I develop a model in which individual time discount rates have a larger effect on human capital accumulation when credit constraints are binding. Impatient individuals obtain less schooling when borrowing constraints limit the ability to finance consumption during school. Using data from the NLSY79, I show that self-reported measures of time preferences have a significantly higher effect on the college attendance decisions of blacks than those of whites and the decisions of low-income youths than those of high-income youths. These results provide new evidence that members of disadvantaged groups obtain lower levels of schooling because they are credit constrained.

Abstract We analyze the impact of a requirement similar to the Basel III Liquidity Coverage Ratio on the bank intermediation applying Regression Discontinuity Designs. Using a unique dataset on Dutch banks, we show that a liquidity requirement causes long-term borrowing and lending rates as well as demand for long-term interbank loans to increase. Lower levels of aggregate liquidity increase the estimated effects. Short-term borrowing and lending rates only rise during periods of lower market-wide liquidity. Further, banks do not seem able to pass on the increased funding costs in the interbank market to their private sector clients. Rather, a liquidity requirement seems to decrease banks’ interest margins.

In nursing this essay through several drafts, I have benefited greatly from suggestions by Edward Denison, Robert Evenson, Zvi Griliches, Richard Levin, John Kendrick, Edwin Mansfield, and Richard Murnane. Moses Abramovitz has been a source ofencouragement and good, substantive editorial advice, for which I am most grateful. The heterodox views are my own, although I share many of them with Sidney Winter.

asks it in a new context. The old question is a paraphrase of the title of Herbert Spencer's famous essay What Knowledge is of Most Worth? The new context is to pose the question for undergraduate students majoring in economics. My intent is to engage you in reflecting about what kinds of knowledge and skills our economics majors should master-what proficiencies they should be able to demonstrate-by the time they graduate from college. My focus is on not the select few who plan to enter graduate economics programs, but rather the vast majority who go out into the world and will become the next generation of leaders. I propose a list of knowledge and skills, perhaps a better word is proficiencies, that we might reasonably expect our majors to demonstrate upon graduation. This is by no means a final or definitive list; rather it is offered to stimulate discussion about the meaning of the economics major and how to give it more meaning.