FEBRUARY 2 2017

Carmen Reinhart, Project Syndicate: Is the Deflation Cycle Over? Until the global financial crisis of 2008-2009, deflation had all but disappeared as a concern for policymakers and investors in the advanced economies, apart from Japan, which has been subject to persistent downward pressure on prices for nearly a generation. And now deflationary fears are on the wane again. If 2017 really does mark a broad reversal of a decade of deflation, it is reasonable to expect that most major central banks will be not be inclined to overreact if, after a decade or so (longer for Japan) of mostly downside disappointments, inflation overshoots its target. Furthermore, the view that higher inflation targets (perhaps 4%) may be desirable (because they would provide central banks with more space to lower interest rates in the advent of a future recession) has gained ground in some academic and policy quarters.

Cecchetti & Schoenholtz, Money&Banking: When Government Misguides. Governments play favorites. They promote residential construction by making mortgages tax deductible. They encourage ethanol production by subsidizing corn. They boost sales of electric cars by offering tax rebates. These political favors usually diminish, rather than increase, aggregate income. They’re about distribution, not production. We could stop here and simply conclude that we are concerned that the Trump Administration has embarked down a road that will protect high-cost inefficient firms and industries under the guise of saving jobs. In the short term, this will drive up prices; in the long run, it won’t save jobs. But the situation is much worse than that. Presidential threats circumvent orderly legal processes, making the United States a less attractive place to invest.

Daniel S. Hamermesh, Katie R. Genadek, Michael Burda, NBER:  Racial/Ethnic Differences in Non-Work at Work. Evidence from the American Time Use Survey 2003-12 suggests the existence of small but statistically significant racial/ethnic differences in time spent not working at the workplace. Minorities, especially men, spend a greater fraction of their workdays not working than do white non-Hispanics. These differences are robust to the inclusion of large numbers of demographic, industry, occupation, time and geographic controls. They do not vary by union status, public-private sector attachment, pay method or age; nor do they arise from the effects of equal-employment enforcement or geographic differences in racial/ethnic representation. The findings imply that measures of the adjusted wage disadvantages of minority employees are overstated by about 10 percent.

Sebastian Galiani, Matthew Staiger, Gustavo Torrens, NBER:When Children Rule: Parenting in Modern Families. During the 20th century there was a secular transformation within American families from a household dominated by the father to a more egalitarian one in which the wife and the children have been empowered. This transformation coincided with two major economic and demographic changes, namely the increase in economic opportunities for women and a decline in family size. To explain the connection between these trends and the transformation in family relationships we develop a novel model of parenting styles that highlights the importance of competition within the family. The key intuition is that the rise in relative earnings of wives increased competition between spouses for the love and affection of their children while the decline in family size reduced competition between children for resources from their parents. The combined effect has empowered children within the household and allowed them to capture an increasing share of the household surplus over the past hundred years.

Alison L. Booth, Eiji Yamamura, IZA: Performance in Mixed-Sex and Single-Sex Tournaments: What We Can Learn from Speedboat Races in Japan. In speedboat racing in Japan, women racers participate and compete in races under the same conditions as men, and all individuals are randomly assigned to mixed-gender or single-gender groups for each race. In this paper we use a sample of over 140,000 observations of individual-level racing records provided by the Japanese Speedboat Racing Association to examine how male-dominated circumstances affect women's racing performance. We control for individual fixed-effects plus a host of other factors affecting performance (such as starting lane, fitness and weather conditions). Our estimates reveal that women's race-time is slower in mixed-gender races than in all-women races, whereas men racer's time is faster in mixed-gender races than men-only races. In mixed-gender races, male racers are found to be more 'aggressive' – as proxied by lane-changing – in spite of the risk of being penalized if they contravene the rules, whereas women follow less aggressive strategies. We find no difference in disqualifications between genders. We suggest that gender-differences in risk-attitudes and over-confidence may result in different responses to the competitive environment and penalties for rule-breaking, and that gender-identity also plays a role.

National Geographic: Before the Flood. From Academy Award-winning filmmaker Fisher Stevens and Academy Award-winning actor, and environmental activist Leonardo DiCaprio, Before The Flood presents a riveting account of the dramatic changes now occurring around the world due to climate change.