The Failure and Promise of Mandated Consumer Mortgage Disclosures: Evidence from Qualitative Interviews and a Controlled Experiment with Mortgage Borrowers by James M. Lacko and Janis K. Pappalardo. Published in volume 100, issue 2, pages 516-21 of American Economic Review, May 2010
There is an extensive economics and finance literature that addresses the potential benefits of financial integration. If on the one hand there is consensus on the significant inherent gain that may be attained in terms of portfolio diversification, decreased cost of equity capital, and reduced financing constraints, on the other hand, economics modeling has typically stumbled in the prediction of negligible welfare gains. Although the models adopted so far in the literature are able to accurately characterize the joint behavior of a large set of economic variables, they are typically silent about how closely they can track stock markets dynamics. Equivalently, it is still not clear what are the welfare benefits of financial integration when one wants to explain simultaneously prices and quantities. In order to address this point, we propose a general equilibrium model that is able to simultaneously explain: (i) the volatility of exchange rate and stochastic discount factors; and both (ii) the volatility of net exports and (iii) the amount of cross-country correlation and persistence of consumption growth rates. In our economy agents have risk-sensitive preferences in the sense of Hansen and Sargent (1995). This implies that investors have a preference for the timing of the resolution of uncertainty. We conduct our analysis for the case in which consumption is a Cobb-Douglas aggregation of domestic and foreign goods, both of which are tradable. Furthermore we let the dynamics of the growth rate of the endowments of ∗ Both authors are affiliated with the University
At the height of the US civil rights movement in the mid-1960s foreign-born persons were less than one percent of the African American popu lation. Today, 12 percent of America's African Diaspora work force consists of immigrants, and three percent are Hispanic. Some black immi grants?for example, Haitians and Spanish speaking Caribbean immigrants?have lower earnings and lower productivity-linked charac teristics than native African Americans. Other
Economywide Implications from US Bioenergy Expansion by Mark Gehlhar, Agapi Somwaru, Peter B. Dixon, Maureen T. Rimmer and Ashley R. Winston. Published in volume 100, issue 2, pages 172-77 of American Economic Review, May 2010
Trade and Carbon Taxes by Joshua Elliott, Ian Foster, Samuel Kortum, Todd Munson, Fernando Pérez Cervantes and David Weisbach. Published in volume 100, issue 2, pages 465-69 of American Economic Review, May 2010
This paper studies how agents with conflicting interests learn to cooperate when the details of cooperation are not common knowledge. It considers a repeated game in which one player has incomplete information about when and how her partner can provide benefits. Initially, monitoring is imperfect and cooperation requires inefficient punishment. As the players' common history grows, the uninformed player can learn to monitor her partner's actions, which allows players to establish more efficient cooperative routines. Because revealing information is costly, it may be optimal not to reveal all the existing information, and efficient equilibria can be path-dependent.
In a paper in the March 2004 AER, Justine Hastings concludes that the acquisition of an independent gasoline retailer, Thrifty, by a vertically integrated firm, ARCO, is associated with sizable price increases at competing stations. To better understand the mechanism to which she attributes this effect – which combines vertical integration and rebranding – we attempted but ultimately failed to reproduce the results using alternative data.
This paper focuses on the importance of equity markets in facilitating the exit of entrepreneurs investing in technology. Entrepreneurs' willingness to invest and aggregate output is affected in two opposite ways. First, uncertainty about equity price or lack of market liquidity discourages technology adoption. This can explain slow technology adoption and limited participation by venture capitalists in underdeveloped equity markets. Second, fast adoption is a positive signal to imperfectly informed equity market participants. This provides a rational explanation for overpricing technology stocks and overinvestment in developed markets. Fast adoption is most probable at an intermediate quality of information.
Long Run Risks, Credit Markets, and Financial Structure by Harjoat S. Bhamra, Lars-Alexander Kuehn and Ilya A. Strebulaev. Published in volume 100, issue 2, pages 547-51 of American Economic Review, May 2010
This paper reports a three-phase experiment on a stylized labor market. In the first two phases, agents face simple games, which we use to estimate subjects' social and reciprocity concerns. In the last phase, four principals compete by offering agents a contract from a fixed menu. Then, agents “choose to work” for a principal by selecting one of the available contracts. We find that (i) (heterogeneous) social preferences are significant determinants of choices, (ii) for both principals and agents, strategic uncertainty aversion is a stronger determinant of choices than fairness, and (iii) agents display a marked propensity to work for principals with similar distributional concerns.