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
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
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.
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:
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
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
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.
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