Many barriers to the international movement of capital across national boundaries have been dismantled over the course of the last 20 years. Financial integration was greatly enhanced by the removal of capital controls on the part of the United States, Germany, Canada, Switzerland, and the Netherlands after 1973; the recycling of surpluses to developing countries through the Euromarkets in the 1970's; the removal of capital controls in the United Kingdom and Japan beginning in 1979; financial integration among European Community countries, including France and Italy, in preparation for 1992; recent moves toward financial liberalization in smaller countries in the Pacific; and the steady process of technical and institutional innovation that has proceeded around the world. Some popular tests of international capital mobility, however, appear to show anomalous results. Martin Feldstein and Charles Horioka upset conventional wisdom in 1980 when they concluded that changes in countries' rates of national saving had very large effects on their rates of investment and interpreted this finding as evidence of low capital mobility. The argument

The Report of the is of necessity a somewhat schizophrenic document. This is so because the Employment Act of 1946 (which called it into being) ordains that it seek to serve two purposes that are not entirely compatible. On the one hand, it is an apology for the President's economic program, prepared by the and a Council of Advisers appointed by him for no fixed term. In this role, it seeks to show that the economic policies of the and his party will be successful (and, if the incumbent president has already been in office for a year or more, have already begun to be successful) in solving the grievous problems created by the foolish mistakes made by the other party when it was last in power. On the other hand, it is a professional economic report on the American economy and related public policy, prepared by three leading professional economists. These three economic advisers are chosen from among those who have devoted their previous careers (and will in all likelihood devote their subsequent careers) primarily to teaching and/or research in economics. In this role, the Report seeks to present to the Congress and the public an analysis that is competent by the standards of the economics profession, describing and assessing the present state of the American economy, how it came to be the way it is, and how it can and cannot be changed by public policy especially at the federal level. I believe this schizophrenia is unavoidable, unless the rules are changed either so that the has no professional economists as advisers, or so that an independent body of professional economists is constituted and charged with issuing reports on the economy and public policy without being responsible to any elected official. Neither of these changes in the rules would be desirable. The first would deprive the President, the Congress, and the public of the competence and discipline offered by professional economic standards. The second would divorce the President's economic advice from the different but equally important discipline of the political arena. The 1973 Report, like its predecessors from 1949 onwards, consists of three very different components. The first is the Economic Report of the President proper, addressed to the Congress and signed by the President. Mr. Nixon's 1973 report, like his 1972 report, is just 5 pages long. The second is the Annual Report of the Council of Advisers, addressed to the and signed by the Council. The 1973 version, by Herbert Stein, chairman, Ezra Solomon, and Marina v.N. Whitman, is 174 pages long, including two appendices. It is in this second part that the schizophrenia is most evident. The third is a statistical Appendix, con* The Johns Hopkins University. I am indebted to my colleagues, Louis Maccini and Jurg Niehans, for valuable comments on an earlier draft, and to Mary Anne Matthews for drawing Figure 1.

Using linked employer-employee data from Brazil, we document a significant gender pay gap, which is largely attributed to women working at lower-paying employers. To interpret this fact, we develop an equilibrium search model with endogenous firm pay, amenities, and hiring. We provide a constructive proof of identification of all model parameters. The estimated model suggests that amenities are important for both men and women, and that compensating differentials account for half of the gender pay gap. Equal treatment policies partly close gender gaps but are not output- or welfare-improving

We construct a public atlas of mean outcomes in adulthood by childhood census tract. Outcomes vary sharply across neighborhoods: For children whose parents earn $27,000, the standard deviation of mean household income in adulthood is $10,420 across tracts within counties. Only half the variation in outcomes is explained by traditional measures of neighborhood opportunity like poverty rates. Experimental and quasi-experimental estimates indicate 60 percent of the variation in outcomes across neighborhoods is driven by causal effects. We demonstrate how our statistics can be applied to better target policies to improve low-opportunity areas and help families move to affordable high-opportunity areas.

This paper examines the effects of privatizing social health insurance in the United States. We study this question in the context of the Medicaid program, the largest health insurer in the US and the largest means-tested program in the nation -serving over 90 million low-income families and individuals with disabilities. Exploiting a natural experiment wherein nearly 100,000 Medicaid enrollees were randomly assigned between a state-administered fee-for-service system and private managed care, we find that spending was nearly 10% lower for enrollees assigned to managed care plans. These savings were concentrated in prescription drugs, where we show that prior authorization was the key mechanism plans used to reduce overuse and encourage substitution to lower-cost alternatives without reducing quality. This was distinct from the effects of privatization on medical benefits, where private plans lowered quality and abraded consumers without achieving savings. In contrast to what our findings imply for an efficient public-private division of services, Medicaid has historically favored the public provision of prescription drugs and private outsourcing of medical care

We develop a leverage theory of tying in markets with network effects. When a monopolist in one market cannot perfectly extract surplus from consumers, tying can be a mechanism through which unexploited consumer surplus is used as a demand-side leverage to create a “quasi-installed base” advantage in another market characterized by network effects. Our mechanism does not require any precommitment to tying; rather, tying emerges as a best response that lowers the quality of tied-market rivals. While tying can lead to exclusion of tied-market rivals, it can also expand use of the tying product, leading to ambiguous welfare effects.

Using new methods, we measure the intensities of higher-order risk preferences (prudence and temperance) in an incentivized experiment with 658 adolescents. Aligned with theory, we find that higher-order risk preferences are strongly related to field behavior, including prevention, health, addictive behavior, and financial decision-making. Most importantly, we show that ignoring prudence and temperance can yield misleading conclusions about the relation of risk preferences to field behavior, and that survey measures of risk tolerance often relate to field behavior because they capture higher-order risk preferences.

The implementation of evidence-based policies hinges on the dissemination of evidence to policymakers, a process influenced by the attributes of the sender. We conduct a country-wide RCT in which two ideologically opposite prominent think tanks, two major newspapers, and a research institution with nonsalient ideology communicate identical information about a low-cost, non-ideological, and effective policy based on published research findings to a large sample of Spanish local policymakers. We measure the impact of information directly on policy adoption and find heterogeneous effects. When the informing institution aligns ideologically with policymakers, communicating research results leads to a more than 65% increase in policy adoption compared to an uninformed control group, while informing from an opposite ideology does not lead to policy adoption. Our design also allows us to compare the impact of knowledge brokers, such as think tanks, and coverage in leading newspapers in adopting public policies. We find that, when ideologically aligned with policymakers, both are equally effective in increasing policy adoption. We propose a three-stage conceptual framework of policy adoption processes - selective exposure to information, belief updating, and policy implementation- and show that ideological alignment does not influence selective exposure to information. However, evidence from a post-intervention online experiment shows that ideological alignment affects belief updating regarding a recommended policy's effectiveness. Finally, we discuss the trade-offs between effectiveness and outreach when using ideologically aligned and nonsalient institutions to disseminate research evidence and comment on the economic impact of ideological alignment for policy implementation.

We introduce an empirical framework for valuing markets in environmental offsets. Using newly-collected data on wetland conservation and offsets, we apply this framework to evaluate a set of decentralized markets in Florida, where land developers purchase offsets from long-lived producers who restore wetlands over time. We find that offsets led to substantial private gains from trade, creating $2.4 billion of net surplus from 1995–2020 relative to direct conservation. Offset trading also generated new hydrological externalities. A locally differentiated Pigouvian tax would have prevented $1.6 billion of new flood damage while preserving more than two-thirds of the private gains from trade.