Knowledge that Transforms

Central banks have a primary goal of price stability. They pursue it using tools that include the interest they pay on reserves, the size and the composition of their balance sheet, and the dividends they distribute to the fiscal authority. We describe the economic theories that justify the central bank’s ability to control inflation and discuss their relative effectiveness in light of the historical record. We present alternative approaches as consistent with each other, as opposed to conflicting ideological camps. While interest-rate setting may often be superior, having both a monetarist pillar and fiscal support is essential, and at times pegging the exchange rate or monetizing the debt is inevitable. (JEL E31, E43, E52, E58, E62, F31, G21)

Intimate partner violence (IPV) is a pervasive global issue, with approximately one in three women experiencing IPV over their lifetime.IPV prevalence is higher in low-and middle-income countries (LMICs), and costs of IPV are also considerably larger as a percentage of GDP in LMICs.We present the economic theory behind IPV and highlight some important determinants such as poverty and societal norms.We then synthesize the causal evidence on the impact of a range of policies and interventions, highlighting approaches which have been effective in reducing IPV.We identify key insights from the existing literature and outline areas where further theoretical and empirical research is needed.

A large literature at the intersection of economics and finance offers prescriptions for regulating banks to increase financial stability.This literature abstracts from the discretion that accounting standards give banks over financial reporting, creating a gap between the information assumed to be available to regulators in models of optimal regulation and the information available to regulators in reality.We bridge insights from the economics, finance, and accounting literatures to synthesize knowledge about the design and implementation of bank regulation and identify areas where more work is needed.We present a simple framework for organizing the relevant ideas, namely the externalities that motivate bank regulation, the rationales for allowing accounting discretion, and the use of discretion to circumvent regulation.Our takeaway from reviewing work in these areas is that academic studies of bank regulation and accounting discretion require a more unified approach to design optimal policy for the real world.

If racial gaps in measures of human capital like educational attainment and standardized test scores were eliminated, what would happen to racial disparities in wages, employment, and other labor market outcomes?A credible answer to this question is foundational for understanding the nature and scope of racial inequality and discrimination in the United States.This article reviews and synthesizes a literature that studies this question by estimating the extent to which controlling for measures of human capital changes Black-white gaps in labor market outcomes, and discusses various conceptual and methodological issues related to interpreting this type of exercise.I show that while accurately interpreting this exercise and its many variants requires careful thinking, the results elucidate many important and subtle aspects of racial inequality in the United States.

Entrepreneurship is thought to be a key driver of economic growth. While there are myriad forms of entrepreneurship, ranging from self-employment to small and medium size enterprises to technology- and innovation-driven startups, recent research provides evidence that the relationship between entrepreneurship and economic growth is driven not by overall quantity of new firm entry, but rather by a small subset of high-growth startups that are primarily categorized as innovation-driven. This paper provides a survey of the growing literature on the economics of such innovation-driven entrepreneurship. We begin by distinguishing between the various forms of entrepreneurship, which are often confounded in both theory and empirical work. We lay out the current state of knowledge, and describe the challenges faced by researchers in the field, particularly around measurement, data and identification. We conclude with an overview of the major open questions and directions for future research in the area.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.