25-26 October 2018, Beijing, China - The 2018 Global Forum is entitled “Designing pension systems to cope with the ageing challenge” and is jointly organised by the OECD, the International Organisation of Pension Supervisors (IOPS) and the China Banking and Insurance Regulatory Commission (CBIRC), China.
The Effects of Conventional and Unconventional Monetary Policy on Exchange Rates -- by Atsushi Inoue, Barbara Rossi
What are the effects of monetary policy on exchange rates? And have unconventional monetary policies changed the way monetary policy is transmitted to international financial markets? According to conventional wisdom, expansionary monetary policy shocks in a country lead to that country's currency depreciation. We revisit the conventional wisdom during both conventional and unconventional monetary policy periods in the US by using a novel identification procedure that defines monetary policy shocks as changes in the whole yield curve due to unanticipated monetary policy moves and allows monetary policy shocks to differ depending on how they affect agents' expectations about the future path of interest rates as well as their perceived effects on the riskiness/uncertainty in the economy. Our empirical results show that: (i) a monetary policy easing leads to a depreciation of the country's spot nominal exchange rate in both conventional and unconventional periods; (ii) however, there is substantial heterogeneity in monetary policy shocks over time and their effects depend on the way they affect agents' expectations; (iii) we find favorable evidence to Dornbusch's (1976) overshooting hypothesis.
Skill versus Voice in Local Development -- by Katherine Casey, Rachel Glennerster, Edward Miguel, Maarten Voors
Where the state is weak, traditional authorities often control the local provision of land, justice, and public goods. These authorities are criticized for ruling in an undemocratic and unaccountable fashion, and are typically quite old and poorly educated relative to younger cohorts who have benefited from recent schooling expansions. We experimentally evaluate two solutions to these problems in rural Sierra Leone: an expensive long-term intervention to make local institutions more inclusive; and a low-cost test to rapidly identify skilled technocrats and delegate project management to them. In a real-world competition for local infrastructure grants, we find that technocratic selection dominates both the status quo of chiefly control and the institutional reform intervention, leading to an average gain of one standard deviation unit in competition outcomes. The results uncover a broader failure of traditional autocratic institutions to fully exploit the human capital present in their communities. We compare these findings to the prior beliefs of experts on likely impacts, and discuss implications for competing views on the sustainability of foreign aid.
Do Neighborhoods Affect Credit Market Decisions of Low-Income Borrowers? Evidence from the Moving to Opportunity Experiment -- by Sarah Miller, Cindy K. Soo
This paper provides new evidence on the role of neighborhood in the financial decisions and outcomes of low-income borrowers. We link participants in the Moving to Opportunity experiment to credit reports and "alternative" credit bureau data that tracks payday loan usage. We find that participants who were randomly selected to receive a voucher experienced better access to credit in adulthood; we also find evidence that, among some subgroups, moving to a lower poverty neighborhood reduced payday loan usage and delinquency behavior. We explore the mechanisms underlying our results by investigating the credit market behavior of peers, the presence of banks and payday loan stores, and approval rates in the neighborhoods in which MTO participants live as adults. Our analysis suggests that the presence of payday loan stores and peer behavior play an important role in the observed improvements in credit market outcomes.
Deduction Dilemmas: The Taiwan Assignment Mechanism -- by Umut M. Dur, Parag A. Pathak, Fei Song, Tayfun Soenmez
This paper analyzes the properties of the Taiwan mechanism, used for high school placement nationwide starting in 2014. In the Taiwan mechanism, points are deducted from an applicant's score with larger penalties for lower ranked choices. Deduction makes the mechanism a new hybrid between the well-known Boston and deferred acceptance mechanisms. Our analysis sheds light on why Taiwan's new mechanism has led to massive nationwide demonstrations and why it nonetheless still remains in use.
This paper examines demand systems where the demand for a good depends only on its own price, consumer income, and a single aggregator synthesizing information on all other prices. This generalizes directly-separable preferences where the Lagrange multiplier provides such an aggregator. As indicated by Gorman (1972), symmetry of the Slutsky substitution terms implies that such demand can take only one of two simple forms. Conversely, here we show that only weak conditions ensure that such demand systems are integrable, i.e. can be derived from the maximization of a well-behaved utility function. This paper further studies useful properties and applications of these demand systems.
Insurance Contracts when Individuals "Greatly Value" Certainty: Results from a Field Experiment in Burkina Faso -- by Elena Serfilippi, Michael Carter, Catherine Guirkinger
In discussing the paradoxical violation of expected utility theory that now bears his name, Maurice Allais noted that individuals tend to "greatly value" payoffs that are certain. Allais' observation would seem to imply that people will undervalue insurance relative to the predictions of expected utility theory because as conventionally constructed, insurance offers an uncertain benefit in exchange for a certain cost that certainty-loving individuals will overvalue. Pursuing this logic, we implemented insurance games with cotton farmers in Burkina Faso. On average, farmer willingness to pay for insurance increases significantly when a premium rebate framing is used to render both costs and benefits of insurance uncertain. We show that the impact of the rebate frame on the willingness to pay for insurance is driven by those farmers who exhibit a well-defined discontinuous preference for certainty, a concept that we adapt from the u-v model of utility and measure with a novel behavioral experiment. Given that the potential impacts of insurance for small scale farmers are high, and yet demand for conventionally framed contracts is often low, the insights from this paper suggest welfare-enhancing ways of designing insurance for low-income farmers.
Public Health Efforts and the Decline in Urban Mortality -- by D. Mark Anderson, Kerwin Kofi Charles, Daniel I. Rees
Using data on 25 major American cities for the period 1900-1940, we explore the effects of municipal-level public health efforts that were viewed as critical in the fight against food- and water-borne diseases. In addition to studying interventions such as treating sewage and setting strict bacteriological standards for milk, which have received little attention in the literature, we provide new evidence on the effects of water filtration and chlorination, extending the work of previous scholars. Contrary to the consensus view, we find that none of the interventions under study contributed substantially to the observed declines in total and infant mortality.
Nevertheless She Persisted? Gender Peer Effects in Doctoral STEM Programs -- by Valerie K. Bostwick, Bruce A. Weinberg
We study the effects of peer gender composition, a proxy for female-friendliness of environment, in STEM doctoral programs on persistence and degree completion. Leveraging unique new data and quasi-random variation in gender composition across cohorts within programs, we show that women entering cohorts with no female peers are 11.9pp less likely to graduate within 6 years than their male counterparts. A 1 sd increase in the percentage of female students differentially increases the probability of on-time graduation for women by 4.6pp. These gender peer effects function primarily through changes in the probability of dropping out in the first year of a Ph.D. program and are largest in programs that are typically male-dominated.