Knowledge that Transforms

We investigate the 2008–2009 trade collapse using microdata from a small open economy, Belgium. Belgian exports and imports mostly fell because of smaller quantities sold and unit prices charged rather than fewer firms, trading partners, and products being involved in trade. Our difference-in-difference results point to a fall in the demand for tradables as the main driver of the collapse. Finance and involvement in global value chains played a minor role. Firm-level exports-to-turnover and imports-to-intermediates ratios reveal a comparable collapse of domestic and cross-border operations. Overall, our results reject a crisis of cross-border trade per se.

A large body of literature estimates private returns to R&D adopting the Griliches knowledge production framework, which ignores the potential impact of spillovers on consistent estimation. Using a panel of twelve manufacturing industries across ten OECD economies, we investigate whether ignoring spillovers leads to bias in the estimated private returns to R&D. We compare results from a common factor framework, which accounts for spillovers and other unobserved shocks, to those from a standard Griliches approach. Our findings confirm that conventional estimates conflate own-R&D and spillover effects, implying that spillovers cannot be ignored even when the interest lies exclusively in evaluating private returns to R&D.

We provide a set of comparable estimates for the rates of inflow to and outflow from unemployment using publicly available data for fourteen OECD economies. Using a novel decomposition that allows for deviations of unemployment from its flow steady state, we find that fluctuations in both inflow and outflow rates contribute substantially to unemployment variation within countries. Anglo-Saxon economies exhibit approximately a 15:85 inflow-outflow split to unemployment variation, while continental European and Nordic countries display closer to a 45:55 split. In all economies, increases in inflows lead increases in unemployment, whereas outflows lag a ramp-up in unemployment.

Abstract We identify the impact of intermediate goods markets imperfections on productivity downstream. Our empirical specification is based on a model of multifactor productivity (MFP) growth in which the effects of upstream competition can vary with distance to frontier. This model is estimated on a panel of fifteen OECD countries and twenty industries over 1985 to 2007. Competitive pressures are proxied with industry product market regulation data. We find evidence that anticompetitive upstream regulations have significantly curbed MFP growth over the past fifteen years, and more strongly so for observations that are close to the productivity frontier.

This paper presents genetic matching, a method of multivariate matching that uses an evolutionary search algorithm to determine the weight each covariate is given. Both propensity score matching and matching based on Mahalanobis distance are limiting cases of this method. The algorithm makes transparent certain issues that all matching methods must confront. We present simulation studies that show that the algorithm improves covariate balance and that it may reduce bias if the selection on observables assumption holds. We then present a reanalysis of a number of data sets in the LaLonde (1986) controversy.

We present a simple model of asset pricing in which payoff salience drives investors' demand for risky assets. The key implication is that extreme payoffs receive disproportionate weight in the market valuation of assets. The model accounts for several puzzles in finance in an intuitive way, including preference for assets with a chance of very high payoffs, an aggregate equity premium, and countercyclical variation in stock market returns.

The first meeting of the 2012 Executive Committee was called to order at 10:01 a.m. on April 27, 2012 in the Writer Room of the Renaissance O’Hare Hotel, Chicago, IL. Members present were: Orley Ashenfelter, Alan Auerbach, Janet Currie, Pinelopi Goldberg, Claudia Goldin, Jonathan Gruber, Robert Hall, Anil Kashyap, Rosa Matzkin, Christina Paxson, Monika Piazzesi, Andrew Postlewaite, Valerie Ramey, Nancy Rose, John Siegfried, Christopher Sims, and Michael Woodford. Executive Committee members David Autor and Esther Duflo participated in parts of the meeting by phone. Caroline Hoxby participated in part of the meeting and Abhijit Banerjee and Vincent Crawford participated by phone as members of the Honors and Awards Committee. Angus Deaton participated in part of the meeting as chair of the Nominating Committee. Associate Secretary-Treasurer Peter Rousseau also attended. Sims welcomed the newly elected members of the 2012 Executive Committee: Claudia Goldin, President-elect; Christina Paxson and Nancy Rose, Vice-presidents; and Anil Kashyap and Rosa Matzkin, and recognized the Secretary at the last meeting of his 16-year tenure. The Minutes of the January 5, 2012 meeting of the Executive Committee were approved as written. Report of the Secretary (Siegfried). Siegfried reviewed the schedule for sites and dates of future meetings: San Diego, January 4–6, 2013 (Friday, Saturday, and Sunday); Philadelphia, January 3–5, 2014 (Friday, Saturday, and Sunday); Boston, January 3–5, 2015 (Saturday, Sunday, and Monday); San Francisco, January 3–5, 2016 (Sunday, Monday, and Tuesday); Chicago, January 6–8, 2017 (Friday, Saturday, and Sunday); Atlanta, January 5–7, 2018 (Friday, Saturday, and Sunday); Philadelphia, January 4–6, 2019 (Friday, Saturday, and Sunday); and San Diego, January 3–5, 2020 (Friday, Saturday, and Sunday). The Executive Committee meets the day prior to the Annual Meeting each year. Minutes of the Meeting of the Executive Committee Chicago, IL April 27, 2012