characterized by spurious dynamics. (3) A statistical formalization of the problem typically produces values for the smoothing parameter vastly at odds with common practice, e.g., a value for λ far below 1600 for quarterly data. (4) There's a better alternative. A regression of the variable at date t+h on the four most recent values as of date t offers a robust approach to detrending that achieves all the objectives sought by users of the HP filter with none of its drawbacks.

22 мая, 16:02

Financial Intermediation in Private Equity: How Well Do Funds of Funds Perform? -- by Robert S. Harris, Tim Jenkinson, Steven N. Kaplan, Ruediger Stucke

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This paper focuses on funds of funds (FOFs) as a form of financial intermediation in private equity (both buyout and venture capital). After accounting for fees, FOFs provide returns equal to or above public market indices for both buyout and venture capital. While FOFs focusing on buyouts outperform public markets, they underperform direct fund investment strategies in buyout. In contrast, the average performance of FOFs in venture capital is on a par with results from direct venture fund investing. This suggests that FOFs in venture capital (but not in buyouts) are able to identify and access superior performing funds.

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22 мая, 16:02

The Lerner Symmetry Theorem: Generalizations and Qualifications -- by Arnaud Costinot, Ivan Werning

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The Lerner Symmetry Theorem (Lerner, 1936) establishes the equivalence between import tariffs and export taxes in a simple neoclassical economy with two countries, two final goods, and no trade costs. In this paper we provide a number of generalizations and qualifications of this well-known result. Among other things, we show that the absence of trade deficits is neither necessary nor sufficient for Lerner Symmetry to hold. We conclude by discussing its implications for border tax adjustments.

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22 мая, 16:02

The Cross-Border Spillover Effects of Recreational Marijuana Legalization -- by Zhuang Hao, Benjamin Cowan

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We examine the spillover effects of recreational marijuana legalization (RML) in Colorado and Washington on neighboring states. We find that RML causes a sharp increase in marijuana possession arrests in border counties of neighboring states relative to non-border counties in these states. RML has no impact on juvenile marijuana possession arrests but is rather fully concentrated among adults. We do not find evidence that marijuana sale/manufacture arrests, DUI arrests, or opium/cocaine possession arrests in border counties are affected by RML.

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22 мая, 16:02

Straight Talkers and Vague Talkers: The Effects of Managerial Style in Earnings Conference Calls -- by Michal Dzielinski, Alexander F. Wagner, Richard J. Zeckhauser

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Managers conducting earnings conference calls display distinctive styles in their word choice. Some CEOs and CFOs are straight talkers. Others, by contrast, are vague talkers. Vague talkers routinely use qualifying words indicating uncertainty, such as "approximately", "probably", or "maybe". Analysts and the stock market attend to the style of managerial talk. They find earnings news less informative when managers are vague; they respond less and more slowly as a result. Thus, quantitative information and straightforward contextual information prove to be complements. Vague communications have the potential benefit of tamping down over-optimistic analysts expectations.