JUNE 21 2010

Jan C. van Ours, Martin A. van Tuijl, IZA: Country-Specific Goal-Scoring in the "Dying Seconds" of International Football Matches. We find that the national teams of Germany, England and the Netherlands are more likely than the three other national teams to score in the last minute – including stoppage time. However, for Germans this comes at a cost. Germany is more likely to concede a goal in the dying seconds of a match than other countries. During our period of analysis, the national teams of Brazil and Italy only conceded one goal in the last minute. As to winning penalty shootouts, Germany outperforms the other! five countries.

Macroadvisers: The Chances of a "Double-Dip" are Essentially Nil. Early in the recovery many forecasters, concerned that the nascent expansion was fueled only by temporary inventory dynamics and short-lived fiscal stimulus, fretted over the possibility of a double-dip recession. Now, with the emergence of the sovereign debt crisis in Europe, that concern has re-surfaced. Certainly we recognize that the debt crisis imparts some downside risk to our baseline forecast for GDP growth. However, based on current, high-frequency data — most of which is financial in nature and so is not subject to revision — we believe the chance of a double-dip recession is small.

Jessica Silver-Greenberg, Business Weeik: Time to Slip into Something Less Comfortable? The bearish forecasters who rose to fame in the market crash of 2008 have, for the most part, not surrendered their pessimism. Their moment could be coming back around. BW divides the dismal forecasters into three groups: The Grizzlies, the Bears with Less Bite, and the Domesticated. The Grizzlies: Nouriel Roubini, Robert Prechter, Peter Schiff, Michael Panzner, Nassim Nicholas Taleb, Marc Faber. Bears with Less Bite: Gary Shilling, Stephen Roach, Meredith Whitney, David Rosenberg. Domesticated: Jeremy Grantham, James Grant.

Raghuram Rajan, Project Syndicate: Jobless Recoveries and Manic Policies. America's fiscal and monetary policies are so accommodating in large part because the nature of US economic recoveries has changed since 1991, with output and employment taking much longer to return to their pre-recession levels. But such policies do not stimulate faster recovery, and US politicians should focus instead on modifying America's outdated social safety net.

David Brooks, NYT: Prune and Grow. Sixteen months ago, Congress passed a stimulus package that will end up costing each average taxpayer $7,798. Economists were divided then about whether this spending was worth it, and they are just as divided now. Edward L. Glaeser of Harvard compared the change in employment in each state to the amount of stimulus money it has received. He found a slight relationship between stimulus dollars and job creation, but none at all if you set aside three states: Alaska and the Dakotas. In times like these, deficit spending to pump up the economy doesn’t make consumers feel more confident; it makes them feel more insecure because they see a political system out of control. So we are exiting a period of fiscal stimulus and entering a period of fiscal consolidation.

Masato Miyazaki, IMF: In Search of Lost Revenue: Why Restoring Fiscal Soundness After a Crisis is Harder than It Looks. This note argues that because fiscal deficit after a crisis owe much to a drop in tax revenues and a sluggish revenue growth, its adjustment has to rely more on revenue augmentation than commonly thought. Cutting extra spending in the wake of the crisis would not balance the book, while a natural growth of tax revenue after the recovery may take a long time before financing the pre-crisis level of expenditure. Faced with unpopular choices, the government may implicitly prefer seeing higher inflation.

Jesús Crespo Cuaresma, OECD: Can emerging asset price bubbles be detected? Bayesian Model Averaging techniques are used to analyse how robustly it is possible to identify factors that may lead to the bursting of asset price bubbles in OECD economies. The results indicate that asset price misalignments are not robust determinants of house price reversals unless their interaction with other characteristics of the economy (credit growth, population growth and interest rate developments) is taken into account. On the other hand, stock price reversals are affected by misalignments, as well as other real and monetary variables. Out-of-sample prediction exercises provide evidence that dealing explicitly with model uncertainty using Bayesian model averaging techniques leads to better forecasts of reversals in asset prices than relying on model selection.

Andrew Leigh, IZA: Who Benefits from the Earned Income Tax Credit? Incidence among Recipients, Coworkers and Firms. How are hourly wages affected by the Earned Income Tax Credit? Using variation in state EITC supplements, I find that a 10 percent increase in the generosity of the EITC is associated with a 5 percent fall in the wages of high school dropouts and a 2 percent fall in the wages of those with only a high school diploma, while having no effect on the wages of college graduates. Given the large increase in labor supply induced by the EITC, this is consistent with most reasonable estimates of the elasticity of labor demand. Although workers with children receive a much larger EITC than childless workers, and the effect of the credit on labor force participation is larger for those with children, the hourly wages of both groups are similarly affected by an EITC increase.

Elke J. Jahn, Michael Rosholm, IZA: Looking Beyond the Bridge: How Temporary Agency Employment Affects Labor Market Outcomes. We find evidence of large positive treatment effects, particularly for immigrants. There is also some indication that higher treatment intensity increases the likelihood of leaving unemployment for regular jobs. Our results show that agency employment is even more effective in tight labor markets, where firms use agency employment primarily to screen potential candidates for permanent posts. Finally, our results suggest that agency employment may improve subsequent match quality in terms of wages and job duration.

Edward L. Glaeser, NYT Blog: The Uncertain Impact of Merit Pay for Teachers. A vast body of evidence now documents the differences in effectiveness among teachers, even when those teachers face the same weak incentives. This suggests that schools could improve dramatically, even without any merit pay, if highly motivated principals had the resources to attract the best teachers and the strength to move the worst ones into other sectors. According to this view, the biggest role of student test scores may be to ensure that decisions about teacher retention are made wisely and fairly.

Philip S. Babcock, Mindy Marks, NBER; The Falling Time Cost of College: Evidence from Half a Century of Time Use Data. Using multiple datasets from different time periods, we document declines in academic time investment by full-time college students in the United States between 1961 and 2003. Full-time students allocated 40 hours per week toward class and studying in 1961, whereas by 2003 they were investing about 27 hours per week. Declines were extremely broad-based, and are not easily accounted for by framing effects, work or major choices, or compositional changes in students or schools. We conclude that there have been substantial changes over time in the quantity or manner of human capital production on college campuses.

Pierre Koning, Karen van der Wiel, IZA: School Responsiveness to Quality Rankings: An Empirical Analysis of Secondary Education in the Netherlands. The current analysis is the first to address the impact of quality scores that have been published by a newspaper (Trouw), rather than public interventions. Our research design exploits the substantial lags in the registration and publication of the Trouw scores and that takes into account all possible outcomes of the ratings, instead of the lowest category only. Overall, we find evidence that school quality performance does respond to Trouw quality scores. Both average grades increase and the number of diplomas go up after receiving a negative score. For schools that receive the most negative ranking, the short-term effects (one year after a change in the ranking of schools) of quality transparency on final exam grades equal 10% to 30% of a standard deviation compared to the average of this variable. The estimated long run impacts are roughly equal to the short-term effects that are measured.

Hunt Allcott, Nathan Wozny, CEEPR: Gasoline Prices, Fuel Economy, and the Energy Paradox. It is often asserted that consumers purchasing automobiles or other goods and services underweight the costs of gasoline or other "add-ons." We test this hypothesis in the US automobile market by examining the effects of time series variation in gasoline price expectations on the prices and market shares of vehicles with different fuel economy ratings. When gas prices rise, demand for high fuel economy vehicles increases, pushing up their relative prices. Market share changes - increased production of high fuel economy vehicles and scrappage of low fuel economy vehicles - attenuate these price changes. Intuitively, the less that equilibrium vehicle prices and shares respond to changes in expected gasoline prices, the less that consumers appear to value gasoline costs. Our results show that US auto consumers are willing to pay just $0.61 to reduce expected discounted gas expenditures by $1. We incorporate the estimated parameters into a new discrete choice approach to behavioral welfare analysis, which suggests with caution that a paternalistic energy efficiency policy could generate welfare gains of $3.6 billion per year.

Jeff Goldblatt, FOX: More Crashes at Chicago Intersections With Red Light Cameras. Using data provided by the Illinois Department of Transportation, Assistant Professor Rajiv Shah compared the total number of accidents the year before the cameras were installed and the year after. What surprised him most is that car accidents have declined city-wide, except at red-light intersections. "The clearest thing is the red light cameras have not changed driving behavior in any significant pattern," he said.

Sebastian Rausch et al, NBER: Distributional Implications of Alternative U.S. Greenhouse Gas. We find that the allocation schemes in all proposals are progressive over the lower half of the income distribution and proportional in the upper half of the income distribution. We also find that carbon pricing by itself (ignoring the return of carbon revenues through allowance allocations) is proportional to modestly progressive. This striking result follows from the dominance of the sources over uses side impacts of the policy and stands in sharp contrast to previous work that has focused only on the uses side. Lower income households derive a large fraction of income from government transfers and, reflecting the reality that these are generally indexed to inflation, we hold the transfers constant in real terms. As a result this source of income is unaffected by carbon pricing, while wage and capital income is affected.

Matt Richtel, NYT: Your Brain on Computers. Hooked on Gadgets, and Paying a Mental Price. Scientists say juggling e-mail, phone calls and other incoming information can change how people think and behave. They say our ability to focus is being undermined by bursts of information. These play to a primitive impulse to respond to immediate opportunities and threats. The stimulation provokes excitement — a dopamine squirt — that researchers say can be addictive. In its absence, people feel bored. Researchers worry that constant digital stimulation like this creates attention problems for children with brains that are still developing, who already struggle to set priorities and resist impulses.