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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 Reserveâ€™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 Reserveâ€™s actions during both the Great Recession and the Covid-19 pandemic, as well as the problems facing the Federal Reserve â€“ a catastrophe of its own making.
Economic Indicators of the College Station-Bryan MSA, April 2024
(2024-04-17) Bullock, Ashley; Dennis, Jansen, W.; Ghosh Sinha, Somali
The Business-Cycle Index increased 0.2% from January to February 2024. The local unemployment rate for February 2024 was 3.1%, unchanged from the previous month. February’s local nonfarm employment increased by 0.2% from January 2024. Inflation-adjusted taxable sales were down by almost 1% from January 2024 to February 2024. Inflation-adjusted quarterly wage payments were down by 1.6% in the third quarter of 2023 compared to the previous quarter. College Station - Bryan ranks ninthth-lowest in overall Regional Price Parity and in Regional Housing Price Parity among eleven selected college towns.
Economic Indicators of the College Station-Bryan MSA, August 2019
(Private Enterprise Research Center, Texas A&M University, 2019-08-19) Bullock, Ashley; Jansen, Dennis W.; Rettenmaier, Andrew J.; Sinha, Somali Ghosh
The Business-Cycle Index rose almost 1% between May and June of 2019. The local economy is in good shape and has had positive growth for the last four months. The seasonally adjusted unemployment rate decreased to 2.7%, a new historical low for the College Station-Bryan metropolitan statistical area. Nonfarm employment dropped marginally by 0.1% from May to June. On a year-to-year basis, nonfarm employment has grown 1.5%. Real taxable sales increased by 2.1% in June and is up 3.5% from its level in June 2018. This month, the focus section compares employment and earnings in the healthcare sector and Medicare spending per enrollee in the local area to other MSAs in the state of Texas.
Economic Indicators of the College Station-Bryan MSA, February 2024
(Private Enterprise Research Center, Texas A&M University, 2024-02-15) Bullock, Ashley; Jansen, Dennis W.; Ghosh Sinha, Somali
The Business-Cycle Index increased from 226 in May 2023 to 228 in June 2023. The local unemployment rate decreased from 3.4% in May 2023 to 3.3% in June 2023. Local nonfarm employment increased by 0.3% from May to June. June’s inflation-adjusted taxable sales were down by 1.2% from May. By using a modified poverty measure that adjusts for college students, the poverty rate in Brazos County drops from 25% to 18%.
Economic Indicators of the College Station-Bryan MSA, March 2024
(Private Enterprise Research Center, Texas A&M University, 2024-03-20) Bullock, Ashley; Jansen, Dennis; Ghosh Sinha, Somali
The Business-Cycle Index increased 0.2% from December 2023 to January 2024. The local unemployment rate for January 2024 was 3.1% in January 2024, unchanged from December 2023. In the March data release, January’s local nonfarm employment decreased by 0.3% from December 2023. Inflation-adjusted taxable sales were up by almost 1% from December 2023 to January 2024. Inflation-adjusted quarterly wages were down by 1.6% in the third quarter of 2023 compared to the previous quarter.
The Effect of Open-Air Waste Burning on Infant Health: Evidence from Government Failure in Lebanon
(Private Enterprise Research Center, Texas A&M University, 2020-06-15) Hoekstra, Mark; Mouganie, Pierre; Ajeeb, Ruba
An estimated 40 percent of the world's garbage is burned in open-air fires, which are responsible for as much as half of the global emissions of some pollutants. However, there is little evidence on the health consequences of open-air waste burning. In this paper, PERCâ€™s Rex B. Grey Professor Mark Hoekstra, along with coauthors Pierre Mouganie and Ruba Ajeeb, estimate the effect of in utero exposure to open-air waste burning on birth outcomes. The authors do so by examining the consequences of the Lebanese garbage crisis of 2015, which led to an abrupt, unanticipated increase in waste burning in residential neighborhoods in Beirut and Mount Lebanon. To identify effects, the authors exploit variation in exposure across neighborhoods before and after the crisis. Results indicate exposure had large impacts on birth outcomes; in utero exposure to at least one open-air waste burn increased premature births by 4 percentage points (50%) and low birth weight by 5 to 8 percentage points (80 { 120%). Given previous research documenting the long-run effects of prenatal shocks on adult health, human capital, and labor market outcomes, this suggests open-air waste burning imposes significant costs on populations worldwide.
The Effect of Own-Gender Juries on Conviction Rates
(Private Enterprise Research Center, Texas A&M University, 2018-07-11) Hoekstra, Mark; Street, Brittany
The right to an impartial jury is the cornerstone of the U.S. justice system and is enshrined in the Bill of Rights, but are these juries truly impartial, or do they favor defendants who are similar to themselves? In PERC working paper 1803, PERCâ€™s Rex Grey Professor Mark Hoekstra and co-author Brittany Street study whether gender matches between jurors and defendants affect criminal conviction rates using administrative data on the juror selection process and trial proceedings for two large counties in Florida. Findings show that own-gender juries result in significantly lower conviction rates on drug charges, though no evidence of effects were found for other charges. Estimates indicate that a one standard deviation increase in expected own-gender jurors (and estimated 10 percentage points) results in a 19 percentage point reduction in conviction rates on drug charges and a 13 percentage point decline in the likelihood of being sentenced to at least some jail time.
The Effect of Public Health Insurance on Criminal Recidivism
(Private Enterprise Research Center, Texas A&M University, 2019-07-23) Aslim, Erkmen G.; Mungan, Murat C.; Navarro, Carlos I.; Yu, Han
The prevalence of mental health and substance abuse disorders is high among incarcerated individuals. Many ex-offenders reenter the community without receiving any specialized treatment and return to prison with existing behavioral health problems. The authors consider a Beckerian law enforcement theory to identify different sources through which access to health care may impact ex-offendersâ€™ propensities to recidivate, and empirically estimate the effect of access to public health insurance on criminal recidivism. The authors exploit the plausibly exogenous variation in state decisions to expand Medicaid under the Affordable Care Act. Using administrative data on prison admission and release records from 2010 to 2016, findings show that the expansions decrease recidivism for both violent and public order crimes. In addition, the authors find that the public coverage expansions substantially increase access to substance use disorder treatment. The effect holds true for individuals who are covered by Medicaid and referred to treatment by the criminal justice system. These findings are most consistent with the theory that increased access to health care reduces ex-offendersâ€™ perceived non-monetary benefits from committing crim
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, PERCâ€™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.
The Great Recession and Charitable Giving
(Private Enterprise Research Center, Texas A&M University, 2017-03-01) Meer, Jonathan; Miller, David; Wulfsberg, Elisa
The authors examine the impact of the Great Recession on charitable giving. Using the Panel Study of Income Dynamics, the authors estimate a variety of specifications and find sharp declines in overall don-ative behavior that is not accounted for by shocks to income or wealth. These results suggest that overall attitudes towards giving changed over this time period.
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, Barbara
Does the Federal Reserve have an â€œinformation advantageâ€� 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 anâ€œinformation channel?â€� 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.
The Higher Costs of Doing Business in China: Minimum Wages and Firms' Export Behavior
(Private Enterprise Research Center, Texas A&M University, 2016-02-01) Gan, Li; Hernandez, Manuel A.; Ma, Shuang
This paper examines the relationship between changes in the minimum wage and firmsâ€™ export behavior in China using detailed firm-level data of medium and large manufacturing enterprises between 1998 and 2007. We find that a 10% increase in the minimum wage is associated with a 0.9 percentage-points decrease in the probability of exporting goods and a 0.9% decline in export sales, conditional on exporting. These findings are generally robust to alternative estimation methods and data sources. We further observe a larger decline among firms with lower average wages and a lower capital-labor ratio. The results suggest that Chinese exports and comparative advantage in international markets are not negligibly affected by higher local labor costs and regulations measured through raises in minimum wage standards.
Homeownership and Housing Transitions: Explaining the Demographic Composition
(Private Enterprise Research Center, Texas A&M University, 2019-06-03) Ma, Eunseong; Zubairy, Sarah
The homeownership rate was relatively stable for the few decades preceding 1995, followed by a large increase between 1995-2005 and a subsequent decline over the next ten years. Authors Eunseong Ma and Sarah Zubairy document the evolution of homeownership rate across various age groups for the period 1995-2015. Two interesting empirical findings emerge. First, there are uneven variations in the homeownership rates across age: it is large for the young, but small for the old. Second, the total variation is mostly driven by renter-to-owner transitions of the young. The authors also consider a life-cycle model featuring housing tenure decisions to explain these empirical facts. The analysis suggests that a variation in the debt-to-income limit plays a crucial role in accounting for the overall rise in homeownership and the uneven behavior across age groups
Household Debt and the Effects of Fiscal Policy
(Private Enterprise Research Center, Texas A&M University, 2021-11-02) Zubairy, Sarah; Alpanda, Sami; Song, Hyunji
This paper examines how the effects of government spending shocks depend on the balance-sheet position of households. Employing U.S. household survey data, the authors find that in response to a positive government spending shock, households with mortgage debt have a large, positive consumption response, while renters have a smaller rise in consumption. Homeowners without mortgage debt, in contrast, have an insignificant expenditure response. A dynamic stochastic general equilibrium (DSGE) model is considered with three types of households: savers who own their housing, borrowers with mortgage debt, and rule-of-thumb consumers who rent housing, and show that it can successfully account for these findings. The model suggests that liquidity constraints and wealth effects, tied to the persistence of public spending, play a crucial role in the propagation of government spending shocks. These findings provide both empirical and theoretical support for the notion that household mortgage debt position plays an important role in the transmission mechanism of fiscal policy.
Household Debt Overhang and Transmission of Monetary Policy
(Private Enterprise Research Center, Texas A&M University, 2018-08-27) Zubairy, Sarah; Alpanda, Sami
Monetary policy was used during the Great Recession to stimulate the U.S. economy, but were its effects dependent on prevailing levels of high household debt? In working paper 1806, PERC Professor Sarah Zubairy and coauthor Sami Alpanda study the role of household debt on the effectiveness of monetary policy shocks. Using a state-dependent time-series model, findings show that the effectiveness of monetary policy is reduced during periods of high household debt. A small-scale theoretical model on interest rate cuts and home-equity loans points to one possibility why this may occur- higher initial debt levels may slow down the increase in home equity extractions when policy rates are cut.
How Do Peers Influence BMI? Evidence from Randomly Assigned Classrooms in South Korea
(Private Enterprise Research Center, Texas A&M University, 2017-08-01) Meer, Jonathan; Lim, Jaegeum
Obesity among children is an important public health concern, and social networks may play a role in students' habits that increase the likelihood of being overweight. We examine data from South Korean middle schools, where students are randomly assigned to classrooms, and exploit the variation in peer body mass index. We use the number of peers siblings as an instrument to account for endogeneity concerns and measurement error. Heavier peers increase the likelihood that a student is heavier; there are no spurious correlations among attributes that are unlikely to have peer contagion. Public policy that targets obesity can have spillovers through social networks.
The Identification of Response of Stock Returns to Monetary Policy Actions Using Market-Based Measures of Monetary Policy Shocks
(Private Enterprise Research Center, Texas A&M University, 2014-08-11) Jansen, Dennis W.; Tsai, Chun-Li
The authors investigate two related approaches to dealing with the possible joint repsonse bias in using Kuttner's approach to identifying monetary policy's impact on stock returns - the methodology recently suggested by Thornton, and use of intraday data. For all three methods, the estimated impact of monetary policy actions on stock returns is negative and statistically significant, and findings show that this negative impact is magnified during the bear markets and during recessions. We find point estimates indicating a positive joint response bias using Thornton's methodology, although these are not statistically significant. We find that intraday data provide the same qualitative pattern of results, but the estimated magnitude of the impact of monetary policy on stock returns is smaller compared to either approach using daily data.
Illegal Immigration, State Law, and Deterrence
(Private Enterprise Research Center, Texas A&M University, 2016-09-01) Hoekstra, Mark; Orozco-Aleman, Sandra
Can state and federal policies deter undocumented workers from entering the U.S.? In Working Paper 1604, PERC's Rex Grey Professor Mark Hoekstra, and Sandra Orozco-Aleman, address this timely and critical immigration policy question. Focusing on Arizona SB 1070, arguably the most restrictive and controversial immigration bill ever passed by a state, the authors examine whether the law deterred unauthorized entry into Arizona. They find the passage and announcement of SB 1070 significantly reduced the flow of undocumented workers into Arizona (relative to other states) from Mexico, suggesting that undocumented workers are responsive to changes in state immigration policy.
Illegal Immigration: The Trump Effect
(Private Enterprise Research Center, Texas A&M University, 2021-06-03) Hoekstra, Mark; Orozco-Aleman, Sandra
Recent years have witnessed the emergence of increasingly provocative anti-immigrant politicians in both Europe and the United States. The authors examine whether the 2016 election of Donald Trump, who made illegal immigration and border enforcement a centerpiece of his campaign, reduced illegal immigration into the U.S. The authors exploit the fact the election result was widely unexpected and thus generated a large, overnight change in expected immigration policy and rhetoric. Migration flows are compared before and after the election and findings show that while it reduced immigration among deported Mexicans and at least temporarily among Central Americans, it had no effect on the overall inflow of unauthorized Mexican workers.
Impact of China's Urban Employee Basic Medical Insurance on Health Care Expenditures and Health Outcomes
(Private Enterprise Research Center, Texas A&M University, 2014-12-01) Huang, Feng; Gan, Li
At the end of 1998, China launched a government-run mandatory insurance program, the Urban Employee Basic Medical Insurance (UEBMI), to replace the previous medical insurance system. Using the UEBMI reform in China as a natural experiment, this study identifies variations in patient cost sharing that were imposed by the UEBMI reform and examine their effects on the demand for healthcare services. Using data from the 1991-2006 waves of the China Health and Nutrition Survey, the authors find that the increased cost sharing is associated with decreased outpatient medical care utilization and expenditures but not with decreased inpatient care utilization and expenditures. Patients from low- and middle- income households, or in less-serious medical situations are found to be more sensitive to prices. The authors also observed little impact on patient health, as measured by self-reported poor health status.

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