Milton Gilbert, Colin Clark, J. R. N. Stone, Francois Perroux, D. K. Lieu, Evelpides, Francois Divisia, Tinbergen, Kuznets, Smithies, Shirras, MacGregor, The Measurement of National Wealth: Discussion, Econometrica, Vol. 17, Supplement: Report of the Washington Meeting (Jul., 1949), pp. 255-272

We propose principled prediction intervals to quantify the uncertainty of a large class of synthetic control predictions (or estimators) in settings with staggered treatment adoption, offering precise non-asymptotic coverage probability guarantees. From a methodological perspective, we provide a detailed discussion of different causal quantities to be predicted, which we call causal predictands, allowing for multiple treated units with treatment adoption at possibly different points in time. We illustrate our methodology with an empirical application studying the effects of economic liberalization on real GDP per capita for Sub-Saharan African countries. Companion software packages are provided in Python, R, and Stata.

Worker shortages are common in many industries. This paper examines the effect of government subsidies to address these shortages in the context of a reform that tied Medicaid payments to nursing home staffing levels. We find that the reform substantially increased staffing, especially for facilities serving many Medicaid patients. Facilities responded primarily by hiring workers in lower-wage roles rather than increasing hours of incumbent or high-wage staff. This contrasts with null effects we estimate for a non-incentivized rate increase, suggesting that the incentive structure of government payments—rather than just the level—is key to boosting employment in sectors facing worker shortages.

In economies with fixed exchange rates, the adjustment to government-spending shocks is asymmetric. Expansionary shocks are absorbed by the real exchange rate, contractionary shocks by output. This result emerges in a small open-economy model with downward nominal wage rigidity and is supported by new empirical evidence based on panel data from different exchange-rate regimes. The exchange-rate regime, economic slack, inflation, and how spending is financed all matter for the fiscal transmission mechanism in the way predicted by the model. Estimates that fail to distinguish between the effects of positive and negative shocks are subject to a “depreciation bias.”

Is government guiding the invisible hand at the top of the labor market? We use new administrative data to measure physicians’ earnings and estimate the influence of health care policies on these earnings, physicians’ labor supply, and the allocation of talent. Combining the administrative registry of U.S. physicians with tax data, Medicare billing records, and survey responses, we find that physicians’ annual earnings average $350,000 and make up 8.6% of national health care spending. Business income makes up one-quarter of earnings and is systematically underreported in survey data. Earnings increase steeply early in the career, and there are major differences across specialties, regions, and firm sizes. The geographic pattern of earnings is unusual compared with other workers. We argue that these patterns reflect policy choices to subsidize demand for physician care, amplified by restrictions on physician entry, especially in certain specialties. Health policy has a major impact on the margin: 25% of physician fee revenue driven by Medicare reimbursements accrues to physicians personally. Physicians earn 8% of public money spent on insurance expansion. These policies in turn affect the type and quantity of medical care physicians supply, retirement timing, and the allocation of talent across specialties.

This research evaluates whether reporting incentives and consequences change under the new lease accounting standard. Under prior guidance (SFAS 13), we predict and find firms with high financing cost sensitivities to leverage have greater incentive to finance investments with operating leases. Under the new lease accounting standard (ASU 2016-02), we predict and find this leverage incentive remains but is reduced, consistent with the FASB’s objective to limit opportunities to structure lease contracts for balance sheet purposes. Under ASU 2016-02, we also predict and find that the leverage incentive encourages firms to reduce operating lease liabilities by decreasing the duration of minimum lease payments. Lastly, we predict and find that firms use fewer operating leases under both SFAS 13 and ASU 2016-02 when managers’ income objectives exclude depreciation and/or interest expense. These findings suggest reporting incentives remain post ASU 2016-02 that encourage firms to structure leases to achieve accounting outcomes. Data Availability: This study uses licensed data from a variety of sources (see Appendix A for a detailed list of providers).

Global markets are moving toward requiring firms to track and report greenhouse gas emissions across their value chain. This includes self-generated emissions (i.e., Scope 1), emissions from power providers (i.e., Scope 2), and emissions from upstream suppliers and downstream parties (i.e., Scope 3). Yet, obtaining reliable emissions data is a complex task that often relies on cumbersome legacy processes and becomes especially challenging with upstream and downstream emissions. Using the Design Science Research Methodology, we propose and prototype (early-stage) a technological solution that uses blockchain, non-fungible tokens, and smart contracts to track and report greenhouse gas emissions across a firm’s value chain. The proposed model demonstrates how these tools can create a reliable classification and provenance of emissions that all value chain members can access for reporting purposes. Experts in the field evaluate the proposed model, find it technologically feasible, and call attention to some of its challenges.

We document time-varying interrelations between aggregate funding conditions and the impact of operating leverage (OL) on stock returns. OL represents a primitive source of risk, which helps explain the well established unconditional relation between OL and future returns. However, the outperformance of firms with high OL occurs exclusively during periods of unconstrained funding. Although high OL represents operational inflexibility, when the Fed eases funding constraints, improved capital availability mitigates this inflexibility. Consequently, investors bid up the prices of stocks with high OL when aggregate funding constraints are loosened to reflect their lower risk and greater expected performance in unconstrained periods. Data Availability: Data are available from the public sources cited in the text.

Boards of directors encourage risk-averse managers to take risky actions by providing stock options and severance pay. We demonstrate that the ability of these incentives to encourage risk-taking hinges on the level of uncertainty facing the manager. We confirm prior findings that stock option convexity encourages risk-taking but find that this relation only holds when market-wide uncertainty is low. We also confirm prior findings that severance pay encourages risk-taking but find that this relation only holds during high market-wide uncertainty and negative market-wide performance. Finally, we find that compensation committees respond to variation in uncertainty by adjusting the level of option grants. Our results suggest that the effectiveness of incentives to take risk varies with the market-wide uncertainty, and that boards consider this in annual compensation design. Data Availability: Data are available from the public sources cited in the text.

We employ a novel machine learning technique to classify analysts’ forecast revisions into five types based on how the revision weighs publicly available signals. We label these forecast types as quant, sundry, contrarian, herder, and independent forecasts. Our tests reveal that a greater diversity of forecast types within the consensus is associated with increased consensus dispersion and improved consensus accuracy. Additionally, consensus diversity is associated with an improved information environment for firms, as reflected in reduced earnings announcement information asymmetry and volatility, higher earnings response coefficients, and faster price formation. Our study sheds light on how analysts revise their forecasts and documents capital market benefits associated with different analyst forecasting approaches.