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Using a novel source of quasi-experimental variation in interest rates, we develop a new approach to estimating the Elasticity of Intertemporal Substitution (EIS). In the UK, the mortgage interest rate features discrete jumps — notches — at thresholds for the loan to value (LTV) ratio. These notches generate large bunching below the critical LTV thresholds and missing mass above them. We develop a dynamic model that links these empirical moments to the underlying structural EIS. The average EIS is small, around 0.1,...Go to webpage
Dr. Zheng and Dr. Li raised concerns about three methodological issues that they say may compromise the inferences of our study.First, they refer that the term “active smoking during pregnancy” was not defined in our study. In the second paragraph of the method section, we present the following definition: “Smoking is generally defined as both the addiction to smoking and the use of tobacco. Tobacco can be defined as cigarettes, cigars and pipes and smokeless tobacco products inhaled as powder or absorbed by the oral...Go to webpage
We propose and experimentally test a theory of strategic behavior in which players are cognitively imprecise and perceive a fundamental parameter with noise. We focus on 2 x 2 coordination games, which generate multiple equilibria when perception is precise. When adding a small amount of cognitive imprecision to the model, we obtain a unique equilibrium where players use a simple cutoff strategy. The model further predicts that behavior is context-dependent: players implement the unique equilibrium strategy with noise, and the noise decreases in fundamental volatility. Our experimental data strongly support this novel prediction and reject several alternative game-theoretic models that do not predict context-dependence. We also find that subjects are aware of other players' imprecision, which is key to generating strategic uncertainty. Our framework has important implications for the literature on global games and, more broadly, illuminates the role of perception in generating both random and context-dependent behavior in games.Go to webpage
We argue that recoveries from demand-driven recessions with expenditure cuts concentrated in services or non-durables will tend to be weaker than recoveries from recessions more biased towards durables. Intuitively, the smaller the bias towards more durable goods, the less the recovery is buffeted by pent-up demand. We show that, in a standard multi-sector business-cycle model, this prediction holds if and only if, following an aggregate demand shock to all categories of spending (e.g., a monetary shock), expenditure on more durable goods reverts back faster. This testable condition receives ample support in U.S. data. We then use (i) a semi-structural shift-share and (ii) a structural model to quantify this effect of varying demand composition on recovery dynamics, and find it to be large. We also discuss implications for optimal stabilization policy.Go to webpage
Certain markets are illicit because part of the supply is coerced, but little is known about the optimal regulation of such markets. We model a prostitution market with voluntary and coerced prostitutes and ask what regulation can restore the benchmark outcome that would arise under laissez-faire absent coercion. Whereas current policies—decriminalization, criminalization of the buy or sell sides, and licensing—are ineffective against trafficking or harm voluntary suppliers, we show that an alternative policy can restore the benchmark outcome. Our results are relevant to the ongoing debate about decriminalizing prostitution and provide guidance for empirical work on prostitution regulation.Go to webpage
Income inequality in the US is high and on the rise, and a growing wage gap among workers with different levels of educational attainment has been a major contributor (Goldin and Katz 2008; Autor 2019; Autor, Goldin, and Katz 2020). Sectoral employment programs, which provide training for careers in high-demand industries to low-wage workers, many of whom have non-traditional educational credentials for these industries, have emerged in recent decades as a promising approach to workplace advancement (Schaberg 2020; Katz et al. 2020). We will conduct a randomized controlled trial to evaluate the impact on earnings and other labor market outcomes of the Pursuit Fellowship, a sectoral employment program that equips low-wage adults from under-resourced communities with the skills needed to build careers in the tech sector.Go to webpage
Public discussion and discourse amongst researchers suggest that smartphone use is excessive from an individual welfare standpoint, but evidence for this remains limited. I implement a randomized intervention encouraging a subset of 629 participants to adopt soft commitment devices limiting phone, Facebook, and Instagram usage. I find that individuals: (i) spend more time on phones and Facebook than they predict and profess to desire; and (ii) significantly reduce use after adopting these limits. This suggests that individuals may be significantly overusing smartphones due to their limited ability to exercise self-control, and that policy-makers can look to soft commitment devices as effective tools to help individuals reduce use.Go to webpage
How do events that highlight a policy issue impact political preferences? In this paper, I analyze the impact of mass shootings on voter behavior. I show that, conditional on population, mass shootings are largely random events. Using a difference-in-differences strategy, I find that mass shootings result in a 1.7 percentage point loss in Republican vote share in counties where they occur. Identification that relies on comparing successful and failed mass shootings yields similar results. Mass shootings lead to an increase in the salience of gun policy and increase the divide on gun policy among both voters and politicians. Democrats (Republicans) tend to demand even stricter (looser) gun control after mass shootings. These results suggest that increasing the salience of an issue may polarize the electorate.Go to webpage
This study investigates optimal minimax rates for specification testing when the alternative hypothesis is built on a set of non-smooth functions. The set consists of bounded functions that are not necessarily differentiable with no smoothness constraints imposed on their derivatives. In the instrumental variable regression set up with an unknown error variance structure, we find that the optimal minimax rate is n−1/4, where n is the sample size. The rate is achieved by a simple test based on the difference between non-parametric and parametric variance estimators. Simulation studies illustrate that the test has reasonable power against various non-smooth alternatives. The empirical application to Engel curves specification emphasizes the good applicability of the test.Go to webpage
We study the impact of the macroeconomic environment on mental health in Germany. Endogeneity concerns are tackled using a shift-share instrumental variables approach in which exposure to macroeconomic fluctuations is estimated from regional variations in historical industry sector composition. Estimation results reveal strong procyclical effects on the 12-item short form survey’s mental health component summary score. These results are supported by corresponding estimates for self-assessed life satisfaction and objective mental health-related hospitalizations. Effects mainly operate through worries about future job loss and income reductions, while actual unemployment and income effects are small. An event study of the impact of the Great Recession reveals that adverse effects on mental health are persistent and remained even after the economy recovered.Go to webpage
According to the widely known ‘culture of honor’ hypothesis from social psychology, traditional herding practices are believed to have generated a value system that is conducive to revenge-taking and violence. We test this idea at a global scale using a combination of ethnographic records, historical folklore information, global data on contemporary conflict events, and large-scale surveys. The data show systematic links between traditional herding practices and a culture of honor. First, the culture of pre-industrial societies that relied on animal herding emphasizes violence, punishment, and revenge-taking. Second, contemporary ethnolinguistic groups that historically subsisted more strongly on herding have more frequent and severe conflict today. Third, the contemporary descendants of herders report being more willing to take revenge and punish unfair behavior in the globally representative Global Preferences Survey. In all, the evidence supports the idea that this form of economic subsistence generated a functional psychology that has persisted until today and plays a role in shaping conflict across the globe.Go to webpage
Mortality inequalities remain substantial in many countries, and large shocks such as pandemics could amplify them further. The unequal distribution of COVID-19 confirmed cases suggests that this is the case. Yet, evidence on the causal effect of the epidemic on mortality inequalities remains scarce. In this paper, we exploit exhaustive municipality-level data in France, one of the most severely hit country in the world, to identify a negative relationship between income and excess mortality within urban areas, that persists over COVID-19 waves. Over the year 2020, the poorest municipalities experienced a 30% higher increase in excess mortality. Our analyses can rule out an independent contribution of lockdown policies to this heterogeneous impact. Finally, we find evidence that both labour-market exposure and housing conditions are major determinants of the epidemic-induced effects of COVID-19 on mortality inequalities, but that their respective role depends on the state of the epidemic.Go to webpage
This paper estimates that pollution damages avoidable by solar capacity vary considerably across zip codes in the United States and that they are uncorrelated with solar subsidy levels in each state. We estimate that $1 billion in avoided pollution damages would be gained annually from optimal siting of installed rooftop solar capacity. States are shown to appropriate a minority of these benefits from their solar investments because of interstate electricity and air pollution flows. This paper further measures the energy value of solar capacity across the United States and finds that rooftop solar does not relieve grid congestion.Go to webpage
We study the impact of trade on wage inequality and welfare when the labor market is monopsonistic. Firm heterogeneity in productivity along with workers’ idiosyncratic preferences for different firms generate between-firm wage inequality for workers with identical skills. The model features a novel welfare channel of workers’ “love of firm variety.” Trade liberalization provides additional welfare gains through the firm-variety channel when monopsony power is high but detracts from welfare gains when monopsony power is low.Go to webpage
Carbon capture, storage, and utilization (CCSU) is recognized as an effective method to reduce the excessive emission of CO2. Absorption by amine aqueous solutions is considered highly efficient for CO2 capture from the flue gas because of the large CO2 capture capacity and high selectivity. However, it is often limited by the equipment corrosion and the high desorption energy consumption, and adsorption of CO2 using solid adsorbents has been receiving more attention in recent years due to its simplicity and high efficiency. More recently, a great number of porous organic polymers (POPs) have been designed and constructed for CO2 capture, and they are proven promising solid adsorbents for CO2 capture due to their high Brunauer-Emmett-Teller (BET) surface area (SBET), adjustable pore size and easy functionalization. In particular, they usually have rigid skeleton, permanent porosity, and good physiochemical stability. In this review, we have a detailed review for the different POPs developed in recent years, not only the design strategy, but also the special structure for CO2 capture. The outlook of the opportunities and challenges of the POPs is also proposed.Go to webpage
This paper proposes a new model for the dynamics of correlation matrices, where the dynamics are driven by the likelihood score with respect to the matrix logarithm of the correlation matrix. In analogy to the exponential GARCH model for volatility, this transformation ensures that the correlation matrices remain positive definite, even in high dimensions. For the conditional distribution of returns, we assume a student-t copula to explain the dependence structure and univariate student-t for the marginals with potentially different degrees of freedom. The separation into volatility and correlation parts allows for a two-step estimation, which facilitates estimation in high dimensions. We derive estimation theory for one-step and two-step estimation. In an application to a set of six asset indices including financial and alternative assets we show that the model performs well in terms of diagnostics, specification tests, and out-of-sample forecasting.Go to webpage
In spring 2020, governments around the globe shut down schools to mitigate the spread of the novel coronavirus. We argue that low-achieving students may be particularly affected by the lack of educator support during school closures. We collect detailed time-use information on students before and during the school closures in a survey of 1,099 parents in Germany. We find that while students on average reduced their daily learning time of 7.4 hours by about half, the reduction was significantly larger for low-achievers (4.1 hours) than for high-achievers (3.7 hours). Low-achievers disproportionately replaced learning time with detrimental activities such as TV or computer games rather than with activities more conducive to child development. The learning gap was not compensated by parents or schools who provided less support for low-achieving students.Go to webpage
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