Knowledge that Transforms

Social identities prescribe behaviors for people. We identify the marginal behavioral effect of these norms on discount rates and risk aversion by measuring how laboratory subjects' choices change when an aspect of social identity is made salient. When we make ethnic identity salient to Asian-American subjects, they make more patient choices. When we make racial identity salient to black subjects, non-immigrant blacks (but not immigrant blacks) make more patient choices. Making gender identity salient has no effect on intertemporal or risk choices.

Economic theory suggests that a natural tool to control medical costs is increased consumer cost sharing for medical care. While such cost sharing reduces “full insurance” (wherein patients are indifferent between falling sick or remaining healthy), a greater reliance on coinsurance and copayments can, in theory, stem patient and provider incentives to engage in moral hazard. These issues are particularly salient for low income populations who are at the center of current efforts to expand coverage (among the uninsured in 2008, 38 percent had incomes below the federal poverty line (FPL), and 52 percent had incomes between 100 and 299 percent of the FPL (Kaiser Commission on Medicaid and the Uninsured 2009)). As insurance is expanded to these groups, it is important to understand how they respond to greater levels of patient cost sharing. On the one hand, smarter plan design could help reduce the fiscal pressures associated with insurance expansion. But on the other, it is also possible that low income recipients are unable to cut back on utilization wisely and, consequently, experience hospitalization “offsets” as a result of greater levels of patient cost sharing. In particular, there remains a concern among many that higher cost sharing on primary care will lead to less effective use of primary care, worse health, and, consequently, higher downstream costs at hospitals (the so-called “offset effects”).

The theory of international trade has paid scant attention to market institutions. Neither neoclassical theory nor new trade models typically specify the process by which supply and demand meet. Yet in the real world, intermediaries play a central role in materializing the gains from exchange outlined by standard trade theories. In Antr’and Costinot (2010), we have developed a stylized but explicit model of intermediation in trade. In this short paper, we present a variant of this model that illustrates the potential role of intermediaries in facilitating the realization of the gains from trade.

"One Discriminatory Rent" or "Double Jeopardy": Multicomponent Negotiation for New Car Purchases by Meghan R. Busse and Jorge M. Silva-Risso. Published in volume 100, issue 2, pages 470-74 of American Economic Review, May 2010

Long Run Risk, the Wealth-Consumption Ratio, and the Temporal Pricing of Risk by Ralph S. J. Koijen, Hanno Lustig, Stijn Van Nieuwerburgh and Adrien Verdelhan. Published in volume 100, issue 2, pages 552-56 of American Economic Review, May 2010

(CEPR) Business Cycle Dating Committee date business cycle turning points using a small number of aggregate measures of real economic activity. For example, in its memorandum explaining the December 2007 peak (NBER Business Cycle Dating Committee 2008), the NBER committee mentioned that it considers five series, quarterly real GDP and the “big four ” monthly series, real personal income less transfers, real manufacturing and wholesaleretail trade sales, industrial production, and nonfarm employment. (These series do not in general receive equal weight.) In contrast, when the NBER research program on dating business cycles commenced, researchers examined turning points in hundreds of series and dated business cycles by detecting clusters of specific-cycle turning points; see Arthur Burns and Wesley Mitchell (1946, 13 and 77–80). The dating of turning points evidently has shifted from aggregating the turning points of many disaggregated series to using the turning points of a few highly aggregated series. This shift raises a methodological question: should reference cycle turning points be determined by aggregating then dating, or by dating then aggregating? This paper provides some preliminary evidence on the question of whether it is better to date then aggregate or aggregate then date using 270 monthly disaggregated real economic indicators. The questions considered in this paper parallel those in the large literature on forecasting

Emotions can have important effects on performance and socioeconomic outcomes. We study a natural experiment where two teams of professionals compete in a tournament taking turns in a sequence. As the sequential order is determined by the random outcome of a coin flip, the treatment and control groups are determined via explicit randomization. Hence, absent any psychological effects, both teams should have the same probability of winning. Yet, we find a systematic first-mover advantage. Further, professionals are self-aware of their own psychological effects and, when given the chance, they rationally react by systematically taking advantage of these effects. (JEL C93, D03, D82, L83)

Americanae nace como un proyecto conjunto que surge dentro de la Red Europea de Información y Documentación sobre América Latina (REDIAL), y que ha afrontado la Biblioteca de la Agencia Española de Cooperación Internacional para el Desarrollo (AECID). Esta nueva biblioteca virtual hace más accesibles los libros digitales de tema americanista a los investigadores y usuarios interesados de cualquier parte del mundo.

Troy Davig and Eric Leeper (2007) have proposed a condition they call the generalized Taylor principle to rule out indeterminate equilibria in a version of the new-Keynesian model where the parameters of the policy rule follow a Markov-switching process. We show that although their condition rules out a subset of indeterminate equilibria, it does not establish uniqueness of the fundamental equilibrium. We discuss the differences between indeterminate fundamental equilibria included by Davig and Leeper's condition and fundamental equilibria that their condition misses

We show, using novel data on currency and prices for US imports, that even conditional on a price change, there is a large difference in the exchange rate pass-through of the average good priced in dollars (25 percent) versus nondollars (95 percent). We document this to be the case across countries and within disaggregated sectors. This finding contradicts the assumption in an important class of models that the currency of pricing is exogenous. We present a model of endogenous currency choice in a dynamic price setting environment and show that the predictions of the model are strongly supported by the data. (JEL E31, F14, F31)