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The Latest NBER Working Papers
11 сентября, 16:16

Should Robots be Taxed? -- by Joao Guerreiro, Sergio Rebelo, Pedro Teles

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We use a model of automation to show that with the current U.S. tax system, a fall in automation costs could lead to a massive rise in income inequality. This inequality can be reduced by raising marginal income tax rates and taxing robots. But this solution involves a substantial efficiency loss for the reduced level of inequality. A Mirrleesian optimal income tax can reduce inequality at a smaller efficiency cost, but is difficult to implement. An alternative approach is to amend the current tax system to include a lump-sum rebate. In our model, with the rebate in place, it is optimal to tax robots only when there is partial automation.

11 сентября, 16:16

Who Owns the Wealth in Tax Havens? Macro Evidence and Implications for Global Inequality -- by Annette Alstadsaeter, Niels Johannesen, Gabriel Zucman

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Drawing on newly published macroeconomic statistics, this paper estimates the amount of household wealth owned by each country in offshore tax havens. The equivalent of 10% of world GDP is held in tax havens globally, but this average masks a great deal of heterogeneity--from a few percent of GDP in Scandinavia, to about 15% in Continental Europe, and 60% in Gulf countries and some Latin American economies. We use these estimates to construct revised series of top wealth shares in ten countries, which account for close to half of world GDP. Because offshore wealth is very concentrated at the top, accounting for it increases the top 0.01% wealth share substantially in Europe, even in countries that do not use tax havens extensively. It has considerable effects in Russia, where the vast majority of wealth at the top is held offshore. These results highlight the importance of looking beyond tax and survey data to study wealth accumulation among the very rich in a globalized world.

11 сентября, 16:16

Enjoying the Quiet Life: Corporate Decision-Making by Entrenched Managers -- by Naoshi Ikeda, Kotaro Inoue, Sho Watanabe

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In this study, we empirically test "quiet life hypothesis," which predicts that managers who are subject to weak monitoring from the shareholders avoid making difficult decisions such as risky investment and business restructuring with Japanese firm data. We employ cross-shareholder and stable shareholder ownership as the proxy variables of the strength of a manager's defense against market disciplinary power. We examine the effect of the proxy variables on manager-enacted corporate behaviors and the results indicate that entrenched managers who are insulated from disciplinary power of stock market avoid making difficult decisions such as large investments and business restructures. However, when managers are closely monitored by institutional investors and independent directors, they tend to be active in making difficult decisions. Taken together, our results are consistent with managerial quiet life hypothesis.

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11 сентября, 16:16

The Effects of Graduation Requirements on Risky Health Behaviors of High School Students -- by Zhuang Hao, Benjamin W. Cowan

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Previous studies have shown that years of formal schooling attained affects health behaviors, but little is known about how the stringency of academic programs affects such behaviors, especially among youth. Using national survey data from the Youth Risk Behavior Surveillance System (YRBS), we study the effects of mathematics and science high-school graduation requirements (HSGR) on high school students' risky health behaviors--specifically on drinking, smoking, and marijuana use. We find that an increase in mathematics and science HSGR has significant negative impacts on alcohol consumption among high-school students, especially males and non-white students. The effects of math and science HSGR on smoking and marijuana use are also negative but generally less precisely estimated. Our results suggest that curriculum design may have potential as a policy tool to curb youth drinking.

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11 сентября, 16:16

How do Credit Supply Shocks Affect the Real Economy? Evidence from the United States in the 1980s -- by Atif Mian, Amir Sufi, Emil Verner

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Does an expansion in credit supply affect the economy by increasing productive capacity, or by boosting demand? We design a test to uncover which of the two channels is more dominant, and we apply it to the United States in the 1980s where the degree of banking deregulation generated differential local credit supply shocks across states. The stronger expansion in credit supply in early deregulation states primarily boosted local demand, especially by households, as opposed to improving labor productivity of firms. States with a more deregulated banking sector see a large relative increase in household debt from 1983 to 1989, which is accompanied by an increase in the price of non-tradable relative to tradable goods, an increase in wages in all sectors, an increase in non-tradable employment, and no change in tradable employment. Credit supply shocks lead to an amplified business cycle, with GDP, employment, residential investment, and house prices increasing by more in early deregulation states during the expansion, and then subsequently falling more during the recession of 1990 and 1991. The worse recession outcomes in early deregulation states appear to be related to downward nominal wage rigidity, household debt overhang, and banking sector losses.

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11 сентября, 16:16

Market Power, Production (Mis)Allocation and OPEC -- by John Asker, Allan Collard-Wexler, Jan De Loecker

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This paper estimates the extent to which market power is a source of production misallocation. Productive inefficiency occurs through more production being allocated to higher-cost units of production, and less production to lower-cost production units, conditional on a fixed aggregate quantity. We rely on rich micro-data covering the global market for crude oil, from 1970 to 2014, to quantify the extent of productive misallocation attributable to market power exerted by the OPEC. We find substantial productive inefficiency attributable to market power, ranging from 14.1 percent to 21.9 percent of the total productive inefficiency, or 105 to 163 billion USD.

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11 сентября, 16:16

The Origins of Financial Development: How the African Slave Trade Continues to Influence Modern Finance -- by Ross Levine, Chen Lin, Wensi Xie

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We assess how the African slave trade--which had enduring effects on social cohesion--continues to influence financial systems. After showing that the intensity with which people were enslaved and exported from Africa during the 1400 - 1900 period helps account for overall financial development, household access to credit, and firm access to finance, we evaluate three potential mechanisms linking the slave trade to modern finance--information sharing institutions, trust in financial institutions, and the quality of legal institutions. We discover that the slave trade is strongly, negatively related to the information sharing and trust mechanisms but not to the legal mechanism.

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11 сентября, 16:16

Understanding Precautionary Cash at Home and Abroad -- by Michael W. Faulkender, Kristine W. Hankins, Mitchell A. Petersen

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Has the need for precautionary savings driven the dramatic increase in U.S. corporate cash? We show that the run-up in cash is concentrated in foreign subsidiaries of multinational corporations. Precautionary motives explain variation in the level of cash held domestically, but not the level or growth of foreign cash. Multinational firms' foreign cash balances are instead explained by low foreign tax rates and the ability to transfer profits within the firm through among related subsidiaries. The firms with the greatest incentive and ability to transfer income to low tax jurisdictions do, causing cash to accumulate in their foreign subsidiaries.

11 сентября, 16:16

FinTech Adoption Across Generations: Financial Fitness in the Information Age -- by Bruce Carlin, Arna Olafsson, Michaela Pagel

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This paper analyzes how better access to financial information via new technology changes use of consumer credit and affects financial fitness. We exploit the introduction of a smartphone application for personal financial management as a source of exogenous variation. FinTech adoption reduces financial fee payments and penalties, but differs cross-sectionally in the population. After adopting the new technology, Millennials and members of Generation X incur fewer financial fees and penalties, whereas Baby Boomers do not benefit from the technological advance. Millennials and Gen Xers save fees by using their credit cards rather than overdrafts to manage short-term liabilities. Moreover, Millennials shift some of their spending to discretionary entertainment, whereas members of Generation X remain more austere. Finally, while men tend to adopt new technology and access information at a higher rate, the economic impact of access is larger for women.

11 сентября, 16:16

Long-Term Care in Latin America and the Caribbean? Theory and Policy Considerations -- by Martin Caruso, Sebastian Galiani, Pablo Ibarraran

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This paper discusses theoretical and practical issues related to long-term care (LTC) services in Latin America. Demand for these services will rise as the region undergoes a swift demographic transition from its currently young population to a rapidly aging one, especially since the region's aging cohorts are more prone to experience a decline in their functional and physical abilities than elderly people elsewhere in the world. We argue that private insurance markets are ill-equipped to provide coverage to meet the need for LTC, while the amount of personal savings required to afford self-insurance would be prohibitively high. We study how developed economies have dealt with the issue of LTC and pay special attention to the most salient features of their LTC programs. We then direct the discussion to Latin America, where LTC may not be an immediate priority, but governments are likely to encourage the development of LTC programs as demand for them steadily grows. In particular, policymakers are probably going to focus initially on LTC programs for the poor and vulnerable, for whom affordability of LTC is a greater problem. We therefore study how basic elements of policy design affect cost-effectiveness of LTC programs by means of a formal model. Our study shows that pro-poor programs are more cost effective when people have the option to receive cash subsidies, and the availability of in-kind and in-cash choices reduces program costs overall.

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11 сентября, 16:16

Uncertainty Shocks as Second-Moment News Shocks -- by David Berger, Ian Dew-Becker, Stefano Giglio

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We provide evidence on the relationship between aggregate uncertainty and the macroeconomy. Identifying uncertainty shocks using methods from the news shocks literature, the analysis finds that innovations in realized stock market volatility are robustly followed by contractions, while shocks to forward-looking uncertainty have no significant effect on the economy. Moreover, investors have historically paid large premia to hedge shocks to realized but not implied volatility. A model in which fundamental shocks are skewed left can match those facts. Aggregate volatility matters, but it is the realization of volatility, rather than uncertainty about the future, that has been associated with declines.

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11 сентября, 16:16

Where Modern Macroeconomics Went Wrong -- by Joseph E. Stiglitz

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This paper provides a critique of the DSGE models that have come to dominate macroeconomics during the past quarter-century. It argues that at the heart of the failure were the wrong microfoundations, which failed to incorporate key aspects of economic behaviour, e.g. incorporating insights from information economics and behavioural economics. Inadequate modelling of the financial sector meant they were ill-suited for predicting or responding to a financial crisis; and a reliance on representative agent models meant they were ill-suited for analysing either the role of distribution in fluctuations and crises or the consequences of fluctuations on inequality. The paper proposes alternative benchmark models that may be more useful both in understanding deep downturns and responding to them.