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Browsing PERC Publications by Subject "PoliticalEconomy"
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Item The Covid-19 Federal Reserve(Private Enterprise Research Center, Texas A&M University, 2023-10-13) Saving, Thomas R.At almost the onset of the effects of the pandemic, the Federal Reserve engaged in a massive asset expansion that was truly unprecedented. In just the first three months of the pandemic, March, April and May of 2020, the Federal Reserve bought $2.13 trillion in securities. Two years later, the money injection reached $4.76 trillion, almost 20% of 2022 GDP! What is more astounding is that unlike the Great Recession interventions, there were no undergoing financial crises that triggered this massive expansion. It has resulted in the end of the Federal Reserve’s annual transfers to the U. S. Treasury that in 2022 equaled 30.5% of the net interest cost of the federal debt. Here, Thomas Saving examines the Federal Reserve’s actions during both the Great Recession and the Covid-19 pandemic, as well as the problems facing the Federal Reserve – a catastrophe of its own making.Item Disbursing Emergency Relief through Utilities: Evidence from Ghana(Private Enterprise Research Center, Texas A&M University, 2021-05-06) Puller, Steven; Berkouwe, Susanna B.r; Biscaye, Pierre E.; Wolfram, Catherine D.Government transfer programs to distribute food, water, or electricity at low or no cost have been widespread during the COVID-19 global health crisis. How does program design affect the efficiency and distributional implications of these policies? And what design features determine their political popularity? The authors study these questions in the context of a program to distribute relief through the electric utility in Accra, Ghana, using data from 1,200 households surveyed during the COVID-19 crisis. Findings show that distributing relief through electricity transfers has significant advantages. It enables an immediate government response to the crisis because it leverages the existing financial infrastructure between the government utility and households. Moreover, theoretical efficiency concerns about in-kind transfers are mitigated because the transfers are inframarginal for most households and electricity credit can be stored, with many even preferring electricity transfers over cash. These advantages do not preclude delays in transfer receipt and the exclusion of some eligible households, however, and the program is regressive in both design and implementation. The households least likely to receive relief are those who use less electricity, pay a landlord or other intermediary for electricity, or share an electricity meter with other users—all common among low-income electricity consumers in urban settings. Finally, transfer receipt increases support for the governing party but support for the program drops significantly if even a fraction of its costs are to be recovered through future electricity tariff increases. Concerns around disbursing relief through utility transfers in this context thus arise not from efficiency loss, but from regressivity, distributional challenges, and politicization.Item Discounting Environmental Benefits to Future Generations: Implications of a Coordinating Debt Policy and Tax Distortions in the Capital Market(Private Enterprise Research Center, Texas A&M University, 2018-04-28) Liu, Liqun; Rettenmaier, Andrew J.; Saving, Thomas R.Looking beyond today’s fiscal problems in the U.S., the debate about the how to best incorporate the well-being of subsequent generations in current public policy discussions continues. Authors Liqun Liu, Andrew J. Rettenmaier, and Thomas R. Saving discuss coordinating the evaluation of long-term environmental projects with debt reduction given that both benefit future generations. This paper establishes a cost-benefit rule used to assess whether long-term projects are Pareto improving with a focus on how the generational benefits and costs should be discounted. This paper goes beyond the existing analysis of intergenerational discounting by exploring the implications of tax distortions in the capital market that drives a wedge between the marginal productivity of capital (the gross rate) and the consumer’s interest rate (the net rate) which have historically been in the range of 7% and 3%, respectively. It concludes that while the lower net rate should be used for future benefits within generations, the higher gross rate is the relevant discount rate for future generations.Item Diversity In Economics Seminars: Who Gives Invited Talks?(Private Enterprise Research Center, Texas A&M University, 2021-04-12) Doleac, Jennifer L.; Erin Hengel; Pancotti, ElizabethIn economics, as in many other academic disciplines, it is common for departments to invite external speakers to give research talks in academic seminars. These invited seminars are a primary way that academic economists get feedback on their work, disseminate their work, and expand their professional networks. In this paper, authors Jennifer L. Doleac, Erin Hengel, Elizabeth Pancotti describe the characteristics of invited seminar speakers, using a balanced panel of 66 economics and economics-adjacent departments from August 2014 through December 2019. Our data are the result of a multi-year, ongoing effort to collect this information from the websites of a broad range of departments in the United States and abroad.Item Does Fundraising Create New Giving?(Private Enterprise Research Center, Texas A&M University, 2016-02-01) Meer, JonathanDespite an extensive literature on the impacts of a variety of charitable fundraising tech-niques, little is known about whether these activities increase overall giving or merely cause donors to substitute away from other causes. Using detailed data from Donorschoose.org, an online plat-form linking teachers with prospective donors, the author examines the extent to which matching grants for donations to certain requests affect giving to others. Eligibility for matches is determined in entirely by observable attributes of the request, providing an exogenous source of variation in incentives to donate between charities. Findings show that, while matches increase giving to eligible requests, they do not appear to crowd out giving to similar ones, either contemporaneously or over timItem Does Maternity Leave Duration Affect Labor Force Participation and Productivity?(Private Enterprise Research Center, Texas A&M University, 2018-12-03) Aslim, Erkmen Giray; Panovska, Irina; Tas, M. AnilGiven the extensively documented evidence that increases in female labor force participation rate are beneficial for the economy in the long run, a natural question that arises in this context is whether policy changes can affect female labor force participation. In this paper coauthored by Erkmen Giray Aslim, Irina Panovska and M. Anil Tas, the authors explore to what extent maternity leave affects female and male labor force participation, and to what extent changes in duration of maternity leave directly affect productivity. Using narrative evidence that identifies the exact dates when legislative changes to maternity leave policies were enacted and enforced, the authors build a comprehensive maternity leave data for a panel of middle and high-income countries with emerging financial markets. Findings show that maternity leave has positive but limited effects on female labor force participation, but it signi�cantly increases male labor force participation. There is some evidence that increases in maternity leave duration decrease productivity in the short run, but there are no signi�cant adverse effects in the intermediate run. The authors also find evidence of substitutability between male and female workers and strong evidence in favor of a nonlinear relationship between GDP per capita and labor force participation.Item Does Playing Against an Error Prone Opponent Influence Learning in Nim?(Private Enterprise Research Center, Texas A&M University, 2014-04-01) McKinney, C. Nicholas, Jr.; Van Huyck, JohnWhen learning to play a game well, does it help to play against an opponent who makes the same sort of mistakes one tends to make or is it better to play against a procedurally rational algorithm, which never makes mistakes? This paper investigates subject performance in the game of Nim. We nd evidence that subject performance improves more when playing against a human opponent than against a procedurally rational algorithm. We also nd that subjects learn to recognize certain heuristics that improve their overall performance in more complex games.Item Does Race Matter for Police Use of Force? Evidence from 911 Calls(Private Enterprise Research Center, Texas A&M University, 2020-03-10) Hoekstra, Mark; Sloan, CarlyWillWhile there is much concern about the role of race in police use of force, identifying causal effects is difficult. This is in part because of selection, and in part because researchers often observe only interactions that end in use of force, necessitating nontrivial benchmarking assumptions. This paper by Rex B. Grey Professor Mark Hoekstra and Graduate Student Fellow CarlyWill Sloan addresses these problems by using data on officers dispatched to over two million 911 calls in two cities. By using a location-by-time �xed effects approach that isolates the random variation in officer race, results show white officers use force 60 percent more on average than black officers, and use gun force twice as often. To examine how civilian race affects use of force, the authors compare how white officers increase use of force as they are dispatched to more minority neighborhoods, compared to minority officers. Perhaps most strikingly, findings show that while white and black officers use gun force at similar rates in white and racially mixed neighborhoods, white officers are �ve times as likely to use gun force in predominantly black neighborhoods. Similarly, white officers increase use of any force much more than minority officers when dispatched to more minority neighborhoods.Item Does Strategic Ability Affect Efficiency? Evidence from Electricity Markets(Private Enterprise Research Center, Texas A&M University, 2017-04-01) Puller, Steven L.; Luco, Fernando; Hortacsu, Ali; Zhu, DongniEven within the same market, firms vary across a number of dimension--structure, production capacity, market experience, and general core competency. If you go as far as to observe individual managers, you will find resumes with differing academic training and experience. It is easy to imagine how these differing backgrounds play a role in strategic decision making. In this study, the authors ask whether strategic ability affects efficiencItem Does the Elderly's Private Pension Ownership Intensify Aggregate Equity Demand? Empirical Evidence in the U.S.(Private Enterprise Research Center, Texas A&M University, 2022-07-05) Jansen, Dennis W.; Kim, Sei-Wan; Kim, Young-Min; Lu, YanxinIn this paper, the authors investigate how the old generation income structure affects aggregate equity purchases, using Flows of Funds Accounts and Survey of Consumer Finances. Results suggest that the risk aversion that increases with age could be modified to incorporate the old’s pension ownership. In particular, private pension income to elder households are related to increased aggregate equity purchases, even considering other pension and all other income. In this sense, private pensions are a ‘stepping-stone’ to increased equity investment in U.S. households.Item Effects of Mandatory Energy Efficiency Disclosure in Housing Markets(Private Enterprise Research Center, Texas A&M University, 2019-11-22) Puller, Steven L.; Myers, Erica; West, JeremyMandatory disclosure policies are increasingly prevalent despite sparse evidence that they improve market outcomes. We study the effects of requiring home sellers to provide buyers with certified audits of residential energy efficiency. Using similar nearby homes as a comparison group, we find this requirement increases price capitalization of energy efficiency and encourages energy-saving residential investments. We present additional evidence characterizing the market failure as symmetrically incomplete information, which is ameliorated by government intervention. More generally, we formalize and provide empirical support for seller ignorance as a motivation for disclosure policies in markets with bilaterally incomplete information about quality.Item Effects of the Minimum Wage on the Nonprofit Sector(Private Enterprise Research Center, Texas A&M University, 2022-12-20) Meer, Jonathan; Tajali, HediehThe nonprofit sector’s ability to absorb increases in labor costs differs from the private sector in a number of ways. We analyze how nonprofits are affected by changes in the minimum wage utilizing data from the Bureau of Labor Statistics and the Internal Revenue Service, linked to state minimum wages. We examine changes in reported employment and volunteering, as well as other financial statements such as revenues and expenses. The results from both datasets show a negative impact on employment for states with large statutory minimum wage increases. We observe some evidence for a reduction in the number of nonprofit establishments, fundraising expenses, and revenues from contributionsItem Elderly Entitlements and Wealth Inequality(Private Enterprise Research Center, Texas A&M University, 2022-12-21) Jansen, Dennis W.; Rettenmaier, Andrew J.By most measures, wealth inequality has risen significantly over the last three decades and is a growing concern. However, standard wealth definitions require that individuals possess a legal claim to assets included as wealth. Accrued Social Security benefits are often excluded from measures of wealth on the grounds that workers and retirees lack a legal claim to the receipt of those benefits. However, accrued benefits are large and their existence affects the lifecycle savings behavior of current recipients and current workers. In PERC working paper 2205, the authors identify Social Security wealth as accrued benefits based on past participation in the program. Accrued Social Security benefits are found to be much more equally distributed than are the conventional measures of wealth. From 1989 to 2019, the top 10% of families held a relatively stable share of about 17.8% of accrued Social Security benefits. In contrast, these families saw their share of conventionally measured net worth grow from 63.1% to 70.8% or by 7.7 percentage points. When Social Security is included, the share of total wealth held by the top 10% was 54.0% in 1989 and 57.3% in 2019. Using this more comprehensive wealth measure that includes Social Security benefits results in a lower measure of wealth inequality and a lower growth over time in that measure of inequality.Item Evaluating Forecast Performance with State Dependence(Private Enterprise Research Center, Texas A&M University, 2022-05-16) Sekhposyan, Tatevik; Odendah, Florensl; Rossi, BarbaraIn forecasting models, usually no single model emerges as the best overall, as forecasting performance is prone to instabilities because the economic mechanisms providing the data work better on one model during some periods than others (state-dependent). Here, the authors propose a new forecast evaluation methodology to assess models’ absolute and relative forecasting performance when the model is a state-dependent function of economic variables. Results show that these tests uncover “pockets of predictability� in U.S. equity premia and forecasts significantly better than the benchmark forecast when real GDP growth is low. These tests can be applied to relative forecast comparisons, forecast encompassing, efficiency, and, more generally, moment-based tests of forecast evaluation.Item Fear the Machine?(Private Enterprise Research Center, Texas A&M University, 2018-03-30) Jansen, Dennis W.; Bradley, Michael D.Advanced automation and artificial intelligence, or ‘robot’ technology use, continues to expand across many industries. Recent decreasing labor market movements fuels the question: How do these technologies affect workers’ wages and jobs? Authors Dennis W. Jansen and Michael D. Bradley study the effects of automation and artificial intelligence on employment and labor income over multiple generations. This paper studies the potential impact of automation using two versions of an overlapping generations model, one with a single production technology where the share of output shifts from labor to capital, and one with two separated technologies where traditional technology and automation compete for labor and capital. Findings show that during the transition period, shifting to technology that uses limited labor can potentially lower wages and labor income. However, a policy of subsidizing labor can mitigate the decline in capital stock and negative economic impacts.Item Fiscal Decentralization, Political Heterogeneity and Welfare(Private Enterprise Research Center, Texas A&M University, 2019-02-15) Aslim, Erkmen Giray; Neyapti, BilinTheoretical and empirical literature on �scal decentralization has been thriving, while understanding the welfare implications of �scal decentralization under political diversity necessitates further investigation. Authors Erkmen G. Aslim and co-author Bilin Neyapti contribute to this literature by formally modeling the interaction between the central government and local governments, where the latter may have varying degrees of political proximity to the former. The model solution reveals that the optimal tax rate is positively associated with �scal decentralization, political unison, and spillovers across localities, while the local tax collection effort is negatively associated with all of these parameters. The �rst novel �nding of this study is that both the welfare and the central government’s utility peak and income distribution is more equitable at a lower level of �scal decentralization when spillovers exist than otherwise, which supports the decentralization theorem. The second novel �nding is that both the amount of redistributable income and central government utility increases with political unison.Item From Fixed-event to Fixed-horizon Density Forecasts: Obtaining Measures of Multi-horizon Uncertainty from Survey Density Forecasts(Private Enterprise Research Center, Texas A&M University, 2019-12-12) Sekhposyan, Tatevik; Ganics, Gergely; Rossi, BarbaraSurveys of professional forecasters produce precise and timely point forecasts for key macroeconomic variables. However, the accompanying density forecasts are not as widely utilized, and there is no consensus about their quality. This is partly because such surveys are often conducted for “�xed events�. For example, in each quarter panelists are asked to forecast output growth and inflation for the current calendar year and the next, implying that the forecast horizon changes with each survey round. The �xed-event nature limits the usefulness of survey density predictions for policymakers and market participants, who often wish to characterize uncertainty a �xed number of periods ahead (“�xed-horizon�). Is it possible to obtain �xed-horizon density forecasts using the available �xed-event ones? The authors propose a density combination approach that weights �xed-event density forecasts according to a uniformity of the probability integral transform criterion, aiming at obtaining a correctly calibrated �xed-horizon density forecast. Using data from the US Survey of Professional Forecasters, they show that our combination method produces competitive density forecasts relative to widely used alternatives based on historical forecast errors or Bayesian VARs. Thus, the proposed �xed-horizon predictive densities are a new and useful tool for researchers and policy makers.Item Generosity Across the Income and Wealth Distributions(Private Enterprise Research Center, Texas A&M University, 2020-06-29) Meer, Jonathan; Priday, Benjamin A.Despite widespread interest, there is little systematic evidence on the relationship between income, wealth, and charitable giving. Although the media suggests that the well-off are stingy, the misuse of data, incomplete controls, inappropriate empirical specifications and a lack of accounting for the influence of outliers make these claims questionable. In this paper, PERC’s Mary Julia and George R. Jordan, Jr. Professor of Public Policy Jonathan Meer and co-author Benjamin A. Priday use the Panel Study of Income Dynamics to provide descriptive statistics on this relationship. The authors find that, irrespective of specification, donative behavior increases with greater resources.Item Has the Information Channel of Monetary Policy Disappeared? Revisiting the Empirical Evidence(Private Enterprise Research Center, Texas A&M University, 2020-03-10) Sekhposyan, Tatevik; Hoesch, Lukas; Rossi, BarbaraDoes the Federal Reserve have an “information advantage� in forecasting macroeconomic variables beyond what is known to private sector forecasters? And are market participants reacting only to monetary policy shocks or also to future information on the state of the economy that the Federal Reserve communicates in its announcements via an“information channel?� This paper by PERC Professor Tatevik Sekhposyan, Lucas Hoesch, and Barbara Rossi investigates the evolution of the information channel over time. Although the information channel appears to be important historically, we find no empirical evidenceof its presence in the recent years once instabilities are accounted for.Item U.S. Budget Woes, the CBO Projections(Private Enterprise Research Center, Texas A&M University, 2018-04-30) Jansen, Dennis W.; Liu, Liqun; Rettenmaier, Andrew J.The latest projections from the Congressional Budget Office are worrisome and were expected to be so. In fact, federal debt held by the public is projected to be 106% of GDP by 2028 and deficits are expected to persist throughout the 10 year forecast horizon. In the Spring 2018 Issue of PERCspectives on Policy, Dennis W. Jansen, Liqun Liu, and Andrew J. Rettenmaier discuss the CBO's forecasts and the causes and long-lasting effects of these deficits.