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24 апреля, 16:04

Growing, Shrinking, and Long Run Economic Performance: Historical Perspectives on Economic Development -- by Stephen Broadberry, John Joseph Wallis

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Using annual data from the thirteenth century to the present, we show that improved long run economic performance has occurred primarily through a decline in the rate and frequency of shrinking, rather than through an increase in the rate of growing. Indeed, as economic performance has improved over time, the short run rate of growing has typically declined rather than increased. Most analysis of the process of economic development has hitherto focused on increasing the rate of growing. Here, we focus on understanding the forces making for a reduction in the rate of shrinking, drawing a distinction between proximate and ultimate factors. The main proximate factors considered are (1) structural change (2) technological change (3) demographic change and (4) the changing incidence of warfare. We conclude with a consideration of institutional change as the key ultimate factor behind the reduction in shrinking.

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24 апреля, 16:04

The Effect of Public Insurance Expansions on Substance Use Disorder Treatment: Evidence from the Affordable Care Act -- by Johanna Catherine Maclean, Brendan Saloner

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We examine the early effects of U.S. state Medicaid expansions under the Affordable Care Act (ACA) on substance use disorder (SUD) treatment utilization. We couple administrative data on admissions to specialty SUD treatment and prescriptions for medications used to treat SUDs in outpatient settings with a differences-in-differences design. We find no evidence that admissions to specialty treatment changed in expanding states relative to non-expending states. However, post expansion, Medicaid-reimbursed prescriptions for medications used to treat SUDs in outpatient settings increased by 33% in expanding states relative to non-expanding states. Among patients admitted to specialty SUD treatment, we find that in expanding states Medicaid insurance and use of Medicaid to pay for treatment increased by 58% and 57% following the expansion. In an extension to the main analyses we find no evidence that the expansions affected fatal alcohol poisonings or drug-related overdoses. Overall, our findings provide evidence on the early effects of the ACA on SUD treatment utilization with the newly-eligible Medicaid population.

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24 апреля, 16:04

Precaution Versus Mercantilism: Reserve Accumulation, Capital Controls, and the Real Exchange Rate -- by Woo Jin Choi, Alan M. Taylor

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We document a new international stylized fact describing the relationship between real exchange rates and external asset holdings. Economists have long argued that the real exchange rate is associated with the net international investment position, appreciating as external wealth increases. This mechanism has been seen as central for international payments equilibrium and relative price adjustments. However, we argue that the effect of external assets held by the public sector--reserve accumulation--on real exchange rates may be quite different from that of privately held external assets, and that capital controls are a critical factor behind this difference. For 1975-2007, controlling for GDP per capita and the terms of trade, we find that a one percentage point increase in external assets relative to GDP (net of reserves) is related to an 0.24 percent real exchange rate appreciation. On the contrary, a one percentage point increase in reserve accumulation relative to GDP has virtually no effect on the real exchange rate in financially open countries (low capital controls), and is related to a 1.65 percent real exchange rate depreciation in financially closed countries (high capital controls). Results are stronger in developing countries and in more recent periods. Gross rather than net positions matter and we present a new theoretical model to account for the stylized fact. The framework encompasses so-called precautionary and mercantilist motives for reserve accumulation, and also explains how the optimal capital account policy--the mix of reserve accumulation and capital controls--is determined. Further empirical support arises from evidence that reserve accumulation is associated with a trade surplus, along with higher GDP and TFP growth in countries with high capital controls, findings that are consistent with the mechanisms of our model.

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24 апреля, 16:04

The Effect of Fuel Economy Standards on Vehicle Weight Dispersion and Accident Fatalities -- by Antonio Bento, Kenneth Gillingham, Kevin Roth

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The firm response to regulation is seldom as controversial as in the context of fuel economy standards, a dominant policy to reduce emissions from vehicles worldwide. It has long been argued that such standards lead to vehicle weight changes that increase accident fatalities. Using unconditional quantile regression, we are the first to document the effect of the Corporate Average Fuel Economy (CAFE) standards on the vehicle weight distribution. We find that on net CAFE reduced fatalities, with lowered mean weight dominating increased dispersion. When monetized, this effect suggests positive net benefits from CAFE even with no undervaluation of fuel economy.

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24 апреля, 16:04

Policy Distortions and Aggregate Productivity with Endogenous Establishment-Level Productivity -- by Jose-Maria Da-Rocha, Marina Mendes Tavares, Diego Restuccia

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What accounts for differences in output per capita and total factor productivity (TFP) across countries? Empirical evidence points to resource misallocation across heterogeneous production units as an important factor. We study resource misallocation in a model where establishment-level productivity is endogenous and responds to the same policy distortions that create misallocation. In this framework, policy distortions not only misallocate resources across a given set of productive units (static effect), but also create disincentives for productivity improvement (dynamic effect) thereby affecting the productivity distribution and further contributing to lower aggregate output and productivity. The dynamic effect is substantial quantitatively. Reducing the dispersion in revenue productivity in the model by 25 percentage points to the level of the U.S. benchmark implies an increase in aggregate output and TFP by a factor of 2.9-fold. Improved resource allocation accounts for 42 percent of the gain, whereas the change in the productivity distribution accounts for the remaining 58 percent.

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24 апреля, 16:04

The Income Elasticity of Import Demand: Micro Evidence and An Application -- by David Hummels, KwanYong Lee

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We construct a synthetic panel of household expenditures from the Consumer Expenditure Survey (CEX) and use the Quadratic Almost Ideal Demand System to estimate expenditure shares and income elasticities of demand that vary by good-income-time. We show that the size and distribution of income shocks drives expenditure change in a manner that varies profoundly across traded goods. Our estimates of expenditure shares and income elasticities could be useful in many applications that seek to explain changes in trade behavior from the demand side, and indicate the strong sensitivity of trade to changes in the tails of the income distribution. We explore an application involving the Great Trade Collapse. Income-induced expenditure changes are positively correlated with the cross-good pattern of import changes, generating a predicted change 40% as large as the raw variation in import declines.

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24 апреля, 16:04

Queens -- by Oeindrila Dube, S.P. Harish

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Are states led by women less prone to conflict than states led by men? We answer this question by examining the effect of female rule on war among European polities over the 15th-20th centuries. We utilize gender of the first born and presence of a female sibling among previous monarchs as instruments for queenly rule. We find that polities led by queens were more likely to engage in war than polities led by kings. Moreover, the tendency of queens to engage as aggressors varied by marital status. Among unmarried monarchs, queens were more likely to be attacked than kings. Among married monarchs, queens were more likely to participate as attackers than kings, and, more likely to fight alongside allies. These results are consistent with an account in which marriages strengthened queenly reigns because married queens were more likely to secure alliances and enlist their spouses to help them rule. Married kings, in contrast, were less inclined to utilize a similar division of labor. These asymmetries, which reflected prevailing gender norms, ultimately enabled queens to pursue more aggressive war policies.

24 апреля, 16:04

35 Years of Reforms: A Panel Analysis of the Incidence of, and Employee and Employer Responses to, Social Security Contributions in the UK -- by Stuart Adam, David Phillips, Barra Roantree

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We exploit variation in National Insurance contributions (NICs) - the UK's system of social security contributions - and a large panel dataset to examine the effects of 35 years of employee and employer NICs reforms on labour cost (gross earnings plus employer NICs), hours of work and labour cost per hour, both immediately (0-6 months) after reforms are implemented and in the slightly longer term (12-18 months). We consider assumptions under which the estimated coefficients on net-of-marginal and net-of-average tax rates in a panel regression can be interpreted as behavioural elasticities or as reflecting incidence. We find a compensated elasticity of taxable earnings with respect to the marginal rate of employee NICs of about 0.2-0.3, operating largely through hours of work, while that with respect to the marginal rate of employer NICs is not statistically significantly different from zero. We also find that labour cost falls by a much larger amount when the average rate of employer NICs is reduced than when the average rate of employee NICs is reduced, which is consistent with the economic incidence of NICs being strongly affected by its formal legal incidence. Estimates from the hours and hourly labour cost regressions provide further support to this interpretation of the findings, and also suggest the presence of substantial income effects - though also, after 1999, a puzzling effect of average employer NICs rates on hours of work. Each of these results remains true after 12-18 months (if anything, coefficients on lagged changes in NICs rates strengthen these findings), implying that any shifting of employer NICs changes to the individual employees concerned (and vice versa for employee NICs) does not begin over this time horizon. These results are similar to those found by Lehmann et al. (2013) for France but represent an extension of that work by considering hours as well as labour cost responses and second-year as well as immediate effects.

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24 апреля, 16:04

An Economic Approach to Alleviate the Crises of Confidence in Science: With an Application to the Public Goods Game -- by Luigi Butera, John A. List

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Novel empirical insights by their very nature tend to be unanticipated, and in some cases at odds with the current state of knowledge on the topic. The mechanics of statistical inference suggest that such initial findings, even when robust and statistically significant within the study, should not appreciably move priors about the phenomenon under investigation. Yet, a few well-conceived independent replications dramatically improve the reliability of novel findings. Nevertheless, the incentives to replicate are seldom in place in the sciences, especially within the social sciences. We propose a simple incentive-compatible mechanism to promote replications, and use experimental economics to highlight our approach. We begin by reporting results from an experiment in which we investigate how cooperation in allocation games is affected by the presence of Knightian uncertainty, a pervasive and yet unexplored characteristic of most public goods. Unexpectedly, we find that adding uncertainty enhances cooperation. This surprising result serves as a test case for our mechanism: instead of sending this paper to a peer-reviewed journal, we make it available online as a working paper, but we commit never to submit it to a journal for publication. We instead offered co-authorship for a second, yet to be written, paper to other scholars willing to replicate our study. That second paper will reference this working paper, will include all replications, and will be submitted to a peer-reviewed journal for publication. Our mechanism allows mutually-beneficial gains from trade between the original investigators and other scholars, alleviates the publication bias problem that often surrounds novel experimental results, and accelerates the advancement of economic science by leveraging the mechanics of statistical inference.

24 апреля, 16:04

The Effect of Stress on Later-Life Health: Evidence from the Vietnam Draft -- by John Cawley, Damien de Walque, Daniel Grossman

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A substantial literature has examined the impact of stress during early childhood on later-life health. This paper contributes to that literature by examining the later-life health impact of stress during adolescence and early adulthood, using a novel proxy for stress: risk of military induction during the Vietnam War. We estimate that a 10 percentage point (2 standard deviation) increase in induction risk in young adulthood is associated with a 1.5 percentage point (8%) increase in the probability of being obese and a 1 percentage point (10%) increase in the probability of being in fair or poor health later in life. This does not appear to be due to cohort effects; these associations exist only for men who did not serve in the war, and are not present for women or men who did serve. These findings add to the evidence on the lasting consequences of stress, and also indicate that induction risk during Vietnam may, in certain contexts, be an invalid instrument for education or marriage because it appears to have a direct impact on health.

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24 апреля, 16:04

The Effect of Labor Market Information on Community College Students' Major Choice -- by Rachel Baker, Eric Bettinger, Brian Jacob, Ioana Marinescu

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An important goal of community colleges is to prepare students for the labor market. But are students aware of the labor market outcomes in different majors? And how much do students weigh labor market outcomes when choosing a major? In this study we find that less than 40% of a sample of community college students in California rank broad categories of majors accurately in terms of labor market outcomes. However, students believe that salaries are 13 percent higher than they actually are, on average, and students underestimate the probability of being employed by almost 25 percent. We find that the main determinants of major choice are beliefs about course enjoyment and grades, but expected labor market outcomes also matter. Experimental estimates of the impact of expected labor market outcomes are larger than OLS estimates and show that a 1% increase in salary is associated with a 1.4 to 1.8% increase in the probability of choosing a specific category of majors.

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17 апреля, 16:21

Distortions and the Structure of the World Economy -- by Lorenzo Caliendo, Fernando Parro, Aleh Tsyvinski

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We develop a model of the world economy as input-output relationships subject to distortions. We then propose a methodology to solve the identification problem, common to the literature on misallocation in input-output relationships, of separating sectoral TFPs from the sectoral distortions. Using both the input shares and the consumption shares within the CES production and CES consumption structure we derive simple closed-form sufficient statistics for the sectoral distortions and for the sectoral TFPs. We then derive a closed-form solution of the elasticities of each entry in the world input-output matrix to distortions. We compute a total of more than half a million internal distortions and TFPs and document significant heterogeneity of those across countries and sectors. We then calculate the whole matrix of about two million elasticities to distortions and TFPs of the input-output matrix of the world economy. We show that internal (within a given country) distortions significantly affect the structure of the economy of that country and have sizeable cross effects on the input-output matrix of other countries. We then find that the world GDP elasticity to changes in internal distortions is an order of magnitude larger than that of the external distortions.